78R4841 KKA-D
By: Harris S.B. No. 1324
A BILL TO BE ENTITLED
AN ACT
relating to a nonsubstantive revision of statutes relating to the
Texas Department of Insurance, the business of insurance, and
certain related businesses, including conforming amendments,
repeals, and penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. TITLE 3, INSURANCE CODE. The Insurance Code is
amended by adding Title 3 to read as follows:
TITLE 3. DEPARTMENT FUNDS, FEES, AND TAXES
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 201. COLLECTION OF REVENUE AND ADMINISTRATION
OF FUNDS
CHAPTER 202. FEES
CHAPTER 203. GENERAL PROVISIONS RELATING TO TAXES
[Chapters 204-220 reserved for expansion]
SUBTITLE B. INSURANCE PREMIUM TAXES
CHAPTER 221. PROPERTY AND CASUALTY INSURANCE PREMIUM TAX
CHAPTER 222. LIFE, HEALTH, AND ACCIDENT INSURANCE PREMIUM
TAX
CHAPTER 223. TITLE INSURANCE PREMIUM TAX
CHAPTER 224. RECIPROCAL AND INTERINSURANCE EXCHANGE
PREMIUM TAX
CHAPTER 225. SURPLUS LINES INSURANCE PREMIUM TAX
CHAPTER 226. UNAUTHORIZED AND INDEPENDENTLY PROCURED
INSURANCE PREMIUM TAX
CHAPTER 227. DISPOSITION OF PROCEEDS OF CERTAIN PREMIUM
TAXES
[Chapters 228-250 reserved for expansion]
SUBTITLE C. INSURANCE MAINTENANCE TAXES
CHAPTER 251. GENERAL PROVISIONS
CHAPTER 252. FIRE AND ALLIED LINES INSURANCE
CHAPTER 253. CASUALTY INSURANCE AND FIDELITY, GUARANTY,
AND SURETY BOND INSURANCE
CHAPTER 254. MOTOR VEHICLE INSURANCE
CHAPTER 255. WORKERS' COMPENSATION INSURANCE
CHAPTER 256. AIRCRAFT INSURANCE
CHAPTER 257. LIFE, HEALTH, AND ACCIDENT INSURANCE
CHAPTER 258. HEALTH MAINTENANCE ORGANIZATIONS
CHAPTER 259. THIRD-PARTY ADMINISTRATORS
CHAPTER 260. NONPROFIT LEGAL SERVICES CORPORATIONS
CHAPTER 261. TEXAS INSURANCE EXCHANGE
[Chapters 262-270 reserved for expansion]
SUBTITLE D. TITLE INSURANCE MAINTENANCE FEES
CHAPTER 271. TITLE INSURANCE MAINTENANCE FEES
[Chapters 272-280 reserved for expansion]
SUBTITLE E. OTHER TAXES
CHAPTER 281. RETALIATORY PROVISIONS
TITLE 3. DEPARTMENT FUNDS, FEES, AND TAXES
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 201. COLLECTION OF REVENUE AND
ADMINISTRATION OF FUNDS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 201.001. TEXAS DEPARTMENT OF INSURANCE OPERATING
ACCOUNT
Sec. 201.002. ACCOUNTING PROCEDURE
Sec. 201.003. REFUNDS
Sec. 201.004. ELECTRONIC TRANSFERS
Sec. 201.005. TRANSFER OF SECURITIES
[Sections 201.006-201.050 reserved for expansion]
SUBCHAPTER B. ADMINISTRATION
Sec. 201.051. POWERS AND DUTIES OF COMPTROLLER
Sec. 201.052. REIMBURSEMENT
Sec. 201.053. COOPERATION BETWEEN DEPARTMENT AND
COMPTROLLER
Sec. 201.054. INFORMATION SHARING; FEDERAL IDENTIFICATION
NUMBERS
Sec. 201.055. FILING DATE OF REPORT OR PAYMENT DELIVERED BY
POSTAL SERVICE
CHAPTER 201. COLLECTION OF REVENUE AND ADMINISTRATION
OF FUNDS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 201.001. TEXAS DEPARTMENT OF INSURANCE OPERATING
ACCOUNT. (a) The Texas Department of Insurance operating account
is an account in the general revenue fund. The account includes the
following:
(1) taxes and fees received by the commissioner or
comptroller that are required by this code to be deposited to the
credit of the account; and
(2) money or credits received by the department or
commissioner from sales, reimbursements, and fees authorized by law
other than this code, including money or credits received from:
(A) charges for providing copies of public
information under Chapter 552, Government Code;
(B) the disposition of surplus or salvage
property under Subchapters C and D, Chapter 2175, Government Code;
(C) the sale of publications and other printed
material under Section 2052.301, Government Code;
(D) miscellaneous transactions and sources under
Section 403.011 or 403.012, Government Code;
(E) charges for postage spent to serve legal
process under Section 17.025, Civil Practice and Remedies Code;
(F) the comptroller involving warrants for which
payment is barred under Chapter 404, Government Code;
(G) sales or reimbursements authorized by the
General Appropriations Act; and
(H) the sale of property purchased with money
from the account or a predecessor fund or account.
(b) The commissioner shall administer money in the account
and may spend money from the account in accordance with state law,
rules adopted by the commissioner, and the General Appropriations
Act.
(c) Money deposited to the credit of the account may be used
for any purpose for which money in the account is authorized to be
used by law. (V.T.I.C. Art. 1.31A, Secs. 2, 3, 4, 5, 6(a).)
Sec. 201.002. ACCOUNTING PROCEDURE. The commissioner shall
maintain a procedure to account for the receipt, disbursement, and
allocation of money deposited in the Texas Department of Insurance
operating account, including recordkeeping procedures adequate
for:
(1) the commissioner or comptroller, as applicable, to
adjust the tax assessments and fee schedules as authorized by this
code; and
(2) the state auditor to determine the source of all
receipts and expenditures. (V.T.I.C. Art. 1.31A, Sec. 6(b).)
Sec. 201.003. REFUNDS. If the department determines that a
person, firm, or corporation through mistake of law or fact
erroneously paid or overpaid a fee or other amount of money,
including any interest or penalty, administered or collected by the
department, the department may refund the erroneous payment or
overpayment by warrant on the state treasury from any funds
appropriated for that purpose. (V.T.I.C. Art. 1.31.)
Sec. 201.004. ELECTRONIC TRANSFERS. (a) The commissioner
shall adopt rules for the electronic transfer of any fee, guarantee
fund, or other money owed to or held for the benefit of this state
that the department has the responsibility to administer under this
code or another insurance law of this state.
(b) The commissioner shall require the electronic transfer
of any amount held or owed that exceeds $500,000. (V.T.I.C. Art.
1.10, Sec. 20.)
Sec. 201.005. TRANSFER OF SECURITIES. (a) A transfer by
the department of any security that is held in any way by the
department is not valid unless the transfer is countersigned by the
comptroller.
(b) The comptroller shall:
(1) countersign any security transfer presented by the
department;
(2) keep a record of all transfers that includes:
(A) the name of the transferee, unless the
security is transferred in blank; and
(B) a description of the security;
(3) when countersigning a security transfer, advise
the company concerned by mail of the details of the transaction; and
(4) state, in the comptroller's annual report to the
legislature, the countersigned transfers and the amount of the
transfers.
(c) To verify the correctness of records:
(1) the department is entitled to free access to the
comptroller's records kept under Subsection (b); and
(2) the comptroller is entitled to free access to the
books and other department documents relating to securities held by
the department. (V.T.I.C. Arts. 1.20, 1.21, 1.22.)
[Sections 201.006-201.050 reserved for expansion]
SUBCHAPTER B. ADMINISTRATION
Sec. 201.051. POWERS AND DUTIES OF COMPTROLLER. (a) Except
as otherwise provided by this code or another insurance law of this
state, the comptroller shall administer and enforce the provisions
of this code and other insurance laws of this state that relate to
the administration, collection, and reporting of taxes and certain
fees and assessments imposed under this code or another insurance
law of this state, as specifically provided by this code.
(b) The comptroller may:
(1) adopt rules to implement the administration,
collection, reporting, and enforcement responsibilities assigned
to the comptroller under this code or another insurance law of this
state; and
(2) prescribe appropriate report forms, establish or
alter tax report due dates not otherwise specifically prescribed by
this code or another insurance law of this state, and otherwise
adapt the functions transferred to the comptroller under Chapter
685, Acts of the 73rd Legislature, Regular Session, 1993, to
increase efficiency and cost-effectiveness.
(c) A rule adopted by the comptroller that relates to the
administration, collection, reporting, or enforcement of taxes
imposed under this code prevails over a conflicting rule, policy,
or procedure established by the department, the commissioner, or
otherwise.
(d) Subtitles A and B, Title 2, Tax Code, apply to the
administration, collection, and enforcement by the comptroller of
taxes and certain fees and assessments under this code or another
insurance law of this state. Except as otherwise provided by this
code, the powers granted to the comptroller under those provisions
of the Tax Code do not limit and are exclusive of the powers granted
to the department or the commissioner in relation to other fees and
assessments under this code. (V.T.I.C. Art. 1.04D, Secs. (a), (c),
(d).)
Sec. 201.052. REIMBURSEMENT. (a) The department shall
reimburse the appropriate portion of the general revenue fund for
the amount of expenses incurred by the comptroller in administering
taxes imposed under this code or another insurance law of this
state.
(b) The comptroller shall certify to the commissioner the
total amount of expenses estimated to be required to perform the
comptroller's duties under this code or another insurance law of
this state for each fiscal biennium. The comptroller shall provide
copies of the certification to the budget division of the
governor's office and to the Legislative Budget Board.
(c) The amount certified by the comptroller shall be
transferred from the Texas Department of Insurance operating
account to the appropriate portion of the general revenue fund. It
is the legislature's intent that money in the Texas Department of
Insurance operating account to be transferred under this subsection
should reflect the revenues from maintenance taxes paid by insurers
under this code or another insurance law of this state.
(d) In setting maintenance taxes for each fiscal year, the
commissioner shall ensure that the amount of taxes imposed is
sufficient to fully reimburse the appropriate portion of the
general revenue fund for the amount of expenses incurred by the
comptroller in administering taxes imposed under this code or
another insurance law of this state.
(e) If the amount of maintenance taxes collected is not
sufficient to reimburse the appropriate portion of the general
revenue fund for the amount of expenses incurred by the
comptroller, other money in the Texas Department of Insurance
operating account shall be used to reimburse the appropriate
portion of the general revenue fund. (V.T.I.C. Art. 4.19.)
Sec. 201.053. COOPERATION BETWEEN DEPARTMENT AND
COMPTROLLER. The commissioner and the comptroller shall cooperate
fully in performing their respective duties under this code or
another insurance law of this state. (V.T.I.C. Art. 4.18, Sec.
(a).)
Sec. 201.054. INFORMATION SHARING; FEDERAL IDENTIFICATION
NUMBERS. (a) The department shall comply with each reasonable
request from the comptroller relating to the sharing of information
gathered or compiled in connection with functions the comptroller
performs under this code or another insurance law of this state.
(b) The department shall maintain a record of the federal
identification number of each entity subject to regulation under
this code or another insurance law of this state and shall include
the appropriate number in any communication to or information
shared with the comptroller relating to that entity. (V.T.I.C.
Art. 4.18, Secs. (b), (c).)
Sec. 201.055. FILING DATE OF REPORT OR PAYMENT DELIVERED BY
POSTAL SERVICE. Except as otherwise specifically provided, for a
report, including a tax report, or payment that is required to be
filed or made in the offices of the comptroller and that is
delivered by the United States Postal Service to the offices of the
comptroller after the date on which the report or payment is
required to be filed or made, the date of filing or payment is the
date of:
(1) the postal service postmark stamped on the cover
in which the report or payment is mailed; or
(2) any other evidence of mailing authorized by the
postal service reflected on the cover in which the report or payment
is mailed. (V.T.I.C. Art. 1.11 (part), as amended Acts 77th Leg.,
R.S., Ch. 1419.)
CHAPTER 202. FEES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 202.001. APPLICABILITY OF CHAPTER
Sec. 202.002. DETERMINATION OF FEES
Sec. 202.003. FEES FOR COPIES
Sec. 202.004. REDUCED FEES FOR CERTAIN INSURERS
[Sections 202.005-202.050 reserved for expansion]
SUBCHAPTER B. SPECIFIC MAXIMUM FEES
Sec. 202.051. GENERAL FEES IMPOSED ON INSURERS
Sec. 202.052. FEES IMPOSED ON CERTAIN INSURERS
[Sections 202.053-202.100 reserved for expansion]
SUBCHAPTER C. DEPOSIT AND USE OF FEES
Sec. 202.101. DEPOSIT AND USE OF FEES GENERALLY
Sec. 202.102. DEPOSIT AND USE OF CERTAIN OTHER FEES
CHAPTER 202. FEES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 202.001. APPLICABILITY OF CHAPTER. Except as provided
by Section 202.052, the insurers that are subject to a fee imposed
under this chapter include:
(1) stock insurance companies;
(2) mutual insurance companies;
(3) local mutual aid associations;
(4) statewide mutual assessment companies;
(5) group hospital service corporations; and
(6) stipulated premium companies. (V.T.I.C. Art.
4.07, Sec. D.)
Sec. 202.002. DETERMINATION OF FEES. The department shall,
subject to the limits established by this chapter, set the amount of
the fees imposed under this chapter. (V.T.I.C. Art. 4.07, Secs. A
(part), C.)
Sec. 202.003. FEES FOR COPIES. (a) The department shall
set and collect a fee for copying any paper of record with the
department. The fee shall be set in an amount sufficient to
reimburse the state for the actual expense.
(b) The department may make and distribute copies of a paper
containing rating information without charge or for a fee that the
commissioner considers appropriate for administering the premium
rating laws by properly distributing rating information.
(c) This section does not affect Article 5.29. (V.T.I.C.
Art. 4.07, Sec. E.)
Sec. 202.004. REDUCED FEES FOR CERTAIN INSURERS. An
insurer to which this chapter applies that had gross premium
receipts of less than $450,000, according to the insurer's annual
statement for the preceding year ending December 31, is required to
pay only one-half the amount of a fee otherwise required to be paid
under this chapter. (V.T.I.C. Art. 4.07, Sec. H.)
[Sections 202.005-202.050 reserved for expansion]
SUBCHAPTER B. SPECIFIC MAXIMUM FEES
Sec. 202.051. GENERAL FEES IMPOSED ON INSURERS. The
department shall impose and receive fees for the use of the state
from each authorized insurer writing insurance in this state. The
amount of the fees may not exceed:
(1) for filing an amendment to a certificate of
authority if the charter is not amended$100;
(2) for affixing the official seal and certifying to
the seal$20;
(3) for reservation of name $200;
(4) for renewal of reservation of name $50;
(5) for filing an application for admission of a
foreign or alien insurer$4,000;
(6) for filing an original charter of an insurer,
including issuance of a certificate of authority$3,000;
(7) for filing an amendment to a charter if a hearing
is held$500;
(8) for filing an amendment to a charter if a hearing
is not held$250;
(9) for filing a designation of an attorney for
service of process or an amendment of a designation$50;
(10) for filing a copy of a total reinsurance
agreement$1,500;
(11) for filing a copy of a partial reinsurance
agreement$300;
(12) for accepting a security deposit $200;
(13) for substitution or amendment of a security
deposit$100;
(14) for certification of a statutory deposit$20;
(15) for filing a notice of intent to locate books and
records outside this state under Chapter 803$300;
(16) for filing a statement under Subchapters D and
E, Chapter 823, for the first $9.9 million of the
consideration$1,000;
(17) for filing a statement under Subchapters D and E,
Chapter 823, if the amount of the consideration exceeds $9.9
million . . . . . . . . . . an additional $500 for each additional $10
million of the consideration that exceeds $9.9 million, but not
more than a total amount of $10,000 under this subdivision and
Subdivision (16);
(18) for filing a registration statement under
Subchapter B, Chapter 823$300;
(19) for filing for review under Subchapter C, Chapter
823, or Subchapter L, Chapter 884$500;
(20) for filing a direct reinsurance agreement under
Subchapter K, Chapter 884$300;
(21) for filing for approval of a merger under Chapter
824$1,500;
(22) for filing for approval of reinsurance under
Chapter 828$1,500;
(23) for filing restated articles of incorporation for
a domestic, foreign, or alien insurer$500;
(24) for filing a joint control agreement $100;
(25) for filing a substitution or amendment to a joint
control agreement$40; and
(26) for filing a change of attorney in fact$500.
(V.T.I.C. Art. 4.07, Sec. A (part).)
Sec. 202.052. FEES IMPOSED ON CERTAIN INSURERS. (a) The
department shall impose and the comptroller shall collect fees for
the use of the state from each authorized insurer writing a class of
insurance that may be written by an insurer operating under Chapter
841. The amount of the fees may not exceed:
(1) for valuing life insurance policies, and for each
$1 million of insurance or fraction thereof$10; and
(2) for filing the annual statement $500.
(b) Subtitles A and B, Title 2, Tax Code, apply to a fee
collected under this section. (V.T.I.C. Art. 4.07, Sec. B.)
[Sections 202.053-202.100 reserved for expansion]
SUBCHAPTER C. DEPOSIT AND USE OF FEES
Sec. 202.101. DEPOSIT AND USE OF FEES GENERALLY. Amounts
collected under Section 202.051:
(1) shall be deposited to the credit of the Texas
Department of Insurance operating account; and
(2) may be appropriated only for the use and benefit of
the department as provided by the General Appropriations Act to pay
salaries and other expenses arising from and in connection with
investigations of violations of the insurance laws of this state
and the examination or licensing of insurers. (V.T.I.C. Art. 4.07,
Sec. F.)
Sec. 202.102. DEPOSIT AND USE OF CERTAIN OTHER FEES.
Amounts collected by the comptroller under Section 202.052:
(1) shall be deposited to the credit of the general
revenue fund; and
(2) are available for appropriation to the department
as provided by the General Appropriations Act to pay salaries and
other expenses arising from investigations of violations of the
insurance laws of this state and the examination or licensing of
insurers. (V.T.I.C. Art. 4.07, Sec. G.)
CHAPTER 203. GENERAL PROVISIONS RELATING TO TAXES
Sec. 203.001. LIMITATION ON CERTAIN ADDITIONAL TAXES
Sec. 203.002. TAX PAYMENT REQUIRED FOR CERTAIN CERTIFICATES;
UNREPORTED GROSS PREMIUM RECEIPTS
CHAPTER 203. GENERAL PROVISIONS RELATING TO TAXES
Sec. 203.001. LIMITATION ON CERTAIN ADDITIONAL TAXES. (a)
This section applies to:
(1) an insurer authorized to engage in the business of
insurance in this state other than an eligible surplus lines
insurer; and
(2) a health maintenance organization authorized to
engage in the business of a health maintenance organization in this
state.
(b) Except as otherwise provided by this code or the Labor
Code, an insurer or health maintenance organization subject to a
tax imposed by Chapter 4, 221, 222, 224, or 257 may not be required
to pay any additional tax imposed by this state or a county or
municipality in proportion to the insurer's or health maintenance
organization's gross premium receipts.
(c) Subsection (b) does not:
(1) limit the applicability of other taxes, fees, and
assessments imposed by this code; or
(2) prohibit the imposition and collection of state,
county, and municipal taxes on the property of insurers or health
maintenance organizations or state, county, and municipal taxes
imposed by other laws of this state, unless a specific exemption for
insurers or health maintenance organizations is provided in those
laws. (V.T.I.C. Art. 4.06.)
Sec. 203.002. TAX PAYMENT REQUIRED FOR CERTAIN
CERTIFICATES; UNREPORTED GROSS PREMIUM RECEIPTS. (a) A life
insurance company may not receive a certificate of authority to
engage in the business of insurance in this state until all taxes
imposed under this code or another insurance law of this state are
paid.
(b) If the commissioner determines by examining a company or
by other means that the company's gross premium receipts in a year
exceed the amount reported by the company for that year, the
commissioner shall report that determination to the comptroller.
The comptroller shall institute a collection action as the
comptroller considers appropriate to collect taxes due on
unreported gross premium receipts. (V.T.I.C. Art. 4.05 (part).)
[Chapters 204-220 reserved for expansion]
SUBTITLE B. INSURANCE PREMIUM TAXES
CHAPTER 221. PROPERTY AND CASUALTY INSURANCE
PREMIUM TAX
Sec. 221.001. APPLICABILITY OF CHAPTER
Sec. 221.002. TAX IMPOSED; RATE
Sec. 221.003. TAX DUE DATES
Sec. 221.004. TAX REPORT
Sec. 221.005. CHANGE IN DUE DATES
Sec. 221.006. CREDIT FOR FEES PAID
Sec. 221.007. FAILURE TO PAY TAXES
CHAPTER 221. PROPERTY AND CASUALTY INSURANCE
PREMIUM TAX
Sec. 221.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies to an insurer, organization, or concern that receives gross
premiums subject to taxation under Section 221.002, including a
reciprocal or interinsurance exchange that elects to be subject to
taxation under this chapter in accordance with Section 224.003 and
a Lloyd's plan.
(b) This chapter does not apply to:
(1) a fraternal benefit society, including a fraternal
benefit society operating under Chapter 885;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a stipulated premium company operating under
Chapter 884;
(4) a mutual assessment association, company, or
corporation regulated under Chapter 887; or
(5) a purely cooperative or mutual fire insurance
company carried on by its members solely for the protection of their
own property and not for profit, except as provided by Section
221.002(b)(13). (V.T.I.C. Art. 4.10, Secs. 1 (part), 3, 4(a).)
Sec. 221.002. TAX IMPOSED; RATE. (a) An annual tax is
imposed on each insurer that receives gross premiums subject to
taxation under this section. The rate of the tax is 1.6 percent of
the insurer's taxable premium receipts for a calendar year.
(b) Except as provided by Subsection (c), in determining an
insurer's taxable premium receipts, the insurer shall include the
total gross amounts of premiums written by the insurer in a calendar
year from any kind of insurance written on property or risks located
in this state, including:
(1) fire insurance;
(2) ocean marine insurance;
(3) inland marine insurance;
(4) accident insurance;
(5) credit insurance;
(6) livestock insurance;
(7) fidelity insurance;
(8) guaranty insurance;
(9) surety insurance;
(10) casualty insurance;
(11) workers' compensation insurance;
(12) employers' liability insurance; and
(13) crop insurance written by a farm mutual insurance
company.
(c) The following premium receipts are not included in
determining an insurer's taxable premium receipts:
(1) premium receipts received from the business of
title insurance;
(2) premium receipts received from the business of
life insurance, personal accident insurance, life and accident
insurance, or health and accident insurance for profit, written by
a life insurance company, life and accident insurance company,
health and accident insurance company, or for mutual benefit or
protection in this state;
(3) premium receipts received from another authorized
insurer for reinsurance;
(4) returned premiums and dividends paid to
policyholders; and
(5) premiums excluded by another law of this state.
(d) In determining an insurer's taxable premium receipts,
an insurer is not entitled to a deduction for premiums paid for
reinsurance. (V.T.I.C. Art. 4.10, Secs. 1 (part), 2, 4(b), 5, 6(a)
(part), 10.)
Sec. 221.003. TAX DUE DATES. (a) The total tax imposed by
this chapter is due and payable not later than March 1 after the end
of the calendar year for which the tax is due.
(b) An insurer that had a net tax liability for the previous
calendar year of more than $1,000 shall make semiannual prepayments
of tax on March 1 and August 1. The tax paid on each date must be
equal to 50 percent of the total amount of tax the insurer paid
under this chapter for the previous calendar year. If the insurer
did not pay a tax under this chapter during the previous calendar
year, the tax paid on each date must be equal to the tax that would
be owed on the aggregate of the gross premiums for the two previous
calendar quarters.
(c) The comptroller may refund any overpayment of taxes that
results from the semiannual prepayment system prescribed by this
section. (V.T.I.C. Art. 4.10, Secs. 6(a) (part), (b).)
Sec. 221.004. TAX REPORT. (a) An insurer liable for the
tax imposed by this chapter must file annually with the comptroller
a tax report on a form prescribed by the comptroller.
(b) The tax report is due on the date the tax is due under
Section 221.003(a). (V.T.I.C. Art. 4.10, Secs. 6(a) (part), 11.)
Sec. 221.005. CHANGE IN DUE DATES. (a) The comptroller by
rule may change the dates for reporting and paying taxes under this
chapter to improve operating efficiencies within the agency.
(b) A change by the comptroller in a reporting or payment
date must retain the system of semiannual prepayments prescribed by
Section 221.003. (V.T.I.C. Art. 4.10, Sec. 6(c).)
Sec. 221.006. CREDIT FOR FEES PAID. (a) Except as provided
by Section 803.007, an insurer is entitled to a credit on the amount
of tax due under this chapter for all examination and evaluation
fees paid to or for the use of this state during the calendar year
for which the tax is due.
(b) The credit provided by this section is in addition to
any other credit authorized by statute. (V.T.I.C. Art. 4.10, Sec.
13.)
Sec. 221.007. FAILURE TO PAY TAXES. An insurer that fails
to pay all taxes imposed by this chapter is subject to Section
203.002. (V.T.I.C. Art. 4.10, Sec. 15.)
CHAPTER 222. LIFE, HEALTH, AND ACCIDENT INSURANCE PREMIUM TAX
Sec. 222.001. APPLICABILITY OF CHAPTER
Sec. 222.002. TAX IMPOSED
Sec. 222.003. TAX RATES
Sec. 222.004. TAX DUE DATES
Sec. 222.005. TAX REPORT
Sec. 222.006. CHANGE IN DUE DATES
Sec. 222.007. CREDIT FOR FEES PAID
Sec. 222.008. FAILURE TO PAY TAXES
CHAPTER 222. LIFE, HEALTH, AND ACCIDENT INSURANCE PREMIUM TAX
Sec. 222.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies to:
(1) an insurer that receives gross premiums subject to
taxation under Section 222.002, including:
(A) a life, health, or accident insurance company
operating under Chapter 841 or 982;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a general casualty company operating under
Chapter 861;
(D) a statewide mutual assessment company
operating under Chapter 881;
(E) a mutual life insurance company operating
under Chapter 882;
(F) a mutual insurance company operating under
Chapter 883;
(G) a stipulated premium company operating under
Chapter 884;
(H) a Lloyd's plan operating under Chapter 941;
(I) a reciprocal or interinsurance exchange
operating under Chapter 942; and
(J) a Mexican casualty insurance company
operating under Chapter 984; and
(2) a health maintenance organization operating under
Chapter 843 that receives gross revenues subject to taxation under
Section 222.002.
(b) This chapter does not apply to:
(1) a fraternal benefit society, including a fraternal
benefit society operating under Chapter 885;
(2) a local mutual aid association operating under
Chapter 886; or
(3) a society that limits its membership to one
occupation. (V.T.I.C. Art. 4.11, Secs. 1 (part), 2(a).)
Sec. 222.002. TAX IMPOSED. (a) An annual tax is imposed
on:
(1) each insurer that receives gross premiums subject
to taxation under this section; and
(2) each health maintenance organization that
receives gross revenues from the sale of health maintenance
certificates or contracts.
(b) Except as otherwise provided by this section, in
determining an insurer's taxable gross premiums or a health
maintenance organization's taxable gross revenues, the insurer or
health maintenance organization shall include the total gross
amounts of premiums, membership fees, assessments, dues, revenues,
and other considerations received by the insurer or health
maintenance organization in a calendar year from any kind of health
maintenance organization certificate or contract or insurance
policy or contract covering a person located in this state and
arising from the business of a health maintenance organization or
the business of life insurance, accident insurance, health
insurance, life and accident insurance, life and health insurance,
health and accident insurance, life, health, and accident
insurance, including variable life insurance, credit life
insurance, and credit accident and health insurance for profit or
otherwise or for mutual benefit or protection.
(c) The following are not included in determining an
insurer's taxable gross premiums or a health maintenance
organization's taxable gross revenues:
(1) returned premiums or revenues;
(2) dividends applied to purchase paid-up additions to
insurance or to shorten the endowment or premium payment period;
(3) premiums received from an insurer for reinsurance;
(4) premiums or revenues received from the treasury of
this state or the United States for insurance or benefits
contracted for by this state or the federal government:
(A) in accordance with or in furtherance of Title
2, Human Resources Code, or the Social Security Act (42 U.S.C.
Section 301 et seq.); or
(B) to provide welfare benefits to designated
welfare recipients;
(5) premiums or revenues paid on group health,
accident, and life policies or contracts in which the group covered
by the policy or contract consists of a single nonprofit trust
established to provide coverage primarily for employees of:
(A) a municipality, county, or hospital district
in this state; or
(B) a county or municipal hospital, without
regard to whether the employees are employees of the county or
municipality or of an entity operating the hospital on behalf of the
county or municipality; or
(6) premiums or revenues excluded by another law of
this state.
(d) For purposes of Subsection (c)(3), a stop-loss or excess
loss insurance policy issued to a health maintenance organization
is considered reinsurance. In determining an insurer's taxable
gross premiums or a health maintenance organization's taxable gross
revenues, an insurer or health maintenance organization is not
entitled to a deduction for premiums paid for reinsurance.
(V.T.I.C. Art. 4.11, Secs. 1, 2(c); Art. 20A.33, Sec. (a) (part);
New.)
Sec. 222.003. TAX RATES. (a) Except as provided by
Subsection (b), the rate of the tax imposed by this chapter on an
insurer is 1.75 percent of the insurer's taxable gross premiums
received during a calendar year.
(b) The rate of the tax imposed by this chapter on an insurer
that receives taxable gross premiums from the business of life
insurance is:
(1) 0.875 percent of the first $450,000 of taxable
gross premiums received during a calendar year from the business of
life insurance; and
(2) 1.75 percent of the remaining taxable gross
premiums received during that calendar year from the business of
life insurance.
(c) The rate of the tax imposed by this chapter on a health
maintenance organization is:
(1) 0.875 percent of the first $450,000 of taxable
gross revenues received during a calendar year for the issuance of
health maintenance certificates or contracts; and
(2) 1.75 percent of the remaining taxable gross
revenues received during that calendar year for the issuance of
health maintenance certificates or contracts. (V.T.I.C. Art. 4.11,
Secs. 2(f), 5F, 5G, 5H; Art. 20A.33, Sec. (a) (part).)
Sec. 222.004. TAX DUE DATES. (a) The total tax imposed by
this chapter is due and payable not later than:
(1) March 1 after the end of the calendar year for
which the tax is due;
(2) the date the annual statement for the insurer or
health maintenance organization is required to be filed with the
commissioner after the end of the calendar year for which the tax is
due; or
(3) another date prescribed by the comptroller.
(b) An insurer or health maintenance organization that had a
net tax liability for the previous calendar year of more than $1,000
shall make semiannual prepayments of tax on March 1 and August 1.
The tax paid on each date must be equal to 50 percent of the total
amount of tax the insurer or health maintenance organization paid
under this chapter for the previous calendar year. If the insurer
or health maintenance organization did not pay a tax under this
chapter during the previous calendar year, the tax paid on each date
must be equal to the tax that would be owed on the aggregate of the
taxable gross premiums or taxable gross revenues for the two
previous calendar quarters.
(c) The comptroller may refund any overpayment of taxes that
results from the semiannual prepayment system prescribed by this
section. (V.T.I.C. Art. 4.11, Secs. 3 (part), 13(a).)
Sec. 222.005. TAX REPORT. (a) An insurer or health
maintenance organization liable for the tax imposed by this chapter
must file annually with the comptroller a tax report on a form
prescribed by the comptroller.
(b) The tax report is due on the date the tax is due under
Section 222.004(a).
(c) The comptroller may require the insurer or health
maintenance organization to file any additional relevant
information that is reasonably necessary to verify the amount of
tax due. (V.T.I.C. Art. 4.11, Secs. 3 (part), 6.)
Sec. 222.006. CHANGE IN DUE DATES. (a) The comptroller by
rule may change the dates for reporting and paying taxes under this
chapter to improve operating efficiencies within the agency.
(b) A change by the comptroller in a reporting or payment
date must retain the system of semiannual prepayments prescribed by
Section 222.004. (V.T.I.C. Art. 4.11, Sec. 13(b).)
Sec. 222.007. CREDIT FOR FEES PAID. (a) Except as provided
by Section 803.007, an insurer or health maintenance organization
is entitled to a credit on the amount of tax due under this chapter
for all examination and valuation fees paid to or for the use of
this state during the calendar year for which the tax is due.
(b) The credit provided by this section is in addition to
any other credit authorized by statute. (V.T.I.C. Art. 4.11, Sec.
8.)
Sec. 222.008. FAILURE TO PAY TAXES. An insurer or health
maintenance organization that fails to pay all taxes imposed by
this chapter is subject to Section 203.002. (V.T.I.C. Art. 4.11,
Sec. 10.)
CHAPTER 223. TITLE INSURANCE PREMIUM TAX
Sec. 223.001. APPLICABILITY OF CERTAIN DEFINITIONS
Sec. 223.002. APPLICABILITY OF CHAPTER
Sec. 223.003. TAX IMPOSED
Sec. 223.004. LIMITATION ON CERTAIN ADDITIONAL TAXES
Sec. 223.005. PREMIUMS PAID TO TITLE INSURANCE AGENT
Sec. 223.006. TAX DUE DATES
Sec. 223.007. TAX REPORTS
Sec. 223.008. RULES
Sec. 223.009. CREDIT FOR FEES PAID
Sec. 223.010. FAILURE TO PAY TAXES
Sec. 223.011. DISPOSITION OF REVENUE
CHAPTER 223. TITLE INSURANCE PREMIUM TAX
Sec. 223.001. APPLICABILITY OF CERTAIN DEFINITIONS. In
this chapter, a term defined by Chapter 2501 has the meaning
assigned by that chapter. (New.)
Sec. 223.002. APPLICABILITY OF CHAPTER. This chapter
applies to a title insurance company that receives premiums subject
to taxation under Section 223.003. (V.T.I.C. Art. 9.59, Sec. 1
(part).)
Sec. 223.003. TAX IMPOSED. (a) An annual tax is imposed on
each title insurance company that receives premiums from the
business of title insurance. The rate of the tax is 1.35 percent of
the title insurance company's taxable premiums for a calendar year,
including any premiums retained by a title insurance agent as
provided by Section 223.005. For purposes of this chapter, a person
engages in the business of title insurance if the person engages in
an activity described by Section 2501.005.
(b) Except as provided by Subsection (c), in determining a
title insurance company's taxable premiums, the company shall
include the total amounts of premiums received in a calendar year
from title insurance written on property located in this state.
(c) The following premiums are not included in determining a
title insurance company's taxable premiums:
(1) premiums received from other title insurance
companies for reinsurance; and
(2) returned premiums and dividends paid to
policyholders.
(d) In determining a title insurance company's taxable
premiums, a title insurance company is not entitled to a deduction
for premiums paid for reinsurance. (V.T.I.C. Art. 9.59, Secs. 1
(part), 2, 3(a) (part), 4; New.)
Sec. 223.004. LIMITATION ON CERTAIN ADDITIONAL TAXES. (a)
Except as otherwise provided by this code or the Labor Code, a
title insurance company or title insurance agent subject to the tax
imposed by this chapter may not be required to pay any additional
tax imposed by this state or a county or municipality in proportion
to the company's or agent's gross premium receipts.
(b) This section does not:
(1) limit the applicability of other taxes, fees, and
assessments imposed by this code; or
(2) prohibit the imposition and collection of state,
county, and municipal taxes on the property of title insurance
companies or title insurance agents or state, county, and municipal
taxes imposed by other laws of this state, unless a specific
exemption for title insurance companies or title insurance agents
is provided in those laws. (V.T.I.C. Art. 9.59, Sec. 8(a).)
Sec. 223.005. PREMIUMS PAID TO TITLE INSURANCE AGENT. (a)
Premiums received from the business of title insurance are subject
to the tax under this chapter regardless of whether paid to a title
insurance company or retained by a title insurance agent, with the
tax being in lieu of the tax on the premiums retained by a title
insurance agent.
(b) The state facilitates the collection of the premium tax
on the premiums retained by a title insurance agent by establishing
the division of the premiums between the title insurance company
and title insurance agent so that the company receives the premium
tax due on the agent's portion of the premiums and remits it to the
state. (V.T.I.C. Art. 9.59, Sec. 8(b).)
Sec. 223.006. TAX DUE DATES. (a) The total tax imposed by
this chapter is due and payable not later than:
(1) March 1 after the end of the calendar year for
which the tax is due; or
(2) another date prescribed by the comptroller.
(b) A title insurance company that had a net tax liability
for the previous calendar year of more than $1,000 shall make
semiannual prepayments of tax on March 1 and August 1. The tax paid
on each date must be equal to 50 percent of the total amount of tax
the company paid under this chapter for the previous calendar year.
If the company did not pay a tax under this chapter during the
previous calendar year, the tax paid on each date must be equal to
the tax that would be owed on the aggregate of the gross premiums
for the two previous calendar quarters.
(c) The comptroller may refund any overpayment of taxes that
results from the semiannual prepayment system prescribed by this
section. (V.T.I.C. Art. 9.59, Secs. 3(a) (part), (b).)
Sec. 223.007. TAX REPORTS. (a) A title insurance company
liable for the tax imposed by this chapter must file annually with
the comptroller a tax report on a form prescribed by the
comptroller.
(b) The tax report is due on the date the tax is due under
Section 223.006(a). (V.T.I.C. Art. 9.59, Secs. 3(a) (part), 5.)
Sec. 223.008. RULES. (a) The commissioner or the
comptroller, as appropriate, may adopt fair and reasonable rules,
minimum standards, and limitations as appropriate to augment and
implement this chapter.
(b) This section does not affect the comptroller's general
authority to adopt rules to promote the efficient administration,
collection, enforcement, and reporting of taxes under this code or
another insurance law of this state. (V.T.I.C. Art. 9.59, Sec.
3(c).)
Sec. 223.009. CREDIT FOR FEES PAID. (a) Except as provided
by Section 803.007, a title insurance company is entitled to a
credit on the amount of tax due under this chapter for all
examination and evaluation fees paid to or for the use of the state
during the calendar year for which the tax is due.
(b) The credit provided by this section is in addition to
any other credit authorized by statute. (V.T.I.C. Art. 9.59, Sec.
7.)
Sec. 223.010. FAILURE TO PAY TAXES. A title insurance
company that fails to pay all taxes imposed by this chapter is
subject to Section 203.002. (V.T.I.C. Art. 9.59, Sec. 9.)
Sec. 223.011. DISPOSITION OF REVENUE. Chapter 227 applies
to the disposition of the revenue from the tax imposed by this
chapter. (V.T.I.C. Art. 9.59, Sec. 15.)
CHAPTER 224. RECIPROCAL AND INTERINSURANCE
EXCHANGE PREMIUM TAX
Sec. 224.001. APPLICABILITY OF CHAPTER
Sec. 224.002. TAX IMPOSED; RATE
Sec. 224.003. TAXATION ELECTION
CHAPTER 224. RECIPROCAL AND INTERINSURANCE
EXCHANGE PREMIUM TAX
Sec. 224.001. APPLICABILITY OF CHAPTER. This chapter
applies to a reciprocal or interinsurance exchange that has a
certificate of authority to engage in business in this state.
(V.T.I.C. Arts. 4.11B, Sec. 1; 4.11C, Sec. 1.)
Sec. 224.002. TAX IMPOSED; RATE. (a) An annual tax is
imposed on each reciprocal or interinsurance exchange that:
(1) does not file an election to be subject to the tax
imposed by Chapter 221 in accordance with Section 224.003; or
(2) withdraws that election.
(b) The rate of the tax is 1.7 percent of the reciprocal or
interinsurance exchange's gross premium receipts.
(c) A reciprocal or interinsurance exchange that is subject
to the tax imposed by this chapter is not subject to the tax imposed
by Chapter 221.
(d) Except as provided by Subsection (b), Chapter 221
applies to the imposition, computation, and administration of the
tax imposed by this chapter in the same manner that Chapter 221
applies to the tax imposed by that chapter. (V.T.I.C. Arts. 4.11B,
Sec. 2; 4.11C, Secs. 2 (part), 5 (part).)
Sec. 224.003. TAXATION ELECTION. (a) A reciprocal or
interinsurance exchange may elect to be subject to the tax imposed
by Chapter 221.
(b) A reciprocal or interinsurance exchange that elects to
be subject to the tax imposed by Chapter 221 must file with the
comptroller on a form prescribed by the comptroller a written
statement that the exchange has elected to be subject to that tax.
The exchange must file the form not later than the 31st day before
the date on which the tax year for which the election is to be
effective begins.
(c) A reciprocal or interinsurance exchange that elects to
be subject to the tax imposed by Chapter 221 continues to be subject
to that tax for each tax year until the exchange withdraws the
election under Subsection (d).
(d) A reciprocal or interinsurance exchange may withdraw an
election made under Subsection (b) by filing with the comptroller
written notice of the withdrawal. The exchange must file the notice
not later than the 31st day before the date on which the tax year for
which the withdrawal is to be effective begins.
(e) A reciprocal or interinsurance exchange that elects to
be subject to the tax imposed by Chapter 221 is not subject to the
tax imposed by Section 224.002. (V.T.I.C. Art. 4.11C, Secs. 2
(part), 3, 5 (part).)
CHAPTER 225. SURPLUS LINES INSURANCE PREMIUM TAX
Sec. 225.001. DEFINITION
Sec. 225.002. APPLICABILITY OF CHAPTER
Sec. 225.003. APPLICABILITY OF GENERAL PROVISIONS
OF OTHER LAW
Sec. 225.004. TAX IMPOSED; RATE
Sec. 225.005. TAX EXCLUSIVE
Sec. 225.006. COLLECTION OF TAX BY AGENT
Sec. 225.007. COLLECTED TAXES HELD IN TRUST
Sec. 225.008. TAX PAYMENT, REPORT, AND DUE DATE
Sec. 225.009. PREPAYMENT OF TAX
Sec. 225.010. TAX ABSORPTION AND REBATES PROHIBITED
Sec. 225.011. CANCELED OR REWRITTEN INSURANCE CONTRACT
Sec. 225.012. STATE AS PREFERRED CREDITOR
Sec. 225.013. FAILURE TO PAY TAXES; CRIMINAL PENALTY
CHAPTER 225. SURPLUS LINES INSURANCE PREMIUM TAX
Sec. 225.001. DEFINITION. In this chapter, "premium"
includes:
(1) a premium;
(2) a membership fee;
(3) an assessment;
(4) dues; and
(5) any other consideration for surplus lines
insurance. (V.T.I.C. Art. 1.14-2, Sec. 12(a) (part).)
Sec. 225.002. APPLICABILITY OF CHAPTER. This chapter
applies to a surplus lines agent who collects gross premiums for
surplus lines insurance. (V.T.I.C. Art. 1.14-2, Sec. 12(a)
(part).)
Sec. 225.003. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 981, including provisions relating
to the applicability and enforcement of that chapter, rulemaking
authority under that chapter, and definitions of terms applicable
in that chapter, apply to this chapter. (V.T.I.C. Art. 1.14-2, Sec.
12(e).)
Sec. 225.004. TAX IMPOSED; RATE. (a) A tax is imposed on
gross premiums for surplus lines insurance. The rate of the tax is
4.85 percent of the gross premiums.
(b) Taxable gross premiums under this section are based on
gross premiums written or received for surplus lines insurance
placed through an eligible surplus lines insurer during a calendar
year.
(c) If a surplus lines insurance policy covers risks or
exposures only partially located in this state, the tax is computed
on the portion of the premium that is properly allocated to a risk
or exposure located in this state.
(d) In determining the amount of taxable premiums under
Subsection (c), a premium, other than a premium properly allocated
or apportioned and reported as a premium that may be subject to
taxation by another state, is considered to be written on property
or risks located or resident in this state if the premium:
(1) is written, procured, or received in this state;
or
(2) is for a policy negotiated in this state.
(e) The following premiums are not taxable in this state:
(1) premiums properly allocated to another state that
are specifically exempt from taxation in that state; and
(2) premiums on risks or exposures that are properly
allocated to federal or international waters or are under the
jurisdiction of a foreign government. (V.T.I.C. Art. 1.14-2, Sec.
12(a) (part).)
Sec. 225.005. TAX EXCLUSIVE. The tax imposed by this
chapter is in lieu of all other insurance taxes. (V.T.I.C. Art.
1.14-2, Sec. 12(a) (part).)
Sec. 225.006. COLLECTION OF TAX BY AGENT. The surplus lines
agent shall collect from the insured the tax imposed by this chapter
at the time of delivery of the cover note, certificate of insurance,
policy, or other initial confirmation of insurance and the full
amount of the gross premium charged by the eligible surplus lines
insurer for the insurance. (V.T.I.C. Art. 1.14-2, Sec. 12(a)
(part).)
Sec. 225.007. COLLECTED TAXES HELD IN TRUST. A surplus
lines agent holds taxes collected under this chapter in trust.
(V.T.I.C. Art. 1.14-2, Sec. 12(b) (part).)
Sec. 225.008. TAX PAYMENT, REPORT, AND DUE DATE. (a) The
tax imposed by this chapter is due and payable on or before March 1.
A surplus lines agent shall file a tax report with the tax payment.
(b) A surplus lines agent shall pay the tax imposed by this
chapter and file the report using forms prescribed by the
comptroller. (V.T.I.C. Art. 1.14-2, Sec. 12(a) (part).)
Sec. 225.009. PREPAYMENT OF TAX. (a) A surplus lines agent
shall prepay the tax imposed by this chapter when the amount of the
accrued taxes due is equal to at least $70,000.
(b) A surplus lines agent shall prepay the taxes using a
form prescribed by the comptroller. The prepayment is due on or
before the 15th day of the month following the month in which the
amount of taxes described by this section accrues. (V.T.I.C. Art.
1.14-2, Sec. 12(a) (part).)
Sec. 225.010. TAX ABSORPTION AND REBATES PROHIBITED. (a) A
surplus lines agent may not absorb the tax imposed by this chapter.
(b) A surplus lines agent may not rebate all or part of the
tax or the agent's commission as an inducement for insurance or for
any other reason. (V.T.I.C. Art. 1.14-2, Sec. 12(a) (part).)
Sec. 225.011. CANCELED OR REWRITTEN INSURANCE CONTRACT. If
a surplus lines insurance contract is canceled and rewritten, the
additional premium for purposes of the tax imposed by this chapter
is the premium amount that exceeds the unearned premium of the
canceled contract. (V.T.I.C. Art. 1.14-2, Sec. 12(a) (part).)
Sec. 225.012. STATE AS PREFERRED CREDITOR. If the property
of a surplus lines agent is seized as the result of an intermediate
or final decision of a court in this state, or if the business of a
surplus lines agent is suspended by the action of a creditor or
turned over to an assignee, receiver, or trustee, the tax imposed by
this chapter and penalties due the state from the agent are
preferred claims and the state is a preferred creditor and must be
paid in full. (V.T.I.C. Art. 1.14-2, Sec. 12(c).)
Sec. 225.013. FAILURE TO PAY TAXES; CRIMINAL PENALTY. (a)
A surplus lines agent who does not pay the tax imposed by this
chapter on or before the due date required by this chapter or who
fraudulently withholds, appropriates, or otherwise uses any
portion of the tax commits the offense of theft, regardless of
whether the surplus lines agent has or claims an interest in the
tax.
(b) An offense under this section is punishable as provided
by law. (V.T.I.C. Art. 1.14-2, Sec. 12(b) (part).)
CHAPTER 226. UNAUTHORIZED AND INDEPENDENTLY PROCURED
INSURANCE PREMIUM TAX
SUBCHAPTER A. UNAUTHORIZED INSURANCE PREMIUM TAX
Sec. 226.001. DEFINITION
Sec. 226.002. APPLICABILITY OF SUBCHAPTER
Sec. 226.003. TAX IMPOSED; RATE
Sec. 226.004. TAX EXCLUSIVE
Sec. 226.005. TAX PAYMENT; DUE DATE
[Sections 226.006-226.050 reserved for expansion]
SUBCHAPTER B. INDEPENDENTLY PROCURED INSURANCE PREMIUM TAX
Sec. 226.051. DEFINITION
Sec. 226.052. APPLICABILITY OF SUBCHAPTER
Sec. 226.053. TAX IMPOSED; RATE
Sec. 226.054. TAX PAYMENT BY CERTAIN INSUREDS
Sec. 226.055. TAX PAYMENT BY CERTAIN CORPORATIONS
Sec. 226.056. EFFECT ON OTHER LAW
CHAPTER 226. UNAUTHORIZED AND INDEPENDENTLY PROCURED
INSURANCE PREMIUM TAX
SUBCHAPTER A. UNAUTHORIZED INSURANCE PREMIUM TAX
Sec. 226.001. DEFINITION. In this subchapter, "premium"
includes any consideration for insurance, including:
(1) a premium;
(2) a membership fee;
(3) an assessment; or
(4) dues. (Ins. Code, Sec. 101.251(a).)
Sec. 226.002. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to an unauthorized insurer who charges gross premiums for
insurance on a subject resident, located, or to be performed in this
state. (Ins. Code, Sec. 101.251(b) (part).)
Sec. 226.003. TAX IMPOSED; RATE. (a) A tax is imposed on
each unauthorized insurer that charges gross premiums subject to
taxation under this section. The rate of the tax is 4.85 percent of
the gross premiums charged by the unauthorized insurer.
(b) Except as otherwise provided by this section, in
determining an unauthorized insurer's taxable gross premiums, the
insurer shall include any premium for insurance on a subject
resident, located, or to be performed in this state.
(c) If a policy covers risks or exposures only partially
located in this state, the tax is computed on the portion of the
premium that is properly allocated to a risk or exposure located in
this state.
(d) In determining the amount of taxable premiums under
Subsection (c), a premium, other than a premium properly allocated
or apportioned and reported as a taxable premium of another state,
is considered to be written on property or risks located or resident
in this state if the premium:
(1) is written, procured, or received in this state;
or
(2) is for a policy negotiated in this state.
(e) Insurance on a subject resident, located, or to be
performed in this state is considered to be insurance procured,
continued, or renewed in this state regardless of the location from
which:
(1) the application is made;
(2) the negotiations are conducted; or
(3) the premiums are remitted.
(f) Premiums on risks or exposures that are properly
allocated to federal waters or international waters or are under
the jurisdiction of a foreign government are not taxable by this
state.
(g) The following premiums are not subject to the tax
imposed by this subchapter:
(1) premiums on insurance procured by a licensed
surplus lines agent from an eligible surplus lines insurer as
defined by Chapter 981 on which premium tax is paid in accordance
with Chapter 225; and
(2) premiums on an independently procured contract of
insurance on which premium tax is paid in accordance with
Subchapter B. (Ins. Code, Secs. 101.251(b) (part), (c), (d), (e),
(f), (j).)
Sec. 226.004. TAX EXCLUSIVE. The tax imposed by this
subchapter is in lieu of all other insurance taxes. (Ins. Code,
Sec. 101.251(h).)
Sec. 226.005. TAX PAYMENT; DUE DATE. (a) The tax imposed
by this subchapter is due and payable not later than:
(1) March 1 after the end of the calendar year in which
the insurance was effectuated, continued, or renewed; or
(2) another date prescribed by the comptroller.
(b) An unauthorized insurer shall pay the tax imposed by
this subchapter using a form prescribed by the comptroller.
(c) If an unauthorized insurer defaults in payment of the
tax imposed by this subchapter, the insured is responsible for
paying the tax. (Ins. Code, Secs. 101.251(b) (part), (g), (i).)
[Sections 226.006-226.050 reserved for expansion]
SUBCHAPTER B. INDEPENDENTLY PROCURED INSURANCE PREMIUM TAX
Sec. 226.051. DEFINITION. In this subchapter, "premium"
includes any consideration for insurance, including:
(1) a premium;
(2) a membership fee; or
(3) dues. (Ins. Code, Sec. 101.252(a).)
Sec. 226.052. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to an insured who procures an insurance contract in
accordance with Section 101.053(b)(4). (Ins. Code, Sec. 101.252(b)
(part).)
Sec. 226.053. TAX IMPOSED; RATE. (a) A tax is imposed on
each insured at the rate of 4.85 percent of the premium paid for the
insurance contract procured in accordance with Section
101.053(b)(4).
(b) If an insurance contract covers risks or exposures only
partially located in this state, the tax is computed on the portion
of the premium that is properly allocated to a risk or exposure
located in this state.
(c) Premiums for individual life or individual disability
insurance are not included in determining an insured's taxable
premiums. (Ins. Code, Secs. 101.252(b) (part), (c), (g).)
Sec. 226.054. TAX PAYMENT BY CERTAIN INSUREDS. (a) Except
as provided by Section 226.055, the tax imposed by this subchapter
is due and payable not later than:
(1) May 15 after the end of the calendar year in which
the insurance was procured, continued, or renewed; or
(2) another date prescribed by the comptroller.
(b) An insured who fails to withhold from the premium the
amount of tax imposed by this subchapter is liable for the amount of
the tax and shall pay the tax due.
(c) The insured shall file a tax report and pay the tax.
(d) The insured may designate another person to file the
report and pay the tax. (Ins. Code, Secs. 101.252(b) (part), (d),
(e).)
Sec. 226.055. TAX PAYMENT BY CERTAIN CORPORATIONS. The
amount of tax due and payable under this subchapter by a corporation
that files a franchise tax report shall be reported directly to the
comptroller and is due:
(1) at the time the franchise tax report is due; or
(2) on another date prescribed by the comptroller.
(Ins. Code, Sec. 101.253.)
Sec. 226.056. EFFECT ON OTHER LAW. Sections
226.051-226.054 do not abrogate or modify any other provision of
this chapter or Chapter 101. (Ins. Code, Sec. 101.252(f).)
CHAPTER 227. DISPOSITION OF PROCEEDS
OF CERTAIN PREMIUM TAXES
Sec. 227.001. DISPOSITION OF TAX PROCEEDS
CHAPTER 227. DISPOSITION OF PROCEEDS
OF CERTAIN PREMIUM TAXES
Sec. 227.001. DISPOSITION OF TAX PROCEEDS. (a) The
proceeds of the taxes imposed under Chapter 221, 222, 224, or 226
shall be deposited to the credit of the general revenue fund.
(b) An amount equal to one-fourth of the proceeds deposited
under Subsection (a) shall be transferred to the credit of the
foundation school fund. (V.T.I.C. Art. 4.12.)
[Chapters 228-250 reserved for expansion]
SUBTITLE C. INSURANCE MAINTENANCE TAXES
CHAPTER 251. GENERAL PROVISIONS
Sec. 251.001. DETERMINING RATE OF ASSESSMENT
Sec. 251.002. DUTY TO ADVISE COMPTROLLER OF RATE
Sec. 251.003. EFFECT OF LATE ADVISEMENT OF RATE
Sec. 251.004. DEPOSIT OF MAINTENANCE TAXES
CHAPTER 251. GENERAL PROVISIONS
Sec. 251.001. DETERMINING RATE OF ASSESSMENT. (a) The
commissioner shall annually determine the rate of assessment of
each maintenance tax imposed under this subtitle.
(b) In determining the rate of assessment, the commissioner
shall consider the requirement to reimburse the appropriate portion
of the general revenue fund under Section 201.052. (V.T.I.C. Art.
1.14-3, Secs. 8(a) (part), (b) (part); Art. 4.17, Secs. (a) (part),
(c) (part); Art. 5.12, Secs. (a) (part), (c) (part); Art. 5.24,
Secs. (a) (part), (c) (part); Art. 5.49, Secs. (a) (part), (c)
(part); Art. 5.68, Secs. (a) (part), (d) (part); Art. 5.91, Secs.
(a) (part), (c) (part); Art. 20A.33, Secs. (d) (part), (f) (part);
Art. 21.07-6, Secs. 21(a) (part), (c) (part); Art. 23.08A, Secs.
(a) (part), (c) (part).)
Sec. 251.002. DUTY TO ADVISE COMPTROLLER OF RATE. The
commissioner shall advise the comptroller of the applicable rate of
assessment of a maintenance tax not later than the 45th day before
the due date of the tax report for the period for which that tax is
due. (V.T.I.C. Art. 1.14-3, Sec. 8(d) (part); Art. 4.17, Sec. (g)
(part); Art. 5.12, Sec. (f) (part); Art. 5.24, Sec. (f) (part); Art.
5.49, Sec. (f) (part); Art. 5.68, Sec. (g) (part); Art. 5.91, Sec.
(f) (part); Art. 20A.33, Sec. (i) (part); Art. 21.07-6, Sec. 21(e)
(part); Art. 23.08A, Sec. (g) (part).)
Sec. 251.003. EFFECT OF LATE ADVISEMENT OF RATE. (a)
Except as provided by Subsection (b), if the commissioner does not
advise the comptroller of the applicable rate of assessment of a
maintenance tax by the date required by Section 251.002, the rate of
assessment is the rate applied in the previous tax period.
(b) If the commissioner advises the comptroller of the
applicable rate of assessment of a maintenance tax after the tax has
been assessed, the comptroller shall:
(1) advise each taxpayer in writing of the amount of
any additional taxes due; or
(2) refund any excess taxes paid. (V.T.I.C. Art.
1.14-3, Sec. 8(d) (part); Art. 4.17, Sec. (g) (part); Art. 5.12,
Sec. (f) (part); Art. 5.24, Sec. (f) (part); Art. 5.49, Sec. (f)
(part); Art. 5.68, Sec. (g) (part); Art. 5.91, Sec. (f) (part); Art.
20A.33, Sec. (i) (part); Art. 21.07-6, Sec. 21(e) (part); Art.
23.08A, Sec. (g) (part).)
Sec. 251.004. DEPOSIT OF MAINTENANCE TAXES. Maintenance
taxes collected under this subtitle shall be deposited in the
general revenue fund and reallocated to the Texas Department of
Insurance operating account. (V.T.I.C. Art. 1.14-3, Sec. 8(c)
(part); Art. 4.17, Sec. (d) (part); Art. 5.12, Sec. (d) (part); Art.
5.24, Sec. (d) (part); Art. 5.49, Sec. (d) (part); Art. 5.68, Sec.
(e) (part); Art. 5.91, Sec. (d) (part); Art. 20A.33, Sec. (g)
(part); Art. 21.07-6, Sec. 21(d) (part); Art. 23.08A, Sec. (d)
(part).)
CHAPTER 252. FIRE AND ALLIED LINES INSURANCE
Sec. 252.001. MAINTENANCE TAX IMPOSED
Sec. 252.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 252.003. PREMIUMS SUBJECT TO TAXATION
Sec. 252.004. MAINTENANCE TAX DUE DATES
CHAPTER 252. FIRE AND ALLIED LINES INSURANCE
Sec. 252.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized insurer with gross premiums subject
to taxation under Section 252.003. The tax required by this chapter
is in addition to other taxes imposed that are not in conflict with
this chapter. (V.T.I.C. Art. 5.49, Secs. (a) (part), (b).)
Sec. 252.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 1.25
percent of the gross premiums subject to taxation under Section
252.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Subchapter C, Chapter 5. (V.T.I.C. Art.
5.49, Secs. (a) (part), (c) (part).)
Sec. 252.003. PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums collected from writing insurance in this
state against loss or damage by:
(1) bombardment;
(2) civil war or commotion;
(3) cyclone;
(4) earthquake;
(5) excess or deficiency of moisture;
(6) explosion as defined by Article 5.52;
(7) fire;
(8) flood;
(9) frost and freeze;
(10) hail;
(11) insurrection;
(12) invasion;
(13) lightning;
(14) military or usurped power;
(15) an order of a civil authority made to prevent the
spread of a conflagration, epidemic, or catastrophe;
(16) rain;
(17) riot;
(18) the rising of the waters of the ocean or its
tributaries;
(19) smoke or smudge;
(20) strike or lockout;
(21) tornado;
(22) vandalism or malicious mischief;
(23) volcanic eruption;
(24) water or other fluid or substance resulting from
the breakage or leakage of sprinklers, pumps, or other apparatus
erected for extinguishing fires, water pipes, or other conduits or
containers;
(25) weather or climatic conditions; or
(26) windstorm. (V.T.I.C. Art. 5.49, Sec. (a)
(part).)
Sec. 252.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually or semiannually, as
determined by the comptroller.
(b) The comptroller may require semiannual or other
periodic payment only from an insurer whose maintenance tax
liability under this chapter for the previous tax year was at least
$2,000. (V.T.I.C. Art. 5.49, Secs. (a) (part), (e).)
CHAPTER 253. CASUALTY INSURANCE AND FIDELITY, GUARANTY,
AND SURETY BOND INSURANCE
Sec. 253.001. MAINTENANCE TAX IMPOSED
Sec. 253.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 253.003. PREMIUMS SUBJECT TO TAXATION
Sec. 253.004. MAINTENANCE TAX DUE DATES
CHAPTER 253. CASUALTY INSURANCE AND FIDELITY, GUARANTY,
AND SURETY BOND INSURANCE
Sec. 253.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized insurer with gross premiums subject
to taxation under Section 253.003. The tax required by this chapter
is in addition to other taxes imposed that are not in conflict with
this chapter. (V.T.I.C. Art. 5.24, Secs. (a) (part), (b).)
Sec. 253.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 0.4
percent of the gross premiums subject to taxation under Section
253.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Subchapter B, Chapter 5. (V.T.I.C. Art.
5.24, Secs. (a) (part), (c) (part).)
Sec. 253.003. PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing a class of insurance specified
under Subchapter B, Chapter 5. (V.T.I.C. Art. 5.24, Sec. (a)
(part).)
Sec. 253.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually or semiannually, as
determined by the comptroller.
(b) The comptroller may require semiannual payment only
from an insurer whose maintenance tax liability under this chapter
for the previous tax year was at least $2,000. (V.T.I.C. Art. 5.24,
Secs. (a) (part), (e).)
CHAPTER 254. MOTOR VEHICLE INSURANCE
Sec. 254.001. MAINTENANCE TAX IMPOSED
Sec. 254.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 254.003. PREMIUMS SUBJECT TO TAXATION
Sec. 254.004. MAINTENANCE TAX DUE DATES
CHAPTER 254. MOTOR VEHICLE INSURANCE
Sec. 254.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized insurer with gross premiums subject
to taxation under Section 254.003. The tax required by this chapter
is in addition to other taxes imposed that are not in conflict with
this chapter. (V.T.I.C. Art. 5.12, Secs. (a) (part), (b).)
Sec. 254.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 0.2
percent of the gross premiums subject to taxation under Section
254.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating motor vehicle
insurance. (V.T.I.C. Art. 5.12, Secs. (a) (part), (c) (part).)
Sec. 254.003. PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing motor vehicle insurance in
this state. (V.T.I.C. Art. 5.12, Sec. (a) (part).)
Sec. 254.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually or semiannually, as
determined by the comptroller.
(b) The comptroller may require semiannual or other
periodic payment only from an insurer whose maintenance tax
liability under this chapter for the previous tax year was at least
$2,000. (V.T.I.C. Art. 5.12, Secs. (a) (part), (e).)
CHAPTER 255. WORKERS' COMPENSATION INSURANCE
Sec. 255.001. MAINTENANCE TAX IMPOSED
Sec. 255.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 255.003. PREMIUMS SUBJECT TO TAXATION
Sec. 255.004. MAINTENANCE TAX DUE DATES
CHAPTER 255. WORKERS' COMPENSATION INSURANCE
Sec. 255.001. MAINTENANCE TAX IMPOSED. (a) A maintenance
tax is imposed on each authorized insurer with gross premiums
subject to taxation under Section 255.003, including a:
(1) stock insurance company;
(2) mutual insurance company;
(3) reciprocal or interinsurance exchange; and
(4) Lloyd's plan.
(b) The tax required by this chapter is in addition to other
taxes imposed that are not in conflict with this chapter. (V.T.I.C.
Art. 5.68, Secs. (a) (part), (c).)
Sec. 255.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 0.6
percent of the gross premiums subject to taxation under Section
255.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating workers'
compensation insurance. (V.T.I.C. Art. 5.68, Secs. (a) (part), (d)
(part).)
Sec. 255.003. PREMIUMS SUBJECT TO TAXATION. (a) An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross workers' compensation insurance premiums from
writing workers' compensation insurance in this state, including
the modified annual premium of a policyholder that purchases an
optional deductible plan under Article 5.55C.
(b) The rate of assessment shall be applied to the modified
annual premium before application of a deductible premium credit.
(V.T.I.C. Art. 5.68, Secs. (a) (part), (b) (part).)
Sec. 255.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually or semiannually.
(b) The comptroller may require semiannual payment only
from an insurer whose maintenance tax liability under this chapter
for the previous tax year was at least $2,000. (V.T.I.C. Art. 5.68,
Secs. (a) (part), (f).)
CHAPTER 256. AIRCRAFT INSURANCE
Sec. 256.001. MAINTENANCE TAX IMPOSED
Sec. 256.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 256.003. PREMIUMS SUBJECT TO TAXATION
Sec. 256.004. MAINTENANCE TAX DUE DATES
CHAPTER 256. AIRCRAFT INSURANCE
Sec. 256.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized insurer with gross premiums subject
to taxation under Section 256.003. The tax required by this chapter
is in addition to other taxes imposed that are not in conflict with
this chapter. (V.T.I.C. Art. 5.91, Secs. (a) (part), (b).)
Sec. 256.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 0.4
percent of the gross premiums subject to taxation under Section
256.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Subchapter K, Chapter 5. (V.T.I.C. Art.
5.91, Secs. (a) (part), (c) (part).)
Sec. 256.003. PREMIUMS SUBJECT TO TAXATION. An insurer
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums from writing a class of insurance specified
under Subchapter K, Chapter 5. (V.T.I.C. Art. 5.91, Sec. (a)
(part).)
Sec. 256.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually or semiannually, as
determined by the comptroller.
(b) The comptroller may require semiannual payment only
from an insurer whose maintenance tax liability under this chapter
for the previous tax year was at least $2,000. (V.T.I.C. Art. 5.91,
Secs. (a) (part), (e).)
CHAPTER 257. LIFE, HEALTH, AND ACCIDENT INSURANCE
Sec. 257.001. MAINTENANCE TAX IMPOSED
Sec. 257.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 257.003. PREMIUMS AND CONSIDERATIONS SUBJECT TO
TAXATION; LIMIT
Sec. 257.004. MAINTENANCE TAX DUE DATES
CHAPTER 257. LIFE, HEALTH, AND ACCIDENT INSURANCE
Sec. 257.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized insurer, including a group hospital
service corporation, local mutual aid association, statewide
mutual assessment company, stipulated premium company, and stock or
mutual insurance company, that collects from residents of this
state gross premiums or gross considerations subject to taxation
under Section 257.003. The tax required by this chapter is in
addition to other taxes imposed that are not in conflict with this
chapter. (V.T.I.C. Art. 4.17, Secs. (a) (part), (b), (f).)
Sec. 257.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed 0.04
percent of the gross premiums and gross considerations subject to
taxation under Section 257.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating life, health, and
accident insurers. (V.T.I.C. Art. 4.17, Secs. (a) (part), (c)
(part).)
Sec. 257.003. PREMIUMS AND CONSIDERATIONS SUBJECT TO
TAXATION; LIMIT. (a) An insurer shall pay maintenance taxes under
this chapter on the correctly reported:
(1) gross premiums collected from writing life,
health, and accident insurance in this state, except as provided in
Subsection (b); and
(2) gross considerations collected from writing
annuity or endowment contracts in this state.
(b) The gross premiums on which an assessment is based under
this chapter may not include premiums received from this state or
the United States for insurance contracted for by this state or the
United States:
(1) in accordance with or in furtherance of Title 2,
Human Resources Code, or the Social Security Act (42 U.S.C. Section
301 et seq.); or
(2) to provide welfare benefits to designated welfare
recipients. (V.T.I.C. Art. 4.17, Sec. (a) (part).)
Sec. 257.004. MAINTENANCE TAX DUE DATES. (a) The insurer
shall pay the maintenance tax annually, semiannually, or on another
periodic basis, as determined by the comptroller.
(b) The comptroller may require semiannual or other
periodic payment only from an insurer whose maintenance tax
liability under this chapter for the previous year was at least
$2,000. (V.T.I.C. Art. 4.17, Secs. (a) (part), (e).)
CHAPTER 258. HEALTH MAINTENANCE ORGANIZATIONS
Sec. 258.001. APPLICABILITY OF CERTAIN DEFINITIONS
Sec. 258.002. MAINTENANCE TAX IMPOSED
Sec. 258.003. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 258.004. REVENUES SUBJECT TO TAXATION; LIMIT
Sec. 258.005. MAINTENANCE TAX DUE DATES
CHAPTER 258. HEALTH MAINTENANCE ORGANIZATIONS
Sec. 258.001. APPLICABILITY OF CERTAIN DEFINITIONS. In
this chapter, a term defined by Section 843.002 has the meaning
assigned by that section. (V.T.I.C. Art. 20A.01B, as added Acts
77th Leg., R.S., Ch. 1419.)
Sec. 258.002. MAINTENANCE TAX IMPOSED. A per capita
maintenance tax is imposed on each authorized health maintenance
organization with gross revenues subject to taxation under Section
258.004. The tax required by this chapter is in addition to other
taxes imposed that are not in conflict with this chapter. (V.T.I.C.
Art. 20A.33, Secs. (d) (part), (e).)
Sec. 258.003. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed $2 per
enrollee.
(b) The commissioner shall annually adjust the rate of
assessment of the per capita maintenance tax so that the tax imposed
that year, together with any unexpended funds produced by the tax,
produces the amount the commissioner determines is necessary to pay
the expenses during the succeeding year of regulating health
maintenance organizations.
(c) The rate of assessment may differ between basic health
care plans, limited health care service plans, and single health
care service plans and must equitably reflect any differences in
regulatory resources attributable to each type of plan. (V.T.I.C.
Art. 20A.33, Secs. (d) (part), (f) (part).)
Sec. 258.004. REVENUES SUBJECT TO TAXATION; LIMIT. (a) A
health maintenance organization shall pay per capita maintenance
taxes under this chapter on the correctly reported gross revenues
collected from issuing health maintenance certificates or
contracts in this state.
(b) The amount of maintenance tax assessed may not be
computed based on enrollees who as individual certificate holders
or their dependents are covered by a master group policy paid for by
revenues received from this state or the United States for
insurance contracted for by this state or the United States:
(1) in accordance with or in furtherance of Title 2,
Human Resources Code, or the Social Security Act (42 U.S.C. Section
301 et seq.); or
(2) to provide welfare benefits to designated welfare
recipients. (V.T.I.C. Art. 20A.33, Sec. (d) (part).)
Sec. 258.005. MAINTENANCE TAX DUE DATES. (a) The health
maintenance organization shall pay the maintenance tax annually or
semiannually.
(b) The comptroller may require semiannual or other
periodic payment only from a health maintenance organization whose
maintenance tax liability under this chapter for the previous year
was at least $2,000. (V.T.I.C. Art. 20A.33, Secs. (d) (part), (h).)
CHAPTER 259. THIRD-PARTY ADMINISTRATORS
Sec. 259.001. DEFINITIONS
Sec. 259.002. MAINTENANCE TAX IMPOSED
Sec. 259.003. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 259.004. ADMINISTRATIVE AND SERVICE FEES SUBJECT TO
TAXATION
Sec. 259.005. MAINTENANCE TAX DUE DATES
CHAPTER 259. THIRD-PARTY ADMINISTRATORS
Sec. 259.001. DEFINITIONS. In this chapter:
(1) "Administrative or service fees" means all
consideration, fees, assessments, payments, reimbursements, dues,
and other compensation received for services as an administrator
during a calendar year. The term does not include sales
commissions.
(2) "Administrator" has the meaning assigned by
Section 4151.001. (V.T.I.C. Art. 21.07-6, Sec. 1(2); New.)
Sec. 259.002. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each authorized administrator with administrative or
service fees subject to taxation under Section 259.004. The tax
required by this chapter is in addition to other taxes imposed that
are not in conflict with this chapter. (V.T.I.C. Art. 21.07-6,
Secs. 21(a) (part), (b).)
Sec. 259.003. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed one
percent of the administrative or service fees subject to taxation
under Section 259.004.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses of regulating administrators. (V.T.I.C. Art. 21.07-6,
Secs. 21(a) (part), (c) (part).)
Sec. 259.004. ADMINISTRATIVE AND SERVICE FEES SUBJECT TO
TAXATION. An administrator shall pay maintenance taxes under this
chapter on the administrator's correctly reported administrative
or service fees. (V.T.I.C. Art. 21.07-6, Sec. 21(a) (part).)
Sec. 259.005. MAINTENANCE TAX DUE DATES. The administrator
shall pay the maintenance tax annually, semiannually, or on another
periodic basis, as determined by the comptroller. (V.T.I.C. Art.
21.07-6, Sec. 21(a) (part).)
CHAPTER 260. NONPROFIT LEGAL SERVICES CORPORATIONS
Sec. 260.001. MAINTENANCE TAX IMPOSED
Sec. 260.002. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 260.003. REVENUES SUBJECT TO TAXATION
Sec. 260.004. MAINTENANCE TAX DUE DATES; RULES
Sec. 260.005. APPLICABILITY OF OTHER LAW
CHAPTER 260. NONPROFIT LEGAL SERVICES CORPORATIONS
Sec. 260.001. MAINTENANCE TAX IMPOSED. A maintenance tax
is imposed on each nonprofit legal services corporation subject to
Chapter 961 with gross revenues subject to taxation under Section
260.003. The tax required by this chapter is in addition to other
taxes imposed that are not in conflict with this chapter. (V.T.I.C.
Art. 23.08A, Secs. (a) (part), (b).)
Sec. 260.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed one
percent of the corporation's gross revenues subject to taxation
under Section 260.003.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating nonprofit legal
services corporations. (V.T.I.C. Art. 23.08A, Secs. (a) (part),
(c) (part).)
Sec. 260.003. REVENUES SUBJECT TO TAXATION. A corporation
shall pay maintenance taxes under this chapter on the correctly
reported gross revenues received from issuing prepaid legal
services contracts in this state. (V.T.I.C. Art. 23.08A, Sec. (a)
(part).)
Sec. 260.004. MAINTENANCE TAX DUE DATES; RULES. (a) The
corporation shall pay the maintenance tax annually or semiannually.
(b) The comptroller may require semiannual payments only
from a corporation whose maintenance tax liability under this
chapter for the previous tax year was at least $2,000.
(c) The comptroller may adopt reasonable rules to implement
semiannual payments that the comptroller considers advisable.
(V.T.I.C. Art. 23.08A, Secs. (a) (part), (f).)
Sec. 260.005. APPLICABILITY OF OTHER LAW. Sections 201.001
and 201.002 apply to taxes collected under this chapter. (V.T.I.C.
Art. 23.08A, Sec. (e).)
CHAPTER 261. TEXAS INSURANCE EXCHANGE
Sec. 261.001. DEFINITION
Sec. 261.002. MAINTENANCE TAX IMPOSED
Sec. 261.003. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 261.004. PREMIUMS SUBJECT TO TAXATION
Sec. 261.005. MAINTENANCE TAX DUE DATES
CHAPTER 261. TEXAS INSURANCE EXCHANGE
Sec. 261.001. DEFINITION. In this chapter, "exchange"
means the Texas Insurance Exchange. (V.T.I.C. Art. 1.14-3, Sec.
1(1).)
Sec. 261.002. MAINTENANCE TAX IMPOSED. A maintenance tax is
imposed on the gross premiums paid through the exchange and subject
to taxation under Section 261.004. (V.T.I.C. Art. 1.14-3, Sec.
8(a) (part).)
Sec. 261.003. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed one
percent of the gross premiums subject to taxation under Section
261.004.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance tax so that the tax imposed that year,
together with any unexpended funds produced by the tax, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating all classes of
insurance specified under Article 1.14-3. (V.T.I.C. Art. 1.14-3,
Secs. 8(a) (part), (b) (part).)
Sec. 261.004. PREMIUMS SUBJECT TO TAXATION. The exchange
shall pay maintenance taxes under this chapter on the correctly
reported gross premiums paid through the exchange on all classes of
insurance specified under Article 1.14-3. (V.T.I.C. Art. 1.14-3,
Sec. 8(a) (part).)
Sec. 261.005. MAINTENANCE TAX DUE DATES. The exchange
shall pay the maintenance tax annually, semiannually, or on another
periodic basis, as determined by the comptroller. (V.T.I.C. Art.
1.14-3, Sec. 8(a) (part).)
[Chapters 262-270 reserved for expansion]
SUBTITLE D. TITLE INSURANCE MAINTENANCE FEES
CHAPTER 271. TITLE INSURANCE MAINTENANCE FEES
Sec. 271.001. APPLICABILITY OF CERTAIN DEFINITIONS
Sec. 271.002. MAINTENANCE FEE IMPOSED
Sec. 271.003. DUPLICATION OF ASSESSMENT PROHIBITED WITH
RESPECT TO TITLE INSURANCE AGENTS
Sec. 271.004. DETERMINING RATE OF ASSESSMENT
Sec. 271.005. MAXIMUM RATE; ANNUAL ADJUSTMENT
Sec. 271.006. PREMIUMS SUBJECT TO ASSESSMENT
Sec. 271.007. COLLECTION OF MAINTENANCE FEE
Sec. 271.008. DUTY TO ADVISE COMPTROLLER OF RATE
Sec. 271.009. EFFECT OF LATE ADVISEMENT OF RATE
Sec. 271.010. DEPOSIT OF MAINTENANCE FEES
Sec. 271.011. MAINTENANCE FEE DUE DATES
Sec. 271.012. RULES
CHAPTER 271. TITLE INSURANCE MAINTENANCE FEES
Sec. 271.001. APPLICABILITY OF CERTAIN DEFINITIONS. In
this chapter, a term defined by Chapter 2501 has the meaning
assigned by that chapter. (New.)
Sec. 271.002. MAINTENANCE FEE IMPOSED. (a) A maintenance
fee is imposed on each insurer with gross premiums subject to
assessment under Section 271.006.
(b) The maintenance fee is not a tax and shall be reported
and paid separately from premium and retaliatory taxes. (V.T.I.C.
Art. 9.46, Sec. (a) (part), as amended Acts 73rd Leg., R.S., Ch.
685, Sec. 3.18; V.T.I.C. Art. 9.46 (part), as amended Acts 73rd
Leg., R.S., Ch. 486, Sec. 6.04.)
Sec. 271.003. DUPLICATION OF ASSESSMENT PROHIBITED WITH
RESPECT TO TITLE INSURANCE AGENTS. The maintenance fee is included
in the division of premiums and may not be separately charged to a
title insurance agent. (V.T.I.C. Art. 9.46, Sec. (a) (part), as
amended Acts 73rd Leg., R.S., Ch. 685, Sec. 3.18; V.T.I.C. Art. 9.46
(part), as amended Acts 73rd Leg., R.S., Ch. 486, Sec. 6.04.)
Sec. 271.004. DETERMINING RATE OF ASSESSMENT. (a) The
commissioner shall annually determine the rate of assessment of the
maintenance fee.
(b) In determining the rate of assessment, the commissioner
shall consider the requirement to reimburse the appropriate portion
of the general revenue fund under Section 201.052. (V.T.I.C. Art.
9.46, Secs. (a) (part), (b) (part), as amended Acts 73rd Leg., R.S.,
Ch. 685, Sec. 3.18; V.T.I.C. Art. 9.46 (part), as amended Acts 73rd
Leg., R.S., Ch. 486, Sec. 6.04.)
Sec. 271.005. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
rate of assessment set by the commissioner may not exceed one
percent of the gross premiums subject to assessment under Section
271.006.
(b) The commissioner shall annually adjust the rate of
assessment of the maintenance fee so that the fee imposed that year,
together with any unexpended funds produced by the fee, produces
the amount the commissioner determines is necessary to pay the
expenses during the succeeding year of regulating title insurance.
(V.T.I.C. Art. 9.46, Secs. (a) (part), (b) (part), as amended Acts
73rd Leg., R.S., Ch. 685, Sec. 3.18; V.T.I.C. Art. 9.46 (part), as
amended Acts 73rd Leg., R.S., Ch. 486, Sec. 6.04.)
Sec. 271.006. PREMIUMS SUBJECT TO ASSESSMENT. An insurer
shall pay maintenance fees under this chapter on the correctly
reported gross premiums from writing title insurance in this state.
(V.T.I.C. Art. 9.46, Sec. (a) (part), as amended Acts 73rd Leg.,
R.S., Ch. 685, Sec. 3.18.)
Sec. 271.007. COLLECTION OF MAINTENANCE FEE. The
comptroller shall collect the maintenance fee. (V.T.I.C. Art.
9.46, Sec. (a) (part), as amended Acts 73rd Leg., R.S., Ch. 685,
Sec. 3.18.)
Sec. 271.008. DUTY TO ADVISE COMPTROLLER OF RATE. The
commissioner shall advise the comptroller of the applicable rate of
assessment of the maintenance fee not later than the 45th day before
the due date of the maintenance fee return for the period for which
that fee is due. (V.T.I.C. Art. 9.46, Sec. (e) (part), as amended
Acts 73rd Leg., R.S., Ch. 685, Sec. 3.18.)
Sec. 271.009. EFFECT OF LATE ADVISEMENT OF RATE. (a)
Except as provided by Subsection (b), if the commissioner does not
advise the comptroller of the applicable rate of assessment of the
maintenance fee by the date required by Section 271.008, the rate of
assessment is the rate imposed in the preceding period.
(b) If the commissioner advises the comptroller of the
applicable rate of assessment after the fee has been assessed, the
comptroller shall:
(1) advise each insurer in writing of the amount of any
additional fees due; or
(2) refund any excess fees paid. (V.T.I.C. Art. 9.46,
Sec. (e) (part), as amended Acts 73rd Leg., R.S., Ch. 685, Sec.
3.18.)
Sec. 271.010. DEPOSIT OF MAINTENANCE FEES. (a) The
comptroller shall deposit maintenance fees collected under this
chapter in the general revenue fund to be reallocated to the Texas
Department of Insurance operating account.
(b) Amounts in the Texas Department of Insurance operating
account may be transferred to the appropriate portion of the
general revenue fund in accordance with Section 201.052. (V.T.I.C.
Art. 9.46, Sec. (c), as amended Acts 73rd Leg., R.S., Ch. 685, Sec.
3.18; V.T.I.C. Art. 9.46 (part), as amended Acts 73rd Leg., R.S.,
Ch. 486, Sec. 6.04.)
Sec. 271.011. MAINTENANCE FEE DUE DATES. (a) The insurer
shall pay the maintenance fee on an annual, semiannual, or other
periodic basis, as determined by the comptroller.
(b) The comptroller may require semiannual or other
periodic payment only from an insurer whose maintenance fee
liability under this chapter for the preceding year was at least
$2,000. (V.T.I.C. Art. 9.46, Secs. (a) (part), (d), as amended Acts
73rd Leg., R.S., Ch. 685, Sec. 3.18.)
Sec. 271.012. RULES. The commissioner may adopt reasonable
rules to implement payments under this chapter. (V.T.I.C. Art.
9.46 (part), as amended Acts 73rd Leg., R.S., Ch. 486, Sec. 6.04.)
[Chapters 272-280 reserved for expansion]
SUBTITLE E. OTHER TAXES
CHAPTER 281. RETALIATORY PROVISIONS
SUBCHAPTER A. RETALIATORY TAXES AND OTHER CHARGES
Sec. 281.001. DEFINITIONS
Sec. 281.002. TREATMENT OF ALIEN INSURER AS
FOREIGN INSURER
Sec. 281.003. EXCEPTION
Sec. 281.004. RETALIATORY TAXES OR OTHER CHARGES,
PROHIBITIONS, AND RESTRICTIONS
Sec. 281.005. EXCLUSION OF CERTAIN TAXES OR CHARGES
Sec. 281.006. TREATMENT OF CERTAIN TAX REDUCTIONS
AND CREDITS
Sec. 281.007. TAX REPORT; ADMINISTRATION AND
COLLECTION OF TAX
[Sections 281.008-281.050 reserved for expansion]
SUBCHAPTER B. RETALIATORY PENALTIES OR OTHER OBLIGATIONS
Sec. 281.051. DEFINITIONS
Sec. 281.052. IMPOSITION OF PENALTY OR OTHER
OBLIGATION
CHAPTER 281. RETALIATORY PROVISIONS
SUBCHAPTER A. RETALIATORY TAXES AND OTHER CHARGES
Sec. 281.001. DEFINITIONS. In this subchapter:
(1) "Domestic insurer" means an insurer organized in
this state.
(2) "Foreign insurer" means an insurer organized in
another state.
(3) "Tax or other charge" includes:
(A) a tax, including an income, corporate
franchise, or maintenance tax;
(B) a fee, including a regulatory fee similar to
a maintenance tax;
(C) a license;
(D) a fine;
(E) a penalty;
(F) a deposit requirement; and
(G) any other obligation. (V.T.I.C. Art. 21.46,
Sec. 1(a) (part).)
Sec. 281.002. TREATMENT OF ALIEN INSURER AS FOREIGN
INSURER. For purposes of this subchapter, an alien insurer is
considered to be organized in the state designated by the insurer in
which the insurer:
(1) has established its principal office or agency in
the United States;
(2) maintains the greatest amount of its assets held
in trust or on deposit for the security of its policyholders or
policyholders and creditors in the United States; or
(3) was admitted to engage in business in the United
States. (V.T.I.C. Art. 21.46, Sec. 1(c).)
Sec. 281.003. EXCEPTION. This subchapter does not apply to
a person, company, firm, association, group, corporation, or
insurance organization of any kind from another state that engages
in business in this state if:
(1) at least 15 percent of the voting stock of the
person, company, firm, association, group, corporation, or
insurance organization is owned by a corporation organized under
the laws of and domiciled in this state; and
(2) the person, company, firm, association, group,
corporation, or insurance organization met the requirements of
Subdivision (1) before January 30, 1957. (V.T.I.C. Art. 21.46,
Sec. (f).)
Sec. 281.004. RETALIATORY TAXES OR OTHER CHARGES,
PROHIBITIONS, AND RESTRICTIONS. (a) The comptroller shall impose
and collect a tax or other charge or a prohibition or restriction on
a foreign insurer authorized to engage in business in this state if:
(1) the foreign insurer's state of organization by law
imposes a tax or other charge or a prohibition or restriction on a
similar domestic insurer that is or may be authorized to engage in
business in that other state; and
(2) the sum of the taxes or other charges,
prohibitions, and restrictions imposed by that other state is more
than the sum of the taxes or other charges, prohibitions, and
restrictions that this state directly imposes on the foreign
insurer.
(b) The comptroller shall impose and collect the tax or
other charge, prohibition, or restriction under Subsection (a) in
the same manner and for the same purpose as the foreign insurer's
state of organization.
(c) The sum of the taxes or other charges that this state
imposes on a foreign insurer under this subchapter may not exceed
the sum of the taxes or other charges imposed by the foreign
insurer's state of organization on a similar domestic insurer that
is or may be authorized to engage in business in that other state.
(V.T.I.C. Art. 21.46, Sec. 1(a).)
Sec. 281.005. EXCLUSION OF CERTAIN TAXES OR CHARGES. In
determining an insurer's taxes or other charges under this
subchapter, the comptroller may not consider:
(1) an ad valorem tax on property;
(2) a personal income tax;
(3) a sales tax;
(4) a surcharge that an insurer may recover directly
from policyholders; or
(5) an assessment for a special purpose, such as an
assessment for a guaranty association, high risk health pool, joint
underwriting association, or windstorm association, under the law
of this or another state. (V.T.I.C. Art. 21.46, Secs. 1(e), (g)
(part).)
Sec. 281.006. TREATMENT OF CERTAIN TAX REDUCTIONS AND
CREDITS. (a) If another state by law reduces a tax rate or grants a
tax credit to a domestic insurer that makes an investment in or
maintains offices in that state or that meets a similar
requirement, the law that reduces the rate or grants the credit
shall be applied in the same manner in this state for the purpose of
determining the total taxes or other charges under this subchapter.
(b) For purposes of this subchapter, a tax offset or credit
related to an assessment described by Section 281.005 is considered
a tax paid in this or another state, as appropriate. (V.T.I.C. Art.
21.46, Secs. 1(b), (g) (part).)
Sec. 281.007. TAX REPORT; ADMINISTRATION AND COLLECTION OF
TAX. The comptroller shall prescribe a due date for filing a report
and paying a tax imposed under this subchapter. (V.T.I.C. Art.
21.46, Sec. 1(d) (part).)
[Sections 281.008-281.050 reserved for expansion]
SUBCHAPTER B. RETALIATORY PENALTIES OR OTHER OBLIGATIONS
Sec. 281.051. DEFINITIONS. In this subchapter:
(1) "Domestic insurer" and "foreign insurer" have the
meanings assigned by Section 281.001.
(2) "Penalty or other obligation" includes a sanction,
fine, financial, deposit, or regulatory requirement, and any other
obligation, prohibition, or restriction. (V.T.I.C. Art. 21.46,
Sec. 2 (part).)
Sec. 281.052. IMPOSITION OF PENALTY OR OTHER OBLIGATION.
(a) The Texas Department of Insurance shall impose a penalty or
other obligation on a foreign insurer authorized to engage in the
business of insurance in this state if:
(1) the insurance department or an insurance
regulatory official of the foreign insurer's state of organization
imposes a penalty or other obligation on any domestic insurer
authorized to engage in the business of insurance in that state; and
(2) the penalty or other obligation is imposed because
the Texas Department of Insurance did not:
(A) obtain or maintain accreditation
certification or a similar form of approval, compliance, or
acceptance from or as a member of the National Association of
Insurance Commissioners or a committee, task force, working group,
or advisory committee of the association; or
(B) comply with a model act, regulation, report,
or requirement of the National Association of Insurance
Commissioners or a committee, task force, working group, or
advisory committee of the association, including a market conduct,
financial examination, or annual financial statement.
(b) A penalty or other obligation imposed by the Texas
Department of Insurance on a foreign insurer under this section
must be the same as the penalty or other obligation imposed on the
domestic insurer by the insurance department or regulatory official
of the foreign insurer's state of organization. (V.T.I.C. Art.
21.46, Sec. 2.)
SECTION 2. TITLE 5, INSURANCE CODE. The Insurance Code is
amended by adding Title 5 to read as follows:
TITLE 5. PROTECTION OF CONSUMER INTERESTS
SUBTITLE A. PUBLIC INSURANCE COUNSEL
CHAPTER 501. OFFICE OF PUBLIC INSURANCE COUNSEL
[Chapters 502-520 reserved for expansion]
SUBTITLE B. CONSUMER SERVICE PROVISIONS
CHAPTER 521. CONSUMER INFORMATION AND COMPLAINTS
CHAPTER 522. CONSUMER INFORMATION IN SPANISH
CHAPTER 523. MARKET ASSISTANCE PROGRAM FOR RESIDENTIAL
PROPERTY INSURANCE
[Chapters 524-540 reserved for expansion]
SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES
CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES
CHAPTER 542. PROCESSING AND SETTLEMENT OF CLAIMS
CHAPTER 543. PROHIBITED PRACTICES RELATED TO POLICY OR
CERTIFICATE OF MEMBERSHIP
CHAPTER 544. PROHIBITED DISCRIMINATION
CHAPTER 545. HIV TESTING
CHAPTER 546. USE OF GENETIC TESTING INFORMATION
CHAPTER 547. FALSE ADVERTISING BY UNAUTHORIZED INSURERS
CHAPTER 548. INSURER INSIDER TRADING AND PROXY REGULATION
CHAPTER 549. PROHIBITED PRACTICES RELATING TO PROPERTY
INSURANCE
CHAPTER 550. PROHIBITED PRACTICES RELATING TO PAYMENTS
CHAPTER 551. PROHIBITED PRACTICES RELATING TO DECLINATION,
CANCELLATION, AND NONRENEWAL OF INSURANCE
POLICIES
CHAPTER 552. ILLEGAL PRICING PRACTICES
CHAPTER 553. ENFORCEMENT OF INSURANCE POLICIES REGARDING
HOLOCAUST VICTIMS
CHAPTER 554. BURDEN OF PROOF AND PLEADING
CHAPTER 555. FAILURE TO SATISFY JUDGMENT
CHAPTER 556. UNFAIR METHODS OF COMPETITION AND UNFAIR
PRACTICES BY FINANCIAL INSTITUTIONS
CHAPTER 557. INSURED PROPERTY SUBJECT TO SECURITY INTEREST
CHAPTER 558. REFUND OF UNEARNED PREMIUM
[Chapters 559-600 reserved for expansion]
SUBTITLE D. PRIVACY
CHAPTER 601. PRIVACY
CHAPTER 602. PRIVACY OF HEALTH INFORMATION
[Chapters 603-650 reserved for expansion]
SUBTITLE E. PREMIUM FINANCING
CHAPTER 651. FINANCING OF INSURANCE PREMIUMS
[Chapters 652-700 reserved for expansion]
SUBTITLE F. INSURANCE FRAUD
CHAPTER 701. INSURANCE FRAUD INVESTIGATIONS
CHAPTER 702. MOTOR VEHICLE THEFT AND MOTOR VEHICLE
INSURANCE FRAUD REPORTING
CHAPTER 703. COVERED ENTITY'S ANTIFRAUD ACTION
CHAPTER 704. ANTIFRAUD PROGRAMS
CHAPTER 705. MISREPRESENTATIONS BY POLICYHOLDERS
TITLE 5. PROTECTION OF CONSUMER INTERESTS
SUBTITLE A. PUBLIC INSURANCE COUNSEL
CHAPTER 501. OFFICE OF PUBLIC INSURANCE COUNSEL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 501.001. DEFINITION
Sec. 501.002. OFFICE OF PUBLIC INSURANCE COUNSEL
Sec. 501.003. SUNSET PROVISION
Sec. 501.004. PUBLIC INTEREST INFORMATION
Sec. 501.005. ACCESS TO PROGRAMS AND FACILITIES
[Sections 501.006-501.050 reserved for expansion]
SUBCHAPTER B. PUBLIC COUNSEL
Sec. 501.051. APPOINTMENT; TERM
Sec. 501.052. QUALIFICATIONS
Sec. 501.053. BUSINESS INTEREST; SERVICE AS PUBLIC
COUNSEL
Sec. 501.054. LOBBYING ACTIVITIES
Sec. 501.055. GROUNDS FOR REMOVAL
Sec. 501.056. PROHIBITED REPRESENTATION OR EMPLOYMENT
[Sections 501.057-501.100 reserved for expansion]
SUBCHAPTER C. PERSONNEL
Sec. 501.101. OFFICE PERSONNEL
Sec. 501.102. TRADE ASSOCIATIONS
Sec. 501.103. CAREER LADDER PROGRAM; PERFORMANCE
EVALUATIONS
Sec. 501.104. EQUAL EMPLOYMENT OPPORTUNITY POLICY;
REPORT
Sec. 501.105. QUALIFICATIONS AND STANDARDS OF CONDUCT
[Sections 501.106-501.150 reserved for expansion]
SUBCHAPTER D. POWERS AND DUTIES
Sec. 501.151. POWERS AND DUTIES OF OFFICE
Sec. 501.152. ADMINISTRATION OF OFFICE
Sec. 501.153. AUTHORITY TO APPEAR, INTERVENE,
OR INITIATE
Sec. 501.154. ACCESS TO INFORMATION
Sec. 501.155. RECOMMENDATION OF LEGISLATION
Sec. 501.156. CONSUMER BILL OF RIGHTS
Sec. 501.157. PROHIBITED INTERVENTIONS OR
APPEARANCES
Sec. 501.158. CONFIDENTIALITY REQUIREMENTS
[Sections 501.159-501.200 reserved for expansion]
SUBCHAPTER E. ASSESSMENTS
Sec. 501.201. OFFICE EXPENSES
Sec. 501.202. ASSESSMENT
Sec. 501.203. ASSESSMENT ON PROPERTY AND CASUALTY
INSURERS
Sec. 501.204. ASSESSMENT ON LIFE, HEALTH, AND ACCIDENT
INSURERS AND RELATED ENTITIES
Sec. 501.205. ASSESSMENT ON TITLE INSURANCE COMPANIES
[Sections 501.206-501.250 reserved for expansion]
SUBCHAPTER F. DUTIES RELATING TO HEALTH
MAINTENANCE ORGANIZATIONS
Sec. 501.251. COMPARISON OF HEALTH MAINTENANCE
ORGANIZATIONS
Sec. 501.252. ANNUAL CONSUMER REPORT CARDS
Sec. 501.253. ACCESS TO INFORMATION
Sec. 501.254. CONFIDENTIALITY AND USE OF INFORMATION
CHAPTER 501. OFFICE OF PUBLIC INSURANCE COUNSEL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 501.001. DEFINITION. In this chapter, "office" means
the office of public insurance counsel. (New.)
Sec. 501.002. OFFICE OF PUBLIC INSURANCE COUNSEL. The
independent office of public insurance counsel represents the
interests of insurance consumers in this state. (V.T.I.C. Art.
1.35A, Sec. 1.)
Sec. 501.003. SUNSET PROVISION. The office is subject to
Chapter 325, Government Code (Texas Sunset Act). Unless continued
in existence as provided by that chapter, the office is abolished
September 1, 2005. (V.T.I.C. Art. 1.35A, Sec. 7.)
Sec. 501.004. PUBLIC INTEREST INFORMATION. (a) The office
shall prepare information of public interest describing the
functions of the office.
(b) The office shall make the information available to the
public and appropriate state agencies. (V.T.I.C. Art. 1.35A, Sec.
6(a).)
Sec. 501.005. ACCESS TO PROGRAMS AND FACILITIES. (a) The
office shall prepare and maintain a written plan that describes how
a person who does not speak English can be provided reasonable
access to the office's programs.
(b) The office shall comply with federal and state laws for
program and facility accessibility. (V.T.I.C. Art. 1.35A, Sec.
6(b).)
[Sections 501.006-501.050 reserved for expansion]
SUBCHAPTER B. PUBLIC COUNSEL
Sec. 501.051. APPOINTMENT; TERM. (a) The governor, with
the advice and consent of the senate, shall appoint a public counsel
to serve as the executive director of the office. The public
counsel serves a two-year term that expires on February 1 of each
odd-numbered year.
(b) The governor shall appoint the public counsel without
regard to the race, color, disability, sex, religion, age, or
national origin of the appointee. (V.T.I.C. Art. 1.35A, Secs.
2(a), (d), (e), 3(a) (part).)
Sec. 501.052. QUALIFICATIONS. To be eligible to serve as
public counsel, a person must:
(1) be licensed to practice law in this state;
(2) have demonstrated a strong commitment to and
involvement in efforts to safeguard the rights of the public; and
(3) possess the knowledge and experience necessary to
practice effectively in insurance proceedings. (V.T.I.C. Art.
1.35A, Sec. 2(b).)
Sec. 501.053. BUSINESS INTEREST; SERVICE AS PUBLIC COUNSEL.
A person is not eligible for appointment as public counsel if the
person or the person's spouse:
(1) is employed by or participates in the management
of a business entity or other organization regulated by or
receiving funds from the department;
(2) owns or controls, directly or indirectly, more
than a 10 percent interest in a business entity or other
organization regulated by or receiving funds from the department or
the office; or
(3) uses or receives a substantial amount of tangible
goods, services, or funds from the department or the office, other
than compensation or reimbursement authorized by law for department
or office membership, attendance, or expenses. (V.T.I.C. Art.
1.35A, Sec. 2(c).)
Sec. 501.054. LOBBYING ACTIVITIES. A person may not serve
as public counsel or act as general counsel to the office if the
person is required to register as a lobbyist under Chapter 305,
Government Code, because of the person's activities for
compensation related to the operation of the department or the
office. (V.T.I.C. Art. 1.35A, Sec. 4(a).)
Sec. 501.055. GROUNDS FOR REMOVAL. (a) It is a ground for
removal from office if the public counsel:
(1) does not have at the time of appointment or
maintain during service as public counsel the qualifications
required by Section 501.052;
(2) violates a prohibition established by Section
501.053, 501.054, 501.056, or 501.102; or
(3) cannot, because of illness or disability,
discharge the public counsel's duties for a substantial part of the
public counsel's term.
(b) The validity of an action of the office is not affected
by the fact that the action is taken when a ground for removal of the
public counsel exists. (V.T.I.C. Art. 1.35A, Secs. 2(f), (g).)
Sec. 501.056. PROHIBITED REPRESENTATION OR EMPLOYMENT. A
former public counsel may not represent any person or receive
compensation for services rendered on behalf of any person
regarding a case pending before the commissioner or department
before the second anniversary of the date the person ceases to serve
as public counsel. (V.T.I.C. Art. 1.35A, Sec. 4(b).)
[Sections 501.057-501.100 reserved for expansion]
SUBCHAPTER C. PERSONNEL
Sec. 501.101. OFFICE PERSONNEL. (a) The public counsel
shall employ professional, technical, and other employees
necessary to implement this chapter.
(b) Compensation for an employee shall be set under the
General Appropriations Act as provided by the legislature.
(V.T.I.C. Art. 1.35A, Sec. 3(a) (part).)
Sec. 501.102. TRADE ASSOCIATIONS. (a) In this section,
"trade association" means a nonprofit, cooperative, and
voluntarily joined association of business or professional
competitors designed to assist its members and its industry or
profession in dealing with mutual business or professional problems
and in promoting their common interest.
(b) A person may not serve as public counsel or be an
employee of the office who is exempt from the state's position
classification plan or is compensated at or above the amount
prescribed by the General Appropriations Act for step 1, salary
group A17, of the position classification salary schedule if the
person is:
(1) an officer, employee, or paid consultant of a
trade association in the field of insurance; or
(2) the spouse of an officer, manager, or paid
consultant of a trade association in the field of insurance.
(V.T.I.C. Art. 1.35A, Secs. 4(c), (d), (e).)
Sec. 501.103. CAREER LADDER PROGRAM; PERFORMANCE
EVALUATIONS. (a) The public counsel or the public counsel's
designee shall develop an intra-agency career ladder program. The
program must require intra-agency posting of all nonentry level
positions concurrently with any public posting.
(b) The public counsel or the public counsel's designee
shall develop a system of annual performance evaluations. All
merit pay for office employees must be based on the system
established under this subsection. (V.T.I.C. Art. 1.35A, Secs.
3(g), (h).)
Sec. 501.104. EQUAL EMPLOYMENT OPPORTUNITY POLICY; REPORT.
(a) The public counsel or the public counsel's designee shall
prepare and maintain a written policy statement to ensure
implementation of an equal employment opportunity program under
which all personnel transactions are made without regard to race,
color, disability, sex, religion, age, or national origin. The
policy statement must include:
(1) personnel policies, including policies relating
to recruitment, evaluation, selection, appointment, training, and
promotion of personnel that are in compliance with the requirements
of Chapter 21, Labor Code;
(2) a comprehensive analysis of the office workforce
that meets federal and state guidelines;
(3) procedures by which a determination can be made
about areas of significant underuse in the office workforce of all
persons for whom federal or state guidelines encourage a more
equitable balance; and
(4) reasonable methods to appropriately address those
areas of significant underuse.
(b) A policy statement prepared under Subsection (a) must:
(1) cover an annual period;
(2) be updated at least annually;
(3) be reviewed by the Commission on Human Rights for
compliance with Subsection (a)(1); and
(4) be filed with the governor.
(c) The governor shall deliver a biennial report to the
legislature based on the information received under Subsection (b).
The report may be made separately or as a part of other biennial
reports to the legislature. (V.T.I.C. Art. 1.35A, Secs. 3(d), (e),
(f).)
Sec. 501.105. QUALIFICATIONS AND STANDARDS OF CONDUCT. The
office shall provide to the public counsel and office employees, as
often as necessary, information regarding their:
(1) qualifications for office or employment under this
chapter; and
(2) responsibilities under applicable laws relating
to standards of conduct for state officers or employees. (V.T.I.C.
Art. 1.35A, Sec. 3(i).)
[Sections 501.106-501.150 reserved for expansion]
SUBCHAPTER D. POWERS AND DUTIES
Sec. 501.151. POWERS AND DUTIES OF OFFICE. The office:
(1) may assess the impact of insurance rates, rules,
and forms on insurance consumers in this state; and
(2) shall advocate in the office's own name positions
determined by the public counsel to be most advantageous to a
substantial number of insurance consumers. (V.T.I.C. Art. 1.35A,
Sec. 5(a).)
Sec. 501.152. ADMINISTRATION OF OFFICE. The public counsel
shall administer and enforce this chapter, including preparing and
submitting to the legislature a budget for the office and approving
expenditures for professional services, travel, per diem, and other
actual and necessary expenses incurred in administering the office.
(V.T.I.C. Art. 1.35A, Sec. 3(a) (part).)
Sec. 501.153. AUTHORITY TO APPEAR, INTERVENE, OR INITIATE.
The public counsel:
(1) may appear or intervene, as a party or otherwise,
as a matter of right before the commissioner or department on behalf
of insurance consumers, as a class, in matters involving:
(A) rates, rules, and forms affecting:
(i) property and casualty insurance;
(ii) title insurance;
(iii) credit life insurance;
(iv) credit accident and health insurance;
or
(v) any other line of insurance for which
the commissioner or department promulgates, sets, adopts, or
approves rates, rules, or forms;
(B) rules affecting life, health, or accident
insurance; or
(C) withdrawal of approval of policy forms:
(i) in proceedings initiated by the
department under Sections 1701.055 and 1701.057; or
(ii) if the public counsel presents
persuasive evidence to the department that the forms do not comply
with this code, a rule adopted under this code, or any other law;
(2) may initiate or intervene as a matter of right or
otherwise appear in a judicial proceeding involving or arising from
an action taken by an administrative agency in a proceeding in which
the public counsel previously appeared under the authority granted
by this chapter;
(3) may appear or intervene, as a party or otherwise,
as a matter of right on behalf of insurance consumers as a class in
any proceeding in which the public counsel determines that
insurance consumers are in need of representation, except that the
public counsel may not intervene in an enforcement or parens
patriae proceeding brought by the attorney general; and
(4) may appear or intervene before the commissioner or
department as a party or otherwise on behalf of small commercial
insurance consumers, as a class, in a matter involving rates,
rules, or forms affecting commercial insurance consumers, as a
class, in any proceeding in which the public counsel determines
that small commercial consumers are in need of representation.
(V.T.I.C. Art. 1.35A, Sec. 5(b) (part).)
Sec. 501.154. ACCESS TO INFORMATION. The public counsel:
(1) is entitled to the same access as a party, other
than department staff, to department records available in a
proceeding before the commissioner or department under the
authority granted to the public counsel by this chapter; and
(2) is entitled to obtain discovery under Chapter
2001, Government Code, of any nonprivileged matter that is relevant
to the subject matter involved in a proceeding or submission before
the commissioner or department as authorized by this chapter.
(V.T.I.C. Art. 1.35A, Sec. 5(b) (part).)
Sec. 501.155. RECOMMENDATION OF LEGISLATION. The public
counsel may recommend legislation to the legislature that the
public counsel determines would positively affect the interests of
insurance consumers. (V.T.I.C. Art. 1.35A, Sec. 5(b) (part).)
Sec. 501.156. CONSUMER BILL OF RIGHTS. The public counsel
shall submit to the department for adoption a consumer bill of
rights appropriate to each personal line of insurance regulated by
the department to be distributed on issuance of a policy by an
insurer to each policyholder under department rules. (V.T.I.C. Art.
1.35A, Sec. 5(b) (part).)
Sec. 501.157. PROHIBITED INTERVENTIONS OR APPEARANCES. The
public counsel may not intervene or appear in:
(1) any proceeding or hearing before the commissioner
or department, or any other proceeding, that relates to approval or
consideration of an individual charter, license, certificate of
authority, acquisition, merger, or examination; or
(2) any proceeding concerning the solvency of an
individual insurer, a financial issue, a policy form, advertising,
or another regulatory issue affecting an individual insurer or
agent. (V.T.I.C. Art. 1.35A, Sec. 5(c) (part).)
Sec. 501.158. CONFIDENTIALITY REQUIREMENTS.
Confidentiality requirements applicable to examination reports
under Article 1.18 and to the commissioner under Section 3A,
Article 21.28-A, apply to the public counsel. (V.T.I.C. Art.
1.35A, Sec. 5(c) (part).)
[Sections 501.159-501.200 reserved for expansion]
SUBCHAPTER E. ASSESSMENTS
Sec. 501.201. OFFICE EXPENSES. Expenses of the office
shall be paid from the assessments collected under this subchapter.
(V.T.I.C. Art. 1.35A, Sec. 3(a) (part).)
Sec. 501.202. ASSESSMENT. To defray the costs of operating
the office, the comptroller shall collect assessments under this
subchapter annually in connection with the collection of other
taxes imposed on an insurer. (V.T.I.C. Art. 1.35B, Sec. (a)
(part).)
Sec. 501.203. ASSESSMENT ON PROPERTY AND CASUALTY INSURERS.
Each property and casualty insurer authorized to engage in business
in this state shall pay an annual assessment of 5.7 cents for each
property and casualty insurance policy in force in this state at the
end of the year. (V.T.I.C. Art. 1.35B, Sec. (a) (part).)
Sec. 501.204. ASSESSMENT ON LIFE, HEALTH, AND ACCIDENT
INSURERS AND RELATED ENTITIES. (a) This section applies to each
insurer authorized to engage in business in this state under:
(1) Chapter 25;
(2) Chapter 841;
(3) Chapter 842;
(4) Chapter 843;
(5) Chapter 882;
(6) Chapter 884;
(7) Chapter 885;
(8) Chapter 887;
(9) Chapter 888;
(10) Chapter 961;
(11) Chapter 982;
(12) Subchapter B, Chapter 1103;
(13) Subchapter A, Chapter 1104;
(14) Chapter 1201, or a provision listed in Section
1201.005;
(15) Chapter 1551;
(16) Chapter 1578; or
(17) Chapter 1601.
(b) Each insurer subject to this section shall pay an annual
assessment of 5.7 cents for each individual policy, and for each
certificate of insurance evidencing coverage under a group policy,
of life, health, or accident insurance that is written for delivery
and placed in force in this state during each calendar year and for
which the initial premium is paid in full. (V.T.I.C. Art. 1.35B,
Sec. (a) (part).)
Sec. 501.205. ASSESSMENT ON TITLE INSURANCE COMPANIES.
Each title insurance company authorized to engage in business in
this state shall pay an annual assessment of 5.7 cents for each
owner and mortgage policy that is written for delivery in this state
during each calendar year and for which the full basic premium is
charged. (V.T.I.C. Art. 1.35B, Sec. (a) (part).)
[Sections 501.206-501.250 reserved for expansion]
SUBCHAPTER F. DUTIES RELATING TO HEALTH
MAINTENANCE ORGANIZATIONS
Sec. 501.251. COMPARISON OF HEALTH MAINTENANCE
ORGANIZATIONS. (a) The office shall develop and implement a system
to compare and evaluate, on an objective basis, the quality of care
provided by and the performance of health maintenance organizations
established under Chapter 843.
(b) In developing the system, the office may use information
or data from a person, agency, organization, or governmental unit
that the office considers reliable. (V.T.I.C. Art. 1.35A, Sec.
5(e) (part).)
Sec. 501.252. ANNUAL CONSUMER REPORT CARDS. (a) The office
shall develop and issue annual consumer report cards that identify
and compare, on an objective basis, health maintenance
organizations in this state. The consumer report cards may be based
on information or data from any person, agency, organization, or
governmental unit that the office considers reliable.
(b) The office may not endorse or recommend a specific
health maintenance organization or plan, or subjectively rate or
rank health maintenance organizations or plans, other than through
comparison and evaluation of objective criteria.
(c) The office shall provide a copy of any consumer report
card on request on payment of a reasonable fee. (V.T.I.C. Art.
1.35A, Secs. 5(e)(2), (10), (11).)
Sec. 501.253. ACCESS TO INFORMATION. (a) The office is
entitled to information that is confidential under a law of this
state, including Section 843.006 of this code, Chapter 108, Health
and Safety Code, and Chapter 552, Government Code.
(b) The department and the Texas Health Care Information
Council shall provide any information or data as requested by the
office in furtherance of the duties under this subchapter.
(c) The office shall use information collected or received
under this subchapter for the benefit of the public. (V.T.I.C. Art.
1.35A, Secs. 5(e)(3), (4) (part), (5).)
Sec. 501.254. CONFIDENTIALITY AND USE OF INFORMATION. (a)
Except as provided by this section, information collected under
this subchapter is subject to Chapter 552, Government Code, and the
office shall make determinations on requests for information in
favor of access.
(b) The office may not make public any confidential
information provided to the office under this subchapter but may
disclose a summary of the information that does not directly or
indirectly identify the health maintenance organization that is the
subject of the information. The office may not release, and a
person or entity may not gain access to, any information that:
(1) could reasonably be expected to reveal the
identity of a patient or physician;
(2) reveals the zip code of a patient's primary
residence;
(3) discloses a provider discount or a differential
between a payment and a billed charge; or
(4) relates to an actual payment made by a payer to an
identified provider.
(c) Information collected or used by the office under this
subchapter is subject to the confidentiality provisions and
criminal penalties of:
(1) Section 81.103, Health and Safety Code;
(2) Section 311.037, Health and Safety Code; and
(3) Chapter 159, Occupations Code.
(d) Information on patients and physicians that is in the
possession of the office and any compilation, report, or analysis
produced from the information that identifies patients and
physicians is not:
(1) subject to discovery, subpoena, or other means of
legal compulsion for release to any person or entity; or
(2) admissible in any civil, administrative, or
criminal proceeding.
(e) Notwithstanding Subsection (b)(2), the office may use
zip code information to analyze information on a geographical
basis. (V.T.I.C. Art. 1.35A, Secs. 5(e)(4) (part), (6), (7), (8),
(9).)
[Chapters 502-520 reserved for expansion]
SUBTITLE B. CONSUMER SERVICE PROVISIONS
CHAPTER 521. CONSUMER INFORMATION AND COMPLAINTS
SUBCHAPTER A. PUBLIC INTEREST INFORMATION AND
COMPLAINT PROCEDURES
Sec. 521.001. PUBLIC INTEREST INFORMATION
Sec. 521.002. COMPLAINT RESOLUTION PROGRAM
Sec. 521.003. NOTIFICATION OF COMPLAINT STATUS
Sec. 521.004. RECORDS OF COMPLAINTS
Sec. 521.005. NOTICE TO ACCOMPANY POLICY
[Sections 521.006-521.050 reserved for expansion]
SUBCHAPTER B. DEPARTMENT TOLL-FREE NUMBER FOR
INFORMATION AND COMPLAINTS
Sec. 521.051. DEPARTMENT TOLL-FREE NUMBER FOR
INFORMATION AND COMPLAINTS
Sec. 521.052. INFORMATION PROVIDED
Sec. 521.053. PUBLICITY REQUIREMENTS
Sec. 521.054. RECORD OF INQUIRY OR COMPLAINT REQUIRED
Sec. 521.055. COMPLAINT NOTIFICATION SYSTEM
Sec. 521.056. INFORMATION BULLETIN TO ACCOMPANY POLICY
[Sections 521.057-521.100 reserved for expansion]
SUBCHAPTER C. HEALTH MAINTENANCE ORGANIZATION OR
INSURER TOLL-FREE NUMBER FOR INFORMATION AND COMPLAINTS
Sec. 521.101. APPLICABILITY OF SUBCHAPTER
Sec. 521.102. HEALTH MAINTENANCE ORGANIZATION OR INSURER
TOLL-FREE NUMBER FOR INFORMATION AND
COMPLAINTS
Sec. 521.103. INFORMATION INCLUDED IN EVIDENCE OF COVERAGE
OR POLICY
CHAPTER 521. CONSUMER INFORMATION AND COMPLAINTS
SUBCHAPTER A. PUBLIC INTEREST INFORMATION AND
COMPLAINT PROCEDURES
Sec. 521.001. PUBLIC INTEREST INFORMATION. (a) The
department shall prepare information of public interest describing
the department's functions and the procedures by which complaints
are filed with and resolved by the department.
(b) The department shall make the information available to
the public and appropriate state agencies. (V.T.I.C. Art. 1.37.)
Sec. 521.002. COMPLAINT RESOLUTION PROGRAM. The department
shall establish a program to facilitate resolution of policyholder
complaints. (V.T.I.C. Art. 1.04B.)
Sec. 521.003. NOTIFICATION OF COMPLAINT STATUS. If a
written complaint is filed with the department, the department, at
least quarterly and until final disposition of the complaint, shall
notify each party to the complaint of the complaint's status unless
the notice would jeopardize an undercover investigation. (V.T.I.C.
Art. 1.10, Sec. 19.)
Sec. 521.004. RECORDS OF COMPLAINTS. The department shall
keep an information file about each complaint filed with the
department that concerns an activity regulated by the department or
the commissioner. (V.T.I.C. Art. 1.10, Sec. 18.)
Sec. 521.005. NOTICE TO ACCOMPANY POLICY. (a) Each
insurance policy delivered or issued for delivery in this state
shall include with the policy a brief written notice that includes:
(1) a suggested procedure to be followed by a
policyholder with a dispute concerning the policyholder's claim or
premium;
(2) the department's name and address; and
(3) the department's toll-free telephone number
maintained under Subchapter B.
(b) The commissioner shall adopt appropriate wording for
the notice. (V.T.I.C. Art. 1.35.)
[Sections 521.006-521.050 reserved for expansion]
SUBCHAPTER B. DEPARTMENT TOLL-FREE NUMBER FOR
INFORMATION AND COMPLAINTS
Sec. 521.051. DEPARTMENT TOLL-FREE NUMBER FOR INFORMATION
AND COMPLAINTS. The department shall maintain a toll-free
telephone number to:
(1) provide the information described by Section
521.052; and
(2) receive and aid in resolving complaints against
insurers. (V.T.I.C. Art. 1.35D, Sec. (a).)
Sec. 521.052. INFORMATION PROVIDED. The department shall
provide to the public through the department's toll-free telephone
number only the following information:
(1) information collected or maintained by the
department relating to the number and disposition of complaints
received against an insurer that are justified, verified as
accurate, and documented as valid, expressed as a percentage of the
total number of insurance policies written by the insurer and in
force on December 31 of the preceding year;
(2) the rating of an insurer, if any, as published by a
nationally recognized rating organization;
(3) the kinds of coverage available to a consumer
through any insurer writing insurance in this state;
(4) an insurer's admitted assets-to-liabilities
ratio; and
(5) other appropriate information collected and
maintained by the department. (V.T.I.C. Art. 1.35D, Sec. (b).)
Sec. 521.053. PUBLICITY REQUIREMENTS. The department shall
publicize the department's toll-free telephone number in public
service announcements and publish that number in telephone books
throughout the state, as the department finds appropriate.
(V.T.I.C. Art. 1.35D, Sec. (e).)
Sec. 521.054. RECORD OF INQUIRY OR COMPLAINT REQUIRED. The
department shall maintain a written record of each inquiry and
complaint received through the department's toll-free telephone
number. (V.T.I.C. Art. 1.35D, Sec. (c).)
Sec. 521.055. COMPLAINT NOTIFICATION SYSTEM. The
department shall establish a system to notify insurers by
electronic transmission to a facsimile machine or other appropriate
system of complaints received by the department through the
department's toll-free telephone number. (V.T.I.C. Art. 1.35D,
Sec. (d).)
Sec. 521.056. INFORMATION BULLETIN TO ACCOMPANY POLICY.
Each insurer that delivers, issues for delivery, or renews an
insurance policy in this state shall include with the policy an
information bulletin that includes:
(1) the department's toll-free telephone number; and
(2) a description of the services available through
the department's toll-free telephone number. (V.T.I.C. Art. 1.35D,
Sec. (f).)
[Sections 521.057-521.100 reserved for expansion]
SUBCHAPTER C. HEALTH MAINTENANCE ORGANIZATION OR
INSURER TOLL-FREE NUMBER FOR INFORMATION AND COMPLAINTS
Sec. 521.101. APPLICABILITY OF SUBCHAPTER. (a) Except as
provided by Subsection (b), this subchapter applies to a health
maintenance organization authorized to engage in the business of a
health maintenance organization in this state or an insurer
authorized to engage in the business of insurance in this state,
including:
(1) a capital stock insurance company;
(2) a mutual insurance company;
(3) a title insurance company;
(4) a fraternal benefit society;
(5) a local mutual aid association;
(6) a statewide mutual assessment company;
(7) a county mutual insurance company;
(8) a Lloyd's plan;
(9) a reciprocal or interinsurance exchange;
(10) a stipulated premium company;
(11) a group hospital service corporation; and
(12) a risk retention group.
(b) This subchapter does not apply to a health maintenance
organization or insurer:
(1) that has gross initial premium receipts collected
in this state of less than $2 million each year; or
(2) with regard to fidelity, surety, or guaranty
bonds. (V.T.I.C. Art. 21.71, Secs. (a), (b).)
Sec. 521.102. HEALTH MAINTENANCE ORGANIZATION OR INSURER
TOLL-FREE NUMBER FOR INFORMATION AND COMPLAINTS. A health
maintenance organization or insurer shall maintain a toll-free
telephone number to:
(1) provide information concerning evidences of
coverage or policies issued by the health maintenance organization
or insurer; and
(2) receive complaints from enrollees or
policyholders. (V.T.I.C. Art. 21.71, Sec. (c).)
Sec. 521.103. INFORMATION INCLUDED IN EVIDENCE OF COVERAGE
OR POLICY. (a) Each health maintenance organization or insurer
that delivers, issues for delivery, or renews an evidence of
coverage or insurance policy in this state shall print on the
evidence of coverage or policy the health maintenance
organization's or insurer's toll-free telephone number.
(b) The commissioner may adopt rules governing the manner in
which the toll-free telephone number appears on the evidence of
coverage or insurance policy. (V.T.I.C. Art. 21.71, Sec. (d).)
CHAPTER 522. CONSUMER INFORMATION IN SPANISH
Sec. 522.001. INFORMATIONAL SHEET FOR TEXAS PERSONAL
AUTOMOBILE POLICIES
CHAPTER 522. CONSUMER INFORMATION IN SPANISH
Sec. 522.001. INFORMATIONAL SHEET FOR TEXAS PERSONAL
AUTOMOBILE POLICIES. (a) The commissioner shall develop or adopt
an informational sheet in the Spanish language to provide a general
explanation of the terms most commonly used in the Texas personal
automobile insurance policy. The department shall make the
informational sheet available to the public.
(b) The informational sheet is intended to provide only a
general explanation of insurance terms used in the Texas personal
automobile insurance policy and is not intended to alter any
rights, obligations, or responsibilities of the contracting
parties. All other applicable laws, including provisions of this
code, apply regardless of whether an informational sheet is used.
(c) The informational sheet must include a disclaimer in the
Spanish language, prominently printed in 10-point boldfaced type at
the top of the informational sheet, that contains the following:
"This document is for informational purposes only and
is not intended to alter or replace the insurance
policy. Additionally, this informational sheet is not
intended to fully set out your rights and obligations
or the rights and obligations of the insurer. If you
have questions about your insurance, you should
consult your insurance agent, the insurer, or the
language of the insurance policy." (V.T.I.C. Art.
1.35E.)
CHAPTER 523. MARKET ASSISTANCE PROGRAM FOR RESIDENTIAL
PROPERTY INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 523.001. DEFINITION
Sec. 523.002. RULES
Sec. 523.003. IMMUNITY
[Sections 523.004-523.050 reserved for expansion]
SUBCHAPTER B. OPERATION OF MARKET ASSISTANCE PROGRAM
Sec. 523.051. MARKET ASSISTANCE PROGRAM
Sec. 523.052. MARKET ASSISTANCE PROGRAM DIVISION
Sec. 523.053. EXECUTIVE COMMITTEE
Sec. 523.054. PLAN OF OPERATION
Sec. 522.055. AMENDMENT OF PLAN OF OPERATION
[Sections 523.056-523.100 reserved for expansion]
SUBCHAPTER C. PARTICIPATION IN MARKET ASSISTANCE
PROGRAM
Sec. 523.101. PARTICIPATION BY INSURERS
Sec. 523.102. APPLICATION ASSISTANCE AND REFERRALS
Sec. 523.103. APPLICATION FOR ASSISTANCE
Sec. 523.104. INSURER ACTION ON APPLICATION
Sec. 523.105. NONPAYMENT OF PREMIUM OR SUBMISSION OF
FRAUDULENT CLAIM
[Sections 523.106-523.150 reserved for expansion]
SUBCHAPTER D. PROGRAM AGENTS
Sec. 523.151. TYPES OF AGENTS
Sec. 523.152. SHARING OF AGENT COMMISSIONS
[Sections 523.153-523.200 reserved for expansion]
SUBCHAPTER E. MARKET ASSISTANCE PROGRAM REVIEW;
PROGRAM TERMINATION
Sec. 523.201. COLLECTION OF PROGRAM INFORMATION
Sec. 523.202. PERIODIC REVIEW OF PROGRAM
Sec. 523.203. TERMINATION OF PROGRAM
CHAPTER 523. MARKET ASSISTANCE PROGRAM FOR RESIDENTIAL
PROPERTY INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 523.001. DEFINITION. In this chapter, "residential
property insurance" means insurance provided by a homeowners policy
or residential fire and allied lines policy against loss incurred
at a fixed location to real or tangible personal property. The term
does not include insurance against loss provided by a farm and ranch
owners policy. (V.T.I.C. Art. 21.49-12, Sec. 1(a) (part).)
Sec. 523.002. RULES. In addition to the plan of operation
adopted under Subchapter B, the commissioner may adopt appropriate
rules to accomplish the purposes of this chapter. (V.T.I.C. Art.
21.49-12, Sec. 8.)
Sec. 523.003. IMMUNITY. The market assistance program, the
members of the executive committee, and participating insurers and
agents are not personally liable for:
(1) an act performed in good faith in the scope of the
person's authority as determined under this chapter; or
(2) damages arising from the person's official acts or
omissions, other than a corrupt or malicious act or omission.
(V.T.I.C. Art. 21.49-12, Sec. 7.)
[Sections 523.004-523.050 reserved for expansion]
SUBCHAPTER B. OPERATION OF MARKET ASSISTANCE PROGRAM
Sec. 523.051. MARKET ASSISTANCE PROGRAM. (a) The market
assistance program is a voluntary program designed to assist
applicants for insurance and insureds in this state in obtaining
residential property insurance coverage in underserved areas. The
commissioner by rule shall designate underserved areas using the
standards described by Section 1, Article 5.35-3.
(b) The commissioner shall establish the types of risks for
which the market assistance program will provide assistance.
(c) The market assistance program may not provide
assistance regarding windstorm and hail insurance coverage for a
risk eligible for that coverage under Article 21.49. (V.T.I.C.
Art. 21.49-12, Secs. 1(a) (part), (b).)
Sec. 523.052. MARKET ASSISTANCE PROGRAM DIVISION. The
department shall operate a market assistance program division.
(V.T.I.C. Art. 21.49-12, Sec. 1(a) (part).)
Sec. 523.053. EXECUTIVE COMMITTEE. (a) The market
assistance program is administered by an executive committee.
(b) The executive committee consists of 11 members
appointed by the commissioner as follows:
(1) five members who represent the interests of
insurers;
(2) four public members; and
(3) two members who are general property and casualty
agents.
(c) Each member of the executive committee who represents
the interests of insurers must be a full-time employee of an
authorized insurer.
(d) The commissioner or the commissioner's designated
representative serves as an ex officio member of the executive
committee and must be present at each executive committee meeting.
(e) The executive committee shall be available to advise and
consult with the commissioner regarding the administration of the
market assistance program. (V.T.I.C. Art. 21.49-12, Secs. 2(a)
(part), 3.)
Sec. 523.054. PLAN OF OPERATION. (a) The operation and
management of the market assistance program is governed by a plan of
operation adopted by rule by the commissioner.
(b) In addition to the other requirements specified by this
chapter, the plan of operation must include provisions regarding
types of coverage, policy forms and terms, application forms,
eligibility, and the overall operation of the market assistance
program.
(c) The plan of operation may provide for subcommittees
necessary to administer the market assistance program. (V.T.I.C.
Art. 21.49-12, Secs. 2(a) (part), (b) (part), (c).)
Sec. 523.055. AMENDMENT OF PLAN OF OPERATION. (a) The
executive committee may develop amendments to the plan of operation
and submit the amendments to the commissioner for adoption by rule.
(b) If the executive committee fails to submit suitable
amendments to the plan of operation, the department shall develop
and submit to the commissioner suitable amendments and the
commissioner shall, after notice and hearing, adopt the amendments
by rule. (V.T.I.C. Art. 21.49-12, Sec. 2(a) (part).)
[Sections 523.056-523.100 reserved for expansion]
SUBCHAPTER C. PARTICIPATION IN MARKET ASSISTANCE PROGRAM
Sec. 523.101. PARTICIPATION BY INSURERS. (a) An insurer
authorized to engage in the business of property or casualty
insurance that writes residential property insurance in this state,
including a Lloyd's plan or a reciprocal or interinsurance
exchange, may voluntarily participate in the market assistance
program. The commissioner may not permit an insurer to condition
its participation in the program in a manner that is inequitable to
the participants.
(b) Notwithstanding Subsection (a), the commissioner may
make insurer participation in the market assistance program
mandatory. The plan of operation must contain the criteria under
which the commissioner may make insurer participation in the market
assistance program mandatory.
(c) Each participating insurer is entitled to individually
evaluate a risk and apply rates under the market assistance program
in accordance with the provisions of this code applicable to the
insurer. (V.T.I.C. Art. 21.49-12, Secs. 2(a) (part), (b) (part).)
Sec. 523.102. APPLICATION ASSISTANCE AND REFERRALS. The
department may:
(1) assist an applicant for coverage through the
market assistance program in completing an initial application; and
(2) refer the applicant to one or more participating
insurers. (V.T.I.C. Art. 21.49-12, Sec. 4(a).)
Sec. 523.103. APPLICATION FOR ASSISTANCE. (a) An
application for assistance must be addressed to the market
assistance program at the department.
(b) An application must be accompanied by a copy of a
current notice of nonrenewal or cancellation of coverage and a
current declination letter from at least one other insurer that
writes the coverage sought, except that an applicant who does not
have previous residential property insurance coverage must provide
copies of current declination letters from at least two
unaffiliated insurers that write the coverage sought. (V.T.I.C.
Art. 21.49-12, Sec. 2(b) (part).)
Sec. 523.104. INSURER ACTION ON APPLICATION. (a) Not later
than the 30th day after the date an insurer receives an application,
the insurer shall:
(1) quote a premium;
(2) indicate its refusal to quote a premium; or
(3) request additional time to consider a premium
quote.
(b) If the insurer quotes a premium, the insurer shall
notify the applicant or the applicant's agent, if an agent is used,
so that the placement of the insurance may be completed if the
applicant accepts the coverage at the quoted premium.
(c) The insurer may provide a premium quote on the same
coverage basis for which the insurer normally provides insurance in
this state using the insurer's underwriting guidelines and applying
rates determined in accordance with the provisions of this code
applicable to the insurer. (V.T.I.C. Art. 21.49-12, Sec. 2(b)
(part).)
Sec. 523.105. NONPAYMENT OF PREMIUM OR SUBMISSION OF
FRAUDULENT CLAIM. If an insurer cancels or does not renew coverage
for nonpayment of premium or submission of a fraudulent claim, an
applicant is ineligible to subsequently apply to the market
assistance program for the same coverage for the same risk.
(V.T.I.C. Art. 21.49-12, Sec. 2(b) (part).)
[Sections 523.106-523.150 reserved for expansion]
SUBCHAPTER D. PROGRAM AGENTS
Sec. 523.151. TYPES OF AGENTS. (a) Notwithstanding other
law, the market assistance program may have both originating agents
and issuing agents.
(b) An originating agent may complete on behalf of an
applicant an application for insurance to submit to the market
assistance program. An applicant is not required to submit the
application through an originating agent. If an originating agent
is used, the originating agent is not required to be appointed to
represent the ultimate insurer.
(c) An issuing agent must be appointed to represent the
ultimate insurer. The issuing agent shall perform the customary
duties of a general property and casualty agent, including:
(1) signing, executing, and delivering insurance
policies;
(2) maintaining a record of the business;
(3) examining and inspecting the risk; and
(4) receiving and collecting premiums.
(d) A person may act as both the originating agent and the
issuing agent. If the originating agent and the issuing agent are
not the same person, the originating agent may not be held to be the
agent of the insurer unless the agent is appointed as provided by
Chapter 4051. (V.T.I.C. Art. 21.49-12, Secs. 4(b), (c), (d), (f).)
Sec. 523.152. SHARING OF AGENT COMMISSIONS. (a) An
originating agent shall share commissions with an issuing agent as
required by the market assistance program plan of operation if the
originating agent holds a license as:
(1) a general property and casualty agent; or
(2) a salaried representative for one or more insurers
whose plan of operation does not contemplate the use of general
property and casualty agents.
(b) The market assistance program may not share in
commissions. (V.T.I.C. Art. 21.49-12, Secs. 4(e), (g).)
[Sections 523.153-523.200 reserved for expansion]
SUBCHAPTER E. MARKET ASSISTANCE PROGRAM REVIEW;
PROGRAM TERMINATION
Sec. 523.201. COLLECTION OF PROGRAM INFORMATION.
Information concerning the number and type of applications received
and placed by the market assistance program and other information
about the program the executive committee or the commissioner
considers appropriate shall be collected. (V.T.I.C. Art. 21.49-12,
Sec. 6(a).)
Sec. 523.202. PERIODIC REVIEW OF PROGRAM. (a) The
executive committee shall review the demand for and performance of
the market assistance program at least annually, as necessary.
(b) After each review, the executive committee shall report
to the commissioner regarding:
(1) the need to continue operating the voluntary
market assistance program;
(2) the need to establish a mandatory market
assistance program;
(3) the need to establish a FAIR (Fair Access to
Insurance Requirements) Plan under Article 21.49A; or
(4) other recommendations the executive committee
considers appropriate. (V.T.I.C. Art. 21.49-12, Sec. 6(b) (part).)
Sec. 523.203. TERMINATION OF PROGRAM. The department may
terminate the market assistance program only on the commissioner's
approval. (V.T.I.C. Art. 21.49-12, Sec. 6(b) (part).)
[Chapters 524-540 reserved for expansion]
SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES
CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 541.001. PURPOSE
Sec. 541.002. DEFINITIONS
Sec. 541.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES PROHIBITED
Sec. 541.004. VENUE FOR ACTIONS INVOLVING DEPARTMENT OR
COMMISSIONER
Sec. 541.005. APPLICABILITY TO RISK RETENTION OR PURCHASING
GROUP
Sec. 541.006. PROHIBITED CONTENT OF CERTAIN INSURANCE
POLICIES
Sec. 541.007. IMMUNITY FROM PROSECUTION
Sec. 541.008. LIBERAL CONSTRUCTION
[Sections 541.009-541.050 reserved for expansion]
SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR
OR DECEPTIVE ACTS OR PRACTICES DEFINED
Sec. 541.051. MISREPRESENTATION REGARDING POLICY OR
INSURER
Sec. 541.052. FALSE INFORMATION AND ADVERTISING
Sec. 541.053. DEFAMATION OF INSURER
Sec. 541.054. BOYCOTT, COERCION, OR INTIMIDATION
Sec. 541.055. FALSE FINANCIAL STATEMENT
Sec. 541.056. PROHIBITED REBATES AND INDUCEMENTS
Sec. 541.057. UNFAIR DISCRIMINATION IN LIFE INSURANCE
AND ANNUITY CONTRACTS
Sec. 541.058. CERTAIN PRACTICES NOT CONSIDERED
DISCRIMINATION OR INDUCEMENT
Sec. 541.059. DECEPTIVE NAME, WORD, SYMBOL, DEVICE, OR
SLOGAN
Sec. 541.060. UNFAIR SETTLEMENT PRACTICES
Sec. 541.061. MISREPRESENTATION OF INSURANCE POLICY
[Sections 541.062-541.100 reserved for expansion]
SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF
COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR
PRACTICES; SANCTIONS AND PENALTIES
Sec. 541.101. EXAMINATION AND INVESTIGATION
Sec. 541.102. STATEMENT OF CHARGES; NOTICE OF HEARING
Sec. 541.103. HEARING
Sec. 541.104. HEARING PROCEDURES
Sec. 541.105. RECORD OF HEARING
Sec. 541.106. COMPLIANCE WITH SUBPOENA
Sec. 541.107. DETERMINATION OF VIOLATION
Sec. 541.108. CEASE AND DESIST ORDER
Sec. 541.109. MODIFICATION OR SETTING ASIDE OF ORDER
Sec. 541.110. ADMINISTRATIVE PENALTY
Sec. 541.111. CIVIL PENALTY FOR VIOLATION OF CEASE AND
DESIST ORDER
[Sections 541.112-541.150 reserved for expansion]
SUBCHAPTER D. PRIVATE ACTION FOR DAMAGES
Sec. 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED
Sec. 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER
RELIEF
Sec. 541.153. FRIVOLOUS ACTION
Sec. 541.154. PRIOR NOTICE OF ACTION
Sec. 541.155. ABATEMENT
Sec. 541.156. SETTLEMENT OFFER
Sec. 541.157. CONTENTS OF SETTLEMENT OFFER
Sec. 541.158. REJECTION OF SETTLEMENT OFFER
Sec. 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT OFFER
Sec. 541.160. EFFECT OF SETTLEMENT OFFER
Sec. 541.161. MEDIATION
Sec. 541.162. LIMITATIONS PERIOD
[Sections 541.163-541.200 reserved for expansion]
SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL
Sec. 541.201. INJUNCTIVE RELIEF
Sec. 541.202. VENUE FOR INJUNCTIVE ACTION
Sec. 541.203. ISSUANCE OF INJUNCTION
Sec. 541.204. CIVIL PENALTY
Sec. 541.205. COMPENSATION OR RESTORATION
Sec. 541.206. CIVIL PENALTY FOR VIOLATION OF INJUNCTION
Sec. 541.207. REMEDIES NOT EXCLUSIVE
[Sections 541.208-541.250 reserved for expansion]
SUBCHAPTER F. CLASS ACTIONS BY ATTORNEY GENERAL OR
PRIVATE INDIVIDUAL
Sec. 541.251. CLASS ACTION AUTHORIZED
Sec. 541.252. RECOVERY
Sec. 541.253. FRIVOLOUS ACTION
Sec. 541.254. STATUTE OF LIMITATIONS TOLLED
Sec. 541.255. PRIOR NOTICE
Sec. 541.256. PREREQUISITES TO CLASS ACTION
Sec. 541.257. CLASS ACTIONS MAINTAINABLE
Sec. 541.258. CLASS ACTIONS: ISSUES AND SUBCLASSES
AUTHORIZED
Sec. 541.259. DETERMINATION REGARDING WHETHER CLASS
ACTION MAY BE MAINTAINED
Sec. 541.260. EFFECT OF DENIAL OF CLASS ACTION
Sec. 541.261. NOTICE OF CLASS ACTION
Sec. 541.262. PROCEDURES IN CLASS ACTION
Sec. 541.263. EFFECT OF SETTLEMENT OFFER
Sec. 541.264. DEFENSES
Sec. 541.265. LIMITATIONS PERIOD FOR DAMAGES
Sec. 541.266. DISPOSITION
Sec. 541.267. CONTENTS OF JUDGMENT; NOTICE
[Sections 541.268-541.300 reserved for expansion]
SUBCHAPTER G. DEPARTMENT ACTION FOR REFUND OF PREMIUMS
Sec. 541.301. REFUND OF PREMIUMS
Sec. 541.302. TIME TO MAKE REFUNDS
Sec. 541.303. SANCTION
Sec. 541.304. EVIDENTIARY USE OF COMPLIANCE OR ATTEMPT
TO COMPLY
[Sections 541.305-541.350 reserved for expansion]
SUBCHAPTER H. ASSURANCE OF VOLUNTARY COMPLIANCE
Sec. 541.351. ACCEPTANCE OF ASSURANCE
Sec. 541.352. EFFECT OF ASSURANCE
Sec. 541.353. REOPENING
Sec. 541.354. RIGHT TO BRING ACTION NOT AFFECTED
[Sections 541.355-541.400 reserved for expansion]
SUBCHAPTER I. RULEMAKING
Sec. 541.401. RULEMAKING AUTHORITY
Sec. 541.402. PETITION
Sec. 541.403. DENIAL OF PETITION
Sec. 541.404. HEARING ON PETITION
Sec. 541.405. JUDICIAL REVIEW OF DEPARTMENT ACTION
[Sections 541.406-541.450 reserved for expansion]
SUBCHAPTER J. CONSTRUCTION OF CHAPTER WITH OTHER LAWS
Sec. 541.451. LIABILITY UNDER OTHER LAW
Sec. 541.452. POWERS IN ADDITION TO OTHER POWERS
AUTHORIZED BY LAW
Sec. 541.453. DOUBLE RECOVERY PROHIBITED
Sec. 541.454. PENALTIES AND RELATED PAYMENTS BY
INSURER
CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 541.001. PURPOSE. The purpose of this chapter is to
regulate trade practices in the business of insurance by:
(1) defining or providing for the determination of
trade practices in this state that are unfair methods of
competition or unfair or deceptive acts or practices; and
(2) prohibiting those trade practices. (V.T.I.C. Art.
21.21, Sec. 1(a).)
Sec. 541.002. DEFINITIONS. In this chapter:
(1) "Knowingly" means actual awareness of the falsity,
unfairness, or deceptiveness of the act or practice on which a claim
for damages under Subchapter D is based. Actual awareness may be
inferred if objective manifestations indicate that a person acted
with actual awareness.
(2) "Person" means an individual, corporation,
association, partnership, reciprocal or interinsurance exchange,
Lloyd's plan, fraternal benefit society, or other legal entity
engaged in the business of insurance, including an agent, broker,
adjuster, or life and health insurance counselor. (V.T.I.C. Art.
21.21, Secs. 2(a), (c).)
Sec. 541.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in
this state in a trade practice that is defined in this chapter as or
determined under this chapter to be an unfair method of competition
or an unfair or deceptive act or practice in the business of
insurance. (V.T.I.C. Art. 21.21, Sec. 3.)
Sec. 541.004. VENUE FOR ACTIONS INVOLVING DEPARTMENT OR
COMMISSIONER. An action under this chapter in which the department
or commissioner is a party must be brought in a district court in
Travis County. (V.T.I.C. Art. 21.21, Sec. 21.)
Sec. 541.005. APPLICABILITY TO RISK RETENTION OR PURCHASING
GROUP. (a) A risk retention group or purchasing group, as those
terms are defined by Section 2, Article 21.54, not chartered in this
state may not engage in a trade practice in this state that is
defined as unlawful under this chapter.
(b) A risk retention group or purchasing group is subject to
this chapter and rules adopted under this chapter. (V.T.I.C. Art.
21.21B.)
Sec. 541.006. PROHIBITED CONTENT OF CERTAIN INSURANCE
POLICIES. Notwithstanding any other provision of this code, it is
unlawful for an insurer engaged in the business of life, accident,
or health insurance to issue or deliver in this state a policy
containing the words "Approved by the Texas Department of
Insurance" or words of a similar meaning. (V.T.I.C. Art. 21.21,
Sec. 9(a).)
Sec. 541.007. IMMUNITY FROM PROSECUTION. (a) This section
applies to a person who requests to be excused from attending and
testifying at a hearing or from producing books, papers, records,
correspondence, or other documents at the hearing on the ground
that the testimony or evidence may:
(1) tend to incriminate the person; or
(2) subject the person to a penalty or forfeiture.
(b) A person who, notwithstanding a request described by
Subsection (a), is directed to provide the testimony or produce the
documents shall comply with that direction. Except as provided by
Subsection (c), the person may not be prosecuted or subjected to a
penalty or forfeiture for or on account of a transaction, matter, or
thing about which the person testifies or produces documents, and
the testimony or documents produced may not be received against the
person in a criminal action, investigation, or proceeding.
(c) A person who complies with a direction to testify or
produce documents is not exempt from prosecution or punishment for
perjury committed while testifying and the testimony or evidence
given or produced is admissible against the person in a criminal
action, investigation, or proceeding concerning the perjury, and
the person is not exempt from the denial, revocation, or suspension
of any license, permission, or authority conferred or to be
conferred under this code.
(d) A person may waive the immunity or privilege granted by
this section by executing, acknowledging, and filing with the
department a statement expressly waiving the immunity or privilege
for a specified transaction, matter, or thing. On filing the
statement:
(1) the testimony or documents produced by the person
in relation to the transaction, matter, or thing may be received by
or produced before a judge or justice or a court, grand jury, or
other tribunal; and
(2) the person is not entitled to immunity or
privilege for the testimony or documents received or produced under
Subdivision (1). (V.T.I.C. Art. 21.21, Sec. 12.)
Sec. 541.008. LIBERAL CONSTRUCTION. This chapter shall be
liberally construed and applied to promote the underlying purposes
as provided by Section 541.001. (V.T.I.C. Art. 21.21, Sec. 1(b).)
[Sections 541.009-541.050 reserved for expansion]
SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR
OR DECEPTIVE ACTS OR PRACTICES DEFINED
Sec. 541.051. MISREPRESENTATION REGARDING POLICY OR
INSURER. It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to:
(1) make, issue, or circulate or cause to be made,
issued, or circulated an estimate, illustration, circular, or
statement misrepresenting with respect to a policy issued or to be
issued:
(A) the terms of the policy;
(B) the benefits or advantages promised by the
policy; or
(C) the dividends or share of surplus to be
received on the policy;
(2) make a false or misleading statement regarding the
dividends or share of surplus previously paid on a similar policy;
(3) make a misleading representation or
misrepresentation regarding:
(A) the financial condition of an insurer; or
(B) the legal reserve system on which a life
insurer operates;
(4) use a name or title of a policy or class of
policies that misrepresents the true nature of the policy or class
of policies; or
(5) make a misrepresentation to a policyholder insured
by any insurer for the purpose of inducing or that tends to induce
the policyholder to allow an existing policy to lapse or to forfeit
or surrender the policy. (V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.052. FALSE INFORMATION AND ADVERTISING. (a) It is
an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to make, publish,
disseminate, circulate, or place before the public or directly or
indirectly cause to be made, published, disseminated, circulated,
or placed before the public an advertisement, announcement, or
statement containing an untrue, deceptive, or misleading
assertion, representation, or statement regarding the business of
insurance or a person in the conduct of the person's insurance
business.
(b) This section applies to an advertisement, announcement,
or statement made, published, disseminated, circulated, or placed
before the public:
(1) in a newspaper, magazine, or other publication;
(2) in a notice, circular, pamphlet, letter, or
poster;
(3) over a radio or television station; or
(4) in any other manner. (V.T.I.C. Art. 21.21, Sec. 4
(part).)
Sec. 541.053. DEFAMATION OF INSURER. (a) It is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to directly or indirectly make, publish,
disseminate, or circulate or to aid, abet, or encourage the making,
publication, dissemination, or circulation of a statement that:
(1) is false, maliciously critical of, or derogatory
to the financial condition of an insurer; and
(2) is calculated to injure a person engaged in the
business of insurance.
(b) This section applies to any oral or written statement,
including a statement in any pamphlet, circular, article, or
literature. (V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.054. BOYCOTT, COERCION, OR INTIMIDATION. It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to commit through concerted
action or to enter into an agreement to commit an act of boycott,
coercion, or intimidation that results in or tends to result in the
unreasonable restraint of or a monopoly in the business of
insurance. (V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.055. FALSE FINANCIAL STATEMENT. (a) It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to, with intent to deceive:
(1) file with a supervisory or other public official a
false statement of financial condition of an insurer; or
(2) make, publish, disseminate, circulate, deliver to
any person, or place before the public or directly or indirectly
cause to be made, published, disseminated, circulated, delivered to
any person, or placed before the public a false statement of
financial condition of an insurer.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to make a
false entry in an insurer's book, report, or statement or wilfully
omit to make a true entry of a material fact relating to the
insurer's business in the insurer's book, report, or statement with
intent to deceive:
(1) an agent or examiner lawfully appointed to examine
the insurer's condition or affairs; or
(2) a public official to whom the insurer is required
by law to report or who has authority by law to examine the
insurer's condition or affairs. (V.T.I.C. Art. 21.21, Sec. 4
(part).)
Sec. 541.056. PROHIBITED REBATES AND INDUCEMENTS. (a)
Subject to Section 541.058 and except as otherwise expressly
provided by law, it is an unfair method of competition or an unfair
or deceptive act or practice in the business of insurance to
knowingly permit the making of, offer to make, or make a life
insurance contract, life annuity contract, or accident and health
insurance contract or an agreement regarding the contract, other
than as plainly expressed in the issued contract, or directly or
indirectly pay, give, or allow or offer to pay, give, or allow as
inducement to enter into a life insurance contract, life annuity
contract, or accident and health insurance contract a rebate of
premiums payable on the contract, a special favor or advantage in
the dividends or other benefits of the contract, or a valuable
consideration or inducement not specified in the contract, or give,
sell, or purchase or offer to give, sell, or purchase in connection
with a life insurance, life annuity, or accident and health
insurance contract or as inducement to enter into the contract
stocks, bonds, or other securities of an insurer or other
corporation, association, or partnership, dividends or profits
accrued from the stocks, bonds, or securities, or anything of value
not specified in the contract.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to issue or
deliver or to permit an agent, officer, or employee to issue or
deliver as an inducement to insurance:
(1) company stock or other capital stock;
(2) a benefit certificate or share in a corporation;
(3) securities; or
(4) a special or advisory board contract or any other
contract promising returns or profits.
(c) Subsection (b) does not prohibit issuing or delivering a
participating insurance policy otherwise authorized by law.
(V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.057. UNFAIR DISCRIMINATION IN LIFE INSURANCE AND
ANNUITY CONTRACTS. Subject to Section 541.058, it is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to make or permit with respect to a life
insurance or life annuity contract an unfair discrimination between
individuals of the same class and equal life expectancy regarding:
(1) the rates charged;
(2) the dividends or other benefits payable; or
(3) any of the other terms and conditions of the
contract. (V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.058. CERTAIN PRACTICES NOT CONSIDERED
DISCRIMINATION OR INDUCEMENT. It is not a rebate or discrimination
prohibited by Section 541.056(a) or 541.057:
(1) for a life insurance or life annuity contract, to
pay a bonus to a policyholder or otherwise abate the policyholder's
premiums in whole or in part out of surplus accumulated from
nonparticipating insurance policies if the bonus or abatement:
(A) is fair and equitable to policyholders; and
(B) is in the best interests of the insurer and
its policyholders;
(2) for a life insurance policy issued on the
industrial debit plan, to make to a policyholder who has
continuously for a specified period made premium payments directly
to the insurer's office an allowance in an amount that fairly
represents the saving in collection expenses;
(3) for a group insurance policy, to readjust the rate
of premium based on the loss or expense experience under the policy
at the end of a policy year if the adjustment is retroactive for
only that policy year; or
(4) for a life annuity contract, to waive surrender
charges under the contract when the contract holder exchanges that
contract for another annuity contract issued by the same insurer if
the waiver and the exchange are fully, fairly, and accurately
explained to the contract holder in a manner that is not deceptive
or misleading. (V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.059. DECEPTIVE NAME, WORD, SYMBOL, DEVICE, OR
SLOGAN. (a) Except as provided by Subsection (b), it is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to use, display, publish, circulate,
distribute, or cause to be used, displayed, published, circulated,
or distributed in a letter, pamphlet, circular, contract, policy,
evidence of coverage, article, poster, or other document,
literature, or public media:
(1) a name as the corporate or business name of a
person or entity engaged in the business of insurance or in an
insurance-related business in this state that is the same as or
deceptively similar to the name adopted and used by an insurance
entity, health maintenance organization, third-party
administrator, or group hospital service corporation authorized to
engage in business under the laws of this state; or
(2) a word, symbol, device, or slogan, either alone or
in combination and regardless of whether registered, and including
the titles, designations, character names, and distinctive
features of broadcast or other advertising, that is the same as or
deceptively similar to a word, symbol, device, or slogan adopted
and used by an insurance entity, health maintenance organization,
third-party administrator, or group hospital service corporation
to distinguish the entity or the entity's products or services from
another entity.
(b) If more than one person or entity uses names, words,
symbols, devices, or slogans, either alone or in combination, that
are the same or deceptively similar and are likely to cause
confusion or mistake, the person or entity that demonstrates the
first continuous actual use of the name, word, symbol, device,
slogan, or combination has not engaged in an unfair method of
competition or deceptive act or practice under this section.
(V.T.I.C. Art. 21.21, Sec. 4 (part).)
Sec. 541.060. UNFAIR SETTLEMENT PRACTICES. (a) It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to engage in the following
unfair settlement practices with respect to a claim by an insured or
beneficiary:
(1) misrepresenting to a claimant a material fact or
policy provision relating to coverage at issue;
(2) failing to attempt in good faith to effectuate a
prompt, fair, and equitable settlement of:
(A) a claim with respect to which the insurer's
liability has become reasonably clear; or
(B) a claim under one portion of a policy with
respect to which the insurer's liability has become reasonably
clear to influence the claimant to settle another claim under
another portion of the coverage unless payment under one portion of
the coverage constitutes evidence of liability under another
portion;
(3) failing to promptly provide to a policyholder a
reasonable explanation of the basis in the policy, in relation to
the facts or applicable law, for the insurer's denial of a claim or
offer of a compromise settlement of a claim;
(4) failing within a reasonable time to:
(A) affirm or deny coverage of a claim to a
policyholder; or
(B) submit a reservation of rights to a
policyholder;
(5) refusing, failing, or unreasonably delaying a
settlement offer under applicable first-party coverage on the basis
that other coverage may be available or that third parties are
responsible for the damages suffered, except as may be specifically
provided in the policy;
(6) undertaking to enforce a full and final release of
a claim from a policyholder when only a partial payment has been
made, unless the payment is a compromise settlement of a doubtful or
disputed claim;
(7) refusing to pay a claim without conducting a
reasonable investigation with respect to the claim;
(8) with respect to a Texas personal automobile
insurance policy, delaying or refusing settlement of a claim solely
because there is other insurance of a different kind available to
satisfy all or part of the loss forming the basis of that claim; or
(9) requiring a claimant as a condition of settling a
claim to produce the claimant's federal income tax returns for
examination or investigation by the person unless:
(A) a court orders the claimant to produce those
tax returns;
(B) the claim involves a fire loss; or
(C) the claim involves lost profits or income.
(b) Subsection (a) does not provide a cause of action to a
third party asserting one or more claims against an insured covered
under a liability insurance policy. (V.T.I.C. Art. 21.21, Sec. 4
(part).)
Sec. 541.061. MISREPRESENTATION OF INSURANCE POLICY. It is
an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to misrepresent an insurance
policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make
other statements made not misleading, considering the
circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a
reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be
disclosed, including failing to make a disclosure in accordance
with another provision of this code. (V.T.I.C. Art. 21.21, Sec. 4
(part).)
[Sections 541.062-541.100 reserved for expansion]
SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF COMPETITION
AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES;
SANCTIONS AND PENALTIES
Sec. 541.101. EXAMINATION AND INVESTIGATION. The
department may examine and investigate the affairs of a person
engaged in the business of insurance in this state to determine
whether the person has or is engaged in an unfair method of
competition or unfair or deceptive act or practice prohibited by
Section 541.003. (V.T.I.C. Art. 21.21, Sec. 5.)
Sec. 541.102. STATEMENT OF CHARGES; NOTICE OF HEARING. (a)
When the department has reason to believe that a person engaged in
the business of insurance in this state has engaged or is engaging
in this state in an unfair method of competition or unfair or
deceptive act or practice defined by Subchapter B and that a
proceeding by the department regarding the charges is in the
interest of the public, the department shall issue and serve on the
person:
(1) a statement of the charges; and
(2) a notice of the hearing on the charges, including
the time and place for the hearing.
(b) The department may not hold the hearing before the sixth
day after the date the notice is served. (V.T.I.C. Art. 21.21, Sec.
6(a).)
Sec. 541.103. HEARING. A person against whom charges are
made under Section 541.102 is entitled at the hearing on the charges
to have an opportunity to be heard and show cause why the department
should not issue an order requiring the person to cease and desist
from the unfair method of competition or unfair or deceptive act or
practice described in the charges. (V.T.I.C. Art. 21.21, Sec. 6(b)
(part).)
Sec. 541.104. HEARING PROCEDURES. (a) Nothing in this
chapter requires the observance of formal rules of pleading or
evidence at a hearing under this subchapter.
(b) At a hearing under this subchapter, the department, on a
showing of good cause, shall permit any person to intervene,
appear, and be heard by counsel or in person. (V.T.I.C. Art. 21.21,
Secs. 6(b) (part), (c).)
Sec. 541.105. RECORD OF HEARING. (a) At a hearing under
this subchapter, the department may, and at the request of a party
to the hearing shall, make a stenographic record of the proceedings
and the evidence presented at the hearing.
(b) If the department does not make a stenographic record
and a person seeks judicial review of the decision made at the
hearing, the department shall prepare a statement of the evidence
and proceeding for use on review. (V.T.I.C. Art. 21.21, Sec. 6(d)
(part).)
Sec. 541.106. COMPLIANCE WITH SUBPOENA. (a) If a person
refuses to comply with a subpoena issued in connection with a
hearing under this subchapter or refuses to testify with respect to
a matter about which the person may be lawfully interrogated, on
application of the department, a district court in Travis County or
in the county in which the person resides may order the person to
comply with the subpoena or testify.
(b) A court may punish as contempt a person's failure to
obey an order under this section. (V.T.I.C. Art. 21.21, Sec. 6(d)
(part).)
Sec. 541.107. DETERMINATION OF VIOLATION. After a hearing
under this subchapter, the department shall determine whether:
(1) the method of competition or the act or practice
considered in the hearing is defined as:
(A) an unfair method of competition or deceptive
act or practice under Subchapter B or a rule adopted under this
chapter; or
(B) a false, misleading, or deceptive act or
practice under Section 17.46, Business & Commerce Code; and
(2) the person against whom the charges were made
engaged in the method of competition or act or practice in violation
of:
(A) this chapter or a rule adopted under this
chapter; or
(B) Subchapter E, Chapter 17, Business & Commerce
Code, as specified in Section 17.46, Business & Commerce Code.
(V.T.I.C. Art. 21.21, Sec. 7(a) (part).)
Sec. 541.108. CEASE AND DESIST ORDER. On determining that a
person committed a violation described by Section 541.107, the
department shall:
(1) make written findings; and
(2) issue and serve on the person an order requiring
the person to cease and desist from engaging in the method of
competition or act or practice determined to be a violation.
(V.T.I.C. Art. 21.21, Sec. 7(a) (part).)
Sec. 541.109. MODIFICATION OR SETTING ASIDE OF ORDER. On
the notice and in the manner the department determines proper, the
department may modify or set aside in whole or in part a cease and
desist order issued under Section 541.108 at any time before a
petition appealing the order is filed in accordance with Subchapter
D, Chapter 36. (V.T.I.C. Art. 21.21, Sec. 7(b).)
Sec. 541.110. ADMINISTRATIVE PENALTY. (a) A person who
violates a cease and desist order issued under Section 541.108 is
subject to an administrative penalty under Chapter 84.
(b) In determining whether a person has violated a cease and
desist order, the department shall consider the maintenance of
procedures reasonably adapted to ensure compliance with the order.
(c) An administrative penalty imposed under this section
may not exceed:
(1) $1,000 for each violation; or
(2) $5,000 for all violations.
(d) An order of the department imposing an administrative
penalty under this section applies only to a violation of the cease
and desist order committed before the date the order imposing the
penalty is issued. (V.T.I.C. Art. 21.21, Secs. 7(c), (d).)
Sec. 541.111. CIVIL PENALTY FOR VIOLATION OF CEASE AND
DESIST ORDER. (a) A person who is found by a court to have violated
a cease and desist order issued under Section 541.108 is liable to
the state for a penalty. The state may recover the penalty in a
civil action.
(b) The penalty may not exceed $50 unless the court finds
the violation to be wilful, in which case the penalty may not exceed
$500. (V.T.I.C. Art. 21.21, Sec. 10.)
[Sections 541.112-541.150 reserved for expansion]
SUBCHAPTER D. PRIVATE ACTION FOR DAMAGES
Sec. 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED. A
person who sustains actual damages may bring an action against
another person for those damages caused by the other person
engaging in an act or practice:
(1) defined by Subchapter B to be an unfair method of
competition or an unfair or deceptive act or practice in the
business of insurance; or
(2) specifically enumerated in Section 17.46(b),
Business & Commerce Code, as an unlawful deceptive trade practice
if the person bringing the action shows that the person relied on
the act or practice to the person's detriment. (V.T.I.C. Art.
21.21, Sec. 16(a).)
Sec. 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER RELIEF.
(a) A plaintiff who prevails in an action under this subchapter may
obtain:
(1) the amount of actual damages, plus court costs and
reasonable and necessary attorney's fees;
(2) an order enjoining the act or failure to act
complained of; or
(3) any other relief the court determines is proper.
(b) On a finding by the trier of fact that the defendant
knowingly committed the act complained of, the trier of fact may
award an amount not to exceed three times the amount of actual
damages. (V.T.I.C. Art. 21.21, Sec. 16(b).)
Sec. 541.153. FRIVOLOUS ACTION. A court shall award to the
defendant court costs and reasonable and necessary attorney's fees
if the court finds that an action under this subchapter is
groundless and brought in bad faith or brought for the purpose of
harassment. (V.T.I.C. Art. 21.21, Sec. 16(c).)
Sec. 541.154. PRIOR NOTICE OF ACTION. (a) A person seeking
damages in an action against another person under this subchapter
must provide written notice to the other person not later than the
61st day before the date the action is filed.
(b) The notice must advise the other person of:
(1) the specific complaint; and
(2) the amount of actual damages and expenses,
including attorney's fees reasonably incurred in asserting the
claim against the other person.
(c) The notice is not required if giving notice is
impracticable because the action:
(1) must be filed to prevent the statute of
limitations from expiring; or
(2) is asserted as a counterclaim. (V.T.I.C. Art.
21.21, Secs. 16(e), (f).)
Sec. 541.155. ABATEMENT. (a) A person against whom an
action under this subchapter is pending who does not receive the
notice as required by Section 541.154 may file a plea in abatement
not later than the 30th day after the date the person files an
original answer in the court in which the action is pending.
(b) The court shall abate the action if, after a hearing,
the court finds that the person is entitled to an abatement because
the claimant did not provide the notice as required by Section
541.154.
(c) An action is automatically abated without a court order
beginning on the 11th day after the date a plea in abatement is
filed if the plea:
(1) is verified and alleges that the person against
whom the action is pending did not receive the notice as required by
Section 541.154; and
(2) is not controverted by an affidavit filed by the
claimant before the 11th day after the date the plea in abatement is
filed.
(d) An abatement under this section continues until the 60th
day after the date notice is provided in compliance with Section
541.154.
(e) This section does not apply if Section 541.154(c)
applies. (V.T.I.C. Art. 21.21, Secs. 16(g), (h), (i).)
Sec. 541.156. SETTLEMENT OFFER. (a) A person who receives
notice provided under Section 541.154 may make a settlement offer
during a period beginning on the date notice under Section 541.154
is received and ending on the 60th day after that date.
(b) In addition to the period described by Subsection (a),
the person may make a settlement offer during a period:
(1) if mediation is not conducted under Section
541.161, beginning on the date an original answer is filed in the
action and ending on the 90th day after that date; or
(2) if mediation is conducted under Section 541.161,
beginning on the day after the date the mediation ends and ending on
the 20th day after that date. (V.T.I.C. Art. 21.21, Secs. 16A(a),
(b), (c).)
Sec. 541.157. CONTENTS OF SETTLEMENT OFFER. A settlement
offer made by a person against whom a claim under this subchapter is
pending must include an offer to pay the following amounts,
separately stated:
(1) an amount of money or other consideration, reduced
to its cash value, as settlement of the claim for damages; and
(2) an amount of money to compensate the claimant for
the claimant's reasonable and necessary attorney's fees incurred as
of the date of the offer. (V.T.I.C. Art. 21.21, Sec. 16A(d).)
Sec. 541.158. REJECTION OF SETTLEMENT OFFER. (a) A
settlement offer is rejected unless both parts of the offer
required under Section 541.157 are accepted by the claimant not
later than the 30th day after the date the offer is made.
(b) A settlement offer made by a person against whom a claim
under this subchapter is pending that complies with this subchapter
and is rejected by the claimant may be filed with the court
accompanied by an affidavit certifying the offer's rejection.
(V.T.I.C. Art. 21.21, Secs. 16A(e), (f).)
Sec. 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT OFFER.
(a) If the court finds that the amount stated in the settlement
offer for damages under Section 541.157(1) is the same as,
substantially the same as, or more than the amount of damages found
by the trier of fact, the claimant may not recover as damages any
amount in excess of the lesser of:
(1) the amount of damages stated in the offer; or
(2) the amount of damages found by the trier of fact.
(b) If the court makes the finding described by Subsection
(a), the court shall determine reasonable and necessary attorney's
fees to compensate the claimant for attorney's fees incurred before
the date and time the rejected settlement offer was made. If the
court finds that the amount stated in the offer for attorney's fees
under Section 541.157(2) is the same as, substantially the same as,
or more than the amount of reasonable and necessary attorney's fees
incurred by the claimant as of the date of the offer, the claimant
may not recover any amount of attorney's fees in excess of the
amount of fees stated in the offer.
(c) This section does not apply if the court finds that the
offering party:
(1) could not perform the offer at the time the offer
was made; or
(2) substantially misrepresented the cash value of the
offer.
(d) The court shall award:
(1) damages as required by Section 541.152 if
Subsection (a) does not apply; and
(2) attorney's fees as required by Section 541.152 if
Subsection (b) does not apply. (V.T.I.C. Art. 21.21, Secs. 16A(g),
(h), (i), (j).)
Sec. 541.160. EFFECT OF SETTLEMENT OFFER. A settlement
offer is not an admission of engaging in an act or practice defined
by Subchapter B to be an unfair method of competition or an unfair
or deceptive act or practice in the business of insurance.
(V.T.I.C. Art. 21.21, Sec. 16A(k).)
Sec. 541.161. MEDIATION. (a) A party may, not later than
the 90th day after the date a pleading seeking relief under this
subchapter is served, file a motion to compel mediation of the
dispute in the manner provided by this section.
(b) The court shall, not later than the 30th day after the
date a motion under this section is filed, sign an order setting the
time and place of the mediation.
(c) The court shall appoint a mediator if the parties do not
agree on a mediator.
(d) The mediation must be held not later than the 30th day
after the date the order is signed, unless:
(1) the parties agree otherwise; or
(2) the court determines that additional time not to
exceed 30 days is warranted.
(e) Each party who has appeared in the action, except as
agreed to by all parties who have appeared, shall:
(1) participate in the mediation; and
(2) except as provided by Subsection (f), share the
mediation fee.
(f) A party may not compel mediation under this section if
the amount of actual damages claimed is less than $15,000 unless the
party seeking to compel mediation agrees to pay the costs of the
mediation.
(g) Except as provided by this section, the following apply
to the appointment of a mediator and the mediation process provided
by this section:
(1) Section 154.023, Civil Practice and Remedies Code;
and
(2) Subchapters C and D, Chapter 154, Civil Practice
and Remedies Code. (V.T.I.C. Art. 21.21, Sec. 16B.)
Sec. 541.162. LIMITATIONS PERIOD. (a) A person must bring
an action under this chapter before the second anniversary of the
following:
(1) the date the unfair method of competition or
unfair or deceptive act or practice occurred; or
(2) the date the person discovered or, by the exercise
of reasonable diligence, should have discovered that the unfair
method of competition or unfair or deceptive act or practice
occurred.
(b) The limitations period provided by Subsection (a) may be
extended for 180 days if the person bringing the action proves that
the person's failure to bring the action within that period was
caused by the defendant's engaging in conduct solely calculated to
induce the person to refrain from or postpone bringing the action.
(V.T.I.C. Art. 21.21, Sec. 16(d).)
[Sections 541.163-541.200 reserved for expansion]
SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL
Sec. 541.201. INJUNCTIVE RELIEF. (a) The attorney general
may bring an action under this section if the attorney general has
reason to believe that:
(1) a person engaged in the business of insurance in
this state is engaging in, has engaged in, or is about to engage in
an act or practice defined as unlawful under:
(A) this chapter or a rule adopted under this
chapter; or
(B) Section 17.46, Business & Commerce Code; and
(2) the action is in the public interest.
(b) The attorney general may bring the action in the name of
the state to restrain by temporary or permanent injunction the
person's use of the method, act, or practice. (V.T.I.C. Art. 21.21,
Sec. 15(a).)
Sec. 541.202. VENUE FOR INJUNCTIVE ACTION. An action for an
injunction under this subchapter may be commenced in a district
court in:
(1) the county in which the person against whom the
action is brought:
(A) resides;
(B) has the person's principal place of business;
or
(C) is engaging in business;
(2) the county in which the transaction or a
substantial portion of the transaction occurred; or
(3) Travis County. (V.T.I.C. Art. 21.21, Sec. 15(b)
(part).)
Sec. 541.203. ISSUANCE OF INJUNCTION. (a) The court may
issue an appropriate temporary or permanent injunction.
(b) The court shall issue the injunction without bond.
(V.T.I.C. Art. 21.21, Sec. 15(b) (part).)
Sec. 541.204. CIVIL PENALTY. In addition to requesting a
temporary or permanent injunction under Section 541.201, the
attorney general may request a civil penalty of not more than
$10,000 for each violation on a finding by the court that the
defendant has engaged in or is engaging in an act or practice
defined as unlawful under:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(V.T.I.C. Art. 21.21, Sec. 15(c).)
Sec. 541.205. COMPENSATION OR RESTORATION. The court may
make an additional order or judgment as necessary to compensate an
identifiable person for actual damages or for restoration of money
or property that may have been acquired by means of an enjoined act
or practice. (V.T.I.C. Art. 21.21, Sec. 15(d).)
Sec. 541.206. CIVIL PENALTY FOR VIOLATION OF INJUNCTION.
(a) A person who violates an injunction issued under this
subchapter is liable for and shall pay to the state a civil penalty
of not more than $10,000 for each violation.
(b) The attorney general may, in the name of the state,
petition the court for recovery of the civil penalty against the
person who violates the injunction.
(c) The court shall consider the maintenance of procedures
reasonably adapted to ensure compliance with the injunction in
determining whether a person has violated an injunction.
(d) The court issuing the injunction retains jurisdiction
and the cause is continued for the purpose of assessing a civil
penalty under this section. (V.T.I.C. Art. 21.21, Sec. 15(e).)
Sec. 541.207. REMEDIES NOT EXCLUSIVE. The remedies
provided by this subchapter are:
(1) not exclusive; and
(2) in addition to any other remedy or procedure
provided by another law or at common law. (V.T.I.C. Art. 21.21,
Sec. 15(f).)
[Sections 541.208-541.250 reserved for expansion]
SUBCHAPTER F. CLASS ACTIONS BY ATTORNEY GENERAL OR
PRIVATE INDIVIDUAL
Sec. 541.251. CLASS ACTION AUTHORIZED. (a) If a member of
the insurance buying public has been damaged by an unlawful method,
act, or practice defined in Subchapter B as an unlawful deceptive
trade practice, the department may request the attorney general to
bring a class action or the individual damaged may bring an action
on the individual's own behalf and on behalf of others similarly
situated to recover damages and obtain relief as provided by this
subchapter.
(b) A class action may not be maintained under this
subchapter if the department and attorney general have initiated an
action under Subchapter G or an action under that subchapter has
resulted in a final determination regarding the same act or
practice and the same defendant in the action under this
subchapter. (V.T.I.C. Art. 21.21, Secs. 17(a), (e).)
Sec. 541.252. RECOVERY. A plaintiff who prevails in a class
action under this subchapter may recover:
(1) court costs and attorney's fees reasonable in
relation to the amount of work expended in addition to actual
damages;
(2) an order enjoining the act or failure to act; and
(3) any other relief the court determines is proper.
(V.T.I.C. Art. 21.21, Sec. 17(b).)
Sec. 541.253. FRIVOLOUS ACTION. The court may award to the
defendant court costs and reasonable attorney's fees in relation to
the work expended on a finding by the court that a class action
under this subchapter was brought by an individual plaintiff in bad
faith or for the purpose of harassment. (V.T.I.C. Art. 21.21, Sec.
17(c).)
Sec. 541.254. STATUTE OF LIMITATIONS TOLLED. The filing of
a class action under this subchapter tolls the statute of
limitations for bringing an action by an individual under Section
541.162. (V.T.I.C. Art. 21.21, Sec. 18(k) (part).)
Sec. 541.255. PRIOR NOTICE. (a) Not later than the 31st
day before the date a class action for damages is commenced under
this subchapter, the prospective plaintiff must:
(1) notify the intended defendant of the complaint;
and
(2) demand that the defendant provide relief to the
prospective plaintiff and others similarly situated.
(b) The notice must be in writing and be sent by certified or
registered mail, return receipt requested, to:
(1) the place where the transaction occurred;
(2) the intended defendant's principal place of
business in this state; or
(3) if notice to the place described by Subdivision
(1) or (2) does not effect notice, the office of the secretary of
state.
(c) A copy of the notice must also be sent to the
commissioner.
(d) A class action for injunctive relief may be commenced
under this subchapter without complying with Subsection (a).
(e) A plaintiff in a class action for injunctive relief
under this subchapter may, on or after the 31st day after the date
the action is commenced and after complying with Subsection (a),
amend the complaint without leave of court to include a request for
damages. (V.T.I.C. Art. 21.21, Secs. 19(a), (b), (c).)
Sec. 541.256. PREREQUISITES TO CLASS ACTION. The court
shall permit one or more members of a class to sue or be sued as
representative parties on behalf of the class only if:
(1) the class is so numerous that joinder of all
members is impracticable;
(2) there are questions of law or fact common to the
class;
(3) the claims or defenses of the representative
parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and
adequately protect the interests of the class. (V.T.I.C. Art.
21.21, Sec. 18(a).)
Sec. 541.257. CLASS ACTIONS MAINTAINABLE. (a) An action
may be maintained as a class action under this subchapter if the
prerequisites of Section 541.256 are satisfied and, in addition:
(1) the prosecution of separate actions by or against
individual members of the class would create a risk of:
(A) inconsistent or varying adjudications with
respect to individual members of the class that would establish
incompatible standards of conduct for the party opposing the class;
or
(B) adjudication with respect to individual
members of the class that would as a practical matter be dispositive
of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to
protect their interests;
(2) the party opposing the class has acted or refused
to act on grounds generally applicable to the class, making
appropriate final injunctive relief or corresponding declaratory
relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact
common to the members of the class predominate over any questions
affecting only individual members and that a class action is
superior to other available methods for the fair and efficient
adjudication of the controversy.
(b) Matters pertinent to a finding under Subsection (a)(3)
include:
(1) the interest of members of the class in
individually controlling the prosecution or defense of separate
actions;
(2) the extent and nature of any litigation concerning
the controversy already commenced by or against members of the
class;
(3) the desirability or undesirability of
concentrating the litigation of the claims in the particular forum;
and
(4) the difficulties likely to be encountered in the
management of a class action.
(c) In construing this section, the courts of this state
shall be guided by the decisions of the federal courts interpreting
Rule 23, Federal Rules of Civil Procedure, as amended. (V.T.I.C.
Art. 21.21, Secs. 18(b), (c).)
Sec. 541.258. CLASS ACTIONS: ISSUES AND SUBCLASSES
AUTHORIZED. When appropriate, an action may be brought or
maintained as a class action under this subchapter with respect to
particular issues or a class may be divided into subclasses and each
subclass treated as a class, and the provisions of this subchapter
shall be construed and applied accordingly. (V.T.I.C. Art. 21.21,
Sec. 18(h).)
Sec. 541.259. DETERMINATION REGARDING WHETHER CLASS ACTION
MAY BE MAINTAINED. (a) As soon as practicable after the
commencement of an action brought as a class action, the court shall
determine by order whether it is to be maintained as a class action
under this subchapter.
(b) An order under this section may be altered or amended
before a decision on the merits.
(c) An order determining whether the action may be
maintained as a class action under this subchapter is an
interlocutory order that is appealable. The procedures applicable
to accelerated appeals in the Texas Rules of Appellate Procedure
apply to the appeal. (V.T.I.C. Art. 21.21, Sec. 18(d).)
Sec. 541.260. EFFECT OF DENIAL OF CLASS ACTION. A court
order denying that an action under this subchapter may be brought as
a class action does not affect whether an individual may bring the
same or a similar action under Subchapter D. (V.T.I.C. Art. 21.21,
Sec. 18(k) (part).)
Sec. 541.261. NOTICE OF CLASS ACTION. (a) If an action is
permitted as a class action under this subchapter, the court shall
direct to the members of the class the best notice practicable under
the circumstances, including individual notice to all members who
can be identified through reasonable effort.
(b) The notice must contain a statement that:
(1) the court will exclude from the class a notified
member if the member requests exclusion by a specified date;
(2) the judgment, whether favorable or not, includes
all members who do not request exclusion; and
(3) a member who does not request exclusion may enter
an appearance through counsel. (V.T.I.C. Art. 21.21, Secs. 18(e),
(f).)
Sec. 541.262. PROCEDURES IN CLASS ACTION. In a class action
under this subchapter, the court may make appropriate orders:
(1) determining the course of proceedings or
prescribing measures to prevent undue repetition or complication in
the presentation of evidence or argument;
(2) requiring, for the protection of the members of
the class or otherwise for the fair conduct of the action, that
notice be given in a manner the court directs to some or all of the
members or the attorney general of:
(A) any step in the action;
(B) the proposed extent of the judgment; or
(C) the opportunity for members to:
(i) signify whether the members consider
the representation to be fair and adequate;
(ii) intervene and present claims or
defenses; or
(iii) otherwise come into the action;
(3) imposing conditions on the representative parties
or intervenors;
(4) requiring that the pleadings be amended to
eliminate allegations relating to representation of absent
persons, and that the action proceed accordingly; or
(5) dealing with similar procedural matters.
(V.T.I.C. Art. 21.21, Sec. 18(j).)
Sec. 541.263. EFFECT OF SETTLEMENT OFFER. (a) Damages may
not be awarded to a class under this subchapter if, not later than
the 30th day after the date the intended defendant receives notice
under Section 541.255, the intended defendant provides to the
plaintiff by certified or registered mail, return receipt
requested, a written settlement offer.
(b) The settlement offer must include:
(1) a statement that all persons similarly situated
have been adequately identified or a reasonable effort to identify
those persons has been made;
(2) a description of the class identified and the
method used to identify that class;
(3) a statement that all persons identified have been
notified that, on request, the intended defendant will provide
relief to those persons and all others similarly situated;
(4) a complete explanation of the relief being
afforded;
(5) a copy of the notice or communication the intended
defendant is providing to the members of the class;
(6) a statement that the relief being afforded the
consumer has been or, if the offer is accepted by the consumer, will
be given within a stated reasonable time; and
(7) a statement that the practice complained of has
ceased.
(c) Except as provided by Subsection (d), an attempt to
comply with this section by a person receiving a demand is:
(1) an offer to compromise;
(2) not admissible as evidence; and
(3) not an admission of engaging in an unlawful act or
practice.
(d) A defendant may introduce evidence of compliance or an
attempt to comply with this section for the purpose of:
(1) establishing good faith; or
(2) showing compliance with this section. (V.T.I.C.
Art. 21.21, Secs. 19(d), (e).)
Sec. 541.264. DEFENSES. Damages may not be awarded in a
class action under this subchapter if the defendant:
(1) proves that the action complained of resulted from
a bona fide error, notwithstanding the use of reasonable procedures
adopted to avoid an error; and
(2) made restitution of any consideration received
from any member of the class. (V.T.I.C. Art. 21.21, Sec. 20.)
Sec. 541.265. LIMITATIONS PERIOD FOR DAMAGES. In a class
action under this subchapter, damages may not include any damages
incurred more than two years before the date the action is
commenced. (V.T.I.C. Art. 21.21, Sec. 17(d).)
Sec. 541.266. DISPOSITION. (a) A class action under this
subchapter may not be dismissed, settled, or compromised without
the approval of the court.
(b) Notice of the proposed dismissal, settlement, or
compromise shall be given to all members of the class in the manner
the court directs. (V.T.I.C. Art. 21.21, Sec. 18(g).)
Sec. 541.267. CONTENTS OF JUDGMENT; NOTICE. (a) The
judgment in a class action under this subchapter must describe
those to whom the notice under Section 541.261 was directed and who
have not requested exclusion and those the court finds to be members
of the class.
(b) The court shall direct to the members of the class the
best notice of the judgment practicable under the circumstances,
including individual notice to each member who can be identified
through reasonable effort. (V.T.I.C. Art. 21.21, Sec. 18(i).)
[Sections 541.268-541.300 reserved for expansion]
SUBCHAPTER G. DEPARTMENT ACTION FOR REFUND OF PREMIUMS
Sec. 541.301. REFUND OF PREMIUMS. (a) After notice and
hearing as provided in Subchapter C, the department may require a
person to make an accounting under Subsection (b):
(1) in connection with a method of competition or act
or practice that is the basis of a cease and desist order issued
under Section 541.108; or
(2) on application of an aggrieved person, in
connection with a determination by the department that the
aggrieved person and other persons similarly situated were induced
to purchase an insurance policy as a result of the person engaging
in a method of competition or act or practice in violation of:
(A) this chapter or a rule adopted under this
chapter; or
(B) Section 17.46, Business & Commerce Code.
(b) A person required to make an accounting under this
section must account for all premiums collected for policies issued
by the person during the preceding two years in connection with the
acts in violation of this chapter described by Subsection (a)(1) or
(2).
(c) The department may require the person described by
Subsection (a) to:
(1) give notice to all persons from whom the premiums
were collected; and
(2) refund the total of all premiums collected from
each person who elects to accept a premium refund in exchange for
cancellation of the insurance policy issued.
(d) A person who refunds premiums under this section shall
deduct from the amount of premiums refunded the amount of benefits
actually paid by the person while the insurance policy was in force.
(V.T.I.C. Art. 21.21, Sec. 14(a) (part).)
Sec. 541.302. TIME TO MAKE REFUNDS. The department shall
specify a reasonable time within which a person required to make
premium refunds under Section 541.301 must make the refunds.
(V.T.I.C. Art. 21.21, Sec. 14(a) (part).)
Sec. 541.303. SANCTION. (a) The department may report to
the attorney general a person's failure to comply with the
department's requirement to refund premiums within the time
specified under Section 541.302. The department may request that
the attorney general file an action to enforce the department's
requirement to refund premiums.
(b) Venue for the action is in a district court in Travis
County.
(c) The court shall enter an appropriate order to enforce
the department's requirement to refund premiums if the court finds
that:
(1) the requirement was lawfully entered; and
(2) the person failed to comply with the requirement.
(d) The court may enforce its order through contempt
proceedings.
(e) The sanction provided by this section is in addition to
any other sanctions provided in this code or other applicable laws.
(V.T.I.C. Art. 21.21, Sec. 14(b).)
Sec. 541.304. EVIDENTIARY USE OF COMPLIANCE OR ATTEMPT TO
COMPLY. (a) Compliance or an attempt to comply with the
department's requirement to refund premiums is:
(1) an offer to compromise;
(2) not admissible as evidence; and
(3) not an admission of engaging in an unlawful act or
practice.
(b) A defendant may introduce evidence of compliance or an
attempt to comply with the department's requirement for the purpose
of:
(1) establishing good faith; or
(2) showing compliance with the department's
requirement. (V.T.I.C. Art. 21.21, Sec. 14(c).)
[Sections 541.305-541.350 reserved for expansion]
SUBCHAPTER H. ASSURANCE OF VOLUNTARY COMPLIANCE
Sec. 541.351. ACCEPTANCE OF ASSURANCE. (a) In
administering this chapter, the department may accept assurance of
voluntary compliance from a person who is engaging in, has engaged
in, or is about to engage in an act or practice in violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(b) The assurance must be in writing and be filed with the
department.
(c) The department may condition acceptance of an assurance
of voluntary compliance on the stipulation that the person offering
the assurance restore to a person in interest money that may have
been acquired by the act or practice described in Subsection (a).
(V.T.I.C. Art. 21.21, Secs. 22(a), (b).)
Sec. 541.352. EFFECT OF ASSURANCE. (a) An assurance of
voluntary compliance is not an admission of a prior violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(b) Unless an assurance of voluntary compliance is
rescinded by agreement, a subsequent failure to comply with the
assurance is prima facie evidence of a violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(V.T.I.C. Art. 21.21, Sec. 22(c).)
Sec. 541.353. REOPENING. A matter closed by the filing of
an assurance of voluntary compliance may be reopened at any time.
(V.T.I.C. Art. 21.21, Sec. 22(d) (part).)
Sec. 541.354. RIGHT TO BRING ACTION NOT AFFECTED. An
assurance of voluntary compliance does not affect the right of an
individual to bring an action under this chapter, except that the
right of an individual in relation to money received according to a
stipulation under Section 541.351(c) is governed by the terms of
the assurance. (V.T.I.C. Art. 21.21, Sec. 22(d) (part).)
[Sections 541.355-541.400 reserved for expansion]
SUBCHAPTER I. RULEMAKING
Sec. 541.401. RULEMAKING AUTHORITY. (a) The commissioner
may adopt and enforce reasonable rules the commissioner determines
necessary to accomplish the purposes of this chapter.
(b) Notwithstanding a previous definition or interpretation
of a term used in this chapter contained in or derived from the
common law or other statutory law of this state, the commissioner
may adopt an express provision necessary to accomplish the purposes
of this chapter, including a provision the commissioner considers
necessary to:
(1) achieve necessary uniformity with the laws of
other states or the United States; or
(2) conform to the adopted procedures of the National
Association of Insurance Commissioners. (V.T.I.C. Art. 21.21, Sec.
13(a) (part).)
Sec. 541.402. PETITION. (a) A petition may be submitted to
the commissioner to adopt, amend, or repeal a rule. The petition
must be:
(1) signed by 100 interested persons; and
(2) supported by evidence that:
(A) a particular act or practice has been or
could be false, misleading, or deceptive to the insurance buying
public; or
(B) an act or practice defined by department rule
to be false, misleading, or deceptive is not false, misleading, or
deceptive.
(b) Not later than the 30th day after the date the
department receives the petition, the department shall:
(1) deny the petition as provided by Section 541.403;
or
(2) initiate hearing proceedings under Section
541.404. (V.T.I.C. Art. 21.21, Sec. 13(b).)
Sec. 541.403. DENIAL OF PETITION. (a) The department must
state in writing the reason for denying a petition to adopt, amend,
or repeal a rule.
(b) The department is expressly authorized to deny the
petition if the action sought would:
(1) destroy uniformity with the laws of other states
or the United States; or
(2) not conform to the adopted procedures of the
National Association of Insurance Commissioners. (V.T.I.C. Art.
21.21, Sec. 13(c).)
Sec. 541.404. HEARING ON PETITION. (a) A hearing held by
the department in response to a petition to adopt, amend, or repeal
a rule must be open to the public.
(b) At the hearing, any person may present to the department
in writing or orally testimony, data, or other information
regarding the act or practice under consideration. (V.T.I.C. Art.
21.21, Sec. 13(d).)
Sec. 541.405. JUDICIAL REVIEW OF DEPARTMENT ACTION. (a) A
person aggrieved by the denial of a petition under Section 541.402
or the adoption, amendment, or repeal of or failure to adopt a rule
under this subchapter may file a petition in a district court in
Travis County for:
(1) a declaratory judgment on the validity or
applicability of an adopted, amended, or repealed rule; or
(2) review of the denial of a petition under Section
541.402.
(b) The commissioner must be made a party to the action.
(c) An action of the commissioner under this subchapter in
adopting, amending, repealing, or failing to adopt a rule or
denying a petition may be invalidated only if the court finds that
the action:
(1) violates a constitutional or state statutory
provision;
(2) exceeds the commissioner's statutory authority;
(3) is arbitrary or capricious or characterized by
abuse of discretion or unwarranted exercise of discretion;
(4) is so vague that it does not establish
sufficiently definite standards to which conduct can be conformed;
(5) is made following unlawful procedure; or
(6) is clearly erroneous in view of the reliable,
probative, and substantial evidence in the whole record as
submitted.
(d) The court may issue an injunction in an action under
this section. (V.T.I.C. Art. 21.21, Secs. 13(e), (f).)
[Sections 541.406-541.450 reserved for expansion]
SUBCHAPTER J. CONSTRUCTION OF CHAPTER WITH OTHER LAWS
Sec. 541.451. LIABILITY UNDER OTHER LAW. An order of the
department under this chapter or an order by a court to enforce that
order does not relieve or absolve a person affected by either order
from liability under another law of this state. (V.T.I.C. Art.
21.21, Sec. 8.)
Sec. 541.452. POWERS IN ADDITION TO OTHER POWERS AUTHORIZED
BY LAW. The powers vested in the department and the commissioner by
this chapter are in addition to any other powers to enforce a
penalty, fine, or forfeiture authorized by law with respect to a
method of competition or act or practice defined as unfair or
deceptive. (V.T.I.C. Art. 21.21, Sec. 11.)
Sec. 541.453. DOUBLE RECOVERY PROHIBITED. A person may not
recover damages and penalties for the same act or practice under
both this chapter and another law. (V.T.I.C. Art. 21.21, Sec. 11A.)
Sec. 541.454. PENALTIES AND RELATED PAYMENTS BY INSURER.
(a) Civil penalties, premium refunds, judgments, compensatory
judgments, individual recoveries, orders, class action awards,
costs, damages, or attorney's fees assessed or awarded under this
chapter:
(1) may be paid only from the capital or surplus funds
of the offending insurer; and
(2) may not take precedence over, be in priority to, or
in any other manner apply to:
(A) Article 21.28-C or 21.28-D or any other
insurance guaranty act; or
(B) Article 21.39-A.
(b) The statutes described by Subsection (a)(2) and the
priorities of funds created by those statutes are exempt from the
provisions of this chapter. (V.T.I.C. Art. 21.21, Sec. 23.)
CHAPTER 542. PROCESSING AND SETTLEMENT OF CLAIMS
SUBCHAPTER A. UNFAIR CLAIM SETTLEMENT PRACTICES
Sec. 542.001. SHORT TITLE
Sec. 542.002. APPLICABILITY OF SUBCHAPTER
Sec. 542.003. UNFAIR CLAIM SETTLEMENT PRACTICES
PROHIBITED
Sec. 542.004. EXAMINATION OF TAX RETURNS PROHIBITED
Sec. 542.005. RECORD OF COMPLAINTS
Sec. 542.006. PERIODIC REPORTING REQUIREMENT
Sec. 542.007. COMPARISON OF CERTAIN INSURERS TO
MINIMUM STANDARD OF PERFORMANCE;
INVESTIGATION
Sec. 542.008. COMPLAINTS AGAINST INSURERS; INVESTIGATION
Sec. 542.009. REVIEW OF INVESTIGATION RESULTS; HEARING
Sec. 542.010. CEASE AND DESIST ORDER; ENFORCEMENT
Sec. 542.011. TIME LIMIT TO APPEAL
Sec. 542.012. ATTORNEY'S FEES
Sec. 542.013. PERSONNEL
Sec. 542.014. RULES
[Sections 542.015-542.050 reserved for expansion]
SUBCHAPTER B. PROMPT PAYMENT OF CLAIMS
Sec. 542.051. DEFINITIONS
Sec. 542.052. APPLICABILITY OF SUBCHAPTER
Sec. 542.053. EXCEPTION
Sec. 542.054. LIBERAL CONSTRUCTION
Sec. 542.055. RECEIPT OF NOTICE OF CLAIM
Sec. 542.056. NOTICE OF ACCEPTANCE OR REJECTION OF CLAIM
Sec. 542.057. PAYMENT OF CLAIM
Sec. 542.058. DELAY IN PAYMENT OF CLAIM
Sec. 542.059. EXTENSION OF DEADLINES
Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER
Sec. 542.061. REMEDIES NOT EXCLUSIVE
[Sections 542.062-542.100 reserved for expansion]
SUBCHAPTER C. PROVIDING CERTAIN CLAIMS INFORMATION
ON REQUEST
Sec. 542.101. REQUEST BY NAMED INSURED UNDER LIABILITY
INSURANCE POLICY
Sec. 542.102. REQUEST BY POLICYHOLDER UNDER PROPERTY
AND CASUALTY INSURANCE POLICY
Sec. 542.103. DEADLINE FOR PROVIDING REQUESTED
INFORMATION
Sec. 542.104. RULES
[Sections 542.105-542.150 reserved for expansion]
SUBCHAPTER D. NOTICE OF SETTLEMENT OF CLAIM UNDER
CASUALTY INSURANCE POLICY
Sec. 542.151. APPLICABILITY OF SUBCHAPTER
Sec. 542.152. EXCEPTION
Sec. 542.153. NOTICE REQUIRED
Sec. 542.154. RULES
[Sections 542.155-542.200 reserved for expansion]
SUBCHAPTER E. COLLECTION FROM THIRD PARTIES UNDER CERTAIN
AUTOMOBILE INSURANCE POLICIES
Sec. 542.201. PURPOSE
Sec. 542.202. DEFINITION
Sec. 542.203. APPLICABILITY OF SUBCHAPTER
Sec. 542.204. ACTION TO RECOVER DEDUCTIBLE
Sec. 542.205. ENFORCEMENT; RULES
CHAPTER 542. PROCESSING AND SETTLEMENT OF CLAIMS
SUBCHAPTER A. UNFAIR CLAIM SETTLEMENT PRACTICES
Sec. 542.001. SHORT TITLE. This subchapter may be cited as
the Unfair Claim Settlement Practices Act. (V.T.I.C. Art. 21.21-2,
Sec. 1.)
Sec. 542.002. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to the following insurers whether organized as a
proprietorship, partnership, stock or mutual corporation, or
unincorporated association:
(1) a life, health, or accident insurance company;
(2) a fire or casualty insurance company;
(3) a hail or storm insurance company;
(4) a title insurance company;
(5) a mortgage guarantee company;
(6) a mutual assessment company;
(7) a local mutual aid association;
(8) a local mutual burial association;
(9) a statewide mutual assessment company;
(10) a stipulated premium company;
(11) a fraternal benefit society;
(12) a group hospital service corporation;
(13) a county mutual insurance company;
(14) a Lloyd's plan;
(15) a reciprocal or interinsurance exchange; and
(16) a farm mutual insurance company. (V.T.I.C. Art.
21.21-2, Sec. 7.)
Sec. 542.003. UNFAIR CLAIM SETTLEMENT PRACTICES
PROHIBITED. (a) An insurer engaging in business in this state may
not engage in an unfair claim settlement practice.
(b) Any of the following acts by an insurer constitutes
unfair claim settlement practices:
(1) knowingly misrepresenting to a claimant pertinent
facts or policy provisions relating to coverage at issue;
(2) failing to acknowledge with reasonable promptness
pertinent communications relating to a claim arising under the
insurer's policy;
(3) failing to adopt and implement reasonable
standards for the prompt investigation of claims arising under the
insurer's policies;
(4) not attempting in good faith to effect a prompt,
fair, and equitable settlement of a claim submitted in which
liability has become reasonably clear;
(5) compelling a policyholder to institute a suit to
recover an amount due under a policy by offering substantially less
than the amount ultimately recovered in a suit brought by the
policyholder;
(6) failing to maintain the information required by
Section 542.005; or
(7) committing another act the commissioner
determines by rule constitutes an unfair claim settlement practice.
(V.T.I.C. Art. 21.21-2, Secs. 2(a), (b) (part).)
Sec. 542.004. EXAMINATION OF TAX RETURNS PROHIBITED. (a)
An insurer regulated under this code may not require a claimant, as
a condition of settling a claim, to produce the claimant's federal
income tax returns for examination or investigation by the insurer
unless:
(1) the claimant is ordered to produce the tax returns
by a court; or
(2) the claim involves:
(A) a fire loss; or
(B) a loss of profits or income.
(b) An insurer that violates this section commits:
(1) a prohibited practice under this subchapter; and
(2) a deceptive trade practice under Subchapter E,
Chapter 17, Business & Commerce Code.
(c) A claimant affected by a violation of this section is
entitled to remedies under Subchapter E, Chapter 17, Business &
Commerce Code. (V.T.I.C. Art. 21.21-2, Sec. 2(c).)
Sec. 542.005. RECORD OF COMPLAINTS. (a) In this section,
"complaint" means any written communication primarily expressing a
grievance.
(b) An insurer shall maintain a complete record of all
complaints received by the insurer during the preceding three years
or since the date of the insurer's last examination by the
department, whichever period is shorter. The record must indicate:
(1) the total number of complaints;
(2) the classification of complaints by line of
insurance;
(3) the nature of each complaint;
(4) the disposition of the complaints; and
(5) the time spent processing each complaint.
(V.T.I.C. Art. 21.21-2, Sec. 2(b) (part).)
Sec. 542.006. PERIODIC REPORTING REQUIREMENT. (a) In this
section, "claim" means a written claim filed by a resident of this
state with an insurer engaging in business in this state.
(b) If, based on complaints of unfair claim settlement
practices under this subchapter, the department finds that an
insurer should be subjected to closer supervision with respect to
the insurer's claim settlement practices, the department may
require the insurer to file periodic reports at intervals the
department determines necessary.
(c) The department shall devise a statistical plan for the
periodic reports required under Subsection (b). The plan must
contain at a minimum:
(1) the following claims information for the preceding
12 months or from the date of the insurer's last periodic report,
whichever period is shorter:
(A) the total number of claims filed, including
for each individual claim:
(i) the original amount filed for by the
insured; and
(ii) the classification by line of
insurance;
(B) the total number of claims denied;
(C) the total number of claims settled, including
for each individual claim:
(i) the original amount filed for by the
insured;
(ii) the amount settled; and
(iii) the classification by line of
insurance; and
(D) the total number of claims for which suits
have been instituted against the insurer, including for each
individual claim:
(i) the original amount filed for by the
insured;
(ii) the amount of final adjudication;
(iii) the reason for the suit; and
(iv) the classification by line of
insurance; and
(2) the information required to be maintained by the
insurer under Section 542.005.
(d) If at any time the department determines that the
requirement to file a periodic report is no longer necessary to
accomplish the objectives of this subchapter, the department may
rescind the reporting requirement. (V.T.I.C. Art. 21.21-2, Sec.
3.)
Sec. 542.007. COMPARISON OF CERTAIN INSURERS TO MINIMUM
STANDARD OF PERFORMANCE; INVESTIGATION. (a) The department shall
compile the information received from an insurer under Section
542.006 in a manner that enables the department to compare the
insurer's performance to a minimum standard of performance adopted
by the commissioner.
(b) If the department determines that the insurer does not
meet the minimum standard of performance, the department shall
investigate the insurer to determine the reason, if any, that the
insurer does not meet the minimum standard. (V.T.I.C. Art.
21.21-2, Sec. 4(b).)
Sec. 542.008. COMPLAINTS AGAINST INSURERS; INVESTIGATION.
(a) The department shall establish a system for receiving and
processing individual complaints alleging a violation of this
subchapter by an insurer regardless of whether the insurer is
required to file a periodic report under Section 542.006.
(b) The department shall investigate an insurer if the
department determines that:
(1) based on the number and type of complaints against
an insurer, the insurer does not meet the minimum standard of
performance adopted under Section 542.007; or
(2) the number and type of complaints against the
insurer are not proportionate to the number and type of complaints
against other insurers writing similar lines of insurance.
(V.T.I.C. Art. 21.21-2, Sec. 4(c).)
Sec. 542.009. REVIEW OF INVESTIGATION RESULTS; HEARING.
(a) On receiving the results of an investigation instituted under
Section 542.007 or 542.008, the department shall review those
results considering the standards of this subchapter to determine
whether further action is necessary.
(b) If the department determines that further action is
necessary, the department shall:
(1) set a date for a hearing to review the alleged
violations of this subchapter; and
(2) notify the insurer of:
(A) the date of the hearing; and
(B) the nature of the charges.
(c) The department shall provide the notice required by
Subsection (b)(2) not later than the 30th day before the date of the
hearing.
(d) At a hearing under this section, the insurer may present
the insurer's case with the assistance of counsel.
(e) Evidence relating to the number and type of complaints
or claims prepared by the department from information received or
compiled under Section 542.006, 542.007, or 542.008 is admissible
in evidence at:
(1) the hearing; and
(2) any related judicial proceeding.
(f) The hearing shall be conducted in accordance with this
code and rules adopted by the commissioner.
(g) An insurer may not be found to be in violation of this
subchapter solely because of the number and type of complaints or
claims against the insurer. (V.T.I.C. Art. 21.21-2, Sec. 5(a).)
Sec. 542.010. CEASE AND DESIST ORDER; ENFORCEMENT. (a) If
the department determines that an insurer has violated this
subchapter, the department shall issue a cease and desist order to
the insurer directing the insurer to stop the unlawful practice.
(b) If the insurer fails to comply with the cease and desist
order, the department may:
(1) revoke or suspend the insurer's certificate of
authority; or
(2) limit, regulate, and control:
(A) the insurer's line of business;
(B) the insurer's writing of policy forms or
other particular forms; and
(C) the volume of the insurer's:
(i) line of business; or
(ii) writing of policy forms or other
particular forms.
(c) The department shall exercise authority under this
section to the extent that the department determines is necessary
to obtain the insurer's compliance with the cease and desist order.
(d) At the request of the department, the attorney general
shall assist the department in enforcing the cease and desist
order. (V.T.I.C. Art. 21.21-2, Sec. 6(a).)
Sec. 542.011. TIME LIMIT TO APPEAL. An insurer affected by
a ruling or order of the department under this subchapter may appeal
the ruling or order, in accordance with Subchapter D, Chapter 36, by
filing a petition for judicial review not later than the 20th day
after the date of the ruling or order. (V.T.I.C. Art. 21.21-2, Sec.
6(b) (part).)
Sec. 542.012. ATTORNEY'S FEES. The department is entitled
to reasonable attorney's fees if judicial action is necessary to
enforce an order of the department under this subchapter.
(V.T.I.C. Art. 21.21-2, Sec. 6(b) (part).)
Sec. 542.013. PERSONNEL. The department may hire employees
and examiners as needed to enforce this subchapter. (V.T.I.C. Art.
21.21-2, Sec. 4(a).)
Sec. 542.014. RULES. The commissioner shall adopt
reasonable rules as necessary to implement and augment the purposes
and provisions of this subchapter. (V.T.I.C. Art. 21.21-2, Sec.
8.)
[Sections 542.015-542.050 reserved for expansion]
SUBCHAPTER B. PROMPT PAYMENT OF CLAIMS
Sec. 542.051. DEFINITIONS. In this subchapter:
(1) "Business day" means a day other than a Saturday,
Sunday, or holiday recognized by this state.
(2) "Claim" means a first-party claim that:
(A) is made by an insured or policyholder under
an insurance policy or contract or by a beneficiary named in the
policy or contract; and
(B) must be paid by the insurer directly to the
insured or beneficiary.
(3) "Claimant" means a person making a claim.
(4) "Notice of claim" means any written notification
provided by a claimant to an insurer that reasonably apprises the
insurer of the facts relating to the claim. (V.T.I.C. Art. 21.55,
Secs. 1(1), (2), (3), (5).)
Sec. 542.052. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any insurer authorized to engage in business as an
insurance company or to provide insurance in this state, including:
(1) a stock life, health, or accident insurance
company;
(2) a mutual life, health, or accident insurance
company;
(3) a stock fire or casualty insurance company;
(4) a mutual fire or casualty insurance company;
(5) a Mexican casualty insurance company;
(6) a Lloyd's plan;
(7) a reciprocal or interinsurance exchange;
(8) a fraternal benefit society;
(9) a stipulated premium company;
(10) a nonprofit legal services corporation;
(11) a statewide mutual assessment company;
(12) a local mutual aid association;
(13) a local mutual burial association;
(14) an association exempt under Section 887.102;
(15) a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
(16) a county mutual insurance company;
(17) a farm mutual insurance company;
(18) a risk retention group;
(19) a purchasing group;
(20) an eligible surplus lines insurer; and
(21) except as provided by Section 542.053(b), a
guaranty association operating under Article 21.28-C or 21.28-D.
(V.T.I.C. Art. 21.55, Sec. 1(4).)
Sec. 542.053. EXCEPTION. (a) This subchapter does not
apply to:
(1) workers' compensation insurance;
(2) mortgage guaranty insurance;
(3) title insurance;
(4) fidelity, surety, or guaranty bonds;
(5) marine insurance other than inland marine
insurance governed by Article 5.53; or
(6) a guaranty association created and operating under
Chapter 2602.
(b) A guaranty association operating under Article 21.28-C
or 21.28-D is not subject to the damage provisions of Section
542.060.
(c) This subchapter does not apply to a health maintenance
organization except as provided by Section 1271.005(c).
(d) This subchapter does not apply to a claim governed by
Subchapter C, Chapter 1301. (V.T.I.C. Art. 21.55, Secs. 5(a), (b)
(part), (c).)
Sec. 542.054. LIBERAL CONSTRUCTION. This subchapter shall
be liberally construed to promote the prompt payment of insurance
claims. (V.T.I.C. Art. 21.55, Sec. 8.)
Sec. 542.055. RECEIPT OF NOTICE OF CLAIM. (a) Not later
than the 15th day or, if the insurer is an eligible surplus lines
insurer, the 30th business day after the date an insurer receives
notice of a claim, the insurer shall:
(1) acknowledge receipt of the claim;
(2) commence any investigation of the claim; and
(3) request from the claimant all items, statements,
and forms that the insurer reasonably believes, at that time, will
be required from the claimant.
(b) An insurer may make additional requests for information
if during the investigation of the claim the additional requests
are necessary.
(c) If the acknowledgment of receipt of a claim is not made
in writing, the insurer shall make a record of the date, manner, and
content of the acknowledgment. (V.T.I.C. Art. 21.55, Sec. 2.)
Sec. 542.056. NOTICE OF ACCEPTANCE OR REJECTION OF CLAIM.
(a) Except as provided by Subsection (b) or (d), an insurer shall
notify a claimant in writing of the acceptance or rejection of a
claim not later than the 15th business day after the date the
insurer receives all items, statements, and forms required by the
insurer to secure final proof of loss.
(b) If an insurer has a reasonable basis to believe that a
loss resulted from arson, the insurer shall notify the claimant in
writing of the acceptance or rejection of the claim not later than
the 30th day after the date the insurer receives all items,
statements, and forms required by the insurer.
(c) If the insurer rejects the claim, the notice required by
Subsection (a) or (b) must state the reasons for the rejection.
(d) If the insurer is unable to accept or reject the claim
within the period specified by Subsection (a) or (b), the insurer,
within that same period, shall notify the claimant of the reasons
that the insurer needs additional time. The insurer shall accept or
reject the claim not later than the 45th day after the date the
insurer notifies a claimant under this subsection. (V.T.I.C. Art.
21.55, Secs. 3(a), (b), (c), (d), (e).)
Sec. 542.057. PAYMENT OF CLAIM. (a) Except as otherwise
provided by this section, if an insurer notifies a claimant under
Section 542.056 that the insurer will pay a claim or part of a
claim, the insurer shall pay the claim not later than the fifth
business day after the date notice is made.
(b) If payment of the claim or part of the claim is
conditioned on the performance of an act by the claimant, the
insurer shall pay the claim not later than the fifth business day
after the date the act is performed.
(c) If the insurer is an eligible surplus lines insurer, the
insurer shall pay the claim not later than the 20th business day
after the notice or the date the act is performed, as applicable.
(V.T.I.C. Art. 21.55, Sec. 4.)
Sec. 542.058. DELAY IN PAYMENT OF CLAIM. (a) Except as
otherwise provided, if an insurer, after receiving all items,
statements, and forms reasonably requested and required under
Section 542.055, delays payment of the claim for a period exceeding
the period specified by other applicable statutes or, if other
statutes do not specify a period, for more than 60 days, the insurer
shall pay damages and other items as provided by Section 542.060.
(b) This section does not apply in a case in which it is
found as a result of arbitration or litigation that a claim received
by an insurer is invalid and should not be paid by the insurer.
(V.T.I.C. Art. 21.55, Secs. 3(f), (g).)
Sec. 542.059. EXTENSION OF DEADLINES. (a) A court may
grant a request by a guaranty association for an extension of the
periods under this subchapter on a showing of good cause and after
reasonable notice to policyholders.
(b) In the event of a weather-related catastrophe or major
natural disaster, as defined by the commissioner, the
claim-handling deadlines imposed under this subchapter are
extended for an additional 15 days. (V.T.I.C. Art. 21.55, Secs.
5(b) (part), (d).)
Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER. (a)
If an insurer that is liable for a claim under an insurance policy
is not in compliance with this subchapter, the insurer is liable to
pay the holder of the policy or the beneficiary making the claim
under the policy, in addition to the amount of the claim, interest
on the amount of the claim at the rate of 18 percent a year as
damages, together with reasonable attorney's fees.
(b) If a suit is filed, the attorney's fees shall be taxed as
part of the costs in the case. (V.T.I.C. Art. 21.55, Sec. 6.)
Sec. 542.061. REMEDIES NOT EXCLUSIVE. The remedies
provided by this subchapter are in addition to any other remedy or
procedure provided by law or at common law. (V.T.I.C. Art. 21.55,
Sec. 7.)
[Sections 542.062-542.100 reserved for expansion]
SUBCHAPTER C. PROVIDING CERTAIN CLAIMS INFORMATION
ON REQUEST
Sec. 542.101. REQUEST BY NAMED INSURED UNDER LIABILITY
INSURANCE POLICY. (a) In this section, "liability insurance"
means:
(1) general liability insurance;
(2) professional liability insurance, including
medical professional liability insurance;
(3) commercial automobile liability insurance; and
(4) the liability portion of commercial multiperil
insurance.
(b) On written request of a named insured under a liability
insurance policy, the insurer that wrote the policy shall provide
to the insured information relating to the disposition of a claim
filed under the policy. The information must include:
(1) the name of each claimant;
(2) details relating to:
(A) the amount paid on the claim;
(B) settlement of the claim; or
(C) judgment on the claim;
(3) details as to how the claim, settlement, or
judgment is to be paid; and
(4) any other information required by rule of the
commissioner that the commissioner considers necessary to
adequately inform an insured with regard to any claim under a
liability insurance policy.
(c) A request for information under this section must be
transmitted to the insurer not later than six months after the date
of disposition of the claim. (V.T.I.C. Art. 21.59, Secs. (a), (b),
(c), (f).)
Sec. 542.102. REQUEST BY POLICYHOLDER UNDER PROPERTY AND
CASUALTY INSURANCE POLICY. (a) On written request of a
policyholder, an insurer that writes property and casualty
insurance in this state shall provide the policyholder with a list
of claims charged against the policy and payments made on each
claim.
(b) This section does not apply to a workers' compensation
insurance policy subject to Article 5.65A. (V.T.I.C. Art. 21.59,
Sec. (d).)
Sec. 542.103. DEADLINE FOR PROVIDING REQUESTED
INFORMATION. (a) An insurer shall provide the information
requested under this subchapter in writing not later than the 30th
day after the date the insurer receives the request for the
information.
(b) For purposes of this section, information is considered
to be provided on the date the information is deposited with the
United States Postal Service or is personally delivered. (V.T.I.C.
Art. 21.59, Sec. (e).)
Sec. 542.104. RULES. The commissioner may by rule
prescribe forms for requesting information and for providing
requested information under this subchapter. (V.T.I.C. Art. 21.59,
Sec. (g).)
[Sections 542.105-542.150 reserved for expansion]
SUBCHAPTER D. NOTICE OF SETTLEMENT OF CLAIM UNDER
CASUALTY INSURANCE POLICY
Sec. 542.151. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to the settlement of a claim under a casualty insurance
policy that is delivered, issued for delivery, or renewed in this
state, including a policy written by:
(1) a county mutual insurance company;
(2) a Lloyd's plan;
(3) an eligible surplus lines insurer; or
(4) a reciprocal or interinsurance exchange.
(V.T.I.C. Art. 21.56, Sec. (a) (part).)
Sec. 542.152. EXCEPTION. This subchapter does not apply
to:
(1) a casualty insurance policy that requires the
insured's consent to settle a claim against the insured;
(2) fidelity, surety, or guaranty bonds; or
(3) marine insurance other than inland marine
insurance governed by Article 5.53. (V.T.I.C. Art. 21.56, Secs.
(a) (part), (e).)
Sec. 542.153. NOTICE REQUIRED. (a) Not later than the 10th
day after the date an initial offer to settle a claim against a
named insured under a casualty insurance policy issued to the
insured is made, the insurer shall notify the insured in writing of
the offer.
(b) Not later than the 30th day after the date a claim
against a named insured under a casualty insurance policy issued to
the insured is settled, the insurer shall notify the insured in
writing of the settlement. (V.T.I.C. Art. 21.56, Secs. (b), (c).)
Sec. 542.154. RULES. The commissioner may adopt rules to
implement this subchapter. (V.T.I.C. Art. 21.56, Sec. (d).)
[Sections 542.155-542.200 reserved for expansion]
SUBCHAPTER E. COLLECTION FROM THIRD PARTIES UNDER CERTAIN
AUTOMOBILE INSURANCE POLICIES
Sec. 542.201. PURPOSE. This subchapter is intended to
encourage insurers to take appropriate and necessary steps to
collect from third parties or the insurers of the third parties.
(V.T.I.C. Art. 21.79G, Sec. (e) (part).)
Sec. 542.202. DEFINITION. In this subchapter, "action"
includes taking various actions such as reasonable and diligent
collection efforts, mediation, arbitration, and litigation against
a responsible third party or the third party's insurer. (V.T.I.C.
Art. 21.79G, Sec. (e) (part).)
Sec. 542.203. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any insurer that delivers, issues for delivery, or
renews in this state a private passenger automobile insurance
policy, including a reciprocal or interinsurance exchange, mutual
insurance company, association, Lloyd's plan, or other insurer.
(V.T.I.C. Art. 21.79G, Sec. (a).)
Sec. 542.204. ACTION TO RECOVER DEDUCTIBLE. (a)
Notwithstanding any other provision of this code and except as
provided by Subsection (b), if an insurer is liable to an insured
for a claim that is subject to a deductible payable by the insured
and a third party may be liable to the insurer or the insured for the
amount of the deductible, the insurer shall:
(1) take action to recover the deductible against the
third party not later than the first anniversary of the date the
insured's claim is paid; or
(2) pay the amount of the deductible to the insured.
(b) An insurer is not required to take action or pay the
amount of the deductible as required by Subsection (a) if, not later
than the earlier of the first anniversary of the date the insured's
claim is paid or the 90th day before the date the statute of
limitations for a negligence action expires, the insurer:
(1) notifies the insured in writing that the insurer
does not intend to take further collection actions against the
third party; and
(2) authorizes the insured to take further collection
actions.
(c) This section applies regardless of whether the third
party who may be liable for the amount of the deductible is insured
or uninsured. (V.T.I.C. Art. 21.79G, Secs. (b), (c), (d).)
Sec. 542.205. ENFORCEMENT; RULES. The commissioner may
enforce this subchapter and adopt and enforce reasonable rules
necessary to accomplish the purposes of this subchapter. (V.T.I.C.
Art. 21.79G, Sec. (f).)
CHAPTER 543. PROHIBITED PRACTICES RELATED TO POLICY
OR CERTIFICATE OF MEMBERSHIP
SUBCHAPTER A. PROHIBITIONS
Sec. 543.001. MISREPRESENTATION PROHIBITED
Sec. 543.002. CONTRACT EXPRESSED IN POLICY ONLY
Sec. 543.003. THING OF VALUE NOT SPECIFIED IN
POLICY
Sec. 543.004. SHARING OF OR PARTICIPATION IN
SPECIAL FUND PROHIBITED
[Sections 543.005-543.050 reserved for expansion]
SUBCHAPTER B. ENFORCEMENT; PENALTY
Sec. 543.051. SUSPENSION OR REVOCATION OF CERTIFICATE,
CHARTER, PERMIT, OR LICENSE
Sec. 543.052. CRIMINAL PENALTY
CHAPTER 543. PROHIBITED PRACTICES RELATED TO POLICY
OR CERTIFICATE OF MEMBERSHIP
SUBCHAPTER A. PROHIBITIONS
Sec. 543.001. MISREPRESENTATION PROHIBITED. (a) In this
section, "life, health, or casualty insurer" includes a corporation
operating on a cooperative or assessment plan, a mutual insurance
company, a fraternal benefit society, and any other society or
association authorized to issue an insurance policy in this state.
(b) A life, health, or casualty insurer, an officer,
director, agent, or representative of that insurer, or any other
person, corporation, or copartnership may not:
(1) issue, circulate, or cause or permit to be issued
or circulated any statement, including an illustration or estimate,
that misrepresents:
(A) the terms of a policy or certificate of
membership issued by a life, health, or casualty insurer;
(B) other benefits or advantages provided by the
policy or certificate; or
(C) the dividends or share of surplus to be
received on the policy or certificate;
(2) use a name or title of a policy, policy class,
certificate of membership, or certificate class that misrepresents
the policy, certificate, or class; or
(3) make a misleading representation or incomplete
comparison of a policy or certificate of membership to an insured or
member for the purpose of inducing or tending to induce the insured
or member to forfeit, surrender, or allow the lapse of the insurance
or membership.
(c) The commissioner may adopt and enforce reasonable rules
as provided by Subchapter I, Chapter 541, to accomplish the
purposes of Subsection (b)(1) as those purposes relate to life
insurance companies. (V.T.I.C. Art. 21.20; Art. 21.21, Sec. 13
(part); Art. 21.21A, Sec. 2.)
Sec. 543.002. CONTRACT EXPRESSED IN POLICY ONLY. An
insurer or an agent of an insurer may not make an insurance contract
or an agreement relating to an insurance contract other than as
expressed in the policy issued in connection with the contract.
(V.T.I.C. Art. 21.21A, Sec. 1 (part).)
Sec. 543.003. THING OF VALUE NOT SPECIFIED IN POLICY. An
insurer or an officer, agent, or representative of an insurer may
not:
(1) directly or indirectly pay, allow, or give or
offer to pay, allow, or give as an inducement to insurance a thing
of value or other inducement that is not specified in the policy,
including:
(A) a rebate of premium payable on the policy;
(B) a special favor or advantage in the dividends
or other benefits to accrue on the policy; or
(C) paid employment or a contract for service; or
(2) give, sell, or purchase or offer to give, sell, or
purchase as an inducement to insurance or in connection with
insurance a thing of value that is not specified in the policy,
including:
(A) stocks, bonds, or other securities of an
insurer or other corporation, association, or partnership; or
(B) dividends or profits to accrue on the stocks,
bonds, or other securities of an insurer or other corporation,
association, or partnership. (V.T.I.C. Art. 21.21A, Sec. 1
(part).)
Sec. 543.004. SHARING OF OR PARTICIPATION IN SPECIAL FUND
PROHIBITED. An insurer or an officer, agent, or representative of
an insurer may not issue a policy that contains a special or board
contract or similar provision by the terms of which the policy will
share or participate in a special fund derived from a tax or a
charge against any portion of the premium on another policy.
(V.T.I.C. Art. 21.21A, Sec. 1 (part).)
[Sections 543.005-543.050 reserved for expansion]
SUBCHAPTER B. ENFORCEMENT; PENALTY
Sec. 543.051. SUSPENSION OR REVOCATION OF CERTIFICATE,
CHARTER, PERMIT, OR LICENSE. (a) On a hearing, the commissioner
may suspend or revoke the certificate, charter, permit, or license
to engage in the business of insurance of a society, association,
corporation, or person that violates Subchapter A.
(b) The commissioner must give 10 days' notice of the
hearing by certified mail to the society, association, corporation,
or person. (V.T.I.C. Art. 21.21A, Sec. 4.)
Sec. 543.052. CRIMINAL PENALTY. (a) A person commits an
offense if the person violates Subchapter A.
(b) An offense under this section is a Class A misdemeanor.
(c) The penalty provided by this section is in addition to
any other penalty specifically provided by law. (V.T.I.C. Art.
21.21A, Sec. 3.)
CHAPTER 544. PROHIBITED DISCRIMINATION
SUBCHAPTER A. GENERAL PROHIBITIONS AGAINST DISCRIMINATION
BY AN INSURER OR HEALTH MAINTENANCE ORGANIZATION
Sec. 544.001. APPLICABILITY OF SUBCHAPTER
Sec. 544.002. UNFAIR DISCRIMINATION
Sec. 544.003. EXCEPTIONS
Sec. 544.004. ENFORCEMENT ACTIONS
[Sections 544.005-544.050 reserved for expansion]
SUBCHAPTER B. OTHER GENERAL PROHIBITIONS AGAINST
DISCRIMINATION BY INSURERS
Sec. 544.051. APPLICABILITY OF SUBCHAPTER
Sec. 544.052. UNFAIR DISCRIMINATION
Sec. 544.053. EXCEPTIONS
Sec. 544.054. JUDICIAL ACTION; AWARD BY COURT
[Sections 544.055-544.100 reserved for expansion]
SUBCHAPTER C. ENGLISH FLUENCY
Sec. 544.101. DEFINITIONS
Sec. 544.102. APPLICABILITY OF SUBCHAPTER
Sec. 544.103. PROHIBITION ON USE OF CERTAIN GUIDELINES
[Sections 544.104-544.150 reserved for expansion]
SUBCHAPTER D. FAMILY VIOLENCE
Sec. 544.151. DEFINITION
Sec. 544.152. APPLICABILITY OF SUBCHAPTER
Sec. 544.153. PROHIBITIONS
Sec. 544.154. CONFIDENTIALITY OF CERTAIN INFORMATION
Sec. 544.155. UNDERWRITING CRITERIA
Sec. 544.156. HEALTH BENEFIT PLAN ISSUER OR LIFE INSURER NOT
LIABLE FOR DEATH OR BODILY INJURY
Sec. 544.157. RIGHT TO CONTINUED COVERAGE UNAFFECTED
Sec. 544.158. UNFAIR OR DECEPTIVE ACT OR PRACTICE
[Sections 544.159-544.200 reserved for expansion]
SUBCHAPTER E. FIBROCYSTIC BREAST CONDITION
Sec. 544.201. DEFINITION
Sec. 544.202. PROHIBITION
Sec. 544.203. UNFAIR OR DECEPTIVE ACT OR PRACTICE
Sec. 544.204. PAYMENT FOR DISEASE NOT REQUIRED
[Sections 544.205-544.250 reserved for expansion]
SUBCHAPTER F. CHURCH PROPERTY
Sec. 544.251. DEFINITIONS
Sec. 544.252. APPLICABILITY OF SUBCHAPTER
Sec. 544.253. PROHIBITION
Sec. 544.254. UNFAIR OR DECEPTIVE ACT OR PRACTICE
CHAPTER 544. PROHIBITED DISCRIMINATION
SUBCHAPTER A. GENERAL PROHIBITIONS AGAINST DISCRIMINATION
BY AN INSURER OR HEALTH MAINTENANCE ORGANIZATION
Sec. 544.001. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to:
(1) any legal entity engaged in the business of
insurance in this state, including:
(A) a capital stock insurance company;
(B) a mutual insurance company;
(C) a title insurance company;
(D) a fraternal benefit society;
(E) a local mutual aid association;
(F) a statewide mutual assessment company;
(G) a county mutual insurance company;
(H) a Lloyd's plan;
(I) a reciprocal or interinsurance exchange;
(J) a stipulated premium company;
(K) a group hospital service corporation;
(L) a farm mutual insurance company;
(M) a risk retention group;
(N) an eligible surplus lines insurer; and
(O) an agent, broker, adjuster, or life and
health insurance counselor; and
(2) a health maintenance organization. (V.T.I.C. Art.
21.21-6, Sec. 2, as added Acts 74th Leg., R.S., Ch. 415.)
Sec. 544.002. UNFAIR DISCRIMINATION. (a) A person may not
refuse to insure or provide coverage to an individual, refuse to
continue to insure or provide coverage to an individual, limit the
amount, extent, or kind of coverage available for an individual, or
charge an individual a rate that is different from the rate charged
to other individuals for the same coverage because of the
individual's:
(1) race, color, religion, or national origin;
(2) age, gender, marital status, or geographic
location; or
(3) disability or partial disability.
(b) Subsection (a)(2) does not prohibit an insurer or health
maintenance organization from considering marital status in
defining persons eligible for dependent benefits.
(c) Subsection (a) does not prevent requirements to provide
title insurance coverage relating to possible community,
homestead, or other marital rights in land. (V.T.I.C. Art.
21.21-6, Secs. 1, 3, 4(e) (part), as added Acts 74th Leg., R.S., Ch.
415.)
Sec. 544.003. EXCEPTIONS. (a) A person does not violate
Section 544.002 by providing coverage only to persons who are
required to obtain or maintain membership or qualification for
membership in a club, group, or organization to be eligible for
coverage if:
(1) the requirements are uniform requirements of the
insurer or health maintenance organization as a condition of
providing coverage and are applied uniformly throughout this state;
and
(2) the person does not engage in an act prohibited
under Section 544.002 against a qualified member, except as
provided by this section.
(b) A person does not violate Section 544.002(a)(2) or (3)
if the refusal, limitation, or charge is based on sound
underwriting or actuarial principles reasonably related to actual
or anticipated loss experience. For the purposes of this
subsection, a refusal, limitation, or charge relating to title
insurance is based on sound actuarial principles if the action is
based on an examination of title or on closing the transaction.
(c) A person does not violate Section 544.002 if the
refusal, limitation, or charge is required or authorized by law or a
regulatory mandate.
(d) A person does not violate Section 544.002 if
policyholders or enrollees with similar expense factors but
different loss exposures are charged different premiums or rates
under a mass marketing plan. The commissioner by rule shall define
selected groups eligible for issuance of policies or evidences of
coverage under a mass marketing plan. (V.T.I.C. Art. 21.21-6,
Secs. 4(a), (b), (c), (d), (e) (part), as added Acts 74th Leg.,
R.S., Ch. 415.)
Sec. 544.004. ENFORCEMENT ACTIONS. (a) A legal entity
engaged in the business of insurance or a health maintenance
organization, that is found to be in violation of or to have failed
to comply with this subchapter, is subject to the sanctions
provided by Chapter 82, including administrative penalties
authorized under Chapter 84.
(b) In addition to the procedures provided by Subsection
(a), the commissioner may use the cease and desist procedures
authorized by Chapter 83. (V.T.I.C. Art. 21.21-6, Sec. 5, as added
Acts 74th Leg., R.S., Ch. 415.)
[Sections 544.005-544.050 reserved for expansion]
SUBCHAPTER B. OTHER GENERAL PROHIBITIONS AGAINST
DISCRIMINATION BY INSURERS
Sec. 544.051. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any individual, corporation, association, partnership,
or other legal entity engaged in the business of insurance,
including:
(1) a fraternal benefit society;
(2) a county mutual insurance company;
(3) a Lloyd's plan;
(4) a reciprocal or interinsurance exchange;
(5) a farm mutual insurance company; and
(6) an agent, broker, adjuster, or life and health
insurance counselor. (V.T.I.C. Art. 21.21-8, Sec. 1.)
Sec. 544.052. UNFAIR DISCRIMINATION. A person may not in
any manner engage in unfair discrimination or permit unfair
discrimination between individuals of the same class and of
essentially the same hazard, including unfair discrimination in:
(1) the amount of premium, policy fees, or rates
charged for a policy or contract of insurance;
(2) the benefits payable under a policy or contract of
insurance; or
(3) any of the terms or conditions of a policy or
contract of insurance. (V.T.I.C. Art. 21.21-8, Sec. 2.)
Sec. 544.053. EXCEPTIONS. (a) A person does not violate
Section 544.052 if the refusal to insure or to continue to insure,
the limiting of the amount, extent, or kind of coverage, or the
charging of an individual a rate that is different from the rate
charged another individual for the same coverage is based on sound
actuarial principles.
(b) A person does not violate Section 544.052 by providing
insurance coverage only to persons who are required to obtain or
maintain membership or qualification for membership in a club,
group, or organization to be eligible for coverage if:
(1) the requirements are uniform requirements of the
insurer as a condition of providing insurance and are applied
uniformly throughout this state; and
(2) the person does not engage in an act prohibited
under Section 544.052 against a qualified member, except as
provided by this section. (V.T.I.C. Art. 21.21-8, Secs. 4, 5.)
Sec. 544.054. JUDICIAL ACTION; AWARD BY COURT. (a) A
person who has sustained economic damages as the result of a
violation of Section 544.052 may maintain only in a Travis County
district court an action against the person who violated that
section.
(b) An action under this section must be commenced before
the first anniversary of the date on which the plaintiff was denied
insurance or the unfair act occurred.
(c) A plaintiff who prevails in an action under this section
may obtain:
(1) the amount of economic damages, court costs, and
attorney's fees; and
(2) an order enjoining the violation.
(d) Court costs under Subsection (c) may include any
reasonable and necessary expert witness fees.
(e) If the trier of fact finds that the defendant knowingly
committed an act prohibited by Section 544.052, the court may award
a civil penalty in an amount of not more than $25,000 for each
claimant.
(f) The court shall award the defendant reasonable and
necessary attorney's fees if the court finds that an action under
this section was:
(1) groundless; and
(2) brought in bad faith or for the purpose of
harassment. (V.T.I.C. Art. 21.21-8, Sec. 3.)
[Sections 544.055-544.100 reserved for expansion]
SUBCHAPTER C. ENGLISH FLUENCY
Sec. 544.101. DEFINITIONS. In this subchapter:
(1) "Health benefit plan issuer" means an insurance
company, association, organization, group hospital service
corporation, or health maintenance organization that delivers or
issues for delivery an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an evidence of coverage that provides health insurance
or health care benefits. The term includes:
(A) a life, health, and accident insurance
company operating under Chapter 841 or 982;
(B) a general casualty insurance company
operating under Chapter 861;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a mutual life insurance company operating
under Chapter 882;
(E) a local mutual aid association operating
under Chapter 886;
(F) a statewide mutual assessment company
operating under Chapter 881;
(G) a mutual assessment company or mutual
assessment life, health, and accident association operating under
Chapter 887;
(H) a mutual insurance company operating under
Chapter 883 that writes coverage other than life insurance;
(I) a Lloyd's plan operating under Chapter 941;
(J) a reciprocal exchange operating under
Chapter 942; and
(K) a stipulated premium company operating under
Chapter 884.
(2) "Underwriting guideline" means a written,
electronic, or oral rule, standard, marketing decision, or practice
that is used by a health benefit plan issuer or an agent of a health
benefit plan issuer to examine, bind, accept, reject, renew or
refuse to renew, cancel, or limit coverages available to classes of
consumers or charge a different rate for the same coverage.
(V.T.I.C. Art. 21.21-7, Sec. 1.)
Sec. 544.102. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any health insurance policy, agreement, contract, or
evidence of coverage delivered or issued for delivery by a health
benefit plan issuer. (V.T.I.C. Art. 21.21-7, Sec. 2.)
Sec. 544.103. PROHIBITION ON USE OF CERTAIN GUIDELINES.
(a) A health benefit plan issuer may not use an underwriting
guideline that is based on:
(1) the ability of an insured or enrollee or an
applicant for insurance coverage or health care benefits to speak
English fluently; or
(2) the literacy in English of the insured, enrollee,
or applicant.
(b) An applicant has the burden of proof to establish a
violation of this subchapter. (V.T.I.C. Art. 21.21-7, Sec. 3.)
[Sections 544.104-544.150 reserved for expansion]
SUBCHAPTER D. FAMILY VIOLENCE
Sec. 544.151. DEFINITION. In this subchapter, "family
violence" means an act between individuals who reside together or
resided together in which one individual:
(1) wilfully attempts to cause bodily injury, or
wilfully or wantonly causes bodily injury, to another;
(2) wilfully by physical threat places another in fear
of imminent bodily injury;
(3) engages in the act of sexual intercourse with a
minor under 16 years of age who is not the spouse of the individual;
or
(4) engages, with the intent to arouse or to satisfy
the sexual desires of the individual, a minor under 16 years of age
who is not the spouse of the individual, or both the individual and
the minor, in any lewd fondling or touching of the individual or the
minor. (V.T.I.C. Art. 21.21-5, Sec. 1.)
Sec. 544.152. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies only to:
(1) a life insurer that delivers, issues for delivery,
or renews a life insurance contract or policy in this state,
including a group contract, policy, or certificate of life
insurance; and
(2) a health benefit plan issuer that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a health benefit plan issuer under Chapter
1501;
(F) a health maintenance organization operating
under Chapter 843;
(G) an employer under a multiple employer welfare
arrangement as defined by Section 3, Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1002), or an analogous
benefit arrangement, to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.);
(H) an issuer of a Medicare supplemental policy
as defined by Section 1882(g)(1), Social Security Act (42 U.S.C.
Section 1395ss); and
(I) an approved nonprofit health corporation
that holds a certificate of authority issued under Chapter 844.
(b) This subchapter does not apply to the issuer of:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to liability insurance;
(E) only for limited benefits; or
(F) only for dental or vision care;
(2) hospital confinement indemnity coverage;
(3) a credit insurance policy;
(4) workers' compensation insurance coverage;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care policy, including a nursing home
fixed indemnity policy, unless the commissioner determines that the
policy provides benefit coverage so comprehensive that the policy
is a health benefit plan as described by Subsection (a)(2).
(V.T.I.C. Art. 21.21-5, Sec. 2.)
Sec. 544.153. PROHIBITIONS. (a) A health benefit plan
issuer or life insurer may not, because of an individual's status as
a victim of family violence:
(1) deny coverage to the individual;
(2) refuse to renew the individual's coverage;
(3) cancel the individual's coverage;
(4) limit the amount, extent, or kind of coverage
available to the individual; or
(5) charge the individual or a group to which the
individual belongs a rate that is different from the rate charged to
other individuals or groups, respectively, for the same coverage.
(b) A health benefit plan issuer or life insurer may not, as
a part of an application for coverage, require an applicant to
reveal whether the applicant has been or may become a victim of
family violence. (V.T.I.C. Art. 21.21-5, Sec. 3.)
Sec. 544.154. CONFIDENTIALITY OF CERTAIN INFORMATION. (a)
Except as provided by Subsection (b), a health benefit plan issuer,
life insurer, or person employed by or under contract with a health
benefit plan issuer or life insurer may not release information
relating to the status as a victim of family violence of an
individual who is clearly a victim of family violence, including:
(1) information about specific acts of family violence
directed at the individual;
(2) the individual's address or telephone number at
home or at work; and
(3) information about the individual's employment,
associations, family membership, or relationships.
(b) A health benefit plan issuer or life insurer may release
information to which Subsection (a) applies only:
(1) to the individual;
(2) to another individual designated in writing by the
individual;
(3) to a licensed physician designated by the
individual;
(4) to a physician or other health care provider for
the provision of health care services;
(5) to an attorney who needs the information to
effectively represent the issuer or insurer, if the issuer or
insurer notifies the attorney of the requirements of this
subchapter and requests that the attorney exercise due diligence to
protect the information consistent with the attorney's obligation
to represent the issuer or insurer;
(6) to an individual covered under, or the owner of,
the health benefit plan or life insurance contract or policy that
contains information about status as a victim of family violence;
(7) to an individual or entity to whom the
commissioner considers the release appropriate;
(8) as required by other law or an order of the
commissioner or a court; or
(9) as necessary for a valid business purpose if:
(A) the information cannot be segregated from
other information about the individual without undue hardship to
the issuer or insurer;
(B) the recipient of the information is:
(i) a reinsurer that seeks to indemnify or
indemnifies all or part of a health benefit plan or life insurance
contract or policy covering the individual if the reinsurer cannot
underwrite or satisfy obligations under the reinsurance agreement
without the release of the information;
(ii) a party to a proposed or consummated
sale, transfer, merger, or consolidation of all or part of the
business of the issuer or insurer;
(iii) medical or claims personnel under
contract with the issuer or insurer, including a parent or
affiliate company under a service agreement with the issuer or
insurer, if the release of the information is necessary to process
an application, to perform duties under the health benefit plan or
life insurance contract or policy, or to protect the safety or
privacy of a victim of family violence; or
(iv) an entity with which the issuer
transacts business if the information is only the address or
telephone number of the individual and the entity cannot transact
the business without the address or telephone number; and
(C) the recipient of the information agrees in
writing to be subject to the requirements of this subchapter.
(V.T.I.C. Art. 21.21-5, Sec. 8.)
Sec. 544.155. UNDERWRITING CRITERIA. Notwithstanding any
other provision of this subchapter, a health benefit plan issuer or
life insurer may underwrite a risk on the basis of an individual's
physical or mental condition regardless of the underlying cause of
the condition or on the basis of any underwriting criteria not
prohibited by this code or another insurance law of this state or a
rule adopted under this code or another insurance law of this state
if the issuer or insurer consistently applies the criteria and does
not merely use the criteria as a pretext to evade the application of
Section 544.153. (V.T.I.C. Art. 21.21-5, Sec. 6.)
Sec. 544.156. HEALTH BENEFIT PLAN ISSUER OR LIFE INSURER
NOT LIABLE FOR DEATH OR BODILY INJURY. A health benefit plan issuer
or life insurer that delivers, issues for delivery, or renews a
health benefit plan or a life insurance policy or contract for an
individual who has been or may become a victim of family violence
may not be held civilly or criminally liable for the death of or
bodily injuries incurred by that individual as a result of family
violence. (V.T.I.C. Art. 21.21-5, Sec. 5.)
Sec. 544.157. RIGHT TO CONTINUED COVERAGE UNAFFECTED. This
subchapter does not affect the right of an individual to continued
coverage under Subchapter G, Chapter 1251. (V.T.I.C. Art. 21.21-5,
Sec. 7.)
Sec. 544.158. UNFAIR OR DECEPTIVE ACT OR PRACTICE. A
violation of this subchapter is an unfair or deceptive act or
practice under Chapter 541. (V.T.I.C. Art. 21.21-5, Sec. 4.)
[Sections 544.159-544.200 reserved for expansion]
SUBCHAPTER E. FIBROCYSTIC BREAST CONDITION
Sec. 544.201. DEFINITION. In this subchapter, "health
benefit plan issuer" means an insurer, a group hospital service
corporation operating under Chapter 842, or a health maintenance
organization operating under Chapter 843 that delivers or issues
for delivery or renews any health insurance policy or contract in
this state, including a group policy, contract, or certificate of
health insurance or evidence of coverage. (V.T.I.C. Art. 21.21-6,
Sec. (a), as added Acts 74th Leg., R.S., Ch. 522.)
Sec. 544.202. PROHIBITION. A health benefit plan issuer
may not, solely or in part because an individual has been diagnosed
with or has a history of a fibrocystic breast condition:
(1) deny coverage to the individual;
(2) refuse to renew the individual's coverage;
(3) cancel the individual's coverage;
(4) limit the amount, extent, or kind of coverage
available to the individual for any other breast condition; or
(5) charge the individual or a group to which the
individual belongs a rate that is different from the rate charged to
other individuals or groups, respectively, for the same coverage.
(V.T.I.C. Art. 21.21-6, Sec. (b), as added Acts 74th Leg., R.S., Ch.
522.)
Sec. 544.203. UNFAIR OR DECEPTIVE ACT OR PRACTICE. A
violation of this subchapter is an unfair or deceptive act or
practice under Chapter 541. (V.T.I.C. Art. 21.21-6, Sec. (c), as
added Acts 74th Leg., R.S., Ch. 522.)
Sec. 544.204. PAYMENT FOR DISEASE NOT REQUIRED. This
subchapter does not require a health benefit plan issuer to pay
benefits for fibrocystic breast disease. (V.T.I.C. Art. 21.21-6,
Sec. (d), as added Acts 74th Leg., R.S., Ch. 522.)
[Sections 544.205-544.250 reserved for expansion]
SUBCHAPTER F. CHURCH PROPERTY
Sec. 544.251. DEFINITIONS. In this subchapter:
(1) "Church" means a facility that is owned by a
religious organization and is used primarily for religious
services.
(2) "Religious organization" means a church,
synagogue, or other organization or association organized
primarily for religious purposes. (V.T.I.C. Art. 21.21-9, Sec. 1,
as added Acts 75th Leg., R.S., Ch. 1007.)
Sec. 544.252. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to an insurer that is admitted to engage in the business of
insurance and authorized to write an insurance policy providing
coverage for losses resulting from fire in this state, including a
county mutual insurance company, a Lloyd's plan, a reciprocal or
interinsurance exchange, or a farm mutual insurance company.
(V.T.I.C. Art. 21.21-9, Sec. 2, as added Acts 75th Leg., R.S., Ch.
1007.)
Sec. 544.253. PROHIBITION. An insurer writing insurance
for a church may not cancel or decline to renew an insurance policy
solely because of:
(1) an occurrence of arson against the church, if the
religious organization that owns the church cooperated with police,
fire, and other authorities in the investigation of the arson and in
the prosecution of those responsible for the arson; or
(2) a verbal or written threat of arson against the
church that was directed to the religious organization or an
official of the religious organization and that the organization or
official reported to the appropriate law enforcement agency within
a reasonable amount of time. (V.T.I.C. Art. 21.21-9, Sec. 3, as
added Acts 75th Leg., R.S., Ch. 1007.)
Sec. 544.254. UNFAIR OR DECEPTIVE ACT OR PRACTICE. A
violation of this subchapter is an unfair or deceptive act or
practice in the business of insurance under Chapter 541. (V.T.I.C.
Art. 21.21-9, Sec. 4, as added Acts 75th Leg., R.S., Ch. 1007.)
CHAPTER 545. HIV TESTING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 545.001. DEFINITIONS
Sec. 545.002. EXCLUSIVE APPLICABILITY
Sec. 545.003. RULES
[Sections 545.004-545.050 reserved for expansion]
SUBCHAPTER B. ISSUER POWERS AND DUTIES
Sec. 545.051. HIV-RELATED TESTING AUTHORIZED
Sec. 545.052. NONDISCRIMINATORY BASIS REQUIRED
Sec. 545.053. EXPLANATION AND AUTHORIZATION REQUIRED
Sec. 545.054. INQUIRIES REGARDING PREVIOUS TESTS
Sec. 545.055. NOTICE OF POSITIVE TEST RESULT; FEE
Sec. 545.056. ADVERSE UNDERWRITING DECISION; TEST
PROTOCOL RULES
Sec. 545.057. CONFIDENTIALITY OF TEST RESULT REQUIRED
[Sections 545.058-545.700 reserved for expansion]
SUBCHAPTER O. SANCTIONS; PENALTIES; INJUNCTIONS
Sec. 545.701. SANCTIONS
Sec. 545.702. CIVIL ACTION; PENALTY
Sec. 545.703. CRIMINAL PENALTY
CHAPTER 545. HIV TESTING
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 545.001. DEFINITIONS. In this chapter:
(1) "AIDS" has the meaning assigned by Section 81.101,
Health and Safety Code.
(2) "Applicant" means an individual who applies to an
issuer for coverage.
(3) "HIV" has the meaning assigned by Section 81.101,
Health and Safety Code.
(4) "Issuer" means a person who delivers, issues for
delivery, or renews coverage in this state, including a group
policy, contract, or certificate of health insurance or evidence of
coverage delivered, issued for delivery, or renewed in this state
by an insurer, including a group hospital service corporation
operating under Chapter 842, or by a health maintenance
organization operating under Chapter 843.
(5) "Test result" means a statement:
(A) that an identifiable individual is positive,
negative, at risk, or has or does not have a certain level of
antigen or antibody; or
(B) that indicates that an identifiable
individual has or has not been tested for AIDS or HIV infection,
antibodies to HIV, or infection with any other probable causative
agent of AIDS. (V.T.I.C. Art. 21.21-4, Sec. (a); New.)
Sec. 545.002. EXCLUSIVE APPLICABILITY. This chapter and
rules adopted under this chapter exclusively govern the practices
of an issuer in testing applicants to determine or help determine if
an applicant has:
(1) AIDS or HIV infection;
(2) antibodies to HIV; or
(3) an infection with any other probable causative
agent of AIDS. (V.T.I.C. Art. 21.21-4, Sec. (p).)
Sec. 545.003. RULES. The commissioner may adopt:
(1) reasonable rules and forms necessary to implement
this chapter; and
(2) rules to be followed for an HIV-related test
requested or required by an issuer. (V.T.I.C. Art. 21.21-4, Sec.
(i).)
[Sections 545.004-545.050 reserved for expansion]
SUBCHAPTER B. ISSUER POWERS AND DUTIES
Sec. 545.051. HIV-RELATED TESTING AUTHORIZED. An issuer
may request or require an applicant to take an HIV-related test in
connection with the application. (V.T.I.C. Art. 21.21-4, Sec. (b)
(part).)
Sec. 545.052. NONDISCRIMINATORY BASIS REQUIRED. (a) An
issuer that requests or requires applicants to take an HIV-related
test must request or require the test on a nondiscriminatory basis.
(b) An issuer may require an applicant to take an
HIV-related test only if:
(1) the test is based on the applicant's current
medical condition or medical history; or
(2) underwriting guidelines for the coverage amounts
require all applicants in the risk class to be tested.
(c) In determining who will be requested or required to take
an HIV-related test, an issuer may not use the marital status,
occupation, sex, beneficiary designation, or territorial
classification, including zip code, of an applicant. (V.T.I.C.
Art. 21.21-4, Secs. (b) (part), (h).)
Sec. 545.053. EXPLANATION AND AUTHORIZATION REQUIRED. (a)
An issuer that requests or requires an applicant to take an
HIV-related test in connection with an application must:
(1) provide an explanation to the applicant, or
another person legally authorized to consent to the test, of how the
test will be used; and
(2) obtain a written authorization from the person to
whom the explanation is provided.
(b) The authorization must:
(1) be on a form adopted by the commissioner; and
(2) be separate from any other document presented to
the applicant or other person legally authorized to consent to the
test. (V.T.I.C. Art. 21.21-4, Sec. (c).)
Sec. 545.054. INQUIRIES REGARDING PREVIOUS TESTS. (a) An
issuer may inquire whether an applicant has:
(1) tested positive on an HIV-related test; or
(2) been diagnosed with HIV or AIDS.
(b) An issuer may not inquire whether an applicant has been
tested for or has received a negative result from a specific test
for:
(1) exposure to HIV; or
(2) a sickness or a medical condition derived from
infection with HIV. (V.T.I.C. Art. 21.21-4, Sec. (d).)
Sec. 545.055. NOTICE OF POSITIVE TEST RESULT; FEE. (a) An
applicant must be given written notice of a positive HIV-related
test result by:
(1) a physician designated by the applicant; or
(2) the Texas Department of Health, if the applicant
has not designated a physician.
(b) The Texas Department of Health by rule may set a fee, not
to exceed $25, to cover the cost of giving written notice under this
section. (V.T.I.C. Art. 21.21-4, Sec. (f).)
Sec. 545.056. ADVERSE UNDERWRITING DECISION; TEST PROTOCOL
RULES. An issuer may not make an adverse underwriting decision
based on a positive HIV-related test unless a test protocol
established by commissioner rule is followed. (V.T.I.C. Art.
21.21-4, Sec. (g).)
Sec. 545.057. CONFIDENTIALITY OF TEST RESULT REQUIRED. (a)
An HIV-related test result is confidential.
(b) An issuer may not release or disclose the test result or
otherwise allow the test result to become known except as:
(1) required by law; or
(2) requested or authorized in writing by the
applicant or a person legally authorized to consent to the test on
the applicant's behalf.
(c) A test result released under Subsection (b)(2) may be
released only to:
(1) the applicant;
(2) a person legally authorized to consent to the
test;
(3) a licensed physician, medical practitioner, or
other person designated by the applicant;
(4) an insurance medical information exchange under
procedures designed to ensure confidentiality, including the use of
general codes that cover results of tests for other diseases or
conditions not related to AIDS, or for the preparation of
statistical reports that do not disclose the identity of any
particular applicant;
(5) a reinsurer, if the reinsurer is involved in the
underwriting process, under procedures designed to ensure
confidentiality;
(6) persons within the issuer's organization who have
the responsibility to make underwriting decisions for the issuer;
or
(7) outside legal counsel that needs the information
to effectively represent the issuer regarding the applicant.
(V.T.I.C. Art. 21.21-4, Sec. (e).)
[Sections 545.058-545.700 reserved for expansion]
SUBCHAPTER O. SANCTIONS; PENALTIES; INJUNCTIONS
Sec. 545.701. SANCTIONS. The commissioner may impose
sanctions under Chapter 82 on an issuer that violates this chapter.
(V.T.I.C. Art. 21.21-4, Sec. (q).)
Sec. 545.702. CIVIL ACTION; PENALTY. (a) A person who is
injured by a violation of Section 545.057 may bring a civil action
for damages.
(b) A person may bring an action to restrain a violation or
threatened violation of Section 545.057.
(c) If it is found in a civil action that a person or entity
has released or disclosed a test result or allowed a test result to
become known in violation of Section 545.057, the person or entity
is liable for:
(1) actual damages;
(2) a civil penalty of:
(A) not more than $1,000 if the release or
disclosure was negligent; or
(B) not less than $1,000 or more than $5,000 if
the release or disclosure was wilful; and
(3) court costs and reasonable attorney's fees
incurred by the person bringing the action.
(d) A defendant in a civil action brought under this section
is not entitled to claim a privilege as a defense to the action.
(V.T.I.C. Art. 21.21-4, Secs. (j), (k), (l), (o).)
Sec. 545.703. CRIMINAL PENALTY. (a) A person or entity
commits an offense if the person or entity, with criminal
negligence, violates Section 545.057 by:
(1) releasing or disclosing a test result or other
information; or
(2) allowing a test result or other information to
become known.
(b) An offense under this section is a Class A misdemeanor.
(c) Each release or disclosure made or allowance of a test
result to become known in violation of this chapter constitutes a
separate offense. (V.T.I.C. Art. 21.21-4, Secs. (m), (n).)
CHAPTER 546. USE OF GENETIC TESTING INFORMATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 546.001. DEFINITIONS
Sec. 546.002. APPLICABILITY OF CHAPTER
Sec. 546.003. EXCEPTIONS
[Sections 546.004-546.050 reserved for expansion]
SUBCHAPTER B. GENETIC TESTING AND USE OF TEST RESULTS
Sec. 546.051. CERTAIN TESTING PERMITTED; INDUCEMENT
PROHIBITED
Sec. 546.052. IMPROPER USE OF TEST RESULTS; REFUSAL TO
SUBMIT TO TESTING
Sec. 546.053. TESTING RELATED TO PREGNANCY
Sec. 546.054. DESTRUCTION OF SAMPLE MATERIAL; EXCEPTIONS
[Sections 546.055-546.100 reserved for expansion]
SUBCHAPTER C. DISCLOSURE OF GENETIC INFORMATION;
CONFIDENTIALITY; EXCEPTIONS
Sec. 546.101. DISCLOSURE OF TEST RESULTS TO INDIVIDUAL
TESTED
Sec. 546.102. CONFIDENTIALITY OF GENETIC INFORMATION
Sec. 546.103. EXCEPTIONS TO CONFIDENTIALITY
Sec. 546.104. AUTHORIZED DISCLOSURE
[Sections 546.105-546.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 546.151. CEASE AND DESIST ORDER
Sec. 546.152. ADMINISTRATIVE PENALTY
CHAPTER 546. USE OF GENETIC TESTING INFORMATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 546.001. DEFINITIONS. In this chapter:
(1) "DNA" means deoxyribonucleic acid.
(2) "Genetic characteristic" means a scientifically
or medically identifiable genetic or chromosomal variation,
composition, or alteration that predisposes an individual to a
disease, disorder, or syndrome.
(3) "Genetic information" means information that is:
(A) obtained from or based on a scientific or
medical determination of the presence or absence in an individual
of a genetic characteristic; or
(B) derived from the results of a genetic test
performed on an individual.
(4) "Genetic test" means a presymptomatic laboratory
test of an individual's genes, gene products, or chromosomes that:
(A) analyzes the individual's DNA, RNA,
proteins, or chromosomes; and
(B) is performed to identify any genetic
variation, composition, or alteration that is associated with the
individual's having a predisposition for:
(i) developing a clinically recognized
disease, disorder, or syndrome; or
(ii) being a carrier of a clinically
recognized disease, disorder, or syndrome.
The term does not include a blood test, cholesterol test,
urine test, or other physical test used for a purpose other than
determining a genetic or chromosomal variation, composition, or
alteration in a specific individual; a routine physical examination
or a routine test performed as part of a physical examination; a
test to determine drug use; or a test to determine the presence of
the human immunodeficiency virus.
(5) "RNA" means ribonucleic acid. (V.T.I.C. Art.
21.73, Secs. 1(1), (2), (3), (4), (6).)
Sec. 546.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) a group, blanket, or franchise insurance
policy or insurance agreement, a group hospital service contract,
or a group evidence of coverage that is offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a group health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act;
(ii) another entity not authorized under
this code or another insurance law of this state that directly
contracts for health care services on a risk-sharing basis,
including a capitation basis; or
(iii) another analogous benefit
arrangement; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.73, Sec. 2(a).)
Sec. 546.003. EXCEPTIONS. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
(D) as a supplement to liability insurance;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) workers' compensation insurance coverage;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care policy, including a nursing home
fixed indemnity policy, unless the commissioner determines that the
policy provides benefit coverage so comprehensive that the policy
is a group health benefit plan as described by Section 546.002.
(V.T.I.C. Art. 21.73, Sec. 2(b).)
[Sections 546.004-546.050 reserved for expansion]
SUBCHAPTER B. GENETIC TESTING AND USE OF TEST RESULTS
Sec. 546.051. CERTAIN TESTING PERMITTED; INDUCEMENT
PROHIBITED. (a) A group health benefit plan issuer that requests
an applicant for coverage under the plan to submit to a genetic test
in connection with the application for coverage for a purpose not
prohibited under Section 546.052 must:
(1) notify the applicant that the test is required;
(2) disclose to the applicant the proposed use of the
test results; and
(3) obtain the applicant's written informed consent
before the test is administered.
(b) The applicant shall state in the consent form whether
the applicant elects to be informed of the test results. If the
applicant elects to be informed, the person or entity that performs
the test shall disclose the test results to the applicant and the
group health benefit plan issuer. The issuer shall ensure that:
(1) the applicant receives an interpretation of the
test results made by a qualified health care practitioner; and
(2) a physician or other health care practitioner
designated by the applicant receives a copy of the test results.
(c) A group health benefit plan issuer may not use the
results of a genetic test conducted in accordance with Subsection
(a) to induce the purchase of coverage under the plan. (V.T.I.C.
Art. 21.73, Secs. 3(b), (c), (d).)
Sec. 546.052. IMPROPER USE OF TEST RESULTS; REFUSAL TO
SUBMIT TO TESTING. A group health benefit plan issuer may not use
genetic information or the refusal of an applicant to submit to a
genetic test to reject, deny, limit, cancel, refuse to renew,
increase the premiums for, or otherwise adversely affect
eligibility for or coverage under the plan. (V.T.I.C. Art. 21.73,
Secs. 3(a), (e).)
Sec. 546.053. TESTING RELATED TO PREGNANCY. (a) In this
section, "coerce" means to restrain or dominate a woman's free will
by actual or implied:
(1) force; or
(2) threat of rejecting, denying, limiting,
canceling, refusing to renew, or otherwise adversely affecting
eligibility for coverage under a group health benefit plan.
(b) A group health benefit plan issuer may not:
(1) require as a condition of coverage genetic testing
of a child in utero without the pregnant woman's consent; or
(2) use genetic information to coerce or compel a
pregnant woman to have an induced abortion. (V.T.I.C. Art. 21.73,
Sec. 8.)
Sec. 546.054. DESTRUCTION OF SAMPLE MATERIAL; EXCEPTIONS.
A sample of genetic material obtained from an individual for a
genetic test shall be destroyed promptly after the purpose for
which the sample was obtained is accomplished unless:
(1) the sample is retained under a court order;
(2) the individual authorizes retention of the sample
for medical treatment or scientific research;
(3) the sample was obtained for research that is
cleared by an institutional review board and retention of the
sample is:
(A) under a requirement the institutional review
board imposes on a specific research project; or
(B) authorized by the research participant with
institutional review board approval under federal law; or
(4) the sample was obtained for a screening test
established by the Texas Department of Health under Section 33.011,
Health and Safety Code, and performed by that department or a
laboratory approved by that department. (V.T.I.C. Art. 21.73, Sec.
6.)
[Sections 546.055-546.100 reserved for expansion]
SUBCHAPTER C. DISCLOSURE OF GENETIC INFORMATION;
CONFIDENTIALITY; EXCEPTIONS
Sec. 546.101. DISCLOSURE OF TEST RESULTS TO INDIVIDUAL
TESTED. (a) An individual who submits to a genetic test has the
right to know the results of the test. On the written request by the
individual, the group health benefit plan issuer or other entity
that performed the test shall disclose the test results to:
(1) the individual; or
(2) a physician designated by the individual.
(b) The right to receive information under this section is
in addition to any right or requirement established under Sections
546.051 and 546.052. (V.T.I.C. Art. 21.73, Sec. 5.)
Sec. 546.102. CONFIDENTIALITY OF GENETIC INFORMATION. (a)
Except as provided by Sections 546.103(a) and (b), genetic
information is confidential and privileged regardless of the source
of the information.
(b) A person or entity that holds genetic information about
an individual may not disclose or be compelled to disclose, by
subpoena or otherwise, that information unless the disclosure is
specifically authorized by the individual as provided by Section
546.104.
(c) This section applies to a redisclosure of genetic
information by a secondary recipient of the information after
disclosure of the information by an initial recipient. Except as
provided by Section 546.103(b), a group health benefit plan issuer
may not redisclose genetic information unless the redisclosure is
consistent with the disclosures authorized by the tested individual
under an authorization executed under Section 546.104. (V.T.I.C.
Art. 21.73, Secs. 4(a), (d) (part).)
Sec. 546.103. EXCEPTIONS TO CONFIDENTIALITY. (a) Subject
to Subchapter G, Chapter 411, Government Code, genetic information
may be disclosed without an authorization under Section 546.104 if
the disclosure is:
(1) authorized under a state or federal criminal law
relating to:
(A) the identification of individuals; or
(B) a criminal or juvenile proceeding, an
inquest, or a child fatality review by a multidisciplinary
child-abuse team;
(2) required under a specific order of a state or
federal court;
(3) for the purpose of establishing paternity as
authorized under a state or federal law;
(4) made to provide genetic information relating to a
decedent and the disclosure is made to the blood relatives of the
decedent for medical diagnosis; or
(5) made to identify a decedent.
(b) A group health benefit plan issuer may redisclose
genetic information without an authorization under Section
546.104:
(1) for actuarial or research studies if:
(A) a tested individual could not be identified
in any actuarial or research report; and
(B) any materials that identify a tested
individual are returned or destroyed as soon as reasonably
practicable;
(2) to the department for the purpose of enforcing
this chapter; or
(3) for a purpose directly related to enabling a
business decision to be made about:
(A) purchasing, transferring, merging, or
selling all or part of an insurance business; or
(B) obtaining reinsurance affecting that
insurance business.
(c) A redisclosure authorized under Subsection (b) may
contain only information reasonably necessary to accomplish the
purpose for which the information is disclosed. (V.T.I.C. Art.
21.73, Secs. 4(c), (d) (part), (e).)
Sec. 546.104. AUTHORIZED DISCLOSURE. An individual or an
individual's legal representative may authorize disclosure of
genetic information relating to the individual by an authorization
that:
(1) is written in plain language;
(2) is dated;
(3) contains a specific description of the information
to be disclosed;
(4) identifies or describes each person authorized to
disclose the genetic information to a group health benefit plan
issuer;
(5) identifies or describes the individuals or
entities to whom the disclosure or subsequent redisclosure of the
genetic information may be made;
(6) describes the specific purpose of the disclosure;
(7) is signed by the individual or legal
representative and, if the disclosure is made to claim proceeds of
an affected life insurance policy, the claimant; and
(8) advises the individual or legal representative
that the individual's authorized representative is entitled to
receive a copy of the authorization. (V.T.I.C. Art. 21.73, Sec.
4(b).)
[Sections 546.105-546.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 546.151. CEASE AND DESIST ORDER. (a) On a finding by
the commissioner that a group health benefit plan issuer is in
violation of this chapter, the commissioner may issue a cease and
desist order in the manner provided by Chapter 83.
(b) If a group health benefit plan issuer refuses or fails
to comply with a cease and desist order issued under this section,
the commissioner may, in the manner provided by this code and other
insurance laws of this state, revoke or suspend the issuer's
certificate of authority or other authorization to operate a group
health benefit plan in this state. (V.T.I.C. Art. 21.73, Sec.
7(a).)
Sec. 546.152. ADMINISTRATIVE PENALTY. A group health
benefit plan issuer that operates a plan in violation of this
chapter is subject to an administrative penalty as provided by
Chapter 84. (V.T.I.C. Art. 21.73, Sec. 7(b).)
CHAPTER 547. FALSE ADVERTISING BY UNAUTHORIZED INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 547.001. DEFINITIONS
Sec. 547.002. CONSTRUCTION OF CHAPTER
[Sections 547.003-547.050 reserved for expansion]
SUBCHAPTER B. PROHIBITION; ENFORCEMENT
Sec. 547.051. ACTS PROHIBITED
Sec. 547.052. NOTICE OF VIOLATION TO INSURER'S
DOMICILIARY STATE
Sec. 547.053. ENFORCEMENT ACTION
CHAPTER 547. FALSE ADVERTISING BY UNAUTHORIZED INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 547.001. DEFINITIONS. In this chapter:
(1) "Alien or foreign insurer" means an insurance
company organized under the laws of:
(A) a country other than the United States; or
(B) a state of the United States other than this
state.
(2) "Resident" includes a domestic, alien, or foreign:
(A) corporation;
(B) partnership; or
(C) person. (V.T.I.C. Art. 21.21-1, Secs. 2(a),
(c).)
Sec. 547.002. CONSTRUCTION OF CHAPTER. This chapter shall
be construed liberally. (V.T.I.C. Art. 21.21-1, Sec. 1(b).)
[Sections 547.003-547.050 reserved for expansion]
SUBCHAPTER B. PROHIBITION; ENFORCEMENT
Sec. 547.051. ACTS PROHIBITED. (a) This section applies
only to an insurer's misrepresentation of:
(1) the insurer's financial condition;
(2) the terms of an existing or future contract;
(3) the benefits or advantages promised by an existing
or future contract; or
(4) the dividends or share of surplus to be received on
an existing or future contract.
(b) An unauthorized alien or foreign insurer may not:
(1) make, issue, circulate, or cause to be made,
issued, or circulated to a resident of this state a
misrepresentation in an advertisement, estimate, illustration,
circular, pamphlet, or letter that violates Chapter 541; or
(2) cause to be made to a resident of this state in a
newspaper, magazine, or other publication, or over a radio or
television station, a misrepresentation in an announcement or
statement that violates Chapter 541. (V.T.I.C. Art. 21.21-1, Sec.
3 (part).)
Sec. 547.052. NOTICE OF VIOLATION TO INSURER'S DOMICILIARY
STATE. (a) In this section, the domiciliary state of an alien
insurer is the state of entry or the state of the insurer's
principal office in the United States.
(b) If the department has reason to believe that an insurer
has engaged in an act prohibited by Section 547.051, the department
shall notify, by registered mail, the insurer and the insurance
supervisory official of the insurer's domiciliary state. (V.T.I.C.
Art. 21.21-1, Sec. 3 (part).)
Sec. 547.053. ENFORCEMENT ACTION. The department shall
take action under Chapter 541 against an insurer notified under
Section 547.052 if:
(1) after the 30th day following the date of notice,
the insurer has not stopped making, issuing, or circulating or
causing to be made, issued, or circulated in this state the false
misrepresentations; and
(2) the department has reason to believe that:
(A) the insurer is issuing or delivering
insurance contracts to residents of this state or is collecting
premiums on those contracts; and
(B) a department proceeding regarding the
misrepresentations is in the public interest. (V.T.I.C. Art.
21.21-1, Sec. 4.)
CHAPTER 548. INSURER INSIDER TRADING AND PROXY REGULATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 548.001. PURPOSE
Sec. 548.002. DEFINITIONS
Sec. 548.003. RULEMAKING AUTHORITY
Sec. 548.004. RULES RELATING TO EQUITY SECURITIES AND
EXEMPT SECURITIES
[Sections 548.005-548.100 reserved for expansion]
SUBCHAPTER B. REQUIRED ACTS; PROHIBITIONS
Sec. 548.101. DEFINITION
Sec. 548.102. STATEMENT OF BENEFICIAL OWNERSHIP
OF EQUITY SECURITIES
Sec. 548.103. RECOVERY OF CERTAIN PROFITS
Sec. 548.104. SALE OR NONDELIVERY OF CERTAIN EQUITY
SECURITIES PROHIBITED
Sec. 548.105. CERTAIN SOLICITATIONS PROHIBITED; DISCLOSURE
BY INSURER
Sec. 548.106. NONAPPLICABILITY OF SUBCHAPTER
[Sections 548.107-548.200 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 548.201. OFFENSES; CRIMINAL PENALTY
Sec. 548.202. CIVIL PENALTY
Sec. 548.203. INJUNCTIVE ACTION
CHAPTER 548. INSURER INSIDER TRADING AND PROXY REGULATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 548.001. PURPOSE. (a) The purpose of this chapter is
to provide for protection of the public interest, investors, and
shareholders of domestic stock insurers by:
(1) regulating proxy solicitation by domestic stock
insurers;
(2) regulating transactions by officers, directors,
and principal equity security holders of domestic stock insurers;
and
(3) requiring appropriate reporting of those
solicitations and transactions.
(b) To that end the misuse of information by certain
insiders of domestic stock insurers shall be prevented and a full
and fair disclosure of all material matters relevant to the
exercise of the corporate franchise of a shareholder of such an
insurer will be promoted and the free exercise of that franchise
will be assured.
(c) In exercising the authority granted by this chapter to
adopt rules, the commissioner shall promote the purposes of this
chapter to prevent misuse of information and to encourage good
faith dealing and full and fair disclosure. (V.T.I.C. Art. 21.48,
Sec. 13.)
Sec. 548.002. DEFINITIONS. In this chapter:
(1) "Domestic stock insurer" includes a domestic title
insurance company regulated by Title 11 and a stipulated premium
company regulated by Chapter 884.
(2) "Equity security" means:
(A) a stock or similar security;
(B) a security that:
(i) is convertible, with or without
consideration, into an equity security; or
(ii) carries a warrant or right to
subscribe to or purchase an equity security;
(C) a warrant or right to subscribe to or
purchase an equity security; or
(D) any other security defined as an equity
security in accordance with Section 548.004(a)(1).
(3) "Federal Securities Exchange Act" means the
Securities Exchange Act of 1934 (15 U.S.C. Section 77b et seq.), as
amended.
(4) "Officer" means:
(A) a president, vice president, treasurer,
actuary, secretary, or controller of a domestic stock insurer; or
(B) any other person who performs for a domestic
stock insurer the functions of an officer described by Paragraph
(A).
(5) "Person" means an individual, corporation,
partnership, association, joint-stock company, business trust, or
unincorporated organization. (V.T.I.C. Art. 21.48, Secs. 8(3), (4)
(part), (6), (7); New.)
Sec. 548.003. RULEMAKING AUTHORITY. The commissioner may:
(1) adopt rules necessary for the execution of the
powers and duties of the department or commissioner under this
subchapter and Subchapter B; and
(2) for that purpose classify domestic stock insurers,
securities, and other persons or matters under the jurisdiction of
the department or commissioner. (V.T.I.C. Art. 21.48, Sec. 10
(part).)
Sec. 548.004. RULES RELATING TO EQUITY SECURITIES AND
EXEMPT SECURITIES. (a) If the commissioner considers it necessary
or appropriate in the public interest or for the protection of
investors, the commissioner by rule may define:
(1) "equity security" to include a security that is
similar in nature to an equity security; and
(2) "exempt security" for purposes of this chapter.
(b) In adopting a rule under Subsection (a)(2), the
commissioner may define the term conditionally, on specified terms,
or for a stated period. (V.T.I.C. Art. 21.48, Secs. 8(4) (part),
(5).)
[Sections 548.005-548.100 reserved for expansion]
SUBCHAPTER B. REQUIRED ACTS; PROHIBITIONS
Sec. 548.101. DEFINITION. In this subchapter, "insider"
means a person who:
(1) is directly or indirectly the beneficial owner of
more than 10 percent of any class of an equity security of a
domestic stock insurer, other than an exempt security; or
(2) is a director or officer of a domestic stock
insurer. (V.T.I.C. Art. 21.48, Secs. 2 (part), 3 (part), 4 (part).)
Sec. 548.102. STATEMENT OF BENEFICIAL OWNERSHIP OF EQUITY
SECURITIES. (a) Not later than the 10th day after the date a person
becomes an insider, the insider shall file with the department a
statement of the amount of all equity securities of the insurer of
which the insider is a beneficial owner.
(b) If in any month a change occurs in the amount of the
equity securities of which the insider is a beneficial owner, the
insider shall file with the department not later than the 10th day
of the following month a statement that indicates:
(1) the amount of all equity securities of which the
insider is a beneficial owner as of the end of that month; and
(2) the changes in the insider's ownership that
occurred in that month.
(c) A statement under this section must be in the form
prescribed by the department. (V.T.I.C. Art. 21.48, Sec. 2
(part).)
Sec. 548.103. RECOVERY OF CERTAIN PROFITS. (a) The purpose
of this section is to prevent the unfair use of information that may
be obtained by an insider because of the insider's relationship
with the domestic stock insurer.
(b) Any profit realized by the insider from the purchase and
sale or from the sale and purchase of an equity security of the
domestic stock insurer within a period of less than six months
inures to and is recoverable by the insurer.
(c) A suit to recover the profit must be brought not later
than the second anniversary of the date the profit is realized. The
suit may be instituted at law or in equity by:
(1) the domestic stock insurer; or
(2) the owner of any security of the domestic stock
insurer, in the name of and in behalf of the insurer, if the insurer
does not:
(A) bring suit not later than the 60th day after
the date a request is made; or
(B) diligently prosecute a suit that is timely
brought by the insurer.
(d) Subsection (b) applies regardless of whether:
(1) the insider intended to hold the equity security
purchased for longer than six months; or
(2) the insider did not intend to repurchase the sold
equity security during the six-month period following the date the
insider sold the equity security.
(e) Subsection (b) does not apply to:
(1) a transaction in which an equity security was
acquired in good faith in connection with a previously contracted
debt;
(2) a transaction in which the beneficial owner of an
equity security was not the beneficial owner at both the time of the
purchase and the time of the sale, or the sale and purchase, of the
security involved;
(3) a transaction involving an exempt security;
(4) a transaction that the commissioner by rule
exempts from this section because it is beyond the scope of the
purpose of this section; or
(5) a transaction involving an equity security of a
domestic stock insurer that is not held by a dealer in an investment
account if the transaction:
(A) is in the ordinary course of the dealer's
business; and
(B) is incident to the establishment or
maintenance by the dealer of a primary or secondary market, other
than on an exchange, as defined by the federal Securities Exchange
Act, for the security.
(f) The commissioner may adopt rules the commissioner
considers necessary or appropriate in the public interest to define
and prescribe terms and conditions with respect to a security held
in an investment account and a transaction made in the ordinary
course of business and incident to the establishment or maintenance
of a primary or secondary market. (V.T.I.C. Art. 21.48, Secs. 3, 6
(part).)
Sec. 548.104. SALE OR NONDELIVERY OF CERTAIN EQUITY
SECURITIES PROHIBITED. (a) An insider may not directly or
indirectly sell an equity security of the domestic stock insurer if
the insider selling the security or the insider's principal:
(1) does not own the security; or
(2) owns the security, but does not:
(A) deliver the security before the 21st day
after the date of the sale; or
(B) deposit the security in the mail or another
usual channel of transportation before the sixth day after the date
of the sale.
(b) An insider is not considered to have violated Subsection
(a)(2) if the insider proves that:
(1) notwithstanding the exercise of good faith, the
insider was unable to make a timely delivery or deposit; or
(2) to make a timely delivery or deposit would cause
undue inconvenience or expense.
(c) Subsection (a) does not apply to the sale of:
(1) an exempt security; or
(2) an equity security of a domestic stock insurer
that is not held by a dealer in an investment account if the sale:
(A) is in the ordinary course of the dealer's
business; and
(B) is incident to the establishment or
maintenance by the dealer of a primary or secondary market, other
than on an exchange, as defined by the federal Securities Exchange
Act, for the security.
(d) The commissioner may adopt rules implementing
Subsection (c) in the manner prescribed by Section 548.103(f).
(V.T.I.C. Art. 21.48, Secs. 4, 6 (part).)
Sec. 548.105. CERTAIN SOLICITATIONS PROHIBITED; DISCLOSURE
BY INSURER. (a) A person, in violation of any rule adopted by the
commissioner under this section, may not solicit or permit the use
of the person's name to solicit a proxy, consent, or authorization
with respect to an equity security, other than an exempt security,
of a domestic stock insurer that is not listed on a national
securities exchange registered as such under the federal Securities
Exchange Act.
(b) Unless before an annual or other meeting a proxy,
consent, or authorization with respect to a security of a domestic
stock insurer covered by Subsection (a) is solicited by or on behalf
of the management of the insurer from a holder of record of the
security in compliance with rules adopted by the commissioner under
this section, the insurer shall, in accordance with rules adopted
by the commissioner, file with the department information
substantially equivalent to the information that would be required
to be sent if a solicitation were made. The insurer shall send the
information to each holder of record of the security.
(c) The commissioner may adopt rules to implement this
section that the commissioner considers necessary or appropriate in
the public interest or for the protection of investors. (V.T.I.C.
Art. 21.48, Sec. 5.)
Sec. 548.106. NONAPPLICABILITY OF SUBCHAPTER. (a) This
subchapter does not apply to an equity security of a domestic stock
insurer if:
(1) the security is or is required to be registered
under Section 12 of the federal Securities Exchange Act; or
(2) the insurer does not have any class of its equity
securities held of record by 100 or more persons on the last
business day of the year preceding the year in which the equity
security would otherwise be subject to this subchapter.
(b) Sections 548.101-548.104 do not apply to a foreign or
domestic arbitrage transaction unless the transaction is made in
violation of a rule adopted by the commissioner to accomplish the
purposes of this chapter.
(c) A provision of this subchapter that imposes liability
does not apply to an act or omission made in good faith in
conformity with a rule adopted by the commissioner. This
subsection applies regardless of whether the rule is subsequently
amended, rescinded, or determined by judicial or other authority to
be invalid for any reason. (V.T.I.C. Art. 21.48, Secs. 7, 9, 10
(part).)
[Sections 548.107-548.200 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 548.201. OFFENSES; CRIMINAL PENALTY. (a) A person
commits an offense if the person intentionally:
(1) violates this chapter or a rule adopted under this
chapter; or
(2) makes or causes to be made a statement that is
false or misleading with respect to a material fact in a document
required to be filed by this chapter or a rule adopted under this
chapter.
(b) Except as provided by Subsection (c), an offense under
this section is punishable by:
(1) a fine not to exceed $10,000;
(2) imprisonment for not more than two years; or
(3) both the fine and imprisonment.
(c) A person may not be punished by imprisonment for
violating a rule as prescribed by this section if the person proves
that the person had no knowledge of the rule. (V.T.I.C. Art. 21.48,
Sec. 11.)
Sec. 548.202. CIVIL PENALTY. (a) A person who wilfully
violates this chapter or a rule adopted under this chapter is liable
for a civil penalty of not less than $100 or more than $1,000 for:
(1) each act of violation; and
(2) each day of violation.
(b) The attorney general, at the request of the
commissioner, shall bring a suit in the name of the state to recover
the civil penalty. The suit must be brought:
(1) in Travis County or the county in which the person
resides;
(2) if more than one person commits the violation, in
the county in which any of the persons resides; or
(3) in the county in which the violation allegedly
occurred. (V.T.I.C. Art. 21.48, Sec. 12 (part).)
Sec. 548.203. INJUNCTIVE ACTION. A suit to enjoin a
violation or a threatened violation of this chapter may be brought
in any district court in which an action for a civil penalty under
Section 548.202 may be brought. (V.T.I.C. Art. 21.48, Sec. 12
(part).)
CHAPTER 549. PROHIBITED PRACTICES RELATING TO
PROPERTY INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 549.001. DEFINITIONS
Sec. 549.002. INAPPLICABILITY OF CHAPTER TO TITLE
INSURANCE
Sec. 549.003. CANCELLATION OF POLICY AFTER FORECLOSURE
AUTHORIZED
[Sections 549.004-549.050 reserved for expansion]
SUBCHAPTER B. PROHIBITED PRACTICES
Sec. 549.051. FEES FOR SUBSTITUTION OR REPLACEMENT OF
POLICY
Sec. 549.052. REQUIRING POLICY FROM PARTICULAR SOURCE
Sec. 549.053. USE OF POLICY INFORMATION
Sec. 549.054. REQUIRING EVIDENCE OF INSURANCE BEFORE
TERMINATION OF POLICY
Sec. 549.055. INSURANCE BINDER AS EVIDENCE OF
INSURANCE
Sec. 549.056. CERTAIN ACTIONS BY LENDER NOT
PROHIBITED
[Sections 549.057-549.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT AND CIVIL REMEDIES
Sec. 549.101. ENFORCEMENT ACTION
Sec. 549.102. CIVIL DAMAGES
CHAPTER 549. PROHIBITED PRACTICES RELATING TO
PROPERTY INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 549.001. DEFINITIONS. In this chapter:
(1) "Borrower" means an individual, partnership,
corporation, association, or other entity who has or acquires a
legal or equitable interest in real or personal property that is or
becomes subject to a mortgage, lien, security agreement, deed of
trust, or other security instrument.
(2) "Insurance binder" means a contract that provides
insurance coverage pending the issuance of an original insurance
policy that will be issued on or before the 30th day after the date
the insurance binder is issued.
(3) "Lender" means an individual, partnership,
corporation, association, or other entity, agent, loan agent,
servicing agent, or loan or mortgage broker who lends money and
receives or otherwise acquires a mortgage, a lien, a deed of trust,
or any other security interest in or on any real or personal
property as security for the loan. (V.T.I.C. Art. 21.48A, Sec. 1.)
Sec. 549.002. INAPPLICABILITY OF CHAPTER TO TITLE
INSURANCE. This chapter does not apply to title insurance.
(V.T.I.C. Art. 21.48A, Sec. 5.)
Sec. 549.003. CANCELLATION OF POLICY AFTER FORECLOSURE
AUTHORIZED. In the event of a foreclosure under a deed of trust,
the lender may cancel an insurance policy covering the foreclosed
property and is entitled to any unearned premiums from the policy if
the lender:
(1) credits the amount of the unearned premiums
against any deficiency owed by the borrower; and
(2) delivers to the borrower any excess unearned
premiums not credited against a deficiency under Subdivision (1).
(V.T.I.C. Art. 21.48A, Sec. 3A.)
[Sections 549.004-549.050 reserved for expansion]
SUBCHAPTER B. PROHIBITED PRACTICES
Sec. 549.051. FEES FOR SUBSTITUTION OR REPLACEMENT OF
POLICY. (a) A lender may not require a fee in an amount greater
than $10 for the substitution by the borrower of a new insurance
policy for another insurance policy in effect, or require a fee for
the furnishing by the borrower of a new insurance policy to replace
an existing insurance policy on termination of the existing policy,
if the new insurance policy is provided through an insurer
authorized to engage in business in this state.
(b) On the sale or transfer of the lender's ownership
interest in real or personal property, the lender is subject to the
payment of a substitution fee as described by Subsection (a) and may
not, directly or indirectly, charge the borrower for the
substitution fee. (V.T.I.C. Art. 21.48A, Secs. 2(a), (e).)
Sec. 549.052. REQUIRING POLICY FROM PARTICULAR SOURCE. A
lender may not directly or indirectly require as a condition of the
financing or lending of money or the renewal or extension of
financing or lending of money that the purchaser or borrower or the
successors of the purchaser or borrower obtain an insurance policy
or the renewal or extension of an insurance policy covering the
property involved in the transaction from or through:
(1) a particular agent, insurer, or other person; or
(2) a particular type or class of agent, insurer, or
other person. (V.T.I.C. Art. 21.48A, Sec. 2(b).)
Sec. 549.053. USE OF POLICY INFORMATION. (a) Except as
otherwise provided by this section, a lender may not:
(1) use or permit the use of any information taken from
an insurance policy insuring the borrower's property for the
purpose of soliciting insurance business from the borrower; or
(2) make information taken from an insurance policy
insuring the borrower's property available to any other person for
any purpose.
(b) Subsection (a) does not:
(1) apply if the borrower provides the lender with
specific written authority permitting or directing the particular
use or disclosure of information before the use or disclosure
occurs; or
(2) prevent a lender who is a licensed general
property and casualty agent from selling insurance to a borrower.
(V.T.I.C. Art. 21.48A, Sec. 2(c).)
Sec. 549.054. REQUIRING EVIDENCE OF INSURANCE BEFORE
TERMINATION OF POLICY. A lender may not require a borrower to
provide evidence of insurance earlier than the 15th day before the
termination date of an existing insurance policy. (V.T.I.C. Art.
21.48A, Sec. 2(d).)
Sec. 549.055. INSURANCE BINDER AS EVIDENCE OF INSURANCE.
(a) A lender that requires a borrower to secure insurance coverage
before the lender will provide a residential mortgage or commercial
real estate loan must accept an insurance binder as evidence of the
required insurance and may not require the borrower to provide an
original insurance policy instead of a binder if:
(1) the binder is issued by a licensed general
property and casualty agent who is appointed to represent the
insurer whose name appears on the binder and who is authorized to
issue binders;
(2) the binder is accompanied by evidence of payment
of the required premium; and
(3) the binder will be replaced by an original
insurance policy for the required coverage on or before the 30th day
after the date the binder is issued.
(b) A general property and casualty agent who issues an
insurance binder under Subsection (a) must, on request, provide the
lender with appropriate evidence for purposes of Subsection (a)(1).
(V.T.I.C. Art. 21.48A, Sec. 2(f).)
Sec. 549.056. CERTAIN ACTIONS BY LENDER NOT PROHIBITED.
(a) This subchapter does not prevent a lender from requiring
evidence to be produced before the commencement or renewal of a risk
that insurance has been obtained that:
(1) has a fixed termination date;
(2) provides adequate coverage in an amount sufficient
to cover the debt or loan; and
(3) will not be canceled without reasonable notice to
the lender.
(b) This subchapter does not prevent a lender from requiring
insurance from an insurer that is authorized to engage in business
in this state and that has a licensed resident agent in this state.
(c) This subchapter does not prevent a lender from refusing
to accept or approve insurance from a particular insurer on
reasonable and nondiscriminatory grounds relating to the financial
soundness of the insurer or the insurer's ability to service the
policy.
(d) This subchapter does not prevent a lender from
providing, in accordance with the terms of the mortgage, security
agreement, deed of trust, or other security instrument, insurance
coverage adequate to protect the lender's security interest in
property in the event the borrower fails to provide on or before the
15th day before the termination date of an existing insurance
policy an insurance policy meeting the requirements established by
the lender as authorized by this chapter. A lender that provides
insurance coverage under this subsection may use information
contained in the existing policy for the purpose of determining
that the insurance coverage provided is adequate.
(e) Except as provided by this subsection, this subchapter
does not prevent a lender from requiring at or before the time of
delivery by a general property and casualty agent or insurer of an
insurance policy to the lender a written statement from the
borrower designating the agent or insurer as the borrower's agent
for the delivery of the policy. A lender may not require a
statement described by this subsection when an agent or insurer is
providing a renewal of an existing expiring insurance policy
provided by the agent or insurer.
(f) This subchapter does not prevent a lender from providing
to a person, firm, or corporation that is or becomes the owner or
holder of a note or obligation secured by a mortgage, security
agreement, deed of trust, or other security instrument an insurance
policy or any information contained in an insurance policy that
covers property that is security for the loan.
(g) This subchapter does not prevent a lender from
processing a claim under the terms of an insurance policy that
covers property that is security for a loan. (V.T.I.C. Art. 21.48A,
Sec. 3.)
[Sections 549.057-549.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT AND CIVIL REMEDIES
Sec. 549.101. ENFORCEMENT ACTION. The attorney general,
commissioner, or department may institute a proceeding to enforce
this chapter and to enjoin any individual, partnership,
corporation, association, or other entity from engaging or
attempting to engage in any activity in violation of this chapter.
(V.T.I.C. Art. 21.48A, Sec. 4(a) (part).)
Sec. 549.102. CIVIL DAMAGES. (a) A borrower may recover
from a lender who violates this chapter civil damages in an amount
equal to three times the annual premium for the insurance policy in
force on the property that is security for the loan.
(b) If the insurance policy is for a period of more than one
year, the annual premium is computed by dividing the total premium
specified in the policy for the entire period of the policy by the
number of years of the duration of the policy. (V.T.I.C. Art.
21.48A, Sec. 4(b).)
CHAPTER 550. PROHIBITED PRACTICES RELATING TO PAYMENTS
Sec. 550.001. SOLICITATION OR COLLECTION
OF CERTAIN PAYMENTS
Sec. 550.002. INCREASE IN CERTAIN
PREMIUM PAYMENTS
CHAPTER 550. PROHIBITED PRACTICES RELATING TO PAYMENTS
Sec. 550.001. SOLICITATION OR COLLECTION OF CERTAIN
PAYMENTS. (a) An insurer or an insurer's agent or sponsoring
organization may not solicit or collect, in connection with an
application for insurance or the issuance of a policy, a payment
other than:
(1) a premium;
(2) a tax;
(3) a finance charge;
(4) a policy fee;
(5) an agent fee;
(6) a service fee, including a charge for costs
described by Section 4005.003;
(7) an inspection fee; or
(8) membership dues in a sponsoring organization.
(b) The commissioner by rule shall permit a sponsoring
organization to solicit a voluntary contribution with a membership
renewal solicitation if the membership renewal solicitation is
separate from an insurance billing.
(c) Except as otherwise provided by statute, an insurer may
require that membership dues in its sponsoring organization be paid
as a condition for issuance or renewal of an insurance policy.
(d) Criminal penalties for a violation of this section are
the same as criminal penalties provided for a violation under
Subchapter K, Chapter 823. (V.T.I.C. Art. 21.35B.)
Sec. 550.002. INCREASE IN CERTAIN PREMIUM PAYMENTS. (a) In
this section:
(1) "Account" means a person's account in a financial
institution.
(2) "Financial institution" means a state or national
bank, a state or federal savings and loan association or
corporation, or a state or federal credit union.
(3) "Insurer" means a person or entity engaged in the
business of insurance in this state as described by Chapter 101.
The term includes a person or entity engaged in the business of
surplus lines insurance in this state.
(4) "Person" means an insured, a policy or certificate
holder, or an owner of an insurance policy or certificate.
(b) An insurer receiving automatic premium payments through
withdrawal of funds from a person's account, including an escrow
account, as authorized by that person to pay premiums on insurance
coverage provided through that insurer, may not increase the amount
of funds to be withdrawn from the account to pay premiums on that
coverage unless:
(1) the insurer, not later than the 30th day before the
effective date of the increase in the premium payment amount,
notifies the person of the increase and provides the person a
postage prepaid form that may be used to object to the increase; and
(2) neither the insurer nor the financial institution
receives written objection to the increase on or before the fifth
day before the date on which the increase takes effect.
(c) This section does not require an insurer to notify a
person of an increase in a premium payment amount if:
(1) the insurance contract or certificate:
(A) when issued contains a schedule of increasing
premiums;
(B) expressly specifies the exact amount of each
premium; and
(C) specifies the period for which each premium
is payable; or
(2) the increase is the result of a change ordered by
the insured.
(d) This section does not apply to an increase in a premium
payment that is less than $10 or 10 percent of the previous amount
per month. (V.T.I.C. Art. 21.57.)
CHAPTER 551. PROHIBITED PRACTICES RELATING TO DECLINATION,
CANCELLATION, AND NONRENEWAL OF INSURANCE POLICIES
SUBCHAPTER A. GENERAL REQUIREMENTS
Sec. 551.001. RULES
Sec. 551.002. WRITTEN STATEMENT OF REASONS FOR DECLINATION,
CANCELLATION, OR NONRENEWAL
Sec. 551.003. IMMUNITY FROM LIABILITY
[Sections 551.004-551.050 reserved for expansion]
SUBCHAPTER B. CANCELLATION AND NONRENEWAL OF
CERTAIN LIABILITY INSURANCE POLICIES
Sec. 551.051. DEFINITIONS
Sec. 551.052. CANCELLATION PROHIBITED; EXCEPTIONS
Sec. 551.053. WRITTEN NOTICE OF CANCELLATION REQUIRED
Sec. 551.054. WRITTEN NOTICE OF NONRENEWAL REQUIRED
Sec. 551.055. REASON FOR CANCELLATION OR NONRENEWAL
REQUIRED
Sec. 551.056. TRANSFER NOT CONSIDERED REFUSAL
TO RENEW
[Sections 551.057-551.100 reserved for expansion]
SUBCHAPTER C. CANCELLATION AND NONRENEWAL OF
CERTAIN PROPERTY AND CASUALTY POLICIES
Sec. 551.101. DEFINITION
Sec. 551.102. APPLICABILITY OF SUBCHAPTER
Sec. 551.103. CANCELLATION
Sec. 551.104. AUTHORIZED CANCELLATION OF POLICIES
Sec. 551.105. NONRENEWAL OF POLICIES; NOTICE REQUIRED
Sec. 551.106. RENEWAL OF PERSONAL AUTOMOBILE INSURANCE
POLICIES
Sec. 551.107. RENEWAL OF CERTAIN POLICIES; PREMIUM SURCHARGE
AUTHORIZED; NOTICE
Sec. 551.108. INSURER RECORDS
Sec. 551.109. INSURER STATEMENT
Sec. 551.110. LIABILITY FOR DISCLOSURE
Sec. 551.111. EFFECT OF NONCOMPLIANCE
Sec. 551.112. RULES
[Sections 551.113-551.150 reserved for expansion]
SUBCHAPTER D. CANCELLATION OR NONRENEWAL OF
CERTAIN POLICIES ISSUED TO ELECTED OFFICIALS
Sec. 551.151. DEFINITION
Sec. 551.152. ELECTED OFFICIALS
CHAPTER 551. PROHIBITED PRACTICES RELATING TO DECLINATION,
CANCELLATION, AND NONRENEWAL OF INSURANCE POLICIES
SUBCHAPTER A. GENERAL REQUIREMENTS
Sec. 551.001. RULES. (a) The commissioner may, as
necessary, adopt and enforce reasonable rules, including notice
requirements, relating to the cancellation and nonrenewal of any
insurance policy regulated by the department under Chapter 5, other
than:
(1) a policy subject to Subchapter B or C; or
(2) a marine insurance policy other than inland
marine.
(b) In adopting rules under this section, the commissioner
shall consider the reasonable needs of the public and the
operations of the insurers. (V.T.I.C. Art. 21.49-2 (part).)
Sec. 551.002. WRITTEN STATEMENT OF REASONS FOR DECLINATION,
CANCELLATION, OR NONRENEWAL. (a) The commissioner shall require
an insurer, on request by an applicant for insurance or a
policyholder, to provide to the applicant or policyholder a written
statement of the reasons for the declination, cancellation, or
nonrenewal of an insurance policy to which Section 551.001 applies.
(b) An insurer's written statement giving the reasons for
the declination, cancellation, or nonrenewal of an insurance policy
must fully explain a decision that adversely affects an applicant
for insurance or a policyholder by denying the applicant or
policyholder insurance coverage or continued coverage.
(c) The statement must:
(1) state the precise incident, circumstance, or risk
factors applicable to the applicant for insurance or the
policyholder that violates any applicable guidelines;
(2) state the source of information on which the
insurer relied regarding the incident, circumstance, or risk
factors; and
(3) specify any other information considered relevant
by the commissioner.
(d) The commissioner shall adopt rules as necessary to
implement this section. (V.T.I.C. Art. 21.49-2 (part); Art.
21.49-2E, Secs. (a) (part), (b).)
Sec. 551.003. IMMUNITY FROM LIABILITY. An insurer or agent
or an employee of an insurer or agent is not liable, and a cause of
action does not arise against that individual or entity, for a
statement, disclosure, or communication made in good faith under
this subchapter. Immunity under this section does not apply to:
(1) disclosure of information known to be false; or
(2) a disclosure made with malice or the wilful intent
to injure any person. (V.T.I.C. Art. 21.49-2 (part).)
[Sections 551.004-551.050 reserved for expansion]
SUBCHAPTER B. CANCELLATION AND NONRENEWAL OF
CERTAIN LIABILITY INSURANCE POLICIES
Sec. 551.051. DEFINITIONS. In this subchapter:
(1) "Insurer" means an insurance company or other
entity admitted to engage in business and authorized to write
liability insurance in this state, including a county mutual
insurance company, a Lloyd's plan, and a reciprocal or
interinsurance exchange. The term does not include a county mutual
fire insurance company that writes exclusively industrial fire
insurance as described by Section 912.310 or a farm mutual
insurance company.
(2) "Liability insurance" means:
(A) general liability insurance;
(B) professional liability insurance other than
medical professional liability insurance;
(C) commercial automobile liability insurance;
(D) commercial multiperil insurance; and
(E) any other type or line of liability insurance
designated by the department. (V.T.I.C. Art. 21.49-2A, Sec. (a).)
Sec. 551.052. CANCELLATION PROHIBITED; EXCEPTIONS. (a) An
insurer may not cancel a liability insurance policy that is a
renewal or continuation policy.
(b) An insurer may not cancel a liability insurance policy
during the initial policy term after the 60th day following the date
on which the policy was issued.
(c) Notwithstanding Subsections (a) and (b), an insurer may
cancel a liability insurance policy at any time during the term of
the policy for:
(1) fraud in obtaining coverage;
(2) failure to pay premiums when due;
(3) an increase in hazard within the control of the
insured that would produce a rate increase; or
(4) loss of the insurer's reinsurance covering all or
part of the risk covered by the policy.
(d) Notwithstanding Subsections (a) and (b), an insurer may
cancel a liability insurance policy at any time during the term of
the policy if the insurer is placed in supervision,
conservatorship, or receivership and the cancellation or
nonrenewal is approved or directed by the supervisor, conservator,
or receiver. (V.T.I.C. Art. 21.49-2A, Secs. (b), (c).)
Sec. 551.053. WRITTEN NOTICE OF CANCELLATION REQUIRED. Not
later than the 10th day before the date on which the cancellation of
a liability insurance policy takes effect, an insurer must deliver
or mail written notice of the cancellation to the first-named
insured under the policy at the address shown on the policy.
(V.T.I.C. Art. 21.49-2A, Sec. (d).)
Sec. 551.054. WRITTEN NOTICE OF NONRENEWAL REQUIRED. (a)
An insurer may refuse to renew a liability insurance policy if the
insurer delivers or mails written notice of the nonrenewal to the
first-named insured under the policy at the address shown on the
policy.
(b) The notice must be delivered or mailed not later than
the 60th day before the date on which the policy expires. If the
notice is delivered or mailed later than the 60th day before the
date on which the policy expires, the coverage remains in effect
until the 61st day after the date on which the notice is delivered
or mailed.
(c) Earned premium for any period of coverage that extends
beyond the expiration date of the policy shall be computed pro rata
based on the previous year's rate. (V.T.I.C. Art. 21.49-2A, Sec.
(e).)
Sec. 551.055. REASON FOR CANCELLATION OR NONRENEWAL
REQUIRED. In a notice to an insured relating to cancellation or
refusal to renew, an insurer must state the reason for the
cancellation or nonrenewal. The statement must comply with:
(1) Sections 551.002(b) and (c); and
(2) rules adopted under Section 551.002(d). (V.T.I.C.
Art. 21.49-2A, Sec. (g); Art. 21.49-2E, Sec. (a) (part).)
Sec. 551.056. TRANSFER NOT CONSIDERED REFUSAL TO RENEW.
For purposes of this subchapter, the transfer of a policyholder
between admitted companies within the same insurance group is not
considered a refusal to renew. (V.T.I.C. Art. 21.49-2A, Sec. (f).)
[Sections 551.057-551.100 reserved for expansion]
SUBCHAPTER C. CANCELLATION AND NONRENEWAL OF
CERTAIN PROPERTY AND CASUALTY POLICIES
Sec. 551.101. DEFINITION. In this subchapter, "insurer"
means any authorized insurer writing property and casualty
insurance in this state, including:
(1) a county mutual insurance company;
(2) a Lloyd's plan;
(3) a reciprocal or interinsurance exchange; and
(4) a farm mutual insurance company. (V.T.I.C. Art.
21.49-2B, Sec. 1(1).)
Sec. 551.102. APPLICABILITY OF SUBCHAPTER. This subchapter
applies only to:
(1) a personal automobile insurance policy, other than
a policy written through the Texas Automobile Insurance Plan
Association;
(2) a homeowners or farm or ranch owners insurance
policy;
(3) a standard fire insurance policy insuring:
(A) a one-family dwelling or a duplex; or
(B) the contents of a one-family dwelling, a
duplex, or an apartment; or
(4) an insurance policy providing property and
casualty coverage, other than a fidelity, surety, or guaranty bond,
to:
(A) this state;
(B) an agency of this state;
(C) a political subdivision of this state,
including:
(i) a municipality or county;
(ii) a school district or junior college
district;
(iii) a levee improvement district,
drainage district, or irrigation district;
(iv) a water improvement district, water
control and improvement district, or water control and preservation
district;
(v) a freshwater supply district;
(vi) a navigation district;
(vii) a conservation and reclamation
district;
(viii) a soil conservation district;
(ix) a communication district; and
(x) a river authority; or
(D) any other governmental agency whose
authority is derived from the laws or constitution of this state.
(V.T.I.C. Art. 21.49-2B, Secs. 1(2), 2.)
Sec. 551.103. CANCELLATION. For the purposes of this
subchapter, an insurer has canceled an insurance policy if the
insurer, without the consent of the insured:
(1) terminates coverage provided under the policy;
(2) refuses to provide additional coverage to which
the insured is entitled under the policy; or
(3) reduces or restricts coverage under the policy by
endorsement or other means. (V.T.I.C. Art. 21.49-2B, Sec. 3.)
Sec. 551.104. AUTHORIZED CANCELLATION OF POLICIES. (a) An
insurer may cancel an insurance policy only as provided by this
section.
(b) An insurer may cancel any policy if:
(1) the named insured does not pay any portion of the
premium when due;
(2) the insured submits a fraudulent claim; or
(3) the department determines that continuation of the
policy would result in a violation of this code or any other law
governing the business of insurance in this state.
(c) An insurer may cancel a policy, other than a personal
automobile insurance policy, if there is an increase in the hazard
covered by the policy that is within the control of the insured and
that would produce an increase in the premium rate of the policy.
(d) An insurer may cancel a personal automobile insurance
policy if the driver's license or motor vehicle registration of the
named insured or any other motor vehicle operator who resides in the
same household as the named insured or who customarily operates an
automobile covered by the policy is suspended or revoked. An
insurer may not cancel a policy under this subsection if the named
insured consents to an endorsement terminating coverage under the
policy for the person whose license is suspended or revoked.
(e) Cancellation of a policy under Subsection (b), (c), or
(d) does not take effect until the 10th day after the date the
insurer mails notice of the cancellation to the insured.
(f) An insurer may cancel a personal automobile insurance
policy effective on any 12-month anniversary of the original
effective date of the policy if the insurer mails to the named
insured written notice of the cancellation not later than the 30th
day before the effective date of the cancellation.
(g) An insurer may cancel a personal automobile insurance
policy if the policy has been in effect less than 60 days. An
insurer may cancel any other insurance policy if the policy has been
in effect less than 90 days. (V.T.I.C. Art. 21.49-2B, Sec. 4.)
Sec. 551.105. NONRENEWAL OF POLICIES; NOTICE REQUIRED.
Unless the insurer has mailed written notice of nonrenewal to the
insured not later than the 30th day before the date on which the
insurance policy expires, an insurer must renew an insurance
policy, at the request of the insured, on the expiration of the
policy. (V.T.I.C. Art. 21.49-2B, Secs. 5, 11(b).)
Sec. 551.106. RENEWAL OF PERSONAL AUTOMOBILE INSURANCE
POLICIES. (a) An insurer may not refuse to renew a personal
automobile insurance policy solely because of the age of the person
covered by the policy.
(b) An insurer shall renew a personal automobile insurance
policy that was written for a term of less than one year, except
that the insurer may refuse to renew the policy on any 12-month
anniversary of the original effective date of the policy.
(V.T.I.C. Art. 21.49-2B, Sec. 6.)
Sec. 551.107. RENEWAL OF CERTAIN POLICIES; PREMIUM
SURCHARGE AUTHORIZED; NOTICE. (a) This section applies only to a
standard fire, homeowners, or farm or ranch owners insurance
policy.
(b) A claim under this section does not include a claim:
(1) resulting from a loss caused by natural causes; or
(2) that is filed but is not paid or payable under the
policy.
(c) An insurer may assess a premium surcharge at the time an
insurance policy is renewed if the insured has filed two or more
claims in the preceding policy year. The insurer may assess an
additional premium surcharge if an additional claim is made in the
following policy year. The department shall set the amount of any
surcharge that may be assessed under this subsection. The amount of
the surcharge may not exceed 10 percent of the total premium,
including any premium surcharge, actually paid by the insured in
the preceding policy year.
(d) Subject to Subsection (e), an insurer may refuse to
renew an insurance policy if the insured has filed three or more
claims under the policy in any three-year period.
(e) An insurer may notify an insured who has filed two
claims in a period of less than three years that the insurer may
refuse to renew the policy if the insured files a third claim during
the three-year period. If the insurer does not notify the insured
in accordance with this subsection, the insurer may not refuse to
renew the policy because of losses. The notice form must:
(1) list the policyholder's claims; and
(2) contain the sentence: "Another non-weather
related loss could cause us to refuse to renew your policy."
(f) An insurer that renews the insurance policy of an
insured who has filed three or more claims under the policy in a
three-year period may assess a premium surcharge in an amount set by
the department. (V.T.I.C. Art. 21.49-2B, Sec. 7.)
Sec. 551.108. INSURER RECORDS. (a) An insurer shall
maintain information regarding cancellation or nonrenewal of
insurance policies in accordance with the insurer's ordinary
practices for maintaining records of expired policies.
(b) The insurer shall make the information available to the
department on request. (V.T.I.C. Art. 21.49-2B, Sec. 8.)
Sec. 551.109. INSURER STATEMENT. An insurer shall, at the
request of an applicant for insurance or an insured, provide a
written statement of the reason for a declination, cancellation, or
nonrenewal of an insurance policy. The statement must comply with:
(1) Sections 551.002(b) and (c); and
(2) rules adopted under Section 551.002(d). (V.T.I.C.
Art. 21.49-2B, Sec. 9; Art. 21.49-2E, Sec. (a) (part).)
Sec. 551.110. LIABILITY FOR DISCLOSURE. An insurer or
agent or an employee of an insurer or agent is not liable for a
statement or disclosure made in good faith under this subchapter
unless the statement or disclosure was:
(1) known to be false; or
(2) made with malice or wilful intent to injure any
person. (V.T.I.C. Art. 21.49-2B, Sec. 10.)
Sec. 551.111. EFFECT OF NONCOMPLIANCE. A cancellation of
an insurance policy made in violation of this subchapter has no
effect. (V.T.I.C. Art. 21.49-2B, Sec. 11(a).)
Sec. 551.112. RULES. The commissioner may adopt rules
relating to the cancellation and nonrenewal of insurance policies.
(V.T.I.C. Art. 21.49-2B, Sec. 12.)
[Sections 551.113-551.150 reserved for expansion]
SUBCHAPTER D. CANCELLATION OR NONRENEWAL OF
CERTAIN POLICIES ISSUED TO ELECTED OFFICIALS
Sec. 551.151. DEFINITION. In this subchapter, "insurer"
has the meaning assigned by Section 551.101. (V.T.I.C. Art.
21.49-2D, Sec. (a).)
Sec. 551.152. ELECTED OFFICIALS. An insurer may not cancel
or refuse to renew an insurance policy based solely on the fact that
the policyholder is an elected official. (V.T.I.C. Art. 21.49-2D,
Sec. (b).)
CHAPTER 552. ILLEGAL PRICING PRACTICES
Sec. 552.001. APPLICABILITY OF CHAPTER
Sec. 552.002. FRAUDULENT INSURANCE ACT
Sec. 552.003. CHARGING DIFFERENT PRICES; OFFENSE
CHAPTER 552. ILLEGAL PRICING PRACTICES
Sec. 552.001. APPLICABILITY OF CHAPTER. This chapter does
not apply to the provision of a health care service to a:
(1) Medicaid or Medicare patient; or
(2) medically indigent person who qualifies for a
sliding fee scale. (V.T.I.C. Art. 21.79F, Sec. (d).)
Sec. 552.002. FRAUDULENT INSURANCE ACT. An offense under
Section 552.003 is a fraudulent insurance act under Chapter 701.
(V.T.I.C. Art. 21.79F, Sec. (c).)
Sec. 552.003. CHARGING DIFFERENT PRICES; OFFENSE. (a) A
person commits an offense if:
(1) the person knowingly or intentionally charges two
different prices for providing the same product or service; and
(2) the higher price charged is based on the fact that
an insurer will pay all or part of the price of the product or
service.
(b) An offense under this section is a Class B misdemeanor.
(V.T.I.C. Art. 21.79F, Secs. (a), (b).)
CHAPTER 553. ENFORCEMENT OF INSURANCE POLICIES
REGARDING HOLOCAUST VICTIMS
Sec. 553.001. DEFINITIONS
Sec. 553.002. SUSPENSION OF LIMITATIONS PERIOD
Sec. 553.003. VIOLATION BY INSURER
Sec. 553.004. EXAMINATION; ENFORCEMENT
CHAPTER 553. ENFORCEMENT OF INSURANCE POLICIES
REGARDING HOLOCAUST VICTIMS
Sec. 553.001. DEFINITIONS. In this chapter:
(1) "Holocaust victim" means a person who was killed
or injured, or who lost financial assets or other property, as the
result of discriminatory laws, policies, or actions directed
against any discrete group of which the person was a member, during
the period of 1920 to 1945, inclusive, in Germany, areas occupied by
Germany, or countries allied with Germany.
(2) "Insurance policy" includes:
(A) a life insurance policy, an annuity, a
property insurance policy, a casualty insurance policy, and a
liability insurance policy; and
(B) reinsurance on a risk covered under a policy
described by Paragraph (A).
(3) "Insurer" means an insurance company or other
entity engaged in the business of insurance or reinsurance in this
state. The term includes:
(A) a capital stock company, a mutual company, or
a Lloyd's plan; and
(B) any parent, subsidiary, or affiliated
company, at least 50 percent of the stock of which is in common
ownership with an insurer engaged in the business of insurance in
this state. (V.T.I.C. Art. 21.74, Sec. 1.)
Sec. 553.002. SUSPENSION OF LIMITATIONS PERIOD. (a)
Notwithstanding any other law, a Holocaust victim, or the heir,
assignee, beneficiary, or successor of a Holocaust victim, who
resides in this state and has a claim arising out of an insurance
policy purchased or in effect in Europe before 1946 that was
delivered, issued for delivery, or renewed by an insurer may bring
an action in this state against an insurer to recover on that claim.
(b) An action brought under this section before December 31,
2012, may not be dismissed for failure to comply with any applicable
limitations period. (V.T.I.C. Art. 21.74, Sec. 2.)
Sec. 553.003. VIOLATION BY INSURER. An insurer violates
this chapter if the insurer fails to comply with a claim brought
under this chapter by:
(1) denying the claim on the grounds that the claim is
not timely; or
(2) asserting a statute of limitations defense in an
action brought under Section 553.002. (V.T.I.C. Art. 21.74, Sec.
3(a).)
Sec. 553.004. EXAMINATION; ENFORCEMENT. (a) If the
commissioner considers it necessary, the commissioner may initiate
an examination of an insurer under Article 1.15.
(b) If the commissioner believes that an insurer is
violating or has violated this chapter, the commissioner may:
(1) impose a sanction under Chapter 82;
(2) issue a cease and desist order under Chapter 83;
(3) assess an administrative penalty under Chapter 84;
or
(4) refer the matter to the attorney general for
appropriate enforcement. (V.T.I.C. Art. 21.74, Secs. 3(b), (c).)
CHAPTER 554. BURDEN OF PROOF AND PLEADING
Sec. 554.001. APPLICABILITY OF CHAPTER
Sec. 554.002. BURDEN OF PROOF AND PLEADING
CHAPTER 554. BURDEN OF PROOF AND PLEADING
Sec. 554.001. APPLICABILITY OF CHAPTER. This chapter
applies to each insurer or health maintenance organization engaged
in the business of insurance or the business of a health maintenance
organization in this state, regardless of form and however
organized, including:
(1) a stock life, health, or accident insurance
company;
(2) a mutual life, health, or accident insurance
company;
(3) a stock fire or casualty insurance company;
(4) a mutual fire or casualty insurance company;
(5) a Mexican casualty insurance company;
(6) a Lloyd's plan;
(7) a reciprocal or interinsurance exchange;
(8) a fraternal benefit society;
(9) a title insurance company;
(10) an attorney's title insurance company;
(11) a stipulated premium company;
(12) a nonprofit legal services corporation;
(13) a statewide mutual assessment company;
(14) a local mutual aid association;
(15) a local mutual burial association;
(16) an association exempt under Section 887.102;
(17) a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
(18) a county mutual insurance company;
(19) a farm mutual insurance company; and
(20) an insurer or health maintenance organization
engaged in the business of insurance or the business of a health
maintenance organization in this state that does not hold a
certificate of authority issued by the department or is not
otherwise authorized to engage in business in this state.
(V.T.I.C. Art. 21.58, Subsec. (a).)
Sec. 554.002. BURDEN OF PROOF AND PLEADING. In a suit to
recover under an insurance or health maintenance organization
contract, the insurer or health maintenance organization has the
burden of proof as to any avoidance or affirmative defense that the
Texas Rules of Civil Procedure require to be affirmatively pleaded.
Language of exclusion in the contract or an exception to coverage
claimed by the insurer or health maintenance organization
constitutes an avoidance or an affirmative defense. (V.T.I.C. Art.
21.58, Subsec. (b).)
CHAPTER 555. FAILURE TO SATISFY JUDGMENT
Sec. 555.001. APPLICABILITY OF CHAPTER
Sec. 555.002. REVOCATION OF CERTIFICATE OF AUTHORITY
CHAPTER 555. FAILURE TO SATISFY JUDGMENT
Sec. 555.001. APPLICABILITY OF CHAPTER. This chapter does
not apply to an insurer subject to Chapter 841. (V.T.I.C. Art.
21.36 (part).)
Sec. 555.002. REVOCATION OF CERTIFICATE OF AUTHORITY. If
an execution issued on a final judgment rendered against an insurer
is not satisfied and discharged before the 31st day after the date
of notice of the execution's issuance, the insurer's certificate of
authority shall be revoked, and the insurer may not engage in the
business of insurance in this state until the execution is
satisfied. (V.T.I.C. Art. 21.36 (part).)
CHAPTER 556. UNFAIR METHODS OF COMPETITION AND UNFAIR
PRACTICES BY FINANCIAL INSTITUTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 556.001. DEFINITIONS
Sec. 556.002. RULES
[Sections 556.003-556.050 reserved for expansion]
SUBCHAPTER B. UNFAIR METHODS OR PRACTICES
Sec. 556.051. UNFAIR METHOD OF COMPETITION OR UNFAIR
PRACTICE: TYING
Sec. 556.052. UNFAIR METHOD OF COMPETITION OR UNFAIR
PRACTICE: FAILURE TO DISCLOSE
[Sections 556.053-556.100 reserved for expansion]
SUBCHAPTER C. REGULATION OF PRACTICES
Sec. 556.101. PROHIBITION ON CERTAIN REFERRALS OR
SOLICITATIONS TO PURCHASE INSURANCE
Sec. 556.102. INSURANCE SALE WITH LOAN TRANSACTION
Sec. 556.103. DESIGNATION OF PLACE OF INSURANCE
ACTIVITIES
Sec. 556.104. USE OF CUSTOMER INFORMATION
[Sections 556.105-556.150 reserved for expansion]
SUBCHAPTER D. DISCLOSURES
Sec. 556.151. APPLICABILITY OF SUBCHAPTER
Sec. 556.152. PROMOTIONAL MATERIALS DISCLOSURE
Sec. 556.153. DISCLOSURE AT TIME OF LOAN APPLICATION
Sec. 556.154. FORM OF DISCLOSURE
CHAPTER 556. UNFAIR METHODS OF COMPETITION AND UNFAIR
PRACTICES BY FINANCIAL INSTITUTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 556.001. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who, directly or
indirectly or through one or more intermediaries, controls or is
controlled by another person or is under common control with
another person.
(2) "Depository institution" has the meaning assigned
by Section 4001.003. (V.T.I.C. Art. 21.21-9, Sec. 1, as added Acts
75th Leg., R.S., Ch. 596.)
Sec. 556.002. RULES. The commissioner may adopt reasonable
rules to comply with federal law applicable to the sale of insurance
and for the implementation and administration of this chapter.
(V.T.I.C. Art. 21.21-9, Sec. 7, as added Acts 75th Leg., R.S., Ch.
596.)
[Sections 556.003-556.050 reserved for expansion]
SUBCHAPTER B. UNFAIR METHODS OR PRACTICES
Sec. 556.051. UNFAIR METHOD OF COMPETITION OR UNFAIR
PRACTICE: TYING. (a) A depository institution engages in an
unfair method of competition or an unfair practice in the sale of
insurance by the depository institution if the depository
institution:
(1) is an agent and, as a condition of extending or
renewing credit, leasing or selling property, or furnishing
services, requires the purchase of insurance from the depository
institution or a subsidiary or affiliate of the depository
institution, or from or through a particular agent, insurer, or any
other person or entity;
(2) conditions the terms of credit or the sale or lease
of property on acquisition of insurance from or through the
depository institution, a subsidiary or affiliate of the depository
institution, or any other particular person or entity;
(3) rejects a required policy solely because the
policy has been issued or underwritten by a person or entity that is
not associated with the depository institution; or
(4) imposes a requirement on an agent or broker who is
not associated with the depository institution that is not imposed
on an agent or broker who is associated with the depository
institution or a subsidiary or affiliate of the depository
institution.
(b) This section does not prevent a person who lends money
or extends credit from placing insurance on property if the
mortgagor, borrower, or purchaser fails to provide required
insurance in accordance with the terms of the loan or credit
document. (V.T.I.C. Art. 21.21-9, Secs. 2(a) (part), (b), as added
Acts 75th Leg., R.S., Ch. 596.)
Sec. 556.052. UNFAIR METHOD OF COMPETITION OR UNFAIR
PRACTICE: FAILURE TO DISCLOSE. A depository institution engages
in an unfair method of competition or an unfair practice in the sale
of insurance by the depository institution if, on the premises of
the depository institution or in connection with a product offering
of the depository institution, the depository institution sells or
solicits the purchase of insurance or a person sells or solicits the
purchase of insurance recommended or sponsored by the depository
institution and the depository institution or person fails to
clearly disclose in all promotional materials relating to an
insurance product distributed to customers and potential customers
that:
(1) an insurance product sold through or in the
depository institution or a subsidiary or affiliate of the
depository institution is not insured by the Federal Deposit
Insurance Corporation;
(2) the insurance product is not issued, guaranteed,
or underwritten by the depository institution or the Federal
Deposit Insurance Corporation; and
(3) the insurance product involves investment risk, if
appropriate, including potential loss of principal. (V.T.I.C. Art.
21.21-9, Sec. 2(a) (part), as added Acts 75th Leg., R.S., Ch. 596.)
[Sections 556.053-556.100 reserved for expansion]
SUBCHAPTER C. REGULATION OF PRACTICES
Sec. 556.101. PROHIBITION ON CERTAIN REFERRALS OR
SOLICITATIONS TO PURCHASE INSURANCE. (a) An individual who is an
employee or agent of a depository institution or a subsidiary or
affiliate of a depository institution may not directly or
indirectly make a referral related to insurance to, or solicit the
purchase of any insurance by, a customer knowing that the customer
has applied for a loan or other extension of credit from a financial
institution, before:
(1) the customer receives a written commitment
relating to that loan or extension of credit; or
(2) if a written commitment has not been or will not be
issued in connection with the loan or extension of credit, the
customer receives notification of approval of that loan or
extension of credit by the financial institution and the financial
institution creates a written record of the approval.
(b) This section does not prohibit a depository institution
from:
(1) informing a customer that insurance is required in
connection with a loan;
(2) contacting a person in the course of a direct or
mass mailing to a group of persons in a manner that is not related to
the person's loan application or credit decision; or
(3) selling credit life, credit disability, credit
property, or involuntary unemployment insurance that is:
(A) specifically authorized by this code;
(B) approved for sale in this state; and
(C) sold in connection with a credit transaction.
(c) This section does not apply to an insurance policy
described by Section 556.151. (V.T.I.C. Art. 21.21-9, Secs. 3(c),
(e) (part), as added Acts 75th Leg., R.S., Ch. 596.)
Sec. 556.102. INSURANCE SALE WITH LOAN TRANSACTION. (a) If
insurance is offered or sold to a depository institution's customer
in connection with a loan transaction by the depository
institution, the insurance salesperson involved in that insurance
transaction may not be involved in that loan transaction and may not
be the person making that loan.
(b) This section does not apply to:
(1) a depository institution that has $40 million or
less in total assets, as reported in the most recent Consolidated
Report of Condition and Income by the Federal Financial
Institutions Examination Council or any successor report required
by federal or state law; or
(2) a credit life, credit disability, credit property,
or involuntary unemployment insurance product that is:
(A) specifically authorized by this code;
(B) approved for sale in this state; and
(C) sold in connection with a credit transaction.
(V.T.I.C. Art. 21.21-9, Sec. 4, as added Acts 75th Leg., R.S., Ch.
596.)
Sec. 556.103. DESIGNATION OF PLACE OF INSURANCE ACTIVITIES.
(a) The place where a depository institution sells or solicits the
purchase of insurance or the place on the premises of a depository
institution where insurance is sold or solicited for purchase shall
be clearly and conspicuously indicated by signs so that the public
can readily distinguish the sale or solicitation as separate from
the lending and deposit-taking activities of the depository
institution.
(b) The commissioner may grant a waiver from the
requirements of this section to a person who files a written request
that:
(1) demonstrates that, due to the size of the physical
premises of the person, compliance with the requirements is not
possible; and
(2) identifies other steps that will be taken to
minimize customer confusion. (V.T.I.C. Art. 21.21-9, Sec. 6, as
added Acts 75th Leg., R.S., Ch. 596.)
Sec. 556.104. USE OF CUSTOMER INFORMATION. (a) In this
section:
(1) "Customer" means a person with an investment,
security, deposit, trust, or credit relationship with a financial
institution.
(2) "Nonpublic customer information" means
information relating to an individual that is derived from a bank
record, including information concerning insurance premiums, the
terms and conditions of insurance coverage, insurance expirations,
insurance claims, and insurance history of the individual. The
term does not include a customer's name, address, or telephone
number.
(b) A person may not use nonpublic customer information for
the purpose of selling or soliciting the purchase of insurance, or
provide nonpublic customer information to a third party for the
purpose of another's selling or soliciting the purchase of
insurance, unless:
(1) it is clearly and conspicuously disclosed that the
nonpublic customer information may be used for that purpose; and
(2) the customer has been provided an opportunity to
object before the time the information is used. (V.T.I.C. Art.
21.21-9, Sec. 5, as added Acts 75th Leg., R.S., Ch. 596.)
[Sections 556.105-556.150 reserved for expansion]
SUBCHAPTER D. DISCLOSURES
Sec. 556.151. APPLICABILITY OF SUBCHAPTER. This subchapter
does not apply to a credit life, credit accident and health, credit
property, or credit involuntary unemployment insurance policy that
is:
(1) specifically authorized by this code;
(2) approved for sale in this state; and
(3) sold in connection with a credit transaction.
(V.T.I.C. Art. 21.21-9, Sec. 3(e), as added Acts 75th Leg., R.S.,
Ch. 596.)
Sec. 556.152. PROMOTIONAL MATERIALS DISCLOSURE. (a) This
section applies to each agent that is a depository institution or
that, on the premises of a depository institution or in connection
with a product offering of a depository institution, sells or
solicits the purchase of insurance recommended or sponsored by the
depository institution.
(b) Promotional materials relating to an insurance product
distributed to a customer or potential customer must clearly
disclose that an insurance product sold through an agent affiliated
with a depository institution:
(1) is not insured by the Federal Deposit Insurance
Corporation;
(2) is not issued, guaranteed, or underwritten by the
depository institution or the Federal Deposit Insurance
Corporation; and
(3) involves investment risk, if appropriate,
including potential loss of principal. (V.T.I.C. Art. 21.21-9,
Sec. 3(a), as added Acts 75th Leg., R.S., Ch. 596.)
Sec. 556.153. DISCLOSURE AT TIME OF LOAN APPLICATION. (a)
At the time a loan application is made, a depository institution
shall provide to the customer a written disclosure as required by
this section and Section 556.154.
(b) The disclosure must be separate from any loan
application or loan document.
(c) The depository institution employee who presents the
disclosure and the customer shall sign and date the disclosure.
(d) The depository institution shall maintain one copy of
the disclosure in the loan file and shall provide one copy to the
customer. (V.T.I.C. Art. 21.21-9, Sec. 3(b) (part), as added Acts
75th Leg., R.S., Ch. 596.)
Sec. 556.154. FORM OF DISCLOSURE. (a) The disclosure
required by Section 556.153 must be in substantially the following
form:
"CUSTOMER DISCLOSURE
"You have applied for a loan with the depository institution.
As permitted by Title 4, Finance Code, the depository institution
is requiring that collateral used to secure the loan be insured to
cover the amount of the loan to the extent insurance is available on
the property to be insured, against the usual and customary
casualty losses.
"You have the right to provide this insurance either through
existing policies already owned or controlled by you or by
obtaining the insurance through any insurance agent or insurer
authorized to engage in business in Texas.
"The depository institution, through its own insurance
agency, can also make this insurance available to you. However,
federal and state laws provide that the depository institution
cannot require you to obtain insurance through the depository
institution, its subsidiary, an affiliate, or any particular
unaffiliated third party, either as a condition to obtaining this
credit or to obtain special terms or consideration.
"Insurance products sold through or in the depository
institution or its affiliate or subsidiary are not insured by the
Federal Deposit Insurance Corporation and are not issued,
guaranteed, or underwritten by the depository institution or the
Federal Deposit Insurance Corporation.
"You are not required or obligated to purchase insurance from
the depository institution or any subsidiary, affiliate, or
particular unaffiliated third party as a condition to obtaining
your loan, and your decision as to insurance agents will not affect
your credit terms in any way.
_________________________________ _____________________________
Customer Date
__________________________________
Employee of Depository Institution"
(b) The commissioner may amend the disclosure form as
necessary to comply with federal or state law. (V.T.I.C. Art.
21.21-9, Secs. 3(b) (part), (d), as added Acts 75th Leg., R.S., Ch.
596.)
CHAPTER 557. INSURED PROPERTY SUBJECT
TO SECURITY INTEREST
SUBCHAPTER A. INSURANCE PROCEEDS HELD BY LENDER
PENDING REPAIR OF RESIDENTIAL REAL PROPERTY
Sec. 557.001. DEFINITIONS
Sec. 557.002. NOTIFICATION BY LENDER TO INSURED
CONCERNING INSURANCE PROCEEDS
Sec. 557.003. LENDER'S RELEASE OR REFUSAL TO RELEASE
INSURANCE PROCEEDS
Sec. 557.004. PAYMENT OF INTEREST; RATE
Sec. 557.005. ACCRUAL OF INTEREST
Sec. 557.006. INTEREST NOT REQUIRED ON INSURANCE PROCEEDS
APPLIED TO REDUCE NOTE
[Sections 557.007-557.050 reserved for expansion]
SUBCHAPTER B. LIENHOLDER APPROVAL OF INSURANCE CLAIM
PAYMENT RELATING TO PERSONAL PROPERTY
Sec. 557.051. LIENHOLDER APPROVAL OF PAYMENT
Sec. 557.052. CIVIL PENALTY
CHAPTER 557. INSURED PROPERTY SUBJECT
TO SECURITY INTEREST
SUBCHAPTER A. INSURANCE PROCEEDS HELD BY LENDER
PENDING REPAIR OF RESIDENTIAL REAL PROPERTY
Sec. 557.001. DEFINITIONS. In this subchapter:
(1) "Lender" means a person holding a mortgage, lien,
deed of trust, or other security interest in property.
(2) "Residential real property" means:
(A) a single-family house;
(B) a duplex, triplex, or quadraplex; or
(C) a unit in a multi-unit residential structure
in which title to an individual unit is transferred to the owner of
the unit under a condominium or cooperative system. (V.T.I.C. Art.
21.48B, Sec. 1.)
Sec. 557.002. NOTIFICATION BY LENDER TO INSURED CONCERNING
INSURANCE PROCEEDS. (a) If a claim under an insurance policy for
damage to residential real property is paid to the insured and a
lender, and the lender holds all or part of the proceeds from the
insurance claim payment pending completion of all or part of the
repairs to the property, the lender shall notify the insured of each
requirement with which the insured must comply for the lender to
release the insurance proceeds.
(b) The notice required under this section must be provided
not later than the 10th day after the date the lender receives
payment of the insurance proceeds. (V.T.I.C. Art. 21.48B, Sec.
2(a).)
Sec. 557.003. LENDER'S RELEASE OR REFUSAL TO RELEASE
INSURANCE PROCEEDS. Not later than the 10th day after the date a
lender receives from the insured a request for release of all or
part of the insurance proceeds held by the lender, the lender shall:
(1) if the lender has received sufficient evidence of
the insured's compliance with the requirements specified by the
lender under Section 557.002 for release of the proceeds, release
to the insured, as requested, all or part of the proceeds; or
(2) provide notice to the insured that explains
specifically:
(A) the reason for the lender's refusal to
release the proceeds to the insured; and
(B) each requirement with which the insured must
comply for the lender to release the proceeds. (V.T.I.C. Art.
21.48B, Sec. 2(b).)
Sec. 557.004. PAYMENT OF INTEREST; RATE. A lender who fails
to provide notice as required by Section 557.002 or 557.003 or to
release insurance proceeds as required by Section 557.003 shall pay
to the insured interest at the rate of 10 percent a year on the
proceeds held by the lender. (V.T.I.C. Art. 21.48B, Sec. 3(a).)
Sec. 557.005. ACCRUAL OF INTEREST. (a) If a lender fails
to provide notice as required by Section 557.002 or 557.003,
interest begins to accrue on the date the lender received the
insurance proceeds.
(b) If a lender fails to release insurance proceeds as
required by Section 557.003, interest begins to accrue on the date
the lender receives sufficient evidence of the insured's compliance
with the requirements specified by the lender under Section 557.002
or 557.003 for release of the proceeds.
(c) Interest stops accruing on the date the lender complies
with Section 557.002 or 557.003, as applicable. (V.T.I.C. Art.
21.48B, Secs. 3(b), (c).)
Sec. 557.006. INTEREST NOT REQUIRED ON INSURANCE PROCEEDS
APPLIED TO REDUCE NOTE. A lender is not required to pay interest on
insurance proceeds applied, in accordance with the terms and
conditions of a deed of trust or other security agreement, to reduce
a note. (V.T.I.C. Art. 21.48B, Sec. 3(d).)
[Sections 557.007-557.050 reserved for expansion]
SUBCHAPTER B. LIENHOLDER APPROVAL OF INSURANCE CLAIM PAYMENT
RELATING TO PERSONAL PROPERTY
Sec. 557.051. LIENHOLDER APPROVAL OF PAYMENT. If payment
of an insurance claim relating to personal property requires the
endorsement of a check or draft by a holder of a lien on the property
or otherwise requires approval of the lienholder, not later than
the 14th business day after the date the lienholder receives a
request for the endorsement or other approval, the lienholder shall
provide:
(1) the endorsement or approval; or
(2) a written statement of the reason for denial of the
endorsement or approval to the person who requested the endorsement
or approval. (V.A.C.S. Art. 9031, Sec. 1.)
Sec. 557.052. CIVIL PENALTY. (a) A lienholder who violates
Section 557.051 is liable for a civil penalty not to exceed $500 for
each violation.
(b) The attorney general may bring an action to collect a
civil penalty under this section. (V.A.C.S. Art. 9031, Sec. 2.)
CHAPTER 558. REFUND OF UNEARNED PREMIUM
Sec. 558.001. DEFINITION
Sec. 558.002. APPLICABILITY OF CHAPTER; REFUND OF
UNEARNED PREMIUM
Sec. 558.003. RULES AND GUIDELINES
Sec. 558.004. EFFECT ON INSURANCE PREMIUM FINANCE
COMPANY
CHAPTER 558. REFUND OF UNEARNED PREMIUM
Sec. 558.001. DEFINITION. In this chapter, "insurer" means
an insurance company or other entity authorized to engage in the
business of insurance in this state. The term includes:
(1) a stock life, health, or accident insurance
company;
(2) a mutual life, health, or accident insurance
company;
(3) a stock fire or casualty insurance company;
(4) a mutual fire or casualty insurance company;
(5) a Mexican casualty insurance company;
(6) a farm mutual insurance company;
(7) a county mutual insurance company;
(8) a Lloyd's plan;
(9) a reciprocal or insurance exchange;
(10) a fraternal benefit society;
(11) a stipulated premium company;
(12) a nonprofit legal services corporation;
(13) a statewide mutual assessment company;
(14) a local mutual aid association;
(15) a local mutual burial association;
(16) an association exempt under Section 887.102;
(17) a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
(18) a risk retention group;
(19) a purchasing group;
(20) an eligible surplus lines insurer; and
(21) a guaranty association operating under Article
21.28-C or 21.28-D. (V.T.I.C. Art. 21.29, Sec. (a).)
Sec. 558.002. APPLICABILITY OF CHAPTER; REFUND OF UNEARNED
PREMIUM. (a) This chapter applies to an insurer that issues an
insurance policy that requires the insurer to maintain an unearned
premium reserve for the portion of the written policy premium
applicable to the unexpired or unused part of the policy period for
which the premium has been paid.
(b) An insurer shall promptly refund the appropriate
portion of any unearned premium to the policyholder if the policy:
(1) has a remaining unearned premium reserve; and
(2) is canceled or terminated by the insured or the
insurer before the end of its term.
(c) A guaranty association shall promptly refund any
unearned premium as described by Section 5(8), Article 21.28-C, or
Sections 5(10) and 8(n), Article 21.28-D. (V.T.I.C. Art. 21.29,
Secs. (b), (c).)
Sec. 558.003. RULES AND GUIDELINES. The commissioner
shall:
(1) adopt rules necessary to implement this chapter;
and
(2) establish appropriate guidelines to determine the
portion of an unearned premium that must be refunded to a
policyholder under this chapter. (V.T.I.C. Art. 21.29, Sec. (d).)
Sec. 558.004. EFFECT ON INSURANCE PREMIUM FINANCE COMPANY.
This chapter does not affect the obligation of an insurer to pay an
unearned premium to an insurance premium finance company in
accordance with Section 651.162. (V.T.I.C. Art. 21.29, Sec. (e).)
[Chapters 559-600 reserved for expansion]
SUBTITLE D. PRIVACY
CHAPTER 601. PRIVACY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 601.001. DEFINITIONS
Sec. 601.002. COMPLIANCE WITH FEDERAL LAW REQUIRED
Sec. 601.003. EXEMPTION
Sec. 601.004. TREATMENT OF CERTAIN HEALTH INFORMATION;
STRICTER RULES NOT PRECLUDED
[Sections 601.005-601.050 reserved for expansion]
SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES
Sec. 601.051. RULES
Sec. 601.052. IMPLEMENTATION OF CERTAIN STANDARDS
[Sections 601.053-601.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 601.101. ENFORCEMENT BY DEPARTMENT
Sec. 601.102. INJUNCTIVE OR DECLARATORY RELIEF; CIVIL
PENALTY
CHAPTER 601. PRIVACY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 601.001. DEFINITIONS. In this chapter:
(1) "Affiliate" means a company that controls, is
controlled by, or is under common control with another company. For
the purposes of this subdivision, "control" has the meaning
described by Sections 823.005 and 823.151.
(2) "Authorization" has the meaning assigned by
Section 82.001.
(3) "Covered entity" means an individual or entity
that receives an authorization from the department. The term
includes an individual or entity described by Section 82.002.
(4) "Nonaffiliated third party" means an entity that
is not an affiliate of, or related to by common ownership or
affiliated by corporate control with, the covered entity. The term
does not include a joint employee of the entity. (V.T.I.C. Art.
28A.01.)
Sec. 601.002. COMPLIANCE WITH FEDERAL LAW REQUIRED. (a) A
covered entity shall comply with 15 U.S.C. Sections 6802 and 6803,
as amended, in the same manner as a financial institution is
required to comply under those sections.
(b) An entity that is a nonaffiliated third party in
relation to a covered entity shall comply with 15 U.S.C. Section
6802(c), as amended. (V.T.I.C. Art. 28A.02.)
Sec. 601.003. EXEMPTION. Section 601.002(a) does not apply
to a covered entity to the extent that the entity is acting solely
as an insurance agent, employee, or other authorized representative
for another covered entity. (V.T.I.C. Art. 28A.03.)
Sec. 601.004. TREATMENT OF CERTAIN HEALTH INFORMATION;
STRICTER RULES NOT PRECLUDED. This chapter does not affect the
authority of the department or another state agency to adopt
stricter rules governing the treatment of health information by a
covered entity if another law gives the department or agency that
authority, including a law or rule of this state related to the
privacy of individually identifiable health information under
Subtitle F, Title II, Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.), as
amended. (V.T.I.C. Art. 28A.04.)
[Sections 601.005-601.050 reserved for expansion]
SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES
Sec. 601.051. RULES. (a) The commissioner shall adopt:
(1) rules to implement this chapter; and
(2) any other rules necessary to carry out Subtitle A,
Title V, Gramm-Leach-Bliley Act (15 U.S.C. Section 6801 et seq.),
as amended, to make this state eligible to override federal
regulations as described by 15 U.S.C. Section 6805(c), as amended.
(b) In adopting rules under this chapter, the commissioner
shall attempt to keep state privacy requirements consistent with
federal regulations adopted under Subtitle A, Title V,
Gramm-Leach-Bliley Act (15 U.S.C. Section 6801 et seq.), as
amended. (V.T.I.C. Art. 28A.51.)
Sec. 601.052. IMPLEMENTATION OF CERTAIN STANDARDS. The
department shall implement standards as required by 15 U.S.C.
Section 6805(b), as amended. (V.T.I.C. Art. 28A.52.)
[Sections 601.053-601.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 601.101. ENFORCEMENT BY DEPARTMENT. The department
shall enforce 15 U.S.C. Sections 6801-6805, as amended, to the
extent required by 15 U.S.C. Section 6805, as amended, and this
chapter. (V.T.I.C. Art. 28A.101.)
Sec. 601.102. INJUNCTIVE OR DECLARATORY RELIEF; CIVIL
PENALTY. (a) The attorney general, after conferring with the
commissioner, may institute an action for injunctive or declaratory
relief to restrain a violation of this chapter.
(b) In addition to instituting an action for injunctive
relief under Subsection (a), the attorney general, after conferring
with the commissioner, may institute an action for civil penalties
against a covered entity or nonaffiliated third party for a
violation of this chapter. A civil penalty assessed under this
section may not exceed $3,000 for each violation.
(c) If the court in which an action under Subsection (b) is
pending finds that violations of this chapter have occurred with a
frequency that constitutes a pattern or practice, the court may
assess a civil penalty not to exceed $250,000.
(d) If the attorney general substantially prevails in an
action for injunctive relief or a civil penalty under this section,
the attorney general may recover reasonable attorney's fees, costs,
and expenses incurred obtaining the relief or penalty, including
court costs and witness fees. (V.T.I.C. Art. 28A.102.)
CHAPTER 602. PRIVACY OF HEALTH INFORMATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 602.001. DEFINITIONS
Sec. 602.002. APPLICABILITY OF CHAPTER TO COVERED
ENTITY REQUIRED TO COMPLY WITH CERTAIN
FEDERAL STANDARDS
Sec. 602.003. CONSTRUCTION OF CHAPTER
Sec. 602.004. RULES
[Sections 602.005-602.050 reserved for expansion]
SUBCHAPTER B. AUTHORIZED DISCLOSURE
OF CERTAIN HEALTH INFORMATION
Sec. 602.051. AUTHORIZATION FOR DISCLOSURE OF CERTAIN
HEALTH INFORMATION
Sec. 602.052. DELIVERY OF AUTHORIZATION FORM AND REQUEST FOR
AUTHORIZATION
Sec. 602.053. EXCEPTIONS
[Sections 602.054-602.100 reserved for expansion]
SUBCHAPTER C. PENALTIES AND ENFORCEMENT
Sec. 602.101. PROHIBITION
Sec. 602.102. INJUNCTION
Sec. 602.103. CIVIL PENALTY
Sec. 602.104. DISCIPLINARY ACTION
Sec. 602.105. EXCLUSION FROM STATE PROGRAMS
Sec. 602.106. REMEDIES AVAILABLE
CHAPTER 602. PRIVACY OF HEALTH INFORMATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 602.001. DEFINITIONS. In this chapter:
(1) "Covered entity" means a person who holds or is
required to hold a license, registration, certificate of authority,
or other authorization under this code or another insurance law of
this state. The term includes:
(A) an insurance company, including:
(i) a county mutual insurance company;
(ii) a farm mutual insurance company;
(iii) a fraternal benefit society;
(iv) a group hospital service corporation;
(v) a Lloyd's plan;
(vi) a local mutual aid association;
(vii) a mutual insurance company;
(viii) a reciprocal or interinsurance
exchange;
(ix) a statewide mutual assessment company;
and
(x) a stipulated premium company;
(B) a health maintenance organization; and
(C) an insurance agent.
(2) "Health information" means information regarding
an individual, other than the individual's age or gender, whether
provided orally or recorded in any medium or form, that is created
by or derived from the individual or a health care provider and that
relates to:
(A) the past, present, or future physical,
mental, or behavioral health or condition of the individual;
(B) the provision of health care to the
individual; or
(C) payment for the provision of health care to
the individual.
(3) "Nonpublic personal health information" means
health information:
(A) that identifies an individual who is the
subject of the information; or
(B) with respect to which there is a reasonable
basis to believe that the information could be used to identify an
individual. (V.T.I.C. Art. 28B.01.)
Sec. 602.002. APPLICABILITY OF CHAPTER TO COVERED ENTITY
REQUIRED TO COMPLY WITH CERTAIN FEDERAL STANDARDS. This chapter
does not apply to a covered entity that is required to comply with
the standards governing the privacy of individually identifiable
health information adopted by the United States secretary of health
and human services under Section 262(a), Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d
et seq.). (V.T.I.C. Art. 28B.05.)
Sec. 602.003. CONSTRUCTION OF CHAPTER. (a) This chapter
does not preempt or supersede state law in effect on July 1, 2002,
that relates to the privacy of medical records, health information,
or insurance information.
(b) This chapter may not be construed to modify, limit, or
supersede the operation of the federal Fair Credit Reporting Act
(15 U.S.C. Section 1681 et seq.).
(c) This chapter may not be used as a basis for drawing an
inference that information is or is not transaction or experience
information under Section 603 of the federal Fair Credit Reporting
Act (15 U.S.C. Section 1681a). (V.T.I.C. Art. 28B.06.)
Sec. 602.004. RULES. The commissioner may adopt rules as
necessary to implement this chapter. (V.T.I.C. Art. 28B.08.)
[Sections 602.005-602.050 reserved for expansion]
SUBCHAPTER B. AUTHORIZED DISCLOSURE
OF CERTAIN HEALTH INFORMATION
Sec. 602.051. AUTHORIZATION FOR DISCLOSURE OF CERTAIN
HEALTH INFORMATION. (a) Except as provided by Section 602.053, a
covered entity must obtain authorization to disclose nonpublic
personal health information before disclosing the information.
(b) A request for authorization to disclose nonpublic
personal health information may be in written or electronic form
and must:
(1) state the identity of the consumer or customer who
is the subject of the information;
(2) describe:
(A) each type of information to be disclosed;
(B) each party to whom the covered entity intends
to disclose the information;
(C) the purpose of the disclosure;
(D) how the information will be used; and
(E) the procedure for revoking the
authorization;
(3) include the signature of:
(A) the consumer or customer who is the subject
of the information; or
(B) the individual who is legally empowered to
grant authorization;
(4) state the date the authorization is signed; and
(5) provide notice of:
(A) the period for which the authorization is
valid; and
(B) the consumer's or customer's right to revoke
the authorization at any time.
(c) The period for which the authorization is valid may not
exceed 24 months.
(d) The right of a consumer or customer to revoke an
authorization at any time is subject to the rights of an individual
who, before receiving notice of a revocation, acted in reliance on
the authorization.
(e) The covered entity shall retain the original or a copy
of the authorization in the records of the individual who is the
subject of the nonpublic personal health information. (V.T.I.C.
Art. 28B.02.)
Sec. 602.052. DELIVERY OF AUTHORIZATION FORM AND REQUEST
FOR AUTHORIZATION. (a) A covered entity may deliver to a consumer
or customer a request for authorization and an authorization form
only if the request and form are clear and conspicuous.
(b) A covered entity is required to include delivery of the
authorization form in a notice to a consumer or customer only if the
covered entity intends to disclose health information protected
under this chapter. (V.T.I.C. Art. 28B.03.)
Sec. 602.053. EXCEPTIONS. A covered entity may disclose
nonpublic personal health information to the extent that the
disclosure is necessary to perform the following insurance or
health maintenance organization functions on behalf of the covered
entity:
(1) the investigation or reporting of actual or
potential fraud, misrepresentation, or criminal activity;
(2) underwriting;
(3) the placement or issuance of an insurance policy
or evidence of coverage;
(4) loss control services;
(5) ratemaking or guaranty fund functions;
(6) reinsurance or excess loss insurance;
(7) risk management;
(8) case management;
(9) disease management;
(10) quality assurance;
(11) quality improvement;
(12) performance evaluation;
(13) health care provider credentialing verification;
(14) utilization review;
(15) peer review activities;
(16) actuarial, scientific, medical, or public policy
research;
(17) grievance procedures;
(18) the internal administration of compliance,
managerial, and information systems;
(19) policyholder or enrollee services;
(20) auditing;
(21) reporting;
(22) database security;
(23) the administration of consumer disputes and
inquiries;
(24) external accreditation standards;
(25) the replacement of a group benefit plan or
workers' compensation policy or program;
(26) activities in connection with a sale, merger,
transfer, or exchange of all or part of a business or operating
unit;
(27) any activity that permits disclosure without
authorization under the federal Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.), as
amended;
(28) disclosure that is required, or that is a lawful
or appropriate method to enforce the covered entity's rights or the
rights of other persons engaged, in carrying out a transaction or
providing a product or service that the consumer requests or
authorizes;
(29) claims administration, adjustment, and
management;
(30) any activity that is:
(A) otherwise permitted by law;
(B) required by a governmental reporting
authority; or
(C) required to comply with legal process; and
(31) any other insurance or health maintenance
organization functions the commissioner approves that are:
(A) necessary for appropriate performance of
insurance or health maintenance organization functions; and
(B) fair and reasonable to the interests of
consumers. (V.T.I.C. Art. 28B.04.)
[Sections 602.054-602.100 reserved for expansion]
SUBCHAPTER C. PENALTIES AND ENFORCEMENT
Sec. 602.101. PROHIBITION. A covered entity may not
knowingly or wilfully violate this chapter. (V.T.I.C. Art.
28B.07.)
Sec. 602.102. INJUNCTION. The attorney general may bring
an action for injunctive relief to restrain a violation of this
chapter. (V.T.I.C. Art. 28B.09, Sec. (a).)
Sec. 602.103. CIVIL PENALTY. (a) The attorney general may
bring an action for a civil penalty against a covered entity or
health care entity for a violation of this chapter.
(b) A civil penalty assessed under this section may not be
less than $3,000 for each violation.
(c) If the court in which an action under this section is
pending finds that the violations have occurred with a frequency as
to constitute a pattern or practice, the court may assess a civil
penalty not to exceed $250,000.
(d) A civil penalty authorized by this section is in
addition to any other civil, administrative, or criminal action
provided by law, including an action for injunctive relief provided
by Section 602.102. (V.T.I.C. Art. 28B.09, Secs. (b), (c), (d).)
Sec. 602.104. DISCIPLINARY ACTION. (a) In addition to a
penalty prescribed by this subchapter, a covered entity that
violates this chapter is subject to investigation, disciplinary
proceedings, and probation or suspension of the covered entity's
license or other form of authorization to engage in business.
(b) If there is evidence that a covered entity has engaged
in a pattern or practice of violating this chapter, the covered
entity's license or other form of authorization to engage in
business may be revoked. (V.T.I.C. Art. 28B.10.)
Sec. 602.105. EXCLUSION FROM STATE PROGRAMS. If there is
evidence that a covered entity has engaged in a pattern or practice
of violating this chapter, in addition to the other penalties
prescribed by this subchapter, the covered entity shall be excluded
from participating in any state-funded health care program.
(V.T.I.C. Art. 28B.11.)
Sec. 602.106. REMEDIES AVAILABLE. This subchapter does not
affect any right of a person under other law to bring a cause of
action or otherwise seek relief with respect to conduct that
violates this chapter. (V.T.I.C. Art. 28B.12.)
[Chapters 603-650 reserved for expansion]
SUBTITLE E. PREMIUM FINANCING
CHAPTER 651. FINANCING OF INSURANCE PREMIUMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 651.001. DEFINITIONS
Sec. 651.002. CERTAIN CONDUCT NOT ENGAGING IN BUSINESS AS
INSURANCE PREMIUM FINANCE COMPANY
Sec. 651.003. RULES
Sec. 651.004. EMPLOYMENT OF EXAMINERS AND INVESTIGATORS;
PAYMENT OF EXPENSES
Sec. 651.005. DEPOSIT AND USE OF FEES
Sec. 651.006. ASSESSMENTS
Sec. 651.007. APPLICABILITY OF CONSUMER CREDIT PROTECTION
ACT AND REGULATION Z
Sec. 651.008. AUTHORITY OF GENERAL PROPERTY AND CASUALTY AGENTS
TO CHARGE INTEREST TO CERTAIN PERSONS
[Sections 651.009-651.050 reserved for expansion]
SUBCHAPTER B. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 651.051. LICENSE REQUIRED
Sec. 651.052. LICENSE FEE
Sec. 651.053. ENTITLEMENT OF BANKS AND SAVINGS AND LOAN
ASSOCIATIONS TO LICENSE
Sec. 651.054. APPLICATION FOR LICENSE; INVESTIGATION FEE;
EXEMPTION
Sec. 651.055. REFUSAL TO ISSUE LICENSE
Sec. 651.056. NOTICE OF ACTION ON APPLICATION
Sec. 651.057. ISSUANCE OF LICENSE
Sec. 651.058. RECIPROCAL LICENSE
Sec. 651.059. ISSUANCE OF MULTIPLE LICENSES
Sec. 651.060. SINGLE BUSINESS LOCATION AUTHORIZED
BY LICENSE
Sec. 651.061. APPEARANCE OF LICENSE; POSTING
Sec. 651.062. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED
Sec. 651.063. TERM OF LICENSE
Sec. 651.064. PROCEDURE FOR LICENSE RENEWAL
Sec. 651.065. STAGGERED RENEWAL SYSTEM
[Sections 651.066-651.100 reserved for expansion]
SUBCHAPTER C. REGULATION OF INSURANCE
PREMIUM FINANCE COMPANIES
Sec. 651.101. BOOKS, ACCOUNTS, AND RECORDS
Sec. 651.102. ANNUAL REPORT
Sec. 651.103. BUSINESS NAME
Sec. 651.104. BUSINESS LOCATION
Sec. 651.105. RELOCATION OF PLACE OF BUSINESS
Sec. 651.106. BUSINESS PREMISES
Sec. 651.107. ENGAGING IN BUSINESS BY MAIL OR OUTSIDE
THE COMMUNITY
Sec. 651.108. CERTAIN CHARGES PROHIBITED
Sec. 651.109. LIMITATIONS ON RATES AND CHARGES
Sec. 651.110. REBATE OF FINANCE CHARGE
Sec. 651.111. DECEPTIVE ADVERTISING PROHIBITED
[Sections 651.112-651.150 reserved for expansion]
SUBCHAPTER D. PREMIUM FINANCE AGREEMENTS
Sec. 651.151. REQUIRED FORM AND CONTENTS OF PREMIUM
FINANCE AGREEMENT
Sec. 651.152. OTHER REQUIRED CONTENTS
Sec. 651.153. FORM OF DISCLOSURES
Sec. 651.154. CONSOLIDATION OF INCREASE ATTRIBUTABLE
TO AMENDMENT OF RATE CLASSIFICATION
Sec. 651.155. RESPONSIBILITIES OF INSURANCE AGENT
Sec. 651.156. TAKING OF INCOMPLETE PREMIUM FINANCE
AGREEMENT PROHIBITED
Sec. 651.157. PERFECTION OF PREMIUM FINANCE AGREEMENT AS
SECURED TRANSACTION: FILING NOT REQUIRED
Sec. 651.158. PREPAYMENT AND REFUND
Sec. 651.159. DEFAULT CHARGE
Sec. 651.160. POWER OF ATTORNEY
Sec. 651.161. CANCELLATION OF INSURANCE CONTRACT
Sec. 651.162. RETURN OF UNEARNED PREMIUMS AND COMMISSIONS
Sec. 651.163. ASSIGNMENT OF PREMIUM FINANCE AGREEMENT
Sec. 651.164. RESTRICTIONS ON PREMIUM FINANCE AGREEMENTS
Sec. 651.165. REQUIRED NOTICE OF CERTAIN PREMIUM FINANCE
AGREEMENTS
Sec. 651.166. TAKING, RECEIVING, OR CHARGING
UNAUTHORIZED AMOUNT
Sec. 651.167. EFFECT OF LICENSE REVOCATION, SUSPENSION,
OR SURRENDER ON PREMIUM FINANCE AGREEMENT
[Sections 651.168-651.200 reserved for expansion]
SUBCHAPTER E. DISCIPLINARY PROCEDURES AND
PENALTIES; OFFENSES
Sec. 651.201. EXAMINATIONS AND INVESTIGATIONS OF LICENSE
HOLDERS
Sec. 651.202. CONFIDENTIALITY OF REPORTS AND RELATED
MATERIAL
Sec. 651.203. HEARINGS AND INVESTIGATIONS; SUBPOENA POWER
Sec. 651.204. REVOCATION OR SUSPENSION OF LICENSE
Sec. 651.205. ISSUANCE OF REVOCATION OR SUSPENSION ORDER
Sec. 651.206. SURRENDER OF LICENSE; EFFECT
Sec. 651.207. LICENSE REINSTATEMENT
Sec. 651.208. OFFENSE
Sec. 651.209. SANCTIONS; CEASE AND DESIST ORDERS
CHAPTER 651. FINANCING OF INSURANCE PREMIUMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 651.001. DEFINITIONS. In this chapter:
(1) "Annual percentage rate" means the annual
percentage rate of finance charge determined under the Consumer
Credit Protection Act and Regulation Z.
(2) "Consumer Credit Protection Act" means the
Consumer Credit Protection Act of 1970 (15 U.S.C. Section 1601 et
seq.; 18 U.S.C. Section 891 et seq.).
(3) "Insurance premium finance company" means:
(A) a person engaged in the business of making
loans under this chapter by entering into premium finance
agreements with insureds or prospective insureds;
(B) a person engaged in the business of acquiring
premium finance agreements from insurance agents or brokers or from
other insurance premium finance companies; or
(C) an insurance agent or broker making loans
under this chapter who holds premium finance agreements made and
delivered by insureds that are payable to the agent or broker or to
the agent's or broker's order.
(4) "Insured" means a person who enters into a premium
finance agreement with an insurance premium finance company.
(5) "Insurer" means an entity organized or authorized
to engage in the business of insurance under this code as a capital
stock insurance company, title insurance company, reciprocal or
interinsurance exchange, Lloyd's plan, fraternal benefit society,
mutual or mutual assessment company of any kind, statewide mutual
assessment company, local mutual aid association, burial
association, county or farm mutual insurance company, fidelity,
guaranty, or surety company, or trust company.
(6) "License holder" means an insurance premium
finance company that holds a license issued under Subchapter B.
(7) "Person" means an individual, partnership,
corporation, joint venture, trust, association, or other legal
entity, regardless of organization.
(8) "Premium finance agreement" means an agreement by
which an insured or prospective insured promises to pay to an
insurance premium finance company the amount advanced or to be
advanced under the agreement to an insurer or to an insurance agent
in payment of the premiums on an insurance contract.
(9) "Regulation Z" means the federal regulations
adopted under the Consumer Credit Protection Act as 12 C.F.R.
Section 226.1 et seq. (V.T.I.C. Art. 24.01, Subdivs. (1) (part),
(2), (4), (5), (6), (7), (8); New.)
Sec. 651.002. CERTAIN CONDUCT NOT ENGAGING IN BUSINESS AS
INSURANCE PREMIUM FINANCE COMPANY. (a) The preparation or
delivery by an insurance agent of a premium finance agreement or
disclosure statement required by Section 651.155 on behalf of the
insured does not constitute engaging in business as an insurance
premium finance company.
(b) Subsection (a) does not apply to a premium finance
agreement held for the benefit of the insurance agent as provided by
Section 651.001(3)(C). (V.T.I.C. Art. 24.01, Subdiv. (1)(A)
(part); Art. 24.04, Sec. (c) (part).)
Sec. 651.003. RULES. (a) The commissioner may adopt and
enforce rules necessary to administer this chapter.
(b) The rules may contain classifications,
differentiations, or other provisions and provide for adjustments
or exceptions for any class of transactions necessary to:
(1) accomplish the purposes of this chapter;
(2) prevent circumvention or evasion of this chapter;
or
(3) facilitate compliance with this chapter.
(c) A rule adopted by the commissioner may not contain any
classification, differentiation, or other provision with respect
to any class of transactions or provide for any adjustment or
exception for any class of transactions that would result in a less
stringent disclosure requirement than required for that class of
transactions by the Consumer Credit Protection Act or Regulation Z.
(V.T.I.C. Art. 24.09.)
Sec. 651.004. EMPLOYMENT OF EXAMINERS AND INVESTIGATORS;
PAYMENT OF EXPENSES. The department may:
(1) employ persons as necessary to examine or
investigate and make reports on alleged violations of this chapter
and compliance with any other provision of this code by a license
holder;
(2) pay the salaries and expenses of persons described
by Subdivision (1) and of all office employees; and
(3) pay an expense necessary to enforce this chapter.
(V.T.I.C. Art. 24.06, Sec. (d) (part).)
Sec. 651.005. DEPOSIT AND USE OF FEES. Each fee collected
under this chapter:
(1) shall be deposited to the credit of the Texas
Department of Insurance operating account; and
(2) may be used by the department to enforce this
chapter. (V.T.I.C. Art. 24.03, Sec. (h) (part); Art. 24.06, Sec.
(d) (part).)
Sec. 651.006. ASSESSMENTS. (a) A license holder shall pay
to the department:
(1) an amount imposed by the department to cover the
direct and indirect cost of examinations and investigations made
under this chapter; and
(2) a proportionate share of the general
administrative expense attributable to the regulation of license
holders.
(b) Each amount required by this section is in addition to
any investigation or license fee imposed under Subchapter B.
(V.T.I.C. Art. 24.06, Sec. (c).)
Sec. 651.007. APPLICABILITY OF CONSUMER CREDIT PROTECTION
ACT AND REGULATION Z. A transaction that is subject to this chapter
is also subject to:
(1) the Consumer Credit Protection Act; and
(2) the applicable provisions of Regulation Z.
(V.T.I.C. Art. 24.12.)
Sec. 651.008. AUTHORITY OF GENERAL PROPERTY AND CASUALTY
AGENTS TO CHARGE INTEREST TO CERTAIN PERSONS. (a) Notwithstanding
any other law, a general property and casualty agent who holds a
license under Chapter 4051 may enter into a written agreement with a
purchaser of insurance from the agent that provides for the payment
of interest to the agent on any amount due to the agent for the
insurance purchased. The interest is computed at a rate not to
exceed the greater of:
(1) a rate allowed by Chapter 303, Finance Code; or
(2) the rate of one percent a month.
(b) A claim or defense of usury may not be raised in
connection with a written agreement under this section. (V.T.I.C.
Art. 24.20.)
[Sections 651.009-651.050 reserved for expansion]
SUBCHAPTER B. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 651.051. LICENSE REQUIRED. Unless the person is a
license holder, a person may not:
(1) negotiate, transact, or engage in the business of
insurance premium financing in this state; or
(2) contract for, charge, or receive directly or
indirectly on or in connection with an insurance premium financing
any charge, regardless of whether the charge is for interest,
compensation, consideration, expense, or otherwise, if in the
aggregate the amount of the charge exceeds the amount the person
would be permitted by law to charge if the person were not a license
holder. (V.T.I.C. Art. 24.02, Sec. (a) (part).)
Sec. 651.052. LICENSE FEE. (a) The department shall
establish the fee for a license under this subchapter in an amount
not to exceed $200.
(b) The fee for a license issued after June 30 may not exceed
$100.
(c) Section 201.001 applies to fees collected under this
section. (V.T.I.C. Art. 24.03, Secs. (f) (part), (h) (part).)
Sec. 651.053. ENTITLEMENT OF BANKS AND SAVINGS AND LOAN
ASSOCIATIONS TO LICENSE. (a) A bank or a savings and loan
association is entitled to receive a license under this subchapter
if the bank or savings and loan association:
(1) is engaging in business under the laws of this
state or the United States; and
(2) notifies the department of its intention to
operate under this chapter.
(b) On receipt of notice under Subsection (a)(2), the
department shall immediately issue a license to the bank or savings
and loan association. (V.T.I.C. Art. 24.02, Sec. (b).)
Sec. 651.054. APPLICATION FOR LICENSE; INVESTIGATION FEE;
EXEMPTION. (a) An application for a license to engage in the
business of insurance premium financing must:
(1) be in writing on a form prescribed by the
commissioner; and
(2) be accompanied by a nonrefundable investigation
fee in an amount not to exceed $400 as established by the
department.
(b) A person who on January 1, 1980, held a license under
Chapter 3, Title 79, Revised Statutes (Article 5069-3.01 et seq.,
Vernon's Texas Civil Statutes), is not required to pay an
investigation fee.
(c) Section 201.001 applies to fees collected under this
section. (V.T.I.C. Art. 24.03, Secs. (a), (e), (g), (h) (part).)
Sec. 651.055. REFUSAL TO ISSUE LICENSE. The department may
refuse to issue a license to an applicant if the department
determines that:
(1) the financial responsibility, experience,
character, or general fitness of the applicant or any person
associated with the applicant does not command the confidence of
the community and does not warrant the belief that the applicant
will engage in the business of insurance premium financing
honestly, fairly, and efficiently; or
(2) the applicant does not have available for the
operation of the business net assets of at least $25,000. (V.T.I.C.
Art. 24.03, Sec. (c).)
Sec. 651.056. NOTICE OF ACTION ON APPLICATION. Not later
than the 90th day after the date the department receives an
application under Section 651.054, the department shall notify the
applicant that:
(1) the application has been approved and the
department will issue a license to the applicant on payment of the
required license fee; or
(2) the application has been denied. (V.T.I.C. Art.
24.03, Sec. (b).)
Sec. 651.057. ISSUANCE OF LICENSE. After approval of an
application and on receipt of the required license fee, the
department shall:
(1) issue a license authorizing the license holder to
engage in business as an insurance premium finance company at the
location specified in the license holder's application; and
(2) send the license to the applicant. (V.T.I.C. Art.
24.03, Secs. (d), (f) (part).)
Sec. 651.058. RECIPROCAL LICENSE. The department may waive
any license requirement for an applicant who holds a valid license
from another state that has license requirements substantially
equivalent to the requirements prescribed by this state. (V.T.I.C.
Art. 24.03, Sec. (k).)
Sec. 651.059. ISSUANCE OF MULTIPLE LICENSES. The
department may issue a person more than one license under this
subchapter but may not issue one person more than 60 of those
licenses. (V.T.I.C. Art. 24.02, Sec. (a) (part).)
Sec. 651.060. SINGLE BUSINESS LOCATION AUTHORIZED BY
LICENSE. A license authorizes the license holder to maintain only
one location where the business of insurance premium financing may
be conducted. (V.T.I.C. Art. 24.02, Sec. (a) (part).)
Sec. 651.061. APPEARANCE OF LICENSE; POSTING. (a) A
license must state the name and address of the license holder.
(b) The license must be conspicuously posted at the location
where the license holder engages in the business of insurance
premium financing. (V.T.I.C. Art. 24.04, Sec. (a) (part).)
Sec. 651.062. TRANSFER OR ASSIGNMENT OF LICENSE PROHIBITED.
A license may not be transferred or assigned. (V.T.I.C. Art. 24.04,
Sec. (a) (part).)
Sec. 651.063. TERM OF LICENSE. Unless a staggered renewal
system is adopted under Section 651.065, a license is issued for the
calendar year and remains valid until December 31 of that year,
unless suspended, revoked, or surrendered in accordance with
Section 651.204 or 651.206. (V.T.I.C. Art. 24.03, Sec. (f)
(part).)
Sec. 651.064. PROCEDURE FOR LICENSE RENEWAL. (a) A license
holder may renew an unexpired license by paying the required
renewal fee to the department.
(b) A person whose license has been expired for 90 days or
less may renew the license by paying to the department:
(1) the required renewal fee; and
(2) an additional fee equal to one-half of the
original license fee.
(c) A person whose license has been expired for more than 90
days but less than two years may renew the license by paying to the
department:
(1) all unpaid renewal fees; and
(2) an additional fee equal to the original license
fee.
(d) A person whose license has been expired for two years or
more may not renew the license. The person may obtain a new license
by complying with the requirements and procedures for obtaining an
original license.
(e) Not later than the 30th day before the date a person's
license expires, the department shall send written notice of the
impending license expiration to the person at the person's last
known address.
(f) This section may not be construed to prevent the
department from denying or refusing to renew a license under an
applicable law or a rule adopted by the commissioner. (V.T.I.C.
Art. 24.03, Sec. (i).)
Sec. 651.065. STAGGERED RENEWAL SYSTEM. (a) The
commissioner by rule may adopt a system under which licenses expire
on various dates during the year.
(b) For a year in which the license expiration date is less
than one year from the date of license issuance or the anniversary
of that date, the license fee shall be prorated so that each license
holder pays only that portion of the license fee allocable to the
number of months during which the license is valid. On each
subsequent renewal of the license, a license holder must pay the
total renewal fee. (V.T.I.C. Art. 24.03, Sec. (j).)
[Sections 651.066-651.100 reserved for expansion]
SUBCHAPTER C. REGULATION OF INSURANCE PREMIUM
FINANCE COMPANIES
Sec. 651.101. BOOKS, ACCOUNTS, AND RECORDS. (a) A license
holder shall maintain books, accounts, and records in sufficient
detail to enable a representative of the department to determine
whether the license holder is in compliance with this chapter and
rules adopted by the commissioner.
(b) A license holder shall maintain for inspection the
license holder's books, accounts, and records, including any cards
used in a card system, for at least four years after the date the
final entry of any premium finance agreement is recorded in those
books, accounts, and records. (V.T.I.C. Art. 24.10, Sec. (a).)
Sec. 651.102. ANNUAL REPORT. On or before April 1 of each
year, a license holder shall file with the department a report
containing information required by the department concerning the
business and operations of the license holder during the preceding
calendar year at each licensed location where the license holder
engages in the business of insurance premium financing in this
state. (V.T.I.C. Art. 24.10, Sec. (b).)
Sec. 651.103. BUSINESS NAME. A license holder may not
engage in the business of insurance premium financing under any
name other than the name stated on the license. (V.T.I.C. Art.
24.04, Sec. (c) (part).)
Sec. 651.104. BUSINESS LOCATION. A license holder may not
engage in the business of insurance premium financing at any
location other than the address stated on the license. (V.T.I.C.
Art. 24.04, Sec. (c) (part).)
Sec. 651.105. RELOCATION OF PLACE OF BUSINESS. (a) A
license holder who proposes to relocate the place where the holder
engages in the business of insurance premium financing shall give
written notice of the proposed change to the department.
(b) If the department approves the proposed relocation, the
department shall issue an endorsement to the license holder
indicating the change and the date of the change.
(c) The endorsement authorizes the license holder to engage
in the business of insurance premium financing at the new location.
The license holder shall attach the endorsement to the license for
that location. (V.T.I.C. Art. 24.04, Sec. (a) (part).)
Sec. 651.106. BUSINESS PREMISES. (a) Except as provided by
Subsection (b), a license holder may engage in the business of
insurance premium financing:
(1) in any office, suite, room, or place of business in
which any other business is solicited or engaged in; or
(2) in association or in conjunction with any other
business.
(b) Subsection (a) does not apply if the department:
(1) determines, after a hearing, that the conduct by
the license holder of the other business at the location for which
the license was issued has concealed evasions of this chapter; and
(2) orders the license holder in writing to stop
engaging in the business of insurance premium financing at that
location. (V.T.I.C. Art. 24.04, Sec. (b).)
Sec. 651.107. ENGAGING IN BUSINESS BY MAIL OR OUTSIDE THE
COMMUNITY. This chapter does not prohibit a license holder from
engaging in the business of insurance premium financing:
(1) by mail; or
(2) with persons who do not reside in the same
community as the licensed location. (V.T.I.C. Art. 24.04, Sec.
(d).)
Sec. 651.108. CERTAIN CHARGES PROHIBITED. In connection
with a premium finance agreement entered into under this chapter,
an insurance charge or any other charge or fee may not be imposed
unless the charge or fee is authorized by this chapter. (V.T.I.C.
Art. 24.15 (part).)
Sec. 651.109. LIMITATIONS ON RATES AND CHARGES. (a) An
insurance premium finance company may not take or receive from an
insured a greater rate or charge than is authorized by Chapter 342,
Finance Code.
(b) For purposes of this section, a charge begins on the
earlier of:
(1) the date from which the insurer requires payment
of the premium and payment was made to the insurer for the financed
policy; or
(2) the effective date of the policy.
(c) The finance charge is computed on the balance of the
premiums due after subtracting any down payment made by the insured
in accordance with the premium finance agreement. (V.T.I.C. Art.
24.15 (part).)
Sec. 651.110. REBATE OF FINANCE CHARGE. (a) An insurance
premium finance company or an employee of an insurance premium
finance company may not:
(1) pay, allow, or offer to pay or allow in any manner
to an insurance agent or broker or an employee of an insurance agent
or broker or to any other person any consideration or compensation,
from the charge for financing specified in the premium finance
agreement or from another source; or
(2) give or offer to give any valuable consideration
or inducement of any kind directly or indirectly to an insurance
agent or broker or an employee of an insurance agent or broker.
(b) Subsection (a)(2) does not prohibit the giving or
offering of an article of merchandise that has a value of $1 or less
on which there is an advertisement of the insurance premium finance
company.
(c) Subsection (a) does not prohibit an insurance premium
finance company from making a payment under a contractual agreement
with a validly organized and operating association of insurance
agents or a subsidiary of the association if no part of a payment
received under the agreement:
(1) is distributed to an insurance agent or broker or
an employee of an insurance agent or broker; or
(2) inures directly to the benefit of a member of the
association or an employee of the member.
(d) A contractual agreement under Subsection (c):
(1) must be in writing; and
(2) is not valid until department approval is
received. (V.T.I.C. Art. 24.14, Sec. (a).)
Sec. 651.111. DECEPTIVE ADVERTISING PROHIBITED. (a) A
license holder may not advertise or cause to be advertised in any
manner any false, misleading, or deceptive statement or
representation with regard to the rates, terms, or conditions of a
premium finance agreement.
(b) If rates or charges are stated in advertising, the
license holder must express the rates or charges in terms of a
simple annual percentage rate as defined by federal law. (V.T.I.C.
Art. 24.13.)
[Sections 651.112-651.150 reserved for expansion]
SUBCHAPTER D. PREMIUM FINANCE AGREEMENTS
Sec. 651.151. REQUIRED FORM AND CONTENTS OF PREMIUM FINANCE
AGREEMENT. (a) A premium finance agreement must be in writing on a
form approved by the commissioner.
(b) A premium finance agreement must be dated and signed by
the insured. An agreement may be signed on behalf of the insured by
the insured's agent if:
(1) the agreement contains policies for other than
personal, family, or household purposes; and
(2) the premiums for the policies exceed $1,000.
(c) A premium finance agreement must contain:
(1) the name and business address of the insurance
agent or broker negotiating the related insurance contract;
(2) the name and residence or business address of the
insured as specified by the insured;
(3) the name and business location of the insurance
premium finance company to which payments are to be made;
(4) a description of each insurance contract involved;
(5) the amount of the premium for each insurance
contract;
(6) the total amount of the premiums for all insurance
contracts;
(7) the amount of any down payment;
(8) the principal balance, which is the difference
between the amounts under Subdivisions (6) and (7);
(9) the total amount of the finance charge, which must
describe each amount included and use the term "finance charge";
and
(10) the balance payable by the insured, which is the
sum of the amounts under Subdivisions (8) and (9). (V.T.I.C. Art.
24.11, Secs. (a), (b), (c).)
Sec. 651.152. OTHER REQUIRED CONTENTS. In addition to the
items required by Section 651.151, a premium finance agreement must
contain the following, as applicable:
(1) the finance charge expressed as an annual
percentage rate, using the term "annual percentage rate";
(2) the number of installments required under the
agreement;
(3) the amount of each installment expressed in
dollars;
(4) the due date or period of each installment;
(5) the amount or method of computing the amount of any
default or delinquency charge that is payable in the event of late
payment; and
(6) the method of computing any unearned portion of
the finance charge in the event of prepayment of the obligation.
(V.T.I.C. Art. 24.11, Sec. (d).)
Sec. 651.153. FORM OF DISCLOSURES. (a) The disclosures
required by Sections 651.151 and 651.152 must be made clearly,
conspicuously, and in meaningful sequence.
(b) If the term "finance charge" or "annual percentage rate"
is required to be used, the term must be printed more conspicuously
than other required terminology.
(c) Each numerical amount or percentage must be expressed as
a figure and:
(1) legibly handwritten; or
(2) printed in not less than the equivalent of
10-point type, 75/1,000-inch computer type, or elite-size
typewritten numerals. (V.T.I.C. Art. 24.11, Sec. (e).)
Sec. 651.154. CONSOLIDATION OF INCREASE ATTRIBUTABLE TO
AMENDMENT OF RATE CLASSIFICATION. (a) If, in a premium finance
agreement, a change in an insured's policy that is caused by an
amendment of the rate classification by endorsement or otherwise
results in an increased principal balance and the amount under the
previous contract has not been fully paid, the subsequent increase,
at the insured's option, may be consolidated with the previous
contract if the agreement provides for consolidation.
(b) A consolidation under this section may be accomplished
by a memorandum of agreement between the agent and the insured if,
before the first scheduled payment date of the amended transaction,
the insurance premium finance company provides to the insured the
following information in writing:
(1) the amount of the premium increase;
(2) the down payment on the increase;
(3) the principal amount of the increase;
(4) the total amount of any finance charge on the
increase;
(5) the total of the additional balance due;
(6) the outstanding balance due under the original
agreement;
(7) the balance due under the consolidated agreement;
(8) the annual percentage rate of any finance charge
on the additional balance due;
(9) the revised schedule of payments;
(10) the amount or method of computing the amount of
any default, deferment, or similar charge authorized by Chapter
342, Finance Code, that is payable in the event of late payment; and
(11) the method of computing any unearned portion of
the finance charge in the event of prepayment of the obligation.
(V.T.I.C. Art. 24.11, Secs. (g), (h).)
Sec. 651.155. RESPONSIBILITIES OF INSURANCE AGENT. An
insurance agent shall:
(1) prepare a premium finance agreement; and
(2) deliver to the insured each disclosure statement
required by law. (V.T.I.C. Art. 24.11, Sec. (f) (part).)
Sec. 651.156. TAKING OF INCOMPLETE PREMIUM FINANCE
AGREEMENT PROHIBITED. A license holder may not take a premium
finance agreement that has not been fully completed and executed at
the time the agreement is executed. (V.T.I.C. Art. 24.11, Sec. (f)
(part).)
Sec. 651.157. PERFECTION OF PREMIUM FINANCE AGREEMENT AS
SECURED TRANSACTION: FILING NOT REQUIRED. Filing of a premium
finance agreement or a financing statement is not necessary to
perfect the agreement as a secured transaction against a creditor,
subsequent purchaser, pledgee, encumbrancer, successor, or assign
of the insured or any other party. (V.T.I.C. Art. 24.14, Sec. (b).)
Sec. 651.158. PREPAYMENT AND REFUND. (a) Notwithstanding
the provisions of any premium finance agreement to the contrary, an
insured may pay the balance due under the agreement in full at any
time before the maturity of the final installment of the balance.
(b) If an insured pays a premium finance agreement in full
as authorized by this section and the agreement included an amount
for a charge, the insured is entitled to receive for the prepayment
by cash or renewal a refund credit in accordance with Subchapter H,
Chapter 342, Finance Code, and rules adopted under that subchapter.
If the amount of the credit for prepayment is less than $1, the
insured is not entitled to a refund credit. (V.T.I.C. Art. 24.16.)
Sec. 651.159. DEFAULT CHARGE. A premium finance agreement
may provide for the payment of a default charge by the insured as
provided by Section 342.203, Finance Code, this code, or a rule
adopted under those statutes. (V.T.I.C. Art. 24.17, Sec. (a).)
Sec. 651.160. POWER OF ATTORNEY. A premium finance
agreement may contain a power of attorney that enables the
insurance premium finance company to cancel any or all of the
insurance contracts listed in the agreement as provided by Section
651.161. (V.T.I.C. Art. 24.17, Sec. (b) (part).)
Sec. 651.161. CANCELLATION OF INSURANCE CONTRACT. (a) An
insurance premium finance company may not cancel an insurance
contract listed in a premium finance agreement except as provided
by this section for an insured's failure to make a payment at the
time and in the amount provided in the agreement.
(b) The insurance premium finance company must mail to the
insured a written notice that the company will cancel the insurance
contract because of the insured's default in payment unless the
default is cured at or before the time stated in the notice. The
stated time may not be earlier than the 10th day after the date the
notice is mailed.
(c) The insurance premium finance company must also mail a
copy of the notice to the insurance agent or broker identified in
the premium finance agreement.
(d) After the time stated in the notice required by
Subsection (b), the insurance premium finance company may cancel
each applicable insurance contract by mailing a notice of
cancellation to the insurer. Each insurance contract shall be
canceled as if the insured had canceled the contract, except that
the return of a canceled contract is not required.
(e) The insurance premium finance company must also mail a
notice of cancellation to:
(1) the insured at the insured's last known address;
and
(2) the insurance agent or broker identified in the
premium finance agreement.
(f) A statutory, regulatory, or contractual restriction
that provides that an insurance contract may not be canceled unless
notice is given to a governmental agency, mortgagee, or other third
party applies to a cancellation under this section. The insurer
shall:
(1) give the prescribed notice on behalf of the
insurer or the insured to each governmental agency, mortgagee, or
other third party on or before the second business day after the
date the insurer receives the notice of cancellation from the
insurance premium finance company; and
(2) determine the effective date of cancellation,
taking into consideration the number of days' notice required to
complete the cancellation. (V.T.I.C. Art. 24.17, Secs. (b) (part),
(c), (d), (e).)
Sec. 651.162. RETURN OF UNEARNED PREMIUMS AND COMMISSIONS.
(a) This section applies only to a premium finance agreement that
contains an assignment or power of attorney for the benefit of the
insurance premium finance company.
(b) If an insurance contract listed in a premium finance
agreement is canceled, the insurer shall return all unearned
premiums that are due under the contract directly to the insurance
premium finance company before the 61st day after the cancellation
date.
(c) The insurer may deduct from the unearned premiums
returned to the insurance premium finance company the amount of any
unearned commission due from the agent writing the insurance if the
insurer notifies the agent to return the unearned commission to the
insurance premium finance company. If the agent does not return the
unearned commission to the insurance premium finance company before
the 91st day after the cancellation date, the insurer shall remit
the unearned commission to the insurance premium finance company
before the 121st day after the cancellation date.
(d) Notwithstanding Subsections (a)-(c), an agent is liable
for the return of unearned commissions on an insurance contract
written through the Texas Windstorm Insurance Association, the
Texas Automobile Insurance Plan Association, or the Texas Medical
Liability Insurance Underwriting Association. An agent placing
business through one of those plans shall return the unearned
commissions to the insurance premium finance company before the
61st day after the date the agent is notified of the cancellation.
(e) An insurer, other than the Texas Windstorm Insurance
Association, the Texas Automobile Insurance Plan Association, or
the Texas Medical Liability Insurance Underwriting Association,
may return the unearned premiums to the producing agent. The
insurer remains liable and shall remit the unearned premiums to the
insurance premium finance company before the 121st day after the
cancellation date if:
(1) the producing agent does not return the unearned
premiums to the insurance premium finance company before the 91st
day after the cancellation date; and
(2) the insurance premium finance company complied
with Section 651.165.
(f) If the insurance premium finance company failed to
comply with Section 651.165, the insurer, including the Texas
Windstorm Insurance Association, the Texas Automobile Insurance
Plan Association, and the Texas Medical Liability Insurance
Underwriting Association, may comply with its legal duty to return
the unearned premiums due under the insurance contract to the
insurance premium finance company by returning those unearned
premiums to the producing agent.
(g) If the crediting of return premiums to the account of an
insured results in a surplus over the amount due from the insured,
the insurance premium finance company shall refund the excess to
the insured. If the amount of the excess is less than $1, the
insured is not entitled to a refund. (V.T.I.C. Art. 24.17, Secs.
(f), (g).)
Sec. 651.163. ASSIGNMENT OF PREMIUM FINANCE AGREEMENT.
Unless the insured has notice of an actual or intended assignment of
a premium finance agreement, payment by an insured under the
agreement to the last known holder of the agreement is binding on
all subsequent holders or assignees. (V.T.I.C. Art. 24.18.)
Sec. 651.164. RESTRICTIONS ON PREMIUM FINANCE AGREEMENTS.
(a) A premium finance agreement may not contain any provision under
which, absent default by the insured, the insurance premium finance
company holding the agreement may arbitrarily or without reasonable
cause accelerate the maturity of all or any part of the amount owing
under the agreement.
(b) For purposes of Subsection (a), reasonable cause
includes a proceeding in bankruptcy, receivership, or insolvency
instituted by or against the insured or the insolvency of or
suspension of business or cessation of the right to engage in
business by an insurer writing policies that are financed for the
insured under the premium finance agreement.
(c) A license holder may not take:
(1) an instrument in which the insured waives any
right accruing to the insured under this chapter;
(2) an instrument that has not been fully completed
and executed by the insured;
(3) an assignment of wages as security for an
insurance premium finance agreement entered into under this
chapter;
(4) a lien on real property as security for a premium
finance agreement entered into under this chapter, except any lien
created by law on the recording of an abstract of judgment; or
(5) a confession of judgment or a power of attorney in
favor of the license holder or a third person to confess judgment or
to appear for an insured in a judicial proceeding. (V.T.I.C. Art.
24.19.)
Sec. 651.165. REQUIRED NOTICE OF CERTAIN PREMIUM FINANCE
AGREEMENTS. (a) An insurance premium finance company that enters
into a premium finance agreement that includes an assignment or
power of attorney shall notify the insurer or the Texas Windstorm
Insurance Association, the Texas Automobile Insurance Plan
Association, or the Texas Medical Liability Insurance Underwriting
Association whose premiums are being financed:
(1) of the existence of the agreement; and
(2) to whom the premium payment has been made.
(b) An insurance premium finance company shall notify and
fund all premiums to a county mutual insurance company unless the
insurance premium finance company is authorized in writing by the
county mutual insurance company to notify or fund an agent or
managing general agent.
(c) Notice required under this section must be made before
the 31st day after the date the premium finance agreement is
accepted by the insurance premium finance company. (V.T.I.C. Art.
24.22.)
Sec. 651.166. TAKING, RECEIVING, OR CHARGING UNAUTHORIZED
AMOUNT. (a) Taking or receiving from an insured or the charging of
an insured by an insurance premium finance company of a charge
greater than authorized by this chapter does not invalidate:
(1) the premium finance agreement; or
(2) the principal balance payable under the agreement.
(b) An action described by Subsection (a) may be adjudged a
forfeiture of all charges that:
(1) are authorized under the premium finance
agreement; or
(2) the insured has agreed to pay.
(c) A person who pays an unauthorized charge or the person's
legal representative may bring an action against the insurance
premium finance company to recover twice the total amount of the
charge paid. The action must be brought within two years after the
date the unauthorized charge is paid. (V.T.I.C. Art. 24.08, Sec.
(b).)
Sec. 651.167. EFFECT OF LICENSE REVOCATION, SUSPENSION, OR
SURRENDER ON PREMIUM FINANCE AGREEMENT. The revocation,
suspension, or surrender of a license does not affect the
obligation of an insured under a lawful premium finance agreement
previously acquired or held by the person whose license was
revoked, suspended, or surrendered. (V.T.I.C. Art. 24.05, Sec.
(d).)
[Sections 651.168-651.200 reserved for expansion]
SUBCHAPTER E. DISCIPLINARY PROCEDURES AND
PENALTIES; OFFENSES
Sec. 651.201. EXAMINATIONS AND INVESTIGATIONS OF LICENSE
HOLDERS. (a) The department may conduct an examination or
investigation that is necessary to determine whether a license
holder:
(1) is in compliance with this chapter; or
(2) has engaged in conduct that would warrant the
revocation or suspension of the license holder's license.
(b) The department or an authorized representative of the
department may:
(1) require the attendance of any person;
(2) examine the person under oath; and
(3) compel the production of any relevant book,
record, account, or document. (V.T.I.C. Art. 24.06, Sec. (a).)
Sec. 651.202. CONFIDENTIALITY OF REPORTS AND RELATED
MATERIAL. (a) A report of an examination or investigation under
Section 651.201 and any correspondence or memoranda concerning or
arising from the examination or investigation:
(1) are confidential communications;
(2) are not subject to subpoena; and
(3) may not be made public, except in connection with a
hearing under Section 651.204 or an appearance in connection with
the hearing.
(b) Subsection (a) applies to an authenticated copy of a
report described by Subsection (a) in the possession of the
commissioner, the department, or a license holder.
(c) Information obtained in the course of an examination or
investigation may be made available to another governmental agency
if the information involves a matter within the scope or
jurisdiction of the agency. (V.T.I.C. Art. 24.06, Sec. (b).)
Sec. 651.203. HEARINGS AND INVESTIGATIONS; SUBPOENA POWER.
In conducting a hearing or investigation under this chapter, the
department or a person designated by the department may:
(1) administer oaths;
(2) subpoena witnesses;
(3) take depositions of witnesses who reside outside
of this state in the manner provided for in a civil action in
district court; and
(4) pay to those witnesses a fee and mileage for
attendance as provided for a witness in a civil action in district
court. (V.T.I.C. Art. 24.07.)
Sec. 651.204. REVOCATION OR SUSPENSION OF LICENSE. After
notice and hearing, the department may revoke or suspend a license
if:
(1) the department finds:
(A) that the license holder has violated this
chapter or a rule adopted by the commissioner under this chapter; or
(B) the existence of a fact or condition that, if
the fact or condition existed at the time of the original
application for the license, clearly would have warranted the
refusal of the license; or
(2) the department learns from any source that the
license holder has failed to return all amounts due from an
insurance premium finance company to the person whose insurance
policy has been canceled as required by Section 651.162. (V.T.I.C.
Art. 24.05, Secs. (a), (b).)
Sec. 651.205. ISSUANCE OF REVOCATION OR SUSPENSION ORDER.
If the department revokes or suspends a license, the department
shall:
(1) immediately issue in duplicate a written order of
revocation or suspension;
(2) file one copy of the order in the office of the
secretary of state; and
(3) mail one copy of the order to the license holder.
(V.T.I.C. Art. 24.05, Sec. (e).)
Sec. 651.206. SURRENDER OF LICENSE; EFFECT. (a) A license
holder may surrender a license by delivering to the department
written notice that the license holder surrenders the license.
(b) The surrender of a license does not affect any civil or
criminal liability of the person for an act committed before the
surrender. (V.T.I.C. Art. 24.05, Sec. (c).)
Sec. 651.207. LICENSE REINSTATEMENT. The department may
reinstate a suspended license or issue a new license to a person
whose license has been revoked if no fact or condition exists that
clearly would have warranted the refusal to issue the license
originally. (V.T.I.C. Art. 24.05, Sec. (f).)
Sec. 651.208. OFFENSE. (a) A person commits an offense if
the person:
(1) intentionally, knowingly, recklessly, or
negligently engages in the operation of an insurance premium
finance company and does not hold a license issued under this
chapter;
(2) intentionally, knowingly, recklessly, or
negligently violates this chapter;
(3) intentionally or knowingly omits to state a
material fact necessary to give the commissioner or the department
information lawfully required of the person; or
(4) refuses to permit an investigation or examination
authorized under this chapter.
(b) An offense under this section is a Class B misdemeanor.
(V.T.I.C. Art. 24.08, Sec. (a).)
Sec. 651.209. SANCTIONS; CEASE AND DESIST ORDERS. In
addition to each penalty provided by Sections 651.166 and 651.208,
the commissioner or a person designated by the commissioner may:
(1) order a sanction under Subchapter B, Chapter 82;
or
(2) issue a cease and desist order under Chapter 83.
(V.T.I.C. Art. 24.08, Sec. (c).)
[Chapters 652-700 reserved for expansion]
SUBTITLE F. INSURANCE FRAUD
CHAPTER 701. INSURANCE FRAUD INVESTIGATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 701.001. DEFINITIONS
Sec. 701.002. BUSINESS OF INSURANCE
Sec. 701.003. EFFECT OF CHAPTER
[Sections 701.004-701.050 reserved for expansion]
SUBCHAPTER B. REPORTING FRAUDULENT INSURANCE ACTS
Sec. 701.051. DUTY TO REPORT
Sec. 701.052. IMMUNITY FOR FURNISHING INFORMATION
RELATING TO A FRAUDULENT INSURANCE
ACT
[Sections 701.053-701.100 reserved for expansion]
SUBCHAPTER C. INVESTIGATIONS
Sec. 701.101. INSURANCE FRAUD UNIT
Sec. 701.102. INVESTIGATION OF CERTAIN ACTS OF FRAUD
Sec. 701.103. DISCIPLINARY ACTION; REPORT TO OTHER
AGENCIES
Sec. 701.104. DEPARTMENT INVESTIGATORS
Sec. 701.105. ASSISTANCE FROM LAW ENFORCEMENT
Sec. 701.106. SUBPOENA AUTHORITY
Sec. 701.107. CERTAIN AGENCIES' DUTY TO PROVIDE
INFORMATION
Sec. 701.108. INSURER'S DUTY TO PROVIDE INFORMATION
Sec. 701.109. REQUEST FOR INVESTIGATION BY INSURER
[Sections 701.110-701.150 reserved for expansion]
SUBCHAPTER D. INSURANCE FRAUD INFORMATION;
CONFIDENTIALITY
Sec. 701.151. CONFIDENTIALITY OF DEPARTMENT INFORMATION
Sec. 701.152. CONFIDENTIALITY OF AUTHORIZED GOVERNMENTAL
AGENCY INFORMATION
Sec. 701.153. DISCLOSURE OF INFORMATION TO CERTAIN
AGENCIES
Sec. 701.154. DISCLOSURE OF INFORMATION TO PUBLIC
CHAPTER 701. INSURANCE FRAUD INVESTIGATIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 701.001. DEFINITIONS. In this chapter:
(1) "Authorized governmental agency" means:
(A) a municipal, county, or state law enforcement
agency of this state or another state or a law enforcement agency of
the United States; or
(B) the prosecuting attorney of a municipality,
county, or judicial district of this state or another state or the
prosecuting attorney of the United States.
(2) "Fraudulent insurance act" means an act that is a
violation of a penal law and is:
(A) committed or attempted while engaging in the
business of insurance;
(B) committed or attempted as part of or in
support of an insurance transaction; or
(C) part of an attempt to defraud an insurer.
(3) "Insurer" means a person who is engaged in the
business of insurance as a principal or agent. The term includes:
(A) an unauthorized insurer; and
(B) an entity that is self-insured and provides
health care benefits to the entity's employees.
(4) "Person" means an individual, corporation,
organization, governmental entity, business trust or another
trust, estate, partnership, joint venture, association, or any
other legal entity. (V.T.I.C. Art. 1.10D, Sec. 1(a).)
Sec. 701.002. BUSINESS OF INSURANCE. A person is engaged in
the business of insurance for purposes of this chapter if the person
performs any act described by Subchapter B, Chapter 101. (V.T.I.C.
Art. 1.10D, Sec. 1(b).)
Sec. 701.003. EFFECT OF CHAPTER. This chapter does not:
(1) preempt the authority or relieve the duty of an
authorized governmental agency to investigate and prosecute
suspected criminal acts;
(2) prevent or prohibit a person from voluntarily
disclosing information to an authorized governmental agency;
(3) limit powers or duties granted to the commissioner
by any other law; or
(4) prohibit or limit the authority of an insurer to
conduct an independent investigation of suspected insurance claim
fraud. (V.T.I.C. Art. 1.10D, Secs. 2(e) (part); 7.)
[Sections 701.004-701.050 reserved for expansion]
SUBCHAPTER B. REPORTING FRAUDULENT INSURANCE ACTS
Sec. 701.051. DUTY TO REPORT. (a) A person who determines
a fraudulent insurance act has been or is about to be committed
shall report the information in writing to the department or an
authorized governmental agency not later than the 30th day after
the date the person makes the determination.
(b) A report made to one authorized governmental agency or
the department constitutes notice to each other authorized
governmental agency and the department. (V.T.I.C. Art. 1.10D,
Secs. 4(a), (b).)
Sec. 701.052. IMMUNITY FOR FURNISHING INFORMATION RELATING
TO A FRAUDULENT INSURANCE ACT. (a) A person is not liable in a
civil action, including an action for libel or slander, and a civil
action may not be brought against the person, for furnishing
information relating to a suspected, anticipated, or completed
fraudulent insurance act if the information is provided to:
(1) an authorized governmental agency or the
department;
(2) a law enforcement officer or an agent or employee
of the officer;
(3) the National Association of Insurance
Commissioners or an employee of the association;
(4) a state or federal governmental agency established
to detect and prevent fraudulent insurance acts or to regulate the
business of insurance or an employee of the agency; or
(5) a special investigative unit of an insurer,
including a person who contracts to provide special investigative
unit services to the insurer or an employee of the insurer who is
responsible for the investigation of suspected fraudulent
insurance acts.
(b) A person may furnish information as described in
Subsection (a) orally or in writing, including through publishing,
disseminating, or filing a bulletin or report.
(c) Subsection (a) does not apply to a person who acts with
malice, fraudulent intent, or bad faith.
(d) A person to whom Subsection (a) applies who prevails in
a civil action arising from furnishing information as described in
Subsection (a) is entitled to attorney's fees and costs.
(e) This section does not affect any common law or statutory
privilege or immunity.
(f) An insurer shall exercise reasonable care concerning
the accuracy of information conveyed to an authorized governmental
agency, the insurance fraud unit, or another insurer, person, or
entity. (V.T.I.C. Art. 1.10D, Secs. 6(a), (b), (c), (d), (e)
(part).)
[Sections 701.053-701.100 reserved for expansion]
SUBCHAPTER C. INVESTIGATIONS
Sec. 701.101. INSURANCE FRAUD UNIT. (a) The purpose of the
department's insurance fraud unit is to enforce laws relating to
fraudulent insurance acts.
(b) The insurance fraud unit may receive, review, and
investigate in a timely manner insurer antifraud reports submitted
under Chapter 704.
(c) The insurance fraud unit shall report annually to the
commissioner in writing regarding:
(1) the number of cases completed by the insurance
fraud unit; and
(2) recommendations for regulatory and statutory
responses to the types of fraudulent activities encountered by the
insurance fraud unit. (V.T.I.C. Art. 1.10D, Secs. 2(a); 3A.)
Sec. 701.102. INVESTIGATION OF CERTAIN ACTS OF FRAUD. If
the commissioner has reason to believe a person has engaged in, is
engaging in, has committed, or is about to commit a fraudulent
insurance act or the offense of insurance fraud under Section
35.02(a), Penal Code, the commissioner may conduct any
investigation necessary inside or outside this state to:
(1) determine whether the act or offense occurred; or
(2) aid in enforcing laws relating to fraudulent
insurance acts or insurance fraud. (V.T.I.C. Art. 1.10D, Sec.
2(b).)
Sec. 701.103. DISCIPLINARY ACTION; REPORT TO OTHER
AGENCIES. (a) The commissioner shall take appropriate
disciplinary action as provided by this code if the commissioner
believes a fraudulent insurance act has occurred. The commissioner
shall report information concerning the commissioner's belief that
a person has committed a fraudulent insurance act to an authorized
governmental agency.
(b) The commissioner shall:
(1) provide all material, documents, reports,
complaints, or other evidence to an authorized governmental agency
on request; and
(2) assist the authorized governmental agency as
requested. (V.T.I.C. Art. 1.10D, Secs. 2(c), (d).)
Sec. 701.104. DEPARTMENT INVESTIGATORS. (a) The
commissioner may:
(1) employ investigators as necessary to enforce this
chapter; and
(2) commission those investigators as peace officers.
(b) If the commissioner commissions investigators as peace
officers, the commissioner shall appoint a chief investigator who:
(1) is commissioned as a peace officer; and
(2) is qualified by training and experience in law
enforcement to supervise, direct, and administer the activities of
the commissioned investigators.
(c) An investigator employed by the department as a peace
officer must meet the requirements for a peace officer under
Chapter 1701, Occupations Code. (V.T.I.C. Art. 1.10D, Sec. 2(f).)
Sec. 701.105. ASSISTANCE FROM LAW ENFORCEMENT. An
investigator employed by the department may request assistance from
local law enforcement officers in conducting an investigation
authorized by this chapter. (V.T.I.C. Art. 1.10D, Sec. 2(g).)
Sec. 701.106. SUBPOENA AUTHORITY. (a) The commissioner
may issue a subpoena to compel the attendance and testimony of a
witness or, except as provided by Subsection (b), the production of
materials relevant to an investigation under this chapter.
(b) A person is not required to produce an item subpoenaed
under Subsection (a) if the item can only be identified by writing
and executing a special computer program for that purpose.
(c) A person possessing materials located outside this
state that are requested by the commissioner may make the materials
available to the commissioner or a representative of the
commissioner for examination at the place where the materials are
located. The commissioner may designate a representative,
including an official of the state in which the materials are
located, to examine the materials. The commissioner may respond to
a similar request from an official of another state or the United
States. (V.T.I.C. Art. 1.10D, Secs. 3(a), (b).)
Sec. 701.107. CERTAIN AGENCIES' DUTY TO PROVIDE
INFORMATION. (a) On the insurance fraud unit's request, an
authorized governmental agency or a state licensing agency shall
provide material, documents, reports, complaints, or other
evidence to the insurance fraud unit.
(b) Compliance with Subsection (a) by an authorized
governmental agency or a state licensing agency does not constitute
waiver of any otherwise applicable privilege or confidentiality
requirement. (V.T.I.C. Art. 1.10D, Sec. 2(d-1) (part).)
Sec. 701.108. INSURER'S DUTY TO PROVIDE INFORMATION. On
the written request of an authorized governmental agency, an
insurer shall provide to the agency any relevant information or
material relating to a matter under investigation. (V.T.I.C. Art.
1.10D, Sec. 4(c).)
Sec. 701.109. REQUEST FOR INVESTIGATION BY INSURER. An
insurer must complete an investigation of suspected insurance claim
fraud and draft a report of the insurer's findings before
requesting that the commissioner conduct an investigation. The
insurer must submit the report and the related investigation file
to the commissioner as part of the insurer's request that the
commissioner conduct an investigation. (V.T.I.C. Art. 1.10D, Sec.
2(e) (part).)
[Sections 701.110-701.150 reserved for expansion]
SUBCHAPTER D. INSURANCE FRAUD INFORMATION;
CONFIDENTIALITY
Sec. 701.151. CONFIDENTIALITY OF DEPARTMENT INFORMATION.
(a) Information or material acquired by the department that is
relevant to an investigation by the insurance fraud unit is not a
public record for the period the commissioner considers reasonably
necessary to:
(1) complete the investigation;
(2) protect the person under investigation from
unwarranted injury; or
(3) serve the public interest.
(b) The information or material is not subject to a subpoena
by another governmental entity, other than a grand jury subpoena,
until:
(1) the information or material is released for public
inspection by the commissioner; or
(2) after notice and a hearing a district court
determines that obeying the subpoena would not jeopardize the
public interest and any investigation by the commissioner.
(c) This section does not affect the conduct of a contested
case under Chapter 2001, Government Code. (V.T.I.C. Art. 1.10D,
Sec. 5(a).)
Sec. 701.152. CONFIDENTIALITY OF AUTHORIZED GOVERNMENTAL
AGENCY INFORMATION. Information or material acquired under this
chapter by an authorized governmental agency is privileged and is
not a public record. The information or material is not subject to a
subpoena, other than a grand jury subpoena, unless, after
reasonable notice to the insurer and agency and a hearing, a
district court determines that obeying the subpoena would not
jeopardize the public interest and any investigation by the agency.
(V.T.I.C. Art. 1.10D, Sec. 5(b) (part).)
Sec. 701.153. DISCLOSURE OF INFORMATION TO CERTAIN
AGENCIES. An authorized governmental agency may release to another
authorized governmental agency or the department and the department
may release to an authorized governmental agency information or
material provided under this chapter. (V.T.I.C. Art. 1.10D, Sec.
5(c).)
Sec. 701.154. DISCLOSURE OF INFORMATION TO PUBLIC. (a)
Except as otherwise provided by law, an authorized governmental
agency or an insurer that possesses or receives information or
material under this chapter may not release that information or
material to the public.
(b) Information provided under this chapter by an insurer to
the insurance fraud unit or an authorized governmental agency is
not subject to public disclosure. The information may be used by
the insurance fraud unit or authorized governmental agency only in
performing duties described by this chapter.
(c) Notwithstanding Section 701.151, the commissioner may
not release evidence obtained under Section 701.107 for public
inspection if releasing the evidence would violate a privilege held
by or a confidentiality requirement imposed on the agency from
which the evidence was obtained. (V.T.I.C. Art. 1.10D, Secs.
2(d-1) (part); 5(b) (part); 6(e) (part).)
CHAPTER 702. MOTOR VEHICLE THEFT AND MOTOR
VEHICLE INSURANCE FRAUD REPORTING
Sec. 702.001. DEFINITIONS
Sec. 702.002. INSURER'S DUTY TO PROVIDE INFORMATION
Sec. 702.003. INSURER'S DUTY TO NOTIFY GOVERNMENTAL
AGENCY
Sec. 702.004. DISCLOSURE OF INFORMATION TO CERTAIN
AGENCIES
Sec. 702.005. INFORMATION PRIVILEGED
Sec. 702.006. IMMUNITY FOR PROVIDING INFORMATION
CHAPTER 702. MOTOR VEHICLE THEFT AND MOTOR
VEHICLE INSURANCE FRAUD REPORTING
Sec. 702.001. DEFINITIONS. In this chapter:
(1) "Authorized governmental agency" means:
(A) the Department of Public Safety;
(B) a police department of a municipality;
(C) a sheriff's department;
(D) a criminal investigative department or
agency of the United States; or
(E) the prosecuting attorney of:
(i) a municipality, judicial district, or
county of this state;
(ii) the United States; or
(iii) a judicial district of the United
States.
(2) "Insurer" means an insurer that is:
(A) authorized to write motor vehicle insurance
in this state; or
(B) liable for a loss due to motor vehicle theft
or motor vehicle insurance fraud. (V.T.I.C. Art. 21.78, Sec. 1.)
Sec. 702.002. INSURER'S DUTY TO PROVIDE INFORMATION. (a)
On the written request of an authorized governmental agency to an
insurer, the insurer or an agent authorized by the insurer to act on
the insurer's behalf shall release to the agency any relevant
information the insurer has that:
(1) is requested by the agency; and
(2) relates to a specific motor vehicle theft or motor
vehicle insurance fraud.
(b) In this section, relevant information includes:
(1) insurance policy information relevant to the
specific motor vehicle theft or motor vehicle insurance fraud under
investigation, including any application for the policy;
(2) available policy premium payment records;
(3) the history of previous claims made by the
insured; and
(4) information relating to the investigation of the
motor vehicle theft or motor vehicle insurance fraud, including
statements of any person, proofs of loss, and notices of loss.
(V.T.I.C. Art. 21.78, Sec. 2(a).)
Sec. 702.003. INSURER'S DUTY TO NOTIFY GOVERNMENTAL AGENCY.
(a) An insurer or an agent authorized by an insurer to act on the
insurer's behalf shall notify an authorized governmental agency if
it:
(1) knows or reasonably believes it knows the identity
of a person who it has reason to believe committed a criminal or
fraudulent act relating to a motor vehicle theft or motor vehicle
insurance claim; or
(2) knows of a criminal fraudulent act relating to a
motor vehicle theft or motor vehicle insurance claim that it
reasonably believes has not been reported to an authorized
governmental agency.
(b) Notice provided under this section to one authorized
governmental agency is sufficient notice to each other authorized
governmental agency. This subsection does not affect the rights
and duties created under Section 702.002. (V.T.I.C. Art. 21.78,
Secs. 2(b), (c).)
Sec. 702.004. DISCLOSURE OF INFORMATION TO CERTAIN
AGENCIES. An authorized governmental agency provided information
under Section 702.002 or 702.003 may provide the information to
another authorized governmental agency. (V.T.I.C. Art. 21.78, Sec.
2(d).)
Sec. 702.005. INFORMATION PRIVILEGED. (a) Information
provided under this chapter is privileged and is not a public
record. Except as otherwise provided by law, an entity that
receives information provided under this chapter may not release
the information to the public.
(b) Evidence or information provided under this chapter is
not subject to a subpoena ad testificandum or a subpoena duces tecum
in a civil or criminal proceeding unless, after reasonable notice
to an insurer, agent authorized by an insurer to act on the
insurer's behalf, or authorized governmental agency that has an
interest in the information and after a hearing, a court determines
that obeying the subpoena would not jeopardize the public interest
and any ongoing investigation by the insurer, agent, or authorized
governmental agency. (V.T.I.C. Art. 21.78, Sec. 3.)
Sec. 702.006. IMMUNITY FOR PROVIDING INFORMATION. (a) An
insurer or a person who provides information on an insurer's behalf
is not liable for damages in a civil action or subject to criminal
prosecution for oral or written statements made or any other action
taken necessary to provide information as required by this chapter.
(b) Subsection (a) does not apply to an insurer or person
who acts with malice or fraudulent intent. (V.T.I.C. Art. 21.78,
Sec. 4.)
CHAPTER 703. COVERED ENTITY'S ANTIFRAUD ACTION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 703.001. DEFINITION
Sec. 703.002. RIGHT OF INTERVENTION
[Sections 703.003-703.050 reserved for expansion]
SUBCHAPTER B. ANTIFRAUD ACTION; CERTIFICATION
Sec. 703.051. ANTIFRAUD ACTION AUTHORIZED
Sec. 703.052. REQUEST FOR CERTIFICATION
Sec. 703.053. NOTICE OF REQUEST FOR CERTIFICATION
Sec. 703.054. HEARING ON REQUEST FOR CERTIFICATION
Sec. 703.055. CERTIFICATION
[Sections 703.056-703.100 reserved for expansion]
SUBCHAPTER C. EXPENSES OF ANTIFRAUD ACTION
Sec. 703.101. DETERMINATION OF EXPENSES
Sec. 703.102. DEDUCTION OR OFFSET FOR EXPENSES;
REIMBURSEMENT
Sec. 703.103. ASSIGNMENT OF DEDUCTION OR OFFSET
Sec. 703.104. TREATMENT OF DEDUCTION OR OFFSET
AS ADMITTED ASSET
CHAPTER 703. COVERED ENTITY'S ANTIFRAUD ACTION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 703.001. DEFINITION. In this chapter, "covered
entity" means a health maintenance organization or insurer
regulated by the department, including:
(1) a stock life, health, or accident insurance
company;
(2) a mutual life, health, or accident insurance
company;
(3) a stock fire or casualty insurance company;
(4) a mutual fire or casualty insurance company;
(5) a Mexican casualty insurance company;
(6) a Lloyd's plan;
(7) a reciprocal or interinsurance exchange;
(8) a fraternal benefit society;
(9) a title insurance company;
(10) an attorney's title insurance company;
(11) a stipulated premium company;
(12) a nonprofit legal services corporation;
(13) a statewide mutual assessment company;
(14) a local mutual aid association;
(15) a local mutual burial association;
(16) an association exempt under Section 887.102;
(17) a nonprofit hospital, medical, or dental service
corporation, including a corporation subject to Chapter 842;
(18) a county mutual insurance company; and
(19) a farm mutual insurance company. (V.T.I.C. Art.
21.79D, Sec. 1(2).)
Sec. 703.002. RIGHT OF INTERVENTION. This chapter does not
affect the right of any person, including a state agency, to
intervene in an antifraud action brought under this chapter.
(V.T.I.C. Art. 21.79D, Sec. 6.)
[Sections 703.003-703.050 reserved for expansion]
SUBCHAPTER B. ANTIFRAUD ACTION; CERTIFICATION
Sec. 703.051. ANTIFRAUD ACTION AUTHORIZED. (a) A covered
entity acting alone or through a person, corporation, or legal
entity affiliated with the covered entity may bring an action in a
court, including a counter-action or cross-action, to:
(1) prevent a person from fraudulently engaging in the
business of insurance or the business of a health maintenance
organization in this state; or
(2) redress the effects of a person who has
fraudulently engaged in the business of insurance or the business
of a health maintenance organization in this state.
(b) An action may be brought under this section if:
(1) the acts of the person may adversely affect or have
adversely affected at least 10 residents of this state; and
(2) the department has not brought an antifraud action
in a court against the person.
(c) An action may be brought under this section regardless
of whether the covered entity is directly affected by the person's
acts. (V.T.I.C. Art. 21.79D, Sec. 2.)
Sec. 703.052. REQUEST FOR CERTIFICATION. A covered entity
may request the court to certify that the action is an antifraud
action under this chapter. (V.T.I.C. Art. 21.79D, Sec. 3(a).)
Sec. 703.053. NOTICE OF REQUEST FOR CERTIFICATION. (a)
When a covered entity files a request for certification, the
covered entity shall provide at least 10 days' notice of the request
to the department and the attorney general by serving each with a
copy of the request in the manner provided for service of notice
under Rule 21a, Texas Rules of Civil Procedure.
(b) The covered entity shall provide the notice regardless
of whether the department or the state is a party to the action.
(V.T.I.C. Art. 21.79D, Sec. 3(b).)
Sec. 703.054. HEARING ON REQUEST FOR CERTIFICATION. As
soon as practicable after a covered entity files a request for
certification, the court shall hold a hearing to determine whether
the action is an antifraud action under this chapter. (V.T.I.C.
Art. 21.79D, Sec. 3(c).)
Sec. 703.055. CERTIFICATION. The court shall certify that
the action is an antifraud action if the court determines that:
(1) the requirements of Section 703.051 are met; and
(2) the pleadings and evidence demonstrate that the
covered entity has a probable right of recovery. (V.T.I.C. Art.
21.79D, Sec. 3(d).)
[Sections 703.056-703.100 reserved for expansion]
SUBCHAPTER C. EXPENSES OF ANTIFRAUD ACTION
Sec. 703.101. DETERMINATION OF EXPENSES. (a) The court
that certifies an action as an antifraud action by order may
determine the amount of reasonable and necessary expenses incurred
in bringing the action, including court costs, reasonable
attorney's fees, witness fees, fees of experts, and deposition
expenses.
(b) In making the determination, the court may consider the
contribution to the action of any person, including a state agency,
that has intervened in the action. (V.T.I.C. Art. 21.79D, Sec. 4.)
Sec. 703.102. DEDUCTION OR OFFSET FOR EXPENSES;
REIMBURSEMENT. (a) Subject to Subsection (b), a covered entity has
a deduction or offset against any obligation, assessment, or debt
owed by the covered entity to this state in the amount of the
reasonable and necessary expenses determined by the court order.
(b) The covered entity shall reimburse the state the amount
of any expenses actually recovered from the parties to the private
antifraud action under a final judgment awarding, wholly or partly,
expenses to or for the covered entity's benefit. The amount of
reimbursement may not exceed the actual amount of deductions or
offsets taken by the covered entity. (V.T.I.C. Art. 21.79D, Sec.
5(a) (part).)
Sec. 703.103. ASSIGNMENT OF DEDUCTION OR OFFSET. The
covered entity may assign the covered entity's deduction or offset
to any other covered entity or reinsurer. (V.T.I.C. Art. 21.79D,
Sec. 5(a) (part).)
Sec. 703.104. TREATMENT OF DEDUCTION OR OFFSET AS ADMITTED
ASSET. A covered entity or a covered entity's assignee entitled to
an offset or deduction that has not been used may show, in the
covered entity's or assignee's books and records, the balance of the
deduction or offset as an admitted asset for any purpose. (V.T.I.C.
Art. 21.79D, Sec. 5(b).)
CHAPTER 704. ANTIFRAUD PROGRAMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 704.001. DEFINITION
Sec. 704.002. NOTICE RELATING TO FALSE OR FRAUDULENT
CLAIMS REQUIRED
[Sections 704.003-704.050 reserved for expansion]
SUBCHAPTER B. ANTIFRAUD PLANS
Sec. 704.051. ANTIFRAUD PLAN REQUIRED FOR CERTAIN PLAN
ISSUERS
Sec. 704.052. ANTIFRAUD PLAN REQUIREMENTS
Sec. 704.053. FILING OF ANTIFRAUD PLAN
Sec. 704.054. FRAUD AND ABUSE PLANS UNDER CERTAIN STATE
PROGRAMS; ENFORCEMENT
CHAPTER 704. ANTIFRAUD PROGRAMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 704.001. DEFINITION. In this chapter, "plan issuer"
means:
(1) a health insurer, including a life, health, and
accident insurer, a health and accident insurer, a health
maintenance organization, and any other person operating under
Chapter 841, 842, 843, 884, 885, 982, or 1501 who is authorized to
issue, issue for delivery, or deliver insurance policies,
certificates, contracts, or evidences of coverage in this state;
(2) an approved nonprofit health corporation that
holds a certificate of authority issued under Chapter 844; or
(3) an insurer authorized by the department to write
workers' compensation insurance in this state. (V.T.I.C. Art.
3.97-1, Subdiv. (2).)
Sec. 704.002. NOTICE RELATING TO FALSE OR FRAUDULENT CLAIMS
REQUIRED. (a) A plan issuer who provides a form for a person to
make a claim against or to give notice of the person's intent to
make a claim against a policy, certificate, contract, or evidence
of coverage issued by the issuer must include on the form, in
comparative prominence with the other content on the form, a
statement that is substantially similar to the following: "Any
person who knowingly presents a false or fraudulent claim for the
payment of a loss is guilty of a crime and may be subject to fines
and confinement in state prison."
(b) This section does not apply to a form provided to make a
claim against a policy issued by a reinsurer. (V.T.I.C. Art.
3.97-2.)
[Sections 704.003-704.050 reserved for expansion]
SUBCHAPTER B. ANTIFRAUD PLANS
Sec. 704.051. ANTIFRAUD PLAN REQUIRED FOR CERTAIN PLAN
ISSUERS. A plan issuer who collects direct written premium shall
adopt an antifraud plan under this subchapter. (V.T.I.C. Art.
3.97-3, Sec. (a) (part).)
Sec. 704.052. ANTIFRAUD PLAN REQUIREMENTS. An antifraud
plan adopted by a plan issuer under this subchapter must include a
description of the issuer's procedures for:
(1) detecting and investigating possible fraudulent
insurance acts; and
(2) reporting possible fraudulent insurance acts to
the insurance fraud unit. (V.T.I.C. Art. 3.97-3, Sec. (a) (part).)
Sec. 704.053. FILING OF ANTIFRAUD PLAN. A plan issuer may
annually file the issuer's antifraud plan adopted under this
subchapter with the insurance fraud unit. (V.T.I.C. Art. 3.97-3,
Sec. (a) (part).)
Sec. 704.054. FRAUD AND ABUSE PLANS UNDER CERTAIN STATE
PROGRAMS; ENFORCEMENT. (a) A fraud and abuse plan put in place by a
plan issuer participating in the Medicaid STAR or STAR + Plus
program or the child health plan program under Chapter 62, Health
and Safety Code, and approved by a health and human services agency
meets the requirements of this subchapter.
(b) If a plan issuer described by Subsection (a) is required
by law to report possible fraudulent insurance acts to a health and
human services agency or the office of the attorney general, the
issuer is not required to report those acts to the insurance fraud
unit.
(c) The insurance fraud unit, the office of the attorney
general, and the health and human services agencies shall
coordinate enforcement efforts with respect to fraudulent
insurance acts covered by this chapter relating to the Medicaid
program or the child health plan program. (V.T.I.C. Art. 3.97-3,
Secs. (b), (c).)
CHAPTER 705. MISREPRESENTATIONS BY POLICYHOLDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 705.001. DEFINITION
Sec. 705.002. APPLICABILITY OF SUBCHAPTER
Sec. 705.003. POLICY PROVISION: MISREPRESENTATION IN PROOF
OF LOSS OR DEATH
Sec. 705.004. POLICY PROVISION: MISREPRESENTATION IN
POLICY APPLICATION
Sec. 705.005. NOTICE TO INSURED OF MISREPRESENTATIONS
[Sections 705.006-705.050 reserved for expansion]
SUBCHAPTER B. SPECIAL PROVISIONS RELATED TO LIFE,
ACCIDENT, AND HEALTH INSURANCE POLICIES
Sec. 705.051. IMMATERIAL MISREPRESENTATION IN LIFE, ACCIDENT,
OR HEALTH INSURANCE APPLICATION
[Sections 705.052-705.100 reserved for expansion]
SUBCHAPTER C. SPECIAL PROVISIONS RELATED TO
LIFE INSURANCE POLICIES
Sec. 705.101. DEFINITION
Sec. 705.102. APPLICABILITY OF SUBCHAPTER
Sec. 705.103. DOCUMENTS TO ACCOMPANY POLICY
Sec. 705.104. MISREPRESENTATION IN APPLICATION FOR
LIFE INSURANCE
Sec. 705.105. APPLICABILITY OF OTHER LAW
CHAPTER 705. MISREPRESENTATIONS BY POLICYHOLDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 705.001. DEFINITION. In this subchapter, "insurance
policy" means a contract or policy of insurance. (V.T.I.C. Arts.
21.16 (part), 21.17 (part), 21.19 (part).)
Sec. 705.002. APPLICABILITY OF SUBCHAPTER. Except as
provided by Section 705.005, this subchapter applies to each
insurance policy issued or contracted for in this state. (V.T.I.C.
Arts. 21.16 (part), 21.17 (part), 21.19 (part).)
Sec. 705.003. POLICY PROVISION: MISREPRESENTATION IN PROOF
OF LOSS OR DEATH. (a) An insurance policy provision that states
that a misrepresentation, including a false statement, made in a
proof of loss or death makes the policy void or voidable:
(1) has no effect; and
(2) is not a defense in a suit brought on the policy.
(b) Subsection (a) does not apply if it is shown at trial
that the misrepresentation:
(1) was fraudulently made;
(2) misrepresented a fact material to the question of
the insurer's liability under the policy; and
(3) misled the insurer and caused the insurer to waive
or lose a valid defense to the policy. (V.T.I.C. Art. 21.19
(part).)
Sec. 705.004. POLICY PROVISION: MISREPRESENTATION IN
POLICY APPLICATION. (a) An insurance policy provision that states
that false statements made in the application for the policy or in
the policy make the policy void or voidable:
(1) has no effect; and
(2) is not a defense in a suit brought on the policy.
(b) Subsection (a) does not apply if it is shown at trial
that the matter misrepresented:
(1) was material to the risk; or
(2) contributed to the contingency or event on which
the policy became due and payable.
(c) It is a question of fact whether a misrepresentation
made in the application for the policy or in the policy itself was
material to the risk or contributed to the contingency or event on
which the policy became due and payable. (V.T.I.C. Art. 21.16
(part).)
Sec. 705.005. NOTICE TO INSURED OF MISREPRESENTATIONS. (a)
This section applies to any suit brought on an insurance policy
issued or contracted for after June 29, 1903.
(b) A defendant may use as a defense a misrepresentation
made in the application for or in obtaining an insurance policy only
if the defendant shows at trial that before the 91st day after the
date the defendant discovered the falsity of the representation,
the defendant gave notice that the defendant refused to be bound by
the policy:
(1) to the insured, if living; or
(2) to the owners or beneficiaries of the insurance
policy, if the insured was deceased.
(c) This section does not:
(1) make available as a defense an immaterial
misrepresentation; or
(2) affect the provisions of Section 705.004.
(V.T.I.C. Art. 21.17 (part).)
[Sections 705.006-705.050 reserved for expansion]
SUBCHAPTER B. SPECIAL PROVISIONS RELATED TO LIFE,
ACCIDENT, AND HEALTH INSURANCE POLICIES
Sec. 705.051. IMMATERIAL MISREPRESENTATION IN LIFE,
ACCIDENT, OR HEALTH INSURANCE APPLICATION. A misrepresentation in
an application for a life, accident, or health insurance policy
does not defeat recovery under the policy unless the
misrepresentation:
(1) is of a material fact; and
(2) affects the risks assumed. (V.T.I.C. Art. 21.18.)
[Sections 705.052-705.100 reserved for expansion]
SUBCHAPTER C. SPECIAL PROVISIONS RELATED TO LIFE
INSURANCE POLICIES
Sec. 705.101. DEFINITION. In this subchapter, "insurance
policy" means a contract or policy of insurance. (V.T.I.C. Art.
21.35 (part).)
Sec. 705.102. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any insurance policy issued or contracted for in this
state. (V.T.I.C. Art. 21.35 (part).)
Sec. 705.103. DOCUMENTS TO ACCOMPANY POLICY. Except as
otherwise provided by this code, a life insurance policy must be
accompanied by a copy of:
(1) the policy application; and
(2) any questions and answers given in connection with
the application. (V.T.I.C. Art. 21.35 (part).)
Sec. 705.104. MISREPRESENTATION IN APPLICATION FOR LIFE
INSURANCE. A defense based on a misrepresentation in the
application for, or in obtaining, a life insurance policy on the
life of a person in or residing in this state is not valid or
enforceable in a suit brought on the policy on or after the second
anniversary of the date of issuance of the policy if premiums due on
the policy during the two years have been paid to and received by
the insurer, unless:
(1) the insurer has notified the insured of the
insurer's intention to rescind the policy because of the
misrepresentation; or
(2) it is shown at the trial that the
misrepresentation was:
(A) material to the risk; and
(B) intentionally made. (V.T.I.C. Art. 21.35
(part).)
Sec. 705.105. APPLICABILITY OF OTHER LAW. Subchapter A
does not apply to a life insurance policy:
(1) that contains a provision making the policy
incontestable after two years or less; and
(2) on which premiums have been duly paid. (V.T.I.C.
Art. 21.35 (part).)
SECTION 3. SUBTITLES A-G, TITLE 8, INSURANCE CODE. Title 8,
Insurance Code, is amended by adding Subtitles A-G to read as
follows:
SUBTITLE A. HEALTH COVERAGE IN GENERAL
CHAPTER 1201. ACCIDENT AND HEALTH INSURANCE
CHAPTER 1202. CANCELLATION AND CONTINUATION OF POLICIES
IN GENERAL
CHAPTER 1203. COORDINATION OF BENEFITS PROVISIONS
CHAPTER 1204. PROCEDURES FOR PAYMENT OF CERTAIN HEALTH
AND ACCIDENT INSURANCE POLICY OR PLAN
BENEFITS
CHAPTER 1205. CERTIFICATION OF CREDITABLE COVERAGE
CHAPTER 1206. DENIAL OF HEALTH BENEFIT PLAN ENROLLMENT
BASED ON EXISTING COVERAGE PROHIBITED
CHAPTER 1207. ENROLLMENT OF MEDICAL ASSISTANCE RECIPIENTS
AND CHILDREN ELIGIBLE FOR STATE CHILD
HEALTH PLAN
CHAPTER 1208. IDENTITY OF AVAILABLE EMPLOYEE OF HEALTH
BENEFIT PLAN ISSUER
CHAPTER 1209. HEALTH BENEFIT CLAIMS COST INFORMATION
CHAPTER 1210. NOTICE OF CERTAIN POLICY PROVISIONS
[Chapters 1211-1250 reserved for expansion]
SUBTITLE B. GROUP HEALTH COVERAGE
CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE
CHAPTER 1252. DISCONTINUATION AND REPLACEMENT OF GROUP
AND GROUP-TYPE HEALTH BENEFIT PLAN COVERAGE
CHAPTER 1253. CANCELLATION OF GROUP COVERAGE IN CERTAIN
CIRCUMSTANCES
CHAPTER 1254. NOTICE OF RATE INCREASE FOR GROUP HEALTH AND
ACCIDENT COVERAGE
[Chapters 1255-1270 reserved for expansion]
SUBTITLE C. MANAGED CARE
CHAPTER 1271. BENEFITS PROVIDED BY HEALTH MAINTENANCE
ORGANIZATIONS; EVIDENCE OF COVERAGE;
CHARGES
CHAPTER 1272. DELEGATION OF CERTAIN FUNCTIONS BY HEALTH
MAINTENANCE ORGANIZATION
CHAPTER 1273. POINT-OF-SERVICE PLANS
[Chapters 1274-1300 reserved for expansion]
SUBTITLE D. PREFERRED PROVIDER BENEFIT PLANS
CHAPTER 1301. PREFERRED PROVIDER BENEFIT PLANS
[Chapters 1302-1350 reserved for expansion]
SUBTITLE E. BENEFITS PAYABLE UNDER HEALTH COVERAGES
CHAPTER 1351. HOME HEALTH SERVICES
CHAPTER 1352. BRAIN INJURY
CHAPTER 1353. IMMUNIZATION OR VACCINATION PROTOCOLS UNDER
MANAGED CARE PLANS
CHAPTER 1354. ELIGIBILITY FOR BENEFITS FOR ALZHEIMER'S
DISEASE
CHAPTER 1355. BENEFITS FOR CERTAIN MENTAL DISORDERS
CHAPTER 1356. LOW-DOSE MAMMOGRAPHY
CHAPTER 1357. MASTECTOMY
CHAPTER 1358. DIABETES
CHAPTER 1359. FORMULAS FOR INDIVIDUALS WITH PHENYLKETONURIA
OR OTHER HERITABLE DISEASES
CHAPTER 1360. DIAGNOSIS AND TREATMENT AFFECTING
TEMPOROMANDIBULAR JOINT
CHAPTER 1361. DETECTION AND PREVENTION OF OSTEOPOROSIS
CHAPTER 1362. CERTAIN TESTS FOR DETECTION OF PROSTATE CANCER
CHAPTER 1363. CERTAIN TESTS FOR DETECTION OF COLORECTAL
CANCER
CHAPTER 1364. COVERAGE PROVISIONS RELATING TO HIV, AIDS, OR
HIV-RELATED ILLNESSES
CHAPTER 1365. LOSS OR IMPAIRMENT OF SPEECH OR HEARING
CHAPTER 1366. BENEFITS RELATED TO FERTILITY AND CHILDBIRTH
CHAPTER 1367. COVERAGE OF CHILDREN
CHAPTER 1368. AVAILABILITY OF CHEMICAL DEPENDENCY COVERAGE
CHAPTER 1369. BENEFITS RELATED TO PRESCRIPTION DRUGS AND
DEVICES AND RELATED SERVICES
[Chapters 1370-1450 reserved for expansion]
SUBTITLE F. PHYSICIANS AND HEALTH CARE PROVIDERS
CHAPTER 1451. ACCESS TO CERTAIN PRACTITIONERS AND
FACILITIES
CHAPTER 1452. PHYSICIAN AND PROVIDER CREDENTIALS
CHAPTER 1453. DISCLOSURE OF REIMBURSEMENT GUIDELINES UNDER
MANAGED CARE PLAN
CHAPTER 1454. EQUAL HEALTH CARE FOR WOMEN
CHAPTER 1455. TELEMEDICINE AND TELEHEALTH
[Chapters 1456-1500 reserved for expansion]
SUBTITLE G. HEALTH COVERAGE AVAILABILITY
CHAPTER 1501. HEALTH INSURANCE PORTABILITY AND AVAILABILITY
ACT
CHAPTER 1502. HEALTH BENEFIT PLANS FOR CHILDREN
CHAPTER 1503. COVERAGE OF CERTAIN STUDENTS
CHAPTER 1504. MEDICAL CHILD SUPPORT
CHAPTER 1505. GROUP INSURANCE PLANS FOR PERSONS 65 YEARS
OF AGE OR OLDER
CHAPTER 1506. TEXAS HEALTH INSURANCE RISK POOL
SUBTITLE A. HEALTH COVERAGE IN GENERAL
CHAPTER 1201. ACCIDENT AND HEALTH INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1201.001. DEFINITIONS
Sec. 1201.002. PURPOSE
Sec. 1201.003. APPLICABILITY OF CHAPTER
Sec. 1201.004. CONSTRUCTION OF CHAPTER
Sec. 1201.005. REFERENCES TO CHAPTER
Sec. 1201.006. RULEMAKING AUTHORITY
Sec. 1201.007. NOTICE AND HEARING
Sec. 1201.008. JUDICIAL REVIEW
Sec. 1201.009. NONCONFORMING POLICY
Sec. 1201.010. THIRD-PARTY OWNERSHIP OF POLICY
Sec. 1201.011. COVERAGE FOR PREMIUM PERIOD WITH LIMITATIONS
BY AGE OR DATE; MISSTATEMENT OF AGE OF
INSURED
Sec. 1201.012. DEFENSE OF CLAIM
[Sections 1201.013-1201.050 reserved for expansion]
SUBCHAPTER B. POLICY TERMS
Sec. 1201.051. ENTIRE CONSIDERATION
Sec. 1201.052. TIME OF EFFECTIVENESS AND TERMINATION
Sec. 1201.053. PERSONS INSURED
Sec. 1201.054. APPEARANCE OF TEXT
Sec. 1201.055. EXCEPTIONS AND REDUCTIONS OF INDEMNITY
Sec. 1201.056. FORM NUMBER
Sec. 1201.057. INCORPORATION OF OR REFERENCE TO OTHER
DOCUMENTS
Sec. 1201.058. NOTIFICATION THAT POLICY IS RETURNABLE; EFFECT
OF RETURN
Sec. 1201.059. TERMINATION OF COVERAGE BASED ON AGE OF CHILD
IN INDIVIDUAL, BLANKET, OR GROUP POLICY
Sec. 1201.060. REQUIRED DEFINITION OF "EMERGENCY CARE" IN
INDIVIDUAL OR GROUP POLICY
Sec. 1201.061. COVERAGE FOR ADOPTED CHILD
Sec. 1201.062. COVERAGE FOR CERTAIN CHILDREN IN INDIVIDUAL OR
GROUP POLICY OR IN PLAN OR PROGRAM
Sec. 1201.063. PROHIBITION OF CERTAIN CRITERIA RELATING TO
CHILD'S COVERAGE IN INDIVIDUAL OR GROUP
POLICY
Sec. 1201.064. COVERAGE FOR CHILD OF SPOUSE IN
INDIVIDUAL OR GROUP POLICY
Sec. 1201.065. AGE AND SCHOOL ENROLLMENT ELIGIBILITY CRITERIA
FOR DEPENDENT CHILDREN IN INDIVIDUAL OR GROUP
POLICY; LATE ENROLLMENT
[Sections 1201.066-1201.100 reserved for expansion]
SUBCHAPTER C. GENERAL POLICY STANDARDS AND PROVISIONS
Sec. 1201.101. STANDARDS FOR POLICY PROVISIONS
Sec. 1201.102. PROHIBITION OF POLICY PROVISIONS
Sec. 1201.103. COMPLIANCE WITH MINIMUM STANDARDS
FOR BENEFITS
Sec. 1201.104. MINIMUM STANDARDS FOR BENEFITS
Sec. 1201.105. MINIMUM STANDARDS FOR BENEFITS FOR LONG-TERM
CARE IN INDIVIDUAL, GROUP, OR BLANKET
POLICY
Sec. 1201.106. IDENTIFICATION OF POLICIES ACCORDING TO
COVERAGE PROVIDED
Sec. 1201.107. OUTLINE OF COVERAGE REQUIRED
Sec. 1201.108. FORMAT AND CONTENT OF OUTLINE OF COVERAGE
[Sections 1201.109-1201.150 reserved for expansion]
SUBCHAPTER D. PREEXISTING CONDITIONS
Sec. 1201.151. COMPLIANCE WITH SUBCHAPTER; PROHIBITION OF
DEFENSE
Sec. 1201.152. COVERAGE UNDER SIMPLIFIED APPLICATION FORM
Sec. 1201.153. COVERAGE FOR INDIVIDUALS AGE 65 OR OLDER
Sec. 1201.154. COVERAGE FOR CERTAIN PREVIOUSLY COVERED
PERSONS
[Sections 1201.155-1201.200 reserved for expansion]
SUBCHAPTER E. REQUIRED POLICY PROVISIONS
Sec. 1201.201. POLICY PROVISIONS REQUIRED
Sec. 1201.202. ORDER OF REQUIRED POLICY PROVISIONS
Sec. 1201.203. OTHER POLICY PROVISIONS
Sec. 1201.204. POLICY PROVISIONS REQUIRED BY OTHER
JURISDICTION
Sec. 1201.205. POLICY PROVISIONS FOR POLICY DELIVERED
OUTSIDE THIS STATE
Sec. 1201.206. FILING PROCEDURE
Sec. 1201.207. POLICY PROVISION: ENTIRETY OF CONTRACT;
POLICY CHANGES
Sec. 1201.208. POLICY PROVISION: INCONTESTABILITY
Sec. 1201.209. POLICY PROVISION: GRACE PERIOD
Sec. 1201.210. POLICY PROVISION: REINSTATEMENT
Sec. 1201.211. POLICY PROVISION: NOTICE OF CLAIM
Sec. 1201.212. POLICY PROVISION: CLAIM FORMS
Sec. 1201.213. POLICY PROVISION: PROOF OF LOSS
Sec. 1201.214. POLICY PROVISION: TIME OF PAYMENT OF
CLAIMS
Sec. 1201.215. POLICY PROVISION: PAYMENT OF CLAIMS
Sec. 1201.216. POLICY PROVISION: PHYSICAL EXAMINATIONS
AND AUTOPSY
Sec. 1201.217. POLICY PROVISION: LEGAL ACTIONS
Sec. 1201.218. POLICY PROVISION: CHANGE OF BENEFICIARY
Sec. 1201.219. POLICY PROVISION: CHANGE OF OCCUPATION
Sec. 1201.220. POLICY PROVISION: MISSTATEMENT OF AGE
Sec. 1201.221. POLICY PROVISION: EXCESS INSURANCE
Sec. 1201.222. POLICY PROVISION: RELATION OF EARNINGS
TO INSURANCE
Sec. 1201.223. POLICY PROVISION: UNPAID PREMIUM
Sec. 1201.224. POLICY PROVISION: CANCELLATION
Sec. 1201.225. POLICY PROVISION: CONFORMITY WITH STATE
STATUTES
Sec. 1201.226. POLICY PROVISION: ILLEGAL OCCUPATION
Sec. 1201.227. POLICY PROVISION: INTOXICANTS AND
NARCOTICS
[Sections 1201.228-1201.270 reserved for expansion]
SUBCHAPTER F. APPLICATION FOR POLICY
Sec. 1201.271. ALTERATION OF POLICY APPLICATION
Sec. 1201.272. FALSE STATEMENTS
Sec. 1201.273. BINDING STATEMENTS
Sec. 1201.274. INSURER'S EVIDENTIARY USE OF APPLICATION FOR
REINSTATEMENT OR RENEWAL
[Sections 1201.275-1201.700 reserved for expansion]
SUBCHAPTER O. ENFORCEMENT
Sec. 1201.701. CIVIL PENALTY
Sec. 1201.702. ACTION AGAINST CERTIFICATE OF AUTHORITY
OR LICENSE
CHAPTER 1201. ACCIDENT AND HEALTH INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1201.001. DEFINITIONS. In this chapter:
(1) "Accident and health insurance policy" includes
any policy or contract that provides insurance against loss
resulting from:
(A) accidental bodily injury;
(B) accidental death; or
(C) sickness.
(2) "Policy" means the entire contract between an
insurer and an insured and includes riders, endorsements, and the
application, if attached. (V.T.I.C. Art. 3.70-1, Secs. (B)(3),
(4).)
Sec. 1201.002. PURPOSE. The purpose of this chapter is to:
(1) provide for reasonable standardization,
readability, and simplification of terms and coverages in
individual accident and health insurance policies;
(2) promote public understanding of coverages;
(3) eliminate provisions in individual accident and
health insurance policies that may be unjust, unfair, misleading,
or unreasonably confusing in connection with:
(A) the purchase of coverage; or
(B) the settlement of claims; and
(4) provide for full and fair disclosure in sales of
accident and health coverage. (V.T.I.C. Art. 3.70-1, Sec. (A).)
Sec. 1201.003. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to an accident and health insurance policy delivered
or issued for delivery in this state.
(b) Except as otherwise provided by this chapter, this
chapter applies only to an individual accident and health insurance
policy delivered or issued for delivery by:
(1) a life, health, and accident insurance company;
(2) a mutual insurance company, including:
(A) a mutual life insurance company; and
(B) a mutual assessment life insurance company;
(3) a local mutual aid association;
(4) a mutual or natural premium life or casualty
insurance company;
(5) a general casualty company;
(6) a Lloyd's plan;
(7) a reciprocal or interinsurance exchange;
(8) a nonprofit hospital, medical, or dental service
corporation, including a corporation operating under Chapter 842;
or
(9) another insurer required by law to be authorized
by the department.
(c) This chapter applies to an accident and health insurance
policy issued by a stipulated premium company subject to Chapter
884.
(d) This chapter does not apply to:
(1) any society, company, or other insurer whose
activities are exempt by statute from the control of the department
and that is entitled by statute to a certificate from the department
that shows the entity's exempt status;
(2) a credit accident and health insurance policy
issued under Chapter 1153;
(3) a workers' compensation insurance policy;
(4) a liability insurance policy, with or without
supplementary expense coverage;
(5) a reinsurance policy or contract;
(6) a blanket or group insurance policy, except as
otherwise provided by this chapter; or
(7) a life insurance endowment or annuity contract or
a contract supplemental to a life insurance endowment or annuity
contract if the contract or supplemental contract contains only
provisions relating to accident and health insurance that:
(A) provide additional benefits in case of
accidental death, accidental dismemberment, or accidental loss of
sight; or
(B) operate to:
(i) safeguard the contract or supplemental
contract against lapse; or
(ii) give a special surrender value, a
special benefit, or an annuity if the insured or annuitant becomes
totally and permanently disabled, as defined by the contract or
supplemental contract.
(e) Subchapters C and D do not apply to a conversion policy
issued under a contractual conversion privilege under a group
accident and health insurance policy. (V.T.I.C. Art. 3.70-1, Sec.
(C) (part); Art. 3.70-8, Secs. (a) (part), (b).)
Sec. 1201.004. CONSTRUCTION OF CHAPTER. This chapter does
not enlarge the powers of an entity listed in Section 1201.003.
(V.T.I.C. Art. 3.70-1, Sec. (C) (part).)
Sec. 1201.005. REFERENCES TO CHAPTER. In this chapter, a
reference to this chapter includes a reference to:
(1) Section 1202.052;
(2) Section 1271.005(a), to the extent that the
subsection relates to the applicability of Section 1201.105, and
Sections 1271.005(d) and (e);
(3) Chapter 1351;
(4) Subchapters C and E, Chapter 1355;
(5) Chapter 1356;
(6) Chapter 1365;
(7) Subchapter A, Chapter 1367; and
(8) Subchapters A, B, and G, Chapter 1451. (New.)
Sec. 1201.006. RULEMAKING AUTHORITY. The commissioner may
adopt reasonable rules as necessary to implement the purposes and
provisions of this chapter. (V.T.I.C. Art. 3.70-1, Sec. (D).)
Sec. 1201.007. NOTICE AND HEARING. The commissioner may
adopt a general rule or order relating to a matter covered by this
chapter only after a hearing held after the 10th day following the
date the department by mail notifies each insurer to which this
chapter applies. (V.T.I.C. Art. 3.70-10 (part).)
Sec. 1201.008. JUDICIAL REVIEW. An insurer that is
dissatisfied with an order, act, rule, administrative ruling, or
decision of the commissioner under this chapter may, after failing
to get relief from the commissioner, file a petition seeking
judicial review of the order, act, rule, ruling, or decision in
accordance with Subchapter D, Chapter 36. The action has
precedence over all other causes on the docket of a different
nature. (V.T.I.C. Art. 3.70-10 (part).)
Sec. 1201.009. NONCONFORMING POLICY. (a) This chapter
governs the rights, duties, and obligations of the insurer, the
insured, and the beneficiary of an accident and health insurance
policy regardless of a provision in the policy that conflicts with
this chapter.
(b) An accident and health insurance policy that violates
this chapter is a valid policy, but the policy shall be construed in
a manner to make the policy consistent with this chapter. (V.T.I.C.
Art. 3.70-4, Sec. (B).)
Sec. 1201.010. THIRD-PARTY OWNERSHIP OF POLICY. The use of
"insured" in this chapter does not prevent a person with an
insurable interest, other than the insured, from:
(1) applying for and owning an individual accident and
health insurance policy covering the insured; or
(2) being entitled to an indemnity, right, or benefit
provided for in an individual accident and health insurance policy
covering the insured. (V.T.I.C. Art. 3.70-3, Sec. (E).)
Sec. 1201.011. COVERAGE FOR PREMIUM PERIOD WITH LIMITATIONS
BY AGE OR DATE; MISSTATEMENT OF AGE OF INSURED. (a) Regardless of a
provision in an individual accident and health insurance policy
that specifies a date, by age limitation or otherwise, after which
coverage under the policy is not effective, coverage continues in
force, subject to any right of cancellation, until the end of the
period for which the insurer accepts a premium if:
(1) the insurer accepts the premium after the
specified date; or
(2) the specified date falls before the end of the
period for which the insurer accepts the premium.
(b) Notwithstanding Subsection (a), if the age of the
insured is misstated and, because of the insured's correct age,
coverage of the insured would not have become effective or would
have terminated before the insurer's acceptance of a premium, the
liability of the insurer is limited to the refund, on request, of
the premiums paid for the period not covered by the policy.
(V.T.I.C. Art. 3.70-7.)
Sec. 1201.012. DEFENSE OF CLAIM. The following actions by
an insurer do not operate as a waiver of the insurer's rights in
defense of a claim that arises under an individual accident and
health insurance policy:
(1) acknowledgment of the receipt of notice given
under the policy;
(2) provision of a form for filing a proof of loss;
(3) acceptance of a proof of loss; or
(4) investigation of a claim under the policy.
(V.T.I.C. Art. 3.70-6.)
[Sections 1201.013-1201.050 reserved for expansion]
SUBCHAPTER B. POLICY TERMS
Sec. 1201.051. ENTIRE CONSIDERATION. An individual
accident and health insurance policy must state the entire monetary
and other consideration for the policy in the policy or in the
application, if the application is made a part of the policy.
(V.T.I.C. Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.052. TIME OF EFFECTIVENESS AND TERMINATION. An
individual accident and health insurance policy must state the time
the insurance takes effect and the time the insurance terminates.
(V.T.I.C. Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.053. PERSONS INSURED. (a) Except as provided by
this section, an individual accident and health insurance policy
may not insure more than one individual.
(b) On the application of an adult member of a family, an
individual accident and health insurance policy may, at the time of
original issuance or by subsequent amendment, insure two or more
eligible members of the adult's family, including a spouse,
unmarried children younger than 25 years of age, including a
grandchild of the adult as described by Section 1201.062(a)(1), a
child the adult is required to insure under a medical support order
issued under Chapter 154, Family Code, or enforceable by a court in
this state, and any other individual dependent on the adult.
(c) The adult who applies for the individual accident and
health insurance policy is considered the policyholder. (V.T.I.C.
Art. 3.70-2, Sec. (A) (part), as amended Acts 77th Leg., R.S., Chs.
396 and 1027.)
Sec. 1201.054. APPEARANCE OF TEXT. (a) In this section,
"text" includes all printed matter of an individual accident and
health insurance policy except:
(1) the name and address of the insurer;
(2) the name or title of the policy;
(3) the brief description, if any; and
(4) captions and subcaptions.
(b) An individual accident and health insurance policy must
have:
(1) a style, arrangement, or overall appearance that
does not give undue prominence to any portion of the text; and
(2) every printed portion of its text and of any
endorsements or attached papers printed plainly in a lightfaced
type:
(A) of a style in general use; and
(B) in a uniform size not less than 10-point with
a lowercase unspaced alphabet length not less than 120-point.
(c) Subsection (b)(2) does not apply to a copy of an
application or identification card. (V.T.I.C. Art. 3.70-2, Sec.
(A) (part).)
Sec. 1201.055. EXCEPTIONS AND REDUCTIONS OF INDEMNITY. (a)
An individual accident and health insurance policy must state each
exception to or reduction of indemnity for the policy.
(b) Except as provided by Subchapter E, each exception to or
reduction of indemnity for the policy must be printed, at the
insurer's option:
(1) with the benefit provision to which the exception
or reduction applies; or
(2) under an appropriate caption such as:
(A) "Exceptions"; or
(B) "Exceptions and Reductions."
(c) Notwithstanding Subsection (b), if an exception or
reduction specifically applies only to a particular benefit of an
individual accident and health insurance policy, the statement of
the exception or reduction must be included with the benefit
provision to which the exception or reduction applies. (V.T.I.C.
Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.056. FORM NUMBER. Each form that constitutes a
part of an individual accident and health insurance policy,
including each rider or endorsement, must be identified by a form
number placed in the lower left corner of the first page of the
form. (V.T.I.C. Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.057. INCORPORATION OF OR REFERENCE TO OTHER
DOCUMENTS. (a) An individual accident and health insurance policy
that provides that a portion of the charter, rules, constitution,
or bylaws of the insurer are a part of the policy must state that
portion fully in the policy.
(b) An individual accident and health insurance policy may
incorporate or refer to:
(1) a statement of rates or classification of risks;
or
(2) a short-rate table filed with the department.
(V.T.I.C. Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.058. NOTIFICATION THAT POLICY IS RETURNABLE;
EFFECT OF RETURN. (a) An individual accident and health insurance
policy must include a notice that states in substance that the
individual to whom the policy is issued is entitled to have the
premium paid refunded if, after the individual examines the policy,
the individual is not satisfied with the policy for any reason and
returns the policy not later than the 10th day after the date the
policy is delivered to the individual.
(b) An individual accident and health insurance policy
returned to the insurer at the insurer's home or branch office or to
the agent through whom the policy was purchased within the time
provided by the notice is void from the date the policy was issued,
and the parties are in the same position as if the policy had not
been issued.
(c) The notice required by this section may be printed on
the policy or attached to the policy.
(d) This section does not apply to a single premium
nonrenewable policy. (V.T.I.C. Art. 3.70-2, Sec. (A) (part).)
Sec. 1201.059. TERMINATION OF COVERAGE BASED ON AGE OF
CHILD IN INDIVIDUAL, BLANKET, OR GROUP POLICY. (a) An accident and
health insurance policy, including an individual, blanket, or group
policy, and including a policy issued by a corporation operating
under Chapter 842, that provides that coverage of a child
terminates when the child attains a limiting age specified in the
policy must provide in substance that the child's attainment of
that age does not terminate coverage while the child is:
(1) incapable of self-sustaining employment because
of mental retardation or physical disability; and
(2) chiefly dependent on the insured or group member
for support and maintenance.
(b) To obtain coverage for a child as described by
Subsection (a), the insured or group member must provide to the
insurer proof of the child's incapacity and dependency:
(1) not later than the 31st day after the date the
child attains the limiting age; and
(2) subsequently as the insurer requires, except that
the insurer may not require proof more frequently than annually
after the second anniversary of the date the child attains the
limiting age. (V.T.I.C. Art. 3.70-2, Sec. (C); Art. 3.70-8, Sec.
(a) (part).)
Sec. 1201.060. REQUIRED DEFINITION OF "EMERGENCY CARE" IN
INDIVIDUAL OR GROUP POLICY. An individual or group accident and
health insurance policy that provides an emergency care benefit,
including a policy issued by a corporation operating under Chapter
842, must define "emergency care" as follows:
"Emergency care" means bona fide emergency services provided
after the sudden onset of a medical condition manifesting itself by
acute symptoms of sufficient severity, including severe pain, such
that the absence of immediate medical attention could reasonably be
expected to result in:
(1) placing the patient's health in serious jeopardy;
(2) serious impairment to bodily functions; or
(3) serious dysfunction of any bodily organ or part.
(V.T.I.C. Art. 3.70-2, Sec. (I).)
Sec. 1201.061. COVERAGE FOR ADOPTED CHILD. (a) An
individual accident and health insurance policy that provides
coverage for an insured's immediate family or children may not,
solely because the insured's child is adopted:
(1) exclude the child from coverage; or
(2) limit coverage for the child.
(b) For the purposes of this section, a child is an
insured's child if the insured is a party to a suit in which the
insured seeks to adopt the child. (V.T.I.C. Art. 3.70-2, Sec. (K).)
Sec. 1201.062. COVERAGE FOR CERTAIN CHILDREN IN INDIVIDUAL
OR GROUP POLICY OR IN PLAN OR PROGRAM. (a) An individual or group
accident and health insurance policy that is delivered, issued for
delivery, or renewed in this state, including a policy issued by a
corporation operating under Chapter 842, or a self-funded or
self-insured welfare or benefit plan or program, to the extent that
regulation of the plan or program is not preempted by federal law,
that provides coverage for a child of an insured or group member, on
payment of a premium, must provide coverage for:
(1) each grandchild of the insured or group member if
the grandchild is:
(A) unmarried;
(B) younger than 25 years of age; and
(C) a dependent of the insured or group member
for federal income tax purposes at the time application for
coverage of the grandchild is made; and
(2) each child for whom the insured or group member
must provide medical support under an order issued under Chapter
154, Family Code, or enforceable by a court in this state.
(b) Coverage for a grandchild of the insured or group member
may not be terminated solely because the grandchild is no longer a
dependent of the insured or group member for federal income tax
purposes. (V.T.I.C. Art. 3.70-2, Sec. (L) (part), as amended Acts
77th Leg., R.S., Chs. 396 and 1027.)
Sec. 1201.063. PROHIBITION OF CERTAIN CRITERIA RELATING TO
CHILD'S COVERAGE IN INDIVIDUAL OR GROUP POLICY. Regarding a
natural or adopted child of an insured or group member or a child
for whom the insured or group member must provide medical support
under an order issued under Chapter 154, Family Code, or
enforceable by a court in this state, an individual or group
accident and health insurance policy that provides coverage for a
child of an insured or group member may not set a different premium
for the child, exclude the child from coverage, or discontinue
coverage of the child because:
(1) the child does not reside with the insured or group
member; or
(2) the insured or group member does not claim the
child as an exemption for federal income tax purposes under Section
151(c)(1)(B), Internal Revenue Code of 1986. (V.T.I.C. Art.
3.70-2, Sec. (M)(1).)
Sec. 1201.064. COVERAGE FOR CHILD OF SPOUSE IN INDIVIDUAL
OR GROUP POLICY. An individual or group accident and health
insurance policy that provides coverage for a child of an insured or
group member may not:
(1) set a premium for a child that is different from
the premium for other children because the child is the natural or
adopted child of the spouse of the insured or group member;
(2) exclude a child described by Subdivision (1) from
coverage; or
(3) discontinue coverage of a child described by
Subdivision (1). (V.T.I.C. Art. 3.70-2, Sec. (M)(2).)
Sec. 1201.065. AGE AND SCHOOL ENROLLMENT ELIGIBILITY
CRITERIA FOR DEPENDENT CHILDREN IN INDIVIDUAL OR GROUP POLICY; LATE
ENROLLMENT. (a) An individual or group accident and health
insurance policy may contain criteria relating to a maximum age or
enrollment in school to establish continued eligibility for
coverage of a child younger than 25 years of age.
(b) In the case of a late enrollment, an insurer may require
evidence of insurability that is satisfactory to the insurer before
a child is included for coverage under the policy. (V.T.I.C. Art.
3.70-2, Sec. (M)(3).)
[Sections 1201.066-1201.100 reserved for expansion]
SUBCHAPTER C. GENERAL POLICY STANDARDS AND PROVISIONS
Sec. 1201.101. STANDARDS FOR POLICY PROVISIONS. (a) The
commissioner shall adopt reasonable rules establishing specific
standards for:
(1) the content of an individual accident and health
insurance policy; and
(2) the manner of sale of an individual accident and
health insurance policy, including disclosures required to be made
in connection with the sale.
(b) Rules adopted under this section must establish
standards for:
(1) policy readability; and
(2) full and fair policy disclosures.
(c) Standards established under this section may include
standards that address:
(1) terms of policy renewability;
(2) initial and subsequent conditions of eligibility;
(3) nonduplication of coverage;
(4) coverage of dependents;
(5) preexisting conditions;
(6) termination of insurance;
(7) probationary periods;
(8) limitations;
(9) exceptions;
(10) reductions;
(11) elimination periods;
(12) requirements for replacement;
(13) recurrent conditions; and
(14) definitions of terms, including definitions of:
(A) "accident";
(B) "accidental means";
(C) "guaranteed renewable and noncancellable";
(D) "hospital";
(E) "injury";
(F) "nervous disorder";
(G) "partial disability";
(H) "physician";
(I) "sickness"; and
(J) "total disability."
(d) A definition of "hospital" adopted under Subsection (c)
may not apply to a corporation operating under Chapter 842.
(V.T.I.C. Art. 3.70-1, Sec. (E)(1).)
Sec. 1201.102. PROHIBITION OF POLICY PROVISIONS. The
commissioner may adopt rules prohibiting specific individual
accident and health insurance policy provisions not specifically
authorized by statute that the commissioner determines are unjust,
unfair, or unfairly discriminatory to:
(1) the policyholder;
(2) an insured under the policy; or
(3) a beneficiary. (V.T.I.C. Art. 3.70-1, Sec.
(E)(2).)
Sec. 1201.103. COMPLIANCE WITH MINIMUM STANDARDS FOR
BENEFITS. (a) An individual accident and health insurance policy
must meet the minimum standards for benefits established under
Section 1201.104 for each category of coverage provided under the
policy.
(b) Subsection (a) does not apply if the commissioner
determines that the policy is a supplemental policy or experimental
policy or determines that the policy will fulfill a reasonable
public need and the policy meets the requirements of Chapter 1701.
(V.T.I.C. Art. 3.70-1, Sec. (F)(3).)
Sec. 1201.104. MINIMUM STANDARDS FOR BENEFITS. (a) For
individual accident and health insurance policies, the
commissioner shall adopt rules establishing minimum standards for
benefits under each of the following categories of coverage:
(1) basic hospital expense;
(2) basic medical-surgical expense;
(3) hospital confinement indemnity;
(4) major medical expense;
(5) disability income protection;
(6) accident only;
(7) specified disease;
(8) specified accident; and
(9) limited benefit.
(b) This section does not prohibit the issuance of an
individual accident and health insurance policy that combines
categories of coverage listed by this section. (V.T.I.C. Art.
3.70-1, Secs. (F)(1), (2).)
Sec. 1201.105. MINIMUM STANDARDS FOR BENEFITS FOR LONG-TERM
CARE IN INDIVIDUAL, GROUP, OR BLANKET POLICY. (a) The commissioner
shall adopt rules establishing minimum standards for benefits for
long-term care coverage under individual, group, and blanket
accident and health insurance policies and certificates delivered
or issued for delivery in this state.
(b) Rules adopted under this section apply to group
coverages delivered or issued for delivery by a corporation
operating under Chapter 842. (V.T.I.C. Art. 3.70-1, Sec. (F)(5)
(part); Art. 3.70-8, Sec. (a) (part).)
Sec. 1201.106. IDENTIFICATION OF POLICIES ACCORDING TO
COVERAGE PROVIDED. The commissioner shall prescribe the method to
identify an individual accident and health insurance policy
according to the coverages the policy provides. (V.T.I.C. Art.
3.70-1, Sec. (F)(4).)
Sec. 1201.107. OUTLINE OF COVERAGE REQUIRED. (a) An
outline of coverage for an individual accident and health insurance
policy must be delivered to the applicant at the time application is
made, and an acknowledgment of receipt or certificate of delivery
of an outline of coverage must be provided to the insurer with the
application.
(b) If the policy issued differs from the policy for which
the applicant applied, an outline of coverage that properly
describes the policy must:
(1) accompany the policy when delivered; and
(2) clearly state that the policy is not the policy for
which the applicant applied.
(c) Subsection (a) does not apply to a direct response
insurance product.
(d) An outline of coverage under a direct response insurance
product must accompany the policy. (V.T.I.C. Art. 3.70-1, Sec.
(G)(1).)
Sec. 1201.108. FORMAT AND CONTENT OF OUTLINE OF COVERAGE.
(a) In this section, "format" means style, arrangement, and
overall appearance, including:
(1) the size, color, and prominence of type; and
(2) the arrangement of text and captions.
(b) The commissioner shall prescribe the format and content
of an outline of coverage required by Section 1201.107.
(c) An outline of coverage must include:
(1) a statement that identifies the applicable
categories of coverage listed by Section 1201.104 and provided by
the policy;
(2) a description of the principal benefits and
coverage provided by the policy;
(3) a statement of the exceptions, reductions, and
limitations in the policy;
(4) a statement of the renewal provision, including
any reservation of the insurer's right to change premiums;
(5) a statement that:
(A) the outline is a summary of the policy issued
or applied for; and
(B) the policy should be consulted to determine
governing contractual provisions;
(6) as the commissioner determines necessary to carry
out the purposes of this chapter, a summary of the provisions
required by Subchapter E to be in the policy; and
(7) any other statement, description, or outline that
the commissioner determines is reasonably necessary to carry out
the purposes of this chapter. (V.T.I.C. Art. 3.70-1, Sec. (G)(2).)
[Sections 1201.109-1201.150 reserved for expansion]
SUBCHAPTER D. PREEXISTING CONDITIONS
Sec. 1201.151. COMPLIANCE WITH SUBCHAPTER; PROHIBITION OF
DEFENSE. Except as provided by this subchapter, an individual
accident and health insurance policy may not include a provision
that permits a defense based on a preexisting condition. (V.T.I.C.
Art. 3.70-1, Sec. (H)(3).)
Sec. 1201.152. COVERAGE UNDER SIMPLIFIED APPLICATION FORM.
(a) Notwithstanding Clause (b) of the provision required by
Section 1201.208(a), an individual accident and health insurance
policy must cover any loss that occurs after 12 months from a
preexisting condition if the insurer uses a simplified application
form that does not include a question concerning the applicant's
health history or medical treatment history.
(b) This section applies regardless of whether the
simplified application form includes a question regarding the
applicant's health at the time of application.
(c) This section does not require an insurer to cover a loss
from a condition that the policy specifically excludes from
coverage. (V.T.I.C. Art. 3.70-1, Sec. (H)(1).)
Sec. 1201.153. COVERAGE FOR INDIVIDUALS AGE 65 OR OLDER.
(a) Notwithstanding Section 1201.152 or Clause (b) of the
provision required by Section 1201.208(a), an individual accident
and health insurance policy delivered or issued for delivery to an
individual who is 65 years of age or older may not include a
provision that excludes from coverage a loss that occurs from a
preexisting condition more than six months after the effective date
of coverage under the policy.
(b) Notwithstanding Subsection (a), the commissioner may
authorize a policy provision that excludes coverage for a
preexisting condition for a period of not more than one year if the
commissioner determines that the provision would serve the public
interest.
(c) This section does not require an insurer to provide
coverage for a loss from a preexisting condition specifically
excluded from coverage by name or specific description in an
exclusion endorsement or rider that is effective on the date of the
loss. (V.T.I.C. Art. 3.70-1, Sec. (H)(2).)
Sec. 1201.154. COVERAGE FOR CERTAIN PREVIOUSLY COVERED
PERSONS. (a) In this section, "creditable coverage" has the
meaning assigned by Section 1205.004.
(b) A preexisting condition provision in an individual
accident and health insurance policy may not apply to an
individual:
(1) who was continuously covered for an aggregate
period of 18 months by creditable coverage that was in effect up to
a date not more than 63 days before the effective date of the
individual coverage, excluding any waiting period; and
(2) whose most recent creditable coverage was under:
(A) a group health plan;
(B) a governmental plan; or
(C) a church plan.
(c) In determining whether a preexisting condition
provision of an individual accident and health insurance policy
applies to an individual, an insurer shall credit the time the
individual previously was covered under creditable coverage if the
previous coverage was in effect at any time during the 18 months
preceding the effective date of the individual coverage. (V.T.I.C.
Art. 3.70-1, Sec. (H)(4).)
[Sections 1201.155-1201.200 reserved for expansion]
SUBCHAPTER E. REQUIRED POLICY PROVISIONS
Sec. 1201.201. POLICY PROVISIONS REQUIRED. (a) Except as
provided by Subsections (b) and (c), an individual accident and
health insurance policy must contain the provisions required by
this subchapter in the words provided by this subchapter.
(b) An insurer may substitute for a policy provision
required by this subchapter a provision with different wording
approved by the commissioner in accordance with reasonable rules
adopted by the commissioner. A substituted provision may not be
less favorable to an insured or a beneficiary of the policy than
the provision required by this subchapter.
(c) If a policy provision required by this subchapter is
wholly or partly inapplicable to or inconsistent with the coverage
provided by a particular form of policy, the insurer, with the
commissioner's approval, shall:
(1) omit from the policy each inapplicable provision
or part of a provision; and
(2) modify each inconsistent provision or part of a
provision so that the provision as contained in the policy is
consistent with the coverage provided by the policy.
(d) A policy provision required by this subchapter must be
preceded by the caption for the provision provided by this
subchapter or, at the option of the insurer, by an appropriate
individual or group caption or subcaption approved by the
commissioner. (V.T.I.C. Art. 3.70-3, Secs. (A) (part), (B) (part),
(C).)
Sec. 1201.202. ORDER OF REQUIRED POLICY PROVISIONS. (a)
Except as provided by Subsection (b), policy provisions required by
this subchapter or corresponding substitute provisions must be
printed in the same consecutive order as provided by this
subchapter.
(b) An insurer may print a policy provision required by this
subchapter or a corresponding substitute provision as a unit in any
part of the policy with other provisions to which the provision is
logically related.
(c) A policy printed under Subsection (b) may not be wholly
or partly unintelligible, uncertain, ambiguous, abstruse, or
likely to mislead a person to whom the policy is offered, delivered,
or issued. (V.T.I.C. Art. 3.70-3, Sec. (D).)
Sec. 1201.203. OTHER POLICY PROVISIONS. A policy provision
that is not otherwise subject to this subchapter may not make an
individual accident and health insurance policy or any portion of
the policy less favorable in any way to the insured or the
beneficiary than the policy provisions that are subject to this
chapter. (V.T.I.C. Art. 3.70-4, Sec. (A).)
Sec. 1201.204. POLICY PROVISIONS REQUIRED BY OTHER
JURISDICTION. An individual accident and health insurance policy
of a foreign or alien insurer may contain any provision that is:
(1) not less favorable to the insured or the
beneficiary than the provisions of this chapter; and
(2) prescribed or required by the law of the state
under which the insurer is organized. (V.T.I.C. Art. 3.70-3, Sec.
(F)(1).)
Sec. 1201.205. POLICY PROVISIONS FOR POLICY DELIVERED
OUTSIDE THIS STATE. An individual accident and health insurance
policy issued by a domestic insurer for delivery in another state or
country may contain any provision permitted or required by the laws
of that state or country. (V.T.I.C. Art. 3.70-3, Sec. (F)(2).)
Sec. 1201.206. FILING PROCEDURE. (a) The commissioner may
adopt reasonable rules regarding the procedure for submitting
policies subject to this chapter that are necessary, proper, or
advisable for the administration of this chapter.
(b) This section does not limit any authority otherwise
granted by law to the commissioner or department. (V.T.I.C. Art.
3.70-3, Sec. (G).)
Sec. 1201.207. POLICY PROVISION: ENTIRETY OF CONTRACT;
POLICY CHANGES. An individual accident and health insurance policy
must contain the following provision:
"Entire Contract; Changes: This policy, including the
endorsements and the attached papers, if any, constitutes the
entire contract of insurance. A change in this policy is not valid
until the change is approved by an executive officer of the insurer
and unless the approval is endorsed on or attached to the policy.
An agent does not have authority to change this policy or to waive
any of its provisions." (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.208. POLICY PROVISION: INCONTESTABILITY. (a)
Except as provided by Subsection (c), an individual accident and
health insurance policy must contain the following provision:
"Time Limit on Certain Defenses: (a) After the second
anniversary of the date this policy is issued, a misstatement,
other than a fraudulent misstatement, made by the applicant in the
application for the policy may not be used to void the policy or to
deny a claim for loss incurred or disability (as defined in the
policy) beginning after that anniversary.
"(b) A claim for loss incurred or disability (as defined in
the policy) beginning after the second anniversary of the date this
policy is issued may not be reduced or denied on the ground that a
disease or physical condition not excluded from coverage by name or
specific description effective on the date of loss existed before
the effective date of coverage of this policy."
(b) Clause (a) of the provision required by Subsection (a)
does not:
(1) affect any legal requirement for avoidance of a
policy or denial of a claim during the initial two-year period; or
(2) limit the application of Section 1201.219,
1201.220, or 1201.221 in a case of a misstatement regarding age,
occupation, or other insurance.
(c) For a policy that provides that the insured is entitled
to continue the policy in force by the timely payment of premiums
until the insured reaches at least 50 years of age or, if the policy
was issued after the insured reached 44 years of age, until at least
the fifth anniversary of the policy's date of issuance, an insurer
may use the following clause instead of Clause (a) of the provision
required by Subsection (a):
"After this policy has been in force for a period of two years
during the lifetime of the insured (excluding any period during
which the insured is disabled), it shall become incontestible as to
the statements contained in the application."
(d) The provision provided by Subsection (c) must be under
the caption "Incontestable." An insurer that uses the provision
may omit the parenthetical clause. (V.T.I.C. Art. 3.70-3, Sec. (A)
(part).)
Sec. 1201.209. POLICY PROVISION: GRACE PERIOD. (a) An
individual accident and health insurance policy must contain the
following provision:
"Grace Period: A grace period of ____ (insert appropriate
number) days will be granted for the payment of each premium due
after the first premium. During the grace period, the policy
continues in force."
(b) The number of days of the grace period may not be less
than:
(1) 7 for a weekly premium policy;
(2) 10 for a monthly premium policy; or
(3) 31 for any other policy.
(c) A policy that contains a cancellation provision may add,
at the end of the provision required by Subsection (a): "subject to
the right of the insurer to cancel the policy in accordance with the
policy's cancellation provision."
(d) A policy in which the insurer reserves the right to
refuse any renewal must include the following provision at the
beginning of the provision required by Subsection (a):
"Unless, not less than five days before the premium due date,
the insurer has delivered to the insured, or has mailed to the
insured's last address as shown by the insurer's records, a written
notice of the insurer's intention not to renew this policy beyond
the period for which the premium has been accepted, . . . ."
(V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.210. POLICY PROVISION: REINSTATEMENT. (a)
Except as provided by Subsection (b), an individual accident and
health insurance policy must contain the following provision:
"Reinstatement: If a renewal premium is not paid before the
expiration of the period granted for the insured to make the
payment, a subsequent acceptance of the premium by the insurer or
any agent authorized by the insurer to accept the premium, without
requiring in connection with the acceptance an application for
reinstatement, reinstates the policy. However, if the insurer or
authorized agent requires an application for reinstatement and
issues a conditional receipt for the premium tendered, the policy
will be reinstated on approval of the application by the insurer or,
if the application is not approved, on the 45th day after the date
of the conditional receipt unless the insurer before that date has
notified the insured in writing of the insurer's disapproval of the
application. The reinstated policy covers only loss resulting from
an accidental injury sustained after the date of reinstatement and
loss due to sickness that begins more than 10 days after the date of
reinstatement. In all other respects the insured and insurer have
the same rights under the reinstated policy as they had under the
policy immediately before the due date of the defaulted premium,
subject to any provisions endorsed in the policy or attached to the
policy in connection with the reinstatement. Any premium accepted
in connection with a reinstatement shall be applied to a period for
which premium has not been previously paid, but not to any period
more than 60 days before the date of reinstatement."
(b) The insurer may omit the last sentence of the provision
required by Subsection (a) in a policy that provides that the
insured is entitled to continue the policy in force by the timely
payment of premiums until the insured reaches at least 50 years of
age or, if the policy was issued after the insured reached 44 years
of age, until at least the fifth anniversary of the policy's date of
issuance. (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.211. POLICY PROVISION: NOTICE OF CLAIM. (a)
Except as provided by Subsection (b), an individual accident and
health insurance policy must contain the following provision:
"Notice of Claim: A written notice of claim must be given to
the insurer before the 21st day after the date of the occurrence or
beginning of any loss covered by the policy, or as soon after that
date as is reasonably possible. A notice given by or on behalf of
the insured or the beneficiary to the insurer at _____ (insert the
location of any office the insurer designates for the purpose), or
to any authorized agent of the insurer, with information sufficient
to identify the insured, constitutes notice to the insurer."
(b) In a policy that provides a loss of time benefit that may
be payable for at least two years, an insurer may insert, between
the first and second sentences of the provision required by
Subsection (a), the following provision:
"Subject to the qualifications below, and except in the event
of a legal incapacity, if the insured suffers loss of time on
account of disability for which indemnity may be payable for at
least two years, the insured shall, at least once in every _____
(insert appropriate number) months after having given notice of
claim, give to the insurer notice of continuance of the disability.
In applying this provision, the period of ______ (insert
appropriate number) months following a filing of proof by the
insured or any payment by the insurer on account of the claim or any
denial of liability in whole or in part by the insurer shall be
excluded. Delay in giving the notice does not impair the insured's
right to any indemnity that would otherwise have accrued during the
period of ______ (insert appropriate number) months preceding the
date on which the notice is actually given."
(c) The number of months inserted in the clause permitted by
Subsection (b) may not be less than one or greater than six.
(V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.212. POLICY PROVISION: CLAIM FORMS. (a) Except
as provided by Subsection (b), an individual accident and health
insurance policy must contain the following provision:
"Claim Forms: The insurer, on receipt of a notice of claim,
will provide to the claimant the forms usually provided by the
insurer for filing proof of loss. If the forms are not provided
before the 16th day after the date of the notice, the claimant shall
be considered to have complied with the requirements of this policy
as to proof of loss on submitting, within the time fixed in the
policy for filing proofs of loss, written proof covering the
occurrence, the character, and the extent of the loss for which the
claim is made."
(b) The provision required by this section is not required
to be contained in a policy issued by a corporation operating under
Chapter 842. (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.213. POLICY PROVISION: PROOF OF LOSS. An
individual accident and health insurance policy must contain the
following provision:
"Proof of Loss: For a claim for loss for which this policy
provides any periodic payment contingent on continuing loss, a
written proof of loss must be provided to the insurer at the
insurer's designated office before the 91st day after the
termination of the period for which the insurer is liable. For a
claim for any other loss, a written proof of loss must be provided
to the insurer at the insurer's designated office before the 91st
day after the date of the loss. Failure to provide the proof within
the required time does not invalidate or reduce any claim if it was
not reasonably possible to give proof within the required time. In
that case, the proof must be provided as soon as reasonably possible
but not later than one year after the time proof is otherwise
required, except in the event of a legal incapacity." (V.T.I.C.
Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.214. POLICY PROVISION: TIME OF PAYMENT OF
CLAIMS. (a) Except as provided by Subsection (c), an individual
accident and health insurance policy must contain the following
provision:
"Time of Payment of Claims: Indemnities payable under this
policy for any loss, other than a loss for which this policy
provides any periodic payment, will be paid immediately on receipt
of due written proof of the loss. Subject to due written proof of
loss, all accrued indemnities for a loss for which this policy
provides periodic payment will be paid ______ (insert period for
payment) and any balance remaining unpaid on termination of
liability will be paid immediately on receipt of due written proof
of loss."
(b) The period for payment to be inserted in the clause
required by Subsection (a) may not be less frequent than monthly.
(c) The provision required by this section is not required
to be contained in a policy issued by a corporation operating under
Chapter 842. (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.215. POLICY PROVISION: PAYMENT OF CLAIMS. (a)
Except as provided by Subsection (d), an individual accident and
health insurance policy must contain the following provision:
"Payment of Claims: Indemnity for loss of life will be
payable in accordance with the beneficiary designation and the
provisions respecting indemnity payments that may be prescribed in
this policy and effective at the time of payment. If such a
designation or provision is not then effective, the indemnity will
be payable to the insured's estate. Any other accrued indemnities
unpaid at the insured's death may, at the option of the insurer, be
paid either in accordance with the beneficiary designation or to
the insured's estate. All other indemnities will be payable to the
insured."
(b) An insurer may include with the provision required by
Subsection (a) one or both of the following provisions:
"If any indemnity of this policy is payable to the insured's
estate, or to an insured or beneficiary who is a minor or is
otherwise not competent to give a valid release, the insurer may pay
the indemnity, up to an amount not exceeding $______ (insert
amount), to any relative by blood or connection by marriage of the
insured or beneficiary who is considered by the insurer to be
equitably entitled to the indemnity. Any payment made by the
insurer in good faith in accordance with this provision fully
discharges the insurer to the extent of the payment."
"Subject to any written direction of the insured, in the
application or otherwise, all or a portion of any indemnity
provided by this policy on account of hospital, nursing, medical,
or surgical services may, at the insurer's option and unless the
insured requests otherwise in writing not later than the time of
filing proof of the loss, be paid directly to the hospital or person
providing the services. It is not required that the service be
provided by a particular hospital or person."
(c) The amount to be inserted in the clause permitted by
Subsection (b) may not exceed $1,000.
(d) The provision required by Subsection (a) is not required
to be contained in a policy issued by a corporation operating under
Chapter 842. (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.216. POLICY PROVISION: PHYSICAL EXAMINATIONS AND
AUTOPSY. An individual accident and health insurance policy must
contain the following provision:
"Physical Examinations and Autopsy: The insurer at its own
expense has the right and opportunity to conduct a physical
examination of the insured when and as often as the insurer
reasonably requires while a claim under the policy is pending and,
in case of death, to require that an autopsy be conducted if not
forbidden by law." (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.217. POLICY PROVISION: LEGAL ACTIONS. An
individual accident and health insurance policy must contain the
following provision:
"Legal Actions: An action at law or in equity may not be
brought to recover on this policy before the 61st day after the date
written proof of loss has been provided in accordance with the
requirements of this policy. An action at law or in equity may not
be brought after the expiration of three years after the time
written proof of loss is required to be provided." (V.T.I.C. Art.
3.70-3, Sec. (A) (part).)
Sec. 1201.218. POLICY PROVISION: CHANGE OF BENEFICIARY.
(a) Except as provided by Subsection (b), an individual accident
and health insurance policy must contain the following provision:
"Change of Beneficiary: Unless the insured makes an
irrevocable designation of beneficiary, the right to change a
beneficiary is reserved for the insured, and the consent of the
beneficiary or beneficiaries is not required for the surrender or
assignment of this policy, for any change of beneficiary or
beneficiaries, or for any other changes in this policy."
(b) An insurer may omit the first clause of the provision
required by Subsection (a) relating to an irrevocable designation
of beneficiary. (V.T.I.C. Art. 3.70-3, Sec. (A) (part).)
Sec. 1201.219. POLICY PROVISION: CHANGE OF OCCUPATION. An
individual accident and health insurance policy must contain the
following provision if the policy addresses the subject matter of
the provision:
"Change of Occupation: If the insured is injured or
contracts a sickness after the insured changes the insured's
occupation to one classified by the insurer as more hazardous than
the occupation stated in this policy or while doing for
compensation anything pertaining to an occupation so classified,
the insurer will pay only the portion of the indemnity provided in
this policy as the premium paid would have purchased at the rates
and within the limits fixed by the insurer for the more hazardous
occupation. If the insured changes the insured's occupation to one
classified by the insurer as less hazardous than the occupation
stated in this policy, the insurer, on receipt of proof of the
change of occupation, will reduce the premium rate accordingly, and
will return the excess pro rata unearned premium from the date of
change of occupation or from the policy anniversary date
immediately preceding the receipt of the proof, whichever date is
more recent. In applying this provision, the classification of
occupational risk and the premium rates are the classification and
rates that, before the occurrence of the loss for which the insurer
is liable or before the date of proof of change in occupation, were:
(1) last filed by the insurer with the state official
having supervision of insurance in the state where the insured
resided at the time this policy was issued; or
(2) if filing was not required, last made effective by
the insurer in the state where the insured resided at the time this
policy was issued." (V.T.I.C. Art. 3.70-3, Sec. (B) (part).)
Sec. 1201.220. POLICY PROVISION: MISSTATEMENT OF AGE. An
individual accident and health insurance policy must contain the
following provision if the policy addresses the subject matter of
the provision:
"Misstatement of Age: If the age of the insured has been
misstated, the amounts payable under this policy are the amounts
the premium paid would have purchased at the correct age."
(V.T.I.C. Art. 3.70-3, Sec. (B) (part).)
Sec. 1201.221. POLICY PROVISION: EXCESS INSURANCE. An
individual accident and health insurance policy must contain one of
the following provisions if the policy addresses the subject matter
of the provision:
"Other Insurance With This Insurer: If an accident or health
or accident and health policy or policies previously issued by the
insurer to the insured is in force concurrently with this policy,
making the aggregate indemnity for ______ (insert types of
coverages) in excess of $______ (insert maximum limit of indemnity
or indemnities), the excess insurance is void and all premiums paid
for the excess shall be returned to the insured or to the insured's
estate."
"Other Insurance With This Insurer: Insurance effective at
any one time on the insured under the same type of policy or
policies with this insurer is limited to the one policy elected by
the insured, the insured's beneficiary, or the insured's estate, as
the case may be, and the insurer will return all premiums paid for
all other policies of the same type." (V.T.I.C. Art. 3.70-3, Sec.
(B) (part).)
Sec. 1201.222. POLICY PROVISION: RELATION OF EARNINGS TO
INSURANCE. (a) Subject to Subsection (b), an individual accident
and health insurance policy must contain the following provision if
the policy addresses the subject matter of the provision:
"Relation of Earnings to Insurance: If the total monthly
amount of loss of time benefits promised for the same loss under all
valid loss of time coverage on the insured, regardless of whether
the benefits are payable on a weekly or monthly basis, exceeds the
amount of monthly earnings of the insured at the time the insured's
disability began or the insured's average amount of monthly
earnings for the period of two years immediately preceding a
disability for which claim is made, whichever amount is greater,
the insurer will be liable only for the proportionate amount of loss
of time benefits under this policy as the amount of the insured's
monthly earnings or average monthly earnings bears to the total
amount of monthly benefits for the same loss under all loss of time
coverage on the insured at the time the disability begins and for
the return of the part of the premiums paid during the immediately
preceding two years that exceeds the pro rata amount of the premiums
for the benefits actually paid under this policy. This provision
does not reduce the total monthly amount of benefits payable under
all loss of time coverage on the insured to less than $200 or the sum
of the monthly benefits specified in the loss of time coverages,
whichever amount is less, and does not reduce benefits other than
loss of time benefits."
(b) The provision described by Subsection (a) may be
included only in a policy that provides that the insured is entitled
to continue the policy in force subject to its terms by the timely
payment of premiums until the insured reaches at least 50 years of
age or, if the policy was issued after the insured reached 44 years
of age, until at least the fifth anniversary of the policy's date of
issuance.
(c) An insurer may include in the provision described by
Subsection (a) a definition of "valid loss of time coverage." The
form of the definition must be approved by the commissioner. The
subject matter of the definition must be limited to:
(1) coverage provided by:
(A) governmental agencies; or
(B) organizations subject to regulation by
insurance laws or by insurance authorities of this or any other
state or any province of Canada;
(2) any other coverage the inclusion of which is
approved by the commissioner; or
(3) any combination of coverages described by
Subdivisions (1) and (2).
(d) In the absence of a definition authorized under
Subsection (c), "valid loss of time coverage" does not include:
(1) coverage provided for the insured under a
compulsory benefit statute, including a workers' compensation or
employer's liability statute; or
(2) benefits provided by:
(A) a union welfare plan;
(B) an employer benefit organization; or
(C) an employee benefit organization. (V.T.I.C.
Art. 3.70-3, Sec. (B) (part).)
Sec. 1201.223. POLICY PROVISION: UNPAID PREMIUM. An
individual accident and health insurance policy must contain the
following provision if the policy addresses the subject matter of
the provision:
"Unpaid Premium: At the time of payment of a claim under this
policy, any premium then due and unpaid or covered by any note or
written order may be deducted from the payment." (V.T.I.C. Art.
3.70-3, Sec. (B) (part).)
Sec. 1201.224. POLICY PROVISION: CANCELLATION. An
individual accident and health insurance policy must contain the
following provision if the policy addresses the subject matter of
the provision:
"Cancellation: The insurer may cancel this policy at any
time by written notice delivered to the insured, or mailed to the
insured's last address as shown by the records of the insurer,
stating when the cancellation is effective, which may not be
earlier than five days after the date the notice is delivered or
mailed. After this policy has been continued beyond its original
term, the insured may cancel the policy at any time by written
notice delivered or mailed to the insurer, effective on receipt or
on a later date specified in the notice. In the event of
cancellation, the insurer will promptly return the unearned portion
of any premium paid. If the insured cancels, the earned premium
shall be computed by the use of the short-rate table last filed with
the state official having supervision of insurance in the state
where the insured resided when the policy was issued. If the
insurer cancels, the earned premium shall be computed pro rata.
Cancellation is without prejudice to any claim originating before
the effective date of cancellation." (V.T.I.C. Art. 3.70-3, Sec.
(B) (part).)
Sec. 1201.225. POLICY PROVISION: CONFORMITY WITH STATE
STATUTES. An individual accident and health insurance policy must
contain the following provision if the policy addresses the subject
matter of the provision:
"Conformity With State Statutes: Any provision of this
policy that, on its effective date, conflicts with the statutes of
the state in which the insured resides on the effective date is by
this clause effectively amended to conform to the minimum
requirements of that state's statutes." (V.T.I.C. Art. 3.70-3,
Sec. (B) (part).)
Sec. 1201.226. POLICY PROVISION: ILLEGAL OCCUPATION. An
individual accident and health insurance policy must contain the
following provision if the policy addresses the subject matter of
the provision:
"Illegal Occupation: The insurer is not liable for any loss
to which a contributing cause was the insured's commission of or
attempt to commit a felony or to which a contributing cause was the
insured's being engaged in an illegal occupation." (V.T.I.C. Art.
3.70-3, Sec. (B) (part).)
Sec. 1201.227. POLICY PROVISION: INTOXICANTS AND
NARCOTICS. An individual accident and health insurance policy must
contain the following provision if the policy addresses the subject
matter of the provision:
"Intoxicants and Narcotics: The insurer is not liable for
any loss sustained or contracted in consequence of the insured's
being intoxicated or under the influence of any narcotic unless the
narcotic is administered on the advice of a physician." (V.T.I.C.
Art. 3.70-3, Sec. (B) (part).)
[Sections 1201.228-1201.270 reserved for expansion]
SUBCHAPTER F. APPLICATION FOR POLICY
Sec. 1201.271. ALTERATION OF POLICY APPLICATION. (a) A
person may not alter a written application for an individual
accident and health insurance policy unless the person has the
written consent of the applicant.
(b) Notwithstanding Subsection (a), an insurer may make an
insertion to an application solely for administrative purposes in a
manner that indicates clearly that the insertion is not attributed
to the applicant. (V.T.I.C. Art. 3.70-5, Sec. (B).)
Sec. 1201.272. FALSE STATEMENTS. The falsity of a
statement in an application for an individual accident and health
insurance policy does not bar a right to recovery under the policy
unless the statement materially affected the acceptance of the risk
or the hazard assumed by the insurer. (V.T.I.C. Art. 3.70-5, Sec.
(C).)
Sec. 1201.273. BINDING STATEMENTS. An insured may not be
bound by a statement made in an application for an individual
accident and health insurance policy unless a copy of the
application is attached to or endorsed on the policy as a part of
the policy when issued. (V.T.I.C. Art. 3.70-5, Sec. (A) (part).)
Sec. 1201.274. INSURER'S EVIDENTIARY USE OF APPLICATION FOR
REINSTATEMENT OR RENEWAL. (a) If an individual accident and health
insurance policy is reinstated or renewed, and the insured or the
beneficiary or assignee of the policy makes a written request for a
copy of the application for reinstatement or renewal, the insurer
shall, not later than the 15th day after the date the insurer
receives the request at its home or branch office, deliver or mail a
copy of the application to the person who made the request.
(b) An insurer that fails to comply with this section may
not introduce the application for reinstatement or renewal as
evidence in any action or proceeding based on or involving the
policy or its reinstatement or renewal. (V.T.I.C. Art. 3.70-5,
Sec. (A) (part).)
[Sections 1201.275-1201.700 reserved for expansion]
SUBCHAPTER O. ENFORCEMENT
Sec. 1201.701. CIVIL PENALTY. A person, partnership, or
corporation that wilfully violates this chapter or an order of the
commissioner made under this chapter is liable to the state for a
civil penalty in an amount not to exceed $5,000 for each violation.
The penalty may be recovered through a civil action. (V.T.I.C. Art.
3.70-9 (part).)
Sec. 1201.702. ACTION AGAINST CERTIFICATE OF AUTHORITY OR
LICENSE. The commissioner may suspend or revoke the certificate of
authority or license of an insurer or agent who wilfully violates
this chapter or an order of the commissioner made under this
chapter. (V.T.I.C. Art. 3.70-9 (part).)
CHAPTER 1202. CANCELLATION AND CONTINUATION OF POLICIES
IN GENERAL
SUBCHAPTER A. CONTINUOUS POLICIES
Sec. 1202.001. CONTINUOUS POLICIES
[Sections 1202.002-1202.050 reserved for expansion]
SUBCHAPTER B. INDIVIDUAL HEALTH INSURANCE POLICIES
Sec. 1202.051. RENEWABILITY AND CONTINUATION OF INDIVIDUAL
HEALTH INSURANCE POLICIES
Sec. 1202.052. CANCELLATION PROHIBITED FOR AIDS OR HIV
CHAPTER 1202. CANCELLATION AND CONTINUATION OF POLICIES
IN GENERAL
SUBCHAPTER A. CONTINUOUS POLICIES
Sec. 1202.001. CONTINUOUS POLICIES. (a) A guaranteed
renewable insurance policy or a noncancellable insurance policy is
considered to be a continuous policy, subject only to the policy
terms and conditions, including payment of the policy premium.
(b) A guaranteed renewable insurance policy or a
noncancellable insurance policy:
(1) is continued in effect by the payment of the policy
premium in accordance with the policy terms and conditions; and
(2) may not be considered or treated as a renewed
policy by the payment of the policy premium.
(c) This section does not apply to a small employer health
benefit plan adopted in accordance with Chapter 1501. (V.T.I.C.
Art. 3.70-13.)
[Sections 1202.002-1202.050 reserved for expansion]
SUBCHAPTER B. INDIVIDUAL HEALTH INSURANCE POLICIES
Sec. 1202.051. RENEWABILITY AND CONTINUATION OF INDIVIDUAL
HEALTH INSURANCE POLICIES. (a) This section applies only to an
individual health insurance policy that provides benefits for
medical care under a hospital, medical, or surgical policy.
(b) Except as provided by Subsection (c), an insurer shall
renew or continue an individual health insurance policy at the
option of the individual.
(c) An insurer may decline to renew or continue an
individual health insurance policy:
(1) for failure to pay a premium or contribution in
accordance with the terms of the policy;
(2) for fraud or intentional misrepresentation;
(3) because the insurer is ceasing to offer coverage
in the individual market in accordance with rules adopted by the
commissioner;
(4) because an individual no longer resides, lives, or
works in an area in which the insurer is authorized to provide
coverage, but only if all policies are not renewed or not continued
under this subdivision uniformly without regard to any
health-status related factor of covered individuals; or
(5) in accordance with federal law, including
regulations.
(d) The commissioner shall adopt rules necessary to:
(1) implement this section; and
(2) meet the minimum requirements of federal law,
including regulations. (V.T.I.C. Art. 3.70-1A.)
Sec. 1202.052. CANCELLATION PROHIBITED FOR AIDS OR HIV.
(a) In this section, "AIDS" and "HIV" have the meanings assigned by
Section 81.101, Health and Safety Code.
(b) Except as provided by Subsection (c), an insurer that
delivers or issues for delivery an individual accident and health
insurance policy in this state may not cancel that policy during its
term because the insured:
(1) has been diagnosed as having AIDS or HIV;
(2) has been treated for AIDS or HIV; or
(3) is being treated for AIDS or HIV.
(c) The insurer may cancel the policy for:
(1) failure to pay a premium when due; or
(2) fraud or misrepresentation in obtaining coverage
by not disclosing a diagnosis of an AIDS or HIV-related condition.
(d) The provisions of Chapter 1201, including provisions
relating to the applicability, purpose, and enforcement of that
chapter, construction of policies under that chapter, rulemaking
under that chapter, and definitions of terms applicable in that
chapter, apply to this section. (V.T.I.C. Art. 3.70-3A; New.)
CHAPTER 1203. COORDINATION OF BENEFITS PROVISIONS
Sec. 1203.001. APPLICABILITY OF CHAPTER
Sec. 1203.002. CERTAIN COORDINATION OF BENEFITS PROVISIONS
PROHIBITED
Sec. 1203.003. CERTAIN COORDINATION OF BENEFITS PROVISIONS
VOID
CHAPTER 1203. COORDINATION OF BENEFITS PROVISIONS
Sec. 1203.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to:
(1) a policy of group accident and health insurance as
described by Chapter 1251;
(2) a policy of blanket accident and health insurance
as described by Chapter 1251;
(3) a policy of individual accident and health
insurance as defined by Section 1201.001; or
(4) an evidence of coverage as defined by Section
843.002.
(b) This chapter does not apply to an individual accident
and health insurance policy that is designed to fully integrate
with other policies through a variable deductible. (V.T.I.C. Art.
3.51-6B, Sec. 1(a) (part).)
Sec. 1203.002. CERTAIN COORDINATION OF BENEFITS PROVISIONS
PROHIBITED. (a) An accident and health insurance policy or
evidence of coverage may not be delivered, issued for delivery, or
renewed in this state if:
(1) a provision of the policy or evidence of coverage
excludes or reduces the payment of benefits to or on behalf of an
insured or enrollee;
(2) the reason for the exclusion or reduction is that
benefits are also payable or have been paid to or on behalf of the
insured or enrollee under a supplemental policy of accident and
health insurance; and
(3) the supplemental policy is individually
underwritten and individually issued as a plan of coverage for:
(A) hospital confinement indemnity;
(B) a specified disease; or
(C) a limited benefit.
(b) Application of Subsection (a) to a provision of an
accident and health insurance policy or evidence of coverage is not
affected by:
(1) the mode or channel by which the premium for a
supplemental policy of accident and health insurance is paid to the
insurer; or
(2) a reduction in the premium for a supplemental
policy of accident and health insurance because of the insured's
membership in an organization or status as an employee. (V.T.I.C.
Art. 3.51-6B, Secs. 1(a) (part), (b).)
Sec. 1203.003. CERTAIN COORDINATION OF BENEFITS PROVISIONS
VOID. A provision of an accident and health insurance policy or
evidence of coverage that violates Section 1203.002 is void.
(V.T.I.C. Art. 3.51-6B, Sec. 2.)
CHAPTER 1204. PROCEDURES FOR PAYMENT OF CERTAIN HEALTH AND
ACCIDENT INSURANCE POLICY OR PLAN BENEFITS
SUBCHAPTER A. PAYMENTS TO CERTAIN PUBLIC HOSPITALS
Sec. 1204.001. NONAPPLICABILITY TO CERTAIN FACILITIES
Sec. 1204.002. BENEFITS PAYABLE FOR TREATMENT PROVIDED
BY HOSPITAL OWNED BY STATE OR UNIT OF LOCAL
GOVERNMENT
[Sections 1204.003-1204.050 reserved for expansion]
SUBCHAPTER B. ASSIGNMENT OF BENEFIT PAYMENTS
Sec. 1204.051. DEFINITIONS
Sec. 1204.052. APPLICABILITY TO CERTAIN PLANS
OR PROGRAMS
Sec. 1204.053. ASSIGNMENT OF BENEFITS
Sec. 1204.054. PAYMENT OF BENEFITS ACCORDING TO ASSIGNMENT
Sec. 1204.055. CONTRACTUAL RESPONSIBILITY FOR DEDUCTIBLES
AND COPAYMENTS
[Sections 1204.056-1204.100 reserved for expansion]
SUBCHAPTER C. UNIFORM CLAIM BILLING FORMS
Sec. 1204.101. DEFINITIONS
Sec. 1204.102. REQUIRED CLAIM BILLING FORMS
[Sections 1204.103-1204.150 reserved for expansion]
SUBCHAPTER D. PAYMENTS FOR CERTAIN PUBLICLY PROVIDED SERVICES
Sec. 1204.151. DEFINITION
Sec. 1204.152. PAYMENT FOR CERTAIN EXPENSES INCURRED BY
TEXAS DEPARTMENT OF HUMAN SERVICES
Sec. 1204.153. PAYMENTS TO TEXAS DEPARTMENT OF HUMAN
SERVICES FOR CERTAIN CHILDREN
Sec. 1204.154. UNIFORM PROVISIONS
[Sections 1204.155-1204.200 reserved for expansion]
SUBCHAPTER E. EXCLUSIONARY CLAUSES
Sec. 1204.201. PROHIBITION OF EXCLUSION OF CERTAIN
MEDICAL ASSISTANCE BENEFITS
[Sections 1204.202-1204.250 reserved for expansion]
SUBCHAPTER F. PAYMENT OF BENEFITS TO CONSERVATOR OF MINOR
Sec. 1204.251. PAYMENT TO CONSERVATOR OTHER THAN
GROUP MEMBER
Sec. 1204.252. PRECONDITIONS FOR PAYMENT; EXCEPTIONS
Sec. 1204.253. RULES
CHAPTER 1204. PROCEDURES FOR PAYMENT OF CERTAIN HEALTH AND
ACCIDENT INSURANCE POLICY OR PLAN BENEFITS
SUBCHAPTER A. PAYMENTS TO CERTAIN PUBLIC HOSPITALS
Sec. 1204.001. NONAPPLICABILITY TO CERTAIN FACILITIES.
This subchapter does not apply to indigent care or chronic disease
care provided in or by an eleemosynary institution, sanitarium,
sanitorium, mental health treatment facility, tuberculosis
treatment facility, or cancer treatment facility that is owned or
controlled by the state or by a unit of local government. (V.T.I.C.
Art. 3.42B (part).)
Sec. 1204.002. BENEFITS PAYABLE FOR TREATMENT PROVIDED BY
HOSPITAL OWNED BY STATE OR UNIT OF LOCAL GOVERNMENT. An insurance
policy providing hospital, nursing, medical, or surgical coverage
that is issued or delivered in this state after August 27, 1973, may
not include a provision that prevents the payment of benefits for
expenses of a nonindigent patient incurred in a hospital facility
that:
(1) is owned or controlled by the state or by a unit of
local government; and
(2) regularly and customarily demands and collects
from nonindigent persons payment for those expenses. (V.T.I.C.
Art. 3.42B (part).)
[Sections 1204.003-1204.050 reserved for expansion]
SUBCHAPTER B. ASSIGNMENT OF BENEFIT PAYMENTS
Sec. 1204.051. DEFINITIONS. In this subchapter:
(1) "Covered person" means a person who is insured or
covered by a health insurance policy or is a participant in an
employee benefit plan. The term includes:
(A) a person covered by a health insurance policy
because the person is an eligible dependent; and
(B) an eligible dependent of a participant in an
employee benefit plan.
(2) "Employee benefit plan" or "plan" means a plan,
fund, or program established or maintained by an employer, an
employee organization, or both, to the extent that it provides,
through the purchase of insurance or otherwise, health care
services to employees, participants, or the dependents of employees
or participants.
(3) "Health care provider" means a person who provides
health care services under a license, certificate, registration, or
other similar evidence of regulation issued by this or another
state of the United States.
(4) "Health care service" means a service to diagnose,
prevent, alleviate, cure, or heal a human illness or injury that is
provided to a covered person by a physician or other health care
provider.
(5) "Health insurance policy" means an individual,
group, blanket, or franchise insurance policy, or an insurance
agreement, that provides reimbursement or indemnity for health care
expenses incurred as a result of an accident or sickness.
(6) "Insurer" means an insurance company,
association, or organization authorized to engage in business in
this state under Chapter 841, 861, 881, 882, 883, 884, 885, 886,
887, 888, 941, 942, or 982.
(7) "Person" means an individual, association,
partnership, corporation, or other legal entity.
(8) "Physician" means an individual licensed to
practice medicine in this or another state of the United States.
(V.T.I.C. Art. 21.24-1, Sec. 1; New.)
Sec. 1204.052. APPLICABILITY TO CERTAIN PLANS OR PROGRAMS.
This subchapter applies to:
(1) an employee benefit plan, to the extent not
preempted by the Employee Retirement Income Security Act of 1974
(29 U.S.C. Section 1001 et seq.);
(2) benefit programs under Chapters 1551 and 1601, to
the extent that the benefit programs are self-insuring; and
(3) insurance coverage provided under Chapter 1575.
(V.T.I.C. Art. 21.24-1, Sec. 2.)
Sec. 1204.053. ASSIGNMENT OF BENEFITS. (a) An insurer may
not deliver, renew, or issue for delivery in this state a health
insurance policy that prohibits or restricts a covered person from
making a written assignment of benefits to a physician or other
health care provider who provides health care services to the
person.
(b) This section does not:
(1) provide a coverage or benefit that is not
otherwise available under the health insurance policy;
(2) allow assignment of a benefit to:
(A) a person who is not legally entitled to
receive such a direct payment; or
(B) another person if, under the health insurance
policy or plan, the benefit must be provided to the covered person
by a physician or other health care provider who is a contractor or
preferred provider under the policy; or
(3) prohibit an insurer from verifying, through the
insurer's normal process, the health care services the physician or
other health care provider provides to the covered person.
(V.T.I.C. Art. 21.24-1, Sec. 3.)
Sec. 1204.054. PAYMENT OF BENEFITS ACCORDING TO ASSIGNMENT.
An insurer shall pay benefits directly to a physician or other
health care provider, and the insurer is relieved of the obligation
to pay, and of any liability for paying, those benefits to the
covered person if:
(1) the covered person makes a written assignment of
those benefits payable to the physician or other health care
provider; and
(2) the assignment is obtained by or delivered to the
insurer with the claim for benefits. (V.T.I.C. Art. 21.24-1, Secs.
4(a), (b).)
Sec. 1204.055. CONTRACTUAL RESPONSIBILITY FOR DEDUCTIBLES
AND COPAYMENTS. (a) The payment of benefits under an assignment
does not relieve a covered person of a contractual obligation to pay
a deductible or copayment.
(b) A physician or other health care provider may not waive
a deductible or copayment by the acceptance of an assignment.
(V.T.I.C. Art. 21.24-1, Sec. 4(c).)
[Sections 1204.056-1204.100 reserved for expansion]
SUBCHAPTER C. UNIFORM CLAIM BILLING FORMS
Sec. 1204.101. DEFINITIONS. In this subchapter:
(1) "Health benefit plan" means a group, blanket, or
franchise insurance policy, a group hospital service contract, or a
group subscriber contract or evidence of coverage issued by a
health maintenance organization, that provides benefits for health
care services.
(2) "Health benefit plan issuer" means an entity
authorized under this code or another insurance law of this state
that provides health insurance or health benefits in this state,
including:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a health maintenance organization operating
under Chapter 843; and
(D) a stipulated premium company operating under
Chapter 884.
(3) "Provider" means a person who provides health care
under a license issued by this state. The term includes a health
care practitioner listed in Section 1451.001 and a nurse first
assistant, as defined by Section 1451.101. (V.T.I.C. Art. 21.52C,
Sec. (a).)
Sec. 1204.102. REQUIRED CLAIM BILLING FORMS. A provider
who seeks payment or reimbursement under a health benefit plan and
the health benefit plan issuer that issued the plan shall use
uniform claim billing form UB-82/HCFA or HCFA 1500, or a successor
to one of those forms, as developed by the National Uniform Billing
Committee or its successor. (V.T.I.C. Art. 21.52C, Sec. (b).)
[Sections 1204.103-1204.150 reserved for expansion]
SUBCHAPTER D. PAYMENTS FOR CERTAIN PUBLICLY PROVIDED SERVICES
Sec. 1204.151. DEFINITION. In this subchapter, "policy"
means an individual or group policy of accident and health
insurance, including a policy issued by a group hospital service
corporation operating under Chapter 842. (V.T.I.C. Art. 3.76, Sec.
1 (part); Art. 21.49-10 (part).)
Sec. 1204.152. PAYMENT FOR CERTAIN EXPENSES INCURRED BY
TEXAS DEPARTMENT OF HUMAN SERVICES. Each policy delivered or
issued for delivery in this state must provide for the repayment of
the actual costs of medical expenses the Texas Department of Human
Services pays through medical assistance for an insured person if,
under the policy, the insured person is entitled to payment for the
medical expenses. (V.T.I.C. Art. 21.49-10 (part).)
Sec. 1204.153. PAYMENTS TO TEXAS DEPARTMENT OF HUMAN
SERVICES FOR CERTAIN CHILDREN. (a) This section applies only to a
policy that is delivered, issued for delivery, or renewed in this
state and that provides coverage for a child whose parent:
(1) purchased the policy; or
(2) is a member of the group covered under the policy.
(b) Each policy must include a requirement that, after
written notice to the insurer or group hospital service corporation
at the insurer's or group hospital service corporation's home
office, benefits payable on behalf of a child must be paid to the
Texas Department of Human Services if:
(1) the parent who purchased the policy or who is a
group member is required to pay child support by a court order or
court-approved agreement and:
(A) is a possessory conservator of the child
under a court order issued in this state; or
(B) is not entitled to possession of or access to
the child;
(2) the Texas Department of Human Services is paying
benefits on behalf of the child under Chapter 31 or 32, Human
Resources Code; and
(3) the insurer or group hospital service corporation
is notified, through an attachment to the claim for benefits at the
time the claim is first submitted to the insurer or group hospital
service corporation, that the benefits must be paid directly to the
Texas Department of Human Services.
(c) The commissioner and the Texas Department of Human
Services may consult regarding implementation of this section.
(V.T.I.C. Art. 3.76, Secs. 1 (part), 2.)
Sec. 1204.154. UNIFORM PROVISIONS. (a) The commissioner
shall adopt uniform policy provisions, riders, and endorsements for
the policy requirement of Section 1204.153.
(b) Before the commissioner adopts or makes a change to a
provision, rider, or endorsement under Subsection (a), the
commissioner shall present each provision, rider, or endorsement,
and any amendment to a provision, rider, or endorsement, to the
Texas Department of Human Services for comment. (V.T.I.C. Art.
3.76, Sec. 3.)
[Sections 1204.155-1204.200 reserved for expansion]
SUBCHAPTER E. EXCLUSIONARY CLAUSES
Sec. 1204.201. PROHIBITION OF EXCLUSION OF CERTAIN MEDICAL
ASSISTANCE BENEFITS. An individual or group accident and health
insurance policy delivered or issued for delivery in this state,
including a policy issued by a group hospital service corporation
operating under Chapter 842, may not include a provision that
excludes or limits the insurer's or group hospital service
corporation's coverage from paying benefits covered by Chapter 32,
Human Resources Code. (V.T.I.C. Art. 21.49-9.)
[Sections 1204.202-1204.250 reserved for expansion]
SUBCHAPTER F. PAYMENT OF BENEFITS TO CONSERVATOR OF MINOR
Sec. 1204.251. PAYMENT TO CONSERVATOR OTHER THAN GROUP
MEMBER. (a) An insurer or group hospital service corporation
operating under Chapter 842 that delivers, issues for delivery, or
renews in this state a group accident and health insurance policy
that provides coverage for a minor child who qualifies as a
dependent of a group member may pay benefits on the child's behalf
to a person who is not a group member if an order providing for the
appointment of a possessory or managing conservator of the child
has been issued by a court in this or another state.
(b) A person who is not a group member is entitled to be paid
benefits under this section only if the person presents to the
insurer or group hospital service corporation, with the claim
application:
(1) written notice that the person is a possessory or
managing conservator of the child on whose behalf the claim is made;
and
(2) a certified copy of a court order designating the
person as possessory or managing conservator of the child or other
evidence designated by rule of the commissioner that the person is
eligible for the benefits as this section provides. (V.T.I.C. Art.
3.51-13, Secs. 1, 3.)
Sec. 1204.252. PRECONDITIONS FOR PAYMENT; EXCEPTIONS. (a)
In accordance with the terms of the policy and this subchapter, an
insurer or group hospital service corporation may be required to
pay benefits under a group accident and health insurance policy to a
person who is not a group member and who complies with:
(1) Section 1204.251;
(2) the insurer's or group hospital service
corporation's claim application procedures; and
(3) department rules.
(b) Any requirement imposed on a possessory or managing
conservator of a child under this subchapter does not apply with
regard to:
(1) an unpaid medical bill for which an assignment of
benefits has been exercised, whether in accordance with policy
provisions or otherwise; or
(2) a claim presented by a group member for which the
group member paid any portion of a medical bill that is covered
under the policy's terms. (V.T.I.C. Art. 3.51-13, Sec. 2.)
Sec. 1204.253. RULES. The commissioner may adopt rules to
ensure the effective implementation of this subchapter. (V.T.I.C.
Art. 3.51-13, Sec. 4.)
CHAPTER 1205. CERTIFICATION OF CREDITABLE COVERAGE
Sec. 1205.001. APPLICABILITY OF CHAPTER
Sec. 1205.002. CERTIFICATION OF COVERAGE
Sec. 1205.003. RULES
Sec. 1205.004. CREDITABLE COVERAGE
CHAPTER 1205. CERTIFICATION OF CREDITABLE COVERAGE
Sec. 1205.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act and operating under Chapter 846;
or
(ii) an analogous benefit arrangement;
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844; or
(3) is offered by any other entity that:
(A) is not authorized under this code or another
insurance law of this state; and
(B) contracts directly for health care services
on a risk-sharing basis, including a capitation basis. (V.T.I.C.
Art. 21.52G, Sec. 2, as added Acts 75th Leg., R.S., Ch. 955.)
Sec. 1205.002. CERTIFICATION OF COVERAGE. (a) A health
benefit plan issuer shall provide a certification of coverage as
necessary to determine the period of applicable creditable coverage
under that health benefit plan.
(b) The certification required under this section must be
provided in accordance with the standards adopted by rule by the
commissioner. (V.T.I.C. Art. 21.52G, Sec. 4, as added Acts 75th
Leg., R.S., Ch. 955.)
Sec. 1205.003. RULES. The commissioner shall adopt rules
as necessary to:
(1) implement this chapter and related provisions of
this code; and
(2) meet the minimum requirements of federal law,
including regulations. (V.T.I.C. Art. 21.52G, Sec. 5, as added
Acts 75th Leg., R.S., Ch. 955.)
Sec. 1205.004. CREDITABLE COVERAGE. (a) An individual's
coverage is creditable coverage for purposes of this chapter if the
coverage is provided under:
(1) a self-funded or self-insured employee welfare
benefit plan that:
(A) provides health benefits; and
(B) is established in accordance with the
Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
1001 et seq.);
(2) a group health benefit plan provided by a health
insurer or health maintenance organization;
(3) an individual health insurance policy or evidence
of coverage;
(4) Part A or Part B of Title XVIII of the Social
Security Act (42 U.S.C. Section 1395c et seq.);
(5) Title XIX of the Social Security Act (42 U.S.C.
Section 1396 et seq.), other than coverage consisting solely of
benefits under Section 1928 of that act (42 U.S.C. Section 1396s);
(6) 10 U.S.C. Section 1071 et seq.;
(7) a medical care program of the Indian Health
Service or of a tribal organization;
(8) a state health benefits risk pool;
(9) a health plan offered under 5 U.S.C. Section 8901
et seq.;
(10) a public health plan as defined by federal
regulations; or
(11) a health benefit plan under Section 5(e), Peace
Corps Act (22 U.S.C. Section 2504(e)).
(b) For purposes of this chapter, creditable coverage does
not include:
(1) accident-only or disability income insurance or a
combination of accident-only and disability income insurance;
(2) coverage issued as a supplement to liability
insurance;
(3) liability insurance, including general liability
insurance and automobile liability insurance;
(4) workers' compensation insurance or other similar
insurance;
(5) automobile medical payment insurance;
(6) credit-only insurance;
(7) coverage for on-site medical clinics;
(8) other coverage that is:
(A) similar to the coverage described by this
subsection under which benefits for medical care are secondary or
incidental to other insurance benefits; and
(B) specified by federal regulations;
(9) coverage that provides limited-scope dental or
vision benefits;
(10) long-term care, nursing home care, home health
care, or community-based care coverage or benefits or any
combination of those coverages or benefits;
(11) coverage that provides other limited benefits
specified by federal regulations;
(12) coverage for a specified disease or illness;
(13) hospital indemnity or other fixed indemnity
insurance; or
(14) Medicare supplemental health insurance, as
defined by Section 1882(g)(1), Social Security Act (42 U.S.C.
Section 1395ss), coverage supplemental to the coverage provided
under 10 U.S.C. Section 1071 et seq., or other similar supplemental
coverage provided under a group plan. (V.T.I.C. Art. 21.52G, Sec.
3, as added Acts 75th Leg., R.S., Ch. 955.)
CHAPTER 1206. DENIAL OF HEALTH BENEFIT PLAN ENROLLMENT
BASED ON EXISTING COVERAGE PROHIBITED
Sec. 1206.001. APPLICABILITY OF CHAPTER
Sec. 1206.002. EXCEPTION
Sec. 1206.003. DENIAL OF ENROLLMENT PROHIBITED
Sec. 1206.004. VIOLATION OF CHAPTER: UNFAIR DISCRIMINATION
CHAPTER 1206. DENIAL OF HEALTH BENEFIT PLAN ENROLLMENT
BASED ON EXISTING COVERAGE PROHIBITED
Sec. 1206.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan, including a small employer
health benefit plan written under Chapter 1501, that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.52L, Secs. 1(a), (b), as added Acts 77th Leg., R.S., Ch. 1074.)
Sec. 1206.002. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses;
(H) only for indemnity for hospital confinement;
or
(I) in accordance with Title XXI of the Social
Security Act (42 U.S.C. Section 1397aa et seq.);
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1206.001. (V.T.I.C. Art. 21.52L, Sec. 1(c), as added
Acts 77th Leg., R.S., Ch. 1074.)
Sec. 1206.003. DENIAL OF ENROLLMENT PROHIBITED. A health
benefit plan issuer may not refuse to enroll an individual in the
plan solely because the individual is enrolled in another health
benefit plan at the time the individual applies for coverage under
the plan. (V.T.I.C. Art. 21.52L, Sec. 2, as added Acts 77th Leg.,
R.S., Ch. 1074.)
Sec. 1206.004. VIOLATION OF CHAPTER: UNFAIR
DISCRIMINATION. A health benefit plan issuer who violates this
chapter engages in unfair discrimination under Subchapter B,
Chapter 544. (V.T.I.C. Art. 21.52L, Sec. 3, as added Acts 77th
Leg., R.S., Ch. 1074.)
CHAPTER 1207. ENROLLMENT OF MEDICAL ASSISTANCE RECIPIENTS AND
CHILDREN ELIGIBLE FOR STATE CHILD HEALTH PLAN
Sec. 1207.001. APPLICABILITY OF CHAPTER
Sec. 1207.002. ENROLLMENT REQUIRED
Sec. 1207.003. EFFECTIVE DATE OF ENROLLMENT
Sec. 1207.004. TERMINATION OF ENROLLMENT
CHAPTER 1207. ENROLLMENT OF MEDICAL ASSISTANCE RECIPIENTS AND
CHILDREN ELIGIBLE FOR STATE CHILD HEALTH PLAN
Sec. 1207.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan, including a small
employer health benefit plan written under Chapter 1501 or a plan
provided under Chapter 1551, 1575, or 1601, or a successor to a plan
provided under one of those chapters, that provides benefits for
medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, including a group, blanket, or
franchise insurance policy or insurance agreement, a group hospital
service contract, or a group evidence of coverage or similar group
coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.52K, Sec. 1.)
Sec. 1207.002. ENROLLMENT REQUIRED. (a) A group health
benefit plan issuer shall permit an individual who is otherwise
eligible for enrollment in the plan to enroll in the plan, without
regard to any enrollment period restriction, on receipt of written
notice from the Texas Department of Health or a designee of that
department stating that the individual is:
(1) a recipient of medical assistance under the state
Medicaid program and is a participant in the health insurance
premium payment reimbursement program under Section 32.0422, Human
Resources Code; or
(2) a child enrolled in the state child health plan
under Chapter 62, Health and Safety Code, and is a participant in
the health insurance premium payment reimbursement program under
Section 62.059, Health and Safety Code.
(b) If an individual described by Subsection (a)(1) or (2)
is not eligible to enroll in the group health benefit plan unless a
family member of the individual is also enrolled in the plan, the
plan issuer, on receipt of written notice under Subsection (a),
shall enroll both the individual and the family member in the plan.
(V.T.I.C. Art. 21.52K, Secs. 2(a), (b), (c).)
Sec. 1207.003. EFFECTIVE DATE OF ENROLLMENT. Unless
enrollment occurs during an established enrollment period,
enrollment in a group health benefit plan under Section 1207.002
takes effect on the first day of the calendar month that begins at
least 30 days after the date written notice is received by the plan
issuer under Section 1207.002(a). (V.T.I.C. Art. 21.52K, Sec.
2(d).)
Sec. 1207.004. TERMINATION OF ENROLLMENT. (a)
Notwithstanding any other requirement of a group health benefit
plan, the plan issuer shall permit an individual who is enrolled in
the plan under Section 1207.002(a)(1), and any family member of the
individual enrolled under Section 1207.002(b), to terminate
enrollment in the plan not later than the 60th day after the date on
which the individual provides satisfactory proof to the issuer that
the individual is no longer:
(1) a recipient of medical assistance under the state
Medicaid program; or
(2) a participant in the health insurance premium
payment reimbursement program under Section 32.0422, Human
Resources Code.
(b) Notwithstanding any other requirement of a group health
benefit plan, the plan issuer shall permit an individual who is
enrolled in the plan under Section 1207.002(a)(2), and any family
member of the individual enrolled under Section 1207.002(b), to
terminate enrollment in the plan not later than the 60th day after
the date on which the individual provides satisfactory proof to the
issuer that the child is no longer a participant in the health
insurance premium payment reimbursement program under Section
62.059, Health and Safety Code. (V.T.I.C. Art. 21.52K, Secs. 2(e),
(f).)
CHAPTER 1208. IDENTITY OF AVAILABLE EMPLOYEE
OF HEALTH BENEFIT PLAN ISSUER
Sec. 1208.001. APPLICABILITY OF CHAPTER
Sec. 1208.002. DISCLOSURE REQUIRED
CHAPTER 1208. IDENTITY OF AVAILABLE EMPLOYEE
OF HEALTH BENEFIT PLAN ISSUER
Sec. 1208.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that provides benefits for
medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, including an individual, group,
blanket, or franchise insurance policy or insurance agreement, a
group hospital service contract, or an individual or group evidence
of coverage or similar coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.24-3, Sec. 1.)
Sec. 1208.002. DISCLOSURE REQUIRED. After an oral or
written request by an insured or enrollee of a health benefit plan,
the plan issuer shall provide to the insured or enrollee the name or
employee identifier of the issuer's employee who is available to
respond to questions or other communication from the insured or
enrollee relating to coverage and benefits provided under the plan
to the insured or enrollee. The issuer shall also provide:
(1) the employee's mailing address;
(2) the municipality and state of the employee's
business location; and
(3) the employee's job title. (V.T.I.C. Art. 21.24-3,
Sec. 2.)
CHAPTER 1209. HEALTH BENEFIT CLAIMS COST INFORMATION
REQUIRED TO BE PROVIDED TO EMPLOYER
Sec. 1209.001. APPLICABILITY OF CHAPTER
Sec. 1209.002. CLAIMS COST INFORMATION
Sec. 1209.003. CONFIDENTIALITY
CHAPTER 1209. HEALTH BENEFIT CLAIMS COST INFORMATION
REQUIRED TO BE PROVIDED TO EMPLOYER
Sec. 1209.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan, including a small
employer health benefit plan written under Chapter 1501, that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including a group, blanket, or franchise insurance policy or
insurance agreement, a group hospital service contract, or a group
evidence of coverage or similar group coverage document that is
offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a reciprocal exchange operating under
Chapter 942;
(F) a health maintenance organization operating
under Chapter 843;
(G) a multiple employer welfare arrangement that
holds a certificate of authority under Chapter 846; or
(H) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; and
(2) provides health benefits to the employees of one
or more employers that sponsor the plan. (V.T.I.C. Art. 21.49-19,
Secs. 1, 2.)
Sec. 1209.002. CLAIMS COST INFORMATION. (a) On the request
of an employer sponsoring a group health benefit plan, the plan
issuer shall provide to the employer the claims cost information
for employees covered by the plan during the preceding calendar
year.
(b) Claims cost information provided under this section:
(1) may be provided in the aggregate or on a detailed
basis;
(2) must be provided separately for each month during
which the group health benefit plan was in effect; and
(3) may not include information, including diagnosis
code information, that may be used to identify a specific
individual enrolled in the plan or a diagnosis of that individual.
(V.T.I.C. Art. 21.49-19, Secs. 3(a), (b).)
Sec. 1209.003. CONFIDENTIALITY. Information obtained by an
employer under this chapter is confidential and may be used by the
employer only for purposes relating to obtaining or maintaining
group health benefit plan coverage for the employer's employees.
(V.T.I.C. Art. 21.49-19, Sec. 3(c).)
CHAPTER 1210. NOTICE OF CERTAIN POLICY PROVISIONS
Sec. 1210.001. NOTICE REQUIRED
CHAPTER 1210. NOTICE OF CERTAIN POLICY PROVISIONS
Sec. 1210.001. NOTICE REQUIRED. A policy, contract, or
certificate of insurance that insures against loss resulting from
sickness or accidental bodily injury and that is subject to an
increase in the premium at time of renewal or to nonrenewal on the
insured attaining a certain age may not be delivered, issued, or
used in this state unless the document contains on the first page
above the policy provisions a printed notice in 10-point type that
states that the policy, contract, or certificate is subject to
either or both conditions. (V.T.I.C. Art. 3.42-1, Secs. (a), (b).)
[Chapters 1211-1250 reserved for expansion]
SUBTITLE B. GROUP HEALTH COVERAGE
CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1251.001. DEFINITIONS
Sec. 1251.002. CERTAIN GROUP HEALTH INSURANCE AUTHORIZED
Sec. 1251.003. CERTAIN BLANKET HEALTH INSURANCE
AUTHORIZED
Sec. 1251.004. CERTAIN PAYMENTS BY INSURERS PROHIBITED
Sec. 1251.005. PAYMENT OF BENEFITS
Sec. 1251.006. POLICY MAY NOT SPECIFY SERVICE PROVIDER
Sec. 1251.007. EXCEPTIONS
Sec. 1251.008. RULES
[Sections 1251.009-1251.050 reserved for expansion]
SUBCHAPTER B. GROUP ACCIDENT AND HEALTH INSURANCE:
ELIGIBLE POLICYHOLDERS
Sec. 1251.051. EMPLOYERS
Sec. 1251.052. ASSOCIATIONS
Sec. 1251.053. FUNDS ESTABLISHED BY EMPLOYERS, LABOR
UNIONS, OR ASSOCIATIONS
Sec. 1251.054. ELIGIBILITY FOR GROUP LIFE INSURANCE
Sec. 1251.055. FUND FOR FORMER EMPLOYEES AND MEMBERS
Sec. 1251.056. OTHER GROUPS
[Sections 1251.057-1251.100 reserved for expansion]
SUBCHAPTER C. GROUP ACCIDENT AND HEALTH INSURANCE:
REQUIRED PROVISIONS
Sec. 1251.101. REQUIRED PROVISIONS
Sec. 1251.102. PAYMENT OF PREMIUMS
Sec. 1251.103. INCONTESTABILITY OF POLICY
Sec. 1251.104. ENTIRE CONTRACT
Sec. 1251.105. STATEMENT MADE BY POLICYHOLDER
OR INSURED
Sec. 1251.106. DISTINCTION BASED ON MARITAL STATUS
PROHIBITED
Sec. 1251.107. EVIDENCE OF INSURABILITY
Sec. 1251.108. EXCLUSION OR LIMITATION OF COVERAGE FOR
PREEXISTING CONDITIONS
Sec. 1251.109. ADJUSTMENT OF PREMIUMS OR BENEFITS IF AGE OF
INSURED IS MISSTATED
Sec. 1251.110. DEADLINE FOR NOTICE OF CLAIM
Sec. 1251.111. CLAIM FORMS
Sec. 1251.112. DEADLINE FOR CLAIM
Sec. 1251.113. PROMPT PAYMENT OF BENEFITS REQUIRED
Sec. 1251.114. PAYMENT OF BENEFITS
Sec. 1251.115. RIGHT TO CONDUCT PHYSICAL EXAMINATION OR
AUTOPSY
Sec. 1251.116. LEGAL OR EQUITABLE ACTIONS; LIMITATIONS
Sec. 1251.117. CONTINUATION OR CONVERSION OF COVERAGE
[Sections 1251.118-1251.150 reserved for expansion]
SUBCHAPTER D. GROUP ACCIDENT AND HEALTH INSURANCE:
COVERAGE FOR DEPENDENTS
Sec. 1251.151. COVERAGE FOR CERTAIN GRANDCHILDREN
Sec. 1251.152. OPTIONAL COVERAGE FOR SPOUSES AND
DEPENDENTS
Sec. 1251.153. OPTIONAL CONTINUATION OF DEPENDENTS'
BENEFITS ON DEATH OF INSURED
Sec. 1251.154. COVERAGE FOR ADOPTED CHILDREN
[Sections 1251.155-1251.200 reserved for expansion]
SUBCHAPTER E. GROUP ACCIDENT AND HEALTH
INSURANCE: GENERAL PROVISIONS
Sec. 1251.201. CERTIFICATE OF INSURANCE
[Sections 1251.202-1251.250 reserved for expansion]
SUBCHAPTER F. CONTINUATION OR CONVERSION PRIVILEGE ON
TERMINATION OF COVERAGE UNDER GROUP POLICY
Sec. 1251.251. CONTINUATION OF GROUP COVERAGE REQUIRED;
EXCEPTION
Sec. 1251.252. ELIGIBILITY FOR CONTINUATION OF GROUP
COVERAGE
Sec. 1251.253. REQUEST FOR CONTINUATION OF GROUP COVERAGE
Sec. 1251.254. PAYMENT OF CONTRIBUTIONS
Sec. 1251.255. TERMINATION OF CONTINUED COVERAGE
Sec. 1251.256. CONVERSION OF GROUP POLICY
Sec. 1251.257. PREMIUM FOR CONVERTED POLICY
Sec. 1251.258. BENEFITS UNDER CONVERTED POLICY
Sec. 1251.259. TERMINATION OF CONVERTED POLICY
Sec. 1251.260. NOTICE OF CONTINUATION AND CONVERSION
PRIVILEGES
[Sections 1251.261-1251.300 reserved for expansion]
SUBCHAPTER G. CONTINUATION OF GROUP COVERAGE FOR CERTAIN
FAMILY MEMBERS AND DEPENDENTS
Sec. 1251.301. CONTINUATION OF GROUP COVERAGE
Sec. 1251.302. ELIGIBILITY FOR CONTINUED COVERAGE
Sec. 1251.303. PHYSICAL EXAMINATION NOT REQUIRED
Sec. 1251.304. SCOPE OF COVERAGE
Sec. 1251.305. AMOUNT OF PREMIUM
Sec. 1251.306. PAYMENT OF PREMIUMS
Sec. 1251.307. NOTICE OF CONTINUATION OPTION
Sec. 1251.308. NOTICE OF SEVERANCE OF FAMILY RELATIONSHIP;
NOTICE OF DESIRE TO EXERCISE OPTION
Sec. 1251.309. CONTINUATION OF CERTAIN COVERAGES
Sec. 1251.310. TERMINATION OF CONTINUED COVERAGE
[Sections 1251.311-1251.350 reserved for expansion]
SUBCHAPTER H. BLANKET ACCIDENT AND HEALTH INSURANCE:
ELIGIBLE POLICYHOLDERS
Sec. 1251.351. COMMON CARRIER OR MOTOR VEHICLE RENTAL OR
LEASING COMPANY
Sec. 1251.352. EMPLOYERS
Sec. 1251.353. EDUCATIONAL INSTITUTIONS
Sec. 1251.354. RELIGIOUS, CHARITABLE, RECREATIONAL,
EDUCATIONAL, OR CIVIC ORGANIZATION
Sec. 1251.355. SPORTS TEAM OR CAMP
Sec. 1251.356. GOVERNMENTAL OR VOLUNTEER EMERGENCY
SERVICES ORGANIZATION
Sec. 1251.357. NEWSPAPER OR OTHER PUBLISHER
Sec. 1251.358. ASSOCIATION
Sec. 1251.359. COVERAGE FOR OTHER RISKS
[Sections 1251.360-1251.400 reserved for expansion]
SUBCHAPTER I. BLANKET ACCIDENT AND HEALTH INSURANCE:
GENERAL PROVISIONS
Sec. 1251.401. INDIVIDUAL APPLICATION AND CERTIFICATE
NOT REQUIRED
Sec. 1251.402. LIABILITY OF POLICYHOLDER NOT AFFECTED
[Sections 1251.403-1251.450 reserved for expansion]
SUBCHAPTER J. REGULATION OF OUT-OF-STATE GROUP
ACCIDENT AND HEALTH INSURANCE COVERAGE
Sec. 1251.451. APPLICABILITY OF CERTAIN LAWS TO OUT-OF-STATE
GROUP ACCIDENT AND HEALTH INSURANCE
COVERAGE
CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1251.001. DEFINITIONS. In this chapter:
(1) "Blanket accident and health insurance" means
accident, health, or accident and health insurance covering a group
described by Subchapter H.
(2) "Group accident and health insurance" means
accident, health, or accident and health insurance covering a group
described by Subchapter B.
(3) "Group hospital service corporation" means a
corporation operating under Chapter 842. (V.T.I.C. Art. 3.51-6,
Secs. 1(a) (part), 2(a) (part).)
Sec. 1251.002. CERTAIN GROUP HEALTH INSURANCE AUTHORIZED.
A group policy of accident, health, or accident and health
insurance, including a group contract issued by a group hospital
service corporation, may be delivered or issued for delivery in
this state only if the policy:
(1) covers a group described by Subchapter B; and
(2) meets the requirements adopted under this chapter
for a group policy. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(1).)
Sec. 1251.003. CERTAIN BLANKET HEALTH INSURANCE
AUTHORIZED. A blanket policy of accident, health, or accident and
health insurance may be delivered or issued for delivery in this
state only if the policy:
(1) covers a group described by Subchapter H; and
(2) meets the requirements adopted under this chapter
for a blanket policy. (V.T.I.C. Art. 3.51-6, Sec. 2(d).)
Sec. 1251.004. CERTAIN PAYMENTS BY INSURERS PROHIBITED.
(a) Except as reimbursement for the cost of services that otherwise
would have been provided by the insurer, an insurer may not pay to
any individual, firm, corporation, or group entity a fee or
allowance for services related to:
(1) a group accident and health insurance policy; or
(2) a blanket accident and health insurance policy.
(b) Subsection (a) does not limit an insurer's right to:
(1) pay dividends;
(2) return a premium to a group or a combination of
groups;
(3) provide for a rate stabilization fund with
combinations of groups; or
(4) pay compensation, including a commission, to a
licensed agent. (V.T.I.C. Art. 3.51-6, Secs. 1(e), 2(e).)
Sec. 1251.005. PAYMENT OF BENEFITS. (a) Except as
otherwise provided by this section or Section 1251.113, benefits
under a group accident and health insurance policy or blanket
accident and health insurance policy must be paid to:
(1) the insured;
(2) the insured's designated beneficiary;
(3) the insured's estate; or
(4) if the insured is a minor or is otherwise not
competent to give a valid release, the insured's parent, guardian,
or other person actually supporting the insured.
(b) A group accident and health insurance policy or blanket
accident and health insurance policy may provide that all or a
portion of any indemnity provided by the policy because of
hospital, nursing, medical, or surgical services may, at the option
of the insurer and unless the insured requests otherwise in writing
not later than the time of filing a proof of the loss, be paid
directly to the hospital or person providing the services. A
payment made as provided by this subsection discharges the
obligation of the insurer with respect to the amount paid.
(c) A group accident and health insurance policy or blanket
accident and health insurance policy must provide that all or a
portion of any benefits provided by the policy for dental care
services may, at the option of the insured, be assigned to the
dentist providing the services. In the case of an assignment under
this subsection, payment must be made directly to the dentist
designated. A payment made pursuant to an assignment under this
subsection discharges the obligation of the insurer with respect to
the amount paid. (V.T.I.C. Art. 3.51-6, Sec. 3 (part).)
Sec. 1251.006. POLICY MAY NOT SPECIFY SERVICE PROVIDER. A
group accident and health insurance policy or blanket accident and
health insurance policy may not require that a covered service be
provided by a particular hospital or person. (V.T.I.C. Art.
3.51-6, Sec. 3 (part).)
Sec. 1251.007. EXCEPTIONS. This subchapter and Subchapters
B-I do not apply to:
(1) a credit accident and health insurance policy
subject to Chapter 1153;
(2) any group specifically provided for or authorized
by law in existence and covered under a policy filed with the State
Board of Insurance before April 1, 1975;
(3) accident or health coverage that is incidental to
any form of a group automobile, casualty, property, workers'
compensation, or employers' liability policy approved by the
commissioner; or
(4) any policy or contract of insurance with a state
agency, department, or board providing health services:
(A) to eligible individuals under Chapter 32,
Human Resources Code; or
(B) under a state plan adopted in accordance with
42 U.S.C. Sections 1396-1396g, as amended, or 42 U.S.C. Section
1397aa et seq., as amended. (V.T.I.C. Art. 3.51-6, Sec. 4.)
Sec. 1251.008. RULES. The commissioner may adopt rules
necessary to administer this chapter. A rule adopted under this
section is subject to notice and hearing as provided by Section
1201.007 for a rule adopted under Chapter 1201. (V.T.I.C. Art.
3.51-6, Sec. 5.)
[Sections 1251.009-1251.050 reserved for expansion]
SUBCHAPTER B. GROUP ACCIDENT AND HEALTH INSURANCE:
ELIGIBLE POLICYHOLDERS
Sec. 1251.051. EMPLOYERS. (a) For purposes of this
section, "employee" includes:
(1) an officer, manager, or employee of the employer;
(2) an individual proprietor or partner, if the
employer is an individual proprietorship or partnership;
(3) an officer, manager, or employee of a subsidiary
or affiliated corporation; and
(4) an individual proprietor, partner, or employee of
an individual or firm, if the business of the employer and the
individual or firm is under common control through stock ownership,
contract, or otherwise.
(b) A policy issued to insure employees of a public body may
provide that the term "employee" includes an elected or appointed
officer of the body.
(c) A policy issued to the trustees of a fund established by
an employer may provide that the term "employee" includes a
trustee, an employee of the trustees, or both, if the person's
duties are principally connected with the trusteeship.
(d) A group accident and health insurance policy may be
issued to an employer or trustees of a fund established by an
employer to insure the employer's active and retired employees for
the benefit of persons other than the employer.
(e) The employer or the trustees of a fund established by an
employer are the policyholder under a policy to which this section
applies. (V.T.I.C. Art. 3.51-6, Sec. 1(a) (part).)
Sec. 1251.052. ASSOCIATIONS. (a) A group accident and
health insurance policy may be issued to an association, including
a labor union or an organization of labor unions, a membership
corporation organized or holding a certificate of authority under
the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes), and a cooperative or corporation
subject to the supervision and control of the Farm Credit
Administration, to insure the association's active and retired
members, employees, or employees of members for the benefit of
persons other than the association or its officers or trustees.
(b) To be eligible to obtain a group accident and health
insurance policy, an association must:
(1) have a constitution and bylaws;
(2) have been organized and have actively existed for
at least two years; and
(3) be maintained in good faith for purposes other
than that of obtaining insurance. (V.T.I.C. Art. 3.51-6, Sec. 1(a)
(part).)
Sec. 1251.053. FUNDS ESTABLISHED BY EMPLOYERS, LABOR
UNIONS, OR ASSOCIATIONS. (a) A group accident and health insurance
policy may be issued to the trustees of a fund established by two or
more employers in the same or related industry, by one or more labor
unions, by one or more employers and one or more labor unions, or by
an association described by Section 1251.052 to insure the active
and retired employees of the employers, members of the union or
association, or employees of the association for the benefit of
persons other than the employers, union, or association.
(b) A policy issued to the trustees of a fund established by
employers or a labor union or association may provide that the term
"employee" includes:
(1) an officer or manager of the employer;
(2) an individual proprietor or partner, if the
employer is an individual proprietorship or partnership; or
(3) a trustee, an employee of the trustees, or both, if
the person's duties are principally connected with the trusteeship.
(c) The trustees of a fund established by employers or a
labor union or association are the policyholder under a policy to
which this section applies. (V.T.I.C. Art. 3.51-6, Sec. 1(a)
(part).)
Sec. 1251.054. ELIGIBILITY FOR GROUP LIFE INSURANCE. A
group accident and health insurance policy may be issued to any
individual or organization to which a policy of group life
insurance may be issued or delivered in this state to insure any
class or classes of individuals that could be insured under the
group life policy. (V.T.I.C. Art. 3.51-6, Sec. 1(a) (part).)
Sec. 1251.055. FUND FOR FORMER EMPLOYEES AND MEMBERS. (a)
An insurer may issue a group accident and health insurance policy
to a trustee of a fund to insure former employees, former members,
and the spouses, former spouses, and dependents of former employees
and members who were previously insured by the insurer under a
policy issued to any entity described by this subchapter.
(b) The trustee of a fund is the policyholder under a policy
to which this section applies. (V.T.I.C. Art. 3.51-6, Sec. 1(a)
(part).)
Sec. 1251.056. OTHER GROUPS. (a) Under the requirements
prescribed by this section, a group accident and health insurance
policy may be issued to cover a group other than a group described
by Sections 1251.051-1251.055 if the commissioner determines that:
(1) the issuance of the policy is not contrary to the
best interest of the public;
(2) the issuance of the policy would result in
economies of acquisition or administration; and
(3) the benefits are reasonable in relation to the
premiums charged.
(b) Group accident and health insurance coverage may not be
offered to a group in this state by an insurer under a policy issued
in another state unless this state or another state having
requirements substantially similar to those prescribed by
Subsections (a)(1)-(3) has determined that those requirements have
been met.
(c) The premium for the policy must be paid from the
policyholder's funds, funds contributed by the covered persons, or
both. (V.T.I.C. Art. 3.51-6, Sec. 1(a) (part).)
[Sections 1251.057-1251.100 reserved for expansion]
SUBCHAPTER C. GROUP ACCIDENT AND HEALTH INSURANCE:
REQUIRED PROVISIONS
Sec. 1251.101. REQUIRED PROVISIONS. (a) A group accident
and health insurance policy, including a group contract issued by a
group hospital service corporation, may not be delivered in this
state unless the policy contains in substance the provisions
prescribed by this subchapter or provisions in relation to
provisions prescribed by this subchapter that, in the opinion of
the commissioner, are:
(1) more favorable to the insureds under the policy;
or
(2) at least as favorable to the insureds under the
policy and more favorable to the policyholder.
(b) The standard provisions required for individual health
insurance policies do not apply to group health insurance policies.
(c) If any provision of this subchapter is wholly or partly
inapplicable to or inconsistent with the coverage provided by a
particular form of policy, the insurer, with the approval of the
commissioner, shall:
(1) omit the inapplicable provision or part from the
policy; or
(2) modify the inconsistent provision in a manner that
makes the provision as contained in the policy consistent with the
coverage provided by the policy. (V.T.I.C. Art. 3.51-6, Sec.
1(d)(2) (part).)
Sec. 1251.102. PAYMENT OF PREMIUMS. A group accident and
health insurance policy must provide that premiums due under the
policy must be remitted by the premium payor as designated in the
policy:
(1) on or before the due date; or
(2) within any grace period specified in the policy.
(V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.103. INCONTESTABILITY OF POLICY. (a) A group
accident and health insurance policy must provide that:
(1) the validity of the policy may not be contested
after the policy has been in force for two years after its date of
issue; and
(2) in the absence of fraud, a statement made by any
individual covered by the policy relating to the individual's
insurability may not be used in contesting the validity of the
insurance with respect to which the statement was made:
(A) after the insurance has been in force before
the contest for two years during the individual's lifetime; and
(B) unless the statement is contained in a
written instrument signed by the individual making the statement.
(b) Subsection (a)(1) does not apply to a contest based on
nonpayment of premiums.
(c) The provisions required by this section do not preclude
the assertion at any time of a defense based on:
(1) a provision in the policy that relates to
eligibility for coverage;
(2) a provision in a group accident and health
insurance policy or disability insurance policy that relates to
overinsurance;
(3) a provision in a disability policy that relates to
the relation of earnings to insurance; or
(4) another similar provision in a group accident and
health insurance policy or disability insurance policy that limits
the amounts of recovery from all sources to not more than 100
percent of the total actual losses or expenses incurred. (V.T.I.C.
Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.104. ENTIRE CONTRACT. A group accident and
health insurance policy must provide that the policy and any
application attached to the policy constitute the entire contract
between the parties. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.105. STATEMENT MADE BY POLICYHOLDER OR INSURED.
A group accident and health insurance policy must provide that:
(1) in the absence of fraud, a statement made by the
policyholder or an insured is considered a representation and not a
warranty; and
(2) a statement made by the policyholder or an insured
may not be used in any contest under the policy, unless a copy of the
written instrument containing the statement is or has been provided
to:
(A) the person making the statement; or
(B) if the statement was made by the insured and
the insured has died or become incapacitated, the insured's
beneficiary or personal representative. (V.T.I.C. Art. 3.51-6,
Sec. 1(d)(2) (part).)
Sec. 1251.106. DISTINCTION BASED ON MARITAL STATUS
PROHIBITED. A group accident and health insurance policy must
include a provision that prohibits a distinction on the basis of the
marital status or lack of marital status between an insured and the
other parent in the determination of the dependents or the
beneficiaries of the insured, or both. (V.T.I.C. Art. 3.51-6, Sec.
1(d)(2) (part).)
Sec. 1251.107. EVIDENCE OF INSURABILITY. A group accident
and health insurance policy must state the conditions, if any,
under which the insurer reserves the right to require an individual
eligible for insurance to provide evidence of individual
insurability satisfactory to the insurer as a condition of
obtaining part or all of the coverage. (V.T.I.C. Art. 3.51-6, Sec.
1(d)(2) (part).)
Sec. 1251.108. EXCLUSION OR LIMITATION OF COVERAGE FOR
PREEXISTING CONDITIONS. (a) A group accident and health insurance
policy must specify the additional exclusions or limitations, if
any, applicable under the policy with respect to a disease or
physical condition of an insured, not otherwise excluded from the
insured's coverage by name or specific description effective on the
date of the insured's loss, that existed before the effective date
of the insured's coverage under the policy.
(b) An exclusion or limitation described by Subsection (a)
may apply only to a disease or physical condition for which the
insured received medical advice or treatment during the 12 months
before the effective date of the insured's coverage.
(c) An exclusion or limitation described by Subsection (a)
may not apply to a loss incurred or disability beginning after the
earlier of:
(1) the end of 12 consecutive months, beginning on or
after the effective date of the insured's coverage, during which
the insured has not received medical advice or treatment in
connection with the disease or physical condition; or
(2) the second anniversary of the effective date of
the insured's coverage.
(d) This section does not apply to:
(1) a credit accident and health insurance policy; or
(2) a group accident and health insurance policy
subject to Chapter 1501. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2)
(part).)
Sec. 1251.109. ADJUSTMENT OF PREMIUMS OR BENEFITS IF AGE OF
INSURED IS MISSTATED. (a) A group accident and health insurance
policy under which the premiums or benefits vary by age must specify
an equitable adjustment of premiums or benefits, or both, to be made
if the age of an insured has been misstated.
(b) The provision required by Subsection (a) must contain a
clear statement of the method of adjustment to be used. (V.T.I.C.
Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.110. DEADLINE FOR NOTICE OF CLAIM. (a) A group
accident and health insurance policy must provide that written
notice of a claim must be given to the insurer not later than the
20th day after the date of the occurrence or beginning of any loss
covered by the policy.
(b) Failure to give notice within the time prescribed by
Subsection (a) does not invalidate or reduce any claim if it is
shown that:
(1) it was not reasonably possible to give the notice
within that time; and
(2) notice was given as soon as was reasonably
possible. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.111. CLAIM FORMS. (a) A group accident and
health insurance policy must provide that the insurer will furnish
to the person making a claim or to the policyholder for delivery to
a person making a claim the forms usually provided by the insurer
for filing a proof of loss.
(b) If the forms for a proof of loss are not provided before
the 16th day after the date the insurer received notice of a claim
under the policy, the person making the claim is considered to have
complied with the requirements of the policy as to proof of loss on
submitting, within the time set in the policy for filing proof of
loss, written proof covering the occurrence, character, and extent
of the loss for which the claim is made. (V.T.I.C. Art. 3.51-6,
Sec. 1(d)(2) (part).)
Sec. 1251.112. DEADLINE FOR CLAIM. (a) A group accident
and health insurance policy must provide that:
(1) in the case of a claim for a loss other than a claim
for a loss of time for disability, written proof of the loss must be
provided to the insurer not later than the 90th day after the date
of the loss; and
(2) in the case of a claim for loss of time for
disability:
(A) written proof of the loss must be provided to
the insurer not later than the 90th day after the beginning of the
period for which the insurer is liable; and
(B) subsequent written proofs of the continuance
of the disability must be provided to the insurer at intervals as
reasonably required by the insurer.
(b) Failure to provide written proof of a loss within the
time prescribed by Subsection (a) does not invalidate or reduce a
claim if:
(1) it was not reasonably possible to provide written
proof of the loss within that time;
(2) written proof of the loss is provided as soon as
reasonably possible; and
(3) unless the claimant does not have the legal
capacity to provide proof of loss, proof of loss is provided not
later than the first anniversary of the date the proof of loss is
otherwise required. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.113. PROMPT PAYMENT OF BENEFITS REQUIRED. A
group accident and health insurance policy must provide that:
(1) all benefits payable under the policy, other than
benefits for loss of time, must be paid not later than the 60th day
after the date the proof of loss is received; and
(2) subject to written proof of loss, all accrued
benefits payable under the policy for loss of time must be paid at
least monthly during the period for which the insurer is liable, and
that any balance remaining unpaid at the end of that period must be
paid as soon as possible after the proof of loss is received.
(V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.114. PAYMENT OF BENEFITS. (a) A group accident
and health insurance policy must provide that all benefits of the
policy, other than benefits for loss of life, must be paid to the
insured or the insured's assignee.
(b) A group accident and health insurance policy must
provide that, subject to the provisions of the policy, benefits for
loss of life of an insured must be paid to:
(1) the beneficiary designated by the insured or the
beneficiary's assignee;
(2) the family member specified by the policy terms,
if the policy contains conditions relating to family status; or
(3) the estate of the insured, if the designated or
specified beneficiary is not living at the time the insured dies.
(c) A group accident and health insurance policy may provide
that if any benefits are payable to the estate of an individual or
to an individual who is a minor or is otherwise not competent to
give a valid release, the insurer may pay the benefits, up to an
amount established by the commissioner, to any individual related
by consanguinity or affinity to the individual who is considered by
the insurer to be equitably entitled to the benefits.
(d) This section does not apply to:
(1) a credit accident and health insurance policy; or
(2) a group contract issued by a group hospital
service corporation. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.115. RIGHT TO CONDUCT PHYSICAL EXAMINATION OR
AUTOPSY. A group accident and health insurance policy must provide
that the insurer has the right and opportunity to:
(1) conduct a physical examination of an individual
for whom a claim is made when and as often as the insurer reasonably
requires during the pendency of the claim under the policy; and
(2) in the case of a death, require that an autopsy be
conducted, unless the autopsy is prohibited by law. (V.T.I.C. Art.
3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.116. LEGAL OR EQUITABLE ACTIONS; LIMITATIONS. A
group accident and health insurance policy must provide that an
action at law or in equity may not be brought to recover on the
policy:
(1) before the 61st day after the date written proof of
loss is filed as required under the policy; or
(2) after the third anniversary of the date on which
written proof of loss is required under the policy to be filed.
(V.T.I.C. Art. 3.51-6, Sec. 1(d)(2) (part).)
Sec. 1251.117. CONTINUATION OR CONVERSION OF COVERAGE. (a)
A group accident and health insurance policy must describe the
continuation of group coverage and any conversion coverage provided
in accordance with Subchapter F.
(b) Subsection (a) does not apply to a credit accident and
health insurance policy. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(2)
(part).)
[Sections 1251.118-1251.150 reserved for expansion]
SUBCHAPTER D. GROUP ACCIDENT AND HEALTH INSURANCE:
COVERAGE FOR DEPENDENTS
Sec. 1251.151. COVERAGE FOR CERTAIN GRANDCHILDREN. (a) A
group policy or contract of insurance for hospital, surgical, or
medical expenses incurred as a result of accident or sickness,
including a group contract issued by a group hospital service
corporation, that provides coverage under the policy or contract
for a child of an insured must, on payment of a premium, provide
coverage for any grandchild of the insured if the grandchild is:
(1) unmarried;
(2) younger than 25 years of age; and
(3) a dependent of the insured for federal income tax
purposes at the time the application for coverage of the grandchild
is made.
(b) Coverage for a grandchild of the insured under this
section may not be terminated solely because the covered grandchild
is no longer a dependent of the insured for federal income tax
purposes. (V.T.I.C. Art. 3.51-6, Sec. 3E, as amended Acts 77th
Leg., R.S., Chs. 396 and 1027.)
Sec. 1251.152. OPTIONAL COVERAGE FOR SPOUSES AND
DEPENDENTS. (a) For purposes of this section, "dependent"
includes:
(1) a child of an employee or member who is:
(A) unmarried; and
(B) younger than 25 years of age; and
(2) a grandchild of an employee or member who is:
(A) unmarried;
(B) younger than 25 years of age; and
(C) a dependent of the insured for federal income
tax purposes at the time the application for coverage of the
grandchild is made.
(b) A group accident and health insurance policy may provide
coverage for the spouse or a dependent of an employee or member.
(V.T.I.C. Art. 3.51-6, Sec. 1(b), as amended Acts 77th Leg., R.S.,
Chs. 396 and 1027.)
Sec. 1251.153. OPTIONAL CONTINUATION OF DEPENDENTS'
BENEFITS ON DEATH OF INSURED. (a) A group accident and health
insurance policy that provides for the payment by the insurer of
benefits for members of the family or dependents of an insured may
provide for a continuation of all or part of those benefits after
the death of the insured.
(b) Insurance provided by benefits described by Subsection
(a) is not life insurance under Title 7.
(c) Coverage described by Subsection (a) may continue for
any period subject to any other policy provisions relating to the
termination of a dependent's coverage. (V.T.I.C. Art. 3.51-6, Sec.
1(f).)
Sec. 1251.154. COVERAGE FOR ADOPTED CHILDREN. A group
policy or contract of insurance for hospital, surgical, or medical
expenses incurred as a result of accident or sickness, including a
group contract issued by a group hospital service corporation, that
provides coverage for the immediate family or a child of an insured
may not exclude from coverage or limit coverage of a child of the
insured solely because the child is adopted. A child is considered
to be the child of an insured if the insured is a party to a suit in
which the insured seeks to adopt the child. (V.T.I.C. Art. 3.51-6,
Sec. 3D.)
[Sections 1251.155-1251.200 reserved for expansion]
SUBCHAPTER E. GROUP ACCIDENT AND HEALTH
INSURANCE: GENERAL PROVISIONS
Sec. 1251.201. CERTIFICATE OF INSURANCE. (a) An insurer
issuing a group policy under this chapter shall provide to the
policyholder for delivery to each employee or member of the insured
group a certificate of insurance that:
(1) summarizes the essential features of the insurance
coverage of the employee or member; and
(2) states the person to whom benefits are payable.
(b) If dependents are included in the coverage, an insurer
is not required to provide more than one certificate for each family
unit. (V.T.I.C. Art. 3.51-6, Sec. 1(c).)
[Sections 1251.202-1251.250 reserved for expansion]
SUBCHAPTER F. CONTINUATION OR CONVERSION PRIVILEGE ON
TERMINATION OF COVERAGE UNDER GROUP POLICY
Sec. 1251.251. CONTINUATION OF GROUP COVERAGE REQUIRED;
EXCEPTION. (a) An insurer or group hospital service corporation
that issues policies that provide hospital, surgical, or major
medical expense insurance coverage or any combination of those
coverages on an expense incurred basis shall, as required by this
subchapter, provide continuation of group coverage for employees or
members and their eligible dependents, subject to the eligibility
provisions prescribed by Section 1251.252.
(b) This subchapter does not apply to an insurance policy
that provides benefits only for expenses incurred because of a
specified disease or an accident. (V.T.I.C. Art. 3.51-6, Secs.
1(d)(3) (part), (3)(A)(i).)
Sec. 1251.252. ELIGIBILITY FOR CONTINUATION OF GROUP
COVERAGE. (a) An employee, member, or dependent is entitled to
continuation of group coverage if:
(1) the individual's coverage under the group policy
is terminated for any reason other than involuntary termination for
cause, including discontinuance of the group policy in its entirety
or with respect to an insured class; and
(2) the individual has been continuously insured under
the group policy, or under any group policy providing similar
benefits that the policy replaces, for at least three consecutive
months immediately before termination.
(b) For purposes of Subsection (a), involuntary termination
for cause does not include termination for any health-related
cause. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(3) (part).)
Sec. 1251.253. REQUEST FOR CONTINUATION OF GROUP COVERAGE.
An employee, member, or dependent must request in writing the
continuation of group coverage not later than the 31st day after the
later of:
(1) the date the group coverage would otherwise
terminate; or
(2) the date the individual is given, in a format
prescribed by the commissioner, notice by either the employer or
the group policyholder of the right to continuation of group
coverage. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(3)(A)(ii).)
Sec. 1251.254. PAYMENT OF CONTRIBUTIONS. (a) An employee,
member, or dependent who elects to continue group coverage under
this subchapter must pay to the employer or group policyholder,
each month in advance, the amount of contribution required by the
employer or policyholder, plus two percent of the group rate for the
coverage being continued under the group policy on the due date of
each payment.
(b) The employee's, member's, or dependent's written
election for continuation of group coverage, together with the
first contribution required to establish advance monthly
contributions, must be given to the employer or policyholder not
later than the later of:
(1) the 31st day after the date coverage would
otherwise terminate; or
(2) the date the individual is given notice by either
the employer or the group policyholder of the right to continuation
of group coverage. (V.T.I.C. Art. 3.51-6, Secs. 1(d)(3)(A)(iii),
(iv).)
Sec. 1251.255. TERMINATION OF CONTINUED COVERAGE. (a)
Group coverage continued under this subchapter may not terminate
until the earliest of:
(1) six months after the date the employee, member, or
dependent elects to continue the group coverage;
(2) the date failure to make timely payments would
terminate the group coverage;
(3) the date the group coverage terminates in its
entirety;
(4) the date the insured is or could be covered under
Medicare;
(5) the date the insured is covered for similar
benefits by another plan or program, including:
(A) a hospital, surgical, medical, or major
medical expense insurance policy;
(B) a hospital or medical service subscriber
contract; or
(C) a medical practice or other prepayment plan;
(6) the date the insured is eligible for similar
benefits, whether or not covered for those benefits, under any
arrangement of coverage for individuals in a group, whether on an
insured or uninsured basis; or
(7) the date similar benefits are provided or
available to the insured under any state or federal law.
(b) Not later than the 30th day before the end of the six
months after the date the employee, member, or dependent elects to
continue group coverage under the policy, the insurer shall:
(1) notify the individual that the individual may be
eligible for coverage under the Texas Health Insurance Risk Pool as
provided by Chapter 1506; and
(2) provide to the individual the address for applying
to that pool. (V.T.I.C. Art. 3.51-6, Secs. 1(d)(3)(A)(v), (vi).)
Sec. 1251.256. CONVERSION OF GROUP POLICY. (a) An insurer
may offer a conversion policy to each employee, member, or
dependent who is covered under a group accident and health
insurance policy that is terminating.
(b) If offered, an issuer shall issue a conversion policy
without evidence of insurability if a written application for the
policy and payment of the first premium are made not later than the
31st day after the date of termination.
(c) Any conversion policy must meet the minimum standards
for benefits for conversion policies.
(d) The insurer may provide the conversion coverage on an
individual or group basis. (V.T.I.C. Art. 3.51-6, Secs.
1(d)(3)(B)(i), (iii).)
Sec. 1251.257. PREMIUM FOR CONVERTED POLICY. (a) An
insurer shall determine the premium for a converted policy issued
under this subchapter in accordance with the insurer's table of
premium rates for coverage that was provided under the group
policy. The premium:
(1) must be based on the type of converted policy and
the coverage provided by the policy; and
(2) may be based on the age and geographic location of
each individual to be covered.
(b) The premium for the same coverage and benefits under a
converted policy may not exceed 200 percent of the premium
determined for the group policy in accordance with Subsection (a).
(V.T.I.C. Art. 3.51-6, Sec. 1(d)(3) (part).)
Sec. 1251.258. BENEFITS UNDER CONVERTED POLICY. The
commissioner by rule shall establish minimum standards for benefits
under converted policies issued under this subchapter. (V.T.I.C.
Art. 3.51-6, Sec. 1(d)(3)(B)(ii) (part).)
Sec. 1251.259. TERMINATION OF CONVERTED POLICY. Conversion
coverage under this subchapter for an insured may not terminate
until the earlier of:
(1) the date failure to make timely payments would
terminate coverage; or
(2) the date of an event specified by Section
1251.255(a)(4), (5), (6), or (7) for termination of continued group
coverage. (V.T.I.C. Art. 3.51-6, Sec. 1(d)(3)(B)(ii) (part).)
Sec. 1251.260. NOTICE OF CONTINUATION AND CONVERSION
PRIVILEGES. (a) An employer that provides to its employees group
accident and health insurance coverage that includes a group
continuation or conversion privilege on termination of coverage
shall give written notice of the continuation or conversion
privileges under the policy to each employee or dependent insured
under the group and affected by the termination.
(b) The commissioner by rule shall establish minimum
standards for the notice required by this section. (V.T.I.C. Art.
3.51-6, Sec. 3C, as added Acts 71st Leg., R.S., Ch. 1041, Sec. 10.)
[Sections 1251.261-1251.300 reserved for expansion]
SUBCHAPTER G. CONTINUATION OF GROUP COVERAGE FOR CERTAIN
FAMILY MEMBERS AND DEPENDENTS
Sec. 1251.301. CONTINUATION OF GROUP COVERAGE. A group
policy or contract delivered, issued for delivery, renewed,
amended, or extended in this state, including a group contract
issued by a group hospital service corporation, that provides
insurance for hospital, surgical, or medical expenses incurred as a
result of accident or sickness must include an option for each
individual covered by the policy or contract because of a family or
dependent relationship to an individual who is a member of the group
for which the policy or contract is provided to continue coverage
with the group if the individual's eligibility for coverage under
the policy or contract ends because of:
(1) the severance of the family relationship; or
(2) the retirement or death of the group member.
(V.T.I.C. Art. 3.51-6, Secs. 3B(a), (b) (part).)
Sec. 1251.302. ELIGIBILITY FOR CONTINUED COVERAGE. A
family member or dependent of an insured is eligible for continued
coverage under this subchapter if the family member or dependent:
(1) has been a member of the group for a period of at
least one year; or
(2) is an infant under one year of age. (V.T.I.C. Art.
3.51-6, Sec. 3B(b) (part).)
Sec. 1251.303. PHYSICAL EXAMINATION NOT REQUIRED. An
individual who exercises the option to continue group coverage
under this subchapter may not be required to take and pass a
physical examination as a condition to continuing coverage.
(V.T.I.C. Art. 3.51-6, Sec. 3B(c).)
Sec. 1251.304. SCOPE OF COVERAGE. (a) An individual
covered under group continuation coverage under this subchapter is
entitled to coverage that is identical in scope to the coverage
provided under the group health insurance policy or contract. An
exclusion that was not included in the health insurance policy or
contract may not be included in the group continuation coverage.
(b) If the group policyholder or contract holder replaces
the health insurance policy or contract within the period
prescribed by Section 1251.310(3), an individual covered under
group continuation coverage may obtain coverage identical in scope
to the coverage under the replacement group policy as provided by
this subchapter. (V.T.I.C. Art. 3.51-6, Sec. 3B(d).)
Sec. 1251.305. AMOUNT OF PREMIUM. Except as provided by
Section 1551.064, the premium for continuation of a spouse or
dependent on the group health insurance policy or contract may not
be more than the premium charged under the group policy or contract
for the individual had the family relationship not been severed.
(V.T.I.C. Art. 3.51-6, Sec. 3B(f).)
Sec. 1251.306. PAYMENT OF PREMIUMS. (a) An individual
covered under group continuation coverage under this subchapter
shall pay premiums for the coverage directly to the group
policyholder or contract holder.
(b) The coverage must provide the individual with the option
of paying the premiums in monthly installments.
(c) The group policyholder or contract holder may require
the individual to pay a monthly fee of not more than $5 for
administrative costs. (V.T.I.C. Art. 3.51-6, Sec. 3B(e).)
Sec. 1251.307. NOTICE OF CONTINUATION OPTION. Except as
provided by Section 1551.064, at the time a health insurance policy
or contract is issued, the group policyholder or contract holder
shall give written notice to each group member and each dependent of
a group member covered by the policy or contract of the continuation
option under this subchapter. (V.T.I.C. Art. 3.51-6, Sec. 3B(g).)
Sec. 1251.308. NOTICE OF SEVERANCE OF FAMILY RELATIONSHIP;
NOTICE OF DESIRE TO EXERCISE OPTION. (a) Except as provided by
Section 1551.064, each group health insurance policy or contract
must require a group member to give written notice to the group
policyholder or contract holder not later than the 15th day after
the date of any severance of the family relationship that might
activate the continuation option under this subchapter. Written
notice under this subsection may be given by the group member's
dependent.
(b) On receipt of notice under Subsection (a), the group
policyholder or contract holder shall immediately give written
notice of the continuation option under this subchapter to each
affected dependent of the group member.
(c) On receipt of notice of the death or retirement of a
group member, the group policyholder or contract holder shall
immediately give written notice of the continuation option under
this subchapter to each dependent of the group member. The notice
must state the amount of the premium to be charged and must be
accompanied by any necessary enrollment forms.
(d) Not later than the 60th day after the date of the
severance of the family relationship or the retirement or death of
the group member, a dependent must give written notice to the group
policyholder or contract holder of the individual's desire to
exercise the continuation option under this subchapter. Coverage
under the health insurance policy or contract remains in effect
during the period prescribed by this subsection if the policy or
contract premiums are paid.
(e) If a dependent does not give written notice of the
individual's desire to exercise the continuation option under this
subchapter within the time prescribed by Subsection (d), the option
expires. (V.T.I.C. Art. 3.51-6, Secs. 3B(h), (i).)
Sec. 1251.309. CONTINUATION OF CERTAIN COVERAGES. (a) Any
period of previous coverage under the health insurance policy or
contract, including a policy or contract executed under Chapter
1551, must be used in full or partial satisfaction of any required
probationary or waiting periods provided in the contract for
dependent coverage.
(b) If a health insurance policy or contract provides to a
group member continuation rights to cover the period between the
time the member retires and the time the member is eligible for
coverage by Medicare, those same continuation rights must be made
available to the group member's dependents. (V.T.I.C. Art. 3.51-6,
Secs. 3B(j), (k).)
Sec. 1251.310. TERMINATION OF CONTINUED COVERAGE. The
coverage of an individual who exercises the continuation option
under this subchapter continues without interruption and may not be
canceled or otherwise terminated until:
(1) the insured fails to make a premium payment within
the time required to make the payment;
(2) the insured becomes eligible for substantially
similar coverage under another plan or program, including a group
health insurance policy or contract, hospital or medical service
subscriber contract, or medical practice or other prepayment plan;
or
(3) the third anniversary of:
(A) the severance of the family relationship; or
(B) the retirement or death of the group member.
(V.T.I.C. Art. 3.51-6, Sec. 3B(l).)
[Sections 1251.311-1251.350 reserved for expansion]
SUBCHAPTER H. BLANKET ACCIDENT AND HEALTH INSURANCE:
ELIGIBLE POLICYHOLDERS
Sec. 1251.351. COMMON CARRIER OR MOTOR VEHICLE RENTAL OR
LEASING COMPANY. (a) A blanket accident and health insurance
policy may be issued to:
(1) a common carrier or the operator, owner, or lessor
of a means of transportation to cover a group of individuals who may
become passengers defined by reference to their travel status on
the common carrier or means of transportation; or
(2) an automobile or truck rental or leasing company
to cover a group of individuals who may become renters, lessees, or
passengers defined by their travel status on the rented or leased
vehicles.
(b) The common carrier, the operator, owner, or lessor of a
means of transportation, or the automobile or truck rental or
leasing company is the policyholder under a policy to which this
section applies. (V.T.I.C. Art. 3.51-6, Sec. 2(a) (part).)
Sec. 1251.352. EMPLOYERS. (a) A blanket accident and
health insurance policy may be issued to an employer to cover any
group of employees, dependents, or guests defined by reference to
specified hazards incident to an activity or operation of the
employer.
(b) The employer is the policyholder under a policy to which
this section applies. (V.T.I.C. Art. 3.51-6, Sec. 2(a) (part).)
Sec. 1251.353. EDUCATIONAL INSTITUTIONS. (a) A blanket
accident and health insurance policy may be issued to a college,
school, or other institution of learning, to a school district or
school jurisdictional unit, or to the head, principal, or governing
board of such an educational unit to cover students, teachers, or
employees.
(b) The institution, head, principal, or governing board is
the policyholder under a policy to which this section applies.
(V.T.I.C. Art. 3.51-6, Sec. 2(a) (part).)
Sec. 1251.354. RELIGIOUS, CHARITABLE, RECREATIONAL,
EDUCATIONAL, OR CIVIC ORGANIZATION. (a) A blanket accident and
health insurance policy may be issued to a religious, charitable,
recreational, educational, or civic organization, or a branch of
the organization, to cover any group of members or participants
defined by reference to specified hazards incident to an activity
or operation sponsored or supervised by the organization or branch.
(b) The organization or branch is the policyholder under a
policy to which this section applies. (V.T.I.C. Art. 3.51-6, Sec.
2(a) (part).)
Sec. 1251.355. SPORTS TEAM OR CAMP. (a) A blanket accident
and health insurance policy may be issued to a sports team or camp
or the sponsor of a sports team or camp to cover members, campers,
employees, officials, or supervisors.
(b) The sports team, camp, or sponsor is the policyholder
under a policy to which this section applies. (V.T.I.C. Art.
3.51-6, Sec. 2(a) (part).)
Sec. 1251.356. GOVERNMENTAL OR VOLUNTEER EMERGENCY
SERVICES ORGANIZATION. (a) A blanket accident and health
insurance policy may be issued to a governmental or volunteer fire
department or fire company, first aid or civil defense
organization, or similar governmental or volunteer organization to
cover a group of members or participants defined by reference to
specified hazards incident to an activity or operation sponsored or
supervised by the organization.
(b) The governmental or volunteer organization is the
policyholder under a policy to which this section applies.
(V.T.I.C. Art. 3.51-6, Sec. 2(a) (part).)
Sec. 1251.357. NEWSPAPER OR OTHER PUBLISHER. (a) A blanket
accident and health insurance policy may be issued to a newspaper or
other publisher to cover the publisher's carriers.
(b) The publisher is the policyholder under a policy to
which this section applies. (V.T.I.C. Art. 3.51-6, Sec. 2(a)
(part).)
Sec. 1251.358. ASSOCIATION. (a) A blanket accident and
health insurance policy may be issued to an association, including
a labor union, to cover any group of members or participants defined
by reference to specified hazards incident to an activity or
operation sponsored or supervised by the association.
(b) To be eligible to obtain a blanket accident and health
insurance policy, an association must:
(1) have a constitution and bylaws; and
(2) have been organized and be maintained in good
faith for purposes other than that of obtaining insurance.
(c) The association is the policyholder under a policy to
which this section applies. (V.T.I.C. Art. 3.51-6, Sec. 2(a)
(part).)
Sec. 1251.359. COVERAGE FOR OTHER RISKS. (a) A blanket
accident and health insurance policy may be issued to cover any risk
or class of risks other than a risk described by this subchapter
that, as determined by the commissioner, is eligible for blanket
accident and health insurance.
(b) The commissioner may make a determination under
Subsection (a) based on an individual risk, a class of risks, or
both. (V.T.I.C. Art. 3.51-6, Sec. 2(a) (part).)
[Sections 1251.360-1251.400 reserved for expansion]
SUBCHAPTER I. BLANKET ACCIDENT AND HEALTH INSURANCE:
GENERAL PROVISIONS
Sec. 1251.401. INDIVIDUAL APPLICATION AND CERTIFICATE NOT
REQUIRED. (a) An individual application from an insured under a
blanket accident and health insurance policy is not required.
(b) An insurer is not required to provide a certificate to
each insured under a blanket accident and health insurance policy.
(V.T.I.C. Art. 3.51-6, Sec. 2(b).)
Sec. 1251.402. LIABILITY OF POLICYHOLDER NOT AFFECTED.
Subchapter H and this subchapter do not affect the legal liability
of a policyholder for the death of or injury to a member of a group.
(V.T.I.C. Art. 3.51-6, Sec. 2(c).)
[Sections 1251.403-1251.450 reserved for expansion]
SUBCHAPTER J. REGULATION OF OUT-OF-STATE GROUP
ACCIDENT AND HEALTH INSURANCE COVERAGE
Sec. 1251.451. APPLICABILITY OF CERTAIN LAWS TO
OUT-OF-STATE GROUP ACCIDENT AND HEALTH INSURANCE COVERAGE. (a)
Chapters 1365 and 1368 and Subchapters A and C, Chapter 1451, apply
to:
(1) a certificate of insurance issued to a resident of
this state under a group accident and health insurance policy
delivered, issued for delivery, or renewed outside this state; or
(2) a certificate issued to a resident of this state
under a policy delivered, issued for delivery, or renewed outside
this state by a group hospital service corporation.
(b) Subsection (a) does not apply to a specified disease or
limited benefit policy. (V.T.I.C. Art. 3.51-12.)
CHAPTER 1252. DISCONTINUATION AND REPLACEMENT OF GROUP AND
GROUP-TYPE HEALTH BENEFIT PLAN COVERAGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1252.001. DEFINITIONS
Sec. 1252.002. APPLICABILITY OF CHAPTER
Sec. 1252.003. COVERAGE ISSUED ON GROUP-TYPE BASIS
[Sections 1252.004-1252.100 reserved for expansion]
SUBCHAPTER B. DISCONTINUATION OF COVERAGE
Sec. 1252.101. NOTICE OF DISCONTINUATION OF COVERAGE
Sec. 1252.102. EXTENSION OF BENEFITS PROVISION; EXEMPTION
Sec. 1252.103. INDEMNITY OR BENEFITS PAYABLE FOR
DISABILITY
Sec. 1252.104. LIABILITY FOR LOSS UNDER AUTOMATICALLY
DISCONTINUED COVERAGE
[Sections 1252.105-1252.200 reserved for expansion]
SUBCHAPTER C. REPLACEMENT OF COVERAGE
Sec. 1252.201. TOTAL DISABILITY STATUS
Sec. 1252.202. EFFECTIVE DATE OF COVERAGE UNDER
REPLACEMENT PLAN
Sec. 1252.203. EXTENSION OF BENEFITS FOR TOTAL DISABILITY
Sec. 1252.204. COVERAGE FOR PREEXISTING CONDITIONS
Sec. 1252.205. WAITING PERIOD
Sec. 1252.206. DETERMINATION OF BENEFITS AVAILABLE UNDER
REPLACED PLAN
Sec. 1252.207. LIABILITY OF PREVIOUS CARRIER
CHAPTER 1252. DISCONTINUATION AND REPLACEMENT OF GROUP AND
GROUP-TYPE HEALTH BENEFIT PLAN COVERAGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1252.001. DEFINITIONS. In this chapter:
(1) "Carrier" means:
(A) an insurer; or
(B) a group hospital service corporation
operating under Chapter 842.
(2) "Health benefit plan" means:
(A) any accident and health insurance policy;
(B) a subscriber contract of a group hospital
service corporation; or
(C) an accident and health benefits package of a
multiple employer trust that is not exempt from regulation by this
state as an employee welfare benefit plan under the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), as amended.
(3) "Previous carrier" means a carrier whose health
benefit plan coverage has been replaced with health benefit plan
coverage provided by a succeeding carrier.
(4) "Succeeding carrier" means a carrier that replaces
the health benefit plan coverage provided by another carrier with
its own health benefit plan coverage.
(5) "Total disability" or "totally disabled" means:
(A) with respect to an employee or other primary
insured covered under a health benefit plan, the complete inability
of that individual to perform all of the substantial and material
duties and functions of the individual's occupation and any other
gainful occupation in which the individual earns substantially the
same compensation earned before the disability; and
(B) with respect to any other individual covered
under a health benefit plan, confinement as a bed patient in a
hospital. (V.T.I.C. Art. 3.51-6A, Secs. 1 (part); 2(b); 5(f);
6(b)(1), (3); New.)
Sec. 1252.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to a health benefit plan that:
(1) provides coverage on a group or group-type basis
to an individual eligible for that coverage because of the
individual's status as:
(A) an employee of an employer; or
(B) a member of a labor union or a member of an
association; and
(2) is delivered or issued for delivery in this state.
(b) This chapter does not apply to an entity that is not
engaged in the business of insurance in this state. (V.T.I.C. Art.
3.51-6A, Sec. 1.)
Sec. 1252.003. COVERAGE ISSUED ON GROUP-TYPE BASIS. (a)
For purposes of this chapter, health benefit plan coverage is
provided on a group-type basis if:
(1) the plan provides coverage under an insurance
policy or subscriber contract to a class of employees or a class of
members of a labor union or members of an association and the class
is determined by conditions relating to their employment or to
their membership in the union or association;
(2) coverage under the plan is not available to the
general public and can be obtained and maintained only because of
the covered individual's employment status or membership in a labor
union or an association;
(3) premiums or subscription charges for the plan are
paid to the carrier on an aggregate or bulk-payment basis; and
(4) the plan is sponsored by:
(A) the employer of the class of employees
covered by the plan; or
(B) the labor union or an association to which
the class of members covered by the plan belongs.
(b) Health benefit plan coverage is not provided on a
group-type basis if it is a salary-budget plan using individual
insurance policies or subscriber contracts that do not meet the
conditions for group-type coverage specified by Subsection (a).
(V.T.I.C. Art. 3.51-6A, Sec. 2(a).)
[Sections 1252.004-1252.100 reserved for expansion]
SUBCHAPTER B. DISCONTINUATION OF COVERAGE
Sec. 1252.101. NOTICE OF DISCONTINUATION OF COVERAGE. A
notice of discontinuation of a health benefit plan must include a
request to the group policyholder or other entity responsible for
making payments or submitting subscription charges to the carrier
to notify employees or members covered by the plan of the
discontinuation and the date of the discontinuation. (V.T.I.C.
Art. 3.51-6A, Sec. 4.)
Sec. 1252.102. EXTENSION OF BENEFITS PROVISION; EXEMPTION.
(a) A health benefit plan must contain, subject to this section and
Section 1252.103, a reasonable provision providing for an extension
of benefits for a total disability that exists on the date of the
plan's discontinuation.
(b) A health benefit plan must contain a reasonable
extension of benefits provision for coverage for hospital or
medical expenses other than dental expenses. A provision is
considered reasonable if it provides to an individual who is
covered under the plan and who is totally disabled on the date of
the plan's discontinuation an extension of benefits for expenses
incurred in treating the condition causing the total disability and
the extension is provided for at least the lesser of:
(1) 90 days; or
(2) the duration of the total disability.
(c) An extension of benefits provision required under this
section may provide for an exclusion from coverage for an
individual whose coverage is being discontinued and replaced with
coverage that:
(1) is provided by a succeeding carrier; and
(2) provides a level of benefits that is at least
substantially equal to the level of benefits provided under the
replaced health benefit plan.
(d) An applicable extension of benefits provision must be
described in the policy or contract and the group insurance
certificate.
(e) Benefits payable during an extension period may be
subject to the regular benefit limits of the health benefit plan.
(f) This section does not apply to a health benefit plan
that was delivered or issued for delivery in this state before
January 1, 1982, and whose level of benefits has not been modified
after December 31, 1981. (V.T.I.C. Art. 3.51-6A, Secs. 5(a), (c),
(d), (e).)
Sec. 1252.103. INDEMNITY OR BENEFITS PAYABLE FOR
DISABILITY. A discontinuation of health benefit plan coverage
occurring during a period of disability does not affect:
(1) any benefits payable under the plan for loss of
time from work because of the disability; or
(2) any specific indemnity required to be provided
under the plan during a period of hospital confinement. (V.T.I.C.
Art. 3.51-6A, Sec. 5(b).)
Sec. 1252.104. LIABILITY FOR LOSS UNDER AUTOMATICALLY
DISCONTINUED COVERAGE. (a) If a health benefit plan provides for
automatic discontinuation of coverage when a premium or
subscription charge due under the plan is not paid before the
expiration of a grace period specified in the plan for that payment,
the carrier or other entity responsible for making premium payments
or for submitting premiums or subscription charges to the carrier
is liable, on the submission of a valid claim, for a loss that is:
(1) covered by the plan; and
(2) incurred before the expiration of the grace
period.
(b) The commissioner may adopt reasonable rules necessary
to implement this section. (V.T.I.C. Art. 3.51-6A, Sec. 3.)
[Sections 1252.105-1252.200 reserved for expansion]
SUBCHAPTER C. REPLACEMENT OF COVERAGE
Sec. 1252.201. TOTAL DISABILITY STATUS. In this
subchapter, a reference to the total disability status of an
individual means the individual's disability status immediately
preceding the date on which the succeeding carrier's coverage takes
effect. (V.T.I.C. Art. 3.51-6A, Sec. 6(c).)
Sec. 1252.202. EFFECTIVE DATE OF COVERAGE UNDER REPLACEMENT
PLAN. (a) An individual who was covered by a previous carrier's
health benefit plan on the date on which that plan was discontinued
shall be provided coverage under the succeeding carrier's health
benefit plan as of the replacement plan's effective date if the
individual:
(1) is eligible for coverage because the individual is
a member of a class eligible for coverage under the replacement plan
and satisfies the replacement plan's actively at work and
nonconfinement requirements; and
(2) elects to be covered under the replacement plan.
(b) An individual who would be covered by the succeeding
carrier under Subsection (a) but who does not satisfy the
replacement plan's actively at work and nonconfinement
requirements shall be covered under the replacement plan when the
individual satisfies those requirements. (V.T.I.C. Art. 3.51-6A,
Sec. 6(e).)
Sec. 1252.203. EXTENSION OF BENEFITS FOR TOTAL DISABILITY.
(a) With respect to providing a type of coverage for which Section
1252.102 requires an extension of benefits for an individual with a
total disability, a succeeding carrier replacing a previous
carrier's plan that is not subject to that section must provide,
subject to Subsection (b), the lesser of:
(1) extended benefit coverage that the previous
carrier would have been required to provide under Section 1252.102
if the previous carrier had been subject to that section; or
(2) extended benefit coverage that the succeeding
carrier is required to provide under Section 1252.102.
(b) The extended benefit coverage may be reduced by any
benefits actually payable under the previous carrier's health
benefit plan. (V.T.I.C. Art. 3.51-6A, Sec. 6(f).)
Sec. 1252.204. COVERAGE FOR PREEXISTING CONDITIONS. (a) A
succeeding carrier's health benefit plan that limits coverage in
accordance with a preexisting conditions provision, other than a
waiting period, must provide, during the period the limitation on
coverage is in effect, the level of benefits prescribed by this
section to an individual covered by the succeeding carrier who:
(1) has a preexisting condition; and
(2) was covered by the previous carrier's plan on the
date on which that plan was discontinued.
(b) The health benefit plan must provide a level of benefits
equal to the lesser of:
(1) the level of benefits available under the
succeeding carrier's plan as determined without applying the
preexisting conditions provision; or
(2) the level of benefits that would have been
available under the previous carrier's plan. (V.T.I.C. Art.
3.51-6A, Sec. 6(g).)
Sec. 1252.205. WAITING PERIOD. If the benefits that were
available under a previous carrier's health benefit plan are
similar to the benefits available under a succeeding carrier's
health benefit plan, the succeeding carrier shall give credit for
the satisfaction or partial satisfaction of any waiting period or
similar provision that has been satisfied under the previous
carrier's plan. (V.T.I.C. Art. 3.51-6A, Sec. 6(h) (part).)
Sec. 1252.206. DETERMINATION OF BENEFITS AVAILABLE UNDER
REPLACED PLAN. (a) If a succeeding carrier requires a
determination of the benefits available under the previous
carrier's health benefit plan, the previous carrier shall provide
at the request of the succeeding carrier:
(1) a statement of the benefits available under the
previous carrier's plan; or
(2) pertinent information sufficient either to allow
verification of those benefits or to allow the succeeding carrier
to make a determination of those benefits.
(b) A determination of benefits under this section must be
made using the definitions of, and in accordance with all of the
conditions and covered expense provisions of, the previous
carrier's plan as if that plan had not been replaced. (V.T.I.C.
Art. 3.51-6A, Sec. 6(h) (part).)
Sec. 1252.207. LIABILITY OF PREVIOUS CARRIER. A carrier of
a health benefit plan that is being discontinued is liable only for
any accrued liabilities regarding the plan and for any extension of
benefits provided under the plan, regardless of whether the group
policyholder or any other entity responsible for making payments or
for submitting subscription charges to the carrier:
(1) replaces the coverage provided under the
discontinued plan with health benefit plan coverage provided by
another carrier;
(2) self-insures a health benefit plan; or
(3) does not provide health benefit plan coverage.
(V.T.I.C. Art. 3.51-6A, Sec. 6(d).)
CHAPTER 1253. CANCELLATION OF GROUP COVERAGE
IN CERTAIN CIRCUMSTANCES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1253.001. LIMITATION OF SERVICES AND BENEFITS ON
CONTRACT RENEGOTIATION
[Sections 1253.002-1253.050 reserved for expansion]
SUBCHAPTER B. CONTINUATION OF GROUP ACCIDENT AND
HEALTH INSURANCE POLICIES DURING LABOR DISPUTE
Sec. 1253.051. APPLICABILITY OF SUBCHAPTER
Sec. 1253.052. CONTINUATION OF GROUP ACCIDENT AND HEALTH
INSURANCE DURING LABOR DISPUTE REQUIRED
FOR CERTAIN POLICIES
Sec. 1253.053. CONTRIBUTIONS IF POLICYHOLDER IS TRUSTEE
Sec. 1253.054. CONTRIBUTIONS IF POLICYHOLDER IS NOT TRUSTEE
Sec. 1253.055. PAYMENT OF CONTRIBUTION AND PREMIUM
Sec. 1253.056. PAST DUE PREMIUM
Sec. 1253.057. INDIVIDUAL PREMIUM RATE INCREASE
Sec. 1253.058. PREMIUM RATE CHANGE NOT LIMITED
Sec. 1253.059. LIMITATIONS ON CONTINUATION OF COVERAGE
Sec. 1253.060. OTHER PROVISIONS; COMMISSIONER APPROVAL
REQUIRED
CHAPTER 1253. CANCELLATION OF GROUP COVERAGE
IN CERTAIN CIRCUMSTANCES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1253.001. LIMITATION OF SERVICES AND BENEFITS ON
CONTRACT RENEGOTIATION. (a) In this section, "health benefit
contract" means a contract providing group health care coverage for
employees that is delivered, issued for delivery, or renewed in
this state by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842; or
(3) a health maintenance organization operating under
Chapter 843.
(b) Subject to Subsection (c), if an employer in this state
agrees to renegotiate a health benefit contract, a change in the
renegotiated contract may not operate solely to terminate
eligibility with respect to any member of the group who, before the
contract was renegotiated:
(1) was covered under the contract; and
(2) had a sickness or injury for which a service was
being provided or a benefit was being paid under the contract.
(c) A renegotiated health benefit contract may include a
different durational or dollar limit or a different deductible
amount or amount of coinsurance applicable to a sickness or injury
for which a service was being provided or benefit was being paid
before the contract was renegotiated if that same or a similar limit
or amount applies to a service provided or benefit paid for a
similar sickness or a related condition or injury covered by the
contract. (V.T.I.C. Art. 3.51-6C.)
[Sections 1253.002-1253.050 reserved for expansion]
SUBCHAPTER B. CONTINUATION OF GROUP ACCIDENT AND
HEALTH INSURANCE POLICIES DURING LABOR DISPUTE
Sec. 1253.051. APPLICABILITY OF SUBCHAPTER. This
subchapter applies to a group accident and health insurance policy
that is delivered or issued for delivery in this state and as to
which any part of the premium is paid or is to be paid by an employer
under the terms of a collective bargaining agreement. (V.T.I.C.
Art. 3.51-8 (part), as amended Acts 77th Leg., R.S., Ch. 1419.)
Sec. 1253.052. CONTINUATION OF GROUP ACCIDENT AND HEALTH
INSURANCE DURING LABOR DISPUTE REQUIRED FOR CERTAIN POLICIES. An
insurer may not deliver or issue for delivery a policy subject to
this subchapter unless the policy provides that if the employees
covered by the policy stop work because of a labor dispute, coverage
continues under the policy, on timely payment of the premium, for
each employee who:
(1) is covered under the policy on the date the work
stoppage begins;
(2) continues to pay the employee's individual
contribution, subject to the conditions provided by this
subchapter; and
(3) assumes and pays during the work stoppage the
contribution due from the employer, subject to the conditions
provided by this subchapter. (V.T.I.C. Art. 3.51-8 (part), as
amended Acts 77th Leg., R.S., Ch. 1419.)
Sec. 1253.053. CONTRIBUTIONS IF POLICYHOLDER IS TRUSTEE.
(a) An employee's contribution for purposes of a policy as to which
the policyholder is a trustee or the trustees of a fund established
or maintained wholly or partly by the employer is the amount the
employee and employer would have been required to contribute to the
fund for the employee if:
(1) the work stoppage had not occurred; and
(2) the agreement requiring the employer to make
contributions to the fund were in effect.
(b) The policy may provide that continuation of coverage is
contingent on the collection of individual contributions by the
policyholder or the policyholder's agent. (V.T.I.C. Art. 3.51-8,
Subdivs. (b), (c) (part).)
Sec. 1253.054. CONTRIBUTIONS IF POLICYHOLDER IS NOT
TRUSTEE. (a) A policy as to which the policyholder is not a trustee
or the trustees of a fund established or maintained in whole or in
part by the employer must provide that the employee's individual
contribution:
(1) is the policy rate applicable:
(A) on the date the work stoppage begins; and
(B) to an individual in the class to which the
employee belongs as provided by the policy; or
(2) if the policy does not provide for a rate
applicable to an individual, is an amount equal to the amount
determined by dividing:
(A) the total monthly premium in effect under the
policy on the date the work stoppage begins; by
(B) the total number of insureds under the policy
on that date.
(b) The policy may provide that continuation of coverage
under this subchapter is contingent on the collection of individual
contributions by the union or unions representing the employees.
(V.T.I.C. Art. 3.51-8, Subdivs. (a), (c) (part).)
Sec. 1253.055. PAYMENT OF CONTRIBUTION AND PREMIUM. A
policy may provide that continuation of coverage for an employee
under the policy is contingent on timely payment of:
(1) contributions by the employee; and
(2) the premium by the entity responsible for
collecting the individual employee contributions. (V.T.I.C. Art.
3.51-8, Subdiv. (d).)
Sec. 1253.056. PAST DUE PREMIUM. (a) A policy may provide
that the continuation of coverage is contingent on payment of any
premium that:
(1) is unpaid on the date the work stoppage begins; and
(2) became due before the date the work stoppage
begins.
(b) A premium described by Subsection (a) must be paid
before the date the next premium becomes due under the policy.
(V.T.I.C. Art. 3.51-8, Subdiv. (h).)
Sec. 1253.057. INDIVIDUAL PREMIUM RATE INCREASE. (a) A
policy may provide that, during the period of a work stoppage, each
individual premium rate shall be increased by an amount not to
exceed 20 percent of the amount shown in the policy, or a greater
percentage as approved by the commissioner, to provide sufficient
compensation to the insurer to cover increased:
(1) administrative costs; and
(2) mortality and morbidity.
(b) If a policy provides for a premium rate increase in
accordance with this section, the amount of an employee's
contribution must be increased by the same percentage. (V.T.I.C.
Art. 3.51-8, Subdiv. (e).)
Sec. 1253.058. PREMIUM RATE CHANGE NOT LIMITED. (a) This
subchapter does not limit any right of the insurer under a policy to
increase or decrease a premium rate before, during, or after a work
stoppage if the insurer would be entitled to increase the premium
rate had a work stoppage not occurred.
(b) A change in a premium rate made in accordance with this
section takes effect on a date that is determined by the insurer in
accordance with the terms of the policy. (V.T.I.C. Art. 3.51-8,
Subdiv. (f).)
Sec. 1253.059. LIMITATIONS ON CONTINUATION OF COVERAGE.
This subchapter does not require the continuation of coverage under
a policy for any loss of time benefits included in the policy or the
continuation of other coverage for a period:
(1) longer than six months after a work stoppage
occurs;
(2) beyond the time that 75 percent of the covered
employees continue the coverage; or
(3) as to an individual covered employee, beyond the
time that the employee takes a full-time job with another employer.
(V.T.I.C. Art. 3.51-8, Subdiv. (i).)
Sec. 1253.060. OTHER PROVISIONS; COMMISSIONER APPROVAL
REQUIRED. A policy may contain any other provision relating to
continuation of policy coverage during a work stoppage that the
commissioner approves. (V.T.I.C. Art. 3.51-8, Subdiv. (g).)
CHAPTER 1254. NOTICE OF RATE INCREASE FOR GROUP HEALTH AND
ACCIDENT COVERAGE
Sec. 1254.001. NOTICE OF RATE INCREASE
CHAPTER 1254. NOTICE OF RATE INCREASE FOR GROUP HEALTH AND
ACCIDENT COVERAGE
Sec. 1254.001. NOTICE OF RATE INCREASE. (a) In this
section, "insurer" means:
(1) a life insurance company;
(2) a health insurance company;
(3) an accident insurance company;
(4) a general casualty company;
(5) a mutual life insurance company or other mutual
insurance company;
(6) a mutual or natural premium life insurance
company;
(7) a Lloyd's plan;
(8) a reciprocal or interinsurance exchange;
(9) a fraternal benefit society;
(10) a local mutual aid association; or
(11) a group hospital service corporation.
(b) Not later than the 31st day before the date on which a
premium rate increase takes effect on a group policy of health
insurance, accident and health insurance, or life, health, and
accident insurance delivered or issued for delivery in this state
by an insurer, the insurer shall give written notice to the
policyholder of:
(1) the amount of the increase; and
(2) the date on which the increase is to take effect.
(c) A health maintenance organization shall give notice of
an increase in subscriber charges and service fees under a group
contract or coverage in the same manner as is required of an insurer
under Subsection (b).
(d) An insurer that issues a group policy described by
Subsection (b) to a multiple employer trust shall give the notice
required by that subsection to the trustee or group policyholder.
(e) The notice required by this section must be based on
coverage in effect on the date of the notice.
(f) This section may not be construed to prevent an insurer
or health maintenance organization, at the request of a
policyholder or contract holder, from negotiating a change in
benefits or rates after delivery of the notice required by this
section. (V.T.I.C. Art. 3.51-10, as amended Acts 77th Leg., R.S.,
Ch. 1419.)
[Chapters 1255-1270 reserved for expansion]
SUBTITLE C. MANAGED CARE
CHAPTER 1271. BENEFITS PROVIDED BY HEALTH MAINTENANCE
ORGANIZATIONS; EVIDENCE OF COVERAGE; CHARGES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1271.001. APPLICABILITY OF DEFINITIONS
Sec. 1271.002. RIGHT TO EVIDENCE OF COVERAGE; ISSUANCE
Sec. 1271.003. EVIDENCE OF COVERAGE NOT HEALTH INSURANCE
POLICY
Sec. 1271.004. INDIVIDUAL HEALTH CARE PLAN
Sec. 1271.005. APPLICABILITY OF OTHER LAW
Sec. 1271.006. BENEFITS TO DEPENDENT CHILD AND GRANDCHILD
Sec. 1271.007. RELIGIOUS CONVICTIONS
[Sections 1271.008-1271.050 reserved for expansion]
SUBCHAPTER B. CONTENTS OF EVIDENCE OF COVERAGE
Sec. 1271.051. EVIDENCE OF COVERAGE: CONTRACT AND
CERTIFICATE REQUIREMENTS
Sec. 1271.052. INFORMATION ABOUT BENEFITS AND
LIMITATIONS
Sec. 1271.053. INFORMATION ABOUT OBTAINING SERVICES
Sec. 1271.054. INFORMATION ABOUT COMPLAINTS AND APPEALS
Sec. 1271.055. OUT-OF-NETWORK SERVICES
Sec. 1271.056. UNFAIR OR DECEPTIVE PROVISIONS
AND STATEMENTS PROHIBITED
[Sections 1271.057-1271.100 reserved for expansion]
SUBCHAPTER C. COMMISSIONER APPROVAL
Sec. 1271.101. APPROVAL OF FORM OF EVIDENCE OF COVERAGE
OR GROUP CONTRACT
Sec. 1271.102. PROCEDURES FOR APPROVAL OF FORM OF EVIDENCE
OF COVERAGE OR GROUP CONTRACT; WITHDRAWAL
OF APPROVAL
Sec. 1271.103. WITHDRAWAL OF APPROVAL OF FORM
Sec. 1271.104. INFORMATION REQUIRED BY COMMISSIONER
[Sections 1271.105-1271.150 reserved for expansion]
SUBCHAPTER D. CERTAIN BENEFITS REQUIRED
Sec. 1271.151. PROVISION OF BASIC HEALTH CARE SERVICES
Sec. 1271.152. STANDARDS FOR BASIC HEALTH CARE
SERVICES
Sec. 1271.153. PERIODIC HEALTH EVALUATIONS
Sec. 1271.154. WELL-CHILD CARE FROM BIRTH
Sec. 1271.155. EMERGENCY CARE
Sec. 1271.156. BENEFITS FOR REHABILITATION SERVICES AND
THERAPIES
[Sections 1271.157-1271.200 reserved for expansion]
SUBCHAPTER E. CHOICE OF PRIMARY CARE PHYSICIAN
FOR CERTAIN ENROLLEES
Sec. 1271.201. DESIGNATION OF SPECIALIST AS PRIMARY
CARE PHYSICIAN
Sec. 1271.202. APPEAL
Sec. 1271.203. EFFECTIVE DATE OF DESIGNATION
[Sections 1271.204-1271.250 reserved for expansion]
SUBCHAPTER F. SCHEDULE OF CHARGES
Sec. 1271.251. APPROVAL OF FORMULA OR METHOD FOR
COMPUTING SCHEDULE OF CHARGES
Sec. 1271.252. CONSIDERATION OF INDIVIDUAL HEALTH
STATUS PROHIBITED
Sec. 1271.253. INFORMATION REQUIRED BY COMMISSIONER
[Sections 1271.254-1271.300 reserved for expansion]
SUBCHAPTER G. CONTINUATION OF COVERAGE, CONVERSION
CONTRACTS, AND RENEWAL
Sec. 1271.301. ENTITLEMENT TO CONTINUATION OF GROUP
COVERAGE
Sec. 1271.302. REQUEST FOR CONTINUED COVERAGE; DEADLINE
Sec. 1271.303. PAYMENT FOR CONTINUED COVERAGE
Sec. 1271.304. TERMINATION OF CONTINUED COVERAGE
Sec. 1271.305. NOTIFICATION OF RISK POOL ELIGIBILITY
Sec. 1271.306. CONVERSION CONTRACTS
Sec. 1271.307. RENEWABILITY OF COVERAGE: INDIVIDUAL
HEALTH CARE PLANS AND CONVERSION
CONTRACTS
CHAPTER 1271. BENEFITS PROVIDED BY HEALTH MAINTENANCE
ORGANIZATIONS; EVIDENCE OF COVERAGE; CHARGES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1271.001. APPLICABILITY OF DEFINITIONS. In this
chapter, terms defined by Section 843.002 have the meanings
assigned by that section. (V.T.I.C. Art. 20A.01B, as added Acts
77th Leg., R.S., Ch. 1419.)
Sec. 1271.002. RIGHT TO EVIDENCE OF COVERAGE; ISSUANCE.
(a) Each enrollee residing in this state is entitled to evidence of
coverage under a health care plan.
(b) The health maintenance organization shall issue the
evidence of coverage, except as provided by Subsection (c).
(c) If the enrollee obtains coverage under a health care
plan through an insurance policy or a contract issued by a group
hospital service corporation, whether by option or otherwise, the
insurer or the group hospital service corporation shall issue the
evidence of coverage. (V.T.I.C. Art. 20A.09, Secs. (a), as amended
Acts 75th Leg., R.S., Ch. 905; (a)(1), as amended Acts 75th Leg.,
R.S., Ch. 1026.)
Sec. 1271.003. EVIDENCE OF COVERAGE NOT HEALTH INSURANCE
POLICY. An evidence of coverage is not a health insurance policy as
that term is defined by this code. (V.T.I.C. Art. 20A.09, Secs.
(o), as amended Acts 75th Leg., R.S., Ch. 905; (g), as amended Acts
75th Leg., R.S., Ch. 1026.)
Sec. 1271.004. INDIVIDUAL HEALTH CARE PLAN. (a) In this
section, "individual health care plan" means a health care plan:
(1) that provides health care services for individuals
and their dependents;
(2) under which an enrollee:
(A) pays the premium; and
(B) is not covered under the contract in
accordance with a continuation of services or continuation of
benefits requirement applicable under federal or state law; and
(3) in which the evidence of coverage meets the
requirements of the definition of "basic health care services"
provided by Section 843.002.
(b) A health maintenance organization may provide an
individual health care plan in accordance with this section and
Section 1271.307.
(c) A health maintenance organization may limit enrollment
in an individual health care plan to individuals who reside or work
within the service area for the plan's network.
(d) The commissioner may adopt rules necessary to implement
this section and to meet the minimum requirements of federal law,
including regulations. (V.T.I.C. Art. 20A.09, Sec. (l) (part), as
added Acts 75th Leg., R.S., Ch. 837.)
Sec. 1271.005. APPLICABILITY OF OTHER LAW. (a) Chapters
1368 and 1652 apply to a health maintenance organization other than
a health maintenance organization that offers only a single health
care service plan.
(b) Subchapter B, Chapter 1355, applies to a health
maintenance organization providing benefits for mental health
treatment in a residential treatment center for children and
adolescents or crisis stabilization unit to the extent that:
(1) Subchapter B, Chapter 1355, does not conflict with
this chapter, Chapter 843, or Subchapter A, Chapter 1452; and
(2) the residential treatment center for children and
adolescents or crisis stabilization unit is located within the
service area of the health maintenance organization and is subject
to inspection and review as required by this chapter, Chapter 843,
or Subchapter A, Chapter 1452, or rules adopted under this chapter,
Chapter 843, or Subchapter A, Chapter 1452.
(c) A health maintenance organization shall comply with
Subchapter B, Chapter 542, with respect to prompt payment to an
enrollee.
(d) Notwithstanding any other law, Subchapter C, Chapter
1355, applies to a group contract issued by a health maintenance
organization.
(e) Notwithstanding any other law, Section 1201.062 applies
to an evidence of coverage issued by a health maintenance
organization. (V.T.I.C. Art. 3.70-1, Sec. (F)(5) (part); Art.
3.70-2, Secs. (F) (part), (L) (part), as amended Acts 77th Leg.,
R.S., Chs. 396 and 1027; Art. 20A.09, Secs. (n), (p), (q), as
amended Acts 75th Leg., R.S., Ch. 905; (e), (f), (h), (i), as
amended Acts 75th Leg., R.S., Ch. 1026; Art. 20A.09Z.)
Sec. 1271.006. BENEFITS TO DEPENDENT CHILD AND GRANDCHILD.
(a) If children are eligible for coverage under the terms of an
evidence of coverage, any limiting age applicable to an unmarried
child of an enrollee, including an unmarried grandchild of an
enrollee, is 25 years of age. The limiting age applicable to a
child must be stated in the evidence of coverage.
(b) A health maintenance organization may provide benefits
under a health care plan to an enrollee's dependent grandchild who
is living with and in the household of the enrollee. (V.T.I.C. Art.
20A.09H, Sec. (a), as redesignated and amended Acts 77th Leg.,
R.S., Ch. 396; Art. 20A.09H, as redesignated and amended Acts 77th
Leg., R.S., Ch. 1027.)
Sec. 1271.007. RELIGIOUS CONVICTIONS. (a) This chapter,
Chapters 843, 1272, and 1367, and Subchapter A, Chapter 1452, do not
require a health maintenance organization, physician, or provider
to recommend, offer advice concerning, pay for, provide, assist in,
perform, arrange, or participate in providing or performing any
health care service that violates the religious convictions of the
health maintenance organization, physician, or provider.
(b) A health maintenance organization that limits or denies
health care services under this section shall state the limitations
in the evidence of coverage as required by Section 1271.052.
(V.T.I.C. Art. 20A.09, Sec. (m), as added Acts 75th Leg., R.S., Ch.
1026.)
[Sections 1271.008-1271.050 reserved for expansion]
SUBCHAPTER B. CONTENTS OF EVIDENCE OF COVERAGE
Sec. 1271.051. EVIDENCE OF COVERAGE: CONTRACT AND
CERTIFICATE REQUIREMENTS. (a) An evidence of coverage that is a
contract must contain a clear and complete statement of the
information required by Sections 1271.052, 1271.053, and 1271.054.
(b) An evidence of coverage that is a certificate must
contain a reasonably complete facsimile of the information required
by Sections 1271.052, 1271.053, and 1271.054. (V.T.I.C. Art.
20A.09, Secs. (e) (part), as amended Acts 75th Leg., R.S., Ch. 905;
(a)(3) (part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.052. INFORMATION ABOUT BENEFITS AND LIMITATIONS.
An evidence of coverage must state:
(1) the health care services, limited health care
services, or single health care service to which the enrollee is
entitled under the health care plan, limited health care service
plan, or single health care service plan;
(2) the issuance of other benefits, if any, to which
the enrollee is entitled under the health care plan, limited health
care service plan, or single health care service plan; and
(3) any limitation on the services, kinds of services,
benefits, or kinds of benefits to be provided, including any
deductible or copayment feature. (V.T.I.C. Art. 20A.09, Secs. (e)
(part), as amended Acts 75th Leg., R.S., Ch. 905; (a)(3) (part), as
amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.053. INFORMATION ABOUT OBTAINING SERVICES. An
evidence of coverage must indicate where and in what manner
information is available about how to obtain services. (V.T.I.C.
Art. 20A.09, Secs. (e) (part), as amended Acts 75th Leg., R.S., Ch.
905; (a)(3) (part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.054. INFORMATION ABOUT COMPLAINTS AND APPEALS.
(a) An evidence of coverage must contain a clear and understandable
description of the health maintenance organization's methods for
resolving enrollee complaints, including:
(1) the enrollee's right to appeal denial of an adverse
determination to an independent review organization; and
(2) the procedures for appealing to an independent
review organization.
(b) A health maintenance organization may indicate a
subsequent change to the methods for resolving enrollee complaints
in a separate document issued to the enrollee. (V.T.I.C. Art.
20A.09, Secs. (e) (part), as amended Acts 75th Leg., R.S., Ch. 905;
(a)(3) (part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.055. OUT-OF-NETWORK SERVICES. (a) An evidence
of coverage must contain a provision regarding non-network
physicians and providers in accordance with the requirements of
this section.
(b) If medically necessary covered services are not
available through network physicians or providers, the health
maintenance organization, on the request of a network physician or
provider and within a reasonable period, shall:
(1) allow referral to a non-network physician or
provider; and
(2) fully reimburse the non-network physician or
provider at the usual and customary rate or at an agreed rate.
(c) Before denying a request for a referral to a non-network
physician or provider, a health maintenance organization must
provide for a review conducted by a specialist of the same or
similar type of specialty as the physician or provider to whom the
referral is requested. (V.T.I.C. Art. 20A.09, Secs. (d), (f), as
amended Acts 75th Leg., R.S., Ch. 905; (a)(3) (part), as amended
Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.056. UNFAIR OR DECEPTIVE PROVISIONS AND
STATEMENTS PROHIBITED. An evidence of coverage may not contain a
provision or statement that:
(1) is unjust, unfair, inequitable, misleading, or
deceptive;
(2) encourages misrepresentation; or
(3) is untrue, misleading, or deceptive within the
meaning of Section 843.204. (V.T.I.C. Art. 20A.09, Secs. (c), as
amended Acts 75th Leg., R.S., Ch. 905; (a)(3) (part), as amended
Acts 75th Leg., R.S., Ch. 1026.)
[Sections 1271.057-1271.100 reserved for expansion]
SUBCHAPTER C. COMMISSIONER APPROVAL
Sec. 1271.101. APPROVAL OF FORM OF EVIDENCE OF COVERAGE OR
GROUP CONTRACT. (a) An evidence of coverage or an amendment of an
evidence of coverage may not be issued or delivered to a person in
this state until the form of the evidence of coverage or amendment
has been filed with and approved by the commissioner.
(b) Except as provided by Subsection (c), the form of an
evidence of coverage or group contract to be used in this state or
an amendment to one of those forms is subject to the filing and
approval requirements of Section 1271.102.
(c) If the form of an evidence of coverage or group contract
or of an amendment to one of those forms is subject to the
jurisdiction of the commissioner under laws governing health
insurance or group hospital service corporations, the filing and
approval provisions of those laws apply to that form. However,
Subchapters B and E apply to that form to the extent that laws
governing health insurance or group hospital service corporations
do not apply to the requirements of Subchapters B and E. (V.T.I.C.
Art. 20A.09, Secs. (b), (j), as amended Acts 75th Leg., R.S., Ch.
905; (a)(2), (5), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.102. PROCEDURES FOR APPROVAL OF FORM OF EVIDENCE
OF COVERAGE OR GROUP CONTRACT; WITHDRAWAL OF APPROVAL. (a) The
commissioner shall, within a reasonable period, approve the form of
an evidence of coverage or group contract or an amendment to one of
those forms if the form meets the requirements of this chapter.
(b) If the commissioner does not disapprove a form before
the 31st day after the date the form is filed, the form is
considered approved. The commissioner may, by written notice,
extend the period for approval or disapproval as necessary for
proper consideration of the filing for not more than an additional
30 days.
(c) If the commissioner disapproves a form, the
commissioner shall notify the person who filed the form of the
reason for the disapproval.
(d) A hearing on the disapproval of a form shall be granted
not later than the 30th day after the date the person filing the
form makes a written request for a hearing. (V.T.I.C. Art. 20A.09,
Secs. (l) (part), as amended Acts 75th Leg., R.S., Ch. 905; (c)
(part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.103. WITHDRAWAL OF APPROVAL OF FORM. (a) After
notice and opportunity for hearing, the commissioner may withdraw
approval of the form of an evidence of coverage or group contract or
an amendment to one of those forms if the commissioner determines
that the form violates this chapter, Chapter 843, 1272, or 1367, or
Subchapter A, Chapter 1452, or a rule adopted by the commissioner.
(b) If the commissioner withdraws approval of a form under
this section, the form may not be issued until it is approved.
(V.T.I.C. Art. 20A.09, Secs. (l) (part), as amended Acts 75th Leg.,
R.S., Ch. 905; (c) (part), as amended Acts 75th Leg., R.S., Ch.
1026.)
Sec. 1271.104. INFORMATION REQUIRED BY COMMISSIONER. The
commissioner may require the submission of any relevant information
the commissioner considers necessary in determining whether to
approve or disapprove a filing under this subchapter. (V.T.I.C.
Art. 20A.09, Secs. (m), as amended Acts 75th Leg., R.S., Ch. 905;
(d), as amended Acts 75th Leg., R.S., Ch. 1026.)
[Sections 1271.105-1271.150 reserved for expansion]
SUBCHAPTER D. CERTAIN BENEFITS REQUIRED
Sec. 1271.151. PROVISION OF BASIC HEALTH CARE SERVICES. A
health maintenance organization that offers a basic health care
plan shall provide or arrange for basic health care services to its
enrollees as needed and without limitation as to time and cost other
than any limitation prescribed by rule of the commissioner.
(V.T.I.C. Art. 20A.09, Sec. (l), as added Acts 75th Leg., R.S., Ch.
1026.)
Sec. 1271.152. STANDARDS FOR BASIC HEALTH CARE SERVICES.
The commissioner may adopt minimum standards relating to basic
health care services. (V.T.I.C. Art. 20A.09, Sec. (n), as added
Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.153. PERIODIC HEALTH EVALUATIONS. (a) The basic
health care services provided under an evidence of coverage must
include periodic health evaluations for each adult enrollee.
(b) The services provided under this section must include a
health risk assessment at least once every three years and, for a
female enrollee, an annual well-woman examination provided in
accordance with Subchapter F, Chapter 1451.
(c) This section does not apply to an evidence of coverage
for a limited health care service plan or a single health care
service plan. (V.T.I.C. Art. 20A.09B.)
Sec. 1271.154. WELL-CHILD CARE FROM BIRTH. (a) In this
section, "well-child care from birth" has the meaning used under
Section 1302, Public Health Service Act (42 U.S.C. Section 300e-1),
and its subsequent amendments. The term includes newborn screening
required by the Texas Department of Health.
(b) A health maintenance organization shall ensure that
each health care plan provided by the health maintenance
organization includes well-child care from birth that complies
with:
(1) federal requirements adopted under Chapter XI,
Public Health Service Act (42 U.S.C. Section 300e et seq.), and its
subsequent amendments; and
(2) the rules adopted by the Texas Department of
Health to implement those requirements. (V.T.I.C. Art. 20A.09E.)
Sec. 1271.155. EMERGENCY CARE. (a) A health maintenance
organization shall pay for emergency care performed by non-network
physicians or providers at the usual and customary rate or at an
agreed rate.
(b) A health care plan of a health maintenance organization
must provide the following coverage of emergency care:
(1) a medical screening examination or other
evaluation required by state or federal law necessary to determine
whether an emergency medical condition exists shall be provided to
covered enrollees in a hospital emergency facility or comparable
facility;
(2) necessary emergency care shall be provided to
covered enrollees, including the treatment and stabilization of an
emergency medical condition; and
(3) services originated in a hospital emergency
facility or comparable facility following treatment or
stabilization of an emergency medical condition shall be provided
to covered enrollees as approved by the health maintenance
organization, subject to Subsections (c) and (d).
(c) A health maintenance organization shall approve or deny
coverage of poststabilization care as requested by a treating
physician or provider within the time appropriate to the
circumstances relating to the delivery of the services and the
condition of the patient, but not to exceed one hour from the time
of the request.
(d) A health maintenance organization shall respond to
inquiries from a treating physician or provider in compliance with
this provision in the health care plan of the health maintenance
organization.
(e) A health care plan of a health maintenance organization
shall comply with this section regardless of whether the physician
or provider furnishing the emergency care has a contractual or
other arrangement with the health maintenance organization to
provide items or services to covered enrollees. (V.T.I.C. Art.
20A.09Y, as added Acts 77th Leg., R.S., Ch. 1419.)
Sec. 1271.156. BENEFITS FOR REHABILITATION SERVICES AND
THERAPIES. (a) If benefits are provided for rehabilitation
services and therapies under an evidence of coverage, the provision
of a rehabilitation service or therapy that, in the opinion of a
physician, is medically necessary may not be denied, limited, or
terminated if the service or therapy meets or exceeds treatment
goals for the enrollee.
(b) For an enrollee with a physical disability, treatment
goals may include maintenance of functioning or prevention of or
slowing of further deterioration. (V.T.I.C. Art. 20A.09, Sec.
(a)(4), as amended Acts 75th Leg., R.S., Ch. 1026.)
[Sections 1271.157-1271.200 reserved for expansion]
SUBCHAPTER E. CHOICE OF PRIMARY CARE PHYSICIAN
FOR CERTAIN ENROLLEES
Sec. 1271.201. DESIGNATION OF SPECIALIST AS PRIMARY CARE
PHYSICIAN. (a) An evidence of coverage must provide that an
enrollee with a chronic, disabling, or life-threatening illness may
apply to the health maintenance organization's medical director to
use a nonprimary care physician specialist as the enrollee's
primary care physician.
(b) The application must:
(1) include information specified by the health
maintenance organization, including certification of the medical
need; and
(2) be signed by the enrollee and the nonprimary care
physician specialist interested in serving as the enrollee's
primary care physician.
(c) To be eligible to serve as the enrollee's primary care
physician, a physician specialist must:
(1) meet the health maintenance organization's
requirements for primary care physician participation; and
(2) agree to accept the responsibility to coordinate
all of the enrollee's health care needs. (V.T.I.C. Art. 20A.09,
Secs. (d), (g), as amended Acts 75th Leg., R.S., Ch. 905; (a)(3)
(part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.202. APPEAL. If a health maintenance
organization denies a request under Section 1271.201, the enrollee
may appeal the decision through the health maintenance
organization's established complaint and appeals process.
(V.T.I.C. Art. 20A.09, Secs. (h), as amended Acts 75th Leg., R.S.,
Ch. 905; (a)(3) (part), as amended Acts 75th Leg., R.S., Ch. 1026.)
Sec. 1271.203. EFFECTIVE DATE OF DESIGNATION. (a) The
effective date of the designation of a nonprimary care physician
specialist as an enrollee's primary care physician under Section
1271.201 may not be applied retroactively.
(b) A health maintenance organization may not reduce the
amount of compensation owed to the original primary care physician
for services provided before the date of the new designation.
(V.T.I.C. Art. 20A.09, Secs. (i), as amended Acts 75th Leg., R.S.,
Ch. 905; (a)(3) (part), as amended Acts 75th Leg., R.S., Ch. 1026.)
[Sections 1271.204-1271.250 reserved for expansion]
SUBCHAPTER F. SCHEDULE OF CHARGES
Sec. 1271.251. APPROVAL OF FORMULA OR METHOD FOR COMPUTING
SCHEDULE OF CHARGES. (a) The formula or method for computing the
schedule of charges for enrollee coverage for health care services
must be filed with the commissioner before the formula or method is
used in conjunction with a health care plan.
(b) The formula or method must be established in accordance
with actuarial principles for the various categories of enrollees.
The filing of the method or formula must contain:
(1) a statement by a qualified actuary that certifies
that the formula or method is appropriate; and
(2) supporting information that the commissioner
considers adequate.
(c) The formula or method must produce charges that are not
excessive, inadequate, or unfairly discriminatory. Benefits must
be reasonable with respect to the rates produced by the formula or
method. (V.T.I.C. Art. 20A.09, Secs. (k) (part), as amended Acts
75th Leg., R.S., Ch. 905; (b) (part), as amended Acts 75th Leg.,
R.S., Ch. 1026.)
Sec. 1271.252. CONSIDERATION OF INDIVIDUAL HEALTH STATUS
PROHIBITED. The charges resulting from the application of a
formula or method described by Section 1271.251 may not be altered
for an individual enrollee based on the status of that enrollee's
health. (V.T.I.C. Art. 20A.09, Secs. (k) (part), as amended Acts
75th Leg., R.S., Ch. 905; (b) (part), as amended Acts 75th Leg.,
R.S., Ch. 1026.)
Sec. 1271.253. INFORMATION REQUIRED BY COMMISSIONER. The
commissioner may require the submission of any relevant information
the commissioner considers necessary in determining whether to
approve or disapprove a filing under this subchapter. (V.T.I.C.
Art. 20A.09, Secs. (m), as amended Acts 75th Leg., R.S., Ch. 905;
(d), as amended Acts 75th Leg., R.S., Ch. 1026.)
[Sections 1271.254-1271.300 reserved for expansion]
SUBCHAPTER G. CONTINUATION OF COVERAGE, CONVERSION
CONTRACTS, AND RENEWAL
Sec. 1271.301. ENTITLEMENT TO CONTINUATION OF GROUP
COVERAGE. (a) In this section, "involuntary termination for cause"
does not include termination for any health-related reason.
(b) A health maintenance organization shall provide a group
coverage continuation privilege as required by and subject to the
eligibility provisions of this subchapter.
(c) An enrollee is entitled to continue group coverage as
provided by this subchapter if:
(1) the enrollee's coverage under a group contract is
terminated for any reason except involuntary termination for cause;
and
(2) the enrollee for at least three consecutive months
immediately before the termination of coverage has been
continuously covered under the group contract and under any
previous group contract providing similar services and benefits
that the current group contract replaced. (V.T.I.C. Art. 20A.09,
Sec. (k)(A) (part), as added Acts 75th Leg., R.S., Ch. 837.)
Sec. 1271.302. REQUEST FOR CONTINUED COVERAGE; DEADLINE.
An enrollee must make a written election to continue group coverage
under this subchapter and pay the first contribution required to
establish contributions on an advance monthly basis to the employer
or group contract holder not later than the 31st day after the later
of:
(1) the date the group coverage would otherwise
terminate; or
(2) the date the enrollee is given notice of the right
of continuation by the employer or group contract holder.
(V.T.I.C. Art. 20A.09, Secs. (k)(A)(1), (3), as added Acts 75th
Leg., R.S., Ch. 837.)
Sec. 1271.303. PAYMENT FOR CONTINUED COVERAGE. (a) An
enrollee electing continuation of group coverage must pay to the
employer or group contract holder the amount of contribution
required by the employer or group contract holder, plus an amount
equal to two percent of the group rate for the coverage being
continued under the group contract.
(b) The enrollee must make the payment in advance on a
monthly basis on the due date of each payment. (V.T.I.C. Art.
20A.09, Sec. (k)(A)(2), as added Acts 75th Leg., R.S., Ch. 837.)
Sec. 1271.304. TERMINATION OF CONTINUED COVERAGE. Group
continued coverage under this subchapter may not terminate until
the earliest of:
(1) the end of the six-month period after the date the
election to continue coverage is made;
(2) the date on which failure to make timely payments
terminates coverage;
(3) the date on which the enrollee is covered for
similar services and benefits by any other plan or program,
including a hospital, surgical, medical, or major medical expense
insurance policy, hospital or medical service subscriber contract,
or medical practice or other prepayment plan; or
(4) the date on which the group coverage terminates in
its entirety. (V.T.I.C. Art. 20A.09, Sec. (k)(A)(4), as added Acts
75th Leg., R.S., Ch. 837.)
Sec. 1271.305. NOTIFICATION OF RISK POOL ELIGIBILITY. (a)
At least 30 days before the end of the six-month period after the
date an enrollee elects to continue group coverage, the health
maintenance organization shall notify the enrollee that the
enrollee may be eligible for coverage under the Texas Health
Insurance Risk Pool as provided by Chapter 1506.
(b) The health maintenance organization shall provide to
the enrollee the address for applying to the pool for coverage.
(V.T.I.C. Art. 20A.09, Sec. (k)(A)(5), as added Acts 75th Leg.,
R.S., Ch. 837.)
Sec. 1271.306. CONVERSION CONTRACTS. (a) A health
maintenance organization may offer to each enrollee a conversion
contract.
(b) A health maintenance organization shall issue the
conversion contract without evidence of insurability if written
application for the contract and payment of the first premium are
made not later than the 31st day after the date of termination of
coverage.
(c) A conversion contract must meet the minimum standards
for services and benefits for conversion contracts. The
commissioner shall adopt rules to prescribe the minimum standards
for services and benefits applicable to conversion contracts.
(d) The premium for a conversion contract shall be
determined in accordance with the health maintenance
organization's premium rates for coverage provided under the group
contract or plan. The premium may be based on the geographic
location of each person to be covered and must be based on the type
of conversion contract and the coverage provided by the contract.
The premium may not exceed 200 percent of the premium rates for the
same coverage provided under a group contract or plan. (V.T.I.C.
Art. 20A.09, Secs. (k)(B), (C), as added Acts 75th Leg., R.S., Ch.
837.)
Sec. 1271.307. RENEWABILITY OF COVERAGE: INDIVIDUAL HEALTH
CARE PLANS AND CONVERSION CONTRACTS. (a) In this section,
"individual health care plan" has the meaning assigned by Section
1271.004.
(b) An individual health care plan or a conversion contract
that provides health care services to an enrollee is renewable at
the option of the enrollee. A health maintenance organization may
decline to renew an individual health care plan or conversion
contract only:
(1) for failure to pay premiums or contributions in
accordance with the terms of the plan or because the issuer of the
plan has not received timely premium payments;
(2) for fraud or intentional misrepresentation;
(3) because the health maintenance organization
ceases to offer coverage in the individual market in accordance
with rules established by the commissioner;
(4) because the enrollee no longer resides or works in
the area in which the health maintenance organization is authorized
to provide coverage, if coverage under the plan is terminated
uniformly for this reason without regard to any factor related to
the health status of a covered enrollee; or
(5) in accordance with applicable federal law,
including regulations.
(c) The commissioner may adopt rules necessary to implement
this section and to meet the minimum requirements of federal law,
including regulations. (V.T.I.C. Art. 20A.09, Sec. (l) (part), as
added Acts 75th Leg., R.S., Ch. 837.)
CHAPTER 1272. DELEGATION OF CERTAIN FUNCTIONS BY
HEALTH MAINTENANCE ORGANIZATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1272.001. DEFINITIONS
Sec. 1272.002. COMPLIANCE OF LIMITED PROVIDER NETWORK
OR DELEGATED ENTITY WITH CERTAIN
LEGAL REQUIREMENTS
[Sections 1272.003-1272.050 reserved for expansion]
SUBCHAPTER B. DELEGATION AGREEMENTS
Sec. 1272.051. APPLICABILITY OF SUBCHAPTER
Sec. 1272.052. DELEGATION AGREEMENT REQUIRED
Sec. 1272.053. MONITORING PLAN
Sec. 1272.054. REQUIREMENTS FOR TERMINATION
WITHOUT CAUSE
Sec. 1272.055. COLLECTION OF PAYMENTS
Sec. 1272.056. COMPLIANCE WITH STATUTORY AND
REGULATORY REQUIREMENTS
Sec. 1272.057. EXAMINATION BY COMMISSIONER
Sec. 1272.058. INFORMATION RELATING TO DELEGATED
THIRD PARTY
Sec. 1272.059. CONTRACTS WITH DELEGATED THIRD PARTY
Sec. 1272.060. UTILIZATION REVIEW
Sec. 1272.061. RIGHTS AND DUTIES OF DELEGATED ENTITY
AND HEALTH MAINTENANCE ORGANIZATION
Sec. 1272.062. INFORMATION TO BE PROVIDED BY DELEGATED
ENTITY TO HEALTH MAINTENANCE ORGANIZATION
Sec. 1272.063. ENROLLEE COMPLAINTS
Sec. 1272.064. RULES
[Sections 1272.065-1272.100 reserved for expansion]
SUBCHAPTER C. INFORMATION REPORTING TO DELEGATED ENTITY
Sec. 1272.101. APPLICABILITY OF SUBCHAPTER
Sec. 1272.102. REPORTING REQUIRED
Sec. 1272.103. RULES
[Sections 1272.104-1272.150 reserved for expansion]
SUBCHAPTER D. RESERVE REQUIREMENTS
Sec. 1272.151. APPLICABILITY OF SUBCHAPTER
Sec. 1272.152. GENERAL RESERVE REQUIREMENTS
Sec. 1272.153. RESERVE REQUIREMENTS FOR MEDICAL CARE
AND HOSPITAL OR INSTITUTIONAL SERVICES
Sec. 1272.154. RESERVE REQUIREMENTS FOR PRESCRIPTION DRUGS
Sec. 1272.155. FORM OF RESERVES
Sec. 1272.156. ESCROW ACCOUNT
[Sections 1272.157-1272.200 reserved for expansion]
SUBCHAPTER E. COMPLIANCE
Sec. 1272.201. APPLICABILITY OF SUBCHAPTER
Sec. 1272.202. NOTICE OF NONCOMPLIANCE OR HAZARDOUS
OPERATING CONDITION
Sec. 1272.203. RESPONSE TO NOTICE
Sec. 1272.204. COOPERATION OF HEALTH MAINTENANCE
ORGANIZATION
Sec. 1272.205. EXAMINATION BY DEPARTMENT; REPORT
Sec. 1272.206. RESPONSE TO DEPARTMENT REPORT; CORRECTIVE
PLAN
Sec. 1272.207. REQUEST FOR CORRECTIVE ACTION
Sec. 1272.208. AUTHORITY OF COMMISSIONER TO ISSUE ORDER
Sec. 1272.209. PUBLIC DOCUMENTS
Sec. 1272.210. RECORD OF COMPLAINTS; REPORT
Sec. 1272.211. RULES
[Sections 1272.212-1272.250 reserved for expansion]
SUBCHAPTER F. PENALTIES
Sec. 1272.251. APPLICABILITY OF SUBCHAPTER
Sec. 1272.252. SUSPENSION OR REVOCATION OF LICENSE OF
THIRD-PARTY ADMINISTRATOR OR
UTILIZATION REVIEW AGENT
Sec. 1272.253. SANCTIONS AND PENALTIES AGAINST HEALTH
MAINTENANCE ORGANIZATION
Sec. 1272.254. CONTRACTUAL PENALTIES REQUIRED
Sec. 1272.255. RULES
[Sections 1272.256-1272.300 reserved for expansion]
SUBCHAPTER G. PROVISION OF SERVICES BY LIMITED PROVIDER NETWORK
OR DELEGATED ENTITY
Sec. 1272.301. ACCESS TO OUT-OF-NETWORK SERVICES
Sec. 1272.302. CONTINUITY OF CARE
CHAPTER 1272. DELEGATION OF CERTAIN FUNCTIONS BY
HEALTH MAINTENANCE ORGANIZATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1272.001. DEFINITIONS. (a) In this chapter:
(1) "Delegated entity" means an entity, other than a
health maintenance organization authorized to engage in business
under Chapter 843, that by itself, or through subcontracts with one
or more entities, undertakes to arrange for or provide medical care
or health care to an enrollee in exchange for a predetermined
payment on a prospective basis and that accepts responsibility for
performing on behalf of the health maintenance organization a
function regulated by this chapter, Chapter 843, 1271, or 1367, or
Subchapter A, Chapter 1452. The term does not include:
(A) an individual physician; or
(B) a group of employed physicians, practicing
medicine under one federal tax identification number, whose total
claims paid to providers not employed by the group constitute less
than 20 percent of the group's total collected revenue computed on a
calendar year basis.
(2) "Delegated network" means a delegated entity that
assumes total financial risk for more than one of the following
categories of health care services: medical care, hospital or other
institutional services, or prescription drugs, as defined by
Section 551.003, Occupations Code. The term does not include a
delegated entity that shares risk for a category of services with a
health maintenance organization.
(3) "Delegated third party" means a third party other
than a delegated entity that contracts with a delegated entity,
either directly or through another third party, to:
(A) accept responsibility for performing a
function regulated by this chapter, Chapter 843, 1271, or 1367, or
Subchapter A, Chapter 1452; or
(B) receive, handle, or administer funds, if the
receipt, handling, or administration is directly or indirectly
related to a function regulated by this chapter, Chapter 843, 1271,
or 1367, or Subchapter A, Chapter 1452.
(4) "Delegation agreement" means an agreement by which
a health maintenance organization assigns the responsibility for a
function regulated by this chapter, Chapter 843, 1271, or 1367, or
Subchapter A, Chapter 1452.
(5) "Limited provider network" means a subnetwork
within a health maintenance organization delivery network in which
contractual relationships exist between physicians, certain
providers, independent physician associations, or physician groups
that limits an enrollee's access to physicians and providers to
those physicians and providers in the subnetwork.
(b) In this chapter, terms defined by Section 843.002 have
the meanings assigned by that section. (V.T.I.C. Art. 20A.02,
Secs. (dd), (ee), (ff), (gg), (hh); New.)
Sec. 1272.002. COMPLIANCE OF LIMITED PROVIDER NETWORK OR
DELEGATED ENTITY WITH CERTAIN LEGAL REQUIREMENTS. A limited
provider network or delegated entity shall comply with each
statutory or regulatory requirement that relates to a function
assumed by or carried out by the network or entity under this
chapter. (V.T.I.C. Art. 20A.18G.)
[Sections 1272.003-1272.050 reserved for expansion]
SUBCHAPTER B. DELEGATION AGREEMENTS
Sec. 1272.051. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a group model health maintenance
organization, as defined by Section 843.111. (V.T.I.C. Art.
20A.18C, Sec. (q).)
Sec. 1272.052. DELEGATION AGREEMENT REQUIRED. (a) A
health maintenance organization that delegates a function required
by this chapter, Chapter 843, 1271, or 1367, or Subchapter A,
Chapter 1452, shall execute a written delegation agreement with the
entity to which the function is delegated.
(b) The health maintenance organization shall file the
delegation agreement with the department not later than the 30th
day after the date the agreement is executed.
(c) The parties to the delegation agreement shall determine
which party bears the expense of complying with a requirement of
this subchapter, including the cost of an examination required by
the department under Article 1.15, if applicable. (V.T.I.C. Art.
20A.18C, Sec. (a) (part).)
Sec. 1272.053. MONITORING PLAN. A delegation agreement
required by Section 1272.052 must establish a monitoring plan that:
(1) allows the health maintenance organization to
monitor compliance with the minimum solvency requirements
established under Subchapter D, if applicable; and
(2) includes:
(A) a description of financial practices that
will ensure that the delegated entity tracks and reports
liabilities that have been incurred but not reported;
(B) a summary of the total amount paid by the
entity to physicians and providers on a monthly basis; and
(C) a summary of complaints from physicians,
providers, and enrollees regarding delays in payment or nonpayment
of claims, including the status of each complaint, on a monthly
basis. (V.T.I.C. Art. 20A.18C, Sec. (a) (part).)
Sec. 1272.054. REQUIREMENTS FOR TERMINATION WITHOUT CAUSE.
A delegation agreement required by Section 1272.052 must provide
that the agreement cannot be terminated without cause by the
delegated entity or the health maintenance organization unless the
party terminating the agreement provides written notice before the
90th day before the termination date. (V.T.I.C. Art. 20A.18C, Sec.
(a) (part).)
Sec. 1272.055. COLLECTION OF PAYMENTS. A delegation
agreement required by Section 1272.052 must prohibit the delegated
entity and the physicians and providers with whom the entity has
contracted from billing or attempting to collect from an enrollee
under any circumstance, including the insolvency of the health
maintenance organization or entity, payments for covered services
other than authorized copayments and deductibles. (V.T.I.C. Art.
20A.18C, Sec. (a) (part).)
Sec. 1272.056. COMPLIANCE WITH STATUTORY AND REGULATORY
REQUIREMENTS. A delegation agreement required by Section 1272.052
must provide that:
(1) the agreement does not limit in any way the health
maintenance organization's authority or responsibility, including
financial responsibility, to comply with each statutory or
regulatory requirement; and
(2) the delegated entity shall comply with each
statutory or regulatory requirement relating to a function assumed
by or carried out by the entity. (V.T.I.C. Art. 20A.18C, Sec. (a)
(part).)
Sec. 1272.057. EXAMINATION BY COMMISSIONER. A delegation
agreement required by Section 1272.052 must require the delegated
entity to permit the commissioner to examine at any time any
information the commissioner reasonably believes is relevant to:
(1) the financial solvency of the entity; or
(2) the ability of the entity to meet the entity's
responsibilities in connection with any function delegated to the
entity by the health maintenance organization. (V.T.I.C. Art.
20A.18C, Sec. (a) (part).)
Sec. 1272.058. INFORMATION RELATING TO DELEGATED THIRD
PARTY. A delegation agreement required by Section 1272.052 must
require the delegated entity to provide the license number of a
delegated third party performing a function that requires:
(1) a license as a third-party administrator under
Chapter 4151 or utilization review agent under Article 21.58A; or
(2) another license under this code or another
insurance law of this state. (V.T.I.C. Art. 20A.18C, Sec. (a)
(part).)
Sec. 1272.059. CONTRACTS WITH DELEGATED THIRD PARTY. A
delegation agreement required by Section 1272.052 must provide
that:
(1) any agreement under which the delegated entity
directly or indirectly delegates a function required by this
chapter, Chapter 843, 1271, or 1367, or Subchapter A, Chapter 1452,
including the handling of funds, if applicable, to a delegated
third party must be in writing; and
(2) the delegated entity, in contracting with a
delegated third party directly or through a third party, shall
require the delegated third party to comply with the requirements
of Section 1272.057 and any rules adopted by the commissioner
implementing that section. (V.T.I.C. Art. 20A.18C, Sec. (a)
(part).)
Sec. 1272.060. UTILIZATION REVIEW. A delegation agreement
required by Section 1272.052 must provide that:
(1) enrollees shall receive notification at the time
of enrollment of which entity is responsible for performing
utilization review;
(2) the delegated entity or third party performing
utilization review shall perform that review in accordance with
Article 21.58A; and
(3) the delegated entity or third party shall forward
utilization review decisions made by the entity or third party to
the health maintenance organization on a monthly basis. (V.T.I.C.
Art. 20A.18C, Sec. (a) (part).)
Sec. 1272.061. RIGHTS AND DUTIES OF DELEGATED ENTITY AND
HEALTH MAINTENANCE ORGANIZATION. A delegation agreement required
by Section 1272.052 must provide that the delegated entity
acknowledges and agrees that:
(1) the health maintenance organization:
(A) is required to establish, operate, and
maintain a health care delivery system, quality assurance system,
provider credentialing system, and other systems and programs that
meet statutory and regulatory standards;
(B) is directly accountable for compliance with
those standards; and
(C) is not precluded from contractually
requesting that the delegated entity provide proof of financial
viability;
(2) the role of another delegated entity with which
the delegated entity subcontracts through a delegated third party
is limited to performing certain delegated functions of the health
maintenance organization, using standards that are approved by the
health maintenance organization and that are in compliance with
applicable statutes and rules and subject to the health maintenance
organization's oversight and monitoring of the entity's
performance; and
(3) if the delegated entity fails to meet monitoring
standards established to ensure that functions delegated or
assigned to the entity under the delegation agreement are in full
compliance with all statutory and regulatory requirements, the
health maintenance organization may cancel delegation of any or all
delegated functions. (V.T.I.C. Art. 20A.18C, Sec. (a) (part).)
Sec. 1272.062. INFORMATION TO BE PROVIDED BY DELEGATED
ENTITY TO HEALTH MAINTENANCE ORGANIZATION. (a) A delegation
agreement required by Section 1272.052 must provide that:
(1) except as provided by Subsection (b), the
delegated entity shall make available to the health maintenance
organization samples of contracts with physicians and providers to
ensure compliance with the contractual requirements described by
Sections 1272.054 and 1272.055; and
(2) the delegated entity shall provide to the health
maintenance organization, in a format usable for audit purposes and
not more frequently than quarterly unless otherwise specified in
the delegation agreement, the data necessary for the health
maintenance organization to comply with the department's reporting
requirements with respect to any delegated functions performed
under the delegation agreement, including:
(A) a summary describing the methods, including
capitation, fee-for-service, or other risk arrangements, that the
delegated entity used to pay the entity's physicians and providers,
and including the percentage of physicians and providers paid for
each payment category;
(B) the period that claims and debts for medical
services owed by the delegated entity have been pending and the
aggregate dollar amount of those claims and debts;
(C) information to enable the health maintenance
organization to file claims for reinsurance, coordination of
benefits, and subrogation, if required by the delegation agreement;
and
(D) documentation, except for information,
documents, and deliberations related to peer review that are
confidential or privileged under Subchapter A, Chapter 160,
Occupations Code, that relates to:
(i) a regulatory agency's inquiry or
investigation of the delegated entity or an individual physician or
provider with whom the entity contracts that relates to an enrollee
of the health maintenance organization; and
(ii) the final resolution of a regulatory
agency's inquiry or investigation.
(b) A delegation agreement may not require a delegated
entity to make available to the health maintenance organization
contractual provisions relating to financial arrangements with the
entity's physicians and providers. (V.T.I.C. Art. 20A.18C, Sec.
(a) (part).)
Sec. 1272.063. ENROLLEE COMPLAINTS. (a) A delegation
agreement required by Section 1272.052 must provide that:
(1) if the delegated entity receives a complaint that
does not involve emergency care, the entity shall report the
complaint to the health maintenance organization not later than the
second business day after the date the entity receives the
complaint; and
(2) if the delegated entity receives a complaint
involving emergency care, the entity shall immediately forward the
complaint to the health maintenance organization.
(b) Subsection (a) does not prohibit a delegated entity from
attempting to resolve a complaint. (V.T.I.C. Art. 20A.18C, Sec.
(a) (part).)
Sec. 1272.064. RULES. The commissioner may adopt rules as
necessary to implement this subchapter. (V.T.I.C. Art. 20A.18C,
Sec. (r).)
[Sections 1272.065-1272.100 reserved for expansion]
SUBCHAPTER C. INFORMATION REPORTING TO DELEGATED ENTITY
Sec. 1272.101. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a group model health maintenance
organization, as defined by Section 843.111. (V.T.I.C. Art.
20A.18C, Sec. (q).)
Sec. 1272.102. REPORTING REQUIRED. (a) The commissioner
shall determine the information a health maintenance organization
shall provide to a delegated entity with which the health
maintenance organization has entered into a delegation agreement.
(b) The information must include:
(1) for each enrollee who is eligible or assigned to
receive services from the delegated entity:
(A) the enrollee's name, birth date or social
security number, age, and sex;
(B) the benefit plan and any riders to that plan
that are applicable to the enrollee; and
(C) the enrollee's employer;
(2) the name and birth date or social security number
of each enrollee added or terminated since the health maintenance
organization last provided the information;
(3) if the health maintenance organization pays any
claims on behalf of the delegated entity, a summary of the number
and amount of:
(A) claims paid during the previous reporting
period; and
(B) pharmacy prescriptions paid for each
enrollee during the previous reporting period for which the
delegated entity has taken partial risk;
(4) information that enables the delegated entity to
file claims for reinsurance, coordination of benefits, and
subrogation;
(5) patient complaint data that relates to the
delegated entity;
(6) detailed risk-pool data, reported quarterly and on
settlement;
(7) if hospital or facility costs impact the delegated
entity's costs, the percent of premium attributable to hospital or
facility costs, reported quarterly; and
(8) if there are changes in hospital or facility
contracts with the health maintenance organization, the projected
impact of those changes on the percent of premium attributable to
hospital and facility costs during the 30-day period following
those changes.
(c) Notwithstanding Subsection (b)(3), a delegated entity
may, on request, receive additional nonproprietary information
regarding claims paid by a health maintenance organization on
behalf of the entity.
(d) A health maintenance organization shall provide
information required under Subsections (b)(1)-(5) in standard
electronic format at least monthly unless the delegation agreement
provides otherwise. (V.T.I.C. Art. 20A.18C, Secs. (b), (c).)
Sec. 1272.103. RULES. The commissioner may adopt rules as
necessary to implement this subchapter. (V.T.I.C. Art. 20A.18C,
Sec. (r).)
[ Sections 1272.104-1272.150 reserved for expansion]
SUBCHAPTER D. RESERVE REQUIREMENTS
Sec. 1272.151. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a group model health maintenance
organization, as defined by Section 843.111. (V.T.I.C. Art.
20A.18D, Sec. (h), as added Acts 77th Leg., R.S., Ch. 550.)
Sec. 1272.152. GENERAL RESERVE REQUIREMENTS. (a) A
delegated network shall maintain reserves adequate for the
liabilities and risks assumed by the network, as computed in
accordance with accepted standards, practices, and procedures
relating to the liabilities and risks for which the reserves are
maintained, including known and unknown components and anticipated
expenses of providing benefits or services.
(b) Except as provided by Sections 1272.153 and 1272.154, a
delegated network shall maintain reserves as described by
Subsection (c) only with respect to the portion of services assumed
under the delegation agreement that is outside the scope of the
network's license for medical care or hospital or other
institutional services, as applicable.
(c) A delegated network shall maintain financial reserves
equal to the greater of:
(1) 80 percent of the amount of liabilities and risks
for which reserves must be maintained under this subchapter and
that have been incurred but not paid by the network; or
(2) an amount equal to two months of the premium amount
assumed by the network for services with respect to which reserves
must be maintained under this subchapter. (V.T.I.C. Art. 20A.18D,
Secs. (a), (b), (e), as added Acts 77th Leg., R.S., Ch. 550.)
Sec. 1272.153. RESERVE REQUIREMENTS FOR MEDICAL CARE AND
HOSPITAL OR INSTITUTIONAL SERVICES. A delegated network that
assumes under a delegation agreement both medical care and hospital
or institutional services shall maintain reserves adequate to cover
the liabilities and risks associated with medical care or hospital
or institutional services, whichever category of services is
allocated the largest portion of the premium by the health
maintenance organization. (V.T.I.C. Art. 20A.18D, Sec. (c), as
added Acts 77th Leg., R.S., Ch. 550.)
Sec. 1272.154. RESERVE REQUIREMENTS FOR PRESCRIPTION
DRUGS. A delegated network that assumes financial risk for medical
care or hospital or institutional services and for prescription
drugs, as defined by Section 551.003, Occupations Code, shall
maintain, in addition to any other reserves required under this
subchapter, reserves adequate to cover the liabilities and risks
associated with the prescription drug benefits. (V.T.I.C. Art.
20A.18D, Sec. (d), as added Acts 77th Leg., R.S., Ch. 550.)
Sec. 1272.155. FORM OF RESERVES. The reserves required
under this subchapter must be:
(1) secured by and consist only of United States legal
tender or bonds of the United States or this state;
(2) held at a financial institution in this state that
is chartered by the United States or this state; and
(3) held in trust for, for the benefit of, or to
provide health care services to enrollees under the delegation
agreement. (V.T.I.C. Art. 20A.18D, Sec. (f), as added Acts 77th
Leg., R.S., Ch. 550.)
Sec. 1272.156. ESCROW ACCOUNT. (a) A delegated network
required to maintain reserves under this subchapter shall establish
an escrow account to pay claims and deposit the reserves into the
escrow account on:
(1) notification of the network's intent to terminate
or refuse to renew a contract under which the network assumed
liabilities and risks from a health maintenance organization; or
(2) modification of a contract under which the network
assumed liabilities and risks from a health maintenance
organization if the modified contract eliminates those liabilities
and risks.
(b) The delegated network shall notify the commissioner on
establishing an escrow account under this section.
(c) On the 271st day after the date the reserves are
deposited into the escrow account, the delegated network is
entitled to the release of funds remaining in escrow. Funds
released from the escrow account shall be distributed to each
individual who contributed to the reserves deposited into the
account in proportion to the individual's total contribution.
(d) The commissioner shall take any action necessary to
ensure the release of funds remaining in escrow after the date
specified by Subsection (c). (V.T.I.C. Art. 20A.18D, Sec. (g), as
added Acts 77th Leg., R.S., Ch. 550.)
[Sections 1272.157-1272.200 reserved for expansion]
SUBCHAPTER E. COMPLIANCE
Sec. 1272.201. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a group model health maintenance
organization, as defined by Section 843.111. (V.T.I.C. Art.
20A.18C, Sec. (q).)
Sec. 1272.202. NOTICE OF NONCOMPLIANCE OR HAZARDOUS
OPERATING CONDITION. (a) If a health maintenance organization
becomes aware of information that indicates a delegated entity with
which the health maintenance organization has entered into a
delegation agreement is not operating in accordance with the
agreement or is operating in a condition that renders continuing
the entity's business hazardous to the enrollees, the health
maintenance organization shall in writing:
(1) notify the entity of those findings; and
(2) request a written explanation and documentation
supporting that explanation of the entity's apparent noncompliance
or the existence of the hazardous condition.
(b) A health maintenance organization shall provide to the
commissioner a copy of each notice and request submitted to a
delegated entity under this section and each response or other
documentation the health maintenance organization receives or
generates in response to the notice and request. (V.T.I.C. Art.
20A.18C, Sec. (d).)
Sec. 1272.203. RESPONSE TO NOTICE. A delegated entity
shall respond in writing to a request from a health maintenance
organization under Section 1272.202 not later than the 30th day
after the date the entity receives the request. (V.T.I.C. Art.
20A.18C, Sec. (e).)
Sec. 1272.204. COOPERATION OF HEALTH MAINTENANCE
ORGANIZATION. A health maintenance organization shall cooperate
with a delegated entity to correct a failure by the entity to comply
with the department's regulatory requirements relating to:
(1) a function delegated to the entity by the health
maintenance organization; or
(2) a matter necessary for the health maintenance
organization to ensure compliance with each statutory or regulatory
requirement. (V.T.I.C. Art. 20A.18C, Sec. (f).)
Sec. 1272.205. EXAMINATION BY DEPARTMENT; REPORT. (a) On
receipt of a notice under Section 1272.202 or if complaints are
filed with the department, the department may conduct an
examination regarding:
(1) any matter contained in the notice; and
(2) any other matter relating to the financial
solvency of the delegated entity or the entity's ability to meet the
entity's responsibilities in connection with a function delegated
to the entity by the health maintenance organization.
(b) Except as provided by Subsection (c), the department, on
completion of an examination under this section, shall report to
the delegated entity and the health maintenance organization:
(1) the results of the examination; and
(2) any action the department determines is necessary
to ensure that:
(A) the health maintenance organization meets
the health maintenance organization's responsibilities under this
code, any other insurance laws of this state, and rules adopted by
the commissioner; and
(B) the entity is able to meet the entity's
responsibilities in connection with a function delegated to the
entity by the health maintenance organization.
(c) The department may not report to the health maintenance
organization information relating to fee schedules, prices, or cost
of care or other information not relevant to the monitoring plan.
(V.T.I.C. Art. 20A.18C, Secs. (g), (h).)
Sec. 1272.206. RESPONSE TO DEPARTMENT REPORT; CORRECTIVE
PLAN. The delegated entity and health maintenance organization
shall respond to the department's report under Section 1272.205(b)
and submit a corrective plan to the department not later than the
30th day after the date of receipt of the report. (V.T.I.C. Art.
20A.18C, Sec. (i).)
Sec. 1272.207. REQUEST FOR CORRECTIVE ACTION. The
department may request at any time that a delegated entity take
corrective action to comply with the department's statutory and
regulatory requirements that:
(1) relate to a function delegated by the health
maintenance organization to the entity; or
(2) are necessary to ensure the health maintenance
organization's compliance with each statutory or regulatory
requirement. (V.T.I.C. Art. 20A.18C, Sec. (k).)
Sec. 1272.208. AUTHORITY OF COMMISSIONER TO ISSUE ORDER.
(a) Regardless of whether a delegated entity complies with a
request for corrective action under Section 1272.207, the
commissioner may order a health maintenance organization with which
the entity has entered into a delegation agreement to take any
action the commissioner determines is necessary to ensure that the
health maintenance organization is complying with this chapter,
Chapter 843, 1271, or 1367, or Subchapter A, Chapter 1452.
(b) Actions the commissioner may order a health maintenance
organization to take under this section include:
(1) reassuming the functions delegated to the
delegated entity, including claims payments for services
previously provided to enrollees;
(2) temporarily or permanently ceasing assignment of
new enrollees to the entity;
(3) temporarily or permanently transferring enrollees
to alternative delivery systems to receive services; or
(4) terminating the delegation agreement with the
entity. (V.T.I.C. Art. 20A.18C, Sec. (l).)
Sec. 1272.209. PUBLIC DOCUMENTS. (a) Except as provided by
Subsection (b), a report required under Section 1272.205(b) or
corrective plan required under Section 1272.206 is a public
document.
(b) Health care provider fee schedules, prices, costs of
care, or other information that is not relevant to the monitoring
plan or is confidential by law is not a public document under this
section. (V.T.I.C. Art. 20A.18C, Sec. (j).)
Sec. 1272.210. RECORD OF COMPLAINTS; REPORT. (a) The
department shall:
(1) maintain enrollee and provider complaints in a
manner that identifies complaints made about limited provider
networks and delegated entities; and
(2) periodically issue a report on the complaints that
includes a list of complaints organized by:
(A) category;
(B) action taken on the complaint; and
(C) entity or network name and type.
(b) The department shall make available to the public the
report and information to assist the public in evaluating the
information contained in the report. (V.T.I.C. Art. 20A.18C, Sec.
(m).)
Sec. 1272.211. RULES. The commissioner may adopt rules as
necessary to implement this subchapter. (V.T.I.C. Art. 20A.18C,
Sec. (r).)
[Sections 1272.212-1272.250 reserved for expansion]
SUBCHAPTER F. PENALTIES
Sec. 1272.251. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a group model health maintenance
organization, as defined by Section 843.111. (V.T.I.C. Art.
20A.18C, Sec. (q).)
Sec. 1272.252. SUSPENSION OR REVOCATION OF LICENSE OF
THIRD-PARTY ADMINISTRATOR OR UTILIZATION REVIEW AGENT.
Notwithstanding any other provision of this code or another
insurance law of this state, the commissioner may suspend or revoke
the license of a third-party administrator or utilization review
agent that fails to comply with Subchapter B, C, or E. (V.T.I.C.
Art. 20A.18C, Sec. (n).)
Sec. 1272.253. SANCTIONS AND PENALTIES AGAINST HEALTH
MAINTENANCE ORGANIZATION. The commissioner may impose sanctions or
penalties under Chapters 82, 83, and 84 on a health maintenance
organization that does not provide in a timely manner information
required by Subchapter C. (V.T.I.C. Art. 20A.18C, Sec. (o).)
Sec. 1272.254. CONTRACTUAL PENALTIES REQUIRED. A health
maintenance organization by contract shall establish penalties for
a delegated entity that does not provide in a timely manner
information required under a monitoring plan established under
Section 1272.053. (V.T.I.C. Art. 20A.18C, Sec. (p).)
Sec. 1272.255. RULES. The commissioner may adopt rules as
necessary to implement this subchapter. (V.T.I.C. Art. 20A.18C,
Sec. (r).)
[Sections 1272.256-1272.300 reserved for expansion]
SUBCHAPTER G. PROVISION OF SERVICES BY LIMITED PROVIDER NETWORK
OR DELEGATED ENTITY
Sec. 1272.301. ACCESS TO OUT-OF-NETWORK SERVICES. (a) A
contract between a health maintenance organization and a limited
provider network or delegated entity must provide that:
(1) if medically necessary covered services are not
available through network physicians or providers, the limited
provider network or delegated entity, on the request of a network
physician or provider, shall:
(A) allow a referral to a non-network physician
or provider; and
(B) fully reimburse the non-network physician or
provider at the usual and customary rate or an agreed rate; and
(2) before the limited provider network or delegated
entity may deny a referral to a non-network physician or provider, a
specialist of the same or similar specialty as the type of physician
or provider to whom the referral is requested must conduct a review
of the request.
(b) The limited provider network or delegated entity shall
allow the referral within the time appropriate to the circumstances
relating to the delivery of the services and the condition of the
enrollee who is a patient, but not later than the fifth business day
after the date the network or entity receives any reasonably
requested documentation.
(c) An enrollee may not be required to change the enrollee's
primary care physician or specialist providers to receive medically
necessary covered services that are not available within the
limited provider network or through the delegated entity.
(d) A denial of out-of-network services under this section
is subject to appeal under Article 21.58A. (V.T.I.C. Art.
20A.18F.)
Sec. 1272.302. CONTINUITY OF CARE. (a) In this section,
"special circumstance" means a condition regarding which a treating
physician or provider reasonably believes that discontinuing care
by that physician or provider could cause harm to an enrollee who is
a patient. Examples of an enrollee who has a special circumstance
include an enrollee with a disability, acute condition, or
life-threatening illness and an enrollee who is past the 24th week
of pregnancy.
(b) A contract between a health maintenance organization
and a limited provider network or delegated entity must require
that each contract between the network or entity and a physician or
provider must:
(1) require that reasonable advance notice be given to
an enrollee of an impending termination from the network or entity
of a physician or provider who is currently treating the enrollee;
and
(2) provide that the termination of the physician's or
provider's contract, except for reason of medical competence or
professional behavior, does not release the network or entity from
the obligation to reimburse the physician or provider for treatment
of an enrollee who has a special circumstance at a rate that is not
less than the contract rate for that enrollee's care in exchange for
continuity of ongoing treatment of the enrollee then receiving
medically necessary treatment in accordance with the dictates of
medical prudence.
(c) The treating physician or provider shall identify a
special circumstance. That physician or provider must:
(1) request that the enrollee be permitted to continue
treatment under the physician's or provider's care; and
(2) agree not to seek payment from the enrollee who is
a patient of any amount for which the enrollee would not be
responsible if the physician or provider continued to be included
in the limited provider network or delegated entity.
(d) Except as provided by Subsection (e), this section does
not extend the obligation of a limited provider network or
delegated entity to reimburse a terminated physician or provider
for ongoing treatment of an enrollee after:
(1) the 90th day after the effective date of the
termination; or
(2) if the enrollee has been diagnosed with a terminal
illness at the time of termination, the expiration of the
nine-month period after the effective date of the termination.
(e) If an enrollee is past the 24th week of pregnancy at the
time of termination, the obligation of the limited provider network
or delegated entity to reimburse the terminated physician or
provider or, if applicable, the enrollee extends through delivery
of the child, immediate postpartum care, and a follow-up checkup
within the six-week period after delivery.
(f) A contract between a limited provider network or
delegated entity and a physician or provider must provide
procedures for resolving disputes regarding the necessity for
continued treatment by a physician or provider. (V.T.I.C. Art.
20A.18E.)
CHAPTER 1273. POINT-OF-SERVICE PLANS
SUBCHAPTER A. BLENDED CONTRACTS
Sec. 1273.001. DEFINITIONS
Sec. 1273.002. POINT-OF-SERVICE PLAN
Sec. 1273.003. BLENDED CONTRACT
Sec. 1273.004. LIMITED BENEFITS AND SERVICES; COST-SHARING
PROVISIONS
Sec. 1273.005. RULES
[Sections 1273.006-1273.050 reserved for expansion]
SUBCHAPTER B. AVAILABILITY OF HEALTH BENEFIT COVERAGE OPTIONS
Sec. 1273.051. DEFINITIONS
Sec. 1273.052. OFFER OF COVERAGE THROUGH NON-NETWORK PLAN
REQUIRED
Sec. 1273.053. COVERAGE OPTIONS
Sec. 1273.054. PREMIUM FOR COVERAGE OPTIONS
Sec. 1273.055. COST-SHARING PROVISIONS
Sec. 1273.056. EXCEPTIONS
Sec. 1273.057. RULES
CHAPTER 1273. POINT-OF-SERVICE PLANS
SUBCHAPTER A. BLENDED CONTRACTS
Sec. 1273.001. DEFINITIONS. In this subchapter:
(1) "Blended contract" means a single document,
including a single contract policy, certificate, or evidence of
coverage, that provides a combination of indemnity and health
maintenance organization benefits.
(2) "Health maintenance organization" has the meaning
assigned by Section 843.002.
(3) "Insurer" means an insurance company,
association, or organization authorized to engage in business in
this state under Chapter 841, 842, 861, 881, 882, 883, 884, 885,
886, 887, 888, 941, 942, or 982.
(4) "Point-of-service plan" means an arrangement
under which:
(A) an enrollee chooses to obtain benefits or
services through:
(i) a health maintenance organization
delivery network, including a limited provider network; or
(ii) a non-network delivery system outside
the health maintenance organization delivery network, including a
limited provider network, that is administered under an indemnity
benefit arrangement for the cost of health care services; or
(B) indemnity benefits for the cost of health
care services are provided by an insurer or group hospital service
corporation in conjunction with network benefits arranged or
provided by a health maintenance organization. (V.T.I.C. Art.
3.64, Sec. (a).)
Sec. 1273.002. POINT-OF-SERVICE PLAN. An insurer may
contract with a health maintenance organization to provide benefits
under a point-of-service plan, including optional coverage for
out-of-area services or out-of-network care. (V.T.I.C. Art. 3.64,
Sec. (b).)
Sec. 1273.003. BLENDED CONTRACT. (a) A health maintenance
organization and an insurer may offer a blended contract. The use
of a blended contract is limited to point-of-service arrangements
between a health maintenance organization and an insurer.
(b) A blended contract delivered, issued, or used in this
state is subject to, and must be filed with the department for
approval as provided by, Chapter 1701 and Section 1271.101.
(V.T.I.C. Art. 3.64, Secs. (c), (d).)
Sec. 1273.004. LIMITED BENEFITS AND SERVICES; COST-SHARING
PROVISIONS. Indemnity benefits and services provided under a
point-of-service plan may be limited to those services described by
the blended contract and may be subject to different cost-sharing
provisions. The cost-sharing provisions for indemnity benefits may
be higher than the cost-sharing provisions for in-network health
maintenance organization coverage. For an enrollee in a limited
provider network, higher cost-sharing may be imposed only when the
enrollee obtains benefits or services outside the health
maintenance organization delivery network. (V.T.I.C. Art. 3.64,
Sec. (e).)
Sec. 1273.005. RULES. The commissioner may adopt rules to
implement this subchapter. (V.T.I.C. Art. 3.64, Sec. (f).)
[Sections 1273.006-1273.050 reserved for expansion]
SUBCHAPTER B. AVAILABILITY OF HEALTH BENEFIT COVERAGE OPTIONS
Sec. 1273.051. DEFINITIONS. In this subchapter:
(1) "Employee" means an individual employed by an
employer.
(2) "Health benefit plan" has the meaning assigned by
Section 1501.002.
(3) "Non-network plan" means health benefit coverage
that provides an enrollee an opportunity to obtain health care
services through a health delivery system other than a health
maintenance organization delivery network, as defined by Section
843.002.
(4) "Point-of-service plan" means an arrangement
under which an enrollee chooses to obtain benefits or services
through:
(A) a health maintenance organization delivery
network, including a limited provider network; or
(B) a non-network delivery system outside the
health maintenance organization delivery network, including a
limited provider network, that is administered under an indemnity
benefit arrangement for the cost of health care services.
(5) "Preferred provider benefit plan" means an
insurance policy issued under Chapter 1301.
(6) "Small employer health benefit plan" has the
meaning assigned by Section 1501.002. (V.T.I.C. Art. 26.02,
Subdivs. (10), (11), (31), as amended Acts 77th Leg., R.S., Ch. 608,
(32), as amended Acts 77th Leg., R.S., Ch. 823; Art. 26.09, Sec.
(a).)
Sec. 1273.052. OFFER OF COVERAGE THROUGH NON-NETWORK PLAN
REQUIRED. (a) Except as provided by Subsection (b), if the only
health benefit coverage offered under an employer's health benefit
plan is a network-based delivery system of coverage offered by one
or more health maintenance organizations, each health maintenance
organization offering coverage must offer to all eligible
employees, at the time of enrollment and at least annually, the
opportunity to obtain coverage through a non-network plan.
(b) Each health maintenance organization to which
Subsection (a) applies may enter into an agreement designating one
or more of those health maintenance organizations to offer the
coverage required by Subsection (a) for eligible employees of the
employer. (V.T.I.C. Art. 26.09, Sec. (b) (part).)
Sec. 1273.053. COVERAGE OPTIONS. The coverage required to
be offered under this subchapter may be provided through:
(1) a point-of-service plan;
(2) a preferred provider benefit plan; or
(3) any coverage arrangement that provides an enrollee
with access to services outside the health maintenance
organization's or limited provider network's delivery network.
(V.T.I.C. Art. 26.09, Sec. (b) (part).)
Sec. 1273.054. PREMIUM FOR COVERAGE OPTIONS. The premium
for coverage required to be offered under this subchapter must be
based on the actuarial value of that coverage and may be different
from the premium for coverage otherwise offered by the health
maintenance organization. (V.T.I.C. Art. 26.09, Sec. (c).)
Sec. 1273.055. COST-SHARING PROVISIONS. (a) Different
cost-sharing provisions may be imposed for a point-of-service plan
offered under this subchapter, and those provisions may be higher
than the cost-sharing provisions for in-network health maintenance
organization coverage. For an enrollee in a limited provider
network, higher cost-sharing may be imposed only when the enrollee
obtains benefits or services outside the health maintenance
organization delivery network.
(b) An employee who chooses the non-network plan is
responsible for any additional costs for the non-network plan, and
the employer may impose a reasonable administrative fee for
providing the non-network plan. (V.T.I.C. Art. 26.09, Secs. (d),
(e).)
Sec. 1273.056. EXCEPTIONS. This subchapter does not apply
to:
(1) a small employer health benefit plan; or
(2) a group model health maintenance organization that
is a nonprofit, state-certified health maintenance organization
that:
(A) provides the majority of its professional
services through a single group medical practice that is governed
by a board composed entirely of physicians; and
(B) educates medical students or resident
physicians through a contract with the medical school component of
a Texas state-supported college or university accredited by the
Accreditation Council on Graduate Medical Education or the American
Osteopathic Association. (V.T.I.C. Art. 26.09, Sec. (f).)
Sec. 1273.057. RULES. The commissioner shall adopt rules
necessary to administer this subchapter. (V.T.I.C. Art. 26.04
(part).)
[Chapters 1274-1300 reserved for expansion]
SUBTITLE D. PREFERRED PROVIDER BENEFIT PLANS
CHAPTER 1301. PREFERRED PROVIDER BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1301.001. DEFINITIONS
Sec. 1301.002. NONAPPLICABILITY TO DENTAL CARE BENEFITS
Sec. 1301.003. PREFERRED PROVIDER BENEFIT PLANS PERMITTED
Sec. 1301.004. COMPLIANCE WITH CHAPTER REQUIRED
Sec. 1301.005. AVAILABILITY OF PREFERRED PROVIDERS
Sec. 1301.006. AVAILABILITY OF AND ACCESSIBILITY TO HEALTH
CARE SERVICES
Sec. 1301.007. RULES
[Sections 1301.008-1301.050 reserved for expansion]
SUBCHAPTER B. RELATIONS WITH PHYSICIANS OR HEALTH CARE PROVIDERS
Sec. 1301.051. DESIGNATION AS PREFERRED PROVIDER
Sec. 1301.052. DESIGNATION OF ADVANCED PRACTICE NURSE OR
PHYSICIAN ASSISTANT AS PREFERRED PROVIDER
Sec. 1301.053. APPEAL RELATING TO DESIGNATION AS PREFERRED
PROVIDER
Sec. 1301.054. NOTICE TO PRACTITIONERS OF PREFERRED PROVIDER
BENEFIT PLAN
Sec. 1301.055. COMPLAINT RESOLUTION
Sec. 1301.056. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT
Sec. 1301.057. TERMINATION OF PARTICIPATION; EXPEDITED REVIEW
PROCESS
Sec. 1301.058. ECONOMIC PROFILING
Sec. 1301.059. QUALITY ASSESSMENT
Sec. 1301.060. COMPENSATION ON DISCOUNTED FEE BASIS
Sec. 1301.061. PREFERRED PROVIDER NETWORKS
Sec. 1301.062. PREFERRED PROVIDER CONTRACTS BETWEEN INSURERS
AND PODIATRISTS
Sec. 1301.063. CONTRACT PROVISIONS RELATING TO USE OF
HOSPITALIST
Sec. 1301.064. CONTRACT PROVISIONS RELATING TO PAYMENT OF
CLAIMS
Sec. 1301.065. SHIFTING OF INSURER'S TORT LIABILITY
PROHIBITED
Sec. 1301.066. RETALIATION AGAINST PREFERRED PROVIDER
PROHIBITED
Sec. 1301.067. INTERFERENCE WITH RELATIONSHIP BETWEEN
PATIENT AND PHYSICIAN OR HEALTH CARE
PROVIDER PROHIBITED
Sec. 1301.068. INDUCEMENT TO LIMIT MEDICALLY NECESSARY
SERVICES PROHIBITED
[Sections 1301.069-1301.100 reserved for expansion]
SUBCHAPTER C. PAYMENT OF CLAIMS TO PROVIDERS
Sec. 1301.101. DEFINITION
Sec. 1301.102. ACKNOWLEDGMENT OF RECEIPT OF CLAIM
Sec. 1301.103. DEADLINE FOR ACTION ON CLEAN CLAIMS
Sec. 1301.104. DEADLINE FOR ACTION ON CERTAIN PRESCRIPTION
BENEFIT CLAIMS
Sec. 1301.105. AUDITED CLAIMS
Sec. 1301.106. CLAIMS PROCESSING PROCEDURES
Sec. 1301.107. VIOLATION OF CLAIMS PAYMENT PROVISIONS;
ADMINISTRATIVE PENALTY
Sec. 1301.108. ATTORNEY'S FEES
Sec. 1301.109. APPLICABILITY TO ENTITIES CONTRACTING WITH
INSURER
Sec. 1301.110. EXCEPTION
[Sections 1301.111-1301.150 reserved for expansion]
SUBCHAPTER D. RELATIONS BETWEEN INSUREDS
AND PREFERRED PROVIDERS
Sec. 1301.151. INSURED'S RIGHT TO TREATMENT
Sec. 1301.152. CONTINUING CARE IN GENERAL
Sec. 1301.153. CONTINUITY OF CARE
Sec. 1301.154. OBLIGATION FOR CONTINUITY OF CARE OF
INSURER
Sec. 1301.155. EMERGENCY CARE
Sec. 1301.156. PAYMENT OF CLAIMS TO INSURED
Sec. 1301.157. PLAIN LANGUAGE REQUIREMENTS
Sec. 1301.158. INFORMATION CONCERNING PREFERRED PROVIDER
BENEFIT PLANS
Sec. 1301.159. ANNUAL LIST OF PREFERRED PROVIDERS
Sec. 1301.160. NOTIFICATION OF TERMINATION OF PARTICIPATION
OF PREFERRED PROVIDER
Sec. 1301.161. RETALIATION AGAINST INSURED PROHIBITED
[Sections 1301.162-1301.200 reserved for expansion]
SUBCHAPTER E. CERTAIN HEALTH CARE PROVIDERS
Sec. 1301.201. CONTRACTS WITH AND REIMBURSEMENT FOR NURSE
FIRST ASSISTANTS
CHAPTER 1301. PREFERRED PROVIDER BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1301.001. DEFINITIONS. In this chapter:
(1) "Health care provider" means a practitioner,
institutional provider, or other person or organization that
furnishes health care services and that is licensed or otherwise
authorized to practice in this state. The term does not include a
physician.
(2) "Health insurance policy" means a group or
individual insurance policy, certificate, or contract providing
benefits for medical or surgical expenses incurred as a result of an
accident or sickness.
(3) "Hospital" means a licensed public or private
institution as defined by Chapter 241, Health and Safety Code, or
Subtitle C, Title 7, Health and Safety Code.
(4) "Institutional provider" means a hospital,
nursing home, or other medical or health-related service facility
that provides care for the sick or injured or other care that may be
covered in a health insurance policy.
(5) "Insurer" means a life, health, and accident
insurance company, health and accident insurance company, health
insurance company, or other company operating under Chapter 841,
842, 884, 885, 982, or 1501, that is authorized to issue, deliver,
or issue for delivery in this state health insurance policies.
(6) "Physician" means a person licensed to practice
medicine in this state.
(7) "Practitioner" means a person who practices a
healing art and is a practitioner described by Section 1451.001 or
1451.101.
(8) "Preferred provider" means a physician or health
care provider, or an organization of physicians or health care
providers, who contracts with an insurer to provide medical care or
health care to insureds covered by a health insurance policy.
(9) "Preferred provider benefit plan" means a benefit
plan in which an insurer provides, through its health insurance
policy, for the payment of a level of coverage that is different
from the basic level of coverage provided by the health insurance
policy if the insured person uses a preferred provider.
(10) "Service area" means a geographic area or areas
specified in a health insurance policy or preferred provider
contract in which a network of preferred providers is offered and
available. (V.T.I.C. Art. 3.70-3C, Secs. 1(2), (3), (4), (5), (6),
(8), (9), (10), (13), 2 (part), as added Acts 75th Leg., R.S., Ch.
1024; Art. 3.70-3C, Sec. 1, as added Acts 75th Leg., R.S., Ch.
1260.)
Sec. 1301.002. NONAPPLICABILITY TO DENTAL CARE BENEFITS.
This chapter does not apply to a provision for dental care benefits
in a health insurance policy. (V.T.I.C. Art. 3.70-3C, Sec. 2
(part), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.003. PREFERRED PROVIDER BENEFIT PLANS PERMITTED.
A health insurance policy that provides different benefits from the
basic level of coverage for the use of preferred providers and that
meets the requirements of this chapter is not:
(1) unjust under Chapter 1701;
(2) unfair discrimination under Subchapter A or B,
Chapter 544; or
(3) a violation of Subchapter B or C, Chapter 1451.
(V.T.I.C. Art. 3.70-3C, Sec. 3(a), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.004. COMPLIANCE WITH CHAPTER REQUIRED. Each
preferred provider benefit plan offered in this state must comply
with this chapter. (V.T.I.C. Art. 3.70-3C, Sec. 3(l) (part), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.005. AVAILABILITY OF PREFERRED PROVIDERS. (a)
An insurer offering a preferred provider benefit plan shall ensure
that both preferred provider benefits and basic level benefits are
reasonably available to all insureds within a designated service
area.
(b) If services are not available through a preferred
provider within the service area, an insurer shall reimburse a
physician or health care provider who is not a preferred provider at
the same percentage level of reimbursement as a preferred provider
would have been reimbursed had the insured been treated by a
preferred provider.
(c) Subsection (b) does not require reimbursement at a
preferred level of coverage solely because an insured resides out
of the service area and chooses to receive services from a provider
other than a preferred provider for the insured's own convenience.
(V.T.I.C. Art. 3.70-3C, Sec. 8, as added Acts 75th Leg., R.S., Ch.
1024.)
Sec. 1301.006. AVAILABILITY OF AND ACCESSIBILITY TO HEALTH
CARE SERVICES. An insurer that markets a preferred provider
benefit plan shall contract with physicians and health care
providers to ensure that all medical and health care services and
items contained in the package of benefits for which coverage is
provided, including treatment of illnesses and injuries, will be
provided under the health insurance policy in a manner ensuring
availability of and accessibility to adequate personnel, specialty
care, and facilities. (V.T.I.C. Art. 3.70-3C, Sec. 3(d), as added
Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.007. RULES. The commissioner shall adopt rules
as necessary to:
(1) implement this chapter; and
(2) ensure reasonable accessibility and availability
of preferred provider benefits and basic level benefits to
residents of this state. (V.T.I.C. Art. 3.70-3C, Sec. 9, as added
Acts 75th Leg., R.S., Ch. 1024.)
[Sections 1301.008-1301.050 reserved for expansion]
SUBCHAPTER B. RELATIONS WITH PHYSICIANS OR HEALTH CARE PROVIDERS
Sec. 1301.051. DESIGNATION AS PREFERRED PROVIDER. (a) An
insurer shall afford a fair, reasonable, and equivalent opportunity
to apply to be and to be designated as a preferred provider to
practitioners and institutional providers and to health care
providers other than practitioners and institutional providers, if
those other health care providers are included by the insurer as
preferred providers, provided that the practitioners,
institutional providers, or health care providers:
(1) are licensed to treat injuries or illnesses or to
provide services covered by a health insurance policy; and
(2) comply with the terms established by the insurer
for designation as preferred providers.
(b) An insurer may not unreasonably withhold a designation
as a preferred provider.
(c) An insurer shall give a physician or health care
provider who, on the person's initial application, is not
designated as a preferred provider written reasons for denial of
the designation.
(d) Unless otherwise limited by this code, this section does
not prohibit an insurer from rejecting a physician's or health care
provider's application for designation based on a determination
that the preferred provider benefit plan has sufficient qualified
providers. (V.T.I.C. Art. 3.70-3C, Secs. 3(b)(1), (4), as added
Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.052. DESIGNATION OF ADVANCED PRACTICE NURSE OR
PHYSICIAN ASSISTANT AS PREFERRED PROVIDER. An insurer offering a
preferred provider benefit plan may not refuse a request made by a
physician participating as a preferred provider under the plan and
an advanced practice nurse or physician assistant to have the
advanced practice nurse or physician assistant included as a
preferred provider under the plan if:
(1) the advanced practice nurse or physician assistant
is authorized by the physician to provide care under Subchapter B,
Chapter 157, Occupations Code; and
(2) the advanced practice nurse or physician assistant
meets the quality of care standards previously established by the
insurer for participation in the plan by advanced practice nurses
and physician assistants. (V.T.I.C. Art. 3.70-3C, Sec. 2, as added
Acts 75th Leg., R.S., Ch. 1260.)
Sec. 1301.053. APPEAL RELATING TO DESIGNATION AS PREFERRED
PROVIDER. (a) An insurer that does not designate a practitioner as
a preferred provider shall provide a reasonable mechanism for
reviewing that action. The review mechanism must incorporate, in
an advisory role only, a review panel.
(b) A review panel must be composed of at least three
individuals selected by the insurer from a list of participating
practitioners and must include one member who is a practitioner in
the same or similar specialty as the affected practitioner, if
available. The practitioners contracting with the insurer in the
applicable service area shall provide the list of practitioners to
the insurer.
(c) On request, the insurer shall provide to the affected
practitioner:
(1) the panel's recommendation, if any; and
(2) a written explanation of the insurer's
determination, if that determination is contrary to the panel's
recommendation. (V.T.I.C. Art. 3.70-3C, Secs. 3(b)(2), (3), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.054. NOTICE TO PRACTITIONERS OF PREFERRED
PROVIDER BENEFIT PLAN. (a) When sponsoring a preferred provider
benefit plan, an insurer shall immediately notify each practitioner
in the plan's service area of the insurer's intent to offer the plan
and of the opportunity to participate. The notification must be
made by publication or in writing to each practitioner.
(b) After establishing a preferred provider benefit plan,
an insurer shall annually provide notice of and an opportunity to
participate in the plan to practitioners in the plan's service area
who do not participate in the plan.
(c) On request, an insurer shall provide to any physician or
health care provider information concerning the application
process and qualification requirements for participation as a
preferred provider in the plan. (V.T.I.C. Art. 3.70-3C, Sec. 3(c),
as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.055. COMPLAINT RESOLUTION. (a) Each contract
under a preferred provider benefit plan between an insurer and a
physician or other practitioner or a physicians' group must have a
mechanism for resolving complaints initiated by an insured, a
physician or other practitioner, or a physicians' group.
(b) A complaint resolution mechanism must provide for
reasonable due process that includes, in an advisory role only, a
review panel selected in the manner described by Section
1301.053(b). (V.T.I.C. Art. 3.70-3C, Sec. 3(f), as added Acts 75th
Leg., R.S., Ch. 1024.)
Sec. 1301.056. RESTRICTIONS ON PAYMENT AND REIMBURSEMENT.
(a) An insurer or third-party administrator may not reimburse a
physician or other practitioner, institutional provider, or
organization of physicians and health care providers on a
discounted fee basis for covered services that are provided to an
insured unless:
(1) the insurer or third-party administrator has
contracted with either:
(A) the physician or other practitioner,
institutional provider, or organization of physicians and health
care providers; or
(B) a preferred provider organization that has a
network of preferred providers and that has contracted with the
physician or other practitioner, institutional provider, or
organization of physicians and health care providers;
(2) the physician or other practitioner,
institutional provider, or organization of physicians and health
care providers has agreed to the contract and has agreed to provide
health care services under the terms of the contract; and
(3) the insurer or third-party administrator has
agreed to provide coverage for those health care services under the
health insurance policy.
(b) A party to a preferred provider contract, including a
contract with a preferred provider organization, may not sell,
lease, or otherwise transfer information regarding the payment or
reimbursement terms of the contract without the express authority
of and prior adequate notification to the other contracting
parties. This subsection does not affect the authority of the
commissioner or the Texas Workers' Compensation Commission under
this code to request and obtain information.
(c) An insurer or third-party administrator who violates
this section:
(1) commits an unfair claim settlement practice in
violation of Subchapter A, Chapter 542; and
(2) is subject to administrative penalties under
Chapters 82 and 84. (V.T.I.C. Art. 3.70-3C, Sec. 7A, as added Acts
75th Leg., R.S., Ch. 1024.)
Sec. 1301.057. TERMINATION OF PARTICIPATION; EXPEDITED
REVIEW PROCESS. (a) Before terminating a contract with a preferred
provider, an insurer shall:
(1) provide written reasons for the termination; and
(2) if the affected provider is a practitioner,
provide, on request, a reasonable review mechanism, except in a
case involving:
(A) imminent harm to a patient's health;
(B) an action by a state medical or other
physician licensing board or other government agency that
effectively impairs the practitioner's ability to practice
medicine; or
(C) fraud or malfeasance.
(b) The review mechanism described by Subsection (a)(2)
must incorporate, in an advisory role only, a review panel selected
in the manner described by Section 1301.053(b) and must be
completed within a period not to exceed 60 days.
(c) The insurer shall provide to the affected practitioner:
(1) the panel's recommendation, if any; and
(2) on request, a written explanation of the insurer's
determination, if that determination is contrary to the panel's
recommendation.
(d) On request, an insurer shall make an expedited review
available to a practitioner whose participation in a preferred
provider benefit plan is being terminated. The expedited review
process must comply with rules established by the commissioner.
(V.T.I.C. Art. 3.70-3C, Sec. 3(g), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.058. ECONOMIC PROFILING. An insurer that
conducts, uses, or relies on economic profiling to admit or
terminate the participation of physicians or health care providers
in a preferred provider benefit plan shall make available to a
physician or health care provider on request the economic profile
of that physician or health care provider, including the written
criteria by which the physician or health care provider's
performance is to be measured. An economic profile must be adjusted
to recognize the characteristics of a physician's or health care
provider's practice that may account for variations from expected
costs. (V.T.I.C. Art. 3.70-3C, Sec. 3(h), as added Acts 75th Leg.,
R.S., Ch. 1024.)
Sec. 1301.059. QUALITY ASSESSMENT. (a) In this section,
"quality assessment" means a mechanism used by an insurer to
evaluate, monitor, or improve the quality and effectiveness of the
medical care delivered by physicians or health care providers to
persons covered by a health insurance policy to ensure that the care
delivered is consistent with the care delivered by an ordinary,
reasonable, and prudent physician or health care provider under the
same or similar circumstances.
(b) An insurer may not engage in quality assessment except
through a panel of at least three physicians selected by the insurer
from among a list of physicians contracting with the insurer. The
physicians contracting with the insurer in the applicable service
area shall provide the list of physicians to the insurer. (V.T.I.C.
Art. 3.70-3C, Secs. 1(12), 3(i), as added Acts 75th Leg., R.S., Ch.
1024.)
Sec. 1301.060. COMPENSATION ON DISCOUNTED FEE BASIS. A
preferred provider contract must include a provision by which the
physician or health care provider agrees that if the preferred
provider is compensated on a discounted fee basis, the insured may
be billed only on the discounted fee and not the full charge.
(V.T.I.C. Art. 3.70-3C, Sec. 3(k), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.061. PREFERRED PROVIDER NETWORKS. (a) An
insurer may enter into an agreement with a preferred provider
organization for the purposes of offering a network of preferred
providers. The agreement may provide that either the insurer or the
preferred provider organization on the insurer's behalf will comply
with the notice requirements and other requirements imposed on the
insurer by this subchapter.
(b) An insurer that enters into an agreement with a
preferred provider organization under this section shall meet the
requirements of this chapter or ensure that those requirements are
met. (V.T.I.C. Art. 3.70-3C, Sec. 3(l) (part), as added Acts 75th
Leg., R.S., Ch. 1024.)
Sec. 1301.062. PREFERRED PROVIDER CONTRACTS BETWEEN
INSURERS AND PODIATRISTS. A preferred provider contract between an
insurer and a podiatrist licensed by the Texas State Board of
Podiatric Medical Examiners must provide that:
(1) the podiatrist may request a copy of the coding
guidelines and payment schedules applicable to the compensation
that the podiatrist will receive under the contract for services;
(2) the insurer shall provide a copy of the coding
guidelines and payment schedules not later than the 30th day after
the date of the podiatrist's request;
(3) the insurer may not unilaterally make material
retroactive revisions to the coding guidelines and payment
schedules; and
(4) the podiatrist may, practicing within the scope of
the law regulating podiatry, furnish x-rays and nonprefabricated
orthotics covered by the health insurance policy. (V.T.I.C. Art.
3.70-3C, Sec. 3(n), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.063. CONTRACT PROVISIONS RELATING TO USE OF
HOSPITALIST. (a) In this section, "hospitalist" means a physician
who:
(1) serves as physician of record at a hospital for a
hospitalized patient of another physician; and
(2) returns the care of the patient to that other
physician at the end of the patient's hospitalization.
(b) A preferred provider contract between an insurer and a
physician may not require the physician to use a hospitalist for a
hospitalized patient. (V.T.I.C. Art. 3.70-3C, Sec. 3B, as added
Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.064. CONTRACT PROVISIONS RELATING TO PAYMENT OF
CLAIMS. Subject to Subchapter C, a preferred provider contract
must provide for payment to a physician or health care provider for
health care services and benefits provided to an insured under the
contract and to which the insured is entitled under the terms of the
contract not later than:
(1) the 45th day after the date on which a claim for
payment is received with the documentation reasonably necessary to
process the claim; or
(2) if applicable, within the number of calendar days
specified by written agreement between the physician or health care
provider and the insurer. (V.T.I.C. Art. 3.70-3C, Sec. 3(m)
(part), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.065. SHIFTING OF INSURER'S TORT LIABILITY
PROHIBITED. A preferred provider contract may not require any
physician, health care provider, or physicians' group to execute a
hold harmless clause to shift the insurer's tort liability
resulting from the insurer's acts or omissions to the preferred
provider. (V.T.I.C. Art. 3.70-3C, Sec. 3(j), as added Acts 75th
Leg., R.S., Ch. 1024.)
Sec. 1301.066. RETALIATION AGAINST PREFERRED PROVIDER
PROHIBITED. An insurer may not engage in any retaliatory action
against a physician or health care provider, including terminating
the physician's or provider's participation in the preferred
provider benefit plan or refusing to renew the physician's or
provider's contract, because the physician or provider has:
(1) on behalf of an insured, reasonably filed a
complaint against the insurer; or
(2) appealed a decision of the insurer. (V.T.I.C.
Art. 3.70-3C, Sec. 7(b), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.067. INTERFERENCE WITH RELATIONSHIP BETWEEN
PATIENT AND PHYSICIAN OR HEALTH CARE PROVIDER PROHIBITED. (a) An
insurer may not, as a condition of a preferred provider contract
with a physician or health care provider or in any other manner,
prohibit, attempt to prohibit, or discourage a physician or
provider from discussing with or communicating to a current,
prospective, or former patient, or a person designated by a
patient, information or an opinion:
(1) regarding the patient's health care, including the
patient's medical condition or treatment options; or
(2) in good faith regarding the provisions, terms,
requirements, or services of the health insurance policy as they
relate to the patient's medical needs.
(b) An insurer may not in any way penalize, terminate the
participation of, or refuse to compensate for covered services a
physician or health care provider for discussing or communicating
with a current, prospective, or former patient, or a person
designated by a patient, pursuant to this section. (V.T.I.C. Art.
3.70-3C, Sec. 7(c), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.068. INDUCEMENT TO LIMIT MEDICALLY NECESSARY
SERVICES PROHIBITED. (a) An insurer may not use any financial
incentive or make payment to a physician or health care provider
that acts directly or indirectly as an inducement to limit
medically necessary services.
(b) This section does not prohibit the use of capitation as
a method of payment. (V.T.I.C. Art. 3.70-3C, Sec. 7(d), as added
Acts 75th Leg., R.S., Ch. 1024.)
[Sections 1301.069-1301.100 reserved for expansion]
SUBCHAPTER C. PAYMENT OF CLAIMS TO PROVIDERS
Sec. 1301.101. DEFINITION. In this subchapter, "clean
claim" means a completed claim, as determined under department
rules, submitted by a preferred provider for medical care or health
care services under a health insurance policy. (V.T.I.C. Art.
3.70-3C, Sec. 3A(a), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.102. ACKNOWLEDGMENT OF RECEIPT OF CLAIM. (a) A
preferred provider may obtain acknowledgment of receipt of a claim
for medical care or health care services under a health insurance
policy by submitting the claim by United States mail, return
receipt requested.
(b) An insurer or the contracted clearinghouse of an insurer
that receives a claim electronically shall acknowledge receipt of
the claim by an electronic transmission to the preferred provider
and is not required to acknowledge receipt of the claim in writing.
(V.T.I.C. Art. 3.70-3C, Sec. 3A(b), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.103. DEADLINE FOR ACTION ON CLEAN CLAIMS. Not
later than the 45th day after the date on which an insurer receives
a clean claim from a preferred provider, the insurer shall:
(1) pay the total amount of the claim in accordance
with the contract between the preferred provider and the insurer;
(2) pay the portion of the claim that is not in dispute
and notify the preferred provider in writing why the remaining
portion of the claim will not be paid; or
(3) notify the preferred provider in writing why the
claim will not be paid. (V.T.I.C. Art. 3.70-3C, Sec. 3A(c), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.104. DEADLINE FOR ACTION ON CERTAIN PRESCRIPTION
BENEFIT CLAIMS. If a preferred provider or its designated agent
authorizes treatment, a prescription benefit claim that is
electronically adjudicated and electronically paid shall be paid
not later than the 21st day after the date on which the treatment is
authorized. (V.T.I.C. Art. 3.70-3C, Sec. 3A(d), as added Acts 75th
Leg., R.S., Ch. 1024.)
Sec. 1301.105. AUDITED CLAIMS. An insurer that
acknowledges coverage of an insured under a health insurance policy
but intends to audit a claim submitted by a preferred provider shall
pay the charges submitted at 85 percent of the contracted rate on
the claim not later than the 45th day after the date on which the
insurer receives the claim from the preferred provider. Following
completion of the audit, any additional payment due a preferred
provider or any refund due the insurer shall be made not later than
the 30th day after the later of the date that:
(1) the preferred provider receives notice of the
audit results; or
(2) any appeal rights of the insured are exhausted.
(V.T.I.C. Art. 3.70-3C, Sec. 3A(e), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.106. CLAIMS PROCESSING PROCEDURES. (a) An
insurer shall provide a preferred provider with copies of all
applicable utilization review policies and claim processing
policies or procedures, including required data elements and claim
formats.
(b) An insurer may, by contract with a preferred provider,
add or change the data elements that must be submitted with a claim.
(c) Not later than the 60th day before the date of an
addition or change in the data elements that must be submitted with
a claim or any other change in an insurer's claim processing and
payment procedures, the insurer shall provide written notice of the
addition or change to each preferred provider. (V.T.I.C. Art.
3.70-3C, Secs. 3A(i), (j), (k), as added Acts 75th Leg., R.S., Ch.
1024.)
Sec. 1301.107. VIOLATION OF CLAIMS PAYMENT PROVISIONS;
ADMINISTRATIVE PENALTY. (a) An insurer that violates Section
1301.103 or 1301.105 is liable to a preferred provider for the full
amount of billed charges submitted on the claim or the amount
payable under the contracted penalty rate, less any amount
previously paid or any charge for a service that is not covered by
the health insurance policy.
(b) In addition to any other penalty or remedy authorized by
this code or another insurance law of this state, an insurer that
violates Section 1301.103 or 1301.105 is subject to an
administrative penalty under Chapter 84. The administrative
penalty imposed under that chapter may not exceed $1,000 for each
day the claim remains unpaid in violation of Section 1301.103 or
1301.105. (V.T.I.C. Art. 3.70-3C, Secs. 3A(f), (h), as added Acts
75th Leg., R.S., Ch. 1024.)
Sec. 1301.108. ATTORNEY'S FEES. A preferred provider may
recover reasonable attorney's fees in an action to recover payment
under this subchapter. (V.T.I.C. Art. 3.70-3C, Sec. 3A(g), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.109. APPLICABILITY TO ENTITIES CONTRACTING WITH
INSURER. This subchapter applies to a person with whom an insurer
contracts to:
(1) process claims; or
(2) obtain the services of a preferred provider to
provide medical care or health care to an insured under a health
insurance policy. (V.T.I.C. Art. 3.70-3C, Sec. 3A(m), as added
Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.110. EXCEPTION. This subchapter does not apply
to a claim submitted by a preferred provider who is a member of the
legislature. (V.T.I.C. Art. 3.70-3C, Sec. 3A(l), as added Acts
75th Leg., R.S., Ch. 1024.)
[Sections 1301.111-1301.150 reserved for expansion]
SUBCHAPTER D. RELATIONS BETWEEN INSUREDS
AND PREFERRED PROVIDERS
Sec. 1301.151. INSURED'S RIGHT TO TREATMENT. Each insured
is entitled to treatment and diagnostic techniques that are
prescribed by the physician or health care provider included in the
preferred provider benefit plan. (V.T.I.C. Art. 3.70-3C, Sec.
3(e), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.152. CONTINUING CARE IN GENERAL. (a) An insurer
shall establish reasonable procedures for ensuring a transition of
insureds to physicians or health care providers and for continuity
of treatment.
(b) An insurer shall:
(1) provide, subject to Section 1301.160, reasonable
advance notice to an insured of the impending termination of the
participation in the plan of a physician or health care provider who
is currently treating the insured; and
(2) in the event of termination of a preferred
provider's participation in the plan, make available to the insured
a current listing of preferred providers.
(c) A contract between an insurer and a physician or health
care provider must include a procedure for resolving disputes
regarding the necessity for continued treatment by the physician or
provider. (V.T.I.C. Art. 3.70-3C, Secs. 4(a), (d), as added Acts
75th Leg., R.S., Ch. 1024.)
Sec. 1301.153. CONTINUITY OF CARE. (a) In this section:
(1) "Life-threatening" means a disease or condition
for which the likelihood of death is probable unless the course of
the disease or condition is interrupted.
(2) "Special circumstances" means a condition
regarding which the treating physician or health care provider
reasonably believes that discontinuing care by the treating
physician or provider could cause harm to the insured. Examples of
an insured who has a special circumstance include an insured with a
disability, acute condition, or life-threatening illness or an
insured who is past the 24th week of pregnancy.
(b) Each contract between an insurer and a physician or
health care provider must provide that the termination of the
physician's or provider's participation in a preferred provider
benefit plan, except for reason of medical competence or
professional behavior, does not:
(1) release the physician or health care provider from
the generally recognized obligation to:
(A) treat an insured whom the physician or
provider is currently treating; and
(B) cooperate in arranging for appropriate
referrals; or
(2) release the insurer from the obligation to
reimburse the physician or health care provider or, if applicable,
the insured, at the same preferred provider rate if, at the time a
physician's or provider's participation is terminated, an insured
whom the physician or provider is currently treating has special
circumstances in accordance with the dictates of medical prudence.
(c) The treating physician or health care provider shall
identify a special circumstance. The treating physician or health
care provider shall:
(1) request that the insured be permitted to continue
treatment under the physician's or provider's care; and
(2) agree not to seek payment from the insured of any
amount for which the insured would not be responsible if the
physician or provider were still a preferred provider. (V.T.I.C.
Art. 3.70-3C, Secs. 1(7), 4(b), (c), as added Acts 75th Leg., R.S.,
Ch. 1024.)
Sec. 1301.154. OBLIGATION FOR CONTINUITY OF CARE OF
INSURER. (a) Except as provided by Subsection (b), Sections
1301.152 and 1301.153 do not extend an insurer's obligation to
reimburse the terminated physician or provider or, if applicable,
the insured at the preferred provider level of coverage for ongoing
treatment of an insured after:
(1) the 90th day after the effective date of the
termination; or
(2) if the insured has been diagnosed as having a
terminal illness at the time of the termination, the expiration of
the nine-month period after the effective date of the termination.
(b) If an insured is past the 24th week of pregnancy at the
time of termination, an insurer's obligation to reimburse, at the
preferred provider level of coverage, the physician or provider or,
if applicable, the insured, extends through delivery of the child,
immediate postpartum care, and the follow-up checkup within the
six-week period after delivery. (V.T.I.C. Art. 3.70-3C, Sec. 4(e),
as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.155. EMERGENCY CARE. (a) In this section,
"emergency care" means health care services provided in a hospital
emergency facility or comparable facility to evaluate and stabilize
a medical condition of a recent onset and severity, including
severe pain, that would lead a prudent layperson possessing an
average knowledge of medicine and health to believe that the
person's condition, sickness, or injury is of such a nature that
failure to get immediate medical care could result in:
(1) placing the person's health in serious jeopardy;
(2) serious impairment to bodily functions;
(3) serious dysfunction of a bodily organ or part;
(4) serious disfigurement; or
(5) in the case of a pregnant woman, serious jeopardy
to the health of the fetus.
(b) If an insured cannot reasonably reach a preferred
provider, an insurer shall provide reimbursement for the following
emergency care services at the preferred level of benefits until
the insured can reasonably be expected to transfer to a preferred
provider:
(1) a medical screening examination or other
evaluation required by state or federal law to be provided in the
emergency facility of a hospital that is necessary to determine
whether a medical emergency condition exists;
(2) necessary emergency care services, including the
treatment and stabilization of an emergency medical condition; and
(3) services originating in a hospital emergency
facility following treatment or stabilization of an emergency
medical condition. (V.T.I.C. Art. 3.70-3C, Secs. 1(1), 5, as added
Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.156. PAYMENT OF CLAIMS TO INSURED. An insurer
shall comply with Subchapter B, Chapter 542, with respect to prompt
payment to insureds. (V.T.I.C. Art. 3.70-3C, Sec. 3(m) (part), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.157. PLAIN LANGUAGE REQUIREMENTS. Each health
insurance policy, health benefit plan certificate, endorsement,
amendment, application, or rider must:
(1) be written in plain language;
(2) be in a readable and understandable format; and
(3) comply with all applicable requirements relating
to minimum readability requirements. (V.T.I.C. Art. 3.70-3C, Sec.
6(a), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.158. INFORMATION CONCERNING PREFERRED PROVIDER
BENEFIT PLANS. (a) In this section, "prospective insured" means:
(1) for group coverage, an individual or an
individual's dependent who is eligible for coverage under a health
insurance policy issued to the group; or
(2) for individual coverage, an individual or an
individual's dependent who is eligible for coverage and who has
expressed an interest in purchasing an individual health insurance
policy.
(b) An insurer shall provide to a current or prospective
group contract holder or current or prospective insured on request
an accurate written description of the terms of the health
insurance policy to allow the current or prospective group contract
holder or current or prospective insured to make comparisons and an
informed decision before selecting among health care plans. The
description must be in a readable and understandable format as
prescribed by the commissioner and must include a current list of
preferred providers. The insurer may satisfy this requirement by
providing its handbook if:
(1) the handbook's content is substantively similar to
and achieves the same level of disclosure as the written
description prescribed by the commissioner; and
(2) the current list of preferred providers is
provided.
(c) An insurer or an agent or representative of an insurer
may not use or distribute, or permit the use or distribution of,
information for prospective insureds that is untrue or misleading.
(V.T.I.C. Art. 3.70-3C, Secs. 1(11), 6(b), (d), as added Acts 75th
Leg., R.S., Ch. 1024.)
Sec. 1301.159. ANNUAL LIST OF PREFERRED PROVIDERS. A
current list of preferred providers shall be provided to each
insured at least annually. (V.T.I.C. Art. 3.70-3C, Sec. 6(c), as
added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.160. NOTIFICATION OF TERMINATION OF
PARTICIPATION OF PREFERRED PROVIDER. (a) If a practitioner's
participation in a preferred provider benefit plan is terminated
for a reason other than at the practitioner's request, an insurer
may not notify insureds of the termination until the later of:
(1) the effective date of the termination; or
(2) the time at which a review panel makes a formal
recommendation regarding the termination.
(b) A physician or health care provider that voluntarily
terminates the physician's or provider's participation in a
preferred provider benefit plan shall provide reasonable notice to
each insured under the physician's or provider's care. The insurer
shall provide assistance to the physician or provider in ensuring
that the notice requirements of this subsection are met.
(c) If a practitioner's participation in a preferred
provider benefit plan is terminated for reasons related to imminent
harm, an insurer may notify insureds immediately. (V.T.I.C. Art.
3.70-3C, Sec. 6(e), as added Acts 75th Leg., R.S., Ch. 1024.)
Sec. 1301.161. RETALIATION AGAINST INSURED PROHIBITED. An
insurer may not engage in any retaliatory action against an
insured, including canceling or refusing to renew a health
insurance policy, because the insured or a person acting on the
insured's behalf has:
(1) filed a complaint against the insurer or against a
preferred provider; or
(2) appealed a decision of the insurer. (V.T.I.C.
Art. 3.70-3C, Sec. 7(a), as added Acts 75th Leg., R.S., Ch. 1024.)
[Sections 1301.162-1301.200 reserved for expansion]
SUBCHAPTER E. CERTAIN HEALTH CARE PROVIDERS
Sec. 1301.201. CONTRACTS WITH AND REIMBURSEMENT FOR NURSE
FIRST ASSISTANTS. A preferred provider may not refuse to:
(1) contract with a nurse first assistant, as defined
by Section 301.1525, Occupations Code, to be included in the
provider's network; or
(2) reimburse the nurse first assistant for a covered
service that a physician has requested the nurse first assistant to
perform. (V.T.I.C. Art. 3.70-3C, Sec. 3(o), as added Acts 75th
Leg., R.S., Ch. 1024.)
[Chapters 1302-1350 reserved for expansion]
SUBTITLE E. BENEFITS PAYABLE UNDER HEALTH COVERAGES
CHAPTER 1351. HOME HEALTH SERVICES
Sec. 1351.001. DEFINITIONS
Sec. 1351.002. APPLICABILITY OF CHAPTER
Sec. 1351.003. APPLICABILITY OF GENERAL PROVISIONS OF
OTHER LAW
Sec. 1351.004. EXCEPTION
Sec. 1351.005. COVERAGE REQUIRED
Sec. 1351.006. REIMBURSEMENT FOR HOME HEALTH SERVICES:
PHYSICIAN CERTIFICATION REQUIRED
Sec. 1351.007. LIMITATIONS AND EXCLUSIONS ON COVERAGE
PERMITTED
Sec. 1351.008. REJECTION OF COVERAGE BY PLAN HOLDER;
NEGOTIATION OF ALTERNATIVE COVERAGE
Sec. 1351.009. ADDITIONAL COVERAGE NOT PRECLUDED
CHAPTER 1351. HOME HEALTH SERVICES
Sec. 1351.001. DEFINITIONS. In this chapter:
(1) "Health services" includes:
(A) skilled nursing by a registered nurse or a
licensed vocational nurse under the supervision of at least one
registered nurse and at least one physician;
(B) physical, occupational, speech, or
respiratory therapy;
(C) the services of a home health aide under the
supervision of a registered nurse; and
(D) the furnishing of medical equipment and
supplies other than drugs or medicines.
(2) "Home health agency" means a business that:
(A) provides home health services; and
(B) is licensed by the Texas Department of Human
Services under Chapter 142, Health and Safety Code.
(3) "Home health services" means the provision of
health services for payment or other consideration in a patient's
residence under a plan of care that is:
(A) established, approved in writing, and
reviewed at least every two months by the attending physician; and
(B) certified by the attending physician as
necessary for medical purposes. (V.T.I.C. Art. 3.70-3B, Sec. 1.)
Sec. 1351.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies to a group health benefit plan that is delivered or issued
for delivery in this state and that is a group policy of accident
and health insurance, including a policy issued by a group hospital
service corporation operating under Chapter 842.
(b) This chapter applies to an accident and health insurance
policy issued by a stipulated premium company subject to Chapter
884. (V.T.I.C. Art. 3.70-3B, Sec. 2(a) (part); Art. 3.70-8, Secs.
(a) (part), (b).)
Sec. 1351.003. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter, the
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this chapter. (New.)
Sec. 1351.004. EXCEPTION. This chapter does not apply to:
(1) a group policy of accident and health insurance
that provides coverage only for:
(A) a specified disease or diseases;
(B) vision care;
(C) dental care;
(D) hospital indemnity;
(E) prescription drugs; or
(F) other limited benefits;
(2) a blanket insurance policy, as described by
Chapter 1251;
(3) a short-term travel insurance policy;
(4) an accident-only insurance policy;
(5) a hospital indemnity insurance policy;
(6) a limited or specified disease insurance policy;
(7) an insurance policy or contract issued under a
right of conversion; or
(8) an insurance policy or contract designed for
issuance to a person eligible for Medicare coverage. (V.T.I.C.
Art. 3.70-3B, Sec. 2(c).)
Sec. 1351.005. COVERAGE REQUIRED. Except as provided by
Section 1351.008, a group health benefit plan must provide coverage
for home health services provided by a home health agency.
(V.T.I.C. Art. 3.70-3B, Sec. 2(a) (part).)
Sec. 1351.006. REIMBURSEMENT FOR HOME HEALTH SERVICES:
PHYSICIAN CERTIFICATION REQUIRED. A group health benefit plan
issuer may not provide reimbursement for home health services
provided under the plan unless the attending physician certifies
that hospitalization or confinement in a skilled facility would be
required if a treatment plan for home health care were not provided.
(V.T.I.C. Art. 3.70-3B, Sec. 2(a) (part).)
Sec. 1351.007. LIMITATIONS AND EXCLUSIONS ON COVERAGE
PERMITTED. (a) A group health benefit plan may include:
(1) a limitation on the number of visits for home
health services for which benefits are payable, subject to
Subsection (b);
(2) an exclusion for home health services coverage
for:
(A) custodial care;
(B) services provided by an individual who:
(i) resides in the covered individual's
home; or
(ii) is a member of the covered individual's
family; or
(C) services provided to a covered individual who
is eligible for Medicare coverage;
(3) annual deductible and coinsurance provisions for
home health services coverage that are not less favorable than the
deductible or coinsurance provisions applicable to hospital
services coverage under the plan; and
(4) other coverage limitations or exclusions
consistent with the remaining provisions of the plan.
(b) A limitation under Subsection (a)(1) may not limit each
individual covered under the plan to fewer than 60 visits in any
calendar year or continuous 12-month period.
(c) For purposes of this section, each of the following is
considered to be one visit for home health services:
(1) a visit by a representative of a home health
agency;
(2) four hours of home health aide service; and
(3) if home health aide service extends beyond four
hours, each additional four hours or portion of that four-hour
period. (V.T.I.C. Art. 3.70-3B, Secs. 3(a), (b), (c).)
Sec. 1351.008. REJECTION OF COVERAGE BY PLAN HOLDER;
NEGOTIATION OF ALTERNATIVE COVERAGE. (a) If the holder of a group
health benefit plan rejects in writing the coverage required under
this chapter, the plan issuer:
(1) may not include the coverage in the plan; and
(2) is not required to:
(A) offer the coverage to the plan holder; or
(B) provide the coverage under the plan.
(b) If a plan holder rejects in writing the coverage
required under this chapter, the plan holder and the plan issuer may
negotiate coverage for home health services other than the coverage
required under this chapter. (V.T.I.C. Art. 3.70-3B, Sec. 2(b).)
Sec. 1351.009. ADDITIONAL COVERAGE NOT PRECLUDED. This
chapter does not preclude a group health benefit plan issuer from
providing coverage for home health services that exceeds the
coverage required under this chapter. (V.T.I.C. Art. 3.70-3B, Sec.
3(d).)
CHAPTER 1352. BRAIN INJURY
Sec. 1352.001. APPLICABILITY OF CHAPTER
Sec. 1352.002. EXCEPTION
Sec. 1352.003. EXCLUSION OF COVERAGE PROHIBITED
Sec. 1352.004. TRAINING FOR CERTAIN PERSONNEL REQUIRED
CHAPTER 1352. BRAIN INJURY
Sec. 1352.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan, including a small employer
health benefit plan written under Chapter 1501, that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a Lloyd's plan operating under Chapter 941;
(7) a health maintenance organization operating under
Chapter 843;
(8) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(9) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.53Q, Secs. 1(a), (b).)
Sec. 1352.002. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit other than an accident policy;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1352.001. (V.T.I.C. Art. 21.53Q, Sec. 1(c).)
Sec. 1352.003. EXCLUSION OF COVERAGE PROHIBITED. (a) A
health benefit plan may not exclude coverage for cognitive
rehabilitation therapy, cognitive communication therapy,
neurocognitive therapy and rehabilitation, neurobehavioral,
neurophysiological, neuropsychological, or psychophysiological
testing or treatment, neurofeedback therapy, remediation,
post-acute transition services, or community reintegration
services necessary as a result of and related to an acquired brain
injury.
(b) Coverage required under this chapter may be subject to
deductibles, copayments, coinsurance, or annual or maximum payment
limits that are consistent with the deductibles, copayments,
coinsurance, or annual or maximum payment limits applicable to
other similar coverage provided under the health benefit plan.
(c) The commissioner shall adopt rules as necessary to
implement this section. (V.T.I.C. Art. 21.53Q, Sec. 2.)
Sec. 1352.004. TRAINING FOR CERTAIN PERSONNEL REQUIRED.
(a) In this section, "preauthorization" means the provision of a
reliable representation to a physician or health care provider of
whether a health benefit plan issuer will pay the physician or
provider for proposed medical or health care services if the
physician or provider provides those services to the patient for
whom the services are proposed. The term includes
precertification, certification, recertification, or any other
activity that involves providing a reliable representation by the
issuer to a physician or health care provider.
(b) The commissioner by rule shall require a health benefit
plan issuer to provide adequate training to personnel responsible
for preauthorization of coverage or utilization review under the
plan. The purpose of the training is to prevent denial of coverage
in violation of Section 1352.003 and to avoid confusion of medical
benefits with mental health benefits. (V.T.I.C. Art. 21.53Q, Sec.
3.)
CHAPTER 1353. IMMUNIZATION OR VACCINATION PROTOCOLS UNDER
MANAGED CARE PLANS
Sec. 1353.001. PROHIBITED CONDUCT
Sec. 1353.002. RULES
CHAPTER 1353. IMMUNIZATION OR VACCINATION PROTOCOLS UNDER
MANAGED CARE PLANS
Sec. 1353.001. PROHIBITED CONDUCT. A managed care entity
may not:
(1) require a physician participating in a managed
care plan to issue an immunization or vaccination protocol for an
immunization or vaccination to be administered to an enrollee in
the plan;
(2) limit an enrollee's benefits for immunizations or
vaccinations to circumstances in which an immunization or
vaccination protocol is issued;
(3) provide a financial incentive to a physician to
issue an immunization or vaccination protocol; or
(4) impose a financial or other penalty on a physician
who refuses to issue an immunization or vaccination protocol.
(V.T.I.C. Art. 21.53K, Sec. 1.)
Sec. 1353.002. RULES. The commissioner may adopt rules to
implement this chapter. (V.T.I.C. Art. 21.53K, Sec. 2.)
CHAPTER 1354. ELIGIBILITY FOR BENEFITS FOR ALZHEIMER'S DISEASE
Sec. 1354.001. APPLICABILITY OF CHAPTER
Sec. 1354.002. PROOF OF ORGANIC DISEASE
CHAPTER 1354. ELIGIBILITY FOR BENEFITS FOR ALZHEIMER'S DISEASE
Sec. 1354.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides coverage for Alzheimer's disease; and
(2) is an individual or group policy, contract,
certificate, or evidence of coverage that is delivered or issued
for delivery in this state by an insurer or a group hospital service
corporation operating under Chapter 842. (V.T.I.C. Art. 3.78
(part).)
Sec. 1354.002. PROOF OF ORGANIC DISEASE. If a health
benefit plan requires demonstrable proof of organic disease or
other proof before the health benefit plan issuer will authorize
payment of benefits for Alzheimer's disease, that proof requirement
is satisfied by a clinical diagnosis of Alzheimer's disease made by
a physician licensed in this state, including a history and
physical, neurological, and psychological or psychiatric
evaluations, and laboratory studies. (V.T.I.C. Art. 3.78 (part).)
CHAPTER 1355. BENEFITS FOR CERTAIN MENTAL DISORDERS
SUBCHAPTER A. GROUP HEALTH BENEFIT PLAN COVERAGE FOR CERTAIN
SERIOUS MENTAL ILLNESSES
Sec. 1355.001. DEFINITIONS
Sec. 1355.002. APPLICABILITY OF SUBCHAPTER
Sec. 1355.003. EXCEPTION
Sec. 1355.004. REQUIRED COVERAGE FOR SERIOUS MENTAL
ILLNESS
Sec. 1355.005. MANAGED CARE PLAN AUTHORIZED
Sec. 1355.006. COVERAGE FOR CERTAIN CONDITIONS RELATED TO
CONTROLLED SUBSTANCE OR MARIHUANA NOT
REQUIRED
Sec. 1355.007. SMALL EMPLOYER COVERAGE
[Sections 1355.008-1355.050 reserved for expansion]
SUBCHAPTER B. ALTERNATIVE MENTAL HEALTH TREATMENT
BENEFITS
Sec. 1355.051. DEFINITIONS
Sec. 1355.052. APPLICABILITY OF SUBCHAPTER
Sec. 1355.053. REQUIRED COVERAGE FOR CERTAIN ILLNESSES
AND DISORDERS
Sec. 1355.054. CONDITIONS FOR COVERAGE
Sec. 1355.055. DETERMINATIONS FOR TREATMENT IN A
RESIDENTIAL TREATMENT CENTER FOR CHILDREN
AND ADOLESCENTS
Sec. 1355.056. DETERMINATIONS FOR TREATMENT BY A
CRISIS STABILIZATION UNIT
Sec. 1355.057. REVIEW AND ADJUSTMENT OF MINIMUM
RATIOS OF REIMBURSEMENT
Sec. 1355.058. ASSISTANCE OF THE TEXAS DEPARTMENT OF
MENTAL HEALTH AND MENTAL RETARDATION
[Sections 1355.059-1355.100 reserved for expansion]
SUBCHAPTER C. PSYCHIATRIC DAY TREATMENT FACILITIES
Sec. 1355.101. DEFINITION
Sec. 1355.102. APPLICABILITY OF SUBCHAPTER
Sec. 1355.103. APPLICABILITY OF GENERAL PROVISIONS OF
OTHER LAW
Sec. 1355.104. REQUIRED COVERAGE FOR TREATMENT IN
PSYCHIATRIC DAY TREATMENT FACILITY
Sec. 1355.105. DETERMINATIONS FOR TREATMENT IN PSYCHIATRIC
DAY TREATMENT FACILITY
Sec. 1355.106. OFFER OF COVERAGE REQUIRED; ALTERNATIVE
BENEFITS
[Sections 1355.107-1355.150 reserved for expansion]
SUBCHAPTER D. CERTAIN COVERAGES PROVIDED BY LOCAL GOVERNMENTS
Sec. 1355.151. PROHIBITION ON EXCLUSION OR LIMITATION OF
CERTAIN COVERAGES
[Sections 1355.152-1355.200 reserved for expansion]
SUBCHAPTER E. BENEFITS FOR TREATMENT BY
TAX-SUPPORTED INSTITUTION
Sec. 1355.201. APPLICABILITY OF GENERAL PROVISIONS OF
OTHER LAW
Sec. 1355.202. PROHIBITION OF EXCLUSION OF MENTAL HEALTH
OR MENTAL RETARDATION BENEFITS FOR
TREATMENT BY TAX-SUPPORTED INSTITUTION
CHAPTER 1355. BENEFITS FOR CERTAIN MENTAL DISORDERS
SUBCHAPTER A. GROUP HEALTH BENEFIT PLAN COVERAGE FOR CERTAIN
SERIOUS MENTAL ILLNESSES
Sec. 1355.001. DEFINITIONS. In this subchapter:
(1) "Serious mental illness" means the following
psychiatric illnesses as defined by the American Psychiatric
Association in the Diagnostic and Statistical Manual (DSM):
(A) bipolar disorders (hypomanic, manic,
depressive, and mixed);
(B) depression in childhood and adolescence;
(C) major depressive disorders (single episode
or recurrent);
(D) obsessive-compulsive disorders;
(E) paranoid and other psychotic disorders;
(F) pervasive developmental disorders;
(G) schizo-affective disorders (bipolar or
depressive); and
(H) schizophrenia.
(2) "Small employer" has the meaning assigned by
Section 1501.002. (V.T.I.C. Art. 3.51-14, Secs. 1(1), (3).)
Sec. 1355.002. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a group health benefit plan that
provides benefits for medical or surgical expenses incurred as a
result of a health condition, accident, or sickness, including:
(1) a group insurance policy, group insurance
agreement, group hospital service contract, or group evidence of
coverage that is offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884; or
(E) a health maintenance organization operating
under Chapter 843; and
(2) to the extent permitted by the Employee Retirement
Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.), a plan
offered under:
(A) a multiple employer welfare arrangement as
defined by Section 3 of that Act; or
(B) another analogous benefit arrangement.
(V.T.I.C. Art. 3.51-14, Sec. 2(a).)
Sec. 1355.003. EXCEPTION. (a) This subchapter does not
apply to coverage under:
(1) a blanket accident and health insurance policy, as
described by Chapter 1251;
(2) a short-term travel policy;
(3) an accident-only policy;
(4) a limited or specified-disease policy that does
not provide benefits for mental health care or similar services;
(5) except as provided by Subsection (b), a plan
offered under Chapter 1551 or Chapter 1601;
(6) a plan offered in accordance with Section
1355.151; or
(7) a Medicare supplement benefit plan, as defined by
Section 1652.002.
(b) For the purposes of a plan described by Subsection
(a)(5), "serious mental illness" has the meaning assigned by
Section 1355.001. (V.T.I.C. Art. 3.51-14, Sec. 2(b).)
Sec. 1355.004. REQUIRED COVERAGE FOR SERIOUS MENTAL
ILLNESS. (a) A group health benefit plan:
(1) must provide coverage, based on medical necessity,
for not less than the following treatments of serious mental
illness in each calendar year:
(A) 45 days of inpatient treatment; and
(B) 60 visits for outpatient treatment,
including group and individual outpatient treatment;
(2) may not include a lifetime limitation on the
number of days of inpatient treatment or the number of visits for
outpatient treatment covered under the plan; and
(3) must include the same amount limitations,
deductibles, copayments, and coinsurance factors for serious
mental illness as the plan includes for physical illness.
(b) A group health benefit plan issuer:
(1) may not count an outpatient visit for medication
management against the number of outpatient visits required to be
covered under Subsection (a)(1)(B); and
(2) must provide coverage for an outpatient visit
described by Subsection (a)(1)(B) under the same terms as the
coverage the issuer provides for an outpatient visit for the
treatment of physical illness. (V.T.I.C. Art. 3.51-14, Secs. 3(a),
(b).)
Sec. 1355.005. MANAGED CARE PLAN AUTHORIZED. A group health
benefit plan issuer may provide or offer coverage required by
Section 1355.004 through a managed care plan. (V.T.I.C. Art.
3.51-14, Sec. 3(c).)
Sec. 1355.006. COVERAGE FOR CERTAIN CONDITIONS RELATED TO
CONTROLLED SUBSTANCE OR MARIHUANA NOT REQUIRED. (a) In this
section, "controlled substance" and "marihuana" have the meanings
assigned by Section 481.002, Health and Safety Code.
(b) This subchapter does not require a group health benefit
plan to provide coverage for the treatment of:
(1) addiction to a controlled substance or marihuana
that is used in violation of law; or
(2) mental illness that results from the use of a
controlled substance or marihuana in violation of law. (V.T.I.C.
Art. 3.51-14, Sec. 5.)
Sec. 1355.007. SMALL EMPLOYER COVERAGE. An issuer of a
group health benefit plan to a small employer must offer the
coverage described by Section 1355.004 to the employer but is not
required to provide the coverage if the employer rejects the
coverage. (V.T.I.C. Art. 3.51-14, Sec. 4.)
[Sections 1355.008-1355.050 reserved for expansion]
SUBCHAPTER B. ALTERNATIVE MENTAL HEALTH TREATMENT
BENEFITS
Sec. 1355.051. DEFINITIONS. In this subchapter:
(1) "Crisis stabilization unit" means a 24-hour
residential program that provides, usually for a short term,
intensive supervision and highly structured activities to
individuals who demonstrate a moderate to severe acute psychiatric
crisis.
(2) "Individual treatment plan" means a treatment plan
with specific attainable goals and objectives that are appropriate
to:
(A) the patient; and
(B) the program's treatment modality.
(3) "Residential treatment center for children and
adolescents" means a child-care institution that:
(A) is accredited as a residential treatment
center by:
(i) the Council on Accreditation;
(ii) the Joint Commission on Accreditation
of Healthcare Organizations; or
(iii) the American Association of
Psychiatric Services for Children; and
(B) provides residential care and treatment for
emotionally disturbed children and adolescents. (V.T.I.C. Art.
3.72, Subsec. (a).)
Sec. 1355.052. APPLICABILITY OF SUBCHAPTER. This
subchapter applies to a group health benefit plan that is delivered
or issued for delivery in this state and that is:
(1) an accident and health insurance group policy;
(2) a group policy issued by a group hospital service
corporation operating under Chapter 842; or
(3) a group health care plan provided by a health
maintenance organization operating under Chapter 843. (V.T.I.C.
Art. 3.72, Subsec. (b) (part).)
Sec. 1355.053. REQUIRED COVERAGE FOR CERTAIN ILLNESSES AND
DISORDERS. A group health benefit plan that provides coverage for
treatment of mental or emotional illness or disorder for a covered
individual when the individual is confined in a hospital must also
provide coverage for treatment in a residential treatment center
for children and adolescents or a crisis stabilization unit that is
at least as favorable as the coverage the plan provides for
treatment of mental or emotional illness or disorder in a hospital.
(V.T.I.C. Art. 3.72, Subsec. (b) (part).)
Sec. 1355.054. CONDITIONS FOR COVERAGE. (a) Benefits of
coverage provided under this subchapter may be used only in a
situation in which:
(1) the covered individual has a serious mental
illness that requires confinement of the individual in a hospital
unless treatment is available through a residential treatment
center for children and adolescents or a crisis stabilization unit;
and
(2) the covered individual's mental illness:
(A) substantially impairs the individual's
thought, perception of reality, emotional process, or judgment; or
(B) as manifested by the individual's recent
disturbed behavior, grossly impairs the individual's behavior.
(b) The service for which benefits are to be paid from
coverage provided under this subchapter must be:
(1) based on an individual treatment plan for the
covered individual; and
(2) provided by a service provider licensed or
operated by the appropriate state agency to provide those services.
(c) Benefits under coverage provided under this subchapter
are subject to the same benefit maximums, durational limitations,
deductibles, and coinsurance factors that apply to inpatient
psychiatric treatment under the coverage. (V.T.I.C. Art. 3.72,
Subsec. (c).)
Sec. 1355.055. DETERMINATIONS FOR TREATMENT IN A
RESIDENTIAL TREATMENT CENTER FOR CHILDREN AND ADOLESCENTS. (a)
Treatment in a residential treatment center for children and
adolescents must be determined as if necessary care and treatment
were inpatient care and treatment in a hospital.
(b) For the purposes of determining policy benefits and
benefit maximums, each two days of treatment in a residential
treatment center for children and adolescents is the equivalent of
one day of treatment of mental or emotional illness or disorder in a
hospital or inpatient program. (V.T.I.C. Art. 3.72, Subsec. (d).)
Sec. 1355.056. DETERMINATIONS FOR TREATMENT BY A CRISIS
STABILIZATION UNIT. (a) Treatment by a crisis stabilization unit
must be determined as if necessary care and treatment were
inpatient care and treatment in a hospital.
(b) For the purposes of determining plan benefits and
benefit maximums, each two days of treatment in a crisis
stabilization unit is the equivalent of one day of treatment of
mental or emotional illness or disorder in a hospital or inpatient
program.
(c) Treatment provided to an individual by a crisis
stabilization unit licensed or certified by the Texas Department of
Mental Health and Mental Retardation shall be reimbursed.
(V.T.I.C. Art. 3.72, Subsec. (e).)
Sec. 1355.057. REVIEW AND ADJUSTMENT OF MINIMUM RATIOS OF
REIMBURSEMENT. (a) The commissioner shall monitor and review the
minimum ratios of reimbursement for alternative treatments
required by Sections 1355.055 and 1355.056.
(b) If the commissioner finds that the limits provided by
this subchapter are creating an artificial increase in the costs of
services, the commissioner by rule may adjust the ratios to the
extent necessary to prevent the artificial increase.
(c) Before the commissioner adjusts a ratio under
Subsection (b), the commissioner must give notice and hold a
hearing to:
(1) consider information related to the adjustment;
and
(2) determine whether the information justifies the
adjustment.
(d) The department shall review the reimbursement ratios at
least every two years. (V.T.I.C. Art. 3.72, Subsec. (f) (part).)
Sec. 1355.058. ASSISTANCE OF THE TEXAS DEPARTMENT OF MENTAL
HEALTH AND MENTAL RETARDATION. (a) The Texas Department of Mental
Health and Mental Retardation shall assist the department in
carrying out the department's responsibilities under this
subchapter.
(b) The department and the Texas Department of Mental Health
and Mental Retardation by rule may adopt a memorandum of
understanding to carry out this subchapter. (V.T.I.C. Art. 3.72,
Subsec. (g).)
[Sections 1355.059-1355.100 reserved for expansion]
SUBCHAPTER C. PSYCHIATRIC DAY TREATMENT FACILITIES
Sec. 1355.101. DEFINITION. In this subchapter,
"psychiatric day treatment facility" means a mental health facility
that:
(1) provides treatment for individuals suffering from
acute mental and nervous disorders in a structured psychiatric
program using individualized treatment plans with specific
attainable goals and objectives that are appropriate to the patient
and the program's treatment modality; and
(2) is clinically supervised by a doctor of medicine
who is certified in psychiatry by the American Board of Psychiatry
and Neurology. (V.T.I.C. Art. 3.70-2, Sec. (F) (part).)
Sec. 1355.102. APPLICABILITY OF SUBCHAPTER. This
subchapter applies to a group policy of accident and health
insurance delivered or issued for delivery in this state, including
a group policy issued by a group hospital service corporation
operating under Chapter 842. (V.T.I.C. Art. 3.70-2, Sec. (F)
(part).)
Sec. 1355.103. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter,
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this subchapter. (New.)
Sec. 1355.104. REQUIRED COVERAGE FOR TREATMENT IN
PSYCHIATRIC DAY TREATMENT FACILITY. (a) A group insurance policy
that provides coverage for treatment of mental or emotional illness
or disorder when an individual is confined in a hospital must also
provide coverage for treatment obtained under the direction and
continued medical supervision of a doctor of medicine or doctor of
osteopathy in a psychiatric day treatment facility that provides
organizational structure and individualized treatment plans
separate from an inpatient program.
(b) The psychiatric day treatment facility coverage
required by this section may not be less favorable than the hospital
coverage and must be subject to the same durational limits,
deductibles, and coinsurance factors.
(c) A group insurance policy subject to this section may
require that:
(1) the treatment obtained in a psychiatric day
treatment facility be provided by a facility that treats a patient
for not more than 8 hours in any 24-hour period;
(2) the attending physician certify that the treatment
is in lieu of hospitalization; and
(3) the psychiatric day treatment facility be
accredited by the Program for Psychiatric Facilities, or its
successor, of the Joint Commission on Accreditation of Healthcare
Organizations. (V.T.I.C. Art. 3.70-2, Sec. (F) (part).)
Sec. 1355.105. DETERMINATIONS FOR TREATMENT IN PSYCHIATRIC
DAY TREATMENT FACILITY. (a) Benefits provided under this
subchapter shall be determined as if necessary care and treatment
in a psychiatric day treatment facility were inpatient care and
treatment in a hospital.
(b) For the purpose of determining policy benefits and
benefit maximums, each full day of treatment in a psychiatric day
treatment facility is the equivalent of one-half of one day of
treatment of mental or emotional illness or disorder in a hospital
or inpatient program. (V.T.I.C. Art. 3.70-2, Sec. (F) (part).)
Sec. 1355.106. OFFER OF COVERAGE REQUIRED; ALTERNATIVE
BENEFITS. (a) An insurer shall offer, and a policyholder is
entitled to reject, coverage under a group insurance policy for
treatment of mental or emotional illness or disorder when confined
in a hospital or in a psychiatric day treatment facility.
(b) A policyholder may select an alternative level of
benefits under the group insurance policy if the alternative level
is offered by or negotiated with the insurer.
(c) The alternative level of benefits must provide policy
benefits and benefit maximums for treatment in a psychiatric day
treatment facility equal to at least one-half of that provided for
treatment in a hospital, except that benefits for treatment in a
psychiatric day treatment facility may not exceed the usual and
customary charges of the facility. (V.T.I.C. Art. 3.70-2, Sec. (F)
(part).)
[Sections 1355.107-1355.150 reserved for expansion]
SUBCHAPTER D. CERTAIN COVERAGES PROVIDED BY LOCAL GOVERNMENTS
Sec. 1355.151. PROHIBITION ON EXCLUSION OR LIMITATION OF
CERTAIN COVERAGES. (a) In this section, "serious mental illness"
has the meaning assigned by Section 1355.001.
(b) A political subdivision that provides group health
insurance coverage, health maintenance organization coverage, or
self-insured health care coverage to the political subdivision's
officers or employees may not contract for or provide coverage that
is less extensive for serious mental illness than the coverage
provided for any other physical illness. (V.T.I.C. Art. 3.51-5A,
Subsecs. (a) (part), (b).)
[Sections 1355.152-1355.200 reserved for expansion]
SUBCHAPTER E. BENEFITS FOR TREATMENT BY TAX-SUPPORTED INSTITUTION
Sec. 1355.201. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter,
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this subchapter. (New.)
Sec. 1355.202. PROHIBITION OF EXCLUSION OF MENTAL HEALTH OR
MENTAL RETARDATION BENEFITS FOR TREATMENT BY TAX-SUPPORTED
INSTITUTION. (a) An individual or group accident and health
insurance policy delivered or issued for delivery to a person in
this state that provides coverage for mental illness or mental
retardation may not exclude benefits under that coverage for
support, maintenance, and treatment provided by a tax-supported
institution of this state, or by a community center for mental
health or mental retardation services, that regularly and
customarily charges patients who are not indigent for those
services.
(b) In determining whether a patient is not indigent, as
provided by Subchapter B, Chapter 552, Health and Safety Code, a
tax-supported institution of this state or a community center for
mental health or mental retardation services shall consider any
insurance policy or policies that provide coverage to the patient
for mental illness or mental retardation. (V.T.I.C. Art. 3.70-2,
Sec. (D).)
CHAPTER 1356. LOW-DOSE MAMMOGRAPHY
Sec. 1356.001. DEFINITION
Sec. 1356.002. APPLICABILITY OF CHAPTER
Sec. 1356.003. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW
Sec. 1356.004. EXCEPTION
Sec. 1356.005. COVERAGE REQUIRED
CHAPTER 1356. LOW-DOSE MAMMOGRAPHY
Sec. 1356.001. DEFINITION. In this chapter, "low-dose
mammography" means the x-ray examination of the breast using
equipment dedicated specifically for mammography, including an
x-ray tube, filter, compression device, screens, films, and
cassettes, with an average radiation exposure delivery of less than
one rad mid-breast, with two views for each breast. (V.T.I.C. Art.
3.70-2, Sec. (H) (part), as amended Acts 70th Leg., R.S., Ch. 1091.)
Sec. 1356.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that is delivered, issued for
delivery, or renewed in this state and that is an individual or
group accident and health insurance policy, including a policy
issued by a group hospital service corporation operating under
Chapter 842. (V.T.I.C. Art. 3.70-2, Sec. (H) (part), as amended
Acts 70th Leg., R.S., Ch. 1091.)
Sec. 1356.003. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter,
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this chapter. (New.)
Sec. 1356.004. EXCEPTION. This chapter does not apply to a
plan that provides coverage only for a specified disease or for
another limited benefit. (V.T.I.C. Art. 3.70-2, Sec. (H) (part),
as amended Acts 70th Leg., R.S., Ch. 1091.)
Sec. 1356.005. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage to a female who is 35 years of age or
older must include coverage for an annual screening by low-dose
mammography for the presence of occult breast cancer.
(b) Coverage required by this section:
(1) may not be less favorable than coverage for other
radiological examinations under the plan; and
(2) must be subject to the same dollar limits,
deductibles, and coinsurance factors as coverage for other
radiological examinations under the plan. (V.T.I.C. Art. 3.70-2,
Sec. (H) (part), as amended Acts 70th Leg., R.S., Ch. 1091.)
CHAPTER 1357. MASTECTOMY
SUBCHAPTER A. RECONSTRUCTIVE SURGERY FOLLOWING
MASTECTOMY
Sec. 1357.001. DEFINITIONS
Sec. 1357.002. APPLICABILITY OF SUBCHAPTER
Sec. 1357.003. EXCEPTION
Sec. 1357.004. COVERAGE REQUIRED
Sec. 1357.005. PROHIBITED CONDUCT
Sec. 1357.006. NOTICE OF COVERAGE
Sec. 1357.007. RULES
[Sections 1357.008-1357.050 reserved for expansion]
SUBCHAPTER B. HOSPITAL STAY FOLLOWING MASTECTOMY AND
CERTAIN RELATED PROCEDURES
Sec. 1357.051. DEFINITION
Sec. 1357.052. APPLICABILITY OF SUBCHAPTER
Sec. 1357.053. EXCEPTION
Sec. 1357.054. COVERAGE REQUIRED
Sec. 1357.055. PROHIBITED CONDUCT
Sec. 1357.056. NOTICE OF COVERAGE
Sec. 1357.057. RULES
CHAPTER 1357. MASTECTOMY
SUBCHAPTER A. RECONSTRUCTIVE SURGERY FOLLOWING
MASTECTOMY
Sec. 1357.001. DEFINITIONS. In this subchapter:
(1) "Breast reconstruction" means reconstruction of a
breast incident to mastectomy to restore or achieve breast
symmetry. The term includes surgical reconstruction of a breast on
which mastectomy has been performed and surgical reconstruction of
a breast on which mastectomy has not been performed.
(2) "Enrollee" means an individual entitled to
coverage under a health benefit plan. (V.T.I.C. Art. 21.53I, Secs.
1(2), (3).)
Sec. 1357.002. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.53I, Sec. 2(a).)
Sec. 1357.003. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or another
limited benefit, other than benefits for cancer;
(B) only for accidental death or dismemberment;
(C) only for wages or payments in lieu of wages
for a period during which an employee is absent from work because of
sickness or injury;
(D) only for credit insurance;
(E) only for dental or vision care;
(F) only for indemnity for hospital confinement;
or
(G) as a supplement to a liability insurance
policy;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1357.002. (V.T.I.C. Art. 21.53I, Sec. 2(b).)
Sec. 1357.004. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for mastectomy must provide coverage
for:
(1) reconstruction of the breast on which the
mastectomy has been performed;
(2) surgery and reconstruction of the other breast to
achieve a symmetrical appearance; and
(3) prostheses and treatment of physical
complications, including lymphedemas, at all stages of mastectomy.
(b) Coverage required under this section:
(1) shall be provided in a manner determined to be
appropriate in consultation with the attending physician and the
enrollee;
(2) may be subject to annual deductibles, copayments,
and coinsurance that are consistent with annual deductibles,
copayments, and coinsurance required for other coverage under the
health benefit plan; and
(3) may not be subject to dollar limits other than the
lifetime maximum benefits under the plan. (V.T.I.C. Art. 21.53I,
Sec. 3.)
Sec. 1357.005. PROHIBITED CONDUCT. (a) An issuer of a
health benefit plan may not:
(1) offer a financial incentive for an enrollee to not
receive breast reconstruction or to waive the coverage required
under this subchapter;
(2) condition, limit, or deny the eligibility of a
person to enroll in the plan or to renew coverage under the terms of
the plan solely to avoid the requirements of this subchapter; or
(3) reduce or limit the reimbursement or amount paid
to, or otherwise penalize, an attending physician or provider or
provide a financial incentive or other benefit to an attending
physician or provider to induce the physician or provider to
provide care to an enrollee in a manner that is inconsistent with
this subchapter.
(b) This section does not prevent an issuer of a health
benefit plan from negotiating with a physician or provider the
level and type of reimbursement that the physician or provider will
receive for care provided in accordance with this subchapter.
(V.T.I.C. Art. 21.53I, Sec. 4.)
Sec. 1357.006. NOTICE OF COVERAGE. (a) An issuer of a
health benefit plan that provides coverage under this subchapter
shall provide to each enrollee notice of the availability of the
coverage.
(b) The notice must be provided in accordance with rules
adopted by the commissioner. (V.T.I.C. Art. 21.53I, Sec. 5.)
Sec. 1357.007. RULES. The commissioner may adopt rules to
implement this subchapter and to meet the minimum requirements of
federal law. (V.T.I.C. Art. 21.53I, Sec. 7.)
[Sections 1357.008-1357.050 reserved for expansion]
SUBCHAPTER B. HOSPITAL STAY FOLLOWING MASTECTOMY AND
CERTAIN RELATED PROCEDURES
Sec. 1357.051. DEFINITION. In this subchapter, "enrollee"
means an individual entitled to coverage under a health benefit
plan. (V.T.I.C. Art. 21.52G, Sec. 1(1), as added Acts 75th Leg.,
R.S., Ch. 725.)
Sec. 1357.052. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) another analogous benefit
arrangement;
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844; or
(3) provides coverage only for a specific disease or
condition or for hospitalization. (V.T.I.C. Art. 21.52G, Secs.
2(a), (b), as added Acts 75th Leg., R.S., Ch. 725.)
Sec. 1357.053. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for accidental death or dismemberment;
(B) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
(C) as a supplement to a liability insurance
policy;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1357.052. (V.T.I.C. Art. 21.52G, Sec. 2(c), as added
Acts 75th Leg., R.S., Ch. 725.)
Sec. 1357.054. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for the treatment of breast cancer must
provide to each enrollee coverage for inpatient care for a minimum
of:
(1) 48 hours following a mastectomy; and
(2) 24 hours following a lymph node dissection for the
treatment of breast cancer.
(b) A health benefit plan is not required to provide the
minimum hours of coverage of inpatient care required under
Subsection (a) if the enrollee and the enrollee's attending
physician determine that a shorter period of inpatient care is
appropriate. (V.T.I.C. Art. 21.52G, Sec. 3, as added Acts 75th
Leg., R.S., Ch. 725.)
Sec. 1357.055. PROHIBITED CONDUCT. An issuer of a health
benefit plan may not:
(1) deny the eligibility or continued eligibility of
an individual to enroll in the plan or renew coverage under the plan
solely to avoid the requirements of this subchapter;
(2) provide money payments or rebates to an enrollee
to encourage the enrollee to accept less than the minimum coverage
required under this subchapter;
(3) reduce or limit the amount paid to an attending
physician, or otherwise penalize the physician, because the
physician provided care to an enrollee in accordance with this
subchapter; or
(4) provide financial or other incentives to an
attending physician to encourage the physician to provide care to
an enrollee in a manner inconsistent with this subchapter.
(V.T.I.C. Art. 21.52G, Sec. 4, as added Acts 75th Leg., R.S., Ch.
725.)
Sec. 1357.056. NOTICE OF COVERAGE. (a) An issuer of a
health benefit plan shall provide to each enrollee written notice
of the coverage required under this subchapter.
(b) The notice must be provided in accordance with rules
adopted by the commissioner. (V.T.I.C. Art. 21.52G, Sec. 5, as
added Acts 75th Leg., R.S., Ch. 725.)
Sec. 1357.057. RULES. The commissioner shall adopt rules
necessary to administer this subchapter. (V.T.I.C. Art. 21.52G,
Sec. 6, as added Acts 75th Leg., R.S., Ch. 725.)
CHAPTER 1358. DIABETES
SUBCHAPTER A. GUIDELINES FOR DIABETES CARE; MINIMUM
COVERAGE REQUIRED
Sec. 1358.001. DEFINITION
Sec. 1358.002. APPLICABILITY OF SUBCHAPTER
Sec. 1358.003. EXCEPTION
Sec. 1358.004. ADOPTION OF MINIMUM STANDARDS
Sec. 1358.005. COVERAGE REQUIRED
[Sections 1358.006-1358.050 reserved for expansion]
SUBCHAPTER B. SUPPLIES AND SERVICES ASSOCIATED WITH
DIABETES TREATMENT
Sec. 1358.051. DEFINITIONS
Sec. 1358.052. APPLICABILITY OF SUBCHAPTER
Sec. 1358.053. EXCEPTION
Sec. 1358.054. COVERAGE REQUIRED
Sec. 1358.055. DIABETES SELF-MANAGEMENT TRAINING
Sec. 1358.056. COVERAGE FOR NEW OR IMPROVED EQUIPMENT
AND SUPPLIES
Sec. 1358.057. RULES
CHAPTER 1358. DIABETES
SUBCHAPTER A. GUIDELINES FOR DIABETES CARE; MINIMUM
COVERAGE REQUIRED
Sec. 1358.001. DEFINITION. In this subchapter, "enrollee"
means an individual entitled to coverage under a health benefit
plan. (V.T.I.C. Art. 21.53D, Sec. 1(1), as added Acts 75th Leg.,
R.S., Ch. 1285.)
Sec. 1358.002. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including:
(1) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884; or
(E) a health maintenance organization operating
under Chapter 843;
(2) to the extent permitted by the Employee Retirement
Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.), a
health benefit plan that is offered by:
(A) a multiple employer welfare arrangement as
defined by Section 3 of that Act; or
(B) another analogous benefit arrangement; and
(3) health and accident coverage provided by a risk
pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law. (V.T.I.C. Art. 21.53D, Sec. 2(a), as added Acts 75th
Leg., R.S., Ch. 1285.)
Sec. 1358.003. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) only for dental or vision care; or
(F) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1358.002. (V.T.I.C. Art. 21.53D, Sec. 2(b), as added
Acts 75th Leg., R.S., Ch. 1285.)
Sec. 1358.004. ADOPTION OF MINIMUM STANDARDS. The
commissioner, in consultation with the Texas Diabetes Council, by
rule shall adopt minimum standards for coverage provided to an
enrollee with diabetes. (V.T.I.C. Art. 21.53D, Sec. 3(a), as added
Acts 75th Leg., R.S., Ch. 1285.)
Sec. 1358.005. COVERAGE REQUIRED. (a) A health benefit
plan must provide coverage in accordance with the standards adopted
under Section 1358.004.
(b) Coverage required under this section may not be subject
to a deductible, coinsurance, or copayment requirement that exceeds
the deductible, coinsurance, or copayment requirement applicable
to other similar coverage provided under the health benefit plan.
(V.T.I.C. Art. 21.53D, Secs. 3(b), (c), as added Acts 75th Leg.,
R.S., Ch. 1285.)
[Sections 1358.006-1358.050 reserved for expansion]
SUBCHAPTER B. SUPPLIES AND SERVICES ASSOCIATED WITH
DIABETES TREATMENT
Sec. 1358.051. DEFINITIONS. In this subchapter:
(1) "Diabetes equipment" means:
(A) blood glucose monitors, including monitors
designed to be used by blind individuals;
(B) insulin pumps and associated appurtenances;
(C) insulin infusion devices; and
(D) podiatric appliances for the prevention of
complications associated with diabetes.
(2) "Diabetes supplies" means:
(A) test strips for blood glucose monitors;
(B) visual reading and urine test strips;
(C) lancets and lancet devices;
(D) insulin and insulin analogs;
(E) injection aids;
(F) syringes;
(G) prescriptive and nonprescriptive oral agents
for controlling blood sugar levels; and
(H) glucagon emergency kits.
(3) "Nutrition counseling" has the meaning assigned by
Section 701.002, Occupations Code.
(4) "Qualified enrollee" means an individual eligible
for coverage under a health benefit plan who has been diagnosed
with:
(A) insulin dependent or noninsulin dependent
diabetes;
(B) elevated blood glucose levels induced by
pregnancy; or
(C) another medical condition associated with
elevated blood glucose levels. (V.T.I.C. Art. 21.53G, Secs. 1(1),
(2), (4), (5).)
Sec. 1358.052. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884;
(v) a reciprocal exchange operating under
Chapter 942; or
(vi) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by a multiple employer
welfare arrangement as defined by Section 3 of that Act; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.53G, Sec. 2(a).)
Sec. 1358.053. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care; or
(G) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1358.052. (V.T.I.C. Art. 21.53G, Sec. 2(b).)
Sec. 1358.054. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for the treatment of diabetes and
conditions associated with diabetes must provide to each qualified
enrollee coverage for:
(1) diabetes equipment;
(2) diabetes supplies; and
(3) diabetes self-management training in accordance
with the requirements of Section 1358.055.
(b) A health benefit plan may require a deductible,
copayment, or coinsurance for coverage provided under this section.
The amount of the deductible, copayment, or coinsurance may not
exceed the amount of the deductible, copayment, or coinsurance
required for treatment of other analogous chronic medical
conditions. (V.T.I.C. Art. 21.53G, Secs. 3, 6.)
Sec. 1358.055. DIABETES SELF-MANAGEMENT TRAINING. (a)
Diabetes self-management training must be provided by a health care
practitioner or provider who is:
(1) licensed, registered, or certified in this state
to provide appropriate health care services; and
(2) acting within the scope of practice authorized by
the license, registration, or certification.
(b) For purposes of this subchapter, "self-management
training" includes:
(1) training provided to a qualified enrollee, after
the initial diagnosis of diabetes, in the care and management of
that condition, including nutrition counseling and counseling on
the proper use of diabetes equipment and supplies;
(2) additional training authorized on the diagnosis of
a physician or other health care practitioner of a significant
change in the qualified enrollee's symptoms or condition that
requires changes in the qualified enrollee's self-management
regime; and
(3) periodic or episodic continuing education
training prescribed by an appropriate health care practitioner as
warranted by the development of new techniques or treatments for
diabetes.
(c) If the diabetes self-management training is provided on
the written order of a physician or other health care practitioner,
including a health care practitioner practicing under protocols
jointly developed with a physician, the training must also include:
(1) a diabetes self-management training program
recognized by the American Diabetes Association;
(2) diabetes self-management training provided by a
multidisciplinary team:
(A) the nonphysician members of which are
coordinated by:
(i) a diabetes educator who is certified by
the National Certification Board for Diabetes Educators; or
(ii) an individual who has completed at
least 24 hours of continuing education that meets guidelines
established by the Texas Board of Health and that includes a
combination of diabetes-related educational principles and
behavioral strategies;
(B) that consists of at least a licensed
dietitian and a registered nurse and may include a pharmacist and a
social worker; and
(C) each member of which, other than a social
worker, has recent didactic and experiential preparation in
diabetes clinical and educational issues as determined by the
member's licensing agency, in consultation with the commissioner of
public health, unless the member's licensing agency, in
consultation with the commissioner of public health, determines
that the core educational preparation for the member's license
includes the skills the member needs to provide diabetes
self-management training;
(3) diabetes self-management training provided by a
diabetes educator certified by the National Certification Board for
Diabetes Educators; or
(4) diabetes self-management training that provides
one or more of the following components:
(A) a nutrition counseling component provided by
a licensed dietitian, for which the licensed dietitian shall be
paid;
(B) a pharmaceutical component provided by a
pharmacist, for which the pharmacist shall be paid;
(C) a component provided by a physician assistant
or registered nurse, for which the physician assistant or
registered nurse shall be paid, except that the physician assistant
or registered nurse may not be paid for providing a nutrition
counseling or pharmaceutical component unless a licensed dietitian
or pharmacist is unavailable to provide that component; or
(D) a component provided by a physician.
(d) An individual may not provide a component of diabetes
self-management training under Subsection (c)(4) unless:
(1) the subject matter of the component is within the
scope of the individual's practice; and
(2) the individual meets the education requirements,
as determined by the individual's licensing agency in consultation
with the commissioner of public health. (V.T.I.C. Art. 21.53G,
Sec. 4.)
Sec. 1358.056. COVERAGE FOR NEW OR IMPROVED EQUIPMENT AND
SUPPLIES. A health benefit plan must provide coverage for new or
improved diabetes equipment or supplies, including improved
insulin or another prescription drug, approved by the United States
Food and Drug Administration if the equipment or supplies are
determined by a physician or other health care practitioner to be
medically necessary and appropriate. (V.T.I.C. Art. 21.53G, Sec.
5.)
Sec. 1358.057. RULES. (a) The commissioner shall adopt
rules necessary to implement this subchapter.
(b) In adopting rules under this section, the commissioner
may consult with the commissioner of public health and other
appropriate entities. (V.T.I.C. Art. 21.53G, Sec. 7.)
CHAPTER 1359. FORMULAS FOR INDIVIDUALS WITH PHENYLKETONURIA
OR OTHER HERITABLE DISEASES
Sec. 1359.001. DEFINITIONS
Sec. 1359.002. APPLICABILITY OF CHAPTER
Sec. 1359.003. COVERAGE REQUIRED
CHAPTER 1359. FORMULAS FOR INDIVIDUALS WITH PHENYLKETONURIA
OR OTHER HERITABLE DISEASES
Sec. 1359.001. DEFINITIONS. In this chapter:
(1) "Heritable disease" means an inherited disease
that may result in mental or physical retardation or death.
(2) "Phenylketonuria" means an inherited condition
that, if not treated, may cause severe mental retardation.
(V.T.I.C. Art. 3.79, Secs. 1(2), (3).)
Sec. 1359.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan that is a group policy,
contract, or certificate of health insurance or an evidence of
coverage delivered, issued for delivery, or renewed in this state
by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842; or
(3) a health maintenance organization operating under
Chapter 843. (V.T.I.C. Art. 3.79, Sec. 1(1).)
Sec. 1359.003. COVERAGE REQUIRED. (a) A group health
benefit plan must provide coverage for formulas necessary to treat
phenylketonuria or a heritable disease.
(b) The group health benefit plan must provide the coverage
to the same extent that the plan provides coverage for drugs that
are available only on the orders of a physician. (V.T.I.C. Art.
3.79, Sec. 2.)
CHAPTER 1360. DIAGNOSIS AND TREATMENT AFFECTING
TEMPOROMANDIBULAR JOINT
Sec. 1360.001. DEFINITION
Sec. 1360.002. APPLICABILITY OF CHAPTER
Sec. 1360.003. EXCEPTION
Sec. 1360.004. COVERAGE REQUIRED
Sec. 1360.005. DENTAL SERVICES COVERAGE NOT REQUIRED
CHAPTER 1360. DIAGNOSIS AND TREATMENT AFFECTING
TEMPOROMANDIBULAR JOINT
Sec. 1360.001. DEFINITION. In this chapter,
"temporomandibular joint" includes the jaw and the
craniomandibular joint. (V.T.I.C. Art. 21.53A, Sec. 3(a) (part).)
Sec. 1360.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan delivered or issued for
delivery in this state that:
(1) provides benefits for dental, medical, or surgical
expenses incurred as a result of a health condition, accident, or
sickness, including:
(A) a group, blanket, or franchise insurance
policy or insurance agreement, a group hospital service contract,
or a group evidence of coverage that is offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act;
(ii) an entity not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis; or
(iii) another analogous benefit
arrangement; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.53A, Secs. 2(a), 3(a) (part).)
Sec. 1360.003. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease or another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for vision care; or
(G) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) a workers' compensation insurance policy;
(4) a small employer health benefit plan written under
Chapter 1501;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1360.002. (V.T.I.C. Art. 21.53A, Sec. 2(b).)
Sec. 1360.004. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for medically necessary diagnostic or
surgical treatment of conditions affecting skeletal joints must
provide comparable coverage for diagnostic or surgical treatment of
conditions affecting the temporomandibular joint if the treatment
is medically necessary as a result of:
(1) an accident;
(2) a trauma;
(3) a congenital defect;
(4) a developmental defect; or
(5) a pathology.
(b) Coverage required under this section may be subject to
any provision in the health benefit plan that is generally
applicable to surgical treatment, including a requirement for
precertification of coverage. (V.T.I.C. Art. 21.53A, Secs. 3(a)
(part), (b), (c).)
Sec. 1360.005. DENTAL SERVICES COVERAGE NOT REQUIRED. (a)
This chapter does not require a health benefit plan to provide
coverage for dental services if dental services are not otherwise
scheduled or provided as part of the coverage provided under the
plan.
(b) A health benefit plan may not exclude from coverage
under the plan an individual who is unable to undergo dental
treatment in an office setting or under local anesthesia due to a
documented physical, mental, or medical reason as determined by the
individual's physician or by the dentist providing the dental care.
(V.T.I.C. Art. 21.53A, Sec. 4.)
CHAPTER 1361. DETECTION AND PREVENTION OF OSTEOPOROSIS
Sec. 1361.001. DEFINITION
Sec. 1361.002. APPLICABILITY OF CHAPTER
Sec. 1361.003. COVERAGE REQUIRED
CHAPTER 1361. DETECTION AND PREVENTION OF OSTEOPOROSIS
Sec. 1361.001. DEFINITION. In this chapter, "qualified
enrollee" means an individual entitled to coverage under a group
health benefit plan who is:
(1) a postmenopausal woman who is not receiving
estrogen replacement therapy;
(2) an individual with:
(A) vertebral abnormalities;
(B) primary hyperparathyroidism; or
(C) a history of bone fractures; or
(3) an individual who is:
(A) receiving long-term glucocorticoid therapy;
or
(B) being monitored to assess the response to or
efficacy of an approved osteoporosis drug therapy. (V.T.I.C. Art.
21.53C, Secs. (b), (c) (part).)
Sec. 1361.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan delivered, issued for
delivery, or renewed in this state that provides coverage for
medical or surgical expenses incurred as a result of accident or
sickness, including:
(1) a group insurance policy;
(2) a group contract issued by a group hospital
service corporation operating under Chapter 842; and
(3) a group contract issued by a health maintenance
organization operating under Chapter 843. (V.T.I.C. Art. 21.53C,
Sec. (a).)
Sec. 1361.003. COVERAGE REQUIRED. A group health benefit
plan must provide to a qualified enrollee coverage for medically
accepted bone mass measurement to detect low bone mass and to
determine the enrollee's risk of osteoporosis and fractures
associated with osteoporosis. (V.T.I.C. Art. 21.53C, Sec. (c)
(part).)
CHAPTER 1362. CERTAIN TESTS FOR DETECTION OF PROSTATE CANCER
Sec. 1362.001. APPLICABILITY OF CHAPTER
Sec. 1362.002. EXCEPTION
Sec. 1362.003. COVERAGE REQUIRED
Sec. 1362.004. NOTICE OF COVERAGE
Sec. 1362.005. RULES
CHAPTER 1362. CERTAIN TESTS FOR DETECTION OF PROSTATE CANCER
Sec. 1362.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) another analogous benefit
arrangement;
(2) is offered by:
(A) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; or
(B) an entity not authorized under this code or
another insurance law of this state that contracts directly for
health care services on a risk-sharing basis, including a
capitation basis; or
(3) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law. (V.T.I.C. Art. 21.53F, Sec. 2(a), as added Acts 75th
Leg., R.S., Ch. 1287.)
Sec. 1362.002. EXCEPTION. This chapter does not apply to:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy; or
(E) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1362.001. (V.T.I.C. Art. 21.53F, Sec. 2(b), as added
Acts 75th Leg., R.S., Ch. 1287.)
Sec. 1362.003. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for diagnostic medical procedures must
provide to each male enrolled in the plan coverage for expenses for
an annual medically recognized diagnostic examination for the
detection of prostate cancer.
(b) Coverage required under this section includes at a
minimum:
(1) a physical examination for the detection of
prostate cancer; and
(2) a prostate-specific antigen test used for the
detection of prostate cancer for each male who:
(A) is at least 50 years of age and is
asymptomatic; or
(B) is at least 40 years of age and has a family
history of prostate cancer or another prostate cancer risk factor.
(V.T.I.C. Art. 21.53F, Sec. 3, as added Acts 75th Leg., R.S., Ch.
1287.)
Sec. 1362.004. NOTICE OF COVERAGE. (a) A health benefit
plan issuer shall provide to each individual enrolled in the plan
written notice of the coverage required under this chapter.
(b) The notice must be provided in accordance with rules
adopted by the commissioner. (V.T.I.C. Art. 21.53F, Sec. 4, as
added Acts 75th Leg., R.S., Ch. 1287.)
Sec. 1362.005. RULES. The commissioner shall adopt rules
necessary to administer this chapter. (V.T.I.C. Art. 21.53F, Sec.
5, as added Acts 75th Leg., R.S., Ch. 1287.)
CHAPTER 1363. CERTAIN TESTS FOR DETECTION OF
COLORECTAL CANCER
Sec. 1363.001. APPLICABILITY OF CHAPTER
Sec. 1363.002. EXCEPTION
Sec. 1363.003. MINIMUM COVERAGE REQUIRED
Sec. 1363.004. NOTICE OF COVERAGE
Sec. 1363.005. RULES
CHAPTER 1363. CERTAIN TESTS FOR DETECTION OF
COLORECTAL CANCER
Sec. 1363.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a Lloyd's plan operating under Chapter
941;
(v) a stipulated premium company operating
under Chapter 884; or
(vi) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) another analogous benefit
arrangement;
(2) is offered by an approved nonprofit health
corporation operating under Chapter 844; or
(3) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law. (V.T.I.C. Art. 21.53S, Sec. 2(a).)
Sec. 1363.002. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease or other limited
benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy; or
(E) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care policy, including a nursing home
fixed indemnity policy, unless the commissioner determines that the
policy provides benefit coverage so comprehensive that the policy
is a health benefit plan as described by Section 1363.001.
(V.T.I.C. Art. 21.53S, Sec. 2(b).)
Sec. 1363.003. MINIMUM COVERAGE REQUIRED. (a) A health
benefit plan that provides coverage for screening medical
procedures must provide to each individual enrolled in the plan who
is 50 years of age or older and at normal risk for developing colon
cancer coverage for expenses incurred in conducting a medically
recognized screening examination for the detection of colorectal
cancer.
(b) The minimum coverage required under this section must
include:
(1) a fecal occult blood test performed annually and a
flexible sigmoidoscopy performed every five years; or
(2) a colonoscopy performed every 10 years. (V.T.I.C.
Art. 21.53S, Sec. 3.)
Sec. 1363.004. NOTICE OF COVERAGE. (a) A health benefit
plan issuer shall provide to each individual enrolled in the plan
written notice of the coverage required under this chapter.
(b) The notice must be provided in accordance with rules
adopted by the commissioner. (V.T.I.C. Art. 21.53S, Sec. 4.)
Sec. 1363.005. RULES. The commissioner shall adopt rules
as necessary to administer this chapter. (V.T.I.C. Art. 21.53S,
Sec. 5.)
CHAPTER 1364. COVERAGE PROVISIONS RELATING TO HIV,
AIDS, OR HIV-RELATED ILLNESSES
SUBCHAPTER A. EXCLUSION FROM OR DENIAL OF COVERAGE PROHIBITED
Sec. 1364.001. APPLICABILITY OF SUBCHAPTER
Sec. 1364.002. EXCEPTION
Sec. 1364.003. PROHIBITION
Sec. 1364.004. RULES
[Sections 1364.005-1364.050 reserved for expansion]
SUBCHAPTER B. CANCELLATION OF GROUP COVERAGE PROHIBITED
Sec. 1364.051. DEFINITIONS
Sec. 1364.052. APPLICABILITY OF SUBCHAPTER
Sec. 1364.053. PROHIBITION
[Sections 1364.054-1364.100 reserved for expansion]
SUBCHAPTER C. CERTAIN COVERAGES PROVIDED BY LOCAL
GOVERNMENTS
Sec. 1364.101. PROHIBITION ON EXCLUSION OR LIMITATION
OF COVERAGES
CHAPTER 1364. COVERAGE PROVISIONS RELATING TO HIV,
AIDS, OR HIV-RELATED ILLNESSES
SUBCHAPTER A. EXCLUSION FROM OR DENIAL OF COVERAGE PROHIBITED
Sec. 1364.001. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a group health benefit plan that is
delivered, issued for delivery, or renewed and that is:
(1) a group accident and health insurance policy;
(2) a group contract issued by a group hospital
service corporation operating under Chapter 842; or
(3) a group evidence of coverage issued by a health
maintenance organization operating under Chapter 843. (V.T.I.C.
Art. 3.51-6, Sec. 3C (part), as added Acts 71st Leg., R.S., Ch.
1041, Sec. 14.)
Sec. 1364.002. EXCEPTION. This subchapter does not apply
to:
(1) a credit accident and health insurance policy
subject to Chapter 1153;
(2) any group specifically provided for or authorized
by law in existence and covered under a policy filed with the State
Board of Insurance before April 1, 1975;
(3) accident or health coverage that is incidental to
any form of a group automobile, casualty, property, workers'
compensation, or employers' liability policy approved by the
department; or
(4) any policy or contract of insurance with a state
agency, department, or board providing health services:
(A) to eligible individuals under Chapter 32,
Human Resources Code; or
(B) under a state plan adopted in accordance with
42 U.S.C. Sections 1396-1396g, as amended, or 42 U.S.C. Section
1397aa et seq., as amended. (V.T.I.C. Art. 3.51-6, Sec. 4.)
Sec. 1364.003. PROHIBITION. A group health benefit plan
may not exclude or deny coverage for:
(1) human immunodeficiency virus (HIV);
(2) acquired immune deficiency syndrome (AIDS); or
(3) an HIV-related illness. (V.T.I.C. Art. 3.51-6,
Sec. 3C (part), as added Acts 71st Leg., R.S., Ch. 1041, Sec. 14.)
Sec. 1364.004. RULES. The commissioner may adopt rules
necessary to administer this subchapter. A rule adopted under this
section is subject to notice and hearing as provided by Section
1201.007 for a rule adopted under Chapter 1201. (V.T.I.C. Art.
3.51-6, Sec. 5.)
[Sections 1364.005-1364.050 reserved for expansion]
SUBCHAPTER B. CANCELLATION OF GROUP COVERAGE PROHIBITED
Sec. 1364.051. DEFINITIONS. In this subchapter, "AIDS" and
"HIV" have the meanings assigned by Section 81.101, Health and
Safety Code. (V.T.I.C. Art. 3.51-6D, Subsec. (a) (part).)
Sec. 1364.052. APPLICABILITY OF SUBCHAPTER. This
subchapter applies to an insurer that delivers or issues for
delivery a group health insurance policy or contract in this state,
including a group hospital service corporation operating under
Chapter 842. (V.T.I.C. Art. 3.51-6D, Subsec. (a) (part).)
Sec. 1364.053. PROHIBITION. (a) Except as provided by
Subsection (b), an insurer may not cancel during the term of a group
health insurance policy or contract an individual's coverage
provided by the policy or contract because the individual:
(1) has been diagnosed as having AIDS or HIV;
(2) has been treated for AIDS or HIV; or
(3) is being treated for AIDS or HIV.
(b) The insurer may cancel the coverage provided by the
policy or contract for fraud or misrepresentation in the obtaining
of coverage by failure to disclose a diagnosis of AIDS or an
HIV-related condition. (V.T.I.C. Art. 3.51-6D, Subsecs. (a)
(part), (b).)
[Sections 1364.054-1364.100 reserved for expansion]
SUBCHAPTER C. CERTAIN COVERAGES PROVIDED BY LOCAL
GOVERNMENTS
Sec. 1364.101. PROHIBITION ON EXCLUSION OR LIMITATION OF
COVERAGES. A political subdivision that provides group health
insurance coverage, health maintenance organization coverage, or
self-insured health care coverage to the political subdivision's
officers or employees may not contract for or provide coverage that
excludes or limits coverage or services for:
(1) acquired immune deficiency syndrome, as defined by
the Centers for Disease Control and Prevention of the United States
Public Health Service; or
(2) human immunodeficiency virus infection.
(V.T.I.C. Art. 3.51-5A, Subsec. (a) (part).)
CHAPTER 1365. LOSS OR IMPAIRMENT OF SPEECH OR HEARING
Sec. 1365.001. APPLICABILITY OF CHAPTER
Sec. 1365.002. APPLICABILITY OF GENERAL PROVISIONS
OF OTHER LAW
Sec. 1365.003. OFFER OF COVERAGE REQUIRED
Sec. 1365.004. RIGHT TO REJECT COVERAGE OR SELECT
ALTERNATIVE COVERAGE
CHAPTER 1365. LOSS OR IMPAIRMENT OF SPEECH OR HEARING
Sec. 1365.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan that provides hospital
and medical coverage on an expense-incurred, service, or prepaid
basis, including a group policy, contract, or plan that is offered
in this state by:
(1) an insurer;
(2) a group hospital service corporation operating
under Chapter 842; or
(3) a health maintenance organization operating under
Chapter 843. (V.T.I.C. Art. 3.70-2, Sec. (G) (part).)
Sec. 1365.002. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter,
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this chapter. (New.)
Sec. 1365.003. OFFER OF COVERAGE REQUIRED. (a) A group
health benefit plan issuer shall offer and make available under the
plan coverage for the necessary care and treatment of loss or
impairment of speech or hearing.
(b) Coverage required under this section:
(1) may not be less favorable than coverage for
physical illness generally under the plan; and
(2) must be subject to the same durational limits,
dollar limits, deductibles, and coinsurance factors as coverage for
physical illness generally under the plan. (V.T.I.C. Art. 3.70-2,
Sec. (G) (part).)
Sec. 1365.004. RIGHT TO REJECT COVERAGE OR SELECT
ALTERNATIVE COVERAGE. An offer of coverage required under Section
1365.003 is subject to the right of the group contract holder to
reject the coverage or to select an alternative level of coverage
that is offered by or negotiated with the group health benefit plan
issuer. (V.T.I.C. Art. 3.70-2, Sec. (G) (part).)
CHAPTER 1366. BENEFITS RELATED TO FERTILITY AND CHILDBIRTH
SUBCHAPTER A. COVERAGE FOR IN VITRO FERTILIZATION PROCEDURES
Sec. 1366.001. APPLICABILITY OF SUBCHAPTER
Sec. 1366.002. EXCEPTION
Sec. 1366.003. OFFER OF COVERAGE REQUIRED
Sec. 1366.004. REJECTION OF OFFER
Sec. 1366.005. CONDITIONS APPLICABLE TO COVERAGE
Sec. 1366.006. CERTAIN ISSUERS OF HEALTH BENEFIT PLANS NOT
REQUIRED TO OFFER COVERAGE
Sec. 1366.007. RULES
[Sections 1366.008-1366.050 reserved for expansion]
SUBCHAPTER B. MINIMUM INPATIENT STAY FOLLOWING BIRTH
OF CHILD AND POSTDELIVERY CARE
Sec. 1366.051. SHORT TITLE
Sec. 1366.052. DEFINITIONS
Sec. 1366.053. APPLICABILITY OF SUBCHAPTER
Sec. 1366.054. EXCEPTION
Sec. 1366.055. COVERAGE FOR INPATIENT CARE REQUIRED
Sec. 1366.056. COVERAGE FOR POSTDELIVERY CARE REQUIRED
Sec. 1366.057. PROHIBITED CONDUCT
Sec. 1366.058. NOTICE OF COVERAGE
Sec. 1366.059. RULES
CHAPTER 1366. BENEFITS RELATED TO FERTILITY AND CHILDBIRTH
SUBCHAPTER A. COVERAGE FOR IN VITRO FERTILIZATION PROCEDURES
Sec. 1366.001. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a group health benefit plan that
provides benefits for hospital, medical, or surgical expenses
incurred as a result of accident or sickness, including a group
health insurance policy, health care service contract or plan, or
other provision of group health benefits, coverage, or services in
this state that is issued, entered into, or provided by:
(1) an insurer;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a health maintenance organization operating under
Chapter 843; or
(4) an employer, multiple employer, union,
association, trustee, or other self-funded or self-insured welfare
or benefit plan, program, or arrangement. (V.T.I.C. Art. 3.51-6,
Sec. 3A(a) (part).)
Sec. 1366.002. EXCEPTION. This subchapter does not apply
to:
(1) a credit accident and health insurance policy
subject to Chapter 1153;
(2) any group specifically provided for or authorized
by law in existence and covered under a policy filed with the State
Board of Insurance before April 1, 1975;
(3) accident and health coverages that are incidental
to any form of a group automobile, casualty, property, workers'
compensation, or employers' liability policy approved by the
commissioner; or
(4) any policy or contract of insurance with a state
agency, department, or board providing health services:
(A) to eligible individuals under Chapter 32,
Human Resources Code; or
(B) under a state plan adopted in accordance with
42 U.S.C. Sections 1396-1396g, as amended, or 42 U.S.C. Section
1397aa et seq., as amended. (V.T.I.C. Art. 3.51-6, Sec. 4.)
Sec. 1366.003. OFFER OF COVERAGE REQUIRED. (a) Subject to
this subchapter, an issuer of a group health benefit plan that
provides pregnancy-related benefits for individuals covered under
the plan shall offer and make available to each holder or sponsor of
the plan coverage for services and benefits on an expense incurred,
service, or prepaid basis for outpatient expenses that arise from
in vitro fertilization procedures.
(b) Benefits for in vitro fertilization procedures required
under this section must be provided to the same extent as benefits
provided for other pregnancy-related procedures under the plan.
(V.T.I.C. Art. 3.51-6, Secs. 3A(a) (part), (b), (d).)
Sec. 1366.004. REJECTION OF OFFER. A rejection of an offer
under Section 1366.003 to provide coverage for in vitro
fertilization procedures must be in writing. (V.T.I.C. Art.
3.51-6, Sec. 3A(c).)
Sec. 1366.005. CONDITIONS APPLICABLE TO COVERAGE. The
coverage offered under Section 1366.003 is required only if:
(1) the patient for the in vitro fertilization
procedure is an individual covered under the group health benefit
plan;
(2) the fertilization or attempted fertilization of
the patient's oocytes is made only with the sperm of the patient's
spouse;
(3) the patient and the patient's spouse have a history
of infertility of at least five continuous years' duration or the
infertility is associated with:
(A) endometriosis;
(B) exposure in utero to diethylstilbestrol
(DES);
(C) blockage of or surgical removal of one or
both fallopian tubes; or
(D) oligospermia;
(4) the patient has been unable to attain a successful
pregnancy through any less costly applicable infertility
treatments for which coverage is available under the group health
benefit plan; and
(5) the in vitro fertilization procedures are
performed at a medical facility that conforms to the minimal
standards for programs of in vitro fertilization adopted by the
American Society for Reproductive Medicine. (V.T.I.C. Art. 3.51-6,
Sec. 3A(e).)
Sec. 1366.006. CERTAIN ISSUERS OF HEALTH BENEFIT PLANS NOT
REQUIRED TO OFFER COVERAGE. An insurer, health maintenance
organization, or self-insuring employer that is owned by or that is
part of an entity, group, or order that is directly affiliated with
a bona fide religious denomination that includes as an integral
part of its beliefs and practices that in vitro fertilization is
contrary to moral principles that the religious denomination
considers to be an essential part of its beliefs is not required to
offer coverage for in vitro fertilization under Section 1366.003.
(V.T.I.C. Art. 3.51-6, Sec. 3A(f).)
Sec. 1366.007. RULES. The commissioner may adopt rules
necessary to administer this subchapter. A rule adopted under this
section is subject to notice and hearing as provided by Section
1201.007 for a rule adopted under Chapter 1201. (V.T.I.C. Art.
3.51-6, Sec. 5.)
[Sections 1366.008-1366.050 reserved for expansion]
SUBCHAPTER B. MINIMUM INPATIENT STAY FOLLOWING BIRTH
OF CHILD AND POSTDELIVERY CARE
Sec. 1366.051. SHORT TITLE. This subchapter may be cited as
the Lee Alexandria Hanley Act. (V.T.I.C. Art. 21.53F, Sec. 1, as
added Acts 75th Leg., R.S., Ch. 832.)
Sec. 1366.052. DEFINITIONS. In this subchapter:
(1) "Attending physician" means an obstetrician,
pediatrician, or other physician who attends a woman who has given
birth to a child or who attends a newborn child.
(2) "Postdelivery care" means postpartum health care
services provided in accordance with accepted maternal and neonatal
physical assessments. The term includes parent education,
assistance and training in breast-feeding and bottle-feeding, and
the performance of any necessary and appropriate clinical tests.
(V.T.I.C. Art. 21.53F, Secs. 2(1), 5(c) (part), as added Acts 75th
Leg., R.S., Ch. 832.)
Sec. 1366.053. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act;
(ii) an entity not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis; or
(iii) another analogous benefit
arrangement; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.53F, Sec. 3(a), as added Acts 75th Leg.,
R.S., Ch. 832.)
Sec. 1366.054. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care; or
(G) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1366.053. (V.T.I.C. Art. 21.53F, Sec. 3(b), as added
Acts 75th Leg., R.S., Ch. 832.)
Sec. 1366.055. COVERAGE FOR INPATIENT CARE REQUIRED. (a)
Except as provided by Subsection (b), a health benefit plan that
provides maternity benefits, including benefits for childbirth,
must provide to a woman who has given birth to a child and the
newborn child coverage for inpatient care in a health care facility
for not less than:
(1) 48 hours after an uncomplicated vaginal delivery;
and
(2) 96 hours after an uncomplicated delivery by
cesarean section.
(b) A health benefit plan that provides to a woman who has
given birth to a child and the newborn child coverage for in-home
postdelivery care is not required to provide the coverage required
under Subsection (a) unless:
(1) the attending physician determines that inpatient
care is medically necessary; or
(2) the woman requests inpatient care.
(c) For purposes of Subsection (a), the attending physician
shall determine whether a delivery is complicated.
(d) This section does not require a woman who is eligible
for coverage under a health benefit plan to:
(1) give birth to a child in a hospital or other health
care facility; or
(2) remain under inpatient care in a hospital or other
health care facility for any fixed term following the birth of a
child. (V.T.I.C. Art. 21.53F, Sec. 4, as added Acts 75th Leg.,
R.S., Ch. 832.)
Sec. 1366.056. COVERAGE FOR POSTDELIVERY CARE REQUIRED.
(a) If a decision is made to discharge a woman who has given birth
to a child or the newborn child from inpatient care before the
expiration of the minimum hours of coverage required under Section
1366.055(a), a health benefit plan must provide to the woman and
child coverage for timely postdelivery care.
(b) The timeliness of the postdelivery care shall be
determined in accordance with recognized medical standards for that
care.
(c) The postdelivery care may be provided by a physician,
registered nurse, or other appropriate licensed health care
provider.
(d) Subject to Subsection (e), the postdelivery care may be
provided at:
(1) the woman's home;
(2) a health care provider's office;
(3) a health care facility; or
(4) another location determined to be appropriate
under rules adopted by the commissioner.
(e) The coverage required under this section must give the
woman the option to have the care provided in the woman's home.
(V.T.I.C. Art. 21.53F, Secs. 5(a), (b), (c) (part), as added Acts
75th Leg., R.S., Ch. 832.)
Sec. 1366.057. PROHIBITED CONDUCT. An issuer of a health
benefit plan may not:
(1) modify the terms and conditions of coverage based
on a request by an enrollee for less than the minimum coverage
required under Section 1366.055(a);
(2) offer to a woman who has given birth to a child a
financial incentive or other compensation the receipt of which is
contingent on the waiver by the woman of the minimum coverage
required under Section 1366.055(a);
(3) refuse to accept a physician's recommendation for
inpatient care made in consultation with the woman who has given
birth to a child if the period of inpatient care recommended by the
physician does not exceed the minimum periods recommended in
guidelines for perinatal care developed by:
(A) the American College of Obstetricians and
Gynecologists;
(B) the American Academy of Pediatrics; or
(C) another nationally recognized professional
association of obstetricians and gynecologists or of
pediatricians;
(4) reduce payments or other forms of reimbursement
for inpatient care below the usual and customary rate of
reimbursement for that care; or
(5) penalize a physician for recommending inpatient
care for a woman or the woman's newborn child by:
(A) refusing to permit the physician to
participate as a provider in the health benefit plan;
(B) reducing payments made to the physician;
(C) requiring the physician to:
(i) provide additional documentation; or
(ii) undergo additional utilization
review; or
(D) imposing other analogous sanctions or
disincentives. (V.T.I.C. Art. 21.53F, Sec. 6, as added Acts 75th
Leg., R.S., Ch. 832.)
Sec. 1366.058. NOTICE OF COVERAGE. (a) An issuer of a
health benefit plan shall provide to each individual enrolled in
the plan written notice of the coverage required under this
subchapter.
(b) The notice must be provided in accordance with rules
adopted by the commissioner. (V.T.I.C. Art. 21.53F, Secs. 2(2), 7,
as added Acts 75th Leg., R.S., Ch. 832.)
Sec. 1366.059. RULES. The commissioner shall adopt rules
necessary to administer this subchapter. (V.T.I.C. Art. 21.53F,
Sec. 8, as added Acts 75th Leg., R.S., Ch. 832.)
CHAPTER 1367. COVERAGE OF CHILDREN
SUBCHAPTER A. NEWBORN CHILDREN
Sec. 1367.001. APPLICABILITY OF SUBCHAPTER
Sec. 1367.002. APPLICABILITY OF GENERAL PROVISIONS
OF OTHER LAW
Sec. 1367.003. CERTAIN LIMITATIONS ON COVERAGE FOR NEWBORN
CHILDREN PROHIBITED
[Sections 1367.004-1367.050 reserved for expansion]
SUBCHAPTER B. CHILDHOOD IMMUNIZATIONS
Sec. 1367.051. APPLICABILITY OF SUBCHAPTER
Sec. 1367.052. EXCEPTION
Sec. 1367.053. COVERAGE REQUIRED
Sec. 1367.054. COPAYMENT, DEDUCTIBLE, OR COINSURANCE
REQUIREMENT PROHIBITED
Sec. 1367.055. RULES
[Sections 1367.056-1367.100 reserved for expansion]
SUBCHAPTER C. HEARING TEST
Sec. 1367.101. APPLICABILITY OF SUBCHAPTER
Sec. 1367.102. EXCEPTION
Sec. 1367.103. COVERAGE REQUIRED
Sec. 1367.104. COPAYMENT OR COINSURANCE REQUIREMENT PERMITTED;
DEDUCTIBLE REQUIREMENT OR DOLLAR LIMIT
PROHIBITED; NOTICE REQUIRED
Sec. 1367.105. RULES
[Sections 1367.106-1367.150 reserved for expansion]
SUBCHAPTER D. CHILD CRANIOFACIAL ABNORMALITIES
Sec. 1367.151. APPLICABILITY OF SUBCHAPTER
Sec. 1367.152. EXCEPTION
Sec. 1367.153. RECONSTRUCTIVE SURGERY FOR CRANIOFACIAL
ABNORMALITIES; DEFINITION REQUIRED
Sec. 1367.154. RULES
CHAPTER 1367. COVERAGE OF CHILDREN
SUBCHAPTER A. NEWBORN CHILDREN
Sec. 1367.001. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan delivered or
issued for delivery in this state that is an individual or group
policy of accident and health insurance, including a policy issued
by a group hospital service corporation operating under Chapter
842. (V.T.I.C. Art. 3.70-2, Sec. (E) (part).)
Sec. 1367.002. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter,
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this subchapter. (New.)
Sec. 1367.003. CERTAIN LIMITATIONS ON COVERAGE FOR NEWBORN
CHILDREN PROHIBITED. A health benefit plan that provides maternity
benefits or accident and health coverage for additional newborn
children may not be issued in this state if the plan excludes or
limits:
(1) initial coverage of a newborn child for a period of
time; or
(2) coverage for congenital defects of a newborn
child. (V.T.I.C. Art. 3.70-2, Sec. (E) (part).)
[Sections 1367.004-1367.050 reserved for expansion]
SUBCHAPTER B. CHILDHOOD IMMUNIZATIONS
Sec. 1367.051. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including an individual, group, blanket, or franchise insurance
policy or insurance agreement, a group hospital service contract,
or an individual or group evidence of coverage that is offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a health maintenance organization operating
under Chapter 843; or
(F) a multiple employer welfare arrangement
subject to regulation under Chapter 846;
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844; or
(3) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law. (V.T.I.C. Art. 21.53F, Secs. 2(a), (c), as added Acts
75th Leg., R.S., Ch. 683.)
Sec. 1367.052. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care; or
(G) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1367.051. (V.T.I.C. Art. 21.53F, Sec. 2(b), as added
Acts 75th Leg., R.S., Ch. 683.)
Sec. 1367.053. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for a family member of an insured or
enrollee shall provide for each covered child from birth through
the date of the child's sixth birthday coverage for:
(1) immunization against:
(A) diphtheria;
(B) haemophilus influenzae type b;
(C) hepatitis B;
(D) measles;
(E) mumps;
(F) pertussis;
(G) polio;
(H) rubella;
(I) tetanus; and
(J) varicella; and
(2) any other immunization that is required for the
child by law.
(b) For purposes of Subsection (a), a covered child is a
child who, as a result of the child's relationship to an insured or
enrollee in a health benefit plan, would be entitled to coverage
under an accident and health insurance policy under Section
1201.061, 1201.062, 1201.063, or 1201.064.
(c) In addition to the immunizations required under
Subsection (a), a health maintenance organization that issues a
health benefit plan shall provide under the plan coverage for
immunization against rotovirus. (V.T.I.C. Art. 20A.09F; Art.
21.53F, Secs. 3, 5, as added Acts 75th Leg., R.S., Ch. 683.)
Sec. 1367.054. COPAYMENT, DEDUCTIBLE, OR COINSURANCE
REQUIREMENT PROHIBITED. (a) Coverage required under Section
1367.053(a) may not be made subject to a deductible, copayment, or
coinsurance requirement.
(b) This section does not prohibit the application of a
deductible, copayment, or coinsurance requirement to another
service provided at the same time the immunization is administered.
(V.T.I.C. Art. 21.53F, Sec. 6(a), as added Acts 75th Leg., R.S., Ch.
683.)
Sec. 1367.055. RULES. The commissioner may adopt
reasonable rules necessary to implement this subchapter. (V.T.I.C.
Art. 21.53F, Sec. 7, as added Acts 75th Leg., R.S., Ch. 683.)
[Sections 1367.056-1367.100 reserved for expansion]
SUBCHAPTER C. HEARING TEST
Sec. 1367.101. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including an individual, group, blanket, or franchise insurance
policy or insurance agreement, a group hospital service contract,
or an individual or group evidence of coverage that is offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a health maintenance organization operating
under Chapter 843; or
(F) a multiple employer welfare arrangement
subject to regulation under Chapter 846;
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844; or
(3) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law.
(b) This subchapter applies to a health benefit plan
described by Subsection (a) that provides coverage to a resident of
this state, regardless of whether the plan issuer is located in or
outside this state. (V.T.I.C. Art. 21.53F, Secs. 2(a), (c), 4(c)
(part), as added Acts 75th Leg., R.S., Ch. 683.)
Sec. 1367.102. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care; or
(G) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1367.101. (V.T.I.C. Art. 21.53F, Sec. 2(b), as added
Acts 75th Leg., R.S., Ch. 683.)
Sec. 1367.103. COVERAGE REQUIRED. (a) A health benefit
plan that provides coverage for a family member of an insured or
enrollee shall provide to each covered child coverage for:
(1) a screening test for hearing loss from birth
through the date the child is 30 days of age, as provided by Chapter
47, Health and Safety Code; and
(2) necessary diagnostic follow-up care related to the
screening test from birth through the date the child is 24 months of
age.
(b) For purposes of Subsection (a), a covered child is a
child who, as a result of the child's relationship to an insured or
enrollee in a health benefit plan, would be entitled to coverage
under an accident and health insurance policy under Section
1201.061, 1201.062, 1201.063, or 1201.064.
(c) This section does not require a health benefit plan to
provide the coverage described by this section to a child of an
individual residing in this state if the individual is:
(1) employed outside this state; and
(2) covered under a health benefit plan maintained for
the individual by the individual's employer as an employment
benefit. (V.T.I.C. Art. 21.53F, Secs. 4(a), (c) (part), 5, as added
Acts 75th Leg., R.S., Ch. 683.)
Sec. 1367.104. COPAYMENT OR COINSURANCE REQUIREMENT
PERMITTED; DEDUCTIBLE REQUIREMENT OR DOLLAR LIMIT PROHIBITED;
NOTICE REQUIRED. (a) Coverage required under this subchapter:
(1) may be subject to a copayment or coinsurance
requirement; and
(2) may not be subject to a deductible requirement or a
dollar limit.
(b) The requirements of this section must be stated in the
coverage document. (V.T.I.C. Art. 21.53F, Sec. 6(b), as added Acts
75th Leg., R.S., Ch. 683.)
Sec. 1367.105. RULES. The commissioner may adopt rules
necessary to implement this subchapter. (V.T.I.C. Art. 21.53F,
Secs. 4(b), 7, as added Acts 75th Leg., R.S., Ch. 683.)
[Sections 1367.106-1367.150 reserved for expansion]
SUBCHAPTER D. CHILD CRANIOFACIAL ABNORMALITIES
Sec. 1367.151. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act;
(ii) an entity not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis; or
(iii) another analogous benefit
arrangement; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.53W, Sec. 2(a).)
Sec. 1367.152. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care; or
(G) only for indemnity for hospital confinement
or other hospital expenses;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1367.151. (V.T.I.C. Art. 21.53W, Sec. 2(b).)
Sec. 1367.153. RECONSTRUCTIVE SURGERY FOR CRANIOFACIAL
ABNORMALITIES; DEFINITION REQUIRED. A health benefit plan that
provides coverage for a child who is younger than 18 years of age
must define "reconstructive surgery for craniofacial
abnormalities" under the plan to mean surgery to improve the
function of, or to attempt to create a normal appearance of, an
abnormal structure caused by congenital defects, developmental
deformities, trauma, tumors, infections, or disease. (V.T.I.C.
Art. 21.53W, Sec. 3.)
Sec. 1367.154. RULES. The commissioner shall adopt rules
necessary to administer this subchapter. (V.T.I.C. Art. 21.53W,
Sec. 4.)
CHAPTER 1368. AVAILABILITY OF CHEMICAL DEPENDENCY COVERAGE
Sec. 1368.001. DEFINITIONS
Sec. 1368.002. APPLICABILITY OF CHAPTER
Sec. 1368.003. EXCEPTION
Sec. 1368.004. COVERAGE REQUIRED
Sec. 1368.005. MINIMUM COVERAGE REQUIREMENTS
Sec. 1368.006. LIMITATION ON COVERAGE
Sec. 1368.007. TREATMENT STANDARDS
Sec. 1368.008. USE OF ENDORSEMENT OR RIDER TO COMPLY
WITH CHAPTER
CHAPTER 1368. AVAILABILITY OF CHEMICAL DEPENDENCY COVERAGE
Sec. 1368.001. DEFINITIONS. In this chapter:
(1) "Chemical dependency" means the abuse of, a
psychological or physical dependence on, or an addiction to alcohol
or a controlled substance.
(2) "Chemical dependency treatment center" means a
facility that provides a program for the treatment of chemical
dependency under a written treatment plan approved and monitored by
a physician and that is:
(A) affiliated with a hospital under a
contractual agreement with an established system for patient
referral;
(B) accredited as a chemical dependency
treatment center by the Joint Commission on Accreditation of
Healthcare Organizations;
(C) licensed as a chemical dependency treatment
program by the Texas Commission on Alcohol and Drug Abuse; or
(D) licensed, certified, or approved as a
chemical dependency treatment program or center by another state
agency.
(3) "Controlled substance" means an abusable volatile
chemical, as defined by Section 485.001, Health and Safety Code, or
a substance designated as a controlled substance under Chapter 481,
Health and Safety Code. (V.T.I.C. Art. 3.51-9, Secs. 2, 2A(e).)
Sec. 1368.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a group health benefit plan that provides hospital
and medical coverage or services on an expense incurred, service,
or prepaid basis, including a group insurance policy or contract or
self-funded or self-insured plan or arrangement that is offered in
this state by:
(1) an insurer;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a health maintenance organization operating under
Chapter 843; or
(4) an employer, trustee, or other self-funded or
self-insured plan or arrangement. (V.T.I.C. Art. 3.51-9, Sec.
2A(a) (part).)
Sec. 1368.003. EXCEPTION. This chapter does not apply to:
(1) an employer, trustee, or other self-funded or
self-insured plan or arrangement with 250 or fewer employees or
members;
(2) an individual insurance policy;
(3) an individual evidence of coverage issued by a
health maintenance organization;
(4) a health insurance policy that provides only:
(A) cash indemnity for hospital or other
confinement benefits;
(B) supplemental or limited benefit coverage;
(C) coverage for specified diseases or
accidents;
(D) disability income coverage; or
(E) any combination of those benefits or
coverages;
(5) a blanket insurance policy;
(6) a short-term travel insurance policy;
(7) an accident-only insurance policy;
(8) a limited or specified disease insurance policy;
(9) an individual conversion insurance policy or
contract;
(10) a policy or contract designed for issuance to a
person eligible for Medicare coverage or other similar coverage
under a state or federal government plan; or
(11) an evidence of coverage provided by a health
maintenance organization if the plan holder is the subject of a
collective bargaining agreement that was in effect on January 1,
1982, and that has not expired since that date. (V.T.I.C. Art.
3.51-9, Secs. 2A(c), 3 (part).)
Sec. 1368.004. COVERAGE REQUIRED. (a) A group health
benefit plan shall provide coverage for the necessary care and
treatment of chemical dependency.
(b) Coverage required under this section may be provided:
(1) directly by the group health benefit plan issuer;
or
(2) by another entity, including a single service
health maintenance organization, under contract with the group
health benefit plan issuer. (V.T.I.C. Art. 3.51-9, Sec. 2A(a)
(part).)
Sec. 1368.005. MINIMUM COVERAGE REQUIREMENTS. (a) Except
as provided by Subsection (b), coverage required under this
chapter:
(1) may not be less favorable than coverage provided
for physical illness generally under the plan; and
(2) shall be subject to the same durational limits,
dollar limits, deductibles, and coinsurance factors that apply to
coverage provided for physical illness generally under the plan.
(b) A group health benefit plan may set dollar or durational
limits for coverage required under this chapter that are less
favorable than for coverage provided for physical illness generally
under the plan if those limits are sufficient to provide
appropriate care and treatment under the guidelines and standards
adopted under Section 1368.007. If guidelines and standards
adopted under Section 1368.007 are not in effect, the dollar and
durational limits may not be less favorable than for physical
illness generally.
(c) This section does not require payment of a usual,
customary, and reasonable rate for treatment of a covered
individual if a health maintenance organization or preferred
provider organization establishes a negotiated rate for the
locality in which the covered individual customarily receives care.
(V.T.I.C. Art. 3.51-9, Sec. 2A(a) (part).)
Sec. 1368.006. LIMITATION ON COVERAGE. (a) In this
section, "treatment series" means a planned, structured, and
organized program to promote chemical-free status that:
(1) may include different facilities or modalities;
and
(2) is completed when the covered individual:
(A) is, on medical advice, discharged from:
(i) inpatient detoxification;
(ii) inpatient rehabilitation or
treatment;
(iii) partial hospitalization or intensive
outpatient treatment; or
(iv) a series of those levels of treatments
without a lapse in treatment; or
(B) fails to materially comply with the treatment
program for a period of 30 days.
(b) Notwithstanding Section 1368.005, coverage required
under this chapter is limited to a lifetime maximum of three
separate treatment series for each covered individual. (V.T.I.C.
Art. 3.51-9, Sec. 2A(b).)
Sec. 1368.007. TREATMENT STANDARDS. (a) Coverage provided
under this chapter for necessary care and treatment in a chemical
dependency treatment center must be provided as if the care and
treatment were provided in a hospital.
(b) The department by rule shall adopt standards formulated
and approved by the department and the Texas Commission on Alcohol
and Drug Abuse for use by insurers, other third-party reimbursement
sources, and chemical dependency treatment centers.
(c) Standards adopted under this section must provide for:
(1) reasonable control of costs necessary for
inpatient and outpatient treatment of chemical dependency,
including guidelines for treatment periods; and
(2) appropriate utilization review of treatment as
well as necessary extensions of treatment.
(d) Coverage required under this chapter is subject to the
standards adopted under this section. (V.T.I.C. Art. 3.51-9, Sec.
2A(d).)
Sec. 1368.008. USE OF ENDORSEMENT OR RIDER TO COMPLY WITH
CHAPTER. A group health benefit plan issuer that uses a policy form
approved by the commissioner before November 10, 1981, may use an
endorsement or rider to comply with this chapter if the endorsement
or rider is approved by the commissioner as complying with this
chapter and other provisions of this code. (V.T.I.C. Art. 3.51-9,
Sec. 3 (part).)
CHAPTER 1369. BENEFITS RELATED TO PRESCRIPTION DRUGS
AND DEVICES AND RELATED SERVICES
SUBCHAPTER A. COVERAGE OF PRESCRIPTION DRUGS IN GENERAL
Sec. 1369.001. DEFINITIONS
Sec. 1369.002. APPLICABILITY OF SUBCHAPTER
Sec. 1369.003. EXCEPTION
Sec. 1369.004. COVERAGE REQUIRED
Sec. 1369.005. RULES
[Sections 1369.006-1369.050 reserved for expansion]
SUBCHAPTER B. COVERAGE OF PRESCRIPTION DRUGS SPECIFIED
BY DRUG FORMULARY
Sec. 1369.051. DEFINITIONS
Sec. 1369.052. APPLICABILITY OF SUBCHAPTER
Sec. 1369.053. EXCEPTION
Sec. 1369.054. NOTICE AND DISCLOSURE OF CERTAIN INFORMATION
REQUIRED
Sec. 1369.055. CONTINUATION OF COVERAGE REQUIRED; OTHER
DRUGS NOT PRECLUDED
Sec. 1369.056. ADVERSE DETERMINATION
Sec. 1369.057. RULES
[Sections 1369.058-1369.100 reserved for expansion]
SUBCHAPTER C. COVERAGE OF PRESCRIPTION CONTRACEPTIVE
DRUGS AND DEVICES AND RELATED SERVICES
Sec. 1369.101. DEFINITIONS
Sec. 1369.102. APPLICABILITY OF SUBCHAPTER
Sec. 1369.103. EXCEPTION
Sec. 1369.104. EXCLUSION OR LIMITATION PROHIBITED
Sec. 1369.105. CERTAIN COST-SHARING PROVISIONS PROHIBITED
Sec. 1369.106. CERTAIN WAITING PERIODS PROHIBITED
Sec. 1369.107. PROHIBITED CONDUCT
Sec. 1369.108. EXEMPTION FOR ENTITIES ASSOCIATED WITH
RELIGIOUS ORGANIZATION
Sec. 1369.109. ENFORCEMENT
[Sections 1369.110-1369.150 reserved for expansion]
SUBCHAPTER D. PHARMACY BENEFIT CARDS
Sec. 1369.151. APPLICABILITY OF SUBCHAPTER
Sec. 1369.152. EXCEPTION
Sec. 1369.153. INFORMATION REQUIRED ON IDENTIFICATION CARD
Sec. 1369.154. RULES
CHAPTER 1369. BENEFITS RELATED TO PRESCRIPTION DRUGS
AND DEVICES AND RELATED SERVICES
SUBCHAPTER A. COVERAGE OF PRESCRIPTION DRUGS IN GENERAL
Sec. 1369.001. DEFINITIONS. In this subchapter:
(1) "Contraindication" means the potential for, or the
occurrence of:
(A) an undesirable change in the therapeutic
effect of a prescribed drug because of the presence of a disease
condition in the patient for whom the drug is prescribed; or
(B) a clinically significant adverse effect of a
prescribed drug on a disease condition of the patient for whom the
drug is prescribed.
(2) "Drug" has the meaning assigned by Section
551.003, Occupations Code.
(3) "Indication" means a symptom, cause, or occurrence
in a disease that points out the cause, diagnosis, course of
treatment, or prognosis of the disease.
(4) "Peer-reviewed medical literature" means
scientific studies published in a peer-reviewed national
professional journal. (V.T.I.C. Art. 21.53M, Secs. 1(1), (2), (4),
(5).)
Sec. 1369.002. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.53M, Sec. 2(a).)
Sec. 1369.003. EXCEPTION. This subchapter does not apply
to:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1369.002. (V.T.I.C. Art. 21.53M, Sec. 2(b).)
Sec. 1369.004. COVERAGE REQUIRED. (a) A health benefit
plan that covers drugs must cover any drug prescribed to treat an
enrollee for a chronic, disabling, or life-threatening illness
covered under the plan if the drug:
(1) has been approved by the United States Food and
Drug Administration for at least one indication; and
(2) is recognized by the following for treatment of
the indication for which the drug is prescribed:
(A) a prescription drug reference compendium
approved by the commissioner for purposes of this section; or
(B) substantially accepted peer-reviewed medical
literature.
(b) Coverage of a drug required under Subsection (a) must
include coverage of medically necessary services associated with
the administration of the drug.
(c) A health benefit plan issuer may not, based on a
"medical necessity" requirement, deny coverage of a drug required
under Subsection (a) unless the reason for the denial is unrelated
to the legal status of the drug use.
(d) This section does not require a health benefit plan to
cover:
(1) experimental drugs that are not otherwise approved
for an indication by the United States Food and Drug
Administration;
(2) any disease or condition that is excluded from
coverage under the plan; or
(3) a drug that the United States Food and Drug
Administration has determined to be contraindicated for treatment
of the current indication. (V.T.I.C. Art. 21.53M, Sec. 3.)
Sec. 1369.005. RULES. The commissioner may adopt rules to
implement this subchapter. (V.T.I.C. Art. 21.53M, Sec. 4.)
[Sections 1369.006-1369.050 reserved for expansion]
SUBCHAPTER B. COVERAGE OF PRESCRIPTION DRUGS SPECIFIED BY
DRUG FORMULARY
Sec. 1369.051. DEFINITIONS. In this subchapter:
(1) "Drug formulary" means a list of drugs:
(A) for which a health benefit plan provides
coverage;
(B) for which a health benefit plan issuer
approves payment; or
(C) that a health benefit plan issuer encourages
or offers incentives for physicians to prescribe.
(2) "Enrollee" means an individual who is covered
under a group health benefit plan, including a covered dependent.
(3) "Physician" means a person licensed as a physician
by the Texas State Board of Medical Examiners.
(4) "Prescription drug" has the meaning assigned by
Section 551.003, Occupations Code. (V.T.I.C. Art. 21.52J, Secs.
1(1), (2), (4), (5).)
Sec. 1369.052. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a group health benefit plan that
provides benefits for medical or surgical expenses incurred as a
result of a health condition, accident, or sickness, including a
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or a group contract
or similar coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.52J, Sec. 2(a).)
Sec. 1369.053. EXCEPTION. This subchapter does not apply
to:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease or for another
single benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1369.052. (V.T.I.C. Art. 21.52J, Sec. 2(b).)
Sec. 1369.054. NOTICE AND DISCLOSURE OF CERTAIN INFORMATION
REQUIRED. An issuer of a group health benefit plan that covers
prescription drugs and uses one or more drug formularies to specify
the prescription drugs covered under the plan shall:
(1) provide in plain language in the coverage
documentation provided to each enrollee:
(A) notice that the plan uses one or more drug
formularies;
(B) an explanation of what a drug formulary is;
(C) a statement regarding the method the issuer
uses to determine the prescription drugs to be included in or
excluded from a drug formulary;
(D) a statement of how often the issuer reviews
the contents of each drug formulary; and
(E) notice that an enrollee may contact the
issuer to determine whether a specific drug is included in a
particular drug formulary;
(2) disclose to an individual on request, not later
than the third business day after the date of the request, whether a
specific drug is included in a particular drug formulary; and
(3) notify an enrollee and any other individual who
requests information under this section that the inclusion of a
drug in a drug formulary does not guarantee that an enrollee's
health care provider will prescribe that drug for a particular
medical condition or mental illness. (V.T.I.C. Art. 21.52J, Sec.
3.)
Sec. 1369.055. CONTINUATION OF COVERAGE REQUIRED; OTHER
DRUGS NOT PRECLUDED. (a) An issuer of a group health benefit plan
that covers prescription drugs shall offer to each enrollee at the
contracted benefit level and until the enrollee's plan renewal date
any prescription drug that was approved or covered under the plan
for a medical condition or mental illness, regardless of whether
the drug has been removed from the health benefit plan's drug
formulary before the plan renewal date.
(b) This section does not prohibit a physician or other
health professional who is authorized to prescribe a drug from
prescribing a drug that is an alternative to a drug for which
continuation of coverage is required under Subsection (a) if the
alternative drug is:
(1) covered under the group health benefit plan; and
(2) medically appropriate for the enrollee. (V.T.I.C.
Art. 21.52J, Sec. 4.)
Sec. 1369.056. ADVERSE DETERMINATION. (a) The refusal of a
group health benefit plan issuer to provide benefits to an enrollee
for a prescription drug is an adverse determination for purposes of
Section 2, Article 21.58A, if:
(1) the drug is not included in a drug formulary used
by the group health benefit plan; and
(2) the enrollee's physician has determined that the
drug is medically necessary.
(b) The enrollee may appeal the adverse determination under
Sections 6 and 6A, Article 21.58A. (V.T.I.C. Art. 21.52J, Sec. 5.)
Sec. 1369.057. RULES. The commissioner may adopt rules to
implement this subchapter. (V.T.I.C. Art. 21.52J, Sec. 6.)
[Sections 1369.058-1369.100 reserved for expansion]
SUBCHAPTER C. COVERAGE OF PRESCRIPTION CONTRACEPTIVE
DRUGS AND DEVICES AND RELATED SERVICES
Sec. 1369.101. DEFINITIONS. In this subchapter:
(1) "Enrollee" means a person who is entitled to
benefits under a health benefit plan.
(2) "Outpatient contraceptive service" means a
consultation, examination, procedure, or medical service that is
provided on an outpatient basis and that is related to the use of a
drug or device intended to prevent pregnancy. (V.T.I.C. Art.
21.52L, Sec. 1, as added Acts 77th Leg., R.S., Ch. 1106.)
Sec. 1369.102. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan, including a small
employer health benefit plan written under Chapter 1501, that
provides benefits for medical or surgical expenses incurred as a
result of a health condition, accident, or sickness, including an
individual, group, blanket, or franchise insurance policy or
insurance agreement, a group hospital service contract, or an
individual or group evidence of coverage or similar coverage
document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.52L, Secs. 2(a), (b), as added Acts 77th Leg., R.S., Ch. 1106.)
Sec. 1369.103. EXCEPTION. This subchapter does not apply
to:
(1) a health benefit plan that provides coverage only:
(A) for a specified disease or for another
limited benefit other than for cancer;
(B) for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) for dental or vision care; or
(G) for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(3) a workers' compensation insurance policy;
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(5) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1369.102. (V.T.I.C. Art. 21.52L, Sec. 2(c), as added
Acts 77th Leg., R.S., Ch. 1106.)
Sec. 1369.104. EXCLUSION OR LIMITATION PROHIBITED. (a) A
health benefit plan that provides benefits for prescription drugs
or devices may not exclude or limit benefits to enrollees for:
(1) a prescription contraceptive drug or device
approved by the United States Food and Drug Administration; or
(2) an outpatient contraceptive service.
(b) This section does not prohibit a limitation that applies
to all prescription drugs or devices or all services for which
benefits are provided under a health benefit plan.
(c) This section does not require a health benefit plan to
cover abortifacients or any other drug or device that terminates a
pregnancy. (V.T.I.C. Art. 21.52L, Sec. 3, as added Acts 77th Leg.,
R.S., Ch. 1106.)
Sec. 1369.105. CERTAIN COST-SHARING PROVISIONS PROHIBITED.
(a) A health benefit plan may not impose a deductible, copayment,
coinsurance, or other cost-sharing provision applicable to
benefits for prescription contraceptive drugs or devices unless the
amount of the required cost-sharing is the same as or less than the
amount of the required cost-sharing applicable to benefits for
other prescription drugs or devices under the plan.
(b) A health benefit plan may not impose a deductible,
copayment, coinsurance, or other cost-sharing provision applicable
to benefits for outpatient contraceptive services unless the amount
of the required cost-sharing is the same as or less than the amount
of the required cost-sharing applicable to benefits for other
outpatient services under the plan. (V.T.I.C. Art. 21.52L, Sec. 4,
as added Acts 77th Leg., R.S., Ch. 1106.)
Sec. 1369.106. CERTAIN WAITING PERIODS PROHIBITED. (a) A
health benefit plan may not impose a waiting period applicable to
benefits for prescription contraceptive drugs or devices unless the
waiting period is the same as or shorter than any waiting period
applicable to benefits for other prescription drugs or devices
under the plan.
(b) A health benefit plan may not impose a waiting period
applicable to benefits for outpatient contraceptive services
unless the waiting period is the same as or shorter than any waiting
period applicable to benefits for other outpatient services under
the plan. (V.T.I.C. Art. 21.52L, Sec. 5, as added Acts 77th Leg.,
R.S., Ch. 1106.)
Sec. 1369.107. PROHIBITED CONDUCT. A health benefit plan
issuer may not:
(1) solely because of the applicant's or enrollee's
use or potential use of a prescription contraceptive drug or device
or an outpatient contraceptive service, deny:
(A) the eligibility of an applicant to enroll in
the plan;
(B) the continued eligibility of an enrollee for
coverage under the plan; or
(C) the eligibility of an enrollee to renew
coverage under the plan;
(2) provide a monetary incentive to an applicant for
enrollment or an enrollee to induce the applicant or enrollee to
accept coverage that does not satisfy the requirements of this
subchapter; or
(3) reduce or limit a payment to a health care
professional, or otherwise penalize the professional, because the
professional prescribes a contraceptive drug or device or provides
an outpatient contraceptive service. (V.T.I.C. Art. 21.52L, Sec.
6, as added Acts 77th Leg., R.S., Ch. 1106.)
Sec. 1369.108. EXEMPTION FOR ENTITIES ASSOCIATED WITH
RELIGIOUS ORGANIZATION. (a) This subchapter does not require a
health benefit plan that is issued by an entity associated with a
religious organization or any physician or health care provider
providing medical or health care services under the plan to offer,
recommend, offer advice concerning, pay for, provide, assist in,
perform, arrange, or participate in providing or performing a
medical or health care service that violates the religious
convictions of the organization, unless the prescription
contraceptive coverage is necessary to preserve the life or health
of the enrollee.
(b) An issuer of a health benefit plan that excludes or
limits coverage for medical or health care services under this
section shall state the exclusion or limitation in:
(1) the plan's coverage document;
(2) the plan's statement of benefits;
(3) plan brochures; and
(4) other informational materials for the plan.
(V.T.I.C. Art. 21.52L, Sec. 7, as added Acts 77th Leg., R.S., Ch.
1106.)
Sec. 1369.109. ENFORCEMENT. A health benefit plan issuer
that violates this subchapter is subject to the enforcement
provisions of Subtitle B, Title 2. (V.T.I.C. Art. 21.52L, Sec. 8,
as added Acts 77th Leg., R.S., Ch. 1106.)
[Sections 1369.110-1369.150 reserved for expansion]
SUBCHAPTER D. PHARMACY BENEFIT CARDS
Sec. 1369.151. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844. (V.T.I.C. Art.
21.53L, Sec. 2(a).)
Sec. 1369.152. EXCEPTION. This subchapter does not apply
to:
(1) a health benefit plan that provides coverage:
(A) only for a specified disease or for another
limited benefit;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(D) as a supplement to a liability insurance
policy;
(E) for credit insurance;
(F) only for dental or vision care;
(G) only for hospital expenses; or
(H) only for indemnity for hospital confinement;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1369.151. (V.T.I.C. Art. 21.53L, Sec. 2(b).)
Sec. 1369.153. INFORMATION REQUIRED ON IDENTIFICATION
CARD. (a) An issuer of a health benefit plan that provides
pharmacy benefits to enrollees shall include on the identification
card of each enrollee:
(1) the name or logo of the entity administering the
pharmacy benefits if the entity is different from the health
benefit plan issuer;
(2) the group number applicable to the enrollee;
(3) the effective date of the coverage evidenced by
the card;
(4) a telephone number for contacting an appropriate
person to obtain information relating to the pharmacy benefits
provided under the plan; and
(5) copayment information for generic and brand-name
prescription drugs.
(b) This section does not require a health benefit plan
issuer that administers its own pharmacy benefits to issue an
identification card separate from any identification card issued to
an enrollee to evidence coverage under the plan if the
identification card issued to evidence coverage contains the
information required by Subsection (a). (V.T.I.C. Art. 21.53L,
Sec. 3.)
Sec. 1369.154. RULES. The commissioner shall adopt rules as
necessary to implement this subchapter. (V.T.I.C. Art. 21.53L,
Sec. 4.)
[Chapters 1370-1450 reserved for expansion]
SUBTITLE F. PHYSICIANS AND HEALTH CARE PROVIDERS
CHAPTER 1451. ACCESS TO CERTAIN PRACTITIONERS AND FACILITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1451.001. DEFINITIONS; HEALTH CARE PRACTITIONERS
[Sections 1451.002-1451.050 reserved for expansion]
SUBCHAPTER B. DESIGNATION OF PRACTITIONERS UNDER ACCIDENT
AND HEALTH INSURANCE POLICY
Sec. 1451.051. APPLICABILITY OF SUBCHAPTER
Sec. 1451.052. APPLICABILITY OF GENERAL PROVISIONS OF
OTHER LAW
Sec. 1451.053. PRACTITIONER DESIGNATION
Sec. 1451.054. TERMS USED TO DESIGNATE HEALTH CARE
PRACTITIONERS
[Sections 1451.055-1451.100 reserved for expansion]
SUBCHAPTER C. SELECTION OF PRACTITIONERS
Sec. 1451.101. DEFINITIONS
Sec. 1451.102. APPLICABILITY OF SUBCHAPTER
Sec. 1451.103. CONFLICTING PROVISIONS VOID
Sec. 1451.104. NONDISCRIMINATORY PAYMENT OR REIMBURSEMENT;
EXCEPTION
Sec. 1451.105. SELECTION OF ACUPUNCTURIST
Sec. 1451.106. SELECTION OF ADVANCED PRACTICE NURSE
Sec. 1451.107. SELECTION OF AUDIOLOGIST
Sec. 1451.108. SELECTION OF CHEMICAL DEPENDENCY COUNSELOR
Sec. 1451.109. SELECTION OF CHIROPRACTOR
Sec. 1451.110. SELECTION OF DENTIST
Sec. 1451.111. SELECTION OF DIETITIAN
Sec. 1451.112. SELECTION OF HEARING INSTRUMENT FITTER
AND DISPENSER
Sec. 1451.113. SELECTION OF LICENSED MASTER SOCIAL
WORKER--ADVANCED CLINICAL PRACTITIONER
Sec. 1451.114. SELECTION OF LICENSED PROFESSIONAL
COUNSELOR
Sec. 1451.115. SELECTION OF SURGICAL ASSISTANT
Sec. 1451.116. SELECTION OF MARRIAGE AND FAMILY THERAPIST
Sec. 1451.117. SELECTION OF NURSE FIRST ASSISTANT
Sec. 1451.118. SELECTION OF OCCUPATIONAL THERAPIST
Sec. 1451.119. SELECTION OF OPTOMETRIST
Sec. 1451.120. SELECTION OF PHYSICAL THERAPIST
Sec. 1451.121. SELECTION OF PHYSICIAN ASSISTANT
Sec. 1451.122. SELECTION OF PODIATRIST
Sec. 1451.123. SELECTION OF PSYCHOLOGICAL ASSOCIATE
Sec. 1451.124. SELECTION OF PSYCHOLOGIST
Sec. 1451.125. SELECTION OF SPEECH-LANGUAGE PATHOLOGIST
Sec. 1451.126. REIMBURSEMENT FOR PHYSICAL MODALITIES AND
PROCEDURES BY HEALTH INSURER, ADMINISTRATOR,
HEALTH MAINTENANCE ORGANIZATION, OR
PREFERRED PROVIDER BENEFIT PLAN ISSUER
Sec. 1451.127. DUTY OF PERSON ARRANGING PROVIDER
CONTRACTS FOR HEALTH INSURER OR HEALTH
MAINTENANCE ORGANIZATION
[Sections 1451.128-1451.150 reserved for expansion]
SUBCHAPTER D. ACCESS TO OPTOMETRISTS AND OPHTHALMOLOGISTS
USED UNDER MANAGED CARE PLAN
Sec. 1451.151. DEFINITIONS
Sec. 1451.152. APPLICABILITY AND CONSTRUCTION OF
SUBCHAPTER
Sec. 1451.153. USE OF OPTOMETRIST, THERAPEUTIC
OPTOMETRIST, OR OPHTHALMOLOGIST
[Sections 1451.154-1451.200 reserved for expansion]
SUBCHAPTER E. DENTAL CARE BENEFITS IN HEALTH INSURANCE
POLICIES OR EMPLOYEE BENEFIT PLANS
Sec. 1451.201. DEFINITIONS
Sec. 1451.202. APPLICABILITY AND CONSTRUCTION OF
SUBCHAPTER
Sec. 1451.203. CONFLICTING PROVISIONS
Sec. 1451.204. CERTAIN CONDUCT PERMITTED
Sec. 1451.205. DISCLOSURE OF BENEFIT TERMS
Sec. 1451.206. PAYMENT OR REIMBURSEMENT OF DENTIST
Sec. 1451.207. PROHIBITED CONDUCT
[Sections 1451.208-1451.250 reserved for expansion]
SUBCHAPTER F. ACCESS TO OBSTETRICAL OR GYNECOLOGICAL CARE
Sec. 1451.251. DEFINITION
Sec. 1451.252. APPLICABILITY OF SUBCHAPTER
Sec. 1451.253. EXCEPTION
Sec. 1451.254. RULES
Sec. 1451.255. RIGHT OF FEMALE ENROLLEE TO SELECT
OBSTETRICIAN OR GYNECOLOGIST
Sec. 1451.256. DIRECT ACCESS TO SERVICES OF OBSTETRICIAN
OR GYNECOLOGIST
Sec. 1451.257. AVAILABILITY OF PROVIDERS
Sec. 1451.258. NOTICE OF AVAILABLE PROVIDERS
Sec. 1451.259. LIMITS ON PHYSICIAN SANCTIONS
Sec. 1451.260. ADMINISTRATIVE PENALTY
[Sections 1451.261-1451.300 reserved for expansion]
SUBCHAPTER G. ACCESS TO DIETITIAN SERVICES
Sec. 1451.301. APPLICABILITY OF GENERAL PROVISIONS OF
OTHER LAW
Sec. 1451.302. DIETITIAN SERVICES
[Sections 1451.303-1451.350 reserved for expansion]
SUBCHAPTER H. DISABILITY CERTIFIED BY PODIATRIST
Sec. 1451.351. LOSS OF INCOME BENEFITS FOR DISABILITY
TREATABLE BY PODIATRIST
[Sections 1451.352-1451.400 reserved for expansion]
SUBCHAPTER I. USE OF OSTEOPATHIC HOSPITAL
Sec. 1451.401. CONTRACT WITH OSTEOPATHIC HOSPITAL
Sec. 1451.402. SERVICES AT OSTEOPATHIC HOSPITAL
Sec. 1451.403. REQUEST FOR ACTION OF COMMISSIONER
Sec. 1451.404. ENFORCEMENT
CHAPTER 1451. ACCESS TO CERTAIN PRACTITIONERS AND FACILITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1451.001. DEFINITIONS; HEALTH CARE PRACTITIONERS. In
this chapter:
(1) "Acupuncturist" means an individual licensed to
practice acupuncture by the Texas State Board of Medical Examiners.
(2) "Advanced practice nurse" means an individual
licensed by the Board of Nurse Examiners as a registered nurse and
recognized by that board as an advanced practice nurse.
(3) "Audiologist" means an individual licensed to
practice audiology by the State Board of Examiners for
Speech-Language Pathology and Audiology.
(4) "Chemical dependency counselor" means an
individual licensed by the Texas Commission on Alcohol and Drug
Abuse.
(5) "Chiropractor" means an individual licensed by the
Texas Board of Chiropractic Examiners.
(6) "Dentist" means an individual licensed to practice
dentistry by the State Board of Dental Examiners.
(7) "Dietitian" means an individual licensed by the
Texas State Board of Examiners of Dietitians.
(8) "Hearing instrument fitter and dispenser" means an
individual licensed by the State Committee of Examiners in the
Fitting and Dispensing of Hearing Instruments.
(9) "Licensed master social worker--advanced clinical
practitioner" means an individual licensed by the Texas State Board
of Social Worker Examiners as a licensed master social worker with
the order of recognition of advanced clinical practitioner.
(10) "Licensed professional counselor" means an
individual licensed by the Texas State Board of Examiners of
Professional Counselors.
(11) "Marriage and family therapist" means an
individual licensed by the Texas State Board of Examiners of
Marriage and Family Therapists.
(12) "Occupational therapist" means an individual
licensed as an occupational therapist by the Texas Board of
Occupational Therapy Examiners.
(13) "Optometrist" means an individual licensed to
practice optometry by the Texas Optometry Board.
(14) "Physical therapist" means an individual
licensed as a physical therapist by the Texas Board of Physical
Therapy Examiners.
(15) "Physician" means an individual licensed to
practice medicine by the Texas State Board of Medical Examiners.
The term includes a doctor of osteopathic medicine.
(16) "Physician assistant" means an individual
licensed by the Texas State Board of Physician Assistant Examiners.
(17) "Podiatrist" means an individual licensed to
practice podiatry by the Texas State Board of Podiatric Medical
Examiners.
(18) "Psychological associate" means an individual
licensed as a psychological associate by the Texas State Board of
Examiners of Psychologists who practices solely under the
supervision of a licensed psychologist.
(19) "Psychologist" means an individual licensed as a
psychologist by the Texas State Board of Examiners of
Psychologists.
(20) "Speech-language pathologist" means an
individual licensed to practice speech-language pathology by the
State Board of Examiners for Speech-Language Pathology and
Audiology.
(21) "Surgical assistant" means an individual
licensed as a surgical assistant by the Texas State Board of Medical
Examiners. (V.T.I.C. Art. 3.70-2, Sec. (B) (part); Art. 21.52,
Sec. 1 (part), as amended Acts 77th Leg., R.S., Ch. 1014.)
[Sections 1451.002-1451.050 reserved for expansion]
SUBCHAPTER B. DESIGNATION OF PRACTITIONERS UNDER ACCIDENT
AND HEALTH INSURANCE POLICY
Sec. 1451.051. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies to an accident and health insurance policy,
including an individual, blanket, or group policy.
(b) This subchapter applies to an accident and health
insurance policy issued by a stipulated premium company subject to
Chapter 884. (V.T.I.C. Art. 3.70-8, Secs. (a) (part), (b).)
Sec. 1451.052. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter, the
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this subchapter. (New.)
Sec. 1451.053. PRACTITIONER DESIGNATION. (a) An accident
and health insurance policy may not make a benefit contingent on
treatment or examination by one or more particular health care
practitioners listed in Section 1451.001 unless the policy contains
a provision that designates the practitioners whom the insurer will
and will not recognize.
(b) The insurer may include the provision anywhere in the
policy or in an endorsement attached to the policy. (V.T.I.C. Art.
3.70-2, Sec. (B) (part).)
Sec. 1451.054. TERMS USED TO DESIGNATE HEALTH CARE
PRACTITIONERS. A provision of an accident and health insurance
policy that designates the health care practitioners whom the
insurer will and will not recognize must use the terms defined by
Section 1451.001 with the meanings assigned by that section.
(V.T.I.C. Art. 3.70-2, Sec. (B) (part).)
[Sections 1451.055-1451.100 reserved for expansion]
SUBCHAPTER C. SELECTION OF PRACTITIONERS
Sec. 1451.101. DEFINITIONS. In this subchapter:
(1) "Health insurance policy" means a policy,
contract, or agreement described by Section 1451.102.
(2) "Insured" means an individual who is issued, is a
party to, or is a beneficiary under a health insurance policy.
(3) "Insurer" means an insurer, association, or
organization described by Section 1451.102.
(4) "Nurse first assistant" has the meaning assigned
by Section 301.1525, Occupations Code. (New; V.T.I.C. Art. 21.52,
Sec. 1 (part), as amended Acts 77th Leg., R.S., Ch. 812.)
Sec. 1451.102. APPLICABILITY OF SUBCHAPTER. Except as
provided by this subchapter, this subchapter applies only to an
individual, group, blanket, or franchise insurance policy,
insurance agreement, or group hospital service contract that
provides health benefits, accident benefits, or health and accident
benefits for medical or surgical expenses incurred as a result of an
accident or sickness and that is delivered, issued for delivery, or
renewed in this state by any incorporated or unincorporated
insurance company, association, or organization, including:
(1) a fraternal benefit society operating under
Chapter 885;
(2) a general casualty company operating under Chapter
861;
(3) a life, health, and accident insurance company
operating under Chapter 841 or 982;
(4) a Lloyd's plan operating under Chapter 941;
(5) a local mutual aid association operating under
Chapter 886;
(6) a mutual insurance company writing insurance other
than life insurance operating under Chapter 883;
(7) a mutual life insurance company operating under
Chapter 882;
(8) a reciprocal exchange operating under Chapter 942;
(9) a statewide mutual assessment company, mutual
assessment company, or mutual assessment life, health, and accident
association operating under Chapter 881 or 887; and
(10) a stipulated premium company operating under
Chapter 884. (V.T.I.C. Art. 21.52, Secs. 1 (part), 2, 3(a) (part).)
Sec. 1451.103. CONFLICTING PROVISIONS VOID. (a) A
provision of a health insurance policy that conflicts with this
subchapter is void to the extent of the conflict.
(b) The presence in a health insurance policy of a provision
void under Subsection (a) does not affect the validity of other
policy provisions.
(c) An insurer shall bring each approved policy form that
contains a provision that conflicts with this subchapter into
compliance with this subchapter by use of:
(1) a rider or endorsement approved by the
commissioner; or
(2) a new or revised policy form approved by the
commissioner. (V.T.I.C. Art. 21.52, Sec. 3(e).)
Sec. 1451.104. NONDISCRIMINATORY PAYMENT OR REIMBURSEMENT;
EXCEPTION. (a) An insurer may not classify, differentiate, or
discriminate between scheduled services or procedures provided by a
health care practitioner selected under this subchapter and
performed in the scope of that practitioner's license and the same
services or procedures provided by another type of health care
practitioner whose services or procedures are covered by a health
insurance policy, in regard to:
(1) the payment schedule or payment provisions of the
policy; or
(2) the amount or manner of payment or reimbursement
under the policy.
(b) An insurer may not deny payment or reimbursement for
services or procedures in accordance with the policy payment
schedule or payment provisions solely because the services or
procedures were performed by a health care practitioner selected
under this subchapter.
(c) Notwithstanding Subsection (a), a health insurance
policy may provide for a different amount of payment or
reimbursement for scheduled services or procedures performed by an
advanced practice nurse, nurse first assistant, licensed surgical
assistant, or physician assistant if the methodology used to
compute the amount is the same as the methodology used to compute
the amount of payment or reimbursement when the services or
procedures are provided by a physician. (V.T.I.C. Art. 21.52,
Secs. 3(c) (part), (d) (part), as amended Acts 77th Leg., R.S., Chs.
812, 1014.)
Sec. 1451.105. SELECTION OF ACUPUNCTURIST. An insured may
select an acupuncturist to provide the services or procedures
scheduled in the health insurance policy that are within the scope
of the acupuncturist's license. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.106. SELECTION OF ADVANCED PRACTICE NURSE. An
insured may select an advanced practice nurse to provide the
services scheduled in the health insurance policy that are within
the scope of the nurse's license. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.107. SELECTION OF AUDIOLOGIST. An insured may
select an audiologist to measure hearing to determine the presence
or extent of the insured's hearing loss or provide aural
rehabilitation services to the insured if the insured has a hearing
loss and the services or procedures are scheduled in the health
insurance policy. (V.T.I.C. Art. 21.52, Sec. 3(a) (part).)
Sec. 1451.108. SELECTION OF CHEMICAL DEPENDENCY COUNSELOR.
An insured may select a chemical dependency counselor to provide
services or procedures scheduled in the health insurance policy
that are within the scope of the counselor's license. (V.T.I.C.
Art. 21.52, Sec. 3(a) (part).)
Sec. 1451.109. SELECTION OF CHIROPRACTOR. An insured may
select a chiropractor to provide the medical or surgical services
or procedures scheduled in the health insurance policy that are
within the scope of the chiropractor's license. (V.T.I.C. Art.
21.52, Sec. 3(a) (part).)
Sec. 1451.110. SELECTION OF DENTIST. An insured may select
a dentist to provide the medical or surgical services or procedures
scheduled in the health insurance policy that are within the scope
of the dentist's license. (V.T.I.C. Art. 21.52, Sec. 3(a) (part).)
Sec. 1451.111. SELECTION OF DIETITIAN. An insured may
select a licensed dietitian or a provisionally licensed dietitian
acting under the supervision of a licensed dietitian to provide the
services scheduled in the health insurance policy that are within
the scope of the dietitian's license. (V.T.I.C. Art. 21.52, Sec.
3(a) (part).)
Sec. 1451.112. SELECTION OF HEARING INSTRUMENT FITTER AND
DISPENSER. An insured may select a hearing instrument fitter and
dispenser to provide the services or procedures scheduled in the
health insurance policy that are within the scope of the license of
the fitter and dispenser. (V.T.I.C. Art. 21.52, Sec. 3(a) (part).)
Sec. 1451.113. SELECTION OF LICENSED MASTER SOCIAL
WORKER--ADVANCED CLINICAL PRACTITIONER. (a) An insured may select
a licensed master social worker--advanced clinical practitioner to
provide the services or procedures scheduled in the health
insurance policy that:
(1) are within the scope of the social worker's
license, including the provision of direct, diagnostic,
preventive, or clinical services to individuals, families, and
groups whose functioning is threatened or affected by social or
psychological stress or health impairment; and
(2) are specified as services under the terms of the
health insurance policy.
(b) The health insurance policy may require that services of
a licensed master social worker--advanced clinical practitioner
must be recommended by a physician. (V.T.I.C. Art. 21.52, Secs.
3(a) (part), (b) (part).)
Sec. 1451.114. SELECTION OF LICENSED PROFESSIONAL
COUNSELOR. (a) An insured may select a licensed professional
counselor to provide the services scheduled in the health insurance
policy that are within the scope of the counselor's license.
(b) The health insurance policy may require that services of
a licensed professional counselor must be recommended by a
physician. (V.T.I.C. Art. 21.52, Secs. 3(a) (part), (b) (part).)
Sec. 1451.115. SELECTION OF SURGICAL ASSISTANT. An insured
may select a surgical assistant to provide the services or
procedures scheduled in the health insurance policy that are within
the scope of the assistant's license. (V.T.I.C. Art. 21.52, Sec.
3(a) (part), as amended Acts 77th Leg., R.S., Ch. 1014.)
Sec. 1451.116. SELECTION OF MARRIAGE AND FAMILY THERAPIST.
(a) An insured may select a marriage and family therapist to
provide the services scheduled in the health insurance policy that
are within the scope of the therapist's license.
(b) The health insurance policy may require that services of
a marriage and family therapist must be recommended by a physician.
(V.T.I.C. Art. 21.52, Secs. 3(a) (part), (b) (part).)
Sec. 1451.117. SELECTION OF NURSE FIRST ASSISTANT. An
insured may select a nurse first assistant to provide the services
scheduled in the health insurance policy that:
(1) are within the scope of the nurse's license; and
(2) are requested by the physician whom the nurse is
assisting. (V.T.I.C. Art. 21.52, Sec. 3(a) (part), as amended Acts
77th Leg., R.S., Ch. 812.)
Sec. 1451.118. SELECTION OF OCCUPATIONAL THERAPIST. An
insured may select an occupational therapist to provide the
services scheduled in the health insurance policy that are within
the scope of the therapist's license. (V.T.I.C. Art. 21.52, Sec.
3(a) (part).)
Sec. 1451.119. SELECTION OF OPTOMETRIST. An insured may
select an optometrist to provide the services or procedures
scheduled in the health insurance policy that are within the scope
of the optometrist's license. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.120. SELECTION OF PHYSICAL THERAPIST. An insured
may select a physical therapist to provide the services scheduled
in the health insurance policy that are within the scope of the
therapist's license. (V.T.I.C. Art. 21.52, Sec. 3(a) (part).)
Sec. 1451.121. SELECTION OF PHYSICIAN ASSISTANT. An
insured may select a physician assistant to provide the services
scheduled in the health insurance policy that are within the scope
of the assistant's license. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.122. SELECTION OF PODIATRIST. An insured may
select a podiatrist to provide the medical or surgical services or
procedures scheduled in the health insurance policy that are within
the scope of the podiatrist's license. (V.T.I.C. Art. 21.52, Sec.
3(a) (part).)
Sec. 1451.123. SELECTION OF PSYCHOLOGICAL ASSOCIATE. An
insured may select a psychological associate to provide the
services scheduled in the health insurance policy that are within
the scope of the associate's license. (V.T.I.C. Art. 21.52, Sec.
3(a) (part), as amended Acts 77th Leg., R.S., Ch. 1014.)
Sec. 1451.124. SELECTION OF PSYCHOLOGIST. An insured may
select a psychologist to provide the services or procedures
scheduled in the health insurance policy that are within the scope
of the psychologist's license. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.125. SELECTION OF SPEECH-LANGUAGE PATHOLOGIST.
An insured may select a speech-language pathologist to evaluate
speech or language, provide habilitative or rehabilitative
services to restore speech or language loss, or correct a speech or
language impairment if the services or procedures are scheduled in
the health insurance policy. (V.T.I.C. Art. 21.52, Sec. 3(a)
(part).)
Sec. 1451.126. REIMBURSEMENT FOR PHYSICAL MODALITIES AND
PROCEDURES BY HEALTH INSURER, ADMINISTRATOR, HEALTH MAINTENANCE
ORGANIZATION, OR PREFERRED PROVIDER BENEFIT PLAN ISSUER. (a) A
health insurer or licensed third-party administrator may not deny
reimbursement to a health care practitioner for the provision of
covered services of physical modalities and procedures that are
within the scope of the practitioner's practice if the services are
performed in strict compliance with:
(1) laws and rules related to that practitioner's
license; and
(2) the terms of the insurance policy or other
coverage agreement.
(b) A health maintenance organization or preferred provider
benefit plan issuer may not deny reimbursement to a participating
health care practitioner for services provided under a coverage
agreement solely because of the type of practitioner providing the
services if the services are performed in strict compliance with:
(1) laws and rules related to that practitioner's
license; and
(2) the terms of the insurance policy or other
coverage agreement.
(c) This section may not be construed to circumvent any
contractual provider network agreement between a health insurer or
third-party administrator and a licensed health care practitioner.
(V.T.I.C. Art. 21.52, Sec. 3A.)
Sec. 1451.127. DUTY OF PERSON ARRANGING PROVIDER CONTRACTS
FOR HEALTH INSURER OR HEALTH MAINTENANCE ORGANIZATION. (a) A
person who arranges contracts with providers on behalf of a health
maintenance organization or health insurer shall comply with laws
related to the duties of the organization or insurer to notify and
consider providers for those contracts.
(b) A violation of this section:
(1) is an unlawful practice under Section 15.05,
Business & Commerce Code; and
(2) constitutes restraint of trade. (V.T.I.C. Art.
21.52, Sec. 4.)
[Sections 1451.128-1451.150 reserved for expansion]
SUBCHAPTER D. ACCESS TO OPTOMETRISTS AND OPHTHALMOLOGISTS
USED UNDER MANAGED CARE PLAN
Sec. 1451.151. DEFINITIONS. In this subchapter:
(1) "Managed care plan" means a plan under which a
health maintenance organization, preferred provider benefit plan
issuer, or other organization provides or arranges for health care
benefits to plan participants and requires or encourages plan
participants to use health care practitioners the plan designates.
(2) "Ophthalmologist" means a physician who
specializes in ophthalmology. (V.T.I.C. Art. 21.52D, Sec. (a).)
Sec. 1451.152. APPLICABILITY AND CONSTRUCTION OF
SUBCHAPTER. (a) This subchapter applies only to a managed care
plan that provides or arranges for benefits for vision or medical
eye care services or procedures that are within the scope of an
optometrist's or therapeutic optometrist's license.
(b) This subchapter does not require a managed care plan to
provide vision or medical eye care services or procedures.
(V.T.I.C. Art. 21.52D, Secs. (b) (part), (c).)
Sec. 1451.153. USE OF OPTOMETRIST, THERAPEUTIC
OPTOMETRIST, OR OPHTHALMOLOGIST. (a) A managed care plan may not:
(1) discriminate against a health care practitioner
because the practitioner is an optometrist, therapeutic
optometrist, or ophthalmologist;
(2) restrict or discourage a plan participant from
obtaining covered vision or medical eye care services or procedures
from a participating optometrist, therapeutic optometrist, or
ophthalmologist solely because the practitioner is an optometrist,
therapeutic optometrist, or ophthalmologist;
(3) exclude an optometrist, therapeutic optometrist,
or ophthalmologist as a participating practitioner in the plan
because the optometrist, therapeutic optometrist, or
ophthalmologist does not have medical staff privileges at a
hospital or at a particular hospital; or
(4) exclude an optometrist, therapeutic optometrist,
or ophthalmologist as a participating practitioner in the plan
because the services or procedures provided by the optometrist,
therapeutic optometrist, or ophthalmologist may be provided by
another type of health care practitioner.
(b) A managed health care plan shall:
(1) include optometrists, therapeutic optometrists,
and ophthalmologists as participating health care practitioners in
the plan; and
(2) include the name of a participating optometrist,
therapeutic optometrist, or ophthalmologist in any list of
participating health care practitioners and give equal prominence
to each name. (V.T.I.C. Art. 21.52D, Sec. (b) (part).)
[Sections 1451.154-1451.200 reserved for expansion]
SUBCHAPTER E. DENTAL CARE BENEFITS IN HEALTH INSURANCE
POLICIES OR EMPLOYEE BENEFIT PLANS
Sec. 1451.201. DEFINITIONS. In this subchapter:
(1) "Dental care service" means a service provided to
a person to prevent, alleviate, cure, or heal a human dental illness
or injury.
(2) "Employee benefit plan" means a plan, fund, or
program established or maintained by an employer or employee
organization.
(3) "Health insurance policy" means any individual,
group, blanket, or franchise insurance policy, insurance
agreement, or group hospital service contract. (V.T.I.C. Art.
21.53, Sec. 1 (part).)
Sec. 1451.202. APPLICABILITY AND CONSTRUCTION OF
SUBCHAPTER. (a) This subchapter applies only to an employee
benefit plan or health insurance policy delivered, issued for
delivery, renewed, or contracted for in this state to the extent
that:
(1) the employee benefit plan is established or
maintained to provide dental care services, through insurance or
otherwise, for the plan's participants or the beneficiaries of the
plan's participants; or
(2) the health insurance policy provides benefits for
dental care services.
(b) This subchapter does not apply to a health maintenance
organization governed by Chapter 843.
(c) The exemptions and exceptions of Sections 881.002 and
881.004 and Article 21.41 do not apply to this subchapter.
(d) This subchapter does not require an employee benefit
plan or health insurance policy to provide any type of benefits for
dental care expenses. (V.T.I.C. Art. 21.53, Secs. 1(a) (part), (b)
(part), 4 (part), 5, 6.)
Sec. 1451.203. CONFLICTING PROVISIONS. A provision of an
employee benefit plan or health insurance policy that conflicts
with this subchapter is void to the extent of the conflict.
(V.T.I.C. Art. 21.53, Sec. 4 (part).)
Sec. 1451.204. CERTAIN CONDUCT PERMITTED. (a)
Notwithstanding any other provision of this subchapter, a dentist
may contract directly with a patient to provide dental care
services to the patient as authorized by law.
(b) Notwithstanding any other provision of this subchapter,
a person providing a health insurance policy or employee benefit
plan or an employer or an employee organization may:
(1) make information available to its insureds,
beneficiaries, participants, employees, or members regarding
dental care services through the distribution of factually accurate
information about dental care services and the rates, fees,
locations, and hours for the services if the information is
distributed on the request of a dentist;
(2) establish an administrative mechanism to
facilitate payments for dental care services from an insured,
beneficiary, participant, employee, or member to a dentist chosen
by the insured, beneficiary, participant, employee, or member; or
(3) nondiscriminatorily pay or reimburse its insured,
beneficiary, participant, employee, or member for the cost of
dental care services provided by a dentist chosen by the insured,
beneficiary, participant, employee, or member. (V.T.I.C. Art.
21.53, Sec. 7.)
Sec. 1451.205. DISCLOSURE OF BENEFIT TERMS. An employee
benefit plan or health insurance policy shall:
(1) if applicable, disclose that the benefit for
dental care services offered is limited to the least costly
treatment; and
(2) specify in dollars and cents the amount of the
payment or reimbursement to be provided for dental care services or
define and explain the standard on which payment of benefits or
reimbursement for the cost of dental care services is based, such
as:
(A) "usual and customary" fees;
(B) "reasonable and customary" fees;
(C) "usual, customary, and reasonable" fees; or
(D) words of similar meaning. (V.T.I.C. Art.
21.53, Sec. 3 (part).)
Sec. 1451.206. PAYMENT OR REIMBURSEMENT OF DENTIST. (a)
The employee benefit plan or health insurance policy shall provide:
(1) that payment or reimbursement for a noncontracting
provider dentist shall be the same as payment or reimbursement for a
contracting provider dentist; and
(2) that the party to or beneficiary of the plan or
policy may assign the right to payment or reimbursement to the
dentist who provides the dental care services.
(b) Notwithstanding Subsection (a)(1), the employee benefit
plan or health insurance policy is not required to make payment or
reimbursement in an amount greater than:
(1) the amount specified in the plan or policy; or
(2) the fee the providing dentist charges for the
dental care services provided.
(c) If the right to payment or reimbursement is assigned as
provided by Subsection (a)(2):
(1) payment or reimbursement shall be made directly to
the designated dentist; and
(2) direct payment to the designated dentist
discharges the payor's obligation. (V.T.I.C. Art. 21.53, Sec. 3
(part).)
Sec. 1451.207. PROHIBITED CONDUCT. (a) An employee
benefit plan or health insurance policy may not:
(1) interfere with or prevent an individual who is a
party to or beneficiary of the plan or policy from selecting a
dentist of the individual's choice to provide a dental care service
the plan or policy offers if the dentist selected is licensed in
this state to provide the service;
(2) deny a dentist the right to participate as a
contracting provider under the plan or policy if the dentist is
licensed to provide the dental care services the plan or policy
offers;
(3) authorize a person to regulate, interfere with, or
intervene in the provision of dental care services a dentist
provides a patient, including diagnosis, if the dentist practices
within the scope of the dentist's license; or
(4) require a dentist to make or obtain a dental x-ray
or other diagnostic aid in providing dental care services.
(b) Subsection (a)(4) does not prohibit a request for an
existing dental x-ray or other existing diagnostic aid for a
determination of benefits payable under an employee benefit plan or
health insurance policy.
(c) This section does not prohibit the predetermination of
benefits for dental care expenses before the attending dentist
provides treatment. (V.T.I.C. Art. 21.53, Sec. 2.)
[Sections 1451.208-1451.250 reserved for expansion]
SUBCHAPTER F. ACCESS TO OBSTETRICAL OR GYNECOLOGICAL CARE
Sec. 1451.251. DEFINITION. In this subchapter, "enrollee"
means an individual enrolled in a health benefit plan. (V.T.I.C.
Art. 21.53D, Sec. 1(1), as added Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.252. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to a health benefit plan that requires an
enrollee to obtain certain specialty health care services through a
referral made by a primary care physician or other gatekeeper and
that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) another analogous benefit
arrangement;
(2) is offered by:
(A) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; or
(B) an entity that is not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis; or
(3) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law. (V.T.I.C. Art. 21.53D, Secs. 2(a), (b), (d), as added
Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.253. EXCEPTION. This subchapter does not apply
to:
(1) a plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments instead of wages for a
period during which an employee is absent from work because of
sickness or injury; or
(D) as a supplement to a liability insurance
policy;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy;
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1451.252; or
(7) any health benefit plan that does not provide:
(A) benefits related to pregnancy; or
(B) well-woman care benefits. (V.T.I.C. Art.
21.53D, Sec. 2(c), as added Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.254. RULES. The commissioner shall adopt rules
necessary to implement this subchapter. (V.T.I.C. Art. 21.53D,
Sec. 6, as added Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.255. RIGHT OF FEMALE ENROLLEE TO SELECT
OBSTETRICIAN OR GYNECOLOGIST. (a) Except as provided by
Subsection (b), a health benefit plan shall permit a female
enrollee to select, in addition to a primary care physician, an
obstetrician or gynecologist to provide the enrollee with health
care services that are within the scope of the professional
specialty practice of a properly credentialed obstetrician or
gynecologist.
(b) A health benefit plan may limit an enrollee's
self-referral under Subsection (a) to only one participating
obstetrician or gynecologist to provide both gynecological and
obstetrical care to the enrollee. This subsection does not affect
the right of an enrollee to select the physician who provides that
care.
(c) This section does not preclude an enrollee from
selecting a qualified physician, including a family physician or
internal medicine physician, to provide the enrollee with health
care services described by Subsection (a).
(d) This section does not affect the authority of a health
benefit plan issuer to establish selection criteria regarding other
physicians who provide services under the plan. (V.T.I.C. Art.
21.53D, Secs. 3(a), (c), 4(e), as added Acts 75th Leg., R.S., Ch.
912.)
Sec. 1451.256. DIRECT ACCESS TO SERVICES OF OBSTETRICIAN OR
GYNECOLOGIST. (a) In this section, "health care services"
includes:
(1) one well-woman examination each year;
(2) care related to pregnancy;
(3) care for any active gynecological condition; and
(4) diagnosis, treatment, and referral for any disease
or condition that is within the scope of the professional specialty
practice of a properly credentialed obstetrician or gynecologist.
(b) In addition to other benefits authorized under the
health benefit plan, a health benefit plan shall permit an enrollee
who selects an obstetrician or gynecologist under Section 1451.255
to have direct access to the health care services of that selected
physician without:
(1) a referral from the enrollee's primary care
physician; or
(2) prior authorization or precertification from the
plan issuer.
(c) A health benefit plan may not impose a copayment or
deductible for direct access to health care services as required by
this section unless the same copayment or deductible is imposed for
access to other health care services provided under the plan.
(d) This section does not affect the authority of a health
benefit plan issuer to require an obstetrician or gynecologist
selected by an enrollee under Section 1451.255 to forward
information concerning the medical care of the enrollee to the
enrollee's primary care physician. (V.T.I.C. Art. 21.53D, Secs.
4(a), (b), (c), (d) (part), as added Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.257. AVAILABILITY OF PROVIDERS. To ensure access
to services that are within the scope of the professional specialty
practice of a properly credentialed obstetrician or gynecologist, a
health benefit plan shall include in the classification of persons
authorized to provide medical services under the plan a sufficient
number of properly credentialed obstetricians and gynecologists.
(V.T.I.C. Art. 21.53D, Sec. 3(b), as added Acts 75th Leg., R.S., Ch.
912.)
Sec. 1451.258. NOTICE OF AVAILABLE PROVIDERS. (a) A health
benefit plan issuer shall provide to each person covered under the
plan a timely written notice of the choices of the types of
physician providers available for the direct access required under
this subchapter.
(b) The notice must be stated in clear and accurate
language. (V.T.I.C. Art. 21.53D, Sec. 5, as added Acts 75th Leg.,
R.S., Ch. 912.)
Sec. 1451.259. LIMITS ON PHYSICIAN SANCTIONS. (a) A health
benefit plan may not sanction or terminate a primary care physician
because of female enrollees' access to participating obstetricians
and gynecologists under this subchapter.
(b) A health benefit plan may not impose a financial or
other penalty on an obstetrician or gynecologist selected under
Section 1451.255, or on the enrollee who selected the physician,
because the selected physician failed to provide to the enrollee's
primary care physician information concerning the medical care of
the enrollee if the selected physician made a reasonable good faith
effort to forward the information. (V.T.I.C. Art. 21.53D, Secs.
4(d) (part), (f), as added Acts 75th Leg., R.S., Ch. 912.)
Sec. 1451.260. ADMINISTRATIVE PENALTY. An entity that
operates a health benefit plan in violation of this subchapter is
subject to an administrative penalty as provided by Chapter 84.
(V.T.I.C. Art. 21.53D, Sec. 7, as added Acts 75th Leg., R.S., Ch.
912.)
[Sections 1451.261-1451.300 reserved for expansion]
SUBCHAPTER G. ACCESS TO DIETITIAN SERVICES
Sec. 1451.301. APPLICABILITY OF GENERAL PROVISIONS OF OTHER
LAW. The provisions of Chapter 1201, including provisions relating
to the applicability, purpose, and enforcement of that chapter, the
construction of policies under that chapter, rulemaking under that
chapter, and definitions of terms applicable in that chapter, apply
to this subchapter. (New.)
Sec. 1451.302. DIETITIAN SERVICES. An individual or group
accident and health insurance policy delivered or issued for
delivery in this state may not:
(1) exclude or deny coverage for services performed
by:
(A) a dietitian; or
(B) a provisionally licensed dietitian acting
under the supervision of a dietitian; or
(2) refuse payment or reimbursement for charges for
services described by Subdivision (1) if the services:
(A) are in the scope of the dietitian's license;
(B) are related to an injury or illness the
policy covers if the services are scheduled in the policy; and
(C) are provided under a professional
recommendation of a physician whose treatment or examination for
the injury or illness would be covered by the policy and would be
payable or reimbursable under the policy. (V.T.I.C. Art. 3.70-2,
Sec. (H), as amended Acts 70th Leg., R.S., Ch. 875, Sec. 2.)
[Sections 1451.303-1451.350 reserved for expansion]
SUBCHAPTER H. DISABILITY CERTIFIED BY PODIATRIST
Sec. 1451.351. LOSS OF INCOME BENEFITS FOR DISABILITY
TREATABLE BY PODIATRIST. (a) This section applies only to an
insurance policy delivered, issued for delivery, or renewed in this
state that provides benefits covering loss of income as a result of
an acute temporary disability caused by sickness or injury.
(b) An insurance policy may not deny payment of benefits
described by Subsection (a) solely because the disability is
certified or attested to by a podiatrist if the disability is caused
by a sickness or injury that may be treated within the scope of the
podiatrist's license. (V.T.I.C. Art. 21.52A.)
[Sections 1451.352-1451.400 reserved for expansion]
SUBCHAPTER I. USE OF OSTEOPATHIC HOSPITAL
Sec. 1451.401. CONTRACT WITH OSTEOPATHIC HOSPITAL. A
health maintenance organization or preferred provider benefit plan
issuer that contracts with a hospital to provide services to
covered individuals may not refuse to contract with an osteopathic
hospital solely because the hospital is an osteopathic hospital.
(V.T.I.C. Art. 21.53B, Sec. (a).)
Sec. 1451.402. SERVICES AT OSTEOPATHIC HOSPITAL. A health
maintenance organization or preferred provider benefit plan issuer
that provides benefits for inpatient or outpatient services
provided by an allopathic hospital shall seek to provide benefits
for similar services provided by an osteopathic hospital if there
is an osteopathic hospital within the service area of the health
maintenance organization or preferred provider benefit plan issuer
that will provide the services at a substantially similar cost.
(V.T.I.C. Art. 21.53B, Sec. (b).)
Sec. 1451.403. REQUEST FOR ACTION OF COMMISSIONER. An
aggrieved party may request that the commissioner conduct an
investigation, review, hearing, or other proceeding to determine
compliance with this subchapter. (V.T.I.C. Art. 21.53B, Sec. (c)
(part).)
Sec. 1451.404. ENFORCEMENT. The commissioner shall take
all reasonable actions to ensure compliance with this subchapter,
including issuing orders and assessing penalties. (V.T.I.C. Art.
21.53B, Sec. (c) (part).)
CHAPTER 1452. PHYSICIAN AND PROVIDER CREDENTIALS
SUBCHAPTER A. CREDENTIALING OF PHYSICIANS AND PROVIDERS
BY HEALTH MAINTENANCE ORGANIZATION
Sec. 1452.001. APPLICABILITY OF CERTAIN DEFINITIONS
Sec. 1452.002. VERIFICATION OF PHYSICIAN'S LICENSE
OR CERTIFICATE
Sec. 1452.003. SITE VISIT FOR INITIAL CREDENTIALING
Sec. 1452.004. LIMITATION ON COMMISSIONER'S AUTHORITY
Sec. 1452.005. SITE VISIT FOR CAUSE NOT PRECLUDED
Sec. 1452.006. RULES RELATED TO SELECTION OF PHYSICIANS
AND PROVIDERS BY HEALTH MAINTENANCE
ORGANIZATION
[Sections 1452.007-1452.050 reserved for expansion]
SUBCHAPTER B. STANDARDIZED FORMS
Sec. 1452.051. DEFINITION
Sec. 1452.052. STANDARDIZED FORM FOR VERIFICATION OF
PHYSICIAN CREDENTIALS
CHAPTER 1452. PHYSICIAN AND PROVIDER CREDENTIALS
SUBCHAPTER A. CREDENTIALING OF PHYSICIANS AND PROVIDERS
BY HEALTH MAINTENANCE ORGANIZATION
Sec. 1452.001. APPLICABILITY OF CERTAIN DEFINITIONS. In
this subchapter, a term defined by Section 843.002 has the meaning
assigned by that section. (V.T.I.C. Art. 20A.01B, as added Acts
77th Leg., R.S., Ch. 1419.)
Sec. 1452.002. VERIFICATION OF PHYSICIAN'S LICENSE OR
CERTIFICATE. The commissioner shall require a health maintenance
organization to verify that a physician's license to practice
medicine and any other certificate the physician is required to
hold, including a certificate issued by the Department of Public
Safety or the federal Drug Enforcement Administration or a
certificate issued under the Medicare program, is valid as of the
date of:
(1) initial credentialing of the physician; and
(2) each recredentialing. (V.T.I.C. Art. 20A.39, Sec.
(b).)
Sec. 1452.003. SITE VISIT FOR INITIAL CREDENTIALING. (a)
The commissioner shall require a health maintenance organization
that conducts a site visit for the purpose of initial credentialing
of a physician or provider to evaluate during the visit a site's
accessibility, appearance, space, medical or dental recordkeeping
practices, availability of appointments, and confidentiality
procedures.
(b) The commissioner may not require the health maintenance
organization to evaluate the appropriateness of equipment during
the site visit. (V.T.I.C. Art. 20A.39, Sec. (c).)
Sec. 1452.004. LIMITATION ON COMMISSIONER'S AUTHORITY. The
commissioner may not require a health maintenance organization to:
(1) formally recredential a physician or provider more
frequently than once in any three-year period;
(2) verify the validity of a license or certificate
held by a physician as of a date other than the date of initial
credentialing or recredentialing of the physician;
(3) use clinical personnel to perform a site visit for
initial credentialing of a physician or provider unless clinical
review is needed during the site visit; or
(4) require a site visit be performed for the purpose
of recredentialing of a physician or provider. (V.T.I.C. Art.
20A.39, Sec. (d).)
Sec. 1452.005. SITE VISIT FOR CAUSE NOT PRECLUDED. This
subchapter does not preclude a health maintenance organization from
conducting a site visit of a physician or provider at any time for
cause, including a complaint made by a member or another external
complaint made to the health maintenance organization. (V.T.I.C.
Art. 20A.39, Sec. (e).)
Sec. 1452.006. RULES RELATED TO SELECTION OF PHYSICIANS AND
PROVIDERS BY HEALTH MAINTENANCE ORGANIZATION. A rule adopted by
the commissioner under Section 843.102 that relates to
implementation and maintenance by a health maintenance
organization of a process for selecting and retaining affiliated
physicians and providers must comply with:
(1) this subchapter; and
(2) standards adopted by the National Committee for
Quality Assurance, to the extent those standards do not conflict
with other laws of this state. (V.T.I.C. Art. 20A.39, Sec. (a).)
[Sections 1452.007-1452.050 reserved for expansion]
SUBCHAPTER B. STANDARDIZED FORMS
Sec. 1452.051. DEFINITION. In this subchapter, "physician"
means an individual licensed to practice medicine in this state.
(V.T.I.C. Art. 21.58D, Sec. 1.)
Sec. 1452.052. STANDARDIZED FORM FOR VERIFICATION OF
PHYSICIAN CREDENTIALS. (a) The commissioner by rule shall:
(1) prescribe a standardized form for the verification
of a physician's credentials; and
(2) require a public or private hospital, a health
maintenance organization operating under Chapter 843, or the issuer
of a preferred provider benefit plan under Chapter 1301 to use the
form for verification of physician credentials.
(b) In prescribing a form under this section, the
commissioner shall consider any credentialing application form
that is widely used in this state. (V.T.I.C. Art. 21.58D, Sec. 2.)
CHAPTER 1453. DISCLOSURE OF REIMBURSEMENT GUIDELINES
UNDER MANAGED CARE PLAN
Sec. 1453.001. DEFINITIONS
Sec. 1453.002. PROVISION OF INFORMATION REGARDING
REIMBURSEMENT GUIDELINES
Sec. 1453.003. RULES
CHAPTER 1453. DISCLOSURE OF REIMBURSEMENT GUIDELINES
UNDER MANAGED CARE PLAN
Sec. 1453.001. DEFINITIONS. In this chapter:
(1) "Health care provider" means:
(A) a hospital, emergency clinic, outpatient
clinic, or other facility providing health care services; or
(B) an individual who is licensed in this state
to provide health care services.
(2) "Managed care entity" means:
(A) a health maintenance organization;
(B) a preferred provider benefit plan issuer;
(C) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; or
(D) another entity that offers a managed care
plan, including:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884;
(v) a multiple employer welfare arrangement
that holds a certificate of authority under Chapter 846; and
(vi) an entity not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis.
(3) "Managed care plan" means a health benefit plan:
(A) under which health care services are provided
through contracts with health care providers to individuals
enrolled in or insured under the plan; and
(B) that provides financial incentives to
individuals enrolled in or insured under the plan to use health care
providers participating in the plan and procedures covered by the
plan. (V.T.I.C. Art. 21.60, Sec. 1.)
Sec. 1453.002. PROVISION OF INFORMATION REGARDING
REIMBURSEMENT GUIDELINES. (a) On the written request of an
out-of-network health care provider, a managed care entity shall
furnish to the provider a written description of the factors
considered by the entity in determining the amount of reimbursement
the provider may receive for goods or services provided to an
individual enrolled in or insured under the entity's managed care
plan.
(b) This section does not require a managed care entity to
disclose proprietary information that is prohibited from
disclosure by a contract between the entity and a vendor that
supplies payment or statistical data to the entity.
(c) A contract between a managed care entity and a vendor
that supplies payment or statistical data to the entity may not
prohibit the entity from disclosing under this section:
(1) the name of the vendor; or
(2) the methodology and origin of information used to
determine the amount of reimbursement.
(d) A managed care entity that denies a request for
information described by Subsection (b) shall send a copy of the
request and the information requested to the department for review.
(V.T.I.C. Art. 21.60, Sec. 2.)
Sec. 1453.003. RULES. The commissioner shall adopt rules
as necessary to implement this chapter. (V.T.I.C. Art. 21.60, Sec.
3.)
CHAPTER 1454. EQUAL HEALTH CARE FOR WOMEN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1454.001. DEFINITIONS
Sec. 1454.002. APPLICABILITY OF CHAPTER
[Sections 1454.003-1454.050 reserved for expansion]
SUBCHAPTER B. REIMBURSEMENT FOR HEALTH CARE SERVICES
Sec. 1454.051. EQUAL REIMBURSEMENT REQUIRED
Sec. 1454.052. REIMBURSEMENT FOR ABORTION NOT REQUIRED
[Sections 1454.053-1454.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 1454.101. SANCTIONS AUTHORIZED
Sec. 1454.102. CEASE AND DESIST PROCEDURES AND RESTITUTION
FOR ATTORNEY'S FEES AUTHORIZED
Sec. 1454.103. ADMINISTRATIVE PENALTIES AUTHORIZED
Sec. 1454.104. AMOUNT OF DAMAGES
Sec. 1454.105. APPLICABILITY OF CERTAIN PROCEDURAL
REQUIREMENTS TO SANCTIONS OR ADMINISTRATIVE
PENALTIES
Sec. 1454.106. INTERVENTION IN PROCEEDING
Sec. 1454.107. TIME FOR COMMISSIONER'S DETERMINATION
Sec. 1454.108. FAILURE OF COMMISSIONER TO MAKE DETERMINATION
BY ORDER; ACTION IN DISTRICT COURT
Sec. 1454.109. APPEAL OF COMMISSIONER'S ORDER
CHAPTER 1454. EQUAL HEALTH CARE FOR WOMEN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1454.001. DEFINITIONS. In this chapter:
(1) "Health care provider" means a home health aide,
hospital, nurse practitioner, nurse midwife, outpatient care
center, physician assistant, registered nurse, or surgery center.
(2) "Physician" has the meaning assigned by Section
151.002, Occupations Code. (V.T.I.C. Art. 21.53N, Sec. 1.)
Sec. 1454.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that provides benefits for
medical or surgical expenses incurred as a result of a health
condition, accident, or sickness, including an individual, group,
blanket, or franchise insurance policy or insurance agreement, a
group hospital service contract, or an individual or group evidence
of coverage or similar coverage document that is offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) a reciprocal exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846;
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844; or
(9) a small employer health benefit plan written under
Chapter 1501. (V.T.I.C. Art. 21.53N, Sec. 2.)
[Sections 1454.003-1454.050 reserved for expansion]
SUBCHAPTER B. REIMBURSEMENT FOR HEALTH CARE SERVICES
Sec. 1454.051. EQUAL REIMBURSEMENT REQUIRED. A health
benefit plan issuer that reimburses a physician or health care
provider for reproductive health or oncology services provided to
women must reimburse the physician or provider in an amount at least
equal to the annual average compensation per hour or unit that would
be paid in the service area to a physician or provider for the same
medical, surgical, hospital, pharmaceutical, nursing, or other
similar resources used to provide the services if the resources
would be used to provide health services exclusively to men or to
the general population. (V.T.I.C. Art. 21.53N, Sec. 3.)
Sec. 1454.052. REIMBURSEMENT FOR ABORTION NOT REQUIRED.
This chapter does not require a health benefit plan issuer to
provide reimbursement for an abortion, as defined by the Family
Code, or for a service related to an abortion. (V.T.I.C. Art.
21.53N, Sec. 6.)
[Sections 1454.053-1454.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT
Sec. 1454.101. SANCTIONS AUTHORIZED. The sanctions
authorized by Chapter 82 apply to a health benefit plan issuer that
violates this chapter. (V.T.I.C. Art. 21.53N, Sec. 4(a) (part).)
Sec. 1454.102. CEASE AND DESIST PROCEDURES AND RESTITUTION
FOR ATTORNEY'S FEES AUTHORIZED. The commissioner may use the cease
and desist procedures authorized by Chapter 83 against a health
benefit plan issuer that violates this chapter. In accordance with
Chapter 83, the commissioner may order the health benefit plan
issuer to make complete restitution for the violation, which may
include restitution for the reasonable attorney's fees incurred by
a person making a complaint under this chapter. (V.T.I.C. Art.
21.53N, Sec. 4(a) (part).)
Sec. 1454.103. ADMINISTRATIVE PENALTIES AUTHORIZED. (a)
In addition to any sanctions authorized by this subchapter, the
commissioner may impose an administrative penalty in accordance
with Chapter 84 on a health benefit plan issuer that violates this
chapter.
(b) On a finding that a health benefit plan issuer knowingly
violated this chapter, the commissioner may impose in addition to
the administrative penalty authorized by Section 84.022 an
administrative penalty that does not exceed $25,000. (V.T.I.C.
Art. 21.53N, Sec. 4(b).)
Sec. 1454.104. AMOUNT OF DAMAGES. Notwithstanding this
subchapter, in imposing a sanction or penalty for a violation of
this chapter, the commissioner may order a health benefit plan
issuer to pay the greater of complete or economic damages.
(V.T.I.C. Art. 21.53N, Sec. 4(a) (part).)
Sec. 1454.105. APPLICABILITY OF CERTAIN PROCEDURAL
REQUIREMENTS TO SANCTIONS OR ADMINISTRATIVE PENALTIES. Subchapter
C, Chapter 84, applies to the imposition of a sanction or
administrative penalty under this chapter. (V.T.I.C. Art. 21.53N,
Sec. 4(d).)
Sec. 1454.106. INTERVENTION IN PROCEEDING. (a) In a
proceeding relating to the imposition by the commissioner of a
sanction or administrative penalty under this chapter, a person
affected by an order of the commissioner, including a physician or
health care provider, may intervene in the proceeding by filing a
notice of intervention with the commissioner. The commissioner
shall provide an affected person a reasonable period to intervene.
(b) At the time the commissioner notifies a health benefit
plan issuer of the issuer's opportunity for a hearing regarding an
alleged violation, the commissioner shall notify each affected
person of all relevant information regarding the hearing.
(c) A person who intervenes under this section has the
rights and powers of a party under Chapter 2001, Government Code.
(V.T.I.C. Art. 21.53N, Sec. 4(e).)
Sec. 1454.107. TIME FOR COMMISSIONER'S DETERMINATION. Not
later than the 120th day after the date a complaint alleging a
violation of this chapter is filed with the department, the
commissioner shall determine whether the alleged violation
occurred and impose appropriate sanctions. (V.T.I.C. Art. 21.53N,
Sec. 4(c).)
Sec. 1454.108. FAILURE OF COMMISSIONER TO MAKE
DETERMINATION BY ORDER; ACTION IN DISTRICT COURT. (a) If the
commissioner fails to determine by order in the time prescribed by
Section 1454.107 whether a violation alleged in a complaint filed
under this chapter occurred, the person who filed the complaint may
bring an action in district court for the violation.
(b) The action must be commenced not later than the first
anniversary of the date by which the commissioner is required to
make a determination under Section 1454.107.
(c) In an action filed under this section, a court may:
(1) impose the sanctions authorized by this subchapter
or similar sanctions;
(2) assess an additional civil penalty of $25,000 if
the trier of fact finds the defendant knowingly violated this
chapter; and
(3) award a claimant who prevails in an action filed
under this section reasonable attorney's fees and court costs,
including reasonable and necessary expert witness fees.
(d) On a finding by the court that an action filed under this
section was groundless and brought in bad faith or brought for the
purpose of harassment, the court shall award the defendant
reasonable and necessary attorney's fees. (V.T.I.C. Art. 21.53N,
Secs. 5(b), (c), (d).)
Sec. 1454.109. APPEAL OF COMMISSIONER'S ORDER. (a) A
person affected by an order of the commissioner regarding a
violation of this chapter, including a person who intervenes under
Section 1454.106, may file an appeal in district court.
(b) The standard of review for an appeal filed under this
section is substantial evidence. (V.T.I.C. Art. 21.53N, Sec.
5(a).)
CHAPTER 1455. TELEMEDICINE AND TELEHEALTH
Sec. 1455.001. DEFINITIONS
Sec. 1455.002. APPLICABILITY OF CHAPTER
Sec. 1455.003. EXCEPTION
Sec. 1455.004. COVERAGE FOR TELEMEDICINE MEDICAL SERVICES
AND TELEHEALTH SERVICES
Sec. 1455.005. RULES
CHAPTER 1455. TELEMEDICINE AND TELEHEALTH
Sec. 1455.001. DEFINITIONS. In this chapter:
(1) "Health professional" means:
(A) a physician;
(B) an individual who is:
(i) licensed or certified in this state to
perform health care services; and
(ii) authorized to assist a physician in
providing telemedicine medical services that are delegated and
supervised by the physician; or
(C) a licensed or certified health professional
acting within the scope of the license or certification who does not
perform a telemedicine medical service.
(2) "Physician" means a person licensed to practice
medicine in this state under Subtitle B, Title 3, Occupations Code.
(3) "Telehealth service" and "telemedicine medical
service" have the meanings assigned by Section 57.042, Utilities
Code. (V.T.I.C. Art. 21.53F, Secs. 1(2), (3), (4), (5), as added
Acts 75th Leg., R.S., Ch. 880.)
Sec. 1455.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) another analogous benefit
arrangement; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 21.53F, Sec. 2(a), as added Acts 75th Leg.,
R.S., Ch. 880.)
Sec. 1455.003. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
(D) as a supplement to a liability insurance
policy;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1455.002. (V.T.I.C. Art. 21.53F, Sec. 2(b), as added
Acts 75th Leg., R.S., Ch. 880.)
Sec. 1455.004. COVERAGE FOR TELEMEDICINE MEDICAL SERVICES
AND TELEHEALTH SERVICES. (a) A health benefit plan may not exclude
a telemedicine medical service or a telehealth service from
coverage under the plan solely because the service is not provided
through a face-to-face consultation.
(b) A health benefit plan may require a deductible, a
copayment, or coinsurance for a telemedicine medical service or a
telehealth service. The amount of the deductible, copayment, or
coinsurance may not exceed the amount of the deductible, copayment,
or coinsurance required for a comparable medical service provided
through a face-to-face consultation. (V.T.I.C. Art. 21.53F, Sec.
3, as added Acts 75th Leg., R.S., Ch. 880.)
Sec. 1455.005. RULES. Subject to Section 107.004,
Occupations Code, the commissioner may adopt rules necessary to
implement this chapter. (V.T.I.C. Art. 21.53F, Sec. 6(a), as added
Acts 75th Leg., R.S., Ch. 880.)
[Chapters 1456-1500 reserved for expansion]
SUBTITLE G. HEALTH COVERAGE AVAILABILITY
CHAPTER 1501. HEALTH INSURANCE PORTABILITY
AND AVAILABILITY ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1501.001. SHORT TITLE
Sec. 1501.002. DEFINITIONS
Sec. 1501.003. APPLICABILITY: SMALL EMPLOYER HEALTH
BENEFIT PLANS
Sec. 1501.004. APPLICABILITY: LARGE EMPLOYER HEALTH
BENEFIT PLANS
Sec. 1501.005. EXCEPTION: CERTAIN INDIVIDUALLY
UNDERWRITTEN POLICIES
Sec. 1501.006. CERTIFICATION
Sec. 1501.007. AFFILIATES
Sec. 1501.008. LATE ENROLLEES
Sec. 1501.009. SCHOOL DISTRICT ELECTION
Sec. 1501.010. GENERAL RULES
Sec. 1501.011. DETERMINATION OF EMPLOYER STATUS FOR
CERTAIN EMPLOYERS
[Sections 1501.012-1501.050 reserved for expansion]
SUBCHAPTER B. PURCHASING COOPERATIVES
Sec. 1501.051. DEFINITIONS
Sec. 1501.052. TEXAS HEALTH BENEFITS PURCHASING
COOPERATIVE; BOARD OF TRUSTEES
Sec. 1501.053. TEXAS HEALTH BENEFITS PURCHASING
COOPERATIVE: EXECUTIVE DIRECTOR AND
OTHER EMPLOYEES
Sec. 1501.054. REGIONAL SUBDIVISIONS OF TEXAS HEALTH
BENEFITS PURCHASING COOPERATIVE
Sec. 1501.055. APPLICABILITY OF PUBLIC INFORMATION LAW TO
TEXAS HEALTH BENEFITS PURCHASING
COOPERATIVE
Sec. 1501.056. PRIVATE PURCHASING COOPERATIVES
Sec. 1501.057. IMMUNITY
Sec. 1501.058. POWERS AND DUTIES OF COOPERATIVES
Sec. 1501.059. SELF-INSURED OR SELF-FUNDED PLAN
PROHIBITED
Sec. 1501.060. SCOPE OF GROUP COVERAGE
Sec. 1501.061. REQUIREMENTS APPLICABLE TO HEALTH BENEFIT
PLAN ISSUERS WITH WHICH COOPERATIVE
MAY CONTRACT
Sec. 1501.062. COOPERATIVE NOT INSURER; AGENTS AND
ADMINISTRATORS
Sec. 1501.063. COOPERATIVE AS EMPLOYER
Sec. 1501.064. CERTAIN USE OF APPROPRIATED MONEY
PROHIBITED
[Sections 1501.065-1501.100 reserved for expansion]
SUBCHAPTER C. PROVISION OF COVERAGE
Sec. 1501.101. GEOGRAPHIC SERVICE AREAS
Sec. 1501.102. PREEXISTING CONDITION PROVISION
Sec. 1501.103. TREATMENT OF CERTAIN CONDITIONS AS
PREEXISTING PROHIBITED
Sec. 1501.104. AFFILIATION PERIOD
Sec. 1501.105. WAITING PERIOD PERMITTED
Sec. 1501.106. CERTAIN LIMITATIONS OR EXCLUSIONS OF
COVERAGE PROHIBITED
Sec. 1501.107. DISCOUNTS, REBATES, AND REDUCTIONS
Sec. 1501.108. RENEWABILITY OF COVERAGE; CANCELLATION
Sec. 1501.109. REFUSAL TO RENEW; DISCONTINUATION OF
COVERAGE
Sec. 1501.110. NOTICE TO COVERED PERSONS
Sec. 1501.111. WRITTEN STATEMENT OF DENIAL, CANCELLATION,
OR REFUSAL TO RENEW REQUIRED
[Sections 1501.112-1501.150 reserved for expansion]
SUBCHAPTER D. GUARANTEED ISSUE OF SMALL EMPLOYER
HEALTH BENEFIT PLANS; CONTINUATION OF COVERAGE
Sec. 1501.151. GUARANTEED ISSUE
Sec. 1501.152. EXCLUSION OF ELIGIBLE EMPLOYEE OR
DEPENDENT PROHIBITED
Sec. 1501.153. EMPLOYER CONTRIBUTION
Sec. 1501.154. MINIMUM PARTICIPATION REQUIREMENT
Sec. 1501.155. EXCEPTION TO MINIMUM PARTICIPATION
REQUIREMENT
Sec. 1501.156. EMPLOYEE ENROLLMENT; WAITING PERIOD
Sec. 1501.157. COVERAGE FOR NEWBORN CHILDREN
Sec. 1501.158. COVERAGE FOR ADOPTED CHILDREN
Sec. 1501.159. CONTINUATION OF COVERAGE FOR CERTAIN
DEPENDENTS
[Sections 1501.160-1501.200 reserved for expansion]
SUBCHAPTER E. UNDERWRITING AND RATING OF
SMALL EMPLOYER HEALTH BENEFIT PLANS
Sec. 1501.201. DEFINITIONS
Sec. 1501.202. ESTABLISHMENT OF CLASSES OF BUSINESS
Sec. 1501.203. ESTABLISHMENT OF CLASSES OF BUSINESS ON
CERTAIN BASES PROHIBITED
Sec. 1501.204. INDEX RATES
Sec. 1501.205. PREMIUM RATES: ESTABLISHMENT
Sec. 1501.206. PREMIUM RATES: ADJUSTMENTS
Sec. 1501.207. PREMIUM RATE ADJUSTMENT IN CLOSED PLAN
Sec. 1501.208. PREMIUM RATES: INDUSTRY CLASSIFICATION
Sec. 1501.209. PREMIUM RATES: NUMBER OF EMPLOYEES
Sec. 1501.210. PREMIUM RATES: NONDISCRIMINATION
Sec. 1501.211. RULES CONCERNING PREMIUM RATES
Sec. 1501.212. RESTRICTED PROVIDER NETWORK
Sec. 1501.213. PREMIUM RATES: HEALTH MAINTENANCE
ORGANIZATION HEALTH BENEFIT PLAN
Sec. 1501.214. ENFORCEMENT
Sec. 1501.215. REPORTING REQUIREMENTS
[Sections 1501.216-1501.250 reserved for expansion]
SUBCHAPTER F. COVERAGE UNDER SMALL EMPLOYER HEALTH
BENEFIT PLANS
Sec. 1501.251. EXCEPTION FROM CERTAIN MANDATED BENEFIT
REQUIREMENTS
Sec. 1501.252. HEALTH BENEFIT PLANS
Sec. 1501.253. COVERAGE REQUIREMENTS
Sec. 1501.254. ALCOHOL AND SUBSTANCE ABUSE BENEFITS
Sec. 1501.255. HEALTH MAINTENANCE ORGANIZATION PLANS
Sec. 1501.256. COORDINATION WITH FEDERAL LAW
Sec. 1501.257. COST CONTAINMENT
Sec. 1501.258. FORMS
Sec. 1501.259. RIDERS; FILING WITH COMMISSIONER
Sec. 1501.260. PLAIN LANGUAGE REQUIRED
[Sections 1501.261-1501.300 reserved for expansion]
SUBCHAPTER G. REINSURANCE FOR SMALL EMPLOYER
HEALTH BENEFIT PLANS
Sec. 1501.301. DEFINITIONS
Sec. 1501.302. TEXAS HEALTH REINSURANCE SYSTEM
Sec. 1501.303. SYSTEM BOARD OF DIRECTORS
Sec. 1501.304. OPEN MEETINGS; PUBLIC INFORMATION
Sec. 1501.305. BOARD MEMBER IMMUNITY
Sec. 1501.306. SYSTEM PLAN OF OPERATION
Sec. 1501.307. SYSTEM POWERS
Sec. 1501.308. SYSTEM NOTES AS LEGAL INVESTMENT FOR SMALL
EMPLOYER HEALTH BENEFIT PLAN ISSUER
Sec. 1501.309. SYSTEM AUDIT
Sec. 1501.310. ELECTION OF STATUS
Sec. 1501.311. CHANGE IN STATUS
Sec. 1501.312. APPLICATION TO OPERATE AS RISK-ASSUMING
HEALTH BENEFIT PLAN ISSUER
Sec. 1501.313. RESCISSION OF APPROVAL TO OPERATE AS
RISK-ASSUMING HEALTH BENEFIT PLAN ISSUER
Sec. 1501.314. REINSURANCE
Sec. 1501.315. LIMITS ON REINSURANCE
Sec. 1501.316. TERMINATION OF REINSURANCE
Sec. 1501.317. APPLICATION OF MANAGED CARE PROCEDURES
Sec. 1501.318. PREMIUM RATES FOR REINSURANCE
Sec. 1501.319. DETERMINATION OF NET LOSS
Sec. 1501.320. ASSESSMENTS TO RECOVER NET LOSSES
Sec. 1501.321. LIMITS ON ASSESSMENTS
Sec. 1501.322. ADJUSTMENT TO ASSESSMENTS ON FEDERALLY
QUALIFIED HEALTH MAINTENANCE
ORGANIZATIONS
Sec. 1501.323. ADVANCE INTERIM ASSESSMENTS
Sec. 1501.324. LIMIT ON TOTAL ASSESSMENTS
Sec. 1501.325. ESTIMATE OF ASSESSMENTS; EVALUATION AND
PROTECTION OF SYSTEM
Sec. 1501.326. DEFERMENT OF ASSESSMENT
[Sections 1501.327-1501.350 reserved for expansion]
SUBCHAPTER H. MARKETING OF
SMALL EMPLOYER HEALTH BENEFIT PLANS
Sec. 1501.351. MARKETING REQUIREMENTS
Sec. 1501.352. HEALTH STATUS AND CLAIMS EXPERIENCE;
PROHIBITED ACTS
Sec. 1501.353. AGENT COMPENSATION
Sec. 1501.354. REQUIRED DISCLOSURES
Sec. 1501.355. RULES CONCERNING MARKETING AND
AVAILABILITY
Sec. 1501.356. REPORTING REQUIREMENTS
Sec. 1501.357. VIOLATIONS
Sec. 1501.358. APPLICABILITY TO THIRD-PARTY
ADMINISTRATOR
[Subchapters I-L reserved for expansion]
SUBCHAPTER M. LARGE EMPLOYER HEALTH BENEFIT PLANS
Sec. 1501.601. PARTICIPATION CRITERIA
Sec. 1501.602. COVERAGE REQUIREMENTS
Sec. 1501.603. EXCLUSION OF ELIGIBLE EMPLOYEE OR
DEPENDENT PROHIBITED
Sec. 1501.604. DECLINING COVERAGE
Sec. 1501.605. MINIMUM CONTRIBUTION OR PARTICIPATION
REQUIREMENTS
Sec. 1501.606. EMPLOYEE ENROLLMENT; WAITING PERIOD
Sec. 1501.607. COVERAGE FOR NEWBORN CHILDREN
Sec. 1501.608. COVERAGE FOR ADOPTED CHILDREN
Sec. 1501.609. COVERAGE FOR UNMARRIED CHILDREN
Sec. 1501.610. PREMIUM RATES; ADJUSTMENTS
Sec. 1501.611. MARKETING REQUIREMENTS
Sec. 1501.612. ENCOURAGING EXCLUSION OF EMPLOYEE
PROHIBITED
Sec. 1501.613. AGENTS
Sec. 1501.614. REPORTING OF CLAIMS INFORMATION
Sec. 1501.615. ADDITIONAL REPORTING REQUIREMENTS
Sec. 1501.616. APPLICABILITY TO THIRD-PARTY ADMINISTRATOR
CHAPTER 1501. HEALTH INSURANCE PORTABILITY
AND AVAILABILITY ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1501.001. SHORT TITLE. This chapter may be cited as
the Health Insurance Portability and Availability Act. (V.T.I.C.
Art. 26.01.)
Sec. 1501.002. DEFINITIONS. In this chapter:
(1) "Agent" means a person who may act as an agent for
the sale of a health benefit plan under a license issued under Title
13.
(2) "Dependent" means:
(A) a spouse;
(B) a child younger than 25 years of age,
including a newborn child;
(C) a child of any age who is:
(i) medically certified as disabled; and
(ii) dependent on the parent;
(D) an individual who must be covered under:
(i) Section 1251.154; or
(ii) Section 1201.062; and
(E) any other child eligible under an employer's
health benefit plan, including a child described by Section
1503.003.
(3) "Eligible employee" means an employee who works on
a full-time basis and who usually works at least 30 hours a week.
The term includes a sole proprietor, a partner, and an independent
contractor, if the individual is included as an employee under a
health benefit plan of a small or large employer. The term does not
include an employee who:
(A) works on a part-time, temporary, seasonal, or
substitute basis;
(B) is covered under:
(i) another health benefit plan; or
(ii) a self-funded or self-insured employee
welfare benefit plan that provides health benefits and is
established in accordance with the Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1001 et seq.); or
(C) elects not to be covered under the employer's
health benefit plan and is covered under:
(i) the Medicaid program;
(ii) another federal program, including the
CHAMPUS program or Medicare program; or
(iii) a benefit plan established in another
country.
(4) "Employee" means an individual employed by an
employer.
(5) "Health benefit plan" means a group, blanket, or
franchise insurance policy, a certificate issued under a group
policy, a group hospital service contract, or a group subscriber
contract or evidence of coverage issued by a health maintenance
organization that provides benefits for health care services. The
term does not include:
(A) accident-only or disability income insurance
coverage or a combination of accident-only and disability income
insurance coverage;
(B) credit-only insurance coverage;
(C) disability insurance coverage;
(D) coverage for a specified disease or illness;
(E) Medicare services under a federal contract;
(F) Medicare supplement and Medicare Select
benefit plans regulated in accordance with federal law;
(G) long-term care coverage or benefits, nursing
home care coverage or benefits, home health care coverage or
benefits, community-based care coverage or benefits, or any
combination of those coverages or benefits;
(H) coverage that provides limited-scope dental
or vision benefits;
(I) coverage provided by a single service health
maintenance organization;
(J) workers' compensation insurance coverage or
similar insurance coverage;
(K) coverage provided through a jointly managed
trust authorized under 29 U.S.C. Section 141 et seq. that contains a
plan of benefits for employees that is negotiated in a collective
bargaining agreement governing wages, hours, and working
conditions of the employees that is authorized under 29 U.S.C.
Section 157;
(L) hospital indemnity or other fixed indemnity
insurance coverage;
(M) reinsurance contracts issued on a stop-loss,
quota-share, or similar basis;
(N) short-term major medical contracts;
(O) liability insurance coverage, including
general liability insurance coverage and automobile liability
insurance coverage, and coverage issued as a supplement to
liability insurance coverage, including automobile medical payment
insurance coverage;
(P) coverage for on-site medical clinics;
(Q) coverage that provides other limited
benefits specified by federal regulations; or
(R) other coverage that:
(i) is similar to the coverage described by
this subdivision under which benefits for medical care are
secondary or incidental to other coverage benefits; and
(ii) is specified by federal regulations.
(6) "Health benefit plan issuer" means an entity
authorized under this code or another insurance law of this state
that provides health insurance or health benefits in this state,
including:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a health maintenance organization operating
under Chapter 843; and
(D) a stipulated premium company operating under
Chapter 884.
(7) "Health status related factor" means:
(A) health status;
(B) medical condition, including both physical
and mental illness;
(C) claims experience;
(D) receipt of health care;
(E) medical history;
(F) genetic information;
(G) evidence of insurability, including
conditions arising out of acts of family violence; and
(H) disability.
(8) "Large employer" means a person who employed an
average of at least 51 eligible employees on business days during
the preceding calendar year and who employs at least two employees
on the first day of the plan year. The term includes a governmental
entity subject to Article 3.51-1, 3.51-2, 3.51-4, or 3.51-5, to
Subchapter C, Chapter 1364, or to Chapter 1578 that otherwise meets
the requirements of this subdivision. For purposes of this
definition, a partnership is the employer of a partner.
(9) "Large employer health benefit plan" means a
health benefit plan offered to a large employer.
(10) "Large employer health benefit plan issuer" means
a health benefit plan issuer, to the extent that the issuer is
offering, delivering, issuing for delivery, or renewing health
benefit plans subject to Subchapters C and M.
(11) "Person" means an individual, corporation,
partnership, or other legal entity.
(12) "Preexisting condition provision" means a
provision that excludes or limits coverage as to a disease or
condition for a specified period after the effective date of
coverage.
(13) "Premium" means all amounts paid by a small or
large employer and eligible employees as a condition of receiving
coverage from a small or large employer health benefit plan issuer,
including any fees or other contributions associated with a health
benefit plan.
(14) "Small employer" means a person who employed an
average of at least two employees but not more than 50 eligible
employees on business days during the preceding calendar year and
who employs at least two employees on the first day of the plan
year. The term includes a governmental entity subject to Article
3.51-1, 3.51-2, 3.51-4, or 3.51-5, to Subchapter C, Chapter 1364,
or to Chapter 1578 that otherwise meets the requirements of this
subdivision. For purposes of this definition, a partnership is the
employer of a partner.
(15) "Small employer health benefit plan" means a
health benefit plan developed by the commissioner under Subchapter
F or any other health benefit plan offered to a small employer in
accordance with Section 1501.252(c) or 1501.255.
(16) "Small employer health benefit plan issuer" means
a health benefit plan issuer, to the extent that the issuer is
offering, delivering, issuing for delivery, or renewing health
benefit plans subject to Subchapters C-H.
(17) "Waiting period" means a period established by an
employer that must elapse before an individual who is a potential
enrollee in a health benefit plan is eligible to be covered for
benefits. (V.T.I.C. Art. 26.02, Subdivs. (2), (8), (9), (10),
(11), (12), (13), (15), (16), (17), (21), (24), (25); Art. 26.02,
Subdivs. (30), (31), (32), (34), as amended Acts 77th Leg., R.S.,
Ch. 823; Art. 26.02, Subdivs. (29), (30), (31), (33), as amended
Acts 77th Leg., R.S., Ch. 608.)
Sec. 1501.003. APPLICABILITY: SMALL EMPLOYER HEALTH
BENEFIT PLANS. An individual or group health benefit plan is a
small employer health benefit plan subject to Subchapters C-H if it
provides health care benefits covering two or more eligible
employees of a small employer and:
(1) the employer pays a portion of the premium or
benefits;
(2) the employer or a covered individual treats the
health benefit plan as part of a plan or program for purposes of
Section 106 or 162, Internal Revenue Code of 1986 (26 U.S.C. Section
106 or 162); or
(3) the health benefit plan is an employee welfare
benefit plan under 29 C.F.R. Section 2510.3-1(j). (V.T.I.C. Art.
26.06, Subsec. (a).)
Sec. 1501.004. APPLICABILITY: LARGE EMPLOYER HEALTH
BENEFIT PLANS. An individual or group health benefit plan is a
large employer health benefit plan subject to Subchapters C and M if
the plan provides health care benefits to eligible employees of a
large employer and:
(1) the employer pays a portion of the premium or
benefits;
(2) the employer or a covered individual treats the
health benefit plan as part of a plan or program for purposes of
Section 106 or 162, Internal Revenue Code of 1986 (26 U.S.C. Section
106 or 162); or
(3) the health benefit plan is an employee welfare
benefit plan under 29 C.F.R. Section 2510.3-1(j). (V.T.I.C. Art.
26.81, Subsec. (a).)
Sec. 1501.005. EXCEPTION: CERTAIN INDIVIDUALLY
UNDERWRITTEN POLICIES. Except as provided by Section 1501.003 or
1501.004, this chapter does not apply to an individual health
insurance policy that is subject to individual underwriting, even
if the premium is paid through a payroll deduction method.
(V.T.I.C. Art. 26.06, Subsec. (c); Art. 26.81, Subsec. (c).)
Sec. 1501.006. CERTIFICATION. (a) In accordance with
rules adopted by the commissioner, each health benefit plan issuer
shall certify that the issuer is offering, delivering, issuing for
delivery, or renewing, or that the issuer intends to offer,
deliver, issue for delivery, or renew:
(1) a health benefit plan to or through a small
employer in this state that is subject to this chapter; or
(2) a health benefit plan to or through a large
employer in this state that is subject to this chapter.
(b) A health benefit plan issuer must submit a revised
certification to the commissioner only if the issuer changes its
status as a small or large employer health benefit plan issuer or
changes its intent to become a small or large employer health
benefit plan issuer to the extent that its previous certification
ceases to be accurate.
(c) The certification must include a statement that the
health benefit plan issuer is complying with this chapter to the
extent it applies to the issuer. (V.T.I.C. Arts. 26.07, 26.82.)
Sec. 1501.007. AFFILIATES. (a) In this section,
"affiliate" has the meaning described by Section 823.003.
(b) For purposes of this chapter, health benefit plan
issuers that are affiliates or that are eligible to file a
consolidated tax return are considered to be one issuer, and a
restriction imposed by this chapter applies as if the health
benefit plans delivered or issued for delivery to small employers
in this state by the affiliates were issued by one issuer.
(c) Notwithstanding Subsection (b), a health maintenance
organization that is an affiliate is considered to be a separate
health benefit plan issuer for purposes of this chapter. (V.T.I.C.
Art. 26.03.)
Sec. 1501.008. LATE ENROLLEES. (a) For purposes of this
chapter, an employee or dependent eligible for enrollment in a
small or large employer's health benefit plan is a late enrollee if
the individual requests enrollment after the expiration of:
(1) the initial enrollment period established under
the terms of the first plan for which the individual was eligible
through the small or large employer; or
(2) an open enrollment period under Section
1501.156(a) or 1501.606(a).
(b) An employee or dependent eligible for enrollment is not
a late enrollee if the individual:
(1) was covered under another health benefit plan or
self-funded employer health benefit plan at the time the individual
was eligible to enroll;
(2) declined enrollment in writing, at the time of the
initial eligibility for enrollment, stating that coverage under
another health benefit plan or self-funded employer health benefit
plan was the reason for declining enrollment;
(3) has lost coverage under the other health benefit
plan or self-funded employer health benefit plan as a result of:
(A) the termination of employment;
(B) a reduction in the number of hours of
employment;
(C) the termination of the other plan's coverage;
(D) the termination of contributions toward the
premium made by the employer; or
(E) the death of a spouse or divorce; and
(4) requests enrollment not later than the 31st day
after the date coverage under the other health benefit plan or
self-funded employer health benefit plan terminates.
(c) An employee or dependent eligible for enrollment is also
not a late enrollee if the individual is:
(1) employed by an employer that offers multiple
health benefit plans and the individual elects a different health
benefit plan during an open enrollment period;
(2) a spouse for whom a court has ordered coverage
under a covered employee's plan and the request for enrollment of
the spouse is made not later than the 31st day after the date the
court order is issued;
(3) a child for whom a court has ordered coverage under
a covered employee's plan and the request for enrollment is made not
later than the 31st day after the date the employer receives the
court order; or
(4) a child of a covered employee who has lost coverage
under Title XIX of the Social Security Act (42 U.S.C. Section 1396
et seq.), other than coverage consisting solely of benefits under
Section 1928 of that Act (42 U.S.C. Section 1396s), or under Chapter
62, Health and Safety Code, and the request for enrollment is made
not later than the 31st day after the date on which the child loses
coverage. (V.T.I.C. Art. 26.02, Subdiv. (18).)
Sec. 1501.009. SCHOOL DISTRICT ELECTION. (a) An
independent school district may elect to participate as a small
employer without regard to the number of eligible employees in the
district. An independent school district that makes the election
is treated as a small employer under this chapter for all purposes.
(b) An independent school district that is participating in
the uniform group coverage program established under Article 3.50-7
may not participate in the small employer market under this section
for health insurance coverage and may not renew a health insurance
contract obtained in accordance with this section after the date on
which the program of coverages provided under Article 3.50-7 is
implemented. This subsection does not affect a contract for the
provision of optional coverages not included in a health benefit
plan under this chapter. (V.T.I.C. Art. 26.036.)
Sec. 1501.010. GENERAL RULES. The commissioner shall adopt
rules necessary to:
(1) implement this chapter; and
(2) meet the minimum requirements of federal law,
including regulations. (V.T.I.C. Art. 26.04.)
Sec. 1501.011. DETERMINATION OF EMPLOYER STATUS FOR CERTAIN
EMPLOYERS. (a) For an employer that did not exist throughout the
calendar year preceding the year in which the determination of
whether the employer is a small employer is made, the determination
is based on the average number of employees and eligible employees
the employer reasonably expects to employ on business days in the
calendar year in which the determination is made.
(b) For an employer that did not exist throughout the
calendar year preceding the year in which the determination of
whether the employer is a large employer is made, the determination
is based on the average number of eligible employees the employer
reasonably expects to employ on business days in the calendar year
in which the determination is made. (V.T.I.C. Art. 26.06, Subsec.
(b); Art. 26.81, Subsec. (b).)
[Sections 1501.012-1501.050 reserved for expansion]
SUBCHAPTER B. PURCHASING COOPERATIVES
Sec. 1501.051. DEFINITIONS. In this subchapter:
(1) "Board of directors" means the board of directors
elected by a private purchasing cooperative.
(2) "Board of trustees" means the board of trustees of
the Texas cooperative.
(3) "Cooperative" means a purchasing cooperative
established under this subchapter.
(4) "Texas cooperative" means the Texas Health
Benefits Purchasing Cooperative established under Section
1501.052. (V.T.I.C. Art. 26.11.)
Sec. 1501.052. TEXAS HEALTH BENEFITS PURCHASING
COOPERATIVE; BOARD OF TRUSTEES. (a) The Texas Health Benefits
Purchasing Cooperative is a nonprofit corporation established to
make health care coverage available to small and large employers
and their eligible employees and the eligible employees'
dependents.
(b) The Texas cooperative is administered by a board of
trustees of six members appointed by the governor with the advice
and consent of the senate. Three members must represent employers,
two members must represent employees, and one member must represent
the public.
(c) Members of the board of trustees serve staggered
six-year terms, with the terms of two members expiring February 1 of
each odd-numbered year.
(d) A member of the board of trustees may not be compensated
for serving on the board but is entitled to reimbursement for actual
expenses incurred in performing functions as a member of the board
as provided by the General Appropriations Act. (V.T.I.C. Art.
26.13, Subsecs. (a), (b), (c), (d).)
Sec. 1501.053. TEXAS HEALTH BENEFITS PURCHASING
COOPERATIVE: EXECUTIVE DIRECTOR AND OTHER EMPLOYEES. (a) The
board of trustees shall employ an executive director. The
executive director may hire other employees of the Texas
cooperative as necessary.
(b) Salaries for employees of the Texas cooperative and
related costs may be paid from administrative fees collected from
employers and participating health benefit plan issuers or other
sources of funding arranged by the Texas cooperative. (V.T.I.C.
Art. 26.13, Subsecs. (e), (g).)
Sec. 1501.054. REGIONAL SUBDIVISIONS OF TEXAS HEALTH
BENEFITS PURCHASING COOPERATIVE. The board of trustees may:
(1) develop regional subdivisions of the Texas
cooperative; and
(2) authorize each subdivision to separately exercise
the powers and duties of a cooperative. (V.T.I.C. Art. 26.13,
Subsec. (f).)
Sec. 1501.055. APPLICABILITY OF PUBLIC INFORMATION LAW TO
TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE. The Texas
cooperative is subject to the public information law, Chapter 552,
Government Code. (V.T.I.C. Art. 26.12, Subsec. (b).)
Sec. 1501.056. PRIVATE PURCHASING COOPERATIVES. (a) Two
or more small or large employers may form a private cooperative to
purchase small or large employer health benefit plans. The
cooperative must be organized as a nonprofit corporation and has
the rights and duties provided by the Texas Non-Profit Corporation
Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
(b) On receipt of a certificate of incorporation or
certificate of authority from the secretary of state, the
cooperative shall file written notice of the receipt of the
certificate and a copy of the cooperative's organizational
documents with the commissioner.
(c) Annually, the board of directors shall file with the
commissioner a statement of all amounts collected and expenses
incurred for each of the preceding three years. (V.T.I.C. Art.
26.14, Subsecs. (a), (b), (c).)
Sec. 1501.057. IMMUNITY. (a) The Texas cooperative or a
member of the board of trustees, the executive director, or an
employee or agent of the Texas cooperative is not liable for:
(1) an act performed in good faith in the execution of
duties in connection with the cooperative; or
(2) an independent action of a small employer health
benefit plan issuer or a person who provides health care services
under a health benefit plan.
(b) A private purchasing cooperative or a member of the
board of directors, the executive director, or an employee or agent
of the cooperative is not liable for:
(1) an act performed in good faith in the execution of
duties in connection with the cooperative; or
(2) an independent action of a small or large employer
health benefit plan issuer or a person who provides health care
services under a health benefit plan. (V.T.I.C. Art. 26.13,
Subsec. (h); Art. 26.14, Subsec. (d).)
Sec. 1501.058. POWERS AND DUTIES OF COOPERATIVES. (a) A
cooperative shall:
(1) arrange for small or large employer health benefit
plan coverage for small or large employer groups that participate
in the cooperative by contracting with small or large employer
health benefit plan issuers that meet the requirements established
by Section 1501.061;
(2) collect premiums to cover the cost of:
(A) small or large employer health benefit plan
coverage purchased through the cooperative; and
(B) the cooperative's administrative expenses;
(3) establish administrative and accounting
procedures for the operation of the cooperative;
(4) establish procedures under which an applicant for
or participant in coverage issued through the cooperative may have
a grievance reviewed by an impartial person;
(5) contract with small or large employer health
benefit plan issuers to provide services to small or large
employers covered through the cooperative; and
(6) develop and implement a plan to maintain public
awareness of the cooperative and publicize the eligibility
requirements for, and the procedures for enrollment in, coverage
through the cooperative.
(b) A cooperative may:
(1) contract with agents to market coverage issued
through the cooperative;
(2) contract with a small or large employer health
benefit plan issuer or third-party administrator to provide
administrative services to the cooperative;
(3) negotiate the premiums paid by its members; and
(4) offer other ancillary products and services to its
members that are customarily offered in conjunction with health
benefit plans.
(c) A cooperative shall comply with:
(1) federal laws applicable to cooperatives and health
benefit plans issued through cooperatives, to the extent required
by state law or rules adopted by the commissioner; and
(2) state laws applicable to cooperatives and health
benefit plans issued through cooperatives. (V.T.I.C. Art. 26.15,
Subsecs. (a), (d).)
Sec. 1501.059. SELF-INSURED OR SELF-FUNDED PLAN
PROHIBITED. A cooperative may not self-insure or self-fund any
health benefit plan or portion of a plan. (V.T.I.C. Art. 26.15,
Subsec. (c).)
Sec. 1501.060. SCOPE OF GROUP COVERAGE. Subchapter B,
Chapter 1251, does not limit the type of group that may be covered
by a group health benefit plan issued through a cooperative.
(V.T.I.C. Art. 26.12, Subsec. (a).)
Sec. 1501.061. REQUIREMENTS APPLICABLE TO HEALTH BENEFIT
PLAN ISSUERS WITH WHICH COOPERATIVE MAY CONTRACT. A cooperative
may contract only with a small or large employer health benefit plan
issuer that desires to offer coverage through the cooperative and
that demonstrates that the issuer:
(1) is in good standing with the department;
(2) has the capacity to administer health benefit
plans;
(3) is able to monitor and evaluate the quality and
cost-effectiveness of care and applicable procedures;
(4) is able to conduct utilization management and
establish applicable procedures and policies;
(5) is able to ensure that enrollees have adequate
access to health care providers, including adequate numbers and
types of providers;
(6) has a satisfactory grievance procedure and is able
to respond to enrollees' calls, questions, and complaints; and
(7) has financial capacity, either through satisfying
financial solvency standards, as applied by the commissioner, or
through appropriate reinsurance or other risk-sharing mechanisms.
(V.T.I.C. Art. 26.15, Subsec. (b).)
Sec. 1501.062. COOPERATIVE NOT INSURER; AGENTS AND
ADMINISTRATORS. (a) A cooperative is not an insurer and the
employees of the cooperative are not required to be licensed under
Title 13.
(b) An agent or third-party administrator used and
compensated by a cooperative must be licensed as required by Title
13.
(c) An agent used and compensated by a cooperative may
market the products and services sponsored by the cooperative
without being appointed by each small employer health benefit plan
issuer participating in the cooperative. The agent may not market
any other product or service of a participating issuer that is not
sponsored by the cooperative unless the agent has been appointed by
that issuer. (V.T.I.C. Art. 26.16, Subsecs. (a), (c), (d).)
Sec. 1501.063. COOPERATIVE AS EMPLOYER. A cooperative is
considered an employer solely for the purposes of benefit elections
under this code. (V.T.I.C. Art. 26.16, Subsec. (b).)
Sec. 1501.064. CERTAIN USE OF APPROPRIATED MONEY
PROHIBITED. The Texas cooperative may not use money appropriated
by the state to pay or otherwise subsidize any portion of the
premium for a small employer covered through the cooperative.
(V.T.I.C. Art. 26.13, Subsec. (i).)
[Sections 1501.065-1501.100 reserved for expansion]
SUBCHAPTER C. PROVISION OF COVERAGE
Sec. 1501.101. GEOGRAPHIC SERVICE AREAS. (a) A small or
large employer health benefit plan issuer must file each of the
issuer's geographic service areas with the commissioner. The
commissioner may disapprove the use of a geographic service area by
a small or large employer health benefit plan issuer.
(b) A small employer health benefit plan issuer that refuses
to issue a small employer health benefit plan in a geographic
service area may not offer a health benefit plan to a small employer
in the applicable service area before the fifth anniversary of the
date of the refusal.
(c) A small or large employer health benefit plan issuer is
not required to offer or issue a small or large employer health
benefit plan to:
(1) a small or large employer that is not located
within a geographic service area of the issuer;
(2) an employee of a small or large employer who
neither resides nor works in the geographic service area of the
issuer; or
(3) a small or large employer located within a
geographic service area of the issuer with respect to which area the
issuer demonstrates to the commissioner's satisfaction that the
issuer:
(A) reasonably anticipates that it will not have
the capacity to deliver services adequately because of obligations
to existing covered individuals; and
(B) is acting uniformly without regard to the
claims experience of the employer or any health status related
factor of employees, employees' dependents, or new employees or
dependents who may become eligible for the coverage.
(d) A small or large employer health benefit plan issuer
that is unable to offer coverage in a geographic service area in
accordance with a determination made by the commissioner under
Subsection (c)(3) may not offer a small or large employer benefit
plan, as applicable, in that service area before the 180th day after
the later of:
(1) the date the issuer refuses to offer coverage; or
(2) the date the issuer demonstrates to the
satisfaction of the commissioner that it has regained the capacity
to deliver services to small or large employers in the geographic
service area.
(e) If the commissioner determines that requiring the
acceptance of small or large employers under this chapter would
place a small or large employer health benefit plan issuer in a
financially impaired condition and that the issuer is acting
uniformly without regard to the claims experience of the small or
large employer or any health status related factors of eligible
employees, eligible employees' dependents, or new employees or
dependents who may become eligible for the coverage, the issuer may
not offer coverage to small or large employers until the later of:
(1) the 180th day after the date the commissioner
makes the determination; or
(2) the date the commissioner determines that
accepting small or large employers would not place the issuer in a
financially impaired condition. (V.T.I.C. Arts. 26.22, 26.85.)
Sec. 1501.102. PREEXISTING CONDITION PROVISION. (a) In
this section, "creditable coverage" has the meaning assigned by
Section 1205.004 and includes coverage provided under:
(1) a political subdivision health benefits risk pool;
and
(2) a short-term limited duration coverage plan.
(b) A preexisting condition provision in a small or large
employer health benefit plan may apply only to coverage for a
disease or condition for which medical advice, diagnosis, care, or
treatment was recommended or received during the six months before
the earlier of:
(1) the effective date of coverage; or
(2) the first day of the waiting period.
(c) A preexisting condition provision in a small or large
employer health benefit plan may not apply to expenses incurred on
or after the first anniversary of the initial effective date of
coverage of the enrollee, including a late enrollee.
(d) A preexisting condition provision in a small or large
employer health benefit plan may not apply to an individual who was
continuously covered for an aggregate period of 12 months under
creditable coverage that was in effect until a date not more than 63
days before the effective date of coverage under the plan,
excluding any waiting period.
(e) In determining whether a preexisting condition
provision applies to an individual covered by a small or large
employer health benefit plan, the plan issuer shall credit the time
the individual was covered under previous creditable coverage if
the previous coverage was in effect at any time during the 12 months
preceding the effective date of coverage under the plan. If the
previous coverage was issued under a health benefit plan, any
waiting period that applied before that coverage became effective
must also be credited against the preexisting condition provision
period. (V.T.I.C. Art. 26.02, Subdiv. (7); Art. 26.035; Art.
26.49, Subsecs. (a), (b), (e), (f); Art. 26.90, Subsecs. (a), (b),
(e), (f).)
Sec. 1501.103. TREATMENT OF CERTAIN CONDITIONS AS
PREEXISTING PROHIBITED. (a) A small or large employer health
benefit plan issuer may not treat genetic information as a
preexisting condition described by Section 1501.102(b) in the
absence of a diagnosis of the condition related to the information.
(b) A small or large employer health benefit plan issuer may
not treat pregnancy as a preexisting condition described by Section
1501.102(b). (V.T.I.C. Art. 26.49, Subsecs. (c), (d); Art. 26.90,
Subsecs. (c), (d).)
Sec. 1501.104. AFFILIATION PERIOD. (a) In this section,
"affiliation period" means a period that, under a small or large
employer health benefit plan offered by a health maintenance
organization, must expire before the coverage becomes effective.
(b) A health maintenance organization may impose an
affiliation period if the period is applied uniformly without
regard to any health status related factor. The affiliation period
may not exceed:
(1) two months for an enrollee, other than a late
enrollee; or
(2) 90 days for a late enrollee.
(c) An affiliation period under a small or large employer
health benefit plan must run concurrently with any applicable
waiting period under the plan. A health maintenance organization
must credit an affiliation period against any preexisting condition
provision period.
(d) During an affiliation period, a health maintenance
organization:
(1) is not required to provide health care services or
benefits to the participant or beneficiary; and
(2) may not charge a premium to the participant or
beneficiary.
(e) A health maintenance organization may use an
alternative method approved by the commissioner to address adverse
selection. (V.T.I.C. Art. 26.02, Subdiv. (1); Art. 26.49, Subsec.
(g); Art. 26.90, Subsec. (g).)
Sec. 1501.105. WAITING PERIOD PERMITTED. Sections
1501.102-1501.104 do not preclude application of a waiting period
that applies to all new enrollees under a small or large employer
health benefit plan. (V.T.I.C. Art. 26.49, Subsec. (h); Art.
26.90, Subsec. (h).)
Sec. 1501.106. CERTAIN LIMITATIONS OR EXCLUSIONS OF
COVERAGE PROHIBITED. (a) A small or large employer health benefit
plan may not limit or exclude, by use of a rider or amendment
applicable to a specific individual, coverage by type of illness,
treatment, medical condition, or accident.
(b) This section does not preclude a small or large employer
health benefit plan from limiting or excluding coverage for a
preexisting condition in accordance with Section 1501.102.
(V.T.I.C. Art. 26.21, Subsec. (m); Art. 26.83, Subsec. (m).)
Sec. 1501.107. DISCOUNTS, REBATES, AND REDUCTIONS. (a) A
small or large employer health benefit plan issuer may establish
premium discounts, rebates, or a reduction in otherwise applicable
copayments or deductibles in return for adherence to programs of
health promotion and disease prevention.
(b) A discount, rebate, or reduction established under this
section does not violate Section 541.056(a). (V.T.I.C. Art. 26.33,
Subsec. (e); Art. 26.89, Subsec. (b).)
Sec. 1501.108. RENEWABILITY OF COVERAGE; CANCELLATION. (a)
Except as provided by Section 1501.109, a small or large employer
health benefit plan issuer shall renew the small or large employer
health benefit plan for any covered small or large employer, as
applicable, at the employer's option, unless:
(1) a premium has not been paid as required by the
terms of the plan;
(2) the employer has committed fraud or has
intentionally misrepresented a material fact;
(3) the employer has not complied with the terms of the
plan;
(4) no enrollee in the plan resides or works in the
geographic service area of the small or large employer health
benefit plan issuer or in the area for which the issuer is
authorized to do business; or
(5) membership of the employer in an association
terminates, but only if coverage is terminated uniformly without
regard to a health status related factor of a covered individual.
(b) A small or large employer health benefit plan issuer may
refuse to renew the coverage of a covered employee or dependent for
fraud or intentional misrepresentation of a material fact by that
individual.
(c) A small or large employer health benefit plan issuer may
not cancel a small or large employer health benefit plan except for
a reason specified for refusal to renew under Subsection (a). A
small or large employer health benefit plan issuer may not cancel
the coverage of a covered employee or dependent except for a reason
specified for refusal to renew under Subsection (b). (V.T.I.C.
Arts. 26.23, 26.86.)
Sec. 1501.109. REFUSAL TO RENEW; DISCONTINUATION OF
COVERAGE. (a) A small or large employer health benefit plan issuer
may elect to refuse to renew all small or large employer health
benefit plans delivered or issued for delivery by the issuer in this
state or in a geographic service area approved under Section
1501.101. The issuer shall notify:
(1) the commissioner of the election not later than
the 180th day before the date coverage under the first plan
terminates under this subsection; and
(2) each affected covered small or large employer not
later than the 180th day before the date coverage terminates for
that employer.
(b) A small employer health benefit plan issuer that elects
under this section to refuse to renew all small employer health
benefit plans in this state or in an approved geographic service
area may not write a new small employer health benefit plan in this
state or in the geographic service area, as applicable, before the
fifth anniversary of the date notice is provided to the
commissioner under Subsection (a).
(c) A large employer health benefit plan issuer that elects
under this section to refuse to renew all large employer health
benefit plans in this state or in an approved geographic service
area may not write a new large employer health benefit plan in this
state or in the geographic service area, as applicable, before the
fifth anniversary of the date notice is provided to the
commissioner under Subsection (a).
(d) A small or large employer health benefit plan issuer may
elect to discontinue a particular type of small or large employer
coverage only if the issuer:
(1) before the 90th day preceding the date of the
discontinuation of the coverage:
(A) provides notice of the discontinuation to the
employer and the commissioner; and
(B) offers to each employer the option to
purchase other small or large employer coverage offered by the
issuer at the time of the discontinuation; and
(2) acts uniformly without regard to the claims
experience of the employer or any health status related factors of
eligible employees, eligible employees' dependents, or new
employees or dependents who may become eligible for the coverage.
(V.T.I.C. Arts. 26.24, 26.87.)
Sec. 1501.110. NOTICE TO COVERED PERSONS. (a) A small or
large employer health benefit plan issuer that cancels or refuses
to renew coverage under a small or large employer health benefit
plan under Section 1501.108 or 1501.109 shall, not later than the
30th day before the date termination of coverage is effective,
notify the small or large employer of the cancellation of or refusal
to renew coverage. The employer is responsible for notifying
enrollees in the plan of the cancellation of or refusal to renew
coverage.
(b) The notice provided to a small or large employer by a
small or large employer health benefit plan issuer under this
section is in addition to any other notice required by Section
1501.109. (V.T.I.C. Arts. 26.25, 26.88.)
Sec. 1501.111. WRITTEN STATEMENT OF DENIAL, CANCELLATION,
OR REFUSAL TO RENEW REQUIRED. Denial by a small or large employer
health benefit plan issuer of an application from a small or large
employer for coverage from the issuer or cancellation of or refusal
to renew coverage by a small or large employer health benefit plan
issuer must:
(1) be in writing; and
(2) state the reason or reasons for the denial,
cancellation, or refusal to renew. (V.T.I.C. Arts. 26.74, 26.94.)
[Sections 1501.112-1501.150 reserved for expansion]
SUBCHAPTER D. GUARANTEED ISSUE OF SMALL EMPLOYER HEALTH
BENEFIT PLANS; CONTINUATION OF COVERAGE
Sec. 1501.151. GUARANTEED ISSUE. (a) A small employer
health benefit plan issuer shall issue the small employer health
benefit plan chosen by the small employer to each small employer
that elects to be covered under the plan and agrees to satisfy the
other requirements of the plan.
(b) A small employer health benefit plan issuer shall
provide small employer health benefit plans without regard to
health status related factors.
(c) This chapter does not require a small employer to
purchase health coverage for the employer's employees. (V.T.I.C.
Art. 26.21, Subsecs. (a), (c) (part).)
Sec. 1501.152. EXCLUSION OF ELIGIBLE EMPLOYEE OR DEPENDENT
PROHIBITED. A small employer health benefit plan issuer may not
exclude an eligible employee or dependent, including a late
enrollee, who would otherwise be covered under a small employer
group. (V.T.I.C. Art. 26.21, Subsec. (l).)
Sec. 1501.153. EMPLOYER CONTRIBUTION. (a) This chapter
does not require a small employer to make an employer contribution
to the premium paid to a small employer health benefit plan issuer,
but the issuer may require an employer contribution in accordance
with the issuer's usual and customary practices applicable to the
issuer's employer group health benefit plans in this state. The
issuer shall apply the employer contribution level uniformly to
each small employer offered or issued coverage by the issuer in this
state.
(b) If two or more small employer health benefit plan
issuers participate in a purchasing cooperative established under
Section 1501.056, each participating issuer may use the employer
contribution requirement established by the cooperative for
policies marketed by the cooperative.
(c) A small employer that elects to make an employer
contribution to the premium paid to a small employer health benefit
plan issuer is not required to pay any amount with respect to an
employee who elects not to be covered.
(d) A small employer may elect to pay the premium for
additional coverage. (V.T.I.C. Art. 26.21, Subsecs. (b) (part),
(c) (part).)
Sec. 1501.154. MINIMUM PARTICIPATION REQUIREMENT. (a)
Except as provided by Section 1501.155, coverage is available under
a small employer health benefit plan if at least 75 percent of a
small employer's eligible employees elect to participate in the
plan.
(b) If a small employer offers multiple health benefit
plans, the collective participation in those plans must be at
least:
(1) 75 percent of the employer's eligible employees;
or
(2) if applicable, the lower participation level
offered by the small employer health benefit plan issuer under
Section 1501.155.
(c) A small employer health benefit plan issuer may elect
not to offer a health benefit plan to a small employer that offers
multiple health benefit plans if:
(1) the plans are provided by more than one issuer;
(2) the issuer would have less than 75 percent of the
employer's eligible employees enrolled in the issuer's plan; and
(3) the issuer's plan is not provided through a
purchasing cooperative. (V.T.I.C. Art. 26.21, Subsecs. (b) (part),
(c) (part).)
Sec. 1501.155. EXCEPTION TO MINIMUM PARTICIPATION
REQUIREMENT. (a) A small employer health benefit plan issuer may
offer a small employer health benefit plan to a small employer with
a participation level of less than 75 percent of the employer's
eligible employees if the issuer permits the same qualifying
participation level for each small employer health benefit plan
offered by the issuer in this state.
(b) A small employer health benefit plan issuer may offer a
small employer health benefit plan to a small employer even if the
employer's participation level is less than the issuer's qualifying
participation level established in accordance with Subsection (a)
if:
(1) the employer obtains a written waiver from each
eligible employee who declines coverage under a health benefit plan
offered to the employer stating that the employee was not induced or
pressured to decline coverage because of the employee's risk
characteristics; and
(2) the issuer accepts or rejects the entire group of
eligible employees who choose to participate and excludes only
those employees who have declined coverage.
(c) A small employer health benefit plan issuer may
underwrite the group of eligible employees who do not decline
coverage under Subsection (b).
(d) A small employer health benefit plan issuer may not
provide coverage to a small employer or the employer's employees
under Subsection (b) if the issuer or an agent for the issuer knows
that the employer has induced or pressured an eligible employee or a
dependent of the employee to decline coverage because of the
individual's risk characteristics.
(e) A small employer health benefit plan issuer, a small
employer, or an agent may not use the exception provided by
Subsection (b) to circumvent the requirements of this chapter.
(V.T.I.C. Art. 26.21, Subsecs. (d), (e), (f).)
Sec. 1501.156. EMPLOYEE ENROLLMENT; WAITING PERIOD. (a)
The initial enrollment period under a small employer health benefit
plan for employees and dependents must be at least 31 days, with a
31-day open enrollment period provided annually.
(b) A small employer may establish a waiting period not to
exceed 90 days from the first day of employment.
(c) A small employer health benefit plan issuer may not deny
coverage to a new employee of a covered small employer or the
employee's dependents if the issuer receives an application for
coverage not later than the 31st day after the date employment
begins or on completion of a waiting period established under
Subsection (b).
(d) A small employer health benefit plan issuer may deny
coverage to a late enrollee until the next annual open enrollment
period and may subject the enrollee to a one-year preexisting
condition provision as described by Section 1501.102. The period
during which the preexisting condition provision applies may not
exceed 18 months from the date of the initial application.
(V.T.I.C. Art. 26.21, Subsecs. (h), (i), (j), (k).)
Sec. 1501.157. COVERAGE FOR NEWBORN CHILDREN. (a) A small
employer health benefit plan may not limit or exclude initial
coverage of a newborn child of a covered employee.
(b) Coverage of a newborn child of a covered employee under
this section ends on the 32nd day after the date of the child's
birth unless, not later than the 31st day after the date of birth,
the small employer health benefit plan issuer receives:
(1) notice of the birth; and
(2) any required additional premium. (V.T.I.C. Art.
26.21, Subsec. (n).)
Sec. 1501.158. COVERAGE FOR ADOPTED CHILDREN. (a) A small
employer health benefit plan may not limit or exclude initial
coverage of an adopted child of an insured. A child is considered
to be the child of an insured if the insured is a party to a suit in
which the insured seeks to adopt the child.
(b) An adopted child of an insured may be enrolled, at the
insured's option, not later than the 31st day after:
(1) the date the insured becomes a party to a suit in
which the insured seeks to adopt the child; or
(2) the date the adoption becomes final.
(c) Coverage of an adopted child of an insured under this
section ends unless the small employer health benefit plan issuer
receives notice of the adoption and any required additional premium
not later than the 31st day after:
(1) the date the insured becomes a party to a suit in
which the insured seeks to adopt the child; or
(2) the date the adoption becomes final. (V.T.I.C.
Art. 26.21A.)
Sec. 1501.159. CONTINUATION OF COVERAGE FOR CERTAIN
DEPENDENTS. An employee's dependent may choose to continue
coverage under a small employer health benefit plan if:
(1) the dependent:
(A) is under one year of age; or
(B) has been covered by the small employer under
a plan for at least one year;
(2) the dependent loses eligibility for coverage
because of the death, divorce, or retirement of the employee, as
provided by Subchapter G, Chapter 1251; and
(3) the Consolidated Omnibus Budget Reconciliation
Act of 1985 (Pub. L. No. 99-272) does not require continuation or
conversion coverage for dependents of an employee. (V.T.I.C. Art.
26.21, Subsec. (o).)
[Sections 1501.160-1501.200 reserved for expansion]
SUBCHAPTER E. UNDERWRITING AND RATING OF
SMALL EMPLOYER HEALTH BENEFIT PLANS
Sec. 1501.201. DEFINITIONS. In this subchapter:
(1) "Base premium rate" means, for each class of
business and for a specific rating period, the lowest premium rate
that is charged or that could be charged under a rating system for
that class of business by a small employer health benefit plan
issuer to small employers with similar case characteristics for
small employer health benefit plans that provide the same or
similar coverage.
(2) "Case characteristics" means, with respect to a
small employer, the geographic area in which the employer's
employees reside, the age and gender of the individual employees
and their dependents, the number of employees and dependents, the
appropriate industry classification as determined by the small
employer health benefit plan issuer, and other objective criteria
established by the issuer that are considered by the issuer in
setting premium rates for the employer. The term does not include:
(A) health status related factors;
(B) duration of coverage since the date of
issuance of a health benefit plan; or
(C) whether a covered individual is or may become
pregnant.
(3) "Class of business" means all small employers or a
separate grouping of small employers established under this
subchapter.
(4) "Index rate" means, for each class of business and
for a specific rating period for small employers with similar case
characteristics, the arithmetic average of the applicable base
premium rate and corresponding highest premium rate.
(5) "New business premium rate" means, for each class
of business and for a specific rating period, the lowest premium
rate that is charged or offered or that could be charged or offered
by a small employer health benefit plan issuer to small employers
with similar case characteristics for newly issued small employer
health benefit plans that provide the same or similar coverage.
(6) "Rating period" means a calendar period during
which premium rates established by a small employer health benefit
plan issuer are assumed to be in effect. (V.T.I.C. Art. 26.02,
Subdivs. (3), (5), (6), (14), (19), (26).)
Sec. 1501.202. ESTABLISHMENT OF CLASSES OF BUSINESS. (a)
Except as otherwise provided by this subchapter, a small employer
health benefit plan issuer may not establish a separate class or
classes of business for small employers.
(b) A small employer health benefit plan issuer may
establish a separate class of business only to reflect substantial
differences in expected claims experience or administrative costs
related to the following reasons:
(1) the issuer uses more than one type of system to
market and sell small employer health benefit plans to small
employers;
(2) the issuer has acquired a class of business from
another small employer health benefit plan issuer; or
(3) the issuer provides coverage to one or more
employer-based association groups.
(c) Except as provided by Subsection (e), a small employer
health benefit plan issuer may not establish more than nine
separate classes of business under this section.
(d) The commissioner may adopt rules to provide for a
transition period to permit a small employer health benefit plan
issuer to comply with Subsection (c) after acquiring an additional
class of business from another small employer health benefit plan
issuer.
(e) On application to the commissioner, the commissioner
may approve the establishment of additional classes of business if
the commissioner finds that the establishment of additional classes
would enhance the efficiency and fairness of the health coverage
market for small employers. (V.T.I.C. Art. 26.21, Subsec. (g);
Art. 26.31, Subsecs. (a), (b), (c), (d).)
Sec. 1501.203. ESTABLISHMENT OF CLASSES OF BUSINESS ON
CERTAIN BASES PROHIBITED. (a) A small employer health benefit plan
issuer may not establish a separate class of business based on:
(1) participation requirements; or
(2) whether the coverage provided to a small employer
group is provided on a guaranteed issue basis or is subject to
underwriting or proof of insurability.
(b) A small employer health benefit plan issuer may not
directly or indirectly use as a criterion for establishing a
separate class of business:
(1) the number of employees and dependents of a small
employer; or
(2) except as provided by Section 1501.202(b)(3), the
trade or occupation of the employees of a small employer or the
industry or type of business of the small employer. (V.T.I.C. Art.
26.31, Subsecs. (e), (f), (g).)
Sec. 1501.204. INDEX RATES. Under a small employer health
benefit plan:
(1) the index rate for a class of business may not
exceed the index rate for any other class of business by more than
20 percent; and
(2) premium rates charged during a rating period to
small employers in a class of business with similar case
characteristics for the same or similar coverage, or premium rates
that could be charged to those employers under the rating system for
that class of business, may not vary from the index rate by more
than 25 percent. (V.T.I.C. Art. 26.32, Subsecs. (a), (b), (c).)
Sec. 1501.205. PREMIUM RATES: ESTABLISHMENT. (a) In this
section:
(1) "Risk characteristic" means:
(A) a health status related factor;
(B) the duration of coverage; or
(C) any characteristic similar to a
characteristic described by Paragraph (A) or (B) that is related to
the health status or experience of a small employer group or of any
member of a small employer group.
(2) "Risk load" means the percentage above the
applicable base premium rate a small employer health benefit plan
issuer charges to a small employer to reflect the risk
characteristics associated with that particular small employer
group.
(b) Small employer health benefit plan issuers shall
develop premium rates for each small employer group in a two-step
process. In the first step, the small employer health benefit plan
issuer shall develop a base premium rate for each small employer
group without regard to any risk characteristic of the group. In
the second step, the small employer health benefit plan issuer may
adjust the resulting base premium rate by the risk load of the
group, subject to this subchapter, to reflect the risk
characteristics of the group.
(c) The risk load assessed to a particular group shall
reflect the risk characteristics of the particular group.
(V.T.I.C. Art. 26.02, Subdivs. (28), (29), as amended Acts 77th
Leg., R.S., Ch. 823; Art. 26.32, Subsecs. (d), (e).)
Sec. 1501.206. PREMIUM RATES: ADJUSTMENTS. (a) The
percentage increase in the premium rate charged to a small employer
for a new rating period may not exceed the sum of:
(1) the percentage change in the new business premium
rate, measured from the first day of the preceding rating period to
the first day of the new rating period;
(2) any adjustment, not to exceed 15 percent annually
and adjusted pro rata for a rating period of less than one year, due
to the claims experience, health status, or duration of coverage of
the employees or dependents of employees of the small employer, as
determined under the small employer health benefit plan issuer's
rate manual for the class of business; and
(3) any adjustment due to change in coverage or change
in the case characteristics of the small employer, as determined
under the issuer's rate manual for the class of business.
(b) An adjustment in the premium rate for claims experience,
health status, or duration of coverage:
(1) may not be charged to individual employees or
dependents; and
(2) must be applied uniformly to the rates charged for
all employees and dependents of employees of the small employer.
(V.T.I.C. Art. 26.33, Subsecs. (a), (b).)
Sec. 1501.207. PREMIUM RATE ADJUSTMENT IN CLOSED PLAN. For
a closed health benefit plan under which a small employer health
benefit plan issuer is no longer enrolling new small employers, the
issuer shall use the percentage change in the base premium rate to
adjust premium rates under Section 1501.206(a)(1). The portion of
change in premium rates computed under that subdivision may not
exceed, on a percentage basis, the change in the new business
premium rate for the most similar health benefit plan under which
the issuer is enrolling new small employers. (V.T.I.C. Art.
26.35.)
Sec. 1501.208. PREMIUM RATES: INDUSTRY CLASSIFICATION. A
small employer health benefit plan issuer may use the industry
classification to which a small employer belongs as a case
characteristic in establishing the premium rate, but the highest
rate factor associated with any industry classification may not
exceed by more than 15 percent the lowest rate factor associated
with any industry classification. (V.T.I.C. Art. 26.33, Subsec.
(c).)
Sec. 1501.209. PREMIUM RATES: NUMBER OF EMPLOYEES. A small
employer health benefit plan issuer may use the number of employees
and dependents of a small employer as a case characteristic in
establishing premium rates for the group. The highest rate factor
associated with a classification based on the number of employees
and dependents of a small employer may not exceed by more than 20
percent the lowest rate factor associated with a classification
based on the number of employees and dependents of a small employer.
(V.T.I.C. Art. 26.33, Subsec. (d).)
Sec. 1501.210. PREMIUM RATES: NONDISCRIMINATION. (a) A
small employer health benefit plan issuer shall apply rating
factors, including case characteristics, consistently with respect
to all small employers in a class of business. Rating factors must
produce premium rates for identical groups that:
(1) differ only by the amounts attributable to health
benefit plan design; and
(2) do not reflect differences because of the nature
of the groups assumed to select particular health benefit plans.
(b) A small employer health benefit plan issuer shall treat
each health benefit plan issued or renewed in the same calendar
month as having the same rating period.
(c) Without the prior approval of the commissioner, a small
employer health benefit plan issuer may not use case
characteristics other than:
(1) the geographic area in which the small employer's
employees reside;
(2) the age and gender of the individual employees and
their dependents;
(3) the number of employees and dependents; and
(4) the appropriate industry classification.
(d) Premium rates for a small employer health benefit plan
must comply with the requirements of this chapter, notwithstanding
any assessment paid or payable by a small employer health benefit
plan issuer.
(e) A small employer health benefit plan issuer may not
transfer a small employer involuntarily into or out of a class of
business. The issuer may not offer to transfer a small employer
into or out of a class of business unless the offer is made to
transfer all other small employers in the employer's class of
business without regard to case characteristics, claims
experience, health status, or duration of coverage since the
issuance of the health benefit plan. (V.T.I.C. Art. 26.36,
Subsecs. (a), (b), (c), (d), (f).)
Sec. 1501.211. RULES CONCERNING PREMIUM RATES. Rules
adopted under Section 1501.010 may ensure that:
(1) rating practices used by small employer health
benefit plan issuers are consistent with the purposes of this
chapter; and
(2) differences in premium rates charged for each
small employer health benefit plan are reasonable and reflect
objective differences in plan design. (V.T.I.C. Art. 26.36,
Subsec. (e).)
Sec. 1501.212. RESTRICTED PROVIDER NETWORK. (a) A small
employer health benefit plan may use a restricted provider network
to provide benefits under the plan.
(b) A small employer health benefit plan that uses a
restricted provider network does not provide similar coverage to a
plan that does not use a restricted provider network if the use of
the network results in reduced premium rates charged to the small
employer or substantial differences in claim costs. (V.T.I.C. Art.
26.37.)
Sec. 1501.213. PREMIUM RATES: HEALTH MAINTENANCE
ORGANIZATION HEALTH BENEFIT PLAN. (a) The premium rates for a
state-approved health benefit plan offered by a health maintenance
organization under Section 1501.255 must be established in
accordance with formulas or schedules of charges filed with the
department.
(b) A health maintenance organization that participates in
a purchasing cooperative that provides employees of small employers
a choice of health benefit plans may use rating methods in
accordance with this subchapter that are used by other small
employer health benefit plan issuers participating in the same
cooperative, including rating by age and gender, if the health
maintenance organization has established:
(1) a separate class of business, as provided by
Section 1501.202; and
(2) a separate line of business, as provided under
Section 1501.255(b) and Title XIII, Public Health Service Act (42
U.S.C. Section 300e et seq.). (V.T.I.C. Art. 26.38.)
Sec. 1501.214. ENFORCEMENT. If the commissioner determines
that a small employer health benefit plan issuer subject to this
chapter exceeds the applicable premium rate established under this
subchapter, the commissioner may order restitution and assess
penalties as provided by Chapter 82. (V.T.I.C. Art. 26.39.)
Sec. 1501.215. REPORTING REQUIREMENTS. (a) Annually, each
small employer health benefit plan issuer that offers a small
employer health benefit plan shall file with the commissioner an
actuarial certification stating that the issuer's underwriting and
rating methods:
(1) comply with accepted actuarial practices;
(2) are uniformly applied to each small employer
health benefit plan covering a small employer; and
(3) comply with this subchapter.
(b) Each small employer health benefit plan issuer shall
maintain at its principal place of business a complete and detailed
description of its rating practices and renewal underwriting
practices, including information and documentation that
demonstrate that its rating methods and practices are based on
commonly accepted actuarial assumptions and are in accordance with
sound actuarial principles.
(c) A small employer health benefit plan issuer shall make
the information and documentation described in Subsection (b)
available to the commissioner on request. Unless the information
or documentation relates to a violation of this chapter, the
information or documentation is considered proprietary and trade
secret information and is not subject to disclosure by the
commissioner to a person outside the department except as agreed to
by the issuer or as ordered by a court. (V.T.I.C. Art. 26.41.)
[Sections 1501.216-1501.250 reserved for expansion]
SUBCHAPTER F. COVERAGE UNDER SMALL EMPLOYER HEALTH
BENEFIT PLANS
Sec. 1501.251. EXCEPTION FROM CERTAIN MANDATED BENEFIT
REQUIREMENTS. Except as expressly provided by this chapter, a
small employer health benefit plan is not subject to a law that
requires coverage or the offer of coverage of a health care service
or benefit. (V.T.I.C. Art. 26.06, Subsec. (d).)
Sec. 1501.252. HEALTH BENEFIT PLANS. (a) A small employer
health benefit plan issuer shall offer the following two health
benefit plans as adopted by the commissioner:
(1) the catastrophic care health benefit plan; and
(2) the basic coverage health benefit plan.
(b) A small employer health benefit plan issuer may offer to
a small employer additional benefit riders to either of the health
benefit plans required by Subsection (a).
(c) Subject to this chapter, a small employer health benefit
plan issuer may also offer to a small employer any other health
benefit plan authorized under this code. Section 1501.251 does not
apply to a health benefit plan offered to a small employer under
this subsection. (V.T.I.C. Art. 26.42.)
Sec. 1501.253. COVERAGE REQUIREMENTS. (a) The
commissioner by rule shall establish coverage requirements for the
catastrophic care health benefit plan and the basic coverage health
benefit plan.
(b) Coverage under the catastrophic care health benefit
plan must be designed to provide necessary coverage in the event of
catastrophic illness or injury. The commissioner shall establish
deductibles and coinsurance requirements at levels that permit
options for a covered individual to obtain affordable catastrophic
coverage.
(c) Coverage under the basic coverage health benefit plan
must be designed to provide basic hospital, medical, and surgical
coverage. Benefits under the plan are limited to basic care
requirements for illness and injury.
(d) The benefits provisions of the catastrophic care and
basic coverage health benefit plan policies must include:
(1) all required or applicable definitions;
(2) a description of covered services required under
the plan;
(3) a list of any exclusions or limitations to
coverage; and
(4) the deductible and coinsurance options that are
required or permitted under the plan. (V.T.I.C. Art. 26.44A,
Subsecs. (a) (part), (b), (c), (d).)
Sec. 1501.254. ALCOHOL AND SUBSTANCE ABUSE BENEFITS. (a)
This section applies only if the basic coverage health benefit plan
developed by the commissioner under Section 1501.253 includes
coverage for alcohol and substance abuse benefits.
(b) A small employer health benefit plan issuer may offer
and the employees of a small employer group may accept a basic
coverage health benefit plan without coverage for alcohol and
substance abuse benefits if:
(1) at least 50 percent of the employees in writing:
(A) waive the benefits; and
(B) indicate that they have undergone alcoholism
or substance abuse treatment or counseling within the preceding
three years; and
(2) the exclusion of those benefits applies only to
those employees. (V.T.I.C. Art. 26.44B.)
Sec. 1501.255. HEALTH MAINTENANCE ORGANIZATION PLANS. (a)
In this section, "point-of-service contract" means a health benefit
plan offered through a health maintenance organization that:
(1) includes corresponding indemnity benefits in
addition to benefits relating to out-of-area or emergency services
provided through insurers or group hospital service corporations;
and
(2) permits the covered individual to obtain coverage
under either the health maintenance organization conventional plan
or the indemnity plan as determined in accordance with the terms of
the contract.
(b) A health maintenance organization may offer:
(1) a state-approved health benefit plan that complies
with this chapter, Chapters 843, 1271, 1272, and 1367, Subchapter
A, Chapter 1452, Title XIII, Public Health Service Act (42 U.S.C.
Section 300e et seq.), and its subsequent amendments, and rules
adopted under those laws;
(2) a health benefit plan developed by the
commissioner under Section 1501.253 and additional benefit riders
to the plan; or
(3) a point-of-service contract in connection with an
insurer that includes optional coverage for out-of-area services,
emergency care, or out-of-network care.
(c) A point-of-service contract offered under Subsection
(b)(3) is subject to this chapter unless specifically exempted.
The insurer with which the health maintenance organization offers a
point-of-service contract is not required to otherwise make
available the health benefit plans adopted under this subchapter if
the insurer's small employer products are limited to the
point-of-service contract. (V.T.I.C. Art. 26.02, Subdiv. (23);
Art. 26.48.)
Sec. 1501.256. COORDINATION WITH FEDERAL LAW. (a) To the
extent required to comply with federal law applicable to a small
employer health benefit plan described by this subchapter, the
commissioner by rule may:
(1) modify the plan; or
(2) adopt a substitute for the plan.
(b) The commissioner shall use the Texas Health Benefits
Purchasing Cooperative in implementing this section. (V.T.I.C.
Art. 26.50.)
Sec. 1501.257. COST CONTAINMENT. (a) A small employer
health benefit plan issuer may use cost containment and managed
care features in a small employer health benefit plan, including:
(1) utilization review of health care services,
including review of the medical necessity of hospital and physician
services;
(2) case management, including discharge planning and
review of stays in hospitals or other health care facilities;
(3) selective contracting with hospitals, physicians,
and other health care providers;
(4) reasonable benefit differentials applicable to
health care providers that participate or do not participate in
restricted network arrangements;
(5) precertification or preauthorization for certain
covered services; and
(6) coordination of benefits.
(b) A provision of a small employer health benefit plan that
provides for coordination of benefits must comply with this chapter
and guidelines established by the commissioner.
(c) Utilization review performed for any cost containment,
case management, or managed care arrangement must comply with
Article 21.58A. (V.T.I.C. Art. 26.08.)
Sec. 1501.258. FORMS. (a) The commissioner shall:
(1) prescribe the benefits section of the catastrophic
care health benefit plan and the basic coverage health benefit plan
policy forms in accordance with Section 1501.253; and
(2) develop prototype policies for each of the health
benefit plans that include all contractual provisions required to
produce an entire contract in accordance with this code.
(b) With regard to each portion of the policy form for the
catastrophic care health benefit plan or the basic coverage health
benefit plan, other than the benefits section, a small employer
health benefit plan issuer shall comply with:
(1) Chapter 1701 as it relates to policy form
approval; and
(2) Chapter 1271 as it relates to evidence of coverage
approval.
(c) A small employer health benefit plan issuer may not
offer the catastrophic care health benefit plan or the basic
coverage health benefit plan through a policy form or evidence of
coverage that does not comply with this chapter. (V.T.I.C. Art.
26.43, Subsec. (a); Art. 26.44A, Subsec. (a) (part).)
Sec. 1501.259. RIDERS; FILING WITH COMMISSIONER. (a) A
small employer health benefit plan issuer shall file with the
commissioner, in a form and manner prescribed by the commissioner,
each rider to a small employer health benefit plan to be used by the
issuer, as authorized by Section 1501.252.
(b) A small employer health benefit plan issuer may use a
rider filed under this section after the 30th day after the date the
rider is filed unless the commissioner disapproves its use.
(c) The commissioner, after notice and an opportunity for a
hearing, may disapprove the continued use of a rider by a small
employer health benefit plan issuer if the rider does not meet the
requirements of this chapter and other applicable statutes.
(V.T.I.C. Art. 26.44.)
Sec. 1501.260. PLAIN LANGUAGE REQUIRED. (a) A health
benefit plan issuer may not issue and the commissioner may not
approve a health benefit plan certificate or policy or a rider to a
health benefit plan certificate or policy unless it is written in
plain language.
(b) Each provision of a health benefit plan certificate or
policy or a rider to a health benefit plan certificate or policy
relating to renewal of coverage, conditions of coverage, or per
occurrence or aggregate dollar limitations on coverage must be
clearly explained in plain language.
(c) A health benefit plan issuer may not use and the
commissioner may not approve a health benefit plan application form
unless it is written in plain language.
(d) Subsections (a)-(c) do not apply if the specific
language to be used is required by federal law or state statute or
by rules implementing federal law.
(e) For purposes of Subsections (a)-(d), a health benefit
plan certificate or policy, a rider to or a provision of a health
benefit plan certificate or policy, or a health benefit plan
application form is written in plain language if it achieves the
minimum score established by the commissioner on the Flesch reading
ease test or an equivalent test selected by the commissioner.
(f) This section does not apply to:
(1) a health benefit plan group master policy; or
(2) a policy application or enrollment form for a
health benefit plan group master policy. (V.T.I.C. Art. 26.43,
Subsecs. (b), (c), (d), (e), (f), (g).)
[Sections 1501.261-1501.300 reserved for expansion]
SUBCHAPTER G. REINSURANCE FOR SMALL EMPLOYER
HEALTH BENEFIT PLANS
Sec. 1501.301. DEFINITIONS. In this subchapter:
(1) "Board" means the board of directors of the Texas
Health Reinsurance System.
(2) "Plan of operation" means the plan of operation of
the system established under Section 1501.306.
(3) "Reinsured health benefit plan issuer" means a
small employer health benefit plan issuer that participates in the
system.
(4) "Risk-assuming health benefit plan issuer" means a
small employer health benefit plan issuer that does not participate
in the system.
(5) "System" means the Texas Health Reinsurance System
established under this subchapter. (V.T.I.C. Art. 26.02, Subdivs.
(4), (22), (27); Art. 26.02, Subdiv. (33), as amended Acts 77th
Leg., R.S., Ch. 823; Art. 26.02, Subdivs. (28), (32), as amended
Acts 77th Leg., R.S., Ch. 608.)
Sec. 1501.302. TEXAS HEALTH REINSURANCE SYSTEM. The Texas
Health Reinsurance System is a nonprofit entity administered by a
board of directors and subject to the supervision and control of the
commissioner. (V.T.I.C. Art. 26.53.)
Sec. 1501.303. SYSTEM BOARD OF DIRECTORS. (a) The board of
directors of the system is composed of:
(1) nine members appointed by the commissioner; and
(2) the commissioner or the commissioner's
representative, who serves as an ex officio member.
(b) Five of the appointed members must be representatives of
reinsured health benefit plan issuers selected from individuals
nominated by small employer health benefit plan issuers in this
state according to procedures developed by the commissioner.
(c) Four of the appointed members must represent the public.
A member representing the public may not:
(1) be an officer, director, or employee of an
insurance company, agency, agent, broker, solicitor, or adjuster or
any other business entity regulated by the department;
(2) be a person required to register under Chapter
305, Government Code; or
(3) be related to a person described by Subdivision
(1) or (2) within the second degree by affinity or consanguinity.
(d) Appointed members serve two-year terms expiring
December 31 of each odd-numbered year. A member's term continues
until a successor is appointed.
(e) A member of the board may not be compensated for serving
on the board but is entitled to reimbursement for actual expenses
incurred in performing functions as a member of the board as
provided by the General Appropriations Act. (V.T.I.C. Art. 26.54,
Subsecs. (a), (b), (c).)
Sec. 1501.304. OPEN MEETINGS; PUBLIC INFORMATION. The
board is subject to:
(1) the open meetings law, Chapter 551, Government
Code; and
(2) the public information law, Chapter 552,
Government Code. (V.T.I.C. Art. 26.54, Subsec. (d).)
Sec. 1501.305. BOARD MEMBER IMMUNITY. (a) A member of the
board is not liable for an act performed, or omission made, in good
faith in the performance of powers and duties under this
subchapter.
(b) A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a). (V.T.I.C.
Art. 26.54, Subsec. (e).)
Sec. 1501.306. SYSTEM PLAN OF OPERATION. (a) The board
shall submit to the commissioner a plan of operation and any
amendments to that plan necessary or suitable to ensure the fair,
reasonable, and equitable administration of the system.
(b) The commissioner, after notice and hearing, may approve
the plan of operation if the commissioner determines the plan:
(1) is suitable to ensure the fair, reasonable, and
equitable administration of the system; and
(2) provides for the sharing of system gains or losses
on an equitable and proportionate basis in accordance with this
subchapter.
(c) The plan of operation is effective on the written
approval of the commissioner.
(d) The plan of operation must:
(1) establish procedures for:
(A) handling and accounting for system assets and
money;
(B) making an annual fiscal report to the
commissioner;
(C) selecting an administering health benefit
plan issuer or third-party administrator and establishing the
powers and duties of the administering issuer or third-party
administrator;
(D) reinsuring risks in accordance with this
subchapter; and
(E) collecting assessments from reinsured health
benefit plan issuers to fund claims and administrative expenses
incurred or estimated to be incurred by the system, including the
imposition of penalties for late payment of an assessment; and
(2) provide for any additional matter necessary to
implement and administer the system. (V.T.I.C. Art. 26.55,
Subsecs. (a) (part), (c).)
Sec. 1501.307. SYSTEM POWERS. (a) The system has the
general powers and authority granted under state law to an insurer
or a health maintenance organization authorized to engage in
business, except that the system may not directly issue a health
benefit plan.
(b) The system may:
(1) enter into contracts necessary or proper to
implement this subchapter, including, with the commissioner's
approval, contracts with similar programs of other states for the
joint performance of common functions or with persons or other
organizations for the performance of administrative functions;
(2) sue or be sued, including taking legal action
necessary or proper to recover assessments and penalties for, on
behalf of, or against the system or a reinsured health benefit plan
issuer;
(3) take legal action necessary to avoid the payment
of improper claims against the system;
(4) issue reinsurance contracts in accordance with
this subchapter;
(5) establish guidelines, conditions, and procedures
for reinsuring risks under the plan of operation;
(6) establish actuarial functions as appropriate for
the operation of the system;
(7) assess reinsured health benefit plan issuers in
accordance with Sections 1501.319-1501.323;
(8) appoint appropriate legal, actuarial, and other
committees necessary to provide technical assistance in:
(A) the operation of the system;
(B) policy and other contract design; and
(C) any other function within the authority of
the system; and
(9) borrow money for a period not to exceed one year to
accomplish the purposes of the system.
(c) The system is exempt from all taxes. (V.T.I.C. Art.
26.56 (part).)
Sec. 1501.308. SYSTEM NOTES AS LEGAL INVESTMENT FOR SMALL
EMPLOYER HEALTH BENEFIT PLAN ISSUER. A note or other evidence of
indebtedness of the system that is not in default is a legal
investment for a small employer health benefit plan issuer and may
be carried as an admitted asset. (V.T.I.C. Art. 26.56 (part).)
Sec. 1501.309. SYSTEM AUDIT. (a) The transactions of the
system are subject to audit by the state auditor in accordance with
Chapter 321, Government Code.
(b) The state auditor shall report the cost of each audit
conducted under this section to the board and the comptroller, and
the board shall remit that amount to the comptroller. (V.T.I.C.
Art. 26.57.)
Sec. 1501.310. ELECTION OF STATUS. (a) Each small employer
health benefit plan issuer shall notify the commissioner of the
issuer's election to operate as a risk-assuming health benefit plan
issuer or as a reinsured health benefit plan issuer. An issuer that
elects to operate as a risk-assuming health benefit plan issuer
shall file an application in accordance with Section 1501.312.
(b) A small employer health benefit plan issuer's election
under this section is effective until the fifth anniversary of the
date of the election.
(c) The commissioner may permit a small employer health
benefit plan issuer to modify its election at any time for good
cause shown. (V.T.I.C. Art. 26.51, Subsecs. (a), (b).)
Sec. 1501.311. CHANGE IN STATUS. (a) The commissioner
shall establish an application process for a small employer health
benefit plan issuer that elects to change its status under this
subchapter.
(b) A reinsured health benefit plan issuer that elects to
change its status to operate as a risk-assuming health benefit plan
issuer may not continue to reinsure a small employer health benefit
plan with the system. The issuer shall pay a prorated assessment
based on business issued as a reinsured health benefit plan issuer
for the portion of the year the business was reinsured. (V.T.I.C.
Art. 26.51, Subsecs. (c), (d).)
Sec. 1501.312. APPLICATION TO OPERATE AS RISK-ASSUMING
HEALTH BENEFIT PLAN ISSUER. (a) A small employer health benefit
plan issuer may apply to operate as a risk-assuming health benefit
plan issuer by filing an application with the commissioner in a form
and manner prescribed by the commissioner.
(b) In evaluating an application, the commissioner shall
consider the small employer health benefit plan issuer's:
(1) financial condition;
(2) history of rating and underwriting small employer
groups;
(3) commitment to market fairly to all small employers
in the state or in the issuer's established geographic service
area; and
(4) experience managing the risk of small employer
groups.
(c) The commissioner shall provide public notice of an
application and shall provide at least a 60-day period for public
comment before making a decision on the application. If the
commissioner does not act on the application before the 90th day
after the date the commissioner receives the application, the
issuer may request and the commissioner shall grant a hearing.
(V.T.I.C. Art. 26.52, Subsecs. (a), (b), (c).)
Sec. 1501.313. RESCISSION OF APPROVAL TO OPERATE AS
RISK-ASSUMING HEALTH BENEFIT PLAN ISSUER. The commissioner, after
notice and hearing, may rescind approval to operate as a
risk-assuming health benefit plan issuer if the commissioner finds
that the issuer:
(1) is not financially able to support the assumption
of risk from issuing coverage to small employers without the
protection provided by the system;
(2) has failed to market fairly to all small employers
in the state or in the issuer's established geographic service
area; or
(3) has failed to provide coverage to eligible small
employers. (V.T.I.C. Art. 26.52, Subsec. (d).)
Sec. 1501.314. REINSURANCE. (a) A small employer health
benefit plan issuer may reinsure risks covered under a small
employer health benefit plan with the system as provided by this
subchapter.
(b) The system shall reinsure the level of coverage provided
under the small employer health benefit plan.
(c) A small employer health benefit plan issuer may
reinsure:
(1) an entire small employer group not later than the
60th day after the date the group's coverage under the small
employer health benefit plan takes effect;
(2) an eligible employee of a small employer or the
employee's dependent not later than the 60th day after the date the
person's coverage takes effect; or
(3) a newly eligible employee of a reinsured small
employer group, the employee's dependent, or an individual covered
under the small employer health benefit plan not later than the 60th
day after the date the individual's coverage takes effect.
(V.T.I.C. Art. 26.58, Subsecs. (a), (b), (c).)
Sec. 1501.315. LIMITS ON REINSURANCE. (a) The system may
not reimburse a reinsured health benefit plan issuer for the claims
of a reinsured individual until the issuer has incurred an initial
level of claims of $5,000 in a calendar year for that individual for
benefits covered by the system. In addition, the reinsured health
benefit plan issuer is responsible for 10 percent of the next
$50,000 of benefit payments during a calendar year, and the system
shall reinsure the remainder. A reinsured health benefit plan
issuer's liability to a reinsured individual may not exceed a
maximum of $10,000 in a calendar year.
(b) The board annually shall adjust the initial level of
claims and the maximum liability to be retained by a reinsured
health benefit plan issuer under Subsection (a) to reflect
increases in:
(1) costs; and
(2) the use of small employer health benefit plans in
this state.
(c) An adjustment under Subsection (b) may not be less than
the annual change in the medical component of the Consumer Price
Index for All Urban Consumers published by the Bureau of Labor
Statistics of the United States Department of Labor unless the
board proposes and the commissioner approves a lower adjustment
factor. (V.T.I.C. Art. 26.58, Subsecs. (d), (e).)
Sec. 1501.316. TERMINATION OF REINSURANCE. A small
employer health benefit plan issuer may terminate reinsurance with
the system for one or more reinsured employees or dependents of
employees of a small employer on a contract anniversary of the small
employer health benefit plan. (V.T.I.C. Art. 26.58, Subsec. (f).)
Sec. 1501.317. APPLICATION OF MANAGED CARE PROCEDURES.
Except as provided by the plan of operation, a reinsured health
benefit plan issuer shall apply consistently with respect to
reinsured and nonreinsured business all managed care procedures,
including utilization review, individual case management,
preferred provider provisions, and other managed care provisions or
methods of operation. (V.T.I.C. Art. 26.58, Subsec. (g).)
Sec. 1501.318. PREMIUM RATES FOR REINSURANCE. (a) As part
of the plan of operation, the board shall adopt a method to
determine premium rates to be charged by the system for reinsuring
small employer groups and individuals under this subchapter.
(b) The method adopted must:
(1) include a classification system for small employer
groups that reflects the variations in premium rates allowed by
this chapter; and
(2) provide for the development of base reinsurance
premium rates that reflect the allowable variations.
(c) Subject to approval by the commissioner, the board shall
establish the base reinsurance premium rates at levels that
reasonably approximate the gross premiums charged to small
employers by small employer health benefit plan issuers for small
employer health benefit plans, adjusted to reflect retention levels
required under this subchapter.
(d) The board shall periodically review the method adopted
under this section, including the classification system and any
rating factors, to ensure that the method reasonably reflects the
claims experience of the system. The board may propose changes to
the method. Any changes are subject to approval by the
commissioner.
(e) An entire small employer group may be reinsured at a
rate that is 1-1/2 times the base reinsurance premium rate for that
group. An eligible employee of a small employer or the employee's
dependent covered under a small employer health benefit plan may be
reinsured at a rate that is five times the base reinsurance premium
rate for that individual.
(f) The board may consider adjustments to the premium rates
charged by the system to reflect the use of effective cost
containment and managed care arrangements. (V.T.I.C. Art. 26.59.)
Sec. 1501.319. DETERMINATION OF NET LOSS. (a) Not later
than March 1 of each year, the board shall determine the system's
net loss for the preceding calendar year, including administrative
expenses and incurred losses for the year, and report the net loss
to the commissioner.
(b) In determining the net loss, the board shall take into
account investment income and other appropriate gains and losses.
(V.T.I.C. Art. 26.60, Subsec. (a) (part).)
Sec. 1501.320. ASSESSMENTS TO RECOVER NET LOSSES. (a) The
board shall recover any net loss of the system by assessing each
reinsured health benefit plan issuer an amount determined annually
by the board based on information in annual statements and other
reports required by and filed with the board.
(b) The board shall establish, as part of the plan of
operation, a formula by which to make assessments against reinsured
health benefit plan issuers. With the approval of the
commissioner, the board may periodically change the assessment
formula as appropriate. The board shall base the assessment
formula on each reinsured issuer's share of:
(1) the total premiums earned in the preceding
calendar year from small employer health benefit plans delivered or
issued for delivery by reinsured health benefit plan issuers to
small employer groups in this state; and
(2) the premiums earned in the preceding calendar year
from newly issued small employer health benefit plans delivered or
issued for delivery during the calendar year by reinsured health
benefit plan issuers to small employer groups in this state.
(V.T.I.C. Art. 26.60, Subsec. (a) (part).)
Sec. 1501.321. LIMITS ON ASSESSMENTS. (a) The formula
established under Section 1501.320(b) may not result in an
assessment for a reinsured health benefit plan issuer that is less
than 50 percent or more than 150 percent of an amount based on the
proportion of the total premiums earned in the preceding calendar
year from small employer health benefit plans delivered or issued
for delivery to small employer groups in this state by that issuer
to the total premiums earned in the preceding calendar year from
small employer health benefit plans delivered or issued for
delivery to small employer groups in this state by all reinsured
health benefit plan issuers.
(b) In determining assessments, the board may not consider
premiums earned by a reinsured health benefit plan issuer that are
less than an amount determined by the board to justify the cost of
collecting an assessment based on those premiums. (V.T.I.C. Art.
26.60, Subsec. (b).)
Sec. 1501.322. ADJUSTMENT TO ASSESSMENTS ON FEDERALLY
QUALIFIED HEALTH MAINTENANCE ORGANIZATIONS. With the
commissioner's approval, the board may adjust the formula
established under Section 1501.320(b) for a reinsured health
benefit plan issuer that is an approved health maintenance
organization that is federally qualified under Title XIII, Public
Health Service Act (42 U.S.C. Section 300e et seq.), to the extent
that any restriction is imposed on that issuer that is not imposed
on other issuers. (V.T.I.C. Art. 26.60, Subsec. (c).)
Sec. 1501.323. ADVANCE INTERIM ASSESSMENTS. (a) The
system may make advance interim assessments as reasonable and
necessary for organizational and interim operating expenses.
(b) After the end of the fiscal year, the system shall
credit an interim assessment made under this section as an offset
against regular assessments due. (V.T.I.C. Art. 26.56 (part).)
Sec. 1501.324. LIMIT ON TOTAL ASSESSMENTS. The maximum
assessment amount payable for a calendar year may not exceed five
percent of the total premiums earned in the preceding calendar year
from small employer health benefit plans delivered or issued for
delivery by reinsured health benefit plan issuers in this state.
(V.T.I.C. Art. 26.61, Subsec. (f).)
Sec. 1501.325. ESTIMATE OF ASSESSMENTS; EVALUATION AND
PROTECTION OF SYSTEM. (a) Not later than March 1 of each year, the
board shall file with the commissioner an estimate of the
assessments necessary to fund the losses for small employer groups
incurred by the system during the preceding calendar year.
(b) If the board determines that the necessary assessments
exceed five percent of the total premiums earned in the preceding
calendar year from small employer health benefit plans delivered or
issued for delivery by reinsured health benefit plan issuers to
small employer groups in this state, the board shall evaluate the
operation of the system and shall report its findings, including
any recommendations for changes to the plan of operation, to the
commissioner not later than April 1 of the year following the
calendar year in which the losses were incurred. The evaluation
must:
(1) include an estimate of future assessments; and
(2) consider:
(A) the administrative costs of the system;
(B) the appropriateness of the premiums charged;
(C) the level of health benefit plan issuer
retention under the system; and
(D) the costs of coverage for small employer
groups.
(c) If the board fails to timely file a report required by
Subsection (b), the commissioner may:
(1) evaluate the operations of the system; and
(2) implement amendments to the plan of operation that
the commissioner considers necessary to reduce future losses and
assessments.
(d) A reinsured health benefit plan issuer may not write
small employer health benefit plans on a guaranteed issue basis
during a calendar year if the assessment amount payable for the
preceding calendar year is at least five percent of the total
premiums earned in that calendar year from small employer health
benefit plans delivered or issued for delivery by reinsured health
benefit plan issuers in this state.
(e) A reinsured health benefit plan issuer may not write
small employer health benefit plans on a guaranteed issue basis
after the board determines that the expected loss from the
reinsurance system for a year will exceed the total amount of
assessments payable at a rate of five percent of the total premiums
earned for the preceding calendar year. A reinsured health benefit
plan issuer may not resume writing small employer health benefit
plans on a guaranteed issue basis until the board determines that
the expected loss will be less than the maximum established by this
subsection. (V.T.I.C. Art. 26.61, Subsecs. (a), (b), (c), (d),
(e).)
Sec. 1501.326. DEFERMENT OF ASSESSMENT. (a) A reinsured
health benefit plan issuer may petition the commissioner for a
deferment in whole or in part of an assessment imposed by the board.
(b) The commissioner may defer all or part of the assessment
if the commissioner determines that payment of the assessment would
endanger the ability of the reinsured health benefit plan issuer to
fulfill its contractual obligations.
(c) The board shall assess the amount of a deferred
assessment against other reinsured health benefit plan issuers in a
manner consistent with the basis for assessment established by this
subchapter.
(d) A reinsured health benefit plan issuer that receives a
deferment:
(1) is liable to the system for the amount deferred;
and
(2) until the issuer pays the outstanding assessment,
may not:
(A) market, deliver, or issue for delivery a
small employer health benefit plan; or
(B) reinsure any individual or group with the
system. (V.T.I.C. Art. 26.62.)
[Sections 1501.327-1501.350 reserved for expansion]
SUBCHAPTER H. MARKETING OF SMALL EMPLOYER HEALTH
BENEFIT PLANS
Sec. 1501.351. MARKETING REQUIREMENTS. (a) Each small
employer health benefit plan issuer shall market a small employer
health benefit plan to eligible small employers in this state
through properly licensed agents.
(b) Each small employer purchasing a small employer health
benefit plan must be given a summary, in a format prescribed by the
commissioner, of the health benefit plans established by the
commissioner under Subchapter F.
(c) An agent shall offer and explain to a small employer on
inquiry and request by the employer each health benefit plan
established by the commissioner under Subchapter F. (V.T.I.C. Art.
26.71, Subsec. (a).)
Sec. 1501.352. HEALTH STATUS AND CLAIMS EXPERIENCE;
PROHIBITED ACTS. (a) A small employer health benefit plan issuer
or agent may not, because of the health status or claims experience
of the eligible employees of a small employer and those employees'
dependents, directly or indirectly encourage or direct the employer
to:
(1) refrain from applying for coverage with the
issuer;
(2) seek coverage from another issuer; or
(3) apply for a particular small employer health
benefit plan.
(b) A small employer health benefit plan issuer may not
directly or indirectly enter into an agreement or arrangement with
an agent that provides for or results in compensation paid to the
agent for the sale of small employer health benefit plans that
varies because of health status or claims experience.
(c) Subsection (b) does not apply to an arrangement that
provides compensation to an agent based on a percentage of premium,
except that the percentage may not vary because of health status or
claims experience.
(d) A small employer health benefit plan issuer or agent may
not encourage a small employer to exclude an eligible employee from
health coverage provided in connection with the employee's
employment.
(e) A small employer health benefit plan issuer may not
terminate, fail to renew, or limit its contract or agreement of
representation with an agent for a reason related to the health
status or claims experience of a small employer group placed by the
agent with the issuer. (V.T.I.C. Art. 26.72; Art. 26.73, Subsec.
(b).)
Sec. 1501.353. AGENT COMPENSATION. (a) A small employer
health benefit plan issuer shall pay the same commission,
percentage of premium, or other amount to an agent for renewal of a
small employer health benefit plan as the issuer paid for original
placement of the plan, except that the issuer may increase
compensation for renewal of a plan to reflect an increase in the
cost of living or similar factors.
(b) A small employer health benefit plan issuer may not
implement, directly or indirectly, agent commission schedules that
vary the level of agent commissions based on the size of the group
or otherwise reduce access to small employer health benefit plans.
(c) Notwithstanding Subsection (b), a small employer health
benefit plan issuer may:
(1) vary agent commission amounts or percentages
based on group size if the variation in the commission amounts or
percentages are inversely related to the size of the group;
(2) vary agent commission amounts or percentages based
on the cumulative premium paid by a single small employer over a
specific period if the variation in the commission amounts or
percentages are inversely related to the cumulative premium paid
during the period; or
(3) pay agent commissions as a percentage of premiums
charged to a small employer if the commission percentage is based on
all premiums paid by the small employer. (V.T.I.C. Art. 26.73,
Subsecs. (a), (c), (d).)
Sec. 1501.354. REQUIRED DISCLOSURES. (a) In connection
with offering a small employer health benefit plan for sale, each
small employer health benefit plan issuer and agent shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of:
(1) the extent to which premium rates for a specific
small employer are established or adjusted based on the actual or
expected variation in:
(A) claim costs; or
(B) health status of the employer's employees and
their dependents;
(2) provisions concerning the issuer's right to change
premium rates and factors other than claims experience that affect
changes in premium rates;
(3) provisions relating to renewability of policies
and contracts; and
(4) any preexisting condition provisions.
(b) On request by a small employer, each small employer
health benefit plan issuer shall disclose the benefits and premiums
available under all small employer coverage for which the employer
is qualified.
(c) A small employer health benefit plan issuer is not
required to disclose information to a small employer that is
proprietary or trade secret information under applicable law.
(d) Information provided under this section to a small
employer must be provided in a manner that is:
(1) understandable by the average small employer; and
(2) sufficient to reasonably inform a small employer
of its rights and obligations under a small employer health benefit
plan. (V.T.I.C. Art. 26.40.)
Sec. 1501.355. RULES CONCERNING MARKETING AND
AVAILABILITY. Rules adopted under Section 1501.010 may establish
additional standards to provide for the fair marketing and broad
availability of small employer health benefit plans to small
employers in this state. (V.T.I.C. Art. 26.75.)
Sec. 1501.356. REPORTING REQUIREMENTS. (a) In this
section, "case characteristics" has the meaning assigned by Section
1501.201.
(b) The department may require periodic reports by small
employer health benefit plan issuers and agents regarding small
employer health benefit plans issued by those issuers and agents.
The reporting requirements must include information regarding:
(1) case characteristics; and
(2) the number of small employer health benefit plans
in various categories that are marketed or issued to small
employers. (V.T.I.C. Art. 26.71, Subsec. (b).)
Sec. 1501.357. VIOLATIONS. A violation of Section 1501.352
by a small employer health benefit plan issuer or agent is an unfair
method of competition and an unfair or deceptive act or practice
under Chapter 541. (V.T.I.C. Art. 26.76, Subsec. (a).)
Sec. 1501.358. APPLICABILITY TO THIRD-PARTY ADMINISTRATOR.
If a small employer health benefit plan issuer enters into an
agreement with a third-party administrator to provide
administrative, marketing, or other services related to offering
small employer health benefit plans to small employers in this
state, the third-party administrator is subject to Sections
1501.111, 1501.351-1501.353, and 1501.355-1501.357. (V.T.I.C.
Art. 26.76, Subsec. (b).)
[Subchapters I-L reserved for expansion]
SUBCHAPTER M. LARGE EMPLOYER HEALTH BENEFIT PLANS
Sec. 1501.601. PARTICIPATION CRITERIA. (a) In this
subchapter, "participation criteria" means any criteria or rules
established by a large employer to determine the employees who are
eligible for enrollment or continued enrollment under the terms of
a health benefit plan.
(b) The participation criteria may not be based on health
status related factors. (V.T.I.C. Art. 26.02, Subdiv. (20); Art.
26.83, Subsec. (a) (part).)
Sec. 1501.602. COVERAGE REQUIREMENTS. (a) A large
employer health benefit plan issuer:
(1) may refuse to provide coverage to a large employer
in accordance with the issuer's underwriting standards and
criteria;
(2) shall accept or reject the entire group of
individuals who meet the participation criteria and choose
coverage; and
(3) may exclude only those employees or dependents who
decline coverage.
(b) On issuance of a health benefit plan to a large
employer, a large employer health benefit plan issuer shall provide
coverage to the employees who meet the participation criteria
without regard to an individual's health status related factors.
(V.T.I.C. Art. 26.83, Subsecs. (a) (part), (b) (part).)
Sec. 1501.603. EXCLUSION OF ELIGIBLE EMPLOYEE OR DEPENDENT
PROHIBITED. A large employer health benefit plan issuer may not
exclude an employee who meets the participation criteria or an
eligible dependent, including a late enrollee, who would otherwise
be covered under a large employer group. (V.T.I.C. Art. 26.83,
Subsec. (l).)
Sec. 1501.604. DECLINING COVERAGE. (a) A large employer
health benefit plan issuer shall obtain a written waiver from each
employee who meets the participation criteria and declines coverage
under a health benefit plan offered to a large employer. The waiver
must ensure that the employee was not induced or pressured to
decline coverage because of the employee's health status related
factors.
(b) A large employer health benefit plan issuer may not
provide coverage to a large employer or the employer's employees if
the issuer or an agent for the issuer knows that the employer has
induced or pressured an employee who meets the participation
criteria or a dependent of the employee to decline coverage because
of the individual's health status related factors. (V.T.I.C. Art.
26.83, Subsecs. (c), (d).)
Sec. 1501.605. MINIMUM CONTRIBUTION OR PARTICIPATION
REQUIREMENTS. (a) A large employer health benefit plan issuer may
require a large employer to meet a minimum contribution or
participation requirement as a condition of issuance or renewal in
accordance with the issuer's usual and customary practices for all
the issuer's employer health benefit plans in this state.
(b) A participation requirement may determine the
percentage of eligible employees who meet the participation
criteria and who must be enrolled in the health benefit plan.
(c) A large employer health benefit plan issuer may apply a
participation requirement to a large employer's eligible
employees, but may not apply the requirement to eligible dependents
of those employees.
(d) A participation requirement must be stated in the health
benefit plan contract and must be applied uniformly to each large
employer offered or issued coverage by a large employer health
benefit plan issuer in this state. (V.T.I.C. Art. 26.83, Subsec.
(e).)
Sec. 1501.606. EMPLOYEE ENROLLMENT; WAITING PERIOD. (a)
The initial enrollment period for employees meeting the
participation criteria under a large employer health benefit plan
must be at least 31 days, with a 31-day annual open enrollment
period.
(b) A large employer may establish a waiting period. The
employer shall determine the duration of the waiting period.
(c) A new employee who meets the participation criteria may
not be denied coverage if the application for coverage is received
by the large employer not later than the 31st day after the later
of:
(1) the date employment begins; or
(2) the date the waiting period established under
Subsection (b) expires.
(d) If dependent coverage is offered to the enrollees under
a large employer health benefit plan:
(1) the initial enrollment period for the dependents
must be at least 31 days, with a 31-day annual open enrollment
period; and
(2) a dependent of a new employee who meets the
participation criteria may not be denied coverage if the
application for coverage is received by the large employer not
later than the 31st day after the latest of:
(A) the date on which the employment begins;
(B) the date the waiting period established under
Subsection (b) expires; or
(C) the date the dependent becomes eligible for
enrollment.
(e) A late enrollee may be excluded from coverage until the
next annual open enrollment period and may be subject to a one-year
preexisting condition provision as described by Section 1501.102.
The period during which a preexisting condition provision applies
may not exceed 18 months from the date of the initial application.
(V.T.I.C. Art. 26.83, Subsecs. (f), (g), (h), (i), (j), (k).)
Sec. 1501.607. COVERAGE FOR NEWBORN CHILDREN. (a) A large
employer health benefit plan may not limit or exclude initial
coverage of a newborn child of a covered employee.
(b) Coverage of a newborn child of a covered employee under
this section ends on the 32nd day after the date of the child's
birth unless:
(1) children are eligible for coverage under the large
employer health benefit plan; and
(2) not later than the 31st day after the date of
birth, the large employer health benefit plan issuer receives:
(A) notice of the birth; and
(B) any required additional premium. (V.T.I.C.
Art. 26.84, Subsec. (a).)
Sec. 1501.608. COVERAGE FOR ADOPTED CHILDREN. (a) This
section applies only if children are eligible for coverage under a
large employer health benefit plan.
(b) A large employer health benefit plan may not limit or
exclude initial coverage of an adopted child of an insured. A child
is considered to be the adopted child of an insured if the insured
is a party to a suit in which the insured seeks to adopt the child.
(c) An adopted child of an insured may be enrolled, at the
insured's option, not later than the 31st day after:
(1) the date the insured becomes a party to a suit in
which the insured seeks to adopt the child; or
(2) the date the adoption becomes final.
(d) Coverage of an adopted child of an insured under this
section ends unless the large employer health benefit plan issuer
receives notice of the adoption and any required additional premium
not later than the 31st day after:
(1) the date the insured becomes a party to a suit in
which the insured seeks to adopt the child; or
(2) the date the adoption becomes final. (V.T.I.C.
Art. 26.84, Subsecs. (b), (c), (d).)
Sec. 1501.609. COVERAGE FOR UNMARRIED CHILDREN. (a) This
section applies only if children are eligible for coverage under a
large employer health benefit plan.
(b) Any limiting age applicable under a large employer
health benefit plan to an unmarried child of an enrollee is 25 years
of age. (V.T.I.C. Art. 26.84, Subsec. (e).)
Sec. 1501.610. PREMIUM RATES; ADJUSTMENTS. (a) A large
employer health benefit plan issuer may charge premiums in
accordance with this section to the group of employees or
dependents who meet the participation criteria and do not decline
coverage.
(b) A large employer health benefit plan issuer may not
charge an adjustment to premium rates for individual employees or
dependents for health status related factors or duration of
coverage. Any adjustment must be applied uniformly to the rates
charged for all employees and dependents of employees of a large
employer.
(c) Subsection (b) does not restrict the amount that a large
employer may be charged for coverage. (V.T.I.C. Art. 26.83,
Subsec. (b) (part); Art. 26.89, Subsec. (a).)
Sec. 1501.611. MARKETING REQUIREMENTS. On request, each
large employer purchasing a health benefit plan shall be given a
summary of all plans for which the employer is eligible. (V.T.I.C.
Art. 26.91, Subsec. (a).)
Sec. 1501.612. ENCOURAGING EXCLUSION OF EMPLOYEE
PROHIBITED. A large employer health benefit plan issuer or agent
may not encourage a large employer to exclude an employee who meets
the participation criteria from health coverage provided in
connection with the employee's employment. (V.T.I.C. Art. 26.92.)
Sec. 1501.613. AGENTS. A large employer health benefit
plan issuer may not terminate, fail to renew, or limit its contract
or agreement of representation with an agent because of health
status related factors of a large employer group placed by the agent
with the issuer. (V.T.I.C. Art. 26.93.)
Sec. 1501.614. REPORTING OF CLAIMS INFORMATION. (a) This
section applies only to an insured employer health benefit plan.
(b) An employer carrier, on written request from an insured
employer covered by that carrier, shall report to the employer
information from the 12 months preceding the date of the report
regarding:
(1) the total amount of charges submitted to the
carrier for persons covered under the employer health benefit plan;
(2) the total amount of payments made by the carrier to
health care providers for persons covered under the plan; and
(3) to the extent available, information on claims
paid by type of health care provider, including total hospital
charges, physician charges, pharmaceutical charges, and other
charges.
(c) An employer carrier shall provide information requested
by an employer under this section annually not later than the 30th
day before the anniversary or renewal date of the employer's health
benefit plan.
(d) Notwithstanding Subsection (c), an employer carrier is
not required to provide information under Subsection (b) earlier
than the 30th day after the date of the initial written request.
(e) An employer carrier may not report any information
required under this section if the release of the information is
prohibited by federal law or regulation.
(f) An employer carrier shall provide claim information
under this section in the aggregate, without information through
which a specific individual covered by the health insurance or
evidence of coverage may be identified. (V.T.I.C. Art. 26.96.)
Sec. 1501.615. ADDITIONAL REPORTING REQUIREMENTS. The
department may require periodic reports by large employer health
benefit plan issuers and agents regarding the large employer health
benefit plans issued by those issuers. The reporting requirements
must:
(1) require information regarding the number of plans
in various categories that are marketed or issued to large
employers; and
(2) comply with federal law, including regulations.
(V.T.I.C. Art. 26.91, Subsec. (b).)
Sec. 1501.616. APPLICABILITY TO THIRD-PARTY ADMINISTRATOR.
If a large employer health benefit plan issuer enters into an
agreement with a third-party administrator to provide
administrative, marketing, or other services related to offering
large employer health benefit plans to large employers in this
state, the third-party administrator is subject to this subchapter
and Subchapter C. (V.T.I.C. Art. 26.95.)
CHAPTER 1502. HEALTH BENEFIT PLANS FOR CHILDREN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1502.001. APPLICABILITY OF CHAPTER
Sec. 1502.002. RULES
[Sections 1502.003-1502.050 reserved for expansion]
SUBCHAPTER B. CHILDREN'S HEALTH BENEFIT PLAN
Sec. 1502.051. CHILDREN'S HEALTH BENEFIT PLAN
Sec. 1502.052. MANDATED BENEFIT PROVISIONS INAPPLICABLE
Sec. 1502.053. EXEMPTION FROM CERTAIN TAXES
CHAPTER 1502. HEALTH BENEFIT PLANS FOR CHILDREN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1502.001. APPLICABILITY OF CHAPTER. This chapter
applies only to the issuer of a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act or another analogous benefit
arrangement; or
(ii) an entity not authorized under this
code or another insurance law of this state that contracts directly
for health care services on a risk-sharing basis, including a
capitation basis; or
(2) is offered by an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844. (V.T.I.C. Art. 27.02.)
Sec. 1502.002. RULES. The commissioner may adopt rules to
implement this chapter. (V.T.I.C. Art. 27.06.)
[Sections 1502.003-1502.050 reserved for expansion]
SUBCHAPTER B. CHILDREN'S HEALTH BENEFIT PLAN
Sec. 1502.051. CHILDREN'S HEALTH BENEFIT PLAN. A health
benefit plan issuer may offer a children's health benefit plan that
provides coverage only to children younger than 18 years of age.
The issuer may offer the plan only if the commissioner approves the
plan's structure and the benefits offered under the plan.
(V.T.I.C. Art. 27.03.)
Sec. 1502.052. MANDATED BENEFIT PROVISIONS INAPPLICABLE. A
children's health benefit plan is not subject to any law that
requires coverage or the offer of coverage of a health care service
or benefit. (V.T.I.C. Art. 27.04.)
Sec. 1502.053. EXEMPTION FROM CERTAIN TAXES. A children's
health benefit plan issuer is not subject to the premium tax or the
tax on revenues imposed under Chapter 222 with respect to money
received for coverage provided under that plan. (V.T.I.C. Art.
27.05.)
CHAPTER 1503. COVERAGE OF CERTAIN STUDENTS
Sec. 1503.001. APPLICABILITY OF CHAPTER
Sec. 1503.002. EXCEPTION
Sec. 1503.003. COVERAGE OF CERTAIN STUDENTS
CHAPTER 1503. COVERAGE OF CERTAIN STUDENTS
Sec. 1503.001. APPLICABILITY OF CHAPTER. This chapter
applies only to a health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage that is
offered by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a fraternal benefit society operating
under Chapter 885;
(iv) a stipulated premium company operating
under Chapter 884; or
(v) a health maintenance organization
operating under Chapter 843; and
(B) to the extent permitted by the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.), a health benefit plan that is offered by:
(i) a multiple employer welfare arrangement
as defined by Section 3 of that Act; or
(ii) an analogous benefit arrangement; or
(2) is offered by:
(A) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; or
(B) another entity that:
(i) is not authorized under this code or
another insurance law of this state; and
(ii) contracts directly for health care
services on a risk-sharing basis, including a capitation basis.
(V.T.I.C. Art. 21.24-2, Sec. 2(a).)
Sec. 1503.002. EXCEPTION. This chapter does not apply to:
(1) a plan that provides coverage:
(A) only for a specified disease;
(B) only for accidental death or dismemberment;
(C) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury; or
(D) as a supplement to a liability insurance
policy;
(2) a small employer health benefit plan written under
Chapter 1501;
(3) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
as amended;
(4) a workers' compensation insurance policy;
(5) medical payment insurance coverage provided under
a motor vehicle insurance policy; or
(6) a long-term care insurance policy, including a
nursing home fixed indemnity policy, unless the commissioner
determines that the policy provides benefit coverage so
comprehensive that the policy is a health benefit plan as described
by Section 1503.001. (V.T.I.C. Art. 21.24-2, Sec. 2(b).)
Sec. 1503.003. COVERAGE OF CERTAIN STUDENTS. (a) A health
benefit plan may not condition coverage for a child younger than 25
years of age on the child's being enrolled at an educational
institution.
(b) A health benefit plan that requires as a condition of
coverage for a child up to 25 years of age that the child be a
full-time student at an educational institution must provide the
coverage:
(1) for the entire academic term during which the
child begins as a full-time student and remains enrolled,
regardless of whether the number of hours of instruction for which
the child is enrolled is reduced to a level that changes the child's
academic status to less than that of a full-time student; and
(2) continuously until the 10th day of instruction of
the subsequent academic term, on which date the health benefit plan
may terminate coverage for the child if the child does not return to
full-time student status before that date.
(c) For purposes of this section, determination of the
full-time student status of a child is made in the manner provided
by the educational institution at which the child is enrolled.
(V.T.I.C. Art. 21.24-2, Sec. 3.)
CHAPTER 1504. MEDICAL CHILD SUPPORT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1504.001. DEFINITIONS
Sec. 1504.002. RULES
Sec. 1504.003. VIOLATION OF CHAPTER: RELIEF AVAILABLE
TO INJURED PERSON
[Sections 1504.004-1504.050 reserved for expansion]
SUBCHAPTER B. DUTIES OF HEALTH BENEFIT PLAN ISSUER
Sec. 1504.051. ENROLLMENT OF CERTAIN CHILDREN REQUIRED
Sec. 1504.052. CHILD RESIDING OUTSIDE SERVICE AREA;
COMPARABLE HEALTH COVERAGE REQUIRED
Sec. 1504.053. CANCELLATION OR NONRENEWAL OF COVERAGE
FOR CERTAIN CHILDREN
Sec. 1504.054. CONTINUATION OR CONVERSION OF
COVERAGE
Sec. 1504.055. PROCEDURE FOR CLAIMS
[Sections 1504.056-1504.100 reserved for expansion]
SUBCHAPTER C. PROHIBITED CONDUCT
Sec. 1504.101. DENIAL OF ENROLLMENT ON CERTAIN
GROUNDS PROHIBITED
Sec. 1504.102. ASSIGNMENT OF MEDICAL SUPPORT RIGHTS:
DIFFERENT REQUIREMENTS PROHIBITED
CHAPTER 1504. MEDICAL CHILD SUPPORT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1504.001. DEFINITIONS. In this chapter:
(1) "Child" has the meaning assigned by Section
101.003, Family Code.
(2) "Child support agency" has the meaning assigned by
Section 101.004, Family Code.
(3) "Custodial parent" means an individual who:
(A) is a managing conservator of a child or a
possessory conservator of a child who is a parent of the child; or
(B) is a guardian of the person or other
custodian of a child and is designated as guardian or custodian by a
court or administrative agency of this or another state.
(4) "Health benefit plan issuer" means:
(A) an insurance company, group hospital service
corporation, or health maintenance organization that delivers or
issues for delivery an individual, group, blanket, or franchise
insurance policy or agreement, a group hospital service contract,
or an evidence of coverage that provides benefits for medical or
surgical expenses incurred as a result of an accident or sickness;
(B) a governmental entity subject to Subchapter
D, Chapter 1355, Subchapter C, Chapter 1364, Chapter 1578, or
Article 3.51-1, 3.51-2, 3.51-4, or 3.51-5;
(C) the issuer of a multiple employer welfare
arrangement as defined by Section 846.001; or
(D) the issuer of a group health plan as defined
by Section 607, Employee Retirement Income Security Act of 1974 (29
U.S.C. Section 1167).
(5) "Medical assistance" means medical assistance
under the state Medicaid program. (V.T.I.C. Art. 3.96-1.)
Sec. 1504.002. RULES. (a) The commissioner shall adopt
reasonable rules as necessary to implement this chapter and 42
U.S.C. Section 1396a(a)(60), including rules that define acts that
constitute unfair or deceptive practices under Subchapter I,
Chapter 541.
(b) The commissioner shall adopt rules that define
"comparable health coverage" in a manner that:
(1) is consistent with federal law; and
(2) complies with the requirements necessary to
maintain federal Medicaid funding. (V.T.I.C. Art. 3.96-8, Sec.
(c); Art. 3.96-10.)
Sec. 1504.003. VIOLATION OF CHAPTER: RELIEF AVAILABLE TO
INJURED PERSON. A health benefit plan issuer that violates this
chapter is subject to the same penalties, and an injured person has
the same rights and remedies, as those provided by Subchapter D,
Chapter 541. (V.T.I.C. Art. 3.96-9.)
[Sections 1504.004-1504.050 reserved for expansion]
SUBCHAPTER B. DUTIES OF HEALTH BENEFIT PLAN ISSUER
Sec. 1504.051. ENROLLMENT OF CERTAIN CHILDREN REQUIRED.
(a) A health benefit plan issuer shall permit a parent to enroll a
child in dependent health coverage offered through the issuer
regardless of any enrollment period restriction if the parent is:
(1) eligible for dependent health coverage; and
(2) required by a court order or administrative order
to provide health insurance coverage for the child.
(b) A health benefit plan issuer shall enroll a child of a
parent described by Subsection (a) in dependent health coverage
offered through the issuer if:
(1) the parent does not apply to obtain health
coverage for the child through the issuer; and
(2) the child, a custodial parent of the child, or a
child support agency having a duty to collect or enforce support for
the child applies for the coverage. (V.T.I.C. Art. 3.96-3.)
Sec. 1504.052. CHILD RESIDING OUTSIDE SERVICE AREA;
COMPARABLE HEALTH COVERAGE REQUIRED. (a) A health benefit plan
issuer may not deny enrollment of a child under the health coverage
of the child's parent on the ground that the child does not reside
in the issuer's service area.
(b) A health benefit plan issuer may not enforce an
otherwise applicable provision of the health coverage that would
deny, limit, or reduce payment of a claim for a covered child who
resides outside the issuer's service area but inside the United
States.
(c) For a covered child who resides outside the health
benefit plan issuer's service area and whose coverage under a
policy or plan is required by a medical support order, the issuer
shall provide coverage that is comparable health coverage to that
provided to other dependents under the policy or plan.
(d) Comparable health coverage may include coverage in
which a health benefit plan issuer uses different procedures for
service delivery and health care provider reimbursement.
Comparable health coverage may not include coverage:
(1) that is limited to emergency services only; or
(2) for which the issuer charges a higher premium.
(V.T.I.C. Art. 3.96-2 (part); Art. 3.96-8, Secs. (a), (b).)
Sec. 1504.053. CANCELLATION OR NONRENEWAL OF COVERAGE FOR
CERTAIN CHILDREN. (a) A health benefit plan issuer may not cancel
or refuse to renew health coverage provided to a child who is
enrolled or entitled to enrollment under this chapter unless
satisfactory written evidence is filed with the issuer showing
that:
(1) the court or administrative order that required
the coverage is not in effect; or
(2) the child:
(A) is enrolled in comparable health coverage; or
(B) will be enrolled in comparable health
coverage that takes effect not later than the effective date of the
cancellation or nonrenewal.
(b) For purposes of this section, a child is not enrolled or
entitled to enrollment under this chapter if the child's
eligibility for health coverage ends because the parent ceases to
be eligible for dependent health coverage. (V.T.I.C. Art. 3.96-4.)
Sec. 1504.054. CONTINUATION OR CONVERSION OF COVERAGE. (a)
If a child's eligibility for dependent health coverage ends because
the parent ceases to be eligible for the coverage and the coverage
provides for the continuation or conversion of the coverage for the
child, the health benefit plan issuer shall notify the custodial
parent and the child support agency of the costs and other
requirements for continuing or converting the coverage.
(b) The health benefit plan issuer shall, on application of
a parent of the child, a child support agency, or the child, enroll
or continue enrollment of a child whose eligibility for coverage
ended under Subsection (a). (V.T.I.C. Art. 3.96-5.)
Sec. 1504.055. PROCEDURE FOR CLAIMS. (a) A health benefit
plan issuer that provides health coverage to a child through a
covered parent of the child shall:
(1) provide to each custodial parent of the child or to
an adult child documents and other information necessary for the
child to obtain benefits under the coverage, including:
(A) the name of the issuer;
(B) the number of the policy or evidence of
coverage;
(C) a copy of the policy or evidence of coverage
and schedule of benefits;
(D) a health coverage membership card;
(E) claim forms; and
(F) any other document or information necessary
to submit a claim in accordance with the issuer's policies and
procedures;
(2) permit a custodial parent, health care provider,
state agency that has been assigned medical support rights, or
adult child to submit claims for covered services without the
approval of the covered parent; and
(3) make payments on covered claims submitted in
accordance with this subsection directly to a custodial parent,
health care provider, adult child, or state agency making a claim.
(b) A health benefit plan issuer shall provide to a state
agency that provides medical assistance to the child or shall
provide to a child support agency that enforces medical support on
behalf of a child the information necessary to obtain reimbursement
of medical services provided to or paid on behalf of the child.
(V.T.I.C. Art. 3.96-6, Sec. (b); Art. 3.96-7.)
[Sections 1504.056-1504.100 reserved for expansion]
SUBCHAPTER C. PROHIBITED CONDUCT
Sec. 1504.101. DENIAL OF ENROLLMENT ON CERTAIN GROUNDS
PROHIBITED. A health benefit plan issuer may not deny enrollment of
a child under the health coverage of the child's parent on the
ground that the child:
(1) has a preexisting condition;
(2) was born out of wedlock;
(3) is not claimed as a dependent on the parent's
federal income tax return;
(4) does not reside with the parent; or
(5) receives or has applied for medical assistance.
(V.T.I.C. Art. 3.96-2 (part).)
Sec. 1504.102. ASSIGNMENT OF MEDICAL SUPPORT RIGHTS:
DIFFERENT REQUIREMENTS PROHIBITED. A health benefit plan issuer
may not require a state agency that has been assigned the rights of
an individual who is eligible for medical assistance and is covered
for health benefits from the issuer to comply with a requirement
that is different from a requirement imposed on an agent or assignee
of any other covered individual. (V.T.I.C. Art. 3.96-6, Sec. (a).)
CHAPTER 1505. GROUP INSURANCE PLANS FOR PERSONS 65 YEARS OF
AGE OR OLDER
Sec. 1505.001. DEFINITION
Sec. 1505.002. PLANS FOR CERTAIN PERSONS 65 YEARS OF
AGE OR OLDER
Sec. 1505.003. APPLICATION AND OTHER EVIDENCE OF
INSURANCE FORMS
Sec. 1505.004. EXECUTION OF POLICY
Sec. 1505.005. USE OF UNINCORPORATED ENTITY
Sec. 1505.006. REQUIRED FILINGS; DEPARTMENT APPROVAL
Sec. 1505.007. EFFECT OF COMMISSIONER DISAPPROVAL
Sec. 1505.008. EXEMPTION FROM PREMIUM TAXES
Sec. 1505.009. EXEMPTION FROM CERTAIN ANTITRUST REQUIREMENTS
CHAPTER 1505. GROUP HEALTH INSURANCE PLANS FOR PERSONS 65 YEARS
OF AGE OR OLDER
Sec. 1505.001. DEFINITION. In this chapter, "health
insurer" means an insurance company authorized to provide a
hospital, surgical, and medical expense insurance plan in this
state, including:
(1) a stock insurance company;
(2) a reciprocal or interinsurance exchange;
(3) a Lloyd's plan;
(4) a fraternal benefit society;
(5) a stipulated premium company; and
(6) a mutual insurance company, including a statewide
mutual assessment company or a local mutual aid association.
(V.T.I.C. Art. 3.71, Sec. 1 (part).)
Sec. 1505.002. PLANS FOR CERTAIN PERSONS 65 YEARS OF AGE OR
OLDER. (a) Two or more health insurers may provide a hospital,
surgical, and medical expense insurance plan under a group
insurance policy that covers residents of this state who are at
least 65 years of age and the spouses of those residents.
(b) The participating health insurers may enter into
agreements regarding matters within the scope of this chapter,
including:
(1) premium rates;
(2) policy provisions; and
(3) sales, administrative, technical, and accounting
procedures.
(c) Each participating health insurer is subject to
regulation under the laws of this state and is severally liable on a
group insurance policy issued under this chapter. (V.T.I.C. Art.
3.71, Secs. 1 (part), 2 (part).)
Sec. 1505.003. APPLICATION AND OTHER EVIDENCE OF INSURANCE
FORMS. An application, policy, certificate, or other evidence of
insurance form for an insurance plan under this chapter is subject
to Chapter 1701. (V.T.I.C. Art. 3.71, Sec. 2 (part).)
Sec. 1505.004. EXECUTION OF POLICY. An authorized person
may execute an insurance policy subject to this chapter on behalf of
the participating health insurers. (V.T.I.C. Art. 3.71, Sec. 1
(part).)
Sec. 1505.005. USE OF UNINCORPORATED ENTITY. (a) The
participating health insurers may issue the group insurance policy
in their own names or in the name of an unincorporated association,
trust, or other organization formed for the sole purposes of this
chapter and evidenced by a written contract executed by the
insurers. An unincorporated association, trust, or other
organization formed under this subsection may sue and be sued in the
name of the association, trust, or organization.
(b) A person licensed as a general life, accident, and
health agent or as a general property and casualty agent under
Chapter 4051 or 4054 may act in the licensed capacity in connection
with an insurance policy or a certificate of insurance issued by an
unincorporated association, trust, or other organization formed
under Subsection (a). The agent is not required to notify the
department that the person has been appointed to act for that
purpose. (V.T.I.C. Art. 3.71, Secs. 1 (part), 3.)
Sec. 1505.006. REQUIRED FILINGS; DEPARTMENT APPROVAL. (a)
The participating health insurers shall provide for the filing with
the department on behalf of the insurers of:
(1) a copy of any contract of association or
organization or trust agreement entered into by the insurers under
this chapter;
(2) the schedule of premium rates to be charged for the
insurance coverage; and
(3) the plan for operating and marketing the
insurance.
(b) Except as provided by Subsection (c), a contract,
schedule, or plan described by Subsection (a) may not be effective
until approved by the commissioner.
(c) A contract, schedule, or plan described by Subsection
(a) that is not approved or disapproved in a written order of the
commissioner on or before the 30th day after the date on which the
document is filed with the department is considered approved on the
31st day after the date of filing. (V.T.I.C. Art. 3.71, Sec. 2
(part).)
Sec. 1505.007. EFFECT OF COMMISSIONER DISAPPROVAL. If,
after notice and public hearing, the commissioner determines under
reasonable assumptions that a premium rate charged for the
insurance coverage offered under this chapter or the plan for
operating and marketing that insurance is excessive, inadequate, or
contrary to the public interest or that any activity or practice
performed in connection with the insurance is unfair, unreasonable,
or contrary to the public interest, the commissioner shall:
(1) enter an order containing the commissioner's
determination and disapproving the premium rate or plan or the
activity or practice; and
(2) require the discontinuance of the premium rate,
plan, activity, or practice within a period that is not less than 30
days after the date of the commissioner's order containing the
determination. (V.T.I.C. Art. 3.71, Sec. 2 (part).)
Sec. 1505.008. EXEMPTION FROM PREMIUM TAXES. Each premium
received for group insurance coverage authorized by this chapter is
exempt from any premium tax imposed by any other law of this state.
(V.T.I.C. Art. 3.71, Sec. 4.)
Sec. 1505.009. EXEMPTION FROM CERTAIN ANTITRUST
REQUIREMENTS. An association, trust, or other organization formed
and operated in accordance with this chapter or an insurance
business conducted in accordance with this chapter is not
considered a combination in restraint of trade, an illegal
monopoly, or an attempt to lessen competition or fix prices
arbitrarily and does not otherwise violate the antitrust laws of
this state. (V.T.I.C. Art. 3.71, Sec. 5.)
CHAPTER 1506. TEXAS HEALTH INSURANCE RISK POOL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1506.001. DEFINITIONS
Sec. 1506.002. DEFINITION OF HEALTH BENEFIT PLAN
Sec. 1506.003. DEFINITION OF DEPENDENT
Sec. 1506.004. AUDIT OF POOL
Sec. 1506.005. RULES
Sec. 1506.006. COMPLAINT PROCEDURES
Sec. 1506.007. PROVISION OF INFORMATION ABOUT POOL
[Sections 1506.008-1506.050 reserved for expansion]
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 1506.051. GOVERNANCE OF POOL; BOARD MEMBERSHIP
Sec. 1506.052. PRESIDING OFFICER
Sec. 1506.053. TERMS; VACANCY
Sec. 1506.054. PER DIEM; REIMBURSEMENT
Sec. 1506.055. MEMBER'S IMMUNITY
Sec. 1506.056. ADJUSTMENTS
Sec. 1506.057. ANNUAL REPORT OF POOL'S ACTIVITIES
Sec. 1506.058. ADDITIONAL POWERS AND DUTIES
[Sections 1506.059-1506.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF POOL
Sec. 1506.101. PURPOSES OF POOL
Sec. 1506.102. EMPLOYEES; COMMITTEES
Sec. 1506.103. PROVIDING COVERAGE
Sec. 1506.104. CHARGES, FORMULAS, AND FORMS
Sec. 1506.105. PREMIUM RATES
Sec. 1506.106. REINSURANCE
Sec. 1506.107. CONTRACTS
Sec. 1506.108. LEGAL ACTION
Sec. 1506.109. COST CONTAINMENT
Sec. 1506.110. BORROWING
Sec. 1506.111. ADDITIONAL AUTHORITY
[Sections 1506.112-1506.150 reserved for expansion]
SUBCHAPTER D. POOL COVERAGE AND BENEFITS
Sec. 1506.151. MINIMUM POOL COVERAGE
Sec. 1506.152. ELIGIBILITY FOR COVERAGE
Sec. 1506.153. INELIGIBILITY FOR COVERAGE
Sec. 1506.154. LIST OF COVERED CONDITIONS
Sec. 1506.155. PREEXISTING CONDITIONS
Sec. 1506.156. BENEFIT REDUCTION
Sec. 1506.157. RECOVERY OF CERTAIN AMOUNTS
Sec. 1506.158. TERMINATION OF POOL COVERAGE
Sec. 1506.159. PROHIBITION ON ARRANGEMENT OR ATTEMPTED
ARRANGEMENT OF CERTAIN POOL COVERAGE;
PENALTY
[Sections 1506.160-1506.200 reserved for expansion]
SUBCHAPTER E. OPERATION OF POOL
Sec. 1506.201. PLAN OF OPERATION
Sec. 1506.202. POOL ADMINISTRATOR
Sec. 1506.203. ADMINISTRATOR'S TERM; SUCCEEDING TERM
Sec. 1506.204. ADMINISTRATOR'S FUNCTIONS
Sec. 1506.205. PAYMENTS TO ADMINISTRATOR
[Sections 1506.206-1506.250 reserved for expansion]
SUBCHAPTER F. ASSESSMENTS FOR OPERATION OF POOL
Sec. 1506.251. INTERIM ASSESSMENTS
Sec. 1506.252. DETERMINATION OF NET LOSS
Sec. 1506.253. ASSESSMENTS TO COVER NET LOSSES
Sec. 1506.254. ASSESSMENT DUE DATE; INTEREST
Sec. 1506.255. ABATEMENT OR DEFERMENT OF ASSESSMENT
Sec. 1506.256. USE OF EXCESS FROM ASSESSMENTS
Sec. 1506.257. COLLECTION OF ASSESSMENTS
Sec. 1506.258. PROCEDURES, CRITERIA, AND FORMS
CHAPTER 1506. TEXAS HEALTH INSURANCE RISK POOL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1506.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of the pool.
(2) "Health benefit arrangement" means a plan,
program, contract, or other arrangement through which an employer
provides health care services, other than health care services
covered through a health benefit plan issuer, to the employer's
officers, employees, or other personnel.
(3) "Health benefit plan issuer" means an entity that
provides health benefit plan coverage in this state, including
stop-loss or excess loss insurance. The term includes:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a health maintenance organization;
(F) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844;
(G) an eligible surplus lines insurer operating
under Chapter 981;
(H) an insurer providing stop-loss or excess loss
insurance to physicians, health care providers, or hospitals or to
any benefit arrangements to the extent permitted by Section 3,
Employee Retirement Income Security Act of 1974 (29 U.S.C. Section
1002); and
(I) any other entity providing a plan of health
insurance or health benefits subject to state insurance regulation.
(4) "Health maintenance organization" means an entity
that holds a certificate of authority to operate under Chapter 843.
(5) "Hospital" means a hospital for which a license is
issued under Chapter 241, Health and Safety Code, or that is owned
or operated by the federal or state government.
(6) "Physician" means a person licensed to practice
medicine in this state under Subtitle B, Title 3, Occupations Code.
(7) "Pool" means the Texas Health Insurance Risk Pool.
(V.T.I.C. Art. 3.77, Secs. 2(2), (8), (9), (11), (12), (14), (16).)
Sec. 1506.002. DEFINITION OF HEALTH BENEFIT PLAN. (a) In
this chapter, "health benefit plan" means an individual or group
health benefit plan and includes:
(1) a hospital or medical expense incurred policy;
(2) coverage of medical or health care services
offered by:
(A) a group hospital service corporation
operating under Chapter 842;
(B) a fraternal benefit society operating under
Chapter 885;
(C) a stipulated premium company operating under
Chapter 884;
(D) a health maintenance organization;
(E) a multiple employer welfare arrangement
subject to Chapter 846; or
(F) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; and
(3) any other health care plan or arrangement that
pays for or furnishes medical or health care services by insurance
or otherwise.
(b) In this chapter, "health benefit plan" does not include:
(1) short-term insurance;
(2) accident insurance;
(3) a plan providing coverage only for dental or
vision care;
(4) fixed indemnity insurance, including hospital
indemnity insurance;
(5) credit insurance;
(6) long-term care insurance;
(7) disability income insurance;
(8) other limited benefit coverage, including
specified disease coverage;
(9) coverage issued as a supplement to liability
insurance;
(10) insurance arising out of a workers' compensation
or similar law;
(11) automobile medical payment insurance; or
(12) insurance coverage under which benefits are
payable with or without regard to fault and that is statutorily
required to be contained in a liability insurance policy or
equivalent self-insurance. (V.T.I.C. Art. 3.77, Sec. 2(7).)
Sec. 1506.003. DEFINITION OF DEPENDENT. In this chapter,
"dependent" means:
(1) a resident spouse or unmarried child younger than
25 years of age; or
(2) a child who is:
(A) a full-time student younger than 25 years of
age who is financially dependent on the parent;
(B) 18 years of age or older and is an individual
for whom a person may be obligated to pay child support; or
(C) disabled and dependent on the parent
regardless of the age of the child. (V.T.I.C. Art. 3.77, Sec.
2(5).)
Sec. 1506.004. AUDIT OF POOL. (a) Annually, the state
auditor shall conduct a special audit of the pool under Chapter 321,
Government Code. The special audit must include a financial audit
and an economy and efficiency audit.
(b) The state auditor shall report the cost of each audit
conducted under this section to the board and the comptroller. The
board shall remit that amount to the comptroller. (V.T.I.C. Art.
3.77, Sec. 15.)
Sec. 1506.005. RULES. The commissioner may adopt rules
necessary and proper to implement this chapter. (V.T.I.C. Art.
3.77, Sec. 8 (part).)
Sec. 1506.006. COMPLAINT PROCEDURES. (a) An applicant for
or participant in coverage from the pool is entitled to have
complaints against the pool reviewed by a grievance committee
appointed by the board.
(b) The grievance committee shall report to the board after
completion of the review of each complaint.
(c) The board shall retain each written complaint
concerning the pool at least until the third anniversary of the date
the pool received the complaint. (V.T.I.C. Art. 3.77, Sec. 14.)
Sec. 1506.007. PROVISION OF INFORMATION ABOUT POOL. (a) A
health benefit plan issuer may provide to its insureds and
enrollees a notice relating to the existence of the pool that
contains the address from which an insured or enrollee may obtain
information about the coverage offered by the pool, the eligibility
for and cost of the coverage, and other information that allows an
insured or enrollee to compare the issuer's health benefit plan
coverage provided to the insured or enrollee with the coverage
offered by the pool.
(b) A health benefit plan issuer providing notice under this
section shall provide the notice as prescribed by the commissioner.
(c) A health benefit plan issuer does not incur any
liability solely for providing notice under this section.
(V.T.I.C. Art. 3.77, Secs. 2(1), 16(a), (b) (part).)
[Sections 1506.008-1506.050 reserved for expansion]
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 1506.051. GOVERNANCE OF POOL; BOARD MEMBERSHIP. (a)
The pool is governed by a board of directors.
(b) The board consists of nine members appointed by the
commissioner as follows:
(1) at least two, but not more than four, members must
be individuals who are affiliated with a health benefit plan issuer
authorized to write health benefit plans in this state;
(2) at least two of the members must be individuals or
the parents of individuals who are covered by the pool or are
reasonably expected to qualify for coverage by the pool; and
(3) the other members of the board may be selected from
individuals such as:
(A) a physician licensed to practice in this
state by the Texas State Board of Medical Examiners;
(B) a hospital administrator;
(C) an advanced nurse practitioner; or
(D) a representative of the public who is not:
(i) employed by or affiliated with an
insurance company or insurance plan, group hospital service
corporation, or health maintenance organization; or
(ii) licensed as, employed by, or
affiliated with a physician, hospital, or other health care
provider.
(c) For purposes of Subsection (b), an individual who is
required to register under Chapter 305, Government Code, because of
the individual's activities with respect to health benefit
plan-related matters is affiliated with a health benefit plan
issuer.
(d) An individual is not disqualified under Subsection
(b)(3)(D)(i) from representing the public if the individual's only
affiliation with an insurance company or insurance plan, group
hospital service corporation, or health maintenance organization
is as an insured or as an individual who has coverage through a plan
provided by the corporation or organization. (V.T.I.C. Art. 3.77,
Secs. 4(a), (b) (part), (c), (d).)
Sec. 1506.052. PRESIDING OFFICER. The commissioner shall
designate one member of the board to serve as presiding officer at
the pleasure of the commissioner. (V.T.I.C. Art. 3.77, Sec. 4(g).)
Sec. 1506.053. TERMS; VACANCY. (a) Members of the board
serve staggered six-year terms.
(b) The commissioner shall fill a vacancy on the board by
appointing, for the unexpired term, an individual who has the
appropriate qualifications to fill that position. (V.T.I.C. Art.
3.77, Secs. 4(b) (part), (e).)
Sec. 1506.054. PER DIEM; REIMBURSEMENT. A member of the
board is entitled to:
(1) a per diem in the amount provided by the General
Appropriations Act for state officials for each day the member
performs duties as a board member; and
(2) reimbursement of expenses incurred while
performing duties as a board member in the amount provided by the
General Appropriations Act for state officials. (V.T.I.C. Art.
3.77, Sec. 4(f).)
Sec. 1506.055. MEMBER'S IMMUNITY. (a) A member of the
board is not liable for an act or omission made in good faith in the
performance of powers and duties under this chapter.
(b) A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a). (V.T.I.C.
Art. 3.77, Sec. 4(h).)
Sec. 1506.056. ADJUSTMENTS. (a) The board may adjust
deductibles, the amounts of stop-loss coverage, and the periods
governing preexisting conditions under Section 1506.155 to
preserve the financial integrity of the pool.
(b) Not later than the 30th day after the date the board
makes an adjustment under this section, the board shall submit to
the commissioner a written report containing a description of and
the reasons for the adjustment. (V.T.I.C. Art. 3.77, Sec. 11(c).)
Sec. 1506.057. ANNUAL REPORT OF POOL'S ACTIVITIES. (a) Not
later than June 1 of each year, the board shall submit a report to
the governor, the lieutenant governor, the speaker of the house of
representatives, and the commissioner.
(b) The report must summarize the activities of the pool in
the calendar year preceding the year in which the report is
submitted and must include information relating to net written and
earned premiums, plan enrollment, administration expenses, and
paid and incurred losses. (V.T.I.C. Art. 3.77, Sec. 6(d).)
Sec. 1506.058. ADDITIONAL POWERS AND DUTIES. The
commissioner by rule may establish powers and duties of the board in
addition to those provided by this chapter. (V.T.I.C. Art. 3.77,
Sec. 8 (part).)
[Sections 1506.059-1506.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF POOL
Sec. 1506.101. PURPOSES OF POOL. (a) The purposes of the
pool are to:
(1) provide for access to quality health care at
minimum cost to the public;
(2) relieve the insurable population of the disruptive
cost of sharing coverage; and
(3) maximize reliance on strategies of managed care
proven by the private sector.
(b) The pool is not intended to diminish the availability of
traditional health care coverage to consumers who are eligible for
that coverage. (V.T.I.C. Art. 3.77, Secs. 1(c), (d).)
Sec. 1506.102. EMPLOYEES; COMMITTEES. (a) The pool may
employ and set the compensation of any persons necessary to assist
the pool in carrying out its responsibilities and functions.
(b) The pool may appoint appropriate legal, actuarial, and
other committees necessary to provide technical assistance in
operating the pool and performing any of the functions of the pool.
(V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.103. PROVIDING COVERAGE. (a) The pool may
provide health benefit coverage to an individual who is eligible
for that coverage under this chapter.
(b) The pool may issue health benefit coverage subject to
this chapter and the pool's plan of operation under Section
1506.201.
(c) The pool may issue additional types of health benefit
coverage to provide optional coverages that comply with applicable
provisions of state and federal law, including a Medicare
supplement benefit plan. (V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.104. CHARGES, FORMULAS, AND FORMS. (a) The pool
may establish appropriate rates, rate schedules, rate adjustments,
expense allowances, agents' referral fees, and claim reserve
formulas and perform actuarial functions appropriate to the
operation of the pool.
(b) The pool may adopt policy forms, endorsements, and
riders and applications for coverage. (V.T.I.C. Art. 3.77, Sec.
6(b) (part).)
Sec. 1506.105. PREMIUM RATES. (a) The pool may not charge
premium rates that are unreasonable in relation to the benefits
provided, the risk experience, and the reasonable expenses of
providing the coverage.
(b) Separate schedules of premium rates based on age, sex,
and geographic location may apply for individual risks.
(c) Premium rates and premium rate schedules may be adjusted
for appropriate risk factors, including age and variation in claim
costs. The pool may consider appropriate risk factors in
accordance with established actuarial and underwriting practices.
(d) The pool shall establish the standard risk rate. In
establishing the rate, the pool shall use reasonable actuarial
techniques and consider the premium rates charged by other health
benefit plan issuers offering health benefit coverage to
individuals. The rate must reflect anticipated experience and
expenses for health benefit coverage.
(e) Initial pool premium rates may not be less than 125
percent or greater than 150 percent of rates established as
applicable for individual standard rates. Subsequent premium rates
shall be established to provide fully for all of the expected costs
of claims, including recovery of prior losses, expenses of
operation, investment income from claim reserves, and any other
cost factors, subject to the limitations described in this
subsection. In no event may pool premium rates exceed 200 percent
of rates applicable to individual standard risks.
(f) The pool shall submit each rate and rate schedule to the
commissioner for approval. The pool may not use a rate or rate
schedule before the rate or schedule is approved by the
commissioner. In evaluating a rate or rate schedule of the pool,
the commissioner shall consider the factors provided by this
section. (V.T.I.C. Art. 3.77, Sec. 9.)
Sec. 1506.106. REINSURANCE. The pool may provide for
reinsurance on a facultative or treaty basis or on both facultative
and treaty bases. (V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.107. CONTRACTS. (a) The pool may enter into a
contract that is necessary to carry out this chapter, including,
with the approval of the commissioner, a contract with:
(1) a similar pool in another state for the joint
performance of common administrative functions; or
(2) another organization for the performance of
administrative functions.
(b) The pool may contract for stop-loss insurance for risks
incurred by the pool. (V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.108. LEGAL ACTION. (a) The pool may sue or be
sued.
(b) The pool may take any legal action necessary to:
(1) avoid payment of improper claims against the pool
or the coverage provided by or through the pool; or
(2) recover or collect amounts due the pool,
including:
(A) assessments due the pool;
(B) amounts erroneously or improperly paid by the
pool; and
(C) amounts paid by the pool as a mistake of fact
or law. (V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.109. COST CONTAINMENT. (a) The pool may provide
for and use cost containment measures and requirements, including
preadmission screening, the requirement of a second surgical
opinion, concurrent utilization review subject to Article 21.58A,
and individual case management, to make the coverage offered by the
pool more cost-effective.
(b) The pool may design, use, contract for, or otherwise
arrange for the delivery of cost-effective health care services,
including establishing or contracting with preferred provider
organizations and health maintenance organizations. (V.T.I.C.
Art. 3.77, Secs. 2(1), 6(b) (part).)
Sec. 1506.110. BORROWING. The pool may borrow money as
necessary to implement the purposes of the pool. (V.T.I.C. Art.
3.77, Sec. 6(b) (part).)
Sec. 1506.111. ADDITIONAL AUTHORITY. In addition to the
other powers granted to the pool under this chapter, the pool may
exercise any of the authority that a health benefit plan issuer
authorized to write health benefit plans in this state may exercise
under the law of this state. (V.T.I.C. Art. 3.77, Sec. 6(a).)
[Sections 1506.112-1506.150 reserved for expansion]
SUBCHAPTER D. POOL COVERAGE AND BENEFITS
Sec. 1506.151. MINIMUM POOL COVERAGE. (a) The pool shall
offer coverage consistent with major medical expense coverage to
each eligible individual who is not eligible for Medicare.
(b) The board, with the approval of the commissioner, shall
establish:
(1) the coverages to be provided by the pool;
(2) the applicable schedules of benefits; and
(3) any exclusions to coverage and other limitations.
(c) The benefits provisions of the pool's coverage must
include:
(1) all required or applicable definitions;
(2) a description of covered services required under
the pool;
(3) a list of any exclusions or limitations to
coverage; and
(4) the deductibles, coinsurance options, and
copayment options that are required or permitted. (V.T.I.C. Art.
3.77, Secs. 11(a), (b).)
Sec. 1506.152. ELIGIBILITY FOR COVERAGE. (a) An
individual who is a legally domiciled resident of this state is
eligible for coverage from the pool if the individual:
(1) provides to the pool evidence that the individual
maintained health benefit plan coverage for the preceding 18 months
with no gap in coverage longer than 63 days and with the most recent
coverage being provided through an employer-sponsored plan, church
plan, or government plan;
(2) provides to the pool evidence that the individual
maintained health benefit plan coverage under another state's
qualified Health Insurance Portability and Accountability Act
health program that was terminated because the individual did not
reside in that state and submits an application for pool coverage
not later than the 63rd day after the date the coverage described by
this subdivision was terminated; or
(3) has been a legally domiciled resident of this
state for the preceding 30 days, is a citizen of the United States
or has been a permanent resident of the United States for at least
three continuous years, and provides to the pool:
(A) a notice of rejection of, or refusal to
issue, substantially similar individual health benefit plan
coverage from a health benefit plan issuer, other than an insurer
that offers only stop-loss, excess loss, or reinsurance coverage,
if the rejection or refusal was for health reasons;
(B) certification from an agent or salaried
representative of a health benefit plan issuer that states that the
agent or salaried representative cannot obtain substantially
similar individual coverage for the individual from any health
benefit plan issuer that the agent or salaried representative
represents because, under the underwriting guidelines of the health
benefit plan issuer, the individual will be denied coverage as a
result of a medical condition of the individual;
(C) an offer to issue substantially similar
individual coverage only with conditional riders;
(D) a notice of refusal by a health benefit plan
issuer to issue substantially similar individual coverage except at
a rate exceeding the pool rate; or
(E) a diagnosis of the individual with one of the
medical or health conditions on the list adopted under Section
1506.154.
(b) Each dependent of an individual who is eligible for
coverage from the pool is also eligible for coverage from the pool.
(c) If an individual who obtains coverage from the pool
under Subsection (a) is a child, each parent, grandparent, brother,
sister, or child of that individual who resides with that
individual is also eligible for coverage from the pool.
(d) The board shall develop a form to be used for
certification under Subsection (a)(3)(B). Before it may be used,
the form must be approved by the commissioner. (V.T.I.C. Art. 3.77,
Secs. 2(6), (17), 10(a), (b), (c).)
Sec. 1506.153. INELIGIBILITY FOR COVERAGE.
Notwithstanding Section 1506.152, an individual is not eligible for
coverage from the pool if:
(1) on the date pool coverage is to take effect, the
individual has health benefit plan coverage from a health benefit
plan issuer or health benefit arrangement in effect;
(2) at the time the individual applies to the pool, the
individual is eligible for other health care benefits, including
benefits from the continuation of coverage under Title X,
Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C.
Section 1161 et seq.), as amended (COBRA), other than:
(A) coverage, including COBRA or other
continuation coverage or conversion coverage, maintained for any
preexisting condition waiting period under a pool policy;
(B) employer group coverage conditioned by a
limitation of the kind described by Section 1506.152(a)(3)(A) or
(C); or
(C) individual coverage conditioned by a
limitation described by Section 1506.152(a)(3)(C) or (D);
(3) within 12 months before the date the individual
applies to the pool, the individual terminated coverage in the
pool, unless the individual demonstrates a good faith reason for
the termination;
(4) the individual is confined in a county jail or
imprisoned in a state prison;
(5) any of the individual's premiums are paid for or
reimbursed under a government-sponsored program or by a government
agency or health care provider, other than as an otherwise
qualifying full-time employee of a government agency or health care
provider or as a dependent of such an employee;
(6) the individual's prior coverage with the pool was
terminated:
(A) during the 12-month period preceding the date
of application for nonpayment of premiums; or
(B) for fraud; or
(7) the individual is eligible for health benefit plan
coverage provided in connection with a policy, plan, or program
paid for or sponsored by an employer, even though the employer
coverage is declined. (V.T.I.C. Art. 3.77, Secs. 10(e), (h)
(part).)
Sec. 1506.154. LIST OF COVERED CONDITIONS. (a) The board
shall adopt a list of medical or health conditions for which an
individual is eligible for pool coverage under Section
1506.152(a)(3)(E) without applying for health benefit plan
coverage.
(b) The board may amend the list as appropriate. (V.T.I.C.
Art. 3.77, Sec. 6(c) (part).)
Sec. 1506.155. PREEXISTING CONDITIONS. (a) Except as
provided by this section and Section 1506.056, pool coverage
excludes charges or expenses incurred before the first anniversary
of the effective date of coverage with regard to any condition for
which medical advice, care, or treatment was recommended or
received during the six-month period preceding the effective date
of coverage.
(b) The exclusion provided by Subsection (a) does not apply
to an individual who:
(1) was continuously covered for a period of at least
12 months, excluding any waiting period, by health benefit plan
coverage that terminated not earlier than the 63rd day before the
effective date of coverage under the pool; and
(2) applied for pool coverage not later than the 63rd
day after the date the health benefit plan coverage described by
Subdivision (1) terminated.
(c) If an individual was covered by health benefit plan
coverage that was in effect at any time during the 12-month period
preceding the effective date of the individual's coverage under the
pool, the pool shall subtract from the exclusion period required
under Subsection (a) the period that the individual was covered
under that health benefit plan and any waiting period that applied
before that health benefit plan coverage became effective.
(V.T.I.C. Art. 3.77, Sec. 12.)
Sec. 1506.156. BENEFIT REDUCTION. The pool shall reduce
benefits otherwise payable under pool coverage by:
(1) the total amount paid or payable through any other
health benefit plan or health benefit arrangement; and
(2) the total amount of hospital or medical expense
benefits paid or payable under:
(A) workers' compensation coverage;
(B) automobile insurance, regardless of whether
provided on the basis of fault or no fault; or
(C) a state or federal law or program. (V.T.I.C.
Art. 3.77, Sec. 11(d).)
Sec. 1506.157. RECOVERY OF CERTAIN AMOUNTS. (a) The pool
has a cause of action against an eligible individual for the
recovery of the amount of benefits paid that are not for covered
expenses.
(b) Benefits due from the pool may be reduced or refused as
an offset against an amount recoverable under this section.
(V.T.I.C. Art. 3.77, Sec. 11(e).)
Sec. 1506.158. TERMINATION OF POOL COVERAGE. (a) An
individual's pool coverage ends:
(1) on the date the individual ceases to be a legally
domiciled resident of this state, unless the individual:
(A) is a student younger than 25 years of age and
is financially dependent on the parent;
(B) is a child for whom an individual may be
obligated to pay child support; or
(C) is a child who is disabled and dependent on
the parent, regardless of the age of the child;
(2) on the date the individual requests coverage to
end;
(3) on the date the individual covered by the pool
dies;
(4) on the date state law requires cancellation of the
coverage;
(5) at the option of the pool, on the 31st day after
the date the pool sends to the individual any inquiry concerning the
individual's eligibility, including an inquiry concerning the
individual's residence, to which the individual does not reply;
(6) on the 31st day after the date a premium payment
for pool coverage becomes due if the payment is not made before that
day; or
(7) at the time the individual ceases to meet the
eligibility requirements for coverage.
(b) Notwithstanding Subsection (a), the coverage of an
individual who ceases to meet the eligibility requirements for
coverage terminates on the earlier of:
(1) the first premium due date after the date the pool
determines the individual does not meet the eligibility
requirements; or
(2) the first day of the first month after the month in
which the pool determines the individual does not meet the
eligibility requirements.
(c) The pool has the sole discretion to determine that an
individual does not meet the eligibility requirements for coverage.
(d) An individual may maintain pool coverage for the period
the individual is satisfying a preexisting waiting period under
another health benefit plan or health benefit arrangement intended
to replace the pool coverage. (V.T.I.C. Art. 3.77, Secs. 10(d),
(f), (g).)
Sec. 1506.159. PROHIBITION ON ARRANGEMENT OR ATTEMPTED
ARRANGEMENT OF CERTAIN POOL COVERAGE; PENALTY. (a) A health
benefit plan issuer, agent, third-party administrator, or other
person authorized or licensed under this code may not arrange or
assist in, or attempt to arrange or assist in, the application for
coverage from or placement in the pool of an individual who is not
eligible under Section 1506.153(7) for coverage from the pool for
the purpose of separating the person from health benefit plan
coverage offered or provided in connection with employment that
would be available to the person as an employee or a dependent of an
employee.
(b) A violation of this section is an unfair method of
competition and an unfair or deceptive act or practice under
Chapter 541. (V.T.I.C. Art. 3.77, Sec. 10(h) (part).)
[Sections 1506.160-1506.200 reserved for expansion]
SUBCHAPTER E. OPERATION OF POOL
Sec. 1506.201. PLAN OF OPERATION. (a) Operation and
management of the pool is governed by a plan of operation. The plan
of operation includes the articles, bylaws, and operating rules of
the pool that are adopted by the board.
(b) The plan of operation must ensure the fair, reasonable,
and equitable administration of the pool.
(c) In addition to complying with the other requirements of
this chapter, the plan of operation must include procedures for:
(1) operation of the pool;
(2) selection of an administrator as provided by
Section 1506.202;
(3) creation of a fund, under management of the board,
for administrative expenses;
(4) handling, accounting, and auditing of money and
other assets of the pool;
(5) development and implementation of a program to:
(A) publicize the existence of the pool, the
eligibility requirements for coverage under the pool, and
enrollment procedures; and
(B) foster public awareness of the pool;
(6) creation of a grievance committee to review
complaints presented by applicants for coverage from the pool and
individuals who are covered by the pool; and
(7) other matters as may be necessary and proper for
the execution of the board's powers, duties, and obligations under
this chapter.
(d) The board shall amend the plan of operation as necessary
to carry out this chapter. An amendment to the plan of operation
must be approved by the commissioner before it becomes a part of the
plan. (V.T.I.C. Art. 3.77, Secs. 2(15), 5(a) (part), (b), (f).)
Sec. 1506.202. POOL ADMINISTRATOR. (a) The board may
select one or more health benefit plan issuers or a third-party
administrator authorized by the department to administer the pool.
The selection must be made under a competitive bidding process in
accordance with the plan of operation.
(b) The board shall establish criteria for evaluating the
bids submitted under this section. The criteria must include:
(1) the bidder's proven ability to handle individual
health benefit plans;
(2) the bidder's efficiency of claims paying
procedures;
(3) an estimate of total charges for administering the
pool;
(4) the bidder's ability to administer the pool in a
cost-efficient manner; and
(5) the bidder's financial condition and stability.
(V.T.I.C. Art. 3.77, Secs. 7(a), (b).)
Sec. 1506.203. ADMINISTRATOR'S TERM; SUCCEEDING TERM. (a)
A person selected as a pool administrator serves in that capacity
for a three-year term beginning on the date the board issues its
order making the selection.
(b) Not later than one year before the expiration of a pool
administrator's term, the board shall invite all health benefit
plan issuers, including the pool administrator, to submit bids to
serve as a pool administrator for the succeeding administration
period. The selection of the succeeding pool administrator must be
made not later than the sixth calendar month preceding the month in
which the pool administrator's term expires. (V.T.I.C. Art. 3.77,
Secs. 7(c), (d).)
Sec. 1506.204. ADMINISTRATOR'S FUNCTIONS. (a) A pool
administrator shall perform the functions relating to the pool that
are assigned to the administrator.
(b) The assigned functions may include:
(1) performing eligibility and administrative claims
payment functions for the pool;
(2) establishing a billing procedure for collection of
premiums from individuals covered by the pool;
(3) performing functions necessary to ensure timely
payment of benefits to individuals covered by the pool, including:
(A) providing information relating to the proper
manner of submitting a claim for benefits to the pool and
distributing claim forms; and
(B) evaluating the eligibility of each claim for
payment by the pool;
(4) submitting regular reports to the board relating
to the operation of the pool; and
(5) determining after each calendar year the net
written and earned premiums, expenses of administration, and paid
and incurred losses of the pool for that calendar year and reporting
that information to the board and the commissioner.
(c) The board shall determine the form, content, and time of
submission of the reports required under Subsection (b)(4).
(d) The commissioner shall prescribe the forms to be used to
report the information under Subsection (b)(5).
(e) The board shall determine the times at which a pool
administrator is to perform the billing functions for the pool.
(V.T.I.C. Art. 3.77, Secs. 7(e), (g), (h).)
Sec. 1506.205. PAYMENTS TO ADMINISTRATOR. (a) The pool
shall pay a pool administrator for the administrator's expenses
incurred in performing duties and functions as provided by the plan
of operation.
(b) Except as provided by Subsection (c), the total amount
of administrative costs and fees paid in a calendar year to all pool
administrators may not exceed 12.5 percent of the gross premium
receipts of the pool for the calendar year.
(c) The commissioner may approve payment of a higher amount,
not to exceed 15 percent of the gross premium receipts of the pool
for the calendar year, if the commissioner determines that the
higher amount is necessary to pay the administrative costs and fees
of the pool. (V.T.I.C. Art. 3.77, Sec. 7(f).)
[Sections 1506.206-1506.250 reserved for expansion]
SUBCHAPTER F. ASSESSMENTS FOR OPERATION OF POOL
Sec. 1506.251. INTERIM ASSESSMENTS. (a) The board may
assess health benefit plan issuers, including making advance
interim assessments, as reasonable and necessary for the pool's
organizational and interim operating expenses.
(b) The board shall credit an interim assessment as an
offset against any regular assessment that is due after the end of
the fiscal year. (V.T.I.C. Art. 3.77, Sec. 13(a).)
Sec. 1506.252. DETERMINATION OF NET LOSS. (a) After the
end of each fiscal year, the board shall determine for the preceding
calendar year any net loss of the pool, including administrative
expenses and incurred losses, and report the net loss to the
commissioner.
(b) In determining the net loss, the board shall take into
account investment income and other appropriate gains and losses.
(V.T.I.C. Art. 3.77, Sec. 13(c) (part).)
Sec. 1506.253. ASSESSMENTS TO COVER NET LOSSES. (a) The
board shall recover any net loss of the pool by assessing each
health benefit plan issuer an amount determined annually by the
board based on information in annual statements and other reports
required by and filed with the board.
(b) The amount of a health benefit plan issuer's assessment
is computed by multiplying the total amount required to be assessed
against all health benefit plan issuers by a number computed by
dividing:
(1) the gross premiums collected by the issuer for
health benefit plans in this state during the preceding calendar
year; by
(2) the gross premiums collected by all issuers for
health benefit plans in this state during the preceding calendar
year.
(c) For purposes of Subsection (b), gross health benefit
plan premiums do not include Medicare supplement benefit plan
premiums subject to Chapter 1652 or small employer health benefit
plan premiums subject to Subchapters A-H, Chapter 1501. (V.T.I.C.
Art. 3.77, Secs. 13(c) (part), (d) (part).)
Sec. 1506.254. ASSESSMENT DUE DATE; INTEREST. (a) An
assessment is due on the date specified by the board that is not
earlier than the 30th day after the date written notice of the
assessment is transmitted to the health benefit plan issuer.
(b) Interest accrues on the unpaid amount of an assessment
at a rate equal to the prime lending rate, as published in the most
recent issue of the Wall Street Journal and determined as of the
date the assessment becomes delinquent, plus three percent.
(V.T.I.C. Art. 3.77, Sec. 13(d) (part).)
Sec. 1506.255. ABATEMENT OR DEFERMENT OF ASSESSMENT. (a) A
health benefit plan issuer may petition the commissioner for an
abatement or deferment of all or part of an assessment imposed by
the board. The commissioner may abate or defer all or part of the
assessment if the commissioner determines that payment of the
assessment would endanger the ability of the health benefit plan
issuer to fulfill its contractual obligations.
(b) If all or part of an assessment against a health benefit
plan issuer is abated or deferred, the amount of the abatement or
deferment shall be assessed against the other health benefit plan
issuers in a manner consistent with the method for computing
assessments under this subchapter.
(c) A health benefit plan issuer receiving an abatement or
deferment under this section remains liable to the pool for the
deficiency. (V.T.I.C. Art. 3.77, Sec. 13(e).)
Sec. 1506.256. USE OF EXCESS FROM ASSESSMENTS. (a) In this
section, "future losses" includes reserves for claims incurred but
not reported.
(b) If the total amount of the assessments exceeds the
pool's actual losses and administrative expenses, the board shall
deposit the excess in an interest-bearing account and shall use
money in that account to offset future losses or to reduce future
assessments. (V.T.I.C. Art. 3.77, Sec. 13(b).)
Sec. 1506.257. COLLECTION OF ASSESSMENTS. The pool may
recover or collect assessments made under this subchapter.
(V.T.I.C. Art. 3.77, Sec. 6(b) (part).)
Sec. 1506.258. PROCEDURES, CRITERIA, AND FORMS. The
commissioner by rule shall provide the procedures, criteria, and
forms necessary to implement, collect, and deposit assessments
under this subchapter. (V.T.I.C. Art. 3.77, Sec. 8 (part).)
SECTION 4. SUBTITLE I, TITLE 8, INSURANCE CODE. Title 8,
Insurance Code, is amended by adding Subtitle I to read as follows:
SUBTITLE I. SPECIALIZED COVERAGES
CHAPTER 1651. LONG-TERM CARE BENEFIT PLANS
CHAPTER 1652. MEDICARE SUPPLEMENT BENEFIT PLANS
SUBTITLE I. SPECIALIZED COVERAGES
CHAPTER 1651. LONG-TERM CARE BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1651.001. APPLICABILITY OF CHAPTER
Sec. 1651.002. EXEMPTIONS
Sec. 1651.003. LONG-TERM CARE BENEFIT PLAN DEFINED
Sec. 1651.004. RULES
Sec. 1651.005. CONSTRUCTION OF CHAPTER
Sec. 1651.006. CONFLICTS WITH OTHER PROVISIONS
[Sections 1651.007-1651.050 reserved for expansion]
SUBCHAPTER B. BENEFIT PLAN STANDARDS
Sec. 1651.051. MINIMUM STANDARDS
Sec. 1651.052. PREEXISTING CONDITIONS
Sec. 1651.053. LOSS RATIO STANDARDS
Sec. 1651.054. NOTICE OF RIGHT TO REFUND
Sec. 1651.055. RATE STABILIZATION
CHAPTER 1651. LONG-TERM CARE BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1651.001. APPLICABILITY OF CHAPTER. (a)
Notwithstanding Section 101.053(b)(5) and subject to Subsection
(b), this chapter applies only to:
(1) an individual long-term care benefit plan that is
delivered or issued for delivery in this state;
(2) a group long-term care benefit plan that is:
(A) delivered or issued for delivery in this
state; and
(B) issued to an eligible group as described by
Subchapter B, Chapter 1251;
(3) a certificate issued under a group long-term care
benefit plan issued to an eligible group as described by Subchapter
B, Chapter 1251, if the certificate is delivered or issued for
delivery in this state, regardless of the place where the plan is
delivered or issued for delivery; and
(4) an evidence of coverage delivered or issued for
delivery in this state for long-term care.
(b) This chapter applies only to a policy, certificate, or
evidence of coverage that is issued by:
(1) a capital stock insurance company, including a
life, health and accident, or general casualty insurance company;
(2) a mutual life insurance company;
(3) a mutual assessment life insurance company,
including a statewide mutual assessment corporation, local mutual
aid association, and burial association;
(4) a mutual or mutual assessment association,
including an association subject to Section 887.101;
(5) a mutual insurance company other than a life
insurance company;
(6) a mutual or natural premium life or casualty
insurance company;
(7) a fraternal benefit society;
(8) a Lloyd's plan insurer;
(9) a reciprocal or interinsurance exchange;
(10) a nonprofit medical, hospital, or dental service
corporation, including a company subject to Chapter 842;
(11) a stipulated premium company;
(12) a health maintenance organization under Chapter
843; or
(13) another insurer required to be licensed by the
department. (V.T.I.C. Art. 3.70-12, Secs. 1(a), (b), 2(2), (3).)
Sec. 1651.002. EXEMPTIONS. This chapter does not apply to:
(1) a certificate that is delivered or issued for
delivery in this state under a single employer or labor union group
policy that is delivered or issued for delivery outside this state;
or
(2) a benefit plan that is not advertised, marketed,
or offered as a long-term care benefit plan or nursing home benefit
plan. (V.T.I.C. Art. 3.70-12, Secs. 1(d), (e).)
Sec. 1651.003. LONG-TERM CARE BENEFIT PLAN DEFINED. (a) In
this chapter, "long-term care benefit plan" means an insurance
policy or group certificate, or rider to the policy or certificate,
or evidence of coverage issued by a health maintenance organization
subject to Chapter 843, that is advertised or marketed as
providing, or offered or designed to provide, coverage for not less
than 12 consecutive months for each covered individual on an
expense-incurred, indemnity, prepaid, or other basis for one or
more necessary or medically necessary diagnostic, preventive,
therapeutic, rehabilitative, maintenance, or personal care
services provided in a setting other than an acute care unit of a
hospital.
(b) The term includes a plan or rider, other than a group or
individual annuity or life insurance policy, that provides for
payment of benefits based on cognitive impairment or the loss of
functional capacity.
(c) The term does not include an insurance policy, group
certificate, or evidence of coverage that is offered primarily to
provide:
(1) basic Medicare supplement coverage, basic
hospital expense coverage, basic medical-surgical expense
coverage, hospital confinement indemnity coverage, major medical
expense coverage, disability income protection coverage,
accident-only coverage, specified disease or specified accident
coverage, or limited benefit health coverage; or
(2) basic or single health care services. (V.T.I.C.
Art. 3.70-12, Sec. 2(4).)
Sec. 1651.004. RULES. (a) In addition to other rules
required or authorized by this chapter, the department may adopt
reasonable rules that are necessary and proper to carry out this
chapter.
(b) Rules adopted under this section must include
requirements no less favorable than the minimum standards for
long-term care benefit plans adopted in any model laws or
regulations relating to minimum standards for benefits for
long-term care benefit plans and in accordance with all applicable
federal law. (V.T.I.C. Art. 3.70-12, Sec. 7.)
Sec. 1651.005. CONSTRUCTION OF CHAPTER. This chapter may
not be construed to enlarge the powers of an entity listed in
Section 1651.001. (V.T.I.C. Art. 3.70-12, Sec. 1(c).)
Sec. 1651.006. CONFLICTS WITH OTHER PROVISIONS. This
chapter prevails to the extent of any conflict with another
provision of this code. (V.T.I.C. Art. 3.70-12, Sec. 6 (part).)
[Sections 1651.007-1651.050 reserved for expansion]
SUBCHAPTER B. BENEFIT PLAN STANDARDS
Sec. 1651.051. MINIMUM STANDARDS. (a) The commissioner by
rule shall establish:
(1) specific standards for provisions of long-term
care benefit plans; and
(2) standards for full and fair disclosure setting
forth the manner, content, and required disclosures for the
marketing and sale of those benefit plans.
(b) The standards are in addition to and must be in
accordance with:
(1) applicable laws of this state, including Chapter
1201;
(2) applicable federal law; and
(3) any rules, regulations, and standards required by
federal law.
(c) The standards must address:
(1) terms of renewability;
(2) initial and subsequent conditions of eligibility;
(3) nonduplication of coverage;
(4) coverage of dependents;
(5) coverage of parents of the insured or enrollee and
parents of the spouse of the insured or enrollee;
(6) preexisting conditions;
(7) termination of insurance;
(8) continuation or conversion;
(9) probationary periods;
(10) benefit limitations, exceptions, and reductions;
(11) elimination periods;
(12) requirements for replacement;
(13) recurrent conditions;
(14) definitions of terms; and
(15) inflation protection.
(d) The standards may:
(1) establish standard claim forms;
(2) establish standard benefits for:
(A) skilled nursing care;
(B) intermediate nursing care;
(C) custodial care; and
(D) home health care;
(3) require coverage for skilled nursing care,
intermediate nursing care, and custodial care to facilitate
comparison among long-term care products;
(4) require long-term care benefit plan issuers to
offer coverage for home health care benefits;
(5) require that rates may not be increased for a
covered individual unless:
(A) the covered individual requests and receives
a change of benefits; or
(B) the increase applies to all members of the
class to which the individual has been assigned by the benefit plan
issuer; or
(6) require a benefit plan issuer to pay for a service
covered by the benefit plan that is provided by an institution
licensed to provide that service under Chapter 242, Health and
Safety Code.
(e) Rules adopted under this section must include
requirements no less favorable than the minimum standards of
benefits for long-term care benefit plans adopted in any model laws
or regulations relating to minimum standards for benefits for
long-term care benefit plans and required by federal law.
(V.T.I.C. Art. 3.70-12, Secs. 3(a), (b), (c), (d).)
Sec. 1651.052. PREEXISTING CONDITIONS. (a) A long-term
care benefit plan may not contain a provision that denies coverage
for a claim for losses incurred more than six months after the
effective date of coverage for a preexisting condition.
(b) A long-term care benefit plan may not define a
preexisting condition more restrictively than as a condition for
which medical advice was given or treatment was recommended by or
received from a physician within six months before the effective
date of coverage.
(c) The commissioner by rule may:
(1) establish additional reasonable regulation of
preexisting conditions consistent with this section and Section
1651.051; and
(2) extend a limitation period specified in this
section as to a specific age group category in a specific benefit
plan form if the commissioner finds that the extension is in the
best interest of the public.
(d) Rules adopted under this section must comply with
Section 1651.051(e). (V.T.I.C. Art. 3.70-12, Secs. 3(d), (e).)
Sec. 1651.053. LOSS RATIO STANDARDS. (a) A long-term care
benefit plan must provide a benefit plan holder with benefits that
are reasonable in relation to the rates charged.
(b) The commissioner shall adopt reasonable rules to
establish minimum standards for loss ratios of long-term care
benefit plans on the basis of:
(1) incurred claims experience;
(2) earned premiums;
(3) the period for which rates are computed to provide
coverage;
(4) experienced and projected trends;
(5) concentration of experience within early benefit
plan duration;
(6) expected claim fluctuations;
(7) experience refunds;
(8) adjustments;
(9) dividends;
(10) renewability features;
(11) all relevant expense factors;
(12) interest;
(13) reserves;
(14) mix of business by risk classification; and
(15) product features otherwise affecting claims
experience.
(c) Annually, each entity providing a long-term care
benefit plan in this state shall:
(1) file its rates, rating schedule, and supporting
documentation to demonstrate compliance with the applicable loss
ratio standards of this state; and
(2) comply with any other filing requirement adopted
by the commissioner relating to loss ratios.
(d) Rules adopted under this section shall be no less
favorable to the holders of long-term care benefit plans than any
model laws, rules, and regulations adopted in connection with
minimum standards for benefits for long-term care benefit plans.
(V.T.I.C. Art. 3.70-12, Sec. 4.)
Sec. 1651.054. NOTICE OF RIGHT TO REFUND. (a) In this
section, "applicant" means:
(1) in the case of an individual long-term care
benefit plan, the individual who seeks to contract for insurance or
other health benefits; and
(2) in the case of a group long-term care benefit plan,
the proposed certificate holder.
(b) A long-term care benefit plan must have a notice
prominently printed on the first page of or attached to the benefit
plan document.
(c) The notice must state in substance that, if the
applicant is not satisfied for any reason after examining the
benefit plan document, the applicant is entitled to:
(1) return the document not later than the 30th day
after the date of its delivery; and
(2) have any premium refunded.
(d) The long-term care benefit plan issuer shall pay in a
timely manner the refund directly to the individual or entity that
paid the premium. (V.T.I.C. Art. 3.70-12, Secs. 2(1), 5.)
Sec. 1651.055. RATE STABILIZATION. (a) The commissioner
shall adopt rules to stabilize long-term care premium rates by:
(1) ensuring that:
(A) initial rates for long-term care benefit plan
forms are adequate; and
(B) any rate schedule increases for long-term
care benefit plans made after issuance of the plans are justified,
adequate, and reasonable in relation to benefits provided to plan
holders;
(2) requiring any appropriate plan terms;
(3) imposing penalties on insurers or other entities
subject to this chapter that violate a rule adopted under this
section; and
(4) protecting plan holders affected by a rate
schedule increase.
(b) Except as provided by this subsection, the commissioner
shall adopt rules under this section that are consistent with
nationally recognized models relating to the stabilization of
long-term care premium rates that existed on January 1, 2001. The
commissioner may adopt rules consistent with any of those models as
they are amended after January 1, 2001. The commissioner shall
adopt rules under this subsection that:
(1) to the extent possible, contribute to the
uniformity of state laws; and
(2) protect consumers.
(c) In adopting rules under this section, the commissioner
may exempt long-term care benefit plans from the requirements of
Sections 1651.053(a), (b), and (d). (V.T.I.C. Art. 3.70-12, Sec.
5A.)
CHAPTER 1652. MEDICARE SUPPLEMENT BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1652.001. DEFINITIONS
Sec. 1652.002. MEDICARE SUPPLEMENT BENEFIT PLAN
Sec. 1652.003. APPLICABILITY OF CHAPTER
Sec. 1652.004. CONSTRUCTION OF CHAPTER
Sec. 1652.005. RULES NECESSARY FOR CERTIFICATION
[Sections 1652.006-1652.050 reserved for expansion]
SUBCHAPTER B. BENEFITS
Sec. 1652.051. MINIMUM STANDARDS
Sec. 1652.052. MINIMUM STANDARDS FOR BENEFITS AND CLAIM
PAYMENTS
Sec. 1652.053. DUPLICATE BENEFITS PROHIBITED
Sec. 1652.054. BASIC PLAN
Sec. 1652.055. ADDITIONAL BENEFITS
Sec. 1652.056. COVERAGE FOR MAMMOGRAPHY
Sec. 1652.057. WAIVER OF WAITING PERIOD
Sec. 1652.058. COVERAGE FOR PREEXISTING CONDITION
[Sections 1652.059-1652.100 reserved for expansion]
SUBCHAPTER C. LOSS RATIO STANDARDS
Sec. 1652.101. LOSS RATIO STANDARDS
Sec. 1652.102. FILING REQUIREMENTS
Sec. 1652.103. REVIEW OF PREMIUM INCREASES
Sec. 1652.104. BENEFIT CHANGES
Sec. 1652.105. REPORTING LOSS RATIO INFORMATION TO SECRETARY
OF HEALTH AND HUMAN SERVICES
[Sections 1652.106-1652.150 reserved for expansion]
SUBCHAPTER D. CONSUMER INFORMATION AND NOTICE
Sec. 1652.151. RULES RELATING TO DISCLOSURE
Sec. 1652.152. OUTLINE OF COVERAGE
Sec. 1652.153. INFORMATIONAL BROCHURE
Sec. 1652.154. NOTICE RELATING TO OTHER TYPES OF COVERAGE
Sec. 1652.155. RIGHT TO RETURN FOR REFUND; NOTICE
Sec. 1652.156. ADVERTISING FILING REQUIREMENTS
[Sections 1652.157-1652.200 reserved for expansion]
SUBCHAPTER E. AGENTS
Sec. 1652.201. INFORMATION PROVIDED TO AGENTS
Sec. 1652.202. PERMITTED COMPENSATION ARRANGEMENTS
CHAPTER 1652. MEDICARE SUPPLEMENT BENEFIT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1652.001. DEFINITIONS. In this chapter:
(1) "Applicant" means:
(A) an individual who seeks to contract for
insurance or other health benefits under an individual Medicare
supplement benefit plan; or
(B) the proposed certificate holder of a group
Medicare supplement benefit plan.
(2) "Approved regulatory program" means a state
regulatory program that complies with the requirements of Section
1882, Social Security Act (42 U.S.C. Section 1395ss).
(3) "Medicare" means the Health Insurance for the Aged
Act (42 U.S.C. Section 1395 et seq.), as amended. (V.T.I.C. Art.
3.74, Secs. 1(b)(1), (4); New.)
Sec. 1652.002. MEDICARE SUPPLEMENT BENEFIT PLAN. (a)
"Medicare supplement benefit plan" means a group or individual
policy of accident and health insurance, a subscriber contract of a
group hospital service corporation operating under Chapter 842, or,
to the extent required by federal law, an evidence of coverage
issued by a health maintenance organization operating under Chapter
843 that is advertised, marketed, or designed primarily as a
supplement to reimbursements under Medicare for the hospital,
medical, or surgical expenses of an individual eligible for
Medicare.
(b) A policy, contract, subscriber contract, or evidence of
coverage is not considered to be a Medicare supplement benefit plan
if it is:
(1) a policy, contract, subscriber contract, or
evidence of coverage of one or more employers or labor
organizations, or of the trustees of a fund established by one or
more employers or labor organizations, or a combination, for
employees or former employees, or a combination, or for members or
former members, or a combination, of the labor organizations;
(2) a policy or health care benefit plan, including a
policy or contract of group insurance, a group contract of a group
hospital service corporation operating under Chapter 842, or a
group evidence of coverage issued by a health maintenance
organization operating under Chapter 843 that is not marketed or
held to be a Medicare supplement benefit plan; or
(3) an individual or group evidence of coverage issued
in accordance with a contract under Section 1833 or 1876, Social
Security Act (42 U.S.C. Section 1395l or 1395mm), by a health
maintenance organization operating under Chapter 843.
(c) The commissioner by rule may modify the definition of
"Medicare supplement benefit plan" provided by Subsection (a) to
the extent necessary for this state to qualify as a state with an
approved regulatory program. (V.T.I.C. Art. 3.74, Sec. 1(b)(3).)
Sec. 1652.003. APPLICABILITY OF CHAPTER. This chapter
applies to an individual or group Medicare supplement benefit plan
delivered or issued for delivery in this state and, regardless of
the place where the plan was delivered or issued for delivery, a
certificate that was issued under a group Medicare supplement
benefit plan and delivered or issued for delivery in this state, if
the plan or certificate is issued by:
(1) a capital stock insurance company, including a
life, health and accident, and general casualty insurance company;
(2) a mutual life insurance company;
(3) a mutual assessment life insurance company,
including a statewide mutual assessment company, local mutual aid
association, and burial association;
(4) a mutual or mutual assessment association of any
kind, including an association subject to Section 887.102;
(5) a mutual insurance company other than a life
insurance company;
(6) a mutual or natural premium life or casualty
insurance company;
(7) a fraternal benefit society;
(8) a Lloyd's plan;
(9) a reciprocal or interinsurance exchange;
(10) a nonprofit hospital, medical, or dental service
corporation, including a corporation operating under Chapter 842;
(11) a stipulated premium company;
(12) another insurer that by law is required to be
authorized by the department; or
(13) a health maintenance organization operating
under Chapter 843, to the extent required by federal law. (V.T.I.C.
Art. 3.74, Secs. 1(a) (part), (b)(2).)
Sec. 1652.004. CONSTRUCTION OF CHAPTER. (a) This chapter
may not be construed to enlarge the powers of an entity described by
Section 1652.003.
(b) This chapter controls to the extent of any conflict with
another provision of this code. (V.T.I.C. Art. 3.74, Secs. 1(a)
(part), 7 (part).)
Sec. 1652.005. RULES NECESSARY FOR CERTIFICATION. In
addition to other rules required or authorized by this chapter, the
commissioner shall adopt reasonable rules necessary and proper to
carry out this chapter, including rules adopted in accordance with
federal law relating to the regulation of Medicare supplement
benefit plan coverage that are necessary for this state to obtain or
retain certification as a state with an approved regulatory
program. (V.T.I.C. Art. 3.74, Sec. 10.)
[Sections 1652.006-1652.050 reserved for expansion]
SUBCHAPTER B. BENEFITS
Sec. 1652.051. MINIMUM STANDARDS. (a) The commissioner
shall adopt reasonable rules to establish specific standards for
provisions in Medicare supplement benefit plans and standards for
facilitating comparisons of different Medicare supplement benefit
plans. The standards are in addition to and must be in accordance
with:
(1) applicable laws of this state, including Chapters
842 and 1201;
(2) applicable federal law, rules, regulations, and
standards; and
(3) any model rules and regulations required by
federal law, including Section 1882, Social Security Act (42 U.S.C.
Section 1395ss).
(b) The standards may include provisions relating to:
(1) terms of renewability;
(2) initial and subsequent conditions of eligibility;
(3) nonduplication of coverage;
(4) probationary periods;
(5) benefit limitations, exceptions, and reductions;
(6) elimination periods;
(7) requirements for replacement;
(8) recurrent conditions;
(9) definitions of terms; and
(10) exclusions required by state or federal law.
(c) The commissioner may adopt reasonable rules that
specifically prohibit benefit plan provisions that:
(1) are not otherwise specifically authorized by
statute; and
(2) the commissioner determines are unjust, unfair, or
unfairly discriminatory to a person who is covered or proposed for
coverage.
(d) Rules adopted under this section must include
requirements that are at least equal to those required by federal
law, rules, regulations, and standards, including Section 1882,
Social Security Act (42 U.S.C. Section 1395ss). (V.T.I.C. Art.
3.74, Secs. 2(c), (d), (f).)
Sec. 1652.052. MINIMUM STANDARDS FOR BENEFITS AND CLAIM
PAYMENTS. (a) The commissioner shall adopt reasonable rules to
establish minimum standards for benefits and claim payments under
Medicare supplement benefit plans.
(b) The standards for benefits and claim payments must
include the requirements for certification of Medicare supplement
benefit plans prescribed by Section 1882, Social Security Act (42
U.S.C. Section 1395ss). (V.T.I.C. Art. 3.74, Sec. 3.)
Sec. 1652.053. DUPLICATE BENEFITS PROHIBITED. A Medicare
supplement benefit plan or certificate in force in this state may
not contain benefits that duplicate benefits provided by Medicare.
(V.T.I.C. Art. 3.74, Sec. 2(a).)
Sec. 1652.054. BASIC PLAN. An entity described by Section
1652.003 that offers for sale in this state a Medicare supplement
benefit plan must offer a basic Medicare supplement benefit plan
that:
(1) provides only those benefits common to all
Medicare supplement benefit plans; and
(2) meets but does not exceed the minimum standards of
benefits for Medicare supplement benefit plans adopted by the
commissioner and authorized by Section 1882, Social Security Act
(42 U.S.C. Section 1395ss). (V.T.I.C. Art. 3.74, Sec. 2(b)
(part).)
Sec. 1652.055. ADDITIONAL BENEFITS. (a) In addition to the
basic Medicare supplement benefit plan described by Section
1652.054, an entity may offer additional Medicare supplement
benefit plans for sale in this state.
(b) The combination of benefits provided by an additional
plan must conform to one of the benefit packages adopted by the
commissioner and authorized by Section 1882, Social Security Act
(42 U.S.C. Section 1395ss).
(c) The commissioner by rule shall provide for the approval
of new or innovative benefits that may be provided in a plan other
than the basic plan and that otherwise comply with this subchapter.
The benefits must:
(1) be offered in a manner consistent with the goal of
Medicare supplement benefit plan simplification; and
(2) meet the requirements prescribed by Section 1882,
Social Security Act (42 U.S.C. Section 1395ss). (V.T.I.C. Art.
3.74, Sec. 2(b) (part).)
Sec. 1652.056. COVERAGE FOR MAMMOGRAPHY. (a) In this
section, "low-dose mammography" means the x-ray examination of the
breast using equipment dedicated specifically for mammography,
including the x-ray tube, filter, compression device, screens,
films, and cassettes, with an average radiation exposure delivery
of less than one rad mid-breast, with two views for each breast.
(b) Each Medicare supplement benefit plan must include
coverage for an annual screening by low-dose mammography for the
presence of occult breast cancer.
(c) The coverage for the annual screening may not be less
favorable than coverage for other radiological examinations and
must be subject to the same dollar limits, deductibles, and
coinsurance factors. (V.T.I.C. Art. 3.74, Sec. 3A.)
Sec. 1652.057. WAIVER OF WAITING PERIOD. (a) An entity
that delivers or issues for delivery in this state a Medicare
supplement benefit plan or certificate that replaces a Medicare
supplement benefit plan or certificate shall give credit for the
satisfaction or partial satisfaction of any waiting period,
elimination period, or probationary period for a preexisting
condition that has been satisfied under the plan being replaced.
(b) A replacement plan that clearly provides a new or
additional benefit may include appropriate and clearly stated
periods as a condition for payment of the new or additional benefit.
(V.T.I.C. Art. 3.74, Sec. 8.)
Sec. 1652.058. COVERAGE FOR PREEXISTING CONDITION. (a) A
Medicare supplement benefit plan may not contain a provision that
excludes coverage for a claim for losses incurred more than six
months after the effective date of coverage for a preexisting
condition.
(b) A Medicare supplement benefit plan may not define a
preexisting condition more restrictively than a condition for which
medical advice was given or treatment was recommended by or
received from a physician within six months before the effective
date of coverage. (V.T.I.C. Art. 3.74, Sec. 2(e).)
[Sections 1652.059-1652.100 reserved for expansion]
SUBCHAPTER C. LOSS RATIO STANDARDS
Sec. 1652.101. LOSS RATIO STANDARDS. (a) A Medicare
supplement benefit plan must return to a plan holder benefits that
are reasonable in relation to the premium charged.
(b) The commissioner shall adopt reasonable rules to
establish minimum loss ratio standards for Medicare supplement
benefit plans. The standards must be established:
(1) on the basis of incurred claims experience and
earned premiums for the entire period for which rates are computed
to provide coverage;
(2) in accordance with accepted actuarial principles
and practices; and
(3) to the extent necessary for the state to obtain or
retain certification as a state with an approved regulatory
program. (V.T.I.C. Art. 3.74, Secs. 4(a), (d).)
Sec. 1652.102. FILING REQUIREMENTS. (a) Annually, each
entity providing Medicare supplement benefit plans in this state
shall file with the department the entity's rates, rating schedule,
and supporting documentation demonstrating that:
(1) the entity is complying with the applicable loss
ratio standards of this state; and
(2) the actual and expected losses in relation to
premiums comply with the requirements of this subchapter and the
rules adopted by the commissioner.
(b) The documentation required by Subsection (a) must
include a report of the ratio of incurred losses to covered premiums
for the preceding calendar year, illustrated by calendar year of
issue.
(c) The commissioner may adopt rules relating to filing
requirements for rates, rating schedules, and loss ratios.
(V.T.I.C. Art. 3.74, Secs. 4(b), (c).)
Sec. 1652.103. REVIEW OF PREMIUM INCREASES. (a) The
commissioner by rule shall provide a process for reviewing and
approving or disapproving a proposed premium increase relating to a
Medicare supplement benefit plan.
(b) The rules must comply with federal law, including
Section 1882, Social Security Act (42 U.S.C. Section 1395ss).
(V.T.I.C. Art. 3.74, Sec. 4(f).)
Sec. 1652.104. BENEFIT CHANGES. (a) Before the date on
which a Medicare benefit change required by federal law takes
effect, each entity providing in this state a Medicare supplement
benefit plan existing on the effective date of the change shall file
with the commissioner, in accordance with Chapter 1701:
(1) each appropriate premium adjustment necessary to
produce the loss ratios originally anticipated for the applicable
plan, accompanied by any supporting documents necessary to justify
the adjustment; and
(2) each appropriate rider, endorsement, or plan form
necessary to modify the coverage so as to eliminate benefit
duplications with Medicare.
(b) A rider, endorsement, or plan form required by
Subsection (a) must provide a clear description of the Medicare
supplement benefits provided by the plan. (V.T.I.C. Art. 3.74,
Sec. 4(e).)
Sec. 1652.105. REPORTING LOSS RATIO INFORMATION TO
SECRETARY OF HEALTH AND HUMAN SERVICES. To the extent necessary for
this state to obtain or retain certification as a state with an
approved regulatory program, the department shall comply with
federal requirements relating to periodic reporting of loss ratio
information to the secretary of health and human services, based on
a uniform methodology, as authorized by federal law. (V.T.I.C.
Art. 3.74, Sec. 4(g).)
[Sections 1652.106-1652.150 reserved for expansion]
SUBCHAPTER D. CONSUMER INFORMATION AND NOTICE
Sec. 1652.151. RULES RELATING TO DISCLOSURE. The rules
adopted under Sections 1652.152, 1652.153, and 1652.154 must
include provisions and requirements that are at least equal to
those required by federal law, including the rules, regulations,
and standards adopted under Section 1882, Social Security Act (42
U.S.C. Section 1395ss). (V.T.I.C. Art. 3.74, Secs. 5(b) (part),
(f).)
Sec. 1652.152. OUTLINE OF COVERAGE. (a) To provide for
full and fair disclosure in the sale of Medicare supplement benefit
plans, a Medicare supplement benefit plan or certificate may not be
delivered or issued for delivery in this state unless an outline of
coverage that complies with this section is delivered to the
applicant when the applicant applies for the coverage.
(b) The commissioner by rule shall prescribe the format and
content of the outline of coverage required by Subsection (a). The
rules must address the style, arrangement, and overall appearance
of the outline of coverage, including the size, color, and
prominence of type and the arrangement of text and captions.
(V.T.I.C. Art. 3.74, Secs. 5(a), (b) (part).)
Sec. 1652.153. INFORMATIONAL BROCHURE. (a) The
commissioner by rule may prescribe a standard form and the contents
of an informational brochure intended to improve the ability of an
individual eligible for Medicare to understand Medicare and to
select the most appropriate Medicare supplement coverage.
(b) Except as provided by Subsection (c), the commissioner
by rule may require that the informational brochure be provided to
an individual eligible for Medicare concurrently with delivery of
the outline of coverage.
(c) If the plan is a direct response Medicare supplement
benefit plan, the commissioner by rule may require that the
informational brochure be provided on request to an individual
eligible for Medicare at any time not later than the time the plan
is delivered. (V.T.I.C. Art. 3.74, Sec. 5(c).)
Sec. 1652.154. NOTICE RELATING TO OTHER TYPES OF COVERAGE.
(a) The commissioner may adopt reasonable rules for captions or
notice requirements for each accident and health insurance policy,
subscriber contract, or evidence of coverage sold to an individual
eligible for Medicare that are determined to be in the public
interest and designed to inform the individual that a particular
coverage is not a Medicare supplement benefit plan. This
subsection does not apply to:
(1) a Medicare supplement benefit plan;
(2) a disability income policy;
(3) a basic, catastrophic, or major medical expense
policy;
(4) a single premium nonrenewable policy; or
(5) another policy, contract, or subscriber contract
described by Section 1652.002(b)(1) or (2).
(b) The commissioner may adopt reasonable rules to govern
the full and fair disclosure of information relating to replacing
an accident and health insurance policy, a subscriber contract, or
a certificate by an individual eligible for Medicare. (V.T.I.C.
Art. 3.74, Secs. 5(d), (e).)
Sec. 1652.155. RIGHT TO RETURN FOR REFUND; NOTICE. (a) If
an applicant is not satisfied for any reason after examining a
Medicare supplement benefit plan document or certificate, the
applicant is entitled to receive a refund of the premium if the
applicant returns the document or certificate not later than the
30th day after the date it is delivered.
(b) The entity issuing the plan or certificate shall refund
the premium directly to the applicant in a timely manner.
(c) A Medicare supplement benefit plan or certificate must
have a notice stating the substance prescribed by Subsection (a)
prominently printed on the first page of or attached to the plan or
certificate. (V.T.I.C. Art. 3.74, Sec. 6.)
Sec. 1652.156. ADVERTISING FILING REQUIREMENTS. (a) The
commissioner shall adopt reasonable rules to require each entity
described by Section 1652.003 to file with the department a copy of
any advertisement relating to Medicare supplement benefit plans
that the entity intends to use in this state. The rules must
require that the entity file the copy not later than the 60th day
before the date of intended use.
(b) At the expiration of the 60-day period provided by
Subsection (a), an advertisement filed in accordance with that
subsection is considered acceptable, unless before the end of that
60-day period the department notifies the entity of the
advertisement's nonacceptance.
(c) An entity may not use an advertisement for Medicare
supplement benefit plans that does not comply with state law,
including department rules. (V.T.I.C. Art. 3.74, Sec. 9.)
[Sections 1652.157-1652.200 reserved for expansion]
SUBCHAPTER E. AGENTS
Sec. 1652.201. INFORMATION PROVIDED TO AGENTS. (a) An
entity that offers a Medicare supplement benefit plan for sale in
this state shall provide to each agent authorized to sell that plan
information relating to:
(1) Medicare;
(2) the Medicare supplement benefit plans offered by
that entity; and
(3) the agent's ethical obligations to clients.
(b) The commissioner by rule may prescribe the information
that must be provided under this section. (V.T.I.C. Art. 3.74, Sec.
9A.)
Sec. 1652.202. PERMITTED COMPENSATION ARRANGEMENTS. (a)
The commissioner by rule shall limit the commission or other
compensation that may be paid to an agent for the sale of a Medicare
supplement benefit plan or certificate, including a replacement
plan or certificate.
(b) The rules must conform to, but may not be more
restrictive than, the requirements of federal law necessary for
this state to obtain or retain certification as a state with an
approved regulatory program. (V.T.I.C. Art. 3.74, Sec. 9B.)
SECTION 5. TITLE 9, INSURANCE CODE. The Insurance Code is
amended by adding Title 9 to read as follows:
TITLE 9. PROVISIONS APPLICABLE TO LIFE AND HEALTH COVERAGES
CHAPTER 1701. POLICY FORMS
TITLE 9. PROVISIONS APPLICABLE TO LIFE AND HEALTH COVERAGES
CHAPTER 1701. POLICY FORMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1701.001. DEFINITION
Sec. 1701.002. APPLICABILITY OF CHAPTER TO FORMS OF
CERTAIN DOCUMENTS
Sec. 1701.003. APPLICABILITY OF CHAPTER TO CERTAIN
INSURERS
Sec. 1701.004. CONSTRUCTION OF CHAPTER
Sec. 1701.005. EXEMPTIONS
[Sections 1701.006-1701.050 reserved for expansion]
SUBCHAPTER B. FILING REQUIREMENT
Sec. 1701.051. FILING REQUIRED
Sec. 1701.052. FILE AND USE
Sec. 1701.053. FILING FEE
Sec. 1701.054. APPROVAL OF FORM
Sec. 1701.055. DISAPPROVAL OF FORM OR WITHDRAWAL
OF APPROVAL OR EXEMPTION
Sec. 1701.056. USE OF DISAPPROVED FORM PROHIBITED
Sec. 1701.057. WITHDRAWAL OF INDIVIDUAL ACCIDENT AND
HEALTH INSURANCE POLICY FORM APPROVAL
Sec. 1701.058. RECONSIDERATION OF FORM
Sec. 1701.059. REPLACEMENT OR AMENDMENT OF DOCUMENT
Sec. 1701.060. GENERAL RULEMAKING AUTHORITY
[Sections 1701.061-1701.100 reserved for expansion]
SUBCHAPTER C. SANCTIONS; APPLICABILITY OF OTHER LAWS
Sec. 1701.101. RESTITUTION
Sec. 1701.102. LIMIT ON SANCTIONS
Sec. 1701.103. APPLICABILITY OF OTHER LAWS
[Sections 1701.104-1701.150 reserved for expansion]
SUBCHAPTER D. CERTAIN POLICY APPLICATION FORMS
Sec. 1701.151. POLICY APPLICATION FORM FOR INDIVIDUAL
ACCIDENT AND HEALTH POLICY
CHAPTER 1701. POLICY FORMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1701.001. DEFINITION. In this chapter, "use" includes
issue and deliver. (New.)
Sec. 1701.002. APPLICABILITY OF CHAPTER TO FORMS OF CERTAIN
DOCUMENTS. This chapter applies to the form of the following
document:
(1) a policy, contract, or certificate of:
(A) accident or health insurance, including
group accident or health insurance;
(B) medical or surgical insurance, including
group medical or surgical insurance;
(C) life or term insurance, including group life
or term insurance;
(D) endowment insurance;
(E) industrial life insurance; or
(F) fraternal benefit insurance;
(2) an annuity or pure endowment contract, including a
group annuity contract;
(3) an application attached or required to be attached
to the policy, contract, or certificate; or
(4) a rider or endorsement to be attached to, printed
on, or used in connection with the policy, contract, or
certificate. (V.T.I.C. Art. 3.42, Secs. (a) (part), (b) (part).)
Sec. 1701.003. APPLICABILITY OF CHAPTER TO CERTAIN
INSURERS. (a) Except as provided by Subsection (b), this chapter
applies to any insurer that uses a document described by Section
1701.002 in this state, including:
(1) a life, accident, health, or casualty insurance
company;
(2) a mutual life insurance company;
(3) a mutual insurance company other than a mutual
life insurance company;
(4) a mutual or natural premium life insurance
company;
(5) a general casualty company;
(6) a Lloyd's plan;
(7) a reciprocal or interinsurance exchange;
(8) a fraternal benefit society; and
(9) a group hospital service corporation.
(b) This chapter does not apply to a society, company, or
other insurer whose activities are by statute exempt from
department control and that is entitled by statute to a certificate
from the department showing that exempt status. (V.T.I.C. Art.
3.42, Sec. (a) (part).)
Sec. 1701.004. CONSTRUCTION OF CHAPTER. This chapter may
not be construed to enlarge the powers of an insurer subject to this
chapter. (V.T.I.C. Art. 3.42, Sec. (a) (part).)
Sec. 1701.005. EXEMPTIONS. (a) This chapter does not apply
to a rider or endorsement that:
(1) is used at the request of the holder of a policy,
contract, or certificate subject to this chapter; and
(2) relates to:
(A) the manner of distribution of benefits under
the policy, contract, or certificate; or
(B) the reservation of rights and benefits under
the policy, contract, or certificate.
(b) The commissioner by written order may exempt a document
from the requirements of this chapter for the period the
commissioner considers proper if the commissioner determines that:
(1) this chapter may not practically be applied to the
document;
(2) the document's preparation, use, and meaning have
become routine or commonplace; or
(3) the filing and approval of the form of the document
are not desirable, appropriate, required, or necessary for the
protection of the public. (V.T.I.C. Art. 3.42, Secs. (b) (part),
(h) (part).)
[Sections 1701.006-1701.050 reserved for expansion]
SUBCHAPTER B. FILING REQUIREMENT
Sec. 1701.051. FILING REQUIRED. (a) Except as provided by
Section 1701.005, an insurer may not use a document described by
Section 1701.002 in this state unless the form of the document is
filed with the department in accordance with this chapter.
(b) Except as provided by Section 1701.052, the insurer must
file the form of the document not later than the 60th day before the
date the document is used. (V.T.I.C. Art. 3.42, Secs. (a) (part),
(b) (part), (c) (part), (d) (part).)
Sec. 1701.052. FILE AND USE. (a) An insurer may use a
document described by Section 1701.002 immediately after the form
of the document is filed if the form, when filed, is accompanied by
a certification that meets the requirements of Subsection (b).
(b) The certification accompanying a form must:
(1) be signed by:
(A) an attorney licensed to practice law in this
state;
(B) an actuary familiar with the requirements of
this code and applicable rules adopted under this code;
(C) the chief executive officer of the insurer;
or
(D) an individual designated by the chief
executive officer of the insurer; and
(2) affirm that:
(A) the certification is made on behalf of the
insurer filing the form;
(B) the insurer is bound by the certification;
(C) the individual making the certification has
reviewed the form; and
(D) to the best knowledge, information, and
belief of the individual making the certification, the form
complies with this code and rules applicable to the form. (V.T.I.C.
Art. 3.42, Sec. (c) (part).)
Sec. 1701.053. FILING FEE. (a) The department shall
collect a fee in an amount determined by the commissioner for the
filing of the form of a document under this chapter.
(b) The fee may not exceed:
(1) $100 for filing the form of a new or amended
document that is not exempt from review under Section 1701.005(b);
and
(2) $50 for filing the form of a new or amended
document that is exempt from review under Section 1701.005(b).
(V.T.I.C. Art. 3.42, Secs. (e), (f) (part).)
Sec. 1701.054. APPROVAL OF FORM. (a) A form filed under
this chapter that is not affirmatively approved or disapproved in a
written order of the commissioner on or before the 60th day after
the date the form is filed is considered approved on the 61st day
after the date of filing unless the approval period is extended
under this section.
(b) An insurer may request in writing that the approval
period for a form be extended for an additional period not to exceed
45 days.
(c) An extension requested under this section is considered
granted on the date the department receives the request.
(d) Only one extension may be granted under this section.
(e) If an extension is granted under this section and the
commissioner does not affirmatively approve or disapprove the form
before the extended period expires, the form is considered approved
on the day after the date the extended period expires.
(f) If the commissioner approves a form that is filed
without a certification meeting the requirements of Section
1701.052(b) before the expiration of the approval period, including
any extension, the remaining portion of the period is waived.
(V.T.I.C. Art. 3.42, Secs. (c) (part), (d) (part).)
Sec. 1701.055. DISAPPROVAL OF FORM OR WITHDRAWAL OF
APPROVAL OR EXEMPTION. (a) Except as provided by Subsection (d),
the commissioner may disapprove or, after notice and hearing,
withdraw approval of a form if the form:
(1) violates this code, a rule of the commissioner, or
any other law; or
(2) contains a provision, title, or heading that is
unjust, encourages misrepresentation, or is deceptive.
(b) A form filed under this chapter that contains a
coordination of benefits provision may not be approved for use in
this state unless the form provides for the order of benefits
determination for insured dependent children. An order of benefits
determination provision may not be approved if the provision:
(1) violates this code, a rule of the commissioner, or
any other law; or
(2) contains a provision, title, or heading that is
unjust, encourages misrepresentation, or is deceptive.
(c) If necessary to accomplish the purpose of Subsection
(b), the commissioner may adopt a policy provision and order the
inclusion of that provision in a document subject to that
subsection.
(d) If a form has been on file with the department for at
least 180 days and has previously been affirmatively approved by
the commissioner, been considered approved under this chapter, or
been exempted from the approval requirements under this chapter,
the commissioner may withdraw the approval or exemption only if:
(1) the form violates this code or a rule adopted under
this code; or
(2) the commissioner finds proof of gross
misrepresentation or fraud to a policyholder.
(e) An order of the commissioner disapproving or
withdrawing approval for a form must state the grounds for the
disapproval or withdrawal of approval and describe in adequate
detail the changes that are necessary to obtain approval.
(V.T.I.C. Art. 3.42, Secs. (g) (part), (i), (j), (o).)
Sec. 1701.056. USE OF DISAPPROVED FORM PROHIBITED. An
insurer who receives written notice that a form filed by the insurer
has been disapproved by the commissioner shall immediately stop
using the form. (V.T.I.C. Art. 3.42, Sec. (c) (part).)
Sec. 1701.057. WITHDRAWAL OF INDIVIDUAL ACCIDENT AND HEALTH
INSURANCE POLICY FORM APPROVAL. (a) Except as provided by
Subsection (b), the commissioner may, after notice and hearing,
withdraw approval of an individual accident and health insurance
policy form if, after consideration of all relevant facts, the
commissioner determines that:
(1) the benefits provided under the form are
unreasonable in relation to the premium charged; or
(2) the reserve required by Section 862.102 is not
maintained by the insurer on the policies issued on the form.
(b) If an individual accident and health insurance policy
form has been on file with the department for at least 360 days and
has been affirmatively approved by the commissioner, been
considered approved under this chapter, or been exempted from the
approval requirements of this chapter, the commissioner may
withdraw the approval or exemption only if:
(1) the form violates this code or a rule adopted under
this code; or
(2) the commissioner finds proof of gross
misrepresentation or fraud to a policyholder.
(c) To enable the department to determine compliance with
Subsection (b), the commissioner:
(1) shall require an insurer to file the rates charged
by that insurer for individual accident and health insurance
policies; and
(2) may adopt and require an insurer to file in
conjunction with the annual statement required under Section
841.255, 982.101, or 982.103 a form for reporting the insurer's
experience on individual accident and health insurance policy forms
issued by the insurer.
(d) The commissioner shall, in accordance with Section
1201.007, adopt reasonable rules necessary to establish standards
under which the approval of an individual accident and health
insurance policy form may be withdrawn.
(e) This section does not grant the commissioner the
authority to determine, fix, prescribe, or promulgate rates to be
charged for an individual accident and health insurance policy.
(V.T.I.C. Art. 3.42, Secs. (k), (l), (m).)
Sec. 1701.058. RECONSIDERATION OF FORM. (a) Not later than
the 45th day after the date of an order of the commissioner
disapproving or withdrawing approval of a form under Section
1701.055, an insurer may correct the deficiencies described by the
order and file the corrected form with the department for
reconsideration by the commissioner.
(b) If the commissioner does not approve or disapprove a
form filed for reconsideration under this section on or before the
45th day after the date the form is filed, the form is considered
approved on the 46th day after the date the form is filed.
(V.T.I.C. Art. 3.42, Sec. (g) (part).)
Sec. 1701.059. REPLACEMENT OR AMENDMENT OF DOCUMENT. The
commissioner may order an insurer to replace a document described
by Section 1701.002 with a corrected document or to amend and
correct the document by endorsement or rider if:
(1) the commissioner disapproves or withdraws
approval of the form of the document under Section 1701.055(a); or
(2) the document is used before the form was approved
under this chapter and corrections must be made to the document to
bring the document into compliance with this code and rules of the
commissioner before the commissioner will approve the form of the
document. (V.T.I.C. Art. 3.42, Sec. (c) (part).)
Sec. 1701.060. GENERAL RULEMAKING AUTHORITY. (a) The
commissioner may, within the standards and purposes of this
chapter, adopt reasonable rules necessary to implement this
chapter, including, after notice and hearing, rules that establish
procedures and criteria under which:
(1) each type of form submitted to the department
under this chapter will be reviewed and approved by the
commissioner or exempted under Section 1701.005(b); and
(2) particular types of forms designated by the
commissioner may be given a summary review and approval if
considered appropriate by the commissioner to expedite review and
approval of those forms.
(b) A rule adopted under this chapter may not be repealed or
amended before the first anniversary of the date the rule was
adopted unless the commissioner determines after notice and in a
public hearing that there is a compelling public need for the rule
to be repealed or amended. (V.T.I.C. Art. 3.42, Secs. (h) (part),
(p) (part).)
[Sections 1701.061-1701.100 reserved for expansion]
SUBCHAPTER C. SANCTIONS; APPLICABILITY OF OTHER LAWS
Sec. 1701.101. RESTITUTION. (a) The commissioner may
order an insurer to make complete restitution to each insured of
this state who is financially damaged by the insurer's use of a form
filed and used but not approved under this chapter if, after notice
and opportunity for hearing, the commissioner determines:
(1) the form does not comply with this code and the
rules of the commissioner;
(2) use of the form resulted in financial damage to an
insured of this state; and
(3) the insurer intentionally used the form with the
knowledge that it did not comply with this code and the rules of the
commissioner.
(b) The commissioner may determine the form and amount of
restitution ordered under this section and the period in which the
restitution must be made. (V.T.I.C. Art. 3.42, Sec. (c) (part).)
Sec. 1701.102. LIMIT ON SANCTIONS. Except as provided by
Section 1701.101, the commissioner may not impose penalties or
other sanctions on an insurer for the issuance of a document the
form of which is filed under Section 1701.052. (V.T.I.C. Art. 3.42,
Sec. (c) (part).)
Sec. 1701.103. APPLICABILITY OF OTHER LAWS. Except as
provided by Section 1701.102, this chapter may not be construed to
limit the applicability of any other statute. (V.T.I.C. Art. 3.42,
Sec. (c) (part).)
[Sections 1701.104-1701.150 reserved for expansion]
SUBCHAPTER D. CERTAIN POLICY APPLICATION FORMS
Sec. 1701.151. POLICY APPLICATION FORM FOR INDIVIDUAL
ACCIDENT AND HEALTH POLICY. A policy application form that is
required to be or that is attached to an individual accident and
health policy shall comply with the rules of the commissioner
adopted under Chapter 1201. (V.T.I.C. Art. 3.42, Sec. (b) (part).)
SECTION 6. TITLE 11, INSURANCE CODE. The Insurance Code is
amended by adding Title 11 to read as follows:
TITLE 11. TITLE INSURANCE
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 2501. GENERAL PROVISIONS
CHAPTER 2502. PROHIBITED CONDUCT
[Chapters 2503-2550 reserved for expansion]
SUBTITLE B. ORGANIZATION OF TITLE INSURANCE COMPANIES
CHAPTER 2551. TITLE INSURERS
CHAPTER 2552. ATTORNEY'S TITLE INSURANCE COMPANIES AND
TITLE ATTORNEYS
CHAPTER 2553. FOREIGN OR ALIEN CORPORATIONS
[Chapters 2554-2600 reserved for expansion]
SUBTITLE C. FINANCIAL SOLVENCY
CHAPTER 2601. SUPERVISION, LIQUIDATION, REHABILITATION,
REORGANIZATION, OR CONSERVATION OF TITLE
INSURANCE COMPANIES AND AGENTS
CHAPTER 2602. TEXAS TITLE INSURANCE GUARANTY ASSOCIATION
[Chapters 2603-2650 reserved for expansion]
SUBTITLE D. TITLE INSURANCE PROFESSIONALS
CHAPTER 2651. TITLE INSURANCE AGENTS AND DIRECT
OPERATIONS
CHAPTER 2652. ESCROW OFFICERS
[Chapters 2653-2700 reserved for expansion]
SUBTITLE E. THE BUSINESS OF TITLE INSURANCE
CHAPTER 2701. GENERAL PROVISIONS
CHAPTER 2702. CLOSING AND SETTLEMENT
CHAPTER 2703. POLICY FORMS AND PREMIUM RATES
CHAPTER 2704. ISSUANCE OF POLICY OR CONTRACT;
DETERMINATION OF INSURABILITY
TITLE 11. TITLE INSURANCE
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 2501. GENERAL PROVISIONS
Sec. 2501.001. SHORT TITLE
Sec. 2501.002. PURPOSE; LEGISLATIVE INTENT
Sec. 2501.003. DEFINITIONS
Sec. 2501.004. ABSTRACT PLANT; JOINT ABSTRACT PLANT
OPERATION
Sec. 2501.005. BUSINESS OF TITLE INSURANCE
Sec. 2501.006. CLOSING THE TRANSACTION
Sec. 2501.007. REFERENCES TO TITLE
CHAPTER 2501. GENERAL PROVISIONS
Sec. 2501.001. SHORT TITLE. This title may be cited as the
Texas Title Insurance Act. (V.T.I.C. Art. 9.01, Sec. A.)
Sec. 2501.002. PURPOSE; LEGISLATIVE INTENT. (a) The
purpose of this title is to completely regulate the business of
title insurance, including the direct issuance of policies and the
reinsurance of any assumed risks, to:
(1) protect consumers and purchasers of title
insurance policies; and
(2) provide adequate and reasonable rates of return
for title insurance companies and title insurance agents.
(b) It is the express legislative intent that this title
accomplish the purpose described by Subsection (a). (V.T.I.C. Art.
9.01, Sec. B.)
Sec. 2501.003. DEFINITIONS. In this title:
(1) "Abstract plant" means an abstract plant as
defined by the department under Section 2501.004.
(2) "Attorney" means:
(A) a person who is licensed to practice law and
is a member of the State Bar of Texas; or
(B) a Texas professional corporation organized
to provide professional legal services.
(3) "Direct operation" means the operations of a title
insurance company under a license issued to the company under
Subchapter B, Chapter 2651. A reference in this title to a title
insurance agent shall be construed to include a direct operation
unless the context indicates otherwise.
(4) "Escrow officer" means an attorney, a bona fide
employee of an attorney licensed as an escrow officer, a bona fide
employee of a direct operation, or a bona fide employee of a title
insurance agent whose responsibilities include:
(A) countersigning title insurance forms;
(B) supervising the preparation and delivery of
title insurance forms;
(C) signing escrow checks; or
(D) closing the transaction, as described by
Section 2501.006.
(5) "Foreign title insurance company" means a title
insurance company organized under the laws of a jurisdiction other
than this state.
(6) "Joint abstract plant operation" means a joint
abstract plant operation as defined by the department under Section
2501.004.
(7) "Person" includes an individual, corporation,
association, partnership, or trust.
(8) "Premium" means the premium rates promulgated by
the commissioner under Subchapters D and E, Chapter 2703, and
includes a charge for:
(A) title examination and closing the
transaction, regardless of whether the examination or closing is
performed by an attorney; and
(B) issuing the policy.
(9) "Residential real property" means real property
that is improved and is designed principally for occupancy by one to
four families. The term includes an individual unit of a
condominium or cooperative.
(10) "Thing of value" includes any payment, advance,
funds, loan, service, or other consideration.
(11) "Title examination" means the search and
examination of a title to determine the conditions of the title to
be insured and to evaluate the risk to be undertaken in the issuance
of a title insurance policy or other title insurance form.
(12) "Title insurance" means:
(A) insurance that insures, guarantees, or
indemnifies an owner of real property, or another interested in the
real property, against loss or damage resulting from:
(i) a lien or encumbrance on or defect in
the title to the real property; or
(ii) the invalidity or impairment of a lien
on the real property; or
(B) any business that is substantially
equivalent to the insurance described by Paragraph (A) and is
conducted in a manner designed to evade the provisions of this
title.
(13) "Title insurance agent" means a person owning or
leasing and controlling an abstract plant or as a participant in a
bona fide joint abstract plant operation and authorized in writing
by a title insurance company to solicit insurance and collect
premiums and to issue or countersign policies on the company's
behalf.
(14) "Title insurance company" means:
(A) a domestic company organized under this title
to engage in the business of title insurance, as described by
Section 2501.005;
(B) a foreign title insurance company that:
(i) meets the requirements of this title;
and
(ii) holds a certificate of authority to
engage in business in this state; or
(C) any other domestic or foreign company that:
(i) meets the requirements of this title;
and
(ii) holds a certificate of authority to
insure a title to real property in this state. (V.T.I.C. Art. 9.02,
Secs. (a), (c), (f) (part), (g), (h), (i) (part), (j), (k), (l),
(m), (o), (p), (q); New.)
Sec. 2501.004. ABSTRACT PLANT; JOINT ABSTRACT PLANT
OPERATION. (a) For purposes of this title, the department shall
define "abstract plant" and "joint abstract plant operation."
(b) To provide for the safety and protection of
policyholders, the department shall require that an abstract plant
be:
(1) geographically arranged;
(2) kept current; and
(3) adequate for use in insuring titles, as determined
by the department. (V.T.I.C. Art. 9.02, Secs. (f) (part), (i)
(part).)
Sec. 2501.005. BUSINESS OF TITLE INSURANCE. (a) For
purposes of this title, a person engages in the business of title
insurance if the person:
(1) as insurer, guarantor, or surety, makes or
proposes to make a contract or policy of title insurance or its
equivalent;
(2) transacts or proposes to transact any phase of
title insurance, including:
(A) soliciting;
(B) title examination other than an examination
conducted by an attorney;
(C) closing the transaction other than a closing
conducted by an attorney;
(D) executing a contract of title insurance; and
(E) insuring and transacting matters arising out
of the contract after the contract is executed, including
reinsurance; or
(3) makes a guaranty or warranty of a title search or a
title examination, or any component of a title search or title
examination, if the person is not the person who performs the search
or examination.
(b) A person engages in the business of title insurance if
the person engages in or proposes to engage in any business that is
substantially equivalent to the business of title insurance as
described by this section, regardless of whether that conduct is
performed in a manner designed to evade the provisions of this
title. (V.T.I.C. Art. 9.02, Sec. (b).)
Sec. 2501.006. CLOSING THE TRANSACTION. (a) For purposes
of this title, "closing the transaction" describes the
investigation that is made:
(1) on behalf of a title insurance company, title
insurance agent, or direct operation before the title insurance
policy is issued; and
(2) to determine proper execution, acknowledgment,
and delivery of all conveyances, mortgage papers, and other title
instruments necessary to consummate a transaction.
(b) Closing the transaction includes a determination that:
(1) all delinquent taxes have been paid;
(2) in the case of an owner title insurance policy, all
current taxes, based on the latest available information, have been
properly prorated between the purchaser and seller;
(3) the consideration has been passed;
(4) all proceeds have been properly disbursed;
(5) a final search of the title has been made; and
(6) all necessary papers have been filed for record.
(V.T.I.C. Art. 9.02, Sec. (n).)
Sec. 2501.007. REFERENCES TO TITLE. In this title, a
reference to this title includes a reference to:
(1) Chapter 223;
(2) Chapter 271;
(3) Section 171.0527, Tax Code; and
(4) Subchapter U, Chapter 171, Tax Code. (New.)
CHAPTER 2502. PROHIBITED CONDUCT
SUBCHAPTER A. PROHIBITED CONDUCT IN GENERAL
Sec. 2502.001. ENGAGING IN CERTAIN INSURANCE BUSINESS
PROHIBITED
Sec. 2502.002. COVERAGE FOR UNMARKETABILITY OF TITLE
PROHIBITED
Sec. 2502.003. INSURING AROUND DEFINED; PROHIBITIONS AND
EXCEPTIONS
Sec. 2502.004. GUARANTEE OF MORTGAGE PAYMENT PROHIBITED
Sec. 2502.005. CIVIL PENALTY
[Sections 2502.006-2502.050 reserved for expansion]
SUBCHAPTER B. REBATES AND DISCOUNTS
Sec. 2502.051. REBATES AND DISCOUNTS PROHIBITED
Sec. 2502.052. CERTAIN DIVISIONS OF REAL PROPERTY CHARGES
PROHIBITED
Sec. 2502.053. CERTAIN COMPENSATORY PAYMENTS
NOT PROHIBITED
Sec. 2502.054. CERTAIN DIVISIONS OF PREMIUMS
NOT PROHIBITED
Sec. 2502.055. CERTAIN PROMOTIONAL AND EDUCATIONAL
ACTIVITIES NOT PROHIBITED
Sec. 2502.056. MONETARY FORFEITURE
CHAPTER 2502. PROHIBITED CONDUCT
SUBCHAPTER A. PROHIBITED CONDUCT IN GENERAL
Sec. 2502.001. ENGAGING IN CERTAIN INSURANCE BUSINESS
PROHIBITED. (a) A domestic or foreign corporation operating under
this title may not engage in the business of any kind of insurance
other than title insurance.
(b) A company may not engage in the business of title
insurance if the company engages in the business of another kind of
insurance. (V.T.I.C. Art. 9.09.)
Sec. 2502.002. COVERAGE FOR UNMARKETABILITY OF TITLE
PROHIBITED. (a) An insurance company may not insure against loss
or damage by reason of unmarketability of title.
(b) The commissioner may not adopt a rule or form providing
for coverage prohibited by this section. (V.T.I.C. Art. 9.09A.)
Sec. 2502.003. INSURING AROUND DEFINED; PROHIBITIONS AND
EXCEPTIONS. (a) Except as provided by Subsection (c), a title
insurance company may not wilfully issue a binder for title
insurance or a title insurance policy showing no outstanding
enforceable recorded liens on real property against which the
company knows an outstanding enforceable recorded lien exists.
(b) A title insurance company knows that an outstanding
enforceable recorded lien exists against real property if, based on
an examination of the title under which the binder for title
insurance or title insurance policy is issued, the company
determines that the lien is valid and enforceable.
(c) The commissioner by rule may approve circumstances
under which a title insurance company may issue a binder for title
insurance or a title insurance policy otherwise prohibited by
Subsection (a).
(d) Except as otherwise provided by this section, a title
insurance company may determine the insurability of title to real
property and any other matter that the company considers to be
insurable under a binder for title insurance or a title insurance
policy issued in connection with the property. (V.T.I.C. Art. 9.08
(part).)
Sec. 2502.004. GUARANTEE OF MORTGAGE PAYMENT PROHIBITED.
(a) A title insurance company may not guarantee the payment of a
mortgage on real property.
(b) A title insurance company that violates this section
forfeits its authority to engage in business in this state and shall
immediately surrender its certificate of authority. (V.T.I.C. Art.
9.08 (part).)
Sec. 2502.005. CIVIL PENALTY. (a) A person is liable to
the state for a civil penalty of not more than $5,000 if the person:
(1) wilfully violates Section 2502.003 or 2502.004; or
(2) violates an order of the commissioner refusing to
approve an application to issue a binder for title insurance or a
title insurance policy prohibited by Section 2502.003(a).
(b) The department may bring an action in a Travis County
district court to recover the penalty provided by this section.
(V.T.I.C. Art. 9.08 (part).)
[Sections 2502.006-2502.050 reserved for expansion]
SUBCHAPTER B. REBATES AND DISCOUNTS
Sec. 2502.051. REBATES AND DISCOUNTS PROHIBITED. A
commission, rebate, discount, portion of a title insurance premium,
or other thing of value may not be directly or indirectly paid,
allowed, or permitted by a person engaged in the business of title
insurance or received or accepted by a person for engaging in the
business of title insurance or for soliciting or referring title
insurance business. (V.T.I.C. Art. 9.30, Sec. A.)
Sec. 2502.052. CERTAIN DIVISIONS OF REAL PROPERTY CHARGES
PROHIBITED. Other than for services actually performed, a person
may not give or accept any portion, split, or percentage of a charge
made or received for a settlement or closing performed in
connection with a transaction involving the conveyance or
mortgaging of real property located in this state. (V.T.I.C. Art.
9.30, Sec. E.)
Sec. 2502.053. CERTAIN COMPENSATORY PAYMENTS NOT
PROHIBITED. This subchapter does not prohibit:
(1) payment for services actually performed by a title
insurance company, title insurance agent, or direct operation in
connection with title examination or with closing the transaction
or furnishing title evidence if:
(A) the payment does not exceed the percentage of
premium or other amount established by the commissioner for the
payment; and
(B) the person receiving the payment is licensed
as provided by this title;
(2) payment of bona fide compensation to a bona fide
employee principally employed by a title insurance company, title
insurance agent, or direct operation;
(3) reasonable payment for goods or facilities
actually provided and received; or
(4) payment for services actually performed by an
attorney in connection with title examination or with closing the
transaction, if the payment does not exceed a reasonable charge for
the services. (V.T.I.C. Art. 9.30, Secs. B (part), C.)
Sec. 2502.054. CERTAIN DIVISIONS OF PREMIUMS NOT
PROHIBITED. (a) For purposes of this section, a subsidiary is a
company at least 50 percent of the voting stock of which is owned by
the title insurance company or by a wholly owned subsidiary of the
title insurance company.
(b) This subchapter does not:
(1) prohibit a title insurance company from:
(A) appointing as its title insurance agent for a
county a person who owns or leases and operates an abstract plant
for that county; and
(B) arranging for a division of premiums with the
agent as set by the commissioner; or
(2) affect the division of a premium between a title
insurance company and its subsidiary title insurance agent when the
company directly issues a title insurance policy or contract under
Section 2704.002. (V.T.I.C. Art. 9.30, Sec. B (part).)
Sec. 2502.055. CERTAIN PROMOTIONAL AND EDUCATIONAL
ACTIVITIES NOT PROHIBITED. This subchapter does not prohibit legal
promotional and educational activities that are not conditioned on
the referral of title insurance business. (V.T.I.C. Art. 9.30,
Sec. B (part).)
Sec. 2502.056. MONETARY FORFEITURE. (a) A person who pays
or receives a commission, rebate, discount, or other thing of value
for soliciting or referring title insurance business in violation
of Section 2502.051 is engaging in the unauthorized business of
insurance.
(b) After notice and opportunity for hearing, a person who
makes or receives a payment described by Subsection (a) is liable
for a monetary forfeiture in an amount not less than the value of or
more than three times the value of the payment.
(c) A monetary forfeiture under Subsection (b) is in
addition to any other penalty provided by law. (V.T.I.C. Art. 9.30,
Sec. D.)
[Chapters 2503-2550 reserved for expansion]
SUBTITLE B. ORGANIZATION OF TITLE INSURANCE COMPANIES
CHAPTER 2551. TITLE INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2551.001. APPLICABILITY OF TITLE AND OTHER LAW
Sec. 2551.002. APPLICABILITY OF LAW GOVERNING
CORPORATIONS
Sec. 2551.003. RULEMAKING; AUTHORITY OF DEPARTMENT AND
COMMISSIONER
[Sections 2551.004-2551.050 reserved for expansion]
SUBCHAPTER B. FORMATION
Sec. 2551.051. FORMATION; GENERAL PURPOSES AND POWERS
Sec. 2551.052. NAME
Sec. 2551.053. STOCK AND SURPLUS REQUIREMENTS
Sec. 2551.054. PURCHASE OF OWN STOCK
Sec. 2551.055. CHARTER OF CORPORATION ENGAGING IN BUSINESS
OF TITLE INSURANCE
Sec. 2551.056. REGULATION OF CERTAIN CORPORATIONS
[Sections 2551.057-2551.100 reserved for expansion]
SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 2551.101. CERTIFICATE OF AUTHORITY REQUIRED
Sec. 2551.102. ISSUANCE OF CERTIFICATE OF AUTHORITY
[Sections 2551.103-2551.150 reserved for expansion]
SUBCHAPTER D. GENERAL POWERS AND DUTIES
Sec. 2551.151. ADMISSIBLE INVESTMENTS
Sec. 2551.152. ANNUAL STATEMENT
Sec. 2551.153. FEES
Sec. 2551.154. TRANSFER OF CERTAIN BUSINESS TO STATE
BANKS OR TRUST COMPANIES
[Sections 2551.155-2551.200 reserved for expansion]
SUBCHAPTER E. REQUIRED DEPOSIT
Sec. 2551.201. DEPOSIT REQUIRED; AMOUNT
Sec. 2551.202. EXCEPTION: FOREIGN TITLE INSURANCE COMPANY
Sec. 2551.203. WITHDRAWAL AND SUBSTITUTION OF DEPOSIT
Sec. 2551.204. USE OF DEPOSIT
[Sections 2551.205-2551.250 reserved for expansion]
SUBCHAPTER F. RESERVES
Sec. 2551.251. STATUTORY PREMIUM RESERVE REQUIRED
Sec. 2551.252. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEAR
1997; REDUCTIONS
Sec. 2551.253. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEARS
AFTER 1997; REDUCTIONS
Sec. 2551.254. TRANSITIONAL RELEASE; TRANSITIONAL CHARGE
Sec. 2551.255. RUNOFF BALANCE
Sec. 2551.256. ACTUARIAL CERTIFICATION
Sec. 2551.257. SUPPLEMENTAL RESERVE
Sec. 2551.258. REEVALUATION OF CERTAIN RESERVE
REQUIREMENTS
Sec. 2551.259. STATUTORY PREMIUM RESERVE AND SUPPLEMENTAL
RESERVE FUND
Sec. 2551.260. EFFECT OF INSOLVENCY OR DISSOLUTION
Sec. 2551.261. RESERVE FOR UNPAID LOSSES AND LOSS
EXPENSES
[Sections 2551.262-2551.300 reserved for expansion]
SUBCHAPTER G. LIABILITY AND REINSURANCE
Sec. 2551.301. MAXIMUM POLICY LIABILITY
Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES
Sec. 2551.303. FORM OF REINSURANCE CONTRACT
Sec. 2551.304. ACCEPTANCE OF REINSURANCE
Sec. 2551.305. CERTAIN REINSURANCE ALLOWED
[Sections 2551.306-2551.350 reserved for expansion]
SUBCHAPTER H. ENFORCEMENT AND INTERVENTION
Sec. 2551.351. FORFEITURE OF RIGHT TO ENGAGE IN BUSINESS
Sec. 2551.352. REVOCATION OF PERMIT AND FORFEITURE
OF CHARTER
Sec. 2551.353. PROCEDURE FOR REVOCATION OF CERTIFICATE
Sec. 2551.354. APPEAL OF COMMISSIONER ACTION
CHAPTER 2551. TITLE INSURERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2551.001. APPLICABILITY OF TITLE AND OTHER LAW. (a)
Except as provided by Subsection (c) and unless the business of
title insurance or title insurance companies are expressly
mentioned, the provisions of this code other than this title do not
apply to:
(1) a corporation incorporated or engaging in business
exclusively under this title; or
(2) any title insurance business engaged in by a
corporation created under:
(A) Subdivision 57, Article 1302, Revised
Statutes;
(B) Chapter 861; or
(C) any other law.
(b) A law enacted after September 7, 1951, does not apply to
a title insurance company or title insurance business described by
Subsection (a) unless the law expressly states that it applies.
(c) To the extent applicable, the following provisions of
this code apply to a title insurance company:
(1) Articles 1.01, 1.04A, 1.09-1, 1.12, 1.13,
1.15-1.19, 21.31, 21.47, and 21.49-8;
(2) Subsection (b), Article 1.04D;
(3) Article 1.14-3, other than Section 8;
(4) Subchapter F, Chapter 5;
(5) Chapters 33, 82, 83, 84, 102, 261, 281, 541, 547,
555, 701, 801, 802, 824, and 828;
(6) Chapter 31, other than Section 31.005;
(7) Chapter 32, other than Section 32.022(b);
(8) Chapter 36, other than Sections 36.003, 36.004,
and 36.101-36.106;
(9) Subchapter A, Chapter 38;
(10) Subchapters A-G, Chapter 101;
(11) Chapter 982, other than Sections 982.003,
982.051, 982.101, 982.105, 982.106(b), 982.109, and 982.113; and
(12) Sections 37.052, 39.001, 39.002, 81.002, 81.004,
201.004, 201.005, 201.051, 201.055, 521.002-521.004, 805.021,
822.001, 822.051, 822.052(1), (2), and (3), 822.053, 822.057,
except Subsection (a)(4), 822.058, 822.059, 822.060, 822.155,
822.157, 822.158, except Subsection (a)(5), 841.004, 841.251,
841.252(a)-(c), and 4001.103.
(d) This title governs in any conflict between a provision
listed by Subsection (c) and a provision of this title.
(e) This title does not regulate the practice of law by an
attorney. The actions of an attorney in examining title or in
closing a real property transaction, regardless of whether a title
insurance policy is issued, does not constitute the business of
title insurance, unless the attorney elects to be licensed as an
escrow officer.
(f) Subsection (e) does not prohibit the commissioner from
promulgating a premium for title insurance. (V.T.I.C. Art. 9.22,
Sec. (b); Art. 9.47, Secs. 1, 2, 3.)
Sec. 2551.002. APPLICABILITY OF LAW GOVERNING
CORPORATIONS. A title insurance company is subject to the Texas
Business Corporation Act, the Texas Miscellaneous Corporation Laws
Act (Article 1302-1.01 et seq., Vernon's Texas Civil Statutes), and
any other law of this state that governs corporations in general, to
the extent those laws are not inconsistent with this title.
(V.T.I.C. Art. 9.04.)
Sec. 2551.003. RULEMAKING; AUTHORITY OF DEPARTMENT AND
COMMISSIONER. (a) The commissioner may adopt and enforce rules:
(1) that prescribe underwriting standards and
practices on which a title insurance contract must be issued;
(2) that define risks that may not be assumed under a
title insurance contract, including risks that may not be assumed
because of the insolvency of the parties to the transaction; and
(3) that the commissioner determines are necessary to
accomplish the purposes of this title.
(b) With respect to a company operating under this title
that engages in the kinds of business described by Section
2551.051(b)(1) or (2) in a manner that might subject the company to
another regulatory statute of this state, all examination and
regulation shall be exercised by the department rather than any
other state agency named in the other regulatory statute, as long as
the corporation engages in the business of title insurance.
(V.T.I.C. Art. 9.21.)
[Sections 2551.004-2551.050 reserved for expansion]
SUBCHAPTER B. FORMATION
Sec. 2551.051. FORMATION; GENERAL PURPOSES AND POWERS. (a)
A private corporation may be created and licensed under this title
for the following purposes:
(1) to compile and own or lease, or to acquire and own
or lease, records or abstracts of title to real property or
interests in real property in this state or other jurisdictions, to
insure titles to that real property or interests in that real
property, and to indemnify the owners of that real property, or the
holders of interests in or liens on that real property, against loss
or damage resulting from an encumbrance on or defect in the title to
the real property or interests in the real property; and
(2) in transactions in which title insurance is to be
or is being issued, to supervise or approve the signing of legal
instruments affecting real property titles, disbursement of money,
prorations, delivery of legal instruments, closing of
transactions, or issuance of commitments for title insurance
specifying the requirements for title insurance and the defects in
title necessary to be cured or corrected.
(b) A corporation described by Subsection (a) may exercise
any of the following powers by including the power in the
corporation's charter:
(1) to make and sell abstracts of title in any county
of this state or another state;
(2) to accumulate and lend money and to purchase, sell
or deal in notes, bonds, and securities, but without banking
privileges;
(3) to act as trustee under a lawful trust committed to
the corporation by contract or will or by appointment by a court as
trustee, receiver, or guardian; and
(4) to act as executor or guardian under the terms of a
will or as an administrator of a decedent's estate under the
appointment of a court.
(c) Notwithstanding any other provision of this section, a
corporation described by Subsection (a) is not authorized to
practice law, as that term is defined by the courts of this state. A
corporation described by Subsection (a) is not authorized to
prepare a legal instrument described by Subsection (a)(2).
(V.T.I.C. Art. 9.03.)
Sec. 2551.052. NAME. (a) The name of a corporation
chartered or operating under this title may contain the words
"Title and Trust Company."
(b) The name of a corporation chartered or operating under
this title may not contain the word "Trust" alone. If the word
"Trust" appears in the corporation's letterhead or literature, the
corporation shall include the words "Without Banking Privileges."
(V.T.I.C. Art. 9.23.)
Sec. 2551.053. STOCK AND SURPLUS REQUIREMENTS. (a) Except
as provided by Section 2552.053(b), a title insurance company must
have a paid-up capital of at least $1 million and a surplus of at
least $1 million.
(b) The capital stock and minimum surplus requirements of a
title insurance company must be maintained intact over and above
all outstanding liabilities, except contingent liabilities on
title insurance policies.
(c) If a title insurance company suffers the impairment of
its capital stock or minimum surplus requirements, the company
shall immediately report the impairment to the department.
(V.T.I.C. Arts. 9.06, 9.20.)
Sec. 2551.054. PURCHASE OF OWN STOCK. (a) Subject to
Section 2551.053(a) and the Texas Business Corporation Act, a title
insurance company may purchase its own shares of stock. A purchase
of its own shares is not considered an investment and does not
constitute a violation of a provision of this code relating to
admissible investments.
(b) A title insurance company that purchases its own shares
must, not later than the 10th day after the date of purchase, file
with the commissioner a statement listing:
(1) the name of each shareholder from whom the shares
have been purchased; and
(2) the amount paid for the shares. (V.T.I.C. Art.
9.06A.)
Sec. 2551.055. CHARTER OF CORPORATION ENGAGING IN BUSINESS
OF TITLE INSURANCE. (a) The incorporators of a corporation
engaging in the business of title insurance and incorporated under
this title, Subdivision 57, Article 1302, Revised Statutes, Chapter
40, Acts of the 41st Legislature, Regular Session, 1929 (Article
1302a, Vernon's Texas Civil Statutes), or any other law shall file
the corporation's original charter only with the department and
shall certify the charter only to the department.
(b) Only the department may collect from a company described
by this section any filing fees required by law.
(c) A corporation described by this section is not subject
to another law to the extent that the law conflicts with this
section. (V.T.I.C. Art. 9.14.)
Sec. 2551.056. REGULATION OF CERTAIN CORPORATIONS. (a) A
corporation incorporated under Subdivision 57, Article 1302,
Revised Statutes, before February 27, 1929, and engaging in
business in this state on February 27, 1929:
(1) may continue to engage in business;
(2) is subject to this title; and
(3) shall comply with the requirements of this title
regarding investments and deposits.
(b) A shareholder in a company acting under this title is
not liable in the event of default in the payment of any debt or
liability of the company beyond the shareholder's subscription for
stock. (V.T.I.C. Art. 9.32.)
[Sections 2551.057-2551.100 reserved for expansion]
SUBCHAPTER C. AUTHORITY TO ENGAGE IN BUSINESS
Sec. 2551.101. CERTIFICATE OF AUTHORITY REQUIRED. A title
insurance company may not engage in the business of title insurance
in this state unless the company holds a certificate of authority
issued under this title. (V.T.I.C. Art. 9.15 (part).)
Sec. 2551.102. ISSUANCE OF CERTIFICATE OF AUTHORITY. (a)
Subject to Subsection (c), the department shall issue a certificate
of authority to engage in the business of title insurance if,
following any examination the department considers proper, the
department makes a determination favorable to the title insurance
company with respect to:
(1) the payment of capital stock and surplus as
required by this title; and
(2) the value of the assets used to pay the capital
stock and surplus.
(b) The title insurance company shall pay the expense of any
examination conducted under Subsection (a).
(c) Issuance of a certificate of authority to a foreign
corporation is governed by Section 2553.001. (V.T.I.C. Art. 9.15
(part); New.)
[Sections 2551.103-2551.150 reserved for expansion]
SUBCHAPTER D. GENERAL POWERS AND DUTIES
Sec. 2551.151. ADMISSIBLE INVESTMENTS. (a) A title
insurance company shall hold all investments in cash or in the
following:
(1) an abstract plant or plants, provided that:
(A) the corporation is organized under this title
and has the right to engage in the business of title insurance;
(B) except as provided by Subsection (b), the
investment is not more than 50 percent of the corporation's capital
stock; and
(C) the valuation of the plant or plants is
approved by the department;
(2) securities described by Article 3.39 or
investments authorized for title insurance companies under the laws
of any other state in which the company is authorized to engage in
business;
(3) real property or any real property interest that
is:
(A) required for the company's convenient
accommodation in the transaction of business with reasonable regard
to future needs;
(B) acquired in connection with a claim under a
title insurance policy;
(C) acquired in satisfaction or on account of
loans, mortgages, liens, judgments, or decrees previously owed to
the company in the course of business;
(D) acquired in partial payment of the
consideration of the sale of real property owned by the company if
the transaction results in a net reduction in the company's
investment in real property; or
(E) reasonably necessary to maintain or enhance
the sale value of real property previously acquired or held by the
company under this subdivision;
(4) a first mortgage note secured by any of the
following, provided that the amount of the note does not exceed 80
percent of the appraised value of the security for the note:
(A) an abstract plant and connected personal
property in or outside this state;
(B) stock of a title insurance agent in or
outside this state;
(C) a construction contract to build an abstract
plant and connected personal property; or
(D) any two or more of the items listed in this
subdivision;
(5) the shares of any federal home loan bank in an
amount necessary to qualify for membership and any additional
amounts approved by the commissioner;
(6) foreign securities that are substantially of the
same kinds, classes, and investment grade as securities otherwise
qualified for investment under this section, provided that, unless
the investment is also qualified under Subdivision (2), the
aggregate amount of foreign investments made under this subdivision
does not exceed:
(A) five percent of the insurer's admitted assets
at the end of the preceding year;
(B) two percent of the insurer's admitted assets
at the end of the preceding year invested in the securities of all
entities domiciled in any one foreign country; and
(C) one-half of one percent of the insurer's
admitted assets at the end of the preceding year invested in the
securities of any one individual entity domiciled in a foreign
country;
(7) securities lending, repurchase, reverse
repurchase, and dollar roll transactions, as described by Section
4(q), Article 3.33; or
(8) money market funds, as described by Section 4(s),
Article 3.33.
(b) If a corporation maintains with the department a deposit
described by Subchapter E in the amount of $100,000, the
corporation may invest more than 50 percent of the corporation's
capital stock under Subsection (a)(1), as considered necessary by
the corporation's board of directors.
(c) A corporation created or operating under this title may
own or acquire more than one abstract plant in any one county, but
only one abstract plant in any one county is admissible as an
investment under Subsection (a)(1).
(d) A title insurance company may not hold real property
acquired under Subsection (a)(3)(B), (C), or (D) for more than 10
years without written approval of the department.
(e) Any investment that does not qualify under this section
and was owned by the title insurance company on October 1, 1967,
continues to qualify.
(f) If any otherwise valid investment qualified under this
section exceeds in amount any of the limitations on investment
provided by this section, the investment is inadmissible only to
the extent that it exceeds the limitation. (V.T.I.C. Art. 9.18.)
Sec. 2551.152. ANNUAL STATEMENT. (a) Not later than March
1 of each year, each title insurance company shall file with the
commissioner a verified statement.
(b) The statement must be in a form required by the
commissioner and must:
(1) provide a statement of the business engaged in by
the title insurance company during the preceding year; and
(2) describe the condition of the company's affairs on
December 31 of the preceding year. (V.T.I.C. Art. 9.22, Sec. (a).)
Sec. 2551.153. FEES. The general laws applicable to
payment of a filing fee by a corporation having capital stock apply
to a corporation subject to this title. (V.T.I.C. Art. 9.13.)
Sec. 2551.154. TRANSFER OF CERTAIN BUSINESS TO STATE BANKS
OR TRUST COMPANIES. (a) This section applies to a corporation
chartered under Section 2551.051, or its antecedents, Article 9.01,
Texas Insurance Code, or Chapter 40, Acts of the 41st Legislature,
Regular Session, 1929 (Article 1302a, Vernon's Texas Civil
Statutes), and empowered to act as:
(1) trustee under a lawful trust committed to the
corporation by contract or will or by appointment by a court as
trustee, receiver, or guardian; and
(2) executor or guardian under the terms of a will or
as an administrator of a decedent's estate under the appointment of
the court.
(b) A corporation described by Subsection (a) may transfer
and assign to one of the following entities all of the corporation's
fiduciary business in which the corporation is named or acts as
guardian, trustee, executor, or administrator or in any other
fiduciary capacity:
(1) a state bank created under Subtitle A, Title 3,
Finance Code, or a predecessor to that law; or
(2) a state trust company created under Chapter 181,
Finance Code, or a predecessor to that law.
(c) On a corporation's transfer or assignment to a state
bank or trust company under this section, the state bank or trust
company shall, without the necessity of any action in a court of
this state or any action by the creator or beneficiary of the trust
or estate:
(1) continue the guardianship, trust, executorship,
administration, or other fiduciary relationship related to the
trust or estate;
(2) perform all of the duties and obligations of the
corporation related to the trust or estate; and
(3) exercise any powers and authority:
(A) related to the trust or estate; and
(B) exercised by the corporation at the time of
the transfer or assignment.
(d) A transfer or assignment by a corporation under this
section is not a resignation or refusal by the corporation to act on
behalf of the guardianship, trust, executorship, administration,
or other fiduciary relationship.
(e) On a corporation's transfer or assignment to a state
bank or trust company under this section, the naming or designation
by a testator or the creator of a living trust of the corporation to
act as trustee, guardian, or executor or in any other fiduciary
capacity includes the naming or designation of the state bank or
trust company and authorizes the state bank or trust company to act
in that capacity. (V.T.I.C. Art. 9.05, Sec. 1 (part).)
[Sections 2551.155-2551.200 reserved for expansion]
SUBCHAPTER E. REQUIRED DEPOSIT
Sec. 2551.201. DEPOSIT REQUIRED; AMOUNT. (a) Except as
provided by Section 2551.202, a title insurance company shall
deposit and maintain in the state treasury, or other depository in
this state named by the company and approved by the department,
either:
(1) cash; or
(2) securities described by Section 2551.151.
(b) A title insurance company's deposit under this section
must be in an amount equal to the lesser of:
(1) one-fourth of the authorized capital of the
company; or
(2) $100,000.
(c) A deposit under this section is for the benefit of all
policyholders. (V.T.I.C. Art. 9.12 (part).)
Sec. 2551.202. EXCEPTION: FOREIGN TITLE INSURANCE COMPANY.
(a) A foreign title insurance company is not required to make a
deposit under Section 2551.201 if the company has on deposit with
insurance regulatory bodies in the United States an aggregate
amount of deposit that:
(1) is equal to the amount required by Section
2551.201; and
(2) secures all policyholders of the company,
regardless of their location.
(b) The foreign title insurance company must file with the
department a certificate of deposit under the hand and seal of each
insurance regulatory body holding a deposit of the company.
(V.T.I.C. Art. 9.12 (part).)
Sec. 2551.203. WITHDRAWAL AND SUBSTITUTION OF DEPOSIT. A
title insurance company may withdraw the deposit of securities made
under Section 2551.201, or any portion of the deposit, after
substituting other securities of a sufficient value to maintain the
amount of deposit required under that section. (V.T.I.C. Art. 9.12
(part).)
Sec. 2551.204. USE OF DEPOSIT. (a) Except as otherwise
provided by Subsection (e), a deposit made under this subchapter
may be used only to pay an obligation connected with title
insurance.
(b) On the insolvency or dissolution of a title insurance
company, the company's deposit shall be used to protect title
insurance policyholders even if no accrued title insurance claims
exist and other unpaid obligations do exist, except as permitted by
Subsection (e).
(c) A title insurance company's deposit must be applied to:
(1) the complete payment of any obligations and
liabilities of the company connected with title insurance business;
and
(2) the establishment of adequate reserves or
reinsurance to protect any subsequently accruing or maturing title
insurance obligations and liabilities.
(d) The amount, handling, and distribution of any reserves
required under Subsection (c)(2) are subject to the control and
discretion of the department and are reviewable in judicial
proceedings governed by rules applicable to review of rates under
Subchapters D and E, Chapter 2703.
(e) Any deposit amount remaining after payments under
Subsection (c) must be applied to:
(1) payment of other obligations and liabilities of
the title insurance company; or
(2) distribution to shareholders. (V.T.I.C. Art. 9.12
(part).)
[Sections 2551.205-2551.250 reserved for expansion]
SUBCHAPTER F. RESERVES
Sec. 2551.251. STATUTORY PREMIUM RESERVE REQUIRED. (a)
Each domestic title insurer shall establish and maintain a
statutory premium reserve. The reserve is cumulative. The reserve
must consist of the amounts required under Sections
2551.252-2551.260 and must be established and maintained during the
period and for the uses and purposes provided by those sections.
(b) The reserve required under this section:
(1) is considered to be unearned portions of the
original premium; and
(2) must be charged as a reserve liability of the title
insurer in determining the insurer's financial condition.
(V.T.I.C. Art. 9.16, Sec. 1.)
Sec. 2551.252. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEAR
1997; REDUCTIONS. (a) The total charges of a domestic title
insurer for title insurance policies written or assumed on or after
January 1, 1997, and before January 1, 1998, are computed by adding
the following, as described in the insurer's annual statement:
(1) the direct premium written by the insurer;
(2) the escrow and settlement service fees paid
directly to and collected by the insurer;
(3) other title fees and service charges paid directly
to and collected by the insurer, including fees for closing
protection letters; and
(4) premiums for any reinsurance assumed by the
insurer, less premiums for reinsurance ceded by the insurer during
that year.
(b) The amount a domestic title insurer must set aside in
the statutory premium reserve for the 1997 calendar year is
computed by multiplying the total charges computed under Subsection
(a) by:
(1) 6-1/5 percent if the insurer had $250 million or
more in direct premium written for the year 1996; or
(2) 3-1/2 percent if the insurer had less than $250
million in direct premium written for the year 1996.
(c) A domestic title insurer shall reduce additions to the
statutory premium reserve set aside for title insurance policies
written or assumed during the year 1997 over a 20-year period
beginning in the year after the year in which the policies are
written or assumed, as provided by Subsection (d), by:
(1) 26 percent of the additions in the first year
following the year of addition;
(2) 20 percent of the additions in the second year
following the year of addition;
(3) 10 percent of the additions in the third year
following the year of addition;
(4) nine percent of the additions in the fourth year
following the year of addition;
(5) five percent of the additions in the fifth and
sixth years following the year of addition;
(6) three percent of the additions in the seventh,
eighth, and ninth years following the year of addition;
(7) two percent of the additions in the 10th through
14th years following the year of addition; and
(8) one percent of the additions in the last six years
of the 20-year period.
(d) A domestic title insurer shall make the annual
reductions under Subsection (c) in increments of one-fourth of the
appropriate percentage of the additions each on March 31, June 30,
September 30, and December 31 of each year. (V.T.I.C. Art. 9.16,
Sec. 2.)
Sec. 2551.253. AMOUNTS ADDED TO RESERVE FOR CALENDAR YEARS
AFTER 1997; REDUCTIONS. (a) Out of total charges for title
insurance policies written or assumed on or after January 1, 1998, a
domestic title insurer shall add to and set aside in the statutory
premium reserve an amount equal to the total of the following, as
described in the insurer's annual statement:
(1) 25 cents per $1,000 of net retained liability if
the insurer had $250 million or more in direct written premiums
written for the most recent calendar year; or
(2) 30 cents per $1,000 of net retained liability if
the insurer had less than $250 million in direct written premiums
written for the most recent calendar year.
(b) A domestic title insurer shall reduce additions to the
statutory premium reserve set aside for title insurance policies
written or assumed after the year 1997 over a 20-year period
beginning in the year after the year in which the policies are
written or assumed in the manner and under the same percentages
applied under Sections 2551.252(c) and (d). (V.T.I.C. Art. 9.16,
Sec. 3.)
Sec. 2551.254. TRANSITIONAL RELEASE; TRANSITIONAL CHARGE.
(a) In addition to the requirements described by Sections 2551.252
and 2551.253, each domestic title insurer shall compute a total
statutory premium reserve balance for all policy years combined as
of December 31, 1996.
(b) A domestic title insurer shall compute the balance under
Subsection (a) as if Section 2551.252 were in effect during the
20-year period ending December 31, 1996. That balance, less the
total actual statutory premium reserve balance carried by the
insurer on December 31, 1996, is the insurer's transitional charge
if the resulting amount is more than zero or is the insurer's
transitional release if the resulting amount is zero or less.
(c) If a domestic title insurer has a transitional charge
under Subsection (b), in addition to any changes to the statutory
premium reserve otherwise required by this subchapter, the insurer
shall add to its statutory premium reserve, on December 31 of each
year for 10 consecutive years beginning on December 31, 1997, an
amount equal to one-tenth of the transitional charge.
(d) If a domestic title insurer has a transitional release
under Subsection (b), in addition to any changes to the statutory
premium reserve otherwise required by this subchapter, the insurer
shall reduce its statutory premium reserve, on December 31 of each
year for 10 consecutive years beginning on December 31, 1997, by an
amount equal to one-tenth of the transitional release. (V.T.I.C.
Art. 9.16, Sec. 4.)
Sec. 2551.255. RUNOFF BALANCE. (a) At the end of each
calendar year beginning in 1997, each domestic title insurer shall
compute a total statutory premium reserve balance for all policy
years before January 1, 1997, combined. The balance shall be
computed as of the year-end evaluation date and as if Section
2551.252 were in effect during the 20-year period ending December
31, 1996. The balance computed under this subsection is the runoff
balance.
(b) A domestic title insurer shall reduce its statutory
premium reserve by an amount equal to the difference between:
(1) the runoff balance computed under Subsection (a);
and
(2) the runoff balance computed for the preceding
calendar year.
(c) The reduction of the statutory premium reserve under
Subsection (b) is in addition to any other changes to the statutory
premium reserve required by this subchapter. (V.T.I.C. Art. 9.16,
Sec. 5.)
Sec. 2551.256. ACTUARIAL CERTIFICATION. (a) Each domestic
or foreign title insurer shall file annually with the insurer's
annual statement required under Section 2551.152 an actuarial
certification made by a member in good standing of the American
Academy of Actuaries.
(b) An actuarial certification must:
(1) conform to the annual statement instructions for a
title insurer adopted by the National Association of Insurance
Commissioners; and
(2) include the actuary's professional opinion of the
insurer's reserves as of the date of the annual statement.
(c) The reserves analyzed under this section must include
reserves for known claims, including adverse development on known
claims, and reserves for incurred but not reported claims.
(V.T.I.C. Art. 9.16, Secs. 6, 8 (part).)
Sec. 2551.257. SUPPLEMENTAL RESERVE. Each domestic or
foreign title insurer shall establish a supplemental reserve in an
amount equal to the amount by which the actuarially certified
reserves exceed the total of the known claim reserve and statutory
premium reserve as set forth in the insurer's annual statement
required under Section 2551.152. (V.T.I.C. Art. 9.16, Secs. 7(a),
8 (part).)
Sec. 2551.258. REEVALUATION OF CERTAIN RESERVE
REQUIREMENTS. The commissioner may reevaluate the adequacy of the
statutory premium reserves required under Section 2551.253 and may
make recommendations for legislative changes as the commissioner
considers appropriate. (V.T.I.C. Art. 9.16, Sec. 9.)
Sec. 2551.259. STATUTORY PREMIUM RESERVE AND SUPPLEMENTAL
RESERVE FUND. The statutory premium reserve and supplemental
reserve fund shall be:
(1) held in cash; or
(2) invested in first mortgage notes or other
securities admissible for investment by title insurers under
Section 2551.151. (V.T.I.C. Art. 9.16, Sec. 10.)
Sec. 2551.260. EFFECT OF INSOLVENCY OR DISSOLUTION. On the
insolvency or dissolution of a title insurer, the statutory premium
reserve and supplemental reserve fund shall be used to protect
title insurance policyholders, even if no accrued title insurance
claims exist and other unpaid obligations do exist. (V.T.I.C. Art.
9.16, Sec. 11.)
Sec. 2551.261. RESERVE FOR UNPAID LOSSES AND LOSS EXPENSES.
(a) A title insurance company shall establish and maintain, in
addition to any other reserves, a reserve against:
(1) unpaid losses; and
(2) loss expense for costs of defense of an insured and
other costs expected to be paid to other parties in the defense,
settlement, or processing of a claim under the terms of a title
insurance policy.
(b) A title insurance company shall compute the amount of
the reserve required by this section by carefully estimating any
loss and loss expense likely to be incurred on a proper disposition
of each claim presented, under notice from or on behalf of the
insured, of a title defect in or lien or adverse claim against a
title insured by the company.
(c) The total expenses of the title insurance company are
equal to the estimate under Subsection (b) for payment of loss and
costs of defense of the insured and other costs expected to be paid
to other parties in the defense, settlement, or processing of the
claim under the terms of the title insurance policy. The title
insurance company shall revise the estimate at least annually and
may additionally revise the estimate as circumstances warrant.
(d) The amounts set aside in the reserve in any year shall be
deducted in determining the net profits for that year of any title
insurance company. (V.T.I.C. Art. 9.17.)
[Sections 2551.262-2551.300 reserved for expansion]
SUBCHAPTER G. LIABILITY AND REINSURANCE
Sec. 2551.301. MAXIMUM POLICY LIABILITY. (a) Except as
provided by Subsection (b), a title insurance company may not issue
a title insurance policy on any real property located in this state
involving a potential policy liability of more than 50 percent of
the company's capital stock and surplus as stated in the most recent
annual statement of the company.
(b) A title insurance company may exceed the limit described
by Subsection (a) if the excess liability is reinsured in due course
in an authorized title insurance company. (V.T.I.C. Art. 9.19,
Sec. A (part).)
Sec. 2551.302. REQUIREMENTS FOR REINSURING POLICIES. A
title insurance company may reinsure any of its policies and
contracts issued on real property located in this state, if:
(1) the reinsuring title insurance company is
authorized to engage in business in this state under this title; and
(2) the department first approves the form of the
reinsurance contract. (V.T.I.C. Art. 9.19, Sec. A (part).)
Sec. 2551.303. FORM OF REINSURANCE CONTRACT. (a) If the
department approves a form of reinsurance contract for a title
insurance company, the company may continue using the form without
submitting individual reinsurance contracts to the department for
approval.
(b) The department may alter the required form of a
reinsurance contract previously approved by the department after
first giving written notice to each title insurance company
affected by the alteration. (V.T.I.C. Art. 9.19, Sec. B.)
Sec. 2551.304. ACCEPTANCE OF REINSURANCE. A title
insurance company may accept a reinsurance risk on real property
located in this state only from an authorized title insurance
company. (V.T.I.C. Art. 9.19, Sec. C.)
Sec. 2551.305. CERTAIN REINSURANCE ALLOWED. (a)
Notwithstanding any other provision of this subchapter, the
department may, on application and hearing, permit a title
insurance company to acquire reinsurance on an individual policy or
facultative basis from a title insurance company not authorized to
engage in the business of title insurance in this state, if:
(1) the company has exhausted the opportunity to
acquire reinsurance from all other authorized title insurance
companies; and
(2) the title insurance company from which the
reinsurance is acquired has a combined capital and surplus of at
least $1.4 million as stated in its annual statement preceding the
acceptance of reinsurance.
(b) Notwithstanding any other provision of this subchapter,
the department may, on application and hearing, permit a title
insurance company, including an authorized reinsuring title
insurance company, to retain an additional potential liability of
not more than 40 percent of the company's capital stock and surplus
as stated in the most recent annual statement of the company, if:
(1) the company has exhausted the opportunity to
acquire reinsurance under Subsection (a); and
(2) the additional potential liability of the company
is incurred only if the loss suffered by the insured under the
policy exceeds the amount of insurance and reinsurance accepted by
the company and its reinsuring title insurance companies under the
other provisions of this subchapter. (V.T.I.C. Art. 9.19, Secs. D,
E.)
[Sections 2551.306-2551.350 reserved for expansion]
SUBCHAPTER H. ENFORCEMENT AND INTERVENTION
Sec. 2551.351. FORFEITURE OF RIGHT TO ENGAGE IN BUSINESS.
(a) A foreign or domestic corporation forfeits any right to engage
in business in this state if the corporation:
(1) issues any form of title insurance policy, or any
other adopted or approved form, on real property in this state other
than a form prescribed by the department;
(2) charges any premium rate on an owner, mortgagee,
or other title insurance policy, or on any other adopted or approved
form, on real property in this state other than a premium rate
prescribed by the commissioner; or
(3) otherwise engages in the business of title
insurance in relation to real property in this state on a form or
for a premium rate not prescribed by the department or
commissioner.
(b) This section does not apply to a premium rate charged in
connection with a reinsurance transaction between two or more title
insurance companies, provided that the reinsurance contract
complies with Subchapter G. (V.T.I.C. Art. 9.11.)
Sec. 2551.352. REVOCATION OF PERMIT AND FORFEITURE OF
CHARTER. (a) A domestic corporation engaged in the business of
title insurance that violates this title is subject to:
(1) revocation by the commissioner of the
corporation's permit; and
(2) forfeiture of the corporation's charter.
(b) A foreign corporation engaged in the business of title
insurance that violates this title is subject to revocation by the
commissioner of the corporation's permit. (V.T.I.C. Art. 9.33,
Sec. (a).)
Sec. 2551.353. PROCEDURE FOR REVOCATION OF CERTIFICATE.
(a) If the commissioner determines that a domestic or foreign
corporation that holds a certificate of authority to engage in
business in this state has violated this title, the commissioner
shall notify the company that the commissioner intends to revoke
the company's certificate of authority on the expiration of the
30-day period following the date actual notice is delivered or
mailed under this section.
(b) Notice under this section must:
(1) be in writing; and
(2) be delivered to an executive officer of the
company by personal service or by registered mail.
(c) If a company receiving notice under this section does
not fully comply before the expiration of the period described by
Subsection (a), the commissioner shall revoke the company's
certificate of authority.
(d) A company whose certificate of authority is revoked
under this section is ineligible for another certificate of
authority until the later of:
(1) the date on which the company fully and in good
faith complies; or
(2) the first anniversary of the date of the
revocation. (V.T.I.C. Art. 9.28 (part).)
Sec. 2551.354. APPEAL OF COMMISSIONER ACTION. (a) A
company qualified or seeking to qualify under this title and
aggrieved by an action of the commissioner, including any action
against the company, may file an appeal of the commissioner's
action in a district court in Travis County.
(b) The appeal must be filed not later than the 30th day
after the date the commissioner issues the order or ruling, except
that if the order or ruling is directed against the company, whether
or not directed against any other party, the company has 30 days
after the date of receipt of official notice of the commissioner's
action to review the action.
(c) An appeal under this section is subject to the same
standard of review as an appeal under this code in accordance with
Section 36.203. (V.T.I.C. Art. 9.33, Sec. (b).)
CHAPTER 2552. ATTORNEY'S TITLE INSURANCE COMPANIES
AND TITLE ATTORNEYS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2552.001. PURPOSE; LEGISLATIVE INTENT
Sec. 2552.002. DEFINITIONS
Sec. 2552.003. APPLICABILITY OF TITLE 11
Sec. 2552.004. BUSINESS OF ATTORNEY'S TITLE INSURANCE
Sec. 2552.005. OTHER TITLE INSURANCE COMPANIES AND AGENTS
PROHIBITED
Sec. 2552.006. RECORD OF TITLE ATTORNEYS
Sec. 2552.007. OTHER PREMIUM OR FEE PROHIBITED
[Sections 2552.008-2552.050 reserved for expansion]
SUBCHAPTER B. ORGANIZATION OF ATTORNEY'S TITLE
INSURANCE COMPANY
Sec. 2552.051. ORGANIZING MEMBERS
Sec. 2552.052. CAPITAL SHARE AND SURPLUS REQUIREMENTS
GENERALLY
Sec. 2552.053. CAPITAL SHARE AND SURPLUS REQUIREMENTS
FOR STATE BAR ENTITY
Sec. 2552.054. REACQUISITION OF SHARES
Sec. 2552.055. REACQUISITION PLAN REQUIRED
Sec. 2552.056. INAPPLICABILITY OF LAWS REGULATING
SECURITIES
[Sections 2552.057-2552.100 reserved for expansion]
SUBCHAPTER C. TITLE ATTORNEY'S LICENSE AND RENEWAL
Sec. 2552.101. LICENSE AND OTHER GENERAL REQUIREMENTS
Sec. 2552.102. LICENSE APPLICATION
Sec. 2552.103. LICENSE ISSUANCE AND DELIVERY
Sec. 2552.104. DUPLICATE LICENSE
Sec. 2552.105. LICENSE TERM
Sec. 2552.106. AUTOMATIC TERMINATION OF LICENSE
Sec. 2552.107. LICENSE SURRENDER OR FORFEITURE
Sec. 2552.108. CONTINUATION OF LICENSE
[Sections 2552.109-2552.150 reserved for expansion]
SUBCHAPTER D. TITLE ATTORNEY GENERAL REQUIREMENTS
Sec. 2552.151. CONTRACT REQUIRED FOR APPOINTMENT
Sec. 2552.152. ABSTRACT PLANT REQUIREMENTS
Sec. 2552.153. CONTRACT WITH LICENSED ABSTRACT PLANT
Sec. 2552.154. BOND OR DEPOSIT REQUIRED
Sec. 2552.155. EXAMINATION OF LOSS COVERED BY BOND
Sec. 2552.156. INVESTIGATION BY ATTORNEY GENERAL
Sec. 2552.157. AUTHORITY TO ISSUE POLICY
Sec. 2552.158. AUTHORITY TO DELIVER BUT NOT ISSUE
POLICY
[Sections 2552.159-2552.200 reserved for expansion]
SUBCHAPTER E. POWERS AND DUTIES OF ATTORNEY'S
TITLE INSURANCE COMPANIES
Sec. 2552.201. ACTING AS TITLE ATTORNEY
Sec. 2552.202. LIST OF TITLE ATTORNEYS
Sec. 2552.203. RENEWAL
Sec. 2552.204. NOTICE OF TERMINATION
[Sections 2552.205-2552.250 reserved for expansion]
SUBCHAPTER F. AUDIT AND EXAMINATION REQUIREMENTS
RELATING TO TRUST FUND ACCOUNTS
Sec. 2552.251. ANNUAL AUDIT
Sec. 2552.252. ANALYSIS OF ANNUAL AUDIT
Sec. 2552.253. EXAMINATION OF TRUST FUND ACCOUNTS;
TRANSACTION REPORTS
Sec. 2552.254. ENFORCEMENT; HEARING
[Sections 2552.255-2552.300 reserved for expansion]
SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2552.301. GROUNDS FOR LICENSE DENIAL OR
DISCIPLINARY ACTION
Sec. 2552.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL, OR
REVOCATION
CHAPTER 2552. ATTORNEY'S TITLE INSURANCE COMPANIES
AND TITLE ATTORNEYS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2552.001. PURPOSE; LEGISLATIVE INTENT. (a) Except as
otherwise expressly provided by this chapter, the purpose of this
chapter is to regulate an attorney's title insurance company in the
same manner as a title insurance company engaged in the business of
title insurance under this title.
(b) It is the express intent of the legislature to achieve
the purpose described by Subsection (a). (V.T.I.C. Art. 9.56, Sec.
1(d).)
Sec. 2552.002. DEFINITIONS. In this chapter:
(1) "Attorney's title insurance" means:
(A) insurance that:
(i) insures, guarantees, or indemnifies an
owner of real property in this state, or another interested in the
real property, against loss or damage resulting from:
(a) a lien or encumbrance on or defect
in the title to the real property; or
(b) the invalidity of a lien on the
real property; and
(ii) is issued only in connection with and
as part of a real property transaction and a title opinion of a
title attorney; or
(B) any business that is substantially
equivalent to the insurance business described by Paragraph (A) and
is conducted in a manner designed to evade the provisions of this
title.
(2) "Attorney's title insurance company" means a
domestic company organized and operated in accordance with this
chapter for the business of attorney's title insurance.
(3) "Title attorney" means an attorney who satisfies
the requirements of this chapter to act as a title attorney in this
state for an attorney's title insurance company. (V.T.I.C. Art.
9.56, Secs. 1(a), 2(a), (c), (d) (part), 3 (part); New.)
Sec. 2552.003. APPLICABILITY OF TITLE 11. Except as
otherwise expressly provided by this chapter:
(1) this title applies to an attorney's title
insurance company;
(2) the provisions of this title that apply to a title
insurance company also apply to an attorney's title insurance
company;
(3) the provisions of this title that apply to a title
insurance agent also apply to a title attorney; and
(4) any rule adopted or premium promulgated by the
commissioner under this title applies to an attorney's title
insurance company and to a title attorney. (V.T.I.C. Art. 9.56,
Secs. 1(b), (c).)
Sec. 2552.004. BUSINESS OF ATTORNEY'S TITLE INSURANCE. (a)
The business of attorney's title insurance may be engaged in only by
an attorney's title insurance company through a title attorney
appointed by an attorney's title insurance company.
(b) For purposes of this chapter, a person engages in the
business of attorney's title insurance if the person:
(1) as insurer, guarantor, or surety, makes or
proposes to make a contract or policy of title insurance; or
(2) transacts or proposes to transact any phase of
title insurance, including:
(A) soliciting;
(B) negotiating before executing a title
insurance contract;
(C) executing a contract of title insurance; and
(D) insuring and transacting matters arising out
of the contract after the contract is executed, including
reinsurance.
(c) A person engages in the business of attorney's title
insurance if the person engages in or proposes to engage in any
business that is substantially equivalent to the business of
attorney's title insurance as part of a real property transaction
and title opinion of a title attorney in a manner designed to evade
the applicable provisions of this title. (V.T.I.C. Art. 9.56,
Secs. 2(b), 12 (part).)
Sec. 2552.005. OTHER TITLE INSURANCE COMPANIES AND AGENTS
PROHIBITED. A title insurance company, title insurance agent, or
escrow officer of a title insurance agent licensed under this title
to engage in the business of title insurance in this state may not
operate as an attorney's title insurance company or act as a title
attorney under this chapter. (V.T.I.C. Art. 9.56, Sec. 12 (part).)
Sec. 2552.006. RECORD OF TITLE ATTORNEYS. The department
shall maintain a record of the name and address of each title
attorney in a manner that allows a person on request to conveniently
ascertain and inspect the title attorneys appointed by an
attorney's title insurance company authorized to engage in the
business of attorney's title insurance in this state. (V.T.I.C.
Art. 9.56, Sec. 6(b) (part).)
Sec. 2552.007. OTHER PREMIUM OR FEE PROHIBITED. Attorney's
title insurance may not be issued for any premium or fee other than
the applicable prescribed premium as provided by Subchapters D and
E, Chapter 2703. (V.T.I.C. Art. 9.56, Sec. 3 (part).)
[Sections 2552.008-2552.050 reserved for expansion]
SUBCHAPTER B. ORGANIZATION OF ATTORNEY'S TITLE INSURANCE COMPANY
Sec. 2552.051. ORGANIZING MEMBERS. Fifteen or more members
of the State Bar of Texas who are residents of this state may
organize a private corporation to act as an attorney's title
insurance company. (V.T.I.C. Art. 9.56, Sec. 3 (part).)
Sec. 2552.052. CAPITAL SHARE AND SURPLUS REQUIREMENTS
GENERALLY. (a) At the time of organization, an attorney's title
insurance company must have the capital and surplus required of a
title insurance company under Section 2551.053(a).
(b) The capital shares of an attorney's title insurance
company may be issued for a par value of $100 or more per share and
in one or more classes.
(c) The capital shares, regardless of class, must be
subscribed and paid for and owned by and issued to licensed members
of the State Bar of Texas, each of whom is a resident of this state
and is qualified to be appointed a title attorney under this
chapter, subject to the right of reacquisition under Section
2552.054.
(d) Each certificate evidencing any share must have
endorsed on the certificate provisions relating to limitation on
the alienation of the shares indicating that the shares may be owned
only by qualifying attorneys or the attorney's title insurance
company issuing the shares.
(e) The requirements prescribed by Subsections (a), (c),
and (d) do not apply to an attorney's title insurance company
described by Section 2552.053 or to capital shares of an attorney's
title insurance company owned under that section. (V.T.I.C. Art.
9.56, Secs. 3 (part), 4(b), 13(b).)
Sec. 2552.053. CAPITAL SHARE AND SURPLUS REQUIREMENTS FOR
STATE BAR ENTITY. (a) An association of the organized State Bar of
Texas, the State Bar of Texas, or any foundation created by or
through the State Bar of Texas, the purposes of which include the
continuing legal education of the bench and bar of this state, may
own any class of capital shares of an attorney's title insurance
company if, at all times, at least 15 members of the State Bar of
Texas who are residents of this state own capital shares, whether or
not of the same class, in the attorney's title insurance company.
(b) An attorney's title insurance company created as an
affiliate or subsidiary of the organized State Bar of Texas, the
State Bar of Texas, or any foundation created by or through the
State Bar of Texas must have a paid-up capital of at least $250,000
and a surplus of at least $150,000. (V.T.I.C. Art. 9.56, Secs. 3
(part), 4(a).)
Sec. 2552.054. REACQUISITION OF SHARES. (a) The capital
shares of an attorney's title insurance company are subject to the
right of reacquisition of the shares by the attorney's title
insurance company in the event of:
(1) the death of the attorney shareholder;
(2) the failure of the attorney shareholder to remain
a licensed member of the State Bar of Texas; or
(3) the failure of the attorney shareholder to remain
appointed and qualified to be appointed a title attorney under this
chapter.
(b) An attorney's title insurance company must reacquire a
deceased attorney shareholder's shares within nine months of the
attorney shareholder's death. (V.T.I.C. Art. 9.56, Secs. 3 (part),
13(d).)
Sec. 2552.055. REACQUISITION PLAN REQUIRED. (a) As part of
the application for the approval of the charter of an attorney's
title insurance company, the applicants must file with the
department an acceptable plan providing for the reacquisition of
all shares of stock of the attorney's title insurance company
issued to a qualified attorney when the attorney is no longer
qualified to own the shares or on the death of the attorney.
(b) The plan must be approved by the department.
(c) In addition to other provisions, the plan must include
an express provision that the attorney's title insurance company
may not reacquire under any circumstance outstanding shares of its
stock as treasury stock if the reacquisition will result in
reducing its capital and surplus below the minimum capital and
surplus required for the initial organization of the attorney's
title insurance company. (V.T.I.C. Art. 9.56, Sec. 13(c).)
Sec. 2552.056. INAPPLICABILITY OF LAWS REGULATING
SECURITIES. (a) All state laws, other than this title, that
provide for supervision, registration, or regulation in connection
with the sale, issuance, or offering of securities do not apply to
the sale, issuance, or offering of any capital stock to a person
authorized under this chapter to own the capital stock.
(b) The sale, issuance, or offering of any stock described
by this section is legal without any action or approval by any
official or state regulatory agency authorized to license,
regulate, or supervise the sale, issuance, or offering of
securities. (V.T.I.C. Art. 9.56, Sec. 13(a).)
[Sections 2552.057-2552.100 reserved for expansion]
SUBCHAPTER C. TITLE ATTORNEY'S LICENSE AND RENEWAL
Sec. 2552.101. LICENSE AND OTHER GENERAL REQUIREMENTS. To
act as a title attorney in this state for an attorney's title
insurance company, an attorney must:
(1) be a member in good standing of the State Bar of
Texas;
(2) own one or more shares of stock in the attorney's
title insurance company by which the attorney is appointed;
(3) be actively engaged in the practice of law;
(4) meet the requirements prescribed by this chapter
regarding an abstract plant;
(5) be appointed by an attorney's title insurance
company as its title attorney authorized by the attorney's title
insurance company to solicit insurance, collect premiums, and
issue or countersign policies on behalf of the attorney's title
insurance company;
(6) be certified as a title attorney to the
department;
(7) hold a license issued by the department under this
subchapter; and
(8) maintain a surety bond or deposit as required by
Section 2552.154. (V.T.I.C. Art. 9.56, Secs. 2(d) (part), 5
(part).)
Sec. 2552.102. LICENSE APPLICATION. (a) Before an initial
license is issued to an attorney to act as a title attorney in this
state for an attorney's title insurance company, the attorney's
title insurance company must file an application for a title
attorney's license with the department on forms provided by the
department.
(b) The application must be:
(1) accompanied by a nonrefundable fee in an amount
not to exceed $50 as prescribed by the department; and
(2) signed and sworn to by the attorney's title
insurance company and the proposed title attorney.
(c) The completed application must state that:
(1) the proposed title attorney:
(A) is a licensed attorney in this state and a
resident of this state;
(B) is actively engaged in the practice of law;
(C) is known to the attorney's title insurance
company:
(i) to have a good business reputation;
(ii) to be a current member, in good
standing, of the State Bar of Texas; and
(iii) to be worthy of the public trust; and
(D) meets the qualifications for a title attorney
as prescribed by this chapter; and
(2) the attorney's title insurance company does not
know of any fact or condition that would disqualify the proposed
title attorney from receiving a license. (V.T.I.C. Art. 9.56, Sec.
6(a) (part).)
Sec. 2552.103. LICENSE ISSUANCE AND DELIVERY. (a) The
department shall issue a title attorney's license if the department
determines, based on the application and the department's
investigation, that the requirements of Section 2552.102 are
satisfied.
(b) The department shall deliver the license to the
attorney's title insurance company for transmittal to the title
attorney. (V.T.I.C. Art. 9.56, Secs. 6(a) (part), (b) (part).)
Sec. 2552.104. DUPLICATE LICENSE. (a) The department
shall collect in advance a fee from a license holder who requests a
duplicate title attorney's license.
(b) The department shall prescribe the fee in an amount not
to exceed $20. (V.T.I.C. Art. 9.56, Sec. 6(a) (part).)
Sec. 2552.105. LICENSE TERM. Unless a system of staggered
renewal is adopted under Section 4003.002, a title attorney's
license expires on June 1 following the date of issuance. (V.T.I.C.
Art. 9.56, Sec. 6(b) (part).)
Sec. 2552.106. AUTOMATIC TERMINATION OF LICENSE. The
license of each title attorney appointed by an attorney's title
insurance company that surrenders its certificate of authority or
has its certificate revoked by the department is automatically
terminated without notice. (V.T.I.C. Art. 9.56, Sec. 6(b) (part).)
Sec. 2552.107. LICENSE SURRENDER OR FORFEITURE. (a) A
title attorney may voluntarily surrender the title attorney's
license at any time by giving notice to the department and to the
attorney's title insurance company.
(b) A title attorney automatically forfeits the title
attorney's license under the attorney's title insurance company if
the title attorney terminates the title attorney's relationship
with the attorney's title insurance company.
(c) A surrender or forfeiture of a title attorney's license
under this section does not affect the culpability of the license
holder for conduct committed before the effective date of the
surrender or forfeiture. The department may institute a
disciplinary proceeding against the former license holder for
conduct committed before the effective date of the surrender or
forfeiture. (V.T.I.C. Art. 9.56, Secs. 8(a), (f).)
Sec. 2552.108. CONTINUATION OF LICENSE. (a) Not later than
the 30th day after the date an attorney's title insurance company
terminates its contract with a title attorney or gives notice of
termination to the title attorney, the title attorney may apply to
the department for continuation of the title attorney's license.
(b) The application must include an amendment to the license
stating the name of another attorney's title insurance company for
which the title attorney is or will be authorized to act. (V.T.I.C.
Art. 9.56, Sec. 6(c).)
[Sections 2552.109-2552.150 reserved for expansion]
SUBCHAPTER D. TITLE ATTORNEY GENERAL REQUIREMENTS
Sec. 2552.151. CONTRACT REQUIRED FOR APPOINTMENT. (a) A
title attorney must be appointed by an attorney's title insurance
company by contract.
(b) The contract must make arrangements for division of
premium as may be approved by the department under this title.
(V.T.I.C. Art. 9.56, Sec. 2(d) (part).)
Sec. 2552.152. ABSTRACT PLANT REQUIREMENTS. (a) A title
attorney must:
(1) own or lease and control a licensed abstract
plant;
(2) participate in a bona fide joint abstract plant
operation;
(3) contract in accordance with this subchapter to
obtain title evidence from a licensed abstract plant; or
(4) use title evidence provided by an approved
abstract plant owned or leased and controlled by the attorney's
title insurance company.
(b) If at the time of applying for a license under Section
2552.102 an attorney does not own or lease and control a licensed
abstract plant, is not a participant in a bona fide joint abstract
plant operation, and is unable to contract to obtain title evidence
from a licensed abstract plant located in the county in which the
attorney resides, the attorney, as part of the license application,
may satisfy the requirements of this section by filing with the
department on a form prescribed by the department a disclosure of
the inability to obtain the contract. (V.T.I.C. Art. 9.56, Sec.
2(d) (part).)
Sec. 2552.153. CONTRACT WITH LICENSED ABSTRACT PLANT. (a)
A title attorney may enter into a contract with a licensed abstract
plant under which the abstract plant provides title evidence to the
title attorney. The contract must:
(1) be on a form prescribed by the commissioner; and
(2) state the standards for the evidence to be
provided.
(b) The commissioner may change the form of the contract.
(c) The parties to the contract shall determine the portion
of the premium to be paid by the title attorney to the licensed
abstract plant, subject to approval by the department.
(d) The department may disapprove any division of the
premium that the department determines to be excessive or
inadequate. The contract is considered to be approved as to the
division of the premium until the parties are notified of
disapproval by the department.
(e) The portion of the premium to be paid to the licensed
abstract plant is considered to be in compliance with Section
2502.053(1).
(f) The parties to the contract shall file with the
department a copy of the contract not later than the 10th day after
the date of execution of the contract. (V.T.I.C. Art. 9.56, Secs.
2(d) (part), 7(b).)
Sec. 2552.154. BOND OR DEPOSIT REQUIRED. (a) A title
attorney shall make, file, and pay for a surety bond payable to the
department in the amount of $7,500 and issued by a corporate surety
company authorized to write surety bonds in this state. The bond
shall obligate the principal and surety to pay any pecuniary loss
that is incurred by:
(1) a participant in a real property settlement or
closing in which an attorney's title insurance policy is issued by
the title attorney and that is sustained through an act of fraud,
dishonesty, theft, embezzlement, or wilful misapplication by a
title attorney; and
(2) any party to an escrow agreement in which the title
attorney is escrowee and that is sustained through an act of fraud,
dishonesty, forgery, theft, embezzlement, or wilful misapplication
by the title attorney, either directly and alone or in conspiracy
with another person.
(b) Instead of a surety bond, a title attorney may deposit
with the department cash or securities approved by the department
in the amount of $7,500, subject to the same conditions required for
the bond. (V.T.I.C. Art. 9.56, Sec. 9(a).)
Sec. 2552.155. EXAMINATION OF LOSS COVERED BY BOND. (a) At
any time it appears that the terms of a title attorney's bond may
have been violated, the department may require the title attorney
to appear in Travis County, with records the department determines
to be proper, for an examination.
(b) The department shall specify a date for the examination
that is not earlier than the 10th day or later than the 15th day
after the date of service of notice of the requirement to appear.
(c) If after the examination the department determines that
the terms of the bond have been violated, the department shall
immediately notify the surety and prepare a written statement of
the facts of the loss and deliver the statement to the attorney
general. (V.T.I.C. Art. 9.56, Sec. 9(b) (part).)
Sec. 2552.156. INVESTIGATION BY ATTORNEY GENERAL. (a) On
receipt of a written statement under Section 2552.155, the attorney
general shall investigate the charges and, on determining that the
terms of the bond have been violated, shall enforce the liability
against cash or securities or by filing suit on the bond.
(b) A suit brought under this section shall be filed in the
name of the department in Travis County for the benefit of all
parties who have suffered any loss because of the violation.
(V.T.I.C. Art. 9.56, Sec. 9(b) (part).)
Sec. 2552.157. AUTHORITY TO ISSUE POLICY. A title attorney
may issue a title insurance policy for an attorney's title
insurance company only if the title attorney:
(1) is appointed by the attorney's title insurance
company as its title attorney;
(2) bases each title opinion on separate and current
title evidence, provided by a licensed abstract plant, of the
records of the county in which the real property, the title to which
is to be insured, is located; and
(3) pays to the licensed abstract plant the portion of
the premium agreed to by the title attorney and the abstract plant
and approved by the department, if the title attorney contracts to
obtain the title evidence from the abstract plant as provided by
Section 2552.153. (V.T.I.C. Art. 9.56, Sec. 7(a).)
Sec. 2552.158. AUTHORITY TO DELIVER BUT NOT ISSUE POLICY. A
title attorney may deliver, but not issue, a title insurance policy
in conformity with Subchapter A, Chapter 2704, if:
(1) the title attorney does not own or lease and
control a licensed abstract plant, is not a participant in a bona
fide joint abstract plant operation, and is unable to contract with
a licensed abstract plant to obtain the required title evidence in
the county in which the real property, the title to which is to be
insured, is located; or
(2) the title insurance policy is based on a certified
abstract of title prepared by a licensed abstract plant covering
the particular real property from the sovereignty of the soil to the
date of the transaction. (V.T.I.C. Art. 9.56, Sec. 7(c).)
[Sections 2552.159-2552.200 reserved for expansion]
SUBCHAPTER E. POWERS AND DUTIES OF ATTORNEY'S
TITLE INSURANCE COMPANIES
Sec. 2552.201. ACTING AS TITLE ATTORNEY. An attorney's
title insurance company may not permit an attorney to act as its
title attorney in this state, including by writing, signing, or
delivering title insurance policies, unless the attorney holds a
license issued under Subchapter C and maintains a surety bond or
deposit as required by Section 2552.154. (V.T.I.C. Art. 9.56,
Secs. 5 (part), 6(b) (part).)
Sec. 2552.202. LIST OF TITLE ATTORNEYS. (a) An attorney's
title insurance company shall certify to the department the name
and address of each title attorney appointed by the attorney's
title insurance company.
(b) The certification required by this section must:
(1) be on a form provided by the department; and
(2) be made on or before June 1 of each year unless a
system of staggered renewal is adopted under Section 4003.002.
(V.T.I.C. Art. 9.56, Sec. 6(b) (part).)
Sec. 2552.203. RENEWAL. An attorney's title insurance
company shall apply for license renewal and pay a fee prescribed by
the department in an amount not to exceed $50 for each title
attorney listed under Section 2552.202. (V.T.I.C. Art. 9.56, Sec.
6(b) (part).)
Sec. 2552.204. NOTICE OF TERMINATION. An attorney's title
insurance company that terminates the appointment of a title
attorney shall:
(1) immediately notify the department in writing of
the termination and request cancellation of the title attorney's
license; and
(2) notify the title attorney of the action by the
attorney's title insurance company. (V.T.I.C. Art. 9.56, Sec. 6(b)
(part).)
[Sections 2552.205-2552.250 reserved for expansion]
SUBCHAPTER F. AUDIT AND EXAMINATION REQUIREMENTS
RELATING TO TRUST FUND ACCOUNTS
Sec. 2552.251. ANNUAL AUDIT. (a) A title attorney shall
have an annual audit made of trust fund accounts. The title
attorney shall pay for the audit.
(b) The audit must be performed by an independent certified
public accountant or licensed public accountant, or a firm composed
of either, recommended by the title attorney and approved by the
attorney's title insurance company represented by the title
attorney.
(c) The audit must include disclosure of payments made for
title evidence under a contract under Section 2552.153 and to whom
the payments were made.
(d) Not later than the 90th day after January 1 of each year,
the title attorney shall send by certified mail, postage prepaid,
to the department one copy of the audit report with a transmittal
letter. The title attorney shall also send a copy of the audit
report and transmittal letter to the attorney's title insurance
company represented by the title attorney. (V.T.I.C. Art. 9.56,
Secs. 7(d), 10 (part).)
Sec. 2552.252. ANALYSIS OF ANNUAL AUDIT. (a) An attorney's
title insurance company shall examine and analyze the annual audit
report received from each of its title attorneys under Section
2552.251.
(b) Not later than three months after the date the audit
report is received, the attorney's title insurance company shall
file with the department, on a form prescribed by the department, a
report of the findings and results of the examination and analysis
of the audit report.
(c) If an attorney's title insurance company fails to
receive an audit report from a title attorney within the time
required by Section 2552.251, the attorney's title insurance
company shall promptly report that fact to the department.
(d) After the report of the examination and analysis is
filed with the department by an attorney's title insurance company,
the department may classify the report as confidential and
privileged. (V.T.I.C. Art. 9.56, Sec. 10 (part).)
Sec. 2552.253. EXAMINATION OF TRUST FUND ACCOUNTS;
TRANSACTION REPORTS. (a) An attorney's title insurance company,
through its examiners or auditors or through independent certified
public accountants commissioned by the attorney's title insurance
company, may examine at any time the trust fund accounts and records
relating to the accounts of any of its title attorneys.
(b) The attorney's title insurance company shall pay for the
examination of the accounts and records.
(c) An attorney's title insurance company may require from
any of its title attorneys special reports regarding any of their
transactions. (V.T.I.C. Art. 9.56, Sec. 11.)
Sec. 2552.254. ENFORCEMENT; HEARING. (a) After notice and
hearing, the department may revoke the license of a title attorney
who:
(1) fails to furnish an annual audit report within the
time required by Section 2552.251; or
(2) furnishes an audit report that reveals any
irregularity, including a shortage, or any practice not in keeping
with sound, honest business practices.
(b) The notice must be provided to the title attorney and
the attorney's title insurance company represented by the title
attorney.
(c) At a hearing under this section, the title attorney and
the attorney's title insurance company may offer evidence
explaining or excusing a failure or irregularity. (V.T.I.C. Art.
9.56, Sec. 10 (part).)
[Sections 2552.255-2552.300 reserved for expansion]
SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2552.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION. The department may deny an application for a title
attorney's license or discipline a title attorney under Sections
4005.102, 4005.103, and 4005.104 if the department determines that
the applicant or license holder:
(1) has wilfully violated this title;
(2) has intentionally made a material misstatement in
the license application;
(3) has obtained or attempted to obtain the license by
fraud or misrepresentation;
(4) has misappropriated or converted to the
applicant's or license holder's own use or illegally withheld money
belonging to an attorney's title insurance company, an insured, or
another person;
(5) has been guilty of fraudulent or dishonest
practices;
(6) has materially misrepresented the terms and
conditions of a title insurance policy or contract;
(7) has failed to maintain:
(A) a separate and distinct accounting of escrow
funds; and
(B) an escrow bank account or accounts separate
and apart from all other accounts;
(8) is no longer a member of the State Bar of Texas; or
(9) is no longer actively engaged in the practice of
law. (V.T.I.C. Art. 9.56, Sec. 8(b).)
Sec. 2552.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL,
OR REVOCATION. (a) An applicant whose license application has been
denied or refused or a license holder whose license has been revoked
under this subchapter may not file another application for a title
attorney's license before the first anniversary of:
(1) the effective date of the denial, refusal, or
revocation; or
(2) the date of a final court order affirming the
denial, refusal, or revocation if judicial review is sought.
(b) A license application filed after the time required by
this section may be denied by the department unless the applicant
shows good cause why the denial, refusal, or revocation should not
be a bar to the issuance of a license. (V.T.I.C. Art. 9.56, Sec.
8(d).)
CHAPTER 2553. FOREIGN OR ALIEN CORPORATIONS
Sec. 2553.001. AUTHORITY TO ENGAGE IN BUSINESS OF TITLE
INSURANCE
Sec. 2553.002. CAPITAL AND SURPLUS REQUIREMENTS
Sec. 2553.003. TAXES AND FEES
CHAPTER 2553. FOREIGN OR ALIEN CORPORATIONS
Sec. 2553.001. AUTHORITY TO ENGAGE IN BUSINESS OF TITLE
INSURANCE. (a) A corporation organized under the laws of another
state may engage in the business of title insurance in this state on
exactly the same basis and is subject to the same rules, prices, and
supervision as provided for a corporation that is organized under
the laws of this state and engaged in the business of title
insurance under this title.
(b) To engage in the business of title insurance in this
state, a foreign corporation must file with the department:
(1) an application for a permit or certificate of
authority; and
(2) a financial statement demonstrating the condition
of the corporation.
(c) The department shall prescribe the form of the
application and financial statement. (V.T.I.C. Arts. 9.10, 9.24.)
Sec. 2553.002. CAPITAL AND SURPLUS REQUIREMENTS. (a) A
foreign corporation may not engage in the business of title
insurance in this state unless the corporation has unimpaired
capital in an amount of at least $1 million and a surplus in an
amount of at least $1 million.
(b) The foreign corporation must demonstrate the required
capital and surplus from its financial statement and any other
examination the department may want to conduct. (V.T.I.C. Art.
9.25.)
Sec. 2553.003. TAXES AND FEES. (a) A corporation organized
and incorporated under the laws of another state, territory, or
country for the purpose of engaging in the business of title
insurance shall pay the same filing fees and occupation tax as a
foreign casualty company is required to pay to obtain a permit to
engage in the business of insurance in this state.
(b) A foreign title insurance company described by
Subsection (a) is not required to pay a franchise tax. (V.T.I.C.
Art. 9.31.)
[Chapters 2554-2600 reserved for expansion]
SUBTITLE C. FINANCIAL SOLVENCY
CHAPTER 2601. SUPERVISION, LIQUIDATION, REHABILITATION,
REORGANIZATION, OR CONSERVATION OF TITLE INSURANCE COMPANIES
AND AGENTS
Sec. 2601.001. SUPERVISION, LIQUIDATION, REHABILITATION,
REORGANIZATION, OR CONSERVATION OF TITLE
INSURANCE COMPANIES AND AGENTS
CHAPTER 2601. SUPERVISION, LIQUIDATION, REHABILITATION,
REORGANIZATION, OR CONSERVATION OF TITLE INSURANCE COMPANIES
AND AGENTS
Sec. 2601.001. SUPERVISION, LIQUIDATION, REHABILITATION,
REORGANIZATION, OR CONSERVATION OF TITLE INSURANCE COMPANIES AND
AGENTS. Each title insurance agent and title insurance company is
subject to Articles 21.28 and 21.28-A. (V.T.I.C. Art. 9.29.)
CHAPTER 2602. TEXAS TITLE INSURANCE
GUARANTY ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2602.001. SHORT TITLE
Sec. 2602.002. PURPOSES AND FINDINGS
Sec. 2602.003. DEFINITIONS
Sec. 2602.004. DESCRIPTION OF CONTROL
Sec. 2602.005. APPLICABILITY; CONFLICT WITH OTHER LAWS
Sec. 2602.006. CONSTRUCTION
Sec. 2602.007. PROHIBITED USE OF PROTECTION PROVIDED BY
CHAPTER
Sec. 2602.008. IMMUNITY
Sec. 2602.009. ASSOCIATION AND TITLE INSURANCE COMPANIES AS
INTERESTED PARTIES
Sec. 2602.010. RULES
Sec. 2602.011. INFORMATION PROVIDED BY AND TO
COMMISSIONER
Sec. 2602.012. APPEALS
[Sections 2602.013-2602.050 reserved for expansion]
SUBCHAPTER B. GOVERNANCE OF TEXAS TITLE INSURANCE
GUARANTY ASSOCIATION
Sec. 2602.051. ASSOCIATION AS LEGAL ENTITY; SUPERVISION;
MEMBERSHIP
Sec. 2602.052. BOARD OF DIRECTORS
Sec. 2602.053. ELIGIBILITY TO SERVE AS PUBLIC
REPRESENTATIVE
Sec. 2602.054. TERM; VACANCY
Sec. 2602.055. COMPENSATION OF BOARD MEMBERS
Sec. 2602.056. FINANCIAL STATEMENT OF BOARD MEMBER
Sec. 2602.057. RIGHTS OF TITLE INSURANCE COMPANY WITH
REPRESENTATIVE ON BOARD
[Sections 2602.058-2602.100 reserved for expansion]
SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 2602.101. GENERAL POWERS AND DUTIES
Sec. 2602.102. PLAN OF OPERATION
Sec. 2602.103. EMPLOYEES AND EXPERTS
Sec. 2602.104. ASSOCIATION RECORDS
Sec. 2602.105. MEETING BY CONFERENCE CALL
Sec. 2602.106. ACCOUNTS
Sec. 2602.107. ADMINISTRATIVE EXPENSES
Sec. 2602.108. DEPOSIT OF FEES AND ASSESSMENTS
Sec. 2602.109. USE OF EXCESS MONEY IN ACCOUNTS
Sec. 2602.110. EXPENSES OF RECEIVERSHIP OR
CONSERVATORSHIP
Sec. 2602.111. DELEGATION OF POWERS AND DUTIES
Sec. 2602.112. EXEMPTION FROM TAXATION
Sec. 2602.113. DETECTION AND PREVENTION OF IMPAIRMENT
Sec. 2602.114. MEETING OF BOARD ON IMPAIRED TITLE INSURANCE
COMPANY OR AGENT
Sec. 2602.115. ASSOCIATION AND BOARD ADVICE AND
ASSISTANCE
Sec. 2602.116. BOARD ACCESS TO RECORDS
Sec. 2602.117. BOARD REPORT AT CONCLUSION OF IMPAIRMENT
[Sections 2602.118-2602.150 reserved for expansion]
SUBCHAPTER D. POLICY GUARANTY FEES
Sec. 2602.151. PAYMENT OF FEE
Sec. 2602.152. AMOUNT OF FEE
Sec. 2602.153. USE OF FEE
Sec. 2602.154. ENFORCEMENT OF FEE
[Sections 2602.155-2602.200 reserved for expansion]
SUBCHAPTER E. ASSESSMENTS
Sec. 2602.201. MAKING OF ASSESSMENT
Sec. 2602.202. AMOUNT OF ASSESSMENT; PRORATION OF
PAYMENT
Sec. 2602.203. NOTICE AND PAYMENT
Sec. 2602.204. EXEMPTION FOR IMPAIRED TITLE INSURANCE
COMPANY
Sec. 2602.205. DEFERMENT
Sec. 2602.206. PARTICIPATION RECEIPTS
Sec. 2602.207. ACCOUNTING; REPORTS; REFUND
Sec. 2602.208. USE OF ASSESSMENTS
Sec. 2602.209. FAILURE TO PAY; COLLECTION BY COMMISSIONER
Sec. 2602.210. RECOVERY OF ASSESSMENT IN RATES; TAX
CREDIT
[Sections 2602.211-2602.250 reserved for expansion]
SUBCHAPTER F. COVERED CLAIMS
Sec. 2602.251. COVERED CLAIMS IN GENERAL
Sec. 2602.252. CLAIM AGAINST TRUST FUNDS OR ESCROW
ACCOUNT
Sec. 2602.253. CLAIM IN CONNECTION WITH FIDELITY OF
AGENT
Sec. 2602.254. CERTAIN CONSERVATOR AND RECEIVER EXPENSES
COVERED
Sec. 2602.255. CLAIMS NOT COVERED
Sec. 2602.256. AMOUNT OF COVERED CLAIM; LIMIT
Sec. 2602.257. EXHAUSTION OF OTHER RIGHTS REQUIRED
Sec. 2602.258. CERTAIN MONEY AUTHORIZED FOR USE IN PAYING
COVERED CLAIM; LIMIT
Sec. 2602.259. STAY OF PROCEEDINGS; CERTAIN DECISIONS NOT
BINDING
Sec. 2602.260. ADMISSIBILITY OF PAYMENT
[Sections 2602.261-2602.300 reserved for expansion]
SUBCHAPTER G. ASSOCIATION POWERS AND DUTIES RELATING TO
COVERED CLAIMS
Sec. 2602.301. GENERAL POWERS AND DUTIES OF ASSOCIATION IN
CONNECTION WITH PAYMENT OF COVERED
CLAIMS
Sec. 2602.302. PAYMENT OF COVERED CLAIMS
Sec. 2602.303. SERVICING FACILITY
Sec. 2602.304. ADVANCE AS LOAN
Sec. 2602.305. ASSOCIATION IN PLACE OF IMPAIRED TITLE
INSURANCE COMPANY OR AGENT
Sec. 2602.306. ASSIGNMENT OF CLAIMANT'S RIGHTS
Sec. 2602.307. SETTLEMENT BY ASSOCIATION BINDING; PRIORITY OF
CLAIM AND EXPENSES
Sec. 2602.308. REPORT TO RECEIVER
[Sections 2602.309-2602.350 reserved for expansion]
SUBCHAPTER H. CONSERVATOR OR RECEIVER POWERS AND DUTIES
RELATING TO COVERED CLAIMS
Sec. 2602.351. DETERMINATION OF CONSERVATOR CONCERNING
REINSURANCE, ASSUMPTION, OR
SUBSTITUTION
Sec. 2602.352. NOTICE OF DETERMINATION CONCERNING ACTUAL
PAYMENT
Sec. 2602.353. FILING OF COVERED CLAIM
Sec. 2602.354. CLAIM BY PERSON WITH CAUSE OF ACTION AGAINST
INSURED
Sec. 2602.355. REPORT TO ASSOCIATION
[Sections 2602.356-2602.400 reserved for expansion]
SUBCHAPTER I. OPERATION OF IMPAIRED TITLE INSURANCE COMPANY
OR AGENT
Sec. 2602.401. ISSUANCE OR RENEWAL OF POLICIES
Sec. 2602.402. DISTRIBUTIONS TO SHAREHOLDERS AND
AFFILIATES
Sec. 2602.403. ASSETS ATTRIBUTABLE TO COVERED POLICIES
CHAPTER 2602. TEXAS TITLE INSURANCE
GUARANTY ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2602.001. SHORT TITLE. This chapter may be cited as
the Texas Title Insurance Guaranty Act. (V.T.I.C. Art. 9.48, Sec.
1.)
Sec. 2602.002. PURPOSES AND FINDINGS. (a) This chapter is
for:
(1) the purposes and findings stated in Section 1,
Article 21.28-A; and
(2) the protection of holders of covered claims.
(b) This chapter and the powers granted and functions
authorized by this chapter shall be exercised to accomplish the
purposes of this chapter. (V.T.I.C. Art. 9.48, Secs. 2, 21 (part).)
Sec. 2602.003. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with an impaired title
insurance company on December 31 of the year preceding the date the
company becomes impaired.
(2) "Agent" includes:
(A) a title insurance agent, as defined by
Section 2501.003;
(B) a title attorney, as defined by Section
2552.002; and
(C) a direct operation or a title insurance
company's wholly owned subsidiary or affiliate that performs the
services usually and customarily performed by a title insurance
agent.
(3) "Association" means the Texas Title Insurance
Guaranty Association.
(4) "Board" means the board of directors of the
association.
(5) "Impaired agent" means an agent that is:
(A) placed in:
(i) temporary or permanent receivership
under a court order based on a finding of insolvency; or
(ii) conservatorship after the
commissioner determines that the agent is insolvent; and
(B) designated by the commissioner as an impaired
agent.
(6) "Impaired title insurance company" means a title
insurance company that is:
(A) placed in:
(i) temporary or permanent receivership
under a court order based on a finding of insolvency; or
(ii) conservatorship after the
commissioner determines that the company is insolvent; and
(B) designated by the commissioner as an impaired
title insurance company.
(7) "Net direct written premiums" means the gross
amount of premiums paid by policyholders for issuance of title
insurance policies insuring risks located in this state and to
which this chapter applies, without deduction for premiums for
reinsurance ceded to other title insurance companies and not
including premiums for reinsurance accepted from other authorized
title insurance companies.
(8) "Payment of covered claims" means:
(A) the actual payment of claims; or
(B) the use of money of the impaired title
insurance company and money derived from assessments or guaranty
fees for consummation of contracts of reinsurance or assumption of
liabilities or contracts of substitution to provide for liabilities
arising from covered claims.
(9) "Trust funds or escrow accounts" includes accounts
subject to annual audit under Subchapter D, Chapter 2651.
(10) "Unauthorized insurer" means a person, firm,
association, or corporation that has engaged in activities
prohibited by Subchapter C, Chapter 101, while engaging in the
business of title insurance. (V.T.I.C. Art. 9.48, Secs. 5(4), (5),
(6), (7), (8), (9), (11), (12), (13), (14).)
Sec. 2602.004. DESCRIPTION OF CONTROL. (a) For purposes of
this chapter, control is the power to direct, or cause the direction
of, the management and policies of a person, other than power that
results from an official position with or corporate office held by
the person. The power may be possessed directly or indirectly by
any means, including through the ownership of voting securities or
by contract, other than a commercial contract for goods or
nonmanagement services.
(b) A person is presumed to control another person if the
person directly or indirectly owns, controls, holds with the power
to vote, or holds proxies representing 10 percent or more of the
voting securities of the other person. This presumption may be
rebutted by a showing that the person does not in fact control the
other person. (V.T.I.C. Art. 9.48, Sec. 5(15).)
Sec. 2602.005. APPLICABILITY; CONFLICT WITH OTHER LAWS.
(a) This chapter applies to:
(1) a title insurance company engaging in business
under this title;
(2) all title insurance, direct or reinsurance,
written by a title insurance company engaging in business under
this title; and
(3) trust funds or escrow accounts of:
(A) title insurance companies engaging in
business under this title; or
(B) agents authorized to engage in business in
this state and engaging in business under and governed by this
title.
(b) If this chapter conflicts with another law relating to
the subject matter of this chapter or its application, other than
Article 21.28 or 21.28-A, this chapter controls. If this chapter
conflicts with Article 21.28 or 21.28-A, that article controls.
(V.T.I.C. Art. 9.48, Secs. 3 (part), 21 (part).)
Sec. 2602.006. CONSTRUCTION. (a) This chapter shall be
liberally construed to implement the purposes of this chapter
described by Section 2602.002, which shall be used to aid and guide
interpretation of this chapter.
(b) This chapter does not:
(1) expand or diminish a right or obligation between
or among policyholders, title insurance companies, or agents; or
(2) require a person to assign, waive, or relinquish a
claim, right, or cause of action arising under Chapter 541 of this
code or Subchapter E, Chapter 17, Business & Commerce Code.
(V.T.I.C. Art. 9.48, Secs. 3 (part), 4.)
Sec. 2602.007. PROHIBITED USE OF PROTECTION PROVIDED BY
CHAPTER. (a) A title insurance company or agent may not advertise
or refer to this chapter as an inducement to the purchase of title
insurance.
(b) The use by a person of the protection provided by this
chapter in the sale of insurance is unfair competition and an unfair
practice under Chapter 541. (V.T.I.C. Art. 9.48, Secs. 16, 19(b).)
Sec. 2602.008. IMMUNITY. (a) Liability does not exist and
a cause of action does not arise against any of the following
persons for a good faith action or omission of the person in
exercising the person's powers and performing the person's duties
under this chapter:
(1) the commissioner or the commissioner's
representative;
(2) the association or the association's agent or
employee;
(3) a title insurance company or the company's agent or
employee;
(4) a board member; and
(5) a special deputy receiver or the special deputy
receiver's agent or employee.
(b) The attorney general shall defend any action to which
Subsection (a) applies that is brought against a person listed in
that subsection, including an action instituted after the
defendant's service with the association, commissioner, or
department has terminated. This subsection does not require the
attorney general to defend a person or entity with respect to an
issue other than the applicability or effect of the immunity
created by Subsection (a). The attorney general is not required to
defend a person listed in Subsection (a)(2), (3), (4), or (5)
against an action regarding the disposition of a claim filed with
the association under this chapter or any issue other than the
applicability or effect of the immunity created by Subsection (a).
The association may contract with the attorney general under
Chapter 771, Government Code, for legal services not covered by
this subsection.
(c) A title insurance company that reinsures or assumes the
policies of an impaired title insurance company is not liable, and a
cause of action does not arise against that company:
(1) for an action or omission by the impaired title
insurance company or an officer, director, employee, attorney, or
agent of the impaired title insurance company;
(2) by subrogation; or
(3) under any type of indemnity agreement. (V.T.I.C.
Art. 9.48, Secs. 10(i) (part), 17.)
Sec. 2602.009. ASSOCIATION AND TITLE INSURANCE COMPANIES AS
INTERESTED PARTIES. The association and each title insurance
company assessed under this chapter are interested parties under
Sections 3(h) and 12(b), Article 21.28. (V.T.I.C. Art. 9.48, Sec.
14(e)(8).)
Sec. 2602.010. RULES. The commissioner shall adopt
reasonable rules as necessary to implement and supplement this
chapter and its purposes. (V.T.I.C. Art. 9.48, Sec. 18.)
Sec. 2602.011. INFORMATION PROVIDED BY AND TO COMMISSIONER.
(a) The commissioner shall notify the association of the existence
of an impaired title insurance company not later than the third day
after the date on which the commissioner gives notice of the
designation of impairment. The association is entitled to a copy of
any complaint seeking an order of receivership with a finding of
insolvency against a title insurance company at the time the
complaint is filed with a court.
(b) The commissioner shall notify the board when the
commissioner receives a report from the commissioner of insurance
or other analogous officer of another state that indicates that a
title insurance company has been designated impaired in another
state. The report to the board must contain all significant details
of the action taken or the report received.
(c) The commissioner shall report to the board when the
commissioner has reasonable cause to believe from a completed or
continuing examination of any title insurance company that the
company may be an impaired title insurance company. The board may
use this information in performing its duties under this chapter.
The board shall keep the report and the information contained in the
report confidential until it is made public by the commissioner or
other lawful authority.
(d) On the board's request, the commissioner shall provide
the association with a statement of the net direct written premiums
of each title insurance company.
(e) The commissioner may require that the association
notify the insureds of the impaired title insurance company and any
other interested party of the designation of impairment and of the
person's rights under this chapter. Notification by publication in
a newspaper of general circulation is sufficient notice under this
section. (V.T.I.C. Art. 9.48, Sec. 15A.)
Sec. 2602.012. APPEALS. (a) A title insurance company may
appeal to the commissioner an action or ruling of the association
relating to an assessment.
(b) An action or ruling of the commissioner under this
chapter may be appealed as provided by Subchapter D, Chapter 36.
(c) A title insurance company appealing an assessment shall
pay the assessment. The association may use the money to meet its
obligations while the appeal is pending. If the appeal on the
assessment is upheld, the association shall return to the company
the amount paid in error or excess.
(d) Venue in a suit relating to an action or ruling under
this chapter is in Travis County. Each party to the action may
appeal, and the appeal is at once returnable to the appellate court
and has precedence over all cases of a different character pending
before the court. The commissioner or association is not required
to give an appeal bond in an appeal of a cause of action arising
under this chapter. (V.T.I.C. Art. 9.48, Sec. 20.)
[Sections 2602.013-2602.050 reserved for expansion]
SUBCHAPTER B. GOVERNANCE OF TEXAS TITLE INSURANCE
GUARANTY ASSOCIATION
Sec. 2602.051. ASSOCIATION AS LEGAL ENTITY; SUPERVISION;
MEMBERSHIP. (a) The Texas Title Insurance Guaranty Association is
a nonprofit legal entity.
(b) The association is subject to the applicable insurance
laws of this state and the immediate supervision of the
commissioner.
(c) A title insurance company may not engage in the business
of title insurance in this state unless the company is a member of
the association. (V.T.I.C. Art. 9.48, Sec. 14(a) (part).)
Sec. 2602.052. BOARD OF DIRECTORS. (a) The association's
powers are exercised through a board of directors consisting of
nine individuals appointed by the commissioner.
(b) Three board members must be officers or employees of
title insurance companies. Two board members must be officers or
employees of agents. Four board members must be public
representatives.
(c) Board members other than public representatives shall
be chosen to give fair representation to all title insurance
companies and agents, considering the following categories:
(1) premium income;
(2) geographical location; and
(3) segments of the industry represented in this
state. (V.T.I.C. Art. 9.48, Secs. 14(a) (part), (b)(1) (part).)
Sec. 2602.053. ELIGIBILITY TO SERVE AS PUBLIC
REPRESENTATIVE. (a) In this section, "immediate family" includes
parents, a spouse, children, brothers, and sisters residing in the
same household.
(b) To be eligible to serve as a public representative on
the board, an individual must have resided in this state during the
five years preceding appointment and may not be:
(1) licensed by or subject to the regulation of the
department;
(2) financially involved in an organization subject to
the regulation of the department other than by ownership of an
insurance policy or contract;
(3) a member of the immediate family of an individual
who is financially involved in an organization subject to the
regulation of the department;
(4) engaged in or employed by an entity having a
contract with an organization subject to the regulation of the
department;
(5) employed by, on the board of directors of, or a
holder of an elective office by or under the authority of a unit of
federal, state, or local government or an organization that
receives a significant part of its funding from a unit of federal,
state, or local government;
(6) employed by or associated with an organization
formed to represent license holders of the department or
organizations or individuals subject to the regulation of the
department; or
(7) required to register as a lobbyist under Chapter
305, Government Code, because of activities on behalf of an
organization representing the regulated industry. (V.T.I.C. Art.
9.48, Sec. 14(b)(1) (part).)
Sec. 2602.054. TERM; VACANCY. (a) Board members serve
staggered six-year terms, with the terms of three members expiring
each odd-numbered year. A member may serve more than one term.
(b) A member shall serve until a successor is appointed.
(c) If a member other than a public representative ceases to
be an officer or employee of a title insurance company or agent, the
member's office becomes vacant.
(d) The commissioner shall appoint an individual to fill a
vacancy on the board for the unexpired term. (V.T.I.C. Art. 9.48,
Sec. 14(b)(1) (part).)
Sec. 2602.055. COMPENSATION OF BOARD MEMBERS. A board
member may not receive compensation for the member's services but
is entitled to reimbursement for actual expenses incurred in
performing the member's duties. (V.T.I.C. Art. 9.48, Sec.
14(b)(2).)
Sec. 2602.056. FINANCIAL STATEMENT OF BOARD MEMBER. Each
board member shall file with the Texas Ethics Commission a
financial statement as provided by Subchapter B, Chapter 572,
Government Code. (V.T.I.C. Art. 9.48, Secs. 14(b)(3), (c) (part).)
Sec. 2602.057. RIGHTS OF TITLE INSURANCE COMPANY WITH
REPRESENTATIVE ON BOARD. (a) A title insurance company is not
prohibited, because the company has an officer, director, or
employee serving as a board member, from negotiating for or
entering into a contract of reinsurance or assumption of liability
or a contract of substitution to provide for liabilities for
covered claims with the receiver or conservator of an impaired
title insurance company or agent.
(b) A conflict of interest does not arise from entering into
a contract described by this section. (V.T.I.C. Art. 9.48, Sec.
14(e)(7).)
[Sections 2602.058-2602.100 reserved for expansion]
SUBCHAPTER C. GENERAL POWERS AND DUTIES OF ASSOCIATION
Sec. 2602.101. GENERAL POWERS AND DUTIES. (a) In addition
to the other powers and duties provided by this chapter, the
association may:
(1) borrow money as necessary to implement this
chapter according to the plan of operation;
(2) lend money to an impaired title insurance company;
(3) sue and be sued, including taking any legal action
necessary or proper to recover an unpaid assessment;
(4) enter into contracts as necessary or proper to
implement this chapter;
(5) ensure payment of the policy obligations of an
impaired title insurance company;
(6) negotiate and contract with a rehabilitator,
conservator, receiver, or ancillary receiver to exercise the powers
and perform the duties of the association;
(7) guarantee, assume, or reinsure, or cause to be
guaranteed, assumed, or reinsured, a policy or contract of an
impaired title insurance company;
(8) take legal action necessary to avoid the payment
of improper claims or to settle claims or potential claims against
an impaired title insurance company or the association; and
(9) perform any other acts as necessary or proper to
implement this chapter.
(b) The association has standing to appear before a court in
this state with jurisdiction over an impaired title insurance
company or agent concerning which the association is or may become
obligated under this chapter. (V.T.I.C. Art. 9.48, Sec. 14(c)
(part).)
Sec. 2602.102. PLAN OF OPERATION. (a) The association
shall perform its functions under a plan of operation. The plan of
operation must contain provisions necessary or proper for the
execution of the association's powers and duties. The plan of
operation must, in addition to the other requirements of this
chapter:
(1) establish:
(A) procedures for handling the assets of the
association;
(B) the amount and method of reimbursing board
members;
(C) regular places and times for board meetings;
(D) procedures for maintaining records of all
financial transactions of the association, its agents, and the
board; and
(E) procedures for determining the amount of
guaranty fees, for collecting those fees, and for assessments; and
(2) contain additional provisions necessary or proper
for the execution of the association's powers and duties.
(b) The association shall submit to the commissioner any
amendment to the plan of operation necessary or suitable to ensure
the fair, reasonable, and equitable administration of the
association. The amendment takes effect on the commissioner's
written approval.
(c) If the association does not submit a suitable amendment
to the plan of operation, the commissioner after notice and hearing
may adopt reasonable rules as necessary or advisable to implement
this chapter. A rule continues in effect until modified by the
commissioner or superseded by an amendment submitted by the
association and approved by the commissioner.
(d) Each title insurance company shall comply with the plan
of operation. (V.T.I.C. Art. 9.48, Secs. 14(a) (part), (d)(1), (2)
(part), (3), (4).)
Sec. 2602.103. EMPLOYEES AND EXPERTS. (a) The association
may employ or retain persons to perform the functions necessary or
proper under this chapter, including persons necessary to handle
the association's financial transactions.
(b) On the commissioner's request, the association shall
retain one or more persons to:
(1) audit and review agent escrow and trust accounts,
financial condition, and compliance with applicable statutes and
rules; and
(2) report to the commissioner on the accounts,
condition, and compliance.
(c) A person retained under Subsection (b) acts solely under
the direction of and as assigned by the commissioner.
(d) From the guaranty fee account, the association shall
compensate a person retained under Subsection (b) and reimburse the
person for the person's reasonable and necessary expenses.
(V.T.I.C. Art. 9.48, Sec. 14(c) (part).)
Sec. 2602.104. ASSOCIATION RECORDS. (a) The association
shall maintain a record of each negotiation or meeting in which the
association or the association's representative discusses the
association's activities in exercising its powers and performing
its duties under this chapter.
(b) A record under Subsection (a) may be made public only
on:
(1) termination of a liquidation, rehabilitation, or
conservation proceeding involving the impaired or insolvent title
insurance company;
(2) termination of the impairment or insolvency of the
title insurance company; or
(3) order of a court.
(c) This section does not limit the association's duty to
report on its activities under this chapter. (V.T.I.C. Art. 9.48,
Sec. 23(a).)
Sec. 2602.105. MEETING BY CONFERENCE CALL. Notwithstanding
Chapter 551, Government Code, the board may hold an open meeting by
telephone conference call if immediate action is required and
convening of a quorum of the board at a single location is not
reasonable or practical. The meeting is subject to the notice
requirements that apply to other meetings. The notice of the
meeting must specify as the location of the meeting the location at
which meetings of the board are usually held, and each part of the
meeting that is required to be open to the public must be audible to
the public at that location and must be tape-recorded. The tape
recording shall be made available to the public for 30 days after
the meeting date. (V.T.I.C. Art. 9.48, Sec. 14(g).)
Sec. 2602.106. ACCOUNTS. For purposes of administration
and assessment, the board shall establish:
(1) an administrative account;
(2) a title account; and
(3) a guaranty fee account. (V.T.I.C. Art. 9.48, Sec.
14(a) (part).)
Sec. 2602.107. ADMINISTRATIVE EXPENSES. (a) The
association may use money in the administrative account to pay
administrative costs and other general expenses of the association.
(b) The association may transfer income from investment of
the association's money to the administrative account.
(c) The association shall assess title insurance companies
as provided by Subchapter E for any additional money needed for the
administrative account. (V.T.I.C. Art. 9.48, Sec. 7(e).)
Sec. 2602.108. DEPOSIT OF FEES AND ASSESSMENTS. The
association may deposit fees and assessments it collects into the
Texas Treasury Safekeeping Trust Company in accordance with
procedures established by the comptroller. The comptroller shall
account to the association for the deposited money separately from
all other money. (V.T.I.C. Art. 9.48, Sec. 6A.)
Sec. 2602.109. USE OF EXCESS MONEY IN ACCOUNTS. (a) If the
association determines that money in the title account exceeds the
amount reasonably necessary for efficient future operation under
this chapter, the association shall return the excess money pro
rata to the holders of participation receipts on which an
outstanding balance exists after deducting any credits against
premium taxes taken under Section 2602.210. The amount deducted
for those credits shall be deposited with the comptroller for
credit to the general revenue fund. The association shall transfer
to the guaranty fee account any excess money remaining in the title
account after the distribution.
(b) If the association determines that money in the
administrative account exceeds the amount reasonably necessary for
efficient future operation under this chapter, the association
shall transfer the excess money to the guaranty fee account.
(V.T.I.C. Art. 9.48, Secs. 9(b), (c).)
Sec. 2602.110. EXPENSES OF RECEIVERSHIP OR
CONSERVATORSHIP. The association may advance money necessary to
pay the expenses of administering the receivership or
conservatorship estate of an impaired title insurance company or
agent, on terms the association negotiates, if the company's or
agent's assets are insufficient to pay those expenses. (V.T.I.C.
Art. 9.48, Sec. 5(2)C (part).)
Sec. 2602.111. DELEGATION OF POWERS AND DUTIES. (a) The
plan of operation may provide that, on approval of the board and the
commissioner, a power or duty of the association may be delegated to
a corporation or other organization that:
(1) performs or will perform in two or more states
functions similar to those of the association or its equivalent;
and
(2) provides protection not substantially less
favorable and effective than that provided by this chapter.
(b) A power or duty under Section 2602.101(a)(1) or (4),
2602.107, 2602.201, 2602.202, 2602.203, or 2602.205 may not be
delegated under this section.
(c) The corporation or other organization shall be:
(1) reimbursed as a servicing facility would be
reimbursed; and
(2) paid for its performance of any other functions of
the association. (V.T.I.C. Art. 9.48, Sec. 14(f).)
Sec. 2602.112. EXEMPTION FROM TAXATION. The association is
exempt from payment of all fees and all taxes levied by this state
or a subdivision of this state, except taxes levied on real or
personal property. (V.T.I.C. Art. 9.48, Sec. 20A.)
Sec. 2602.113. DETECTION AND PREVENTION OF IMPAIRMENT. (a)
The board may make recommendations to the commissioner for
detecting and preventing title insurance company or agent
impairments. The board shall advise and counsel with the
commissioner on matters relating to the solvency of title insurance
companies and agents.
(b) The board may report and make recommendations to the
commissioner relating to any matter germane to the solvency,
liquidation, rehabilitation, or conservation of a title insurance
company or agent. A report or recommendation under this subsection
is not a public document until a title insurance company is
designated impaired.
(c) The board shall notify the commissioner of any
information indicating that a title insurance company or agent may
be unable or potentially unable to fulfill its contractual
obligations and shall request a meeting with the commissioner. The
board may request appropriate investigation and action by the
commissioner. The commissioner may investigate and act as the
commissioner considers appropriate. (V.T.I.C. Art. 9.48, Secs.
14(e)(2), (3) (part), (4), (5).)
Sec. 2602.114. MEETING OF BOARD ON IMPAIRED TITLE INSURANCE
COMPANY OR AGENT. (a) The commissioner:
(1) shall call a meeting of the board when the
commissioner determines that a title insurance company or agent is
insolvent or impaired; and
(2) may call a meeting of the board when the
commissioner determines that a title insurance company or agent is
in danger of becoming insolvent or impaired.
(b) The meeting is not open to the public. Only board
members, the commissioner, and persons the commissioner authorizes
may attend the meeting.
(c) The commissioner may require an officer, director, or
employee of the title insurance company or agent to appear before
the board for conference or to give testimony.
(d) At the meeting the commissioner may disclose to the
board information that the commissioner possesses and may disclose
department records, including an examination report or a
preliminary report from an examiner that relates to the title
insurance company or agent.
(e) A board member may not disclose information received in
the meeting unless authorized by the commissioner or required as
witness in court. A board member and the meeting are subject to the
confidentiality standard imposed on an examiner under Article 1.18,
except that a bond is not required of a board member. (V.T.I.C.
Art. 9.48, Sec. 14(e)(3) (part).)
Sec. 2602.115. ASSOCIATION AND BOARD ADVICE AND ASSISTANCE.
(a) On the commissioner's request, the board shall attend hearings
before the commissioner and meet with and advise the commissioner
or the receiver or the conservator appointed by the commissioner on
matters relating to:
(1) the affairs of an impaired title insurance company
or agent;
(2) action that the commissioner, receiver, or
conservator may take to best protect the interest of holders of
covered claims against the company or agent; and
(3) the marshalling of assets.
(b) On the commissioner's request, the association may
assist and advise the commissioner concerning rehabilitation,
payment of claims, continuation of coverage, or the performance of
other contractual obligations of an impaired title insurance
company or agent. (V.T.I.C. Art. 9.48, Secs. 14(c) (part), (e)(3)
(part).)
Sec. 2602.116. BOARD ACCESS TO RECORDS. The receiver or
statutory successor of an impaired title insurance company shall
give the board or its representative:
(1) access to the company's records as necessary for
the board to perform its functions under this chapter relating to
covered claims; and
(2) copies of those records on the board's request and
at the board's expense. (V.T.I.C. Art. 9.48, Sec. 20B (part).)
Sec. 2602.117. BOARD REPORT AT CONCLUSION OF IMPAIRMENT.
At the conclusion of a title insurance company or agent impairment
in which the association exercised its powers or performed its
duties under this chapter, the board shall prepare, from
information available to the association, and submit to the
commissioner a report on the history and causes of the impairment.
(V.T.I.C. Art. 9.48, Sec. 14(e)(6).)
[Sections 2602.118-2602.150 reserved for expansion]
SUBCHAPTER D. POLICY GUARANTY FEES
Sec. 2602.151. PAYMENT OF FEE. (a) An agent or, if there is
no agent, the title insurance company shall pay the association a
quarterly guaranty fee for each owner or mortgagee title insurance
policy that the agent or company is required to report on its
statistical report to the department.
(b) The fee is due:
(1) May 1, for the quarter ending March 31;
(2) August 1, for the quarter ending June 30;
(3) November 1, for the quarter ending September 30;
and
(4) February 1, for the quarter ending December 31.
(c) The association shall deposit the fee in the guaranty
fee account.
(d) Except as provided by Section 2602.109, money in the
guaranty fee account shall be derived only from guaranty fees as
provided by this subchapter. (V.T.I.C. Art. 9.48, Secs. 6(a)
(part), (b), 7(c) (part).)
Sec. 2602.152. AMOUNT OF FEE. Annually or more frequently,
the board shall determine the amount of the guaranty fee, not to
exceed $5, considering the amount of money to be maintained in the
guaranty fee account that is reasonably necessary for efficient
future operation under this chapter. (V.T.I.C. Art. 9.48, Sec.
6(a) (part).)
Sec. 2602.153. USE OF FEE. (a) The association shall
collect, receive, retain, and disburse the guaranty fees only as
specifically provided by this chapter.
(b) The following covered claims shall be paid from guaranty
fees only and may not be paid from assessments:
(1) claims against trust funds or an escrow account of
an impaired agent under Section 2602.252; and
(2) conservator and receiver expenses under Section
2602.254.
(c) Administrative expenses with respect to the estate of an
impaired agent under Section 2602.110 may be paid only from the
guaranty fee account.
(d) Guaranty fees may be used only for payment of:
(1) covered claims described by Subsection (b) or (c);
and
(2) audit and review expenses under Section
2602.103(b). (V.T.I.C. Art. 9.48, Secs. 5(2)A (part), C (part), D
(part), 6(c), 14(c) (part).)
Sec. 2602.154. ENFORCEMENT OF FEE. (a) After notice and
opportunity for hearing, the commissioner may suspend or revoke the
certificate of authority or license to engage in business in this
state of a title insurance company or agent that does not comply
with this subchapter.
(b) The commissioner shall adopt rules that implement the
program created under this subchapter. (V.T.I.C. Art. 9.48, Secs.
6(d), (e).)
[Sections 2602.155-2602.200 reserved for expansion]
SUBCHAPTER E. ASSESSMENTS
Sec. 2602.201. MAKING OF ASSESSMENT. (a) If the
commissioner determines that a title insurance company or agent has
become impaired, the association shall promptly estimate the amount
of additional money needed to supplement the assets of the impaired
title insurance company or agent to pay all covered claims and
administrative expenses.
(b) The association shall assess title insurance companies
in writing an amount as determined under Section 2602.202. A title
insurance company does not incur real or contingent liability under
this chapter until the association actually makes the written
assessment. (V.T.I.C. Art. 9.48, Secs. 7(a), (b) (part), (f).)
Sec. 2602.202. AMOUNT OF ASSESSMENT; PRORATION OF PAYMENT.
(a) The association shall assess title insurance companies the
amount necessary to pay:
(1) the association's obligations under this chapter
and the expenses of handling covered claims subsequent to an
impairment; and
(2) other expenses authorized by this chapter.
(b) The assessment of each title insurance company must be
in the proportion that the net direct written premiums of that
company for the calendar year preceding the assessment bear to the
net direct written premiums of all title insurance companies for
that year.
(c) The total assessment of a title insurance company in a
year may not exceed an amount equal to two percent of the company's
net direct written premiums for the calendar year preceding the
assessment. If the maximum assessment and the association's other
assets are insufficient in any one year to make all necessary
payments, the money available shall be prorated and the unpaid
portion shall be paid as soon as money becomes available. (V.T.I.C.
Art. 9.48, Sec. 7(b) (part).)
Sec. 2602.203. NOTICE AND PAYMENT. (a) Not later than the
30th day before the date an assessment is due, the association shall
notify the title insurance company.
(b) Not later than the 30th day after the date an assessment
is made, the title insurance company shall pay the association the
amount of the assessment. (V.T.I.C. Art. 9.48, Secs. 7(b) (part),
(d) (part).)
Sec. 2602.204. EXEMPTION FOR IMPAIRED TITLE INSURANCE
COMPANY. A title insurance company is exempt from assessment
during the period beginning on the date the commissioner designates
the company as an impaired title insurance company and ending on the
date the commissioner determines that the company is no longer an
impaired title insurance company. (V.T.I.C. Art. 9.48, Sec. 7(g).)
Sec. 2602.205. DEFERMENT. (a) The association may defer in
whole or in part an assessment of a title insurance company that
would cause the company's financial statement to show amounts of
capital or surplus less than the minimum amount required for a
certificate of authority in any jurisdiction in which the company
is authorized to engage in the business of insurance.
(b) The title insurance company shall pay the deferred
assessment when payment will not reduce capital or surplus below
required minimums. The payment shall be refunded to or credited
against future assessments of any title insurance company receiving
a larger assessment because of the deferment, as elected by that
company.
(c) During a period of deferment, the title insurance
company may not pay a dividend to shareholders or policyholders.
(V.T.I.C. Art. 9.48, Sec. 7(c) (part).)
Sec. 2602.206. PARTICIPATION RECEIPTS. (a) On receipt
from a title insurance company of payment of an assessment or
partial assessment, the association shall provide the company with
a participation receipt. A participation receipt creates liability
against the impaired title insurance company.
(b) The holder of the receipt is a general creditor of the
impaired title insurance company, except that if the amount of
assessments the association receives exceeds the amount paid for
covered claims, the holders of participation receipts have
preference over other general creditors to, and are entitled to
share pro rata in, the excess. (V.T.I.C. Art. 9.48, Sec. 9(a)
(part).)
Sec. 2602.207. ACCOUNTING; REPORTS; REFUND. (a) The
association shall adopt accounting procedures to show how money
received from assessments or partial assessments is used.
(b) The association shall make interim accounting reports
as the commissioner requires.
(c) The association shall make a final report to the
commissioner showing how money received from assessments or partial
assessments has been used, including a statement of any final
balance of that money. As soon as practicable after completion of
the final report, the association shall refund the remaining
balance to the holders of participation receipts as required by
Section 2602.206(b). (V.T.I.C. Art. 9.48, Sec. 9(a) (part).)
Sec. 2602.208. USE OF ASSESSMENTS. (a) Money from
assessments is considered to supplement the marshalling of an
impaired title insurance company's assets to make payments on the
impaired title insurance company's behalf. The association may
assess title insurance companies or use money from assessments to
pay covered claims before the receiver exhausts the impaired title
insurance company's assets.
(b) The association may use money from assessments to
negotiate and consummate contracts of reinsurance or assumption of
liabilities or contracts of substitution to provide for outstanding
liabilities of covered claims.
(c) Except as provided by Section 2602.109, money from
assessments may not be used for the guaranty fee account. (V.T.I.C.
Art. 9.48, Secs. 7(c) (part), 7A, 10(i) (part).)
Sec. 2602.209. FAILURE TO PAY; COLLECTION BY COMMISSIONER.
(a) The association shall promptly report to the commissioner a
failure of a title insurance company to pay an assessment when due.
(b) On failure of a title insurance company to pay an
assessment when due, the commissioner may either:
(1) suspend or revoke, after notice and hearing, the
company's certificate of authority to engage in business in this
state; or
(2) assess an administrative penalty as provided by
Chapter 84 in an amount not to exceed the greater of five percent of
the unpaid assessment each month or $100 each month.
(c) A title insurance company whose certificate of
authority is canceled or surrendered is liable for any unpaid
assessments made before the date of the cancellation or surrender.
(d) The commissioner may collect an assessment on behalf of
the association through a suit brought for that purpose. (V.T.I.C.
Art. 9.48, Secs. 7(d) (part), 8.)
Sec. 2602.210. RECOVERY OF ASSESSMENT IN RATES; TAX CREDIT.
(a) A title insurance company is entitled to recover in its rates
for the succeeding calendar year amounts paid in assessments not to
exceed one percent of the company's net direct written premiums. In
promulgating or establishing rates the commissioner shall consider
assessments and refunds of assessments and shall adjust the rates
to allow for recovery under this subsection.
(b) Unless the department determines that all amounts paid
as assessments by each title insurance company have been recovered
under Subsection (a), for any amount not recovered the title
insurance company is entitled to a credit against its premium tax
under Chapter 223. The credit may be taken at a rate of 20 percent
each year for five successive years following the date of
assessment and, if the title insurance company elects, may be taken
over an additional number of years.
(c) An amount of a tax credit allowed by this section that is
unclaimed may be shown in the title insurance company's books and
records as an admitted asset for all purposes, including an annual
statement under Section 862.001. (V.T.I.C. Art. 9.48, Sec. 15.)
[Sections 2602.211-2602.250 reserved for expansion]
SUBCHAPTER F. COVERED CLAIMS
Sec. 2602.251. COVERED CLAIMS IN GENERAL. An unpaid claim
is a covered claim if:
(1) the claim is made by an insured under a title
insurance policy to which this chapter applies;
(2) the claim arises out of the policy and is within
the coverage and applicable limits of the policy;
(3) the title insurance company that issued the policy
or assumed the policy under an assumption certificate is an
impaired title insurance company; and
(4) the insured real property or a lien on the property
is located in this state. (V.T.I.C. Art. 9.48, Sec. 5(2)A (part).)
Sec. 2602.252. CLAIM AGAINST TRUST FUNDS OR ESCROW ACCOUNT.
An unpaid claim is a covered claim if the claim:
(1) is against trust funds or an escrow account of an
impaired title insurance company or agent; and
(2) is unpaid because of a shortage of those funds or
in that account. (V.T.I.C. Art. 9.48, Sec. 5(2)A (part).)
Sec. 2602.253. CLAIM IN CONNECTION WITH FIDELITY OF AGENT.
An unpaid claim is a covered claim if an impaired title insurance
company is liable for the claim in connection with the fidelity of
the company's agent as authorized by Subchapter A, Chapter 2702.
(V.T.I.C. Art. 9.48, Sec. 5(2)A (part).)
Sec. 2602.254. CERTAIN CONSERVATOR AND RECEIVER EXPENSES
COVERED. Reasonable and necessary administrative expenses
incurred by a conservator appointed by the commissioner or a
receiver appointed by a court for an unauthorized insurer operating
in this state are covered claims if the commissioner has notified
the association or the association has otherwise become aware that:
(1) the unauthorized insurer has insufficient liquid
assets to pay those expenses; and
(2) insufficient money is available from:
(A) abandoned money under Section 8, Article
21.28; and
(B) department appropriations for use in paying
those expenses. (V.T.I.C. Art. 9.48, Sec. 5(2)D (part).)
Sec. 2602.255. CLAIMS NOT COVERED. The following are not
covered claims:
(1) an amount due a reinsurer, title insurance
company, insurance pool, or underwriting association as a
subrogation recovery or otherwise;
(2) a supplementary payment obligation incurred
before a determination is made under this chapter that a title
insurance company or agent is impaired, including:
(A) adjustment fees or expenses;
(B) attorney's fees or expenses;
(C) court costs;
(D) interest;
(E) enhanced damages, sought as a recovery
against the insured, the impaired title insurance company or agent,
or the association, that arise under Chapter 541 of this code or
Subchapter E, Chapter 17, Business & Commerce Code; and
(F) bond premiums;
(3) a shortage of trust funds or in an escrow account
resulting from the insolvency of a financial institution;
(4) exemplary, extracontractual, or bad faith damages
awarded against an insured or title insurance company by a court
judgment;
(5) a claim under Section 2602.252 by a claimant who
has a lien against the real property that was the subject of the
transaction from which the claim arises, unless the lien is held to
be invalid as a matter of law;
(6) a claim under Section 2602.251, 2602.252, or
2602.253 by a claimant who caused or substantially contributed to
the claimant's loss by the claimant's action or omission; and
(7) a claim filed with the association after the final
date set by the court for the filing of claims against a receiver of
an impaired title insurance company or agent. (V.T.I.C. Art. 9.48,
Secs. 5(2)B, 10(c).)
Sec. 2602.256. AMOUNT OF COVERED CLAIM; LIMIT. (a) A
covered claim under Section 2602.251 or 2602.253 may not exceed the
lesser of $250,000 for each claimant or $250,000 for each policy.
(b) A covered claim under Section 2602.252 may not exceed
the lesser of $250,000 for each claimant or the amount of money
actually delivered to the impaired title insurance company or agent
as trust funds or an escrow account for each claimant in a
transaction from which the claim arises, except that the cumulative
amount of covered claims arising from a single transaction may not
exceed $250,000. (V.T.I.C. Art. 9.48, Sec. 5(2)A (part).)
Sec. 2602.257. EXHAUSTION OF OTHER RIGHTS REQUIRED. (a) A
person having a covered claim that is also a claim against a title
insurance company under law or under an insurance policy other than
a policy of an impaired title insurance company must exhaust the
person's rights under law or the policy before asserting the
covered claim under this chapter.
(b) The amount payable on the covered claim is reduced by
the amount of any recovery under law or the policy.
(c) Notwithstanding any other provision, to avoid undue
hardship to a claimant the association may authorize payment of a
covered claim against an impaired agent without regard to the
liability of any title insurance company or coverage under any
insurance policy, subject to the approval of the receivership court
or commissioner, as applicable. On payment, the association is in
all respects subrogated to the rights and claims of the claimant.
(V.T.I.C. Art. 9.48, Sec. 12.)
Sec. 2602.258. CERTAIN MONEY AUTHORIZED FOR USE IN PAYING
COVERED CLAIM; LIMIT. (a) Money from assessments or guaranty fees
is liable only for the difference between the amount of covered
claims and the amount of assets marshalled by a receiver or
conservator for payment to holders of covered claims.
(b) In an ancillary receivership in this state, money from
assessments is liable only for the difference between the amount of
covered claims and the amount of assets marshalled by receivers in
other states for payment of covered claims in this state. (V.T.I.C.
Art. 9.48, Secs. 11(a), (b) (part).)
Sec. 2602.259. STAY OF PROCEEDINGS; CERTAIN DECISIONS NOT
BINDING. (a) To permit the receiver or association to properly
defend a pending cause of action, a proceeding in which an impaired
title insurance company is a party or is obligated to defend a party
in a court in this state, other than a proceeding directly related
to the receivership or instituted by the receiver, is stayed for:
(1) a six-month period beginning on the later of the
date of the designation of impairment or the date an ancillary
proceeding is brought in this state; and
(2) any subsequent period as determined by the court.
(b) If a covered claim arises from a judgment, order,
verdict, finding, or other decision based on the default of an
impaired title insurance company or its failure to defend an
insured, the association on its own behalf or on behalf of the
insured may apply to the court or administrator that made the
decision to have the decision set aside and may defend the claim on
its merits.
(c) In a proceeding considering a covered claim, a judgment
against an insured taken after the date the delinquency proceeding
begins or a conservator is appointed is not evidence of liability or
of the amount of damages, and a default or consent judgment against
an insured or the impaired title insurance company or a settlement,
release, or judgment entered into by the insured or the impaired
title insurance company does not bind the association and is not
evidence of liability or of the amount of damages in connection with
a claim brought against the association or another party under this
chapter. (V.T.I.C. Art. 9.48, Secs. 11(c) (part), 20B (part).)
Sec. 2602.260. ADMISSIBILITY OF PAYMENT. In a lawsuit
brought by a conservator or receiver of an impaired title insurance
company or agent to recover assets of the company or agent, the fact
that a claim against the company or agent has been or will be paid
under this chapter is not admissible and may not be placed before a
jury by evidence, argument, or reference. (V.T.I.C. Art. 9.48,
Sec. 19(a).)
[Sections 2602.261-2602.300 reserved for expansion]
SUBCHAPTER G. ASSOCIATION POWERS AND DUTIES RELATING TO
COVERED CLAIMS
Sec. 2602.301. GENERAL POWERS AND DUTIES OF ASSOCIATION IN
CONNECTION WITH PAYMENT OF COVERED CLAIMS. (a) The association
shall:
(1) investigate a claim brought against the
association, the commissioner, or a special deputy receiver
appointed under Article 21.28 if the claim involves or may involve
the association's rights and obligations under this chapter; and
(2) adjust, compromise, settle, and pay a covered
claim to the extent of the association's obligation, and deny all
other claims.
(b) The association may review a settlement, release, or
judgment to which an impaired title insurance company or agent or
its insured was a party to determine the extent to which the
settlement, release, or judgment is contested. (V.T.I.C. Art.
9.48, Sec. 10(e).)
Sec. 2602.302. PAYMENT OF COVERED CLAIMS. (a) The
association shall pay covered claims:
(1) existing before the determination of impairment;
or
(2) arising on or before:
(A) the date of cancellation of the impaired
title insurance company's policies; or
(B) the claim deadline for covered claims against
an impaired agent.
(b) The court in which the receivership proceedings are
pending shall set, as applicable:
(1) the date of cancellation of the policies, which
may not be later than the fifth anniversary of the date of
determination of impairment; or
(2) the claim deadline, which may not be later than the
first anniversary of the date of determination of impairment.
(c) Subject to the approval of the commissioner, the
association shall establish:
(1) procedures for filing claims with the association;
and
(2) acceptable forms of proof of covered claims.
(d) The association shall pay claims in the order the
association considers reasonable, including payment as claims are
received from the claimants or in groups or categories of claims.
(e) The association may not pay a claimant an amount
exceeding the amount of the claimant's covered claim. (V.T.I.C.
Art. 9.48, Secs. 10(a), (b), (f), (g) (part).)
Sec. 2602.303. SERVICING FACILITY. (a) The association
may handle claims through its employees or through one or more title
insurance companies or other persons designated, subject to the
approval of the commissioner, as a servicing facility.
(b) A title insurance company may decline designation as a
servicing facility.
(c) The association shall reimburse a servicing facility
for:
(1) obligations of the association paid by the
facility; and
(2) expenses incurred by the facility in handling
claims for the association. (V.T.I.C. Art. 9.48, Sec. 10(h).)
Sec. 2602.304. ADVANCE AS LOAN. Money advanced by the
association under this chapter is considered a special fund loan to
the impaired title insurance company or agent for payment of
covered claims and does not become an asset of the title insurance
company or agent. The loan is repayable to the extent money from
the title insurance company or agent is available. (V.T.I.C. Art.
9.48, Sec. 10(j).)
Sec. 2602.305. ASSOCIATION IN PLACE OF IMPAIRED TITLE
INSURANCE COMPANY OR AGENT. (a) To the extent of the association's
obligation on a covered claim, the association stands in the place
of the impaired title insurance company or agent and has all the
rights, duties, and obligations of the company or agent as if the
company or agent were not impaired.
(b) In performing its obligations under this chapter, the
association is not considered:
(1) to be engaged in the business of insurance;
(2) to have assumed or succeeded to a liability of the
impaired title insurance company or agent; or
(3) to otherwise stand in the place of the impaired
title insurance company or agent, including as to whether the
association is subject to personal jurisdiction of the courts of
another state. (V.T.I.C. Art. 9.48, Sec. 10(d).)
Sec. 2602.306. ASSIGNMENT OF CLAIMANT'S RIGHTS. (a) Any
cause of action or other right of the holder of a covered claim
arising from the occurrence on which the claim is based is assigned
to the association on the holder's acceptance of:
(1) the association's payment of the claim; or
(2) a benefit of a contract by the association
providing for reinsurance or assumption of liabilities or for
substitution.
(b) Rights are assigned to the association under Subsection
(a) to the extent of the amount accepted or the value of the benefit
provided.
(c) The association may assign the rights acquired under
this section to the title insurance company executing the
reinsurance, assumption, or substitution agreement. (V.T.I.C.
Art. 9.48, Sec. 11(d).)
Sec. 2602.307. SETTLEMENT BY ASSOCIATION BINDING; PRIORITY
OF CLAIM AND EXPENSES. (a) The settlement of a covered claim by the
association binds the receiver or statutory successor of an
impaired title insurance company.
(b) The court shall give the covered claim the same priority
against assets of the impaired title insurance company that the
claim would have had in the absence of this chapter.
(c) The association's expenses in handling claims have the
same priority as the receiver's expenses. (V.T.I.C. Art. 9.48,
Sec. 11(e).)
Sec. 2602.308. REPORT TO RECEIVER. The association shall
periodically file with the receiver of an impaired title insurance
company a statement of covered claims paid by the association and an
estimate of claims anticipated against the association. The
statement preserves the rights of the association against the
assets of the company. (V.T.I.C. Art. 9.48, Sec. 11(f).)
[Sections 2602.309-2602.350 reserved for expansion]
SUBCHAPTER H. CONSERVATOR OR RECEIVER POWERS AND DUTIES
RELATING TO COVERED CLAIMS
Sec. 2602.351. DETERMINATION OF CONSERVATOR CONCERNING
REINSURANCE, ASSUMPTION, OR SUBSTITUTION. A conservator appointed
to handle the affairs of an impaired title insurance company or
agent shall determine whether covered claims should or can be
provided for in whole or in part by reinsurance, assumption, or
substitution. (V.T.I.C. Art. 9.48, Sec. 11(b) (part).)
Sec. 2602.352. NOTICE OF DETERMINATION CONCERNING ACTUAL
PAYMENT. (a) On determination by the conservator that covered
claims should be actually paid, the conservator shall give notice
of the determination to holders of covered claims.
(b) The conservator shall mail the notice to each holder of
a covered claim at the most recent address shown in the impaired
title insurance company's or agent's records, except that if those
records do not show the claimant's address the conservator may give
notice by publication in a newspaper of general circulation.
(c) The notice must state a date, not earlier than the 91st
day after the date of the mailing or publication of the notice,
before which the claimant must file a claim with the conservator.
(V.T.I.C. Art. 9.48, Sec. 11(b) (part).)
Sec. 2602.353. FILING OF COVERED CLAIM. The conservator
may require in whole or in part that claimants file:
(1) sworn claim forms; and
(2) additional information or evidence reasonably
necessary for the conservator to determine the legality of or
amount due under a covered claim. (V.T.I.C. Art. 9.48, Sec. 11(b)
(part).)
Sec. 2602.354. CLAIM BY PERSON WITH CAUSE OF ACTION AGAINST
INSURED. (a) On determination by the conservator that covered
claims should be actually paid or on order of the court to the
receiver to give notice for the filing of claims, a person having a
cause of action that constitutes a covered claim against an insured
of the impaired title insurance company under a title insurance
policy issued or assumed by the company may file the claim with the
receiver or conservator, regardless of whether the claim is
unliquidated or undetermined.
(b) A claim under this section may be approved as a covered
claim if:
(1) it may be reasonably inferred from the proof
presented that the claimant would be able to obtain a judgment on
the cause of action against the insured;
(2) the claimant provides suitable proof that no valid
claim exists against the impaired title insurance company arising
from the cause of action other than claims already made; and
(3) the total liability of the impaired title
insurance company to all claimants under the same title insurance
policy does not exceed the amount of the company's total liability
if the company were not in liquidation, rehabilitation, or
conservation. (V.T.I.C. Art. 9.48, Sec. 11(c) (part).)
Sec. 2602.355. REPORT TO ASSOCIATION. (a) A receiver of an
impaired title insurance company or agent shall periodically submit
a list of claims to the association or a similar organization in
another state.
(b) Notice of a claim to the receiver is considered notice
to the association. (V.T.I.C. Art. 9.48, Sec. 10(g) (part).)
[Sections 2602.356-2602.400 reserved for expansion]
SUBCHAPTER I. OPERATION OF IMPAIRED TITLE INSURANCE
COMPANY OR AGENT
Sec. 2602.401. ISSUANCE OR RENEWAL OF POLICIES. (a) If an
assessment has been made under this chapter for an impaired title
insurance company or association funds have been provided for the
company, the company, on release from the conservatorship or
receivership, may not issue a new or renewal insurance policy until
the company:
(1) has repaid pro rata in full to each holder of a
participation receipt the assessment amount paid by the receipt
holder or its assignee; and
(2) has repaid in full the amount of guaranty fees paid
by the association.
(b) If an assessment has been made under this chapter for an
impaired agent or guaranty fees have been provided for the agent,
the agent, on release from the conservatorship or receivership, may
not issue a new or renewal insurance policy until the agent has
repaid in full the amount of guaranty fees paid by the association.
(c) Notwithstanding Subsections (a) and (b), on
application of the association and after hearing, the commissioner
may permit the impaired title insurance company or agent to issue
new policies as provided by a plan of operation for repayment. In
approving the plan, the commissioner may restrict the issuance of
new or renewal policies as the commissioner considers necessary to
implement the plan.
(d) Not later than the 11th day before the date of a hearing
under Subsection (c), the commissioner shall give notice of the
hearing to the association. The commissioner shall give 10 days'
notice of the hearing to title insurance companies to whom
participation receipts were issued for an assessment made for the
benefit of the released title insurance company. The association
and title insurance companies are entitled to appear at and
participate in the hearing.
(e) Money recovered against an impaired title insurance
company under this section shall be repaid to the title insurance
companies that paid assessments in relation to the impaired title
insurance company on return of the participation receipt.
(V.T.I.C. Art. 9.48, Secs. 13, 23(i).)
Sec. 2602.402. DISTRIBUTIONS TO SHAREHOLDERS AND
AFFILIATES. (a) An impaired or insolvent title insurance company
may not make a distribution to shareholders until the association
has recovered the total amount of valid claims for money spent in
exercising the association's powers and performing the
association's duties under this chapter with respect to that
company, plus interest on that amount.
(b) Except as otherwise provided by this section, the
receiver appointed under an order of receivership of a title
insurance company domiciled in this state may recover on behalf of
the company from an affiliate that controlled the company the
amount of a distribution, other than a stock dividend the company
paid on its common stock, made during the five years preceding the
date of the petition for liquidation or rehabilitation.
(c) A person who was an affiliate that controlled the title
insurance company when the distribution described by Subsection (b)
was paid is liable for the amount of the distribution received. A
person who was an affiliate that controlled the title insurance
company when the distribution was declared is liable for the amount
of the distribution the affiliate would have received if the
distribution had been paid immediately. Two or more persons liable
for the same distribution are jointly and severally liable. If a
person liable under this subsection is insolvent, all of the
affiliates that controlled the insolvent person when the
distribution was paid are jointly and severally liable for any
resulting deficiency in the amount recovered from the insolvent
person.
(d) The maximum amount recoverable under Subsections (b)
and (c) is the amount needed in excess of all other available assets
of the insolvent title insurance company to pay the company's
contractual obligations.
(e) The receiver may not recover a distribution under
Subsection (b) if the title insurance company shows that:
(1) the distribution was lawful and reasonable on the
date of payment; and
(2) the company did not know and could not reasonably
have known that the distribution might adversely affect the ability
of the company to fulfill its contractual obligations. (V.T.I.C.
Art. 9.48, Secs. 23(c), (d), (e), (f), (g), (h).)
Sec. 2602.403. ASSETS ATTRIBUTABLE TO COVERED POLICIES.
(a) For the purposes of this section, assets attributable to
covered policies are the proportion of the assets that the reserves
that should have been established for the covered policies bear to
the reserves that should have been established for all insurance
policies written by the impaired or insolvent title insurance
company.
(b) To perform its obligations under this chapter, the
association is considered a creditor of the impaired or insolvent
title insurance company to the extent of assets attributable to
covered policies, less any amount that the association recovers as
a subrogee under this chapter.
(c) Assets of the impaired or insolvent title insurance
company attributable to covered policies shall be used to continue
all covered policies and pay all contractual obligations of the
impaired or insolvent company as required by this chapter.
(V.T.I.C. Art. 9.48, Sec. 23(b).)
[Chapters 2603-2650 reserved for expansion]
SUBTITLE D. TITLE INSURANCE PROFESSIONALS
CHAPTER 2651. TITLE INSURANCE AGENTS AND DIRECT OPERATIONS
SUBCHAPTER A. TITLE INSURANCE AGENT'S LICENSE
Sec. 2651.001. LICENSE AND BOND OR DEPOSIT REQUIRED
Sec. 2651.002. LICENSE APPLICATION
Sec. 2651.003. LICENSE AND RENEWAL FEES
Sec. 2651.004. LICENSE ISSUANCE
Sec. 2651.005. DUPLICATE LICENSE
Sec. 2651.006. LICENSE TERM
Sec. 2651.007. LICENSE RENEWAL
Sec. 2651.008. RECORDS OF AGENTS
Sec. 2651.009. MULTIPLE APPOINTMENTS
Sec. 2651.010. SUSPENSION OF LICENSE
Sec. 2651.011. PRIVILEGED COMMUNICATIONS
[Sections 2651.012-2651.050 reserved for expansion]
SUBCHAPTER B. DIRECT OPERATION LICENSE
Sec. 2651.051. LICENSE REQUIRED
Sec. 2651.052. LICENSE APPLICATION
Sec. 2651.053. LICENSE AND RENEWAL FEES
Sec. 2651.054. LICENSE TERM
Sec. 2651.055. LICENSE RENEWAL
Sec. 2651.056. CEASING OPERATION OF ABSTRACT PLANT;
REQUEST FOR LICENSE CANCELLATION
Sec. 2651.057. AUTOMATIC TERMINATION OF LICENSES
Sec. 2651.058. RECORDS OF DIRECT OPERATIONS
Sec. 2651.059. USE OF AGENTS NOT PROHIBITED
[Sections 2651.060-2651.100 reserved for expansion]
SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2651.101. BOND REQUIRED
Sec. 2651.102. ALTERNATIVE TO BOND
Sec. 2651.103. EXAMINATION OF LOSS COVERED BY BOND OR
DEPOSIT
Sec. 2651.104. INVESTIGATION BY ATTORNEY GENERAL
[Sections 2651.105-2651.150 reserved for expansion]
SUBCHAPTER D. ANNUAL AUDIT
Sec. 2651.151. ANNUAL AUDIT OF TRUST FUND ACCOUNTS:
TITLE INSURANCE AGENTS AND DIRECT
OPERATIONS
Sec. 2651.152. ANNUAL AUDIT OF TRUST FUND ACCOUNTS:
TITLE INSURANCE COMPANIES
Sec. 2651.153. RULES
Sec. 2651.154. PERFORMANCE OF AUDIT BY PUBLIC ACCOUNTANT
Sec. 2651.155. CONFIDENTIALITY OF AUDIT
Sec. 2651.156. FAILURE TO RECEIVE AUDIT REPORT FROM
AGENTS OR DIRECT OPERATIONS
Sec. 2651.157. ENFORCEMENT; HEARING
[Sections 2651.158-2651.200 reserved for expansion]
SUBCHAPTER E. GENERAL REGULATION OF TITLE INSURANCE
AGENTS AND DIRECT OPERATIONS
Sec. 2651.201. LICENSE SURRENDER OR FORFEITURE
Sec. 2651.202. TRUST FUND ACCOUNT DISBURSEMENTS
Sec. 2651.203. DISCLOSURE OF OWNERSHIP AND PREMIUM
INFORMATION
Sec. 2651.204. CONTINUING EDUCATION
[Sections 2651.205-2651.250 reserved for expansion]
SUBCHAPTER F. TITLE INSURANCE COMPANY POWERS AND DUTIES
REGARDING TITLE INSURANCE AGENTS
Sec. 2651.251. EXAMINATION OF TRUST FUND ACCOUNTS BY
TITLE INSURANCE COMPANY
Sec. 2651.252. SPECIAL REPORTS
Sec. 2651.253. AUDIT OF UNUSED FORMS
[Sections 2651.254-2651.300 reserved for expansion]
SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2651.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION
Sec. 2651.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL,
OR REVOCATION
CHAPTER 2651. TITLE INSURANCE AGENTS AND DIRECT OPERATIONS
SUBCHAPTER A. TITLE INSURANCE AGENT'S LICENSE
Sec. 2651.001. LICENSE AND BOND OR DEPOSIT REQUIRED. (a)
An individual, firm, association, or corporation may not act in
this state as a title insurance agent for a title insurance company
unless the individual or entity:
(1) holds a license as an agent issued by the
department; and
(2) maintains a surety bond or deposit required under
Subchapter C.
(b) A title insurance company may not allow or permit an
individual, firm, association, or corporation to act as its agent
in this state unless the individual or entity complies with this
section. (V.T.I.C. Art. 9.35.)
Sec. 2651.002. LICENSE APPLICATION. (a) Before an initial
license is issued to an individual, firm, association, or
corporation to act as an agent in this state for a title insurance
company, the company must file an application for an agent's
license with the department on forms provided by the department.
(b) The application must be:
(1) accompanied by a nonrefundable license fee; and
(2) signed and sworn to by the title insurance company
and by the proposed agent.
(c) The completed application must state that:
(1) the proposed agent is:
(A) an individual who is a bona fide resident of
this state;
(B) an association or firm composed only of Texas
residents; or
(C) a Texas corporation or a foreign corporation
authorized to engage in business in this state;
(2) the proposed agent, including a corporation's
managerial personnel, if applicable, has reasonable experience or
instruction in the field of title insurance;
(3) the title insurance company:
(A) knows that the proposed agent has a good
business reputation and is worthy of the public trust; and
(B) is unaware of any fact or condition that
disqualifies the proposed agent from receiving a license; and
(4) the proposed agent qualifies as a title insurance
agent under this chapter. (V.T.I.C. Art. 9.36, Sec. 1(a) (part).)
Sec. 2651.003. LICENSE AND RENEWAL FEES. (a) The
department shall prescribe the license fee in an amount not to
exceed $50.
(b) License fees, and renewal fees collected under this
subchapter, shall be deposited to the credit of the Texas
Department of Insurance operating account to be used by the
department to enforce this chapter and any other law of this state
that regulates title insurance agents. (V.T.I.C. Art. 9.36, Sec.
1(a) (part).)
Sec. 2651.004. LICENSE ISSUANCE. The department shall
issue a license if the department determines, based on the
application and the department's investigation, that the
requirements of Section 2651.002 are satisfied. (V.T.I.C. Art.
9.36, Sec. 1(b).)
Sec. 2651.005. DUPLICATE LICENSE. (a) The department
shall collect in advance a fee from a title insurance agent who
requests a duplicate license.
(b) The department shall prescribe the fee in an amount not
to exceed $20. (V.T.I.C. Art. 9.36, Sec. 1(c).)
Sec. 2651.006. LICENSE TERM. Unless a system of staggered
license renewal is adopted under Section 4003.002, a license issued
under this subchapter expires on June 1 after the second
anniversary of the date of issuance. (V.T.I.C. Art. 9.36, Sec.
2(b).)
Sec. 2651.007. LICENSE RENEWAL. (a) A title insurance
agent may renew a license by:
(1) filing a completed license renewal application
form with the department; and
(2) paying the nonrefundable license renewal fee to
the department.
(b) The department shall prescribe the license renewal
application form.
(c) The department shall prescribe the license renewal fee
in an amount not to exceed $50. (V.T.I.C. Art. 9.36, Sec. 2(a).)
Sec. 2651.008. RECORDS OF AGENTS. The department shall
maintain a record of the name and address of each title insurance
agent licensed by the department in a manner that ensures that the
agents appointed by any company authorized to engage in the
business of title insurance in this state may be conveniently
ascertained and inspected by any person on request. (V.T.I.C. Art.
9.36, Sec. 2(c).)
Sec. 2651.009. MULTIPLE APPOINTMENTS. (a) A licensed
title insurance agent may be appointed to represent additional
title insurance companies.
(b) Any additional title insurance company must notify the
department of the appointment in the manner prescribed by the
department. The agent must include with the notice a nonrefundable
fee for each additional appointment. The department shall
prescribe the fee in an amount not to exceed $16.
(c) The appointment is effective on the eighth day following
the date the department receives the completed notice of
appointment and the fee, unless the department rejects the
appointment. If the department rejects the appointment, the
department shall state in writing the reasons for rejection not
later than the seventh day after the date on which the department
receives the completed notice of appointment.
(d) A title insurance company may not permit an agent
appointed by the company to write, sign, or deliver title insurance
until the agent's appointment is effective.
(e) The appointment remains effective, without the
necessity of renewal, until the appointment:
(1) is terminated by the title insurance company as
provided by this section; or
(2) is otherwise terminated under this subchapter.
(f) A renewal license issued to an agent authorizes the
agent to represent and act for the title insurance companies for
which the agent holds appointments until the appointments are
terminated, and the agent is considered to be the agent of the
appointing companies for purposes of this subchapter.
(g) When a title insurance company terminates the
appointment of an agent, the company shall immediately file with
the department a statement that contains:
(1) the facts relating to the termination of the
appointment; and
(2) the effective date and reason for the termination.
(h) On receipt of the statement, the department shall
terminate the appointment of the agent to represent that title
insurance company in this state. (V.T.I.C. Art. 9.36, Secs. 3(a),
(b), (c).)
Sec. 2651.010. SUSPENSION OF LICENSE. The department shall
suspend the license of a title insurance agent during any period in
which the agent does not have a valid appointment. The department
shall end the suspension when the department receives an acceptable
notice of a valid appointment. (V.T.I.C. Art. 9.36, Sec. 4.)
Sec. 2651.011. PRIVILEGED COMMUNICATIONS. Any
information, including a document, record, or statement, required
to be made or disclosed to the department under this subchapter,
other than Section 2651.001, is:
(1) a privileged communication; and
(2) not admissible in evidence in a court action or
proceeding except under a subpoena issued by a court of record.
(V.T.I.C. Art. 9.36, Sec. 3(d).)
[Sections 2651.012-2651.050 reserved for expansion]
SUBCHAPTER B. DIRECT OPERATION LICENSE
Sec. 2651.051. LICENSE REQUIRED. (a) A title insurance
company may not own or lease and operate an abstract plant or
participate in a bona fide joint abstract plant operation in a
county in this state unless the company holds a license as a direct
operation issued by the department for that county.
(b) A title insurance company may not write, sign, or
deliver title insurance in a county in which the company operates an
abstract plant until the department has issued a direct operation
license to the company. (V.T.I.C. Art. 9.36A, Secs. A, C (part).)
Sec. 2651.052. LICENSE APPLICATION. (a) Before a direct
operation license is issued to a title insurance company, the
company must file an application for a direct operation license on
forms provided by the department.
(b) The application must be:
(1) accompanied by a nonrefundable license fee; and
(2) signed and sworn to by the title insurance
company.
(c) The completed application must state that:
(1) the title insurance company is a Texas corporation
or a foreign corporation holding a certificate of authority to
insure titles to real property in this state and meets the
requirements of this title; and
(2) the abstract plant to be licensed:
(A) complies with department requirements
relating to abstract plants; and
(B) has been approved by the department.
(V.T.I.C. Art. 9.36A, Sec. B (part).)
Sec. 2651.053. LICENSE AND RENEWAL FEES. (a) The
department shall prescribe the license fee in an amount not to
exceed $50.
(b) License fees, and renewal fees collected under this
subchapter, shall be deposited to the credit of the Texas
Department of Insurance operating account to be used by the
department to enforce this chapter and the laws of this state that
regulate title insurance agents and title insurance companies.
(V.T.I.C. Art. 9.36A, Sec. B (part).)
Sec. 2651.054. LICENSE TERM. Unless a system of staggered
license renewal is adopted, a license issued under this subchapter
expires on the second June 1 following the date of issuance.
(V.T.I.C. Art. 9.36A, Sec. C (part).)
Sec. 2651.055. LICENSE RENEWAL. (a) On or before the
expiration date of a license issued under this subchapter, a title
insurance company may renew the license by:
(1) certifying to the department each county and
address at which the company operates the abstract plant for each
license to be renewed;
(2) filing a completed renewal application; and
(3) paying a nonrefundable license renewal fee for
each license.
(b) The department shall provide the forms used under this
section.
(c) The department shall prescribe the license renewal fee
in an amount not to exceed $50.
(d) If a license has been expired for 90 days or less, the
license holder may renew the license by paying to the department the
required nonrefundable renewal fee and a nonrefundable fee equal to
one-half of the original license fee.
(e) If a license has been expired for more than 90 days, the
license may not be renewed. (V.T.I.C. Art. 9.36A, Sec. C (part).)
Sec. 2651.056. CEASING OPERATION OF ABSTRACT PLANT; REQUEST
FOR LICENSE CANCELLATION. If a title insurance company ceases to
operate a licensed abstract plant, the company shall immediately
notify the department in writing and request cancellation of the
license. (V.T.I.C. Art. 9.36A, Sec. C (part).)
Sec. 2651.057. AUTOMATIC TERMINATION OF LICENSES. If a
title insurance company surrenders the company's certificate of
authority or if the certificate of authority is revoked by the
department, all licenses of the company's abstract plants
automatically terminate. (V.T.I.C. Art. 9.36A, Sec. C (part).)
Sec. 2651.058. RECORDS OF DIRECT OPERATIONS. The
department shall maintain a record of the county and address of each
location at which a title insurance company operates an abstract
plant in a manner that ensures that the abstract plants may be
conveniently ascertained and inspected by any person on request.
(V.T.I.C. Art. 9.36A, Sec. C (part).)
Sec. 2651.059. USE OF AGENTS NOT PROHIBITED. This
subchapter does not prohibit a title insurance company from issuing
title insurance through a licensed title insurance agent.
(V.T.I.C. Art. 9.36A, Sec. C (part).)
[Sections 2651.060-2651.100 reserved for expansion]
SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2651.101. BOND REQUIRED. (a) Each licensed title
insurance agent and direct operation shall make, file, and pay for a
surety bond payable to the department and issued by a corporate
surety company authorized to write surety bonds in this state. The
bond shall obligate the principal and surety to pay for any
pecuniary loss sustained by:
(1) any participant in an insured real property
transaction through an act of fraud, dishonesty, theft,
embezzlement, or wilful misapplication by a title insurance agent
or direct operation; or
(2) the department as a result of any administrative
expense incurred in a receivership of a title insurance agent or
direct operation.
(b) The amount of the bond must be the greater of:
(1) $10,000; or
(2) an amount equal to 10 percent of the gross premium
written by the title insurance agent or direct operation in
accordance with the latest statistical report to the department but
not to exceed $100,000. (V.T.I.C. Art. 9.38, Sec. (a) (part).)
Sec. 2651.102. ALTERNATIVE TO BOND. (a) Instead of the
bond required by Section 2651.101, a title insurance agent or
direct operation may deposit with the department:
(1) cash;
(2) irrevocable letters of credit issued by a
financial institution in this state that is insured by an agency of
the United States; or
(3) securities approved by the department.
(b) The cash, letters of credit, or securities deposited
under this section are subject to the conditions required for a
bond under Section 2651.101. (V.T.I.C. Art. 9.38, Sec. (a)
(part).)
Sec. 2651.103. EXAMINATION OF LOSS COVERED BY BOND OR
DEPOSIT. (a) At any time it appears that a loss covered by a bond
or deposit has occurred, the department may require the title
insurance agent or direct operation to appear in Travis County,
with records the department determines to be proper, for an
examination.
(b) The department shall specify a date for the examination
that is not earlier than the 10th day or later than the 15th day
after the date of service of notice of the requirement to appear.
(c) If after the examination the department determines that
a loss covered by the bond or deposit has occurred, the department
shall immediately notify the surety on the bond, if applicable, and
prepare a written statement of the facts of the loss and deliver the
statement to the attorney general. (V.T.I.C. Art. 9.38, Sec. (b)
(part).)
Sec. 2651.104. INVESTIGATION BY ATTORNEY GENERAL. (a) On
receipt of a written statement under Section 2651.103, the attorney
general shall investigate the charges and, on determining that a
loss covered by the bond or deposit has occurred, shall enforce the
liability by collecting against the deposited cash or securities or
by filing suit on the bond.
(b) A suit brought under this section shall be filed in the
name of the department in Travis County for the benefit of all
parties who have suffered any loss covered by the bond or deposit.
(V.T.I.C. Art. 9.38, Sec. (b) (part).)
[Sections 2651.105-2651.150 reserved for expansion]
SUBCHAPTER D. ANNUAL AUDIT
Sec. 2651.151. ANNUAL AUDIT OF TRUST FUND ACCOUNTS: TITLE
INSURANCE AGENTS AND DIRECT OPERATIONS. (a) Each title insurance
agent and direct operation shall have an annual audit made of trust
fund accounts. The agent or direct operation shall pay for the
audit.
(b) Not later than the 90th day after the date of the end of
the agent's or direct operation's fiscal year, the agent or direct
operation shall send by certified mail, postage prepaid, to the
department one copy of the audit report with a transmittal letter.
The agent shall also send a copy of the audit report and transmittal
letter to each title insurance company that the agent represents.
(V.T.I.C. Art. 9.39, Sec. (a).)
Sec. 2651.152. ANNUAL AUDIT OF TRUST FUND ACCOUNTS: TITLE
INSURANCE COMPANIES. (a) Each title insurance company shall have
an annual audit made of trust fund accounts for each county in which
it operates in its own name. The company shall pay for the audit.
(b) Not later than the 90th day after the date of the end of
the title insurance company's fiscal year, the company shall send
by certified mail, postage prepaid, to the department one copy of
the audit report. (V.T.I.C. Art. 9.39, Sec. (b).)
Sec. 2651.153. RULES. The commissioner by rule shall
adopt:
(1) the standards for an audit; and
(2) the form of the required audit report. (V.T.I.C.
Art. 9.39, Sec. (c).)
Sec. 2651.154. PERFORMANCE OF AUDIT BY PUBLIC ACCOUNTANT.
An audit required under this subchapter must be performed by an
independent certified public accountant or licensed public
accountant, or a firm composed of either. (V.T.I.C. Art. 9.39, Sec.
(d).)
Sec. 2651.155. CONFIDENTIALITY OF AUDIT. The commissioner
may classify an audit report that is filed with the department by a
title insurance company under this subchapter as confidential and
privileged. (V.T.I.C. Art. 9.39, Sec. (f).)
Sec. 2651.156. FAILURE TO RECEIVE AUDIT REPORT FROM AGENTS
OR DIRECT OPERATIONS. If a title insurance company fails to receive
an audit report from any of the company's agents or direct
operations in the specified period required by Section 2651.151,
the company shall report that failure to the department not later
than the 30th day after the expiration of the specified period.
(V.T.I.C. Art. 9.39, Sec. (e).)
Sec. 2651.157. ENFORCEMENT; HEARING. (a) After notice and
hearing, the department may revoke the license or certificate of
authority of a title insurance agent, direct operation, or title
insurance company that:
(1) fails to furnish an audit report in the time
required; or
(2) furnishes an audit report that reveals any
irregularity, including a shortage, or any practice not in keeping
with sound, honest business practices.
(b) The notice must be provided to the agent, the direct
operation, or each title insurance company involved.
(c) At a hearing under this section, the agent, direct
operation, or title insurance company may offer evidence explaining
or excusing a failure or irregularity. (V.T.I.C. Art. 9.39, Sec.
(g).)
[Sections 2651.158-2651.200 reserved for expansion]
SUBCHAPTER E. GENERAL REGULATION OF TITLE INSURANCE
AGENTS AND DIRECT OPERATIONS
Sec. 2651.201. LICENSE SURRENDER OR FORFEITURE. (a) A
title insurance agent or direct operation may voluntarily surrender
at any time a license issued under this chapter by giving notice to:
(1) the department; and
(2) the affected title insurance company.
(b) A title insurance agent or direct operation that
terminates the agency contract with a title insurance company
automatically forfeits the license under that company.
(c) A surrender or forfeiture of a license under this
section does not affect the culpability of the license holder for
conduct committed before the effective date of the surrender or
forfeiture. The department may institute a disciplinary proceeding
against the former license holder for conduct committed before the
effective date of the surrender or forfeiture. (V.T.I.C. Art.
9.37, Secs. A, F.)
Sec. 2651.202. TRUST FUND ACCOUNT DISBURSEMENTS. (a) A
title insurance company, title insurance agent, or direct operation
may not disburse funds from a trust fund account until good funds
related to the transaction have been received and deposited in the
account in amounts sufficient to fund any disbursements from the
transaction.
(b) A title insurance company, title insurance agent, or
direct operation is not liable for a violation of this section if
the violation:
(1) was not intentional; and
(2) resulted from a bona fide error despite the
maintenance of procedures reasonably adopted to avoid the error.
(c) The commissioner shall adopt rules and definitions to
implement this section. (V.T.I.C. Art. 9.39A, Secs. (a) (part),
(b), (c) (part).)
Sec. 2651.203. DISCLOSURE OF OWNERSHIP AND PREMIUM
INFORMATION. (a) A title insurance agent who receives a portion
of a premium shall disclose to each purchaser of a title insurance
policy or other title insurance form the following:
(1) each shareholder, owner, or partner owning or
controlling at least one percent of the agent;
(2) each shareholder, owner, or partner owning or
controlling at least 10 percent of an entity that owns or controls
at least one percent of the agent;
(3) each person who is not a full-time employee of the
agent and who receives a portion of the premium for services
performed on behalf of the agent in connection with the issuance of
a title insurance form; and
(4) the amount of premium that a person disclosed in
Subdivision (3) receives.
(b) The department shall prescribe the form of the
disclosure required by this section. (V.T.I.C. Art. 9.38, Sec.
(c).)
Sec. 2651.204. CONTINUING EDUCATION. (a) To protect the
public and to preserve and improve the competence of license
holders, the department shall require as a condition of holding a
title insurance agent license that the license holder enroll in and
attend or teach continuing education consisting of class
instruction, lectures, seminars, or other forms of education
approved by the department for title insurance agents.
(b) The department shall prescribe the required number of
hours of continuing education, not to exceed 15 hours in each
two-year license period.
(c) Continuing education instruction must be designed to
refresh the license holder's understanding of:
(1) basic principles and coverages relating to title
insurance;
(2) recent and prospective changes in those principles
and coverages;
(3) applicable rules of the commissioner and laws;
(4) the proper conduct of the license holder's
business; and
(5) the duties and responsibilities of the license
holder.
(d) The department may permit a license holder to complete
an equivalent course of study and instruction by mail if, because of
the remote location of the license holder's residence or business,
the license holder is unable to attend educational sessions with
reasonable convenience.
(e) On written request by the license holder, the department
may extend the time for the license holder to comply with the
requirements of this section or may exempt the license holder from
all or part of the requirements for a license period if the
department determines that the license holder is unable to comply
with the requirements because of illness, medical disability, or
another extenuating circumstance beyond the control of the license
holder. The commissioner shall prescribe the criteria for an
extension or exemption by rule.
(f) The commissioner shall adopt rules to administer this
section. (V.T.I.C. Art. 9.58, Secs. A (part), B, C, D, E.)
[Sections 2651.205-2651.250 reserved for expansion]
SUBCHAPTER F. TITLE INSURANCE COMPANY POWERS AND DUTIES REGARDING
TITLE INSURANCE AGENTS
Sec. 2651.251. EXAMINATION OF TRUST FUND ACCOUNTS BY TITLE
INSURANCE COMPANY. (a) A title insurance company may examine, at
any time, the trust fund accounts and related records of the
company's title insurance agents through the company's examiners or
auditors or through independent certified public accountants
commissioned by the company.
(b) The title insurance company shall pay for each
examination. (V.T.I.C. Art. 9.40 (part).)
Sec. 2651.252. SPECIAL REPORTS. A title insurance company
may require special reports from the company's title insurance
agents regarding any of its transactions. (V.T.I.C. Art. 9.40
(part).)
Sec. 2651.253. AUDIT OF UNUSED FORMS. (a) A title
insurance company shall periodically audit the unused forms in the
possession of each of the company's title insurance agents to
determine that all used forms have been reported to the company.
(b) A title insurance company shall conduct an audit
required by this section at least once every two years.
(c) A report of each audit conducted under this section
shall be made to the department. (V.T.I.C. Art. 9.40 (part).)
[Sections 2651.254-2651.300 reserved for expansion]
SUBCHAPTER G. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2651.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION. The department may deny an application for a license or
discipline a title insurance agent or direct operation under
Sections 4005.102, 4005.103, and 4005.104 if the department
determines that the applicant or license holder has:
(1) wilfully violated this title;
(2) intentionally made a material misstatement in the
license application;
(3) obtained or attempted to obtain the license by
fraud or misrepresentation;
(4) misappropriated or converted to the applicant's or
license holder's own use or illegally withheld money belonging to a
title insurance company, an insured, or another person;
(5) been guilty of fraudulent or dishonest practices;
(6) materially misrepresented the terms and
conditions of a title insurance policy or contract; or
(7) failed to maintain:
(A) a separate and distinct accounting of escrow
funds; and
(B) an escrow bank account or accounts separate
and apart from all other accounts. (V.T.I.C. Art. 9.37, Sec. B.)
Sec. 2651.302. LICENSE APPLICATION AFTER DENIAL, REFUSAL,
OR REVOCATION. (a) An applicant whose license application has been
denied or refused or a license holder whose license has been revoked
under this subchapter may not file another application for a
license as a title insurance agent or direct operation before the
first anniversary of:
(1) the effective date of the denial, refusal, or
revocation; or
(2) the date of a final court order affirming the
denial, refusal, or revocation if judicial review is sought.
(b) A license application filed after the time required by
this section may be denied by the department unless the applicant
shows good cause why the denial, refusal, or revocation should not
be a bar to the issuance of a license. (V.T.I.C. Art. 9.37, Sec. D.)
CHAPTER 2652. ESCROW OFFICERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2652.001. LICENSE AND BOND OR DEPOSIT REQUIRED
Sec. 2652.002. EMPLOYMENT OF ESCROW OFFICER
Sec. 2652.003. ATTORNEY ACTING AS ESCROW OFFICER
Sec. 2652.004. TRUST FUND ACCOUNT DISBURSEMENTS
Sec. 2652.005. ESCROW ACCOUNT AUDIT
Sec. 2652.006. RECORD OF ESCROW OFFICERS
[Sections 2652.007-2652.050 reserved for expansion]
SUBCHAPTER B. LICENSE APPLICATION AND RENEWAL
Sec. 2652.051. LICENSE APPLICATION
Sec. 2652.052. LICENSE AND RENEWAL FEES
Sec. 2652.053. LICENSE ISSUANCE
Sec. 2652.054. DUPLICATE LICENSE
Sec. 2652.055. LICENSE TERM
Sec. 2652.056. AUTOMATIC TERMINATION OF LICENSE
Sec. 2652.057. LICENSE SURRENDER OR FORFEITURE
Sec. 2652.058. CONTINUING EDUCATION
[Sections 2652.059-2652.100 reserved for expansion]
SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2652.101. BOND REQUIRED
Sec. 2652.102. ALTERNATIVE TO BOND
Sec. 2652.103. AMOUNT OF BOND OR DEPOSIT
Sec. 2652.104. EXAMINATION OF LOSS COVERED BY BOND
OR DEPOSIT
Sec. 2652.105. INVESTIGATION BY ATTORNEY GENERAL
[Sections 2652.106-2652.150 reserved for expansion]
SUBCHAPTER D. DUTIES OF TITLE INSURANCE AGENTS AND DIRECT
OPERATIONS REGARDING ESCROW OFFICERS
Sec. 2652.151. LIST OF ESCROW OFFICERS
Sec. 2652.152. RENEWAL
Sec. 2652.153. NOTICE OF TERMINATION
[Sections 2652.154-2652.200 reserved for expansion]
SUBCHAPTER E. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2652.201. GROUNDS FOR LICENSE DENIAL OR
DISCIPLINARY ACTION
Sec. 2652.202. LICENSE APPLICATION AFTER DENIAL, REFUSAL,
OR REVOCATION
CHAPTER 2652. ESCROW OFFICERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2652.001. LICENSE AND BOND OR DEPOSIT REQUIRED. An
individual may not act as an escrow officer unless the individual:
(1) holds a license issued by the department; and
(2) maintains a surety bond or deposit required under
Subchapter C. (V.T.I.C. Art. 9.41, Sec. A (part); New.)
Sec. 2652.002. EMPLOYMENT OF ESCROW OFFICER. (a) A title
insurance agent or direct operation may not employ an individual as
an escrow officer unless the individual holds a license and
maintains a surety bond or deposit as required by this chapter.
(b) A title insurance agent or direct operation may not
permit an individual to act as an escrow officer in this state
before the agent or direct operation has complied with Sections
2652.151 and 2652.152 with respect to the individual. (V.T.I.C.
Art. 9.41, Sec. A (part); Art. 9.42, Sec. 1(a) (part); New.)
Sec. 2652.003. ATTORNEY ACTING AS ESCROW OFFICER. (a)
Notwithstanding Section 2652.001, an attorney is not required to be
licensed as an escrow officer to perform the duties of an escrow
officer as defined by Section 2501.003.
(b) An attorney may hold a license to act as an escrow
officer. An employee of an attorney licensed as an escrow officer
also may hold a license to act as an escrow officer. An attorney
licensed as an escrow officer shall comply with the provisions of
this code that apply to escrow officers and trust funds as if the
attorney were a title insurance agent.
(c) Notwithstanding any other provision of this chapter, a
title insurance company or title insurance agent may not permit an
attorney to conduct the attorney's business in the name of the
company or agent unless the attorney and the attorney's bona fide
employees who close transactions are licensed escrow officers.
(V.T.I.C. Art. 9.41, Secs. B, C.)
Sec. 2652.004. TRUST FUND ACCOUNT DISBURSEMENTS. (a) An
escrow officer may not disburse funds from a trust fund account
until good funds related to the transaction have been received and
deposited in the account in amounts sufficient to fund any
disbursements from the transaction.
(b) An escrow officer is not liable for a violation of this
section if the violation:
(1) was not intentional; and
(2) resulted from a bona fide error despite the
maintenance of procedures reasonably adopted to avoid the error.
(c) The commissioner shall adopt rules and definitions to
implement this section. (V.T.I.C. Art. 9.39A, Secs. (a) (part),
(b), (c) (part).)
Sec. 2652.005. ESCROW ACCOUNT AUDIT. Each escrow account
used by a licensed escrow officer for closing a transaction is
subject to the audit requirements of Subchapter D, Chapter 2651.
(V.T.I.C. Art. 9.41, Sec. D.)
Sec. 2652.006. RECORD OF ESCROW OFFICERS. The department
shall maintain a record of the name and address of each escrow
officer licensed by the department in a manner that ensures that the
escrow officers employed by any title insurance agent or direct
operation in this state may be conveniently determined. (V.T.I.C.
Art. 9.42, Sec. 1(c).)
[Sections 2652.007-2652.050 reserved for expansion]
SUBCHAPTER B. LICENSE APPLICATION AND RENEWAL
Sec. 2652.051. LICENSE APPLICATION. (a) Before an initial
license is issued to an individual to act as an escrow officer in
this state for a title insurance agent or direct operation, the
title insurance agent or direct operation must file an application
for an escrow officer's license with the department on forms
provided by the department.
(b) The application must be:
(1) accompanied by a nonrefundable license fee; and
(2) signed and sworn to by the title insurance agent or
direct operation and by the proposed escrow officer.
(c) The completed application must state that:
(1) the proposed escrow officer is an individual who
is a bona fide resident of this state;
(2) the proposed escrow officer is an attorney or is a
bona fide employee of:
(A) an attorney licensed as an escrow officer; or
(B) a title insurance agent or direct operation;
(3) the proposed escrow officer has reasonable
experience or instruction in the field of title insurance; and
(4) the title insurance agent or direct operation does
not know of any fact or condition that disqualifies the proposed
escrow officer from receiving a license. (V.T.I.C. Art. 9.43,
Secs. A (part), B.)
Sec. 2652.052. LICENSE AND RENEWAL FEES. (a) The
department shall prescribe the license fee in an amount not to
exceed $50.
(b) License fees, and renewal fees collected under Section
2652.152, shall be deposited to the credit of the Texas Department
of Insurance operating account to be used by the department to
enforce this chapter and any other law of this state that regulates
escrow officers for title insurance agents or direct operations.
(V.T.I.C. Art. 9.43, Sec. A (part).)
Sec. 2652.053. LICENSE ISSUANCE. The department shall
issue a license if the department determines, based on the
application and the department's investigation, that the
requirements of Section 2652.051 are satisfied. (V.T.I.C. Art.
9.43, Sec. C.)
Sec. 2652.054. DUPLICATE LICENSE. (a) The department
shall collect in advance a fee from a title insurance agent or
direct operation that requests a duplicate license.
(b) The department shall prescribe the fee in an amount not
to exceed $20. (V.T.I.C. Art. 9.43, Sec. D.)
Sec. 2652.055. LICENSE TERM. Unless a system of staggered
license renewal is adopted under Section 4003.002, a license
expires on the second June 1 following the date of issuance.
(V.T.I.C. Art. 9.42, Sec. 1(b) (part).)
Sec. 2652.056. AUTOMATIC TERMINATION OF LICENSE. The
license of each escrow officer employed by a title insurance agent
or direct operation that surrenders its license or has its license
revoked by the department is automatically terminated without
notice. (V.T.I.C. Art. 9.42, Sec. 1(b) (part).)
Sec. 2652.057. LICENSE SURRENDER OR FORFEITURE. (a) An
escrow officer may voluntarily surrender the escrow officer's
license at any time by giving notice to the department.
(b) An escrow officer automatically forfeits the escrow
officer's license if the officer is not employed as an escrow
officer.
(c) A surrender or forfeiture of a license under this
section does not affect the culpability of the license holder for
conduct committed before the effective date of the surrender or
forfeiture. The department may institute a disciplinary proceeding
against the former license holder for conduct committed before the
effective date of the surrender or forfeiture. (V.T.I.C. Art.
9.44, Secs. 1, 6.)
Sec. 2652.058. CONTINUING EDUCATION. (a) To protect the
public and to preserve and improve the competence of license
holders, the department shall require as a condition of holding an
escrow officer license that the license holder enroll in and attend
or teach continuing education consisting of class instruction,
lectures, seminars, or other forms of education approved by the
department for escrow officers.
(b) The department shall prescribe the required number of
hours of continuing education, not to exceed 15 hours in each
two-year license period.
(c) Continuing education instruction must be designed to
refresh the license holder's understanding of:
(1) basic principles and coverages relating to title
insurance;
(2) recent and prospective changes in those principles
and coverages;
(3) applicable rules of the commissioner and laws;
(4) the proper conduct of the license holder's
business; and
(5) the duties and responsibilities of the license
holder.
(d) The department may permit a license holder to complete
an equivalent course of study and instruction by mail if, because of
the remote location of the license holder's residence or business,
the license holder is unable to attend educational sessions with
reasonable convenience.
(e) On written request by the license holder, the department
may extend the time for the license holder to comply with the
requirements of this section or may exempt the license holder from
all or part of the requirements for a license period if the
department determines that the license holder is unable to comply
with the requirements because of illness, medical disability, or
another extenuating circumstance beyond the control of the license
holder. The commissioner shall prescribe the criteria for an
extension or exemption by rule.
(f) The commissioner shall adopt rules to administer this
section. (V.T.I.C. Art. 9.58, Secs. A (part), B, C, D, E.)
[Sections 2652.059-2652.100 reserved for expansion]
SUBCHAPTER C. BOND AND DEPOSIT REQUIREMENTS
Sec. 2652.101. BOND REQUIRED. (a) A title insurance agent
or direct operation shall obtain, at its own expense, a bond for its
escrow officers payable to the department. The bond shall obligate
the principal and surety to pay for any pecuniary loss sustained by
the title insurance agent or direct operation through an act of
fraud, dishonesty, forgery, theft, embezzlement, or wilful
misapplication by an escrow officer, either directly and alone or
in conspiracy with another person.
(b) The bond must be:
(1) of a type approved by the department; and
(2) issued by a surety licensed by the department to do
business in this state. (V.T.I.C. Art. 9.45, Sec. (a) (part).)
Sec. 2652.102. ALTERNATIVE TO BOND. (a) Instead of the
bond required by Section 2652.101, a title insurance agent or
direct operation may deposit with the department:
(1) cash;
(2) irrevocable letters of credit issued by a
financial institution insured by an agency of the United States; or
(3) securities approved by the department.
(b) The cash, letters of credit, or securities deposited
under this section are subject to the conditions required for a bond
under Section 2652.101. (V.T.I.C. Art. 9.45, Sec. (a) (part).)
Sec. 2652.103. AMOUNT OF BOND OR DEPOSIT. The amount of the
bond or deposit required under this subchapter is determined by
multiplying the number of escrow officers employed by the title
insurance agent or direct operation by $5,000, except that the
maximum amount of the bond or deposit required under this
subchapter is $50,000. (V.T.I.C. Art. 9.45, Sec. (a) (part).)
Sec. 2652.104. EXAMINATION OF LOSS COVERED BY BOND OR
DEPOSIT. (a) At any time it appears that a loss covered by a bond
or deposit has occurred, the department may require the escrow
officer to appear in Travis County, with records the department
determines to be proper, for an examination.
(b) The department shall specify a date for the examination
that is not earlier than the 10th day or later than the 15th day
after the date of service of notice of the requirement to appear.
Copies of the notice shall be sent to any title insurance agent or
direct operation concerned.
(c) If after the examination the department determines that
a loss covered by the bond or deposit has occurred, the department
shall immediately notify the appropriate title insurance agent or
direct operation and the surety on the bond, if applicable, and
prepare a written statement of the facts of the loss and deliver the
statement to the attorney general. (V.T.I.C. Art. 9.45, Sec. (b)
(part).)
Sec. 2652.105. INVESTIGATION BY ATTORNEY GENERAL. (a) On
receipt of a written statement under Section 2652.104, the attorney
general shall investigate the charges and, on determining that a
loss covered by the bond or deposit has occurred, shall enforce the
liability by collecting against the deposited cash or securities or
by filing suit on the bond.
(b) A suit brought under this section shall be filed in the
name of the department in Travis County for the benefit of all
parties who have suffered any loss covered by the bond or deposit.
(V.T.I.C. Art. 9.45, Sec. (b) (part).)
[Sections 2652.106-2652.150 reserved for expansion]
SUBCHAPTER D. DUTIES OF TITLE INSURANCE AGENTS AND
DIRECT OPERATIONS REGARDING ESCROW OFFICERS
Sec. 2652.151. LIST OF ESCROW OFFICERS. (a) A title
insurance agent or direct operation shall certify to the
department, not later than the expiration date of the title
insurance agent's or direct operation's license, the name and
address of each individual employed by the title insurance agent or
direct operation to serve as an escrow officer in this state.
(b) The certification required by this section must be on a
form provided by the department. (V.T.I.C. Art. 9.42, Sec. 1(a)
(part).)
Sec. 2652.152. RENEWAL. A title insurance agent or direct
operation shall apply for renewal and pay a nonrefundable license
renewal fee prescribed by the department in an amount not to exceed
$50 for each escrow officer listed by the title insurance agent or
direct operation under Section 2652.151. (V.T.I.C. Art. 9.42, Sec.
1(a) (part).)
Sec. 2652.153. NOTICE OF TERMINATION. A title insurance
agent or direct operation that terminates the employment of a
licensed escrow officer shall:
(1) immediately notify the department in writing of
the termination and request cancellation of the license; and
(2) notify the escrow officer of the action by the
title insurance agent or direct operation. (V.T.I.C. Art. 9.42,
Sec. 1(a) (part).)
[Sections 2652.154-2652.200 reserved for expansion]
SUBCHAPTER E. LICENSE DENIAL AND DISCIPLINARY ACTION
Sec. 2652.201. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION. The department may deny an application for a license or
discipline an escrow officer under Sections 4005.102, 4005.103, and
4005.104 if the department determines that the applicant or license
holder has:
(1) wilfully violated this title;
(2) intentionally made a material misstatement in the
license application;
(3) obtained or attempted to obtain the license by
fraud or misrepresentation;
(4) misappropriated or converted to the escrow
officer's own use or illegally withheld money belonging to a title
insurance agent, direct operation, or another person;
(5) been guilty of fraudulent or dishonest practices;
(6) materially misrepresented the terms and
conditions of a title insurance policy or contract; or
(7) failed to complete all educational requirements.
(V.T.I.C. Art. 9.44, Sec. 2.)
Sec. 2652.202. LICENSE APPLICATION AFTER DENIAL, REFUSAL,
OR REVOCATION. (a) An applicant whose license application has been
denied or refused or a license holder whose license has been revoked
under this subchapter may not file another application for a
license as an escrow officer before the first anniversary of:
(1) the effective date of the denial, refusal, or
revocation; or
(2) the date of a final court order affirming the
denial, refusal, or revocation if judicial review is sought.
(b) A license application filed after the time required by
this section may be denied by the department unless the applicant
shows good cause why the denial, refusal, or revocation should not
be a bar to the issuance of a license. (V.T.I.C. Art. 9.44, Sec. 4.)
[Chapters 2653-2700 reserved for expansion]
SUBTITLE E. THE BUSINESS OF TITLE INSURANCE
CHAPTER 2701. GENERAL PROVISIONS
Sec. 2701.001. ABSTRACT OF TITLE DISTINGUISHED; PROHIBITION
ON REGULATION OF ABSTRACT OF TITLE
Sec. 2701.002. CONSTRUCTION OF CHAPTER 39, BUSINESS
& COMMERCE CODE
CHAPTER 2701. GENERAL PROVISIONS
Sec. 2701.001. ABSTRACT OF TITLE DISTINGUISHED;
PROHIBITION ON REGULATION OF ABSTRACT OF TITLE. (a) In this
section, "commitment for title insurance" means a title insurance
form under which a title insurance company offers to issue a title
insurance policy subject to stated exceptions, requirements, and
terms. The term includes a mortgagee title policy binder on an
interim construction loan.
(b) A commitment for title insurance constitutes a
statement of the terms and conditions on which a title insurance
company is willing to issue its policy. A title insurance policy or
other title insurance form constitutes a statement of the terms and
conditions of the indemnity under the policy or form.
(c) An abstract of title prepared from an abstract plant for
a chain of title to real property described in the abstract of title
is not title insurance, a commitment for title insurance, or any
other title insurance form. A commitment for title insurance,
title insurance policy, or other title insurance form is not an
abstract of title.
(d) The commissioner may not adopt rules relating to
abstracts of title. (V.T.I.C. Art. 9.07B.)
Sec. 2701.002. CONSTRUCTION OF CHAPTER 39, BUSINESS &
COMMERCE CODE. Chapter 39, Business & Commerce Code, is a consumer
protection law when construed in connection with a title insurance
policy issued in this state. (V.T.I.C. Art. 9.50.)
CHAPTER 2702. CLOSING AND SETTLEMENT
SUBCHAPTER A. INSURED CLOSING AND SETTLEMENT LETTERS
Sec. 2702.001. INSURED CLOSING AND SETTLEMENT LETTER:
LOANS
Sec. 2702.002. INSURED CLOSING AND SETTLEMENT LETTER:
CERTAIN BUYERS OR SELLERS
Sec. 2702.003. EFFECT OF FAILURE TO ISSUE INSURED
CLOSING AND SETTLEMENT LETTER
[Sections 2702.004-2702.050 reserved for expansion]
SUBCHAPTER B. UNIFORM CLOSING AND SETTLEMENT STATEMENTS
Sec. 2702.051. APPLICABILITY
Sec. 2702.052. DUTY TO PRESCRIBE UNIFORM CLOSING AND
SETTLEMENT STATEMENT FORMS
Sec. 2702.053. CONTENT OF CLOSING AND SETTLEMENT STATEMENT
Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM
PERMITTED
[Sections 2702.055-2702.100 reserved for expansion]
SUBCHAPTER C. ADVANCE DISCLOSURE OF CLOSING AND SETTLEMENT
COSTS IN TRANSACTIONS INVOLVING RESIDENTIAL REAL PROPERTY
Sec. 2702.101. APPLICABILITY
Sec. 2702.102. DUTY TO PROVIDE ADVANCE DISCLOSURE OF CLOSING
AND SETTLEMENT COSTS
Sec. 2702.103. TITLE INSURANCE COMPANY OR TITLE INSURANCE
AGENT NOT SUBJECT TO REQUIREMENTS
APPLICABLE TO LENDERS
CHAPTER 2702. CLOSING AND SETTLEMENT
SUBCHAPTER A. INSURED CLOSING AND SETTLEMENT LETTERS
Sec. 2702.001. INSURED CLOSING AND SETTLEMENT LETTER:
LOANS. (a) On request, a title insurance company may issue insured
closing and settlement letters in connection with the closing and
settlement by a title insurance agent or direct operation of loans
relating to real property located in this state.
(b) Insured closing and settlement letters must be issued in
the form prescribed by the commissioner.
(c) A title insurance company may not impose a charge for
issuing insured closing and settlement letters under this section.
(V.T.I.C. Art. 9.49, Sec. (a) (part).)
Sec. 2702.002. INSURED CLOSING AND SETTLEMENT LETTER:
CERTAIN BUYERS OR SELLERS. (a) On written request, a title
insurance company may issue to the buyer or seller of real property
located in this state, the sales price of which exceeds the maximum
covered claim specified by Chapter 2602, an insured closing and
settlement letter in connection with the closing and settlement of
the transaction by a title insurance agent or direct operation.
Only the title insurance company that is to issue an owner title
insurance policy in connection with the transaction may issue the
insured closing and settlement letter.
(b) An insured closing and settlement letter must be issued:
(1) at or before closing; and
(2) in the form and manner prescribed by the
commissioner.
(c) The commissioner may adopt a charge for the issuance of
an insured closing and settlement letter under this section and
prescribe the form and manner in which the charge must be made.
(V.T.I.C. Art. 9.49, Sec. (b) (part).)
Sec. 2702.003. EFFECT OF FAILURE TO ISSUE INSURED CLOSING
AND SETTLEMENT LETTER. The failure of a title insurance company to
issue an insured closing and settlement letter does not affect the
company's liability under an issued title insurance policy.
(V.T.I.C. Art. 9.49, Secs. (a) (part), (b) (part).)
[Sections 2702.004-2702.050 reserved for expansion]
SUBCHAPTER B. UNIFORM CLOSING AND SETTLEMENT STATEMENTS
Sec. 2702.051. APPLICABILITY. This subchapter does not
apply to the closing or settlement of:
(1) a residential real property transaction regulated
by the Real Estate Settlement Procedures Act of 1974 (Pub. L. No.
93-533); or
(2) a real property transaction if the closing or
settlement is not actually handled by:
(A) a title insurance company, a title insurance
agent, or an attorney for a title insurance company or title
insurance agent; or
(B) a representative of a title insurance
company, a title insurance agent, or an attorney for a title
insurance company or title insurance agent. (V.T.I.C. Art. 9.53
(part).)
Sec. 2702.052. DUTY TO PRESCRIBE UNIFORM CLOSING AND
SETTLEMENT STATEMENT FORMS. (a) The department, after notice and
hearing, shall prescribe uniform closing and settlement statement
forms to be used in connection with the closing and settlement of a
transaction involving:
(1) the conveyance or mortgage of real property; and
(2) the issuance of a title insurance policy by a title
insurance company or title insurance agent.
(b) The department may prescribe separate forms under this
section for transactions involving improved residential real
property and for all other real property transactions.
(c) The department shall design the forms under this section
to enable each party to the transaction to be provided with a dual
or separate form identifying only the charges made to that party.
(V.T.I.C. Art. 9.53 (part).)
Sec. 2702.053. CONTENT OF CLOSING AND SETTLEMENT STATEMENT.
(a) Each closing and settlement statement provided to a party to a
transaction described by Section 2702.052(a) must state the name of
any person receiving any amount from that party.
(b) Notwithstanding Subsection (a), the title insurance
company or title insurance agent is required to include in the
closing and settlement statement only those items of disbursement
that are actually disbursed by the company or agent.
(c) If an attorney, other than a full-time employee of the
title insurance company or title insurance agent, examines a title
or provides any closing or settlement services, the closing and
settlement statement must include:
(1) the amount of the fee for the services, shown as
included in the premium; and
(2) the name of the attorney or, if applicable, the
name of the firm to which the fee was paid.
(d) The closing and settlement statement must conspicuously
and clearly itemize the charges imposed on the party in connection
with the closing and settlement.
(e) If a charge for title insurance is made to the party, the
closing and settlement statement must state whether the title
insurance premium included in the charge covers the mortgagee's
interest in the real property, the borrower's interest, or both.
(V.T.I.C. Art. 9.53 (part).)
Sec. 2702.054. USE OF ALTERNATE SETTLEMENT STATEMENT FORM
PERMITTED. A title insurance company or title insurance agent may
use the uniform settlement statement form prepared under the Real
Estate Settlement Procedures Act of 1974 (Pub. L. No. 93-533)
instead of the uniform closing and settlement statement form
prescribed by the department under this subchapter. (V.T.I.C. Art.
9.53 (part).)
[Sections 2702.055-2702.100 reserved for expansion]
SUBCHAPTER C. ADVANCE DISCLOSURE OF CLOSING AND SETTLEMENT
COSTS IN TRANSACTIONS INVOLVING RESIDENTIAL REAL PROPERTY
Sec. 2702.101. APPLICABILITY. This subchapter does not
apply to the closing or settlement of a real property transaction if
the closing or settlement is not actually handled by:
(1) a title insurance company, a title insurance
agent, or an attorney for a title insurance company or title
insurance agent; or
(2) a representative of a title insurance company, a
title insurance agent, or an attorney for a title insurance company
or title insurance agent. (V.T.I.C. Art. 9.54 (part).)
Sec. 2702.102. DUTY TO PROVIDE ADVANCE DISCLOSURE OF
CLOSING AND SETTLEMENT COSTS. (a) Except as provided by Subsection
(c), on the written request of the buyer, seller, or borrower before
the closing and settlement of a transaction involving improved
residential real property, a title insurance company or title
insurance agent shall, in connection with the issuance of any kind
of title insurance policy guaranteeing a lien on or the title to the
property, provide to the requesting party an itemized disclosure of
each charge to be made to that party that arises in connection with
the closing and settlement.
(b) The itemized disclosure must be provided on a closing
and settlement statement form prescribed or permitted under
Subchapter B.
(c) The title insurance company or title insurance agent is
required to provide the itemized disclosure only to the extent that
information is available concerning each charge to be made to the
party. If information concerning a charge is not available, the
title insurance company or title insurance agent shall:
(1) make a notation that the charge is to be made but
that the information is not available or that the amount shown is an
estimate of the charge; and
(2) advise the party in writing as to the identity of
the person or organization responsible for the charge. (V.T.I.C.
Art. 9.54 (part).)
Sec. 2702.103. TITLE INSURANCE COMPANY OR TITLE INSURANCE
AGENT NOT SUBJECT TO REQUIREMENTS APPLICABLE TO LENDERS. (a)
Notwithstanding Section 2702.102, a title insurance company or
title insurance agent is not required to disclose a cost or charge
that a lender is required by law to disclose to a party.
(b) Section 2702.102 does not impose on a title insurance
company or title insurance agent any obligation imposed on a lender
by the Real Estate Settlement Procedures Act of 1974 (Pub. L. No.
93-533). (V.T.I.C. Art. 9.54 (part).)
CHAPTER 2703. POLICY FORMS AND PREMIUM RATES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2703.001. COMPLIANCE WITH TITLE AND RULES
Sec. 2703.002. USE OF FORMS IN GENERAL
Sec. 2703.003. PAYMENT OF PREMIUMS
[Sections 2703.004-2703.050 reserved for expansion]
SUBCHAPTER B. POLICY PROVISIONS
Sec. 2703.051. CERTAIN PROVISIONS REQUIRED
Sec. 2703.052. DUTY OF TITLE INSURANCE COMPANY
Sec. 2703.053. ESTABLISHMENT OF STANDARDS AND
SCHEDULES
Sec. 2703.054. AUTHORITY OF COMMISSIONER IN IMPLEMENTING
SUBCHAPTER
[Sections 2703.055-2703.100 reserved for expansion]
SUBCHAPTER C. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY
Sec. 2703.101. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY
[Sections 2703.102-2703.150 reserved for expansion]
SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES
Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES
Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM
RATES
Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM
RATES
[Sections 2703.154-2703.200 reserved for expansion]
SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES,
POLICY FORMS, AND OTHER RELATED MATTERS
Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM
RATE
Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE
Sec. 2703.203. BIENNIAL HEARING
Sec. 2703.204. ADMISSION AS PARTY TO BIENNIAL HEARING
Sec. 2703.205. PHASES OF BIENNIAL HEARING
Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS
AS NECESSARY
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS
Sec. 2703.208. ADDITIONS OR AMENDMENTS TO MANUAL
CHAPTER 2703. POLICY FORMS AND PREMIUM RATES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2703.001. COMPLIANCE WITH TITLE AND RULES. (a) This
section applies to a corporation organized under this title, a
foreign corporation, and, to the extent that the corporation is
engaged in the business of title insurance, a corporation organized
under another law, including:
(1) Subdivision 57, Article 1302, Revised Statutes,
before repeal of that statute; and
(2) Chapter 861.
(b) A corporation operates in this state under the control
and supervision of the commissioner and under uniform rules adopted
by the commissioner relating to:
(1) forms of policies and underwriting contracts;
(2) premiums for those policies and contracts; and
(3) underwriting standards and practices.
(c) With respect to real property located in this state, a
corporation may not issue any kind of title insurance coverage, any
kind of guarantee, or reinsurance of a risk assumed under a title
insurance policy, except as provided by Section 2551.305(a), unless
the corporation is authorized to engage in the business of title
insurance under this title and otherwise complies with this title.
In engaging in the business of title insurance with respect to real
property located in this state, the corporation shall comply with
this title and rules described by Subsection (b), including when:
(1) issuing any kind of title insurance policy or an
underwriting contract;
(2) reinsuring any portion of a risk assumed under a
title insurance policy; and
(3) deleting a title insurance policy exclusion.
(d) Title insurance coverage, reinsurance, or a guarantee
issued in violation of Subsection (c) is invalid. (V.T.I.C. Art.
9.07, Sec. (a) (part).)
Sec. 2703.002. USE OF FORMS IN GENERAL. A title insurance
company or title insurance agent may not use a form required under
this title to be prescribed or approved until the commissioner has
prescribed or approved the form. (V.T.I.C. Art. 9.07, Sec. (a)
(part).)
Sec. 2703.003. PAYMENT OF PREMIUMS. The premium for a title
insurance policy or for another form prescribed or approved by the
commissioner shall be paid in the due and ordinary course of
business. (V.T.I.C. Art. 9.07, Sec. (b) (part).)
[Sections 2703.004-2703.050 reserved for expansion]
SUBCHAPTER B. POLICY PROVISIONS
Sec. 2703.051. CERTAIN PROVISIONS REQUIRED. A title
insurance policy delivered or issued for delivery in this state to
insure an owner of real property must include certain provisions,
the form and content of which shall be prescribed by the
commissioner, in accordance with this subchapter. (V.T.I.C. Art.
9.57, Sec. (a).)
Sec. 2703.052. DUTY OF TITLE INSURANCE COMPANY. (a) On a
report to a title insurance company made by an insured after a title
insurance policy has been issued that a lien, encumbrance, or title
defect exists that is not excepted under the policy or otherwise
excluded from coverage, the company shall promptly investigate to
determine whether the lien or encumbrance is valid and not barred by
statute or other law.
(b) A title insurance company that concludes that a valid
lien or encumbrance that is not barred by statute or other law
exists or that a title defect exists shall:
(1) institute all necessary legal proceedings to clear
the title to the property;
(2) indemnify the insured according to the terms of
the policy;
(3) reinsure at current value the title to the
property without making exception to the lien, encumbrance, or
defect or indemnify another insurer for reinsuring the title
without making exception to the lien, encumbrance, or defect;
(4) secure a release of the lien, encumbrance, or
defect; or
(5) take a combination of the actions described by
this subsection. (V.T.I.C. Art. 9.57, Sec. (b).)
Sec. 2703.053. ESTABLISHMENT OF STANDARDS AND SCHEDULES.
The commissioner by rule shall establish standards and time
schedules for implementing and handling claims by title insurance
companies in accordance with this subchapter. (V.T.I.C. Art. 9.57,
Sec. (d).)
Sec. 2703.054. AUTHORITY OF COMMISSIONER IN IMPLEMENTING
SUBCHAPTER. (a) The commissioner may adopt, by amendment to an
owner title insurance policy or by separate endorsement to an owner
title insurance policy, language to implement this subchapter in a
manner consistent with the terms, provisions, conditions, and
stipulations of the policy or the exceptions to coverage contained
in the schedules to the policy.
(b) This subchapter does not prohibit the commissioner from
adopting for use in this state one or more policies in a simplified,
generally more understandable, and usable form. (V.T.I.C. Art.
9.57, Sec. (c).)
[Sections 2703.055-2703.100 reserved for expansion]
SUBCHAPTER C. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY
Sec. 2703.101. POLICY FORMS FOR RESIDENTIAL REAL PROPERTY.
(a) The commissioner shall prescribe an owner title insurance
policy form to be issued in connection with a transaction involving
residential real property in this state.
(b) A title insurance company or title insurance agent shall
use the form prescribed by the commissioner in issuing to an
individual an owner title insurance policy relating to residential
real property in this state.
(c) Unless authorized by rule adopted by the commissioner,
an insurer may not enter into a contract or other agreement
concerning an individual title insurance policy if the contract or
other agreement is not expressed in the policy. A contract or
agreement prohibited by this subsection is void.
(d) An endorsement prescribed by the commissioner may be
attached to the title insurance policy form as authorized by rule
adopted by the commissioner.
(e) The commissioner may not prescribe an owner title
insurance policy form for residential real property or an
endorsement to the policy if the policy form or endorsement is not
written in plain language. For purposes of this subsection, a
policy form or endorsement is written in plain language if it
achieves the minimum score established by the commissioner on the
Flesch reading ease test or an equivalent test selected by the
commissioner or, at the commissioner's option, if it conforms to
the language requirements in a National Association of Insurance
Commissioners model act relating to plain language. This
subsection does not apply to policy language required by state or
federal law.
(f) For an owner title insurance policy on residential real
property that is issued to an individual, the commissioner may
adopt coverages that insure against ad valorem taxes, including
penalties and interest, to be paid with respect to the property for
a previous tax year:
(1) that are delinquent on the effective date of the
policy because of sale, diversion, or change of use, unless
excluded because the insured has actual knowledge of the delinquent
taxes; or
(2) that result from an exemption granted to a
previous owner of the property under Section 11.13, Tax Code, or
from an improvement not assessed for a previous tax year, unless
excluded because the insured has actual knowledge of the taxes.
(V.T.I.C. Art. 9.07A.)
[Sections 2703.102-2703.150 reserved for expansion]
SUBCHAPTER D. FIXING AND PROMULGATING PREMIUM RATES
Sec. 2703.151. FIXING AND PROMULGATING PREMIUM RATES. (a)
Except as provided by Subsection (b), the commissioner shall fix
and promulgate the premium rates to be charged by a title insurance
company or by a title insurance agent for title insurance policies
or for other forms prescribed or approved by the commissioner.
(b) The commissioner may not fix or promulgate the premium
rates for reinsurance between title insurance companies. Title
insurance companies may establish the premium rates in amounts to
which the companies agree.
(c) Except for a premium charged for reinsurance, a premium
may not be charged for a title insurance policy or for another
prescribed or approved form at a rate different than the rate fixed
and promulgated by the commissioner. (V.T.I.C. Art. 9.07, Sec. (b)
(part).)
Sec. 2703.152. FACTORS CONSIDERED IN FIXING PREMIUM RATES.
(a) In fixing premium rates, the commissioner shall consider all
relevant income and expenses of title insurance companies and title
insurance agents attributable to engaging in the business of title
insurance in this state.
(b) The premium rates fixed by the commissioner must be:
(1) reasonable as to the public; and
(2) nonconfiscatory as to title insurance companies
and title insurance agents. (V.T.I.C. Art. 9.07, Sec. (b) (part).)
Sec. 2703.153. COLLECTION OF DATA FOR FIXING PREMIUM RATES.
(a) Each title insurance company and title insurance agent engaged
in the business of title insurance in this state shall submit to the
department, as required by the department to collect data to use to
fix premium rates, all information relating to:
(1) loss experience;
(2) expense of operation; and
(3) other material matters.
(b) The information must be submitted in the form prescribed
by the department. (V.T.I.C. Art. 9.07, Sec. (b) (part).)
[Sections 2703.154-2703.200 reserved for expansion]
SUBCHAPTER E. PROCEDURES REGARDING PREMIUM RATES,
POLICY FORMS, AND OTHER RELATED MATTERS
Sec. 2703.201. HEARING REQUIRED FOR FIXING PREMIUM RATE.
Before a premium rate may be fixed and a premium charged, the
department must provide reasonable notice and a hearing must be
afforded to title insurance companies, title insurance agents, and
the public. (V.T.I.C. Art. 9.07, Sec. (a) (part).)
Sec. 2703.202. HEARING REQUIRED FOR CHANGE IN PREMIUM RATE.
(a) A premium rate previously fixed by the commissioner may not be
changed until after the commissioner holds a public hearing.
(b) At the request of a title insurance company or the
office of public insurance counsel, the commissioner shall order a
public hearing to consider changing a premium rate. (V.T.I.C. Art.
9.07, Sec. (d) (part).)
Sec. 2703.203. BIENNIAL HEARING. The commissioner shall
hold a biennial public hearing not earlier than July 1 of each
even-numbered year to consider adoption of premium rates and other
matters relating to regulating the business of title insurance that
an association, title insurance company, title insurance agent, or
member of the public requests to be considered or that the
commissioner determines necessary to consider. (V.T.I.C. Art.
9.07, Sec. (c) (part).)
Sec. 2703.204. ADMISSION AS PARTY TO BIENNIAL HEARING. An
individual or association or other entity recommending adoption of
a premium rate or another matter relating to regulating the
business of title insurance shall be admitted as a party to the
biennial hearing. (V.T.I.C. Art. 9.07, Sec. (c) (part).)
Sec. 2703.205. PHASES OF BIENNIAL HEARING. (a) The
biennial hearing consists of:
(1) a rulemaking phase to consider rules, forms,
endorsements, and related matters that do not have rate
implications; and
(2) a ratemaking phase to consider fixing of premium
rates and other matters that have rate implications.
(b) The commissioner shall certify which matters have rate
implications to be considered in the ratemaking phase of the
hearing.
(c) Except as provided by Subsection (d), the commissioner
shall conduct both phases of the hearing.
(d) At the direction of the commissioner or at the written
request of a person seeking admission as a party to the ratemaking
phase of the hearing, the State Office of Administrative Hearings
shall conduct the ratemaking phase of the hearing in accordance
with Chapter 40. A request under this subsection must be made at
the time a person seeks to be admitted as a party to the hearing but
may not be made later than the 10th day after the date notice of the
hearing is provided under Section 2703.207.
(e) The ratemaking phase of the hearing shall be conducted
as a contested case in accordance with Chapter 2001, Government
Code.
(f) A party's presentation of relevant, admissible oral
testimony may not be limited.
(g) Each matter in each phase of the hearing shall be
considered by the commissioner and decisions on the matters made in
an open meeting. (V.T.I.C. Art. 9.07, Sec. (c) (part).)
Sec. 2703.206. COMMISSIONER AUTHORITY TO HOLD HEARINGS AS
NECESSARY. At any time, the commissioner may order a public hearing
to consider adoption of premium rates and other matters relating to
regulating the business of title insurance as the commissioner
determines necessary or proper. (V.T.I.C. Art. 9.07, Sec. (e)
(part).)
Sec. 2703.207. NOTICE OF CERTAIN HEARINGS. Not later than
the 60th day before the date of a hearing under Section 2703.202,
2703.203, or 2703.206, notice of the hearing and of each item to be
considered at the hearing shall be:
(1) sent directly to all title insurance companies and
title insurance agents; and
(2) provided to the public in a manner that gives fair
notice concerning the hearing. (V.T.I.C. Art. 9.07, Secs. (c)
(part), (d) (part), (e) (part).)
Sec. 2703.208. ADDITIONS OR AMENDMENTS TO MANUAL. (a) An
addition or amendment to the Basic Manual of Rules, Rates, and Forms
for the Writing of Title Insurance in the State of Texas may be
proposed and adopted by reference by publishing notice of the
proposal or adoption by reference in the Texas Register.
(b) Notice under this section must include:
(1) a brief summary of the substance of the matter to
be added or amended; and
(2) a statement that the full text of the matter is
available for review in the office of the chief clerk of the
department. (V.T.I.C. Art. 9.07, Sec. (c) (part).)
CHAPTER 2704. ISSUANCE OF POLICY OR CONTRACT;
DETERMINATION OF INSURABILITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2704.001. ISSUANCE OF POLICY OR CONTRACT
Sec. 2704.002. DIRECT ISSUANCE OF POLICY OR CONTRACT
Sec. 2704.003. COPY OF POLICY OR CONTRACT TO AGENT OR DIRECT
OPERATION
Sec. 2704.004. EXCEPTIONS TO APPLICABILITY OF CHAPTER
[Sections 2704.005-2704.050 reserved for expansion]
SUBCHAPTER B. ISSUANCE OF OWNER AND MORTGAGEE POLICIES FOR
RESIDENTIAL REAL PROPERTY
Sec. 2704.051. ISSUANCE OF OWNER POLICY REQUIRED IN
CONNECTION WITH ISSUANCE OF MORTGAGEE
POLICY
Sec. 2704.052. REJECTION OF ISSUANCE OF OWNER POLICY
[Sections 2704.053-2704.100 reserved for expansion]
SUBCHAPTER C. TITLE INSURANCE COVERING AREAS AND BOUNDARIES
Sec. 2704.101. DEFINITION
Sec. 2704.102. RULES AUTHORIZING ACCEPTANCE OF EXISTING
SURVEY
Sec. 2704.103. CERTAIN DISCRIMINATION PROHIBITED
Sec. 2704.104. INDEMNITY PROHIBITED
CHAPTER 2704. ISSUANCE OF POLICY OR CONTRACT;
DETERMINATION OF INSURABILITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2704.001. ISSUANCE OF POLICY OR CONTRACT. A title
insurance policy or contract may not be written unless:
(1) Sections 2502.053, 2502.054, and 2502.055 have
been complied with;
(2) the policy or contract is based on an examination
of title made from title evidence prepared from an abstract plant
owned, or leased and operated by a title insurance agent or direct
operation for the county in which the real property is located,
except as provided by Section 2704.002;
(3) insurability of title has been determined in
accordance with sound title underwriting practices; and
(4) evidence thereof is preserved and retained in the
files of the title insurance company, title insurance agent, or
direct operation for a period of not less than 15 years after the
date of issuance of the policy or contract. (V.T.I.C. Art. 9.34
(part).)
Sec. 2704.002. DIRECT ISSUANCE OF POLICY OR CONTRACT. A
title insurance company may directly issue a title insurance policy
or contract based on the best title evidence available if:
(1) a title insurance agent or direct operation does
not exist for the county in which the real property is located; or
(2) each title insurance agent and direct operation
for that county refuses to provide title evidence:
(A) in a reasonable period as determined by the
department; and
(B) in compliance with Section 2502.053(1).
(V.T.I.C. Art. 9.34 (part).)
Sec. 2704.003. COPY OF POLICY OR CONTRACT TO AGENT OR DIRECT
OPERATION. In a reasonable period as determined by the department,
a copy of each title insurance policy or contract issued in a real
property transaction shall be provided to each title insurance
agent or direct operation providing the title evidence on which the
policy or contract is issued. (V.T.I.C. Art. 9.34 (part).)
Sec. 2704.004. EXCEPTIONS TO APPLICABILITY OF CHAPTER.
This chapter does not apply to a company that:
(1) does not assume primary liability in a reinsurance
contract; or
(2) acts as coinsurer, if at least one of the other
coinsurers has complied with this chapter. (V.T.I.C. Art. 9.34
(part).)
[Sections 2704.005-2704.050 reserved for expansion]
SUBCHAPTER B. ISSUANCE OF OWNER AND MORTGAGEE POLICIES FOR
RESIDENTIAL REAL PROPERTY
Sec. 2704.051. ISSUANCE OF OWNER POLICY REQUIRED IN
CONNECTION WITH ISSUANCE OF MORTGAGEE POLICY. (a) In this section,
"mortgagee title insurance policy" means a mortgagee policy of
title insurance or another agreement or the equivalent that
constitutes the business of title insurance.
(b) Except as provided by Section 2704.052, a title
insurance company or title insurance agent that issues a mortgagee
title insurance policy in connection with a lien on improved
residential real property in this state that is sold shall also
issue an owner title insurance policy to the owner of the property.
(c) The title insurance company or title insurance agent
issuing the owner title insurance policy shall charge the required
premium promulgated by the commissioner. (V.T.I.C. Art. 9.55
(part).)
Sec. 2704.052. REJECTION OF ISSUANCE OF OWNER POLICY. At or
before closing and settlement, the person acquiring title may
reject the issuance of the owner title insurance policy required
under Section 2704.051 by executing a written and acknowledged
rejection in the form prescribed, after notice and hearing, by the
commissioner. (V.T.I.C. Art. 9.55 (part).)
[Sections 2704.053-2704.100 reserved for expansion]
SUBCHAPTER C. TITLE INSURANCE COVERING AREAS AND BOUNDARIES
Sec. 2704.101. DEFINITION. In this subchapter, "area and
boundary coverage" means title insurance coverage relating to
discrepancies, conflicts, or shortages in area or boundary lines,
or any encroachments or protrusions, or any overlapping of
improvements. (V.T.I.C. Art. 9.07C, Sec. (a).)
Sec. 2704.102. RULES AUTHORIZING ACCEPTANCE OF EXISTING
SURVEY. (a) The commissioner by rule may authorize a title
insurance company providing area and boundary coverage to accept an
existing real property survey as provided by this section.
(b) A title insurance company may accept an existing real
property survey rather than requiring a new survey if,
notwithstanding the age of the survey or the identity of the person
for whom the survey was prepared, the company is willing to accept:
(1) evidence of the existing survey; and
(2) an affidavit prescribed by the commissioner that
verifies the existing survey. (V.T.I.C. Art. 9.07C, Sec. (b).)
Sec. 2704.103. CERTAIN DISCRIMINATION PROHIBITED. A title
insurance company may not discriminate in providing area and
boundary coverage in connection with residential real property
solely because:
(1) the real property is platted or unplatted; or
(2) a municipality did not accept a subdivision plat
relating to the real property before September 1, 1975. (V.T.I.C.
Art. 9.07C, Sec. (c).)
Sec. 2704.104. INDEMNITY PROHIBITED. A title insurance
company may not require an indemnity from a seller, buyer,
borrower, or lender to provide area and boundary coverage.
(V.T.I.C. Art. 9.07C, Sec. (d).)
SECTION 7. TITLE 13, INSURANCE CODE. The Insurance Code is
amended by adding Title 13 to read as follows:
TITLE 13. REGULATION OF PROFESSIONALS
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 4001. AGENT LICENSING IN GENERAL
CHAPTER 4002. EXAMINATION OF LICENSE APPLICANTS
CHAPTER 4003. LICENSE EXPIRATION AND RENEWAL
CHAPTER 4004. CONTINUING EDUCATION
CHAPTER 4005. CONDUCT, DISCIPLINARY ACTIONS,
AND SANCTIONS
CHAPTER 4006. DISABILITY PROBATION OF AGENTS
[Chapters 4007-4050 reserved for expansion]
SUBTITLE B. AGENTS
CHAPTER 4051. PROPERTY AND CASUALTY AGENTS
CHAPTER 4052. LIFE AND HEALTH INSURANCE COUNSELORS
CHAPTER 4053. MANAGING GENERAL AGENTS
CHAPTER 4054. LIFE, ACCIDENT, AND HEALTH AGENTS
CHAPTER 4055. SPECIALTY AGENTS
CHAPTER 4056. NONRESIDENT AGENTS
[Chapters 4057-4100 reserved for expansion]
SUBTITLE C. ADJUSTERS
CHAPTER 4101. INSURANCE ADJUSTERS
[Chapters 4102-4150 reserved for expansion]
SUBTITLE D. OTHER PROFESSIONALS
CHAPTER 4151. THIRD-PARTY ADMINISTRATORS
CHAPTER 4152. REINSURANCE INTERMEDIARIES
CHAPTER 4153. RISK MANAGERS
TITLE 13. REGULATION OF PROFESSIONALS
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 4001. AGENT LICENSING IN GENERAL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4001.001. PURPOSE
Sec. 4001.002. APPLICABILITY
Sec. 4001.003. DEFINITIONS
Sec. 4001.004. LIMITED LIABILITY COMPANIES
Sec. 4001.005. RULES
Sec. 4001.006. FEES
Sec. 4001.007. INVESTIGATION OF ALLEGED VIOLATIONS
Sec. 4001.008. COMMISSIONER AGENT FOR SERVICE OF PROCESS
Sec. 4001.009. REFERENCES TO OTHER LAW
[Sections 4001.010-4001.050 reserved for expansion]
SUBCHAPTER B. ACTS CONSTITUTING ACTING AS AGENT;
CONSEQUENCES OF AGENT'S ACTIONS
Sec. 4001.051. ACTS CONSTITUTING ACTING AS AGENT
Sec. 4001.052. SOLICITOR OF APPLICATION FOR INSURANCE
CONSIDERED AGENT OF INSURER
Sec. 4001.053. PERSONAL LIABILITY FOR ACTING AS
AGENT
Sec. 4001.054. LIABILITY OF AGENT AND INSURER FOR
TAXES
[Sections 4001.055-4001.100 reserved for expansion]
SUBCHAPTER C. LICENSE REQUIREMENTS
Sec. 4001.101. LICENSE OR CERTIFICATE OF AUTHORITY
REQUIRED
Sec. 4001.102. LICENSE APPLICATION
Sec. 4001.103. FAILURE TO PROVIDE COMPLETE SET OF
FINGERPRINTS: GROUND FOR DENIAL OF
APPLICATION
Sec. 4001.104. ISSUANCE OF LICENSE: INTENT TO ACTIVELY
ENGAGE IN BUSINESS OF INSURANCE FOR
GENERAL PUBLIC
Sec. 4001.105. ISSUANCE OF LICENSE TO INDIVIDUAL
Sec. 4001.106. ISSUANCE OF LICENSE TO CORPORATION OR
PARTNERSHIP
Sec. 4001.107. ISSUANCE OF LICENSE TO DEPOSITORY
INSTITUTION
Sec. 4001.108. ISSUANCE OF LICENSE TO ENTITY CHARTERED BY
FEDERAL FARM CREDIT ADMINISTRATION
Sec. 4001.109. LICENSING OF SUBAGENT
[Sections 4001.110-4001.150 reserved for expansion]
SUBCHAPTER D. TEMPORARY LICENSE
Sec. 4001.151. AUTHORITY TO ISSUE TEMPORARY LICENSE
Sec. 4001.152. EXAMINATION NOT REQUIRED
Sec. 4001.153. APPLICATION FOR AND ISSUANCE OF TEMPORARY
LICENSE
Sec. 4001.154. AUTHORITY TO ACT AS AGENT PENDING RECEIPT
OF TEMPORARY LICENSE
Sec. 4001.155. TERM OF TEMPORARY LICENSE
Sec. 4001.156. RESTRICTION ON ISSUANCE OR RENEWAL OF
TEMPORARY LICENSE
Sec. 4001.157. OBTAINING CERTAIN COMMISSIONS PROHIBITED
Sec. 4001.158. REPLACEMENT OF EXISTING LIFE INSURANCE OR
ANNUITY CONTRACT PROHIBITED
Sec. 4001.159. SUSPENSION OR REVOCATION OF TEMPORARY
APPOINTMENT POWERS OF AGENT, INSURER,
OR HEALTH MAINTENANCE ORGANIZATION
Sec. 4001.160. TRAINING OF APPLICANT FOR TEMPORARY
LICENSE
Sec. 4001.161. DUTY TO ENSURE THAT APPLICANTS TAKE
LICENSING EXAMINATION
Sec. 4001.162. RESTRICTION ON APPOINTMENT OF TEMPORARY
LICENSE HOLDERS
[Sections 4001.163-4001.200 reserved for expansion]
SUBCHAPTER E. APPOINTMENT OF AGENT
Sec. 4001.201. APPOINTMENT REQUIRED
Sec. 4001.202. APPOINTMENT BY MULTIPLE INSURERS
Sec. 4001.203. TERM OF APPOINTMENT
Sec. 4001.204. AUTHORITY TO ACT AS AGENT BEFORE NOTICE OF
APPOINTMENT
Sec. 4001.205. APPOINTMENT OF SUBAGENT; TERMINATION
Sec. 4001.206. TERMINATION OF APPOINTMENT OF AGENT FOR
CAUSE; LIABILITY
[Sections 4001.207-4001.250 reserved for expansion]
SUBCHAPTER F. REGULATION OF AGENTS
Sec. 4001.251. INCORPORATION OF SOLE PROPRIETORSHIP
Sec. 4001.252. NOTIFICATION TO DEPARTMENT OF CERTAIN
INFORMATION
Sec. 4001.253. RESTRICTION ON ACQUISITION OF OWNERSHIP
INTEREST IN ENTITY LICENSED AS AGENT
Sec. 4001.254. MAINTENANCE OF QUALIFICATIONS
Sec. 4001.255. MAINTENANCE OF RECORDS
[Sections 4001.256-4001.300 reserved for expansion]
SUBCHAPTER G. OTHER PERSONS WHO MAY
SHARE IN PROFITS OF AGENCY
Sec. 4001.301. PROFITS AFTER DEATH OF AGENT WHO IS
MEMBER OF AGENCY PARTNERSHIP
Sec. 4001.302. PROFITS AFTER DEATH OF AGENT WHO IS SOLE
PROPRIETOR
Sec. 4001.303. PROFITS AFTER DEATH OF SHAREHOLDER OF
CORPORATE AGENCY
Sec. 4001.304. TRANSFER OF INTEREST IN AGENCY BY AGENT WHO
IS SOLE PROPRIETOR
Sec. 4001.305. TRANSFER OF INTEREST IN AGENCY BY SHAREHOLDER
OF CORPORATE AGENCY
CHAPTER 4001. AGENT LICENSING IN GENERAL
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4001.001. PURPOSE. It is the intent of the legislature
to:
(1) simplify and reform the regulation of agents and
other persons regulated under this title in this state by
consolidating the kinds of licenses issued to those persons under
this title; and
(2) promote uniformity in the licensing, examination,
continuing education, and disciplinary requirements for those
persons in this state and with other states. (V.T.I.C. Art. 21.01,
Sec. 1.)
Sec. 4001.002. APPLICABILITY. (a) Except as otherwise
provided by this code, this title applies to each person licensed
under:
(1) Subchapter H, Chapter 885;
(2) Subchapter F, Chapter 911;
(3) Section 912.251;
(4) Subchapter E, Chapter 981;
(5) Subchapter D, Chapter 1152;
(6) Subchapter C or D of this chapter;
(7) Subtitle B, C, or D of this title;
(8) Article 23.23A; or
(9) Subsection (c), Article 5.13-1.
(b) This title does not apply to:
(1) a resident of this state who arbitrates in the
adjustment of losses between an insurer and an insured, a marine
adjuster who adjusts particular or general average losses of
vessels or cargoes if the adjuster paid an occupation tax of $200
for the year in which the adjustment is made, or a practicing
attorney at law in this state, acting in the regular transaction of
the person's business as an attorney at law, who is not a local
agent and is not acting as an adjuster for an insurer;
(2) a full-time home office salaried employee of an
insurer authorized to engage in the business of insurance in this
state, other than an employee who solicits or receives an
application for the sale of insurance through an oral, written, or
electronic communication in accordance with Subchapter G, Chapter
4051;
(3) an attorney in fact or the traveling salaried
representative of a reciprocal or interinsurance exchange admitted
to engage in the business of insurance in this state as to business
transacted through the attorney in fact or salaried representative;
(4) the attorney in fact for a Lloyd's plan;
(5) the group motor vehicle insurance business or the
group motor vehicle department of a company engaged in that
business; or
(6) a salaried employee who is not involved in
soliciting or negotiating insurance in the office of an agent and
who devotes the employee's full time to clerical and administrative
services, including the incidental taking of information from
customers and receipt of premiums in the office of an agent, if:
(A) the employee does not receive any
commissions; and
(B) the employee's compensation is not varied by
the volume of premiums taken and received. (V.T.I.C. Art. 21.01,
Sec. 3; Art. 21.02, Sec. (a) (part); Art. 21.07, Sec. 1(b).)
Sec. 4001.003. DEFINITIONS. Unless the context clearly
indicates otherwise, in this title:
(1) "Agent" means a person who is an authorized agent
of an insurer or health maintenance organization, a subagent, and
any other person who performs the acts of an agent, whether through
an oral, written, electronic, or other form of communication, by
soliciting, negotiating, procuring, or collecting a premium on an
insurance or annuity contract, or who represents or purports to
represent a health maintenance organization, including a health
maintenance organization offering only a single health care service
plan, in soliciting, negotiating, procuring, or effectuating
membership in the health maintenance organization. The term does
not include:
(A) a regular salaried officer or employee of an
insurer, health maintenance organization, or agent who:
(i) devotes substantially all of the
officer's or employee's time to activities other than the
solicitation of applications for insurance, annuity contracts, or
memberships;
(ii) does not receive a commission or other
compensation directly dependent on the business obtained; and
(iii) does not solicit or accept from the
public applications for insurance, annuity contracts, or
memberships;
(B) an employer or an employer's officer or
employee or a trustee of an employee benefit plan, to the extent
that the employer, officer, employee, or trustee is engaged in the
administration or operation of an employee benefits program
involving the use of insurance or annuities issued by an insurer or
memberships issued by a health maintenance organization, if the
employer, officer, employee, or trustee is not directly or
indirectly compensated by the insurer or health maintenance
organization issuing the insurance or annuity contracts or
memberships;
(C) except as otherwise provided by this code, a
depository institution, or an officer or employee of a depository
institution, to the extent that the depository institution or
officer or employee collects and remits premiums or charges by
charging those premiums or charges against accounts of depositors
on the orders of those depositors; or
(D) a person or the employee of a person who has
contracted to provide administrative, management, or health care
services to a health maintenance organization and who is
compensated for those services by the payment of an amount computed
as a percentage of the revenues, net income, or profit of the health
maintenance organization, if that method of compensation is the
sole basis for subjecting that person or the employee of the person
to this title.
(2) "Control" means the power to direct or cause the
direction of the management and policies of a license holder,
whether directly or indirectly. For the purposes of this title, a
person is considered to control:
(A) a corporate license holder if the person,
individually or acting with others, directly or indirectly, holds
with the power to vote, owns, or controls, or holds proxies
representing, at least 10 percent of the voting stock or voting
rights of the corporate license holder; or
(B) a partnership if the person through a right
to vote or through any other right or power exercises rights in the
management, direction, or conduct of the business of the
partnership.
(3) "Corporation" means a legal entity that is
organized under the business corporation laws or limited liability
company laws of this state or another state and that has as one of
its purposes the authority to act as an agent.
(4) "Depository institution" means:
(A) a bank or savings association as defined by
12 U.S.C. Section 1813, as amended;
(B) a foreign bank that maintains a branch,
agency, or commercial lending company in the United States;
(C) a federal or state credit union as defined by
12 U.S.C. Section 1752, as amended;
(D) a bank branch; or
(E) a bank subsidiary, as defined by state or
federal law.
(5) "Individual" means a natural person. The term
includes a resident or a nonresident of this state.
(6) "Insurer" means an insurance company or insurance
carrier regulated by the department. The term includes:
(A) a stock life, health, or accident insurance
company;
(B) a mutual life, health, or accident insurance
company;
(C) a stock fire or casualty insurance company;
(D) a mutual fire or casualty insurance company;
(E) a Mexican casualty insurance company;
(F) a Lloyd's plan;
(G) a reciprocal or interinsurance exchange;
(H) a fraternal benefit society;
(I) a stipulated premium company;
(J) a nonprofit or for-profit legal services
corporation;
(K) a statewide mutual assessment company;
(L) a local mutual aid association;
(M) a local mutual burial association;
(N) an association exempt under Section 887.102;
(O) a nonprofit hospital, medical, or dental
service corporation, including a company subject to Chapter 842;
(P) a health maintenance organization;
(Q) a county mutual insurance company; and
(R) a farm mutual insurance company.
(7) "Partnership" means an association of two or more
persons organized under the partnership laws or limited liability
partnership laws of this state or another state. The term includes
a general partnership, limited partnership, limited liability
partnership, and limited liability limited partnership.
(8) "Person" means an individual, partnership,
corporation, or depository institution.
(9) "Subagent" means a person engaging in activities
described under Subdivision (1) who acts for or on behalf of an
agent, whether through an oral, written, electronic, or other form
of communication, by soliciting, negotiating, or procuring an
insurance or annuity contract or health maintenance organization
membership, or collecting premiums or charges on an insurance or
annuity contract or health maintenance organization membership,
without regard to whether the subagent is designated by the agent as
a subagent or by any other term. A subagent is an agent for all
purposes of this title, and a reference to an agent in this title,
Chapter 21, or a provision listed in Section 4001.009 includes a
subagent without regard to whether a subagent is specifically
mentioned. (V.T.I.C. Art. 21.07, Secs. 1A(1), (2), (3) (part),
(4), (5), (6), (7), (8), (9).)
Sec. 4001.004. LIMITED LIABILITY COMPANIES. The licensing
and regulation of a limited liability company are subject to each
provision of this title that applies to a corporation licensed
under this title. (V.T.I.C. Art. 21.07, Sec. 1A(3) (part).)
Sec. 4001.005. RULES. The commissioner may adopt rules
necessary to implement this title and to meet the minimum
requirements of federal law, including regulations. (V.T.I.C. Art.
21.01, Sec. 4.)
Sec. 4001.006. FEES. (a) The department shall collect from
each agent of an insurer writing insurance in this state under this
code:
(1) a nonrefundable license fee; and
(2) a nonrefundable appointment fee for each
appointment of the agent by an insurer.
(b) The department shall deposit the fees described by
Subsection (a), together with other license fees, examination fees,
and license renewal fees, to the credit of the Texas Department of
Insurance operating account.
(c) The department shall set the fees in amounts reasonable
and necessary to implement this title and may use any portion of
those fees to enforce this title. (V.T.I.C. Art. 21.07, Secs.
6C(a), (b) (part), (c).)
Sec. 4001.007. INVESTIGATION OF ALLEGED VIOLATIONS. (a)
The department may:
(1) employ persons as the department considers
necessary to investigate and make reports regarding alleged
violations of this code and misconduct on the part of agents; and
(2) pay the salaries and expenses of those persons and
office employees and other expenses necessary to enforce this title
from the fees described by Section 4001.006.
(b) A person employed by the department under this section
may:
(1) administer the oath to, and examine under oath,
any person considered necessary in gathering information and
evidence; and
(2) have that information and evidence reduced to
writing if considered necessary.
(c) All expenses related to the activities described by
Subsection (b) shall be paid from the fees described by Section
4001.006. (V.T.I.C. Art. 21.07, Sec. 6C(b) (part).)
Sec. 4001.008. COMMISSIONER AGENT FOR SERVICE OF PROCESS.
In the manner provided by Subchapter C, Chapter 804, the
commissioner is a corporation's or partnership's agent for service
of process in a legal proceeding against the corporation or
partnership if:
(1) the corporation or partnership is licensed to
engage in business in this state and does not appoint or maintain an
agent for service in this state;
(2) an agent for service cannot be found with
reasonable diligence; or
(3) the license of the corporation or partnership is
revoked. (V.T.I.C. Art. 21.07, Sec. 2(r).)
Sec. 4001.009. REFERENCES TO OTHER LAW. (a) As referenced
in Section 4001.003(9), a reference to an agent in the following
laws includes a subagent without regard to whether a subagent is
specifically mentioned:
(1) Chapters 281, 523, 541-556, 558, 702, 703, 705,
821, 823-825, 827, 828, 844, 1108, 1205-1209, 1352, 1353, 1357,
1358, 1360-1363, 1369, 1453-1455, and 1503;
(2) Subchapter C, Chapter 521;
(3) Subchapter A, Chapter 557;
(4) Subchapter B, Chapter 805;
(5) Subchapter D, Chapter 1103;
(6) Subchapters B, C, D, and E, Chapter 1204,
excluding Sections 1204.153 and 1204.154;
(7) Subchapter B, Chapter 1366;
(8) Subchapters B, C, and D, Chapter 1367, excluding
Section 1367.053(c);
(9) Subchapters A, C, D, E, F, H, and I, Chapter 1451;
(10) Subchapter B, Chapter 1452;
(11) Sections 982.001, 982.002, 982.004, 982.052,
982.102, 982.103, 982.104, 982.106, 982.107, 982.108, 982.110,
982.111, and 982.112;
(12) Subchapters D, E, and F, Chapter 982;
(13) Section 1101.003(a); and
(14) Chapter 107, Occupations Code.
(b) As referenced in Section 4001.051(b), a person is the
agent of the insurer for which the act is done or risk is taken in
the manner provided by that subsection for purposes of the
liabilities, duties, requirements, and penalties provided by a law
listed in Subsection (a). (New.)
[Sections 4001.010-4001.050 reserved for expansion]
SUBCHAPTER B. ACTS CONSTITUTING ACTING AS AGENT;
CONSEQUENCES OF AGENT'S ACTIONS
Sec. 4001.051. ACTS CONSTITUTING ACTING AS AGENT. (a) This
section applies regardless of whether an insurer is incorporated
under the laws of this state or another state or a foreign
government.
(b) Regardless of whether the act is done at the request of
or by the employment of an insurer, broker, or other person, a
person is the agent of the insurer for which the act is done or risk
is taken for purposes of the liabilities, duties, requirements, and
penalties provided by this title, Chapter 21, or a provision listed
in Section 4001.009 if the person:
(1) solicits insurance on behalf of the insurer;
(2) receives or transmits other than on the person's
own behalf an application for insurance or an insurance policy to or
from the insurer;
(3) advertises or otherwise gives notice that the
person will receive or transmit an application for insurance or an
insurance policy;
(4) receives or transmits an insurance policy of the
insurer;
(5) examines or inspects a risk;
(6) receives, collects, or transmits an insurance
premium;
(7) makes or forwards a diagram of a building;
(8) takes any other action in the making or
consummation of an insurance contract for or with the insurer other
than on the person's own behalf; or
(9) examines into, adjusts, or aids in adjusting a
loss for or on behalf of the insurer.
(c) This section does not authorize an agent to orally, in
writing, or otherwise alter or waive a term or condition of an
insurance policy or an application for an insurance policy.
(d) The referral by an unlicensed person of a customer or
potential customer to an agent is not an act of an agent under this
section unless the unlicensed person discusses specific insurance
policy terms or conditions with the customer or potential customer.
(V.T.I.C. Art. 21.02, Secs. (a) (part), (b).)
Sec. 4001.052. SOLICITOR OF APPLICATION FOR INSURANCE
CONSIDERED AGENT OF INSURER. (a) A person who solicits an
application for life, accident, or health insurance or property or
casualty insurance is considered the agent of the insurer issuing a
policy on the application and not the agent of the insured in any
controversy between the insurer and the insured, the insured's
beneficiary, or the insured's dependents.
(b) The agent may not alter or waive a term or condition of
the application or policy. (V.T.I.C. Art. 21.04.)
Sec. 4001.053. PERSONAL LIABILITY FOR ACTING AS AGENT. A
person who takes an action listed in Section 4001.051 for or on
behalf of an insurer before the insurer complies with the
requirements of the laws of this state is personally liable to the
holder of any insurance policy with respect to which the action was
taken for any loss covered by the insurance policy. (V.T.I.C. Art.
21.02, Sec. (a) (part).)
Sec. 4001.054. LIABILITY OF AGENT AND INSURER FOR TAXES.
(a) If a person takes an action in this state listed in Section
4001.051 for or on behalf of an insurer, the insurer is considered
to be engaged in the business of insurance in this state and is
subject to the same state, county, and municipal taxes as an insurer
that has been legally qualified and admitted to engage in the
business of insurance in this state.
(b) Taxes shall be assessed against and collected from an
insurer under this section in the same manner as taxes are assessed
against and collected from insurers that are legally qualified and
admitted to engage in the business of insurance in this state.
(c) A person who takes an action by means of which an insurer
is considered to be engaged in the business of insurance in this
state under this section is personally liable for any taxes
assessed against the insurer under this section. (V.T.I.C. Art.
21.03.)
[Sections 4001.055-4001.100 reserved for expansion]
SUBCHAPTER C. LICENSE REQUIREMENTS
Sec. 4001.101. LICENSE OR CERTIFICATE OF AUTHORITY
REQUIRED. (a) Unless the person holds a license or certificate of
authority issued by the department, a person may not:
(1) solicit or receive an application for insurance in
this state; or
(2) aid in the transaction of the business of an
insurer.
(b) A person may not act as an agent of a health maintenance
organization or other type of insurer authorized to engage in
business in this state unless the person holds a license issued by
the department as provided by this title.
(c) An insurer described by Subsection (b) may not appoint a
person to act as its agent unless the person holds a license under
this title.
(d) This subchapter does not permit an employee or agent of
a corporation or partnership to perform an act of an agent under
this title without obtaining a license. (V.T.I.C. Art. 21.01, Sec.
2; Art. 21.07, Secs. 1(a) (part), 2(j).)
Sec. 4001.102. LICENSE APPLICATION. (a) To become an agent
for an insurer or health maintenance organization, a person must
submit to the department a completed license application in the
form required by the department.
(b) The commissioner by rule shall prescribe the
requirements for a properly completed application. (V.T.I.C. Art.
21.07, Secs. 2(a), (b).)
Sec. 4001.103. FAILURE TO PROVIDE COMPLETE SET OF
FINGERPRINTS: GROUND FOR DENIAL OF APPLICATION. (a) In this
section, "authorization" means any authorization issued by the
department to engage in an activity regulated under this title,
including a license or permit.
(b) The department may deny an application for an
authorization if the applicant fails to provide a complete set of
fingerprints on request by the department. (V.T.I.C. Art. 1.10C
(part).)
Sec. 4001.104. ISSUANCE OF LICENSE: INTENT TO ACTIVELY
ENGAGE IN BUSINESS OF INSURANCE FOR GENERAL PUBLIC. (a) The
department may not issue a license as an agent to write any line of
insurance unless the department determines that:
(1) the applicant is or intends to be actively engaged
in the soliciting or writing of insurance for the general public and
is to be actively engaged in the business of insurance; and
(2) the application is not made to evade the laws
against rebating and discrimination, either for the applicant or
for another person.
(b) This subchapter does not prohibit an applicant from
insuring property that the applicant owns or in which the applicant
has an interest. It is the intent of this subchapter to prohibit
coercion of insurance and to preserve to each individual the right
to choose that individual's own agent or insurer and to prohibit the
licensing of an applicant to engage in the business of insurance
principally to handle business that the applicant controls only
through ownership, mortgage, sale, family relationship, or
employment. An applicant for an original license must have a bona
fide intention to engage in business in which, in any calendar year,
at least 25 percent of the total volume of premiums is derived from
persons other than the applicant and from property other than that
on which the applicant controls the placing of insurance through
ownership, mortgage, sale, family relationship, or employment.
(c) The department may not deny a license application solely
on the ground that the applicant will act only part-time as an
agent. (V.T.I.C. Art. 21.07, Secs. 2(c), (d), (e).)
Sec. 4001.105. ISSUANCE OF LICENSE TO INDIVIDUAL. The
department shall issue a license to an individual to engage in
business as an agent if the department determines that the
individual:
(1) is at least 18 years of age;
(2) has passed the licensing examination required
under this code within the past 12 months;
(3) has not committed an act for which a license may be
denied under Subchapter C, Chapter 4005; and
(4) has submitted the application, appropriate fees,
and any other information required by the department. (V.T.I.C.
Art. 21.07, Sec. 2(f).)
Sec. 4001.106. ISSUANCE OF LICENSE TO CORPORATION OR
PARTNERSHIP. (a) In this section, "customer" means a person or
firm to which a corporation or partnership sells or attempts to sell
an insurance policy or from which a corporation or partnership
accepts an application for insurance.
(b) The department shall issue a license to a corporation or
partnership if the department determines that:
(1) the corporation or partnership is:
(A) organized under the laws of this state or
another state;
(B) admitted to engage in business in this state
by the secretary of state, if required; and
(C) authorized by its articles of incorporation
or its partnership agreement to act as an agent;
(2) at least one officer of the corporation or one
active partner of the partnership and all other persons performing
any acts of an agent on behalf of the corporation or partnership in
this state are individually licensed by the department separately
from the corporation or partnership;
(3) the corporation or partnership will have the
ability to pay any amount up to $25,000 that it might become legally
obligated to pay under a claim made against it by a customer and
caused by a negligent act, error, or omission of the corporation or
partnership or a person for whose acts the corporation or
partnership is legally liable in the conduct of its business under
this code;
(4) if engaged in the business of insurance, the
corporation or partnership intends to be actively engaged in that
business as required under Section 4001.104(a);
(5) each location from which the corporation or
partnership will engage in business in this state under authority
of a license issued by the department is registered separately with
the department;
(6) the corporation or partnership has submitted the
application, appropriate fees, and any other information required
by the department; and
(7) an officer, director, member, manager, partner, or
other person who has the right or ability to control the corporation
or partnership has not:
(A) had a license suspended or revoked or been
the subject of any other disciplinary action by a financial or
insurance regulator of this state, another state, or the United
States; or
(B) committed an act for which a license may be
denied under Subchapter C, Chapter 4005.
(c) A corporation or partnership shall maintain the ability
to pay a claim described by Subsection (b)(3) by obtaining:
(1) an errors and omissions policy insuring the
corporation or partnership against errors and omissions in at least
the amount of $250,000, with a deductible of not more than 10
percent of the full amount of the policy, issued by:
(A) an insurer authorized to engage in the
business of insurance in this state; or
(B) if a policy cannot be obtained from an
insurer authorized to engage in the business of insurance in this
state, a surplus lines insurer under Chapter 981; or
(2) a bond in the principal amount of $25,000 that is:
(A) executed by the corporation or partnership as
principal and a surety company authorized to engage in business in
this state as surety;
(B) payable to the department for the use and
benefit of customers of the corporation or partnership; and
(C) conditioned that the corporation or
partnership shall pay any final judgment recovered against it by a
customer.
(d) A binding commitment to issue a policy or bond described
by Subsection (c) is sufficient in connection with an application
for a license. (V.T.I.C. Art. 21.07, Sec. 2(i) (part).)
Sec. 4001.107. ISSUANCE OF LICENSE TO DEPOSITORY
INSTITUTION. The department shall issue a license to a depository
institution in the manner provided by this subchapter for the
licensing of a corporation. (V.T.I.C. Art. 21.07, Sec. 2(m).)
Sec. 4001.108. ISSUANCE OF LICENSE TO ENTITY CHARTERED BY
FEDERAL FARM CREDIT ADMINISTRATION. The department may license an
entity chartered by the federal Farm Credit Administration under
the farm credit system established under 12 U.S.C. Section 2001 et
seq., as amended, to solicit insurance in this state as provided by
12 U.S.C. Section 2218, as amended. The department shall issue the
license in the manner provided by this subchapter for the licensing
of a corporation. (V.T.I.C. Art. 21.07, Sec. 2(v).)
Sec. 4001.109. LICENSING OF SUBAGENT. A subagent must be
licensed to write each line of insurance that the subagent is
employed to write, but is not required to hold each kind of license
issued to the agent for whom the subagent acts. (V.T.I.C. Art.
21.07, Sec. 2(u).)
[Sections 4001.110-4001.150 reserved for expansion]
SUBCHAPTER D. TEMPORARY LICENSE
Sec. 4001.151. AUTHORITY TO ISSUE TEMPORARY LICENSE. The
department may issue a temporary agent's license to an applicant
for a license under Section 4001.102 who is being considered for
appointment as an agent by another agent, an insurer, or a health
maintenance organization. (V.T.I.C. Art. 21.07, Sec. 3A(a)
(part).)
Sec. 4001.152. EXAMINATION NOT REQUIRED. An applicant is
not required to pass a written examination to obtain a temporary
license. (V.T.I.C. Art. 21.07, Sec. 3A(a) (part).)
Sec. 4001.153. APPLICATION FOR AND ISSUANCE OF TEMPORARY
LICENSE. The department shall issue a temporary license
immediately on receipt of a properly completed application executed
by the applicant in the form required by Section 4001.102 and
accompanied by:
(1) the nonrefundable filing fee set by the
department; and
(2) a certificate signed by an officer or properly
authorized representative of an agent, insurer, or health
maintenance organization stating that:
(A) the applicant is being considered for
appointment by the agent, insurer, or health maintenance
organization as its full-time agent;
(B) the agent, insurer, or health maintenance
organization desires that the applicant be issued a temporary
license; and
(C) the applicant will complete training as
prescribed by Section 4001.160 under the agent's, insurer's, or
health maintenance organization's supervision. (V.T.I.C. Art.
21.07, Sec. 3A(a) (part).)
Sec. 4001.154. AUTHORITY TO ACT AS AGENT PENDING RECEIPT OF
TEMPORARY LICENSE. If a temporary license is not received from the
department before the eighth day after the date the application,
nonrefundable fee, and certificate are delivered or mailed to the
department and the appropriate agent, insurer, or health
maintenance organization has not been notified that the application
is denied, the agent, insurer, or health maintenance organization
may assume that the temporary license will be issued and the
applicant may proceed to act as an agent. (V.T.I.C. Art. 21.07,
Sec. 3A(b).)
Sec. 4001.155. TERM OF TEMPORARY LICENSE. A temporary
license is valid for 90 days after the date of issuance. (V.T.I.C.
Art. 21.07, Sec. 3A(a) (part).)
Sec. 4001.156. RESTRICTION ON ISSUANCE OR RENEWAL OF
TEMPORARY LICENSE. (a) A temporary license may not be issued to or
renewed by the same person more than once in a consecutive six-month
period.
(b) A temporary license may not be issued to a person who
does not intend to apply for a license to sell insurance or
memberships to the general public. (V.T.I.C. Art. 21.07, Secs.
3A(c), (d).)
Sec. 4001.157. OBTAINING CERTAIN COMMISSIONS PROHIBITED.
(a) A temporary license holder may not obtain a commission on a
sale made to a person who has a family, employment, or business
relationship with the temporary license holder.
(b) An agent, insurer, or health maintenance organization
may not knowingly pay, directly or indirectly, to a temporary
license holder, and a temporary license holder may not receive or
accept, a commission on the sale of a contract of insurance or
membership covering:
(1) the temporary license holder;
(2) a person related to the temporary license holder
by consanguinity or affinity;
(3) a person who is or has been during the past six
months the temporary license holder's employer, either as an
individual or as a member of a partnership, association, firm, or
corporation; or
(4) a person who is or has been during the past six
months an employee of the temporary license holder. (V.T.I.C. Art.
21.07, Sec. 3A(e).)
Sec. 4001.158. REPLACEMENT OF EXISTING LIFE INSURANCE OR
ANNUITY CONTRACT PROHIBITED. (a) A temporary license holder who is
acting under the authority of that license may not:
(1) engage in an insurance solicitation, sale, or
other agency transaction that the license holder knows or should
know will result or is intended to result in:
(A) the purchase of a new life insurance or
annuity contract; and
(B) any of the following actions with regard to
an existing individual life insurance or annuity contract as a
result of that purchase:
(i) termination of the contract by lapse,
forfeiture, surrender, or other means;
(ii) conversion of the contract to reduced
paid-up insurance, continuation of the contract as extended term
insurance, or reduction in value of the contract by the use of
nonforfeiture benefits or other policy values;
(iii) amendment of the contract to reduce:
(a) benefits; or
(b) the term for which coverage would
otherwise remain in force or for which benefits would be paid;
(iv) reissuance of the contract with a
reduction in cash value; or
(v) pledge of the contract as collateral or
subjection of the contract to borrowing, whether in a single loan or
under a schedule of borrowing, for amounts that in the aggregate
exceed 25 percent of the loan value prescribed by the contract; or
(2) directly or indirectly receive a commission or
other compensation that results or may result from a solicitation,
sale, or other agency transaction described by Subdivision (1).
(b) A person who holds a permanent license may not
circumvent or attempt to circumvent the intent of this section by
acting for or with a person holding a temporary license. (V.T.I.C.
Art. 21.07, Sec. 3A(f).)
Sec. 4001.159. SUSPENSION OR REVOCATION OF TEMPORARY
APPOINTMENT POWERS OF AGENT, INSURER, OR HEALTH MAINTENANCE
ORGANIZATION. (a) The department may suspend or revoke the
temporary appointment powers of an agent, insurer, or health
maintenance organization if, after notice and opportunity for
hearing, the department determines that the agent, insurer, or
health maintenance organization has abused the temporary
appointment powers.
(b) In determining whether abuse has occurred, the
department may consider:
(1) the number of temporary appointments made;
(2) the percentage of appointees taking the
examination required for licensing as an agent, as provided by
Section 4001.161; and
(3) the number of appointees who pass the examination.
(V.T.I.C. Art. 21.07, Sec. 3A(g) (part).)
Sec. 4001.160. TRAINING OF APPLICANT FOR TEMPORARY LICENSE.
(a) An agent, insurer, or health maintenance organization that is
considering appointment of a temporary license applicant as its
agent shall provide at least 40 hours of training to the applicant
not later than the 14th day after the date the application,
nonrefundable fee, and certificate are delivered or mailed to the
department.
(b) At least 10 hours of the training must be taught in a
classroom setting, including:
(1) an accredited college, university, junior
college, or community college;
(2) a business school; or
(3) a private institute or classes sponsored by the
agent, insurer, or health maintenance organization and
specifically established for that purpose.
(c) The training program must be designed to provide an
applicant with basic knowledge of:
(1) the broad principles of insurance, including the
licensing and regulatory laws of this state;
(2) the broad principles of health maintenance
organizations, including membership requirements and related
licensing and regulatory laws of this state; and
(3) the ethical obligations and duties of an agent.
(d) If the department determines under Section 4001.159
that an abuse of temporary appointment powers has occurred, the
department may require the affected agent, insurer, or health
maintenance organization to:
(1) file with the department a description of the
agent's, insurer's, or health maintenance organization's training
program; and
(2) obtain the approval of the department before
continuing to use the training program. (V.T.I.C. Art. 21.07,
Secs. 3A(a) (part), (h), (i).)
Sec. 4001.161. DUTY TO ENSURE THAT APPLICANTS TAKE
LICENSING EXAMINATION. An agent, insurer, or health maintenance
organization shall ensure that, during any two consecutive calendar
quarters, at least 70 percent of the agent's, insurer's, or health
maintenance organization's applicants for temporary licenses take
the required licensing examination. At least 50 percent of the
applicants taking the examination must pass the examination during
that period. (V.T.I.C. Art. 21.07, Sec. 3A(j).)
Sec. 4001.162. RESTRICTION ON APPOINTMENT OF TEMPORARY
LICENSE HOLDERS. An agent, insurer, or health maintenance
organization may not appoint more than 250 temporary license
holders during a calendar year. (V.T.I.C. Art. 21.07, Sec. 3A(k).)
[Sections 4001.163-4001.200 reserved for expansion]
SUBCHAPTER E. APPOINTMENT OF AGENT
Sec. 4001.201. APPOINTMENT REQUIRED. A person who obtains
a license under this title may not engage in business as an agent
unless the person has been appointed to act as an agent by an
insurer designated by the provisions of this code and authorized to
engage in business in this state. (V.T.I.C. Art. 21.07, Sec. 1(a)
(part).)
Sec. 4001.202. APPOINTMENT BY MULTIPLE INSURERS. (a)
Except as specifically prohibited by this code, an agent may
represent and act as an agent for more than one insurer.
(b) Not later than the 30th day after the effective date of
the appointment, the agent and the insurer involved shall notify
the department, on a form prescribed by the department, of any
additional appointment authorizing the agent to act as agent for
one or more additional insurers. The notice must be accompanied by
a nonrefundable fee in an amount set by the department for each
additional appointment for which the insurer applies. (V.T.I.C.
Art. 21.07, Sec. 6(a).)
Sec. 4001.203. TERM OF APPOINTMENT. (a) An appointment
authorizing an agent to act for an insurer continues in effect
without the necessity of renewal until the appointment is
terminated or withdrawn by the insurer or the agent.
(b) A renewal license issued to an agent authorizes the
agent to represent and act for each insurer for which the agent
holds an appointment until the appointment is terminated or
withdrawn, and the agent is considered to be the agent of each
appointing insurer for the purposes of this code. (V.T.I.C. Art.
21.07, Sec. 6(b) (part).)
Sec. 4001.204. AUTHORITY TO ACT AS AGENT BEFORE NOTICE OF
APPOINTMENT. An agent appointed under this subchapter may act on
behalf of the appointing insurer before the department receives the
notice filed under Section 4001.202(b). (V.T.I.C. Art. 21.07, Sec.
6(c).)
Sec. 4001.205. APPOINTMENT OF SUBAGENT; TERMINATION. (a)
A general life, accident, and health agent or a general property and
casualty agent appointed by an insurer authorized to engage in the
business of insurance in this state shall notify the department on a
form prescribed by the department if the agent appoints a subagent.
The notice must be accompanied by a nonrefundable fee in an amount
set by the department.
(b) An insurer is not required to separately appoint a
subagent who has been designated by an agent in a notice filed with
the department under Subsection (a).
(c) An agent who terminates the appointment of a subagent
for a reason other than for cause shall promptly report the
termination to the department. The termination ends the subagent's
authority to act for the agent or the insurer for whom the agent is
acting.
(d) Section 4001.206 applies to the termination of the
appointment of a subagent for cause. (V.T.I.C. Art. 21.07, Secs.
6(d), (e), (f).)
Sec. 4001.206. TERMINATION OF APPOINTMENT OF AGENT FOR
CAUSE; LIABILITY. (a) On termination of the appointment of an
agent for cause, the insurer or agent shall immediately file with
the department a statement of the facts relating to the termination
of the appointment and the date and cause of the termination. On
receipt of the statement, the department shall record the
termination of the appointment of that agent to represent the
insurer in this state.
(b) A document, record, statement, or other information
required to be made or disclosed to the department under this
section is a privileged and confidential communication and is not
admissible in evidence in a court action or proceeding except under
a subpoena issued by a court of record.
(c) A person, including an insurer or an employee or agent
of an insurer, who provides without malice information required to
be disclosed under this section is not liable for providing the
information. (V.T.I.C. Art. 21.07, Secs. 6(b) (part), 6B.)
[Sections 4001.207-4001.250 reserved for expansion]
SUBCHAPTER F. REGULATION OF AGENTS
Sec. 4001.251. INCORPORATION OF SOLE PROPRIETORSHIP. An
individual engaged in business as a sole proprietorship under a
license issued under this title may incorporate. The corporation
does not have greater license authority than that granted to the
license holder in the holder's individual capacity. (V.T.I.C. Art.
21.07, Sec. 2(g).)
Sec. 4001.252. NOTIFICATION TO DEPARTMENT OF CERTAIN
INFORMATION. (a) An individual licensed as an agent shall notify
the department on a monthly basis of:
(1) a change of the license holder's mailing address;
(2) a felony conviction of the license holder; or
(3) an administrative action taken against the license
holder by a financial or insurance regulator of this state, another
state, or the United States.
(b) A corporation or partnership licensed as an agent under
this title shall file under oath, on a form developed by the
department, biographical information for:
(1) each executive officer, director, or unlicensed
partner who administers the entity's operations in this state;
(2) each shareholder who is in control of the
corporation or partner who has the right or ability to control the
partnership; and
(3) if the corporation or partnership is owned, in
whole or in part, by another entity, each individual who is in
control of the parent entity.
(c) A corporation or partnership shall notify the
department not later than the 30th day after the date of:
(1) a felony conviction of a licensed agent of the
entity or an individual associated with the entity who is required
to file biographical information with the department;
(2) an event for which notification would be required
under Section 81.003; or
(3) the addition or removal of an officer, director,
partner, member, or manager. (V.T.I.C. Art. 21.07, Secs. 2(h),
(k), (l).)
Sec. 4001.253. RESTRICTION ON ACQUISITION OF OWNERSHIP
INTEREST IN ENTITY LICENSED AS AGENT. (a) A person may not acquire
in any manner an ownership interest in an entity licensed as an
agent under this title if the person is, or after the acquisition
would be, directly or indirectly in control of the license holder,
or otherwise acquire control of or exercise any control over the
license holder, unless the person has filed with the department
under oath:
(1) a biographical form for each person by whom or on
whose behalf the acquisition of control is to be effected;
(2) a statement certifying that no person who is
acquiring an ownership interest in or control of the license holder
has been the subject of a disciplinary action taken by a financial
or insurance regulator of this state, another state, or the United
States;
(3) a statement certifying that, immediately on the
change of control, the license holder will be able to satisfy the
requirements for the issuance of the license to solicit each line of
insurance for which it is licensed; and
(4) any additional information that the commissioner
by rule may prescribe as necessary or appropriate to the protection
of the insurance consumers of this state or as in the public
interest.
(b) The department may require a partnership, syndicate, or
other group that is required to file a statement under Subsection
(a) to provide the information under that subsection for each
partner of the partnership, each member of the syndicate or group,
and each person who controls the partner or member. If the partner,
member, or person is a corporation or the person required to file
the statement under Subsection (a) is a corporation, the department
may require that the information required under that subsection be
provided regarding:
(1) the corporation;
(2) each individual who is an executive officer or
director of the corporation; and
(3) each person who is directly or indirectly the
beneficial owner of more than 10 percent of the outstanding voting
securities of the corporation.
(c) The department may disapprove an acquisition of control
if, after notice and opportunity for hearing, the commissioner
determines that:
(1) immediately on the change of control the license
holder would not be able to satisfy the requirements for the
issuance of the license to solicit each line of insurance for which
it is presently licensed;
(2) the competence, trustworthiness, experience, and
integrity of the persons who would control the operation of the
license holder are such that it would not be in the interest of the
insurance consumers of this state to permit the acquisition of
control; or
(3) the acquisition of control would violate this code
or another law of this state, another state, or the United States.
(d) Notwithstanding Subsection (c), a change in control is
considered approved if the department has not proposed to deny the
requested change before the 61st day after the date the department
receives all information required by this section. (V.T.I.C. Art.
21.07, Secs. 2(n), (o), (p), (q).)
Sec. 4001.254. MAINTENANCE OF QUALIFICATIONS. The
department shall, in the manner provided by Subchapter C, Chapter
4005, revoke, suspend, or refuse to renew the license of a license
holder who does not maintain the qualifications necessary to obtain
the license. (V.T.I.C. Art. 21.07, Sec. 2(s).)
Sec. 4001.255. MAINTENANCE OF RECORDS. An agent shall
maintain all insurance records, including all records relating to
customer complaints, separate from the records of any other
business in which the agent may be engaged. (V.T.I.C. Art. 21.07,
Sec. 2(t).)
[Sections 4001.256-4001.300 reserved for expansion]
SUBCHAPTER G. OTHER PERSONS WHO MAY
SHARE IN PROFITS OF AGENCY
Sec. 4001.301. PROFITS AFTER DEATH OF AGENT WHO IS MEMBER OF
AGENCY PARTNERSHIP. On the death of an agent who is a member of an
agency partnership, the surviving spouse and children, if any, of
the deceased partner, or a trust for the surviving spouse and
children, may share in the profits of the agency partnership during
the lifetime of the surviving spouse or children, as the case may
be, as provided by:
(1) a written partnership agreement; or
(2) in the absence of a written agreement, an
agreement by the surviving partner or partners and the surviving
spouse, the trustee, and the legal representative of the surviving
children. (V.T.I.C. Art. 21.07, Sec. 2A(a).)
Sec. 4001.302. PROFITS AFTER DEATH OF AGENT WHO IS SOLE
PROPRIETOR. (a) On the death of an agent who is a sole proprietor,
unless otherwise provided by the probated will of the deceased
agent, the surviving spouse and children, if any, of the deceased
agent, or a trust for the surviving spouse or children, may share in
the profits of the agency business of the deceased agent during the
lifetime of the surviving spouse and children if the agency
business is continued by an agent.
(b) The surviving spouse and children or trust is not
required to qualify as an agent to share in the profits of the
agency but may not perform an act of an agent in connection with the
agency business without first being licensed as an agent.
(V.T.I.C. Art. 21.07, Sec. 2A(b) (part).)
Sec. 4001.303. PROFITS AFTER DEATH OF SHAREHOLDER OF
CORPORATE AGENCY. (a) On the death of a shareholder of a corporate
licensed agency, the surviving spouse and children, if any, of the
deceased shareholder, or a trust for the surviving spouse and
children, may share in the profits of the corporate agency during
the lifetime of the surviving spouse or children as provided by a
contract entered into by each shareholder and the corporation.
(b) The surviving spouse and children or trust is not
required to qualify as an agent to share in the profits of the
corporation but may not perform an act of an agent on behalf of the
corporation without qualifying as an agent. (V.T.I.C. Art. 21.07,
Sec. 2A(c) (part).)
Sec. 4001.304. TRANSFER OF INTEREST IN AGENCY BY AGENT WHO
IS SOLE PROPRIETOR. (a) An agent who is a sole proprietor may
transfer an interest in the agency to the agent's children, or a
trust for the agent's children, and may operate that interest for
their use and benefit. The children may share in the profits of the
agency during their lifetime.
(b) The children are not required to qualify as agents to
share in the profits of the agency but may not perform an act of an
agent in connection with the agency business without first being
licensed as agents. (V.T.I.C. Art. 21.07, Sec. 2A(b) (part).)
Sec. 4001.305. TRANSFER OF INTEREST IN AGENCY BY
SHAREHOLDER OF CORPORATE AGENCY. (a) A shareholder of a corporate
licensed agency may, if provided by a contract entered into by each
shareholder and the corporation, transfer an interest in the agency
to the shareholder's children or a trust for the shareholder's
children. The children or trust may share in the profits of the
agency to the extent of that interest during the children's
lifetime.
(b) The children or trust is not required to qualify as an
agent to share in the profits of the corporation but may not perform
an act of an agent on behalf of the corporation without qualifying
as an agent. (V.T.I.C. Art. 21.07, Sec. 2A(c) (part).)
CHAPTER 4002. EXAMINATION OF LICENSE APPLICANTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4002.001. EXAMINATION REQUIRED
Sec. 4002.002. EXAMINATION FOR LIMITED LICENSE
Sec. 4002.003. EXEMPTIONS FROM EXAMINATION REQUIREMENT
Sec. 4002.004. ADVISORY BOARD
Sec. 4002.005. EXAMINATION FEE
Sec. 4002.006. BILINGUAL EXAMINATION
Sec. 4002.007. EXAMINATION RESULTS
[Sections 4002.008-4002.050 reserved for expansion]
SUBCHAPTER B. ADMINISTRATION OF EXAMINATION BY
TESTING SERVICE
Sec. 4002.051. ADMINISTRATION BY TESTING SERVICE
AUTHORIZED
Sec. 4002.052. AGREEMENT WITH TESTING SERVICE
Sec. 4002.053. HEARING REQUIRED BEFORE AGREEMENT
[Sections 4002.054-4002.100 reserved for expansion]
SUBCHAPTER C. DUTIES OF DEPARTMENT
Sec. 4002.101. ADMINISTRATION BY DEPARTMENT
Sec. 4002.102. RULES
Sec. 4002.103. CONTENT OF EXAMINATION QUESTIONS
CHAPTER 4002. EXAMINATION OF LICENSE APPLICANTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4002.001. EXAMINATION REQUIRED. (a) Except as
otherwise provided by this code, an applicant for a license to act
as an agent in this state must:
(1) take a personal written examination prescribed by
the commissioner; and
(2) pass the examination to the satisfaction of the
department.
(b) The examination must determine the applicant's
competence with respect to:
(1) the type of insurance contracts for which the
applicant seeks a license;
(2) the laws of this state regulating the business of
insurance; and
(3) the ethical obligations and duties of an agent.
(V.T.I.C. Art. 21.01-1, Sec. 2(a).)
Sec. 4002.002. EXAMINATION FOR LIMITED LICENSE. (a) The
commissioner shall prescribe a limited written examination for an
applicant for a limited agent's license under Chapter 4051 or 4054.
(b) The examination must determine the applicant's
competence and understanding of:
(1) the basic principles of insurance contracts;
(2) the basic laws of this state regulating the
business of insurance; and
(3) the ethical obligations and duties of an agent.
(V.T.I.C. Art. 21.01-1, Sec. 2(c).)
Sec. 4002.003. EXEMPTIONS FROM EXAMINATION REQUIREMENT.
(a) The department may not require a person to take an examination
under this chapter if the person is:
(1) an applicant for the renewal of an unexpired
license issued by the department;
(2) an applicant whose license issued by the
department expired less than one year before the date of the
application, if the previous license was not denied, revoked, or
suspended by the commissioner;
(3) a partnership, corporation, or depository
institution;
(4) an applicant for a life, accident, and health
license who is designated as a chartered life underwriter (CLU);
(5) an applicant for a life and health insurance
counselor license who is designated as a chartered life underwriter
(CLU), chartered financial consultant (ChFC), or certified
financial planner (CFP);
(6) an applicant for a property and casualty license
who is designated as a chartered property casualty underwriter
(CPCU);
(7) an applicant for a specialty license issued under
Chapter 4055;
(8) a nonresident individual who is exempt from the
examination requirement under Chapter 4056; or
(9) an applicant for a general life, accident, and
health license who was authorized to solicit or procure insurance
on behalf of a fraternal benefit society on September 1, 1999, if
the applicant:
(A) solicited or procured insurance on behalf of
the fraternal benefit society for at least 24 months preceding
September 1, 1999; and
(B) does not, on or after September 1, 1999,
solicit or procure:
(i) insurance for any other insurer or a
different fraternal benefit society;
(ii) an insurance contract from anyone
other than a person who is eligible for membership in the fraternal
benefit society; or
(iii) an interest-sensitive life insurance
contract that exceeds $35,000 of coverage on an individual life,
unless the applicant is designated as a "Fraternal Insurance
Counselor" at the time the contract is solicited or procured.
(b) A license to which the exemption authorized by
Subsection (a)(9) applies must be held by the applicant in an
individual capacity and is not transferable. (V.T.I.C. Art.
21.01-1, Secs. 2(d), (e).)
Sec. 4002.004. ADVISORY BOARD. (a) The commissioner may
appoint one or more advisory boards to make recommendations to the
commissioner or the testing service regarding:
(1) the scope, type, and conduct of examinations
required by this chapter; and
(2) the times and locations in this state where the
examinations shall be held.
(b) The commissioner may appoint to an advisory board any
combination of the following:
(1) a person who holds a license for which an
examination is intended;
(2) an employee of an insurer that appoints license
holders for which an examination is intended;
(3) a person who acts as a general agent or manager;
(4) a person who teaches insurance at an accredited
college or university in this state; or
(5) a resident of this state who is not described by
Subdivisions (1)-(4).
(c) A member of an advisory board serves without
compensation but is entitled to reimbursement for reasonable
expenses incurred in attending meetings of the advisory board.
(V.T.I.C. Art. 21.01-1, Sec. 1(b).)
Sec. 4002.005. EXAMINATION FEE. (a) The department shall
charge each applicant an examination fee in an amount determined by
the department as necessary to administer the examination.
(b) The examination fee must accompany each application to
take the examination.
(c) An applicant may receive a refund of the examination fee
only if:
(1) the applicant fails to take the examination
because of an emergency;
(2) the applicant notifies the department of the
emergency at least 24 hours before the time of the examination; and
(3) the department agrees to refund the fee.
(V.T.I.C. Art. 21.01-1, Sec. 2(b).)
Sec. 4002.006. BILINGUAL EXAMINATION. An examination
administered under this chapter shall be offered in English and
Spanish. (V.T.I.C. Art. 21.01-1, Sec. 2(f).)
Sec. 4002.007. EXAMINATION RESULTS. (a) The department
shall notify each examinee of the results of a licensing
examination administered under this code not later than the 30th
day after the date the examination is administered. If an
examination is graded or reviewed by a testing service, the
department shall notify each examinee of the results of the
examination not later than the 14th day after the date the
department receives the results from the testing service.
(b) The department may require a testing service to notify
examinees of the results of an examination.
(c) If the notice of the results of an examination graded or
reviewed by a testing service will be delayed for longer than 90
days after the examination date, the department shall notify the
examinee of the reason for the delay before the 90th day.
(d) If requested in writing by a person who fails a
licensing examination administered under this code, the department
shall provide to the person an analysis of the person's performance
on the examination. (V.T.I.C. Art. 21.01-1, Secs. 1(d), (e).)
[Sections 4002.008-4002.050 reserved for expansion]
SUBCHAPTER B. ADMINISTRATION OF EXAMINATION BY
TESTING SERVICE
Sec. 4002.051. ADMINISTRATION BY TESTING SERVICE
AUTHORIZED. The commissioner may accept an examination
administered by a testing service to satisfy the examination
requirements of a person seeking a license as an agent, counselor,
or adjuster under this code. (V.T.I.C. Art. 21.01-1, Sec. 1(a)
(part).)
Sec. 4002.052. AGREEMENT WITH TESTING SERVICE. (a) The
commissioner may negotiate an agreement with a testing service to
perform examination services, including:
(1) developing an examination;
(2) scheduling an examination;
(3) arranging the site for an examination; and
(4) administering, grading, reporting, and analyzing
an examination.
(b) The commissioner may require a testing service to:
(1) correspond directly with applicants with regard to
the administration of examinations;
(2) collect fees for administering examinations
directly from applicants; and
(3) provide for the administration of examinations in
specific locations and at specified frequencies.
(c) The commissioner shall retain the authority to
establish the scope and type of each examination. (V.T.I.C. Art.
21.01-1, Sec. 1(a) (part).)
Sec. 4002.053. HEARING REQUIRED BEFORE AGREEMENT. Before
the department may negotiate and enter into an agreement with a
testing service:
(1) a hearing must be held in accordance with Chapter
2001, Government Code; and
(2) the commissioner must adopt any rules or standards
that the commissioner considers appropriate to implement the
authority granted by this chapter. (V.T.I.C. Art. 21.01-1, Sec.
1(a) (part).)
[Sections 4002.054-4002.100 reserved for expansion]
SUBCHAPTER C. DUTIES OF DEPARTMENT
Sec. 4002.101. ADMINISTRATION BY DEPARTMENT. In the
absence of an agreement with a testing service, the department
shall administer any required examination in accordance with this
chapter. (V.T.I.C. Art. 21.01-1, Sec. 1(c) (part).)
Sec. 4002.102. RULES. (a) The commissioner may adopt rules
relating to:
(1) the scope, type, and conduct of an examination;
(2) the time and location in this state at which an
examination is conducted; or
(3) the designation of textbooks, manuals, and other
materials to be studied by an applicant for an examination.
(b) The textbooks, manuals, or other materials designated
by the commissioner under Subsection (a)(3) may consist of:
(1) material available to an applicant by purchase
from the publisher; or
(2) material prepared at the direction of the
commissioner and distributed to an applicant on request and on
payment of the reasonable cost of the material. (V.T.I.C. Art.
21.01-1, Sec. 1(c) (part).)
Sec. 4002.103. CONTENT OF EXAMINATION QUESTIONS. All
examination questions must be prepared from the contents of the
textbooks, manuals, and other materials designated or prepared by
the commissioner under Section 4002.102. (V.T.I.C. Art. 21.01-1,
Sec. 1(c) (part).)
CHAPTER 4003. LICENSE EXPIRATION AND RENEWAL
Sec. 4003.001. LICENSE EXPIRATION
Sec. 4003.002. STAGGERED RENEWAL SYSTEM
Sec. 4003.003. NOTICE OF LICENSE EXPIRATION
Sec. 4003.004. PROCEDURE FOR RENEWAL OF LICENSE
Sec. 4003.005. RENEWAL FEE NONREFUNDABLE
Sec. 4003.006. CONTINUATION OF ORIGINAL LICENSE
Sec. 4003.007. RENEWAL OF EXPIRED LICENSE
Sec. 4003.008. RENEWAL OF EXPIRED LICENSE BY
OUT-OF-STATE AGENT
Sec. 4003.009. INTERSTATE MOVE BY AGENT
Sec. 4003.010. CHAPTER NOT APPLICABLE TO THIRD-PARTY
ADMINISTRATORS
CHAPTER 4003. LICENSE EXPIRATION AND RENEWAL
Sec. 4003.001. LICENSE EXPIRATION. (a) Unless a staggered
renewal system is adopted under Section 4003.002, each agent
license issued by the department and not suspended or revoked by the
commissioner expires on the second anniversary of the date the
license is issued.
(b) The commissioner by rule may change the two-year
expiration period if the commissioner determines that the change is
necessary to promote uniformity of license periods of this state
with those of other states. (V.T.I.C. Art. 21.01-2, Sec. 1A(a)
(part).)
Sec. 4003.002. STAGGERED RENEWAL SYSTEM. (a) The
commissioner by rule may adopt a system under which licenses expire
on various dates during a licensing period.
(b) For the licensing period in which the license expiration
is changed, license fees shall be prorated so that each license
holder pays only that portion of the license fee allocable to the
period during which the license is valid. On renewal of the license
on the new expiration date, the total renewal fee is payable.
(c) The commissioner shall adopt a system under which a
person who holds more than one license may renew all the licenses
held in a single process. (V.T.I.C. Art. 21.01-2, Sec. 1A(j).)
Sec. 4003.003. NOTICE OF LICENSE EXPIRATION. Not later
than the 30th day before the date a person's license expires, the
department shall send written notice of the impending license
expiration to the person at the person's last known mailing address
according to the department's records. (V.T.I.C. Art. 21.01-2,
Sec. 1A(i).)
Sec. 4003.004. PROCEDURE FOR RENEWAL OF LICENSE. (a) A
person may renew an unexpired license by:
(1) filing a properly completed renewal application
with the department in the form prescribed by the department; and
(2) paying to the department the required renewal fee
in an amount set by the department.
(b) A person may not renew a license that has been suspended
or revoked. (V.T.I.C. Art. 21.01-2, Secs. 1A(a) (part), (b)
(part).)
Sec. 4003.005. RENEWAL FEE NONREFUNDABLE. A renewal fee
paid under this chapter is nonrefundable. (V.T.I.C. Art. 21.01-2,
Sec. 1A(a) (part).)
Sec. 4003.006. CONTINUATION OF ORIGINAL LICENSE. The
original license of a person who has applied for license renewal in
compliance with Section 4003.004 remains in effect from the date
the renewal application is filed until the date:
(1) the department issues the renewal license; or
(2) the commissioner issues an order revoking the
license. (V.T.I.C. Art. 21.01-2, Sec. 1A(b) (part).)
Sec. 4003.007. RENEWAL OF EXPIRED LICENSE. (a) A person
whose license has been expired for 90 days or less may renew the
license by:
(1) filing a renewal application with the department
in the form prescribed by the department; and
(2) paying to the department:
(A) the required renewal fee; and
(B) an additional fee equal to one-half of the
required renewal fee.
(b) A person whose license has been expired for more than 90
days but less than one year may not renew the license. The person
may obtain a new license without taking the applicable examination
by:
(1) filing a new application with the department; and
(2) paying to the department:
(A) the license fee; and
(B) an additional fee equal to one-half of the
license fee.
(c) A person whose license has been expired for one year or
more may not renew the license. The person may obtain a new license
by:
(1) submitting to reexamination, if examination is
required for original issuance of the license; and
(2) complying with the other requirements and
procedures for obtaining an original license. (V.T.I.C. Art.
21.01-2, Secs. 1A(c), (d), (e).)
Sec. 4003.008. RENEWAL OF EXPIRED LICENSE BY OUT-OF-STATE
AGENT. (a) The department may renew without reexamination an
expired license of a person who was licensed in this state, moved to
another state, and is currently licensed and has been in continual
practice in the other state preceding the date of the application.
(b) The person must pay to the department a fee equal to the
license fee. (V.T.I.C. Art. 21.01-2, Sec. 1A(f).)
Sec. 4003.009. INTERSTATE MOVE BY AGENT. (a) Not later
than the 30th day after moving from one state to another state, an
agent licensed in this state shall file with the department:
(1) the agent's new address; and
(2) proof of authorization to engage in the business
of insurance in the new state of residence.
(b) The department may not charge a fee or require a license
application under this section. (V.T.I.C. Art. 21.01-2, Secs.
1A(g), (h).)
Sec. 4003.010. CHAPTER NOT APPLICABLE TO THIRD-PARTY
ADMINISTRATORS. This chapter does not apply to a certificate of
authority issued under Chapter 4151. (V.T.I.C. Art. 21.01-2, Sec.
1A(k).)
CHAPTER 4004. CONTINUING EDUCATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4004.001. DEPARTMENT JURISDICTION EXCLUSIVE
Sec. 4004.002. ADVISORY COUNCIL
[Sections 4004.003-4004.050 reserved for expansion]
SUBCHAPTER B. AGENT CONTINUING EDUCATION REQUIREMENTS
Sec. 4004.051. GENERAL REQUIREMENTS
Sec. 4004.052. EXTENSIONS AND EXEMPTIONS
Sec. 4004.053. REQUIREMENTS BASED ON TYPE OF LICENSE HELD
Sec. 4004.054. ETHICS REQUIREMENT
[Sections 4004.055-4004.100 reserved for expansion]
SUBCHAPTER C. CONTINUING EDUCATION PROGRAMS
Sec. 4004.101. PROGRAM CERTIFICATION
Sec. 4004.102. CERTIFICATION FEE
Sec. 4004.103. PROVIDER REGISTRATION; OTHER REQUIREMENTS
Sec. 4004.104. INDEPENDENT CONTRACTORS
CHAPTER 4004. CONTINUING EDUCATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4004.001. DEPARTMENT JURISDICTION EXCLUSIVE. The
department has exclusive jurisdiction of all matters relating to
the continuing education of agents licensed under this code.
(V.T.I.C. Art. 21.01-1, Sec. 3(a).)
Sec. 4004.002. ADVISORY COUNCIL. (a) The commissioner may
appoint an advisory council to provide the commissioner with
information and assistance in the conduct of the continuing
education program for agents licensed under this title.
(b) If an advisory council is appointed, the council must be
composed of nine members, four of whom must be public members.
(c) A public member is entitled to reimbursement for the
member's travel expenses as provided by Chapter 660, Government
Code, and the General Appropriations Act.
(d) A public member may not:
(1) be an officer, director, or employee of an
insurer, insurance agency, agent, broker, adjuster, or other
business entity regulated by the department;
(2) be a person required to register with the Texas
Ethics Commission under Chapter 305, Government Code; or
(3) be related to a person described by Subdivision
(1) or (2) within the second degree by affinity or consanguinity, as
determined under Chapter 573, Government Code. (V.T.I.C. Art.
21.01-1, Sec. 3(g).)
[Sections 4004.003-4004.050 reserved for expansion]
SUBCHAPTER B. AGENT CONTINUING EDUCATION REQUIREMENTS
Sec. 4004.051. GENERAL REQUIREMENTS. (a) Except as
provided by Section 4004.052 or other law, each individual who
holds a license issued by the department shall complete continuing
education as provided by this chapter.
(b) All required continuing education hours must be
completed before the expiration date of the individual's license.
(c) At least 50 percent of all required continuing education
hours must be completed in a classroom setting or a classroom
equivalent setting approved by the department.
(d) The department may accept continuing education hours
completed in other professions or in association with professional
designations in an insurance-related field. (V.T.I.C. Art.
21.01-1, Sec. 3(b) (part).)
Sec. 4004.052. EXTENSIONS AND EXEMPTIONS. (a) On the
timely written request of an agent, the department may extend the
time for the agent to comply with the continuing education
requirements of this chapter or may exempt the agent from some or
all of the requirements for a licensing period if the department
determines that the agent is unable to comply with the requirements
because of illness, medical disability, or another extenuating
circumstance beyond the control of the agent. The commissioner by
rule shall prescribe the criteria for an exemption or extension
under this subsection.
(b) An individual who has continuously held for at least 20
years an agent license issued under this code is exempt from the
continuing education requirements of this chapter.
(c) The commissioner by rule may provide for other
reasonable exemptions from the continuing education requirements
of this chapter. (V.T.I.C. Art. 21.01-1, Secs. 3(c), (d).)
Sec. 4004.053. REQUIREMENTS BASED ON TYPE OF LICENSE HELD.
(a) An individual who holds a general life, accident, and health
license, a life and health insurance counselor license, or a
general property and casualty license must complete 15 hours of
continuing education annually. If the individual holds more than
one license for which continuing education is otherwise required,
the individual is not required to complete more than 15 continuing
education hours annually.
(b) An individual who holds a limited life, accident, and
health license or a limited property and casualty license must
complete five hours of continuing education annually. (V.T.I.C.
Art. 21.01-1, Sec. 3(b) (part).)
Sec. 4004.054. ETHICS REQUIREMENT. Each individual who
holds a license issued by the department shall complete two hours of
continuing education in ethics during each license renewal period.
(V.T.I.C. Art. 21.01-1, Sec. 3(b) (part).)
[Sections 4004.055-4004.100 reserved for expansion]
SUBCHAPTER C. CONTINUING EDUCATION PROGRAMS
Sec. 4004.101. PROGRAM CERTIFICATION. (a) The department
shall certify continuing education programs for agents. The
certification criteria must be designed to ensure that continuing
education programs enhance the knowledge, understanding, and
professional competence of the license holder.
(b) Only a program that satisfies the criteria established
by rule by the commissioner may receive certification. (V.T.I.C.
Art. 21.01-1, Sec. 3(e) (part).)
Sec. 4004.102. CERTIFICATION FEE. (a) A nonrefundable
certification fee, in an amount set by the commissioner as
necessary to administer this chapter, must accompany each
application for certification of a continuing education program.
(b) The commissioner by rule shall establish the
certification fee based on a graduated scale according to the
number of hours required to complete the program. (V.T.I.C. Art.
21.01-1, Sec. 3(e) (part).)
Sec. 4004.103. PROVIDER REGISTRATION; OTHER REQUIREMENTS.
(a) Each continuing education program provider shall register with
the department as a course provider.
(b) The department shall assess a registration fee for each
application for registration as a course provider, set by the
commissioner in an amount necessary for the proper administration
of this chapter.
(c) The commissioner may adopt rules establishing other
requirements for continuing education program providers.
(V.T.I.C. Art. 21.01-1, Sec. 3(f) (part).)
Sec. 4004.104. INDEPENDENT CONTRACTORS. (a) The
department may enter into agreements with independent contractors
under which the independent contractor certifies and registers
continuing education programs and providers.
(b) The department may require the independent contractors
to correspond directly with providers with regard to the
administration of continuing education programs. The contractors
may collect fees from the providers for administration of the
courses.
(c) Notwithstanding Subsections (a) and (b), the department
retains the authority to establish the scope and type of continuing
education requirements for each type of license. (V.T.I.C. Art.
21.01-1, Sec. 3(f) (part).)
CHAPTER 4005. CONDUCT, DISCIPLINARY ACTIONS, AND
SANCTIONS
SUBCHAPTER A. AUTHORIZED CONDUCT
Sec. 4005.001. DEFINITION
Sec. 4005.002. AUTHORIZATION TO OBTAIN CERTAIN RECORDS OR
PHOTOGRAPHS
Sec. 4005.003. FEES
[Sections 4005.004-4005.050 reserved for expansion]
SUBCHAPTER B. PROHIBITED CONDUCT
Sec. 4005.051. APPLICABILITY OF SUBCHAPTER
Sec. 4005.052. CERTAIN CONDUCT PROHIBITED AFTER REVOCATION
OF LICENSE
Sec. 4005.053. CERTAIN PAYMENTS PROHIBITED TO OR FROM
PERSON NOT HOLDING LICENSE
Sec. 4005.054. RECEIVING ADDITIONAL FEE PROHIBITED
Sec. 4005.055. CERTAIN COVERAGE FOR LOSS BY FIRE
PROHIBITED
[Sections 4005.056-4005.100 reserved for expansion]
SUBCHAPTER C. DISCIPLINARY ACTIONS AND PROCEDURES;
ENFORCEMENT
Sec. 4005.101. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION
Sec. 4005.102. REMEDIES FOR VIOLATION OF INSURANCE LAWS
OR COMMISSIONER RULES
Sec. 4005.103. PROBATED LICENSE SUSPENSION
Sec. 4005.104. HEARING
Sec. 4005.105. APPLICATION FOR LICENSE AFTER DENIAL OF
APPLICATION OR REVOCATION OF LICENSE
Sec. 4005.106. APPLICATION FOR LICENSE AFTER CERTAIN
DETERMINATIONS
Sec. 4005.107. DISCIPLINARY PROCEEDING FOR CONDUCT COMMITTED
BEFORE SURRENDER OR FORFEITURE OF
LICENSE
Sec. 4005.108. DISABILITY PROBATION
Sec. 4005.109. FINES
Sec. 4005.110. ENFORCEMENT OF TITLE
[Sections 4005.111-4005.150 reserved for expansion]
SUBCHAPTER D. CRIMINAL PENALTIES
Sec. 4005.151. ACTING AS AGENT AFTER LICENSE SUSPENSION OR
REVOCATION; CRIMINAL PENALTY
Sec. 4005.152. AGENT ASSISTING OR CONSPIRING WITH PERSON
WHOSE LICENSE HAS BEEN SUSPENDED OR
REVOKED; CRIMINAL PENALTY
Sec. 4005.153. EMBEZZLEMENT OR CONVERSION BY AGENT; CRIMINAL
PENALTY
CHAPTER 4005. CONDUCT, DISCIPLINARY ACTIONS, AND
SANCTIONS
SUBCHAPTER A. AUTHORIZED CONDUCT
Sec. 4005.001. DEFINITION. In this subchapter, "client"
means:
(1) an applicant for insurance coverage; or
(2) an insured. (V.T.I.C. Art. 21.35A, Sec. (a).)
Sec. 4005.002. AUTHORIZATION TO OBTAIN CERTAIN RECORDS OR
PHOTOGRAPHS. (a) In connection with a client's application for
insurance coverage, the issuance of an insurance policy to a
client, or on a client's request, a general property and casualty
agent may obtain:
(1) the motor vehicle record of a person insured under
or to be insured under an insurance policy; or
(2) a photograph of property insured under or to be
insured under an insurance policy.
(b) The agent must provide a copy of the motor vehicle
record to the client. (V.T.I.C. Art. 21.35A, Sec. (b) (part).)
Sec. 4005.003. FEES. (a) A general property and casualty
agent may charge a client a fee to reimburse the agent for costs the
agent incurred in obtaining a motor vehicle record or photograph of
property described under Section 4005.002. The fee may not exceed
the actual costs to the agent.
(b) For services provided to a client, a general property
and casualty agent may charge a reasonable fee, including a fee for:
(1) special delivery or postal charges;
(2) printing or reproduction costs;
(3) electronic mail costs;
(4) telephone transmission costs; and
(5) similar costs that the agent incurs on behalf of
the client.
(c) A general property and casualty agent may charge a
client a fee under this section only if, before the agent incurs an
expense for the client, the agent:
(1) notifies the client of the agent's fee; and
(2) obtains the client's written consent for each fee
to be charged. (V.T.I.C. Art. 21.35A, Secs. (b) (part), (c), (d).)
[Sections 4005.004-4005.050 reserved for expansion]
SUBCHAPTER B. PROHIBITED CONDUCT
Sec. 4005.051. APPLICABILITY OF SUBCHAPTER. This
subchapter does not apply to a person who holds a license or
certificate of authority issued under Title 11. (V.T.I.C. Art.
21.01-2, Sec. 2A(i).)
Sec. 4005.052. CERTAIN CONDUCT PROHIBITED AFTER REVOCATION
OF LICENSE. A person whose insurance license has been revoked in
this state or any other state may not:
(1) solicit or otherwise engage in business under
Chapter 885 unless the department determines it to be in the public
interest, for good cause shown, to permit the person to act in that
capacity; or
(2) act as an officer, director, member, manager, or
partner, or as a shareholder with a controlling interest, of an
entity holding a license issued under this title unless the
department determines it to be in the public interest, for good
cause shown, to permit the person to act in that capacity.
(V.T.I.C. Art. 21.01-2, Secs. 2A(e), (f).)
Sec. 4005.053. CERTAIN PAYMENTS PROHIBITED TO OR FROM
PERSON NOT HOLDING LICENSE. (a) An insurer or agent engaged in the
business of insurance in this state may not pay to any person,
directly or indirectly, and may not accept from any person a
commission or other valuable consideration for a service performed
by that person as an agent in this state unless the person holds a
license to act as an agent in this state.
(b) Subsection (a) does not prevent the payment of a renewal
or other deferred commission to a person or the acceptance of a
renewal or other deferred compensation by a person solely because
the person no longer holds a license to act as an agent.
(c) An agent may not pay, permit, or give or offer to pay,
permit, or give, directly or indirectly, to any person who does not
hold a license as an agent:
(1) a rebate of premiums payable, a commission,
employment, a contract for service, or any other valuable
consideration or inducement that is not specified in the insurance
policy or contract for or on account of the solicitation or
negotiation of an insurance contract; or
(2) a fee or other valuable consideration for
referring a customer who seeks to purchase an insurance product or
seeks an opinion on or advice regarding an insurance product, based
on that customer's purchase of insurance. (V.T.I.C. Art. 21.01-2,
Secs. 2A(b), (c), (h).)
Sec. 4005.054. RECEIVING ADDITIONAL FEE PROHIBITED. A
person who holds a license under this code and receives a commission
or other consideration for services as an agent may not receive an
additional fee for those services provided to the same client
except for a fee described by Section 550.001 or 4005.003.
(V.T.I.C. Art. 21.01-2, Sec. 2A(a).)
Sec. 4005.055. CERTAIN COVERAGE FOR LOSS BY FIRE
PROHIBITED. A property and casualty agent may not knowingly grant,
write, or permit a greater amount of insurance against loss by fire
than the reasonable value of the insured subject. (V.T.I.C. Art.
21.01-2, Sec. 2A(g).)
[Sections 4005.056-4005.100 reserved for expansion]
SUBCHAPTER C. DISCIPLINARY ACTIONS AND PROCEDURES;
ENFORCEMENT
Sec. 4005.101. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION. (a) This section does not apply to a person who holds a
license or certificate of authority issued under Title 11.
(b) The department may deny a license application or
discipline a license holder under this subchapter if the department
determines that the applicant or license holder, individually or
through an officer, director, or shareholder:
(1) has wilfully violated an insurance law of this
state;
(2) has intentionally made a material misstatement in
the license application;
(3) has obtained or attempted to obtain a license by
fraud or misrepresentation;
(4) has misappropriated, converted to the applicant's
or license holder's own use, or illegally withheld money belonging
to:
(A) an insurer;
(B) a health maintenance organization; or
(C) an insured, enrollee, or beneficiary;
(5) has engaged in fraudulent or dishonest acts or
practices;
(6) has materially misrepresented the terms and
conditions of an insurance policy or contract, including a contract
relating to membership in a health maintenance organization;
(7) has made or issued, or caused to be made or issued,
a statement misrepresenting or making incomplete comparisons
regarding the terms or conditions of an insurance or annuity
contract legally issued by an insurer or a membership issued by a
health maintenance organization to induce the owner of the contract
or membership to forfeit or surrender the contract or membership or
allow it to lapse for the purpose of replacing the contract or
membership with another;
(8) has been convicted of a felony;
(9) has offered or given a rebate of an insurance
premium or commission to an insured or enrollee;
(10) is not actively engaged in soliciting or writing
insurance for the public generally as required by Section
4001.104(a); or
(11) has obtained or attempted to obtain a license,
not for the purpose of holding the applicant or license holder out
to the general public as an agent, but primarily for the purpose of
soliciting, negotiating, or procuring an insurance or annuity
contract or membership covering:
(A) the applicant or license holder;
(B) a member of the applicant's or license
holder's family; or
(C) a business associate of the applicant or
license holder. (V.T.I.C. Art. 21.01-2, Secs. 3A(c), (h).)
Sec. 4005.102. REMEDIES FOR VIOLATION OF INSURANCE LAWS OR
COMMISSIONER RULES. In addition to any other remedy available
under Chapter 82, for a violation of this code, another insurance
law of this state, or a rule of the commissioner, the department
may:
(1) deny an application for an original license;
(2) suspend, revoke, or deny renewal of a license;
(3) place on probation a person whose license has been
suspended;
(4) assess an administrative penalty; or
(5) reprimand a license holder. (V.T.I.C. Art.
21.01-2, Sec. 3A(a) (part).)
Sec. 4005.103. PROBATED LICENSE SUSPENSION. If a license
suspension is probated, the commissioner may require the license
holder to:
(1) report regularly to the department on any matter
that is the basis of the probation;
(2) limit the license holder's practice to the areas
prescribed by the department; or
(3) continue or review professional education until
the license holder attains a degree of skill satisfactory to the
commissioner in each area that is the basis of the probation.
(V.T.I.C. Art. 21.01-2, Sec. 3A(a) (part).)
Sec. 4005.104. HEARING. (a) If the department proposes to
deny an application for an original license or to suspend, revoke,
or deny renewal of a license, the applicant or license holder is
entitled to a hearing conducted by the State Office of
Administrative Hearings as provided by Chapter 40.
(b) Notice of the hearing shall be provided to:
(1) the applicant or license holder; and
(2) any insurer indicated on the application as
desiring that the license be issued. (V.T.I.C. Art. 21.01-2, Sec.
3A(b).)
Sec. 4005.105. APPLICATION FOR LICENSE AFTER DENIAL OF
APPLICATION OR REVOCATION OF LICENSE. (a) This section does not
apply to a person who holds a license or certificate of authority
issued under Title 11.
(b) An individual whose license application has been denied
or whose license has been revoked under this subchapter may not
apply for an agent license before the fifth anniversary of:
(1) the effective date of the denial or revocation; or
(2) the date of a final court order affirming the
denial or revocation if judicial review was sought.
(c) A license application filed after the time required by
Subsection (b) may be denied by the commissioner if the applicant
fails to show good cause why the denial or revocation should not be
a bar to the issuance of a new license.
(d) Subsection (c) does not apply to an applicant whose
license application was denied for failure by the applicant to:
(1) pass a required written examination; or
(2) submit a properly completed license application.
(V.T.I.C. Art. 21.01-2, Secs. 3A(d), (e), (h).)
Sec. 4005.106. APPLICATION FOR LICENSE AFTER CERTAIN
DETERMINATIONS. (a) In addition to any other penalty imposed under
this code, a person who the department determines has engaged in
conduct described by this section may not obtain a license as an
agent before the fifth anniversary of the date of the
determination.
(b) This section applies to a person who:
(1) acts as an agent without holding a license under
this code;
(2) solicits an insurance contract or acts as an agent
without having been appointed or designated by an authorized
insurer, association, or organization to do so as provided by this
code;
(3) solicits an insurance contract or acts as an agent
for a person, including an insurer, association, or organization,
who is not authorized to engage in the business of insurance in this
state without holding a surplus lines agent license issued under
Chapter 981; or
(4) as an officer or representative of an insurer,
knowingly contracts with or appoints as an agent a person who does
not hold a valid license. (V.T.I.C. Art. 21.01-2, Sec. 2A(d).)
Sec. 4005.107. DISCIPLINARY PROCEEDING FOR CONDUCT
COMMITTED BEFORE SURRENDER OR FORFEITURE OF LICENSE. (a) The
department may institute a disciplinary proceeding against a former
license holder for conduct committed before the effective date of a
voluntary surrender or automatic forfeiture of the license.
(b) In a proceeding under this section, the fact that the
license holder has surrendered or forfeited the license does not
affect the former license holder's culpability for the conduct that
is the subject of the proceeding. (V.T.I.C. Art. 21.01-2, Sec.
3A(g).)
Sec. 4005.108. DISABILITY PROBATION. (a) This section
does not apply to a person who holds a license or certificate of
authority issued under Title 11.
(b) Instead of or in addition to taking disciplinary action
under Section 4005.102, 4005.103, 4005.105(c), or 4005.107, the
department may order that a license holder who is disabled be placed
on disability probation under the terms specified under Chapter
4006 and department rules. (V.T.I.C. Art. 21.01-2, Secs. 3A(f),
(h).)
Sec. 4005.109. FINES. (a) To expedite the department's
processing of certain violations of this code, the commissioner by
rule may establish fines for certain violations.
(b) A violation for which a fine may be assessed under this
section includes a failure to:
(1) obtain the total number of continuing education
hours before the renewal date of a license;
(2) timely report a change of address to the
department; or
(3) notify the department of an administrative action
against the agent by a financial or insurance regulator of another
state or of the federal government.
(c) This section does not limit the department's authority
to take any other disciplinary action against a license holder as
otherwise provided by this code.
(d) The dispute of an assessment of a fine under this
section is a contested case subject to Chapter 2001, Government
Code. (V.T.I.C. Art. 21.01-2, Sec. 5A.)
Sec. 4005.110. ENFORCEMENT OF TITLE. The attorney general,
a district or county attorney, or the department acting through the
commissioner may bring a proceeding for an injunction or bring any
other proceeding to enforce this title and to enjoin any person,
firm, corporation, or depository institution from engaging in or
attempting to engage in the business of insurance in violation of
this code or any other insurance law of this state. (V.T.I.C. Art.
21.01-2, Sec. 6A (part).)
[Sections 4005.111-4005.150 reserved for expansion]
SUBCHAPTER D. CRIMINAL PENALTIES
Sec. 4005.151. ACTING AS AGENT AFTER LICENSE SUSPENSION OR
REVOCATION; CRIMINAL PENALTY. (a) A person commits an offense if
the person acts as an agent after the person's agent license has
been suspended or revoked.
(b) An offense under this section is a felony punishable by:
(1) a fine not to exceed $5,000;
(2) imprisonment for a term of not more than two years;
or
(3) both fine and imprisonment under this subsection.
(V.T.I.C. Art. 21.15-1, Sec. 1.)
Sec. 4005.152. AGENT ASSISTING OR CONSPIRING WITH PERSON
WHOSE LICENSE HAS BEEN SUSPENDED OR REVOKED; CRIMINAL PENALTY. (a)
A person commits an offense if the person is an agent who holds a
license under this code and the person assists or conspires with a
person whose license as an agent has been suspended or revoked to
act as an agent.
(b) An offense under this section is a misdemeanor
punishable by:
(1) a fine not to exceed $1,000;
(2) confinement in jail for a term of not more than six
months; or
(3) both fine and confinement in jail under this
subsection. (V.T.I.C. Art. 21.15-1, Sec. 2.)
Sec. 4005.153. EMBEZZLEMENT OR CONVERSION BY AGENT;
CRIMINAL PENALTY. (a) A person commits an offense if the person,
as an agent for an insurer lawfully engaged in the business of
insurance in this state, collects premiums or otherwise receives
money or a substitute for money, and the person:
(1) embezzles, fraudulently converts, or appropriates
to the person's own use the money or substitute for money; or
(2) with intent to embezzle and contrary to the
instructions of or without the consent of the insurer, takes,
secretes, or otherwise disposes of or fraudulently withholds,
appropriates, lends, invests, or otherwise uses or applies, any
money or substitute for money received by the person in the person's
capacity as agent or broker.
(b) A person who commits an offense under this section shall
be punished as if the person had stolen the money or substitute for
money. (V.T.I.C. Art. 21.15-5.)
CHAPTER 4006. DISABILITY PROBATION OF AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4006.001. DEFINITION
Sec. 4006.002. RULES
[Sections 4006.003-4006.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT
Sec. 4006.051. DISABILITY PROBATION ORDER
Sec. 4006.052. RESTITUTION
Sec. 4006.053. DURATION OF PROBATION
Sec. 4006.054. PROBATION CONDITIONS
Sec. 4006.055. SUPERVISION DURING PROBATION
Sec. 4006.056. EFFECT OF NONCOMPLIANCE
CHAPTER 4006. DISABILITY PROBATION OF AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4006.001. DEFINITION. In this chapter, "disability"
means any physical, mental, or emotional condition that results in
an agent's inability to carry out the agent's professional
responsibilities to insureds, the profession, or the public.
(V.T.I.C. Art. 21.15-6, Sec. (a) (part).)
Sec. 4006.002. RULES. The commissioner may adopt rules as
necessary to implement this chapter. (V.T.I.C. Art. 21.15-6, Sec.
(g).)
[Sections 4006.003-4006.050 reserved for expansion]
SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT
Sec. 4006.051. DISABILITY PROBATION ORDER. (a) The
department may order that an agent be placed on disability
probation if, after notice and an opportunity for a hearing, the
department determines that the agent is suffering from a
disability.
(b) The department may order disability probation for an
agent only if the agent demonstrates that:
(1) the disability can be successfully arrested and
treated while the agent is engaged in the agent's professional
business;
(2) the disability is unlikely to cause harm to the
public during the period of rehabilitation;
(3) adequate supervision of any necessary conditions
of the probation will occur; and
(4) the agent is capable of competently performing the
agent's professional duties. (V.T.I.C. Art. 21.15-6, Secs. (a)
(part), (b).)
Sec. 4006.052. RESTITUTION. (a) The department may order
disability probation for an agent only if the agent makes full
restitution during the probation period to all insureds and other
persons harmed by the agent's:
(1) violation of this code or other laws regulating
the business of insurance in this state; or
(2) failure to comply with other professional
responsibilities.
(b) The department shall require the restitution described
by Subsection (a) as a condition of the probation. (V.T.I.C. Art.
21.15-6, Sec. (e).)
Sec. 4006.053. DURATION OF PROBATION. (a) If the
department orders disability probation, the department shall set
the probation for a specified period or until further order of the
department.
(b) The department may order a probation period that exceeds
the one-year maximum suspension authorized under Section
82.052(1). (V.T.I.C. Art. 21.15-6, Sec. (c).)
Sec. 4006.054. PROBATION CONDITIONS. (a) An order placing
an agent on disability probation must state the probation
conditions.
(b) In establishing the probation conditions, the
department shall consider:
(1) the nature and circumstances of the agent's
conduct;
(2) the agent's history, character, and condition; and
(3) the nature of the agent's disability.
(c) The department may impose on the agent any of the
following probation conditions:
(1) periodic reports to the department;
(2) satisfactory completion of a course of study
required by the department;
(3) payment of costs, including reasonable attorney's
fees and other expenses, related to the proceedings before the
department;
(4) psychological evaluation, counseling, and
treatment;
(5) drug and alcohol abuse evaluation, counseling, and
treatment;
(6) abstinence from alcohol or drugs;
(7) mandatory attendance at meetings of Alcoholics
Anonymous, Narcotics Anonymous, or similar support groups;
(8) periodic random urine testing to screen for drug
and alcohol abuse; and
(9) any other probation condition that the department
considers appropriate. (V.T.I.C. Art. 21.15-6, Sec. (d).)
Sec. 4006.055. SUPERVISION DURING PROBATION. The
department shall supervise an agent placed on disability probation.
(V.T.I.C. Art. 21.15-6, Sec. (f) (part).)
Sec. 4006.056. EFFECT OF NONCOMPLIANCE. On a showing of an
agent's failure to comply with the disability probation conditions,
the department may:
(1) revoke the probation; or
(2) impose other conditions that the department
considers necessary for the public's protection and the agent's
rehabilitation. (V.T.I.C. Art. 21.15-6, Sec. (f) (part).)
[Chapters 4007-4050 reserved for expansion]
SUBTITLE B. AGENTS
CHAPTER 4051. PROPERTY AND CASUALTY AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4051.001. APPLICABILITY OF CHAPTER
Sec. 4051.002. REQUIREMENTS APPLICABLE TO CERTAIN AGENT
CONTRACTS
[Sections 4051.003-4051.050 reserved for expansion]
SUBCHAPTER B. GENERAL PROPERTY AND CASUALTY LICENSE
Sec. 4051.051. LICENSE REQUIRED
Sec. 4051.052. AUTHORITY TO WRITE ADDITIONAL LINES
Sec. 4051.053. AUTHORITY TO WRITE CERTAIN ACCIDENT
AND HEALTH INSURANCE
Sec. 4051.054. DECEASED, DISABLED, OR INSOLVENT AGENTS;
EMERGENCY LICENSE
[Sections 4051.055-4051.100 reserved for expansion]
SUBCHAPTER C. LIMITED PROPERTY AND CASUALTY LICENSE
Sec. 4051.101. LICENSE REQUIRED
Sec. 4051.102. DESIGNATION OF KINDS OF INSURANCE
[Sections 4051.103-4051.150 reserved for expansion]
SUBCHAPTER D. INSURANCE SERVICE REPRESENTATIVE LICENSE
Sec. 4051.151. LICENSE REQUIRED
Sec. 4051.152. APPLICABILITY OF CERTAIN REQUIREMENTS
[Sections 4051.153-4051.200 reserved for expansion]
SUBCHAPTER E. COUNTY MUTUAL AGENT LICENSE
Sec. 4051.201. LICENSE ISSUANCE
Sec. 4051.202. COURSE
Sec. 4051.203. EXAMINATION
Sec. 4051.204. INVESTIGATION BY DEPARTMENT
Sec. 4051.205. WITHDRAWAL OF COMPANY'S AUTHORITY
Sec. 4051.206. APPLICABILITY OF LIMITED LICENSE LAWS
[Sections 4051.207-4051.250 reserved for expansion]
SUBCHAPTER F. AGRICULTURAL INSURANCE AGENT
Sec. 4051.251. APPOINTMENT OF AGENT
Sec. 4051.252. REQUIREMENTS FOR APPOINTMENT; PROCEDURE
Sec. 4051.253. ACCEPTANCE OF CERTAIN CONTINUING EDUCATION
Sec. 4051.254. RULES
[Sections 4051.255-4051.300 reserved for expansion]
SUBCHAPTER G. REGISTRATION OF HOME OFFICE EMPLOYEES
Sec. 4051.301. REGISTRATION AND DISCLOSURE REQUIRED; FEE
Sec. 4051.302. CONTINUING EDUCATION REQUIREMENTS
Sec. 4051.303. SUSPENSION OF REGISTERED EMPLOYEE;
DISCIPLINARY ACTION AGAINST INSURER
[Sections 4051.304-4051.350 reserved for expansion]
SUBCHAPTER H. TERMINATION OR SUSPENSION OF AGENT
CONTRACTS BY PROPERTY AND CASUALTY INSURERS
Sec. 4051.351. APPLICABILITY OF SUBCHAPTER
Sec. 4051.352. SUSPENSION OF AGENT'S CONTRACT;
OTHER DEFINITIONS
Sec. 4051.353. NOTICE REQUIRED BEFORE TERMINATION OR
SUSPENSION OF CONTRACT
Sec. 4051.354. AUTOMATIC TERMINATION OF CONTRACT ON
WITHDRAWAL FROM STATE OR REDUCTION OF
BUSINESS
Sec. 4051.355. RENEWAL OF INSURANCE CONTRACTS AFTER
NOTICE OF TERMINATION OR SUSPENSION
Sec. 4051.356. INSURER REFUSAL TO RENEW AGENT'S BUSINESS
PROHIBITED
Sec. 4051.357. INSURER APPROVAL FOR NEW BUSINESS OR
INCREASE IN LIABILITY
Sec. 4051.358. PROVISION OF UNDERWRITING STANDARDS TO
AGENT WHOSE CONTRACT IS TERMINATED
OR SUSPENDED
Sec. 4051.359. PAYMENT OF MONEY DUE INSURER
Sec. 4051.360. REVISION OF TERMINATION PROVISIONS OF
AGENT'S CONTRACT
Sec. 4051.361. ADMINISTRATIVE PENALTY
Sec. 4051.362. ACTION FOR DAMAGES
CHAPTER 4051. PROPERTY AND CASUALTY AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4051.001. APPLICABILITY OF CHAPTER. (a) This
subchapter and Subchapters B-E and G apply to each agent of an
insurer authorized to engage in the business of property and
casualty insurance in this state.
(b) This subchapter and Subchapters B-E and G apply to each
person who performs the acts of an agent, as described by Section
4001.051, whether through an oral, written, electronic, or other
form of communication, by soliciting, negotiating, procuring, or
collecting a premium on an insurance contract offered by any kind of
insurer authorized to engage in the business of property and
casualty insurance in this state, including:
(1) a fidelity or surety company;
(2) a mutual insurance company, including a farm
mutual or a county mutual;
(3) a reciprocal or interinsurance exchange; and
(4) a Lloyd's plan. (V.T.I.C. Art. 21.14, Sec. 1(b).)
Sec. 4051.002. REQUIREMENTS APPLICABLE TO CERTAIN AGENT
CONTRACTS. An agent's contract entered into on or after August 27,
1973, by an insurer engaged in the business of property and casualty
insurance in this state is subject to Article 21.11-2. (New.)
[Sections 4051.003-4051.050 reserved for expansion]
SUBCHAPTER B. GENERAL PROPERTY AND CASUALTY LICENSE
Sec. 4051.051. LICENSE REQUIRED. A person is required to
hold a general property and casualty license if the person acts as:
(1) an agent who writes property and casualty
insurance for an insurer authorized to engage in the business of
property and casualty insurance in this state;
(2) a subagent of a person who holds a license as an
agent under this chapter who solicits and binds insurance risks for
that agent; or
(3) an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state. (V.T.I.C. Art. 21.14, Sec. 2.)
Sec. 4051.052. AUTHORITY TO WRITE ADDITIONAL LINES. A
person who holds a general property and casualty license may, in
addition, write the kinds of insurance contracts described by:
(1) Section 4051.101 and Subchapter E; or
(2) Chapter 4055. (V.T.I.C. Art. 21.14, Sec. 3.)
Sec. 4051.053. AUTHORITY TO WRITE CERTAIN ACCIDENT AND
HEALTH INSURANCE. A person who holds a general property and
casualty license may, without holding a license under Chapter 4054,
write health and accident insurance for a property and casualty
insurer authorized to sell those insurance products in this state.
(V.T.I.C. Art. 21.14, Sec. 4.)
Sec. 4051.054. DECEASED, DISABLED, OR INSOLVENT AGENTS;
EMERGENCY LICENSE. (a) If a property and casualty agent dies,
becomes disabled, or is found to be insolvent and unable to pay for
premiums as they become due to an insurer, the department may issue,
without examination, to an applicant for a property and casualty
agent license an emergency license on receipt of proof satisfactory
to the department that the emergency license is necessary to
preserve the agency assets of the deceased, disabled, or insolvent
agent.
(b) An emergency license is valid for 90 days in any 12
consecutive months and may be renewed by the department for an
additional 90 days during the 12-month period if the other
requirements of Subtitle A are satisfied. (V.T.I.C. Art. 21.14,
Sec. 5.)
[Sections 4051.055-4051.100 reserved for expansion]
SUBCHAPTER C. LIMITED PROPERTY AND CASUALTY LICENSE
Sec. 4051.101. LICENSE REQUIRED. (a) Except as provided by
Section 4051.052, a person is required to hold a limited property
and casualty license if the person acts as an agent who writes:
(1) job protection insurance as defined by Article
25.01;
(2) exclusively, insurance on growing crops under
Subchapter F;
(3) any form of insurance authorized under Chapter 911
for a farm mutual insurance company;
(4) exclusively, any form of insurance authorized to
be solicited and written in this state that relates to:
(A) the ownership, operation, maintenance, or
use of a motor vehicle designed for use on the public highways,
including a trailer or semitrailer, and the motor vehicle's
accessories or equipment; or
(B) the ownership, occupancy, maintenance, or
use of a manufactured home classified as personal property under
Section 2.001, Property Code;
(5) a prepaid legal services contract under Article
5.13-1 or Chapter 961;
(6) exclusively, an industrial fire insurance policy:
(A) covering dwellings, household goods, and
wearing apparel;
(B) written on a weekly, monthly, or quarterly
basis on a continuous premium payment plan; and
(C) written for an insurer exclusively engaged in
the business as described by Section 912.310;
(7) credit insurance, except as otherwise provided by
Chapter 4055; or
(8) any other kind of insurance, if holding a limited
property and casualty license to write that kind of insurance is
determined necessary by the commissioner for the protection of the
insurance consumers of this state.
(b) Subsection (a)(2) applies to an entity chartered by the
federal Farm Credit Administration, as provided by the farm credit
system under 12 U.S.C. Section 2001 et seq., as amended.
(c) This section does not apply to a person who wrote for the
previous calendar year:
(1) policies authorized by Chapter 911 for a farm
mutual insurance company that generated, in the aggregate, less
than $50,000 in direct premium; or
(2) industrial fire insurance policies that
generated, in the aggregate, less than $20,000 in direct premium.
(V.T.I.C. Art. 21.14, Secs. 6(a), (b), (d).)
Sec. 4051.102. DESIGNATION OF KINDS OF INSURANCE. A person
who holds a limited property and casualty license may write only the
kind of insurance designated on the license. (V.T.I.C. Art. 21.14,
Sec. 6(c).)
[Sections 4051.103-4051.150 reserved for expansion]
SUBCHAPTER D. INSURANCE SERVICE REPRESENTATIVE LICENSE
Sec. 4051.151. LICENSE REQUIRED. A person is required to
hold an insurance service representative license if the person is a
salaried employee who performs assigned duties only in an office of
a property and casualty agent, including explaining insurance
coverage, describing an insurance product, quoting insurance
premium rates, and issuing insurance binders only with the express
approval of the property and casualty agent who supervises the
license holder. (V.T.I.C. Art. 21.14, Sec. 8(a).)
Sec. 4051.152. APPLICABILITY OF CERTAIN REQUIREMENTS. The
provisions of this title that apply to the holder of a general
property and casualty license apply to the holder of a license
issued under this subchapter, except that proof of financial
responsibility is not required for a person licensed only under
this subchapter. (V.T.I.C. Art. 21.14, Sec. 8(b).)
[Sections 4051.153-4051.200 reserved for expansion]
SUBCHAPTER E. COUNTY MUTUAL AGENT LICENSE
Sec. 4051.201. LICENSE ISSUANCE. The department shall
issue a license to an individual applicant to act as an agent for a
county mutual insurance company under Chapter 912 on receipt of
certification from the company that the applicant has:
(1) completed a course of study and instruction in
compliance with this subchapter; and
(2) passed without aid a written examination
administered by the company. (V.T.I.C. Art. 21.14, Sec. 9(a)
(part).)
Sec. 4051.202. COURSE. (a) To be eligible to receive a
license under this subchapter, an applicant must complete a course
of study and instruction offered by the applicable company on motor
vehicle insurance and insurance covering dwellings.
(b) The course of study and instruction must:
(1) be at least five hours in duration; and
(2) include instruction on:
(A) the policies to be sold; and
(B) the laws relating to the regulation of
insurance in this state. (V.T.I.C. Art. 21.14, Secs. 9(a) (part),
(b).)
Sec. 4051.203. EXAMINATION. (a) The commissioner shall
prescribe a uniform examination for applicants that fairly tests
knowledge of the information contained in the course provided under
Section 4051.202.
(b) The department shall authorize a county mutual
insurance company to administer the examination after approval by
the department of a complete outline and explanation of the course
and the manner of conducting the examination. (V.T.I.C. Art.
21.14, Sec. 9(c).)
Sec. 4051.204. INVESTIGATION BY DEPARTMENT. The department
may investigate as necessary the manner of instruction and the
examination administered by a company under this subchapter.
(V.T.I.C. Art. 21.14, Sec. 9(d) (part).)
Sec. 4051.205. WITHDRAWAL OF COMPANY'S AUTHORITY. The
department may withdraw from a county mutual insurance company the
authority under this subchapter to offer instruction and administer
an examination. (V.T.I.C. Art. 21.14, Sec. 9(d) (part).)
Sec. 4051.206. APPLICABILITY OF LIMITED LICENSE LAWS.
Except as specifically provided by this subchapter, the provisions
of this title that apply to the holder of a limited license apply to
the holder of a license issued under this subchapter. (V.T.I.C.
Art. 21.14, Sec. 9(e).)
[Sections 4051.207-4051.250 reserved for expansion]
SUBCHAPTER F. AGRICULTURAL INSURANCE AGENT
Sec. 4051.251. APPOINTMENT OF AGENT. (a) An insurer that
holds a valid certificate of authority to engage in the business of
insurance in this state and whose authority in this state and each
other jurisdiction in which the insurer is authorized to engage in
the business of insurance is limited to the business of insuring
risks on growing crops may, subject to this subchapter, appoint and
act through an agent licensed under Subchapter B, C, or E.
(b) An agent appointed under Subsection (a) may act as an
agent for more than one insurer but may act as an agent under this
subchapter only with respect to the business of insuring risks on
growing crops.
(c) This title applies to the licensing and regulation of an
agent appointed under this subchapter. (V.T.I.C. Art. 21.14-2,
Secs. 1, 3, 4.)
Sec. 4051.252. REQUIREMENTS FOR APPOINTMENT; PROCEDURE.
(a) To appoint an agent under this subchapter, an insurer must
submit a completed appointment form to the department and pay a
nonrefundable fee in an amount set by the department.
(b) The appointment form must be signed by a representative
of the insurer.
(c) The department shall approve an appointment unless the
department determines that the applicant does not meet the
requirements of this title.
(d) The department may waive any examination requirement
imposed by this title for a license applicant seeking an
appointment under this subchapter who has passed an examination as
required by Federal Crop Insurance Corporation guidelines for
administering the federal crop insurance program. (V.T.I.C. Art.
21.14-2, Secs. 2(a), (b), (c).)
Sec. 4051.253. ACCEPTANCE OF CERTAIN CONTINUING EDUCATION.
The department may accept continuing education hours completed
under the guidelines of the Federal Crop Insurance Corporation as
satisfying the continuing education requirements imposed under
this title. (V.T.I.C. Art. 21.14-2, Sec. 2(d).)
Sec. 4051.254. RULES. The commissioner may adopt rules
necessary to implement this subchapter and to meet the minimum
requirements of federal law, including regulations. (V.T.I.C. Art.
21.14-2, Sec. 5.)
[Sections 4051.255-4051.300 reserved for expansion]
SUBCHAPTER G. REGISTRATION OF HOME OFFICE EMPLOYEES
Sec. 4051.301. REGISTRATION AND DISCLOSURE REQUIRED; FEE.
(a) A person is required to be registered with the department if
the person acts as a full-time home office salaried employee who
solicits or receives an application for the sale of insurance
through an oral, written, or electronic communication for an
insurer authorized to engage in the business of insurance in this
state.
(b) A person who registers under this section must submit a
nonrefundable registration fee in an amount set by the department.
(c) A person registered under this section shall disclose
that the person is registered on making an oral, written, or
electronic communication to solicit or receive an application for
the sale of insurance. (V.T.I.C. Art. 21.14, Secs. 7(a), (d), (e).)
Sec. 4051.302. CONTINUING EDUCATION REQUIREMENTS. (a) An
insurer authorized to engage in the business of insurance in this
state whose general plan of operation includes the use of employees
described by Section 4051.301 shall certify to the department that
each of those employees receives at least 15 hours of continuing
education annually.
(b) Each continuing education course provided by the
insurer must be submitted to the department for certification as
provided by Chapter 4004.
(c) A person registered under this subchapter shall comply
with the continuing education requirements imposed by Chapter 4004
as if the person were a licensed agent.
(d) The continuing education required by this section must
be designed to give the employees:
(1) reasonable familiarity with:
(A) the broad principles of insurance;
(B) insurance licensing and regulatory laws; and
(C) the terms and conditions of the insurance
that the employees transact;
(2) a fair and general understanding of the duties of
an insurer to an insured; and
(3) training in ethical considerations. (V.T.I.C.
Art. 21.14, Sec. 7(b).)
Sec. 4051.303. SUSPENSION OF REGISTERED EMPLOYEE;
DISCIPLINARY ACTION AGAINST INSURER. The registration of an
employee under this subchapter shall be suspended and the insurer
who employs the registered employee may be disciplined for any act
for which an agent may be disciplined under Subchapter C, Chapter
4005. (V.T.I.C. Art. 21.14, Sec. 7(c).)
[Sections 4051.304-4051.350 reserved for expansion]
SUBCHAPTER H. TERMINATION OR SUSPENSION OF AGENT CONTRACTS
BY PROPERTY AND CASUALTY INSURERS
Sec. 4051.351. APPLICABILITY OF SUBCHAPTER. (a) Except as
provided by Subsection (b), this subchapter applies to each
contract between an agent and an insurer engaged in the business of
property and casualty insurance in this state.
(b) This subchapter does not apply to:
(1) the termination or suspension by an insurer of an
agent's contract because of:
(A) insolvency;
(B) abandonment;
(C) gross and wilful misconduct;
(D) failure to pay the insurer money due to the
insurer after receipt of a written demand; or
(E) revocation of the agent's license by the
department; or
(2) the termination or suspension by an insurer of an
agent's contract if the insurance policies and insurance business
are owned by the insurer rather than the agent. (V.T.I.C. Art.
21.11-1, Secs. 3, 4.)
Sec. 4051.352. SUSPENSION OF AGENT'S CONTRACT; OTHER
DEFINITIONS. (a) For purposes of this subchapter, "suspension,"
with regard to an agent's contract, means the temporary cessation
of business relations between an insurer and an agent and refusal by
the insurer to accept insurance contracts submitted by the agent.
The term does not include a situation in which business is suspended
immediately after a natural disaster.
(b) The commissioner shall adopt reasonable rules to
provide definitions necessary to accomplish the purposes of this
subchapter. (V.T.I.C. Art. 21.11-1, Secs. 1(a) (part), (f).)
Sec. 4051.353. NOTICE REQUIRED BEFORE TERMINATION OR
SUSPENSION OF CONTRACT. (a) An insurer may not terminate or
suspend a contract with an appointed agent that has been in effect
for at least two years unless the insurer provides written notice of
the termination or suspension to the agent at least six months
before the date the termination or suspension takes effect.
(b) A contract that replaces or revises a contract that has
been in effect for at least two years is subject to this subchapter
if there has not been a material change in the ownership of the
agency. (V.T.I.C. Art. 21.11-1, Secs. 1(a) (part), (e).)
Sec. 4051.354. AUTOMATIC TERMINATION OF CONTRACT ON
WITHDRAWAL FROM STATE OR REDUCTION OF BUSINESS. (a) An insurer
that withdraws from this state or reduces the insurer's total
annual premium volume by at least 75 percent in any year is
considered to have terminated the contracts of the insurer's
agents. Except as provided by Subsection (b), the insurer shall
comply with the requirements of this subchapter.
(b) An insurer described by Subsection (a) shall renew each
contract for property and casualty insurance for the affected agent
for 24 months from the date of the notice of termination or
suspension of the contract.
(c) This section does not apply to the transfer of business
from an insurer to another insurer with which the agent has a
contract and that:
(1) is under common ownership; and
(2) is admitted to engage in the business of insurance
in this state. (V.T.I.C. Art. 21.11-1, Sec. 5.)
Sec. 4051.355. RENEWAL OF INSURANCE CONTRACTS AFTER NOTICE
OF TERMINATION OR SUSPENSION. (a) Except as provided by Subsection
(b), an insurer that terminates or suspends an agent's contract
with an appointed agent shall renew all contracts for property and
casualty insurance for the agent during the six months after the
effective date of the termination or suspension of the contract.
(b) The insurer may decline to renew an insurance contract
if any risk does not meet the insurer's current underwriting
standards. The insurer must provide at least 60 days' notice to the
agent of the insurer's intent not to renew the contract.
(c) An insurer that renews an insurance contract under this
section shall pay to the agent commissions for the renewal
according to the commission schedule that was in effect for the
agent before the insurer's decision to terminate or suspend the
agent's contract.
(d) An insurer that renews an insurance contract under this
section may not require the agent to convert from agency billing to
company billing during the termination period unless the agent
agrees in writing to the conversion. (V.T.I.C. Art. 21.11-1, Sec.
1(b) (part).)
Sec. 4051.356. INSURER REFUSAL TO RENEW AGENT'S BUSINESS
PROHIBITED. During the term of the agent's contract, the insurer
may not refuse to renew business from the agent that complies with
the underwriting standards in effect for agents of the insurer
whose contracts have not been terminated or suspended. (V.T.I.C.
Art. 21.11-1, Sec. 2.)
Sec. 4051.357. INSURER APPROVAL FOR NEW BUSINESS OR
INCREASE IN LIABILITY. An agent who receives notice of termination
or suspension of the agent's contract from an insurer may not write,
without the written approval of the insurer:
(1) any new business; or
(2) any increase in liability on a renewal policy or an
existing policy. (V.T.I.C. Art. 21.11-1, Sec. 1(c).)
Sec. 4051.358. PROVISION OF UNDERWRITING STANDARDS TO AGENT
WHOSE CONTRACT IS TERMINATED OR SUSPENDED. (a) On providing notice
to an agent of termination or suspension of the agent's contract
under this subchapter, the insurer shall provide to the agent the
insurer's written underwriting standards. The standards must
conform to the underwriting standards that were in effect for that
agent before the insurer's decision to terminate or suspend the
agent's contract.
(b) An insurer may provide different underwriting standards
to different agents of the insurer if the standards are not used in
a way that prevents or discourages the renewal of the insurance
policies of an agent whose contract is terminated or suspended.
(V.T.I.C. Art. 21.11-1, Sec. 1(b) (part).)
Sec. 4051.359. PAYMENT OF MONEY DUE INSURER. An insurer
shall allow an agent whose contract has been terminated or
suspended under this subchapter to pay to the insurer all money due
under the same accounts current payment terms in effect for agents
of the insurer whose contracts have not been terminated or
suspended. (V.T.I.C. Art. 21.11-1, Sec. 1(b) (part).)
Sec. 4051.360. REVISION OF TERMINATION PROVISIONS OF
AGENT'S CONTRACT. (a) This subchapter does not prohibit an
amendment of or addendum to an agent's contract providing that the
contract may be terminated before the time required by this
subchapter if the agent agrees in writing to the earlier
termination.
(b) An insurer that proposes to revise the termination
provisions of an agent's contract must first present the agent with
a separate written impact statement that summarizes any effect that
the proposed amendment or addendum would have on the agent's rights
under this subchapter. (V.T.I.C. Art. 21.11-1, Sec. 1(d).)
Sec. 4051.361. ADMINISTRATIVE PENALTY. If the department
determines that an insurer has violated this subchapter, the
insurer is subject to an administrative penalty as provided by
Chapter 84 of not less than $1,000 or more than $10,000. (V.T.I.C.
Art. 21.11-1, Sec. 6.)
Sec. 4051.362. ACTION FOR DAMAGES. An agent who has
sustained actual damages as a result of an insurer's violation of
this subchapter may bring an action against the insurer regardless
of whether the department has determined that there has been a
violation of this subchapter. (V.T.I.C. Art. 21.11-1, Sec. 7.)
CHAPTER 4052. LIFE AND HEALTH INSURANCE COUNSELORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4052.001. DEFINITION
Sec. 4052.002. USE OF CERTAIN TITLES NOT PROHIBITED
Sec. 4052.003. APPLICABILITY OF OTHER LAW
Sec. 4052.004. EXEMPTIONS
Sec. 4052.005. RULES
[Sections 4052.006-4052.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4052.051. LICENSE REQUIRED
Sec. 4052.052. EXAMINATION
Sec. 4052.053. APPOINTMENT TO ACT FOR INSURER NOT REQUIRED
Sec. 4052.054. LIMITS ON ADVERTISING
Sec. 4052.055. DUAL COMPENSATION PROHIBITED
Sec. 4052.056. ELIGIBILITY FOR NEW LICENSE AFTER
REVOCATION
[Sections 4052.057-4052.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT OF COUNSELOR'S AGREEMENT
Sec. 4052.101. ENFORCEMENT OF AGREEMENT
CHAPTER 4052. LIFE AND HEALTH INSURANCE COUNSELORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4052.001. DEFINITION. In this chapter, "life and
health insurance counselor" means a person who:
(1) for compensation, offers to examine or examines a
life, accident, or health insurance policy, a health benefit plan,
or an annuity or pure endowment contract to give advice or other
information regarding:
(A) the policy, plan, or contract terms,
conditions, benefits, coverage, or premiums; or
(B) the advisability of:
(i) changing, exchanging, converting,
replacing, surrendering, continuing, or rejecting a policy, plan,
or contract; or
(ii) accepting or procuring a policy, plan,
or contract from an insurer or health benefit plan issuer; or
(2) in any public manner:
(A) uses as a title:
(i) "insurance adviser";
(ii) "insurance analyst";
(iii) "insurance counselor";
(iv) "insurance specialist";
(v) "policyholders' adviser";
(vi) "policyholders' counselor"; or
(vii) any other similar title; or
(B) uses any other title indicating that the
person gives or is engaged in the business of giving advice or other
information to an insured, a beneficiary, or any other person
having an interest in a life, accident, or health insurance policy,
a health benefit plan, or an annuity or pure endowment contract.
(V.T.I.C. Art. 21.07-2, Sec. 1 (part).)
Sec. 4052.002. USE OF CERTAIN TITLES NOT PROHIBITED. This
chapter does not prohibit a person who, through the completion of a
course of instruction recognized in the business of insurance, is
designated as a chartered life underwriter (CLU), chartered
financial consultant (ChFC), or certified financial planner (CFP)
from using that designation to indicate professional achievement.
(V.T.I.C. Art. 21.07-2, Sec. 1 (part).)
Sec. 4052.003. APPLICABILITY OF OTHER LAW. Except as
provided by this chapter, the provisions of this title that apply to
the licensing and regulation of agents apply to the licensing and
regulation of a life and health insurance counselor. (V.T.I.C.
Art. 21.07-2, Secs. 5(a) (part), 6.)
Sec. 4052.004. EXEMPTIONS. This chapter does not apply to:
(1) a licensed agent for a life insurance company
while acting as an agent for the company;
(2) a licensed attorney at law of this state while
acting in the course or scope of the attorney's profession;
(3) a licensed public accountant of this state while
acting in the course or scope of the accountant's profession;
(4) a regular salaried officer or employee of an
authorized insurer issuing policies of life or health insurance
while acting for the insurer in discharging the duties of the
position or employment;
(5) an officer or employee of a bank or trust company
who does not receive compensation from a source other than the bank
or trust company for activities connected with the position or
employment; or
(6) an employer, an employer's officer or employee, or
a trustee of an employee benefit plan to the extent that the
employer, officer, employee, or trustee is engaged in the
administration or operation of an employee benefit program that
involves the use of insurance or annuities issued by a legal reserve
life insurer. (V.T.I.C. Art. 21.07-2, Sec. 3.)
Sec. 4052.005. RULES. The commissioner may adopt rules
necessary to implement this chapter and to meet the minimum
requirements of federal law, including regulations. (V.T.I.C. Art.
21.07-2, Sec. 10.)
[Sections 4052.006-4052.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4052.051. LICENSE REQUIRED. A person may not act as a
life and health insurance counselor unless the person holds a
license issued by the department under this chapter. (V.T.I.C.
Art. 21.07-2, Sec. 2.)
Sec. 4052.052. EXAMINATION. (a) An applicant for a life
and health insurance counselor license must take an examination
administered under Chapter 4002 that includes the following:
(1) fundamentals of life and health insurance;
(2) group life insurance, pensions, and health
insurance;
(3) law, trust, and taxation;
(4) finance and economics; and
(5) business insurance and estate planning.
(b) The department may not issue a life and health insurance
counselor license to a person unless the person has passed each part
of the examination.
(c) The department may schedule and give the examination.
(V.T.I.C. Art. 21.07-2, Secs. 5(b), (c) (part).)
Sec. 4052.053. APPOINTMENT TO ACT FOR INSURER NOT REQUIRED.
An appointment to act for an insurer is not a condition to the
issuance of a life and health insurance counselor license.
(V.T.I.C. Art. 21.07-2, Sec. 5(a) (part).)
Sec. 4052.054. LIMITS ON ADVERTISING. A life and health
insurance counselor may not advertise in any manner and may not
circulate materials indicating professional superiority or the
performance of professional service in a superior manner.
(V.T.I.C. Art. 21.07-2, Sec. 5(a) (part).)
Sec. 4052.055. DUAL COMPENSATION PROHIBITED. A life and
health insurance counselor is not entitled to receive compensation
for the same service provided to the same client if the counselor:
(1) holds a license under Chapter 4054; and
(2) receives compensation for the service as an agent
licensed under that chapter. (V.T.I.C. Art. 21.07-2, Sec. 4a.)
Sec. 4052.056. ELIGIBILITY FOR NEW LICENSE AFTER
REVOCATION. If the department revokes a life and health insurance
counselor's license, the license holder is not eligible for a new
license until the second anniversary of the revocation date.
(V.T.I.C. Art. 21.07-2, Sec. 7 (part).)
[Sections 4052.057-4052.100 reserved for expansion]
SUBCHAPTER C. ENFORCEMENT OF COUNSELOR'S AGREEMENT
Sec. 4052.101. ENFORCEMENT OF AGREEMENT. A life and health
insurance counselor, or a person acting on the counselor's behalf,
may enforce an agreement between the counselor and a person, firm,
or corporation relating to the services of the counselor only if:
(1) the agreement is in writing;
(2) the agreement is executed in duplicate by the
person, firm, or corporation to be charged;
(3) a duplicate is delivered to and retained by the
person, firm, or corporation when executed; and
(4) the agreement specifies:
(A) the amount of the compensation paid or to be
paid to the counselor; and
(B) the services to be provided by the counselor.
(V.T.I.C. Art. 21.07-2, Sec. 4 (part).)
CHAPTER 4053. MANAGING GENERAL AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4053.001. DEFINITIONS
Sec. 4053.002. EXCEPTION
Sec. 4053.003. INAPPLICABILITY OF CHAPTER
Sec. 4053.004. REGULATION OF MANAGING GENERAL AGENTS
Sec. 4053.005. RULES
[Sections 4053.006-4053.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4053.051. LICENSE REQUIRED; EXEMPTIONS
Sec. 4053.052. ISSUANCE OF TEMPORARY OR EMERGENCY
LICENSE
Sec. 4053.053. SINGLE LICENSE REQUIRED
Sec. 4053.054. NOTICE AND APPROVAL OF APPOINTMENT
Sec. 4053.055. LAPSE OF LICENSE
[Sections 4053.056-4053.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF MANAGING
GENERAL AGENTS
Sec. 4053.101. GENERAL POWERS AND DUTIES
Sec. 4053.102. CONTRACTS
Sec. 4053.103. ACCOUNT REPORT
Sec. 4053.104. SEPARATE RECORDS
Sec. 4053.105. ESCROW ACCOUNT
Sec. 4053.106. FIDUCIARY CAPACITY
Sec. 4053.107. FINANCIAL EXAMINATION
Sec. 4053.108. REQUIRED NOTICES TO DEPARTMENT
Sec. 4053.109. REINSURANCE
Sec. 4053.110. REDEMPTION OF CORPORATE SHARES
[Sections 4053.111-4053.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 4053.151. DISCIPLINARY ACTION
Sec. 4053.152. GUARANTY FUND REIMBURSEMENT
CHAPTER 4053. MANAGING GENERAL AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4053.001. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person who is classified as an
affiliate under Section 823.003(a).
(2) "Insurer" means an insurance company, carrier,
corporation, reciprocal or interinsurance exchange, mutual,
association, county mutual insurance company, Lloyd's plan, or
other insurance carrier authorized to engage in the business of
insurance in this state.
(3) "Managing general agent" means a person, firm, or
corporation that has supervisory responsibility for the local
agency and field operations of an insurer in this state or that is
authorized by an insurer to accept or process on the insurer's
behalf insurance policies produced and sold by other agents.
(V.T.I.C. Art. 21.07-3, Secs. 2(a) (part), (b) (part), (e).)
Sec. 4053.002. EXCEPTION. An agent licensed under
Subchapter E of Chapter 981, Subchapters B-E of Chapter 4051, or
Chapter 4056 is not a managing general agent unless the agent
accepts 50 percent or more of the agent's total annual business or
does $500,000 or more of total annual business as measured by
premium volume, whichever amount is less, from insurance policies
produced and sold by other agents. (V.T.I.C. Art. 21.07-3, Sec.
2(a) (part).)
Sec. 4053.003. INAPPLICABILITY OF CHAPTER. This chapter
does not apply to:
(1) the transaction of the business of life, health,
and accident insurance, including variable life insurance and
variable annuity contracts;
(2) a full-time salaried employee of an insurer acting
for and in connection with the insurance business of the insurer; or
(3) an adjuster or inspector of risks for an insurer.
(V.T.I.C. Art. 21.07-3, Secs. 2(b) (part), 16.)
Sec. 4053.004. REGULATION OF MANAGING GENERAL AGENTS. This
title applies to the licensing and regulation of a person acting as
a managing general agent. (V.T.I.C. Art. 21.07-3, Sec. 19(a).)
Sec. 4053.005. RULES. The commissioner may adopt
reasonable rules for the administration of this chapter. (V.T.I.C.
Art. 21.07-3, Sec. 21.)
[Sections 4053.006-4053.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4053.051. LICENSE REQUIRED; EXEMPTIONS. (a) Except
as provided by Subsection (b), a person, firm, or corporation may
not act as a managing general agent unless the person, firm, or
corporation holds a license issued under this chapter.
(b) A business corporation is not required to hold a license
issued under this chapter to act as a managing general agent if:
(1) the corporation is authorized to engage in
business in this state;
(2) all of the corporation's outstanding stock is
solely owned by an insurer authorized to engage in business in this
state and the corporation's business affairs are completely
controlled by that insurer;
(3) the principal purpose for which the corporation
exists is to facilitate the accumulation of commissions from the
insurer and its subsidiaries and affiliates for the account of and
payment to an agent who could otherwise lawfully receive the
commissions directly from the insurer and its subsidiaries and
affiliates; and
(4) the corporation does not engage in any other act of
a managing general agent as provided by this chapter.
(c) Notwithstanding Subsection (b), the managing general
agent shall execute on the insurer's behalf a contract entered into
with an agent. (V.T.I.C. Art. 21.07-3, Sec. 3.)
Sec. 4053.052. ISSUANCE OF TEMPORARY OR EMERGENCY LICENSE.
The commissioner may, without requiring an examination, issue a
temporary or emergency license under this chapter to an applicant
for a period not to exceed six months:
(1) on the death or disability of a managing general
agent or for another good cause satisfactory to the commissioner;
and
(2) if the applicant meets the other requirements of
this chapter. (V.T.I.C. Art. 21.07-3, Sec. 7.)
Sec. 4053.053. SINGLE LICENSE REQUIRED. A license issued
under this chapter entitles the license holder to represent or act
for one or more insurers as a managing general agent. The license
holder is not required to hold a separate license for each insurer
the license holder represents. (V.T.I.C. Art. 21.07-3, Sec.
11(a).)
Sec. 4053.054. NOTICE AND APPROVAL OF APPOINTMENT. (a)
Each appointment to act as a managing general agent shall be
reported to the commissioner on a form prescribed by the
commissioner.
(b) The form must include:
(1) the details required by rules adopted under this
chapter;
(2) the insurer's name and identifying number;
(3) the managing general agent's name and address;
(4) a statement by an officer of the insurer that the
officer or the officer's agent has personal knowledge that the
managing general agent has had experience or instruction that
qualifies the agent to act as a managing general agent;
(5) a statement of whether the managing general agent
may exercise claim settlement authority for the insurer and, if so:
(A) whether that authority exceeds $25,000 on any
one claim; and
(B) whether that authority includes third-party
liability other than property damage; and
(6) a statement of whether funds exceeding $100,000
are customarily held by the managing general agent to pay losses and
loss adjustment expenses for the insurer.
(c) For each additional appointment for which a managing
general agent applies, the agent shall pay a nonrefundable fee in an
amount not to exceed $16 as determined by the department.
(d) If approval of an additional appointment is not received
from the commissioner before the eighth day after the date the
commissioner receives the completed application and fee, the
managing general agent and insurer may assume, in the absence of
notice of disapproval from the commissioner, that the commissioner
approves the application and the managing general agent may act for
the insurer. (V.T.I.C. Art. 21.07-3, Secs. 11(c), (d), (e).)
Sec. 4053.055. LAPSE OF LICENSE. If a license holder is not
appointed or under appointment to represent an insurer at the time
the license is subject to renewal, the license lapses and the
commissioner shall deny the renewal application. (V.T.I.C. Art.
21.07-3, Sec. 11(b).)
[Sections 4053.056-4053.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF MANAGING GENERAL AGENTS
Sec. 4053.101. GENERAL POWERS AND DUTIES. A managing
general agent acting for an insurer may:
(1) receive and pass on daily reports and monthly
accounts;
(2) receive and be responsible for agency balances;
(3) handle the adjustment of losses; or
(4) appoint or direct general property and casualty
agents in this state. (V.T.I.C. Art. 21.07-3, Sec. 2(a) (part).)
Sec. 4053.102. CONTRACTS. (a) An insurer may not accept
business from a managing general agent and the agent may not place
business with the insurer without a written contract that
addresses:
(1) the responsibilities of each party;
(2) cancellation or termination;
(3) reports, records, and auditing; and
(4) if applicable:
(A) premium volume limits;
(B) appointment or cancellation of agents;
(C) claims settlement;
(D) underwriting; and
(E) reinsurance.
(b) The commissioner may adopt rules establishing
requirements for a contract with a managing general agent.
(c) A contract with a managing general agent and a report or
record submitted under that contract are subject to review by the
department under Section 38.001. (V.T.I.C. Art. 21.07-3, Sec. 3A.)
Sec. 4053.103. ACCOUNT REPORT. (a) At least once each
calendar quarter, a managing general agent shall submit an account
report to each insurer with whom the agent has a contract.
(b) The account report must include, as applicable, a
statement of:
(1) written, earned, and unearned premiums;
(2) losses and loss expenses paid and outstanding;
(3) losses incurred but not reported; and
(4) management fees. (V.T.I.C. Art. 21.07-3, Sec.
3C(a).)
Sec. 4053.104. SEPARATE RECORDS. (a) For each insurer with
which a managing general agent has a contract, the agent shall
maintain separate records of the business handled by the agent for
the insurer.
(b) The managing general agent shall make a record required
under Subsection (a) available for inspection by:
(1) each insurer; and
(2) the department's examiners. (V.T.I.C. Art.
21.07-3, Sec. 3C(b).)
Sec. 4053.105. ESCROW ACCOUNT. (a) A managing general
agent shall maintain an escrow account in a bank that:
(1) is a member of the Federal Reserve System; and
(2) has its accounts insured by the Federal Deposit
Insurance Corporation.
(b) On receipt, the managing general agent shall deposit in
the escrow account all money collected for each insurer with which
the agent has a contract.
(c) Except as provided by the contract required by Section
4053.102, a managing general agent may not use, take as an offset,
or convert money that is or should have been deposited in the escrow
account. (V.T.I.C. Art. 21.07-3, Secs. 3C(c), (d).)
Sec. 4053.106. FIDUCIARY CAPACITY. A managing general
agent holds money on behalf of an insured or insurer in a fiduciary
capacity and shall properly account for that money as required by
law, department rules, and a contract with an insurer. The
department's examiners may audit money held in a fiduciary
capacity. (V.T.I.C. Art. 21.07-3, Sec. 3C(e).)
Sec. 4053.107. FINANCIAL EXAMINATION. (a) As the
commissioner considers necessary, a managing general agent shall
submit to an examination of the agent's financial condition and the
agent's compliance with the laws of this state affecting the
conduct of the agent's business.
(b) The examination may be conducted by:
(1) the commissioner;
(2) one or more commissioned examiners; or
(3) a certified public accountant or other person or
firm qualified to perform those examinations.
(c) The managing general agent shall pay the examination
expenses in an amount the commissioner certifies as just and
reasonable. (V.T.I.C. Art. 21.07-3, Sec. 3C(f).)
Sec. 4053.108. REQUIRED NOTICES TO DEPARTMENT. (a) On
forms prescribed by the department, a managing general agent shall
notify the department not later than the 30th day after the date any
of the following occurs:
(1) balances due to an insurer for more than 90 days
exceed:
(A) $1 million; or
(B) 10 percent of the insurer's policyholder
surplus, as reported in the annual statement filed with the
department;
(2) balances due for more than 60 days from a property
and casualty agent or managing general agent appointed by or
reporting to the managing general agent exceed $500,000;
(3) authority to settle claims for an insurer is
withdrawn;
(4) money held for an insurer for losses is greater
than an amount that is $100,000 more than the amount necessary to
pay the losses and loss adjustment expenses expected to be paid on
the insurer's behalf within the next 60-day period; or
(5) the contract required under Section 4053.102 is
canceled or terminated.
(b) Notwithstanding the time limitation imposed by
Subsection (a), the requirement to file under Subsections (a)(1),
(2), and (4) may be met with a single annual report if:
(1) the managing general agent routinely operates
above the limits established by those subsections; and
(2) the department verifies that fact in accordance
with rules adopted by the commissioner. (V.T.I.C. Art. 21.07-3,
Sec. 11A.)
Sec. 4053.109. REINSURANCE. (a) A managing general agent
may not knowingly cede, arrange, facilitate, or bind an insurer to
reinsurance.
(b) Notwithstanding Subsection (a), a managing general
agent may bind a facultative reinsurance contract in accordance
with an obligatory facultative agreement if the contract with the
insurer contains reinsurance underwriting guidelines including,
for both assumed and ceded reinsurance:
(1) a list of reinsurers with whom the automatic
agreements are in effect;
(2) the coverages and amounts or percentages that may
be reinsured; and
(3) commission schedules.
(c) A managing general agent may not commit an insurer to
participate in insurance or reinsurance syndicates. (V.T.I.C. Art.
21.07-3, Sec. 3B.)
Sec. 4053.110. REDEMPTION OF CORPORATE SHARES. A
corporation acting as a managing general agent may redeem the
shares of a shareholder or a deceased shareholder:
(1) on terms agreed on by the board of directors and
the shareholder or the shareholder's personal representative; or
(2) at a price and on terms provided in the articles of
incorporation, the bylaws, or an existing contract entered into
between the shareholders. (V.T.I.C. Art. 21.07-3, Sec. 4.)
[Sections 4053.111-4053.150 reserved for expansion]
SUBCHAPTER D. ENFORCEMENT
Sec. 4053.151. DISCIPLINARY ACTION. A person, firm, or
corporation that violates this chapter or a rule or order adopted
under this title, including this chapter, is subject to:
(1) Subchapters B and C, Chapter 4005; and
(2) Chapter 82. (V.T.I.C. Art. 21.07-3, Sec. 19(b).)
Sec. 4053.152. GUARANTY FUND REIMBURSEMENT. (a) If a court
finds by a final nonappealable judgment that a violation of this
chapter by a managing general agent contributes materially to the
insolvency of an insurer under which the agent held an appointment,
the agent shall reimburse the appropriate guaranty fund for money
paid to cover losses of the insolvent insurer in an amount equal to
all payments made from that guaranty fund in excess of:
(1) gross earned premiums and investment income earned
on those premiums; and
(2) loss reserves for that business.
(b) The reimbursement made under this section shall be used
for losses, loss adjustments, and administrative expenses on
business placed by the managing general agent. (V.T.I.C. Art.
21.07-3, Sec. 19A.)
CHAPTER 4054. LIFE, ACCIDENT, AND HEALTH AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4054.001. APPLICABILITY OF CHAPTER
[Sections 4054.002-4054.050 reserved for expansion]
SUBCHAPTER B. GENERAL LIFE, ACCIDENT, AND
HEALTH LICENSE
Sec. 4054.051. LICENSE REQUIRED
Sec. 4054.052. COMBINATION LIFE INSURANCE AGENT
Sec. 4054.053. AUTHORITY TO WRITE ADDITIONAL LINES
[Sections 4054.054-4054.100 reserved for expansion]
SUBCHAPTER C. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE
Sec. 4054.101. LICENSE REQUIRED
Sec. 4054.102. DESIGNATION OF KINDS OF INSURANCE
Sec. 4054.103. TEMPORARY LICENSE
[Sections 4054.104-4054.150 reserved for expansion]
SUBCHAPTER D. FUNERAL PREARRANGEMENT LIFE
INSURANCE LICENSE
Sec. 4054.151. FUNERAL PREARRANGEMENT LIFE INSURANCE AGENT
Sec. 4054.152. LICENSE ISSUANCE
Sec. 4054.153. COURSE
Sec. 4054.154. EXAMINATION
Sec. 4054.155. INVESTIGATION BY DEPARTMENT
Sec. 4054.156. WITHDRAWAL OF INSURER'S AUTHORITY
Sec. 4054.157. LIMIT ON AGENT'S AUTHORITY
Sec. 4054.158. REVOCATION; NOTIFICATION
Sec. 4054.159. CONTINUING EDUCATION EXEMPTION
Sec. 4054.160. APPLICABILITY OF LIMITED LICENSE LAWS
[Sections 4054.161-4054.200 reserved for expansion]
SUBCHAPTER E. LIFE INSURANCE NOT EXCEEDING $15,000
Sec. 4054.201. LICENSE ISSUANCE; EXCEPTION
Sec. 4054.202. COURSE
Sec. 4054.203. EXAMINATION
Sec. 4054.204. INVESTIGATION BY DEPARTMENT
Sec. 4054.205. WITHDRAWAL OF INSURER'S AUTHORITY
Sec. 4054.206. LIMIT ON AGENT'S AUTHORITY
Sec. 4054.207. CONTINUING EDUCATION EXEMPTION
Sec. 4054.208. APPLICABILITY OF LIMITED LICENSE LAWS
[Sections 4054.209-4054.250 reserved for expansion]
SUBCHAPTER F. RENEWAL OR SERVICE COMMISSIONS TO AGENTS
OF LIFE INSURANCE COMPANIES DISCONTINUING BUSINESS IN STATE
Sec. 4054.251. INSURANCE COMPANY LIABILITY FOR PAYMENT OF
COMMISSIONS
Sec. 4054.252. MONTHLY AND QUARTERLY STATEMENTS
Sec. 4054.253. PRESUMPTION IN LAWSUIT
CHAPTER 4054. LIFE, ACCIDENT, AND HEALTH AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4054.001. APPLICABILITY OF CHAPTER. (a) This chapter
applies to each agent of an insurer authorized to provide life,
accident, and health insurance coverage in this state.
(b) This chapter applies to each person who:
(1) performs the acts of an agent, as described by
Section 4001.051, whether through an oral, written, electronic, or
other form of communication by soliciting, negotiating, procuring,
or collecting a premium on an insurance or annuity contract offered
by any type of insurer authorized to engage in the business of life,
accident, and health insurance in this state; or
(2) represents or purports to represent a health
maintenance organization in soliciting, negotiating, procuring, or
effecting membership in the health maintenance organization.
(V.T.I.C. Art. 21.07-1, Sec. 1(b).)
[Sections 4054.002-4054.050 reserved for expansion]
SUBCHAPTER B. GENERAL LIFE, ACCIDENT, AND HEALTH LICENSE
Sec. 4054.051. LICENSE REQUIRED. A person is required to
hold a general life, accident, and health license if the person acts
as:
(1) an agent who represents a health maintenance
organization;
(2) an industrial life insurance agent for an insurer
that writes only weekly premium life insurance on a debit basis
under Chapter 1151;
(3) an agent who writes life, accident, and health
insurance for a life insurance company;
(4) an agent who writes only accident and health
insurance;
(5) an agent who writes fixed or variable annuity
contracts or variable life contracts;
(6) an agent who writes for a stipulated premium
company:
(A) only life insurance in excess of $15,000 on
any one life;
(B) only accident and health insurance; or
(C) both kinds of insurance described by
Paragraphs (A) and (B);
(7) an agent who writes life, accident, and health
insurance for any type of authorized life insurance company that is
domiciled in this state, including a legal reserve life insurance
company, and who represents the company:
(A) in a foreign country or territory; and
(B) on a United States military installation or
with United States military personnel;
(8) an agent who writes life, accident, and health
insurance for a fraternal benefit society except as provided by
Section 885.352; or
(9) an agent who writes any other kind of insurance as
required by the commissioner for the protection of the insurance
consumers of this state. (V.T.I.C. Art. 21.07-1, Sec. 2(a).)
Sec. 4054.052. COMBINATION LIFE INSURANCE AGENT. (a) In
this section, a "combination company" means an insurer that writes
weekly premium life insurance or monthly ordinary life insurance on
a debit basis.
(b) A person may not act as a combination life insurance
agent for a combination company unless the person holds a general
life, accident, and health license.
(c) A combination company and a combination life insurance
agent may also write ordinary life insurance contracts. (V.T.I.C.
Art. 21.07-1, Sec. 2(b).)
Sec. 4054.053. AUTHORITY TO WRITE ADDITIONAL LINES. A
person who holds a general life, accident, and health license may,
without obtaining an additional license, write the kinds of
insurance contracts described by:
(1) Subchapter C, D, or E; or
(2) Chapter 4055. (V.T.I.C. Art. 21.07-1, Sec. 3.)
[Sections 4054.054-4054.100 reserved for expansion]
SUBCHAPTER C. LIMITED LIFE, ACCIDENT, AND HEALTH LICENSE
Sec. 4054.101. LICENSE REQUIRED. Except as provided by
Section 4054.053, an agent is required to hold a limited life,
accident, and health license if the agent writes:
(1) a policy or rider to a policy that provides only:
(A) lump-sum cash benefits in the event of
accidental death or dismemberment; or
(B) ambulance expense benefits in the event of
accident or sickness;
(2) a prepaid legal services contract under Article
5.13-1 or Chapter 961;
(3) credit insurance, except as otherwise provided by
Chapter 4055; or
(4) any other kind of insurance, if holding a limited
life, accident, and health license to write that kind of insurance
is determined necessary by the commissioner for the protection of
the insurance consumers of this state. (V.T.I.C. Art. 21.07-1,
Sec. 4(a).)
Sec. 4054.102. DESIGNATION OF KINDS OF INSURANCE. A person
who holds a limited life, accident, and health license may write
only the kind of insurance designated on the license. (V.T.I.C.
Art. 21.07-1, Sec. 4(b).)
Sec. 4054.103. TEMPORARY LICENSE. An applicant for a
limited life, accident, and health license is eligible for a
temporary license under Subchapter D, Chapter 4001. (V.T.I.C. Art.
21.07-1, Sec. 4(c).)
[Sections 4054.104-4054.150 reserved for expansion]
SUBCHAPTER D. FUNERAL PREARRANGEMENT LIFE INSURANCE LICENSE
Sec. 4054.151. FUNERAL PREARRANGEMENT LIFE INSURANCE
AGENT. A funeral prearrangement life insurance agent is a life
insurance agent who, subject to the limitations of this subchapter,
writes only life insurance policies and fixed annuity contracts to
secure the delivery of funeral services and merchandise under
prepaid funeral contracts regulated by the Texas Department of
Banking under Chapter 154, Finance Code. (V.T.I.C. Art. 21.07-1,
Sec. 5(a).)
Sec. 4054.152. LICENSE ISSUANCE. The department shall
issue a license to an individual applicant to act as a funeral
prearrangement life insurance agent on receipt of certification
from an insurer authorized to write life insurance policies and
fixed annuity contracts in this state that the applicant has:
(1) completed a course of study and instruction in
compliance with this subchapter; and
(2) passed without aid a written examination
administered by the insurer. (V.T.I.C. Art. 21.07-1, Sec. 5(b)
(part).)
Sec. 4054.153. COURSE. (a) To be eligible to receive a
license under this subchapter, an applicant must complete a course
of study and instruction offered by an insurer under this section on
life insurance policies and fixed annuity contracts.
(b) The course of study and instruction must:
(1) be at least five hours in duration; and
(2) include instruction on:
(A) the life insurance policies and fixed annuity
contracts to be sold; and
(B) the laws relating to funeral prearrangement.
(V.T.I.C. Art. 21.07-1, Sec. 5(b) (part).)
Sec. 4054.154. EXAMINATION. (a) The commissioner shall
prescribe a uniform examination for applicants that fairly tests
knowledge of the information contained in the course under Section
4054.153.
(b) The department shall authorize an insurer to administer
the examination as provided by this section after approval by the
department of a complete outline and explanation of the course and
the manner of conducting the examination. (V.T.I.C. Art. 21.07-1,
Sec. 5(c).)
Sec. 4054.155. INVESTIGATION BY DEPARTMENT. The department
may investigate as necessary the manner of instruction and the
examination administered by an insurer under this subchapter.
(V.T.I.C. Art. 21.07-1, Sec. 5(d) (part).)
Sec. 4054.156. WITHDRAWAL OF INSURER'S AUTHORITY. The
department may withdraw from an insurer the authority under this
subchapter to offer instruction and administer an examination.
(V.T.I.C. Art. 21.07-1, Sec. 5(d) (part).)
Sec. 4054.157. LIMIT ON AGENT'S AUTHORITY. A funeral
prearrangement life insurance agent licensed under this subchapter
may not write any coverage or combination of coverages with an
initial guaranteed death benefit that exceeds $15,000 on any life.
(V.T.I.C. Art. 21.07-1, Sec. 5(e) (part).)
Sec. 4054.158. REVOCATION; NOTIFICATION. (a) A license
issued under this subchapter to act as an agent for an insurer is
revoked if the license holder ceases to act as an agent for the
insurer.
(b) Not later than the 15th day after the date on which the
license holder ceases to act as an agent for an insurer, the insurer
or agent shall send written notification to the department.
(V.T.I.C. Art. 21.07-1, Sec. 5(f).)
Sec. 4054.159. CONTINUING EDUCATION EXEMPTION. (a)
Notwithstanding any other provision of this code, a funeral home
employee or other person who holds a funeral prearrangement life
insurance agent license and who writes only life insurance policies
and fixed annuity contracts to secure the delivery of funeral
services and merchandise under prepaid funeral contracts regulated
by the Texas Department of Banking under Chapter 154, Finance Code,
is not required to comply with any continuing education
requirements to maintain the license, except that the appointing
insurer must educate its appointed agents about any new products
sold by the agent to fund prepaid funeral contracts.
(b) A license holder to whom this section applies may be
appointed by more than one insurer. (V.T.I.C. Art. 21.07-1, Sec. 5B
(part).)
Sec. 4054.160. APPLICABILITY OF LIMITED LICENSE LAWS.
Except as specifically provided by this subchapter, the provisions
of this title that apply to the holder of a limited license apply to
the holder of a license issued under this subchapter. (V.T.I.C.
Art. 21.07-1, Sec. 5(g).)
[Sections 4054.161-4054.200 reserved for expansion]
SUBCHAPTER E. LIFE INSURANCE NOT EXCEEDING $15,000
Sec. 4054.201. LICENSE ISSUANCE; EXCEPTION. (a) The
department shall issue a license to an individual applicant to act
as an agent who writes only life insurance policies in an amount
that does not exceed $15,000 on any one life on receipt of
certification from a stipulated premium company, a statewide mutual
assessment company, a local mutual aid association, or a local
mutual burial association, that the applicant has:
(1) completed a course of study and instruction in
compliance with this subchapter; and
(2) passed without aid a written examination
administered by the insurer.
(b) A license is not required under this subchapter for an
agent who, in the preceding calendar year, wrote policies that
generated, in the aggregate, less than $20,000 in direct premium.
(V.T.I.C. Art. 21.07-1, Secs. 6(a) (part), (e).)
Sec. 4054.202. COURSE. (a) To be eligible to receive a
license under this subchapter, an applicant must complete a course
of study and instruction offered by an insurer under this section on
life insurance and fixed annuities.
(b) The course of study and instruction must:
(1) be at least five hours in duration; and
(2) include instruction on:
(A) the policies to be sold; and
(B) the laws relating to the regulation of
insurance in this state. (V.T.I.C. Art. 21.07-1, Sec. 6(a)
(part).)
Sec. 4054.203. EXAMINATION. (a) The commissioner shall
prescribe a uniform examination for applicants that fairly tests
knowledge of the information contained in the course provided under
Section 4054.202.
(b) The department shall authorize an insurer described by
Section 4054.201 to administer the examination as provided by this
section after approval by the department of a complete outline and
explanation of the course and the manner of conducting the
examination. (V.T.I.C. Art. 21.07-1, Sec. 6(b).)
Sec. 4054.204. INVESTIGATION BY DEPARTMENT. The department
may investigate as necessary the manner of instruction and the
examination administered by an insurer under this subchapter.
(V.T.I.C. Art. 21.07-1, Sec. 6(c) (part).)
Sec. 4054.205. WITHDRAWAL OF INSURER'S AUTHORITY. The
department may withdraw from an insurer the authority under this
subchapter to offer instruction and administer an examination.
(V.T.I.C. Art. 21.07-1, Sec. 6(c) (part).)
Sec. 4054.206. LIMIT ON AGENT'S AUTHORITY. An insurance
agent licensed under this subchapter may not write any coverage or
combination of coverages with an initial guaranteed death benefit
that exceeds $15,000 on any life. (V.T.I.C. Art. 21.07-1, Sec.
6(d).)
Sec. 4054.207. CONTINUING EDUCATION EXEMPTION. (a)
Notwithstanding any other provision of this code, a person who
holds a license under this subchapter and who writes only life
insurance policies and fixed annuity contracts to secure the
delivery of funeral services and merchandise under prepaid funeral
contracts regulated by the Texas Department of Banking under
Chapter 154, Finance Code, is not required to comply with any
continuing education requirements to maintain the license, except
that the appointing insurer must educate its appointed agents about
any new products sold by the agent to fund prepaid funeral
contracts.
(b) A license holder to whom this section applies may be
appointed by more than one insurer. (V.T.I.C. Art. 21.07-1, Sec. 5B
(part).)
Sec. 4054.208. APPLICABILITY OF LIMITED LICENSE LAWS.
Except as specifically provided by this subchapter, the provisions
of this title that apply to the holder of a limited license apply to
the holder of a license issued under this subchapter. (V.T.I.C.
Art. 21.07-1, Sec. 6(f).)
[Sections 4054.209-4054.250 reserved for expansion]
SUBCHAPTER F. RENEWAL OR SERVICE COMMISSIONS TO AGENTS
OF LIFE INSURANCE COMPANIES DISCONTINUING BUSINESS IN STATE
Sec. 4054.251. INSURANCE COMPANY LIABILITY FOR PAYMENT OF
COMMISSIONS. A life insurance company that discontinues the
business of issuing life insurance policies on the lives of
residents of this state remains liable for the payment of renewal or
service commissions on life insurance policies previously written
by the company under the terms of the company's contracts
previously made with agents residing in this state. (V.T.I.C. Art.
21.08 (part).)
Sec. 4054.252. MONTHLY AND QUARTERLY STATEMENTS. (a) A
life insurance company shall provide to each agent who may be
entitled to receive renewal or service commissions from the company
under Section 4054.251:
(1) a monthly statement that shows the policies
written by the agent for the company that terminated during the
month for which the statement is made; and
(2) at least quarterly, a detailed statement of all
policies written by the agent for the company on the lives of
residents of this state that shows:
(A) the policies in force; and
(B) the policies that have terminated, with the
reason for the termination.
(b) A life insurance company is not required to provide an
agent with a statement under this section after the expiration of
the period during which renewal or service commissions are payable
as to all of the policies written by the agent for the company.
(V.T.I.C. Art. 21.08 (part).)
Sec. 4054.253. PRESUMPTION IN LAWSUIT. In a suit against a
life insurance company for the recovery of a renewal or service
commission under this subchapter, a presumption exists that each
policy written by the company on the life of a resident of this
state by the agent bringing the suit continues in effect unless the
defendant proves the contrary by competent evidence. (V.T.I.C.
Art. 21.08 (part).)
CHAPTER 4055. SPECIALTY AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4055.001. DEFINITION
Sec. 4055.002. APPLICABILITY OF CHAPTER TO CERTAIN
AGENTS
Sec. 4055.003. RULES
Sec. 4055.004. APPLICATION
Sec. 4055.005. LICENSE ISSUANCE
Sec. 4055.006. EXAMINATION AND CONTINUING EDUCATION NOT
REQUIRED
Sec. 4055.007. APPOINTMENT AS AGENT BY INSURER
Sec. 4055.008. GENERAL POWERS AND DUTIES
Sec. 4055.009. CERTAIN REPRESENTATIONS PROHIBITED
Sec. 4055.010. TREATMENT OF CERTAIN PREMIUMS
Sec. 4055.011. AUTHORITY OF EMPLOYEE OF SPECIALTY LICENSE
HOLDER
Sec. 4055.012. TRAINING REQUIRED TO ACT ON BEHALF OF SPECIALTY
LICENSE HOLDER
Sec. 4055.013. ASSIGNMENT AND TRANSFER OF COMPENSATION BY
CERTAIN AGENTS
Sec. 4055.014. DISCLOSURES REQUIRED BEFORE ISSUANCE OF
INSURANCE
Sec. 4055.015. VIOLATION BY SPECIALTY LICENSE HOLDER;
PENALTIES
[Sections 4055.016-4055.050 reserved for expansion]
SUBCHAPTER B. RENTAL CAR COMPANY LICENSE
Sec. 4055.051. DEFINITIONS
Sec. 4055.052. ISSUANCE OF LICENSE
Sec. 4055.053. AUTHORITY OF RENTAL CAR COMPANY OR
FRANCHISEE
[Sections 4055.054-4055.100 reserved for expansion]
SUBCHAPTER C. CREDIT INSURANCE LICENSE
Sec. 4055.101. GENERAL DEFINITIONS
Sec. 4055.102. DEFINITION OF CREDIT PROPERTY INSURANCE
Sec. 4055.103. ISSUANCE OF LICENSE
Sec. 4055.104. AUTHORITY OF CREDIT INSURANCE AGENT
Sec. 4055.105. EXEMPTION FROM CERTAIN DISCLOSURE
REQUIREMENTS
[Sections 4055.106-4055.150 reserved for expansion]
SUBCHAPTER D. TRAVEL INSURANCE LICENSE
Sec. 4055.151. DEFINITIONS
Sec. 4055.152. ISSUANCE OF LICENSE
Sec. 4055.153. AUTHORITY OF TRAVEL AGENCY OR FRANCHISEE
[Sections 4055.154-4055.200 reserved for expansion]
SUBCHAPTER E. SELF-SERVICE STORAGE FACILITY LICENSE
Sec. 4055.201. DEFINITIONS
Sec. 4055.202. ISSUANCE OF LICENSE
Sec. 4055.203. AUTHORITY OF SELF-SERVICE STORAGE FACILITY
OR FRANCHISEE
[Sections 4055.204-4055.250 reserved for expansion]
SUBCHAPTER F. TELECOMMUNICATIONS EQUIPMENT VENDOR LICENSE
Sec. 4055.251. DEFINITIONS
Sec. 4055.252. ISSUANCE OF LICENSE
Sec. 4055.253. AUTHORITY OF RETAIL VENDOR OF
TELECOMMUNICATIONS EQUIPMENT
CHAPTER 4055. SPECIALTY AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4055.001. DEFINITION. In this chapter, "specialty
license holder" means a person who holds a license issued under this
chapter. (V.T.I.C. Art. 21.09, Sec. 1(a) (part).)
Sec. 4055.002. APPLICABILITY OF CHAPTER TO CERTAIN AGENTS.
(a) A person who holds a general property and casualty license
issued under Chapter 4051 or a general life, accident, and health
license issued under Chapter 4054 or who holds a substantially
equivalent license under this code, as determined by the
commissioner, is not required to obtain a specialty license.
(b) A person described by Subsection (a) is subject to the
other requirements of this chapter in the solicitation, sale, or
delivery of an insurance product that is subject to this chapter.
(V.T.I.C. Art. 21.09, Sec. 1(j).)
Sec. 4055.003. RULES. The commissioner may adopt rules
necessary to implement this chapter and to meet the minimum
requirements of federal law, including regulations. (V.T.I.C. Art.
21.09, Sec. 1(a) (part).)
Sec. 4055.004. APPLICATION. To obtain a specialty license
an applicant must:
(1) submit to the commissioner:
(A) a written application:
(i) signed by the applicant;
(ii) on a form and supplements to the form
prescribed by the commissioner; and
(iii) containing the information
prescribed by the commissioner;
(B) a certification by an insurer authorized to
engage in business in this state:
(i) signed and sworn to by an officer of the
insurer;
(ii) stating that the insurer is satisfied
that the applicant is trustworthy and competent to act as the
insurer's agent for a limited purpose authorized by this chapter;
and
(iii) stating that if the specialty license
applied for is issued by the department the insurer will appoint the
applicant to act as an agent for a kind of insurance that is subject
to this chapter; and
(C) a nonrefundable license fee set by the
department in an amount necessary to administer this chapter; and
(2) comply with the other requirements of this
chapter. (V.T.I.C. Art. 21.09, Sec. 1(b).)
Sec. 4055.005. LICENSE ISSUANCE. The commissioner may
issue a specialty license to an applicant who complies with Section
4055.004 and the other requirements of this chapter. (V.T.I.C.
Art. 21.09, Sec. 1(a) (part).)
Sec. 4055.006. EXAMINATION AND CONTINUING EDUCATION NOT
REQUIRED. (a) An examination is not required for issuance of a
specialty license.
(b) A person is not required to comply with continuing
education requirements to hold a specialty license. (V.T.I.C. Art.
21.09, Sec. 1(l).)
Sec. 4055.007. APPOINTMENT AS AGENT BY INSURER. An insurer
that appoints an agent under this chapter shall:
(1) submit a certification of the appointment signed
by an officer of the insurer; and
(2) affirm that the insurer is satisfied that the
specialty license holder is trustworthy and competent to act as an
agent on behalf of the insurer. (V.T.I.C. Art. 21.09, Sec. 1(k).)
Sec. 4055.008. GENERAL POWERS AND DUTIES. (a) A specialty
license holder may act as an agent for the kinds of insurance that
are subject to this chapter for any insurer authorized to engage in
the business of those kinds of insurance in this state.
(b) Except as otherwise provided by this chapter, a
specialty license holder acting under this chapter shall comply
with this title. (V.T.I.C. Art. 21.09, Sec. 1(a) (part), (e).)
Sec. 4055.009. CERTAIN REPRESENTATIONS PROHIBITED. A
specialty license holder may not advertise, represent, or otherwise
hold out the license holder or an employee of the license holder as
an agent licensed under another chapter unless the entity or
individual holds the applicable license. (V.T.I.C. Art. 21.09,
Sec. 1(i).)
Sec. 4055.010. TREATMENT OF CERTAIN PREMIUMS.
Notwithstanding any other provision of this title or any rule
adopted by the commissioner, a specialty license holder is not
required to treat as money received in a fiduciary capacity
premiums collected from a consumer who purchases insurance coverage
when completing a consumer transaction associated with the coverage
if:
(1) the insurer represented by the license holder has
consented in writing, signed by an officer of the insurer, that
premiums are not required to be segregated from money received by
the license holder because of the consumer transaction associated
with the insurance coverage; and
(2) the charges for insurance coverage are itemized
but not billed to the consumer separately from the charges for the
associated consumer transaction. (V.T.I.C. Art. 21.09, Sec. 1(f).)
Sec. 4055.011. AUTHORITY OF EMPLOYEE OF SPECIALTY LICENSE
HOLDER. An employee of a specialty license holder may act as an
agent with respect to the kinds of insurance the license holder is
authorized to offer under this chapter only if the employee:
(1) is trained under Section 4055.012 to act
individually on behalf of the license holder;
(2) acts on behalf of and under the supervision of the
license holder; and
(3) is not compensated based primarily on the amount
of insurance sold by the employee under this chapter. (V.T.I.C.
Art. 21.09, Sec. 1(c).)
Sec. 4055.012. TRAINING REQUIRED TO ACT ON BEHALF OF
SPECIALTY LICENSE HOLDER. (a) A specialty license holder may not
allow an individual to act on the license holder's behalf with
respect to a kind of insurance that the license holder is authorized
to offer unless the individual has completed an approved training
program.
(b) The materials for the training program must be provided
to the specialty license holder by an insurer that writes the kind
of insurance authorized under the specialty license.
(c) An insurer that provides training program materials
under Subsection (b) must submit the training program to the
commissioner for approval before the training program is used.
(d) The training program must meet the following minimum
standards:
(1) each trainee must receive basic instruction about
the kinds of insurance the specialty license holder is authorized
to offer for purchase by prospective consumers;
(2) each trainee must be instructed to inform a
prospective consumer that, except as may be specifically provided
by another law of this state or the United States, the purchase of
the kind of insurance offered is not required to complete the
associated consumer transaction; and
(3) each trainee must be instructed with respect to
the disclosures required to be made to consumers. (V.T.I.C. Art.
21.09, Sec. 1(d).)
Sec. 4055.013. ASSIGNMENT AND TRANSFER OF COMPENSATION BY
CERTAIN AGENTS. A person who is licensed as a general life,
accident, and health agent or as a general property and casualty
agent or who holds a substantially equivalent license under this
code, as determined by the commissioner, and who enters into a
contract with an insurer to act as the insurer's agent in soliciting
or writing policies or certificates of insurance that are subject
to this chapter may assign and transfer to the agent's employer any
commission, fee, or other compensation to be paid to the agent under
the agent's contract with the insurer only if the sale of the
insurance product occurs within the scope of the agent's
employment. (V.T.I.C. Art. 21.09, Sec. 1(m).)
Sec. 4055.014. DISCLOSURES REQUIRED BEFORE ISSUANCE OF
INSURANCE. Except as provided by Section 4055.105, insurance
coverage may not be issued under this chapter unless:
(1) at each location at which sales of the coverage
occur, brochures or other written materials are prominently
displayed and readily available to a prospective consumer that:
(A) summarize, clearly and correctly, the
material terms of the coverage offered to consumers, including the
identity of the insurer;
(B) disclose that the coverage offered by the
specialty license holder may duplicate coverage already provided by
a consumer's personal auto insurance policy, homeowner's insurance
policy, personal liability insurance policy, or another source of
coverage;
(C) state that, except as specifically provided
by another law of this state or the United States, the purchase by
the consumer of the kind of insurance offered is not required to
complete the associated consumer transaction;
(D) describe the process for filing a claim for
benefits; and
(E) contain any additional information required
by the commissioner by rule regarding the price, benefits,
exclusions, conditions, or other limitations of the coverage; and
(2) evidence of coverage is provided to each consumer
who purchases the coverage. (V.T.I.C. Art. 21.09, Secs. 1(g), 2(d)
(part), 4(d), 5(d), 7(d).)
Sec. 4055.015. VIOLATION BY SPECIALTY LICENSE HOLDER;
PENALTIES. If a specialty license holder violates this title, the
commissioner may:
(1) impose any disciplinary action authorized by
Subchapter C, Chapter 4005; or
(2) after notice and opportunity for hearing, impose
other penalties, including suspending the transaction of insurance
at specific locations where a violation of this title has occurred,
as the commissioner considers necessary or appropriate to implement
the purposes of this title. (V.T.I.C. Art. 21.09, Sec. 1(h).)
[Sections 4055.016-4055.050 reserved for expansion]
SUBCHAPTER B. RENTAL CAR COMPANY LICENSE
Sec. 4055.051. DEFINITIONS. In this subchapter:
(1) "Rental agreement" means a written agreement that
states the terms and conditions governing the use of a vehicle or
vehicle equipment provided by a rental car company.
(2) "Rental car company" means a person engaged in the
business of providing leased or rented vehicles or vehicle
equipment to the public.
(3) "Renter" means a person who obtains the use of a
vehicle or vehicle equipment from a rental car company under the
terms of a rental agreement.
(4) "Vehicle" means:
(A) a private passenger motor vehicle, including
passenger vans and minivans that are primarily intended for the
transport of persons;
(B) a motor home;
(C) a motorcycle;
(D) a trailer with a gross vehicle weight rating
of 10,000 pounds or less; or
(E) a truck with a gross vehicle weight rating of
26,000 pounds or less and the operation of which does not require a
commercial driver's license.
(5) "Vehicle equipment" means a cartop carrier, tow
bar, or tow dolly specifically designed for use with a vehicle.
(V.T.I.C. Art. 21.09, Sec. 2(a).)
Sec. 4055.052. ISSUANCE OF LICENSE. Notwithstanding any
other provision of this chapter or this code, the commissioner
shall issue a specialty license to a rental car company, or to the
franchisee of a rental car company, that complies with this
subchapter. The specialty license may be issued only for the
limited purposes specified by this subchapter. (V.T.I.C. Art.
21.09, Sec. 2(b).)
Sec. 4055.053. AUTHORITY OF RENTAL CAR COMPANY OR
FRANCHISEE. (a) A rental car company or franchisee licensed under
this chapter may act as an agent for an authorized insurer only:
(1) in connection with the rental of vehicles or
vehicle equipment; and
(2) with respect to:
(A) excess liability insurance that provides
coverage in excess of the standard liability limits provided by the
rental car company in the rental agreement to the rental car company
or franchisee and to renters and other authorized drivers of rental
vehicles for liability arising from the negligent operation or use
of the rental vehicle or vehicle equipment;
(B) accident and health insurance that provides
coverage to renters and other rental vehicle occupants for
accidental death or dismemberment and for medical expenses
resulting from an accident involving the vehicle or vehicle
equipment that occurs during the rental period;
(C) personal effects insurance that provides
coverage to renters and other rental vehicle occupants for the loss
of or damage to personal effects or household belongings that
occurs during the rental period; or
(D) any other coverage the commissioner approves
as meaningful and appropriate in connection with the rental of
vehicles or vehicle equipment.
(b) A rental car company or franchisee licensed under this
chapter may not issue insurance under this subchapter in connection
with a rental agreement if the rental period under the agreement
exceeds 30 consecutive days. (V.T.I.C. Art. 21.09, Secs. 2(c), (d)
(part).)
[Sections 4055.054-4055.100 reserved for expansion]
SUBCHAPTER C. CREDIT INSURANCE LICENSE
Sec. 4055.101. GENERAL DEFINITIONS. In this subchapter:
(1) "Credit insurance" includes:
(A) credit life insurance;
(B) credit accident and health insurance;
(C) credit property insurance;
(D) credit involuntary unemployment insurance;
and
(E) insurance that covers the difference between
the actual cash value of a motor vehicle used as security for a loan
or lease and the outstanding balance of that loan or lease if loss
or damage renders the vehicle an actual or constructive total loss
while the debt for which the vehicle serves as security exceeds the
actual cash value of the vehicle.
(2) "Credit insurance agent" means a person licensed
under this chapter to sell credit insurance as specifically
provided by this subchapter. (V.T.I.C. Art. 21.09, Secs. 3(a)(1),
(2).)
Sec. 4055.102. DEFINITION OF CREDIT PROPERTY INSURANCE.
(a) In this subchapter, "credit property insurance" means
insurance that covers personal property:
(1) used as security for a personal or consumer loan;
or
(2) under an installment sales agreement or through a
consumer credit transaction that is purchased in connection with or
in relation to the personal or consumer loan, installment sale, or
consumer credit transaction.
(b) "Credit property insurance" does not include insurance
that:
(1) provides theft, collision, liability, property
damage, or comprehensive insurance coverage on an automobile,
motorized aircraft, motorcycle, truck, truck-tractor, traction
engine, or any other self-propelled vehicle or craft that is
designed primarily for operation in the air, or on highways,
roadways, waterways, or the sea, and the operating equipment of the
self-propelled vehicle or craft; or
(2) is necessary because of liability imposed by law
for damages arising out of the ownership, operation, maintenance,
or use of a vehicle or craft described by Subdivision (1), other
than single interest coverage on any vehicle or craft described by
Subdivision (1) that insures the interest of the creditor in the
same manner as security for a loan. (V.T.I.C. Art. 21.09, Sec.
3(a)(3).)
Sec. 4055.103. ISSUANCE OF LICENSE. Notwithstanding any
other provision of this chapter or this code, the commissioner may
issue a specialty license to a retail distributor of goods, an
automobile dealer, a bank, a state or federal savings and loan, a
state or federal credit union, a finance company, a production
credit association, a manufactured home retailer, or a mobile home
retailer that complies with this subchapter. The specialty license
may be issued only for the limited purposes specified by this
subchapter. (V.T.I.C. Art. 21.09, Sec. 3(b).)
Sec. 4055.104. AUTHORITY OF CREDIT INSURANCE AGENT. A
credit insurance agent appointed by an insurer authorized to engage
in the business of insurance under this code may act as the agent
for the insurer in the sale of any kind of credit insurance in the
business of which the insurer is authorized to engage, including
individual or group credit insurance. (V.T.I.C. Art. 21.09, Sec.
3(c).)
Sec. 4055.105. EXEMPTION FROM CERTAIN DISCLOSURE
REQUIREMENTS. A specialty license holder and the license holder's
representative are not required to make the disclosures required by
Section 4055.014 as that section relates to the sale or delivery of
a credit insurance product that is subject to this subchapter if the
license holder or representative complies with all disclosure
requirements prescribed by another provision of this code or
another law of this state or the United States with regard to the
sale or delivery of that product. (V.T.I.C. Art. 21.09, Sec. 3(d).)
[Sections 4055.106-4055.150 reserved for expansion]
SUBCHAPTER D. TRAVEL INSURANCE LICENSE
Sec. 4055.151. DEFINITIONS. In this subchapter:
(1) "Planned trip" means any journey or travel
arranged through the services of a travel agency.
(2) "Travel agency" means an entity engaged in the
business of selling or arranging transportation or accommodations
for the public.
(3) "Traveler" means an individual who seeks the
assistance of a travel agency in connection with the planning and
purchase of a trip. (V.T.I.C. Art. 21.09, Sec. 4(a).)
Sec. 4055.152. ISSUANCE OF LICENSE. Notwithstanding any
other provision of this chapter or this code, the commissioner may
issue a specialty license to a travel agency, the franchisee of a
travel agency, or a public carrier that complies with this
subchapter. The specialty license may be issued only for the
limited purposes specified by this subchapter. (V.T.I.C. Art.
21.09, Sec. 4(b).)
Sec. 4055.153. AUTHORITY OF TRAVEL AGENCY OR FRANCHISEE. A
travel agency or franchisee licensed under this chapter may act as
an agent for an authorized insurer only:
(1) in connection with the sale or arrangement of
transportation or accommodations for travelers; and
(2) with respect to:
(A) accident and health insurance that provides
coverage to a traveler for accidental death or dismemberment and
for medical expenses resulting from an accident involving the
traveler that occurs during the planned trip;
(B) insurance that provides coverage to a
traveler for expenses incurred as a result of trip cancellation or
interruption of a planned trip;
(C) personal effects insurance that provides
coverage to a traveler for loss of or damage to personal effects
during the planned trip;
(D) life insurance not exceeding $150,000 on any
one life covering risks of travel during a planned trip; or
(E) any other coverage the commissioner approves
as meaningful and appropriate in connection with the transportation
or accommodations arranged through a travel agency. (V.T.I.C. Art.
21.09, Sec. 4(c).)
[Sections 4055.154-4055.200 reserved for expansion]
SUBCHAPTER E. SELF-SERVICE STORAGE FACILITY LICENSE
Sec. 4055.201. DEFINITIONS. In this subchapter:
(1) "Rental agreement" means a written agreement that
states the terms governing the use of storage space provided by a
self-service storage facility.
(2) "Renter" means a person who obtains the use of
storage space from a self-service storage facility under a rental
agreement.
(3) "Self-service storage facility" means a person
engaged in the business of providing leased or rented storage space
to the public.
(4) "Storage space" means a room, unit, locker, or
open space offered for rental to the public for temporary storage of
personal belongings or light commercial goods. (V.T.I.C. Art.
21.09, Sec. 5(a).)
Sec. 4055.202. ISSUANCE OF LICENSE. Notwithstanding any
other provision of this chapter or this code, the commissioner may
issue a specialty license to a self-service storage facility or to
the franchisee of a self-service storage facility that complies
with this subchapter. The specialty license may be issued only for
the limited purposes specified by this subchapter. (V.T.I.C. Art.
21.09, Sec. 5(b).)
Sec. 4055.203. AUTHORITY OF SELF-SERVICE STORAGE FACILITY
OR FRANCHISEE. A self-service storage facility or franchisee
licensed under this chapter may act as an agent for any authorized
insurer only:
(1) in connection with the rental of storage space;
and
(2) with respect to:
(A) hazard insurance coverage provided to a
renter for loss of or damage to tangible personal property in
storage or in transit during the rental period; or
(B) any other coverage the commissioner approves
as meaningful and appropriate in connection with the rental of
storage space. (V.T.I.C. Art. 21.09, Sec. 5(c).)
[Sections 4055.204-4055.250 reserved for expansion]
SUBCHAPTER F. TELECOMMUNICATIONS EQUIPMENT VENDOR LICENSE
Sec. 4055.251. DEFINITIONS. In this subchapter:
(1) "Customer" means a person who purchases
telecommunications equipment in a retail sales transaction.
(2) "Telecommunications equipment" includes handsets,
pagers, automatic answering devices, batteries, and other devices
used to originate or receive wireless communications exclusive of
cordless, wireline communications. (V.T.I.C. Art. 21.09, Sec.
7(a).)
Sec. 4055.252. ISSUANCE OF LICENSE. Notwithstanding any
other provision of this chapter or this code, the commissioner may
issue a specialty license to a retail vendor of telecommunications
equipment who complies with this subchapter. The specialty license
may be issued only for the limited purposes specified by this
subchapter. (V.T.I.C. Art. 21.09, Sec. 7(b).)
Sec. 4055.253. AUTHORITY OF RETAIL VENDOR OF
TELECOMMUNICATIONS EQUIPMENT. A retail vendor of
telecommunications equipment licensed under this chapter may act as
an agent for an authorized insurer only:
(1) in connection with the sale and use of
telecommunications equipment; and
(2) with respect to:
(A) insurance coverage provided to customers for
the loss or malfunction of or damage to telecommunications
equipment; or
(B) any other coverage the commissioner approves
as meaningful and appropriate in connection with the use of
telecommunications equipment. (V.T.I.C. Art. 21.09, Sec. 7(c).)
CHAPTER 4056. NONRESIDENT AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4056.001. APPLICABILITY OF TITLE
Sec. 4056.002. RIGHTS OF LICENSE HOLDERS
Sec. 4056.003. RECIPROCAL LICENSING AGREEMENTS
Sec. 4056.004. HOME OFFICE EMPLOYEES
Sec. 4056.005. RULES
[Sections 4056.006-4056.050 reserved for expansion]
SUBCHAPTER B. NONRESIDENT AGENT LICENSE
Sec. 4056.051. APPLICATION FOR NONRESIDENT AGENT LICENSE;
CRIMINAL HISTORY
Sec. 4056.052. ISSUANCE OF LICENSE TO NONRESIDENT
AGENT LICENSED IN OTHER STATE
Sec. 4056.053. ISSUANCE OF LICENSE TO NONRESIDENT AGENT
NOT LICENSED IN OTHER STATE
Sec. 4056.054. ISSUANCE OF LICENSE TO CORPORATION OR
PARTNERSHIP
Sec. 4056.055. WAIVER OF REQUIREMENTS FOR NONRESIDENT
AGENT LICENSED IN OTHER STATE
OR JURISDICTION
Sec. 4056.056. RESTRICTIONS ON LINE OF INSURANCE
BUSINESS FOR RECIPROCAL NONRESIDENT
AGENT LICENSE
Sec. 4056.057. CONTINUING EDUCATION
Sec. 4056.058. SERVICE OF PROCESS
CHAPTER 4056. NONRESIDENT AGENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4056.001. APPLICABILITY OF TITLE. This title applies
to licensing of a nonresident agent under this chapter. (V.T.I.C.
Art. 21.11, Sec. 3(c).)
Sec. 4056.002. RIGHTS OF LICENSE HOLDERS. Except as
otherwise specifically provided by this code, an individual who is
not a resident of this state and to whom a license is issued under
this chapter has the same rights and privileges as a resident
license holder. (V.T.I.C. Art. 21.11, Sec. 2(a).)
Sec. 4056.003. RECIPROCAL LICENSING AGREEMENTS. The
commissioner may enter into an agreement with the appropriate
official of another state as necessary to implement reciprocal
licensing of nonresident agents. (V.T.I.C. Art. 21.11, Sec. 1(b).)
Sec. 4056.004. HOME OFFICE EMPLOYEES. This chapter does
not affect the authority established under Subchapter G, Chapter
4051, of a full-time home office salaried employee of an insurer
authorized to engage in the business of insurance in this state.
(V.T.I.C. Art. 21.11, Sec. 4.)
Sec. 4056.005. RULES. The commissioner may adopt rules as
necessary to implement this subchapter and Subchapter B and to meet
the minimum requirements of federal law, including regulations.
(V.T.I.C. Art. 21.11, Sec. 5.)
[Sections 4056.006-4056.050 reserved for expansion]
SUBCHAPTER B. NONRESIDENT AGENT LICENSE
Sec. 4056.051. APPLICATION FOR NONRESIDENT AGENT LICENSE;
CRIMINAL HISTORY. (a) To apply for a license to act as a
nonresident agent, a person who is not a resident of this state must
submit to the department:
(1) an application on a form prescribed by the
department; and
(2) the nonrefundable license application fee.
(b) An applicant who does not hold an insurance agent's
license in the applicant's state of residence must, through the law
enforcement agency of the state of residence, submit to the
department a copy of the applicant's criminal history records. The
department shall use the criminal history records to determine the
applicant's eligibility for issuance of a license in accordance
with this title and other laws of this state. (V.T.I.C. Art. 21.11,
Secs. 1(a) (part), (e).)
Sec. 4056.052. ISSUANCE OF LICENSE TO NONRESIDENT AGENT
LICENSED IN OTHER STATE. (a) The department shall issue a license
to an applicant under this chapter if:
(1) the applicant holds a license in good standing as
an agent in the applicant's state of residence; and
(2) the applicant's state of residence will grant a
nonresident agent license on a reciprocal basis to a resident agent
of this state.
(b) The department may issue a reciprocal nonresident agent
license to an applicant if the authority granted by the license
issued by the applicant's state of residence is generally
comparable to the authority granted by a license issued by this
state. (V.T.I.C. Art. 21.11, Secs. 1(a) (part), 3(a).)
Sec. 4056.053. ISSUANCE OF LICENSE TO NONRESIDENT AGENT NOT
LICENSED IN OTHER STATE. The department shall issue a license to an
applicant under this chapter if the applicant has:
(1) passed the examination for an agent's license
required under this title;
(2) met the eligibility requirements for issuance of a
license after an examination of the applicant's criminal history
records under Section 4056.051(b); and
(3) satisfied the requirements for a license for an
individual under this code, including Subchapter C, Chapter 4001.
(V.T.I.C. Art. 21.11, Sec. 1(a) (part).)
Sec. 4056.054. ISSUANCE OF LICENSE TO CORPORATION OR
PARTNERSHIP. The department shall issue a license to an applicant
under this chapter if the applicant has satisfied the requirements
for a license for a corporation or partnership under Subchapter C,
Chapter 4001. (V.T.I.C. Art. 21.11, Sec. 1(a) (part).)
Sec. 4056.055. WAIVER OF REQUIREMENTS FOR NONRESIDENT AGENT
LICENSED IN OTHER STATE OR JURISDICTION. The department may waive
any license requirement for an applicant who holds a valid license
from another state or jurisdiction if:
(1) that state or jurisdiction has license
requirements substantially equivalent to those of this state; or
(2) the waiver is necessary to promote reciprocal
licensing of nonresident agents among a majority of the states.
(V.T.I.C. Art. 21.11, Sec. 1(c).)
Sec. 4056.056. RESTRICTIONS ON LINE OF INSURANCE BUSINESS
FOR RECIPROCAL NONRESIDENT AGENT LICENSE. A nonresident agent
licensed under Section 4056.052 may not act as a nonresident agent
for a line of insurance business in this state unless the agent is
authorized in the agent's state of residence to act in that state as
an agent for that line of insurance business. (V.T.I.C. Art. 21.11,
Sec. 3(b).)
Sec. 4056.057. CONTINUING EDUCATION. (a) The continuing
education requirements imposed under Chapter 4004 do not apply to a
person who:
(1) holds a license issued under this chapter; and
(2) is in compliance with the continuing education
requirements of the person's state of residence.
(b) A person who holds a license issued under this chapter
and who does not hold an insurance agent's license in the person's
state of residence shall comply with the continuing education
requirements imposed under Chapter 4004. (V.T.I.C. Art. 21.11,
Secs. 2(b), (c).)
Sec. 4056.058. SERVICE OF PROCESS. The commissioner is the
agent for service of process in the manner provided by Subchapter C,
Chapter 804, in a legal proceeding against a nonresident agent who
holds a license issued under this chapter if:
(1) the nonresident agent does not appoint or maintain
an agent for service in this state;
(2) an agent for service is appointed but cannot with
reasonable diligence be found; or
(3) the license of the nonresident agent is revoked.
(V.T.I.C. Art. 21.11, Sec. 1(d).)
[Chapters 4057-4100 reserved for expansion]
SUBTITLE C. ADJUSTERS
CHAPTER 4101. INSURANCE ADJUSTERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4101.001. DEFINITIONS
Sec. 4101.002. GENERAL EXEMPTIONS
Sec. 4101.003. TEMPORARY EXEMPTION
Sec. 4101.004. RECIPROCITY
Sec. 4101.005. RULES
Sec. 4101.006. ADVISORY BOARD
[Sections 4101.007-4101.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4101.051. LICENSE REQUIRED
Sec. 4101.052. APPLICATION
Sec. 4101.053. QUALIFICATIONS; ISSUANCE
Sec. 4101.054. EXAMINATION REQUIRED
Sec. 4101.055. EXAMINATION PROCEDURES
Sec. 4101.056. EXEMPTION FROM EXAMINATION REQUIREMENT
Sec. 4101.057. FEES
Sec. 4101.058. LICENSE FORM
Sec. 4101.059. CONTINUING EDUCATION: GENERAL REQUIREMENTS
Sec. 4101.060. CONTINUING EDUCATION: EXEMPTIONS AND
WAIVERS
Sec. 4101.061. EXPIRATION; RENEWAL
[Sections 4101.062-4101.100 reserved for expansion]
SUBCHAPTER C. SPECIAL LICENSES
Sec. 4101.101. EMERGENCY LICENSE
Sec. 4101.102. LIMITED LICENSE
[Sections 4101.103-4101.150 reserved for expansion]
SUBCHAPTER D. POWERS AND DUTIES OF ADJUSTER
Sec. 4101.151. PLACE OF BUSINESS
Sec. 4101.152. REFERRAL BY INSURER
[Sections 4101.153-4101.200 reserved for expansion]
SUBCHAPTER E. ENFORCEMENT
Sec. 4101.201. GROUNDS FOR DISCIPLINARY ACTION
Sec. 4101.202. REINSTATEMENT OR REISSUANCE OF LICENSE
Sec. 4101.203. CRIMINAL PENALTY
CHAPTER 4101. INSURANCE ADJUSTERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4101.001. DEFINITIONS. (a) In this chapter,
"adjuster" means an individual who:
(1) investigates or adjusts losses on behalf of an
insurer as an independent contractor or as an employee of:
(A) an adjustment bureau;
(B) an association;
(C) a general property and casualty agent;
(D) an independent contractor;
(E) an insurer; or
(F) a managing general agent; or
(2) supervises the handling of claims.
(b) For purposes of this chapter, "insurer" includes a
self-insured. (V.T.I.C. Art. 21.07-4, Secs. 1(a), (c).)
Sec. 4101.002. GENERAL EXEMPTIONS. (a) This chapter does
not apply to:
(1) an attorney who:
(A) adjusts insurance losses periodically and
incidentally to the practice of law; and
(B) does not represent that the attorney is an
adjuster;
(2) a salaried employee of an insurer who is not
regularly engaged in the adjustment, investigation, or supervision
of insurance claims;
(3) a person employed only to furnish technical
assistance to a licensed adjuster, including:
(A) an attorney;
(B) an engineer;
(C) an estimator;
(D) a handwriting expert;
(E) a photographer; and
(F) a private detective;
(4) an agent or general agent of an authorized insurer
who processes an undisputed or uncontested loss for the insurer
under a policy issued by the agent or general agent;
(5) a person who performs clerical duties and does not
negotiate with parties to disputed or contested claims;
(6) a person who handles claims arising under life,
accident, and health insurance policies;
(7) a person:
(A) who is employed principally as:
(i) a right-of-way agent; or
(ii) a right-of-way and claims agent;
(B) whose primary responsibility is the
acquisition of easements, leases, permits, or other real property
rights; and
(C) who handles only claims arising out of
operations under those easements, leases, permits, or other
contracts or contractual obligations; or
(8) an individual who is employed to investigate
suspected fraudulent insurance claims but who does not adjust
losses or determine claims payments.
(b) A nonresident adjuster is not required to hold a license
under this chapter to:
(1) adjust a single loss in this state;
(2) adjust losses arising out of a catastrophe common
to all those losses; or
(3) act as a temporary substitute for a licensed
adjuster. (V.T.I.C. Art. 21.07-4, Secs. 1(b), 2(a) (part).)
Sec. 4101.003. TEMPORARY EXEMPTION. An individual who is
undergoing training as an adjuster under the supervision of a
licensed adjuster may act as an adjuster for a period not to exceed
12 months without having a license issued under this chapter if, at
the beginning of the period, the individual has been registered
with the commissioner as a trainee. (V.T.I.C. Art. 21.07-4, Sec.
2(a) (part).)
Sec. 4101.004. RECIPROCITY. The department may waive any
license requirement imposed under this chapter for an applicant who
holds a valid license from another state if the state has license
requirements substantially equivalent to the requirements for a
license issued under this chapter. (V.T.I.C. Art. 21.07-4, Sec.
4.)
Sec. 4101.005. RULES. The commissioner may adopt rules
necessary to implement this chapter and to meet the minimum
requirements of federal law, including regulations. (V.T.I.C. Art.
21.07-4, Sec. 24.)
Sec. 4101.006. ADVISORY BOARD. (a) An advisory board shall
make recommendations to the commissioner regarding:
(1) the scope, time, and conduct of written
examinations under Subchapter B;
(2) the times and locations in this state where the
examinations are held; and
(3) any other matter the commissioner submits to the
advisory board for a recommendation.
(b) The advisory board is composed of nine members appointed
by the commissioner as follows:
(1) the presiding officer of the unauthorized practice
of law committee of the State Bar of Texas;
(2) three members who represent the public;
(3) two members with knowledge and experience in the
profession of insurance adjusting;
(4) one member from a domestic insurer authorized to
engage in business in this state;
(5) one member from a foreign insurer authorized to
engage in business in this state; and
(6) one member who is an independent adjuster.
(c) A member who represents the public may not be:
(1) an officer, director, or employee of:
(A) an adjuster;
(B) an agent;
(C) a broker;
(D) an insurance agency;
(E) an insurer; or
(F) any other business entity regulated by the
department;
(2) a person required to register as a lobbyist under
Chapter 305, Government Code; or
(3) a person related to a person described by
Subdivision (1) or (2) within the second degree of affinity or
consanguinity.
(d) A member of the advisory board serves without
compensation. If authorized by the commissioner, an advisory board
member is entitled to reimbursement for reasonable expenses
incurred in attending meetings of the advisory board. (V.T.I.C.
Art. 21.07-4, Sec. 9.)
[Sections 4101.007-4101.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4101.051. LICENSE REQUIRED. Except as otherwise
provided by this chapter, a person may not act as or represent that
the person is an adjuster in this state unless the person holds a
license under this chapter. (V.T.I.C. Art. 21.07-4, Sec. 2(a)
(part).)
Sec. 4101.052. APPLICATION. (a) An applicant for a license
under this chapter must submit to the department an application on a
form prescribed and provided by the department, and include as part
of or in connection with the application any information that the
department reasonably requires, including information about the
applicant's:
(1) identity;
(2) personal history;
(3) experience; and
(4) business record.
(b) The application must be accompanied by the fee required
by Section 4101.057. (V.T.I.C. Art. 21.07-4, Secs. 3, 14(b).)
Sec. 4101.053. QUALIFICATIONS; ISSUANCE. (a) To qualify
for a license under this chapter, an applicant must:
(1) comply with this chapter;
(2) present evidence satisfactory to the department
that the applicant:
(A) is at least 18 years of age;
(B) resides in this state or a state or country
that permits a resident of this state to act as an adjuster in that
state or country;
(C) has complied with all federal laws relating
to employment or the transaction of business in the United States,
if the applicant does not reside in the United States;
(D) is trustworthy; and
(E) has had experience, special education, or
training of sufficient duration and extent regarding the handling
of loss claims under insurance contracts to make the applicant
competent to fulfill the responsibilities of an adjuster; and
(3) pass an examination conducted under this
subchapter or present evidence that the applicant has been exempted
under Section 4101.056.
(b) The commissioner shall issue a license to an applicant
who meets the qualifications prescribed by this section. (V.T.I.C.
Art. 21.07-4, Sec. 7.)
Sec. 4101.054. EXAMINATION REQUIRED. (a) To be eligible
for a license under this chapter, an applicant must personally take
and pass, to the satisfaction of the commissioner, a written
examination of the applicant's qualifications and competency.
(b) The department may supplement a written examination
under Subsection (a) with an oral examination.
(c) The commissioner shall prescribe each examination under
this section. An examination must be of sufficient scope to
reasonably test the applicant's knowledge relative to the kinds of
insurance that may be dealt with under the license and of:
(1) the duties of a licensed adjuster; and
(2) the laws of this state that apply to a licensed
adjuster.
(d) The commissioner may require a reasonable waiting
period before an applicant who fails to pass an examination is
eligible to be retested on a similar examination. (V.T.I.C. Art.
21.07-4, Secs. 10 (part), 11(a), 12(a), (c).)
Sec. 4101.055. EXAMINATION PROCEDURES. (a) The department
shall prepare and make available to applicants instructions
specifying in general terms the subjects that may be covered in an
examination required under Section 4101.054.
(b) An examination under this subchapter shall be given at
times and locations in this state necessary to reasonably serve the
convenience of the department and applicants. (V.T.I.C. Art.
21.07-4, Secs. 11(b), 12(b).)
Sec. 4101.056. EXEMPTION FROM EXAMINATION REQUIREMENT. (a)
An applicant for a license under this chapter is not required to
pass an examination under Section 4101.054 to receive the license
if the applicant:
(1) had been principally engaged in the investigation,
adjustment, or supervision of losses on August 27, 1973, and during
the 90-day period preceding that date;
(2) is applying for a renewal license under this
chapter;
(3) is licensed as an adjuster in another state with
which a reciprocal agreement has been entered into by the
commissioner; or
(4) has completed a course in adjusting losses as
prescribed and approved by the commissioner and it is certified to
the commissioner on completion of the course that the applicant
has:
(A) completed the course; and
(B) passed an examination testing the
applicant's knowledge and qualification, as prescribed by the
commissioner.
(b) An applicant wishing to claim an exemption under
Subsection (a)(4) is responsible for the scheduling and
administration of the examination required under that subsection.
(V.T.I.C. Art. 21.07-4, Secs. 10 (part), 12(d).)
Sec. 4101.057. FEES. (a) Before issuing or renewing a
license under this chapter, the department shall set and collect a
nonrefundable license fee in an amount not to exceed $50.
(b) An applicant must remit the fee required by Subsection
(a) biennially after the issuance of the original license. If the
applicant's license has been expired for not more than 90 days, an
applicant for a renewal license must remit, in addition to the fee
assessed under Subsection (a), a fee equal to one-half of the
original license fee.
(c) Before administering an examination under this
subchapter, the department shall set and collect a nonrefundable
examination fee in an amount not to exceed $50.
(d) Before issuing a duplicate license requested by an
adjuster, the department shall set and collect a duplicate license
fee.
(e) The department shall deposit a fee collected under this
chapter to the credit of the Texas Department of Insurance
operating account. (V.T.I.C. Art. 21.07-4, Secs. 14(a), (c), 23.)
Sec. 4101.058. LICENSE FORM. (a) The commissioner shall
prescribe the form of a license issued under this chapter.
(b) A license must contain:
(1) the adjuster's name;
(2) the address of the adjuster's place of business;
(3) the date of issuance and the date of expiration of
the license; and
(4) the name of the firm or insurer with whom the
adjuster is employed at the time the license is issued. (V.T.I.C.
Art. 21.07-4, Sec. 13.)
Sec. 4101.059. CONTINUING EDUCATION: GENERAL
REQUIREMENTS. (a) To renew a license under this chapter a licensed
adjuster must participate in a continuing education program
relating to consumer protection. The program must include
education relating to consumer protection laws, including:
(1) Chapter 541;
(2) Chapter 547;
(3) Subchapter A, Chapter 542;
(4) Subchapter E, Chapter 17, Business & Commerce
Code; and
(5) any other similar laws specified by the
department.
(b) The department may certify continuing education
programs. (V.T.I.C. Art. 21.07-4, Secs. 7A(a), (b).)
Sec. 4101.060. CONTINUING EDUCATION: EXEMPTIONS AND
WAIVERS. (a) On written request of a licensed adjuster and if the
department determines that the adjuster is unable to comply with
continuing education requirements under this subchapter because of
illness, medical disability, or another extenuating circumstance
beyond the control of the adjuster, the department may:
(1) extend the time for the adjuster to comply with the
continuing education requirements; or
(2) exempt the adjuster from any of the requirements
for a licensing period.
(b) The commissioner by rule shall establish the criteria
for an extension or exemption under Subsection (a).
(c) The department may waive any continuing education
requirement imposed under this chapter for a nonresident adjuster
who holds a valid license from another state if the state has
continuing education requirements substantially equivalent to the
requirements for a license issued under this chapter. (V.T.I.C.
Art. 21.07-4, Secs. 7A(c), (d).)
Sec. 4101.061. EXPIRATION; RENEWAL. Expiration and renewal
of a license issued under this chapter are governed by rules adopted
by the commissioner or any applicable provision of this code or
another insurance law of this state. (V.T.I.C. Art. 21.07-4, Sec.
16.)
[Sections 4101.062-4101.100 reserved for expansion]
SUBCHAPTER C. SPECIAL LICENSES
Sec. 4101.101. EMERGENCY LICENSE. (a) If a catastrophe or
an emergency arises out of a disaster, act of God, riot, civil
commotion, conflagration, or other similar occurrence, the
commissioner shall, on application, issue an emergency license to a
person if the application is certified to the commissioner not
later than the fifth day after the date on which the person begins
work as an adjuster by:
(1) a person who holds a license under this chapter; or
(2) an insurer that maintains an office in this state
and holds a certificate of authority to engage in the business of
insurance in this state.
(b) The person or insurer that certifies an application
under Subsection (a) is responsible for the loss or claims
practices of the emergency license holder whom the person or
insurer certifies.
(c) The commissioner may, after notice and hearing, revoke
an emergency license on grounds specified by Section 4101.201.
(d) An emergency license is effective for a period not to
exceed 90 days. The commissioner may extend the term of the
emergency license for an additional period of 90 days.
(e) The commissioner shall establish a fee for an emergency
license in an amount not to exceed $20. A person issued an
emergency license shall remit the fee to the department not later
than the 30th day after the date on which the department issues the
license.
(f) The commissioner may issue an emergency license to an
applicant who meets the requirements of Subsection (a) regardless
of whether the applicant is:
(1) a resident of this state; or
(2) an otherwise licensed adjuster. (V.T.I.C. Art.
21.07-4, Sec. 5.)
Sec. 4101.102. LIMITED LICENSE. (a) If considered
necessary by the commissioner, the department may issue a limited
license to an applicant in the manner otherwise provided for the
issuance of a license under this chapter.
(b) The license shall specifically limit the kinds of
insurance that may be handled by the person.
(c) The person may not adjust claims in a kind of insurance
other than that for which the adjuster is specifically licensed.
(V.T.I.C. Art. 21.07-4, Secs. 8(a), (b), (c).)
[Sections 4101.103-4101.150 reserved for expansion]
SUBCHAPTER D. POWERS AND DUTIES OF ADJUSTER
Sec. 4101.151. PLACE OF BUSINESS. (a) A licensed adjuster
shall maintain a place of business that is:
(1) located at the place at which the adjuster
principally conducts transactions under the license; and
(2) accessible to the public.
(b) A licensed adjuster shall promptly notify the
commissioner if the adjuster changes the location of the adjuster's
place of business. (V.T.I.C. Art. 21.07-4, Sec. 15.)
Sec. 4101.152. REFERRAL BY INSURER. (a) An insurer may not
knowingly refer a claim or loss for adjustment in this state to a
person purporting to be or acting as an adjuster unless the person
holds a license under this chapter.
(b) Before referring a claim or loss for adjustment, an
insurer must ascertain from the commissioner whether the person
performing the adjustment holds a license under this chapter. Once
the insurer has ascertained that the person holds a license, the
insurer may refer the claim or loss to the person and may continue
to refer claims or losses to the person until the insurer has
knowledge or receives information from the commissioner that the
person no longer holds a license. (V.T.I.C. Art. 21.07-4, Sec. 6.)
[Sections 4101.153-4101.200 reserved for expansion]
SUBCHAPTER E. ENFORCEMENT
Sec. 4101.201. GROUNDS FOR DISCIPLINARY ACTION. (a) The
commissioner may discipline an adjuster or deny an application for
a license under this chapter under a department rule or any
applicable insurance law of this state.
(b) Department rules may specify grounds for discipline
that are comparable to grounds for discipline of other license
holders under this title. (V.T.I.C. Art. 21.07-4, Sec. 17.)
Sec. 4101.202. REINSTATEMENT OR REISSUANCE OF LICENSE. The
commissioner may not reinstate or reissue the license of a license
holder or former license holder whose license has been suspended,
revoked, or refused renewal until the commissioner determines that
the cause for a suspension, revocation, or refusal of a license
issued under this chapter no longer exists. (V.T.I.C. Art.
21.07-4, Sec. 20.)
Sec. 4101.203. CRIMINAL PENALTY. A person commits an
offense if the person violates Section 4101.051 or 4101.102(c). An
offense under this section is a misdemeanor punishable by:
(1) a fine of not more than $500;
(2) confinement in the county jail for not more than
six months; or
(3) both the fine and the confinement. (V.T.I.C. Art.
21.07-4, Secs. 2(b), 8(d).)
[Chapters 4102-4150 reserved for expansion]
SUBTITLE D. OTHER PROFESSIONALS
CHAPTER 4151. THIRD-PARTY ADMINISTRATORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4151.001. DEFINITIONS
Sec. 4151.002. EXEMPTIONS
Sec. 4151.003. APPLICABILITY OF OTHER PROVISIONS OF CODE
Sec. 4151.004. APPLICABILITY TO CERTAIN INSURERS
AND HEALTH MAINTENANCE ORGANIZATIONS
Sec. 4151.005. ADMINISTRATOR NOT INSURANCE AGENT
Sec. 4151.006. RULES
[Sections 4151.007-4151.050 reserved for expansion]
SUBCHAPTER B. CERTIFICATE OF AUTHORITY
Sec. 4151.051. CERTIFICATE OF AUTHORITY REQUIRED
Sec. 4151.052. APPLICATION
Sec. 4151.053. APPROVAL OF APPLICATION
Sec. 4151.054. DENIAL OF APPLICATION
Sec. 4151.055. FIDELITY BOND REQUIRED
Sec. 4151.056. DURATION OF CERTIFICATE OF AUTHORITY
[Sections 4151.057-4151.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF
THIRD-PARTY ADMINISTRATORS
Sec. 4151.101. WRITTEN AGREEMENT WITH INSURER
OR PLAN SPONSOR REQUIRED
Sec. 4151.102. CONTENTS OF WRITTEN AGREEMENT
Sec. 4151.103. RETENTION OF WRITTEN AGREEMENT;
INSPECTION BY COMMISSIONER
Sec. 4151.104. NOTICE OF USE OF ADMINISTRATOR'S SERVICES
Sec. 4151.105. PAYMENTS TO ADMINISTRATOR
Sec. 4151.106. CERTAIN FUNDS COLLECTED OR RECEIVED
BY ADMINISTRATOR
Sec. 4151.107. DELIVERY OR DEPOSIT OF CERTAIN FUNDS
RECEIVED BY ADMINISTRATOR
Sec. 4151.108. WITHDRAWALS FROM FIDUCIARY ACCOUNT
Sec. 4151.109. PAYMENT OF CLAIMS FROM FIDUCIARY
ACCOUNT PROHIBITED
Sec. 4151.110. UNDERWRITING STANDARDS
Sec. 4151.111. ADJUDICATION OF CLAIMS
Sec. 4151.112. MAINTENANCE OF BOOKS AND RECORDS
Sec. 4151.113. ACCESS TO BOOKS AND RECORDS
Sec. 4151.114. DISPOSITION OF BOOKS AND RECORDS ON
TERMINATION OF WRITTEN AGREEMENT
Sec. 4151.115. CONFIDENTIALITY OF PERSONAL INFORMATION
Sec. 4151.116. ADVERTISING
Sec. 4151.117. COMPENSATION OF ADMINISTRATOR
[Sections 4151.118-4151.150 reserved for expansion]
SUBCHAPTER D. PHARMACY BENEFIT PLANS
Sec. 4151.151. DEFINITION
Sec. 4151.152. IDENTIFICATION CARDS
Sec. 4151.153. DISCLOSURE OF CERTAIN PATIENT
INFORMATION PROHIBITED
[Sections 4151.154-4151.200 reserved for expansion]
SUBCHAPTER E. REGULATION OF
THIRD-PARTY ADMINISTRATORS
Sec. 4151.201. EXAMINATION OF ADMINISTRATOR
Sec. 4151.202. CONTENTS OF EXAMINATION;
ON-SITE EVALUATION
Sec. 4151.203. COST OF EXAMINATION
Sec. 4151.204. EXAMINATION UNDER OATH
Sec. 4151.205. ANNUAL REPORT
Sec. 4151.206. FEES
Sec. 4151.207. ADMINISTRATIVE SANCTIONS
Sec. 4151.208. OFFENSE
CHAPTER 4151. THIRD-PARTY ADMINISTRATORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4151.001. DEFINITIONS. In this chapter:
(1) "Administrator" means a person who, in connection
with annuities or life, health, and accident benefits, including
pharmacy benefits, collects premiums or contributions from or
adjusts or settles claims for residents of this state. The term
does not include a person described by Section 4151.002.
(2) "Insurer" means a person who engages in the
business of life, health, or accident insurance under the law of
this state.
(3) "Person" means an individual, partnership,
corporation, organization, government or governmental subdivision
or agency, business trust, estate trust, association, or any other
legal entity.
(4) "Plan" means a plan, fund, or program established,
adopted, or maintained by a plan sponsor or insurer to the extent
that the plan, fund, or program is established, adopted, or
maintained to provide indemnification or expense reimbursement for
any type of life, health, or accident benefit.
(5) "Plan sponsor" means a person, other than an
insurer, who establishes, adopts, or maintains a plan that covers
residents of this state, including a plan established, adopted, or
maintained by two or more employers or jointly by one or more
employers and one or more employee organizations, an association, a
committee, a joint board of trustees, or any similar group of
representatives who establish, adopt, or maintain a plan.
(V.T.I.C. Art. 21.07-6, Secs. 1(1) (part), (5), (6), (7), (8).)
Sec. 4151.002. EXEMPTIONS. A person is not an
administrator if the person is:
(1) an employer acting on behalf of its employees or
the employees of one or more subsidiaries or affiliated
corporations of the employer;
(2) a union acting on behalf of its members;
(3) an insurer or a group hospital service corporation
subject to Chapter 842 acting with respect to a policy lawfully
issued and delivered by the insurer or corporation in and under the
law of a state in which the insurer or corporation was authorized to
engage in the business of insurance;
(4) a health maintenance organization that is
authorized to operate in this state under Chapter 843 with respect
to any activity that is specifically regulated under that chapter,
Chapter 1271, 1272, or 1367, or Subchapter A, Chapter 1452;
(5) an agent licensed under Subchapter B, Chapter
4054, who receives commissions as an agent and is acting:
(A) under appointment on behalf of an insurer
authorized to engage in the business of insurance in this state; and
(B) in the customary scope and duties of the
person's authority as an agent;
(6) a creditor acting on behalf of its debtor with
respect to insurance that covers a debt between the creditor and its
debtor, if the creditor performs only the functions of a group
policyholder or a creditor;
(7) a trust established in conformity with 29 U.S.C.
Section 186 or a trustee or employee who is acting under the trust;
(8) a trust that is exempt from taxation under Section
501(a), Internal Revenue Code of 1986, or a trustee or employee
acting under the trust;
(9) a custodian or a custodian's agent or employee who
is acting under a custodian account that complies with Section
401(f), Internal Revenue Code of 1986;
(10) a bank, credit union, savings and loan
association, or other financial institution that is subject to
supervision or examination under federal or state law by a federal
or state regulatory authority, if the institution is performing
only those functions for which the institution holds a license
under federal or state law;
(11) a company that advances and collects a premium or
charge from its credit card holders on their authorization, if the
company does not adjust or settle claims and acts only in the
company's debtor-creditor relationship with its credit card
holders;
(12) a person who adjusts or settles claims in the
normal course of the person's practice or employment as a licensed
attorney and who does not collect any premium or charge in
connection with annuities or with life, health, or accident
benefits, including pharmacy benefits;
(13) an adjuster licensed by the department who is
engaged in the performance of the person's powers and duties as an
adjuster in the scope of the person's license;
(14) a person who provides technical, advisory,
utilization review, precertification, or consulting services to an
insurer, plan, or plan sponsor but does not make any management or
discretionary decisions on behalf of the insurer, plan, or plan
sponsor;
(15) an attorney in fact for a Lloyd's plan operating
under Chapter 941 or for a reciprocal or interinsurance exchange
operating under Chapter 942 who is acting in the capacity of
attorney in fact under the applicable chapter;
(16) a joint fund, risk management pool, or
self-insurance pool composed of political subdivisions of this
state that participate in a fund or pool through interlocal
agreements, any nonprofit administrative agency or governing body
or other nonprofit entity that acts solely on behalf of a fund,
pool, agency, or body, or any other fund, pool, agency, or body
established under or for the purpose of implementing an interlocal
governmental agreement;
(17) a self-insured political subdivision;
(18) a plan under which insurance benefits are
provided exclusively by an insurer authorized to engage in the
business of insurance in this state and the administrator of which
is:
(A) a full-time employee of the plan's organizing
or sponsoring association, trust, or other entity; or
(B) a trustee of the organizing or sponsoring
trust; or
(19) a parent of a wholly owned direct or indirect
subsidiary insurer authorized to engage in the business of
insurance in this state or a wholly owned direct or indirect
subsidiary insurer that is a part of the parent's holding company
system that, under an agreement regulated and approved under
Chapter 823 or a similar statute of the domiciliary state if the
parent or subsidiary insurer is a foreign insurer engaged in
business in this state, on behalf of only itself or an affiliated
insurer:
(A) collects premiums or contributions, if the
parent or subsidiary insurer:
(i) prepares only billing statements and
places those statements in the United States mail; and
(ii) causes all collected premiums to be
deposited directly in a depository account of the particular
affiliated insurer; or
(B) furnishes proof-of-loss forms, reviews
claims, determines the amount of the liability for those claims,
and negotiates settlements, if the parent or subsidiary insurer
pays claims only from the funds of the particular subsidiary by
checks or drafts of that subsidiary. (V.T.I.C. Art. 21.07-6, Sec.
1(1) (part).)
Sec. 4151.003. APPLICABILITY OF OTHER PROVISIONS OF CODE.
An administrator is subject to Section 823.457, Subchapter H of
Chapter 101, Chapter 541, Subchapter A of Chapter 542, and Chapter
804. (V.T.I.C. Art. 21.07-6, Sec. 23.)
Sec. 4151.004. APPLICABILITY TO CERTAIN INSURERS AND HEALTH
MAINTENANCE ORGANIZATIONS. An insurer or health maintenance
organization that is not exempt under Section 4151.002(3) or (4) is
subject to all provisions of this chapter other than Sections
4151.005, 4151.051-4151.054, 4151.056, and 4151.206(a)(1).
(V.T.I.C. Art. 21.07-6, Sec. 24.)
Sec. 4151.005. ADMINISTRATOR NOT INSURANCE AGENT. (a) An
administrator licensed in any state who accepts an agent's
commission for coverage for a risk located in this state and
disburses that commission to an agent in this state is not
considered an agent for purposes of this state's laws relating to
the licensing of agents.
(b) The exemption provided by this section does not
authorize an administrator to perform any other act for which a
license as an agent is required by law. (V.T.I.C. Art. 21.07-6,
Sec. 10.)
Sec. 4151.006. RULES. The commissioner may adopt fair and
reasonable rules, minimum standards, or limitations as appropriate
to augment and implement this chapter. (V.T.I.C. Art. 21.07-6,
Sec. 2.)
[Sections 4151.007-4151.050 reserved for expansion]
SUBCHAPTER B. CERTIFICATE OF AUTHORITY
Sec. 4151.051. CERTIFICATE OF AUTHORITY REQUIRED. (a) An
individual, corporation, organization, trust, partnership, or
other legal entity may not act as or hold itself out as an
administrator unless the entity is covered by and is engaging in
business under a certificate of authority issued under this
chapter.
(b) An administrator is required to hold only one
certificate of authority issued under this chapter. (V.T.I.C. Art.
21.07-6, Secs. 3(a), (b).)
Sec. 4151.052. APPLICATION. An application for a
certificate of authority to engage in business as an administrator
must be in a form prescribed by the commissioner and must include
the following:
(1) a copy of each basic organizational document of
the applicant, including the articles of incorporation, bylaws,
articles of association, trade name certificate, and any other
similar document and a copy of any amendment to any of those
documents;
(2) a description of the applicant and the applicant's
services, facilities, and personnel;
(3) if the applicant is not domiciled in this state, a
power of attorney executed by the applicant appointing the
commissioner, the commissioner's successors in office, or the
commissioner's appointed designee as the applicant's attorney in
this state on whom process may be served in any legal action or
proceeding based on a cause of action arising in this state against
the applicant;
(4) an audited financial statement of the applicant
covering the preceding three calendar years or any lesser period
that the applicant and any predecessors of the applicant have been
in existence, or if an audited financial statement is not
available, an unaudited financial statement as of a date not
earlier than the 120th day before the date the application is filed,
accompanied by an affidavit or certification of the applicant that:
(A) the unaudited financial statement is true and
correct, as of its date; and
(B) a material change in financial condition has
not occurred from the date of the financial statement to the
execution date of the affidavit or certification; and
(5) any other information the commissioner reasonably
requires. (V.T.I.C. Art. 21.07-6, Sec. 4.)
Sec. 4151.053. APPROVAL OF APPLICATION. The commissioner
shall approve an application for a certificate of authority to
engage in business in this state as an administrator if the
commissioner is satisfied that:
(1) granting the application would not violate a
federal or state law;
(2) the financial condition of the applicant or of
each person who would operate or control the applicant is such that
granting a certificate of authority would not be adverse to the
public interest;
(3) the applicant has not attempted to obtain the
certificate of authority through fraud or bad faith;
(4) the applicant has complied with this chapter and
rules adopted by the commissioner under this chapter; and
(5) the name under which the applicant will engage in
business in this state is not so similar to that of another
administrator or insurer that it is likely to mislead the public.
(V.T.I.C. Art. 21.07-6, Sec. 5(a).)
Sec. 4151.054. DENIAL OF APPLICATION. (a) If the
commissioner is unable to approve an application for a certificate
of authority, the commissioner shall:
(1) provide the applicant with written notice
specifying each deficiency in the application; and
(2) offer the applicant the opportunity for a hearing
to address each reason and circumstance for possible denial of the
application.
(b) The commissioner must provide an opportunity for a
hearing before the commissioner finally denies an application.
(c) At the hearing, the applicant has the burden to produce
sufficient competent evidence on which the commissioner can make
the determinations required by Section 4151.053. (V.T.I.C. Art.
21.07-6, Sec. 5(b).)
Sec. 4151.055. FIDELITY BOND REQUIRED. (a) If the
commissioner approves an application for a certificate of
authority, before the commissioner issues the certificate of
authority, the applicant must:
(1) obtain and maintain a fidelity bond that complies
with this section; and
(2) submit to the commissioner proof that the
applicant has obtained the fidelity bond.
(b) The fidelity bond must protect against an act of fraud
or dishonesty by the applicant in exercising the applicant's powers
and duties as administrator.
(c) The fidelity bond may not be less than $10,000 and may
not be more than the lesser of:
(1) 10 percent of the amount of funds handled during
the preceding year or, if no funds were handled during the preceding
year, 10 percent of the amount of funds reasonably estimated to be
handled by the administrator during the current calendar year; or
(2) $500,000.
(d) On written request by an administrator for reduction of
the amount of the fidelity bond for a particular year, the
commissioner may authorize the reduction of the amount of the bond
if the administrator presents evidence that the amount of funds to
be handled during that year will be less than the amount handled
during the preceding year.
(e) For purposes of this section, the amount of funds
handled by a person in the person's capacity as administrator is
either the total amount of premiums and contributions received by
the administrator or the total amount of benefits paid by the
administrator, whichever is greater, during the preceding calendar
year in all jurisdictions in which the person acts as an
administrator.
(f) Unless the administrator and the insurer or plan agree
otherwise in writing, an administrator is required to obtain and
maintain only one fidelity bond for all insurers and plans for which
the administrator acts as administrator in this state. (V.T.I.C.
Art. 21.07-6, Sec. 6.)
Sec. 4151.056. DURATION OF CERTIFICATE OF AUTHORITY. A
certificate of authority issued to an administrator under this
chapter is effective until it is suspended, canceled, or revoked.
The issuance, denial, suspension, cancellation, or revocation of a
certificate of authority to act as an administrator is subject to:
(1) Subchapters B and C, Chapter 4005; and
(2) Chapter 82. (V.T.I.C. Art. 21.07-6, Sec. 3(c).)
[Sections 4151.057-4151.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF
THIRD-PARTY ADMINISTRATORS
Sec. 4151.101. WRITTEN AGREEMENT WITH INSURER OR PLAN
SPONSOR REQUIRED. An administrator may provide services only under
a written agreement with an insurer or plan sponsor. (V.T.I.C. Art.
21.07-6, Sec. 11(a).)
Sec. 4151.102. CONTENTS OF WRITTEN AGREEMENT. (a) The
written agreement must include each requirement prescribed by this
subchapter except for a requirement that does not apply to any
function the administrator performs.
(b) If a policy or plan document is issued to a trustee, a
copy of the trust agreement and any amendment to that trust
agreement becomes part of the written agreement.
(c) The written agreement may not contain a provision that
unreasonably restricts the availability to a plan participant of an
individual life, health, or accident policy or annuity through an
agent selected by the plan participant. (V.T.I.C. Art. 21.07-6,
Secs. 11(d), (e), (f).)
Sec. 4151.103. RETENTION OF WRITTEN AGREEMENT; INSPECTION
BY COMMISSIONER. (a) During the term of the written agreement, the
administrator and the insurer, plan, or plan sponsor shall retain a
copy of the agreement as part of their official records.
(b) On written request by the commissioner, the
administrator shall make the written agreement available for
inspection by the commissioner or the commissioner's designee.
(c) Information the commissioner or the commissioner's
designee obtains from the written agreement is confidential and may
not be made available to the public. An employee of the department
may examine the information in exercising powers and performing
duties under this chapter. (V.T.I.C. Art. 21.07-6, Secs. 11(b),
(c).)
Sec. 4151.104. NOTICE OF USE OF ADMINISTRATOR'S SERVICES.
If an insurer, plan, or plan sponsor uses the services of an
administrator, the administrator shall give written notice to each
insured or plan participant of the administrator's identity and the
relationship among the administrator and the insurer, plan, or plan
sponsor and the insured or plan participant. The insurer, plan, or
plan sponsor must approve the notice before the notice is
distributed. (V.T.I.C. Art. 21.07-6, Sec. 13(a).)
Sec. 4151.105. PAYMENTS TO ADMINISTRATOR. (a) If an
insurer, plan, or plan sponsor uses the services of an
administrator:
(1) a payment of a premium or contribution to the
administrator by or on behalf of an insured or plan participant is
considered to have been received by the insurer, plan, or plan
sponsor; and
(2) a payment of a return premium, contribution, or
claim to the administrator by the insurer, plan, or plan sponsor is
not considered payment to the insured, plan participant, or
claimant until the insured, plan participant, or claimant receives
the payment.
(b) This section does not limit a right of an insurer, plan,
or plan sponsor against the administrator resulting from the
administrator's failure to make a payment to an insured, plan
participant, or claimant. (V.T.I.C. Art. 21.07-6, Sec. 12.)
Sec. 4151.106. CERTAIN FUNDS COLLECTED OR RECEIVED BY
ADMINISTRATOR. (a) An administrator who collects funds must
identify and state separately in writing the amount of any premium
or contribution specified by the insurer, plan, or plan sponsor for
the coverage and provide the information to any person who pays to
the administrator a premium or contribution.
(b) An administrator holds in a fiduciary capacity:
(1) a premium or contribution the administrator
collects on behalf of an insurer, plan, or plan sponsor; and
(2) a return premium the administrator receives from
an insurer, plan, or plan sponsor. (V.T.I.C. Art. 21.07-6, Secs.
13(b), 17(a).)
Sec. 4151.107. DELIVERY OR DEPOSIT OF CERTAIN FUNDS
RECEIVED BY ADMINISTRATOR. (a) On receiving a premium,
contribution, or return premium, an administrator shall:
(1) timely deliver the funds to the person entitled to
the funds according to terms of the written agreement; or
(2) promptly deposit the funds in a fiduciary bank
account established and maintained by the administrator.
(b) If premiums or contributions deposited in a fiduciary
bank account were collected on behalf of more than one insurer,
plan, or plan sponsor, the administrator shall:
(1) maintain records that clearly record separately
the deposits to and withdrawals from the account on behalf of each
insurer, plan, or plan sponsor; and
(2) on request of an insurer, plan, or plan sponsor,
provide to the insurer, plan, or plan sponsor a copy of the records
relating to deposits and withdrawals on behalf of that insurer or
plan.
(c) The requirements of Subsection (b):
(1) are in addition to requirements of any other
federal or state law; and
(2) do not authorize the commingling of funds if
otherwise prohibited by law. (V.T.I.C. Art. 21.07-6, Secs. 17(b),
(c).)
Sec. 4151.108. WITHDRAWALS FROM FIDUCIARY ACCOUNT. A
withdrawal from a fiduciary bank account established under Section
4151.107 may be made only as provided in the written agreement for
any of the following purposes:
(1) delivery to an insurer, plan, or plan sponsor
entitled to payment;
(2) deposit in an account controlled and maintained in
the name of the insurer, plan, or plan sponsor;
(3) transfer to and deposit in a claims payment
account for payment of a claim as provided by Section 4151.111;
(4) payment to a group policyholder for delivery to
the insurer entitled to payment;
(5) payment to the administrator of the
administrator's commission, fees, or charges;
(6) delivery of a return premium to any person
entitled to payment; or
(7) payment of a premium for stop-loss or excess loss
insurance. (V.T.I.C. Art. 21.07-6, Sec. 17(e).)
Sec. 4151.109. PAYMENT OF CLAIMS FROM FIDUCIARY ACCOUNT
PROHIBITED. An administrator may not pay a claim from a fiduciary
bank account established under Section 4151.107. (V.T.I.C. Art.
21.07-6, Sec. 17(d).)
Sec. 4151.110. UNDERWRITING STANDARDS. If an administrator
has the authority to accept or reject a risk, the written agreement
must address underwriting or other standards of the insurer or
plan. (V.T.I.C. Art. 21.07-6, Sec. 16.)
Sec. 4151.111. ADJUDICATION OF CLAIMS. (a) An
administrator shall adjudicate a claim not later than the 60th day
after the date on which the administrator receives valid proof of
loss in connection with the claim.
(b) The administrator shall pay each claim on a draft
authorized by the insurer, plan, or plan sponsor in the written
agreement. (V.T.I.C. Art. 21.07-6, Sec. 18.)
Sec. 4151.112. MAINTENANCE OF BOOKS AND RECORDS. (a) An
administrator shall maintain at the administrator's principal
administrative office adequate books and records of each
transaction in which the administrator engages with an insurer,
plan, plan sponsor, insured, or plan participant.
(b) The administrator shall maintain the books and records:
(1) until the fifth anniversary of the end of the term
of the written agreement to which the books and records relate; and
(2) in accordance with prudent standards of insurance
recordkeeping. (V.T.I.C. Art. 21.07-6, Secs. 14(a), (b), (c).)
Sec. 4151.113. ACCESS TO BOOKS AND RECORDS. (a) For the
purpose of examination, audit, and inspection, the administrator
shall provide to the commissioner and the commissioner's designee
access to the books and records maintained as required by Section
4151.112.
(b) A trade secret, including the identity and address of a
policyholder or certificate holder, is confidential, except the
commissioner may use that information in a proceeding against the
administrator.
(c) An insurer, plan, or plan sponsor is entitled to
continuing access to the books and records sufficient to permit the
insurer, plan, or plan sponsor to fulfill a contractual obligation
to an insured or plan participant. The right provided by this
subsection is subject to any restriction included in the written
agreement relating to the parties' proprietary rights to the books
and records. (V.T.I.C. Art. 21.07-6, Secs. 14(d), (e), (f).)
Sec. 4151.114. DISPOSITION OF BOOKS AND RECORDS ON
TERMINATION OF WRITTEN AGREEMENT. On termination of the written
agreement, an administrator may fulfill the requirements of
Sections 4151.112 and 4151.113 by:
(1) delivering the books and records:
(A) to a successor administrator; or
(B) if there is not a successor administrator, to
the insurer, plan, or plan sponsor; and
(2) giving written notice to the commissioner of the
location of the books and records. (V.T.I.C. Art. 21.07-6, Sec.
14(g).)
Sec. 4151.115. CONFIDENTIALITY OF PERSONAL INFORMATION.
(a) Information that identifies an individual covered by a plan is
confidential.
(b) During the time information described by Subsection (a)
is in an administrator's custody or control, the administrator
shall take all reasonable precautions to prevent disclosure or use
of the information for a purpose unrelated to administration of the
plan.
(c) The administrator shall disclose information described
by Subsection (a) only:
(1) in response to a court order;
(2) for an examination conducted by the commissioner
under this chapter;
(3) for an audit or investigation conducted under the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et
seq.);
(4) to or at the request of the insurer or plan
sponsor; or
(5) with the written consent of the identified
individual or the individual's legal representative. (V.T.I.C.
Art. 21.07-6, Sec. 14A.)
Sec. 4151.116. ADVERTISING. Before an administrator uses
advertising relating to business underwritten by an insurer, plan,
or plan sponsor, the insurer, plan, or plan sponsor must approve use
of the advertising. (V.T.I.C. Art. 21.07-6, Sec. 15.)
Sec. 4151.117. COMPENSATION OF ADMINISTRATOR. An
administrator's compensation may be determined:
(1) as a percentage of the premiums or charges the
administrator collects or the amount of claims the administrator
pays or processes; or
(2) on another basis as specified in the written
agreement. (V.T.I.C. Art. 21.07-6, Sec. 19.)
[Sections 4151.118-4151.150 reserved for expansion]
SUBCHAPTER D. PHARMACY BENEFIT PLANS
Sec. 4151.151. DEFINITION. In this subchapter, "pharmacy
benefit manager" means a person, other than a pharmacy or
pharmacist, who acts as an administrator in connection with
pharmacy benefits. (V.T.I.C. Art. 21.07-6, Sec. 1(9).)
Sec. 4151.152. IDENTIFICATION CARDS. (a) Except as
provided by rules adopted by the commissioner, an administrator for
a plan that provides pharmacy benefits shall issue an
identification card to each individual covered by the plan. The
administrator shall issue the identification card not later than
the 30th day after the date the administrator receives notice that
the individual is eligible for the benefits.
(b) The commissioner by rule shall adopt standard
information to be included on the identification card. The
standard form identification card must include:
(1) the name or logo of the entity administering the
pharmacy benefits;
(2) the international identification number assigned
by the American National Standards Institute for the entity
administering the pharmacy benefits;
(3) the group number applicable to the covered
individual;
(4) the effective date of the coverage evidenced by
the card;
(5) a telephone number to be used to contact an
appropriate person to obtain information relating to the pharmacy
benefits provided under the coverage; and
(6) copayment information for generic and brand-name
prescription drugs. (V.T.I.C. Art. 21.07-6, Sec. 19A.)
Sec. 4151.153. DISCLOSURE OF CERTAIN PATIENT INFORMATION
PROHIBITED. (a) A pharmacy benefit manager may not sell a list of
patients that contains information through which the identity of an
individual patient is disclosed.
(b) A pharmacy benefit manager shall maintain all data that
identifies a patient in a confidential manner that prevents
disclosure to a third party unless the disclosure is otherwise
authorized by law or by the patient.
(c) This section does not prohibit:
(1) general advertising about a specific
pharmaceutical product or service; or
(2) the request and receipt by a person of information
regarding:
(A) a specific pharmaceutical product or
service;
(B) the person's own records or claims; or
(C) the person's dependent's records or claims.
(V.T.I.C. Art. 21.07-6, Sec. 19B.)
[Sections 4151.154-4151.200 reserved for expansion]
SUBCHAPTER E. REGULATION OF
THIRD-PARTY ADMINISTRATORS
Sec. 4151.201. EXAMINATION OF ADMINISTRATOR. (a) The
commissioner may examine an administrator with regard to its
business in this state.
(b) The commissioner may designate one or more employees to
perform an examination. (V.T.I.C. Art. 21.07-6, Secs. 8(a), (b).)
Sec. 4151.202. CONTENTS OF EXAMINATION; ON-SITE
EVALUATION. (a) An examination under Section 4151.201 must
include a review of:
(1) each existing written agreement between the
administrator and an insurer or plan sponsor; and
(2) the administrator's financial statements.
(b) The commissioner also may have examiners conduct an
on-site evaluation of the administrator's personnel and facilities
and any books and records of the administrator relating to the
transaction of business by and the financial condition of the
administrator.
(c) Before an examiner enters an administrator's property,
the commissioner shall give notice to the administrator of the
examiner's intent to conduct an on-site evaluation. The notice
must:
(1) be in the form required by rule adopted by the
commissioner; and
(2) include the date and estimated time that the
examiner will enter the administrator's property.
(d) An examiner shall comply with operational rules of an
administrator while on the administrator's property. (V.T.I.C.
Art. 21.07-6, Secs. 8(c), (d).)
Sec. 4151.203. COST OF EXAMINATION. The cost of an
examination under Section 4151.201 shall be paid from the fee
collected under Section 4151.206(a)(2) and with revenue from the
maintenance tax levied under Chapter 259. (V.T.I.C. Art. 21.07-6,
Sec. 8(f).)
Sec. 4151.204. EXAMINATION UNDER OATH. If necessary to
make a complete evaluation of the activities and operations of an
administrator, the commissioner may summon and examine under oath
the administrator and the administrator's personnel. (V.T.I.C.
Art. 21.07-6, Sec. 8(e).)
Sec. 4151.205. ANNUAL REPORT. (a) An administrator shall
annually, not later than March 1, file with the commissioner a
report on a form prescribed by the commissioner.
(b) The annual report must cover the preceding calendar
year. (V.T.I.C. Art. 21.07-6, Sec. 9.)
Sec. 4151.206. FEES. (a) The commissioner shall collect
and an applicant or administrator shall pay to the commissioner
fees in an amount to be determined by the commissioner as follows:
(1) a filing fee not to exceed $1,000 for processing an
original application for a certificate of authority for an
administrator;
(2) a fee not to exceed $500 for an examination under
Section 4201.201; and
(3) a filing fee not to exceed $200 for an annual
report.
(b) The commissioner shall deposit a fee collected under
this section to the credit of the Texas Department of Insurance
operating account. (V.T.I.C. Art. 21.07-6, Sec. 20.)
Sec. 4151.207. ADMINISTRATIVE SANCTIONS. An administrator
or other person who violates this chapter is subject to the
sanctions provided by Chapter 82. (V.T.I.C. Art. 21.07-6, Sec.
22.)
Sec. 4151.208. OFFENSE. (a) An administrator commits an
offense if the administrator knowingly violates this chapter or a
rule of the commissioner adopted under this chapter.
(b) An offense under this section is a misdemeanor
punishable by a fine of not less than $500 or more than $5,000.
(V.T.I.C. Art. 21.07-6, Sec. 7.)
CHAPTER 4152. REINSURANCE INTERMEDIARIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4152.001. DEFINITIONS
Sec. 4152.002. CLASSIFICATION AS COMMERCIALLY DOMICILED
INSURER
Sec. 4152.003. RIGHTS OF THIRD PARTIES NOT AFFECTED
Sec. 4152.004. RULES
[Sections 4152.005-4152.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4152.051. LICENSE REQUIRED
Sec. 4152.052. QUALIFICATIONS
Sec. 4152.053. APPLICATION
Sec. 4152.054. SERVICE OF NOTICE, ORDERS, AND PROCESS
Sec. 4152.055. FEES
Sec. 4152.056. LICENSE ISSUANCE
Sec. 4152.057. PERSONS AUTHORIZED TO ACT UNDER LICENSE
Sec. 4152.058. BOND OR ERRORS AND OMISSIONS POLICY
Sec. 4152.059. LICENSE EXPIRATION AND RENEWAL
[Sections 4152.060-4152.100 reserved for expansion]
SUBCHAPTER C. EXAMINATION OF REINSURANCE INTERMEDIARIES
Sec. 4152.101. EXAMINATION BY COMMISSIONER
Sec. 4152.102. ACCESS TO AND MAINTENANCE OF BOOKS, BANK
ACCOUNTS, AND RECORDS
Sec. 4152.103. CONDUCT OF EXAMINATION
Sec. 4152.104. EXAMINATION EXPENSE
[Sections 4152.105-4152.150 reserved for expansion]
SUBCHAPTER D. REQUIREMENTS RELATING TO BROKERS
Sec. 4152.151. CONTRACT BETWEEN BROKER AND INSURER
Sec. 4152.152. PLACEMENT OF REINSURANCE WITH UNAUTHORIZED
REINSURER
Sec. 4152.153. TRANSACTION RECORDS
Sec. 4152.154. EMPLOYMENT OF PERSON BY INSURER AND BROKER
[Sections 4152.155-4152.200 reserved for expansion]
SUBCHAPTER E. REQUIREMENTS RELATING TO MANAGERS
Sec. 4152.201. CONTRACT BETWEEN MANAGER AND INSURER
Sec. 4152.202. TERMINATION OF CONTRACT
Sec. 4152.203. ACCOUNTING FOR TRANSACTIONS
Sec. 4152.204. MANAGEMENT OF MONEY
Sec. 4152.205. TRANSACTION RECORDS
Sec. 4152.206. CONTRACT ASSIGNMENT PROHIBITED
Sec. 4152.207. COMPLIANCE WITH UNDERWRITING AND RATING
STANDARDS OF INSURER
Sec. 4152.208. SETTLEMENT OF CLAIMS
Sec. 4152.209. PAYMENT OF INTERIM PROFITS
Sec. 4152.210. AUDITED STATEMENT OF MANAGER'S FINANCIAL
CONDITION
Sec. 4152.211. DISCLOSURE OF RELATIONSHIPS WITH OTHER
INSURERS
Sec. 4152.212. ACTS OF MANAGER CONSIDERED ACTS OF
INSURER
Sec. 4152.213. ACTUARY'S OPINION ON ADEQUACY OF LOSS
RESERVES
Sec. 4152.214. PLACEMENT OF REINSURANCE WITH
UNAUTHORIZED REINSURER
Sec. 4152.215. PROHIBITIONS
Sec. 4152.216. EMPLOYMENT OF PERSON BY INSURER AND MANAGER
[Sections 4152.217-4152.250 reserved for expansion]
SUBCHAPTER F. REQUIREMENTS RELATING TO INSURERS
Sec. 4152.251. ENGAGEMENT OF SERVICES OF UNLICENSED BROKER
OR MANAGER
Sec. 4152.252. AUDITED STATEMENT OF MANAGER'S FINANCIAL
CONDITION
Sec. 4152.253. REVIEW OF UNDERWRITING AND CLAIMS PROCESSING
OPERATIONS
Sec. 4152.254. AUTHORITY FOR RETROCESSIONAL CONTRACTS OR
PARTICIPATION IN REINSURANCE SYNDICATES
Sec. 4152.255. NOTIFICATION OF TERMINATION OF MANAGER'S
CONTRACT
Sec. 4152.256. APPOINTMENT OF CERTAIN PERSONS TO BOARD OF
DIRECTORS PROHIBITED
[Sections 4152.257-4152.300 reserved for expansion]
SUBCHAPTER G. DISCIPLINE AND ENFORCEMENT
Sec. 4152.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION
Sec. 4152.302. IMPOSITION OF SANCTIONS
CHAPTER 4152. REINSURANCE INTERMEDIARIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4152.001. DEFINITIONS. In this chapter:
(1) "Actuary" means a member in good standing of the
American Academy of Actuaries.
(2) "Broker" means a person, other than an officer or
employee of an insurer, who solicits, negotiates, or places
reinsurance business on behalf of an insurer and who may not
exercise the authority to bind reinsurance on behalf of that
insurer.
(3) "Control" has the meaning described by Sections
823.005 and 823.151.
(4) "Insurer" means a commercially domiciled insurer
or other person legally organized in this state to engage in the
business of insurance as an insurance company, including:
(A) a capital stock insurance company;
(B) a mutual insurance company;
(C) a title insurance company;
(D) a fraternal benefit society;
(E) a local mutual aid association;
(F) a statewide mutual assessment company;
(G) a county mutual insurance company;
(H) a Lloyd's plan;
(I) a reciprocal or interinsurance exchange;
(J) a stipulated premium company;
(K) a group hospital service corporation;
(L) a farm mutual insurance company; and
(M) a risk retention group.
(5) "Manager" means a person who has the authority to
bind reinsurance or who manages all or part of the reinsurance
business of an insurer, including the management of a separate
division, department, or underwriting office, and who acts as an
agent for that insurer. The term does not include:
(A) an employee of the insurer;
(B) a manager of the United States branch of an
alien insurer;
(C) an underwriting manager who, under a
contract, manages all of the reinsurance operations of an insurer,
who is under common control with the insurer under Chapter 823, and
whose compensation is not based on the volume of premiums written;
or
(D) a manager of a group, association, pool, or
other organization of insurers who engages in joint underwriting or
joint reinsurance and who is subject to examination by the
insurance commissioner or other appropriate officer of the state in
which the manager's principal business office is located.
(6) "Person" means an individual or a corporation,
partnership, association, or other private legal entity.
(7) "Qualified United States financial institution"
means an institution that is:
(A) organized or, in the case of a United States
office of a foreign banking organization, licensed under the laws
of the United States or a state; and
(B) regulated, supervised, and examined by
United States federal or state authorities who have regulatory
authority over banks and trust companies.
(8) "Reinsurance" means a written contract that for
consideration transfers an insurance risk of loss between insurers
and indemnifies a ceding insurer against all or part of the loss
that the ceding insurer may sustain under an insurance policy the
ceding insurer has issued or assumed. The term does not include a
contract for the bulk sale, transfer, and assumption of direct
insurance policy liability to the insureds.
(9) "Reinsurance intermediary" means a broker or
manager.
(10) "Reinsurer" means an insurer who has the
authority to assume reinsurance, including retrocessions. The term
includes a retrocessionaire. (V.T.I.C. Art. 21.07-7, Secs. 2(1),
(2), (4), (5), (6), (7), (8), (9), (10), (11).)
Sec. 4152.002. CLASSIFICATION AS COMMERCIALLY DOMICILED
INSURER. (a) For purposes of this chapter, a foreign or alien
insurer authorized to engage in the business of insurance in this
state is a commercially domiciled insurer if during the period
described by Subsection (b) the average of the gross premiums
written by the insurer in this state is:
(1) more than the average of the gross premiums
written by the insurer in the insurer's state of domicile; and
(2) 20 percent or more of the total gross premiums
written by the insurer in the United States, as reported in the
insurer's three most recent annual statements.
(b) The period applicable to Subsection (a) is:
(1) the three most recent fiscal years of the insurer
that precede the fiscal year in which the determination under this
section is made; or
(2) if the insurer has been authorized to engage in the
business of insurance in this state for less than the period
described by Subdivision (1), the period for which the insurer has
been authorized to engage in the business of insurance in this
state. (V.T.I.C. Art. 21.07-7, Sec. 2(3).)
Sec. 4152.003. RIGHTS OF THIRD PARTIES NOT AFFECTED. This
chapter does not restrict the rights of or confer any additional
rights on a policyholder, claimant, creditor, or other third party.
(V.T.I.C. Art. 21.07-7, Sec. 10(d).)
Sec. 4152.004. RULES. The commissioner may adopt
reasonable rules as necessary to implement this chapter. (V.T.I.C.
Art. 21.07-7, Sec. 11.)
[Sections 4152.005-4152.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4152.051. LICENSE REQUIRED. (a) A person may not act
as a broker or manager in this state for an insurer engaged in the
business of insurance or reinsurance in this state unless the
person holds an appropriate license under this chapter.
(b) A person who holds a manager license is not required to
obtain a broker license but must comply with Subchapter D to act as
a broker. (V.T.I.C. Art. 21.07-7, Secs. 3(a), (h); Sec. 7(a).)
Sec. 4152.052. QUALIFICATIONS. The commissioner may
establish qualifications for a reinsurance intermediary license as
reasonably necessary to fulfill the requirements of this chapter.
(V.T.I.C. Art. 21.07-7, Sec. 3(f).)
Sec. 4152.053. APPLICATION. (a) An application for a
reinsurance intermediary license may not be accepted unless the
application shows on its face that the applicant has been engaged in
the business of insurance or reinsurance for at least three years.
(b) Each person authorized under Section 4152.057 to act as
a reinsurance intermediary under a reinsurance intermediary
license issued to an entity must be named in the application and any
supplement to the application. (V.T.I.C. Art. 21.07-7, Secs. 3(c)
(part), (g).)
Sec. 4152.054. SERVICE OF NOTICE, ORDERS, AND PROCESS. (a)
An applicant for a reinsurance intermediary license who is not a
resident of this state must:
(1) designate the commissioner as agent for service of
process in the manner, and with the same legal effect, as provided
by Chapter 804 for service of process on unauthorized insurers; and
(2) provide the commissioner with the name and address
of a resident of this state on whom a notice or order of the
commissioner or process affecting the applicant may be served.
(b) A license holder who is a nonresident shall notify the
commissioner in writing of each change in the license holder's
designated agent under Subsection (a)(2) not later than the 30th
day after the date on which the license holder makes the change. The
change does not take effect until acknowledged by the commissioner.
(V.T.I.C. Art. 21.07-7, Sec. 3(d).)
Sec. 4152.055. FEES. (a) The department shall collect a
nonrefundable licensing fee from each reinsurance intermediary who
applies for an original or renewal license in this state.
(b) The commissioner shall set the fees for original,
renewal, and reciprocal licenses in amounts that are reasonable and
necessary to cover the costs of the licensing program.
(c) The fees shall be deposited to the credit of the Texas
Department of Insurance operating account. Money deposited in the
account under this subsection may be used by the department only to
enforce this chapter. (V.T.I.C. Art. 21.07-7, Secs. 4(a), (b).)
Sec. 4152.056. LICENSE ISSUANCE. The commissioner shall
issue a reinsurance intermediary license to a person who complies
with this chapter. (V.T.I.C. Art. 21.07-7, Sec. 3(c) (part).)
Sec. 4152.057. PERSONS AUTHORIZED TO ACT UNDER LICENSE.
(a) A reinsurance intermediary license issued to a firm or
association authorizes each member of the firm or association and
any designated employee to act as a reinsurance intermediary under
the license.
(b) A reinsurance intermediary license issued to a
corporation authorizes each officer and any designated employee or
director of the corporation to act as a reinsurance intermediary
under the license. (V.T.I.C. Art. 21.07-7, Sec. 3(c) (part).)
Sec. 4152.058. BOND OR ERRORS AND OMISSIONS POLICY. (a)
The commissioner may require a reinsurance intermediary to:
(1) file a bond with the commissioner for the
protection of all insurers represented; or
(2) maintain an errors and omissions policy.
(b) The issuer of the bond or the errors and omissions
policy must be acceptable to the commissioner. The bond or the
policy must be in an amount determined by the commissioner to be
customary and adequate under the circumstances. (V.T.I.C. Art.
21.07-7, Sec. 3(b).)
Sec. 4152.059. LICENSE EXPIRATION AND RENEWAL. (a) A
reinsurance intermediary license is valid for two years from the
date of issuance and may be renewed for two-year terms.
(b) The commissioner may adopt standards for the renewal of
a reinsurance intermediary license. (V.T.I.C. Art. 21.07-7, Sec.
3(i).)
[Sections 4152.060-4152.100 reserved for expansion]
SUBCHAPTER C. EXAMINATION OF REINSURANCE INTERMEDIARIES
Sec. 4152.101. EXAMINATION BY COMMISSIONER. (a) A
reinsurance intermediary is subject to examination by the
commissioner of the reinsurance intermediary's:
(1) financial condition; and
(2) compliance with the laws of this state affecting
the conduct of the reinsurance intermediary's business.
(b) A manager may be examined as if the manager were an
insurer. (V.T.I.C. Art. 21.07-7, Secs. 9(a) (part), (b), (c)
(part).)
Sec. 4152.102. ACCESS TO AND MAINTENANCE OF BOOKS, BANK
ACCOUNTS, AND RECORDS. (a) The commissioner is entitled to access
to all books, bank accounts, and records of a reinsurance
intermediary.
(b) A reinsurance intermediary shall maintain books, bank
accounts, and records in a form usable by the commissioner.
(V.T.I.C. Art. 21.07-7, Sec. 9(a) (part).)
Sec. 4152.103. CONDUCT OF EXAMINATION. The commissioner,
one or more commissioned examiners, a certified public accountant,
or another person qualified to perform the examination shall
conduct an examination under this subchapter as the commissioner
considers necessary. (V.T.I.C. Art. 21.07-7, Sec. 9(c) (part).)
Sec. 4152.104. EXAMINATION EXPENSE. (a) A reinsurance
intermediary who is examined under this subchapter shall pay an
amount for the expense of the examination that the commissioner
certifies as just and reasonable.
(b) Expenses relating to an examination conducted under
this subchapter may be charged to the person examined in accordance
with Article 1.16. (V.T.I.C. Art. 21.07-7, Secs. 4(c), 9(c)
(part).)
[Sections 4152.105-4152.150 reserved for expansion]
SUBCHAPTER D. REQUIREMENTS RELATING TO BROKERS
Sec. 4152.151. CONTRACT BETWEEN BROKER AND INSURER. (a) A
broker and an insurer represented by the broker may enter into a
transaction only under a written contract that:
(1) is executed by a responsible officer of both the
broker and the insurer; and
(2) specifies the responsibilities of each party.
(b) At a minimum, a contract entered into under this section
must:
(1) authorize the insurer to terminate the broker's
authority in writing at any time;
(2) require the broker to:
(A) provide accounts to the insurer at least
quarterly that accurately detail all material transactions,
including information necessary to support all commissions,
charges, and other fees received by or owing to the broker;
(B) pay all money due the insurer not later than
the 30th day after the date of receipt;
(C) hold all money collected for the insurer's
account in a fiduciary capacity in a bank that is a qualified United
States financial institution; and
(D) if premiums or contributions are collected on
behalf of or for more than one insurer:
(i) maintain records to identify the
ownership interest of each insurer in money held in a fiduciary
capacity; and
(ii) provide to each insurer on request a
copy of the records relating to deposits and withdrawals on behalf
of or for that insurer;
(3) state that the broker will:
(A) comply with:
(i) Section 4152.153; and
(ii) the written standards established by
the insurer for the cession or retrocession of risks ceded;
(B) disclose to the insurer any relationship with
a reinsurer to which business will be ceded or retroceded; and
(C) provide annually to each insurer with whom
the broker transacts business an audited statement of the broker's
financial condition prepared by a certified public accountant;
(4) identify:
(A) the name and address of the insurer;
(B) the kinds of insurance to be reinsured or
retroceded;
(C) the type of reinsurance or retrocessions; and
(D) the limits of coverage; and
(5) state the effective date and expiration date of
the contract. (V.T.I.C. Art. 21.07-7, Sec. 5(a) (part).)
Sec. 4152.152. PLACEMENT OF REINSURANCE WITH UNAUTHORIZED
REINSURER. Unless the ceding insurer releases the broker in
writing from the broker's obligations under this section, a broker
who places reinsurance on behalf of an authorized ceding insurer
with a reinsurer that is not authorized, accredited, or trusteed in
this state under Article 3.10 or 5.75-1 shall:
(1) exercise due diligence in inquiring into the
financial condition of the reinsurer;
(2) disclose to the ceding insurer the broker's
findings in connection with the inquiry under Subdivision (1); and
(3) make available to the ceding insurer a copy of the
current financial statement of the reinsurer. (V.T.I.C. Art.
21.07-7, Sec. 5(b).)
Sec. 4152.153. TRANSACTION RECORDS. (a) For at least 10
years after the expiration of each contract of reinsurance
transacted by a broker, the broker shall maintain a complete record
for each transaction that contains:
(1) the type of contract, limits, underwriting
restrictions, classes of risks, and territory;
(2) the period of coverage, including effective and
expiration dates, cancellation provisions, and notice requirements
regarding cancellation;
(3) reporting and settlement requirements regarding
balances;
(4) the rate used to compute the reinsurance premium;
(5) the name and address of each ceding or assuming
insurer;
(6) the rates of all reinsurance commissions,
including the commissions on any retrocessions handled by the
broker;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the
broker, including the identity and address of each retrocessionaire
and the respective percentage of each contract assumed or ceded;
(10) financial records, including premium and loss
accounts; and
(11) if the broker procures a reinsurance contract on
behalf of an authorized ceding insurer:
(A) written evidence that the assuming insurer
has agreed to assume the risk if the contract is procured directly
from an assuming insurer; or
(B) written evidence that the reinsurer has
delegated binding authority to the representative who has agreed to
assume the risk and that the representative is qualified to act as a
manager under this chapter if the contract is procured through a
representative of the assuming insurer, other than an employee.
(b) Each insurer subject to a contract of reinsurance
transacted by a broker is entitled to access to the information
maintained by the broker under Subsection (a) and may copy and audit
all accounts and records maintained by the broker related to the
insurer's business. The broker shall maintain the information in a
form usable by the insurer. (V.T.I.C. Art. 21.07-7, Secs. 5(c),
(d).)
Sec. 4152.154. EMPLOYMENT OF PERSON BY INSURER AND BROKER.
A person may not be employed by an insurer and a broker with whom the
insurer transacts business unless the broker is:
(1) under common control with the insurer; and
(2) subject to Chapter 823. (V.T.I.C. Art. 21.07-7,
Sec. 5(e).)
[Sections 4152.155-4152.200 reserved for expansion]
SUBCHAPTER E. REQUIREMENTS RELATING TO MANAGERS
Sec. 4152.201. CONTRACT BETWEEN MANAGER AND INSURER. (a) A
manager and an insurer represented by the manager may enter into a
transaction only under a written contract that:
(1) is executed by a responsible officer of both the
manager and the insurer;
(2) is approved by the insurer's board of directors or
attorney in fact;
(3) specifies the responsibilities of each party;
(4) identifies the rate, terms, and purpose of each
commission, charge, or other fee the manager may assess the
insurer; and
(5) at a minimum, incorporates the requirements of
Sections 4152.202-4152.214.
(b) Not later than the 30th day before the date the insurer
assumes or cedes business through the manager, a copy of the
executed contract must be filed with the commissioner for approval.
(V.T.I.C. Art. 21.07-7, Secs. 6(a), (j).)
Sec. 4152.202. TERMINATION OF CONTRACT. An insurer may:
(1) terminate a contract entered into under Section
4152.201 for cause on written notice to the manager by certified
mail, return receipt requested; and
(2) suspend the authority of the manager to assume or
cede business during any dispute regarding the cause for
termination. (V.T.I.C. Art. 21.07-7, Sec. 6(b).)
Sec. 4152.203. ACCOUNTING FOR TRANSACTIONS. A manager who
enters into a contract with an insurer under Section 4152.201 shall
provide accounts to the insurer at least quarterly that accurately
detail all material transactions, including information necessary
to support all commissions, charges, and other fees received by or
owing to the manager. (V.T.I.C. Art. 21.07-7, Sec. 6(c) (part).)
Sec. 4152.204. MANAGEMENT OF MONEY. (a) A manager shall
pay an insurer at least monthly all money due the insurer under a
contract entered into under Section 4152.201.
(b) The manager must hold all money collected for the
insurer's account in a fiduciary capacity in a bank that is a
qualified United States financial institution. The manager may not
retain more than three months of estimated claims payments and
allocated loss adjustment expenses.
(c) If premiums or contributions are collected on behalf of
or for more than one insurer, the manager shall:
(1) keep a separate account for each insurer;
(2) maintain a copy of the records for each account;
and
(3) provide to each insurer on request a copy of the
records relating to deposits and withdrawals on behalf of or for
that insurer. (V.T.I.C. Art. 21.07-7, Secs. 6(c) (part), (d),
(e).)
Sec. 4152.205. TRANSACTION RECORDS. (a) For at least 10
years after the expiration of each reinsurance contract transacted
by a manager, the manager shall maintain a complete record for each
transaction that contains:
(1) the type of contract, limits, underwriting
restrictions, classes of risks, and territory;
(2) the period of coverage, including effective and
expiration dates, cancellation provisions and notice requirements
regarding cancellation, and disposition of outstanding reserves on
covered risks;
(3) reporting and settlement requirements regarding
balances;
(4) the rate used to compute the reinsurance premium;
(5) the name and address of each ceding or assuming
insurer;
(6) the rates of all reinsurance commissions,
including the commissions on any retrocessions handled by the
manager;
(7) related correspondence and memoranda;
(8) proof of placement;
(9) details regarding retrocessions handled by the
manager, as permitted by Section 4152.254, including the identity
and address of each retrocessionaire and the respective percentage
of each contract assumed;
(10) financial records, including premium and loss
accounts; and
(11) if the manager procures a reinsurance contract on
behalf of a ceding insurer:
(A) written evidence that the assuming insurer
has agreed to assume the risk if the contract is procured directly
from an assuming insurer; or
(B) written evidence that the reinsurer has
delegated binding authority to the representative who has agreed to
assume the risk and that the representative is qualified to act as a
manager under this chapter if the contract is procured through a
representative of the assuming insurer, other than an employee.
(b) Each insurer is entitled to access to the information
maintained by the manager and may copy all accounts and records
maintained by the manager related to the insurer's business. The
manager shall maintain the information in a form usable by the
insurer. (V.T.I.C. Art. 21.07-7, Secs. 6(f), (g).)
Sec. 4152.206. CONTRACT ASSIGNMENT PROHIBITED. A manager
may not assign in whole or in part a contract entered into under
Section 4152.201. (V.T.I.C. Art. 21.07-7, Sec. 6(h).)
Sec. 4152.207. COMPLIANCE WITH UNDERWRITING AND RATING
STANDARDS OF INSURER. A manager shall comply with the written
underwriting and rating standards established by an insurer with
whom the manager has entered into a contract under Section 4152.201
for the acceptance, rejection, or cession of all risks. (V.T.I.C.
Art. 21.07-7, Sec. 6(i).)
Sec. 4152.208. SETTLEMENT OF CLAIMS. (a) This section
applies only to a contract entered into under Section 4152.201 that
permits a manager to settle claims on behalf of an insurer.
(b) All claims must be reported to the insurer at least
quarterly.
(c) The manager shall send a copy of the claim file to the
insurer at the insurer's request or as soon as it is known that the
claim:
(1) has the potential to exceed the lesser of:
(A) an amount determined by the commissioner; or
(B) the limit set by the insurer;
(2) involves a coverage dispute;
(3) may exceed the manager's claims settlement
authority;
(4) has been open for more than six months; or
(5) has been closed by payment of the lesser of:
(A) an amount determined by the commissioner; or
(B) the limit set by the insurer.
(d) A claim file is the joint property of the insurer and
manager, except that on an order of liquidation of the insurer the
file becomes the sole property of the insurer or the insurer's
estate. The manager is entitled to reasonable access to the claim
file and may copy the file on a timely basis.
(e) Any settlement authority granted to the manager may be
terminated for cause on the insurer's written notice by certified
mail, return receipt requested, to the manager or on the
termination of the contract. The insurer may suspend the
settlement authority during any dispute regarding the cause of
termination. (V.T.I.C. Art. 21.07-7, Sec. 6(k).)
Sec. 4152.209. PAYMENT OF INTERIM PROFITS. If a contract
entered into under Section 4152.201 provides for the sharing of
interim profits by the manager, interim profits may not be paid
until:
(1) the first anniversary of the end of each
underwriting period for property business, the fifth anniversary of
the end of each underwriting period for casualty business, or the
expiration of the period set by the executive director for those or
other specified kinds of insurance; and
(2) the adequacy of reserves on remaining claims has
been verified under Section 4152.213. (V.T.I.C. Art. 21.07-7, Sec.
6(l).)
Sec. 4152.210. AUDITED STATEMENT OF MANAGER'S FINANCIAL
CONDITION. (a) A manager shall provide annually to each insurer
and reinsurer with whom the manager transacts business an audited
statement of the manager's financial condition.
(b) The statement must be prepared by an independent
certified public accountant in a form acceptable to the
commissioner. (V.T.I.C. Art. 21.07-7, Secs. 6(m), 8(b) (part).)
Sec. 4152.211. DISCLOSURE OF RELATIONSHIPS WITH OTHER
INSURERS. Before ceding or assuming any business on behalf of an
insurer under a contract entered into under Section 4152.201, a
manager shall disclose to the insurer any relationship the manager
has with another insurer. (V.T.I.C. Art. 21.07-7, Sec. 6(o).)
Sec. 4152.212. ACTS OF MANAGER CONSIDERED ACTS OF INSURER.
The acts of a manager are considered to be the acts of the insurer on
whose behalf the manager is acting. (V.T.I.C. Art. 21.07-7, Sec.
6(p).)
Sec. 4152.213. ACTUARY'S OPINION ON ADEQUACY OF LOSS
RESERVES. In addition to any other required loss reserve
certification, a manager who establishes loss reserves shall
provide annually, or more frequently as required by other law, an
opinion from an actuary attesting to the adequacy of the loss
reserves established for losses incurred and outstanding on
business produced by the manager. (V.T.I.C. Art. 21.07-7, Sec.
6(q).)
Sec. 4152.214. PLACEMENT OF REINSURANCE WITH UNAUTHORIZED
REINSURER. (a) Unless the ceding insurer releases the manager in
writing from the manager's obligations under this section, a
manager who places reinsurance on behalf of an authorized ceding
insurer with a reinsurer that is not authorized, accredited, or
trusteed in this state under Article 3.10 or 5.75-1 shall:
(1) exercise due diligence in inquiring into the
financial condition of the reinsurer;
(2) disclose to the ceding insurer the manager's
findings in connection with the inquiry under Subdivision (1); and
(3) make available to the ceding insurer a copy of the
current financial statement of the reinsurer.
(b) A ceding insurer that releases a manager from the
manager's obligations under Subsection (a) assumes those
obligations. (V.T.I.C. Art. 21.07-7, Sec. 6(r).)
Sec. 4152.215. PROHIBITIONS. (a) A reinsurance
intermediary acting as a manager may not:
(1) bind retrocessions on behalf of an insurer, except
that the manager may bind facultative retrocessions under
obligatory retrocessional agreements if the contract entered into
with the insurer under Section 4152.201 contains reinsurance
underwriting guidelines for those retrocessions that include:
(A) a list of reinsurers with whom those
automatic agreements are in effect; and
(B) for each reinsurer:
(i) the coverages and amounts or
percentages that may be reinsured; and
(ii) commission schedules;
(2) commit an insurer to participate in a reinsurance
syndicate;
(3) appoint or contract with a broker without ensuring
that the broker is qualified to act as a manager under this chapter;
(4) without prior approval of the insurer, pay or
commit an insurer to pay a claim that exceeds the lesser of:
(A) an amount specified by the insurer; or
(B) one percent of the insurer's policyholders'
surplus as of December 31 of the last complete calendar year; or
(5) collect a payment from a retrocessionaire or
commit an insurer to a claim settlement with a retrocessionaire
without prior approval of the insurer.
(b) If prior approval is given as provided by Subsection
(a)(5), a report must be forwarded to the reinsurer as provided by
Section 4152.203. (V.T.I.C. Art. 21.07-7, Sec. 7(b).)
Sec. 4152.216. EMPLOYMENT OF PERSON BY INSURER AND MANAGER.
A person may not be employed by an insurer and a manager with whom
the insurer transacts business unless the manager is:
(1) under common control with the insurer; and
(2) subject to Chapter 823. (V.T.I.C. Art. 21.07-7,
Sec. 7(c).)
[Sections 4152.217-4152.250 reserved for expansion]
SUBCHAPTER F. REQUIREMENTS RELATING TO INSURERS
Sec. 4152.251. ENGAGEMENT OF SERVICES OF UNLICENSED BROKER
OR MANAGER. (a) Except as provided by Subsection (b), an insurer
may not engage the services of a person to act as a broker or manager
on the insurer's behalf unless the person holds a license if
required by Section 4152.051.
(b) An insurer, or an employee, attorney, or actuary of an
insurer, may negotiate and obtain reinsurance for that insurer
without holding a broker or manager license or without using the
services of a broker or manager if that insurer, employee,
attorney, or actuary does not otherwise hold the person out as a
broker or manager or perform the duties or provide the services of a
broker or manager. (V.T.I.C. Art. 21.07-7, Sec. 8(a).)
Sec. 4152.252. AUDITED STATEMENT OF MANAGER'S FINANCIAL
CONDITION. An insurer shall obtain annually an audited statement
as provided by Section 4152.210 of the financial condition of each
manager with whom the insurer transacts business. (V.T.I.C. Art.
21.07-7, Sec. 8(b) (part).)
Sec. 4152.253. REVIEW OF UNDERWRITING AND CLAIMS PROCESSING
OPERATIONS. An insurer shall conduct at least semiannually an
on-site review of the underwriting and claims processing operations
of a manager with whom the insurer enters into a contract under
Section 4152.201. (V.T.I.C. Art. 21.07-7, Sec. 6(n).)
Sec. 4152.254. AUTHORITY FOR RETROCESSIONAL CONTRACTS OR
PARTICIPATION IN REINSURANCE SYNDICATES. Binding authority for all
retrocessional contracts or participation in reinsurance
syndicates rests with an officer of the insurer. That officer may
not be affiliated with a manager acting for the insurer. (V.T.I.C.
Art. 21.07-7, Sec. 8(c).)
Sec. 4152.255. NOTIFICATION OF TERMINATION OF MANAGER'S
CONTRACT. (a) Not later than the 30th day after the date an insurer
terminates a manager's contract, the insurer shall provide written
notice to the commissioner of the termination, including the
reasons for termination.
(b) The notice is a privileged communication and is not
subject to public disclosure or admission into evidence in any
proceeding. (V.T.I.C. Art. 21.07-7, Sec. 8(d).)
Sec. 4152.256. APPOINTMENT OF CERTAIN PERSONS TO BOARD OF
DIRECTORS PROHIBITED. (a) This section does not apply to a
relationship governed by Chapter 823.
(b) An insurer may not appoint to the insurer's board of
directors an officer, director, employee, controlling shareholder,
or submanager of a manager acting for that insurer. (V.T.I.C. Art.
21.07-7, Sec. 8(e).)
[Sections 4152.257-4152.300 reserved for expansion]
SUBCHAPTER G. DISCIPLINE AND ENFORCEMENT
Sec. 4152.301. GROUNDS FOR LICENSE DENIAL OR DISCIPLINARY
ACTION. The department may deny an application for a license or
discipline a license holder under Subchapter C, Chapter 4005, if
the department determines that the applicant or license holder, or
a person who would be authorized to act on behalf of the applicant
or license holder under Section 4152.057, has:
(1) wilfully violated or participated in the violation
of this chapter or another insurance law of this state;
(2) intentionally made a material misstatement in the
license application;
(3) obtained or attempted to obtain the license by
fraud or misrepresentation;
(4) misappropriated, converted to the person's own
use, or illegally withheld money required to be held in a fiduciary
capacity;
(5) materially misrepresented the terms or effect of
any contract of insurance or reinsurance, or engaged in any
fraudulent transaction; or
(6) been convicted of a felony or of a misdemeanor of
which criminal fraud is an essential element. (V.T.I.C. Art.
21.07-7, Sec. 3(e).)
Sec. 4152.302. IMPOSITION OF SANCTIONS. (a) The
commissioner may impose or seek any sanction authorized by law,
including the penalties authorized by Chapters 82 and 83, against a
reinsurance intermediary, insurer, or reinsurer who the
commissioner determines, after notice and hearing as provided by
this code, has violated this chapter.
(b) The commissioner may impose or seek any sanction
authorized by law, including the penalties authorized by Chapter
101, against a nonlicensed reinsurance intermediary who violates
this chapter. (V.T.I.C. Art. 21.07-7, Sec. 10(a).)
CHAPTER 4153. RISK MANAGERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4153.001. DEFINITION
Sec. 4153.002. EXEMPTIONS
Sec. 4153.003. RULES
[Sections 4153.004-4153.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4153.051. LICENSE REQUIRED
Sec. 4153.052. APPLICATION
Sec. 4153.053. QUALIFICATIONS
Sec. 4153.054. EXAMINATION
Sec. 4153.055. EXEMPTIONS FROM EXAMINATION REQUIREMENT
Sec. 4153.056. REEXAMINATION
Sec. 4153.057. FEES
Sec. 4153.058. RECIPROCAL LICENSE
Sec. 4153.059. LICENSE EXPIRATION
Sec. 4153.060. LICENSE RENEWAL
[Sections 4153.061-4153.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF RISK MANAGERS
Sec. 4153.101. PLACE OF BUSINESS
Sec. 4153.102. NOTIFICATION OF CHANGE OF PLACE OF
BUSINESS
[Sections 4153.103-4153.150 reserved for expansion]
SUBCHAPTER D. DISCIPLINARY ACTION
Sec. 4153.151. GROUNDS FOR DISCIPLINARY ACTION
Sec. 4153.152. LICENSE SUSPENSION
Sec. 4153.153. REINSTATEMENT OR REISSUANCE OF LICENSE
CHAPTER 4153. RISK MANAGERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4153.001. DEFINITION. In this chapter, "risk manager"
means a person who:
(1) represents to the public that the person is a risk
manager; and
(2) for compensation examines or evaluates risks for
and provides advice regarding reduction of risks to a person
seeking to obtain or renew property and casualty insurance coverage
in this state. (V.T.I.C. Art. 21.14-1, Sec. 1(1).)
Sec. 4153.002. EXEMPTIONS. This chapter does not apply to a
person who is employed as a risk manager by:
(1) a liability insurance company authorized to engage
in business in this state;
(2) a single employer; or
(3) a public self-insurance pool. (V.T.I.C. Art.
21.14-1, Sec. 3.)
Sec. 4153.003. RULES. The commissioner may adopt rules
necessary to carry out this chapter and to regulate risk managers.
(V.T.I.C. Art. 21.14-1, Sec. 15.)
[Sections 4153.004-4153.050 reserved for expansion]
SUBCHAPTER B. LICENSE REQUIREMENTS
Sec. 4153.051. LICENSE REQUIRED. A person may not act as or
represent that the person is a risk manager in this state unless the
person:
(1) meets the requirements prescribed by this chapter
and department rules; and
(2) holds a license issued by the department.
(V.T.I.C. Art. 21.14-1, Sec. 2.)
Sec. 4153.052. APPLICATION. (a) To obtain a license to act
as a risk manager in this state, an applicant must submit to the
department an application on forms prescribed by the commissioner
and provided by the department.
(b) An application must be accompanied by the license fee
required by Section 4153.057 and include:
(1) information the department requires relating to
the applicant's identity, personal history, experience, and
business record; and
(2) any other information the department requires.
(V.T.I.C. Art. 21.14-1, Secs. 4, 7(b).)
Sec. 4153.053. QUALIFICATIONS. To qualify for a risk
manager's license, an applicant must:
(1) be at least 18 years of age;
(2) maintain a place of business in this state;
(3) meet the application requirements prescribed by
this chapter and department rules;
(4) take and pass the examination required by this
chapter; and
(5) pay the examination and license fees. (V.T.I.C.
Art. 21.14-1, Sec. 5.)
Sec. 4153.054. EXAMINATION. (a) Except as provided by
Sections 4153.055 and 4153.058, an applicant for a risk manager's
license must personally take and pass an examination to the
satisfaction of the commissioner under this chapter and department
rules.
(b) The commissioner shall prescribe the examination for a
risk manager's license. The examination must:
(1) be designed to test the qualifications and
competency of the applicant to be a risk manager; and
(2) be of sufficient scope to reasonably test the
applicant's knowledge of risk management and the duties and
responsibilities of a risk manager under the laws of this state and
department rules.
(c) The department shall:
(1) determine the times and places for examinations;
and
(2) give reasonable public notice of the examinations
in the manner provided by department rules. (V.T.I.C. Art.
21.14-1, Secs. 6(a), (c), (d), (e).)
Sec. 4153.055. EXEMPTIONS FROM EXAMINATION REQUIREMENT. An
applicant is not required to take an examination to obtain a risk
manager's license if the applicant holds the designation of:
(1) chartered property casualty underwriter (CPCU)
from the American Institute for Chartered Property Casualty
Underwriters;
(2) certified insurance counselor (CIC) from the
national Society of Certified Insurance Counselors; or
(3) associate in risk management (ARM) from the
Insurance Institute of America. (V.T.I.C. Art. 21.14-1, Sec.
6(b).)
Sec. 4153.056. REEXAMINATION. (a) An applicant who fails
the examination may retake the examination on payment of an
additional examination fee.
(b) The commissioner may require the applicant to wait for a
reasonable period determined by the commissioner before the
applicant may retake the examination. (V.T.I.C. Art. 21.14-1,
Secs. 6(g), (i).)
Sec. 4153.057. FEES. (a) The commissioner shall set and
collect in advance a nonrefundable fee, in an amount not to exceed
$50, for:
(1) an examination required by this chapter if the
department administers the examination;
(2) a risk manager's license; and
(3) the renewal of a risk manager's license.
(b) A fee collected under this section shall be deposited to
the credit of the Texas Department of Insurance operating account.
(V.T.I.C. Art. 21.14-1, Secs. 7(a), (c); Sec. 8 (part).)
Sec. 4153.058. RECIPROCAL LICENSE. On submission of an
application and the license fee required by Section 4153.057, a
person may receive a risk manager's license without examination if
the person is licensed as a risk manager by another state, the
licensing requirements of which were, on the date the license was
issued, substantially equivalent to the requirements prescribed by
this chapter. (V.T.I.C. Art. 21.14-1, Sec. 13.)
Sec. 4153.059. LICENSE EXPIRATION. Except as otherwise
provided by a staggered renewal system adopted under Section
4003.002, a risk manager's license expires on the second
anniversary of the date the license was issued. (V.T.I.C. Art.
21.14-1, Sec. 8 (part).)
Sec. 4153.060. LICENSE RENEWAL. (a) A license holder may
renew an unexpired license by:
(1) filing with the department a completed renewal
application; and
(2) paying the nonrefundable renewal fee.
(b) The commissioner shall issue a renewal certificate to
the license holder if the commissioner determines the license
holder continues to be eligible for the license. (V.T.I.C. Art.
21.14-1, Sec. 8 (part).)
[Sections 4153.061-4153.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES OF RISK MANAGERS
Sec. 4153.101. PLACE OF BUSINESS. A license holder shall
maintain a place of business in this state that is:
(1) accessible to the public; and
(2) located at the place at which the license holder
principally conducts business. (V.T.I.C. Art. 21.14-1, Sec. 9
(part).)
Sec. 4153.102. NOTIFICATION OF CHANGE OF PLACE OF BUSINESS.
A license holder who changes the address of the license holder's
place of business from the address that appears on the license shall
notify the department of that change as provided by department
rules. (V.T.I.C. Art. 21.14-1, Sec. 9 (part).)
[Sections 4153.103-4153.150 reserved for expansion]
SUBCHAPTER D. DISCIPLINARY ACTION
Sec. 4153.151. GROUNDS FOR DISCIPLINARY ACTION. The
department may discipline a license holder or deny an applicant a
license under Subchapter C, Chapter 4005:
(1) for any cause for which, if known by the
department, issuance of the license could have been refused; or
(2) if the license holder or applicant:
(A) wilfully or knowingly violates this chapter,
an insurance law of this state, or a department rule;
(B) obtains or attempts to obtain a license
through wilful misrepresentation or fraud;
(C) fails the examination required by this
chapter; or
(D) is convicted on final judgment of a felony.
(V.T.I.C. Art. 21.14-1, Sec. 10.)
Sec. 4153.152. LICENSE SUSPENSION. (a) An order
suspending a license must specify the duration of the suspension
period. The department may not suspend a license for a period of
more than 12 months.
(b) A license holder whose license is revoked or suspended
shall surrender the license to the commissioner at the
commissioner's request. (V.T.I.C. Art. 21.14-1, Sec. 11.)
Sec. 4153.153. REINSTATEMENT OR REISSUANCE OF LICENSE. The
commissioner may not reinstate the license of or reissue a license
to a person whose license is suspended or revoked or to whom the
department refuses to issue a renewal certificate until the first
anniversary of the date of the suspension, revocation, or refusal
to renew. (V.T.I.C. Art. 21.14-1, Sec. 12.)
SECTION 8. CONFORMING AMENDMENT. Article 1.10, Insurance
Code, is amended to read as follows:
Art. 1.10. CERTAIN DUTIES OF THE DEPARTMENT. In addition to
the other duties required of the department, the department shall
perform duties as follows:
2. File Articles of Incorporation and Other Papers.
File and preserve in its office all acts or articles of
incorporation of insurance companies and all other papers required
by law to be deposited with the Department and, upon application of
any party interested therein, furnish certified copies thereof upon
payment of the fees prescribed by law.
3. Shall Calculate Reserve. For every company
transacting any kind of insurance business in this State, for which
no basis is prescribed by law, the Department shall calculate the
reinsurance reserve upon the same basis prescribed in Section
862.102 of this code as to companies transacting fire insurance
business.
4. To Calculate Re-insurance Reserve. On the
thirty-first day of December of each and every year, or as soon
thereafter as may be practicable, the Department shall have
calculated in the Department the re-insurance reserve for all
unexpired risks of all insurance companies organized under the laws
of this state, or transacting business in this state, transacting
any kind of insurance other than life, fire, marine, inland,
lightning or tornado insurance, which calculation shall be in
accordance with the provisions of Paragraph 3 hereof.
5. When a Company's Surplus is Impaired. No impairment
of the capital stock of a stock company shall be permitted. No
impairment of the surplus of a stock company, or of the minimum
required aggregate surplus of a mutual, Lloyd's, or reciprocal
insurer, shall be permitted in excess of that provided by this
section. Having charged against a company other than a life
insurance company, the reinsurance reserve, as prescribed by the
laws of this State, and adding thereto all other debts and claims
against the company, the Commissioner shall, (i) if it is
determined that the surplus required by Section 822.054, 822.202,
822.203, 822.205, 822.210, 822.211, or 822.212 of this code of a
stock company doing the kind or kinds of insurance business set out
in its Certificate of Authority is impaired to the extent of more
than fifty (50%) per cent of the required surplus for a capital
stock insurance company, or is less than the minimum level of
surplus required by Commissioner promulgated risk-based capital
and surplus regulations, or (ii) if it is determined that the
required aggregate surplus of a reciprocal or mutual company, or
the required aggregate of guaranty fund and surplus of a Lloyd's
company, other than a life insurance company, doing the kind or
kinds of insurance business set out in its Certificate of Authority
is impaired to the extent of more than twenty-five per cent (25%) of
the required aggregate surplus, or is less than the minimum level of
surplus required by Commissioner promulgated risk-based capital
and surplus regulations, the Commissioner shall order the company
to remedy the impairment of surplus to acceptable levels specified
by the Commissioner or to cease to do business within this State.
The Commissioner shall thereupon immediately institute such
proceedings as may be necessary to determine what further actions
shall be taken in the case.
6. Shall Publish Results of Investigation. The
Department shall publish the result of an examination of the
affairs of any company whenever the Commissioner deems it for the
interest of the public.
17. Voluntary Deposits. (a) In the event any
insurance company organized and doing business under the provisions
of this Code shall be required by any other state, country or
province as a requirement for permission to do an insurance
business therein to make or maintain a deposit with an officer of
any state, country, or province, such company, at its discretion,
may voluntarily deposit with the Comptroller such securities as may
be approved by the Commissioner of Insurance to be of the type and
character authorized by law to be legal investments for such
company, or cash, in any amount sufficient to enable it to meet such
requirements. The Comptroller is hereby authorized and directed to
receive such deposit and hold it exclusively for the protection of
all policyholders or creditors of the company wherever they may be
located, or for the protection of the policyholders or creditors of
a particular state, country or province, as may be designated by
such company at the time of making such deposit. The company may,
at its option, withdraw such deposit or any part thereof, first
having deposited with the Comptroller, in lieu thereof, other
securities of like class and of equal amount and value to those
withdrawn, which withdrawal and substitution must be approved by
the Commissioner of Insurance. The proper officer of each
insurance company making such deposit shall be permitted at all
reasonable times to examine such securities and to detach coupons
therefrom, and to collect interest thereon, under such reasonable
rules and regulations as may be prescribed by the Comptroller and
the Commissioner of Insurance. Any deposit so made for the
protection of policyholders or creditors of a particular state,
country or province shall not be withdrawn, except by substitution
as provided above, by the company, except upon filing with the
Commissioner of Insurance evidence satisfactory to him that the
company has withdrawn from business, and has no unsecured
liabilities outstanding or potential policyholder liabilities or
obligations in such other state, country or province requiring such
deposit, and upon the filing of such evidence the company may
withdraw such deposit at any time upon the approval of the
Commissioner of Insurance. Any deposit so made for the protection
of all policyholders or creditors wherever they may be located
shall not be withdrawn, except by substitution as provided above,
by the company except upon filing with the Commissioner of
Insurance evidence satisfactory to him that the company does not
have any unsecured liabilities outstanding or potential policy
liabilities or obligations anywhere, and upon filing such evidence
the company may withdraw such deposit upon the approval of the
Commissioner of Insurance. For the purpose of state, county and
municipal taxation, the situs of any securities deposited with the
Comptroller hereunder shall be in the city and county where the
principal business office of such company is fixed by its charter.
(b) Any voluntary deposit held by the Comptroller or
the Department heretofore made by any insurance company in this
State, and which deposit was made for the purpose of gaining
admission to another state, may be considered, at the option of such
company, to be hereinafter held under the provisions of this Act.
(c) When two or more companies merge or consolidate or
enter a total reinsurance contract by which the ceding company is
dissolved and its assets acquired and liabilities assumed by the
surviving company, and the companies have on deposit with the
Comptroller two or more deposits made for identical purposes under
this section or Article 4739, Revised Statutes, as amended, and now
repealed, all such deposits, except the deposit of greatest amount
and value, may be withdrawn by the new surviving or reinsuring
company, upon proper showing of duplication of such deposits and
that the company is the owner thereof.
(d) Any company which has made a deposit or deposits
under this section or Article 4739, Revised Statutes, as amended
and now repealed, shall be entitled to a return of such deposits
upon proper application therefor and a showing before the
Commissioner that such deposit or deposits are no longer required
under the laws of any state, country or province in which such
company sought or gained admission to do business upon the strength
of a certificate of such deposit.
(e) Upon being furnished a certified copy of the
Commissioner's order issued under Subsection (c) or (d) above, the
Comptroller shall release, transfer and deliver such deposit or
deposits to the owner as directed in said order.
[18. Complaint File. The Department shall keep an
information file about each complaint filed with the Department
concerning an activity that is regulated by the Department or
Commissioner.
[19. Notice of Complaint Status. If a written
complaint is filed with the Department, the Department, at least
quarterly and until final disposition of the complaint, shall
notify the parties to the complaint of the status of the complaint
unless the notice would jeopardize an undercover investigation.
[20. Electronic Transfer of Funds. The Commissioner
shall adopt rules for the electronic transfer of any taxes, fees,
guarantee funds, or other money owed to or held for the benefit of
the state and for which the Department has the responsibility to
administer under this code or another insurance law of this state.
The Commissioner shall require the electronic transfer of any
amounts held or owed in an amount exceeding $500,000.]
SECTION 9. CONFORMING AMENDMENT. Chapter 30, Insurance
Code, is amended to read as follows:
CHAPTER 30. GENERAL PROVISIONS
Sec. 30.001. PURPOSE OF TITLES 2, 3, 5, 6, 7, [AND] 8, 9, 11,
AND 13. (a) This title and Titles 3, 5, 6, 7, [and] 8, 9, 11, and 13
are enacted as a part of the state's continuing statutory revision
program, begun by the Texas Legislative Council in 1963 as directed
by the legislature in the law codified as Section 323.007,
Government Code. The program contemplates a topic-by-topic
revision of the state's general and permanent statute law without
substantive change.
(b) Consistent with the objectives of the statutory
revision program, the purpose of this title and Titles 3, 5, 6, 7,
[and] 8, 9, 11, and 13 is to make the law encompassed by the titles
more accessible and understandable by:
(1) rearranging the statutes into a more logical
order;
(2) employing a format and numbering system designed
to facilitate citation of the law and to accommodate future
expansion of the law;
(3) eliminating repealed, duplicative,
unconstitutional, expired, executed, and other ineffective
provisions; and
(4) restating the law in modern American English to
the greatest extent possible.
Sec. 30.002. CONSTRUCTION. Except as provided by Section
30.003 and as otherwise expressly provided in this code, Chapter
311, Government Code (Code Construction Act), applies to the
construction of each provision in this title and in Titles 3, 5, 6,
7, [and] 8, 9, 11, and 13.
Sec. 30.003. DEFINITION OF PERSON. The definition of
"person" assigned by Section 311.005, Government Code, does not
apply to any provision in this title or in Title 3, 5, 6, 7, [or] 8,
9, 11, or 13.
Sec. 30.004. REFERENCE IN LAW TO STATUTE REVISED BY TITLE 2,
3, 5, 6, 7, [OR] 8, 9, 11, OR 13. A reference in a law to a statute
or a part of a statute revised by this title or by Title 3, 5, 6, 7,
[or] 8, 9, 11, or 13 is considered to be a reference to the part of
this code that revises that statute or part of that statute.
SECTION 10. CONFORMING AMENDMENT. Subchapter B, Chapter
36, Insurance Code, is amended by adding Section 36.108 to read as
follows:
Sec. 36.108. FILING DATE OF REPORT, FINANCIAL STATEMENT, OR
PAYMENT DELIVERED BY POSTAL SERVICE. Except as otherwise
specifically provided, for a report, financial statement, or
payment that is required to be filed or made in the offices of the
commissioner and that is delivered by the United States Postal
Service to the offices of the commissioner after the date on which
the report, financial statement, or payment is required to be filed
or made, the date of filing or payment is the date of:
(1) the postal service postmark stamped on the cover
in which the report, financial statement, or payment is mailed; or
(2) any other evidence of mailing authorized by the
postal service reflected on the cover in which the report,
financial statement, or payment is mailed. (V.T.I.C. Art. 1.11
(part), as amended Acts 77th Leg., R.S., Ch. 1419.)
SECTION 11. CONFORMING AMENDMENT. Subchapter B, Chapter
36, Insurance Code, is amended by adding Section 36.109 to read as
follows:
Sec. 36.109. RENEWAL EXTENSION FOR CERTAIN PERSONS
PERFORMING MILITARY SERVICE. (a) The department may extend the
renewal period for a license, permit, certificate of authority,
certificate of registration, or other authorization issued by the
department to engage in an activity regulated under this code or
other insurance laws of this state for a person who is unable in a
timely manner to comply with renewal requirements, including any
applicable continuing education requirements, because the person
was on active duty in a combat theater of operations in the United
States armed forces.
(b) A person must submit a written application for an
extension under this section to the department.
(c) The department shall exempt a person who receives an
extension under this section from any increased fee or other
penalty otherwise imposed for failure to renew in a timely manner.
(d) The commissioner may adopt rules as necessary to
implement this section. (V.T.I.C. Art. 1.10-1.)
SECTION 12. CONFORMING AMENDMENT. Subchapter B, Chapter
37, Insurance Code, is amended by adding Section 37.053 to read as
follows:
Sec. 37.053. EFFECTIVENESS OF RATE DURING APPEAL. (a) An
order of the commissioner that determines, approves, or sets a rate
under this code and that is appealed remains in effect during the
pendency of the appeal. An insurer shall use the rate provided in
the order while the appeal is pending.
(b) The rate is lawful and valid during the appeal, and an
insurer may not be required to make any refund from that rate after
a decision on the appeal is rendered.
(c) If the order is vacated on appeal, the rate established
by the commissioner before the vacated order was rendered remains
in effect from the date of remand until the commissioner makes a
further determination. The commissioner shall consider the court's
order in setting a future rate. (V.T.I.C. Art. 1.35A, Sec. 5(d).)
SECTION 13. CONFORMING AMENDMENT. Section 101.053(b),
Insurance Code, is amended to read as follows:
(b) Sections 101.051 and 101.052 do not apply to:
(1) the lawful transaction of surplus lines insurance
under Chapter 981;
(2) the lawful transaction of reinsurance by insurers;
(3) a transaction in this state that:
(A) involves a policy that:
(i) is lawfully solicited, written, and
delivered outside this state; and
(ii) covers, at the time the policy is
issued, only subjects of insurance that are not resident, located,
or expressly to be performed in this state; and
(B) takes place after the policy is issued;
(4) a transaction:
(A) that involves an insurance contract
independently procured through negotiations occurring entirely
outside this state;
(B) that is reported; and
(C) on which premium tax is paid in accordance
with Chapter 226 [this chapter];
(5) a transaction in this state that:
(A) involves group life, health, or accident
insurance, other than credit insurance, and group annuities in
which the master policy for the group was lawfully issued and
delivered in a state in which the insurer or person was authorized
to do insurance business; and
(B) is authorized by a statute of this state;
(6) an activity in this state by or on the sole behalf
of a nonadmitted captive insurance company that insures solely:
(A) directors' and officers' liability insurance
for the directors and officers of the company's parent and
affiliated companies;
(B) the risks of the company's parent and
affiliated companies; or
(C) both the individuals and entities described
by Paragraphs (A) and (B);
(7) the issuance of a qualified charitable gift
annuity under Chapter 102; or
(8) a lawful transaction by a servicing company of the
Texas workers' compensation employers' rejected risk fund under
Section 4.08, Article 5.76-2, as that article existed before its
repeal.
SECTION 14. CONFORMING AMENDMENT. Section 101.103(a),
Insurance Code, is amended to read as follows:
(a) If the commissioner has reason to believe a person,
including an insurer, has violated or is threatening to violate
this chapter or Chapter 226 or a rule adopted under this chapter or
Chapter 226, or that a person, including an insurer, violating this
chapter or Chapter 226 has engaged in or is threatening to engage in
an unfair act, the commissioner may:
(1) issue a cease and desist order under Subchapter D;
(2) seek injunctive relief under Section 101.105;
(3) request the attorney general to recover a civil
penalty under Section 101.105; or
(4) take any combination of those actions.
SECTION 15. CONFORMING AMENDMENT. Sections 101.105(a) and
(b), Insurance Code, are amended to read as follows:
(a) A person or entity, including an insurer, that violates
this chapter or Chapter 226 is subject to a civil penalty of not
more than $10,000 for each act of violation and for each day of
violation.
(b) The commissioner may request that the attorney general
institute a civil suit in a district court in Travis County for
injunctive relief to restrain a person or entity, including an
insurer, from continuing a violation or threat of violation
described by Section 101.103(a). On application for injunctive
relief and a finding that a person or entity, including an insurer,
is violating or threatening to violate this chapter or Chapter 226,
the district court shall grant the injunctive relief and issue an
injunction without bond.
SECTION 16. CONFORMING AMENDMENT. Section 101.201(b),
Insurance Code, is amended to read as follows:
(b) This section does not apply to insurance procured by a
licensed surplus lines agent from an eligible surplus lines insurer
as defined by Chapter 981 [Article 1.14-2] and independently
procured contracts of insurance, as described in Section
101.053(b)(4), that are reported and on which premium tax is paid in
accordance with Chapter 225 or 226 [this chapter or Article
1.14-2].
SECTION 17. CONFORMING AMENDMENT. Subchapter C, Chapter
841, Insurance Code, is amended by adding Section 841.104 to read as
follows:
Sec. 841.104. TAX PAYMENT REQUIRED FOR ISSUANCE OF CERTAIN
CERTIFICATES OF AUTHORITY. (a) This section applies to a life
insurance company that:
(1) has previously held a certificate of authority to
engage in the business of life insurance in this state;
(2) ceased to write new business in this state under
that certificate of authority; and
(3) after ceasing to write new business, continued to
collect from residents of this state renewal or other premiums on
policies written under that certificate of authority.
(b) A life insurance company to which this section applies
may not obtain a new certificate of authority to engage in the
business of life insurance in this state until the company:
(1) files with the department under oath a report that
discloses the gross amount of renewal or other premiums received
each calendar year from residents of this state after the period
covered by the company's last tax report of gross premium receipts
filed under this code; and
(2) pays to the state occupation taxes on those
premiums.
(c) The life insurance company shall pay the occupation tax
for each year of nonpayment. The company shall pay the tax for each
year at the same rate for that year as a company engaged in the
business of life insurance in this state during that year.
(d) The life insurance company shall remit the penalties for
failure to pay the taxes and file required reports when the company
pays the taxes and receives a certificate of authority. (V.T.I.C.
Art. 3.59.)
SECTION 18. CONFORMING AMENDMENT. The heading to
Subchapter C, Chapter 982, Insurance Code, is amended to read as
follows:
SUBCHAPTER C. [REQUIREMENTS FOR] CERTIFICATE OF AUTHORITY
SECTION 19. CONFORMING AMENDMENT. Subchapter C, Chapter
982, Insurance Code, is amended by adding Section 982.114 to read as
follows:
Sec. 982.114. PAYMENT OF TAX BY FOREIGN OR ALIEN LIFE
INSURANCE COMPANY. (a) A foreign or alien life insurance company
that obtains a certificate of authority under this subchapter on or
after April 2, 1909, accepts that certificate and agrees to engage
in the business of insurance in this state subject to a requirement
that, if the company ceases to transact new insurance business in
this state but continues to collect renewal premiums from residents
of this state, the company shall continue to pay an occupation tax
based on gross premiums for each year from residents of this state.
(b) The rate of the tax imposed by this section may not
exceed the rate imposed by law on insurance companies transacting
new insurance business in this state.
(c) The foreign or alien life insurance company shall pay
the tax and make reports relating to its gross premium receipts in
the same manner as a foreign or alien life insurance company that is
transacting new insurance business in this state.
(d) The foreign or alien life insurance company is subject
to examination by the department or by a department designee in the
same manner and to the same extent as a company that is transacting
new insurance business in this state. (V.T.I.C. Art. 3.25 (part).)
SECTION 20. CONFORMING AMENDMENT. Section 181.051, Health
and Safety Code, is amended to read as follows:
Sec. 181.051. PARTIAL EXEMPTION. Except for Subchapter D,
this chapter does not apply to:
(1) a covered entity as defined by Section 602.001
[licensee as defined in Article 28B.01], Insurance Code;
(2) an entity established under Article 5.76-3,
Insurance Code; or
(3) an employer.
SECTION 21. CONFORMING AMENDMENT. Section 403.002(b),
Labor Code, is amended to read as follows:
(b) The assessment may not exceed an amount equal to two
percent of the correctly reported gross workers' compensation
insurance premiums, including the modified annual premium of a
policyholder that purchases an optional deductible plan under
Article 5.55C, Insurance Code. The rate of assessment shall be
applied to the modified annual premium before application of a
deductible premium credit. (V.T.I.C. Art. 5.68, Sec. (b) (part).)
SECTION 22. CONFORMING AMENDMENT. Subtitle A, Title 3,
Occupations Code, is amended by adding Chapter 107 to read as
follows:
CHAPTER 107. TELEMEDICINE AND TELEHEALTH
Sec. 107.001. DEFINITIONS. In this chapter:
(1) "Health professional" and "physician" have the
meanings assigned by Section 1455.001, Insurance Code.
(2) "Telehealth service" and "telemedicine medical
service" have the meanings assigned by Section 57.042, Utilities
Code. (V.T.I.C. Art. 21.53F, Secs. 1(2), (3), (4), (5), as added
Acts 75th Leg., R.S., Ch. 880.)
Sec. 107.002. INFORMED CONSENT. A treating physician or
health professional who provides or facilitates the use of
telemedicine medical services or telehealth services shall ensure
that the informed consent of the patient, or another appropriate
individual authorized to make health care treatment decisions for
the patient, is obtained before telemedicine medical services or
telehealth services are provided. (V.T.I.C. Art. 21.53F, Sec. 4,
as added Acts 75th Leg., R.S., Ch. 880.)
Sec. 107.003. CONFIDENTIALITY. A treating physician or
health professional who provides or facilitates the use of
telemedicine medical services or telehealth services shall ensure
that the confidentiality of the patient's medical information is
maintained as required by Chapter 159 or other applicable law.
(V.T.I.C. Art. 21.53F, Sec. 5, as added Acts 75th Leg., R.S., Ch.
880.)
Sec. 107.004. RULES. The Texas State Board of Medical
Examiners, in consultation with the commissioner of insurance, as
appropriate, may adopt rules necessary to:
(1) ensure that patients using telemedicine medical
services receive appropriate, quality care;
(2) prevent abuse and fraud in the use of telemedicine
medical services, including rules relating to the filing of claims
and records required to be maintained in connection with
telemedicine medical services;
(3) ensure adequate supervision of health
professionals who are not physicians and who provide telemedicine
medical services;
(4) establish the maximum number of health
professionals who are not physicians that a physician may supervise
through a telemedicine medical service; and
(5) require a face-to-face consultation between a
patient and a physician providing a telemedicine medical service
within a certain number of days following an initial telemedicine
medical service only if the physician has never seen the patient.
(V.T.I.C. Art. 21.53F, Sec. 6(b), as added Acts 75th Leg., R.S., Ch.
880.)
SECTION 23. CONFORMING AMENDMENT. Subchapter B, Chapter
171, Tax Code, is amended by adding Section 171.0525 to read as
follows:
Sec. 171.0525. EXEMPTION--CERTAIN INSURANCE COMPANIES. A
corporation that is a farm mutual insurance company, local mutual
aid association, or burial association is exempted from the
franchise tax. (V.T.I.C. Art. 4.10, Sec. 14.)
SECTION 24. CONFORMING AMENDMENT. Subchapter B, Chapter
171, Tax Code, is amended by adding Section 171.0527 to read as
follows:
Sec. 171.0527. EXEMPTION--TITLE INSURANCE COMPANIES AND
TITLE INSURANCE AGENTS. (a) In this section, "title insurance
company" and "title insurance agent" have the meanings assigned by
Section 2501.003, Insurance Code.
(b) A corporation that is a title insurance company or title
insurance agent whose principal activity is the business of title
insurance as described by Section 2501.005, Insurance Code, is
exempted from the franchise tax. (V.T.I.C. Art. 9.59, Sec. 16(d)
(part); (New).)
SECTION 25. CONFORMING AMENDMENT. Chapter 171, Tax Code,
is amended by adding Subchapter U to read as follows:
SUBCHAPTER U. TAX CREDIT FOR CERTAIN PREMIUM TAXES
Sec. 171.891. APPLICABILITY OF DEFINITIONS. In this
subchapter:
(1) "Control" has the meaning described by Sections
823.005 and 823.151, Insurance Code.
(2) "Controlled insurer," "domestic insurer," and
"holding company" have the meanings assigned by Section 823.002,
Insurance Code.
(3) "Title insurance," "title insurance agent," and
"title insurance company" have the meanings assigned by Section
2501.003, Insurance Code. (V.T.I.C. Art. 9.59, Sec. 16(a); (New).)
Sec. 171.892. ELIGIBILITY. A corporation is entitled to a
credit as provided by this subchapter against the tax imposed under
this chapter if the corporation:
(1) is a title insurance holding company subject to
Chapter 823, Insurance Code; and
(2) controls one or more domestic title insurance
companies that are subject to the tax on premiums imposed under
Chapter 223, Insurance Code. (V.T.I.C. Art. 9.59, Sec. 16(b)
(part).)
Sec. 171.893. AMOUNT; LIMITATIONS. (a) The amount of the
credit for each controlled domestic title insurance company is
computed by multiplying the amount of tax on premiums paid by that
company in the most recent calendar year ending before the
franchise tax report is due by the percentage ownership of the title
insurance holding company in the controlled domestic title
insurance company. The percentage of ownership of a controlled
domestic title insurance company is determined as of the accounting
year-end on which the report is based.
(b) The total credit claimed under this subchapter may not
exceed the amount of tax due for the report.
(c) A corporation may not carry a credit forward or backward
to apply the credit to another year's report. (V.T.I.C. Art. 9.59,
Secs. 16(b) (part), (c).)
Sec. 171.894. EFFECT ON OTHER TAXES. This subchapter does
not exempt a title insurance holding company, title insurance
company, or title insurance agent from another tax imposed under
this code. (V.T.I.C. Art. 9.59, Sec. 16(d) (part).)
SECTION 26. REPEALER. (a) The following Acts and articles
as compiled in Vernon's Texas Insurance Code are repealed:
(1) 1.04B, 1.10C, 1.10D, 1.10-1, 1.11, 1.14-2, 1.20,
1.21, 1.22, 1.31, 1.31A, 1.31B, 1.35, 1.35A, 1.35B, 1.35D, 1.35E,
1.37, 3.25, 3.42, 3.42B, 3.42-1, 3.51-5A, 3.51-6, 3.51-6A, 3.51-6B,
3.51-6C, 3.51-6D, 3.51-8, 3.51-9, 3.51-10, 3.51-12, 3.51-13,
3.51-14, 3.59, 3.64, 3.70-1, 3.70-1A, 3.70-2, 3.70-3, 3.70-3A,
3.70-3B, 3.70-4, 3.70-5, 3.70-6, 3.70-7, 3.70-8, 3.70-9, 3.70-10,
3.70-11, 3.70-12, 3.70-13, 3.71, 3.72, 3.74, 3.76, 3.77, 3.78,
3.79, 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.10, 4.11, 4.11B, 4.11C,
4.12, 4.17, 4.18, 4.19, 5.12, 5.24, 5.49, 5.68, 5.91, 20A.01A,
20A.01B, 20A.02, 20A.09B, 20A.09E, 20A.09F, 20A.09Y, 20A.09Z,
20A.18C, 20A.18E, 20A.18F, 20A.18G, 20A.33, 20A.39, 21.01,
21.01-1, 21.01-2, 21.02, 21.03, 21.04, 21.07, 21.07-2, 21.07-3,
21.07-4, 21.07-6, 21.07-7, 21.08, 21.09, 21.10, 21.11, 21.11-1,
21.12, 21.14, 21.14-1, 21.14-2, 21.15-1, 21.15-5, 21.15-6, 21.16,
21.17, 21.18, 21.19, 21.20, 21.21, 21.21A, 21.21B, 21.21-1,
21.21-2, 21.21-4, 21.21-5, 21.21-7, 21.21-8, 21.24-1, 21.24-2,
21.24-3, 21.29, 21.35, 21.35A, 21.35B, 21.36, 21.46, 21.48, 21.48A,
21.48B, 21.49-2, 21.49-2A, 21.49-2B, 21.49-2D, 21.49-2E, 21.49-9,
21.49-10, 21.49-12, 21.49-19, 21.52, 21.52A, 21.52B, 21.52C,
21.52D, 21.52J, 21.52K, 21.53, 21.53A, 21.53B, 21.53C, 21.53G,
21.53I, 21.53K, 21.53L, 21.53M, 21.53N, 21.53Q, 21.53S, 21.53W,
21.55, 21.56, 21.57, 21.58, 21.58D, 21.59, 21.60, 21.71, 21.73,
21.74, 21.78, 21.79D, 21.79F, 21.79G, and 23.08A;
(2) 3.70-3C, as added by Chapter 1024, Acts of the 75th
Legislature, Regular Session, 1997;
(3) 3.70-3C, as added by Chapter 1260, Acts of the 75th
Legislature, Regular Session, 1997;
(4) 20A.09, as amended by Chapters 163, 837, 905,
1023, and 1026, Acts of the 75th Legislature, Regular Session,
1997;
(5) 20A.09H, as redesignated and amended by Chapter
396, Acts of the 77th Legislature, Regular Session, 2001;
(6) 20A.09H, as redesignated and amended by Chapter
1027, Acts of the 77th Legislature, Regular Session, 2001;
(7) 20A.18D, as added by Chapter 550, Acts of the 77th
Legislature, Regular Session, 2001;
(8) 21.07-1, as added by Chapter 213, Acts of the 54th
Legislature, Regular Session, 1955;
(9) 21.07-1, as added by Chapter 703, Acts of the 77th
Legislature, Regular Session, 2001;
(10) 21.21-6, as added by Chapter 415, Acts of the 74th
Legislature, Regular Session, 1995;
(11) 21.21-6, as added by Chapter 522, Acts of the 74th
Legislature, Regular Session, 1995;
(12) 21.21-9, as added by Chapter 596, Acts of the 75th
Legislature, Regular Session, 1997;
(13) 21.21-9, as added by Chapter 1007, Acts of the
75th Legislature, Regular Session, 1997;
(14) 21.52G, as added by Chapter 725, Acts of the 75th
Legislature, Regular Session, 1997;
(15) 21.52G, as added by Chapter 955, Acts of the 75th
Legislature, Regular Session, 1997;
(16) 21.52L, as added by Chapter 1074, Acts of the 77th
Legislature, Regular Session, 2001;
(17) 21.52L, as added by Chapter 1106, Acts of the 77th
Legislature, Regular Session, 2001;
(18) 21.53D, as added by Chapter 912, Acts of the 75th
Legislature, Regular Session, 1997;
(19) 21.53D, as added by Chapter 1285, Acts of the 75th
Legislature, Regular Session, 1997;
(20) 21.53F, as added by Chapter 683, Acts of the 75th
Legislature, Regular Session, 1997;
(21) 21.53F, as added by Chapter 832, Acts of the 75th
Legislature, Regular Session, 1997;
(22) 21.53F, as added by Chapter 880, Acts of the 75th
Legislature, Regular Session, 1997; and
(23) 21.53F, as added by Chapter 1287, Acts of the 75th
Legislature, Regular Session, 1997.
(b) The following laws are repealed:
(1) Subsections (a), (c), and (d), Article 1.04D,
Insurance Code;
(2) Section 8, Article 1.14-3, Insurance Code;
(3) Subchapters J and K, Chapter 3, Insurance Code;
(4) Chapters 9, 24, 26, 27, 28A, and 28B, Insurance
Code;
(5) Subchapter F, Chapter 101, Insurance Code; and
(6) Article 9031, Revised Statutes.
SECTION 27. LEGISLATIVE INTENT. This Act is enacted under
Section 43, Article III, Texas Constitution. This Act is intended
as a recodification only, and no substantive change in law is
intended by this Act.
SECTION 28. EFFECTIVE DATE. This Act takes effect April 1,
2005.