79R6604 DLF-F
By: Taylor H.B. No. 3374
A BILL TO BE ENTITLED
AN ACT
relating to the dissolution, suspension, and reactivation of the
Texas Health Reinsurance System.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter G, Chapter 1501, Insurance Code, is
amended by adding Sections 1501.327 and 1501.328 to read as
follows:
Sec. 1501.327. DISSOLUTION OF SYSTEM AND SUSPENSION OF
SYSTEM OPERATIONS. (a) In this section, "plan" means the plan of
dissolution and suspension required by this section.
(b) The board shall develop and submit to the commissioner a
plan of dissolution of the system and suspension of system
operations in accordance with this section. The plan must:
(1) ensure the fair, reasonable, and equitable winding
down and dissolution of the system and suspension of system
operations; and
(2) provide for the sharing of any remaining system
assets on a proportionate basis in accordance with this section.
(c) The commissioner may approve the plan if the
commissioner determines the plan meets the requirements of
Subsections (b) and (e). The plan is effective on the written
approval of the commissioner.
(d) If the board fails to submit a suitable plan, the
commissioner, after notice and hearing, shall adopt a plan.
(e) The plan must:
(1) specify the date after which a small employer
health benefit plan issuer that is not a reinsured health benefit
plan issuer on the effective date of the plan may not:
(A) become a reinsured health benefit plan issuer
under Sections 1501.310, 1501.311, and 1501.312; and
(B) reinsure with the system a small employer
group, or any risk, covered under any small employer health benefit
plan;
(2) specify the date after which a small employer
health benefit plan issuer that is a reinsured health benefit plan
issuer on the effective date of the plan may not:
(A) reinsure with the system additional small
employer groups in accordance with Section 1501.314; or
(B) cede additional eligible lives to the system
in accordance with Section 1501.314;
(3) provide for:
(A) the filing, receipt, processing, and payment
of all claims against and debts of the system, and extinguishment of
all liabilities of the system, including balances on any lines of
credit that may have been established by or on behalf of the system;
(B) the collection and receipt of all assessments
made with respect to reinsured health benefit plan issuers,
including any deferred assessments and any final assessment made
under Subsection (h);
(C) a final audit of the system by the state
auditor as provided by Subsection (i); and
(D) the distribution of any surplus assets of the
system that remain after the closing date, in a manner that shares
the remaining system assets on a proportionate basis and in
accordance with this subsection; and
(4) specify, as the closing date, the effective date
of the closing of the transactions required by the plan and
addressed in this subsection.
(f) The closing date may not be later than the 270th day
after the effective date of the plan.
(g) On and after the closing date, a reinsured health
benefit plan issuer that has not elected to change status before
that date operates as a risk-assuming health benefit plan issuer
with respect to risks the issuer reinsured with the system before
that date.
(h) The board may make a final assessment of the small
employer health benefit plan issuers that, for any portion of
calendar year 2005, were reinsured health benefit plan issuers. An
assessment under this subsection may be made only if the board
determines the assessment is necessary to recover net losses of the
system, as provided in Sections 1501.319-1501.326, including
administrative expenses for transactions essential to complete
execution of the plan, and the cost of the final audit by the state
auditor. For a health benefit plan issuer that changed its status
to risk-assuming health benefit plan issuer on or after January 1,
2005, but before the closing date of the plan, the assessment must
be prorated based on small employer premium received as a reinsured
health benefit plan issuer for the portion of calendar year 2005
that the issuer was reinsured with the system.
(i) The transactions necessary to complete execution of the
plan are subject to audit by the state auditor under Chapter 321,
Government Code. The state auditor shall report the cost of the
final audit conducted under this section to the board and the
comptroller, and the board shall remit that amount to the
comptroller for deposit to the general revenue fund.
(j) The system shall continue the system's corporate
existence until the third anniversary of the closing date
established by the plan solely for the purpose of prosecuting or
defending in the system's corporate name any action or proceeding
by or against the system.
(k) During the three-year period established by Subsection
(j), the board members serving at the time of dissolution shall
continue to manage the affairs of the system for the sole purpose
stated by that subsection and have the powers and immunities
necessary to accomplish that sole purpose, in accordance with
Sections 1501.305 and 1501.307.
(l) If during the three-year period established by
Subsection (j) a board member fails to serve, the commissioner
shall appoint a replacement member in accordance with Section
1501.303. A member appointed under this subsection to replace a
member described by Section 1501.303(b) must be a representative of
a health benefit plan issuer that was a reinsured issuer
immediately before the closing date and selected from individuals
nominated by small employer health benefit plan issuers in this
state according to procedures developed by the commissioner.
Sec. 1501.328. REACTIVATION OF SYSTEM. (a) After the
system is dissolved and the system's operations are suspended under
Section 1501.327, the commissioner, after notice and hearing in
accordance with this section, may reactivate the system.
(b) The commissioner shall hold a hearing under this section
on petition of an association of health benefit plan issuers in this
state or a group of at least 15 small employer health benefit plan
issuers operating in this state or may hold the hearing if the
commissioner believes that small employer health benefit plan
issuers in this state are threatened with the inability to secure
reinsurance coverage in the open market.
(c) Not later than the 15th day before the date of a hearing
under this section, the department shall provide notice of the
hearing to each small employer health benefit plan issuer.
(d) If, after hearing, the commissioner finds that
reactivation of the system is in the public interest, the
commissioner shall order the reactivation. The reactivation must
be effective at least 15 days, but not more than 60 days, after the
date the order is entered, as specified in the order. On the date
specified for reactivation, Sections 1501.301-1501.326 become
effective as if those provisions had been reenacted effective on
the date specified in the order.
SECTION 2. The board of directors of the Texas Health
Reinsurance System shall submit to the commissioner a plan of
dissolution and suspension of the Texas Health Reinsurance System,
as required by Section 1501.327, Insurance Code, as added by this
Act, not later than the 90th day following the effective date of
this Act. If the board fails to timely submit the plan, the
commissioner of insurance shall adopt a plan in accordance with
Section 1501.327(d), Insurance Code, as added by this Act.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.