S.B. No. 561
 
 
 
 
AN ACT
  relating to the subrogation interests of certain political
  subdivisions or insurance carriers providing reinsurance for
  subdivisions.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 172.015, Local Government Code, is
  amended to read as follows:
         Sec. 172.015.  SUBROGATION; ADEQUATE RECOVERY.  (a)  In this
  section, "covered individual" means a person who is covered by the
  pool.  The term includes an official, an employee, a retiree, and an
  employee of an affiliated service contractor and their dependents.
         (b)  The payor of employee benefits, whether a political
  subdivision, group of political subdivisions, pool, or carrier
  providing reinsurance to one of those entities, is [shall be]
  subrogated to a covered individual's [the employees'] right of
  recovery for personal injuries caused by the tortious conduct of a
  third party.
         (c)  A payor of employee benefits whose interest is not
  actively represented by an attorney in a third-party action shall
  pay to an attorney representing the covered individual a fee in an
  amount determined under an agreement entered into between the
  attorney and the payor of employee benefits. Except as provided by
  Subsection (i), in the absence of an agreement, the court shall
  award to the attorney, payable out of the recovery of the payor of
  employee benefits, a reasonable fee for recovery of the interest of
  the payor of employee benefits, not to exceed one-third of the
  payor's recovery.
         (d)  If the injured covered individual is not able to realize
  a complete and adequate recovery for injuries sustained as a result
  of the actionable fault of a third party, the payor of employee
  benefits is entitled to a pro rata recovery described by Subsection
  (e).  A common law doctrine that requires that an injured party be
  made whole before a subrogee makes a recovery does not apply to the
  recovery of the payor of employee benefits under this subsection.
         (e)  Unless otherwise agreed by a covered individual and the
  payor of employee benefits and subject to Subsection (f), the
  payor's pro rata share under Subsection (d) is an amount that is
  equal to the lesser of:
               (1)  one-third of the covered individual's total
  recovery; or
               (2)  the total cost of employee benefits paid by the
  payor as a direct result of the tortious conduct of the third party.
         (f)  A covered individual may bring an action for declaratory
  judgment to establish that the amount of the pro rata recovery to
  which the payor of employee benefits is entitled is an amount that
  is less than the pro rata share described by Subsection (e). To
  prevail in an action brought under this subsection, the covered
  individual must prove by a preponderance of the evidence that the
  amount of the covered individual's total recovery is less than 50
  percent of the value of the covered person's underlying claim for
  damages.
         (g)  Except as otherwise provided by this subsection, the
  court shall establish the payor's pro rata recovery under
  Subsection (f) in an amount that is not less than 15 percent of and
  not more than one-third of the covered individual's total recovery.
  If a covered individual shows by clear and convincing evidence that
  the pro rata share otherwise described by this subsection would
  result in manifest injustice, the court shall establish the payor's
  pro rata recovery in an amount that is less than 15 percent of and
  equal to or greater than five percent of the covered individual's
  total recovery.
         (h)  Notwithstanding Chapter 37, Civil Practice and Remedies
  Code, or any other law, in an action brought under Subsection (f)
  the court may not award costs or attorney's fees to any party in the
  action.
         (i)  Notwithstanding Subsection (c), a payor of employee
  benefits may not be assessed out of the recovery to which the payor
  is entitled under Subsection (e) or (f) any attorney's fees under
  any theory or rule of law, including the common fund doctrine.
         (j)  Subsections (c)-(i) do not apply to a payor of employee
  benefits participating in a cooperative effort to design and
  administer benefits through an administrative agency that includes
  a cooperative member that is a county with a population of at least
  two million that is adjacent to a county with a population of at
  least one million.
         SECTION 2.  Section 172.015, Local Government Code, as
  amended by this Act, applies only to a cause of action that accrues
  on or after the effective date of this Act. An action that accrued
  before the effective date of this Act is governed by the law
  applicable to the action immediately before the effective date of
  this Act, and that law is continued in effect for that purpose.
         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, 2007.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 561 passed the Senate on
  April  16, 2007, by the following vote: Yeas 29, Nays 1; and that
  the Senate concurred in House amendment on May 17, 2007, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 561 passed the House, with
  amendment, on May 8, 2007, by the following vote: Yeas 139,
  Nays 2, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor