81R6474 PB-D

By: Eiland H.B. No. 1291

A BILL TO BE ENTITLED

AN ACT

relating to regulation of certain disaster remediation contractors; providing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

ARTICLE 1. REGULATION BY TEXAS DEPARTMENT OF INSURANCE

SECTION 1.001. Title 20, Insurance Code, is amended by adding Chapter 6005 to read as follows:

CHAPTER 6005. REGULATION OF DISASTER REMEDIATION CONTRACTORS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 6005.001. DEFINITIONS. In this chapter:

(1) "Contract holder" means a person who enters into a contract with a disaster remediation contractor for the performance of disaster remediation on property owned or leased by the contract holder.

(2) "Council of governments" means a regional planning commission or similar regional planning agency created under Chapter 391, Local Government Code.

(3) "Disaster remediation" means the removal, cleaning, sanitizing, demolition, reconstruction, or other treatment of improvements to real property performed because of damage or destruction to that property caused by a natural disaster.

(4) "Disaster remediation contractor" means a person who engages in disaster remediation for compensation.

(5) "Natural disaster" means the occurrence of widespread or severe damage, injury, or loss of life or property related to any natural cause, including fire, flood, earthquake, wind, storm, or wave action, that results in a disaster declaration by the governor under Chapter 418, Government Code.

(6) "Person" means an individual, corporation, trust, partnership, association, or other private legal entity.

(7) "Region" has the meaning assigned by Section 391.002, Local Government Code.

[Sections 6005.002-6005.050 reserved for expansion]

SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES

Sec. 6005.051. GENERAL RULES. The commissioner shall adopt rules as necessary to implement this chapter.

Sec. 6005.052. CODE OF PROFESSIONAL RESPONSIBILITY; STANDARDS OF CONDUCT. (a) In cooperation with the attorney general, the commissioner by rule shall adopt a code of professional responsibility to regulate the conduct of a disaster remediation contractor who provides services in this state.

(b) The code of professional responsibility must contain standards of conduct that must be followed by a person authorized under this chapter to operate as a disaster remediation contractor in this state in dealing with the public.

Sec. 6005.053. COMPLAINT INVESTIGATIONS. (a) The department shall establish procedures for receiving a complaint alleging a violation of the code of professional responsibility established under Section 6005.052.

(b) The department may investigate a complaint received by the department under Subsection (a) and may forward results of an investigation conducted under this subsection to the attorney general and appropriate law enforcement authorities.

[Sections 6005.054-6005.100 reserved for expansion]

SUBCHAPTER C. REGISTRATION REQUIREMENT

Sec. 6005.101. REGISTRATION REQUIRED. (a) A person may not engage in disaster remediation for compensation in this state or act as a disaster remediation contractor in this state unless the person holds a certificate of registration issued under this subchapter.

(b) A person may not assume or use the title or designation "certified disaster remediation contractor" or any other title, designation, word, letter, abbreviation, sign, card, or device tending to indicate that the person is registered under this chapter, including any reference to the Federal Emergency Management Agency, unless the person holds a certificate of registration under this chapter or is otherwise determined by the commissioner to be authorized to use the title or designation.

(c) Each applicant for registration under this chapter must register, in the manner provided by this chapter, with:

(1) the department; and

(2) the governing body of the council of governments in each region in which the applicant proposes to provide disaster remediation services for compensation.

Sec. 6005.102. EXEMPTIONS. (a) A person is not required to register under this chapter to perform disaster remediation for compensation if the person:

(1) holds a license, certificate of registration, or other authority issued by the Texas Department of Licensing and Regulation, another licensing agency of this state, or a federal regulatory agency; and

(2) provides disaster remediation services for compensation solely within the scope of that authority.

(b) A managing agent or employee of a property owner is not required to be licensed under this chapter to perform disaster remediation on property owned by the property owner. This exemption does not apply if the managing agent or employee engages in the business of performing disaster remediation for the public.

(c) An employee of a certificate holder is not required to register under this chapter to perform disaster remediation while supervised by the certificate holder, as provided by rules adopted under this chapter.

[Sections 6005.103-6005.150 reserved for expansion]

SUBCHAPTER D. DEPARTMENT REGISTRATION PROCEDURES

Sec. 6005.151. APPLICATION REQUIREMENTS. (a) An applicant for a certificate of registration issued by the department under this chapter must:

(1) submit to the department a completed application on a form prescribed by the commissioner;

(2) sign a statement agreeing to comply with the code of professional responsibility prescribed by the commissioner;

(3) provide evidence of the security required under this subchapter;

(4) pay the required fees; and

(5) provide any other information required by the commissioner.

(b) The department may conduct an examination of any criminal conviction of an applicant, including by obtaining any criminal history record information permitted by law.

Sec. 6005.152. RECIPROCAL REGISTRATION. On proper application, the department may issue a certificate of registration to a person who holds a license, certificate of registration, or other authority to perform disaster remediation issued by another state that the commissioner determines has requirements that are equivalent to those of this state.

Sec. 6005.153. FEES; SECURITY REQUIREMENTS. (a) The commissioner may adopt fees for registration under this subchapter, including application fees and renewal fees.

(b) As a guarantee that a disaster remediation contractor will meet the contractor's obligations to contract holders, the contractor shall maintain with the department a bond or other security accepted by the commissioner.

(c) A bond posted as security must:

(1) be issued by an insurer authorized to engage in the business of insurance in this state;

(2) be continuous;

(3) be cancelable by the surety only after at least 90 days' notice to the department; and

(4) recognize that the obligation continues for the terms of the contracts written by the disaster remediation contractor while the bond is in force.

(d) Any security provided under this section in a form other than a bond must be convertible to cash by the department for the benefit of contract holders in this state, without resort to the courts, if the commissioner determines that the disaster remediation contractor is in default of the contractor's financial obligations to contract holders. Any amount remaining after all contract holders' claims are paid must be returned to the disaster remediation contractor not later than the 120th day after the date the last outstanding contract expires.

Sec. 6005.154. ISSUANCE OF CERTIFICATE; TERM. (a) On receipt of the application and required fees, and on satisfaction of the security requirement under Section 6005.153, the department shall issue a certificate of registration to an applicant under this subchapter.

(b) A certificate of registration expires on the first anniversary of the date of issuance and may be renewed annually in the manner prescribed by the commissioner. An application for renewal must be submitted to the department not later than the 30th day before the expiration date of the certificate.

[Sections 6005.155-6005.200 reserved for expansion]

SUBCHAPTER E. CONSUMER DISCLOSURE REQUIREMENTS

Sec. 6005.201. LIST OF SERVICES. (a) A disaster remediation contractor shall prepare a comprehensive list that describes each service that the contractor offers.

(b) The contractor shall provide a written copy of the list to each prospective contract holder.

Sec. 6005.202. CONTRACT. Before entering into a contract for disaster remediation services, a disaster remediation contractor must deliver to the prospective contract holder a complete written copy of the contract, accompanied by a written receipt for any payment made by the contract holder under the contract.

[Sections 6005.203-6005.250 reserved for expansion]

SUBCHAPTER F. REGISTRATION WITH COUNCIL OF GOVERNMENTS

Sec. 6005.251. REGISTRATION WITH COUNCIL OF GOVERNMENTS. (a) A person required to hold a certificate of registration under Section 6005.101 must also register with the governing body of the council of governments in each region in which the person proposes to provide disaster remediation services.

(b) Registration under Subsection (a) is subject to Section 391.0092, Local Government Code.

[Sections 6005.252-6005.300 reserved for expansion]

SUBCHAPTER G. ENFORCEMENT; CRIMINAL PENALTY

Sec. 6005.301. DISCIPLINARY ACTIONS. (a) The commissioner may suspend, revoke, or refuse to issue or renew a certificate of registration under this chapter if, after notice and hearing, the commissioner finds that the applicant or registrant has engaged in acts that:

(1) violate this chapter;

(2) violate rules or standards adopted under this chapter;

(3) violate Section 391.0092, Local Government Code; or

(4) constitute misrepresentation made in connection with disaster remediation services.

(b) An original or renewal certificate of registration may be denied, suspended, or revoked, if, after notice and hearing, the commissioner determines from the evidence presented at the hearing that this chapter or a rule adopted under this chapter has been violated.

Sec. 6005.302. DISCIPLINARY HEARING. (a) If the commissioner proposes to suspend, revoke, or refuse to renew a certificate of registration under this chapter, the holder of the certificate is entitled to a hearing conducted by the State Office of Administrative Hearings.

(b) Proceedings for a disciplinary action are governed by Chapter 2001, Government Code.

(c) Rules of practice adopted by the commissioner applicable to the proceedings for a disciplinary action may not conflict with rules adopted by the State Office of Administrative Hearings.

Sec. 6005.303. DECEPTIVE TRADE PRACTICE. (a) This section applies to:

(1) a violation of this chapter;

(2) a violation of rules or standards adopted under this chapter;

(3) a violation of Section 391.0092, Local Government Code; or

(4) an act that constitutes misrepresentation made in connection with disaster remediation services.

(b) A violation or act described by Subsection (a) constitutes a deceptive trade practice under Section 17.46, Business & Commerce Code, and is subject to penalties as provided by that section.

Sec. 6005.304. CRIMINAL PENALTY. (a) A person commits an offense if the person violates Section 6005.101.

(b) An offense under this section is a Class B misdemeanor.

(c) Venue for an offense under this section is in Travis County or the county in which the offense is committed.

ARTICLE 2. REGISTRATION WITH COUNCIL OF GOVERNMENTS

SECTION 2.001. Section 391.005, Local Government Code, is amended by adding Subsection (d) to read as follows:

(d) A commission may implement a registration program under Section 391.0092 and may charge a registration fee set in an amount reasonable and necessary to cover the costs of the registration program.

SECTION 2.002. Chapter 391, Local Government Code, is amended by adding Section 391.0092 to read as follows:

Sec. 391.0092. REGISTRATION OF DISASTER REMEDIATION CONTRACTORS. (a) In this section, "disaster remediation," "disaster remediation contractor," and "natural disaster" have the meanings assigned by Section 6005.001, Insurance Code.

(b) The governing body of each commission located in a region subject to a natural disaster shall, not later than the 15th day after the date of the disaster declaration, establish a registry for disaster remediation contractors who propose to provide disaster remediation services in the region.

(c) Each disaster remediation contractor who provides disaster remediation services in the region shall register with the commission in the manner prescribed by the governing body of the commission.

(d) A disaster remediation contractor who violates Subsection (c) commits a deceptive trade practice under Section 17.46, Business & Commerce Code.

ARTICLE 3. DECEPTIVE TRADE PRACTICE

SECTION 3.001. Section 17.46(b), Business & Commerce Code, is amended to read as follows:

(b) Except as provided in Subsection (d) of this section, the term "false, misleading, or deceptive acts or practices" includes, but is not limited to, the following acts:

(1) passing off goods or services as those of another;

(2) causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;

(3) causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;

(4) using deceptive representations or designations of geographic origin in connection with goods or services;

(5) representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he does not;

(6) representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand;

(7) representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;

(8) disparaging the goods, services, or business of another by false or misleading representation of facts;

(9) advertising goods or services with intent not to sell them as advertised;

(10) advertising goods or services with intent not to supply a reasonable expectable public demand, unless the advertisements disclosed a limitation of quantity;

(11) making false or misleading statements of fact concerning the reasons for, existence of, or amount of price reductions;

(12) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;

(13) knowingly making false or misleading statements of fact concerning the need for parts, replacement, or repair service;

(14) misrepresenting the authority of a salesman, representative or agent to negotiate the final terms of a consumer transaction;

(15) basing a charge for the repair of any item in whole or in part on a guaranty or warranty instead of on the value of the actual repairs made or work to be performed on the item without stating separately the charges for the work and the charge for the warranty or guaranty, if any;

(16) disconnecting, turning back, or resetting the odometer of any motor vehicle so as to reduce the number of miles indicated on the odometer gauge;

(17) advertising of any sale by fraudulently representing that a person is going out of business;

(18) advertising, selling, or distributing a card which purports to be a prescription drug identification card issued under Section 4151.152, Insurance Code, in accordance with rules adopted by the commissioner of insurance, which offers a discount on the purchase of health care goods or services from a third party provider, and which is not evidence of insurance coverage, unless:

(A) the discount is authorized under an agreement between the seller of the card and the provider of those goods and services or the discount or card is offered to members of the seller;

(B) the seller does not represent that the card provides insurance coverage of any kind; and

(C) the discount is not false, misleading, or deceptive;

(19) using or employing a chain referral sales plan in connection with the sale or offer to sell of goods, merchandise, or anything of value, which uses the sales technique, plan, arrangement, or agreement in which the buyer or prospective buyer is offered the opportunity to purchase merchandise or goods and in connection with the purchase receives the seller's promise or representation that the buyer shall have the right to receive compensation or consideration in any form for furnishing to the seller the names of other prospective buyers if receipt of the compensation or consideration is contingent upon the occurrence of an event subsequent to the time the buyer purchases the merchandise or goods;

(20) representing that a guarantee or warranty confers or involves rights or remedies which it does not have or involve, provided, however, that nothing in this subchapter shall be construed to expand the implied warranty of merchantability as defined in Sections 2.314 through 2.318 and Sections 2A.212 through 2A.216 to involve obligations in excess of those which are appropriate to the goods;

(21) promoting a pyramid promotional scheme, as defined by Section 17.461;

(22) representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts replaced;

(23) filing suit founded upon a written contractual obligation of and signed by the defendant to pay money arising out of or based on a consumer transaction for goods, services, loans, or extensions of credit intended primarily for personal, family, household, or agricultural use in any county other than in the county in which the defendant resides at the time of the commencement of the action or in the county in which the defendant in fact signed the contract; provided, however, that a violation of this subsection shall not occur where it is shown by the person filing such suit he neither knew or had reason to know that the county in which such suit was filed was neither the county in which the defendant resides at the commencement of the suit nor the county in which the defendant in fact signed the contract;

(24) failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed;

(25) using the term "corporation," "incorporated," or an abbreviation of either of those terms in the name of a business entity that is not incorporated under the laws of this state or another jurisdiction;

(26) selling, offering to sell, or illegally promoting an annuity contract under Chapter 22, Acts of the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil Statutes), with the intent that the annuity contract will be the subject of a salary reduction agreement, as defined by that Act, if the annuity contract is not an eligible qualified investment under that Act or is not registered with the Teacher Retirement System of Texas as required by Section 8A of that Act; or

(27) taking advantage of a disaster declared by the governor under Chapter 418, Government Code, by:

(A) selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excessive price; [or]

(B) demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, or another necessity; or

(C) providing services as a disaster remediation contractor for compensation in violation of Chapter 6005, Insurance Code, or Section 391.0092, Local Government Code.

ARTICLE 4. TRANSITION; EFFECTIVE DATE

SECTION 4.001. The commissioner of insurance shall adopt rules and prescribe standards as required by Subchapter B, Chapter 6005, Insurance Code, as added by this Act, not later than December 1, 2009.

SECTION 4.002. A person is not required to register under Chapter 6005, Insurance Code, as added by this Act, or Section 391.0092, Local Government Code, as added by this Act, until January 1, 2010.

SECTION 4.003. The following laws take effect January 1, 2010:

(1) Section 6005.101, Insurance Code, as added by this Act;

(2) Subchapter G, Chapter 6005, Insurance Code, as added by this Act;

(3) Section 391.0092, Local Government Code, as added by this Act; and

(4) Section 17.46(b), Business & Commerce Code, as amended by this Act.

SECTION 4.004. Except as otherwise provided by this Act, this Act takes effect September 1, 2009.