81R25994 YDB-D
 
  By: Truitt H.B. No. 4341
 
  Substitute the following for H.B. No. 4341:
 
  By:  Davis of Harris C.S.H.B. No. 4341
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of discount health care programs by the
  Texas Department of Insurance; providing penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle C, Title 5, Insurance Code, is amended
  by adding Chapter 562 to read as follows:
  CHAPTER 562. UNFAIR METHODS OF COMPETITION AND
  UNFAIR OR DECEPTIVE ACTS OR PRACTICES REGARDING
  DISCOUNT HEALTH CARE PROGRAMS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 562.001.  PURPOSE.  The purpose of this chapter is to
  regulate trade practices in the business of discount health care
  programs 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 unfair or deceptive trade
  practices.
         Sec. 562.002.  DEFINITIONS.  In this chapter:
               (1)  "Discount health care program" means a business
  arrangement or contract in which an entity, in exchange for fees,
  dues, charges, or other consideration, offers its members access to
  discounts on health care services provided by health care
  providers. The term does not include an insurance policy, a
  certificate of coverage, or a self-funded or self-insured employee
  benefit plan.
               (2)  "Discount health care program operator" means a
  person who, in exchange for fees, dues, charges, or other
  consideration, operates a discount health care program and
  contracts with providers, provider networks, or other discount
  health care program operators to offer access to health care
  services at a discount and determines the charge to members.
               (3)  "Health care services" includes physician care,
  inpatient care, hospital surgical services, emergency services,
  ambulance services, laboratory services, audiology services,
  dental services, vision services, mental health services,
  substance abuse services, chiropractic services, and podiatry
  services, and the provision of medical equipment and supplies,
  including prescription drugs.
               (4)  "Knowingly" means with actual awareness of the
  falsity, unfairness, or deceptiveness of the act or practice on
  which a claim for damages under this chapter is based. Actual
  awareness may be inferred if any objective manifestations indicate
  that a person acted with actual awareness.
               (5)  "Marketer" means a person who sells or
  distributes, or offers to sell or distribute, a discount health
  care program, including a private label entity that places its name
  on and markets or distributes a discount health care program, but
  does not operate a discount health care program.
               (6)  "Member" means a person who pays fees, dues,
  charges, or other consideration for the right to participate in a
  discount health care program.
               (7)  "Person" means an individual, corporation,
  association, partnership, or other legal entity.
               (8)  "Program operator" means a discount health plan
  program operator.
               (9)  "Provider" means a person who is licensed or
  otherwise authorized to provide health care services in this state.
         Sec. 562.003.  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.
         Sec. 562.004.  APPLICABILITY. Except as otherwise provided
  by this chapter, a program operator, including the operator of a
  freestanding discount health care program or a discount health care
  program marketed by an insurer or a health maintenance
  organization, shall comply with this chapter.
         Sec. 562.005.  LIBERAL CONSTRUCTION.  This chapter shall be
  liberally construed and applied to promote the underlying purposes
  as provided by Section 562.001.
  [Sections 562.006-562.050 reserved for expansion]
  SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND
  UNFAIR OR DECEPTIVE ACTS OR PRACTICES DEFINED
         Sec. 562.051.  MISREPRESENTATION REGARDING DISCOUNT HEALTH
  CARE PROGRAM.  It is an unfair method of competition or an unfair or
  deceptive act or practice in the business of discount health care
  programs to:
               (1)  knowingly misrepresent the price range of
  discounts offered by the discount health care program;
               (2)  knowingly misrepresent the size or location of the
  program's network of providers;
               (3)  knowingly misrepresent the participation of a
  provider in the program's network;
               (4)  suggest that a discount card offered through the
  program is a federally approved Medicare prescription discount
  card;
               (5)  use the term "insurance," except as:
                     (A)  a disclaimer of any relationship between the
  discount health care program and insurance; or
                     (B)  a description of an insurance product
  connected with a discount health care program; or
               (6)  use the term "health plan," "coverage," "copay,"
  "copayments," "deductible," "preexisting conditions," "guaranteed
  issue," "premium," "PPO," or "preferred provider organization," or
  another similar term, in a manner that could reasonably mislead an
  individual into believing that the discount health care program is
  health insurance or provides coverage similar to health insurance.
         Sec. 562.052.  FALSE INFORMATION AND ADVERTISING.  (a)  It
  is an unfair method of competition or an unfair or deceptive act or
  practice in the business of discount health care programs 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 advertisements,
  solicitations, or marketing materials containing an untrue,
  deceptive, or misleading assertion, representation, or statement
  regarding the discount health care program.
         (b)  This section applies to an advertisement, solicitation,
  or marketing material 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;
               (4)  through the Internet; or
               (5)  in any other manner.
         Sec. 562.053.  FAILURE TO REGISTER OR RENEW REGISTRATION;
  FALSE REGISTRATION OR RENEWAL STATEMENT.  It is an unfair method of
  competition or an unfair or deceptive act or practice in the
  business of discount health care programs to:
               (1)  fail to register or renew registration as required
  under Chapter 7001; or
               (2)  with intent to deceive:
                     (A)  file with the department a false statement in
  connection with an application for registration as a program
  operator under Chapter 7001; or
                     (B)  file with the department a false statement in
  connection with an application for renewal of a registration as a
  program operator under Chapter 7001.
         Sec. 562.054.  MISREPRESENTATION OF DISCOUNT HEALTH CARE
  PROGRAMS.  It is an unfair method of competition or an unfair or
  deceptive act or practice in the business of discount health care
  programs to misrepresent a discount health care program 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 an applicable disclosure
  required by this code.
  [Sections 562.055-562.100 reserved for expansion]
  SUBCHAPTER C.  REGULATION OF PRACTICES
         Sec. 562.101.  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
  discount health care programs.
         Sec. 562.102.  PROHIBITED CONTENT OF CERTAIN DISCOUNT HEALTH
  CARE PROGRAM ADVERTISING, SOLICITATION, OR MARKETING.  
  Notwithstanding any other provision of this code, it is unlawful
  for a program operator or marketer to advertise, solicit, or market
  a discount health care program containing the words "approved by
  the Texas Department of Insurance" or words with a similar meaning.
         Sec. 562.103.  PROGRAM OPERATOR DUTIES. (a)  A program
  operator shall:
               (1)  provide a toll-free telephone number and Internet
  website for members to obtain information about the discount health
  care program and confirm or find providers currently participating
  in the program; and
               (2)  remove a provider from the discount health care
  program not later than the 30th day after the date the program
  operator learns that the provider is no longer participating in the
  program or has lost the authority to provide services or products.
         (b)  A program operator shall issue at least one membership
  card to serve as proof of membership in the discount health care
  program that must:
               (1)  contain a clear and conspicuous statement that the
  discount health care program is not insurance; and
               (2)  if the discount health care program includes
  discount prescription drug benefits, include:
                     (A)  the name or logo of the entity administering
  the prescription drug benefits;
                     (B)  the international identification number
  assigned by the American National Standards Institute for the
  entity administering the prescription drug benefits;
                     (C)  the group number applicable to the member;
  and
                     (D)  a telephone number to be used to contact an
  appropriate person to obtain information relating to the
  prescription drug benefits provided under the program.
         (c)  Not later than the 15th day after the date of
  enrollment, a program operator shall issue at least one set of
  disclosure materials describing the terms and conditions of the
  discount health care program to each household in which a person is
  a member, including a statement that:
               (1)  the discount health care program is not insurance,
  with the word "not" capitalized;
               (2)  the member is required to pay the entire amount of
  the discounted rate;
               (3)  the discount health care program does not
  guarantee the quality of the services or products offered by
  individual providers; and
               (4)  if the member remains dissatisfied after
  completing the discount health care program's complaint system, the
  member may contact the member's state insurance department.
         (d)  A program operator shall ensure that an application form
  or other membership agreement:
               (1)  clearly and conspicuously discloses the duration
  of membership and the amount of payments the member is obligated to
  make for the membership; and
               (2)  contains a clear and conspicuous statement that
  the discount health care program is not insurance.
         (e)  A program operator shall allow any member who cancels a
  membership in the discount health care program not later than the
  30th day after the date the person becomes a member to receive a
  refund, not later than the 30th day after the date the program
  operator receives a valid cancellation notice and returned
  membership card, of all periodic membership charges paid by that
  member to the program operator and the amount of any one-time
  enrollment fee that exceeds $50.
         (f)  A program operator shall:
               (1)  maintain a surety bond, payable to the department
  for the use and benefit of members in a manner prescribed by the
  department, in the principal amount of $50,000, except that a
  program operator that is an insurer that holds a certificate of
  authority under Title 6 is not required to maintain the surety bond;
               (2)  maintain an agent for service of process in this
  state; and
               (3)  establish and operate a fair and efficient
  procedure for resolution of complaints regarding the availability
  of contracted discounts or services or other matters relating to
  the contractual obligations of the discount health care program to
  its members.
         Sec. 562.104.  MARKETING OF PROGRAM. (a) A program operator
  may market directly or contract with marketers for the distribution
  of the program operator's discount health care programs.
         (b)  A program operator shall enter into a written contract
  with a marketer before the marketer begins marketing, promoting,
  selling, or distributing the program operator's discount health
  care program. The contract must prohibit the marketer from using
  advertising, solicitations, other marketing materials, or discount
  cards that have not been approved in advance and in writing by the
  program operator.
         (c)  A program operator must approve in writing before their
  use all advertisements, solicitations, or other marketing
  materials and all discount cards used by marketers to market,
  promote, sell, or distribute the discount health care program.
         (d)  Each advertisement, solicitation, or marketing material
  of a discount health care program must clearly and conspicuously
  state that the discount health care program is not insurance.
         Sec. 562.105.  CONTRACT REQUIREMENTS. (a) A program
  operator shall contract, directly or indirectly, with a provider
  offering discounted health care services or products under the
  discount health care program. The written contract must contain
  all of the following provisions:
               (1)  a description of the discounts to be provided to a
  member;
               (2)  a provision prohibiting the provider from charging
  a member more than the discounted rate agreed to in the written
  agreement with the provider; and
               (3)  a provision requiring the provider to promptly
  notify the program operator if the provider no longer participates
  in the program or loses the authority to provide services or
  products.
         (b)  The program operator may not charge or receive from a
  provider any fee or other compensation for entering into the
  agreement.
         (c)  If the program operator contracts with a network of
  providers, the program operator shall obtain written assurance from
  the network that:
               (1)  the network has a written agreement with each
  network provider that includes a discounted rate that is applicable
  to a program operator's discount health care program and contains
  all of the terms described in Subsection (a); and
               (2)  the network is authorized to obligate the network
  providers to provide services to members of the discount health
  care program.
         (d)  The program operator shall require the network to:
               (1)  maintain and provide the program operator on a
  monthly basis an up-to-date list of providers in the network; and
               (2)  promptly remove a provider from its network if the
  provider no longer participates or loses the authority to provide
  services or products.
         (e)  The program operator shall maintain a copy of each
  written agreement the program operator has with a provider or a
  network for at least two years following termination of the
  agreement.
  [Sections 562.106-562.150 reserved for expansion]
  SUBCHAPTER D. DETERMINATION OF UNFAIR METHODS OF COMPETITION AND
  UNFAIR OR DECEPTIVE ACTS OR PRACTICES; ENFORCEMENT; SANCTIONS AND
  PENALTIES
         Sec. 562.151.  EXAMINATION AND INVESTIGATION.  The
  department may examine and investigate the affairs of a person
  engaged in the business of discount health care programs in this
  state to determine whether the person:
               (1)  has or is engaged in an unfair method of
  competition or unfair or deceptive act or practice prohibited by
  this chapter; or
               (2)  has violated Subchapter B or C.
         Sec. 562.152.  STATEMENT OF CHARGES; NOTICE OF HEARING.  (a)  
  When the department has reason to believe that a person engaged in
  the business of discount health care programs 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 or has violated Subchapter B or C 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 required by Subsection (a)(2) is
  served.
         Sec. 562.153.  HEARING.  A person against whom charges are
  made under Section 562.152 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:
               (1)  performing the unfair method of competition or
  unfair or deceptive act or practice described in the charges; or
               (2)  violating Subchapter B or C.
         Sec. 562.154.  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.
         Sec. 562.155.  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 record of the proceedings and the
  evidence presented at the hearing.
         (b)  If the department does not make a 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.
         Sec. 562.156.  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.
         Sec. 562.157.  DETERMINATION OF VIOLATION.  After a hearing
  under this subchapter to determine whether a person has engaged in
  an unfair method of competition or unfair or deceptive act or
  practice prohibited by this chapter, 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
                     (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
                     (B)  Subchapter E, Chapter 17, Business & Commerce
  Code, as specified in Section 17.46, Business & Commerce Code.
         Sec. 562.158.  CEASE AND DESIST ORDER.  On determining that a
  person committed a violation described by Section 562.157 or
  committed a violation of Subchapter B or C, 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 or the
  violation of Subchapter B or C, as applicable.
         Sec. 562.159.  MODIFICATION OR SETTING ASIDE OF ORDER.  On
  the notice and in the manner the department determines proper, the
  department may modify or set aside wholly or partly a cease and
  desist order issued under Section 562.158 at any time before a
  petition appealing the order is filed in accordance with Subchapter
  D, Chapter 36.
         Sec. 562.160.  IMMUNITY FROM PROSECUTION.  (a)  This section
  applies to a person who requests to be excused from attending and
  testifying at a hearing under this chapter 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:
               (1)  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; or
               (2)  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).
         Sec. 562.161.  ADMINISTRATIVE PENALTY FOR VIOLATION OF CEASE
  AND DESIST ORDER.  (a)  A person who violates a cease and desist
  order issued under Section 562.158 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.
         Sec. 562.162.  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 562.158 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.
  [Sections 562.163-562.200 reserved for expansion]
  SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL
         Sec. 562.201.  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 discount
  health care programs 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
                     (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.
         Sec. 562.202.  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.
         Sec. 562.203.  ISSUANCE OF INJUNCTION.  (a)  The court may
  issue an appropriate temporary or permanent injunction.
         (b)  The court shall issue the injunction without bond.
         Sec. 562.204.  CIVIL PENALTY.  In addition to requesting a
  temporary or permanent injunction under Section 562.201, 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 this chapter or Section 17.46, Business &
  Commerce Code.
         Sec. 562.205.  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.
         Sec. 562.206.  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.
         Sec. 562.207.  REMEDIES NOT EXCLUSIVE.  The remedies
  provided by this subchapter:
               (1)  are not exclusive; and
               (2)  are in addition to any other remedy or procedure
  provided by another law or at common law.
  [Sections 562.208-562.250 reserved for expansion]
  SUBCHAPTER F.  ASSURANCE OF VOLUNTARY COMPLIANCE
         Sec. 562.251.  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 this
  chapter or 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).
         Sec. 562.252.  EFFECT OF ASSURANCE.  (a)  An assurance of
  voluntary compliance is not an admission of a prior violation of
  this chapter or 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 this chapter or
  Section 17.46, Business & Commerce Code.
         Sec. 562.253.  REOPENING.  A matter closed by the filing of
  an assurance of voluntary compliance may be reopened at any time.
  [Sections 562.254-562.300 reserved for expansion]
  SUBCHAPTER G.  CONSTRUCTION OF CHAPTER WITH OTHER LAWS
         Sec. 562.301.  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.
         Sec. 562.302.  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.
         Sec. 562.303.  DOUBLE RECOVERY PROHIBITED.  A person may not
  recover damages and penalties for the same act or practice under
  both this chapter and another law.
         SECTION 2.  The Insurance Code is amended by adding Title 21
  to read as follows:
  TITLE 21. DISCOUNT HEALTH CARE PROGRAMS
  CHAPTER 7001. REGISTRATION OF DISCOUNT HEALTH CARE
  PROGRAM OPERATORS
         Sec. 7001.001.  DEFINITIONS. In this chapter:
               (1)  "Discount health care program" means a business
  arrangement or contract in which an entity, in exchange for fees,
  dues, charges, or other consideration, offers its members access to
  discounts on health care services provided by health care
  providers. The term does not include an insurance policy, a
  certificate of coverage, or a self-funded or self-insured employee
  benefit plan.
               (2)  "Discount health care program operator" means a
  person who, in exchange for fees, dues, charges, or other
  consideration, operates a discount health care program and
  contracts with providers, provider networks, or other discount
  health care program operators to offer access to health care
  services at a discount and determines the charge to members.
               (3)  "Health care services" includes physician care,
  inpatient care, hospital surgical services, emergency services,
  ambulance services, laboratory services, audiology services,
  dental services, vision services, mental health services,
  substance abuse services, chiropractic services, and podiatry
  services, and the provision of medical equipment and supplies,
  including prescription drugs.
               (4)  "Marketer" means a person who sells or
  distributes, or offers to sell or distribute, a discount health
  care program, including a private label entity that places its name
  on and markets or distributes a discount health care program, but
  does not operate a discount health care program.
               (5)  "Member" means a person who pays fees, dues,
  charges, or other consideration for the right to participate in a
  discount health care program.
               (6)  "Program operator" means a discount health plan
  program operator.
               (7)  "Provider" means a person who is licensed or
  otherwise authorized to provide health care services in this state.
         Sec. 7001.002.  EXEMPTION.  This chapter does not apply to a
  program operator who is an insurer and who holds a certificate of
  authority under Title 6.
         Sec. 7001.003.  RULES.  The commissioner shall adopt rules
  in the manner prescribed by Subchapter A, Chapter 36, as necessary
  to implement this chapter.
         Sec. 7001.004.  REGISTRATION REQUIRED. A discount health
  care program operator may not offer a discount health care program
  in this state unless the program operator is registered with the
  department.
         Sec. 7001.005.  APPLICATION FOR REGISTRATION AND RENEWAL OF
  REGISTRATION.  (a)  An applicant for registration under this
  chapter or an applicant for renewal of registration under this
  chapter whose information has changed shall submit:
               (1)  a completed registration application on the form
  prescribed by the department indicating the program operator's
  name, physical address, and mailing address and its agent for
  service of process;
               (2)  a list of names, addresses, official positions,
  and biographical information of:
                     (A)  the individuals responsible for conducting
  the program operator's affairs, including:
                           (i)  each member of the board of directors,
  board of trustees, executive committee, or other governing board or
  committee;
                           (ii)  the officers of the program operator;
  and
                           (iii)  any contracted management company
  personnel; and
                     (B)  any person owning or having the right to
  acquire 10 percent or more of the voting securities of the program
  operator;
               (3)  a statement generally describing the applicant,
  its facilities and personnel, and the health care services or
  products for which a discount will be made available under its
  discount health care programs;
               (4)  a list of the marketers authorized to sell or
  distribute the program operator's programs under the program
  operator's name and a list of the marketing entities authorized to
  private label the program operator's programs; and
               (5)  a copy of the form of all contracts made or to be
  made between the program operator and any providers or provider
  networks regarding the provision of health care services or
  products to members.
         (b)  After the initial registration, if the form of a
  contract described by Subsection (a)(5) changes, the program
  operator must file the modified contract form with the department
  before it may be used.
         (c)  As part of the registration required under Subsection
  (a), and annually thereafter, the program operator shall certify in
  writing to the department that its programs comply with the
  requirements of this chapter and Chapter 561.
         Sec. 7001.006.  FEES.  A discount health care program
  operator shall pay the department an initial registration fee of
  $1,000 and an annual renewal fee in the amount set by the
  commissioner not to exceed $500.
         Sec. 7001.007.  CRIMINAL BACKGROUND CHECK.  The department
  may conduct a criminal background check on:
               (1)  the individuals responsible for conducting the
  program operator's affairs;
               (2)  each member of the board of directors, board of
  trustees, executive committee, or other governing board or
  committee;
               (3)  the officers of the program operator;
               (4)  any contracted management company personnel; and
               (5)  any person owning or having the right to acquire 10
  percent or more of the voting securities of the program operator.
         SECTION 3.  Chapter 76, Health and Safety Code, is repealed.
         SECTION 4.  Not later than January 1, 2010, the commissioner
  of insurance shall adopt the rules and procedures necessary to
  implement Chapter 7001, Insurance Code, as added by this Act.
         SECTION 5.  (a)  Notwithstanding Section 7001.004,
  Insurance Code, as added by this Act, a person is not required to
  register under that section before April 1, 2010, except as
  provided by Subsection (b) of this section.
         (b)  A program operator that is registered with the
  Department of Licensing and Regulation on January 1, 2010, as
  required by Chapter 76, Health and Safety Code, shall file an
  application for renewal of registration with the Texas Department
  of Insurance under Chapter 7001, Insurance Code, not later than
  April 1, 2010.
         SECTION 6.  (a)  Except as provided by Subsections (b) and
  (c) of this section, this Act takes effect September 1, 2009.
         (b)  Section 3 of this Act takes effect April 1, 2010.
         (c)  Subchapter E, Chapter 562, Insurance Code, as added by
  this Act, takes effect April 1, 2010.