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A BILL TO BE ENTITLED
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AN ACT
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relating to prohibition of certain business practices related to |
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rescission of coverage under health benefit plans. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 6, Insurance Code, is amended |
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by adding Chapter 848 to read as follows: |
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CHAPTER 848. PROHIBITED PRACTICES RELATED TO RESCISSION |
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Sec. 848.001. APPLICABILITY. (a) This chapter applies to |
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a health benefit plan that provides benefits in this state for |
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medical or surgical expenses incurred as a result of a health |
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condition, accident, or sickness, including an individual, group, |
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blanket, or franchise insurance policy or insurance agreement, a |
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group hospital service contract, or an individual or group evidence |
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of coverage or similar coverage document that is offered by: |
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(1) an insurance company; |
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(2) a group hospital service corporation operating |
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under Chapter 842; |
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(3) a fraternal benefit society operating under |
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Chapter 885; |
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(4) a stipulated premium company operating under |
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Chapter 884; |
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(5) a reciprocal exchange operating under Chapter 942; |
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(6) a health maintenance organization operating under |
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Chapter 843; |
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(7) a multiple employer welfare arrangement that holds |
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a certificate of authority under Chapter 846; or |
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(8) an approved nonprofit health corporation that |
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holds a certificate of authority under Chapter 844. |
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(b) This chapter does not apply to: |
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(1) a health benefit plan that provides coverage only: |
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(A) for a specified disease or diseases or under |
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an individual limited benefit policy; |
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(B) for accidental death or dismemberment; |
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(C) as a supplement to a liability insurance |
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policy; or |
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(D) for dental or vision care; |
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(2) disability income insurance coverage or a |
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combination of accident-only and disability income insurance |
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coverage; |
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(3) credit insurance coverage; |
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(4) a hospital confinement indemnity policy; |
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(5) a Medicare supplemental policy as defined by |
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Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss); |
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(6) a workers' compensation insurance policy; |
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(7) medical payment insurance coverage provided under |
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a motor vehicle insurance policy; or |
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(8) a long-term care insurance policy, including a |
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nursing home fixed indemnity policy, unless the commissioner |
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determines that the policy provides benefits so comprehensive that |
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the policy is a health benefit plan and should not be subject to the |
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exemption provided under this section. |
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Sec. 848.002. BAD FAITH RESCISSION. (a) It is an unfair |
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method of competition or an unfair or deceptive act or practice for |
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purposes of Chapter 541 for a health benefit plan issuer to: |
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(1) set rescission goals, quotas, or targets; |
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(2) pay compensation of any kind, including a bonus or |
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award, that varies according to the number of rescissions; |
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(3) set, as a condition of employment, a number or |
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volume of rescissions to be achieved; or |
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(4) set a performance standard, for employees or by |
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contract with another entity, based on the number or volume of |
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rescissions. |
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(b) For purposes of this chapter, "rescission" means the |
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termination of an insurance agreement, contract, evidence of |
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coverage, insurance policy, or other similar coverage document in |
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which the health benefit plan issuer refunds premium payments or, |
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if applicable, demands the restitution of any benefit paid under |
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the plan, on the ground the issuer is entitled to restoration of the |
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issuer's precontractual position. |
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SECTION 2. This Act takes effect September 1, 2009. |
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