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A BILL TO BE ENTITLED
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AN ACT
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relating to contractual subrogation and other recovery rights of |
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certain insurers and benefit plan issuers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 6, Civil Practice and Remedies Code, is |
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amended by adding Chapter 140 to read as follows: |
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CHAPTER 140. CONTRACTUAL SUBROGATION RIGHTS OF PAYORS OF CERTAIN |
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BENEFITS |
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Sec. 140.001. DEFINITIONS. In this chapter: |
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(1) "Covered individual" means an individual entitled |
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to benefits described by Section 140.002. |
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(2) "Payor of benefits" or "payor" means an issuer of a |
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plan providing benefits described by Section 140.002 that: |
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(A) pays benefits to or on behalf of a covered |
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individual as a result of personal injuries to the covered |
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individual caused by the tortious conduct of a third party; and |
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(B) has a contractual right of subrogation |
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described by Section 140.004. |
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Sec. 140.002. APPLICABILITY OF CHAPTER. (a) This chapter |
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applies to an issuer of a health benefit plan that provides benefits |
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for medical or surgical expenses incurred as a result of a health |
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condition, accident, or sickness, a disability benefit plan, or an |
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employee welfare benefit plan, 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, including: |
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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, Insurance Code; |
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(3) a fraternal benefit society operating under |
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Chapter 885, Insurance Code; |
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(4) a stipulated premium insurance company operating |
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under Chapter 884, Insurance Code; |
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(5) a reciprocal exchange operating under Chapter 942, |
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Insurance Code; |
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(6) a health maintenance organization operating under |
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Chapter 843, Insurance Code; |
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(7) a multiple employer welfare arrangement that holds |
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a certificate of authority under Chapter 846, Insurance Code; or |
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(8) an approved nonprofit health corporation that |
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holds a certificate of authority under Chapter 844, Insurance Code. |
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(b) Notwithstanding Section 172.014, Local Government Code, |
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or any other law, this chapter applies to a risk pool providing |
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health and accident coverage under Chapter 172, Local Government |
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Code. |
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(c) Notwithstanding any other law, this chapter applies to |
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an issuer of a plan or coverage under Chapter 1551, 1575, 1579, or |
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1601, Insurance Code. |
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(d) Notwithstanding any other law, this chapter applies to |
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any self-funded issuer of a plan that provides a benefit described |
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by Subsection (a). |
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(e) This chapter applies to any policy, evidence of |
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coverage, or contract under which a benefit described by Subsection |
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(a) is provided and: |
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(1) that is delivered, issued for delivery, or entered |
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into in this state; or |
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(2) under which an individual or group in this state is |
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entitled to benefits. |
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(f) This chapter does not apply to: |
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(1) a workers' compensation insurance policy or any |
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other source of medical benefits under Title 5, Labor Code; |
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(2) Medicare; |
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(3) the Medicaid program under Chapter 32, Human |
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Resources Code; |
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(4) a Medicaid managed care program operated under |
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Chapter 533, Government Code; |
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(5) the state child health plan or any other program |
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operated under Chapter 62 or 63, Health and Safety Code; or |
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(6) a self-funded plan that is subject to the Employee |
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Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et |
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seq.). |
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Sec. 140.003. CONFLICTS WITH OTHER LAW. In the event of a |
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conflict between this chapter and another law, including a rule of |
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procedure or evidence, this chapter controls to the extent of the |
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conflict. |
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Sec. 140.004. CONTRACTUAL SUBROGATION RIGHTS AUTHORIZED. |
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An issuer of a plan that provides benefits described by Section |
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140.002 under which the policy or plan issuer may be obligated to |
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make payments or provide medical or surgical benefits to or on |
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behalf of a covered individual as a result of a personal injury to |
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the individual caused by the tortious conduct of a third party may |
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contract to be subrogated to and have a right of reimbursement for |
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payments made or costs of benefits provided from the individual's |
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recovery for that injury, subject to this chapter. |
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Sec. 140.005. PAYORS' RECOVERY LIMITED. (a) If an injured |
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covered individual is entitled by law to seek a recovery from the |
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third-party tortfeasor for benefits paid or provided by a subrogee |
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as described by Section 140.004, then all payors are entitled to |
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recover as provided by Subsection (b) or (c). |
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(b) This subsection applies when a covered individual is not |
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represented by an attorney in obtaining a recovery. All payors' |
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share under Subsection (a) of a covered individual's recovery is an |
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amount that is equal to the lesser of: |
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(1) one-half of the covered individual's gross |
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recovery; or |
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(2) the total cost of benefits paid, provided, or |
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assumed by the payor as a direct result of the tortious conduct of |
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the third party. |
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(c) This subsection applies when a covered individual is |
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represented by an attorney in obtaining a recovery. All payors' |
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share under Subsection (a) of a covered individual's recovery is an |
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amount that is equal to the lesser of: |
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(1) one-half of the covered individual's gross |
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recovery less attorney's fees and procurement costs as provided by |
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Section 140.007; or |
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(2) the total cost of benefits paid, provided, or |
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assumed by the payor as a direct result of the tortious conduct of |
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the third party less attorney's fees and procurement costs as |
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provided by Section 140.007. |
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(d) A common law doctrine that requires an injured party to |
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be made whole before a subrogee makes a recovery does not apply to |
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the recovery of a payor under this section. |
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Sec. 140.006. ATTORNEY'S FEES IN DECLARATORY JUDGMENT |
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ACTION. Notwithstanding Section 37.009 or any other law, if a |
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declaratory judgment action is brought under this chapter, the |
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court may not award costs or attorney's fees to any party in the |
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action. |
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Sec. 140.007. ATTORNEY'S FEES IN RECOVERY ACTION. (a) |
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Except as provided by Subsection (c), a payor of benefits whose |
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interest is not actively represented by an attorney in an action to |
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recover for a personal injury to a covered individual shall pay to |
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an attorney representing the covered individual a fee in an amount |
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determined under an agreement entered into between the attorney and |
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the payor plus a pro rata share of expenses incurred in connection |
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with the recovery. |
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(b) Except as provided by Subsection (c), in the absence of |
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an agreement described by Subsection (a), the court shall award to |
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the attorney, payable out of the payor's share of the total gross |
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recovery, a reasonable fee for recovery of the payor's share, not to |
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exceed one-third of the payor's recovery. |
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(c) If an attorney representing the payor's interest |
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actively participates in obtaining a recovery, the court shall |
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award and apportion between the covered individual's and the |
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payor's attorneys a fee payable out of the payor's subrogation |
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recovery. In apportioning the award, the court shall consider the |
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benefit accruing to the payor as a result of each attorney's |
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service. The total attorney's fees may not exceed one-third of the |
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payor's recovery. |
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Sec. 140.008. FIRST-PARTY RECOVERY. (a) Except as provided |
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by Subsection (b), a payor of benefits may not pursue a recovery |
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against a covered individual's first-party recovery. |
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(b) A payor of benefits may pursue recovery against |
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uninsured/underinsured motorist coverage or medical payments |
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coverage only if the covered individual or the covered individual's |
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immediate family did not pay the premiums for the coverage. |
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Sec. 140.009. CONSTRUCTION OF CHAPTER. This chapter does |
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not create a cause of action. Nothing in this chapter shall be |
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construed to prevent a payor of benefits from waiving, negotiating, |
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or not pursuing any claim or recovery described by Section 140.004 |
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or 140.005. |
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SECTION 2. Section 172.015, Local Government Code, is |
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repealed. |
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SECTION 3. It is the intent of the legislature that if any |
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provision, section, subsection, sentence, clause, phrase, or word |
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of this Act or the application thereof to any person or circumstance |
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is found to be unconstitutional, the provision, section, |
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subsection, sentence, clause, phrase, or word is hereby declared to |
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be severable and the balance of this Act remains effective |
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notwithstanding such unconstitutionality. Moreover, the |
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legislature declares that it would have passed this Act, and each |
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provision, section, subsection, sentence, clause, phrase, or word |
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thereof, irrespective of the fact that any provision, section, |
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subsection, sentence, clause, phrase, or word, or any of their |
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applications, were to be declared unconstitutional. |
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SECTION 4. The change in law made by this Act applies only |
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to a contractual right of subrogation in a cause of action that |
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accrues on or after the effective date of this Act to assert a |
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contractual right of subrogation or recovery described by Section |
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140.004, Civil Practice and Remedies Code, as added by this Act. |
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SECTION 5. This Act takes effect January 1, 2014. |
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