83R7234 AJA-F
 
  By: Duncan S.B. No. 1339
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to contractual subrogation rights of certain insurers and
  benefit plan issuers.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 6, Civil Practice and Remedies Code, is
  amended by adding Chapter 140 to read as follows:
  CHAPTER 140. CONTRACTUAL SUBROGATION RIGHTS OF PAYORS OF CERTAIN
  BENEFITS
         Sec. 140.001.  DEFINITIONS. In this chapter:
               (1)  "Covered individual" means an individual entitled
  to benefits described by Section 140.002.
               (2)  "Payor of benefits" or "payor" means an issuer of a
  plan providing benefits described by Section 140.002 who:
                     (A)  pays benefits to or on behalf of a covered
  individual as a result of personal injuries to the covered
  individual caused by the tortious conduct of a third party; and
                     (B)  has a contractual right of subrogation
  described by Section 140.004.
         Sec. 140.002.  APPLICABILITY OF CHAPTER. (a) This chapter
  applies to an issuer of a health benefit plan that provides benefits
  for medical or surgical expenses incurred as a result of a health
  condition, accident, or sickness, a disability benefit plan, or an
  employee welfare benefit plan, including an individual, group,
  blanket, or franchise insurance policy or insurance agreement, a
  group hospital service contract, or an individual or group evidence
  of coverage or similar coverage document, including:
               (1)  an insurance company;
               (2)  a group hospital service corporation operating
  under Chapter 842, Insurance Code;
               (3)  a fraternal benefit society operating under
  Chapter 885, Insurance Code;
               (4)  a stipulated premium insurance company operating
  under Chapter 884, Insurance Code;
               (5)  a reciprocal exchange operating under Chapter 942,
  Insurance Code;
               (6)  a health maintenance organization operating under
  Chapter 843, Insurance Code;
               (7)  a multiple employer welfare arrangement that holds
  a certificate of authority under Chapter 846, Insurance Code; or
               (8)  an approved nonprofit health corporation that
  holds a certificate of authority under Chapter 844, Insurance Code.
         (b)  Notwithstanding Section 172.014, Local Government Code,
  or any other law, this chapter applies to a risk pool providing
  health and accident coverage under Chapter 172, Local Government
  Code.
         (c)  Notwithstanding any provision in Chapter 1551, 1575,
  1579, or 1601, Insurance Code, or any other law, this chapter
  applies to an issuer of:
               (1)  a basic coverage plan under Chapter 1551,
  Insurance Code;
               (2)  a basic plan under Chapter 1575, Insurance Code;
               (3)  a primary care coverage plan under Chapter 1579,
  Insurance Code; and
               (4)  basic coverage under Chapter 1601, Insurance Code.
         (d)  Notwithstanding any other law, this chapter applies to
  any self-funded issuer of a plan that provides a benefit described
  by Subsection (a).
         (e)  This chapter applies to any policy, evidence of
  coverage, or contract under which a benefit described by Subsection
  (a) is provided and:
               (1)  that is delivered, issued for delivery, or entered
  into in this state; or
               (2)  under which an individual or group in this state is
  entitled to benefits.
         Sec. 140.003.  CONFLICTS WITH OTHER LAW. In the event of a
  conflict between this chapter and another law, including a rule of
  procedure or evidence, this chapter controls to the extent of the
  conflict.
         Sec. 140.004.  CONTRACTUAL SUBROGATION RIGHTS AUTHORIZED.
  An issuer of a plan that provides benefits described by Section
  140.002 under which the policy or plan issuer may make payments to
  or on behalf of a covered individual as a result of a personal
  injury to the individual caused by the tortious conduct of a third
  party may contract to be subrogated to and have a right of
  reimbursement from the individual's recovery for that injury,
  subject to this chapter.
         Sec. 140.005.  PAYOR'S RECOVERY LIMITED. (a)  If an injured
  covered individual to whose rights a payor of benefits is
  subrogated is not able to realize a complete and adequate recovery
  for an injury sustained as a result of the actionable tortious
  conduct of a third party, the payor is entitled to recover as
  provided by Subsection (b).
         (b)  Subject to Subsections (c), (d), and (e), a payor's
  share under Subsection (a) of a covered individual's recovery 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 benefits paid by the payor as a
  direct result of the tortious conduct of the third party.
         (c)  A covered individual may bring a declaratory judgment
  action to limit the amount of a payor's recovery under this section
  to an amount that is less than the amount otherwise payable under
  Subsection (b), as provided by Subsections (d) and (e).
         (d)  If, in an action under Subsection (c), the covered
  individual proves by a preponderance of the evidence that the
  covered individual's total recovery is less than 50 percent of the
  value of the covered person's underlying claim for damages, the
  payor's total recovery under this section is limited to an amount
  that is not less than 15 percent of and not more than one-third of
  the covered individual's total recovery.
         (e)  If, in an action under Subsection (c), the covered
  individual shows by clear and convincing evidence that the payor's
  recovery of an amount otherwise payable under this section would
  result in a recognized injustice, the payor's total recovery under
  this section is limited to an amount that is less than 15 percent of
  and equal to or greater than five percent of the covered
  individual's total recovery.
         (f)  A common law doctrine that requires an injured party to
  be made whole before a subrogee makes a recovery does not apply to
  the recovery of a payor under this section.
         Sec. 140.006.  ATTORNEY'S FEES IN ACTION TO LIMIT SUBROGEE'S
  RECOVERY. Notwithstanding Section 37.009 or any other law, in an
  action brought under Section 140.005(c), the court may not award
  costs or attorney's fees to any party in the action.
         Sec. 140.007.  ATTORNEY'S FEES IN THIRD-PARTY ACTION. (a)
  Except as provided by Subsection (c), a payor of benefits whose
  interest is not actively represented by an attorney in a
  third-party action to recover for a personal injury to a covered
  individual 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 plus a pro rata share of
  expenses incurred in connection with the recovery.
         (b)  Except as provided by Subsection (c), in the absence of
  an agreement described by Subsection (a), the court shall award to
  the attorney, payable out of the payor's share of the total
  recovery, a reasonable fee for recovery of the payor's share, not to
  exceed one-third of the payor's recovery.
         (c)  Notwithstanding Subsection (a) or (b), a payor may not
  be assessed out of a recovery limited under Section 140.005(d) or
  (e) any attorney's fees under any theory or rule of law, including
  the common fund doctrine.
         Sec. 140.008.  FIRST PARTY RECOVERY. A payor of benefits may
  not pursue a recovery against a covered individual's first party
  recovery.
         Sec. 140.009.  CONSTRUCTION OF CHAPTER. Except as provided
  by Section 140.005(c), this chapter does not create a cause of
  action.
         SECTION 2.  The change in law made by this Act applies only
  to a contractual right of subrogation in:
               (1)  an insurance policy or evidence of coverage
  delivered, issued for delivery, or renewed on or after the
  effective date of this Act; or
               (2)  a contract entered into or renewed on or after the
  effective date of this Act.
         SECTION 3.  This Act takes effect January 1, 2014.