BILL ANALYSIS

 

 

Senate Research Center	H.B. 2113
	By: Goldman (Zaffirini)
	Business & Commerce
	5/4/2017
	Engrossed

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

It is burdensome to licensees and wasteful of public resources to administer licensing programs that do little to protect the public good. For that reason, the Texas Department of Licensing and Regulation (TDLR) has undertaken a strategic initiative to identify licensing programs that could be deregulated without threatening public health, safety, or welfare. Current law requires licensing of for-profit legal service contract companies, which sell contracts that enable a consumer to obtain a set amount of legal counsel or representation for a specific time and price, varying by the type of service contracted for. Found in Chapter 953, Occupations Code, the program requires licensees to pay a $250-$750 initial and renewal fee for companies and $20-$25 for salespersons. What's more, both companies and salespersons are subject to disciplinary action in the form of administrative penalties and sanctions. According to TDLR, in 2016 the program had 15 licensed companies, approximately 11,000 licensed salespersons, and one licensed administrator. The program had only 29 complaints filed that year, and only one disciplinary action was taken. TDLR concludes that deregulation would pose minimal threat to consumers. To address this, H.B. 2113 would repeal the statewide licensing requirement but would not change provisions relating to requirements for contracting attorneys, the form of and disclosures required in legal service contracts, or consumer protections for contract holders through the Deceptive Trade Practices Act

 

H.B. 2113 amends current law relating to the regulation of for-profit legal service contract companies.

 

RULEMAKING AUTHORITY

 

Rulemaking authority previously granted to the executive director of the Texas Department of Licensing and Regulation is rescinded in SECTION 2 (Section 953.156, Occupations Code), SECTION 3 (Section 953.162, Occupations Code), and SECTION 5 (Sections 953.005, 953.056, and 953.057, Occupations Code)�� of this bill.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Section 953.001(1), Occupations Code, to redefine "administrator."

 

SECTION 2. Amends Section 953.156, Occupations Code, as follows:

 

Sec. 953.156. FORM OF LEGAL SERVICE CONTACT AND REQUIRED DISCLOSURES. Deletes existing Subsection (a) requiring that a legal service contract and any subsequent endorsement or attachment to the contract be filed with the executive director of the Texas Department of Licensing and Regulation (executive director) before certain actions are taken. Deletes existing text requiring that a legal service contract marketed, sold, offered for sale, administered, or issued in this state include certain contact information for the Texas Department of Licensing and Regulation (TDLR) and any other items required by the executive director of TDLR as determined by rule.

 

SECTION 3. Amends Section 953.162, Occupations Code, to delete existing text authorizing the executive director of TDLR to adopt rules regarding the registration of an administrator with TDLR.

 

SECTION 4. Amends Chapter 953, Occupations Code, by adding Subchapter F, as follows:

 

SUBCHAPTER F. ENFORCEMENT

 

Sec. 953.251. DECEPTIVE TRADE PRACTICE. Provides that a violation of this chapter (Regulation of For-Profit Legal Service Contract Companies) is a deceptive trade practice actionable under Subchapter E (Deceptive Trade Practices and Consumer Protection), Chapter 17 (Deceptive Trade Practices), Business & Commerce Code.

 

SECTION 5. Repealers:

 

(1) Sections 953.001(4) (relating to the definition of "department"), (5) (relating to the definition of "executive director"), and (6) (relating to the definition of "financial security"), Occupations Code;

 

(2) Sections 953.004 (Prepaid Legal Service Contract Programs), 953.005 (Powers and Duties of Executive Director), and 953.155 (Company Records), Occupations Code; and

 

(3) Subchapters B (Registration Requirements), C (Financial Security Requirements for Legal Service Contract Companies), and E (Disciplinary Action), Chapter 953, Occupations Code.

 

SECTION 6. (a) Provides that, on the effective date of this Act, a registration issued under former Subchapter B, Chapter 953, Occupations Code, expires.

 

(b) Provides that, on the effective date of this Act, a pending proceeding under Chapter 953, Occupations Code, including a complaint investigation, disciplinary action, or administrative penalty proceeding, relating to a registration issued under former Subchapter B, Chapter 953, Occupations Code, or relating to another former provision of Chapter 953, Occupations Code, that is repealed by this Act, is dismissed.

 

SECTION 7. Effective date: September 1, 2019.