CHAPTER 21. GENERAL PROVISIONS
INSURANCE CODE - NOT CODIFIED
TITLE 1. THE INSURANCE CODE OF 1951
CHAPTER 21. GENERAL PROVISIONS
SUBCHAPTER E. MISCELLANEOUS PROVISIONS
Art. 21.41. OTHER LAWS FOR CERTAIN COMPANIES. No provision of
this chapter shall apply to companies carrying on the business of
life or casualty insurance on the assessment or annual premium
plan, under the provisions of this code.
Acts 1951, 52nd Leg., ch. 491.
Art. 21.42. TEXAS LAWS GOVERN POLICIES. Any contract of
insurance payable to any citizen or inhabitant of this State by
any insurance company or corporation doing business within this
State shall be held to be a contract made and entered into under
and by virtue of the laws of this State relating to insurance,
and governed thereby, notwithstanding such policy or contract of
insurance may provide that the contract was executed and the
premiums and policy (in case it becomes a demand) should be
payable without this State, or at the home office of the company
or corporation issuing the same.
Acts 1951, 52nd Leg., ch. 491.
Art. 21.47. FALSE STATEMENT IN WRITTEN INSTRUMENT; PENALTY. (a)
A person commits an offense if the person knowingly or
intentionally makes, files or uses any instrument in writing
required to be made to or filed with the State Board of Insurance
or the Insurance Commissioner, either by the Insurance Code or by
rule or regulation of the State Board of Insurance, when the
instrument in writing contains any false, fictitious, or
fraudulent statement or entry with regard to any material fact.
(b) For purposes of this article, "Texas Department of Insurance"
includes but is not limited to the executive director of the
Texas Department of Insurance, the State Board of Insurance, or
any association, corporation, or person created by the Insurance
Code.
(c) An offense under this article is a felony of the third
degree.
Added by Acts 1971, 62nd Leg., p. 2449, ch. 789, Sec. 2, eff.
June 8, 1971.
Amended by Acts 1991, 72nd Leg., ch. 565, Sec. 7, eff. Sept. 1,
1991.
Art. 21.49-3. MEDICAL LIABILITY INSURANCE UNDERWRITING
ASSOCIATION ACT.
Sec. 1. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Definitions
Sec. 2. (1) "Medical liability insurance" means primary and
excess insurance coverage against the legal liability of the
insured and against loss, damage, or expense incident to a claim
arising out of the death or injury of any person as the result of
negligence in rendering or the failure to render professional
service by a health care provider or physician who is in one of
the categories eligible for coverage by the association.
(2) "Association" means the joint underwriting association
established pursuant to the provisions of this article.
(3) "Net direct premiums" means gross direct premiums written on
automobile liability and liability other than auto insurance
written pursuant to the provisions of the Insurance Code, less
policyholder dividends, return premiums for the unused or
unabsorbed portion of premium deposits and less return premiums
upon cancelled contracts written on such liability risks.
(4) "Board" means the State Board of Insurance of the State of
Texas.
(5) "Physician" means a person licensed to practice medicine in
this state.
(6) "Health care provider" means:
(A) any person, partnership, professional association,
corporation, facility, or institution duly licensed or chartered
by the State of Texas to provide health care as defined in
Section 1.03(a)(2), Medical Liability and Insurance Improvement
Act of Texas (Article 4590i, Vernon's Texas Civil Statutes), as:
(i) a registered nurse, hospital, dentist, podiatrist,
pharmacist, chiropractor, or optometrist;
(ii) a for-profit or not-for-profit nursing home;
(iii) a radiation therapy center that is independent of any
other medical treatment facility and which is licensed by the
Texas Department of Health in that agency's capacity as the Texas
Radiation Control Agency pursuant to the provisions of Chapter
401, Health and Safety Code, and which is in compliance with the
regulations promulgated under that chapter;
(iv) a blood bank that is a nonprofit corporation chartered to
operate a blood bank and which is accredited by the American
Association of Blood Banks;
(v) a nonprofit corporation which is organized for the delivery
of health care to the public and which is certified under Chapter
162, Occupations Code;
(vi) a health center as defined by 42 U.S.C. Section 254b, as
amended; or
(vii) a for-profit or not-for-profit assisted living facility; or
(B) an officer, employee, or agent of an entity listed in
Paragraph (A) of this subdivision acting in the course and scope
of that person's employment.
Sec. 3. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 3A. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 3B. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 3C. Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.
3B.060(b), eff. September 1, 2007.
Sec. 4. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 4A. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 4B. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Sec. 5. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 6. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 7. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 8. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 9. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18, eff.
April 1, 2007.
Sec. 10. Repealed by Acts 2005, 79th Leg., Ch. 727, Sec. 18,
eff. April 1, 2007.
Dissolution of the association
Sec. 11. Upon the effective date of this article, the board
shall, after consultation with the joint underwriting
association, representatives of the public, the Texas Medical
Association, the Texas Podiatry Association, the Texas Hospital
Association, and other affected individuals and organizations,
promulgate a plan of suspension consistent with the provisions of
this article, to become effective and operative on December 31,
1985, unless the board determines before that time that the
association may be suspended or is no longer needed to accomplish
the purposes for which it was created. The plan of suspension
shall contain provisions for maintaining reserves for losses
which may be reported subsequent to the expiration of all
policies in force at the time of such suspension. If, after the
date of suspension ordered by the board, the board finds, after
notice and hearing, that all known claims have been paid,
provided for, or otherwise disposed of by the association,
relating to policies issued prior to such suspension, then the
board may wind up the affairs of the association, relating to
policies issued prior to such suspension, by paying all funds
remaining in the association to a special fund created by the
statutory liquidator of the board as a reasonable reserve to be
administered by said liquidator for unknown claims and claims
expenses and for reimbursing assessments and contributions in
accordance with Section 4(b)(5) of this article. The board shall,
after consultation with the representatives of the public, the
Texas Medical Association, the Texas Podiatry Association, the
Texas Hospital Association, and other affected individuals and
organizations, promulgate a plan for distribution of funds, if
any, less reasonable and necessary expenses, to the policyholders
ratably in proportion to premiums and assessments paid during the
period of time prior to suspension in which the association
issued policies. When all claims have been paid and no further
liability of this association exists, the statutory liquidator
shall distribute all funds in its possession to the applicable
policyholders in accordance with the plan promulgated by the
board. If such reserve fund administered by the statutory
liquidator proves inadequate, the association shall be treated as
an insolvent insurer in respect to the applicable provisions of
Articles 21.28, 21.28A and 21.28-C, Insurance Code, not
inconsistent with this article. Notice of claim shall be made
upon the board.
Authority of the board over dissolution
Sec. 12. At any time the board finds that the association is no
longer needed to accomplish the purposes for which it was
created, the board may issue an order suspending the association
as of a certain date stated in the order. As soon as may be
reasonably practical after December 31, 1984, the board shall
determine whether or not medical liability insurance is
reasonably available to physicians, health care providers, or any
category of physicians or health care providers in this state
through facilities other than the association and the need for
the continuation of the operation of the association as to
physicians, health care providers, or any category of physicians
or health care providers. The board shall not make such
determination until a public meeting has been held. Prior notice
of such meeting shall be given at least 10 days to the same
persons or entities as are required for consultation in Section
11 of this article.
Termination of policies
Sec. 13. After the date ordered for suspension by the board, no
policies will be issued by the association. All then issued
policies shall continue in force until terminated in accordance
with the terms and conditions of such policies.
Acts 1975, 64th Leg., p. 867, ch. 331, Sec. 1, eff. June 3, 1975.
Amended by Acts 1977, 65th Leg., p. 129, ch. 59, Sec. 1, 2, eff.
April 13, 1977; Acts 1977, 65th Leg. p. 2057, ch. 817, Sec. 31.03
to 31.12, eff. Aug. 29, 1977; Acts 1979, 66th Leg., p. 147, ch.
79, Sec. 1, 2, eff. Aug. 27, 1979; Acts 1981, 67th Leg., p. 3159,
ch. 829, Sec. 1, eff. June 17, 1981.
Secs. 3, 11 to 13 amended by Acts 1983, 68th Leg., p. 5027, ch.
904, Sec. 1, eff. Aug. 29, 1983; Sec. 2(6) amended by Acts 1986,
69th Leg., 3rd C.S., ch. 11, Sec. 1, eff. Oct. 2, 1986; Sec. 3(b)
amended by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 7.02, eff.
Sept. 2, 1987; Sec. 2(6) amended by Acts 1991, 72nd Leg., ch. 14,
Sec. 284(89), eff. Sept. 1, 1991; Sec. 6 amended by Acts 1991,
72nd Leg., ch. 242, Sec. 9.11, eff. Sept. 1, 1991; Sec. 7(b)
amended by Acts 1991, 72nd Leg., ch. 242, Sec. 1.14, eff. Sept.
1, 1991; Sec. 7(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec.
22.07, eff. Sept. 1, 1993; Sec. 10 amended by Acts 1997, 75th
Leg., ch. 879, Sec. 9, eff. Sept. 1, 1997; Sec. 7 amended by Acts
1999, 76th Leg., ch. 779, Sec. 1, eff. Sept. 1, 1999; Sec. 2(6)
amended by Acts 2001, 77th Leg., ch. 921, Sec. 1, eff. Sept. 1,
2001; Sec. 2(6) amended by Acts 2001, 77th Leg., ch. 1284, Sec.
5.04, eff. June 15, 2001; Sec. 3A(c) added by Acts 2001, 77th
Leg., ch. 921, Sec. 2, eff. Sept. 1, 2001; Sec. 3A(c) added by
Acts 2001, 77th Leg., ch. 1284, Sec. 5.05, eff. June 15, 2001;
Sec. 4(b)(1) amended by Acts 2001, 77th Leg., ch. 921, Sec. 3,
eff. Sept. 1, 2001; Sec. 4(b)(1), (3) amended by Acts 2001, 77th
Leg., ch. 1284, Sec. 5.06, eff. June 15, 2001; Sec. 4(b)(6) added
by Acts 2001, 77th Leg., ch. 1284, Sec. 5.06, eff. June 15, 2001;
Sec. 4(d) added by Acts 2001, 77th Leg., ch. 921, Sec. 4, eff.
Sept. 1, 2001; Sec. 4A amended by Acts 2001, 77th Leg., ch. 921,
Sec. 5, eff. Sept. 1, 2001; Sec. 4A amended by Acts 2001, 77th
Leg., ch. 1284, Sec. 5.07, eff. June 15, 2001; Secs. 4B, 4C added
by Acts 2001, 77th Leg., ch. 1284, Sec. 5.08, eff. June 15, 2001;
Sec. 5 amended by Acts 2001, 77th Leg., ch. 1284, Sec. 5.09, eff.
June 15, 2001; Sec. 2(6) amended by Acts 2003, 78th Leg., ch.
141, Sec. 3, eff. Sept. 1, 2003; Sec. 3(d), added by Acts 2003,
78th Leg., ch. 1195, Sec. 1, eff. Sept. 1, 2003; Sec. 3A amended
by Acts 2003, 78th Leg., ch. 141, Sec. 4, eff. Sept. 1, 2003;
Sec. 3B added by Acts 2003, 78th Leg., ch. 141, Sec. 5, eff.
Sept. 1, 2003; Sec. 4(a)(2) amended by Acts 2003, 78th Leg., ch.
56, Sec. 1, eff. Sept. 1, 2003; Sec. 4(b)(1) amended by Acts
2003, 78th Leg., ch. 141, Sec. 6, eff. Sept. 1, 2003; Sec.
4(b)(2) amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.47(8),
eff. June 11, 2003; Sec. 4(b)(3), amended by Acts 2003, 78th
Leg., ch. 141, Sec. 6, eff. Sept. 1, 2003; Sec. 4(b)(4) amended
by Acts 2003, 78th Leg., ch. 206, Sec. 21.34, eff. June 11, 2003;
Sec. 4(b)(5) amended by Acts 2003, 78th Leg., ch. 206, Sec.
18.01, eff. June 11, 2003; Sec 4(b)(6) amended by Acts 2003, 78th
Leg., ch. 141, Sec. 6, eff. Sept. 1, 2003; Sec. 4(e), (f) added
by Acts 2003, 78th Leg., ch. 56, Sec. 2, eff. Sept. 1, 2003; Sec.
4A amended by Acts 2003, 78th Leg., ch. 141, Sec. 7, eff. Sept.
1, 2003; amended by Acts 2003, 78th Leg., ch. 1195, Sec. 2, eff.
Sept. 1, 2003; Sec. 4A(b) amended by Acts 2003, 78th Leg., ch.
56, Sec. 3, eff. Sept. 1, 2003; Sec. 4B(a) amended by Acts 2003,
78th Leg., ch. 141, Sec. 9, eff. Sept. 1, 2003; Sec. 4B(b)
amended by Acts 2003, 78th Leg., ch. 56, Sec. 4, eff. Sept. 1,
2003; amended by Acts 2003, 78th Leg. ch. 141, Sec. 9, eff. Sept.
1, 2003; Sec. 4B(d), (e), (h) amended by Acts 2003, 78th Leg.,
ch. 141, Sec. 9, eff. Sept. 1, 2003; Sec. 4C(a), (c) amended by
Acts 2003, 78th Leg., ch. 141, Sec. 10, eff. Sept. 1, 2003, Sec.
4C(d-1) added by Acts 2003, 78th Leg., ch. 141, Sec. 10, eff.
Sept. 1, 2003; Sec. 5(a) amended by Acts 2003, 78th Leg., ch.
141, Sec. 11, eff. Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch.
246, Sec. 1, eff. May 30, 2005.
Acts 2005, 79th Leg., Ch.
727, Sec. 18, eff. April 1, 2007.
Acts 2005, 79th Leg., Ch.
1136, Sec. 2, eff. June 18, 2005.
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.060(b), eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.060(b), eff. September 1, 2007.
Art. 21.49-3a. REACTIVATION OF JOINT UNDERWRITING ASSOCIATIONS .
Sec. 1. Subsequent to the suspension of the operation of the
Joint Underwriting Association created by the Texas Medical
Liability Insurance Underwriting Association Act (Article
21.49-3, Insurance Code), it may be reactivated in conformity
with the terms of Section 3 of this article. The board may also,
if it deems such action to be appropriate, direct the statutory
liquidator to secure reinsurance for all claims which potentially
might be brought on policies issued by the Joint Underwriting
Association or take any other action which will reduce to a
minimum the participation and activities of the Joint
Underwriting Association until such time as the association may
be reactivated under the terms of Section 3 of this article.
Sec. 2. All terms used in this article have the same meanings as
those specifically set out in Section 2, Article 21.49-3,
Insurance Code.
Sec. 3. The State Board of Insurance, after notice and hearing as
hereinafter provided, is authorized to reactivate the Joint
Underwriting Association created by Article 21.49-3, Insurance
Code. A hearing to determine the need for reactivation shall be
set by the State Board of Insurance on petition of the Texas
Medical Association, the Texas Podiatry Association, or the Texas
Hospital Association or as many as 15 physicians or health care
providers practicing or operating in this state, or such hearing
may be set by the State Board of Insurance on its own finding
that physicians or health care providers, or any category
thereof, in this state are threatened with the possibility of
being unable to secure medical liability insurance. At least 15
days prior to the date set, notice of the hearing shall be given
to each insurer which, if reactivation is ordered, would be a
member of the association as provided in Section 3(a), Article
21.49-3, Insurance Code. If the board finds that reactivation of
the Joint Underwriting Association will be in the public
interest, the board shall order the reactivation, designating the
category or categories of physicians or health care providers who
shall be eligible to secure medical liability insurance coverage
from the association and specifying in the order a date not fewer
than 15 nor more than 60 days thereafter on which the provisions
of Article 21.49-3, Insurance Code, shall become effective as if
the same had been reenacted to be effective on the date specified
in the order.
Added by Acts 1983, 68th Leg., p. 5031, ch. 904, Sec. 2, eff.
Aug. 29, 1983.
Art. 21.49-3c. TEXAS NONPROFIT ORGANIZATION LIABILITY INSURANCE
UNDERWRITING ASSOCIATION.
Definitions
Sec. 1. In this article:
(1) "Association" means the Texas Nonprofit Organization
Liability Insurance Underwriting Association.
(2) "Board" means the State Board of Insurance.
(3) "Board of directors" means the board of directors of the
association.
(4) "Fund" means the policyholder stabilization reserve fund.
(5) "Net direct premiums" means gross direct premiums written on
automobile liability and liability other than automobile
insurance written under this code, less the total of the
policyholder dividends, return premiums for the unused or
unabsorbed portion of premium deposits, and return premiums on
canceled contracts written on those liability risks.
(6) "Nonprofit organization" means an organization that is listed
under Section 501(c)(3) or (4), Internal Revenue Code of 1986.
(7) "Nonprofit organization liability insurance" means primary
insurance coverage against the legal liability of the insured
organization and its officers and employees acting on behalf of
the organization and against any loss, damage, or expense
incident to a claim arising out of the acts of the insured
organization or its officers and employees acting on behalf of
the organization.
Creation; composition of the association; dissolution
Sec. 2. (a) The Texas Nonprofit Organization Liability Insurance
Underwriting Association is created if, after notice and hearing,
the board determines that a market assistance program created
under Article 21.49-12 of this code has not alleviated a problem
in the availability of liability insurance to nonprofit
organizations. The board may not make this determination until a
market assistance program has been in operation for at least 180
days.
(b) The association is composed of all insurers authorized to
write and engaged in writing, on or after January 1, 1987,
automobile liability insurance and liability other than
automobile insurance in this state on a direct basis as provided
by this code and includes Lloyd's and reciprocal or
interinsurance exchanges.
(c) The association does not include farm mutual insurance
companies authorized by Chapter 16 of this code and mutual
insurance companies authorized by Chapter 17 of this code.
(d) Each insurer covered by Subsection (b) of this section must
be a member of the association as a condition of its authority to
continue to transact a liability insurance business in this
state.
(e) The association is not a licensed insurer under Article
1.14-2 of this code.
(f) Not later than the first anniversary of the creation of the
association under this section, the board shall give notice and
hold a hearing to determine whether it is necessary to continue
the association beyond the first anniversary of its creation. If
the association is continued beyond the first anniversary of its
creation, the board shall give notice and hold a hearing annually
to determine whether it is necessary to continue the association
for another year.
Insurer participation in association
Sec. 3. (a) Each insurer that is a member of the association
shall participate in its writings, expenses, and losses in the
proportion that the net direct premiums of each member, excluding
that portion of premiums attributable to the operation of the
association, written during the preceding calendar year bears to
the aggregate net direct premiums written in this state by all
members of the association.
(b) Each insurer's participation in the association shall be
determined annually on the basis of net direct premiums written
during the preceding calendar year, as reported in the annual
statements and other reports filed by the insurer with the board.
(c) A member of the association is not obligated in any one year
to reimburse the association in excess of one percent of its
surplus to policyholders on account of its proportionate share in
the deficit from the operations of the association in that year.
The aggregate amount not reimbursed shall be reallocated among
the remaining members under the method of determining
participation provided by this section, after excluding from the
computation the total net direct premiums of all members not
sharing in the excess deficit.
(d) If the deficit from the operations allocated to all members
of the association in a calendar year exceeds one percent of
their respective surplus to policyholders, the amount of the
deficit shall be allocated to each member under the method of
determining participation under this section.
General responsibility of association
Sec. 4. The association shall provide liability insurance on a
self-supporting basis to nonprofit organizations.
General authority
Sec. 5. Pursuant to this article and the plan of operation, the
association may:
(1) issue, or cause to be issued, nonprofit organization
liability insurance policies that include primary and incidental
coverages in amounts not to exceed $750,000 per occurrence and
$1.5 million aggregate a year for an individual insured;
(2) underwrite association insurance and adjust and pay losses
with respect to that insurance;
(3) appoint service companies to adjust and pay losses for the
association; and
(4) purchase reinsurance.
Board of directors
Sec. 6. (a) The association is governed by a board of directors
composed of nine members.
(b) Members of the board of directors serve for terms of one
year.
(c) Four members of the board of directors shall be members of
the general public, appointed by the board. The remaining members
of the board of directors shall be selected by members of the
association and must be selected so that they fairly represent
various classes of insurers and organizations that are members of
the association.
(d) The plan of operation shall provide a process for the
selection of members of the board of directors who are
representatives of the insurance industry.
(e) A public representative who is a member of the board of
directors may not be:
(1) an officer, director, or employee of an insurance company,
insurance agency, agent, broker, solicitor, adjuster, or any
other business entity regulated by the State Board of Insurance;
(2) a person required to register with the secretary of state
under Chapter 305, Government Code; or
(3) related to a person described by Subdivision (1) or (2) of
this subsection within the second degree of affinity or
consanguinity.
Plan of operation
Sec. 7. (a) The initial board of directors of the association
shall prepare and adopt a plan of operation that is consistent
with this article.
(b) The plan must provide for:
(1) economic, fair, and nondiscriminatory administration of the
association and its duties;
(2) prompt and efficient provision of primary liability insurance
for nonprofit organizations;
(3) preliminary assessment of association members for initial
expenses necessary to begin operations;
(4) establishing necessary facilities;
(5) management of the association;
(6) assessment of members and policyholders to defray losses and
expenses;
(7) administration of the policyholder stabilization reserve
fund;
(8) commission arrangements;
(9) reasonable and objective underwriting standards;
(10) obtaining reinsurance;
(11) appointment of servicing carriers; and
(12) determining amounts of insurance to be provided by the
association.
(c) The plan of operation must provide that any balance remaining
in the various funds of the association at the close of its
fiscal year shall be added to the reserves of the association. A
balance remaining at the close of the fiscal year means the
excess of revenue over expenditures after reimbursement of
members' contributions as provided by Section 12 of this article.
(d) The board of directors may amend the plan of operation with
the approval of the board and shall amend the plan of operation
at the direction of the board.
Eligibility for coverage
Sec. 8. (a) The board, by order, shall establish the categories
of nonprofit organizations that are eligible to obtain coverage
from the association and may amend the order to include or
exclude from eligibility particular categories of nonprofit
organizations.
(b) If a category of nonprofit organizations is excluded from
eligibility to obtain coverage from the association, the board,
after notice and hearing, may determine that liability insurance
for nonprofit organizations in that category is not available,
and on that determination that category of nonprofit
organizations is eligible to obtain insurance coverage from the
association.
Application for coverage
Sec. 9. (a) A nonprofit organization included in a category
eligible for coverage by the association is entitled to submit an
application to the association for coverage as provided by this
article and the plan of operation.
(b) An agent authorized under Article 21.14 of this code may
submit the application to the association on behalf of an
applicant.
(c) If the association determines that the applicant meets the
underwriting standards provided by the plan of operation and that
there is no unpaid, uncontested premium, policyholder
stabilization reserve fund charge, or assessment owed by the
applicant for prior insurance, the association, on receipt of the
premium and the policyholder stabilization reserve fund charge or
the portion of that charge required by the plan of operation,
shall cause a liability insurance policy to be issued to the
nonprofit organization for one year.
Rates and policy forms
Sec. 10. (a) The rates, rating plans, rating rules, rating
classification, territories, and policy forms that apply to
liability insurance written by the association and the statistics
relating to that insurance coverage are governed by Subchapter B,
Chapter 5, of this code, except to the extent that this article
is in conflict. This article prevails over any conflict with
Subchapter B, Chapter 5, of this code.
(b) In carrying out its responsibilities under Subsection (a) of
this section, the board shall give due consideration to the past
and prospective loss and expense experience, as available, for
liability insurance covering nonprofit organizations inside and
outside this state for all member companies of the association,
trends in frequency and severity of losses, the investment income
of the association, and other information the board may require.
(c) After the initial year of operation for the association,
rates, rating plans, and rating rules and any provision for
recoupment shall be based on the association's loss and expense
experience to the extent credible, together with other
information based on that experience. The board of directors
shall engage the services of an independent actuarial firm to
develop and recommend actuarially sound rates, rating plans, and
rating rules and classifications. Those recommendations shall
become effective unless, after hearing and not later than the
30th day after the date the recommendations are submitted, the
commissioner determines the recommendations to be arbitrary and
capricious.
Association deficit
Sec. 11. (a) A deficit sustained by the association in any year
shall be recouped pursuant to the plan of operation and the
rating plan that is in effect at the time of the deficit.
(b) The association shall recoup the deficit by following one or
more of the following procedures in this sequence:
(1) a contribution from the policyholder stabilization reserve
fund until that fund is exhausted;
(2) an assessment on the policyholders under Section 13 of this
article; and
(3) an assessment on the members of the association as provided
by Section 12 of this article.
Assessment of association members
Sec. 12. (a) In addition to assessments paid as provided by the
plan of operation and contributions from the policyholder
stabilization reserve fund, if sufficient funds are not available
for the sound financial operation of the association, the members
of the association shall contribute to the financial requirements
of the association on the basis and for the period considered
necessary by the board.
(b) A member of the association shall be reimbursed for any
assessment or contribution made under this section plus interest
at a rate determined by the board.
(c) Pending the recoupment or reimbursement of assessments or
contributions paid by a member to the association, the unrepaid
balance of the assessments and contributions may be reflected in
the books of the member of the association as an admitted asset
of the insurer for all purposes including exhibition in the
annual statement under Article 6.12 of this code.
(d) To the extent that a member of the association has paid one
or more assessments and has not received reimbursement from the
association as provided by Subsection (b) of this section, the
member is entitled to a credit against its premium taxes under
Article 4.10 of this code. The tax credit shall be allowed at a
rate of 20 percent a year over a period of five successive years
following the year in which the deficit is sustained or over a
different number of years at the option of the member.
Policyholder assessment
Sec. 13. (a) Each policyholder of the association has a
contingent liability for a proportionate share of any assessment
of policyholders made under this article.
(b) If a deficit as calculated under the plan of operation is
sustained by the association in any year, the board of directors
shall levy an assessment only on those policyholders who had
policies in force at any time during the two most recently
completed calendar years in which the association issued policies
preceding the date on which the assessment is levied.
(c) The aggregate amount of the assessment shall be equal to that
part of the deficit that is not paid from the policyholder
stabilization reserve fund.
(d) The maximum aggregate assessment for each policyholder may
not exceed the annual premium for the liability policy from the
association most recently in effect.
(e) Subject to the limitation provided by Subsection (d) of this
section, each policyholder shall be assessed for that portion of
the deficit that reflects the proportion that the earned premium
on the policies of the policyholder bears to the total earned
premium for all policies of the association in the two most
recently completed calendar years.
Policyholder stabilization reserve fund
Sec. 14. (a) The policyholder stabilization reserve fund is
created and shall be administered as provided by this article and
the plan of operation.
(b) Each policyholder shall pay to the fund annually an amount
determined annually by the board of directors as provided by the
plan of operation.
(c) The charge shall be computed in proportion to each premium
payment due for liability insurance through the association.
(d) The policy shall state the charge separately. The charge is
not part of the premium and is not subject to premium taxes,
servicing fees, acquisition costs, or any other similar charges.
(e) The association shall collect money for and administer the
fund, and the fund shall be treated as a liability of the
association along with and in the same manner as premium and loss
reserves.
(f) The board of directors shall value the fund annually at the
close of the last preceding year.
(g) The association shall continue to collect the charge until
the time the net balance of the fund is not less than the
projected sum of premiums to be written in the year following the
valuation date under Subsection (f) of this section.
(h) All charges collected from policyholders shall be credited to
the fund, and the fund shall be charged with any deficit from
operations of the association during the previous year.
Appeal
Sec. 15. (a) A person insured or applying for insurance under
this article or his authorized representative or an affected
insurer who may be aggrieved by an act, ruling, or decision of
the association may appeal the act, ruling, or decision to the
board of directors not later than the 30th day after the date on
which the act took place or the ruling or decision was issued.
(b) The board of directors shall hold a hearing on the appeal not
later than the 30th day after the date the appeal is filed and
shall give at least 10 days' written notice of the time and place
of the hearing to the person filing the appeal or his authorized
representative.
(c) Not later than the 10th day after the date the hearing ends,
the board of directors shall issue an order affirming, reversing,
or modifying the appealed act, ruling, or decision.
(d) A person or entity that is a party to an appeal under
Subsection (a) of this section may appeal the board of directors'
decision to the board.
(e) The board shall hold a hearing on an appeal filed under
Subsection (d) of this section not later than the 30th day after
the date on which the appeal is filed with the board and shall
give written notice to any person or entity filing the appeal or
his authorized representative not later than the 10th day before
the date on which the appeal is to be heard.
(f) Not later than the 30th day after the date on which the
board's hearing ends, the board shall decide the appeal and shall
issue an order.
(g) Pending a hearing and decision on an appeal to the board, the
board may suspend or postpone the effective date of the decision
appealed.
(h) A final decision of the board may be appealed as provided by
Subsection (f), Article 1.04, of this code.
Immunity
Sec. 16. The association, its agents and employees, an insurer, a
licensed agent, or the board or its authorized representatives
are not liable for any statements made in good faith by them.
Annual statements
Sec. 17. (a) The association shall file with the board a
statement that includes information with respect to its
transactions, condition, operations, and affairs during the
preceding calendar year. This statement must be filed each year
on or before March 1.
(b) The statement shall include those matters and that
information that is required by the board and shall be in the
form approved by the board.
(c) The board may require the association to furnish additional
information with regard to the association's transactions,
condition, or any matter connected with its transactions and
condition considered to be material and of assistance in
evaluating the scope, operation, and experience of the
association.
Examinations
Sec. 18. The board shall make an examination into the affairs of
the association at least annually. The examination shall be
conducted, the report of the examination filed, and the expenses
borne and paid in the manner provided by Articles 1.15 and 1.16
of this code.
Filing information with state
Sec. 19. The association shall collect the data, information, and
statements and shall file with the board the reports and
statements required by Articles 1.24A and 1.24B of this code.
Added by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 5.06, eff.
Sept. 2, 1987. Sec. 6 amended by Acts 1991, 72nd Leg., ch. 242,
Sec. 9.13, eff. Sept. 1, 1991.
Art. 21.49-5. [BLANK].
Art. 21.52B. PHARMACEUTICAL SERVICES.
Definitions
Sec. 1. In this article:
(1) "Health insurance policy" means an individual, group,
blanket, or franchise insurance policy, insurance policy or
agreement, or group hospital service contract that provides
benefits for pharmaceutical services that are necessary as a
result of or to prevent an accident or sickness, but does not
include evidence of coverage provided by a health maintenance
organization under the Texas Health Maintenance Organization Act
(Chapter 20A, Vernon's Texas Insurance Code).
(2) "Pharmaceutical services" means services, including
dispensing prescription drugs, that are ordinarily and
customarily rendered by a pharmacy or pharmacist licensed to
practice pharmacy under the Texas Pharmacy Act (Article 4542a-1,
Vernon's Texas Civil Statutes).
(3) "Pharmacist" means a person licensed to practice pharmacy
under the Texas Pharmacy Act (Article 4542a-1, Vernon's Texas
Civil Statutes).
(4) "Pharmacy" means a facility licensed as a pharmacy under the
Texas Pharmacy Act (Article 4542a-1, Vernon's Texas Civil
Statutes).
(5) "Drugs" and "prescription drugs" have the meanings assigned
by Section 5, Texas Pharmacy Act (Article 4542a-1, Vernon's Texas
Civil Statutes).
(6) "Managed care plan" means a health maintenance organization,
a preferred provider organization, or another organization that,
under a contract or other agreement entered into with a
participant in the plan:
(A) provides health care benefits, or arranges for health care
benefits to be provided, to a participant in the plan; and
(B) requires or encourages those participants to use health care
providers designated by the plan.
Prohibited contractual provisions
Sec. 2. (a) A health insurance policy or managed care plan that
is delivered, issued for delivery, or renewed or for which a
contract or other agreement is executed may not:
(1) prohibit or limit a person who is a beneficiary of the policy
from selecting a pharmacy or pharmacist of the person's choice to
be a provider under the policy to furnish pharmaceutical services
offered or provided by that policy or interfere with that
person's selection of a pharmacy or pharmacist;
(2) deny a pharmacy or pharmacist the right to participate as a
contract provider under the policy or plan if the pharmacy or
pharmacist agrees to provide pharmaceutical services that meet
all terms and requirements and to include the same
administrative, financial, and professional conditions that apply
to pharmacies and pharmacists who have been designated as
providers under the policy or plan; or
(3) require a beneficiary of a policy or a participant in a plan
to obtain or request a specific quantity or dosage supply of
pharmaceutical products.
(b) Notwithstanding Subsection (a)(3) of this section, a health
insurance policy or managed care plan may allow the physician of
a beneficiary or participant to prescribe drugs in a quantity or
dosage supply the physician determines appropriate and that is in
compliance with state and federal statutes.
(c) This section does not prohibit:
(1) a provision of a policy or plan from limiting the quantity or
dosage supply of pharmaceutical products for which coverage is
provided or providing financial incentives to encourage the
beneficiary or participant and the prescribing physician to use a
program that provides pharmaceutical products in quantities that
result in cost savings to the insurance program or managed care
plan and the beneficiary or participant if the provision applies
equally to all designated providers of pharmaceutical services
under the policy or plan;
(2) a pharmacy card program that provides a means of obtaining
pharmaceutical services offered by the policy or plan through all
designated providers of pharmaceutical services; or
(3) a plan from establishing reasonable application and
recertification fees for a pharmacy which provides pharmaceutical
services as a contract provider under the plan, provided that
such fees are uniformly charged to each pharmacy under contract
to the plan.
Provision void
Sec. 3. A provision of a health insurance policy or managed care
plan that is delivered, issued for delivery, entered into, or
renewed in this state that conflicts with Section 2 of this
article is void to the extent of the conflict.
Construction of article
Sec. 4. This article does not require a health insurance policy
or managed care plan to provide pharmaceutical services.
Application of prohibition
Sec. 5. The provisions of Section 2 of this article do not apply
to a self-insured employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
Section 1001, et seq.).
Sec. 6. Repealed by Acts 1993, 73rd Leg., ch. 685, Sec. 19.06,
eff. Aug. 30, 1993.
Added by Acts 1991, 72nd Leg., ch. 182, Sec. 1, eff. Sept. 1,
1991. Sec. 2(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec.
19.07, eff. Sept. 1, 1993; Sec. 5 amended by Acts 1993, 73rd
Leg., ch. 685, Sec. 19.08, eff. Sept. 1, 1993; Sec. 6 repealed by
Acts 1993, 73rd Leg., ch. 685, Sec. 19.06, eff. Aug. 30, 1993;
Sec. 1(6) added by Acts 1995, 74th Leg., ch. 852, Sec. 1, eff.
Sept. 1, 1995; Sec. 2 amended by Acts 1995, 74th Leg., ch. 852,
Sec. 2, eff. Sept. 1, 1995; Sec. 3 amended by Acts 1995, 74th
Leg., ch. 852, Sec. 3, eff. Sept. 1, 1995; Sec. 4 amended by Acts
1995, 74th Leg., ch. 852, Sec. 4, eff. Sept. 1, 1995.