CHAPTER 2203. MEDICAL LIABILITY INSURANCE JOINT UNDERWRITING ASSOCIATION
INSURANCE CODE
TITLE 10. PROPERTY AND CASUALTY INSURANCE
SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE
CHAPTER 2203. MEDICAL LIABILITY INSURANCE JOINT UNDERWRITING
ASSOCIATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2203.001. SHORT TITLE. This chapter may be cited as the
Texas Medical Liability Insurance Underwriting Association Act.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.002. DEFINITIONS. In this chapter:
(1) "Assisted living facility" means a for-profit or
not-for-profit assisted living facility.
(2) "Association" means the joint underwriting association
established under this chapter.
(3) "Board of directors" means the board of directors of the
association.
(4) "Health care provider" means:
(A) a person, partnership, professional association,
corporation, facility, or institution licensed or chartered by
this state to provide health care, as defined in Section
74.001(a)(10), Civil Practice and Remedies Code, as:
(i) a registered nurse, dentist, podiatrist, pharmacist,
chiropractor, or optometrist;
(ii) a hospital;
(iii) a nursing home;
(iv) a radiation therapy center that is independent of any other
medical treatment facility, is licensed by the Department of
State Health Services in that agency's capacity as the Texas
Radiation Control Agency under Chapter 401, Health and Safety
Code, and is in compliance with the regulations adopted under
that chapter;
(v) a blood bank that is a nonprofit corporation chartered to
operate a blood bank and is accredited by the American
Association of Blood Banks;
(vi) a nonprofit corporation that is organized for the delivery
of health care to the public and is certified under Chapter 162,
Occupations Code;
(vii) a health center, as defined by 42 U.S.C. Section 254b, as
amended; or
(viii) an assisted living facility; or
(B) an officer, employee, or agent of an entity listed in
Paragraph (A) acting in the course and scope of that person's
office, employment, or agency.
(5) "Medical liability insurance" means primary and excess
liability insurance coverage against:
(A) the legal liability of the insured; and
(B) loss, damage, or expense incident to a claim arising out of
the death or injury of a person as the result of negligence in
rendering or failing to render professional service by a health
care provider or physician who is in a category eligible for
coverage by the association.
(6) "Net direct premiums" means gross direct premiums written on
automobile liability and other liability insurance written under
this code, less:
(A) policyholder dividends;
(B) return premiums for the unused or unabsorbed portion of
premium deposits; and
(C) return premiums on canceled contracts written on the
liability risks.
(7) "Nursing home" means a for-profit or not-for-profit nursing
home.
(8) "Physician" means a person licensed to practice medicine in
this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.003. IMMUNITY. Liability does not exist on the part
of, and a cause of action does not arise against, the
association, an association agent or employee, an insurer, an
agent licensed under this code, the commissioner or department,
or an authorized representative of the commissioner or department
for a statement made in good faith by any of them:
(1) in a report or communication concerning risks insured or to
be insured through the association; or
(2) at an administrative hearing conducted in connection with
the report or communication.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.004. APPLICABILITY OF OTHER LAW. The association is
subject to Sections 401.051, 401.052, 401.054-401.062, 401.151,
401.152, 401.155, and 401.156 and Subchapter A, Chapter 86.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.005. RELATIONSHIP TO SURPLUS LINES INSURANCE. The
association is not an authorized insurer for purposes of Chapter
981 with respect to medical liability insurance for physicians.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER B. ASSOCIATION ADMINISTRATION AND OPERATION
Sec. 2203.051. PURPOSE OF ASSOCIATION. The association provides
medical liability insurance on a self-supporting basis.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.052. BOARD OF DIRECTORS. (a) The association is
governed by a board of directors composed of the following nine
members:
(1) five representatives of insurers that are required to be
association members, elected by association members;
(2) one physician, appointed by the Texas Medical Association or
a successor to that association;
(3) one representative of hospitals, appointed by the Texas
Hospital Association or a successor to that association; and
(4) two public members, appointed by the commissioner.
(b) The board members serve one-year terms beginning on October
1 of each year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.053. PLAN OF OPERATION. (a) The association operates
under a plan of operation adopted by the commissioner.
(b) The plan of operation must:
(1) provide for economic, fair, and nondiscriminatory
administration;
(2) provide for the prompt and efficient provision of medical
liability insurance; and
(3) contain other provisions, including provisions relating to:
(A) the establishment of necessary facilities;
(B) the association's management;
(C) the assessment of members and policyholders to defray losses
and expenses;
(D) the administration of the policyholder's stabilization
reserve funds;
(E) commission arrangements;
(F) reasonable and objective underwriting standards;
(G) the acceptance, assumption, and cession of reinsurance;
(H) the appointment of servicing insurers; and
(I) procedures for determining amounts of insurance to be
provided by the association.
(c) The plan of operation must direct that any revenue exceeding
expenditures that remains in the association's funds at the close
of the association's fiscal year, after the association
reimburses members' contributions in accordance with Section
2203.255(a), be added to the association's reserves.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.054. AMENDMENTS TO PLAN OF OPERATION. Amendments to
the plan of operation:
(1) shall be made at the commissioner's direction; or
(2) may be made by the board of directors, subject to the
commissioner's approval.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.055. JOINT UNDERWRITING ASSOCIATION MEMBERSHIP. (a)
The association is composed of each insurer, including a Lloyd's
plan and a reciprocal or interinsurance exchange, authorized to
write and writing liability insurance, including automobile
liability insurance, on a direct basis in this state, other than:
(1) a farm mutual insurance company authorized under Chapter
911; and
(2) a county mutual insurance company authorized under Chapter
912.
(b) An insurer that is a member of the association must remain a
member as a condition of the insurer's authority to engage in the
business of the insurance described by Subsection (a).
(c) Each association member participates in the writings,
expenses, and losses of the association in the proportion that
the net direct premiums of the member, excluding the 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 association
members.
(d) The association shall annually determine a member's
participation in the association on the basis of the net direct
premiums written by the member during the preceding calendar
year, as reported in the annual statements and other reports the
member files as required by the department.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.056. ANNUAL STATEMENT; ADDITIONAL INFORMATION. (a)
Not later than March 1 of each year, the association shall file
with the department a statement that contains information
regarding the association's transactions, condition, operations,
and affairs during the preceding calendar year.
(b) The statement must:
(1) contain the matters and information required by the
department; and
(2) be in the form approved by the department.
(c) The department at any time may require the association to
provide additional information regarding the association's
transactions or condition, or any related matter considered to
be:
(1) material; and
(2) of assistance in evaluating the scope, operation, and
experience of the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER C. ELIGIBILITY FOR COVERAGE
Sec. 2203.101. GENERAL ELIGIBILITY. (a) The commissioner shall
by order establish the categories of physicians and health care
providers that are eligible to obtain insurance coverage from the
association. The commissioner may revise the order to:
(1) include as eligible for that coverage other categories of
physicians and health care providers; or
(2) exclude from eligibility for that coverage particular
categories of physicians and health care providers.
(b) If a category of physicians or health care providers is
excluded from eligibility to obtain insurance coverage from the
association, the commissioner may determine, after notice of at
least 10 days and a hearing, that medical liability insurance is
not otherwise available. On that determination, the previously
excluded category is eligible to obtain insurance coverage from
the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.102. INSURER OF LAST RESORT FOR CERTAIN NURSING HOMES
AND ASSISTED LIVING FACILITIES. (a) A nursing home or assisted
living facility not otherwise eligible for insurance coverage
from the association under Section 2203.101 is eligible for that
coverage if the home or facility demonstrates, in accordance with
the requirements of the association, that the home or facility:
(1) made a verifiable effort to obtain insurance coverage from
authorized insurers and eligible surplus lines insurers; and
(2) was unable to obtain substantially equivalent insurance
coverage and rates.
(b) In consultation with the Department of Aging and Disability
Services, the commissioner by rule shall adopt minimum rating
standards for for-profit nursing homes and for-profit assisted
living facilities that must be met before a for-profit nursing
home or for-profit assisted living facility may obtain insurance
coverage through the association. The standards must promote the
highest practical level of care for residents of the nursing
homes and assisted living facilities.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.1021. VOLUNTEER HEALTH CARE PROVIDERS. (a) In this
section:
(1) "Charitable organization" has the meaning assigned by
Section 84.003, Civil Practice and Remedies Code.
(2) "Volunteer health care provider" has the meaning assigned by
Section 84.003, Civil Practice and Remedies Code.
(b) The association shall make available medical liability
insurance or appropriate health care liability insurance covering
a volunteer health care provider for the legal liability of the
person against any 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 while acting in the course and scope of the person's
duties as a volunteer health care provider as described by
Chapter 84, Civil Practice and Remedies Code.
(c) A volunteer health care provider who is serving as a direct
service volunteer of a charitable organization is eligible to
obtain from the association the liability insurance made
available under this section. A volunteer health care provider
who obtains coverage under this section is subject to Section
2203.302 and the other provisions of this chapter in the same
manner as physicians who are eligible to obtain medical liability
insurance from the association.
(d) This section does not affect the liability of a volunteer
health care provider who is serving as a direct service volunteer
of a charitable organization. Section 84.004(c), Civil Practice
and Remedies Code, applies to the volunteer health care provider
without regard to whether the volunteer health care provider
obtains liability insurance under this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.060(a), eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.060(a), eff. September 1, 2007.
Sec. 2203.103. ELIGIBILITY OF OTHER HEALTH CARE PRACTITIONERS
AND FACILITIES. (a) In this section:
(1) "Health care" includes a medical or health care service,
including an examination, treatment, medical diagnosis, or
evaluation, and care provided in an inpatient, outpatient, or
residential setting.
(2) "Health care facility" means a facility providing health
care, other than a facility described by Section 2203.002(4).
(3) "Health care practitioner" means an individual, other than
an individual described by Section 2203.002(4), who:
(A) is licensed to provide health care; or
(B) is not licensed to provide health care but provides health
care under the direction or supervision of a licensed individual.
(b) After notice and opportunity for hearing, the commissioner
may:
(1) determine that appropriate liability insurance coverage
written by insurers authorized to engage in business in this
state is not reasonably available to a type of health care
practitioner or health care facility; and
(2) by order designate that type of health care practitioner or
health care facility to be included as a health care provider
eligible to receive coverage under this chapter.
(c) A health care practitioner or facility designated under
Subsection (b) is entitled to receive insurance coverage under
this chapter in accordance with Chapter 1901 in the same manner
as other health care providers described by Section 2203.002 and
Section 1901.001.
(d) The commissioner's order may indicate whether a health care
practitioner or facility designated under Subsection (b) is
included under the policyholder's stabilization reserve fund
established under Section 2203.301 or 2203.303 or whether a
separate policyholder's stabilization reserve fund is created. A
separate policyholder's stabilization reserve fund established
under this subsection operates in the same manner as a
policyholder's stabilization reserve fund created under Section
2203.303.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.104. APPLICATION FOR COVERAGE. (a) A health care
provider or physician included in a category eligible for
insurance coverage by the association is entitled to apply to the
association for the coverage. An agent authorized under Chapter
4051 may apply on behalf of an applicant.
(b) The association shall issue a medical liability insurance
policy to an applicant:
(1) if the association determines that:
(A) the applicant meets the underwriting standards of the
association prescribed by the plan of operation; and
(B) there is no unpaid and uncontested premium, policyholder's
stabilization reserve fund charge, or assessment due from the
applicant for prior insurance, as shown by the insured's failure
to pay or to object in writing to the charges on or before the
30th day after the date of the billing; and
(2) on receipt of the premium and the policyholder's
stabilization reserve fund charge, or the portion of the premium
and charge prescribed by the plan of operation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER D. ASSOCIATION COVERAGE
Sec. 2203.151. POWERS RELATING TO MEDICAL LIABILITY INSURANCE
COVERAGE. (a) Under this chapter and the plan of operation, the
association, on behalf of the association members, may:
(1) issue, or cause to be issued, medical liability insurance
policies to applicants, including primary, excess, and incidental
coverages, subject to the limits specified in the plan of
operation and Section 2203.152;
(2) underwrite medical liability insurance and adjust and pay
losses related to that insurance, or appoint servicing insurers
to perform those functions;
(3) either or both accept and refuse the assumption of
reinsurance from association members; and
(4) cede and purchase reinsurance.
(b) The association may provide general liability insurance
coverage to be issued in connection with medical liability
insurance issued by the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.152. POLICY LIMITS. The association may not issue one
or more policies insuring an individual or organization for an
amount exceeding $1 million for each occurrence and $3 million in
the aggregate for a year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.153. FOLLOWING FORM EXCESS LIABILITY COVERAGE. Excess
liability insurance coverage written for a physician or health
care provider by the association under this chapter must be
written as following form excess liability insurance to the
physician's or provider's primary insurance coverage.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.154. PUNITIVE DAMAGES EXCLUDED. The association may
not issue or renew a medical liability insurance policy for a
physician or health care provider under this chapter that
includes coverage for punitive damages assessed against the
physician or health care provider.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.155. INSTALLMENT PLAN. The association may offer an
installment payment plan for insurance coverage obtained through
the association.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.156. TERM OF POLICY; NOTICE OF CERTAIN CHANGES. (a)
A policy issued by the association must be for a term of one year
or less, as determined by the association.
(b) Section 1901.253 does not apply to a medical liability
insurance policy issued by the association for a term of less
than one year.
(c) The association shall ensure that appropriate written notice
is provided to the insured for a policy described by Subsection
(b) if the association intends to:
(1) increase the premiums on the policy; or
(2) cancel or not renew the policy for a reason other than for
nonpayment of premiums or because the insured is no longer
licensed.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER E. RATES AND POLICY FORMS
Sec. 2203.201. APPLICABILITY OF OTHER LAW TO RATES AND POLICY
FORMS. (a) Except as provided by Subsection (b) and subject to
Section 2203.203, the following laws govern the rates, rating
plans, rating rules, rating classifications, territories, and
policy forms applicable to the insurance written by the
association and related statistics:
(1) Section 36.002(1);
(2) Subchapter B, Chapter 5;
(3) Subchapters A and C, Chapter 1806;
(4) Subchapter A, Chapter 2301;
(5) Chapter 251, as that chapter relates to casualty insurance
and fidelity, guaranty, and surety bond insurance;
(6) Chapter 253;
(7) Chapters 2251 and 2252; and
(8) Subtitle B.
(b) If a provision of a law described by Subsections (a)(1)-(8)
conflicts with a provision of this chapter, this chapter
prevails.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.202. RATE STANDARDS. (a) In determining rates,
rating plans, rating rules, rating classifications, territories,
and policy forms, the association shall consider:
(1) the past and prospective loss and expense experience for
medical professional liability insurance, inside and outside this
state, of all of the association members;
(2) trends in the frequency and severity of losses;
(3) the association's investment income; and
(4) other information the commissioner may require.
(b) Rates, rating plans, and rating rules must be based on:
(1) the association's loss and expense experience; and
(2) other information based on that experience the department
considers appropriate.
(c) The resultant premium rates must be:
(1) actuarially sound; and
(2) computed to be self-supporting.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.203. DISCOUNT FOR CERTAIN HEALTH CARE PROVIDERS. (a)
The rates applicable to professional liability insurance coverage
provided by the association for not-for-profit nursing homes and
not-for-profit assisted living facilities must reflect a discount
of 30 percent from the rates for the same coverage provided to
others in the same category of insureds.
(b) The commissioner shall ensure compliance with this section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER F. FINANCIAL PARTICIPATION BY MEMBERS AND
POLICYHOLDERS
Sec. 2203.251. DEFICIT RECOUPMENT. (a) This section applies to
a deficit sustained in a single year by the association with
respect to:
(1) physicians and health care providers, other than nursing
homes and assisted living facilities; or
(2) a nursing home or assisted living facility.
(b) The deficit must be recouped in accordance with the plan of
operation and the rating plan in effect when the deficit is
sustained under one or more of the following procedures, in this
sequence:
(1) a contribution from the policyholder's stabilization reserve
fund established under Section 2203.301 or the policyholder's
stabilization reserve fund established under Section 2203.303, as
appropriate, until the respective fund is exhausted;
(2) an assessment on the policyholders in accordance with
Section 2203.252; or
(3) an assessment on the members in accordance with Sections
2203.055(c) and (d) and 2203.253.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.252. ASSESSMENT OF POLICYHOLDERS FOR DEFICIT
RECOUPMENT. (a) Each policyholder within the group of
physicians and health care providers, other than nursing homes
and assisted living facilities, or within the group of nursing
homes and assisted living facilities, has contingent liability
for a proportionate share of an assessment made under this
chapter of policyholders in the applicable group.
(b) If a deficit, as computed under the plan of operation, is
sustained with respect to a group described by Subsection (a) in
a single year, the board of directors shall levy an assessment
only on the policyholders in the applicable group who held
policies in force at any time during the two most recently
completed calendar years:
(1) before the date the assessment is levied; and
(2) in which the association was issuing policies.
(c) The aggregate amount of an assessment under Subsection (b)
must be equal to the amount of the deficit not recouped under
Section 2203.251(b)(1) from the applicable policyholder's
stabilization reserve fund. Subject to Subsection (d), each
policyholder in the applicable group shall be assessed for a
portion of the deficit that reflects the proportion that the
earned premium on the policies of that policyholder bears to the
total earned premium for all policies of the association in the
applicable group in the two most recently completed calendar
years.
(d) The maximum aggregate assessment on each policyholder in the
applicable group may not exceed the annual premium for the
liability insurance policy most recently in effect.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.253. LIMITATION ON REIMBURSEMENT BY MEMBER FOR DEFICIT
RECOUPMENT. (a) An association member is not obligated in a
single year to reimburse the association for the member's
proportionate share of the deficits from the association's
operations in that year in an amount that exceeds one percent of
the member's policyholder surplus. The aggregate amount not
reimbursed in accordance with this subsection shall be
reallocated among the other association members. The association
shall reallocate that amount in accordance with the method of
determining a member's participation under Sections 2203.055(c)
and (d), after excluding the total net direct premiums of all
members not sharing in the excess deficits.
(b) If the deficits from the association's operations allocated
to all association members in a calendar year exceed one percent
of all members' respective policyholder surplus, the association
shall allocate to each member the amount of the deficits in
accordance with the method of determining a member's
participation under Sections 2203.055(c) and (d).
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.254. CONTRIBUTION BY MEMBERS FOR SOUND FINANCIAL
OPERATION. If sufficient funds are not available for the sound
financial operation of the association, each association member
shall contribute to the financial requirements of the association
in accordance with Sections 2203.055(c) and (d), 2203.252, and
2203.253, as authorized and considered necessary by the
department. A contribution under this section is in addition to:
(1) an assessment paid in accordance with the plan of operation
under Section 2203.053(b); and
(2) a contribution from a policyholder's stabilization reserve
fund.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.255. REIMBURSEMENT OF ASSESSMENT OR CONTRIBUTION;
PREMIUM TAX CREDIT. (a) Subject to commissioner approval, the
association shall reimburse an assessment or contribution, with
interest at a rate approved by the commissioner, to:
(1) the association members; or
(2) the state, to the extent that the members have recouped
their assessments using premium tax credits as provided by
Subsection (c).
(b) Pending recoupment or reimbursement of an assessment or
contribution paid by a member to the association, the unrepaid
balance of the assessment or contribution may be reflected in the
member's books and records as an admitted asset of the member for
all purposes, including exhibition in an annual statement under
Section 862.001.
(c) To the extent a member has paid one or more assessments and
has not received reimbursement from the association in accordance
with Subsection (a), a credit against premium taxes under Chapter
221 is allowed at a rate of 20 percent a year for five successive
years following the year in which the deficit was sustained. At
the member's option, the tax credit may be taken over an
additional number of years.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.256. STANDARDS FOR RECOUPMENT PROVISIONS. A provision
for recoupment must be based on:
(1) the association's loss and expense experience; and
(2) other information based on that experience the department
considers appropriate.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER G. POLICYHOLDER'S STABILIZATION RESERVE FUNDS
Sec. 2203.301. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR
PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) The
policyholder's stabilization reserve fund for physicians and
health care providers other than nursing homes and assisted
living facilities is collected and administered by the
association as provided by this section, Section 2203.302, and
the plan of operation.
(b) The policyholder's stabilization reserve fund shall be:
(1) credited with all policyholder's stabilization reserve fund
charges collected under Section 2203.302;
(2) charged with any deficit sustained by physicians and health
care providers, other than nursing homes and assisted living
facilities, from the association's operation during the previous
year;
(3) treated as a liability of the association along with, and in
the same manner as, premium and loss reserves; and
(4) valued annually by the board of directors as of the close of
the preceding year.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.302. POLICYHOLDER'S STABILIZATION RESERVE FUND CHARGE
FOR PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) Each
policyholder other than a nursing home or assisted living
facility shall pay annually into the policyholder's stabilization
reserve fund under Section 2203.301 a charge that:
(1) is in an amount established annually by advisory directors
chosen by physicians and health care providers, other than
nursing homes and assisted living facilities, eligible for
insurance through the association in accordance with the plan of
operation;
(2) is in proportion to each premium payment due for liability
insurance through the association; and
(3) is separately stated in the policy.
(b) A charge stated in a policy as required by Subsection (a)(3)
is not:
(1) a part of premiums; or
(2) subject to premium taxation or a servicing fee, acquisition
cost, or any other similar charge.
(c) If the association offers an installment payment plan for
coverage obtained through the association, the association may:
(1) permit payment of the policyholder's stabilization reserve
fund charge under this section on an installment basis; or
(2) require the policyholder to pay the charge as an annual lump
sum.
(d) Collections of the policyholder's stabilization reserve fund
charge under this section shall continue until the net balance of
the policyholder's stabilization reserve fund under Section
2203.301 is not less than the projected sum of premiums for
physicians and health care providers, other than nursing homes
and assisted living facilities, to be written in the year
following the valuation date.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.303. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR
NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) The
policyholder's stabilization reserve fund for nursing homes and
assisted living facilities is collected and administered by the
association as provided by this section, Section 2203.304, and
the plan of operation.
(b) The policyholder's stabilization reserve fund shall be:
(1) credited with:
(A) all policyholder's stabilization reserve fund charges
collected under Section 2203.304; and
(B) the net earnings on liability insurance policies issued to
nursing homes and assisted living facilities;
(2) charged with any deficit sustained by nursing homes and
assisted living facilities from the association's operation
during the previous year;
(3) treated as a liability of the association along with, and in
the same manner as, premium and loss reserves; and
(4) valued annually by the board of directors as of the close of
the preceding year.
(c) The policyholder's stabilization reserve fund under this
section, and any earnings of the fund, are state funds and shall
be held by the comptroller outside the state treasury on behalf
of, and with legal title in, the department. No part of the fund
or the earnings of the fund may inure to the benefit of an
association member, a policyholder, or another individual. The
fund assets may be used in accordance with the association's plan
of operation only to implement this chapter and for the purposes
of the association, including to make payment to satisfy, wholly
or partly, the liability of the association regarding a claim
made on a policy written by the association.
(d) Notwithstanding Sections 11, 12, and 13, Article 21.49-3,
the policyholder's stabilization reserve fund under this section
may be terminated only by law.
(e) Notwithstanding Section 11, Article 21.49-3, on termination
of the policyholder's stabilization reserve fund under this
section, all assets of the fund shall be transferred to the
general revenue fund to be appropriated for purposes related to
ensuring the provision of the kinds of liability insurance
coverage that the association may provide under this chapter to
nursing homes and assisted living facilities.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.304. POLICYHOLDER'S STABILIZATION RESERVE FUND CHARGE
FOR NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) Each
policyholder that is a nursing home or assisted living facility
shall pay annually into the policyholder's stabilization reserve
fund under Section 2203.303 a charge that:
(1) is in an amount established annually by advisory directors
chosen by nursing homes and assisted living facilities eligible
for insurance through the association in accordance with the plan
of operation;
(2) is in proportion to each premium payment due for liability
insurance through the association; and
(3) is separately stated in the policy.
(b) A charge stated in a policy as required by Subsection (a)(3)
is not:
(1) a part of premiums; or
(2) subject to premium taxation or a servicing fee, acquisition
cost, or any other similar charge.
(c) If the association offers an installment payment plan for
coverage obtained through the association, the association may:
(1) permit payment of the policyholder's stabilization reserve
fund charge under this section on an installment basis; or
(2) require the policyholder to pay the charge as an annual lump
sum.
(d) Collections of the policyholder's stabilization reserve fund
charge under this section shall continue only until the net
balance of the policyholder's stabilization reserve fund under
Section 2203.303 is not less than the projected sum of premiums
for nursing homes and assisted living facilities to be written in
the year following the valuation date.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.305. SEPARATE FUNDS. The policyholder's stabilization
reserve fund for physicians and health care providers other than
nursing homes and assisted living facilities described by Section
2203.301 is separate from the policyholder's stabilization
reserve fund for nursing homes and assisted living facilities
described by Section 2203.303.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER H. REVENUE BOND PROGRAM
Sec. 2203.351. PURPOSE. The legislature finds that the issuance
of bonds to provide a method to raise funds to provide
professional liability insurance for nursing homes and assisted
living facilities in this state through the association is to
benefit the public and to further a public purpose.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.352. DEFINITIONS. In this subchapter:
(1) "Board" means the board of directors of the Texas Public
Finance Authority.
(2) "Bond resolution" means the resolution or order authorizing
bonds to be issued under this subchapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.353. APPLICABILITY OF OTHER LAWS. The following laws
apply to bonds issued under this subchapter to the extent
consistent with this subchapter:
(1) Chapters 1201, 1202, 1204, 1205, 1231, 1232, and 1371,
Government Code; and
(2) Subchapter A, Chapter 1206, Government Code.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.354. ISSUANCE OF BONDS AUTHORIZED. On behalf of the
association and subject to Section 2203.355, the Texas Public
Finance Authority shall issue revenue bonds to:
(1) fund the policyholder's stabilization reserve fund for
nursing homes and assisted living facilities under Section
2203.303;
(2) pay costs related to issuing the bonds; and
(3) pay other costs related to the bonds as determined by the
board.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.355. LIMITATION ON AMOUNT OF BONDS. The Texas Public
Finance Authority may issue on behalf of the association bonds in
a total amount not to exceed $75 million.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.356. TERMS OF ISSUANCE. (a) Bonds issued under this
subchapter may be issued at a public or private sale.
(b) Bonds must:
(1) be issued in the name of the association; and
(2) mature not more than 10 years after the date issued.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.357. CONTENTS OF BOND RESOLUTION; ADMINISTRATION OF
ACCOUNTS. (a) In a bond resolution, the board may:
(1) provide for the flow of funds and the establishment,
maintenance, and investment of funds and special accounts with
regard to the bonds, including an interest and sinking fund
account, a reserve account, and other accounts; and
(2) make additional covenants with regard to the bonds and the
designated income and receipts of the association pledged to the
payment of the bonds.
(b) The association shall administer the accounts in accordance
with this chapter.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.358. SOURCE OF PAYMENT. (a) Bonds issued under this
subchapter are payable only from:
(1) the surcharge fee established under Section 2203.359; or
(2) other sources the association is authorized to levy and
charge and from which the association is authorized to collect in
connection with paying any portion of the bonds.
(b) The bonds are obligations solely of the association and do
not create a pledge, gift, or loan of the faith, credit, or
taxing authority of this state.
(c) Each bond must:
(1) include a statement that the state is not obligated to pay
any amount on the bond and that the faith, credit, and taxing
authority of this state are not pledged, given, or loaned to
those payments; and
(2) state on the bond's face that the bond:
(A) is payable solely from the revenue pledged for that purpose;
and
(B) is not a legal or moral obligation of the state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.359. SURCHARGE FEE. (a) A surcharge fee is assessed
against:
(1) each association member; and
(2) the association.
(b) The commissioner shall set the surcharge fee in an amount
sufficient to pay all debt service on the bonds issued under this
subchapter. Each association member and the association shall
pay the surcharge fee as required by the commissioner by rule.
(c) The comptroller shall collect the surcharge fee and the
department shall reimburse the comptroller in the manner
described by Section 201.052.
(d) The commissioner, in consultation with the comptroller, may
coordinate payment and collection of the surcharge fee with other
payments made by association members and collected by the
comptroller.
(e) Except as provided by Subsection (f), as a condition of
engaging in the business of insurance in this state, an
association member agrees that, if the member leaves the
liability insurance market in this state, the member remains
obligated to pay the member's share of the surcharge fee assessed
under this section until the bonds are retired. The amount
assessed against a member under this subsection must be:
(1) proportionate to the member's share of the liability
insurance market, including automobile liability insurance, in
this state as of the last complete reporting period before the
date the member ceases to engage in the liability insurance
business in this state; and
(2) based on the member's gross premiums for liability
insurance, including automobile liability insurance, for the
member's last reporting period.
(f) An association member is not required to pay the
proportionate amount under Subsection (e) in any year in which
the surcharge fee assessed against association members continuing
to write liability insurance in this state is sufficient to
service the bond obligation.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.360. EXEMPTION FROM TAXATION. Bonds issued under this
subchapter, any interest from the bonds, and all assets pledged
to secure the payment of the bonds are exempt from taxation by
the state or a political subdivision of this state.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.361. AUTHORIZED INVESTMENTS. Bonds issued under this
subchapter are authorized investments under Subchapter B, Chapter
424, and Subchapter D, Chapter 425.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.362. STATE PLEDGE REGARDING BOND OWNER RIGHTS AND
REMEDIES. (a) The state pledges to and agrees with the owners
of bonds issued in accordance with this subchapter that the state
will not limit or alter the rights vested in the association to
fulfill the terms of agreements made with the owners or impair
the rights and remedies of the owners until the following
obligations are fully discharged:
(1) the bonds;
(2) any bond premium;
(3) interest; and
(4) all costs and expenses related to an action or proceeding by
or on behalf of the owners.
(b) The association may include the state's pledge and agreement
under Subsection (a) in an agreement with the owners of the
bonds.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.363. PAYMENT ENFORCEABLE BY MANDAMUS. A writ of
mandamus and any other legal or equitable remedy are available to
a party in interest to require the association or another party
to fulfill an agreement or perform a function or duty under:
(1) this subchapter;
(2) the Texas Constitution; or
(3) a bond resolution.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
SUBCHAPTER I. APPEALS
Sec. 2203.401. DEFINITION. In this subchapter, "act" includes a
ruling or decision.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.402. APPEAL TO BOARD OF DIRECTORS; HEARING. (a) A
person insured or applying for insurance under this chapter, the
person's authorized representative, or an affected insurer that
may be aggrieved by an act of the association may appeal to the
board of directors not later than the 30th day after the date the
act occurs. At the time the person is notified of the act, the
association shall provide to the person written notice of the
person's right to appeal under this subsection.
(b) The board of directors shall:
(1) hear an appeal brought under Subsection (a) not later than
the 30th day after the date the board of directors receives the
appeal; and
(2) give not less than 10 days' written notice of the time and
place of the hearing to the person bringing the appeal or the
person's authorized representative.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.403. DECISION OF BOARD OF DIRECTORS. (a) Not later
than the 10th day after the date of the hearing under Section
2203.402(b), the board of directors shall affirm, reverse, or
modify the board's previous action or the appealed act.
(b) At the time the person is notified of the final action of
the board of directors, the association shall provide to the
person written notice of the person's right to appeal under
Section 2203.404.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.404. APPEAL TO COMMISSIONER; HEARING. (a) Not later
than the 30th day after the date of the final action of the board
of directors under Section 2203.403, a person insured or applying
for insurance aggrieved by that final action may appeal to the
commissioner by making a written request for a hearing.
(b) The appeal shall be heard not later than the 30th day after
the date the appeal is received. The person bringing the appeal
or the person's authorized representative must be given written
notice of the time and place of the hearing on or before the 10th
day before the date of the hearing.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.405. COMMISSIONER'S DECISION. (a) Not later than the
30th day after the date of the hearing under Section 2203.404,
the commissioner shall affirm, reverse, or modify the appealed
act.
(b) Pending the hearing and decision, the commissioner may
suspend or postpone the effective date of a rule or of the act
appealed.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.
Sec. 2203.406. APPEAL OF COMMISSIONER'S DECISION. (a) The
association or a person aggrieved by an order or decision of the
commissioner may appeal in accordance with Subchapter D, Chapter
36.
(b) At the time the person is notified of the commissioner's
order or decision, the commissioner shall provide to the person
written notice of the person's right to appeal under this
section.
Added by Acts 2005, 79th Leg., Ch.
727, Sec. 2, eff. April 1, 2007.