CHAPTER 4151. THIRD-PARTY ADMINISTRATORS
INSURANCE CODE
TITLE 13. REGULATION OF PROFESSIONALS
SUBTITLE D. OTHER PROFESSIONALS
CHAPTER 4151. THIRD-PARTY ADMINISTRATORS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 4151.001. DEFINITIONS. In this chapter:
(1) "Administrator" means a person who, in connection with
annuities or life benefits, health benefits, accident benefits,
pharmacy benefits, or workers' compensation benefits, collects
premiums or contributions from or adjusts or settles claims for
residents of this state. The term includes a delegated entity
under Chapter 1272 and a workers' compensation health care
network authorized under Chapter 1305 that administers a workers'
compensation claim for an insurer, including an insurer that
establishes or contracts with the network to provide health care
services. The term does not include a person described by
Section 4151.002.
(2) "Insurer" means a person who engages in the business of
life, health, accident, or workers' compensation insurance under
the law of this state. For purposes of this chapter only, the
term also includes an "insurance carrier," as defined by Section
401.011(27), Labor Code, other than a governmental entity or a
workers' compensation self-insurance group subject to regulation
under Chapter 407A, Labor Code.
(3) "Person" means an individual, partnership, corporation,
organization, government or governmental subdivision or agency,
business trust, estate trust, association, or any other legal
entity.
(4) "Plan" means a plan, fund, or program established, adopted,
or maintained by a plan sponsor or insurer to the extent that the
plan, fund, or program is established, adopted, or maintained to
provide indemnification or expense reimbursement for any type of
life, health, or accident benefit.
(5) "Plan sponsor" means a person, other than an insurer, who
establishes, adopts, or maintains a plan that covers residents of
this state, including a plan established, adopted, or maintained
by two or more employers or jointly by one or more employers and
one or more employee organizations, an association, a committee,
a joint board of trustees, or any similar group of
representatives who establish, adopt, or maintain a plan.
(6) "Workers' compensation benefits" means benefits provided
under Title 5, Labor Code, or services provided through a
certified workers' compensation health care network authorized
under Chapter 1305.
(7) "Workers' compensation insurance coverage" means coverage
subject to Subtitle E, Title 10. The term includes coverage
described by Sections 401.011(44)(A) and (B), Labor Code.
(8) "Workers' compensation self-insurer" means a legal entity
subject to regulation under Chapter 407, Labor Code.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.01, eff. September 1, 2007.
Sec. 4151.002. EXEMPTIONS. A person is not an administrator if
the person is:
(1) an employer, other than a certified workers' compensation
self-insurer, administering an employee benefit plan or the plan
of an affiliated employer under common management and control;
(2) a union administering a benefit plan on behalf of its
members;
(3) an insurer or a group hospital service corporation subject
to Chapter 842 acting with respect to a policy lawfully issued
and delivered by the insurer or corporation in and under the law
of a state in which the insurer or corporation was authorized to
engage in the business of insurance;
(4) a health maintenance organization that is authorized to
operate in this state under Chapter 843 with respect to any
activity that is specifically regulated under that chapter,
Chapter 1271, 1272, or 1367, Subchapter A, Chapter 1452, or
Subchapter B, Chapter 1507;
(5) an agent licensed under Subchapter B, Chapter 4051,
Subchapter B, Chapter 4053, or Subchapter B, Chapter 4054, who
receives commissions as an agent and is acting:
(A) under appointment on behalf of an insurer authorized to
engage in the business of insurance in this state; and
(B) in the customary scope and duties of the person's authority
as an agent;
(6) a creditor acting on behalf of its debtor with respect to
insurance that covers a debt between the creditor and its debtor,
if the creditor performs only the functions of a group
policyholder or a creditor;
(7) a trust established in conformity with 29 U.S.C. Section 186
or a trustee or employee who is acting under the trust;
(8) a trust that is exempt from taxation under Section 501(a),
Internal Revenue Code of 1986, or a trustee or employee acting
under the trust;
(9) a custodian or a custodian's agent or employee who is acting
under a custodian account that complies with Section 401(f),
Internal Revenue Code of 1986;
(10) a bank, credit union, savings and loan association, or
other financial institution that is subject to supervision or
examination under federal or state law by a federal or state
regulatory authority, if the institution is performing only those
functions for which the institution holds a license under federal
or state law;
(11) a company that advances and collects a premium or charge
from its credit card holders on their authorization, if the
company does not adjust or settle claims and acts only in the
company's debtor-creditor relationship with its credit card
holders;
(12) a person who adjusts or settles claims in the normal course
of the person's practice or employment as a licensed attorney and
who does not collect any premium or charge in connection with
annuities or with life, health, accident, pharmacy, or workers'
compensation benefits;
(13) an adjuster licensed under Subtitle C by the department who
is engaged in the performance of the individual's powers and
duties as an adjuster in the scope of the individual's license;
(14) a person who provides technical, advisory, utilization
review, precertification, or consulting services to an insurer,
plan, or plan sponsor but does not make any management or
discretionary decisions on behalf of the insurer, plan, or plan
sponsor;
(15) an attorney in fact for a Lloyd's plan operating under
Chapter 941 or for a reciprocal or interinsurance exchange
operating under Chapter 942 who is acting in the capacity of
attorney in fact under the applicable chapter;
(16) a joint fund, risk management pool, or self-insurance pool
composed of political subdivisions of this state that participate
in a fund or pool through interlocal agreements, any nonprofit
administrative agency or governing body or other nonprofit entity
that acts solely on behalf of a fund, pool, agency, or body, or
any other fund, pool, agency, or body established under or for
the purpose of implementing an interlocal governmental agreement;
(17) a self-insured political subdivision;
(18) a plan under which insurance benefits are provided
exclusively by an insurer authorized to engage in the business of
insurance in this state and the administrator of which is:
(A) a full-time employee of the plan's organizing or sponsoring
association, trust, or other entity; or
(B) a trustee of the organizing or sponsoring trust;
(19) a parent of a wholly owned direct or indirect subsidiary
insurer authorized to engage in the business of insurance in this
state or a wholly owned direct or indirect subsidiary insurer
that is a part of the parent's holding company system that, under
an agreement regulated and approved under Chapter 823 or a
similar statute of the domiciliary state if the parent or
subsidiary insurer is a foreign insurer engaged in business in
this state, on behalf of only itself or an affiliated insurer:
(A) collects premiums or contributions, if the parent or
subsidiary insurer:
(i) prepares only billing statements and places those statements
in the United States mail; and
(ii) causes all collected premiums to be deposited directly in a
depository account of the particular affiliated insurer; or
(B) furnishes proof-of-loss forms, reviews claims, determines
the amount of the liability for those claims, and negotiates
settlements, if the parent or subsidiary insurer pays claims only
from the funds of the particular subsidiary by checks or drafts
of that subsidiary; or
(20) an affiliate, as described by Chapter 823.003, of a
self-insurer certified under Chapter 407, Labor Code, and who:
(A) is performing the acts of an administrator on behalf of that
certified self-insurer; and
(B) directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with that
certified self-insurer, as the term "control" is described by
Section 823.005.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2005, 79th Leg., Ch.
728, Sec. 11.074(j), eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.02, eff. September 1, 2007.
Sec. 4151.0021. APPLICABILITY TO CERTAIN PROCESSING AGENTS. (a)
In this section, "processing agent" means a person described by
Section 413.0111, Labor Code.
(b) A processing agent is not an administrator for purposes of
this chapter if the processing agent is acting as an assignee of
a pharmacy and if:
(1) the assignee has a written contract with the pharmacy to:
(A) act as the provider of licensed pharmacy services in lieu of
the pharmacy; and
(B) purchase the pharmacy's claims at face value, or at a value
expressly stated in the contract; and
(2) the contract specifically prohibits the assignee from
performing any function of an administrator, as that term is
defined in this chapter, unless the assignee holds a certificate
of authority under this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.03, eff. September 1, 2007.
Sec. 4151.003. APPLICABILITY OF OTHER PROVISIONS OF CODE. An
administrator is subject to Section 823.457, Subchapter H of
Chapter 101, Chapter 541, Subchapter A of Chapter 542, and
Chapter 804.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.0031. MARKET ANALYSIS. The commissioner may conduct
market analyses and examinations of an administrator under
Chapter 751.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.03, eff. September 1, 2007.
Sec. 4151.004. APPLICABILITY TO CERTAIN INSURERS AND HEALTH
MAINTENANCE ORGANIZATIONS. An insurer or health maintenance
organization that is not exempt under Section 4151.002(3) or (4)
is subject to all provisions of this chapter other than Sections
4151.005, 4151.051-4151.054, 4151.056, and 4151.206(a)(1).
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.005. ADMINISTRATOR NOT INSURANCE AGENT. (a) An
administrator licensed in any state who accepts an agent's
commission for coverage for a risk located in this state and
disburses that commission to an agent in this state is not
considered an agent for purposes of this state's laws relating to
the licensing of agents.
(b) The exemption provided by this section does not authorize an
administrator to perform any other act for which a license as an
agent is required by law.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.0051. REFERRAL TO ADJUSTER BY ADMINISTRATOR. (a) An
administrator may not knowingly refer a claim or loss for
adjustment in this state to an individual purporting to be or
acting as an adjuster unless the individual holds a license under
Chapter 4101.
(b) Before first referring a claim or loss for adjustment, an
administrator must ascertain from the commissioner whether the
individual selected to perform the adjustment holds a license
under Chapter 4101. After receipt of information from the
department that the individual does hold an adjuster license, the
administrator may refer claims or losses to the individual for
adjustment until the administrator has actual knowledge or
receives information from the department that the individual no
longer holds an adjuster license under Chapter 4101. The
department shall keep an updated list of individuals who hold
adjuster licenses.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.03, eff. September 1, 2007.
Sec. 4151.006. RULES. The commissioner may adopt, in the manner
prescribed by Subchapter A, Chapter 36, rules that are fair,
reasonable, and appropriate to augment and implement this
chapter, including rules establishing financial standards,
reporting requirements, and required contract provisions.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.04, eff. September 1, 2007.
SUBCHAPTER B. CERTIFICATE OF AUTHORITY
Sec. 4151.051. CERTIFICATE OF AUTHORITY REQUIRED. (a) An
individual, corporation, organization, trust, partnership, or
other legal entity may not act as or hold itself out as an
administrator unless the entity is covered by and is engaging in
business under a certificate of authority issued under this
chapter.
(b) An administrator is required to hold only one certificate of
authority issued under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.052. APPLICATION. (a) An application for a
certificate of authority to engage in business as an
administrator must be in a form prescribed by the commissioner
and must include the following:
(1) a copy of each basic organizational document of the
applicant, including the articles of incorporation, bylaws,
articles of association, trade name certificate, and any other
similar document and a copy of any amendment to any of those
documents;
(2) a description of the applicant and the applicant's services,
facilities, and personnel;
(3) if the applicant is not domiciled in this state, a power of
attorney executed by the applicant appointing the commissioner,
the commissioner's successors in office, or the commissioner's
appointed designee as the applicant's attorney in this state on
whom process may be served in any legal action or proceeding
based on a cause of action arising in this state against the
applicant;
(4) an audited financial statement of the applicant covering the
preceding three calendar years or any lesser period that the
applicant and any predecessors of the applicant have been in
existence, or if an audited financial statement is not available,
an unaudited financial statement as of a date not earlier than
the 120th day before the date the application is filed,
accompanied by an affidavit or certification of the applicant
that:
(A) the unaudited financial statement is true and correct, as of
its date; and
(B) a material change in financial condition has not occurred
from the date of the financial statement to the execution date of
the affidavit or certification; and
(5) any other information the commissioner reasonably requires.
(b) An applicant for a certificate of authority or a certificate
holder under this chapter shall notify the department in the
manner prescribed by commissioner rule of a change of control in
the applicant's or certificate holder's ownership not later than
the 30th day after the effective date of the change and shall
notify the department of any other fact or circumstance affecting
the applicant's or certificate holder's qualifications for a
certificate of authority in this state as required by
commissioner rule.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.05, eff. September 1, 2007.
Sec. 4151.053. APPROVAL OF APPLICATION. The commissioner shall
approve an application for a certificate of authority to engage
in business in this state as an administrator if the commissioner
is satisfied that:
(1) granting the application would not violate a federal or
state law;
(2) the financial condition of the applicant or of each person
who would operate or control the applicant is such that granting
a certificate of authority would not be adverse to the public
interest;
(3) the applicant has not attempted to obtain the certificate of
authority through fraud or bad faith;
(4) the applicant has complied with this chapter and rules
adopted by the commissioner under this chapter; and
(5) the name under which the applicant will engage in business
in this state is not so similar to that of another administrator
or insurer that it is likely to mislead the public.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.054. DENIAL OF APPLICATION. (a) If the commissioner
is unable to approve an application for a certificate of
authority, the commissioner shall:
(1) provide the applicant with written notice specifying each
deficiency in the application; and
(2) offer the applicant the opportunity for a hearing to address
each reason and circumstance for possible denial of the
application.
(b) The commissioner must provide an opportunity for a hearing
before the commissioner finally denies an application.
(c) At the hearing, the applicant has the burden to produce
sufficient competent evidence on which the commissioner can make
the determinations required by Section 4151.053.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.055. FIDELITY BOND REQUIRED. (a) If the commissioner
approves an application for a certificate of authority, before
the commissioner issues the certificate of authority, the
applicant must:
(1) obtain and maintain a fidelity bond that complies with this
section; and
(2) submit to the commissioner proof that the applicant has
obtained the fidelity bond.
(b) The fidelity bond must protect against an act of fraud or
dishonesty by the applicant in exercising the applicant's powers
and duties as administrator.
(c) The fidelity bond may not be less than $10,000 and may not
be more than the lesser of:
(1) 10 percent of the amount of funds handled during the
preceding year or, if no funds were handled during the preceding
year, 10 percent of the amount of funds reasonably estimated to
be handled by the administrator during the current calendar year;
or
(2) $500,000.
(d) On written request by an administrator for reduction of the
amount of the fidelity bond for a particular year, the
commissioner may authorize the reduction of the amount of the
bond if the administrator presents evidence that the amount of
funds to be handled during that year will be less than the amount
handled during the preceding year.
(e) For purposes of this section, the amount of funds handled by
a person in the person's capacity as administrator is either the
total amount of premiums and contributions received by the
administrator or the total amount of benefits paid by the
administrator, whichever is greater, during the preceding
calendar year in all jurisdictions in which the person acts as an
administrator.
(f) Unless the administrator and the insurer or plan agree
otherwise in writing, an administrator is required to obtain and
maintain only one fidelity bond for all insurers and plans for
which the administrator acts as administrator in this state.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.056. DURATION OF CERTIFICATE OF AUTHORITY. A
certificate of authority issued to an administrator under this
chapter is effective until it is suspended, canceled, or revoked.
The issuance, denial, suspension, cancellation, or revocation of
a certificate of authority to act as an administrator is subject
to:
(1) Subchapters B and C, Chapter 4005;
(2) Chapter 82; and
(3) Subchapter G.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.06, eff. September 1, 2007.
SUBCHAPTER C. POWERS AND DUTIES OF ADMINISTRATORS AND INSURERS
Sec. 4151.101. WRITTEN AGREEMENT WITH INSURER OR PLAN SPONSOR
REQUIRED. (a) An administrator may provide services only under
a written agreement with an insurer or plan sponsor.
(b) The commissioner by rule may prescribe provisions that must
be included in the written agreement.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.08, eff. September 1, 2007.
Sec. 4151.102. CONTENTS OF WRITTEN AGREEMENT. (a) The written
agreement must include each requirement prescribed by this
subchapter except for a requirement that does not apply to any
function the administrator performs.
(a-1) The written agreement must include a statement of the
duties that the administrator is expected to perform on behalf of
the insurer, and the lines, classes, or types of insurance that
the administrator is authorized to administer. The agreement
must include, as applicable, provisions regarding claims handling
and other standards relating to the business underwritten by the
insurer.
(b) If a policy or plan document is issued to a trustee, a copy
of the trust agreement and any amendment to that trust agreement
becomes part of the written agreement.
(c) The written agreement may not contain a provision that
unreasonably restricts the availability to a plan participant of
an individual life, health, or accident policy or annuity through
an agent selected by the plan participant.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.09, eff. September 1, 2007.
Sec. 4151.103. RETENTION OF WRITTEN AGREEMENT; INSPECTION BY
COMMISSIONER. (a) The administrator and the insurer, plan, or
plan sponsor shall retain a copy of the written agreement as part
of their official records:
(1) during the term of the agreement; and
(2) until the fifth anniversary of the date on which the
agreement expires.
(b) On written request by the commissioner, the administrator
shall make the written agreement available for inspection by the
commissioner or the commissioner's designee.
(c) Information the commissioner or the commissioner's designee
obtains from the written agreement is confidential and may not be
made available to the public. An employee of the department may
examine the information in exercising powers and performing
duties under this chapter.
(d) The commissioner shall adopt rules to address the transfer
of records from one administrator to another.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.10, eff. September 1, 2007.
Sec. 4151.104. NOTICE OF USE OF ADMINISTRATOR'S SERVICES. (a)
If an insurer, plan, or plan sponsor uses the services of an
administrator, the administrator shall give written notice to
each insured and injured employee of the administrator's identity
and the relationship among the administrator and the insurer,
plan, or plan sponsor and the insured and injured employee. The
insurer, plan, or plan sponsor must approve the notice before the
notice is distributed.
(b) An administrator administering workers' compensation claims
may satisfy the requirements of Subsection (a) by including the
notice as part of, or in conjunction with, the notice required
under Section 406.005(c), Labor Code.
(c) An administrator who fails to provide notice as required by
Subsection (a) is subject to an administrative penalty in the
manner provided by Chapter 84.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.11, eff. September 1, 2007.
Sec. 4151.1041. REFERRAL BY INSURER. (a) An insurer may not
knowingly refer a claim or loss for administration in this state
to a person purporting to be or acting as an administrator unless
the person holds a certificate of authority under this chapter.
(b) Before first referring a claim or loss for administration,
an insurer must ascertain from the commissioner whether the
person performing the administration holds a certificate of
authority under this chapter. Once the insurer has ascertained
that the person holds a certificate of authority, the insurer may
refer a claim to the person for administration and may continue
to refer claims to the person until the insurer has knowledge or
receives information from the commissioner that the person no
longer holds a certificate of authority.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.12, eff. September 1, 2007.
Sec. 4151.1042. RESPONSIBILITIES OF INSURER; SEMIANNUAL AUDIT.
(a) If an insurer uses the services of an administrator, the
insurer is responsible for determining the benefits, premium
rates, reimbursement procedures, and claims payment procedures
applicable to the coverage and for securing reinsurance, if any.
The insurer shall provide a copy of the written requirements
relating to those matters to the administrator. The
responsibilities of the administrator as to any of those matters
must be set forth in the written agreement between the
administrator and the insurer.
(b) An insurer shall ensure competent administration of its
programs.
(c) If an administrator administers benefits for more than 100
certificate holders, injured employees, plan participants, or
policyholders on behalf of an insurer, the insurer shall, at
least semiannually, conduct a review of the operations of the
administrator. At least biennially, the insurer shall conduct an
on-site audit of the operations of the administrator.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.12, eff. September 1, 2007.
Sec. 4151.105. PAYMENTS TO ADMINISTRATOR. (a) If an insurer,
plan, or plan sponsor uses the services of an administrator:
(1) a payment of a premium or contribution to the administrator
by or on behalf of an insured or plan participant is considered
to have been received by the insurer, plan, or plan sponsor; and
(2) a payment of a return premium, contribution, or claim to the
administrator by the insurer, plan, or plan sponsor is not
considered payment to the insured, plan participant, or claimant
until the insured, plan participant, or claimant receives the
payment.
(b) This section does not limit a right of an insurer, plan, or
plan sponsor against the administrator resulting from the
administrator's failure to make a payment to an insured, plan
participant, or claimant.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.106. CERTAIN FUNDS COLLECTED OR RECEIVED BY
ADMINISTRATOR. (a) An administrator who collects funds must
identify and state separately in writing the amount of any
premium or contribution specified by the insurer, plan, or plan
sponsor for the coverage and provide the information to any
person who pays to the administrator a premium or contribution.
(b) An administrator holds in a fiduciary capacity:
(1) a premium or contribution the administrator collects on
behalf of an insurer, plan, or plan sponsor; and
(2) a return premium the administrator receives from an insurer,
plan, or plan sponsor.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.107. DELIVERY OR DEPOSIT OF CERTAIN FUNDS RECEIVED BY
ADMINISTRATOR. (a) On receiving a premium, contribution, or
return premium, an administrator shall:
(1) timely deliver the funds to the person entitled to the funds
according to terms of the written agreement; or
(2) promptly deposit the funds in a fiduciary bank account
established and maintained by the administrator.
(b) If premiums or contributions deposited in a fiduciary bank
account were collected on behalf of more than one insurer, plan,
or plan sponsor, the administrator shall:
(1) maintain records that clearly record separately the deposits
to and withdrawals from the account on behalf of each insurer,
plan, or plan sponsor; and
(2) on request of an insurer, plan, or plan sponsor, provide to
the insurer, plan, or plan sponsor a copy of the records relating
to deposits and withdrawals on behalf of that insurer or plan.
(c) The requirements of Subsection (b):
(1) are in addition to requirements of any other federal or
state law; and
(2) do not authorize the commingling of funds if otherwise
prohibited by law.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.108. WITHDRAWALS FROM FIDUCIARY ACCOUNT. A withdrawal
from a fiduciary bank account established under Section 4151.107
may be made only as provided in the written agreement for any of
the following purposes:
(1) delivery to an insurer, plan, or plan sponsor entitled to
payment;
(2) deposit in an account controlled and maintained in the name
of the insurer, plan, or plan sponsor;
(3) transfer to and deposit in a claims payment account for
payment of a claim as provided by Section 4151.111;
(4) payment to a group policyholder for delivery to the insurer
entitled to payment;
(5) payment to the administrator of the administrator's
commission, fees, or charges;
(6) delivery of a return premium to any person entitled to
payment; or
(7) payment of a premium for stop-loss or excess loss insurance.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.109. PAYMENT OF CLAIMS FROM FIDUCIARY ACCOUNT
PROHIBITED. An administrator may not pay a claim from a
fiduciary bank account established under Section 4151.107.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.110. UNDERWRITING STANDARDS. If an administrator has
the authority to accept or reject a risk, the written agreement
must address underwriting or other standards of the insurer or
plan.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.111. ADJUDICATION OF CLAIMS. (a) An administrator
shall adjudicate a claim not later than the 60th day after the
date on which the administrator receives valid proof of loss in
connection with the claim.
(b) The administrator shall pay each claim on a draft authorized
by the insurer, plan, or plan sponsor in the written agreement.
(c) In the event of a conflict between this section and a
provision of the Labor Code relating to time periods for
adjudication and payment of workers' compensation claims, the
Labor Code provision prevails.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.13, eff. September 1, 2007.
Sec. 4151.112. MAINTENANCE OF BOOKS AND RECORDS. (a) An
administrator shall maintain at the administrator's principal
administrative office adequate books and records of each
transaction in which the administrator engages with an insurer,
plan, plan sponsor, insured, or plan participant.
(b) The administrator shall maintain the books and records:
(1) until the fifth anniversary of the end of the term of the
written agreement to which the books and records relate; and
(2) in accordance with prudent standards of insurance
recordkeeping.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.113. ACCESS TO BOOKS AND RECORDS. (a) For the
purpose of examination, audit, and inspection, the administrator
shall provide to the commissioner and the commissioner's designee
access to the books and records maintained as required by Section
4151.112.
(b) A trade secret, including the identity and address of a
policyholder, certificate holder, or injured employee, is
confidential, except the commissioner may use that information in
a proceeding against the administrator.
(c) An insurer, plan, or plan sponsor is entitled to continuing
access to the books and records sufficient to permit the insurer,
plan, or plan sponsor to fulfill a contractual obligation to an
insured or plan participant. The right provided by this
subsection is subject to any restriction included in the written
agreement relating to the parties' proprietary rights to the
books and records.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.14, eff. September 1, 2007.
Sec. 4151.114. DISPOSITION OF BOOKS AND RECORDS ON TERMINATION
OF WRITTEN AGREEMENT. On termination of the written agreement,
an administrator may fulfill the requirements of Sections
4151.112 and 4151.113 by:
(1) delivering the books and records:
(A) to a successor administrator; or
(B) if there is not a successor administrator, to the insurer,
plan, or plan sponsor; and
(2) giving written notice to the commissioner of the location of
the books and records.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.115. CONFIDENTIALITY OF PERSONAL INFORMATION. (a)
Information that identifies an individual covered by a plan is
confidential.
(b) During the time information described by Subsection (a) is
in an administrator's custody or control, the administrator shall
take all reasonable precautions to prevent disclosure or use of
the information for a purpose unrelated to administration of the
plan.
(c) The administrator shall disclose information described by
Subsection (a) only:
(1) in response to a court order;
(2) for an examination conducted by the commissioner under this
chapter;
(3) for an audit or investigation conducted under the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.);
(4) to or at the request of the insurer or plan sponsor; or
(5) with the written consent of the identified individual or the
individual's legal representative.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.116. ADVERTISING. Before an administrator uses
advertising relating to business underwritten by an insurer,
plan, or plan sponsor, the insurer, plan, or plan sponsor must
approve use of the advertising.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.117. COMPENSATION OF ADMINISTRATOR. (a) An
administrator's compensation may be determined:
(1) as a percentage of the premiums or charges the administrator
collects or the amount of claims the administrator pays or
processes; or
(2) except as provided by Subsection (b), on another basis as
specified in the written agreement.
(b) An insurer or plan sponsor may not permit or provide
compensation or another thing of value to an administrator that
is based on the savings accruing to the insurer or plan sponsor
because of adverse determinations regarding claims for benefits,
reductions of or limitations on benefits, or other analogous
actions inconsistent with this chapter, that are made or taken by
the administrator.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.15, eff. September 1, 2007.
SUBCHAPTER D. PHARMACY BENEFIT PLANS
Sec. 4151.151. DEFINITION. In this subchapter, "pharmacy
benefit manager" means a person, other than a pharmacy or
pharmacist, who acts as an administrator in connection with
pharmacy benefits.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.152. IDENTIFICATION CARDS. (a) Except as provided by
rules adopted by the commissioner, an administrator for a plan
that provides pharmacy benefits shall issue an identification
card to each individual covered by the plan. The administrator
shall issue the identification card not later than the 30th day
after the date the administrator receives notice that the
individual is eligible for the benefits.
(b) The commissioner by rule shall adopt standard information to
be included on the identification card. The standard form
identification card must include:
(1) the name or logo of the entity administering the pharmacy
benefits;
(2) the international identification number assigned by the
American National Standards Institute for the entity
administering the pharmacy benefits;
(3) the group number applicable to the covered individual;
(4) the effective date of the coverage evidenced by the card;
(5) a telephone number to be used to contact an appropriate
person to obtain information relating to the pharmacy benefits
provided under the coverage; and
(6) copayment information for generic and brand-name
prescription drugs.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.153. DISCLOSURE OF CERTAIN PATIENT INFORMATION
PROHIBITED. (a) A pharmacy benefit manager may not sell a list
of patients that contains information through which the identity
of an individual patient is disclosed.
(b) A pharmacy benefit manager shall maintain all data that
identifies a patient in a confidential manner that prevents
disclosure to a third party unless the disclosure is otherwise
authorized by law or by the patient.
(c) This section does not prohibit:
(1) general advertising about a specific pharmaceutical product
or service; or
(2) the request and receipt by a person of information
regarding:
(A) a specific pharmaceutical product or service;
(B) the person's own records or claims; or
(C) the person's dependent's records or claims.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
SUBCHAPTER E. DEPARTMENT REGULATION OF ADMINISTRATORS
Sec. 4151.201. EXAMINATION OF ADMINISTRATOR. (a) The
commissioner may examine an administrator with regard to its
business in this state.
(b) The commissioner may designate one or more employees to
perform an examination.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.202. CONTENTS OF EXAMINATION; ON-SITE EVALUATION. (a)
An examination under Section 4151.201 must include a review of:
(1) each existing written agreement between the administrator
and an insurer or plan sponsor; and
(2) the administrator's financial statements.
(b) The commissioner also may have examiners conduct an on-site
evaluation of the administrator's personnel and facilities and
any books and records of the administrator relating to the
transaction of business by and the financial condition of the
administrator.
(c) Before an examiner enters an administrator's property, the
commissioner shall give notice to the administrator of the
examiner's intent to conduct an on-site evaluation. The notice
must:
(1) be in the form required by rule adopted by the commissioner;
and
(2) include the date and estimated time that the examiner will
enter the administrator's property.
(d) An examiner shall comply with operational rules of an
administrator while on the administrator's property.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.203. COST OF EXAMINATION. The cost of an examination
under Section 4151.201 shall be paid from the fee collected under
Section 4151.206(a)(2) and with revenue from the maintenance tax
levied under Chapter 259.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.204. EXAMINATION UNDER OATH. If necessary to make a
complete evaluation of the activities and operations of an
administrator, the commissioner may summon and examine under oath
the administrator and the administrator's personnel.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Sec. 4151.205. ANNUAL REPORT. (a) An administrator shall
annually, not later than June 30, file with the commissioner a
report on a form prescribed by the commissioner. The report must
contain any information required by the commissioner and must be
verified by at least two officers of the administrator.
(b) The annual report must cover the preceding calendar year.
(c) Except as provided by Subsection (f), the annual report must
include an audited financial statement performed by an
independent certified public accountant. An audited financial
statement prepared on a consolidated basis must include a
columnar consolidating or combining worksheet that shall be filed
with the annual report and must comply with the following:
(1) amounts shown on the consolidated audited financial report
must be shown on the worksheet;
(2) amounts for each entity must be stated separately; and
(3) explanations of consolidating and eliminating entries must
be included.
(d) The annual report must include notes to the financial
statement or attachments that reflect the complete name and
address of each insurer in this state with which the
administrator had an agreement during the preceding fiscal year.
(e) Information derived from an audited financial statement
contained in an annual report under this section is confidential
and is not subject to disclosure under Chapter 552, Government
Code.
(f) An administrator who receives less than $10 million annually
as compensation for performing administrative services and
operates under written agreements subject to this chapter with
insurers or plan sponsors in this state is not required to file
an audited financial statement under Subsection (c), but must
file a financial statement certified in the manner prescribed by
commissioner rule.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.17, eff. September 1, 2007.
Sec. 4151.206. FEES. (a) The commissioner shall collect and an
applicant or administrator shall pay to the commissioner fees in
an amount to be determined by the commissioner as follows:
(1) a filing fee not to exceed $1,000 for processing an original
application for a certificate of authority for an administrator;
(2) a fee not to exceed $500 for an examination under Section
4151.201; and
(3) a filing fee not to exceed $200 for an annual report.
(b) The commissioner shall deposit a fee collected under this
section to the credit of the Texas Department of Insurance
operating account.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 3B.074, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
921, Sec. 9.074, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.18, eff. September 1, 2007.
Sec. 4151.210. EFFECT OF REVOCATION OF OTHER CERTIFICATES. An
officer or a director or a shareholder with a controlling
interest of an entity whose certificate of authority to engage in
the business of insurance or other analogous authorization has
been revoked in this state or in any other state may not act as
an officer, director, member, manager, or partner, or as a
shareholder with a controlling interest, of an entity that holds
a certificate of authority issued under this chapter unless the
commissioner determines, for good cause shown, that it is in the
public interest to permit the individual to act in that capacity.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.19, eff. September 1, 2007.
Sec. 4151.211. RESTRICTIONS ON ACQUISITION OF OWNERSHIP
INTEREST. (a) A person may not acquire an ownership interest in
an entity that holds a certificate of authority under this
chapter if the person is, or after the acquisition would be,
directly or indirectly in control of the certificate holder, or
otherwise acquire control of or exercise any control over the
certificate holder, unless the person has filed with the
department under oath:
(1) a biographical form for each person by whom or on whose
behalf the acquisition of control is to be effected;
(2) a statement certifying that no person who is acquiring an
ownership interest in or control of the certificate holder has
been the subject of a disciplinary action taken by a financial or
insurance regulator of this state, another state, or the United
States;
(3) a statement certifying that, immediately on the change of
control, the certificate holder will be able to satisfy the
requirements for the issuance of a certificate of authority; and
(4) any additional information that the commissioner by rule may
prescribe as necessary or appropriate to the public interest and
the protection of the insurance consumers of this state.
(b) The department may require a partnership, syndicate, or
other group that is required to file a statement under Subsection
(a) to provide the information required under that subsection for
each partner of the partnership, each member of the syndicate or
group, and each person who controls the partner or member. If
the partner, member, or person is a corporation or the person
required to file the statement under Subsection (a) is a
corporation, the department may require that the information
required under that subsection be provided regarding:
(1) the corporation;
(2) each individual who is an executive officer or director of
the corporation; and
(3) each person who is directly or indirectly the beneficial
owner of more than 10 percent of the outstanding voting
securities of the corporation.
(c) The department may disapprove an acquisition of control if,
after notice and opportunity for hearing, the commissioner
determines that:
(1) immediately on the change of control the certificate holder
would not be able to satisfy the requirements for the certificate
of authority;
(2) the competence, trustworthiness, experience, and integrity
of the persons who would control the operation of the certificate
holder are such that it would not be in the interest of the
insurance consumers of this state to permit the acquisition of
control; or
(3) the acquisition of control would violate this code or
another law of this state, another state, or the United States.
(d) Notwithstanding Subsection (c), a change in control is
considered approved if the commissioner has not proposed to deny
the requested change before the 61st day after the date on which
the department receives all information required by this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.19, eff. September 1, 2007.
Sec. 4151.212. MAINTENANCE OF QUALIFICATIONS REQUIRED. The
department may, in the manner prescribed by Section 4151.056 and
by Subchapter G, revoke, suspend, or refuse to renew the
certificate of authority of a certificate holder who does not
maintain the qualifications necessary to obtain a certificate of
authority issued under this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.19, eff. September 1, 2007.
SUBCHAPTER F. WORKERS' COMPENSATION BENEFIT PLANS
Sec. 4151.251. DEFINITION. For purposes of this subchapter
only, "insurance carrier" means:
(1) an insurance company; or
(2) a certified self-insurer for workers' compensation
insurance, other than a certified self-insurance group under
Chapter 407A, Labor Code, or a governmental entity that
self-insures.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.252. APPLICATION. (a) This subchapter applies to the
administration of workers' compensation insurance coverage.
(b) This subchapter does not apply to an employer that does not
elect under Subchapter A, Chapter 406, Labor Code, to obtain
workers' compensation insurance coverage.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.253. AGREEMENTS BETWEEN ADMINISTRATORS AND CARRIERS.
(a) An administrator shall enter into a contract in connection
with workers' compensation benefits for collecting premium or
contributions, adjusting claims, or settling claims with the
insurance carrier responsible for those claims, including the
insurance carrier responsible for claims arising under policies
authorized under Section 2053.202(b). A contract required by
this subsection may be in the form of a master services
agreement.
(b) A contract required by Subsection (a) must provide that:
(1) the contract does not limit in any way the insurance
carrier's authority or responsibility, including financial
responsibility, to comply with each statutory or regulatory
requirement; and
(2) the administrator shall comply with each statutory or
regulatory requirement relating to a function assumed by or
carried out by the administrator.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.254. AGREEMENTS BETWEEN ADMINISTRATORS AND EMPLOYERS.
(a) In addition to the contract required by Section 4151.253, an
administrator may also enter into a contract with an employer in
connection with workers' compensation benefits for collecting
premium or contributions, adjusting claims, or settling claims,
including an employer purchasing a policy authorized under
Section 2053.202(b).
(b) A contract entered into under Subsection (a) must provide
that:
(1) the contract does not limit or modify in any way:
(A) the insurance carrier's authority or responsibility,
including financial responsibility, to comply with each statutory
or regulatory requirement; and
(B) the provisions of the contract entered into between the
administrator and the insurance carrier under Section 4151.253;
and
(2) the administrator shall comply with each statutory or
regulatory requirement relating to a function assumed by or
carried out by the administrator.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.255. ADMINISTRATOR COMPENSATION. Except as provided
by Section 4151.117, an administrator may accept compensation of
any kind for the performance of administrative services in
connection with workers' compensation claims from:
(1) an insurance carrier responsible for those claims;
(2) an employer with whom the administrator has entered into a
contract; or
(3) both the insurance carrier and the employer.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.256. LARGE DEDUCTIBLE POLICIES. An employer who
enters into a contract with an insurance carrier under Section
2053.202(b) may not use or contract with an administrator to
perform administrative services in connection with workers'
compensation benefits unless the administrator has entered into a
written agreement with the insurance carrier that:
(1) complies with all the provisions of this chapter; and
(2) provides that the insurance carrier is responsible for:
(A) setting standards used in the handling of claims; and
(B) arranging for the payment of claims.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
Sec. 4151.257. RULES. The commissioner shall adopt rules to
implement the requirements of this subchapter, including rules
prescribing requirements for contracts and master services
agreements and requirements for the payment of claims. The rules
must provide for compliance with the requirements of this chapter
for any contract that takes effect or has an annual anniversary
date on or after January 1, 2008.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.20, eff. September 1, 2007.
SUBCHAPTER G. DISCIPLINARY ACTIONS; PENALTIES
Sec. 4151.301. GROUNDS FOR DENIAL, SUSPENSION, OR REVOCATION OF
CERTIFICATE OF AUTHORITY. The department may deny an application
for a certificate of authority or discipline the holder of a
certificate of authority under this subchapter if the department
determines that the applicant or holder, individually, or through
an officer, director, or shareholder:
(1) has wilfully violated an insurance law of this state;
(2) has intentionally made a material misstatement in the
application for a certificate of authority;
(3) has obtained or attempted to obtain a certificate of
authority by fraud or misrepresentation;
(4) has misappropriated, converted to the applicant's or
holder's own use, or illegally withheld money belonging to:
(A) an insurance carrier, as that term is defined by Section
401.011, Labor Code;
(B) an insurer, as that term is defined by Section 4001.003;
(C) a health maintenance organization; or
(D) an insured, enrollee, injured employee, or beneficiary;
(5) has engaged in fraudulent or dishonest acts or practices;
(6) has materially misrepresented the terms and conditions of an
insurance policy, certificate, evidence of coverage, or contract;
(7) has been convicted of a felony;
(8) is in a financial condition, or is operating or conducting
business in a manner, that would render further transaction of
business in this state hazardous or injurious to insured persons
or the public;
(9) has failed to comply with any judgment rendered against the
applicant or holder before the 60th day after the date on which
the judgment becomes final;
(10) has wilfully violated a commissioner rule;
(11) has refused to be examined or to produce accounts, records,
and files for examination as required by this chapter or
commissioner rule;
(12) at any time fails to meet a qualification for which
issuance of the certificate of authority could have been denied
had the failure then existed and been known to the commissioner;
(13) has had a certificate of authority, license, or other
authority issued by this state, another state, or the United
States suspended or revoked; or
(14) has failed to timely file the annual report required by
Section 4151.205.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.302. REMEDIES FOR VIOLATION OF INSURANCE LAWS OR
COMMISSIONER RULES. In addition to any other remedy available
under Chapter 82 for a violation of this code, another insurance
law of this state, or a commissioner rule, the department may:
(1) deny an application for a certificate of authority;
(2) suspend or revoke a certificate of authority;
(3) place on probation a person whose certificate of authority
has been suspended;
(4) assess an administrative penalty; or
(5) reprimand a certificate of authority holder.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.303. PROBATED SUSPENSION. If the suspension of a
certificate of authority is probated, the commissioner may
require the holder to:
(1) report regularly to the department on any matter that is the
basis of the probation; or
(2) limit the holder's practice to the areas prescribed by the
department.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.304. HEARING. If the department proposes to deny an
application for a certificate of authority, or to suspend or
revoke a certificate of authority, the applicant or holder is
entitled to notice and a hearing conducted by the State Office of
Administrative Hearings as provided by Chapter 40.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.305. APPLICATION FOR CERTIFICATE OF AUTHORITY AFTER
DENIAL OR REVOCATION. (a) A person, or officer, director, or
shareholder of a person, whose application has been denied or
whose certificate of authority has been revoked under this
subchapter may not apply for a certificate of authority before
the fifth anniversary of:
(1) the effective date of the denial or revocation; or
(2) the date of a final court order affirming the denial or
revocation if judicial review was sought.
(b) An application filed after the period required by Subsection
(a) may be denied by the commissioner if the applicant fails to
show good cause why the denial or revocation should not be a bar
to the issuance of a new certificate.
(c) Subsection (b) does not apply to an applicant whose
application was denied for failure by the applicant to submit a
properly completed application for a certificate of authority.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.306. DISCIPLINARY PROCEEDING FOR CONDUCT COMMITTED
BEFORE SURRENDER OR FORFEITURE OF CERTIFICATE. (a) The
department may institute a disciplinary proceeding against a
former certificate holder, or officer, director, or shareholder
of a former certificate holder, for conduct committed before the
effective date of a voluntary surrender or automatic forfeiture
of the certificate of authority.
(b) In a proceeding under this section, the fact that the
certificate holder, or officer, director, or shareholder of a
certificate holder, has surrendered or forfeited the certificate
does not affect the former certificate holder's, or officer,
director, or shareholder of a former certificate holder's,
culpability for the conduct that is the subject of the
proceeding.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.307. EMERGENCY CERTIFICATE SUSPENSION. (a) The
commissioner may suspend the certificate of an administrator
without notice or hearing if the commissioner determines that:
(1) the administrator is insolvent or impaired;
(2) an order for receivership, conservatorship, rehabilitation,
or any other delinquency regarding the administrator has been
entered in any state; or
(3) the financial condition or business practices of the
administrator otherwise pose an imminent threat to the public
health, safety, or welfare of the residents of this state.
(b) On determining that grounds exist under Subsection (a) to
suspend the administrator's certificate of authority, the
commissioner may issue an order suspending the certificate. The
commissioner shall immediately serve notice of the suspension on
the holder.
(c) The notice required by Subsection (b) must:
(1) be personally served on the holder or be sent by registered
or certified mail, return receipt requested, to the holder's last
known address according to the department's records;
(2) state the grounds for the suspension; and
(3) inform the holder of the right to a hearing on the
suspension order.
(d) An administrator whose certificate of authority is suspended
under this section is entitled to request a hearing on the
suspension not later than the 30th day after the date of receipt
of notice of the suspension. Not later than the 10th day after
the date a hearing is requested, the commissioner shall issue a
notice of hearing.
(e) The hearing must be held not later than the 10th day after
the date notice of hearing is issued, unless the parties agree to
a later date.
(f) A hearing on a suspension order under this section is
subject to Chapter 2001, Government Code, and to Subchapter A,
Chapter 40. After the hearing, the administrative law judge
shall recommend to the commissioner whether to uphold, vacate, or
modify the suspension order.
(g) A suspension order issued under this section remains in
effect until further action is taken by the commissioner.
Added by Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.21, eff. September 1, 2007.
Sec. 4151.308. GENERAL ADMINISTRATIVE SANCTIONS. An
administrator or other person who violates this chapter is
subject to the sanctions provided by Chapter 82.
Added by Acts 2003, 78th Leg., ch. 1274, Sec. 7, eff. April 1,
2005.
Renumbered from Insurance Code, Section 4151.207 and amended by
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 1.22, eff. September 1, 2007.
Sec. 4151.309. CRIMINAL PENALTY. (a) An ad