CHAPTER 83. EMERGENCY CEASE AND DESIST ORDERS
INSURANCE CODE
TITLE 2. TEXAS DEPARTMENT OF INSURANCE
SUBTITLE B. DISCIPLINE AND ENFORCEMENT
CHAPTER 83. EMERGENCY CEASE AND DESIST ORDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 83.001. DEFINITIONS. In this chapter:
(1) "Authorized person" means an individual or entity described
by Section 83.002.
(2) "Emergency" means a sudden, urgent occurrence that requires
immediate action.
(3) "Unauthorized person" means an individual or a corporation,
association, partnership, or other artificial person who directly
or indirectly does an act of insurance business that is:
(A) described by Section 101.051 or 101.052; and
(B) not done in accordance with specific authorization of law.
(4) "Unfair act" means an unfair method of competition, an
unfair or deceptive act or practice, or an unfair claim
settlement practice as defined under Chapter 541 or 542 or a rule
adopted under either chapter.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1419, Sec. 19, eff.
June 1, 2003; Acts 2001, 77th Leg., ch. 1420, Sec. 11.003, eff.
Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2B.011, eff. April 1, 2009.
Sec. 83.002. APPLICATION OF CHAPTER. (a) This chapter applies
to each company regulated by the commissioner, including:
(1) a domestic or foreign, stock or mutual, life, health, or
accident insurance company;
(2) a domestic or foreign, stock or mutual, fire or casualty
insurance company;
(3) a Mexican casualty company;
(4) a domestic or foreign Lloyd's plan insurer;
(5) a domestic or foreign reciprocal or interinsurance exchange;
(6) a domestic or foreign fraternal benefit society;
(7) a domestic or foreign title insurance company;
(8) an attorney's title insurance company;
(9) a stipulated premium insurance company;
(10) a nonprofit legal service corporation;
(11) a statewide mutual assessment company;
(12) a local mutual aid association;
(13) a local mutual burial association;
(14) an association exempt under Section 887.102;
(15) a nonprofit hospital, medical, or dental service
corporation, including a company subject to Chapter 842;
(16) a county mutual insurance company; and
(17) a farm mutual insurance company.
(b) This chapter also applies to:
(1) an agent of an entity described by Subsection (a); and
(2) an individual or a corporation, association, partnership, or
other artificial person who:
(A) is engaged in the business of insurance;
(B) holds a permit, certificate, registration, license, or other
authority under this code; or
(C) is regulated by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1419, Sec. 20, eff.
June 1, 2003; Acts 2001, 77th Leg., ch. 1420, Sec. 11.004, eff.
Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2B.012, eff. April 1, 2009.
Sec. 83.003. RULES. The commissioner may adopt reasonable rules
to implement this chapter, including rules that provide, to the
extent possible, uniformity of procedures between this state and
other states, the United States, or the National Association of
Insurance Commissioners.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.004. PROCEEDINGS UNDER OTHER LAW. The commissioner may
proceed solely under this chapter or under this chapter in
conjunction with other applicable law.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER B. ISSUANCE OF ORDERS
Sec. 83.051. AUTHORITY OF COMMISSIONER TO ISSUE ORDER. (a) The
commissioner ex parte may issue an emergency cease and desist
order if:
(1) the commissioner believes that:
(A) an authorized person engaging in the business of insurance
is:
(i) committing an unfair act; or
(ii) in a hazardous condition or a hazardous financial condition
under Section 843.406 or Subchapter A, Chapter 404, as determined
by the commissioner; or
(B) an unauthorized person:
(i) is engaging in the business of insurance in violation of
Chapter 101 or in violation of a rule adopted under that chapter;
or
(ii) is engaging in the business of insurance in violation of
Chapter 101 and is committing an unfair act; and
(2) it appears to the commissioner that the alleged conduct:
(A) is fraudulent;
(B) is hazardous or creates an immediate danger to the public
safety; or
(C) is causing or can be reasonably expected to cause public
injury that:
(i) is likely to occur at any moment;
(ii) is incapable of being repaired or rectified; and
(iii) has or is likely to have influence or effect.
(b) An order is final on the 31st day after the date it is
received, unless the affected person requests a hearing under
Section 83.053.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2B.013, eff. April 1, 2009.
Sec. 83.052. NOTICE. (a) On issuance of an order under Section
83.051, the commissioner shall serve on the affected person an
order that:
(1) contains a statement of the charges; and
(2) requires the person immediately to cease and desist from the
acts, methods, or practices stated in the order.
(b) The commissioner shall serve the order by registered or
certified mail, return receipt requested, to the affected
person's last known address.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.053. REQUEST FOR HEARING. (a) A person affected by an
order is entitled to request a hearing to contest the order.
(b) The affected person must request the hearing not later than
the 30th day after the date on which the person receives the
order required by Section 83.052.
(c) A request to contest an order must:
(1) be in writing;
(2) be directed to the commissioner; and
(3) state the grounds for the request to set aside or modify the
order.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.054. HEARING. (a) On receiving a request for a hearing
under Section 83.053, the commissioner shall serve notice of the
time and place of the hearing.
(b) The hearing is subject to the procedures for contested cases
under Chapter 2001, Government Code. The hearing must be held not
later than the 10th day after the date the commissioner receives
the request for a hearing unless the parties mutually agree to a
later hearing date.
(c) At the hearing, the person requesting the hearing is
entitled to show cause why the order should not be affirmed.
(d) Following receipt of the proposal for decision from the
State Office of Administrative Hearings regarding the hearing,
the commissioner shall affirm, modify, or set aside in whole or
in part the order.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.055. EFFECT OF ORDER PENDING HEARING. Pending a hearing
under this subchapter, an order continues in effect unless the
order is stayed by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER C. ENFORCEMENT
Sec. 83.101. AUTHORITY OF COMMISSIONER. If the commissioner
reasonably believes that a person has violated an order issued
under this chapter, the commissioner may:
(1) initiate proceedings under this subchapter to impose an
administrative penalty or direct restitution;
(2) refer the matter to the attorney general for enforcement;
(3) initiate a proceeding to revoke the person's certificate of
authority; or
(4) pursue another action the commissioner considers appropriate
under applicable law.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.102. DETERMINATION OF VIOLATION. In determining whether
an order has been violated, the commissioner shall consider the
maintenance of procedures reasonably adopted to ensure compliance
with the order.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.103. HEARING ON ADMINISTRATIVE PENALTY. (a) If the
commissioner pursues action to impose an administrative penalty
under Section 83.101(1), the commissioner shall serve on the
person notice of the time and place of a hearing to be held not
earlier than the 21st day after the date the notice is received.
(b) The notice must contain a statement of the facts or conduct
alleged to violate the order.
(c) The commissioner shall serve the notice by registered or
certified mail, return receipt requested, to the person's last
known address.
(d) The hearing is subject to the procedures for contested cases
under Chapter 2001, Government Code.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.104. IMPOSITION OF ADMINISTRATIVE PENALTY; RESTITUTION.
(a) After a hearing, if the commissioner determines that an
order has been violated, the commissioner may:
(1) impose an administrative penalty of $25,000 for each act of
violation;
(2) direct the person against whom the order was issued to make
complete restitution to each Texas resident, Texas insured, and
entity operating in this state that is harmed by the violation;
or
(3) impose the penalty and direct restitution.
(b) A person directed to make restitution shall make the
restitution in the form and amount and within the period
determined by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.105. FAILURE TO PAY PENALTY. If a person fails to pay a
penalty assessed under this subchapter, the commissioner may:
(1) refer the matter to the attorney general for enforcement; or
(2) cancel or revoke any permit, license, certificate of
authority, certificate of registration, or other authorization
issued under this code as provided by Chapter 82.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER D. JUDICIAL REVIEW; JUDICIAL ACTION
Sec. 83.151. APPEAL. A person affected by an order of the
commissioner under Section 83.051 or 83.104 may appeal the order
by filing suit in a district court in Travis County not later
than the 20th day after the date of the order.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.152. EFFECT OF PETITION ON ORDER OR RELATED DECISION. A
petition for appeal filed under Section 83.151 does not stay or
vacate an order or a decision made under Subchapter B unless the
court, after hearing, issues an order that specifically stays or
vacates the order or decision.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.
Sec. 83.153. JUDICIAL ACTION FOR ENFORCEMENT OF ORDER;
ATTORNEY'S FEES. The department may recover reasonable
attorney's fees if judicial action is necessary to enforce an
order issued under Section 83.051 or 83.104.
Added by Acts 1999, 76th Leg., ch. 101, Sec. 1, eff. Sept. 1,
1999.