CHAPTER 407. SELF-INSURANCE REGULATION
LABOR CODE
TITLE 5. WORKERS' COMPENSATION
SUBTITLE A. TEXAS WORKERS' COMPENSATION ACT
CHAPTER 407. SELF-INSURANCE REGULATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 407.001. DEFINITIONS. In this chapter:
(1) "Association" means the Texas Certified Self-Insurer
Guaranty Association.
(2) Repealed by Acts 2005, 79th Leg., Ch. 265, Sec. 7.01(17),
eff. September 1, 2005.
(3) "Impaired employer" means a certified self-insurer:
(A) who has suspended payment of compensation as determined by
the division;
(B) who has filed for relief under bankruptcy laws;
(C) against whom bankruptcy proceedings have been filed; or
(D) for whom a receiver has been appointed by a court of this
state.
(4) "Incurred liabilities for compensation" means the amount
equal to the sum of:
(A) the estimated amount of the liabilities for outstanding
workers' compensation claims, including claims incurred but not
yet reported; and
(B) the estimated amount necessary to provide for the
administration of those claims, including legal costs.
(5) "Qualified claims servicing contractor" means a person who
provides claims service for a certified self-insurer, who is a
separate business entity from the affected certified
self-insurer, and who holds a certificate of authority under
Chapter 4151.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.042, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
265, Sec. 7.01(17), eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
728, Sec. 11.137, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 3.02, eff. September 1, 2007.
SUBCHAPTER B. DIVISION OF SELF-INSURANCE REGULATION
Sec. 407.023. EXCLUSIVE POWERS AND DUTIES OF COMMISSIONER. The
commissioner shall:
(1) approve or deny the issuance or revocation of a certificate
of authority to self-insure; and
(2) certify that a certified self-insurer has suspended payment
of compensation or has otherwise become an impaired employer.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.0421, eff. September 1, 2005.
Sec. 407.024. CLAIM OR SUIT. (a) A claim or suit brought by a
claimant or a certified self-insurer shall be styled "in re:
[name of employee] and [name of certified self-insurer]."
(b) The commissioner is the agent for service of process for a
claim or suit brought by a workers' compensation claimant against
the qualified claims servicing contractor of a certified
self-insurer.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.0422, eff. September 1, 2005.
SUBCHAPTER C. CERTIFICATE OF AUTHORITY TO SELF-INSURE
Sec. 407.041. APPLICATION. (a) An employer who desires to
self-insure under this chapter must submit an application to the
division for a certificate of authority to self-insure.
(b) The application must be:
(1) submitted on a form adopted by the commissioner; and
(2) accompanied by a nonrefundable $1,000 application fee.
(c) Not later than the 60th day after the date on which the
application is received, the commissioner shall approve or deny
the application.
(d) During the pendency of the approval or denial of the
application, the applicant may not operate as a self-insurer
under this chapter.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.043, eff. September 1, 2005.
Sec. 407.042. ISSUANCE OF CERTIFICATE. With the approval of the
Texas Certified Self-Insurer Guaranty Association, the
commissioner shall issue a certificate of authority to
self-insure to an applicant who meets the certification
requirements under this chapter and pays the required fee.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.044, eff. September 1, 2005.
Sec. 407.043. PROCEDURES ON DENIAL OF APPLICATION. (a) If the
commissioner determines that an applicant for a certificate of
authority to self-insure does not meet the certification
requirements, the division shall notify the applicant in writing
of the commissioner's determination, stating the specific reasons
for the denial and the conditions to be met before approval may
be granted.
(b) The applicant is entitled to a reasonable period, as
determined by the commissioner, to meet the conditions for
approval before the application is considered rejected for
purposes of appeal.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.045, eff. September 1, 2005.
Sec. 407.044. TERM OF CERTIFICATE OF AUTHORITY; RENEWAL. (a) A
certificate of authority to self-insure is valid for one year
after the date of issuance and may be renewed under procedures
prescribed by the commissioner.
(b) The commissioner may stagger the renewal dates of
certificates of authority to self-insure to facilitate the work
load of the division.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.046, eff. September 1, 2005.
Sec. 407.045. WITHDRAWAL FROM SELF-INSURANCE. (a) A certified
self-insurer may withdraw from self-insurance at any time with
the approval of the commissioner. The commissioner shall approve
the withdrawal if the certified self-insurer shows to the
satisfaction of the commissioner that the certified self-insurer
has established an adequate program to pay all incurred losses,
including unreported losses, that arise out of accidents or
occupational diseases first distinctly manifested during the
period of operation as a certified self-insurer.
(b) A certified self-insurer who withdraws from self-insurance
shall surrender to the division the certificate of authority to
self-insure.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.047, eff. September 1, 2005.
Sec. 407.046. REVOCATION OF CERTIFICATE OF AUTHORITY. (a) The
commissioner may revoke the certificate of authority to
self-insure of a certified self-insurer who fails to comply with
requirements or conditions established by this chapter or a rule
adopted by the commissioner under this chapter.
(b) If the commissioner believes that a ground exists to revoke
a certificate of authority to self-insure, the commissioner shall
refer the matter to the State Office of Administrative Hearings.
That office shall hold a hearing to determine if the certificate
should be revoked. The hearing shall be conducted in the manner
provided for a contested case hearing under Chapter 2001,
Government Code.
(c) The State Office of Administrative Hearings shall notify the
certified self-insurer of the hearing and the grounds not later
than the 30th day before the scheduled hearing date.
(d) If the certified self-insurer fails to show cause why the
certificate should not be revoked, the commissioner immediately
shall revoke the certificate.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49), eff.
Sept. 1, 1995; Acts 1995, 74th Leg., ch. 980, Sec. 1.21, eff.
Sept. 1, 1995.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.048, eff. September 1, 2005.
Sec. 407.047. EFFECT OF REVOCATION. (a) A certified
self-insurer whose certificate of authority to self-insure is
revoked is not relieved of the obligation for compensation to an
employee for an accidental injury or occupational disease that
occurred during the period of self-insurance.
(b) The security required under Sections 407.064 and 407.065
shall be maintained with the division or under the division's
control until each claim for workers' compensation benefits is
paid, is settled, or lapses under this subtitle.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.049, eff. September 1, 2005.
SUBCHAPTER D. REQUIREMENTS FOR CERTIFICATE OF AUTHORITY
Sec. 407.061. GENERAL REQUIREMENTS. (a) To be eligible for a
certificate of authority to self-insure, an applicant for an
initial or renewal certificate must present evidence satisfactory
to the commissioner and the association of sufficient financial
strength and liquidity, under standards adopted by the
commissioner, to ensure that all workers' compensation
obligations incurred by the applicant under this chapter are met
promptly.
(b) The applicant must:
(1) be a business entity, or one of the consolidated
subsidiaries of the entity, that is required to register under
the Securities Act of 1933 (15 U.S.C. Section 77a et seq.) and
furnish financial information prepared in accordance with the
requirements for those business entities; or
(2) annually furnish audited financial statements comparable in
form and manner of preparation to those filed by a business
entity required to register under the Securities Act of 1933 (15
U.S.C. Section 77a et seq.).
(c) The applicant must present a plan for claims administration
that:
(1) is acceptable to the commissioner;
(2) designates a qualified claims servicing contractor; and
(3) complies with Chapter 4151, Insurance Code.
(d) The applicant must demonstrate the existence of an effective
safety program for each location in the state at which it
conducts business.
(e) The applicant must provide to the commissioner a copy of
each contract entered into with a person that provides claims
services, underwriting services, or accident prevention services
if the provider of those services is not an employee of the
applicant. The contract must be acceptable to the commissioner
and must be submitted in a standard form adopted by the
commissioner, if the commissioner adopts such a form.
(f) The commissioner shall adopt rules for the requirements for
the financial statements required by Subsection (b)(2).
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.050, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
1176, Sec. 3.03, eff. September 1, 2007.
Sec. 407.062. FINANCIAL STRENGTH AND LIQUIDITY REQUIREMENTS. In
assessing the financial strength and liquidity of an applicant,
the commissioner shall consider:
(1) the applicant's organizational structure and management
background;
(2) the applicant's profit and loss history;
(3) the applicant's compensation loss history;
(4) the source and reliability of the financial information
submitted by the applicant;
(5) the number of employees affected by self-insurance;
(6) the applicant's access to excess insurance markets;
(7) financial ratios, indexes, or other financial measures that
the commissioner finds appropriate; and
(8) any other information considered appropriate by the
commissioner.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.051, eff. September 1, 2005.
Sec. 407.063. PREMIUM REQUIREMENTS. (a) In addition to meeting
the other certification requirements imposed under this chapter,
an applicant for an initial certificate of authority to
self-insure must present evidence satisfactory to the
commissioner of a total unmodified workers' compensation
insurance premium in this state in the calendar year of
application of at least $500,000.
(b) Instead of the state premium required under this section,
the applicant may present evidence of a total unmodified national
workers' compensation insurance premium of at least $10 million.
(c) Expired.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.052, eff. September 1, 2005.
Sec. 407.064. GENERAL SECURITY REQUIREMENTS. (a) Each
applicant shall provide security for incurred liabilities for
compensation through a deposit with the division, in a
combination and from institutions approved by the commissioner,
of the following security:
(1) cash or negotiable securities of the United States or of
this state;
(2) a surety bond that names the commissioner as payee; or
(3) an irrevocable letter of credit that names the commissioner
as payee.
(b) If an applicant who has provided a letter of credit as all
or part of the security required under this section desires to
cancel the existing letter of credit and substitute a different
letter of credit or another form of security, the applicant shall
notify the division in writing not later than the 60th day before
the effective date of the cancellation of the original letter of
credit.
(c) An estimate of the applicant's incurred liabilities for
compensation must be signed and sworn to by an accredited
casualty actuary and submitted with the application.
(d) The sum of the deposited securities must be at least equal
to the greater of:
(1) $300,000; or
(2) 125 percent of the applicant's incurred liabilities for
compensation.
(e) If an applicant is granted a certificate of authority to
self-insure, any interest or other income that accrues from cash
or negotiable securities deposited by the applicant as security
under this section while the cash or securities are on deposit
with the division shall be paid to the applicant quarterly.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.053, eff. September 1, 2005.
Sec. 407.065. SPECIFIC SECURITY REQUIREMENTS. (a) A security
deposit must include within its coverage all amounts covered by
terminated surety bonds or terminated excess insurance policies.
(b) A surety bond, irrevocable letter of credit, or document
indicating issuance of an irrevocable letter of credit must be in
a form approved by the commissioner and must be issued by an
institution acceptable to the commissioner. The instrument may
be released only according to its terms but may not be released
by the deposit of additional security.
(c) The certified self-insurer shall deposit the security with
the comptroller on behalf of the division. The comptroller may
accept securities for deposit or withdrawal only on the written
order of the commissioner.
(d) On receipt by the division of a request to renew, submit, or
increase or decrease a security deposit, a perfected security
interest is created in the certified self-insurer's assets in
favor of the commissioner to the extent of any then unsecured
portion of the self-insurer's incurred liabilities for
compensation. That perfected security interest transfers to cash
or securities deposited by the self-insurer with the division
after the date of the request and may be released only on:
(1) the acceptance by the commissioner of a surety bond or
irrevocable letter of credit for the full amount of the incurred
liabilities for compensation; or
(2) the return of cash or securities by the division.
(e) The certified self-insurer loses all right to, title to,
interest in, and control of the assets or obligations submitted
or deposited as security. The commissioner may liquidate the
deposit and apply it to the certified self-insurer's incurred
liabilities for compensation either directly or through the
association.
(f) If the commissioner determines that a security deposit is
not immediately available for the payment of compensation, the
commissioner shall determine the appropriate method of payment
and claims administration, which may include payment by the
surety that issued the bond or by the issuer of an irrevocable
letter of credit, and administration by a surety, an adjusting
agency, the association, or through any combination of those
entities approved by the commissioner.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 12.12, eff. Sept.
1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.054, eff. September 1, 2005.
Sec. 407.066. EFFECT OF DISPUTE. (a) The commissioner, after
notice to the concerned parties and an opportunity for a hearing,
shall resolve a dispute concerning the deposit, renewal,
termination, release, or return of all or part of the security,
liability arising out of the submission or failure to submit
security, or the adequacy of the security or reasonableness of
the administrative costs, including legal fees, that arises
among:
(1) a surety;
(2) an issuer of an agreement of assumption and guarantee of
workers' compensation liabilities;
(3) an issuer of a letter of credit;
(4) a custodian of the security deposit;
(5) a certified self-insurer; or
(6) the association.
(b) A party aggrieved by a decision of the commissioner is
entitled to judicial review. Venue for an appeal is in Travis
County.
(c) Payment of claims from the security deposit or by the
association may not be stayed pending the resolution of a dispute
under this section unless the court issues a determination
staying the payment of claims.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.055, eff. September 1, 2005.
Sec. 407.067. EXCESS INSURANCE; REINSURANCE; ADMINISTRATIVE
VIOLATION. (a) Each applicant shall obtain excess insurance or
reinsurance to cover liability for losses not paid by the
self-insurer in an amount not less than the amount required by
the commissioner.
(b) The commissioner shall require excess insurance or
reinsurance in at least the amount of $5 million per occurrence.
(c) A certified self-insurer shall notify the division not later
than the 10th day after the date on which the certified
self-insurer has notice of the cancellation or termination of
excess insurance or reinsurance coverage required under this
section.
(d) A person commits an administrative violation if the person
violates Subsection (c).
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.056, eff. September 1, 2005.
Sec. 407.068. GUARANTEE BY PARENT ORGANIZATION. If an applicant
for a certificate of authority to self-insure is a subsidiary,
the parent organization of the applicant must guarantee the
obligations imposed by this chapter.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
SUBCHAPTER E. POWERS AND DUTIES OF CERTIFIED SELF-INSURER
Sec. 407.081. ANNUAL REPORT. (a) Each certified self-insurer
shall file an annual report with the division. The commissioner
shall prescribe the form of the report and shall furnish blank
forms for the preparation of the report to each certified
self-insurer.
(b) The report must:
(1) include payroll information, in the form prescribed by this
chapter and the commissioner;
(2) state the number of injuries sustained in the three
preceding calendar years; and
(3) indicate separately the amount paid during each year for
income benefits, medical benefits, death benefits, burial
benefits, and other proper expenses related to worker injuries.
(c) Each certified self-insurer shall file with the division as
part of the annual report annual independent financial statements
that reflect the financial condition of the self-insurer. The
division shall make a financial statement filed under this
subsection available for public review.
(d) The division may require that the report include additional
financial and statistical information.
(e) The certified self-insurer shall present evidence in the
report of sufficient financial ability to meet all obligations
under this chapter.
(f) The report must include an estimate of future liability for
compensation. The estimate must be signed and sworn to by a
certified casualty actuary every third year, or more frequently
if required by the commissioner.
(g) If the commissioner considers it necessary, the commissioner
may order a certified self-insurer whose financial condition or
claims record warrants closer supervision to report as provided
by this section more often than annually.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.057, eff. September 1, 2005.
Sec. 407.082. EXAMINATION OF RECORDS; ADMINISTRATIVE VIOLATION.
(a) Each certified self-insurer shall maintain the books,
records, and payroll information necessary to compile the annual
report required under Section 407.081 and any other information
reasonably required by the commissioner.
(b) The certified self-insurer may maintain the books, records,
and payroll information in locations outside this state.
(c) The material maintained by the certified self-insurer shall
be open to examination by an authorized agent or representative
of the division at reasonable times to ascertain the correctness
of the information.
(d) The examination may be conducted at any location, including
the division's Austin offices, or, at the certified
self-insurer's option, in the offices of the certified
self-insurer. The certified self-insurer shall pay the
reasonable expenses, including travel expenses, of an inspector
who conducts an inspection at its offices.
(e) An unreasonable refusal on the part of a certified
self-insurer to make available for inspection the books, records,
payroll information, or other required information constitutes
grounds for the revocation of the certificate of authority to
self-insure and is an administrative violation.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.058, eff. September 1, 2005.
Sec. 407.083. PAYMENT OF INSURANCE AGENT'S COMMISSION. This
chapter does not prohibit a certified self-insurer from paying a
commission to an insurance agent licensed in this state.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
SUBCHAPTER F. FINANCING OF SELF-INSURANCE PROGRAM
Sec. 407.101. FUND. (a) The workers' compensation
self-insurance fund is a fund in the state treasury. The fund may
be used only for the regulation of certified self-insurers.
(b) The department shall deposit the application fee for a
certificate of authority to self-insure in the Texas Department
of Insurance operating account to the credit of the division.
(c) Any amount remaining in the fund at the end of a fiscal year
shall be used to reduce the regulatory fee assessed under Section
407.102 in the succeeding fiscal year.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.059, eff. September 1, 2005.
Sec. 407.102. REGULATORY FEE. (a) Each certified self-insurer
shall pay an annual fee to cover the administrative costs
incurred by the division in implementing this chapter.
(b) The division shall base the fee on the total amount of
income benefit payments made in the preceding calendar year. The
division shall assess each certified self-insurer a pro rata
share based on the ratio that the total amount of income benefit
payments made by that certified self-insurer bears to the total
amount of income benefit payments made by all certified
self-insurers.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.060, eff. September 1, 2005.
Sec. 407.103. SELF-INSURER MAINTENANCE TAX; EFFECT ON GENERAL
MAINTENANCE TAX. (a) Each certified self-insurer shall pay a
self-insurer maintenance tax for the administration of the
division and the office of injured employee counsel and to
support the prosecution of workers' compensation insurance fraud
in this state. Not more than two percent of the total tax base
of all certified self-insurers, as computed under Subsection (b),
may be assessed for a maintenance tax under this section.
(b) To determine the tax base of a certified self-insurer for
purposes of this chapter, the department shall multiply the
amount of the certified self-insurer's liabilities for workers'
compensation claims incurred in the previous year, including
claims incurred but not reported, plus the amount of expense
incurred by the certified self-insurer in the previous year for
administration of self-insurance, including legal costs, by 1.02.
(c) The tax liability of a certified self-insurer under this
section is the tax base computed under Subsection (b) multiplied
by the rate assessed workers' compensation insurance companies
under Sections 403.002 and 403.003.
(d) In setting the rate of maintenance tax assessment for
insurance companies, the commissioner of insurance may not
consider revenue or expenditures related to the operation of the
self-insurer program under this chapter.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 980, Sec. 1.22, eff. Sept.
1, 1995; Acts 1997, 75th Leg., ch. 1443, Sec. 6, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.061, eff. September 1, 2005.
Sec. 407.104. COLLECTION OF TAXES AND FEES; ADMINISTRATIVE
VIOLATION. (a) The regulatory fee imposed by Section 407.102
and the taxes imposed by Section 407.103 are due on the 60th day
after the issuance of a certificate of authority to self-insure
and on the 60th day after each annual renewal date.
(b) The department shall compute the fee and taxes of a
certified self-insurer and notify the certified self-insurer of
the amounts due. The taxes and fees shall be remitted to the
division.
(c) The regulatory fee imposed under Section 407.102 shall be
deposited in the Texas Department of Insurance operating account
to the credit of the division. The self-insurer maintenance tax
shall be deposited in the Texas Department of Insurance operating
account to the credit of the division.
(d) A certified self-insurer commits an administrative violation
if the self-insurer does not pay the taxes and fee imposed under
Sections 407.102 and 407.103 in a timely manner.
(e) If the certificate of authority to self-insure of a
certified self-insurer is terminated, the commissioner or the
commissioner of insurance shall proceed immediately to collect
taxes due under this subtitle, using legal process as necessary.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.062, eff. September 1, 2005.
SUBCHAPTER G. TEXAS CERTIFIED SELF-INSURER GUARANTY ASSOCIATION
Sec. 407.121. GUARANTY ASSOCIATION. (a) The Texas Certified
Self-Insurer Guaranty Association provides for the payment of
workers' compensation insurance benefits for the injured
employees of an impaired employer.
(b) Each employer who desires to become a certified self-insurer
must be a member of the association.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Sec. 407.122. BOARD OF DIRECTORS. (a) The members of the
association shall elect a board of directors.
(b) The board of directors is composed of the following voting
members:
(1) three certified self-insurers;
(2) one member designated by the commissioner; and
(3) the public counsel of the office of public insurance
counsel.
(c) Repealed by Acts 2005, 79th Leg., Ch. 265, Sec. 7.01(19),
eff. September 1, 2005.
(d) A member of the board of directors or a member of the staff
of the board of directors is not liable in a civil action for an
act performed in good faith in the execution of that person's
powers or duties.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 980, Sec. 1.23, eff. Sept.
1, 1995.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.063, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
265, Sec. 7.01(19), eff. September 1, 2005.
Sec. 407.123. BOARD RULES. (a) The board of directors may
adopt rules for the operation of the association.
(b) Rules adopted by the board are subject to the approval of
the commissioner.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.064, eff. September 1, 2005.
Sec. 407.124. IMPAIRED EMPLOYER; ASSESSMENTS. (a) On
determination by the division that a certified self-insurer has
become an impaired employer, the commissioner shall secure
release of the security deposit required by this chapter and
shall promptly estimate:
(1) the amount of additional funds needed to supplement the
security deposit;
(2) the available assets of the impaired employer for the
purpose of making payment of all incurred liabilities for
compensation; and
(3) the funds maintained by the association for the emergency
payment of compensation liabilities.
(b) The commissioner shall advise the board of directors of the
association of the estimate of necessary additional funds, and
the board shall promptly assess each certified self-insurer to
collect the required funds. An assessment against a certified
self-insurer shall be made in proportion to the ratio that the
total paid income benefit payment for the preceding reported
calendar year for that self-insurer bears to the total paid
income benefit payment by all certified self-insurers, except
impaired employers, in this state in that calendar year.
(c) A certified self-insurer designated as an impaired employer
is exempt from assessments beginning on the date of the
designation until the division determines that the employer is no
longer impaired.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.065, eff. September 1, 2005.
Sec. 407.125. PAYMENT OF ASSESSMENTS. Each certified
self-insurer shall pay the amount of its assessment to the
association not later than the 30th day after the date on which
the division notifies the self-insurer of the assessment. A
delinquent assessment may be collected on behalf of the
association through suit. Venue is in Travis County.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Sec. 407.126. TRUST FUND; FEE; SCHEDULE. (a) Each member of
the association shall be assessed a fee, based on total amount of
income benefits payments made in this state for the preceding
reported calendar year, to create, over a period of 10 years
beginning January 1, 1993, a Texas certified self-insurer
guaranty trust fund of at least $1 million for the emergency
payment of the compensation liabilities of an impaired employer.
The fund may not exceed $2 million.
(b) The board of directors shall adopt a year-by-year schedule
of assessments to meet the 10-year funding goal of the trust
fund.
(c) The assessment for the first year after an employer is
issued a certificate of authority to self-insure shall be based
on the income benefit payments paid by the employer's insurance
carrier on the employer's policy in the year before the
certificate was issued.
(d) The board of directors shall administer the trust fund in
accordance with rules adopted by the commissioner.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 980, Sec. 1.24, eff. Sept.
1, 1995.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.066, eff. September 1, 2005.
Sec. 407.127. PAYMENT OF BENEFITS THROUGH ASSOCIATION. (a) If
the commissioner determines that the payment of benefits and
claims administration shall be made through the association, the
association assumes the workers' compensation obligations of the
impaired employer and shall begin the payment of the obligations
for which it is liable not later than the 30th day after the date
of notification by the director.
(b) The association shall make payments to claimants whose
entitlement to benefits can be ascertained by the association.
(c) Notwithstanding Subsection (a), the association is not
liable for the payment of any penalties assessed for any act or
omission on the part of any person other than the association.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.52(a), eff. Sept.
1, 1995.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.067, eff. September 1, 2005.
Sec. 407.128. POSSESSION OF SECURITY BY ASSOCIATION. On the
assumption of obligations by the association under the
commissioner's determination, the association is entitled to
immediate possession of any deposited security, and the
custodian, surety, or issuer of an irrevocable letter of credit
shall deliver the security to the association with any accrued
interest.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.068, eff. September 1, 2005.
Sec. 407.129. RELEASE OF CLAIM INFORMATION TO ASSOCIATION.
Information on a workers' compensation claim may be released to
the association as provided by Section 402.084(a), if the
association has assumed the obligations of an impaired employer.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Sec. 407.130. ASSOCIATION AS PARTY IN INTEREST. (a) The
association is a party in interest in a proceeding involving a
workers' compensation claim against an impaired employer whose
compensation obligations have been paid or assumed by the
association.
(b) The association has the same rights and defenses as the
impaired employer, including the right to:
(1) appear, defend, or appeal a claim;
(2) receive notice of, investigate, adjust, compromise, settle,
or pay a claim; and
(3) investigate, handle, or deny a claim.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Sec. 407.131. PREFERENCE. The benefit payments made by the
association or the surety under this chapter are entitled to the
same preference over other debts of the impaired employer or the
impaired employer's estate as provided by law to benefit payments
owed by the employer or employer's estate to the person entitled
to the benefits.
Acts 1993, 73rd Leg., ch. 269 , Sec. 1, eff. Sept. 1, 1993.
Sec. 407.132. SPECIAL FUND. Funds advanced by the association
under this subchapter do not become assets of the impaired
employer but are a special fund advanced to the commissioner,
trustee in bankruptcy, receiver, or other lawful conservator only
for the payment of compensation liabilities, including the costs
of claims administration and legal costs.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.069, eff. September 1, 2005.
Sec. 407.133. SUSPENSION OR REVOCATION OF CERTIFICATE FOR
FAILURE TO PAY ASSESSMENT. (a) The commissioner may suspend or
revoke the certificate of authority to self-insure of a certified
self-insurer who fails to pay an assessment. The association
promptly shall report such a failure to the director.
(b) A certified self-insurer whose certificate of authority to
self-insure is revoked or surrendered remains liable for any
unpaid assessments made against an impaired employer who becomes
an impaired employer before the date of the revocation or
surrender.
(c) Repealed by Acts 1995, 74th Leg., ch. 76, Sec. 9.52(b), eff.
Sept. 1, 1995.
Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 9.52(b), eff. Sept.
1, 1995.
Amended by:
Acts 2005, 79th Leg., Ch.
265, Sec. 3.070, eff. September 1, 2005.