TLC: Insurance Code Proposed Chapters

CHAPTER 2203. MEDICAL LIABILITY INSURANCE JOINT UNDERWRITING ASSOCIATION

SUBCHAPTER A. GENERAL PROVISIONS

Revised Law

Sec. 2203.001. SHORT TITLE. This chapter may be cited as the Texas Medical Liability Insurance Underwriting Association Act. (V.T.I.C. Art. 21.49-3, Sec. 1.)

Source Law

Art. 21.49-3

Sec. 1. This Act shall be known as the "Texas Medical Liability Insurance Underwriting Association Act."

Revised Law

Sec. 2203.002. DEFINITIONS. In this chapter:

(1) "Assisted living facility" means a for-profit or not-for-profit assisted living facility.

(2) "Association" means the joint underwriting association established under this chapter.

(3) "Board of directors" means the board of directors of the association.

(4) "Health care provider" means:

(A) a person, partnership, professional association, corporation, facility, or institution licensed or chartered by this state to provide health care, as defined in Section 74.001(a)(10), Civil Practice and Remedies Code, as:

(i) a registered nurse, dentist, podiatrist, pharmacist, chiropractor, or optometrist;

(ii) a hospital;

(iii) a nursing home;

(iv) a radiation therapy center that is independent of any other medical treatment facility, is licensed by the Department of State Health Services in that agency's capacity as the Texas Radiation Control Agency under Chapter 401, Health and Safety Code, and is in compliance with the regulations adopted under that chapter;

(v) a blood bank that is a nonprofit corporation chartered to operate a blood bank and is accredited by the American Association of Blood Banks;

(vi) a nonprofit corporation that is organized for the delivery of health care to the public and is certified under Chapter 162, Occupations Code;

(vii) a health center, as defined by 42 U.S.C. Section 254b, as amended; or

(viii) an assisted living facility; or

(B) an officer, employee, or agent of an entity listed in Paragraph (A) acting in the course and scope of that person's office, employment, or agency.

(5) "Medical liability insurance" means primary and excess liability insurance coverage against:

(A) the legal liability of the insured; and

(B) loss, damage, or expense incident to a claim arising out of the death or injury of a person as the result of negligence in rendering or failing to render professional service by a health care provider or physician who is in a category eligible for coverage by the association.

(6) "Net direct premiums" means gross direct premiums written on automobile liability and other liability insurance written under this code, less:

(A) policyholder dividends;

(B) return premiums for the unused or unabsorbed portion of premium deposits; and

(7) "Nursing home" means a for-profit or not-for-profit nursing home.

(8) "Physician" means a person licensed to practice medicine in this state. (V.T.I.C. Art. 21.49-3, Secs. 2(1), (2), (3), (5), (6); Art. 21.49-3d, Sec. 2(1); New.)

Source Law

[Art. 21.49-3]

Sec. 2. (1) "Medical liability insurance" means primary and excess insurance coverage against the legal liability of the insured and against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence in rendering or the failure to render professional service by a health care provider or physician who is in one of the categories eligible for coverage by the association.

(2) "Association" means the joint underwriting association established pursuant to the provisions of this article.

(3) "Net direct premiums" means gross direct premiums written on automobile liability and liability other than auto insurance written pursuant to the provisions of the Insurance Code, less policyholder dividends, return premiums for the unused or unabsorbed portion of premium deposits and less return premiums upon cancelled contracts written on such liability risks.

(5) "Physician" means a person licensed to practice medicine in this state.

(6) "Health care provider" means:

(A) any person, partnership, professional association, corporation, facility, or institution duly licensed or chartered by the State of Texas to provide health care as defined in Section 1.03(a)(2), Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes), as:

(i) a registered nurse, hospital, dentist, podiatrist, pharmacist, chiropractor, or optometrist;

(ii) a for-profit or not-for-profit nursing home;

(iii) a radiation therapy center that is independent of any other medical treatment facility and which is licensed by the Texas Department of Health in that agency's capacity as the Texas Radiation Control Agency pursuant to the provisions of Chapter 401, Health and Safety Code, and which is in compliance with the regulations promulgated under that chapter;

(iv) a blood bank that is a nonprofit corporation chartered to operate a blood bank and which is accredited by the American Association of Blood Banks;

(v) a nonprofit corporation which is organized for the delivery of health care to the public and which is certified under Chapter 162, Occupations Code;

(vi) a health center as defined by 42 U.S.C. Section 254b, as amended; or

(vii) a for-profit or not-for-profit assisted living facility; or

(B) an officer, employee, or agent of an entity listed in Paragraph (A) of this subdivision acting in the course and scope of that person's employment.

[Art. 21.49-3d]

Sec. 2. In this article:

(1) "Association" means the joint underwriting association established under Article 21.49-3 of this code.

Revisor's Note

(1) Section 2(4), V.T.I.C. Article 21.49-3, defines "board" as the State Board of Insurance. Chapter 685, Acts of the 73rd Legislature, Regular Session, 1993, abolished the State Board of Insurance and transferred its functions to the commissioner of insurance and the Texas Department of Insurance. Throughout this chapter, references to the board have been changed appropriately. For this reason, the revised law omits the definition of "board." The omitted law reads:

(4) "Board" means the State Board of Insurance of the State of Texas.

(2) Section 2(6), V.T.I.C. Article 21.49-3, refers to an institution that is "duly" licensed. The revised law omits the reference to "duly" as unnecessary because the word does not add to the clear meaning of the law.

(3) Section 2(6), V.T.I.C. Article 21.49-3, refers to "health care as defined in Section 1.03(a)(2), Medical Liability and Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas Civil Statutes)." Section 10.09, Chapter 204, Acts of the 78th Legislature, Regular Session, 2003, repealed Article 4590i, and Section 10.01 of that act transferred the substance of that article's definition of "health care" to Section 74.001(a)(10), Civil Practice and Remedies Code. The revised law is drafted accordingly.

(4) Section 2(6), V.T.I.C. Article 21.49-3, refers to a medical treatment facility licensed by the "Texas Department of Health" in the department's capacity as the Texas Radiation Control Agency. The Texas Department of Health was abolished under the provisions of Section 1.26, Chapter 198, Acts of the 78th Legislature, Regular Session, 2003, and that act transferred the department's duties and functions with respect to licensing to the Department of State Health Services, which was created under Section 1.19 of that act. In addition, any license that was issued by the former Texas Department of Health was continued in effect as a license of the Department of State Health Services. Accordingly, the revised law substitutes "Department of State Health Services" for "Texas Department of Health."

(5) The revised law adds definitions of "assisted living facility," "board of directors," and "nursing home" for drafting convenience and to eliminate frequent, unnecessary repetition of the substance of the definitions.

Revised Law

Sec. 2203.003. IMMUNITY. Liability does not exist on the part of, and a cause of action does not arise against, the association, an association agent or employee, an insurer, an agent licensed under this code, the commissioner or department, or an authorized representative of the commissioner or department for a statement made in good faith by any of them:

(1) in a report or communication concerning risks insured or to be insured through the association; or

(2) at an administrative hearing conducted in connection with the report or communication. (V.T.I.C. Art. 21.49-3, Sec. 8.)

Source Law

Sec. 8. There shall be no liability on the part of, and no cause of action of any nature shall arise against the association, its agents or employees, an insurer, any licensed agent, or the board or its authorized representatives, for any statements made in good faith by them in any reports or communications, concerning risks insured or to be insured by the association, or at any administrative hearings conducted in connection therewith.

Revised Law

Sec. 2203.004. APPLICABILITY OF OTHER LAW. The association is subject to __________ [[[V.T.I.C. Article 1.15]]] and __________ [[[V.T.I.C. Article 1.16]]]. (V.T.I.C. Art. 21.49-3, Sec. 10.)

Source Law

Sec. 10. The association is subject to Articles 1.15 and 1.16 of this code.

Revised Law

Sec. 2203.005. RELATIONSHIP TO SURPLUS LINES INSURANCE. The association is not an authorized insurer for purposes of Chapter 981 with respect to medical liability insurance for physicians. (V.T.I.C. Art. 21.49-3, Sec. 3(a) (part).)

Source Law

(a) … The association shall not be a licensed insurer within the meaning of Article 1.14-2, Insurance Code, relating to medical liability insurance for physicians as defined in this article.

Revisor's Note

Section 3(a), V.T.I.C. Article 21.49-3, refers to a "licensed insurer." The revised law substitutes "authorized" for "licensed" because "certificate of authority" is the term used throughout this code in relation to an entity's authority to engage in business.

[Sections 2203.006-2203.050 reserved for expansion]

SUBCHAPTER B. ASSOCIATION ADMINISTRATION AND OPERATION

Revised Law

Sec. 2203.051. PURPOSE OF ASSOCIATION. The association provides medical liability insurance on a self-supporting basis. (V.T.I.C. Art. 21.49-3, Sec. 3(a) (part).)

Source Law

(a) … The purpose of the association shall be to provide medical liability insurance on a self-supporting basis… .

Revised Law

Sec. 2203.052. BOARD OF DIRECTORS. (a) The association is governed by a board of directors composed of the following nine members:

(1) five representatives of insurers that are required to be association members, elected by association members;

(2) one physician, appointed by the Texas Medical Association or a successor to that association;

(3) one representative of hospitals, appointed by the Texas Hospital Association or a successor to that association; and

(4) two public members, appointed by the commissioner.

(b) The board members serve one-year terms beginning on October 1 of each year. (V.T.I.C. Art. 21.49-3, Sec. 6.)

Source Law

Sec. 6. (a) The association shall be governed by a board of nine directors, to be selected annually as follows:

(1) five representatives of insurers required to be members of the association who are elected by members of the association;

(2) one physician who is appointed by the Texas Medical Association or its successor;

(3) one representative of hospitals appointed by the Texas Hospital Association or its successor; and

(4) two members of the public to be appointed by the State Board of Insurance.

(b) Members of the association's board of directors take office on October 1 each year.

Revised Law

Sec. 2203.053. PLAN OF OPERATION. (a) The association operates under a plan of operation adopted by the commissioner.

(b) The plan of operation must:

(1) provide for economic, fair, and nondiscriminatory administration;

(2) provide for the prompt and efficient provision of medical liability insurance; and

(3) contain other provisions, including provisions relating to:

(A) the establishment of necessary facilities;

(B) the association's management;

(D) the administration of the stabilization reserve funds;

(E) commission arrangements;

(F) reasonable and objective underwriting standards;

(G) the acceptance, assumption, and cession of reinsurance;

(H) the appointment of servicing insurers; and

(I) procedures for determining amounts of insurance to be provided by the association.

(c) The plan of operation must direct that any revenue exceeding expenditures that remains in the association's funds at the close of the association's fiscal year, after the association reimburses members' contributions in accordance with Section 2203.255(a), be added to the association's reserves. (V.T.I.C. Art. 21.49-3, Secs. 3(c)(1) (part), (2) (part), (3).)

Source Law

(c)(1) The board shall … promulgate a plan of operation … .

(2) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of medical liability insurance, and shall contain other provisions including, but not limited to, … establishment of necessary facilities, management of the association, assessment of members and assessment of policyholders to defray losses and expenses, administration of the policyholder's stabilization reserve fund, commission arrangements, reasonable and objective underwriting standards, acceptance, assumption, and cession of reinsurance, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association.

(3) The plan of operation shall provide that any balance remaining in the funds of the association at the close of its fiscal year, meaning its then excess of revenue over expenditures after reimbursement of members' contributions in accordance with Section 4(b)(5) of this article by the association shall be added to the reserves of the association.

Revisor's Note

(1) Sections 3(c)(1) and (2), V.T.I.C. Article 21.49-3, require the State Board of Insurance to adopt a plan of operation after consulting with certain persons and entities and require that the plan provide for the assessment of association members to meet the initial expenses necessary for the joint underwriting association to begin operating. The revised law omits the language as executed. The omitted law reads:

(c)(1) [The board shall], after consultation with the joint underwriting association, representatives of the public, the Texas Medical Association, the Texas Podiatry Association, the Texas Hospital Association, and other affected individuals and organizations, [promulgate a plan of operation] consistent with the provisions of this article, to become effective and operative no later than 90 days after the effective date of this Act.

(2) [The plan of operation … shall contain other provisions including,] … preliminary assessment of all members for initial expenses necessary to commence operations, … .

(2) Section 3(c)(2), V.T.I.C. Article 21.49-3, states that the plan of operation must contain provisions, "including, but not limited to," certain specified provisions. The revised law omits "but not limited to" as unnecessary because Section 311.005(13), Government Code (Code Construction Act), applicable to the revised law, and Section 312.011(19), Government Code, provide that "includes" and "including" are terms of enlargement and not of limitation and do not create a presumption that components not expressed are excluded.

(3) Section 3(c)(2), V.T.I.C. Article 21.49-3, refers to the "policyholder's stabilization reserve fund." The revised law omits the reference to "policyholder's" as inaccurate because, after the enactment of Section 3(c)(2), another stabilization reserve fund was established under Section 4B, V.T.I.C. Article 21.49-3, revised in relevant part in this chapter as Section 2203.303. That section establishes a "stabilization reserve fund," not a "policyholder's stabilization reserve fund." Throughout this chapter, the revised law substitutes "stabilization reserve fund" or "stabilization reserve funds," as appropriate, for "policyholder's stabilization reserve fund" or "policyholder stabilization reserve fund."

Revised Law

Sec. 2203.054. AMENDMENTS TO PLAN OF OPERATION. Amendments to the plan of operation:

(1) shall be made at the commissioner's direction; and

(2) may be made by the board of directors, subject to the commissioner's approval. (V.T.I.C. Art. 21.49-3, Sec. 3(c)(4).)

Source Law

(4) Amendments to the plan of operation may be made by the directors of the association, subject to the approval of the board, or shall be made at the direction of the board.

Revised Law

Sec. 2203.055. JOINT UNDERWRITING ASSOCIATION MEMBERSHIP. (a) The association is composed of each insurer, including a Lloyd's plan and a reciprocal or interinsurance exchange, authorized to write and writing liability insurance, including automobile liability insurance, on a direct basis in this state, other than:

(1) a farm mutual insurance company authorized under Chapter 911; and

(2) a county mutual insurance company authorized under Chapter 912.

(b) An insurer that is a member of the association must remain a member as a condition of the insurer's authority to engage in the business of the insurance described by Subsection (a).

(c) Each association member participates in the writings, expenses, and losses of the association in the proportion that the net direct premiums of the member, excluding the portion of premiums attributable to the operation of the association, written during the preceding calendar year bears to the aggregate net direct premiums written in this state by all association members.

(d) The association shall annually determine a member's participation in the association on the basis of the net direct premiums written by the member during the preceding calendar year, as reported in the annual statements and other reports the member files as required by the department. (V.T.I.C. Art. 21.49-3, Secs. 3(a) (part), 5(b) (part).)

Source Law

Sec. 3. (a) A joint underwriting association is hereby created, consisting of all insurers authorized to write and engaged in writing, within this state, on a direct basis, automobile liability and liability other than auto insurance on or after January 1, 1975, as provided in the Insurance Code, specifically including and applicable to Lloyds and reciprocal or interinsurance exchanges, but excluding farm mutual insurance companies as authorized by Chapter 16 of this code, and county mutual insurance companies as authorized by Chapter 17 of this code. Every such insurer shall be a member of the association and shall remain a member as a condition of its authority to continue to transact such kind of insurance in this state… .

[Sec. 5]

(b) All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums, as defined herein, of each such member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the association. Each insurer's participation in the association shall be determined annually on the basis of such net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer that may be required by the board… .

Revisor's Note

(1) Section 3(a), V.T.I.C. Article 21.49-3, states that the joint underwriting association "is hereby created." The revised law omits "is hereby created" as executed.

(2) Section 3(a), V.T.I.C. Article 21.49-3, refers to an insurer authorized to write and writing insurance "as provided in the Insurance Code." The revised law omits the quoted language as unnecessary because the only authorization to write insurance in this state is provided by this code.

(3) Section 3(a), V.T.I.C. Article 21.49-3, refers to the joint underwriting association consisting of all insurers authorized to write and writing certain insurance in this state "on or after January 1, 1975." The revised law omits the quoted language as executed.

(4) Section 3(a), V.T.I.C. Article 21.49-3, refers to "Lloyds." For consistency of terminology within this code, the revised law substitutes "Lloyd's plan" for "Lloyds."

Revised Law

Sec. 2203.056. ANNUAL STATEMENT; ADDITIONAL INFORMATION. (a) Not later than March 1 of each year, the association shall file with the department a statement that contains information regarding the association's transactions, condition, operations, and affairs during the preceding calendar year.

(b) The statement must:

(1) contain the matters and information required by the department; and

(2) be in the form approved by the department.

(c) The department at any time may require the association to provide additional information regarding the association's transactions or condition, or any related matter considered to be:

(1) material; and

(2) of assistance in evaluating the scope, operation, and experience of the association. (V.T.I.C. Art. 21.49-3, Sec. 9.)

Source Law

Sec. 9. The association shall file in the office of the board, annually on or before the first day of March, a statement which shall contain information with respect to its transactions, condition, operations, and affairs during the preceding calendar year. Such statement shall contain such matters and information as are prescribed and shall be in such form as is approved by the board. The board may, at any time, require the association to furnish additional information with respect to its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operation, and experience of the association.

[Sections 2203.057-2203.100 reserved for expansion]

SUBCHAPTER C. ELIGIBILITY FOR COVERAGE

Revised Law

Sec. 2203.101. GENERAL ELIGIBILITY. (a) The commissioner shall by order establish the categories of physicians and health care providers that are eligible to obtain insurance coverage from the association. The commissioner may revise the order to:

(1) include as eligible for that coverage other categories of physicians and health care providers; or

(2) exclude from eligibility for that coverage particular categories of physicians and health care providers.

(b) If a category of physicians or health care providers is excluded from eligibility to obtain insurance coverage from the association, the commissioner may determine, after notice of at least 10 days and a hearing, that medical liability insurance is not otherwise available. On that determination, the previously excluded category is eligible to obtain insurance coverage from the association. (V.T.I.C. Art. 21.49-3, Secs. 3A(a), (b).)

Source Law

Sec. 3A. (a) The commissioner shall establish by order the categories of physicians and health care providers who are eligible to obtain coverage from the association and may, from time to time, revise its order to include or exclude from eligibility particular categories of such physicians and health care providers.

(b) If a category of physicians or health care providers has been excluded from eligibility to obtain coverage from the association, the commissioner may determine, after notice of at least 10 days and a hearing, that medical liability insurance is not available. On that determination, the category of physicians or health care providers is eligible to obtain insurance coverage from the association.

Revisor's Note

Section 3A, V.T.I.C. Article 21.49-3, states that the commissioner of insurance may revise the order that contains categories of eligible physicians and health care providers "from time to time." The revised law omits the quoted language as unnecessary because the power to take an action includes the power to act "from time to time."

Revised Law

Sec. 2203.102. INSURER OF LAST RESORT FOR CERTAIN NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) A nursing home or assisted living facility not otherwise eligible for insurance coverage from the association under Section 2203.101 is eligible for that coverage if the home or facility demonstrates, in accordance with the requirements of the association, that the home or facility:

(1) made a verifiable effort to obtain insurance coverage from authorized insurers and eligible surplus lines insurers; and

(2) was unable to obtain substantially equivalent insurance coverage and rates.

(b) In consultation with the Department of Aging and Disability Services, the commissioner by rule shall adopt minimum rating standards for for-profit nursing homes and for-profit assisted living facilities that must be met before a for-profit nursing home or for-profit assisted living facility may obtain insurance coverage through the association. The standards must promote the highest practical level of care for residents of the nursing homes and assisted living facilities. (V.T.I.C. Art. 21.49-3, Secs. 3A(c), (d).)

Source Law

(c) A for-profit or not-for-profit nursing home or assisted living facility not otherwise eligible under this section for coverage from the association is eligible for coverage if the nursing home or assisted living facility demonstrates, in accordance with the requirements of the association, that the nursing home or assisted living facility made a verifiable effort to obtain coverage from authorized insurers and eligible surplus lines insurers and was unable to obtain substantially equivalent coverage and rates.

(d) In consultation with the Texas Department of Human Services, the commissioner shall, by rule, adopt minimum rating standards for for-profit nursing homes and for-profit assisted living facilities that must be met before a for-profit nursing home or for-profit assisted living facility may obtain coverage through the association. The standards must promote the highest practical level of care for residents of those nursing homes and assisted living facilities.

Revisor's Note

Section 3A(d), V.T.I.C. Article 21.49-3, states that the commissioner of insurance shall consult with the "Texas Department of Human Services" to adopt rating standards for for-profit nursing homes and assisted living facilities. The Texas Department of Human Services was abolished under the provisions of Section 1.26, Chapter 198, Acts of the 78th Legislature, Regular Session, 2003, and that act transferred the department's duties and functions to various other state agencies. That act also created the Department of Aging and Disability Services, to which the duties and functions related to the provision of services by for-profit nursing homes and assisted living facilities were transferred. Accordingly, the revised law substitutes "Department of Aging and Disability Services" for "Texas Department of Human Services."

Revised Law

Sec. 2203.103. ELIGIBILITY OF OTHER HEALTH CARE PRACTITIONERS AND FACILITIES. (a) In this section:

(1) "Health care" includes a medical or health care service, including an examination, treatment, medical diagnosis, or evaluation, and care provided in an inpatient, outpatient, or residential setting.

(2) "Health care facility" means a facility providing health care, other than a facility described by Section 2203.002(4).

(3) "Health care practitioner" means an individual, other than an individual described by Section 2203.002(4), who:

(A) is licensed to provide health care; or

(B) is not licensed to provide health care but provides health care under the direction or supervision of a licensed individual.

(b) After notice and opportunity for hearing, the commissioner may:

(1) determine that appropriate liability insurance coverage written by insurers authorized to engage in business in this state is not reasonably available to a type of health care practitioner or health care facility; and

(2) by order designate that type of health care practitioner or health care facility to be included as a health care provider eligible to receive coverage under this chapter.

(c) A health care practitioner or facility designated under Subsection (b) is entitled to receive insurance coverage under this chapter in accordance with ______ [[[V.T.I.C. Article 5.15-1]]] in the same manner as other health care providers described by Section 2203.002 and Section ______ [[[Section 2, V.T.I.C. Article 5.15-1]]].

(d) The commissioner's order may indicate whether a health care practitioner or facility designated under Subsection (b) is included under the stabilization reserve fund established under Section 2203.301 or 2203.303 or whether a separate policyholder's stabilization reserve fund is created. A separate policyholder's stabilization reserve fund established under this subsection operates in the same manner as a stabilization reserve fund created under Section 2203.303. (V.T.I.C. Art. 21.49-3, Sec. 3B.)

Source Law

Sec. 3B. (a) In this section:

(1) "Health care" includes any medical or health care service, including an examination, treatment, medical diagnosis, or evaluation, and care provided in an inpatient, outpatient, or residential setting.

(2) "Health care facility" means a facility providing health care, other than a facility described by Section 2(6) of this article.

(3) "Health care practitioner" means an individual, other than an individual described by Section 2(6) of this article, who:

(A) is licensed to provide health care; or

(B) is not licensed to provide health care but provides health care under the direction or supervision of a licensed individual.

(b) After notice and opportunity for hearing, the commissioner may:

(2) by order designate that type of health care practitioner or health care facility to be included as a health care provider eligible to receive coverage under this article.

(c) A health care practitioner or facility designated under Subsection (b) of this section is entitled to receive coverage provided under this article in accordance with Article 5.15-1 of this code in the same manner as other health care providers described by Section 2 of this article and Section 2, Article 5.15-1, of this code.

(d) The commissioner's order may indicate whether a health care practitioner or facility designated under Subsection (b) of this section is included under the policyholder's stabilization reserve fund established under Section 4A or 4B of this article or whether a separate policyholder's stabilization reserve fund is created. A separate policyholder's stabilization reserve fund established under this subsection operates in the same manner as a stabilization reserve fund created under Section 4B of this article.

Revised Law

Sec. 2203.104. APPLICATION FOR COVERAGE. (a) A health care provider or physician included in a category eligible for insurance coverage by the association is entitled to apply to the association for the coverage. An agent may apply on behalf of an applicant.

(b) The association shall issue a medical liability insurance policy to an applicant:

(1) if the association determines that:

(A) the applicant meets the underwriting standards of the association prescribed by the plan of operation; and

(B) there is no unpaid and uncontested premium, stabilization reserve fund charge, or assessment due from the applicant for prior insurance, as shown by the insured's failure to pay or to object in writing to the charges on or before the 30th day after the date of the billing; and

(2) on receipt of the premium and the stabilization reserve fund charge, or the portion of the premium and charge prescribed by the plan of operation. (V.T.I.C. Art. 21.49-3, Secs. 4(a)(1), (2) (part).)

Source Law

Sec. 4. (a)(1) Any health care provider or physician included in one of the categories of health care providers eligible for coverage by the association shall, on or after the effective date of the plan of operation, be entitled to apply to the association for such coverage. Such application may be made on behalf of an applicant by an agent authorized pursuant to Article 21.14 of this code.

(2) If the association determines that the applicant meets the underwriting standards of the association as prescribed in the plan of operation and there is no unpaid, uncontested premium, policyholder stabilization reserve fund charge, or assessment due from the applicant for prior insurance (as shown by the insured having failed to pay or make written objection to such charges within 30 days after billing) then the association, upon receipt of the premium and the policyholder stabilization reserve fund charge, or such portion thereof as is prescribed in the plan of operation, shall cause to be issued a policy of medical liability insurance … .

Revisor's Note

(1) Section 4(a)(1), V.T.I.C. Article 21.49-3, entitles certain health care providers and physicians to apply to the joint underwriting association for insurance coverage "on or after the effective date of the plan of operation." The revised law omits the quoted language as executed.

(2) Section 4(a)(1), V.T.I.C. Article 21.49-3, refers to an agent "authorized" under Chapter 4051. The revised law omits "authorized" as unnecessary in this context because a license is the document authorizing an insurance agent to act as an agent, and under Section 4001.101 of this code a person may not act as an agent unless the person holds a license.

[Sections 2203.105-2203.150 reserved for expansion]

SUBCHAPTER D. ASSOCIATION COVERAGE

Revised Law

Sec. 2203.151. POWERS RELATING TO MEDICAL LIABILITY INSURANCE COVERAGE. (a) Under this chapter and the plan of operation, the association, on behalf of the association members, may:

(1) issue, or cause to be issued, medical liability insurance policies to applicants, including primary, excess, and incidental coverages, subject to the limits specified in the plan of operation and Section 2203.152;

(2) underwrite medical liability insurance and adjust and pay losses related to that insurance, or appoint servicing insurers to perform those functions;

(3) either or both accept and refuse the assumption of reinsurance from association members; and

(4) cede and purchase reinsurance.

(b) The association may provide general liability insurance coverage to be issued in connection with medical liability insurance issued by the association. (V.T.I.C. Art. 21.49-3, Secs. 3(b) (part), (d).)

Source Law

(b) The association shall, pursuant to the provisions of this article and the plan of operation with respect to medical liability insurance, have the power on behalf of its members:

(1) to issue, or to cause to be issued, policies of insurance to applicants, including primary, excess, and incidental coverages and subject to limits as specified in the plan of operation; …;

(2) to underwrite such insurance and to adjust and pay losses with respect thereto, or to appoint service companies to perform those functions;

(3) to either or both accept and refuse the assumption of reinsurance from its members; and

(4) to cede and purchase reinsurance.

(d) The association may provide general liability insurance coverage to be issued in connection with medical liability insurance issued by the association.

Revised Law

Sec. 2203.152. POLICY LIMITS. The association may not issue one or more policies insuring an individual or organization for an amount exceeding $1 million for each occurrence and $3 million in the aggregate for a year. (V.T.I.C. Art. 21.49-3, Sec. 3(b) (part).)

Source Law

(b) …

(1) … provided that no individual or organization may be insured by policies issued by the association for an amount exceeding a total of $1 million per occurrence and $3 million aggregate per annum;

…

Revised Law

Sec. 2203.153. FOLLOWING FORM EXCESS LIABILITY COVERAGE. The association must write excess liability insurance coverage under this chapter for a physician or health care provider as following form excess liability insurance to the physician's or provider's primary insurance coverage. (V.T.I.C. Art. 21.49-3, Sec. 4(c).)

Source Law

(c) Excess insurance coverage written for a health care provider or a physician by the association under this article shall be written on a following form basis to the primary insurance coverage of that health care provider.

Revised Law

Sec. 2203.154. PUNITIVE DAMAGES EXCLUDED. The association may not issue or renew a medical liability insurance policy for a physician or health care provider under this chapter that includes coverage for punitive damages assessed against the physician or health care provider. (V.T.I.C. Art. 21.49-3, Sec. 4(d).)

Source Law

(d) A policy of medical liability insurance issued to or renewed for a physician or health care provider by the association under this article may not include coverage for punitive damages assessed against the physician or health care provider.

Revised Law

Sec. 2203.155. INSTALLMENT PLAN. The association may offer an installment payment plan for insurance coverage obtained through the association. (V.T.I.C. Art. 21.49-3, Sec. 4(e).)

Source Law

(e) The association may offer an installment payment plan for coverage obtained through the association.

Revised Law

Sec. 2203.156. TERM OF POLICY; NOTICE OF CERTAIN CHANGES. (a) The association must issue a medical liability insurance policy for a term of one year or less, as determined by the association.

(b) Section ______ [[[Section 7, V.T.I.C. Article 5.15-1]]] does not apply to a medical liability insurance policy issued by the association for a term of less than one year.

(c) The association shall ensure that appropriate written notice is provided to the insured for a policy described by Subsection (b) if the association intends to:

(1) increase the premiums on the policy; or

(2) other than for nonpayment of premiums or because the insured is no longer licensed, cancel or not renew the policy. (V.T.I.C. Art. 21.49-3, Secs. 4(a)(2) (part), (f).)

Source Law

[(a)]

(2) … [then the association] … shall cause to be issued a policy of medical liability insurance for a term of one year or less, as determined by the association.

(f) Section 7, Article 5.15-1 of this code, does not apply to a medical liability insurance policy issued by the association for a term of less than one year. With respect to a policy subject to this subsection, the association shall ensure that appropriate written notice is provided to an insured if premiums are increased or the policy is to be canceled or is not to be renewed other than for nonpayment of premiums or because the insured is no longer licensed.

[Sections 2203.157-2203.200 reserved for expansion]

SUBCHAPTER E. RATES AND POLICY FORMS

Revised Law

Sec. 2203.201. APPLICABILITY OF OTHER LAW TO RATES AND POLICY FORMS. (a) Except as provided by Subsection (b) and subject to Section 2203.203, Chapters _____ [[[V.T.I.C. Article 5.13-2]]] and _____ [[[V.T.I.C. Article 5.15-1, Sections 1-9; Article 5.15-4]]] govern the rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to the insurance written by the association and related statistics.

(b) If a provision of Chapter _____ [[[V.T.I.C. Article 5.13-2]]] or _____ [[[V.T.I.C. Article 5.15-1, Sections 1-9; Article 5.15-4]]] conflicts with a provision of this chapter, this chapter prevails. (V.T.I.C. Art. 21.49-3, Sec. 4(b)(1) (part).)

Source Law

(b)(1) Subject to Subdivision (6) of this subsection, the rates, rating plans, rating rules, rating classification, territories, and policy forms applicable to the insurance written by the association and statistics relating thereto shall be subject to Subchapter B of Chapter 5 of the Insurance Code, as amended, … provided, that if any article of the above subchapter is in conflict with any provision of this Act, this Act shall prevail… .

Revisor's Note

(1) Section 4(b)(1), V.T.I.C. Article 21.49-3, refers to Subchapter B, V.T.I.C. Chapter 5, "as amended." The revised law omits "as amended" because Section 311.027, Government Code (Code Construction Act), applicable to the revised law, provides that unless expressly provided otherwise, a reference to a statute applies to all reenactments, revisions, or amendments of the statute.

(2) Section 4(b)(1), V.T.I.C. Article 21.49-3, refers to Subchapter B, V.T.I.C. Chapter 5. That subchapter is revised in various chapters in this code. The relevant provisions are revised as Chapters _____ [[[V.T.I.C. Article 5.13-2]]] and _____ [[[V.T.I.C. Article 5.15-1, Sections 1-9; Article 5.15-4]]], and the revised law is drafted accordingly.

Revised Law

Sec. 2203.202. RATE STANDARDS. (a) In determining rates, rating plans, rating rules, rating classifications, territories, and policy forms, the association shall consider:

(1) the past and prospective loss and expense experience for medical professional liability insurance, inside and outside this state, of all of the association members;

(2) trends in the frequency and severity of losses;

(3) the association's investment income; and

(4) other information the commissioner may require.

(b) Rates, rating plans, and rating rules must be based on:

(1) the association's loss and expense experience; and

(2) other information based on that experience the department considers appropriate.

(1) actuarially sound; and

(2) computed to be self-supporting. (V.T.I.C. Art. 21.49-3, Secs. 4(b)(1) (part), (4) (part).)

Source Law

(1) … the rates, rating plans, rating rules, rating classification, territories, and policy forms applicable to the insurance written by the association … [shall be subject to Subchapter B of Chapter 5] … giving due consideration to the past and prospective loss and expense experience for medical professional liability insurance within and without this state of all of the member companies of the association, trends in the frequency and severity of losses, the investment income of the association, and such other information as the commissioner may require; … .

(4) After the initial year of operation, rates, rating plans, and rating rules, and … should be based upon the association's loss and expense experience, together with such other information based upon such experience as the department may deem appropriate. The resultant premium rates shall be on an actuarially sound basis and shall be calculated to be self-supporting.

Revisor's Note

(1) Section 4(b)(1), V.T.I.C. Article 21.49-3, states that for-profit nursing homes and assisted living facilities are subject to the same requirements under V.T.I.C. Article 5.15-1 as not-for-profit nursing homes and assisted living facilities. The revised law omits the statement because Article 5.15-1 applies by its own terms to those nursing homes and assisted living facilities. Before 2001, Article 5.15-1 applied to not-for-profit nursing homes. Section 2(2), Article 5.15-1, was amended in 2001 by Chapter 1284, Acts of the 77th Legislature, Regular Session, to apply to for-profit and not-for-profit nursing homes. That section was amended again in 2003 by Chapter 141, Acts of the 78th Legislature, Regular Session, to apply to for-profit and not-for-profit nursing homes and assisted living facilities. The omitted law reads:

(1) … For purposes of this article, rates, rating plans, rating rules, rating classifications, territories, and policy forms for for-profit nursing homes and for-profit assisted living facilities are subject to the requirements of Article 5.15-1 of this code to the same extent as not-for-profit nursing homes and not-for-profit assisted living facilities.

(2) Section 4(b)(4), V.T.I.C. Article 21.49-3, refers to the information on which the joint underwriting association relies in making rates "[a]fter the initial year of operation." V.T.I.C. Article 21.49-3 was enacted by Chapter 331, Acts of the 64th Legislature, Regular Session, 1975, and the joint underwriting association was established by that act on the act's effective date of June 3, 1975. Accordingly, the revised law omits the reference as executed.

Revised Law

Sec. 2203.203. DISCOUNT FOR CERTAIN HEALTH CARE PROVIDERS. (a) The rates applicable to professional liability insurance coverage provided by the association for not-for-profit nursing homes and not-for-profit assisted living facilities must reflect a discount of 30 percent from the rates for the same coverage provided to others in the same category of insureds.

(b) The commissioner shall ensure compliance with this section. (V.T.I.C. Art. 21.49-3, Sec. 4(b)(6).)

Source Law

(6) The rates applicable to professional liability insurance provided by the association that cover nursing homes and assisted living facilities that are not for profit must reflect a discount of 30 percent from the rates for the same coverage provided to others in the same category of insureds. The commissioner shall ensure compliance with this subdivision.

[Sections 2203.204-2203.250 reserved for expansion]

SUBCHAPTER F. FINANCIAL PARTICIPATION BY MEMBERS AND POLICYHOLDERS

Revised Law

Sec. 2203.251. DEFICIT RECOUPMENT. (a) This section applies to a deficit sustained in a single year by the association with respect to:

(1) physicians and health care providers, other than nursing homes and assisted living facilities; or

(2) a nursing home or assisted living facility.

(b) The deficit must be recouped in accordance with the plan of operation and the rating plan in effect when the deficit is sustained under one or more of the following procedures, in this sequence:

(1) a contribution from the stabilization reserve fund established under Section 2203.301 or the stabilization reserve fund established under Section 2203.303, as appropriate, until the respective fund is exhausted;

(2) an assessment on the policyholders in accordance with Section 2203.252; or

(3) an assessment on the members in accordance with Sections 2203.055(c) and (d) and 2203.253. (V.T.I.C. Art. 21.49-3, Sec. 4(b)(3) (part).)

Source Law

(3) Any deficit sustained by the association with respect to physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, or by for-profit and not-for-profit nursing homes and assisted living facilities in any one year shall be recouped, pursuant to the plan of operation and the rating plan then in effect, by one or more of the following procedures in this sequence:

First, a contribution from the policyholder's stabilization reserve fund for physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, established under Section 4A of this article or from the stabilization reserve fund for for-profit and not-for-profit nursing homes and assisted living facilities, established under Section 4B of this article, as appropriate, until the respective fund is exhausted;

Second, an assessment upon the policyholders pursuant to Section 5(a) of this article;

Third, an assessment upon the members pursuant to Section 5(b) of this article. …

Revised Law

Sec. 2203.252. ASSESSMENT OF POLICYHOLDERS FOR DEFICIT RECOUPMENT. (a) Each policyholder within the group of physicians and health care providers, other than nursing homes and assisted living facilities, or within the group of nursing homes and assisted living facilities, has contingent liability for a proportionate share of an assessment made under this chapter of policyholders in the applicable group.

(b) If a deficit, as computed under the plan of operation, is sustained with respect to a group described by Subsection (a) in a single year, the board of directors shall levy an assessment only on the policyholders in the applicable group who held policies in force at any time during the two most recently completed calendar years:

(1) before the date the assessment is levied; and

(2) in which the association was issuing policies.

(c) The aggregate amount of an assessment under Subsection (b) must be equal to the amount of the deficit not recouped under Section 2203.251(b)(1) from the applicable stabilization reserve fund. Subject to Subsection (d), each policyholder in the applicable group shall be assessed for a portion of the deficit that reflects the proportion that the earned premium on the policies of that policyholder bears to the total earned premium for all policies of the association in the applicable group in the two most recently completed calendar years.

(d) The maximum aggregate assessment on each policyholder in the applicable group may not exceed the annual premium for the liability insurance policy most recently in effect. (V.T.I.C. Art. 21.49-3, Sec. 5(a).)

Source Law

Sec. 5. (a) Each policyholder within the group of physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, or within the group of for-profit and not-for-profit nursing homes and assisted living facilities shall have contingent liability for a proportionate share of any assessment of policyholders in the applicable group made under the authority of this article. Whenever a deficit, as calculated pursuant to the plan of operation, is sustained with respect to the group of physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, or the group of for-profit and not-for-profit nursing homes and assisted living facilities in any one year, its directors shall levy an assessment only upon those policyholders in the applicable group who held policies in force at any time within the two most recently completed calendar years in which the association was issuing policies preceding the date on which the assessment was levied. The aggregate amount of the assessment shall be equal to that part of the deficit not recouped from the applicable stabilization reserve fund. The maximum aggregate assessment per policyholder in the applicable group shall not exceed the annual premium for the liability policy most recently in effect. Subject to such maximum limitation, each policyholder in the applicable group shall be assessed for that portion of the deficit reflecting the proportion which the earned premium on the policies of such policyholder bears to the total earned premium for all policies of the association in the applicable group in the two most recently completed calendar years.

Revisor's Note

Section 5(a), V.T.I.C. Article 21.49-3, refers to deficit recoupment from the stabilization reserve fund. Section 4(b)(3), V.T.I.C. Article 21.49-3, the relevant part of which is revised in this chapter as Section 2203.251(b)(1), provides for the recoupment of a deficit from the stabilization reserve fund. The revised law adds a cross-reference to Section 2203.251(b)(1) for the convenience of the reader.

Revised Law

Sec. 2203.253. LIMITATION ON REIMBURSEMENT BY MEMBER FOR DEFICIT RECOUPMENT. (a) An association member is not obligated in a single year to reimburse the association for the member's proportionate share of the deficits from the association's operations in that year in an amount that exceeds one percent of the member's policyholder surplus. The aggregate amount not reimbursed in accordance with this subsection shall be reallocated among the other association members. The association shall reallocate that amount in accordance with the method of determining a member's participation under Sections 2203.055(c) and (d), after excluding the total net direct premiums of all members not sharing in the excess deficits.

(b) If the deficits from the association's operations allocated to all association members in a calendar year exceed one percent of all members' respective policyholder surplus, the association shall allocate to each member the amount of the deficits in accordance with the method of determining a member's participation under Sections 2203.055(c) and (d). (V.T.I.C. Art. 21.49-3, Sec. 5(b) (part).)

Source Law

(b) … No member shall be obligated in any one year to reimburse the association on account of its proportionate share in the deficits from operations of the association in that year in excess of one percent of its surplus to policyholders and the aggregate amount not so reimbursed shall be reallocated among the remaining members in accordance with the method of determining participation prescribed in this subdivision, after excluding from the computation the total net direct premiums of all members not sharing in such excess deficits. In the event that the deficits from operations allocated to all members of the association in any calendar year shall exceed one percent of their respective surplus to policyholders, the amount of such deficits shall be allocated to each member in accordance with the method of determining participation prescribed in this subdivision.

Revised Law

Sec. 2203.254. CONTRIBUTION BY MEMBERS FOR SOUND FINANCIAL OPERATION. If sufficient funds are not available for the sound financial operation of the association, each association member shall contribute to the financial requirements of the association in accordance with Sections 2203.055(c) and (d), 2203.252, and 2203.253, as authorized and considered necessary by the department. A contribution under this subsection is in addition to:

(1) an assessment paid in accordance with the plan of operation under Section 2203.053(b); and

(2) a contribution from a stabilization reserve fund. (V.T.I.C. Art. 21.49-3, Sec. 4(b)(5) (part).)

Source Law

(5) In the event that sufficient funds are not available for the sound financial operation of the association, in addition to assessments paid pursuant to the plan of operation in accordance with Section 3(c)(2) of this article and contributions from the policyholder's stabilization reserve fund, all members shall, on a basis authorized by the department, as long as the department deems it necessary, contribute to the financial requirements of the association in the manner provided for in Section 5… .

Revised Law

Sec. 2203.255. REIMBURSEMENT OF ASSESSMENT OR CONTRIBUTION; PREMIUM TAX CREDIT. (a) Subject to commissioner approval, the association shall reimburse an assessment or contribution, with interest at a rate approved by the commissioner, to:

(1) the association members; or

(2) the state, to the extent that the members have recouped their assessments using premium tax credits as provided by Subsection (c).

(b) Pending recoupment or reimbursement of an assessment or contribution paid by a member to the association, the unrepaid balance of the assessment or contribution may be reflected in the member's books and records as an admitted asset of the member for all purposes, including exhibition in an annual statement under Section 862.001.

(c) To the extent a member has paid one or more assessments and has not received reimbursement from the association in accordance with Subsection (a), a credit against premium taxes under Chapter 221 is allowed at a rate of 20 percent a year for five successive years following the year in which the deficit was sustained. At the member's option, the tax credit may be taken over an additional number of years. (V.T.I.C. Art. 21.49-3, Secs. 4(b)(3) (part), (5) (part).)

Source Law

(3) … To the extent a member has paid one or more assessments and has not received reimbursement from the association in accordance with Subdivision (5) of this subsection, a credit against premium taxes under Article 4.10 of this code, as amended, shall be allowed. The tax credit shall be allowed at a rate of 20 percent per year for five successive years following the year in which said deficit was sustained and at the option of the insurer may be taken over an additional number of years.

(5) … Any assessment or contribution shall be reimbursed to the members, or to the state to the extent that the members have recouped their assessments using premium tax credits as provided under Subsection (b)(3) of this section, with interest at a rate to be approved by the commissioner, subject to the approval of the commissioner. Pending recoupment or reimbursement of assessments or contributions paid to the association by a member, the unrepaid balance of such assessments and contributions may be reflected in the books and records of the insurer as an admitted asset of the insurer for all purposes, including exhibition in annual statements pursuant to Section 862.001 of this code.

Revisor's Note

Section 4(b)(3), V.T.I.C. Article 21.49-3, refers to "Article 4.10 of this code, as amended." The revised law omits "as amended" for the reason stated in Revisor's Note (1) to Section 2203.201.

Revised Law

Sec. 2203.256. STANDARDS FOR RECOUPMENT PROVISIONS. A provision for recoupment must be based on:

(1) the association's loss and expense experience; and

(2) other information based on that experience the department considers appropriate. (V.T.I.C. Art. 21.49-3, Sec. 4(b)(4) (part).)

Source Law

(4) … any provision for recoupment should be based upon the association's loss and expense experience, together with such other information based upon such experience as the department may deem appropriate… .

[Sections 2203.257-2203.300 reserved for expansion]

SUBCHAPTER G. STABILIZATION RESERVE FUNDS

Revised Law

Sec. 2203.301. STABILIZATION RESERVE FUND FOR PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) The policyholder's stabilization reserve fund for physicians and health care providers other than nursing homes and assisted living facilities is collected and administered by the association as provided by this section, Section 2203.302, and the plan of operation.

(b) The stabilization reserve fund shall be:

(1) credited with all stabilization reserve fund charges collected under Section 2203.302;

(2) charged with any deficit sustained by physicians and health care providers, other than nursing homes and assisted living facilities, from the association's operation during the previous year;

(3) treated as a liability of the association along with, and in the same manner as, premium and loss reserves; and

(4) valued annually by the board of directors as of the close of the preceding year. (V.T.I.C. Art. 21.49-3, Secs. 4A(a) (part), (c), (e).)

Source Law

Sec. 4A. (a) There is hereby created a policyholder's stabilization reserve fund for physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, which shall be administered as provided herein and in the plan of operation of the association… .

(c) The stabilization reserve fund shall be collected and administered by the association and shall be treated as a liability of the association along with and in the same manner as premium and loss reserves. The fund shall be valued annually by the board of directors as of the close of the last preceding year.

(e) The stabilization reserve fund shall be credited with all stabilization reserve fund charges collected from physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, and shall be charged with any deficit sustained by physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, from the prior year's operation of the association.

Revisor's Note

(1) Section 4A(a), V.T.I.C. Article 21.49-3, states that "[t]here is hereby created a policyholder's stabilization reserve fund." The revised law omits the language as executed.

(2) Section 4A(c), V.T.I.C. Article 21.49-3, refers to the "last preceding year." The revised law omits "last" as unnecessary. "The preceding" means "the last preceding."

Revised Law

Sec. 2203.302. STABILIZATION RESERVE FUND CHARGE FOR PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) Each policyholder other than a nursing home or assisted living facility shall pay annually into the stabilization reserve fund under Section 2203.301 a charge that:

(1) is in an amount established annually by advisory directors chosen by physicians and health care providers, other than nursing homes and assisted living facilities, eligible for insurance through the association in accordance with the plan of operation;

(2) is in proportion to each premium payment due for liability insurance through the association; and

(3) is separately stated in the policy.

(b) A charge stated in a policy as required by Subsection (a)(3) is not:

(1) a part of premiums; or

(2) subject to premium taxation or a servicing fee, acquisition cost, or any other similar charge.

(c) If the association offers an installment payment plan for coverage obtained through the association, the association may:

(1) permit payment of the stabilization reserve fund charge under this section on an installment basis; or

(2) require the policyholder to pay the charge as an annual lump sum.

(d) Collections of the stabilization reserve fund charge under this section shall continue until the net balance of the stabilization reserve fund under Section 2203.301 is not less than the projected sum of premiums for physicians and health care providers, other than nursing homes and assisted living facilities, to be written in the year following the valuation date. (V.T.I.C. Art. 21.49-3, Secs. 4A(b), as amended Acts 78th Leg., R.S., Chs. 56, 141, (d).)

Source Law

(b) [as amended Acts 78th Leg., R.S., Ch. 56] Each policyholder shall pay annually into the stabilization reserve fund a charge, the amount of which shall be established annually by advisory directors chosen by health care providers, other than for-profit and not-for-profit nursing homes, and physicians eligible for insurance in the association in accordance with the plan of operation. The charge shall be in proportion to each premium payment due for liability insurance through the association. Such charge shall be separately stated in the policy, but shall not constitute a part of premiums or be subject to premium taxation, servicing fees, acquisition costs, or any other such charges. If the association offers an installment payment plan for coverage obtained through the association, the association may permit payment of the stabilization reserve fund charge on an installment basis or may require the policyholder to pay the charge as an annual lump sum.

(b) [as amended Acts 78th Leg., R.S., Ch. 141] Each policyholder shall pay annually into the stabilization reserve fund a charge, the amount of which shall be established annually by advisory directors chosen by health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, and physicians eligible for insurance in the association in accordance with the plan of operation. The charge shall be in proportion to each premium payment due for liability insurance through the association. Such charge shall be separately stated in the policy, but shall not constitute a part of premiums or be subject to premium taxation, servicing fees, acquisition costs, or any other such charges.

(d) Collections of the stabilization reserve fund charge shall continue until such time as the net balance of the stabilization reserve fund is not less than the projected sum of premiums for physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, to be written in the year following valuation date.

Revised Law

Sec. 2203.303. STABILIZATION RESERVE FUND FOR NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) The stabilization reserve fund for nursing homes and assisted living facilities is collected and administered by the association as provided by this section, Section 2203.304, and the plan of operation.

(b) The stabilization reserve fund shall be:

(1) credited with:

(A) all stabilization reserve fund charges collected under Section 2203.304; and

(B) the net earnings on liability insurance policies issued to nursing homes and assisted living facilities;

(2) charged with any deficit sustained by nursing homes and assisted living facilities from the association's operation during the previous year;

(3) treated as a liability of the association along with, and in the same manner as, premium and loss reserves; and

(4) valued annually by the board of directors as of the close of the preceding year.

(c) The stabilization reserve fund under this section, and any earnings of the fund, are state funds and shall be held by the comptroller outside the state treasury on behalf of, and with legal title in, the department. No part of the fund or the earnings of the fund may inure to the benefit of an association member, a policyholder, or another individual. The fund assets may be used in accordance with the association's plan of operation only to implement this chapter and for the purposes of the association, including to make payment to satisfy, wholly or partly, the liability of the association regarding a claim made on a policy written by the association.

(d) Notwithstanding Sections 11, 12, and 13, Article 21.49-3, the stabilization reserve fund under this section may be terminated only by law.

(e) Notwithstanding Section 11, Article 21.49-3, on termination of the stabilization reserve fund under this section, all assets of the fund shall be transferred to the general revenue fund to be appropriated for purposes related to ensuring the provision of the kinds of liability insurance coverage that the association may provide under this chapter to nursing homes and assisted living facilities. (V.T.I.C. Art. 21.49-3, Secs. 4B(a) (part), (c), (e), (f), (g), (h).)

Source Law

Sec. 4B. (a) There is hereby created a stabilization reserve fund for for-profit and not-for-profit nursing homes and assisted living facilities that shall be administered as provided in this section and in the plan of operation of the association… .

(e) The stabilization reserve fund shall be credited with all stabilization reserve fund charges collected from for-profit and not-for-profit nursing homes and assisted living facilities and the net earnings on liability insurance policies issued to for-profit and not-for-profit nursing homes and assisted living facilities and shall be charged with any deficit sustained by for-profit and not-for-profit nursing homes and assisted living facilities from the prior year's operation of the association.

(f) The stabilization reserve fund established under this section, and any earnings of the fund, are state funds and shall be held by the comptroller outside the state treasury on behalf of, and with legal title in, the department. No part of the fund, or the earnings of the fund, may inure to the benefit of a member of the association, a policyholder, or any other individual, and the assets of the fund may be used in accordance with the association's plan of operation only to implement this article and for the purposes of the association, including making payment to satisfy, in whole or in part, the liability of the association regarding a claim made on a policy written by the association.

(g) Notwithstanding Sections 11, 12, and 13 of this article, the stabilization reserve fund established under this section may be terminated only by law.

(h) Notwithstanding Section 11 of this article, on termination of the stabilization reserve fund established under this section, all assets of the fund shall be transferred to the general revenue fund to be appropriated for purposes related to ensuring the kinds of liability insurance coverage that may be provided by the association under this article for for-profit and not-for-profit nursing homes and assisted living facilities.

Revisor's Note

(1) Section 4B(a), V.T.I.C. Article 21.49-3, states that "[t]here is hereby created a stabilization reserve fund" for for-profit and not-for-profit nursing homes and assisted living facilities. The revised law omits the language as executed.

(2) Section 4B(c), V.T.I.C. Article 21.49-3, refers to the "last preceding year." The revised law omits "last" for the reason stated in Revisor's Note (2) to Section 2203.301.

Revised Law

Sec. 2203.304. STABILIZATION RESERVE FUND CHARGE FOR NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) Each policyholder that is a nursing home or assisted living facility shall pay annually into the stabilization reserve fund under Section 2203.303 a charge that:

(1) is in an amount established annually by advisory directors chosen by nursing homes and assisted living facilities eligible for insurance through the association in accordance with the plan of operation;

(2) is in proportion to each premium payment due for liability insurance through the association; and

(3) is separately stated in the policy.

(b) A charge stated in a policy as required by Subsection (a)(3) is not:

(1) a part of premiums; or

(2) subject to premium taxation or a servicing fee, acquisition cost, or any other similar charge.

(c) If the association offers an installment payment plan for coverage obtained through the association, the association may:

(1) permit payment of the stabilization reserve fund charge under this section on an installment basis; or

(2) require the policyholder to pay the charge as an annual lump sum.

(d) Collections of the stabilization reserve fund charge under this section shall continue only until the net balance of the stabilization reserve fund under Section 2203.303 is not less than the projected sum of premiums for nursing homes and assisted living facilities to be written in the year following the valuation date. (V.T.I.C. Art. 21.49-3, Secs. 4B(b), as amended Acts 78th Leg., R.S., Chs. 56, 141, (d).)

Source Law

(b) [as amended Acts 78th Leg., R.S., Ch. 56] Each policyholder shall pay annually into the stabilization reserve fund a charge, the amount of which shall be established annually by advisory directors chosen by for-profit and not-for-profit nursing homes eligible for insurance in the association in accordance with the plan of operation. The charge shall be in proportion to each premium payment due for liability insurance through the association. The charge shall be separately stated in the policy, but shall not constitute a part of premiums or be subject to premium taxation, servicing fees, acquisition costs, or any other similar charges. If the association offers an installment payment plan for coverage obtained through the association, the association may permit payment of the stabilization reserve fund charge on an installment basis or may require the policyholder to pay the charge as an annual lump sum.

(b) [as amended Acts 78th Leg., R.S., Ch. 141] Each policyholder shall pay annually into the stabilization reserve fund a charge, the amount of which shall be established annually by advisory directors chosen by for-profit and not-for-profit nursing homes and assisted living facilities eligible for insurance in the association in accordance with the plan of operation. The charge shall be in proportion to each premium payment due for liability insurance through the association. The charge shall be separately stated in the policy, but shall not constitute a part of premiums or be subject to premium taxation, servicing fees, acquisition costs, or any other similar charges.

(d) Collections of the stabilization reserve fund charge shall continue only until such time as the net balance of the stabilization reserve fund is not less than the projected sum of premiums for for-profit and not-for-profit nursing homes and assisted living facilities to be written in the year following the valuation date.

Revised Law

Sec. 2203.305. SEPARATE FUNDS. The policyholder's stabilization reserve fund for physicians and health care providers other than nursing homes and assisted living facilities described by Section 2203.301 is separate from the stabilization reserve fund for nursing homes and assisted living facilities described by Section 2203.303. (V.T.I.C. Art. 21.49-3, Secs. 4A(a) (part), 4B(a) (part).)

Source Law

Sec. 4A. (a) … The stabilization reserve fund created by this section is separate and distinct from the stabilization reserve fund for for-profit and not-for-profit nursing homes and assisted living facilities created by Section 4B of this article.

Sec. 4B. (a) … The stabilization reserve fund created by this section is separate and distinct from the policyholder's stabilization reserve fund for physicians and health care providers, other than for-profit and not-for-profit nursing homes and assisted living facilities, created by Section 4A of this article.

Revisor's Note

Sections 4A(a) and 4B(a), V.T.I.C. Article 21.49-3, refer to "separate and distinct" funds. The revised law omits the references to "distinct" because "distinct" is included in the meaning of "separate."

[Sections 2203.306-2203.350 reserved for expansion]

SUBCHAPTER H. REVENUE BOND PROGRAM

Revised Law

Sec. 2203.351. PURPOSE. The legislature finds that the issuance of bonds to provide a method to raise money to provide professional liability insurance for nursing homes and assisted living facilities in this state through the association is to benefit the public and to further a public purpose. (V.T.I.C. Art. 21.49-3d, Sec. 1.)

Source Law

Art. 21.49-3d

Sec. 1. The legislature finds that the issuance of bonds to provide a method to raise funds to provide professional liability insurance through the association for nursing homes and assisted living facilities in this state is for the benefit of the public and in furtherance of a public purpose.

Revisor's Note

Section 1, V.T.I.C. Article 21.49-3d, refers to the issuance of bonds to raise "funds." Throughout this subchapter, the revised law substitutes "money" for "funds" when appropriate because, in context, "funds" and "money" are synonymous and "money" is more commonly used.

Revised Law

Sec. 2203.352. DEFINITIONS. In this subchapter:

(1) "Board" means the board of directors of the Texas Public Finance Authority.

(2) "Bond resolution" means the resolution or order authorizing bonds to be issued under this subchapter. (V.T.I.C. Art. 21.49-3d, Secs. 2(2), (3).)

Source Law

Sec. 2. In this article:

(2) "Bond resolution" means the resolution or order authorizing the bonds to be issued under this article.

(3) "Board" means the board of directors of the Texas Public Finance Authority.

Revisor's Note

Section 2(4), V.T.I.C. Article 21.49-3d, defines "insurer" to mean an insurer required to be a member of the joint underwriting association under Section 3, V.T.I.C. Article 21.49-3, revised in relevant part in this chapter in Section 2203.055. For consistency with the terminology used in Subchapters A-G and I of this chapter, the revised law omits the definition of "insurer" and throughout this subchapter substitutes "association member" for references to "insurer." The omitted law reads:

(4) "Insurer" means any insurer required to be a member of the association under Section 3, Article 21.49-3 of this code.

Revised Law

Sec. 2203.353. APPLICABILITY OF OTHER LAWS. The following laws apply to bonds issued under this subchapter to the extent consistent with this subchapter:

(1) Chapters 1201, 1202, 1204, 1205, 1231, 1232, and 1371, Government Code; and

(2) Subchapter A, Chapter 1206, Government Code. (V.T.I.C. Art. 21.49-3d, Secs. 3(b), 4.)

Source Law

[Sec. 3]

(b) To the extent not inconsistent with this article, Chapter 1232, Government Code, applies to bonds issued under this article. In the event of a conflict, this article controls.

Sec. 4. The following laws apply to bonds issued under this article to the extent consistent with this article:

(1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371, Government Code; and

(2) Subchapter A, Chapter 1206, Government Code.

Revisor's Note

Section 3(b), V.T.I.C. Article 21.49-3d, provides that, to the extent not inconsistent with that article, Chapter 1232, Government Code, applies to bonds issued under that article but that, in the event of a conflict, that article controls. The revised law omits the statement that in the event of a conflict V.T.I.C. Article 21.49-3d controls over Chapter 1232, Government Code, because that is implied by the statement that Chapter 1232, Government Code, applies to bonds issued under V.T.I.C. Article 21.49-3d to the extent not inconsistent with that article.

Revised Law

Sec. 2203.354. ISSUANCE OF BONDS AUTHORIZED. On behalf of the association and subject to Section 2203.355, the Texas Public Finance Authority shall issue revenue bonds to:

(1) fund the stabilization reserve fund for nursing homes and assisted living facilities under Section 2203.303;

(2) pay costs related to issuing the bonds; and

(3) pay other costs related to the bonds as determined by the board. (V.T.I.C. Art. 21.49-3d, Sec. 3(a).)

Source Law

Sec. 3. (a) On behalf of the association, the Texas Public Finance Authority shall issue revenue bonds to:

(1) fund the stabilization reserve fund for for-profit and not-for-profit nursing homes and assisted living facilities established under Section 4B, Article 21.49-3 of this code;

(2) pay costs related to issuance of the bonds; and

(3) pay other costs related to the bonds as may be determined by the board.

Revisor's Note

Section 3(a), V.T.I.C. Article 21.49-3d, provides that the Texas Public Finance Authority shall issue revenue bonds for the joint underwriting association for certain purposes. Section 5, V.T.I.C. Article 21.49-3d, revised in this chapter as Section 2203.355, limits the total amount of bonds the authority may issue on behalf of the association. For the convenience of the reader, the revised law adds a cross-reference to Section 2203.355.

Revised Law

Sec. 2203.355. LIMITATION ON AMOUNT OF BONDS. The Texas Public Finance Authority may issue on behalf of the association bonds in a total amount not to exceed $75 million. (V.T.I.C. Art. 21.49-3d, Sec. 5.)

Source Law

Sec. 5. The Texas Public Finance Authority may issue, on behalf of the association, bonds in a total amount not to exceed $75 million.

Revised Law

Sec. 2203.356. TERMS OF ISSUANCE. (a) Bonds issued under this subchapter may be issued at a public or private sale.

(b) Bonds must:

(1) be issued in the name of the association; and

(2) mature not more than 10 years after the date issued. (V.T.I.C. Art. 21.49-3d, Sec. 6.)

Source Law

Sec. 6. (a) Bonds may be issued at public or private sale.

(b) Bonds may mature not more than 10 years after the date issued.

Revised Law

Sec. 2203.357. CONTENTS OF BOND RESOLUTION; ADMINISTRATION OF ACCOUNTS. (a) In a bond resolution, the board may:

(1) provide for the flow of money and the establishment, maintenance, and investment of funds and special accounts with regard to the bonds, including an interest and sinking fund account, a reserve account, and other accounts; and

(2) make additional covenants with regard to the bonds and the designated income and receipts of the association pledged to the payment of the bonds.

(b) The association shall administer the accounts in accordance with this chapter. (V.T.I.C. Art. 21.49-3d, Secs. 7, 8.)

Source Law

Sec. 7. In a bond resolution, the board may make additional covenants with respect to the bonds and the designated income and receipts of the association pledged to their payment and may provide for the flow of funds and the establishment, maintenance, and investment of funds and accounts with respect to the bonds.

Sec. 8. (a) A bond resolution may establish special accounts, including an interest and sinking fund account, reserve account, and other accounts.

(b) The association shall administer the accounts in accordance with Article 21.49-3 of this code.

Revised Law

Sec. 2203.358. SOURCE OF PAYMENT. (a) Bonds issued under this subchapter are payable only from:

(1) the surcharge fee established under Section 2203.359; or

(2) other sources the association is authorized to levy and charge and from which the association is authorized to collect in connection with paying any portion of the bonds.

(b) The bonds are obligations solely of the association and do not create a pledge, gift, or loan of the faith, credit, or taxing authority of this state.

(1) include a statement that the state is not obligated to pay any amount on the bond and that the faith, credit, and taxing authority of this state are not pledged, given, or loaned to those payments; and

(2) state on the bond's face that the bond:

(A) is payable solely from the revenue pledged for that purpose; and

(B) is not a legal or moral obligation of the state. (V.T.I.C. Art. 21.49-3d, Sec. 9.)

Source Law

Sec. 9. (a) Bonds are payable only from the surcharge fee established in Section 10 of this article or other sources the association is authorized to levy, charge, and collect in connection with paying any portion of the bonds.

(b) Bonds are obligations solely of the association. Bonds do not create a pledging, giving, or lending of the faith, credit, or taxing authority of this state.

(c) Each bond must include a statement that the state is not obligated to pay any amount on the bond and that the faith, credit, and taxing authority of this state are not pledged, given, or lent to those payments.

(d) Each bond issued under this article must state on its face that the bond is payable solely from the revenues pledged for that purpose and that the bond does not and may not constitute a legal or moral obligation of the state.

Revised Law

Sec. 2203.359. SURCHARGE FEE. (a) A surcharge fee is assessed against:

(1) each association member; and

(2) the association.

(b) The commissioner shall set the surcharge fee in an amount sufficient to pay all debt service on the bonds issued under this subchapter. Each association member and the association shall pay the surcharge fee as required by the commissioner by rule.

(c) The comptroller shall collect the surcharge fee and the department shall reimburse the comptroller in the manner described by Section 201.052.

(d) The commissioner, in consultation with the comptroller, may coordinate payment and collection of the surcharge fee with other payments made by association members and collected by the comptroller.

(e) Except as provided by Subsection (f), as a condition of engaging in the business of insurance in this state, an association member agrees that, if the member leaves the liability insurance market in this state, the member remains obligated to pay the member's share of the surcharge fee assessed under this section until the bonds are retired. The amount assessed against a member under this subsection must be:

(1) proportionate to the member's share of the liability insurance market, including automobile liability insurance, in this state as of the last complete reporting period before the date the member ceases to engage in the liability insurance business in this state; and

(2) based on the member's gross premiums for liability insurance, including automobile liability insurance, for the member's last reporting period.

(f) An association member is not required to pay the proportionate amount under Subsection (e) in any year in which the surcharge fee assessed against association members continuing to write liability insurance in this state is sufficient to service the bond obligation. (V.T.I.C. Art. 21.49-3d, Sec. 10.)

Source Law

Sec. 10. (a) A surcharge fee is assessed against:

(1) each insurer; and

(2) the association.

(b) The surcharge fee shall be set by the commissioner in an amount sufficient to pay all debt service on the bonds. The surcharge shall be paid by each insurer and the association as required by commissioner rule.

(c) The comptroller shall collect the surcharge fee and the department shall reimburse the comptroller in the manner described by Article 4.19 of this code.

(d) The commissioner, in consultation with the comptroller, may coordinate payment and collection of the surcharge fee with other payments made by insurers and collected by the comptroller.

(e) As a condition of engaging in the business of insurance in this state, an insurer agrees that if the company leaves the market for liability insurance in this state the insurer remains obligated to pay, until the bonds are retired, the insurer's share of the surcharge fee assessed under this section in an amount proportionate to that insurer's share of the market for liability insurance, including motor vehicle liability insurance, in this state as of the last complete reporting period before the date on which the insurer ceases to engage in that insurance business in this state. The proportion assessed against the insurer shall be based on the insurer's gross premiums for liability insurance, including motor vehicle liability insurance, for the insurer's last reporting period. However, an insurer is not required to pay the proportionate amount in any year in which the surcharge fee assessed against insurers continuing to write liability insurance in this state is sufficient to service the bond obligation.

Revisor's Note

Section 10(e), V.T.I.C. Article 21.49-3d, refers to "motor vehicle liability insurance." The revised law substitutes "automobile liability insurance" for the reference to "motor vehicle liability insurance" for consistency with terminology used in this code and because "automobile" insurance is the term more commonly used to describe the kind of insurance that provides coverage for motor vehicles.

Revised Law

Sec. 2203.360. EXEMPTION FROM TAXATION. Bonds issued under this subchapter, any interest from the bonds, and all assets pledged to secure the payment of the bonds are exempt from taxation by the state or a political subdivision of this state. (V.T.I.C. Art. 21.49-3d, Sec. 11.)

Source Law

Sec. 11. The bonds issued under this article, and any interest from the bonds, and all assets pledged to secure the payment of the bonds are free from taxation by the state or a political subdivision of this state.

Revised Law

Sec. 2203.361. AUTHORIZED INVESTMENTS. Bonds issued under this subchapter are authorized investments under Sections _______ [[[V.T.I.C. Article 2.10]]] and _______ [[[Subpart A, Part I, V.T.I.C. Article 3.39]]]. (V.T.I.C. Art. 21.49-3d, Sec. 12.)

Source Law

Sec. 12. The bonds issued under this article constitute authorized investments under Article 2.10 and Subpart A, Part I, Article 3.39, of this code.

Revised Law

Sec. 2203.362. STATE PLEDGE REGARDING BOND OWNER RIGHTS AND REMEDIES. (a) The state pledges to and agrees with the owners of bonds issued in accordance with this subchapter that the state will not limit or alter the rights vested in the association to fulfill the terms of agreements made with the owners or impair the rights and remedies of the owners until the following obligations are fully discharged:

(1) the bonds;

(2) any bond premium;

(3) interest; and

(4) all costs and expenses related to an action or proceeding by or on behalf of the owners.

(b) The association may include the state's pledge and agreement under Subsection (a) in an agreement with the owners of the bonds. (V.T.I.C. Art. 21.49-3d, Sec. 13.)

Source Law

Sec. 13. The state pledges to and agrees with the owners of any bonds issued in accordance with this article that the state will not limit or alter the rights vested in the association to fulfill the terms of any agreements made with the owners of the bonds or in any way impair the rights and remedies of those owners until the bonds, any premium or interest, and all costs and expenses in connection with any action or proceeding by or on behalf of those owners are fully met and discharged. The association may include this pledge and agreement of the state in any agreement with the owners of the bonds.

Revised Law

Sec. 2203.363. PAYMENT ENFORCEABLE BY MANDAMUS. A writ of mandamus and any other legal or equitable remedy are available to a party in interest to require the association or another party to fulfill an agreement or perform a function or duty under:

(1) this subchapter;

(2) the Texas Constitution; or

(3) a bond resolution. (V.T.I.C. Art. 21.49-3d, Sec. 14.)

Source Law

Sec. 14. A writ of mandamus and all other legal and equitable remedies are available to any party at interest to require the association and any other party to carry out agreements and to perform functions and duties under this article, the Texas Constitution, or a bond resolution.

[Sections 2203.364-2203.400 reserved for expansion]

SUBCHAPTER I. APPEALS

Revised Law

Sec. 2203.401. DEFINITION. In this subchapter, "act" includes a ruling or decision. (New.)

Revisor's Note

The revised law adds a definition of "act" for drafting convenience and to eliminate frequent, unnecessary repetition of the substance of the definition.

Revised Law

Sec. 2203.402. APPEAL TO BOARD OF DIRECTORS; HEARING. (a) A person insured or applying for insurance under this chapter, the person's authorized representative, or an affected insurer that may be aggrieved by an act of the association may appeal to the board of directors not later than the 30th day after the date the act occurs. At the time the person is notified of the act, the association shall provide to the person written notice of the person's right to appeal under this subsection.

(b) The board of directors shall:

(1) hear an appeal brought under Subsection (a) not later than the 30th day after the date the board of directors receives the appeal; and

(2) give not less than 10 days' written notice of the time and place of the hearing to the person bringing the appeal or the person's authorized representative. (V.T.I.C. Art. 21.49-3, Secs. 7(a), (b) (part).)

Source Law

Sec. 7. (a) Any person insured or applying for insurance pursuant to this Act, or his duly authorized representative, or any affected insurer who may be aggrieved by an act, ruling, or decision of the association, may, within 30 days after such act, ruling, or decision, appeal to the board of directors of the association. At the time the person is notified of the act, ruling, or decision of the association, the association shall provide to the person written notice of the person's right to appeal under this subsection.

(b) The board of directors of the association shall hear said appeal within 30 days after receipt of such request or appeal and shall give not less than 10 days' written notice of the time and place of hearing to the person making such request or the duly authorized representative… .

Revisor's Note

(1) Sections 7(a) and (b), V.T.I.C. Article 21.49-3, refer to a person's "duly authorized representative." The revised law omits the references to "duly" for the reason stated in Revisor's Note (2) to Section 2203.002.

(2) Section 7(b), V.T.I.C. Article 21.49-3, prescribes the time during which the joint underwriting association's board of directors must hear a "request or appeal," meaning an appeal brought under Section 7(a) of that article, and refers to the person making that "request." Section 7(c) of that article, revised in relevant part in this chapter as Section 2203.404, refers to a "request or appeal," meaning an appeal brought by making a written request to the commissioner of insurance for a hearing. For consistency of terminology within this subchapter, the revised law substitutes "appeal" for the quoted language.

Revised Law

Sec. 2203.403. DECISION OF BOARD OF DIRECTORS. (a) Not later than the 10th day after the date of the hearing under Section 2203.402(b), the board of directors shall affirm, reverse, or modify the board's previous action or the appealed act.

(b) At the time the person is notified of the final action of the board of directors, the association shall provide to the person written notice of the person's right to appeal under Section 2203.404. (V.T.I.C. Art. 21.49-3, Sec. 7(b) (part).)

Source Law

(b) … Within 10 days after such hearing, the board of directors of the association shall affirm, reverse, or modify its previous action or the act, ruling, or decision appealed to the board of directors of the association. At the time the person is notified of the final action of the board of directors of the association, the association shall provide to the person written notice of the person's right to appeal under Subsection (c) of this section.

Revised Law

Sec. 2203.404. APPEAL TO COMMISSIONER; HEARING. (a) Not later than the 30th day after the date of the final action of the board of directors under Section 2203.403, a person insured or applying for insurance aggrieved by that final action may appeal to the commissioner by making a written request for a hearing.

(b) The appeal shall be heard not later than the 30th day after the date the appeal is received. The person bringing the appeal or the person's authorized representative must be given written notice of the time and place of the hearing on or before the 10th day before the date of the hearing. (V.T.I.C. Art. 21.49-3, Sec. 7(c) (part).)

Source Law

(c) In the event any person insured or applying for insurance is aggrieved by the final action of the board of directors of the association, the aggrieved party may, within 30 days after such action, make a written request to the commissioner for a hearing thereon. The commissioner shall hear the appeal from an act, ruling, or decision of the association, within 30 days after receipt of such request or appeal and shall give not less than 10 days' written notice of the time and place of hearing to the person, or his duly authorized representative, appealing from the act, ruling, or decision of the board of directors of the association… .

Revisor's Note

Section 7(c), V.T.I.C. Article 21.49-3, refers to a person's "duly authorized representative." The revised law omits the reference to "duly" for the reason stated in Revisor's Note (2) to Section 2203.002.

Revised Law

Sec. 2203.405. COMMISSIONER'S DECISION. (a) Not later than the 30th day after the date of the hearing under Section 2203.404, the commissioner shall affirm, reverse, or modify the appealed act.

(b) Pending the hearing and decision, the commissioner may suspend or postpone the effective date of a rule or of the act appealed. (V.T.I.C. Art. 21.49-3, Sec. 7(c) (part).)

Source Law

(c) … Within 30 days after such hearing, the commissioner shall affirm, reverse, or modify the act, ruling, or decision appealed to the commissioner. Pending such hearing and decision thereon, the commissioner may suspend or postpone the effective date of the rule or of the act, ruling, or decision appealed.

Revised Law

Sec. 2203.406. APPEAL OF COMMISSIONER'S DECISION. (a) The association or a person aggrieved by an order or decision of the commissioner may appeal in accordance with Subchapter D, Chapter 36.

(b) At the time the person is notified of the commissioner's order or decision, the commissioner shall provide to the person written notice of the person's right to appeal under this section. (V.T.I.C. Art. 21.49-3, Sec. 7(d).)

Source Law

(d) The association, or the person aggrieved by any order or decision of the commissioner, may thereafter appeal in accordance with Article 1.04 of this code. At the time the person is notified of the decision of the commissioner, the commissioner shall provide to the person written notice of the person's right to appeal under this subsection.


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