28 TAC — Insurance

Part 1 TEXAS DEPARTMENT OF INSURANCE

Chapter 1 GENERAL ADMINISTRATION

Subchapter B FEES, CHARGES, AND COSTS

28 Tex. Admin. Code § 1.301 Charges for Copies of Public Records

(a) The charge to any person requesting copies of any public record of the Texas Department of Insurance (TDI) will be the charge for such copy or copies as established by the Office of the Attorney General in 1 TAC Chapter 70 (relating to Cost of Copies of Public Information).

(b) TDI may waive the charges addressed in subsection (a) of this section, at the discretion of the commissioner or the commissioner's designee, if a public benefit would result from such waiver.

History

Source Note: The provisions of this §1.301 adopted to be effective August 10, 1994, 19 TexReg 5715; amended to be effective November 6, 2025, 50 TexReg 7111.

28 Tex. Admin. Code § 1.302 Charges for Affixing the Official Seal and Certifying to the Seal

The charge to any person or entity requesting the affixing of the official seal and certifying to the seal is $10.

History

Source Note: The provisions of this §1.302 adopted to be effective April 23, 1996, 21 TexReg 3189; amended to be effective November 6, 2025, 50 TexReg 7111.

Subchapter C ASSESSMENT OF MAINTENANCE TAXES AND FEES

28 Tex. Admin. Code § 1.414 Assessment of Maintenance Taxes and Fees

(a) Each calendar year by Commissioner order the department will assess rates for maintenance taxes and fees on the gross premiums of insurers for the following lines of insurance:

(1) motor vehicle insurance, under Insurance Code §254.002;

(2) casualty insurance and fidelity, guaranty, and surety bonds, under Insurance Code §253.002;

(3) fire insurance and allied lines, including inland marine, under Insurance Code §252.002;

(4) workers' compensation insurance, under Insurance Code §255.002;

(5) workers' compensation insurance, under Labor Code §403.003;

(6) workers' compensation insurance, under Labor Code §405.003;

(7) workers' compensation insurance, under Labor Code §407A.301;

(8) workers' compensation insurance, under Labor Code §407A.302; and

(9) title insurance, under Insurance Code §271.005.

(b) Each calendar year by Commissioner order the department will assess the rate for the maintenance tax to be assessed on gross premiums of insurers for life, health, and accident insurance and the gross considerations for annuity and endowment contracts, under Insurance Code §257.002.

(c) Each calendar year by Commissioner order the department will assess rates for maintenance taxes for the following entities:

(1) under Insurance Code §258.003, an amount per enrollee for:

(A) single service health maintenance organizations;

(B) multiservice health maintenance organizations; and

(2) under Insurance Code §259.003, a rate of the correctly reported gross amount of administrative or service fees for third-party administrators.

(d) Each calendar year by Commissioner order the department will assess a rate for maintenance tax under Labor Code §405.003 for each certified self-insurer, to fund the Workers' Compensation Research and Evaluation Group. The rate will be calculated under Labor Code §407.103(b), and it will be billed to the certified self-insurer by the Division of Workers' Compensation.

(e) Each calendar year by Commissioner order the department will assess a rate for maintenance tax under Labor Code §405.003 and §407A.301 for each workers' compensation self-insurance group, to fund the Workers' Compensation Research and Evaluation Group. The rate will be calculated under Labor Code §407.103(b).

(f) Each calendar year by Commissioner order the department will assess a rate for self-insurer maintenance tax under Labor Code §407.103 and §407.104 for each certified self-insurer. The rate will be calculated under Labor Code §407.103(b), and it will be billed to the certified self-insurer by the Division of Workers' Compensation.

(g) The maintenance tax revenue need is calculated as the amount of revenue needed to reach the targeted year-end fund balance, taking into account the beginning balance, expected non-maintenance tax revenues, and estimated expenditures. For each line of insurance:

(1) the assessment rate is calculated by dividing the revenue need by the estimated premium volume or assessment base; and

(2) if the calculated rate is above the statutory rate, the rate is set at the statutory maximum and any revenue shortfall is spread to the other maintenance tax lines, increasing the revenue need and tax rates for the remaining lines.

(h) The taxes and fees assessed by the Commissioner order issued under subsections (a), (b), (c), and (e) of this section will be payable and due to the Comptroller of Public Accounts on March 1 each year.

History

Source Note: The provisions of this §1.414 adopted to be effective February 2, 1994, 19 TexReg 346; amended to be effective February 1, 1995, 20 TexReg 283; amended to be effective January 1, 1996, 20 TexReg 10783; amended to be effective January 13, 1997, 22 TexReg 113; amended to be effective February 9, 1998, 23 TexReg 1097; amended to be effective January 27, 1999, 24 TexReg 387; amended to be effective January 3, 2000, 24 TexReg 12068; amended to be effective January 10, 2001, 26 TexReg 201; amended to be effective January 7, 2002, 27 TexReg 184; amended to be effective January 8, 2003, 28 TexReg 74; amended to be effective January20,2004, 29 TexReg 457; amended to be effective January 11, 2005, 30 TexReg 21; amended to be effective February 2, 2006, 31 TexReg 700; amended to be effective February 1, 2012, 37 TexReg 323; amended to be effective January 30, 2013, 38 TexReg 372; amended to be effective January 6, 2014, 39 TexReg 79; amended to be effective January 6, 2015, 40 TexReg 62; amended to be effective January 5, 2016, 41 TexReg 250; amended to be effective January 4, 2017, 41 TexReg 10616; amended to be effective January 3, 2018, 42 TexReg 7710; amended to be effective January 3, 2019, 43 TexReg 8596; amended to be effective January 5, 2020, 45 TexReg 154; amended to be effective December 29, 2020, 45 TexReg 9563.

Subchapter D EFFECT OF CRIMINAL CONDUCT

28 Tex. Admin. Code § 1.501 Purpose and Application

(a) The purpose of this subchapter is to implement Chapter 53, Occupations Code, and sections and articles of the Insurance Code and Occupations Code that require and authorize the department to determine a person's fitness for holding a license, authorization, certification, permit, or registration, or a person's fitness to have the ability to control licensed, registered, permitted, certificate holding, and authorized entities, when that person has committed a criminal offense or has engaged in fraudulent or dishonest activity. This subchapter also establishes the procedure by which the department may obtain criminal history information on persons applying for a license, authorization, certification, permit, or registration, or acquiring the ability to control an entity holding or seeking a license, authorization, certificate, permit, or registration. To effect this implementation the department has developed guidelines in §1.502 of this subchapter (relating to Licensing Persons with Criminal Backgrounds) identifying the types of criminal offenses that directly relate to the duties and responsibilities of licensed and authorized insurance activities which are of such a serious nature that they are of prime importance in determining the person's fitness for licensure, authorization, certification, permit or registration, or control of a licensed, registered, permitted, certificate holding, or authorized entity.

(b) Section 1.502 of this subchapter applies to the following persons:

(1) applicants for, or holders of, any license, registration, permit, authorization, or certification, including temporary or training licenses or certificates, as agents, adjusters, public insurance adjusters, counselors, risk managers, reinsurance intermediaries, title agents, title escrow officers, title attorneys, utilization review agents, independent review organizations, viatical and life settlement registrants, workers' compensation health care networks, management contractors, and administrators, under the following Insurance Code provisions:

(A) Chapter 4201;

(B) Chapter 4202;

(D) Chapter 1111;

(E) Chapter 1305;

(F) Chapter 2552;

(G) Chapter 2651 Subchapter A;

(H) Chapter 2652;

(I) Chapter 4001;

(J) Chapter 4051;

(K) Chapter 4052;

(L) Chapter 4053;

(M) Chapter 4054;

(N) Chapter 4055;

(O) Chapter 4056;

(P) Chapter 4101;

(Q) Chapter 4102;

(R) Chapter 4151;

(S) Chapter 4152;

(T) Chapter 4153; or

(U) any other provision providing for any type of license, registration, certification, permit, or authorization that the department may deny or revoke because of a criminal offense of the applicant or license holder;

(2) applicants for, or holders of, a license, registration, permit or authorization issued by the State Fire Marshal's Office, including the following provisions:

(A) Insurance Code Chapter 6001;

(B) Insurance Code Chapter 6002;

(D) Occupations Code Chapter 2154; or

(E) any other provision providing for any type of license, registration, or authorization that the State Fire Marshal's Office may deny or revoke because of a criminal offense of the applicant or license holder;

(3) those who are, become, or have similar responsibilities to principals, partners, officers, directors, or controlling shareholders, including limited liability company members and managers, of entities that are applicants for, or holders of, a license, authorization, permit, certification, or registration under provisions specified in paragraphs (1) and (2) of this subsection and from whom biographical information is required;

(4) with regard to insurance companies, health maintenance organizations, holding companies, and other related entities, an individual who is required to provide biographical information and who:

(A) is the applicant, if the applicant is an individual, or an officer, director, or controlling shareholder of the applicant seeking an authorization as an insurer as described in Insurance Code Chapter 801 or an authorization under Insurance Code Chapters 822, 823, 841, 843, 844, 846, 2551, or 2552;

(B) becomes an officer, director, or controlling shareholder of an entity authorized as an insurer as described in Insurance Code Chapter 801 or an entity authorized under Insurance Code Chapters 822, 823, 841, 843, 844, 846, 2551, or 2552; or

(C) is the applicant if such person is an individual, or the chairman of the board, chief executive officer, president, chief financial officer, treasurer, and controller of the applicant if the applicant is not an individual, for each applicant under §7.209 of this title (relating to Form A);

(5) each person who is required to file biographical information under §5.6403 of this title (relating to Application for Initial Certificate of Approval); and

(6) each individual whose biographical information is required to be filed with the department under the Insurance Code §7001.005(a)(2) (relating to Application for Registration and Renewal of Registration) and each individual for whom the commissioner may conduct a criminal background check under the Insurance Code §7001.008 (relating to Criminal Background Check).

(c) As used in §1.502 of this subchapter, the terms "license holder," "licensee," and "authorization holder" shall include all persons listed in subsection (b) of this section.

(d) As used in §1.502 of this subchapter, the terms "license" and "authorization" shall include all types of licenses, registrations, certificates, permits, or authorizations listed in subsection (b) of this section.

History

Source Note: The provisions of this §1.501 adopted to be effective May 2, 2004, 29 TexReg 4185; amended to be effective October 23, 2006, 31 TexReg 8676; amended to be effective December 21, 2008, 33 TexReg 10183; amended to be effective September 8, 2010, 35 TexReg 8107.

28 Tex. Admin. Code § 1.502 Licensing Persons with Criminal Backgrounds

(a) The special nature of the relationship between licensees, insurance companies, other insurance-related entities, discount health care programs, and the public with respect to insurance and related businesses regulated by the department requires that the public trust and rely on licensees because of the complex and varied nature of insurance, insurance-related products, and discount health care programs.

(b) Fire protection systems and equipment are often technically sophisticated beyond the knowledge or understanding of the average consumer. During times of imminent personal danger, the public relies on licensees to have correctly designed, installed, and serviced fire protection systems and equipment to operate the first time and each time they are needed. Additionally, licensees are often permitted to service these systems unescorted in nursing homes, schools, day care centers, and commercial facilities where children and those unable to protect themselves are present and valuables are located. Finally, the manufacturing, storing, selling, and discharge of fireworks requires numerous special precautions to maintain a safe environment for the licensees and the public. Each of these factors requires the public to trust and rely on these individuals.

(c) The department considers it very important that license and authorization holders and applicants, including those regulated under the State Fire Marshal's Office, the officers, directors, members, managers, partners, and any other persons who have the right to control a license or authorization holder or applicant, and the members of boards of directors of insurance companies, be honest, trustworthy, and reliable.

(d) After notice and opportunity for hearing and, as applicable, consideration of the factors addressed in subsection (e) of this section, in accordance with Texas Occupations Code §53.021 the department may refuse to issue an original license or authorization and may revoke, suspend, or refuse to renew a license or authorization if the department determines that the applicant or license or authorization holder, or any partner, officer, director, member, manager, or any other person who has the right to control the applicant or license or authorization holder, has been convicted of or placed on deferred adjudication for:

(1) an offense that directly relates to the duties and responsibilities of the licensed occupation;

(2) an offense listed in Code of Criminal Procedure Article 42A.054; or

(3) a sexually violent offense as defined by Code of Criminal Procedure Article 62.001.

(e) The department will consider the factors specified in Occupations Code §53.022 and §53.023 in determining whether to issue an original license or authorization or revoke, suspend, or refuse to renew a license or authorization under subsection (d) of this section.

(f) In accordance with the requirements of Texas Occupations Code §53.025, the department has developed guidelines relating to the matters the department will consider in determining whether to grant, deny, suspend, or revoke any license or authorization under its jurisdiction. Those crimes that the department considers to be of such serious nature that they are directly related to the duties and responsibilities of the licensed occupation or are of prime importance in determining fitness for licensure or authorization include:

(1) any offense for which fraud, dishonesty, or deceit is an essential element;

(2) any criminal violation of the Texas Insurance Code or an offense pertaining to the financial industry or business of insurance under any state or federal law or any law of a foreign country or the Uniform Code of Military Justice, including:

(A) a fraud offense, as described by Penal Code Chapter 32;

(B) money laundering, as described by Penal Code Chapter 34;

(D) health care fraud, as described by Penal Code Chapter 35A; or

(E) engaging in the unauthorized business of insurance, as described by Insurance Code §101.106;

(3) any felony involving moral turpitude or breach of fiduciary duty;

(4) any offense with the essential elements of:

(A) a criminal solicitation offense, as described by Penal Code §15.03 or §15.031;

(B) a criminal homicide offense, as described by Penal Code Chapter 19;

(D) an offense related to the smuggling of persons or the trafficking of persons, as described by Penal Code Chapter 20 or 20A;

(E) a sexual offense, as described by Penal Code Chapter 21;

(F) an assaultive offense, as described by Penal Code Chapter 22;

(G) an offense against the family, as described by Penal Code Chapter 25;

(H) an arson or property damage offense, as described by Penal Code Chapter 28;

(I) a robbery offense, as described by Penal Code Chapter 29;

(J) a burglary offense, as described by Penal Code Chapter 30;

(K) a theft offense, as described by Penal Code Chapter 31;

(L) online solicitation of a minor, as described by Penal Code §33.021;

(M) a bribery or corrupt influence offense, as described by Penal Code Chapter 36;

(N) a perjury or falsification offense, as described by Penal Code Chapter 37;

(O) a stalking offense, as described by Penal Code §42.072;

(P) an offense against public order and decency, as described by Penal Code Chapter 43;

(Q) a weapons offense, as described by Penal Code Chapter 46;

(R) an intoxication assault or manslaughter offense, as described by Penal Code §49.07 or §49.08;

(S) an organized crime offense, as described by Penal Code Chapter 71; or

(T) an offense relating to the manufacture, delivery, or possession with intent to manufacture or deliver, a controlled substance, a simulated controlled substance, a dangerous drug, or a volatile chemical;

(5) any offense described by Code of Criminal Procedure Article 42A.054;

(6) a sexually violent offense as described by Code of Criminal Procedure Article 62.001;

(7) any criminal attempt or conspiracy to commit any offense listed under this section, as described by Penal Code §15.01 or §15.02; or

(8) any offense under the laws of another state, federal law, the laws of a foreign country, or the Uniform Code of Military Justice if the offense contains elements that are substantially similar to the elements of an offense listed under this section.

(g) The department will consider any specific criteria the legislature has set out for any license or authorization in considering whether to grant, deny, suspend, or revoke such license or authorization.

(h) The department will revoke a license or authorization on the holder's imprisonment following a felony conviction, felony community supervision revocation, revocation of parole, or revocation of mandatory supervision.

(i) No person currently serving in prison for conviction of a felony under any state or federal law is eligible to obtain a license or authorization issued by the department.

History

Source Note: The provisions of this §1.502 adopted to be effective May 2, 2004, 29 TexReg 4185; amended to be effective September 8, 2010, 35 TexReg 8107; amended to be effective September 26, 2023, 48 TexReg 5550.

28 Tex. Admin. Code § 1.503 Application of Fingerprint Requirement

The fingerprint requirement in §1.504(a) of this subchapter (relating to Fingerprint Requirement) applies to the following individuals:

(1) applicants for any license, registration, certification, authorization or permit, including temporary or training licenses or certificates, as agents, adjusters, public insurance adjusters, counselors, risk managers, reinsurance intermediaries, title agents, title escrow officers, viatical and life settlement registrants, workers' compensation health care networks, management contractors, and administrators, under the following Insurance Code provisions:

(A) Chapter 4201;

(B) Chapter 4202;

(D) Chapter 1111;

(E) Chapter 1305;

(F) Chapter 2651, Subchapter A;

(G) Chapter 2652;

(H) Chapter 4001;

(I) Chapter 4051;

(J) Chapter 4052;

(K) Chapter 4053;

(L) Chapter 4054;

(M) Chapter 4056;

(N) Chapter 4101;

(O) Chapter 4102;

(P) Chapter 4151;

(Q) Chapter 4152; or

(R) Chapter 4153.

(2) with the exception of those individuals associated with licenses issued to corporations and limited liability companies under Insurance Code Chapter 2651 Subchapter A, individuals who are required to provide biographical information and who:

(A) are or have similar responsibilities to principals, partners, officers, directors, or controlling shareholders, including limited liability company members and managers, of entities that are applicants for a license, certification, permit, registration, or authorization under provisions specified in paragraph (1) of this section; or

(B) become or will have similar responsibilities to principals, partners, officers, directors, or controlling shareholders, including limited liability company members and managers, of entities that are holders of a license, authorization, permit, certification or registration under provisions specified in paragraph (1) of this section.

(3) with regard to insurance companies, health maintenance organizations, holding companies, and other related entities, an individual who is required to provide biographical information and who:

(4) each person who is required to file biographical information under §5.6403 of this title (relating to Application for Initial Certificate of Approval); or

(5) each individual whose biographical information is required to be filed with the department under the Insurance Code §7001.005(a)(2) (relating to Application for Registration and Renewal of Registration) and each individual for whom the commissioner may conduct a criminal background check under the Insurance Code §7001.008 (relating to Criminal Background Check).

History

Source Note: The provisions of this §1.503 adopted to be effective October 23, 2006, 31 TexReg 8676; amended to be effective December 21, 2008, 33 TexReg 10183; amended to be effective September 8, 2010, 35 TexReg 8107.

28 Tex. Admin. Code § 1.504 Fingerprint Requirement

(a) In the manner described in §1.509 of this title (relating to Fingerprint Format and Complete Application), each individual listed in §1.503 of this title (relating to Application of Fingerprint Requirement) must, at or near the same time that they submit their biographical information or application for licensure, registration, authorization, certification, or permit, also submit:

(1) a complete set of the individual's fingerprints;

(2) full payment for all processing fees charged by the Texas Department of Public Safety and the Federal Bureau of Investigation; and

(3) all additional identifying information required by the Texas Department of Public Safety and the Federal Bureau of Investigation for processing fingerprints.

(b) An individual listed in §1.503 of this subchapter is exempt from the requirement set forth in subsection (a) of this section if the individual satisfies the requirements of this subsection.

(1) Except as provided in subsection (d) of this section, the individual is submitting an application or biographical information, and:

(A) previously provided the department a complete, legible fingerprint card or electronic set of fingerprints as part of an earlier submission which was granted or approved; and

(B) maintains that prior license, or licensed entity association, in good standing on the date of the subsequent application.

(2) The individual is licensed, or associated with an entity licensee, under Insurance Code Chapter 981, Subchapter E, concerning Surplus Lines Agents, or Title 13, concerning Regulation of Professionals, and is:

(A) renewing an unexpired license or license that has been expired for not more than 90 days; or

(B) applying for a license that has been expired for more than 90 days but not more than one year.

(3) The individual is applying for an original emergency license under Insurance Code Chapter 4051, concerning Property and Casualty Agents; Chapter 4053, concerning Managing General Agents; or Chapter 4101, concerning Insurance Adjusters. Emergency licensees who later qualify for a permanent license by examination must submit a complete set of fingerprints and payment of all fingerprint processing fees before issuance of the permanent license.

(4) The individual, or the entity with which the individual is associated, is renewing an unexpired license, certification, registration, or authorization.

(5) The individual is licensed under Insurance Code Chapter 2651, Subchapter A, concerning Title Insurance Agent's License, or Chapter 2652, concerning Escrow Officers, and is renewing an unexpired license or license that has been expired for not more than 90 days.

(6) The individual is submitting an application under Insurance Code Chapter 2651, Subchapter A, or Chapter 2652 and has previously provided the department a complete, legible fingerprint card or electronic set of fingerprints as part of an earlier Insurance Code Chapter 2651, Subchapter A, or Chapter 2652 submission that was granted or approved; and either:

(A) maintains that prior license in good standing on the date of the current application; or

(B) held a prior Insurance Code Chapter 2651 , Subchapter A, or Chapter 2652 license that has not been canceled for more than 60 days and maintained that license in good standing at the time of cancellation.

(c) The commissioner may waive the requirement in subsection (a) of this section if the commissioner determines that the individual is unable to provide fingerprints due to permanent physical injury or illness. The individual seeking a waiver under this subsection must submit evidence of such a condition to the satisfaction of the commissioner.

(d) The exemption set forth in subsection (b)(1) of this section is subject to the department's ability to maintain an individual's previously submitted set of fingerprints, and the department may require a complete set of fingerprints and payment of all fingerprint processing fees from an individual notwithstanding the exemption.

(e) This subchapter does not limit the department's statutory authority to require the submission of fingerprints or obtain criminal history information.

(f) For a natural person, agency, or company to be eligible for a license, registration, certification, or association with a regulated agency or company, the natural person, agency, or company must start the application or association process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/agent/fingerprinting-process.html. The requesting agency, company, or natural person must submit information necessary to complete the fingerprint service code request, including:

(1) the agency's name, agency representative's name, agency's email address, and license type the agency is applying for, if applying for association with an agency;

(2) the company's name, company representative's name, and company's email address, if applying for association with a company; and

(3) the natural person's name, state of residence, email address, and license type the natural person is applying for, if applying for a license as a natural person.

History

Source Note: The provisions of this §1.504 adopted to be effective October 23, 2006, 31 TexReg 8676; amended to be effective April 16, 2023, 48 TexReg 1834.

28 Tex. Admin. Code § 1.505 Nonresident Agents and Adjusters

(a) As authorized under Insurance Code §§4056.055 and 4101.004, the commissioner may waive the requirement in §1.504 of this subchapter (relating to Fingerprint Requirement) to the extent necessary to comply with federal law and promote reciprocal licensing between the states for nonresident individuals holding an agent or adjuster license in their state of residence.

(b) The requirement in §1.504 of this subchapter is in addition to and does not alter the criminal history reporting requirement set forth in Insurance Code §4056.051 for nonresident individuals who do not hold a license in their state of residence.

History

Source Note: The provisions of this §1.505 adopted to be effective October 23, 2006, 31 TexReg 8676.

28 Tex. Admin. Code § 1.506 Insurance Companies and Related Entities

The commissioner may waive the requirement in §1.504 of this subchapter (relating to Fingerprint Requirement) for individuals listed under §1.503(3) of this subchapter (relating to Application of Fingerprint Requirement) if the individual, or the entity with which the individual is associated, is not domiciled in Texas.

History

Source Note: The provisions of this §1.506 adopted to be effective October 23, 2006, 31 TexReg 8676.

28 Tex. Admin. Code § 1.507 Other Licensees and Registrants

The commissioner may waive the requirement in §1.504 of this subchapter (relating to Fingerprint Requirement) for individuals listed under §1.503(1), (2), (4), and (5) of this subchapter (relating to Application of Fingerprint Requirement) if the individual, or the entity with which the individual is associated, is not domiciled in Texas.

History

Source Note: The provisions of this §1.507 adopted to be effective October 23, 2006, 31 TexReg 8676; amended to be effective September 8, 2010, 35 TexReg 8107.

28 Tex. Admin. Code § 1.508 Use and Confidentiality of Fingerprints

(a) The department will submit all fingerprints received under this subchapter to the Texas Department of Public Safety and the Federal Bureau of Investigation to obtain criminal history information on the individual for the purpose of determining the individual's fitness for licensure, authorization, certification, permit, or registration, or control of an entity holding or seeking a license, authorization, certificate, permit, or registration.

(b) The department will use and maintain all criminal history information obtained under this subchapter in accordance with state and federal laws, including:

(1) Texas Government Code §411.106, concerning Access to Criminal History Record Information: Texas Department of Insurance;

(2) Texas Government Code §411.084, concerning Use of Criminal History Record Information;

(3) United States Public Law 92-544; and

(4) Code of Federal Regulations 28 CFR 50.12.

History

Source Note: The provisions of this §1.508 adopted to be effective October 23, 2006, 31 TexReg 8676; amended to be effective April 16, 2023, 48 TexReg 1834.

28 Tex. Admin. Code § 1.509 Fingerprint Format and Complete Application

(a) Each individual described in §1.503 of this title (relating to Application of Fingerprint Requirement) and who is required to submit fingerprints under §1.504 of this title (relating to Fingerprint Requirement) must have a complete set of their fingerprints captured by:

(1) an electronic fingerprint vendor authorized by the Texas Department of Public Safety; or

(2) a criminal law enforcement agency, including a sheriff's office or police department.

(b) Individuals having their fingerprints captured by a vendor authorized by the Texas Department of Public Safety must pay, in a manner acceptable to the vendor, all fingerprint capture and processing fees directly to the vendor at the time the fingerprints are captured or at such time as is acceptable to the vendor.

(1) coordinate with the vendor authorized by the Texas Department of Public Safety to obtain a fingerprint card, including paying any upfront processing fees;

(2) pay that agency any associated charges that may apply to the capture of their fingerprints in a manner acceptable to that agency; and

(3) mail the completed card to the vendor authorized by the Texas Department of Public Safety.

(d) All fingerprint impressions must be legible and suitable for use by the Texas Department of Public Safety and Federal Bureau of Investigation.

(e) Individuals required to submit fingerprints must submit them within the time frame indicated on the specific application or biographical submission form. Individuals may request an extension by contacting the division of the department that will process the application or biographical submission.

(f) The application or submission of a person required to submit fingerprints will not be complete until the department receives the criminal history information.

History

Source Note: The provisions of this §1.509 adopted to be effective October 23, 2006, 31 TexReg 8676; amended to be effective April 16, 2023, 48 TexReg 1834.

Subchapter E NOTICE OF TOLL-FREE TELEPHONE NUMBERS AND PROCEDURES FOR OBTAINING INFORMATION AND FILING COMPLAINTS

28 Tex. Admin. Code § 1.601 Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures

(a) Purpose and applicability.

(1) The purpose of this section is to provide the means for insurers and health maintenance organizations (HMOs) to comply with the notice requirements of Insurance Code §521.103, concerning Information Included in Evidence of Coverage or Policy; §521.005, concerning Notice to Accompany Policy; and §521.056, concerning Information Bulletin to Accompany Policy. Compliance with this section is deemed compliance with these notice requirements.

(2) The notice must be provided at the time of delivery with all policies, bonds, annuity contracts, certificates, or evidences of coverage that are delivered, issued for delivery, or renewed in Texas by insurers or HMOs. When insurers add a certificate holder, annuitant, or enrollee to a group policy or group plan, insurers must also provide the notice when the certificate, annuity contract, or evidence of coverage is delivered.

(A) The notice must appear on a full, separate page with no text other than that provided in this section. The notice must be prominently placed in any package of documents it is delivered with, and it must be the first, second, or third page of the set of documents.

(B) The form of the notice must be consistent with Figure: 28 TAC §1.601(a)(2)(B) and the requirements of subsection (b) of this section. The form of notice is not required to be filed with the department.

Attached Graphic

(C) The form of the notice for workers' compensation must be consistent with Figure: 28 TAC §1.601(a)(2)(C) and the requirements of subsection (b) of this section. The form of notice is not required to be filed with the department.

Attached Graphic

(b) Notice requirements. The text may be single spaced, but it must include at least one blank line between each paragraph. The Spanish portion of the notice is required for personal automobile, homeowners, life, accident, and health policies, certificates, and evidences of coverage. The notice may include the letterhead of the insurer or HMO and any automated form identification numbers.

(1) The notice must include a title and telephone number for the insurer or HMO. At its option, the insurer or HMO may provide the name and telephone number of an agent, third-party administrator, managing general agent, or employee benefits coordinator. The telephone number must be in bold type and be preceded and followed by one blank line. The insurer or HMO must provide a toll-free telephone number, unless one of the exemptions in subparagraphs (A) - (C) of this paragraph applies. For purposes of this section, a toll-free telephone number is one that any covered person can use to get information or make a complaint without incurring long-distance calling expenses. An insurer or HMO is exempt from providing a toll-free number:

(A) when the insurer's or HMO's gross initial premium receipts collected in Texas are less than $2 million a year;

(B) with respect to fidelity, surety, or guaranty bonds; or

(2) The notice must include a mailing address and email address for the insurer or HMO. The notice may include a company's URL address.

(3) The notice must be in a type size no smaller than 10 point.

(c) Exceptions to maintenance of toll-free number. Any exception claimed under subsection (b)(1)(A) of this section must be based on gross initial premium receipts collected in Texas during the previous calendar year. This information and any other data that the company relied on to determine if it was entitled to an exception is subject to examination by the department. Failure by any insurer or HMO to maintain the information required in this paragraph, or failure to provide information to the department on request, constitutes grounds for enforcement action that may result in the cancellation, revocation, or suspension of the insurer's or HMO's certificate of authority. Any insurer or HMO claiming an exception must retain and provide to the department on request:

(1) the statutory basis for the exception; and

(2) the amount of gross initial premium receipts collected in Texas for the calendar year immediately preceding the year for which an exception is claimed. The gross initial premium receipts collected may be documented either by:

(A) the annual statement submitted by the insurer or HMO; or

(B) records maintained for each new policy written during a calendar year that include the policy number, the effective date of the policy, and the amount of initial premium received, including any membership fees, assessments, dues, and any other considerations for that insurance.

(d) Providing notice. Insurers and HMOs will not need to refile previously approved policies, bonds, annuity contracts, certificates, or evidences of coverage, but they must provide the notice in the manner required by this section.

(e) Implementation date. Insurers and HMOs must begin using the notice form described in subsection (a)(2) of this section no later than July 1, 2023. Insurers and HMOs may continue using the previous notice form until that time.

History

Source Note: The provisions of this §1.601 adopted to be effective August 24, 1984, 9 TexReg 4340; amended to be effective June 12, 1990, 15 TexReg 3015; amended to be effective May 1, 1992, 17 TexReg 2776; amended to be effective October 28, 1992, 17 TexReg 7230; amended to be effective January 22, 2007, 32 TexReg 241; amended to be effective June 1, 2015, 40 TexReg 3174; amended to be effective November 4, 2019, 44 TexReg 6541; amended to be effective July 1, 2021, 45 TexReg 9225; amended to be effective June 7, 2023, 48 TexReg 2854.

28 Tex. Admin. Code § 1.602 Notice of Website

(a) Purpose and applicability.

(1) The purpose of this section is to establish the form and content of the notice required under Insurance Code §32.104(b), concerning Duties of Insurer.

(2) This section applies to insurers that comprise the top-25 insurance groups in the national market and that issue residential property insurance or personal automobile insurance policies in this state, including a Lloyd's plan, a reciprocal or interinsurance exchange, a county mutual insurance company, a farm mutual insurance company, the Texas Windstorm Insurance Association, the FAIR Plan Association, and the Texas Automobile Insurance Plan Association.

(3) This section applies to all residential property insurance and personal automobile insurance policies that are delivered, issued for delivery, or renewed in this state on or after January 1, 2008.

(b) Notice requirements. Insurers must comply with either subsection (b)(1) or (b)(2) of this section or may opt to comply with both.

(1) Notwithstanding the requirements in §1.601(a)(2) of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures), the insurer must include the text in subparagraphs (A) and (B) of this paragraph in the notice required under §1.601(a)(2) of this title with each policy specified. The text must be in a type size no smaller than 10 point. The heading "To compare policies and prices" must be in bold type. The website address "HelpInsure.com" must be in bold type and must be preceded by one blank line.

(A) "To compare policies and prices: Visit HelpInsure.com to compare prices and coverages on home and auto insurance policies. The website is a service of the Texas Department of Insurance and the Office of Public Insurance Counsel" in the English portion.

(B) "Para comparar pólizas y precios: Visite HelpInsure.com para comparar precios y coberturas en pólizas de seguro para el hogar y automóvil. El sitio web es un servicio del Departamento de Seguros de Texas y de la Oficina del Asesor Público de Seguros (Office of Public Insurance Counsel, por su nombre en inglés)" in the Spanish portion.

(C) Insurers must begin using the notice form described in this paragraph no later than July 1, 2023. Insurers may continue using the previous notice form until that time.

Attached Graphic

(2) The insurer must provide the following notice in a conspicuous manner with each policy. The notice must be printed in type size that is at least as large as the type used for the main body of the policy, and it must be preceded and followed by at least one blank line. "Insurance Website Notice" and "Aviso del Sitio Web de Seguros" must be in all capital letters and bold type and "HelpInsure.com" must be in bold type. Insurers must begin using the notice described in this paragraph no later than May 1, 2020. Insurers may continue using the previous notice until that time.

Attached Graphic

History

Source Note: The provisions of this §1.602 adopted to be effective January 8, 2008, 33 TexReg 186; amended to be effective June 1, 2015, 40 TexReg 3174; amended to be effective November 4, 2019, 44 TexReg 6541; amended to be effective June 7, 2023, 48 TexReg 2854.

28 Tex. Admin. Code § 1.603 Complaint Information Available through the Texas Department of Insurance's Toll-Free Telephone Number

(a) The Texas Department of Insurance (TDI) will provide to the public through its toll-free telephone number the information specified by the Insurance Code §521.052, including information collected or maintained by TDI relating to the number and disposition of complaints received against an insurer that are justified, verified as accurate, and documented as valid, expressed as a percentage of the total number of insurance policies written by the insurer and in force on December 31 of the preceding year.

(b) TDI considers a complaint justified if the complaint is a confirmed complaint.

(1) an insurer committed any violation of:

(A) an applicable state insurance law or regulation;

(B) a federal requirement TDI has authority to enforce; or

(2) the complaint and insurer's response, considered together, suggest that the insurer was in error or that the complainant had a valid reason for the complaint.

(d) To determine the percentage described in subsection (a) of this section and required by Insurance Code §521.052, policy count information must be:

(1) prepared in accordance with the Policy Count Exhibit Form and Instructions, which are adopted by reference; and

(2) submitted only to TDI electronically as instructed on the Policy Count Exhibit Form and Instructions as part of the insurer's annual statement under §7.68 of this title.

History

Source Note: The provisions of this §1.603 adopted to be effective October 22, 2012, 37 TexReg 8320; amended to be effective December 22, 2016, 41 TexReg 9937.

Subchapter F SUMMARY PROCEDURES FOR ROUTINE MATTERS

28 Tex. Admin. Code § 1.701 Purpose and Scope

The intent of this subchapter is to formalize agency decision-making channels and to facilitate agency review of routine matters, pursuant to the Insurance Code, Article 1.33. The board has determined the activities designated in §1.702 of this title (relating to Designated Activities) to be routine, voluminous, repetitive, noncontroversial, and of limited interest to persons other than those immediately involved in or affected by the proposed agency decision.

History

Source Note: The provisions of this §1.701 adopted to be effective February 15, 1985, 10 TexReg 399; amended to be effective August 21, 1985, 10 TexReg 3016.

28 Tex. Admin. Code § 1.702 Designated Activities

The following statutorily prescribed activities are designated for summary procedure disposition:

(1) Filings of forms, rates, and related filings pursuant to Insurance Code Articles 3.42, 3.50-6A, 3.70-12, 3.53, 3.74, 5.13-1; Chapters 23 and 26; and §3.3325(f) and (g) of this title (relating to Medicare Select Policies, Certificates, and Plans of Operation), but not withdrawals of approval pursuant to Insurance Code Articles 3.42, 3.53, 5.13-1, and Chapter 23.

(2) Filings of forms, rates, and related filings by health maintenance organizations pursuant to §11.301(4)(A), (B), and (L), and (5)(C), (G), (K), (M), and (N) of this title (relating to Filing Requirements), but not withdrawals of approval pursuant to Insurance Code Chapter 20A.

(3) Filings of forms, rates, and related filings by health maintenance organizations pursuant to §11.301 of this title, except those listed in paragraph (2) of this section, but not withdrawals of approval pursuant to Insurance Code Chapter 20A.

(4) Filings of application or renewal for the following:

(A) agents and adjusters licenses pursuant to Insurance Code Articles 1.14-2, 3.75, 21.07, 21.07-1, 21.07-2, 21.07-3, 21.07-4, 21.09, 21.11, 21.14, and 23.23, insurance premium finance licenses pursuant to Insurance Code Article 24.03, and third party administrator certificates of authority pursuant to Insurance Code Article 21.07-6;

(B) viatical and life settlement certificates of registration pursuant to Insurance Code Article 3.50-6A;

(C) utilization review agent certificates pursuant to Insurance Code Article 21.58A and §§19.1704(g) and 19.2004 of this title (relating to Certification of Utilization Review Agents), and independent review organization certificates pursuant to Insurance Code Article 21.58C and §12.109 of this title (relating to Appeal of Denial of Application or Renewal); and

(D) licenses pursuant to Insurance Code Articles 9.35 - 9.38, 9.41 - 9.45, 9.56, and 9.58.

(5) Applications to change rates, forms, or deductibles for motor vehicle insurance on an individual risk basis pursuant to Rule 4 in the Texas Automobile Rules and Rating Manual adopted under Insurance Code Article 5.101.

(6) Applications to charge a rate or premium greater than the standard rate or premium approved by the commissioner for the types of insurance specified in Insurance Code Article 5.13, pursuant to Insurance Code Article 5.15(c).

(7) Filings of endorsements for negotiated deductible plans for workers' compensation insurance policies made pursuant to Insurance Code Article 5.55C.

History

Source Note: The provisions of this §1.702 adopted to be effective February 15, 1985, 10 TexReg 399; amended to be effective August 21, 1985, 10 TexReg 3016; amended to be effective June 30, 1992, 17 TexReg 4539; amended to be effective August 28, 1993, 18 TexReg 4641; amended to be effective June 1, 2003, 28 TexReg 3952.

28 Tex. Admin. Code § 1.703 Delegation

The Commissioner of Insurance hereby delegates to the following associate or deputy commissioners administration over the activities designated in paragraphs (1) - (7) of this section. In the event the names of certain divisions, titles, or positions within the department are changed due to consolidation or expansion of the department's activities or divisions, the delegation of the administration over the following activities will follow the appropriate associate or deputy commissioner assuming responsibility for the activity.

(1) Deputy commissioner for life/health insurance is responsible for activities listed in §1.702(1) and (4)(B) of this subchapter (relating to Designated Activities).

(2) Deputy commissioner for health maintenance organization is responsible for activities listed in §1.702(2) and (4)(C) of this subchapter.

(3) Senior associate commissioner for financial is responsible for activities listed in §1.702(3) of this subchapter.

(4) Deputy commissioner for licensing is responsible for activities listed in §1.702(4)(A) of this subchapter.

(5) Deputy commissioner for title insurance is responsible for activities listed in §1.702(4)(D) of this subchapter.

(6) Associate commissioner for property and casualty insurance is responsible for activities listed in §1.702(5) - (6) of this subchapter.

(7) Deputy commissioner of workers' compensation insurance is responsible for activities listed in §1.702(7) of this subchapter.

History

Source Note: The provisions of this §1.703 adopted to be effective February 15, 1985, 10 TexReg 399; amended to be effective August 21, 1985, 10 TexReg 3016; amended to be effective July 6, 1992, 17 TexReg 4539; amended to be effective August 28, 1993, 18 TexReg 4641; amended to be effective June 1, 2003, 28 TexReg 3952.

28 Tex. Admin. Code § 1.704 Summary Procedure; Notice

(a) Actual notice for proposed negative action. In the case of proposed negative action with regard to any delegated activity designated under §1.702 of this subchapter (relating to Designated Activities), parties directly involved shall be given actual notice at least five days in advance of the action proposed. Actual notice means written or electronic notice. If the actual notice is a written notice, it will be sent by mail addressed to the last known address of the person, or, if the person is represented by an attorney, to the person's attorney of record, as submitted with the filing, application, form, or submission that is the subject of the proposed negative action. If the actual notice is electronic, it will be sent electronically to the email address or to the electronic destination, as applicable, from which the person submitted the filing, application, form, or submission which is the subject of the proposed negative action.

(b) Notice of decision. For §1.702(1) - (7) of this subchapter, the appropriate associate or deputy commissioner shall notify the person by mail or electronic transmission of a positive or negative decision and the date of the decision, shall record the decision in the department's electronic files, and shall retain a record of the notification with the filing, application, form, or submission or cause the appropriate license, certificate, or registration to be mailed to the person.

History

Source Note: The provisions of this §1.704 adopted to be effective February 15, 1985, 10 TexReg 399; amended to be effective August 21, 1985, 10 TexReg 399; amended to be effective August 21, 1985, 10 TexReg 3016; amended to be effective March 4, 1988, 10 TexReg 3016; amended to be effective July 6, 1992, 17 TexReg 4539; amended to be effective June 1, 2003, 28 TexReg 3952.

28 Tex. Admin. Code § 1.705 Review

Any person affected by any action taken by an associate or deputy commissioner under this subchapter may petition the Commissioner for a hearing to review the matter. The petition must contain an identification of the matter complained of and a petitioner's statement, including a rebuttal of the associate or deputy commissioner's action with specific particularity to inform the Commissioner and any interested persons of the petitioner's reasons and arguments serving as the basis of the petition. The petition must be filed with the Chief Clerk, by mail to MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030; or by email to ChiefClerk@tdi.texas.gov. The review will be conducted under the Texas Administrative Procedure Act. Any further relief sought is governed by Insurance Code §§36.201 - 36.205.

History

Source Note: The provisions of this §1.705 adopted to be effective February 15, 1985, 10 TexReg 399; amended to be effective July 6, 1992, 17 TexReg 4539; amended to be effective June 1, 2003, 28 TexReg 3952; amended to be effective June 7, 2023, 48 TexReg 2854.

Subchapter G NOTICE AND PROCESSING PERIODS FOR PERMIT APPLICATIONS

28 Tex. Admin. Code § 1.801 Purpose and Scope

In order to minimize delays which hamper small businesses and other enterprises, this subchapter establishes time periods within which the State Board of Insurance shall review and process permit applications efficiently and provides for an appeal process should the agency violate these periods.

History

Source Note: The provisions of this §1.801 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.802 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Agency--The State Board of Insurance, consisting of the board, the commissioner, all divisions and departments, including the Fire Marshal's Office, and employees thereof.

(2) Applicant--Any individual, proprietorship, partnership, association, cooperative, corporation, nonprofit organization, or any other organization that has made a permit application with the State Board of Insurance.

(3) Board--The three-member State Board of Insurance.

(4) Commissioner--The commissioner of insurance.

(5) Filing fee--The fee paid for filing a permit application with the agency.

(6) Fire marshal--The state fire marshal.

(7) HMO--Health maintenance organization.

(8) Permit--Any license, certificate, registration, permit, or other form of authorization issued by the State Board of Insurance that must be obtained by a person to engage in a particular business.

History

Source Note: The provisions of this §1.802 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.803 Computation of Time

In computing any period of time prescribed or allowed by this subchapter, the date of the act, event, or default after which the designated period of time begins to run is not to be included. The last day of the period so computed is to be included, unless it is a Saturday, a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not a Saturday, a Sunday, or a legal holiday.

History

Source Note: The provisions of this §1.803 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.804 Manner of Notice

Notice. Written notice that an application is complete or deficient will be delivered to the applicant by such means as will reasonably provide actual notice, such as through a designated email address provided by the applicant under §1.1302 of this title (relating to Electronic Communications from the Texas Department of Insurance).

History

Source Note: The provisions of this §1.804 adopted to be effective January 20, 1989, 14 TexReg 114; amended to be effective June 7, 2023, 48 TexReg 2854.

28 Tex. Admin. Code § 1.805 Written Notice Not Required

Written notice that an application is complete shall not be required under this subchapter if an application is approved and a permit issued during the notice period.

History

Source Note: The provisions of this §1.805 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.806 Agent's License

(a) Notice to applicant. Within 40 days from receipt of an application for an agent's license, the agency shall determine an application to be complete or deficient for purposes of submission for review and shall issue written notice to the applicant regarding the status of the application.

(1) Complete application.

(A) The written notice for a complete application shall state that the application is complete and accepted for filing for review as of the date of its receipt and shall include the information contained in subsections (b) and (c)(2) of this section, unless such information has previously been furnished to the applicant.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the content and form prescribed for submission for review by the agency.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete, set out the specific additional information that is required for completion, and include the information contained in subsection (c) (1) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application.

(b) Processing of application.

(1) No examination required. Within 40 days after receipt of a complete application for which no examination is required, the agency shall grant the license or give notice of denial to the applicant.

(2) Examination required.

(A) Within 40 days after the filing of an applicant's passing examination score, the agency shall grant the license or give notice of denial to the applicant, except as provided in paragraph (3) of this subsection.

(B) An examination score is filed with the agency at the time the examination is completed by the applicant or is received by the agency from an independent grading service, whichever is later.

(3) HMO agent's license. Pursuant to §11.404 of this title (relating to Application for License Prior to Certificate of Authority), an applicant for an HMO agent's license shall not be issued a license until after a certificate of authority has been granted to the applicant's appointing HMO.

(1) An application which is not complete within 180 days of the date of its receipt may be disapproved.

(2) An application for which an examination is required may be disapproved if a passing examination score is not on file with the agency within 180 days from receipt of the application.

History

Source Note: The provisions of this §1.806 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.807 Company License

(a) Notice to applicant. Within 120 days from receipt of an application for a company license, the agency shall determine an application to be complete or deficient and issue written notice to the applicant regarding the status of the application. For the purposes of this section, license means any certificate of authority granted by the agency pursuant to authority under the Insurance Code, Article 1.14.

(1) Complete application.

(A) The written notice for a complete application shall state that the application is complete and accepted for filing and shall include the information contained in subsection (b) of this section unless such information has previously been furnished to the applicant.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the content and form prescribed by the agency.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete, set out the specific additional information that is required for completion, and include the information contained in subsection (c) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application.

(b) Processing of application. Within 180 days after receipt of a complete application, the agency shall grant or deny the company license.

(c) Application disapproved. An application for a company license which is not complete within one year of the date of its receipt may be disapproved.

History

Source Note: The provisions of this §1.807 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.808 Application for Foreign Admission

(a) Notice to applicant. Within 60 days from receipt of an application for admission to do business in the State of Texas, the agency shall determine an application to be complete or deficient and shall immediately issue written notice to the applicant regarding the status of the application.

(1) Complete application.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the content and form prescribed by the agency.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete, set out the specific additional information that is required for completion, and include the information contained in subsection (c) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application.

(b) Processing of application. Within 180 days after receipt of a complete application, the agency shall approve or deny the application for admission.

(c) Application disapproved. An application for admission which is not complete within one year of the date of its receipt may be disapproved.

History

Source Note: The provisions of this §1.808 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.809 HMO Certificate of Authority

(a) Notice to applicant. Within 180 days from receipt of an application for an HMO certificate of authority, the commissioner shall determine an application to be complete or deficient and shall immediately issue written notice to the applicant regarding the status of the application.

(1) Complete application.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the Texas Health Maintenance Organization Act, §4.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete and shall set out what specific additional information is required for completion. Such notice shall further state that the process prescribed in subsection (b) of this section shall not begin until written notice for a complete application is issued and shall also state that an application which remains deficient may be disapproved under subsection (c) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application as needed within the period established in this subsection.

(b) Processing of application.

(1) Upon determination that an application is complete, the agency shall send a copy of the application to the State Board of Health for certification under the Texas Health Maintenance Organization Act, §5(a)(3).

(2) The Texas Health Maintenance Organization Act, §5(a)(3), requires that, within 45 days of receipt of the application, the State Board of Health shall certify to the commissioner of insurance that the proposed health maintenance organization meets or does not meet the requirements of the Texas Health Maintenance Organization Act, §5.

(3) Within 75 days from receipt of certification by the State Board of Health, the commissioner, after notice and hearing, shall issue or deny the certificate of authority, except as provided in subsection (d) of this section.

(c) Application disapproved. Unless a delay is granted under subsection (d) of this section, an application that is not complete within the period prescribed in subsection (a) of this section may be disapproved.

(d) Delay of action. On written request of the applicant, the commissioner may grant a delay of final action on the application pursuant to the Texas Health Maintenance Organization Act, §5(b).

History

Source Note: The provisions of this §1.809 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.810 Insurance Premium Finance License

(a) Notice to applicant. Within 15 days from receipt of an application for an insurance premium finance license, the agency shall determine an application to be complete or deficient and shall immediately issue written notice to the applicant regarding the status of the application.

(1) Complete application.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the content and form prescribed by the agency.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete, shall set out the specific additional information that is required for completion, and shall include the information contained in subsection (c) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application.

(b) Processing of application. Within 90 days after receipt of an application, the agency shall notify the applicant that:

(1) the application has been approved and a license will be issued on payment of the appropriate license fee; or

(2) the application has been denied.

(c) Application denied. An application which is not complete within 90 days from the date of its original receipt shall be denied.

History

Source Note: The provisions of this §1.810 adopted to be effective January 10, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.811 Policy Approval

(a) Notice. Within 25 days of receipt of a form from a company for which no forms have been approved by the agency, the agency shall determine a filing to be complete or deficient for purposes of submission for review and shall issue written notice to the company regarding the status of the form. For purposes of this section, a form is a policy, contract, certificate of insurance, or other form set out in the Insurance Code, Article 3.42.

(1) Complete filing.

(A) The written notice for a complete filing shall state that the form is complete and accepted for filing for review as of the date of its receipt and shall include the information contained in subsection (b) of this section unless such information has previously been furnished to the company.

(B) For purposes of this section, a form is complete upon agency determination that it is in compliance with the content and form prescribed for submission for review by the agency.

(2) Deficient filing.

(A) The written notice for a deficient filing shall state that the form is deficient and not accepted for filing and shall set out the specific items that must be corrected to make the form complete. After one written notice of deficiency has been issued, another is not required for a filing resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the company, in any manner, of problems with the form.

(b) Processing of forms.

(1) Within 60 days after a form is accepted for filing for review, the agency shall review it and approve or disapprove it; provided that the insurer may request in writing that the period for reviewing a form be extended for an additional period of time, not to exceed 60 days.

(2) A form that is accepted for filing for review is deemed accepted for filing as of the date the agency receives it.

(3) The request for extension shall be considered granted upon its receipt by the agency.

History

Source Note: The provisions of this §1.811 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.812 State Fire Marshal Permits

(a) Notice to applicant. Within 30 days from receipt of an application for a certificate of registration or license issued pursuant to the Insurance Code, Articles 5.43-1 through 5.43-4, the agency shall determine a filing to be complete or deficient and immediately issue written notice to the applicant regarding the status of the application.

(1) Complete application.

(A) The written notice for a complete application shall state that the application is complete and accepted for filing and shall include the information contained in subsection (b) and subsection (c)(1) of this section unless such information has previously been provided to the applicant.

(B) For purposes of this section, an application is complete upon agency determination that it is in compliance with the content and form prescribed by the agency.

(2) Deficient application.

(A) The written notice for a deficient application shall state that the application is not complete, set out the specific additional information that is required for completion, and include the information contained in subsection (c) (2) of this section. After one written notice of deficiency has been issued, another is not required for an application resubmitted in whole or in part with deficiencies.

(B) In addition to notice issued under subparagraph (A) of this paragraph, the agency may notify the applicant, in any manner, of deficiencies in the application.

(b) Processing of application. Within 60 days after receipt of a complete application, the agency shall:

(1) issue the certificate of registration or license on payment of the appropriate fees and successful completion of all required examinations and practicals; or

(2) deny the certificate of registration or license.

(1) The fire marshal may disapprove an application for a certificate of registration or license if the applicant fails to successfully complete all required examinations and practicals within one year of the receipt of the original application.

(2) The fire marshal may disapprove an application that is not complete within 90 days of its original receipt by the agency.

History

Source Note: The provisions of this §1.812 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.813 Appeal

(a) Hearing.

(1) Notice. An applicant who does not receive notice as to the complete or deficient status of a permit application within the period established in this subchapter for such application may petition for a hearing to review the matter.

(2) Processing. An applicant whose permit is not approved or denied within the period established in this subchapter for such permit may petition for a hearing to review the matter.

(3) Procedure. A hearing under this section shall be in accordance with the Insurance Code, the Administrative Procedure and Texas Register Act, and Subchapter A of this chapter (relating to Rules of Practice and Procedure).

(b) Petition. A petition filed under this section must be in writing and directed to the commissioner; except that, for periods established in §1.812 of this title (relating to State Fire Marshal Permits), a petition shall be made to the fire marshal. The petition shall identify the applicant, indicate the type of permit sought and the date of the application, specify each provision in this subchapter that the agency has violated, and describe with particularity how the agency has violated each provision. The petition shall be filed with the docket clerk of the agency's hearings section.

(c) Decision. An appeal filed under this section shall be decided in the applicant's favor if the commissioner or fire marshal, as the case may be, finds that:

(1) the agency exceeded an established period under this subchapter; and

(2) the agency failed to establish good cause for exceeding the period.

(d) Good cause. The agency is considered to have good cause for exceeding a notice or processing period established for a permit if:

(1) the number of permits to be processed exceeds by 15% or more the number of permits processed in the same calendar quarter of the preceding year;

(2) the agency must rely on another public or private entity for all or part of its permit processing, and the delay is caused by the other entity;

(3) the hearing and decision-making process results in reasonable delay under the circumstances;

(4) the applicant is under administrative review; or

(5) any other conditions exist giving the agency good cause for exceeding a notice or processing period.

(e) Board review. A permit applicant aggrieved by a final decision or order of the commissioner or the fire marshal concerning a period established by these sections may appeal to the board in writing after the decision or order complained of is final. To the extent not superseded by the Administrative Procedure and Texas Register Act, the procedures specified in the Insurance Code, Article 1.04(d), apply to appeals to the board from decisions of the commissioner and are adopted for appeals to the board from decisions of the fire marshal. An appeal under this subchapter shall be made within 30 days from the date that the writing evidencing the official action or order complained of is final and appealable; but, for good cause shown, the board may allow an appeal after that date.

(f) Relief.

(1) Complete or deficient status. An applicant who maintains a successful appeal under subsection (c) of this section for agency failure to issue notice as to the complete or deficient status of an application shall be entitled to notice of application status.

(2) Permit approval or denial. An applicant who maintains a successful appeal under subsection (c) of this section for agency failure to approve or deny a permit shall be entitled to such approval or denial of the permit and to full reimbursement of all filing fees that have been paid to the agency in connection with the application.

History

Source Note: The provisions of this §1.813 adopted to be effective January 20, 1989, 14 TexReg 114.

28 Tex. Admin. Code § 1.814 Military Service Member, Military Veteran, and Military Spouse

(a) Definitions.

(1) The definitions for terms defined in Occupations Code §55.001, concerning Definitions, are applicable to this section, including the terms "military service member," "military veteran," and "military spouse."

(2) for purposes of this section, "license" has the same meaning as "permit," as defined in §1.802 of this title (relating to Definitions), unless the context clearly indicates otherwise, and "licensee" includes anyone who holds a permit issued by the agency.

(b) Conflict. To the extent that provisions in this section conflict with provisions in any other section in this title, this section controls.

(c) Applicability. The provisions in this section apply to all permits as defined in §1.802 of this title, including licenses and certificates of authority for administrators under Chapter 7, Subchapter P of this title (relating to Administrators); surplus lines agents under Chapter 15, Subchapter B of this title (relating to Surplus Lines Agents); insurance professionals under Chapter 19, Subchapter I of this title (relating to General Provisions Regarding Fees, Applications, and Renewals); and insurance premium finance companies under Chapter 25, Subchapter B of this title (relating to Licensing and Regulation); and licenses issued by the state fire marshal under Chapter 34 of this title (relating to State Fire Marshal).

(d) Alternative licensing requirements. Consistent with Occupations Code §55.004, concerning Alternative Licensing for Military Service Members, Military Veterans, and Military Spouses, an applicant for a license who is a military service member, military veteran, or military spouse may complete the following alternative procedures for licensing:

(1) Resident licensing by reciprocity for military service members and military spouses. An applicant who is a military service member or military spouse and who holds a current license issued by another jurisdiction that has licensing requirements that are substantially equivalent to the requirements for the license may apply for a Texas resident license as provided in subsection (g) of this section.

(2) Resident licensing by reciprocity for military veterans. An applicant who is a military veteran and who holds a current license issued by another jurisdiction that has licensing requirements that are substantially equivalent to the requirements for the license may apply for a Texas resident license subject to the applicable qualifications for resident licenses as provided in this title and subject to subsection (f) of this section.

(3) Expired resident licenses. An applicant who is a military service member, military veteran, or military spouse and whose Texas resident license has been expired for fewer than five years preceding the application date may request that TDI waive the examination requirement. An applicant requesting this waiver must submit to the applicable licensing office or division of the agency:

(A) a new license application;

(B) identification indicating that the applicant is a military service member; military veteran; or military dependent, if a military spouse;

(C) evidence that the applicant has completed all required continuing education for the periods the applicant was licensed and paid all fines as required under this title; and

(D) a request for waiver that includes an explanation that justifies waiver of the licensing examination.

(e) License renewal extension and fee exemption.

(1) As specified in Occupations Code §55.003, concerning Extension of License Renewal Deadlines for Military Service Members, a military service member who holds a license is entitled to two additional years to complete any requirements related to the renewal of the license, including continuing education requirements, and to submit a renewal application including the following:

(A) the licensee's name, address, and license number;

(B) the licensee's military identification indicating that the individual is a military service member; and

(C) a statement requesting up to two years of additional time to complete the renewal, including continuing education requirements.

(2) A military service member specified in paragraph (1) of this subsection is exempt from additional fees or penalties required under this title for failure to renew a license in a timely manner, as specified in Occupations Code §55.002, concerning Exemption from Penalty for Failure to Renew License.

(3) A military service member specified in paragraph (1) of this subsection must satisfy the continuing education requirement for which the compliance period has been extended before satisfying the continuing education requirement for any other period.

(4) A military service member serving in a combat theater, as provided for in Insurance Code §36.109, concerning Renewal Extension for Certain Persons Performing Military Service, may apply for an exemption from or an extension of time for meeting license renewal requirements, including continuing education requirements. The licensee must request the exemption or extension before the end of the applicable reporting period and must include:

(A) a copy of the order for active duty status, service in a combat theater, or other positive documentation of military service that will demonstrate that the licensee is prevented from compliance;

(B) a clear request for either an extension or exemption, or both;

(C) a statement indicating whether the request is for an extension or exemption, or both, from continuing education requirements or from license renewal;

(D) the expected duration of the assignment; and

(E) any other information the licensee believes may assist the agency or that the agency requests, on a case-by-case basis.

(f) Fee exemptions.

(1) Consistent with Occupations Code §55.009, concerning License Application and Examination Fees, the following applicants are not required to pay any applicable license application fee or examination fee that is otherwise payable to the agency:

(A) a military service member or military veteran whose military service, training, or education substantially meets all of the requirements for the license; or

(B) a military service member, military veteran, or military spouse who holds a current license issued by another jurisdiction that has licensing requirements that are substantially equivalent to the requirements for the license.

(2) The fee exemption under paragraph (1) of this subsection does not apply to license renewal application fees.

(3) To qualify for the fee exemption under paragraph (1)(A) of this subsection, the applicant must submit as applicable:

(A) the license application, with a request for waiver of the application fee and examination fee;

(B) identification indicating that the applicant is a military service member or military veteran; and

(C) documentation that the applicant's military service, training, or education substantially meets all the requirements for the license.

(4) To qualify for the fee exemption under paragraph (1)(B) of this subsection, the applicant must submit as applicable:

(A) the license application, with a request for waiver of the application fee and examination fee; and

(B) identification indicating that the applicant is a military service member, military veteran, or military spouse.

(g) Reciprocal licenses for military service members and military spouses.

(1) A military service member or military spouse who is licensed in a state with substantially equivalent requirements to those of Texas is eligible for a Texas resident license while the military service member is stationed at a military installation in Texas.

(2) A license granted under paragraph (1) of this subsection is effective for a period of three years from the date the applicant receives confirmation from the agency of receipt of the items described in paragraph (4)(A) - (C) of this subsection and may not be renewed.

(3) Consistent with 50 USC §4025a, concerning Portability of Professional Licenses of Servicemembers and Their Spouses, if military orders require the military service member to continue to be stationed in Texas past the expiration of the license as described in paragraph (2) of this subsection, the licensee may apply for a new license under paragraph (1) of this subsection. A licensee seeking a new license under this paragraph must submit to the applicable licensing office or division of the agency documentation of the military order or orders requiring that the military service member continue to be stationed in Texas past the license expiration date.

(4) To apply for a license under this subsection, the applicant must provide to the applicable licensing office or division of the agency:

(A) an application notifying the agency of the applicant's intent to operate in Texas;

(B) proof of the applicant's residency in Texas and a copy of the applicant's military identification card; and

(C) evidence of good standing from the state with substantially equivalent requirements to the requirements of this state.

(5) Within 30 days after the applicant's submission of the items described in paragraph (4) of this subsection, the agency will verify the applicant's good standing status described in paragraph (4)(C) of this subsection.

(h) Administrators.

(1) A military service member or military spouse who is licensed as an administrator in a state with substantially equivalent requirements as those found in §7.1604 of this title (relating to Application for Certificate of Authority) and Insurance Code Chapter 4151, concerning Third-Party Administrators, may engage as an administrator while the military service member is stationed at a military installation in Texas.

(2) A military service member or military spouse seeking to engage as an administrator under this subsection must:

(A) submit an application notifying the agency of the military service member or military spouse's intent to engage as an administrator in Texas;

(B) submit to the agency proof of the applicant's residency in Texas and a copy of the applicant's military identification card; and

(C) show evidence of good standing from a jurisdiction with substantially equivalent requirements as those found in §7.1604 of this title and Insurance Code Chapter 4151.

(3) Notwithstanding §7.1604 of this title, a military service member or military spouse seeking to engage as an administrator under this subsection will not be assessed any application fees under that section.

(4) A military service member or military spouse authorized to engage as an administrator must comply with and adhere to all other laws and rules applicable to administrators.

(i) Expedited license procedure. Within 30 days of the filing of a license application by a military service member, military veteran, or military spouse, the agency will process the application and issue the license to an applicant who qualifies for the license under subsection (d) of this section, subject to other qualification requirements under this title.

(j) Credit for military service, training, or education.

(1) An applicant who is a military service member or military veteran may submit to the agency documentation of the applicant's military service, training, or education. Such military service, training, or education, after verification by the agency, will be credited to license requirements other than examination requirements. This subsection will not apply to an applicant who holds a restricted license issued by another jurisdiction or who has an unacceptable criminal history.

(2) If an apprenticeship is required for the license, an applicant who is a military service member or military veteran may submit to the agency documentation of the applicant's military service, training, or education that is relevant to the occupation. Such military service, training, or education, after verification by the agency, will be credited to the apprenticeship requirements.

(k) Residency. For an application for a license that has a residency requirement for license eligibility, an applicant who is a military service member or military spouse may establish residency for the purposes of this section by providing the applicable licensing office or division of the agency with a copy of the permanent change of station order or other military order requiring the military service member to be stationed in Texas, or any other documentation of residency for license eligibility permitted under this title.

(l) States with substantially equivalent requirements. For the purposes of this section, the agency will work with non-Texas jurisdictions to:

(1) identify, with respect to each type of license issued by the agency, the jurisdictions that have licensing requirements that are substantially equivalent to the requirements for the license in Texas; and

(2) verify that a military service member or military spouse is licensed in good standing in a jurisdiction described in paragraph (1) of this subsection.

History

Source Note: The provisions of this §1.814 adopted to be effective February 29, 2024, 49 TexReg 1090.

Subchapter H EMERGENCY CEASE AND DESIST ORDERS

28 Tex. Admin. Code § 1.901 Issuance of Emergency Cease and Desist Orders

The Commissioner of Insurance may issue an emergency cease and desist order, ex parte, upon application by the staff of the Texas Department of Insurance.

History

Source Note: The provisions of this §1.901 adopted to be effective April 17, 1990, 15 TexReg 1895; amended to be effective August 11, 2022, 47 TexReg 4679.

28 Tex. Admin. Code § 1.903 Contents of the Emergency Cease and Desist Order

An emergency cease and desist order will contain the following:

(1) the name and last known address of the affected person;

(2) a short and plain statement of the alleged conduct that supports issuing the order under Insurance Code §83.051;

(3) a requirement that the affected person immediately cease and desist from the described conduct, acts, methods, or practices;

(4) a statement of the rights of the affected person to request a hearing to contest the order. This statement will include:

(A) the specific statutes or rules found to have been violated;

(B) a statement of legal authority and jurisdiction under which the order is issued;

(C) the time limit for requesting a hearing to contest the order, including citation to Insurance Code Chapter 83 and this subchapter; and

(D) notice that the burden of requesting the hearing is on the affected person; and

(5) a statement of the penalties that may be assessed against the affected person if the affected person violates the order.

History

Source Note: The provisions of this §1.903 adopted to be effective April 17, 1990, 15 TexReg 1895; amended to be effective August 11, 2022, 47 TexReg 4679.

28 Tex. Admin. Code § 1.905 Request for Hearing on Emergency Cease and Desist Orders

A person who is affected by the issuance of an emergency cease and desist order and who desires a hearing regarding such order must file a written request for hearing with the chief clerk of the Texas Department of Insurance no later than the 60th day after the date on which the person is served the order. The chief clerk will send a copy of the request to the staff attorney responsible for representing the Texas Department of Insurance at the hearing.

History

Source Note: The provisions of this §1.905 adopted to be effective April 17, 1990, 15 TexReg 1895; amended to be effective August 11, 2022, 47 TexReg 4679.

Subchapter I DISCLOSURE OF GUARANTY FUND NONPARTICIPATION

28 Tex. Admin. Code § 1.1001 Disclosure of Guaranty Fund Nonparticipation

(a) With the exception enumerated in this section, each certificate or evidence of coverage and each insurance policy or contract or application that is delivered or issued for delivery in this state on or after January 1, 1990, and that is not covered by an insurance guaranty fund or other solvency protection arrangement authorized by the Insurance Code shall have the following notice affixed to the first page in no less than 10-point type. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement.

(b) Mortgage guaranty insurers are required to make the disclosure contained in subsection (a) of this section only on all master policies, but not on individual certificates, delivered or issued for delivery in this state on or after January 1, 1990.

(c) Each surplus lines contract certificate, binder, cover note, or other confirmation of surplus lines insurance, including any application used to bind coverage, shall have affixed to its first page the notice prescribed by the Insurance Code, Article 1.14-2, §7(a), rather than the disclosure contained in subsection (a) of this section.

(d) Instead of the language contained in subsection (a) of this section, insurers issuing variable annuity contracts on or after January 1, 1990, may affix the following notice to the first page of such contracts in no less than 10-point type: "This contract is not covered by an insurance guaranty fund or other solvency protection arrangement because this contract is a contract under which the risk is borne by the policyholder."

(e) Fidelity, surety, and guaranty bonds delivered or issued for delivery in this state on or after September 1, 1991, need not bear the disclosure notice required by subsection (a) of this section.

History

Source Note: The provisions of this §1.1001 adopted to be effective May 28, 1990, 15 TexReg 2756; amended to be effective July 17, 1992, 17 TexReg 4769.

Subchapter J PROCEDURES FOR VENDOR PROTESTS OF PROCUREMENTS

28 Tex. Admin. Code § 1.1101 Purpose

The purpose of this subchapter is to provide a protest procedure to be used by any actual or prospective bidder, offeror, proposer, or contractor who is aggrieved in connection with the solicitation, evaluation, or award of a contract by the department. These procedures are consistent with rules adopted by the Texas Comptroller of Public Accounts in 34 TAC Chapter 20, Subchapter F, Division 3 (relating to Protests and Appeals).

History

Source Note: The provisions of this §1.1101 adopted to be effective November 6, 2001, 26 TexReg 8846; amended to be effective November 6, 2025, 50 TexReg 7111.

28 Tex. Admin. Code § 1.1102 Filing of Protest

(a) An actual or prospective bidder, offeror, proposer, or contractor who is aggrieved in connection with the solicitation, evaluation, or award of a contract by the department may file a written protest. The protest must be addressed to the department's chief financial officer and must be received no later than 10 working days after the aggrieved person knows, or should have known, of the occurrence of the action which is protested.

(b) The protest must be sworn and must contain the following:

(1) a specific identification of the statutory or regulatory provision(s) or procedure(s) that the action complained of is alleged to have violated;

(2) a specific description of each act alleged to have violated the statutory or regulatory provision(s) or procedure(s) identified in the protest;

(3) a precise statement of the relevant facts;

(4) an identification of the issue or issues to be resolved;

(5) argument and authorities in support of the protest; and

(6) a statement that copies of the protest have been mailed or delivered to all other identifiable interested parties.

(c) Upon written request, the department will furnish to the requestor a list of interested parties, as reflected in the records of the department's Purchasing and Contracts Administration Division.

History

Source Note: The provisions of this §1.1102 adopted to be effective November 6, 2001, 26 TexReg 8846.

28 Tex. Admin. Code § 1.1103 Review of Protest and Determination

(a) Upon receipt of a timely protest that conforms with this subchapter, the chief financial officer will review the protest. The chief financial officer may request written responses to the protest from any department staff and may request from department staff any and all documents related to the protest. The chief financial officer may solicit written responses to the protest from other interested parties.

(b) The chief financial officer has the authority, prior to appeal to the Commissioner, to settle and resolve the dispute concerning the solicitation or award of the contract.

(c) If the protest is not resolved by mutual agreement, the chief financial officer will issue a written determination on the protest.

(1) If the chief financial officer determines that no violation of rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and all other interested parties of that determination by letter, which must set forth the reasons for the determination.

(2) In a case where a contract has not been awarded, if the chief financial officer determines that a violation of the rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and all other interested parties of that determination by letter. The letter must set forth the reasons for the determination and may set forth any appropriate remedial action.

(3) In a case where a contract has been awarded, if the chief financial officer determines that a violation of the rules, statutes, or procedures has occurred, the chief financial officer shall inform the protesting party and other interested parties of that determination by letter. The letter must set forth the reasons for the determination and may set forth any appropriate remedial action, which may include canceling or voiding the contract to the extent allowed by law.

History

Source Note: The provisions of this §1.1103 adopted to be effective November 6, 2001, 26 TexReg 8846.

28 Tex. Admin. Code § 1.1104 Appeal

(a) A protesting party or any other interested party who is not satisfied with the determination of the chief financial officer may appeal the determination to the commissioner. The appeal must be submitted in writing to the commissioner and received in the office of the commissioner no later than 10 working days after the date of the chief financial officer's determination. The appeal is limited to review of the chief financial officer's determination.

(b) The appealing party must mail or deliver copies of the appeal to all other interested parties. The appeal to the commissioner must contain an affidavit that such copies have been provided.

(c) Upon receipt of a timely appeal that conforms with this subchapter, the commissioner may designate one or more members of the department's executive management staff or other employees of the department to review the protest, the determination of the chief financial officer, and the appeal of the determination. The designee(s) will prepare and submit to the commissioner a written recommendation regarding the appeal.

(d) The written decision of the commissioner shall be the final administrative action of the department regarding the protest and appeal.

History

Source Note: The provisions of this §1.1104 adopted to be effective November 6, 2001, 26 TexReg 8846.

28 Tex. Admin. Code § 1.1105 Failure to File Timely

Protests and appeals that are not filed timely will not be considered, unless good cause for delay is shown or the commissioner determines that a protest or appeal raises issues significant to the department's procurement practices or procedures.

History

Source Note: The provisions of this §1.1105 adopted to be effective November 6, 2001, 26 TexReg 8846.

28 Tex. Admin. Code § 1.1106 Status of Procurement During Protest and Appeal

If the contract being protested has not been awarded, upon the timely filing of a protest and appeal under these procedures, the department shall not proceed further with the solicitation or award of the contract unless the chief financial officer, in consultation with the appropriate executive management staff, makes a written determination that the award of the contract without delay is necessary to protect substantial interests of the State of Texas.

History

Source Note: The provisions of this §1.1106 adopted to be effective November 6, 2001, 26 TexReg 8846.

28 Tex. Admin. Code § 1.1107 Retention of Documents

The department will maintain all documentation about the purchasing process to be used in the event of a protest or appeal in accordance with the department's retention schedule.

History

Source Note: The provisions of this §1.1107 adopted to be effective November 6, 2001, 26 TexReg 8846.

Subchapter K SICK LEAVE POOL

28 Tex. Admin. Code § 1.1201 Sick Leave Pool

A sick leave pool is established to alleviate hardship caused to an employee and the employee's immediate family if a catastrophic injury or illness forces the employee to exhaust all eligible leave time earned by that employee and to lose compensation time from the state.

(1) The Texas Department of Insurance's Human Resources Director is designated as the pool administrator.

(2) The pool administrator will recommend a policy, operating procedures, and forms for the administration of this section for approval by the commissioner of insurance or designee.

(3) Operation of the pool shall be consistent with the Government Code, Chapter 661.

History

Source Note: The provisions of this §1.1201 adopted to be effective October 26, 2011, 36 TexReg 7167.

Subchapter L ELECTRONIC SUBMISSIONS AND COMMUNICATIONS

28 Tex. Admin. Code § 1.1301 Electronic Submissions

(a) Notwithstanding any other provision in Part 1 of this title (relating to Texas Department of Insurance), any submissions made to the Texas Department of Insurance (department) may be made electronically, unless statute requires an alternative method of submission.

(b) A submission made electronically to the department must be made in accordance with any specific procedure for electronic submissions established by statute or rule. If a specific procedure for electronic submissions is not established by statute or rule, an electronic submission must be made as specified on the department's website.

History

Source Note: The provisions of this §1.1301 adopted to be effective May 23, 2021, 46 TexReg 3293.

28 Tex. Admin. Code § 1.1302 Electronic Communications from the Texas Department of Insurance

(a) In this section, "regulated person" means an individual, corporation, association, partnership, or other artificial person holding an authorization, meaning a permit, license, certificate of authority, certificate of registration, or other authorization, issued or existing under the Commissioner's or the Texas State Fire Marshal's authority or the Insurance Code.

(b) Notwithstanding any other provision in Part 1 of this title (relating to Texas Department of Insurance) other than §1.90 of this title (relating to Joint Memorandum of Understanding (MOU) between Texas Department of Insurance (TDI) and State Office of Administrative Hearings (SOAH) Concerning Procedures for Contested Cases before SOAH and Responsibilities of Each Agency), the department may send official communications to the email address designated for such communications by a regulated person, unless statute requires a different method of communication.

(c) Except as provided by subsection (e) of this section, all regulated persons must provide an email address that is designated for receipt of official department communications. Regulated persons should provide the email address as specified on the department's website. If communications may no longer be received at the designated email address, the regulated person must notify the department and designate a new email address within 10 business days.

(d) Notice or service sent by email under this section satisfies any notice or service requirements, unless a different method of notice or service is required by statute or §1.90 of this title.

(e) If a regulated person does not have the technological capability to maintain an email address designated for official department communications, or for good reason does not wish to receive communications by email from the department, the regulated person should notify the department as specified on the department's website regarding address changes.

(f) Subsection (c) of this section is applicable beginning January 1, 2022.

History

Source Note: The provisions of this §1.1302 adopted to be effective May 23, 2021, 46 TexReg 3293.

Subchapter M PROBATION OF AGENTS BASED ON CERTAIN DISABILITIES

28 Tex. Admin. Code § 1.1501 General Provisions and Definitions

(a) Statutory basis and purpose. This subchapter implements the provisions of the Insurance Code, Article 21.15-6, which provides for disability probation for agents who are disabled by a mental, physical or emotional condition.

(b) Severability. Where any terms or section of this subchapter is determined by a court of competent jurisdiction to be inconsistent with any statute of this state or to be unconstitutional, the remaining terms and provisions of this subchapter shall remain in effect.

(c) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Agent--Any individual licensed as an agent by the Texas Department of Insurance.

(2) Commissioner--The commissioner of insurance.

(3) Department--The Texas Department of Insurance.

(4) Disability--Any physical, mental or emotional condition that significantly impairs an agent's ability or results in an agent's inability to carry out the agent's professional responsibilities to insureds, the profession, or the public.

(5) Independent evaluation--An evaluation performed by a professional individual or organization licensed by the State of Texas to treat and/or diagnose physical, mental, or emotional conditions to determine if an agent suffers from a disability due to such conditions. The evaluation should include the extent of the disability and whether the disability may be successfully arrested and treated while the agent is engaged in the agent's professional business.

(6) Staff--Designated representatives of the staff of the Texas Department of Insurance for participation in the disciplinary proceedings related to the agent.

History

Source Note: The provisions of this §1.1501 adopted to be effective July 14, 1994, 19 TexReg 5097.

28 Tex. Admin. Code § 1.1502 Request for Probation in Lieu of Suspension, Revocation, or Cancellation of License

(a) An agent may raise the issue of disability and request probation pursuant to the Insurance Code, Article 21.15-6, and this subchapter, prior to a hearing to suspend, revoke or cancel the agent's license.

(1) An agent may request probation prior to a contested case hearing after receipt of a notice of intention to institute disciplinary action from the staff of the department against the agent suggesting suspension, revocation or cancellation of an agent's license. The request for probation must be submitted prior to the hearing on such disability, and the agent must furnish the items specified in subparagraphs (A) and (B) of this paragraph:

(A) written stipulations in a format acceptable to the staff of the department; and

(B) evidence of the agent's disability.

(2) If the staff and the agent are in agreement as to the proposed stipulations relating to the violation, the evidence of the agent's disability, and the proposed conditions of probation, the staff of the department may recommend a consent order be signed by the commissioner that meets the requirements of §1.1504 of this title (relating to Contents of Order Granting Probation) and which has been drafted in accordance with stipulations and agreed conditions based, as applicable, on the contents of the forms "GAP-FORM 1-General Agent Probation Conditions, T.D.I. Legal Services & Compliance," "GAP-FORM 2-Authorization for release of Information and Medical Records," and "GAP-FORM 3-Support Group Attendance," which are adopted by reference as a part of this subchapter, and copies of which are on file with the secretary of state and available from the department.

(3) If the staff and the agent cannot reach agreement as to the underlying facts related to the alleged violation, the evidence of the agent's disability, and/or the proposed conditions of probation, a hearing shall be held on any or all of these contested matters in accordance with the Government Code, §2001.051, et seq., and Subchapter A of this chapter (relating to Rules of Practice and Procedure). All matters necessary to a resolution of the allegations relating to the proposed suspension, revocation or cancellation of the license, the evidence of the disability and the conditions of any proposed probation, may be decided in the same hearing before the same hearing officer.

(b) An agent may raise the issue of probation for disability during the hearing relating to a suspension, revocation or cancellation of the agent's license.

(1) The agent must give written notice to the staff attorney representing the department in the contested case of the agent's intention to raise the issue of probation. The written notice must be received by the staff attorney at least five days prior to the scheduled hearing date. Upon receipt of such notification, the staff attorney may request a continuance of the hearing to acquire and present evidence and legal authority on the issue of the propriety of probation for any disability of the agent and/or to obtain an independent evaluation of the agent. The continuance shall be granted by the hearing officer for a reasonable period of time depending upon the circumstances.

(2) If the agent does not give the written notice required in paragraph (1) of this subsection and seeks to raise the issue of probation as a result of a disability at the hearing, the hearing officer shall not consider evidence of the disability of the agent unless the agent, by a preponderance of evidence, is able to establish good cause for failure to provide the written notification. If the agent is able to establish good cause, the hearing officer may hear evidence of the disability of the agent after having granted any continuance requested by the staff to acquire and present evidence and legal authority on the issue of the propriety of probation for any disability of the agent. The continuance must be for a reasonable period and be sufficient to allow for an independent evaluation of the agent at the staff's request.

History

Source Note: The provisions of this §1.1502 adopted to be effective July 14, 1994, 19 TexReg 5097.

28 Tex. Admin. Code § 1.1503 Procedures for Placing an Agent on Probation

The procedures for placing an agent on probation are described in paragraphs (1)-(8) of this section.

(1) The department may require the agent to undergo an independent evaluation at the agent's expense by a licensed professional competent to evaluate the agent's alleged disability.

(2) If the request for probation is not raised by the agent at a hearing already in progress, following the evaluation of the agent described in paragraph (1) of this subsection, and after such other investigation of pertinent facts as the department may choose to conduct, a notice of hearing on the question of whether probation of the agent should be granted will be sent to the agent. A hearing will be held on the request for probation unless the parties resolve all issues related to the request and a consent order is signed.

(3) Either the agent or the department may introduce into evidence at the hearing any material evidence relevant to the question of whether probation should be granted to the agent in lieu of suspension or revocation of the agent's license. The department is specifically authorized to introduce into evidence a written recommendation of the departmental employee assigned to review the desirability or non-desirability of probation for the disabled agent. The departmental employee may be called to testify about the desirability or non-desirability of probation or any aspect of the written recommendation upon the request of either party, if the written recommendation is introduced into evidence.

(4) The hearing shall be held in accordance with the provisions of the Government Code, §2001.051, et seq., and Subchapter A of this chapter (relating to Rules of Practice and Procedure).

(5) The agent may not be placed on disability probation unless at the hearing the agent has proven, by a preponderance of the evidence, that the agent suffers from a physical, mental or emotional condition that constitutes a disability under the Insurance Code, Article 21.15-6, and this subchapter.

(A) The agent must present credible and relevant evidence of the disability or disabilities from person(s), organization(s), or other entity(ies) with sufficient knowledge of such disability or disabilities to present reliable information concerning the disability or disabilities.

(B) The agent may present evidence concerning the disability or disabilities through testimony and/or records of a professional individual or organization licensed by the State of Texas to treat and/or diagnose such disability or disabilities.

(6) The agent may not be placed on disability probation unless, at the hearing, the agent has demonstrated:

(A) a disability that can be successfully arrested and treated while the agent is engaged in the agent's professional business;

(B) harm to the public resulting from the disability during the period of rehabilitation is not probable.

(7) If disability probation is ordered based upon the evidence at the hearing, the order shall set a specified period of probation for the agent. This period of probation may exceed the one-year maximum term of suspension authorized under the Insurance Code, Article 1.10, §7(a)(1).

(8) The commissioner may take disciplinary action under the Insurance Code, Article 1.10 §7, or may stay all or any part of the disciplinary action during the period of probation.

History

Source Note: The provisions of this §1.1503 adopted to be effective July 14, 1994, 19 TexReg 5097.

28 Tex. Admin. Code § 1.1504 Contents of Order Granting Probation

(a) The commissioner's order placing the agent on disability probation shall state the conditions of the probation.

(b) In determining the conditions of probation, the commissioner shall consider, based upon the evidence at the hearing, the nature and circumstances of the conduct of the agent, the history, character, and condition of the agent; and the nature of the agent's disability. The commissioner shall consider the recommendation of the employee assigned to make a recommendation as to the desirability or non-desirability of probation for the agent, if such report is introduced at the hearing by the staff either in written form or through testimony. The commissioner is not required to follow the recommendation of such employee.

(c) In instances where the staff and the agent are in agreement with respect to material facts and the propriety of probation, the consent order granting probation may be entered in accordance with stipulations, agreements and agreed conditions contained in GAP-FORM 1, GAP-FORM 2, and GAP-FORM 3, as applicable. These forms are adopted by reference as a part of this subchapter, and copies of such forms are on file with the secretary of state and available from the department. In instances where the order to be entered is not a consent order, the commissioner shall impose such conditions upon probation as are deemed appropriate, which may include, but are not limited to:

(1) periodic reports to the Texas Department of Insurance;

(2) satisfactory completion of any course of study required;

(3) psychological evaluation, counseling and treatment, the nature and duration of which shall be set forth in the order;

(4) full or partial payment of costs, including reasonable attorneys' fees and other expenses related to the proceeding, by agent including all costs associated with the prehearing, hearing, and probationary process;

(5) abstinence from the abuse of alcohol and/or drugs;

(6) mandatory attendance at meetings of Alcoholics Anonymous, Narcotics Anonymous, or similar support groups;

(7) periodic field monitoring, at intervals deemed necessary by the department, of the agent's activities, including, but not limited to, any accounting procedures, ledgers, or accounts in which funds of insurers or policyholders may be placed, any records relating to the insurance business of the agent, the way in which the agent conducts insurance business, and compliance with probationary conditions; and

(8) random urine testing to screen for drug and/or alcohol abuse, where drug and/or alcohol abuse is the underlying reason for the disability.

(d) The order of probation shall indicate that the agent has made or will make full restitution to all insureds, and any other persons found to have been harmed by the agent's violation of the Insurance Code or other laws regulating the business of insurance, or by the agent's failure to comply with the agent's professional responsibilities.

(e) If restitution is not made prior to probation, the restitution requirement shall be imposed as a condition of probation and must be made in full during the term of probation.

(f) The order of probation shall name the office of the department responsible for the supervision of the agent placed on disability probation. The order shall recite that on a showing of a failure to comply with the conditions of the probation, the probation may be revoked, and any disciplinary action which has been stayed, in whole or in part, may be imposed.

(g) The order of probation shall recite that upon a showing of a failure to comply with the conditions of probation, additional conditions may be imposed on the probation of the agent for protection of the public and the rehabilitation of the agent.

History

Source Note: The provisions of this §1.1504 adopted to be effective July 14, 1994, 19 TexReg 5097.

28 Tex. Admin. Code § 1.1505 Appeal from Commissioner's Order of Probation

If the agent is dissatisfied with the commissioner's order denying probation in lieu of suspension, revocation, or cancellation of the agent's license, the agent may appeal the order to the district court in Travis County in a manner consistent with the Insurance Code, Article 1.04, after filing a motion for rehearing and following other appeal procedures required by the Government Code, §2001.051, et seq.

History

Source Note: The provisions of this §1.1505 adopted to be effective July 14, 1994, 19 TexReg 5097.

28 Tex. Admin. Code § 1.1506 Revocation of Probation

If the department determines that the conditions of probation have not been met by the agent, the agent will be notified of the reasons why the department is seeking revocation or why additional conditions are to be imposed on the probation and the authority of such action. Following notice and a hearing held pursuant to the Government Code, §2001.051, et seq., and Subchapter A of this chapter (relating to Rules of Practice and Procedure), the department shall revoke the probation if the department finds that the conditions of probation have not been complied with by the agent or the department may impose such additional conditions as are necessary to protect the public or rehabilitate the agent.

History

Source Note: The provisions of this §1.1506 adopted to be effective July 14, 1994, 19 TexReg 5097.

Subchapter N HISTORICALLY UNDERUTILIZED BUSINESSES

28 Tex. Admin. Code § 1.1601 Historically Underutilized Businesses

The Texas Department of Insurance adopts the rules of the Comptroller of Public Accounts relating to the Historical Underutilized Business Program at 34 TAC Chapter 20, Subchapter B.

History

Source Note: The provisions of this §1.1601 adopted to be effective September 26, 2000, 25 TexReg 9627; amended to be effective November 9, 2014, 39 TexReg 8595.

Subchapter O COLLECTION OF DELINQUENT DEBTS

28 Tex. Admin. Code § 1.1701 Referrals of Delinquent Obligations to the Office of the Attorney General for Collection

(a) The commissioner or the commissioner's designee shall decide whether to refer a delinquent obligation to the attorney general for collection.

(b) The department may, in its discretion, decline to refer collection matters in which the amount to be collected would be less than the total sum of expense to the department and the attorney general for travel, employee time, court costs, and other relevant expenses.

(c) Not later than 120 days after the department determines that normal collection procedures for an obligation owed the department have failed, the department shall report the uncollected and delinquent obligation to the attorney general for further collection efforts. In making a determination of whether to refer a matter to the attorney general, the department shall consider:

(1) the expense of further collection procedures;

(2) the size of the debt;

(3) the existence of any security;

(4) the possibility of collection or satisfaction of the debt through other means;

(5) the likelihood of collection; and

(6) any other relevant factors established by the department.

(d) Prior to referring a matter to the attorney general, the department shall:

(1) verify the debtor's address and telephone number;

(2) conclude that the obligation is not uncollectible; and

(3) transmit no more than two demand letters to the debtor at the debtor's verified address.

(e) The department may, for policy reasons or other good cause, determine that a matter should be referred to the attorney general.

History

Source Note: The provisions of this §1.1701 adopted to be effective September 28, 2000, 25 TexReg 9627.

28 Tex. Admin. Code § 1.1702 Records

(a) The department will maintain records identifying all persons or entities liable for delinquent obligations and the correct physical address of the debtor's place of business and/or residence, if available.

(b) Such records should also contain collection histories on each debtor showing, where applicable:

(1) attempted contacts with the debtor,

(2) efforts to locate the debtor,

(3) efforts to locate assets of the debtor and the results of such efforts,

(4) state warrants that may be issued to the debtor, and

(5) any other information considered to be relevant by the department.

History

Source Note: The provisions of this §1.1702 adopted to be effective September 28, 2000, 25 TexReg 9627.

28 Tex. Admin. Code § 1.1703 Exceptions

For good cause, the commissioner may make exceptions to the procedures in §1.1701 of this subchapter (relating to Referrals of Matters to the Office of the Attorney General for Collection).

History

Source Note: The provisions of this §1.1703 adopted to be effective September 28, 2000, 25 TexReg 9627.

Subchapter P NEGOTIATION AND MEDIATION OF A CLAIM OF BREACH OF CONTRACT

28 Tex. Admin. Code § 1.1801 Purpose

This subchapter governs the negotiation and mediation of a claim of breach of contract asserted by a contractor against the Texas Department of Insurance under Government Code Chapter 2260.

History

Source Note: The provisions of this §1.1801 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1802 Applicability

(a) This subchapter does not apply to an action of the department for which a contractor is entitled to a specific remedy pursuant to state or federal constitution or statute.

(b) This subchapter does not apply to contracts:

(1) between the department and the federal government or its agencies, another state or another nation;

(2) between two or more units of state government;

(3) between the department and a local governmental body, or a political subdivision of another state;

(4) between a subcontractor and a contractor;

(5) subject to §201.112 of the Transportation Code;

(6) within the exclusive jurisdiction of state or local regulatory bodies;

(7) within the exclusive jurisdiction of federal courts or regulatory bodies; or

(8) that are solely and entirely funded by federal grant monies other than for a project defined in §1.1803 of this title (relating to Definitions);

History

Source Note: The provisions of this §1.1802 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1803 Definitions

The following words and terms, when used in this subchapter, shall have the following meaning, unless the context clearly indicates otherwise:

(1) Claim--A demand for damages by the contractor based upon the department's alleged breach of a contract.

(2) Commissioner--Commissioner of Insurance of the State of Texas.

(3) Contract--A written contract between the department and a contractor by the terms of which the contractor agrees either:

(A) to provide goods or services, by sale or lease, to or for the department; or

(B) to perform a project as defined by Government Code, §2166.001.

(4) Contractor--Independent contractor who has entered into a contract directly with the department. The term does not include:

(A) the contractor's subcontractor, officer, employee, agent or other person furnishing goods or services to a contractor;

(B) an employee of the department; or

(5) Counterclaim--A demand by the department based upon the contractor's claim.

(6) Day--A calendar day. If an act is required to occur on a day falling on a Saturday, Sunday, or holiday, the first working day which is not one of these days should be counted as the required day for purpose of that act.

(7) Department--The Texas Department of Insurance.

(8) Event--An act or omission or a series of acts or omissions giving rise to a claim.

(9) Goods--Supplies, materials or equipment.

(10) Parties--The contractor and the department that have entered into a contract in connection with which a claim of breach of contract has been filed under this subchapter.

(11) Project--As defined in Government Code §2166.001, a building construction project that is financed wholly or partly by a specific appropriation, bond issue or federal money, including the construction of:

(A) a building, structure, or appurtenant facility or utility, including the acquisition and installation of original equipment and original furnishing; and

(B) an addition to, or alteration, modification, rehabilitation or repair of an existing building, structure, or appurtenant facility or utility.

(12) Services--The furnishing of skilled or unskilled labor or consulting or professional work, or a combination thereof, excluding the labor of an employee of the department.

History

Source Note: The provisions of this §1.1803 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1804 Prerequisites to Suit

The procedures contained in this subchapter are exclusive and required prerequisites to suit under the Civil Practice & Remedies Code, Chapter 107, and the Government Code, Chapter 2260.

History

Source Note: The provisions of this §1.1804 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1805 Sovereign Immunity

The provisions of this subchapter do not waive the department's sovereign immunity to suit or liability.

History

Source Note: The provisions of this §1.1805 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1806 Notice of Claim of Breach of Contract

(a) A contractor asserting a claim of breach of contract under the Government Code, Chapter 2260, shall file notice of the claim as provided by this section.

(b) The notice of claim shall:

(1) be in writing and signed by the contractor or the contractor's authorized representative;

(2) be delivered by hand, certified mail return receipt requested, or other verifiable delivery service, to the officer of the department designated in the contract to receive a notice of claim of breach of contract under the Government Code, Chapter 2260; if no person is designated in the contract, the notice shall be delivered to the commissioner; and

(3) state in detail:

(A) the nature of the alleged breach of contract, including the date of the event that the contractor asserts as the basis of the claim and each contractual provision allegedly breached;

(B) a description of damages that resulted from the alleged breach, including the amount and method used to calculate those damages; and

(C) the legal theory of recovery, i.e., breach of contract, including the causal relationship between the alleged breach and the damages claimed.

(c) The notice of claim shall be delivered no later than 180 days after the date of the event that the contractor asserts as the basis of the claim; provided, however, that a contractor shall deliver to the department notice of a claim that was pending before the department on August 30, 1999, no later than February 26, 2000.

History

Source Note: The provisions of this §1.1806 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1807 Agency Counterclaim

(a) To assert a counterclaim under the Government Code, Chapter 2260, the department shall file notice of the counterclaim as provided by this section.

(b) The notice of counterclaim shall:

(1) be in writing;

(2) be delivered by hand, certified mail return receipt requested or other verifiable delivery service to the contractor or representative of the contractor who signed the notice of claim of breach of contract; and

(3) state in detail:

(A) the nature of the counterclaim;

(B) a description of damages or offsets sought, including the amount and method used to calculate those damages or offsets; and

(c) The notice of counterclaim shall be delivered to the contractor no later than 60 days after the department's receipt of the contractor's notice of claim.

(d) Nothing herein precludes the department from initiating a lawsuit for damages against the contractor in a court of competent jurisdiction.

History

Source Note: The provisions of this §1.1807 adopted to be effective November 27, 2000, 25 TexReg 11658; amended to be effective May 9, 2007, 32 TexReg 2469.

28 Tex. Admin. Code § 1.1808 Duty to Negotiate

The parties shall negotiate in accordance with the timetable set forth in §1.1809 of this subchapter (relating to Timetable) to attempt to resolve all claims and counterclaims. No party is obligated to settle with the other party as a result of the negotiation.

History

Source Note: The provisions of this §1.1808 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1809 Timetable

(a) Following receipt of a contractor's timely notice of claim, the commissioner or other designated representative shall review the contractor's claim(s) and the department's counterclaim(s), if any, and initiate negotiations with the contractor to attempt to resolve the claim(s) and counterclaim(s).

(b) Subject to subsection (c) of this section, the parties shall begin negotiations within a reasonable period of time, not to exceed 120 days following the date the department receives the contractor's notice of claim.

(c) The department may delay negotiations until after the 180th day after the date of the event giving rise to the claim of breach of contract by:

(1) delivering written notice to the contractor that the commencement of negotiations will be delayed; and

(2) delivering written notice to the contractor of the date on which the department is ready to begin negotiations.

(d) The parties may conduct negotiations according to an agreed schedule so long as they begin negotiations no later than the deadlines set forth in subsections (b) or (c) of this section, whichever is applicable.

(e) Subject to subsection (f) of this section, the parties shall complete the negotiations that are required by this subchapter as a prerequisite to a contractor's request for contested case hearing no later than 270 days after the department receives the contractor's notice of claim.

(f) The parties may agree in writing to extend the time for negotiations on or before the 270th day after the department receives the contractor's notice of claim. The agreement shall be signed by representatives of the parties with authority to bind each respective party and shall provide for the extension of the statutory negotiation period until a date certain. The parties may enter into a series of written extension agreements that comply with the requirements of this section.

(g) The contractor may request a contested case hearing before the State Office of Administrative Hearings (SOAH) pursuant to §1.1814 of this subchapter (relating to Request for Contested Case Hearing) after the 270th day after the department receives the contractor's notice of claim, or the expiration of any extension agreed to under subsection (f) of this section.

(h) The parties may agree to mediate the dispute at any time before the 120th day after the department receives the contractor's notice of claim or before the expiration of any extension agreed to by the parties pursuant to subsection (f) of this section. The mediation shall be governed by §1.1816 of this subchapter (relating to Mediation of Contract Disputes).

(i) Nothing in this section is intended to prevent the parties from agreeing to commence negotiations earlier than the deadlines established in subsections (b) and (c) of this section, or from continuing or resuming negotiations after the contractor requests a contested case hearing before SOAH.

History

Source Note: The provisions of this §1.1809 adopted to be effective November 27, 2000, 25 TexReg 11658; amended to be effective May 9, 2007, 32 TexReg 2469.

28 Tex. Admin. Code § 1.1810 Conduct of Negotiation

(a) Negotiation is a consensual bargaining process in which the parties attempt to resolve a claim and counterclaim. A negotiation under this subchapter may be conducted by any method, technique, or procedure authorized under the contract or agreed upon by the parties.

(b) The parties may conduct negotiations with the assistance of one or more neutral third parties. If the parties choose to mediate their dispute, the mediation shall be conducted in accordance with §1.1816 of this subchapter (relating to Mediation of Contract Disputes). Parties may choose an assisted negotiation process other than mediation.

(c) To facilitate the meaningful evaluation and negotiation of the claim(s) and any counterclaim(s), the parties may exchange relevant documents that support their respective claims, defenses, counterclaims or positions.

(d) Material submitted pursuant to this section and claimed to be confidential by the contractor shall be handled pursuant to the requirements of the Texas Public Information Act.

History

Source Note: The provisions of this §1.1810 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1811 Settlement Approval Procedures

The parties' settlement approval procedures shall be disclosed prior to, or at the beginning of, negotiations. To the extent possible, the parties shall select negotiators who are knowledgeable about the subject matter of the dispute, who are in a position to reach agreement, and who can credibly recommend approval of an agreement.

History

Source Note: The provisions of this §1.1811 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1812 Settlement Agreement

(a) A settlement agreement may resolve an entire claim or any designated and severable portion of a claim.

(b) To be enforceable, a settlement agreement must be in writing and signed by representatives of the contractor and the department who have authority to bind each respective party.

(c) A partial settlement does not waive a party's rights under the Government Code Chapter 2260 as to the parts of the claims or counterclaims that are not resolved.

History

Source Note: The provisions of this §1.1812 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1813 Costs of Negotiation

Unless the parties agree otherwise, each party shall be responsible for its own costs incurred in connection with a negotiation, including, without limitation, the costs of attorney's fees, consultant's fees and expert's fees.

History

Source Note: The provisions of this §1.1813 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1814 Request for Contested Case Hearing

(a) If a claim for breach of contract is not resolved in its entirety through negotiation, mediation or other assisted negotiation process in accordance with this subchapter on or before the 270th day after the department receives the notice of claim, or after the expiration of any extension agreed to by the parties pursuant to §1.1809 of this subchapter (relating to Timetable), the contractor may file a request with the department for a contested case hearing before SOAH.

(b) A request for a contested case hearing shall state the legal and factual basis for the claim, and shall be delivered to the commissioner of the department or other officer designated in the contract to receive notice within a reasonable time after the 270th day or the expiration of any written extension agreed to pursuant to §1.1809 of this subchapter.

(c) The department shall forward the contractor's request for contested case hearing to SOAH within a reasonable period of time, not to exceed thirty days, after receipt of the request.

(d) The parties may agree to submit the case to SOAH before the 270th day after the notice of claim is received by the department if they have achieved a partial resolution of the claim or if an impasse has been reached in the negotiations and proceeding to a contested case hearing would serve the interests of justice.

History

Source Note: The provisions of this §1.1814 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1815 Mediation Timetable

(a) The contractor and the department may agree to mediate the dispute at any time before the 120th day after the department receives a notice of claim of breach of contract, or before the expiration of any extension agreed to by the parties in writing.

(b) A contractor and the department may mediate the dispute even after the case has been referred to SOAH for a contested case. SOAH may also refer a contested case for mediation pursuant to its own rules and guidelines, whether or not the parties have previously attempted mediation.

History

Source Note: The provisions of this §1.1815 adopted to be effective November 27, 2000, 25 TexReg 11658; amended to be effective May 9, 2007, 32 TexReg 2469.

28 Tex. Admin. Code § 1.1816 Mediation of Contract Disputes

(a) The parties may agree to mediate a claim through an impartial third party. The mediation is subject to the provisions of the Governmental Dispute Resolution Act, Government Code, Chapter 2009. For purposes of this subchapter, "mediation" is assigned the meaning set forth in the Civil Practice and Remedies Code §154.023.

(b) Mediation is a consensual process in which an impartial third party, the mediator, facilitates communication between the parties to promote reconciliation, settlement, or understanding among them. A mediator may not impose his or her own judgment on the issues for that of the parties. The mediator must be acceptable to both parties.

History

Source Note: The provisions of this §1.1816 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1817 Qualifications and Immunity of the Mediator

The mediator shall possess the qualifications required under the Civil Practice and Remedies Code §154.052, be subject to the standards and duties prescribed by the Civil Practice and Remedies Code §154.053 and have the qualified immunity prescribed by the Civil Practice and Remedies Code §154.055, if applicable.

History

Source Note: The provisions of this §1.1817 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1818 Confidentiality of Mediation and Final Settlement Agreement

(a) A mediation conducted under this section is confidential in accordance with Government Code §2009.054.

(b) The confidentiality of a final settlement agreement to which the department is a signatory that is reached as a result of the mediation is governed by Government Code Chapter 552.

History

Source Note: The provisions of this §1.1818 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1819 Costs of Mediation

Unless the contractor and the department agree otherwise, each party shall be responsible for its own costs incurred in connection with the mediation, including costs of document reproduction for documents requested by such party, attorney's fees, and consultant or expert fees. The costs of the mediator shall be divided equally between the parties.

History

Source Note: The provisions of this §1.1819 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1820 Settlement Approval Procedures

The parties' settlement approval procedures shall be disclosed by the parties prior to the mediation. To the extent possible, the parties shall select representatives who are knowledgeable about the subject matter of the dispute, who are in a position to reach agreement, and who can credibly recommend approval of an agreement.

History

Source Note: The provisions of this §1.1820 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1821 Initial Settlement Agreement

Any settlement agreement reached during the mediation shall be signed by the representatives of the contractor and the department, and shall describe any procedures required to be followed by the parties in connection with final approval of the agreement.

History

Source Note: The provisions of this §1.1821 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1822 Final Settlement Agreement

(a) A final settlement agreement reached during, or as a result of mediation, that resolves an entire claim or any designated and severable portion of a claim shall be in writing and signed by representatives of the contractor and the department who have authority to bind each respective party.

(b) If the settlement agreement does not resolve all issues raised by the claim and counterclaim, the agreement shall identify the issues that are not resolved.

(c) A partial settlement does not waive a contractor's rights under the Government Code, Chapter 2260, as to the parts of the claim that are not resolved.

History

Source Note: The provisions of this §1.1822 adopted to be effective November 27, 2000, 25 TexReg 11658.

28 Tex. Admin. Code § 1.1823 Referral to the State Office of Administrative Hearings

If mediation does not resolve all issues raised by the claim, the contractor may request that the claim be referred to SOAH by the department. Nothing in this subchapter prohibits the contractor and the department from mediating their dispute after the case has been referred for contested case hearing, subject to the rules of SOAH.

History

Source Note: The provisions of this §1.1823 adopted to be effective November 27, 2000, 25 TexReg 11658.

Subchapter Q ASSIGNMENT AND USE OF AGENCY VEHICLES

28 Tex. Admin. Code § 1.1901 Purpose

This subchapter sets out the process for the assignment and use of the department's vehicles. This subchapter implements Government Code §2171.1045, concerning Restrictions on Assignment of Vehicles, and is consistent with the State Vehicle Fleet Management Plan as adopted by the Office of Vehicle Fleet Management of the Texas Comptroller of Public Accounts.

History

Source Note: The provisions of this §1.1901 adopted to be effective July 8, 2001, 26 TexReg 4874; amended to be effective November 6, 2025, 50 TexReg 7111.

28 Tex. Admin. Code § 1.1902 Use of Department Vehicles

All vehicles, with the exception of vehicles assigned to field employees, are assigned to the department motor pool and may be available for checkout as needed for state business. Because of the department's organizational structure, some pool vehicles may be maintained at remote or field locations.

History

Source Note: The provisions of this §1.1902 adopted to be effective July 8, 2001, 26 TexReg 4874.

28 Tex. Admin. Code § 1.1903 Assignment of Department Vehicles

The department may assign a vehicle to an individual administrative or executive employee on a regular or daily basis only if there is a written documentation by the department that the assignment is critical to the needs and mission of the department.

History

Source Note: The provisions of this §1.1903 adopted to be effective July 8, 2001, 26 TexReg 4874.

28 Tex. Admin. Code § 1.1904 Waiver or Exemption

The department will cooperate with the Texas Comptroller of Public Accounts to identify, request and, if appropriate, use any waiver or exemption provision in the State Vehicle Fleet Management Plan based on conditions specific to the department in the interest of promoting fiscal efficiency and good business practices.

History

Source Note: The provisions of this §1.1904 adopted to be effective July 8, 2001, 26 TexReg 4874; amended to be effective November 6, 2025, 50 TexReg 7111.

Subchapter U ENHANCED CONTRACTS AND PERFORMANCE MONITORING

28 Tex. Admin. Code § 1.2201 Enhanced Contracts and Performance Monitoring

Under Government Code §2261.253, the Texas Department of Insurance implements the following procedures for contracts for the purchase of goods or services from private vendors until the contract expires or is completed.

(1) For each contract with a value greater than $25,000, the procurement director will evaluate whether enhanced contract or performance monitoring is appropriate. The procurement director may evaluate whether enhanced contract or performance monitoring is appropriate for contracts with a value less than $25,000. Criteria that may be considered include:

(A) total cost of the contract, including contract renewals;

(B) risk of loss to the department under the contract;

(D) whether the vendor is a foreign or domestic person or entity.

(2) After evaluation of the contract, if enhanced contract or performance monitoring is appropriate, the procurement director or designee will immediately report to the commissioner of insurance, the commissioner of workers' compensation, or both commissioners, as appropriate, based on the subject matter of the contract:

(A) the basis for determination as to whether enhanced contract or performance monitoring is appropriate;

(B) include any serious issues or risks identified with the contract, if applicable; and

(C) if enhanced contract or performance monitoring is appropriate, the department's plan for carrying out the enhanced contract or performance monitoring.

History

Source Note: The provisions of this §1.2201 adopted to be effective July 26, 2016, 41 TexReg 5427.

Subchapter BB FORMS PRIVACY NOTICE

28 Tex. Admin. Code § 1.2801 Purpose and Applicability

The purpose of these sections is to implement the state government privacy policy requirements of Texas Government Code Chapter 559. This subchapter only applies to forms adopted directly or by reference under this title, and for which the department collects information about an individual by means of a form that the individual completes and files with the department in a paper format or in an electronic format including on the department's Internet site.

History

Source Note: The provisions of this §1.2801 adopted to be effective June 5, 2002, 27 TexReg 4707.

28 Tex. Admin. Code § 1.2802 Right To Be Informed About Information Collected

It is the policy of the department that an individual is entitled to be informed about information that the department collects about the individual unless the department is allowed to withhold the information from the individual pursuant to Government Code §552.023.

History

Source Note: The provisions of this §1.2802 adopted to be effective June 5, 2002, 27 TexReg 4707.

28 Tex. Admin. Code § 1.2803 Notice About Certain Information Laws and Practices

(a) The following notice is hereby incorporated into all forms adopted directly or by reference under this title and for which the department collects information about an individual by means of a form that the individual completes and files with the department in a paper format or in an electronic format, including on the department's website.

Attached Graphic

(b) The notice incorporated by subsection (a) of this section will be deemed incorporated into such forms as of the effective date of this section.

History

Source Note: The provisions of this §1.2803 adopted to be effective June 5, 2002, 27 TexReg 4707; amended to be effective June 7, 2023, 48 TexReg 2854.

Subchapter CC ADVISORY COMMITTEES

28 Tex. Admin. Code § 1.2828 Advisory Committees

(a) The department may create advisory committees as it deems necessary in accordance with Government Code Chapter 2110 to assist, advise, and provide expertise to the department, or as required by statute. Committees are not responsible for rulemaking or policymaking.

(b) The following provisions apply to an advisory committee established by the department, unless different requirements are imposed by statute:

(1) Role and responsibility.

(A) An advisory committee will review department issues and provide advice to the department.

(B) An advisory committee may make recommendations to the department.

(2) Composition.

(A) The commissioner or the commissioner's designee may appoint one or more department staff in a non-member position to assist each advisory committee. Such non-member positions are non-voting.

(B) The commissioner or the commissioner's designee will appoint a reasonable number of members, not to exceed 24, to each advisory committee.

(C) An advisory committee will be composed of members from diverse geographical areas who have demonstrated expertise in the area of the particular advisory committee.

(D) The committee must select from among its members a presiding officer who presides over the advisory committee, establishes meeting agendas, and reports to the department.

(3) Membership.

(A) Members will be appointed for terms not to exceed four years. The commissioner or the commissioner's designee may appoint members for staggered terms. Members may serve after expiration of their term until the commissioner or the commissioner's designee appoints a replacement.

(B) If a vacancy occurs, the commissioner or the commissioner's designee will appoint a qualified replacement to serve the unexpired portion of that term.

(D) Members serve on an advisory committee without compensation. Travel reimbursement and per diem expenses incurred in performing official duties of membership will be permitted only if authorized by the Legislature in the General Appropriations Act or through the budget execution process under the Government Code Chapter 317 if the advisory committee is created after it is practicable to address the existence of the committee in the General Appropriations Act.

(4) Meetings.

(A) An advisory committee must meet at least quarterly unless otherwise directed by the commissioner or designee.

(B) A meeting of the advisory committee may be called by the presiding officer, the commissioner, or the commissioner's designee.

(C) A simple majority of advisory committee members will constitute a quorum. An advisory committee may transact official business only when a quorum is present.

(D) An advisory committee must comply with the Open Meetings Act, Government Code Chapter 551.

(5) Training.

(A) Each member of an advisory committee must receive training regarding the Open Meetings Act.

(B) Each member of an advisory committee must receive training as to the department's mission, organizational structure, and goals.

(C) Each member of an advisory committee must receive training necessary to perform his or her official duties as a committee member.

(6) Evaluation.

(A) An advisory committee will regularly report to the commissioner or designee its recommendations.

(B) When requested by the commissioner or the commissioner's designee, an advisory committee must file a report with the department containing:

(i) the minutes of all meetings;

(ii) an executive summary including details as to the committee's work and usefulness; and

(iii) a list of recommendations.

(7) Duration.

(A) Unless an abolishment date is set by rule, an advisory committee will operate as long as the commissioner or the commissioner's designee deems necessary based on an annual evaluation of the need and usefulness of each committee.

(B) If an abolishment date for a committee is set by rule, the committee will be abolished on its abolishment date.

History

Source Note: The provisions of this §1.2828 adopted to be effective May 13, 2012, 37 TexReg 3595.

Subchapter DD EMPLOYEE TRAINING AND EDUCATION

28 Tex. Admin. Code § 1.3101 General Provisions

(a) TDI may use state funds to provide education and training for its employees.

(b) The education and training program benefits the TDI and participating employees by:

(1) preparing for technological and legal developments;

(2) increasing work capabilities;

(3) increasing the number of qualified employees; and

(4) increasing the competence of employees.

(c) Approval to participate in an education or training program is not automatic and may be subject to the availability of funds.

History

Source Note: The provisions of this §1.3101 adopted to be effective October 13, 2015, 40 TexReg 7092.

28 Tex. Admin. Code § 1.3102 Eligibility requirements

(a) The education or training must be related to the employee's current position or prospective job duties.

(b) In order for an employee to be eligible for tuition reimbursement or education leave, an employee may be required to meet certain conditions, including, but not limited to, an employment period, performance ratings, and disciplinary actions.

History

Source Note: The provisions of this §1.3102 adopted to be effective October 13, 2015, 40 TexReg 7092.

28 Tex. Admin. Code § 1.3103 Participation

(a) Participation in an education or training program may include:

(1) mandatory TDI-sponsored training required for all employees;

(2) education and training relating to technical or professional certifications and licenses;

(3) education and training relating to the promotion of employee development;

(4) employee-funded external education;

(5) TDI-funded external education; and

(6) other TDI-sponsored education and training.

(b) Employees may be required to complete an education or training program related to the employee's duties or prospective duties as a condition of employment.

(c) Permission to participate in any education and training program may be withdrawn if TDI determines that participation would negatively impact the employee's job duties or performance.

History

Source Note: The provisions of this §1.3103 adopted to be effective October 13, 2015, 40 TexReg 7092.

28 Tex. Admin. Code § 1.3104 Obligations

On completion of an education or training program, an employee's manager may require that the employee assume certain additional obligations, including, but not limited to:

(1) discussing and sharing information obtained at the training with other employees;

(2) assuming the additional job duties that the training prepared the employee for;

(3) conducting training for other employees concerning the information or skills taught at the training program; and

(4) remaining employed at TDI for a specific length of time or repay the reimbursement.

History

Source Note: The provisions of this §1.3104 adopted to be effective October 13, 2015, 40 TexReg 7092.

28 Tex. Admin. Code § 1.3105 No Effect on At-Will Status

Approval to participate in any portion of the education and training program will not affect an employee's at-will status or constitute a guarantee or indication of continued employment, nor will it constitute a guarantee or indication of future employment in a current or prospective position.

History

Source Note: The provisions of this §1.3105 adopted to be effective October 13, 2015, 40 TexReg 7092.

Chapter 3 LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES

Subchapter C APPROVAL, DISAPPROVAL, AND WITHDRAWAL OF APPROVAL OF CERTAIN PARTICIPATING POLICY FORMS

28 Tex. Admin. Code § 3.201 Definition of Certain Participating Policies

A "certain participating" policy is defined as any contract of life insurance which contains a provision through which the policy holder becomes, or which creates or tends to create the understanding that he will become, an investor in the insurance company, and that, as an investor, he will be entitled to participate in future corporate earnings as specified in the contract of insurance. The "certain participating" policy defined in this paragraph is to be contrasted to policies which employ participation provisions which make no greater promise (or which neither create nor tend to create an understanding of a greater promise) than that the policy holder may receive back, by way of participation, part of the premiums which he has paid. This latter type of participation provision, which is unobjectionable, raises no inference that the insured occupies any status other than that of policy holder. It does not, in other words, promise or tend to lead the policy holder into the belief that he is an investor in the company and that his position is comparable to a part owner of the company insofar as the distribution of profits is concerned. In making the distinctions herein described, the commissioner may also consider any regulations as applied by the Internal Revenue Service relating to the taxation of corporate profits distributed as dividends. This is to be contrasted to a partial refund of insurance premiums, which is not taxable as income under Internal Revenue Service regulations.

History

Source Note: The provisions of this §3.201 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 3.202 Specification of Certain Participating Policies

Consistent with the definitions and principles contained and expressed in §3.201 of this title (relating to Definition of Certain Participating Policies), and without limiting their generality, the types of policies described in paragraphs (1) and (2) of this section are also defined as "certain participating" policies.

(1) Charter or founder's policies. A "charter policy" or "founder's policy" is that form of life insurance policy or annuity contract, usually issued by a newly organized insurer, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the insurer, or perhaps both. The prospective purchaser may be led to believe that he will receive a special advantage in any future distribution of earnings, profits, or dividends not available to those persons holding other types of policies issued by the insurer.

(2) Profit-sharing policies. A "profit-sharing policy" is that form of life insurance policy or annuity contract which contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate in any future distribution of general corporate profits, with special advantages not available to persons holding other types of policies issued by the insurer to individuals of the same class and equal expectations of life.

History

Source Note: The provisions of this §3.202 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 3.203 Instructions to Commissioner

From and after the effective date hereof, the commissioner will not approve any "certain participating" policy form as defined herein. The commissioner will proceed to withdraw approval, under authority of Insurance Code Chapter 1701, of any such forms which have heretofore been approved. Without limiting the generality of the legal bases upon which disapprovals or withdrawals of approvals heretofore granted will be predicated, the department hereby finds and declares as follows:

(1) such policy forms are by their nature unfair, inequitable, misleading, and deceptive, and encourage misrepresentation; and

(2) such policy forms are particularly subject to misleading sales techniques.

History

Source Note: The provisions of this §3.203 adopted to be effective January 1, 1976; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.204 Material and Information for the Commissioner To Consider

When any other type participating policies are being reviewed by the commissioner of insurance for approval or disapproval, the commissioner is authorized to study and take into consideration not only the titles, terms, and text of such policy itself but also the following additional materials, data, evidence, and information to determine whether such policy complies with the provisions hereof and the requirements of the Insurance Code:

(1) any and all advertisements, estimates, comparisons, illustrations, circulars, statements, notices, brochures, pamphlets, letters, posters, announcements, articles, projections, literature, pictures, reports, books, newspapers, magazines, records, films, or other matter of any nature whatsoever made, issued, circulated, published, disseminated, delivered, used, referred to, or placed before the public in any manner whatsoever relating to or in connection with such certain participating policies of insurance;

(2) any and all oral statements, assertions, or representations, the sales techniques or procedures, and the training, study or learning devices or programs made, used, followed, or employed by the agents, employees or representatives of the insurance company;

(3) any other matters set forth in Insurance Code Chapter 541 or other statute of the Insurance Code;

(4) in the event the commissioner finds that such participating policy and such materials referred to previously do not truthfully, correctly, fairly, honestly, adequately, or properly explain and represent such terms, conditions, promises, and benefits of such policy, the commissioner will disapprove such policy under the provisions of Insurance Code Chapter 1701.

History

Source Note: The provisions of this §3.204 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.205 Construction of Rules

This subchapter may not be construed to prohibit the use of any provision authorized by Insurance Code §541.056(c) or other applicable statute.

History

Source Note: The provisions of this §3.205 adopted to be effective June 2, 1982, 7 TexReg 1903; amended to be effective May 11, 2022, 47 TexReg 2758.

Subchapter E GROUP LIFE, AND/OR GROUP ACCIDENT AND HEALTH INSURANCE POLICIES AND CERTIFICATES

28 Tex. Admin. Code § 3.408 Mandatory Policy Provisions

(a) Each group policy of accident and sickness insurance that is delivered, issued for delivery, or renewed in Texas on or after January 1, 1988, including a policy issued by a company subject to Insurance Code Chapter 842, must contain a benefit provision which states, "All benefits paid on behalf of the child or children under the policy must be paid to the Texas Health and Human Services Commission" whenever:

(1) the Texas Health and Human Services Commission is paying benefits under Human Resources Code Chapter 31 or Chapter 32, i.e., financial and medical assistance service programs administered pursuant to the Human Resources Code; and

(2) the parent who is covered by the group policy has possession or access to the child pursuant to a court order, or is not entitled to access or possession of the child and is required by the court to pay child support.

(b) The insurer or group nonprofit hospital service company must receive at its home office, written notice affixed to the insurance claim that when the claim is first submitted, and the notice must state that all benefits paid pursuant to this section must be paid directly to the Texas Health and Human Services Commission.

(c) With respect to any policy forms approved by the Texas Department of Insurance prior to the effective date of this section, an insurer is authorized to achieve compliance with this section by the use of endorsements or riders, provided such endorsements or riders are approved by the Texas Department of Insurance as being in compliance with this section and the provisions of the Insurance Code.

(d) All policies issued or renewed on and after January 1, 1988, will be considered in compliance with this section if they contain the language prescribed within subsection (a) of this section.

History

Source Note: The provisions of this §3.408 adopted to be effective May 2, 1989, 14 TexReg 1870; amended to be effective May 11, 2022, 47 TexReg 2758.

Subchapter F RATE REVIEW FOR HEALTH BENEFIT PLANS

28 Tex. Admin. Code § 3.501 Purpose and Applicability

(a) The purpose of this subchapter is to implement Insurance Code Chapter 1698, concerning Rates for Certain Coverage, and to establish an effective rate review program in the individual and small group markets, consistent with 45 CFR §154.301, concerning CMS's Determinations of Effective Rate Review Programs.

(b) This subchapter applies to a plan that is subject to Insurance Code Chapter 1698.

(1) "short-term limited-duration insurance" as defined in Insurance Code Chapter 1509, concerning Short-Term Limited-Duration Insurance;

(2) "grandfathered health plan coverage" as defined by 45 CFR §147.140, concerning Preservation of Right to Maintain Existing Coverage; or

(3) individual limited scope plans, including but not limited to dental benefit plans and vision benefit plans.

History

Source Note: The provisions of this §3.501 adopted to be effective June 16, 2022, 47 TexReg 3467.

28 Tex. Admin. Code § 3.502 Definitions

For purposes of this subchapter, the following terms have the meanings indicated, except where the context clearly indicates otherwise:

(1) Actuarial value (AV)--As defined in 45 CFR §156.20, concerning Definitions.

(2) Cost-sharing reductions (CSRs)--As defined in 45 CFR §155.20, concerning Definitions.

(3) Essential health benefits (EHBs)--Health benefits contained in the applicable "essential health benefits package" as that term is defined in 45 CFR §156.20.

(4) Federal medical loss ratio standard--The applicable medical loss ratio standard for the market segment involved, determined under subpart B of 45 CFR part 158, concerning Issuer Use of Premium Revenue: Reporting and Rebate Requirements.

(5) HHS--The U.S. Department of Health and Human Services.

(6) Issuer--An insurance company or health maintenance organization that issues a plan that is subject to Insurance Code Chapter 1698, concerning Rates for Certain Coverage.

(7) Index rate--A rate based on the total combined claims costs for providing essential health benefits within the single risk pool of the applicable market.

(8) Plan--As defined in 45 CFR §144.103, concerning Definitions.

(9) Product--As defined in 45 CFR §154.102, concerning Definitions.

(10) Qualified actuary--An actuary who is certified by the American Academy of Actuaries to meet the U.S. Qualification Standards.

(11) Single risk pool--With respect to a particular issuer and for the purposes of considering claims experience and developing an index rate, the grouping of all members enrolled in individual market plans or small group market plans that are subject to this chapter, consistent with 45 CFR §156.80, concerning Single Risk Pool.

(12) Unified Rate Review Template (URRT)--A spreadsheet that comprises Part I of the rate filing justification, as described in 45 CFR §154.215, concerning Submission of Rate Filing Justification.

History

Source Note: The provisions of this §3.502 adopted to be effective June 16, 2022, 47 TexReg 3467.

28 Tex. Admin. Code § 3.503 Rating Standards

A rate filing filed under this subchapter must comply with all applicable state and federal requirements, including:

(1) Insurance Code Chapter 560, concerning Prohibited Rates;

(2) Insurance Code §843.2071, concerning Notice of Increase in Charge for Coverage;

(3) Insurance Code §1201.109, concerning Notice of Rate Increase for Major Medical Expense Insurance Policy;

(4) Insurance Code Chapter 1271, Subchapter F, concerning Schedule of Charges;

(5) Insurance Code §1501.215, concerning Reporting Requirements, and §1501.216, concerning Premium Rates: Notice of Increase;

(6) Insurance Code Chapter 1698, concerning Rates for Certain Coverage;

(7) 42 USC §300gg, concerning Fair Health Insurance Premiums;

(8) 42 USC §300gg-94, concerning Ensuring That Consumers Get Value for Their Dollars;

(9) 42 USC §18032(c), concerning Consumer Choice;

(10) 45 CFR §147.102, concerning Fair Health Insurance Premiums;

(11) 45 CFR Part 154, concerning Health Insurance Issuer Rate Increases: Disclosure and Review Requirements; and

(12) 45 CFR §156.80, concerning Single Risk Pool.

History

Source Note: The provisions of this §3.503 adopted to be effective June 16, 2022, 47 TexReg 3467.

28 Tex. Admin. Code § 3.504 Geographic Rating Areas

(a) An issuer may vary rates based on rating area, which is determined:

(1) in the individual market, using the primary policyholder's or contract holder's address; and

(2) in the small group market, using the group policyholder's or contract holder's principal business address.

(b) For the purposes of this subchapter, rating areas for plan or policy years beginning on or after January 1, 2023, are established as follows.

(1) Rating area 1 (Abilene) consists of the following Texas counties:

(A) Brown;

(B) Callahan;

(D) Comanche;

(E) Eastland;

(F) Fisher;

(G) Haskell;

(H) Jones;

(I) Kent;

(J) Mitchell;

(K) Nolan;

(L) Runnels;

(M) Scurry;

(N) Shackelford;

(O) Stephens;

(P) Stonewall;

(Q) Taylor; and

(R) Throckmorton.

(2) Rating area 2 (Amarillo) consists of the following Texas counties:

(A) Armstrong;

(B) Briscoe;

(D) Castro;

(E) Childress;

(F) Collingsworth;

(G) Dallam;

(H) Deaf Smith;

(I) Donley;

(J) Gray;

(K) Hall;

(L) Hansford;

(M) Hartley;

(N) Hemphill;

(O) Hutchinson;

(P) Lipscomb;

(Q) Moore;

(R) Ochiltree;

(S) Oldham;

(T) Parmer;

(U) Potter;

(V) Randall;

(W) Roberts;

(X) Sherman;

(Y) Swisher; and

(Z) Wheeler.

(3) Rating area 3 (Austin) consists of the following Texas counties:

(A) Bastrop;

(B) Blanco;

(D) Caldwell;

(E) Fayette;

(F) Hays;

(G) Lee;

(H) Llano;

(I) Travis; and

(J) Williamson.

(4) Rating area 4 (Beaumont) consists of the following Texas counties:

(A) Angelina;

(B) Hardin;

(D) Jasper;

(E) Jefferson;

(F) Nacogdoches;

(G) Newton;

(H) Orange;

(I) Polk;

(J) Sabine;

(K) San Augustine;

(L) San Jacinto;

(M) Shelby;

(N) Trinity; and

(O) Tyler.

(5) Rating area 5 (Brownsville) consists of the following Texas counties:

(A) Cameron;

(B) Kenedy; and

(6) Rating area 6 (College Station) consists of the following Texas counties:

(A) Brazos;

(B) Burleson;

(D) Leon;

(E) Madison;

(F) Milam;

(G) Robertson; and

(H) Washington.

(7) Rating area 7 (Corpus Christi) consists of the following Texas counties:

(A) Aransas;

(B) Bee;

(D) Kleberg;

(E) Live Oak;

(F) Nueces;

(G) Refugio; and

(H) San Patricio.

(8) Rating area 8 (Dallas) consists of the following Texas counties:

(A) Collin;

(B) Dallas;

(D) Hunt;

(E) Kaufman;

(F) Navarro; and

(G) Rockwall.

(9) Rating area 9 (El Paso) consists of the following Texas counties:

(A) Brewster;

(B) Culberson;

(D) Hudspeth;

(E) Jeff Davis; and

(F) Presidio.

(10) Rating area 10 (Houston) consists of the following Texas counties:

(A) Galveston; and

(B) Harris.

(11) Rating area 11 (Killeen/Temple) consists of the following Texas counties:

(A) Bell;

(B) Coryell;

(D) Lampasas;

(E) Mills; and

(F) San Saba.

(12) Rating area 12 (Laredo) consists of the following Texas counties:

(A) Duval;

(B) Jim Hogg;

(D) Webb; and

(E) Zapata.

(13) Rating area 13 (Longview) consists of the following Texas counties:

(A) Gregg;

(B) Harrison;

(D) Panola;

(E) Rusk; and

(F) Upshur.

(14) Rating area 14 (Lubbock) consists of the following Texas counties:

(A) Bailey;

(B) Cochran;

(D) Dickens;

(E) Floyd;

(F) Garza;

(G) Hale;

(H) Hockley;

(I) King;

(J) Lamb;

(K) Lubbock;

(L) Lynn;

(M) Motley;

(N) Terry; and

(O) Yoakum.

(15) Rating area 15 (McAllen) consists of the following Texas counties:

(A) Brooks;

(B) Hidalgo; and

(16) Rating area 16 (Midland/Odessa) consists of the following Texas counties:

(A) Andrews;

(B) Borden;

(D) Dawson;

(E) Ector;

(F) Gaines;

(G) Glasscock;

(H) Howard;

(I) Loving;

(J) Martin;

(K) Midland;

(L) Pecos;

(M) Reeves;

(N) Terrell;

(O) Upton;

(P) Ward; and

(Q) Winkler.

(17) Rating area 17 (San Angelo) consists of the following Texas counties:

(A) Coke;

(B) Concho;

(D) Irion;

(E) Kimble;

(F) Mason;

(G) McCulloch;

(H) Menard;

(I) Reagan;

(J) Schleicher;

(K) Sterling;

(L) Sutton; and

(M) Tom Green.

(18) Rating area 18 (San Antonio) consists of the following Texas counties:

(A) Atascosa;

(B) Bandera;

(D) Comal;

(E) Dimmit;

(F) Edwards;

(G) Frio;

(H) Gillespie;

(I) Gonzales;

(J) Guadalupe;

(K) Kendall;

(L) Kerr;

(M) Kinney;

(N) La Salle;

(O) Maverick;

(P) Medina;

(Q) Real;

(R) Uvalde;

(S) Val Verde;

(T) Wilson; and

(U) Zavala.

(19) Rating area 19 (Sherman/Dennison) consists of the following Texas counties:

(A) Cooke;

(B) Fannin; and

(20) Rating area 20 (Texarkana) consists of the following Texas counties:

(A) Bowie;

(B) Camp;

(D) Delta;

(E) Franklin;

(F) Hopkins;

(G) Lamar;

(H) Morris;

(I) Red River; and

(J) Titus.

(21) Rating area 21 (Tyler) consists of the following Texas counties:

(A) Anderson;

(B) Cherokee;

(D) Rains;

(E) Smith;

(F) Van Zandt; and

(G) Wood.

(22) Rating area 22 (Victoria) consists of the following Texas counties:

(A) Calhoun;

(B) DeWitt;

(D) Jackson;

(E) Karnes;

(F) Lavaca; and

(G) Victoria.

(23) Rating area 23 (Waco) consists of the following Texas counties:

(A) Bosque;

(B) Falls;

(D) Hill;

(E) Limestone; and

(F) McLennan.

(24) Rating area 24 (Wichita Falls) consists of the following Texas counties:

(A) Archer;

(B) Baylor;

(D) Cottle;

(E) Foard;

(F) Hardeman;

(G) Jack;

(H) Knox;

(I) Montague;

(J) Wichita;

(K) Wilbarger; and

(L) Young.

(25) Rating area 25 (Fort Worth) consists of the following Texas counties:

(A) Denton;

(B) Erath;

(D) Johnson;

(E) Palo Pinto;

(F) Parker;

(G) Somervell;

(H) Tarrant; and

(I) Wise.

(26) Rating area 26 (Houston SW) consists of the following Texas counties:

(A) Austin;

(B) Brazoria;

(D) Fort Bend;

(E) Matagorda;

(F) Waller; and

(G) Wharton.

(27) Rating area 27 (Houston NE) consists of the following Texas counties:

(A) Chambers;

(B) Liberty;

(D) Walker.

History

Source Note: The provisions of this §3.504 adopted to be effective June 16, 2022, 47 TexReg 3467.

28 Tex. Admin. Code § 3.505 Required Rate Filings

(a) An issuer may not use a rate with respect to a plan if:

(1) the issuer has not filed the rate with TDI for review;

(2) the rate filing does not comply with the standards in §3.503 of this title (relating to Rating Standards); or

(3) the rate filing has been withdrawn.

(b) Each issuer must submit an annual rate filing no later than June 15 for any individual or small group market plan that will be issued effective on or after January 1 in the following calendar year. A small group issuer may include scheduled quarterly trend increases within the annual rate filing. An issuer may have only one active annual single risk pool rate filing in each market. An issuer may not modify an annual rate filing later than October 1 prior to the calendar year for which the filing was submitted.

(c) A small group issuer may submit a rate filing for a quarterly rate change that takes effect on April 1, July 1, or October 1. A small group issuer may have only one active quarterly single risk pool rate filing at a given time. Notwithstanding §26.11 of this title (relating to Restrictions Relating to Premium Rates), a small group issuer must submit a quarterly rate filing at least 105 days before the effective date of the rate change.

(d) A rate filing must include the index rate for the single risk pool and reflect every product and plan that is part of the single risk pool in the applicable market. Issuers are not required to enter CSR plan variations separately.

(e) Rate filings made under this subchapter must be submitted through the electronic system designated by TDI, according to any technical instructions provided for the electronic system and consistent with the rules and procedures in Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings) and §11.301 of this title (relating to Filing Requirements).

(f) Rate filings made under this subchapter must include the following:

(1) the URRT (Part I);

(2) for a rate increase that is 15% or more within a 12-month period that begins on January 1, as determined by 45 CFR §154.200(b) and (c), concerning Rate Increases Subject to Review, a written description justifying the rate increase (Part II) that complies with 45 CFR §154.215(e), concerning Submission of Rate Filing Justification;

(3) rating filing documentation (Part III) that complies with 45 CFR §154.215(f) and that includes an unredacted actuarial memorandum signed by a qualified actuary;

(4) a rates table that identifies the applicable rate for each plan, depending on an individual's rating area, tobacco use, and age;

(5) an enrollment spreadsheet that contains, with respect to each county:

(A) the number of covered lives, as of March 31 of the current year, that are enrolled in each of the following plan types, separated on the basis of whether the enrollment is through the federal exchange or off-exchange:

(i) catastrophic plans;

(ii) bronze plans;

(iii) silver plans, separated as follows:

(I) silver plans with an AV of 70%;

(II) silver plans with an AV of 73%;

(III) silver plans with an AV of 87%;

(IV) silver plans with an AV of 94%; and

(V) silver plans with an AV of 100%;

(iv) gold plans; and

(v) platinum plans;

(B) whether the plan is available in the county in the current calendar year; and

(6) an AV and cost-sharing factor spreadsheet that contains:

(A) the plan ID specified in the URRT; and

(B) the component factors of an AV and cost-sharing design of plan field in the URRT, which should not include adjustments that account for the morbidity of the population expected to enroll in the plan, including:

(i) the AV used in the pricing of the plan, which must fall within the de minimis variation permitted for the level of coverage provided by the plan under 45 CFR §156.140, concerning Levels of Coverage;

(ii) the induced-demand factor of 1.00 for bronze plans, 1.03 for silver plans, 1.08 for gold plans, and 1.15 for platinum plans; and

(iii) for individual silver plans on the exchange, a CSR adjustment factor of 1.40, that accounts for the average costs attributable to CSRs, to the extent that issuers are not otherwise being reimbursed for those costs. If issuers are being reimbursed for those costs by HHS, consistent with 42 USC §18071, concerning Reduced Cost-Sharing for Individuals Enrolling in Qualified Health Plans, then the CSR adjustment factor would not apply.

(g) Issuers may submit data using the templates available on TDI's website at www.tdi.texas.gov/health/ratereview.html.

(h) On request from TDI, an issuer must provide any additional information needed to evaluate the rate filing.

(i) An issuer that does not intend to issue a plan that would require a rate filing for the next calendar year, but that has enrollment in a plan that is subject to this subchapter in the current year or the prior year, must submit the data for such plan under paragraphs (1) and (2) of this subsection, as applicable, to TDI no later than June 15. For example, in June of 2022, an issuer must submit data under paragraph (1) of this subsection for the 2021 calendar year, and data under paragraph (2) of this subsection for the first five months of calendar year 2022. An issuer that does not have data to submit under paragraph (2) of this subsection is still required to submit data under paragraph (1) of this subsection.

(1) For prior year cumulative data, an issuer must submit:

(A) allowed claim costs, defined as total payments made under the plan to health care providers on behalf of covered members and including payments made by the issuer, member cost-sharing, cost-sharing paid by HHS on behalf of low-income members, and net payments from any federal or state reinsurance arrangement or program;

(B) incurred claim costs, defined as allowed claim costs as specified in subparagraph (A) of this paragraph, less member cost-sharing, cost-sharing paid by HHS on behalf of low-income members, and any net payments from a federal or state reinsurance arrangement;

(D) member months.

(2) For current year cumulative data through March 31, an issuer must submit:

(A) earned premium;

(B) member months; and

History

Source Note: The provisions of this §3.505 adopted to be effective June 16, 2022, 47 TexReg 3467; amended to be effective June 1, 2025, 50 TexReg 2693.

28 Tex. Admin. Code § 3.506 Review of Rate Filings

(a) Upon receipt of a rate filing under this subchapter, TDI will evaluate whether the issuer has provided sufficient data and documentation for TDI to make the determinations specified in this section. If the level of detail provided by the issuer under §3.505 of this title (relating to Required Rate Filings) does not provide a sufficient basis for TDI to make a determination, TDI will request additional information as necessary. The issuer must provide the requested information within 10 business days of the request. If the issuer fails to provide the requested information or establish a plan that is acceptable to TDI to provide the information, TDI will deem the filing withdrawn and notify the issuer of the withdrawal.

(b) In reviewing rates filed under this subchapter, TDI will examine:

(1) the reasonableness of the assumptions used by the issuer to develop the rates and the validity of the historical data underlying the assumptions;

(2) the issuer's data related to past projections and actual experience;

(3) the reasonableness of assumptions used by the issuer to estimate the rate impact of the reinsurance and risk adjustment programs under 42 USC §18061, concerning Transitional Reinsurance Program for Individual Market in Each State, and 42 USC §18063, concerning Risk Adjustment; and

(4) the issuer's data related to implementation and ongoing utilization of a market-wide single risk pool, essential health benefits, actuarial values, and other market reform rules as required by 42 USC Subchapter XXV, Part A, concerning Individual and Group Market Reforms.

(c) In reviewing rates filed under this subchapter, TDI will consider the following factors to the extent applicable to the filing under review:

(1) the factors specified in Insurance Code §1698.052(b) and (d), concerning Additional Rules and Guidance Related to Individual Health Plan Rates;

(2) the factors listed in 45 CFR §154.301(a)(4), concerning CMS's Determinations of Effective Rate Review Programs; and

(3) whether the issuer complies with the rating standards provided under §3.503 of this title (relating to Rating Standards).

(d) In reviewing rates for a qualified health plan, TDI will also consider the factors specified in Insurance Code §1698.052(c).

(e) A rate increase is unreasonable if, based on the criteria identified in this subsection, the rate is excessive, unjustified, or unfairly discriminatory.

(1) A rate increase is excessive if it causes the premium charged for the health insurance coverage to be unreasonably high in relation to the benefits provided under the coverage. In determining whether the rate increase causes the premium charged to be unreasonably high in relationship to the benefits provided, TDI will consider:

(A) whether the rate increase results in a projected medical loss ratio below the federal medical loss ratio standard in the applicable market to which the rate increase applies, after accounting for any adjustments allowable under federal law;

(B) whether one or more of the assumptions on which the rate increase is based is not supported by substantial evidence; and

(2) A rate increase is unjustified if the issuer provides data or documentation that is incomplete, inadequate, or otherwise does not provide a basis upon which the reasonableness of an increase may be determined.

(3) A rate increase is unfairly discriminatory as described by Insurance Code §560.002(c), concerning Use of Certain Rates Prohibited; Rate Requirements.

(f) A rate will be deemed compliant at the expiration of 60 days from the filing of the rate, unless the filing is withdrawn or TDI has determined that the rate is noncompliant or granted an extension as described below. If TDI has not finalized a determination before the 60th day, TDI may extend the 60-day period by not more than 10 days if TDI provides notice of the extension to the issuer. Notwithstanding anything else in this subsection, the issuer may extend the time frame for TDI's review or waive the right to deem the rate compliant.

(g) If a rate filing fails to comply with the rating standards provided under §3.503 of this title, TDI will identify the deficiency and ask for corrections. If within 10 business days the issuer fails to either make the necessary corrections or establish a plan that is acceptable to TDI to address the identified deficiencies, TDI will deem the filing to be noncompliant and notify the issuer of the determination.

(h) Before making a determination that a rate increase is unreasonable, TDI will communicate its objections to the issuer and provide an opportunity for the issuer to provide additional information or to make modifications. If TDI determines that a rate increase is unreasonable but that the issuer is legally permitted to implement the rate increase, TDI will issue a final determination and a brief explanation. After receiving a final determination that a rate increase is unreasonable, the issuer must submit a final justification for the rate increase and prominently post information concerning the rate increase, consistent with 45 CFR §154.230, concerning Submission and Posting of Final Justifications for Unreasonable Rate Increases.

History

Source Note: The provisions of this §3.506 adopted to be effective June 16, 2022, 47 TexReg 3467.

28 Tex. Admin. Code § 3.507 Public Disclosure and Input

(a) Information related to proposed annual rate increases of 15% or more will be publicly available on the website published by the Centers for Medicare and Medicaid Services (CMS). A link to the CMS website will be posted on TDI's website: www.tdi.texas.gov/health/ratereview.html.

(b) Public comments concerning proposed rate increases can be sent to RateReview@tdi.texas.gov.

(c) Final rate increases will be publicly available on the website published by CMS no later than the first day of the annual open enrollment period in the individual market for the applicable calendar year.

(d) TDI will make information related to proposed or final rate filings available to the public in a manner consistent with 45 CFR §154.301(b), concerning CMS's Determinations of Effective Rate Review Programs.

History

Source Note: The provisions of this §3.507 adopted to be effective June 16, 2022, 47 TexReg 3467.

Subchapter G PLAIN LANGUAGE REQUIREMENTS FOR HEALTH BENEFIT POLICIES

28 Tex. Admin. Code § 3.601 Purpose and Scope, Applicability, and Definitions Used in This Subchapter

(a) Purpose and scope. The sections contained in this subchapter are intended to implement Insurance Code §1501.260 and to establish plain language requirements for health benefit plans or forms that will be approved by the department and issued by health carriers in this state. This subchapter establishes the plain language requirements and minimum score for readability for such health benefit plans or forms, in accordance with Insurance Code §1501.260. This subchapter also establishes procedures that health carriers must follow to demonstrate and assure compliance with the new requirements.

(b) Applicability. This subchapter applies to all health benefit plans, including policies, certificates, evidences of coverage, riders, endorsements, amendments, and/or applications, approved by the commissioner on or after January 1, 1994, and issued in the State of Texas after such date. This subchapter does not apply to a health benefit plan group master policy or to a health benefit plan group master policy application or to an enrollment form for a health benefit plan group master policy when the enrollment form is used solely to enroll individuals in the plan. This subchapter also does not apply to any health benefit plan forms approved by the commissioner under department rules before January 1, 1994.

(1) Commissioner--The commissioner of insurance of the State of Texas.

(2) Form--Any health benefit plan certificate, policy, evidence of coverage, endorsement, amendment, application, or rider.

(3) Franchise insurance policy--An individual health benefit plan under which a number of individual policies are offered to a selected group. The rates for such a policy may differ from the rate applicable to individually solicited policies of the same type and may differ from the rate applicable to individuals of essentially the same class.

(4) Health benefit plan--A group, blanket, or franchise insurance policy, a certificate issued under a group policy, a group hospital service contract, or a group subscriber contract or evidence of coverage issued by a health maintenance organization that provides benefits for health care services. The term does not include:

(A) accident-only insurance coverage;

(B) credit insurance coverage;

(D) specified disease coverage or other limited benefit policies;

(E) coverage of Medicare services under a federal contract;

(F) Medicare supplement and Medicare Select policies regulated in accordance with federal law;

(G) long-term care insurance coverage;

(H) coverage limited to dental care;

(I) coverage limited to care of vision;

(J) coverage provided by a single-service health maintenance organization;

(K) insurance coverage issued as a supplement to liability insurance;

(L) insurance coverage arising out of a workers' compensation system or similar statutory system;

(M) automobile medical payment insurance coverage;

(N) jointly managed trusts authorized under 29 United States Code §141 et seq. that contain a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 United States Code §157;

(O) hospital confinement indemnity coverage; or

(P) reinsurance contracts issued on a stop-loss, quota-share, or similar basis.

(5) Health carrier--Any entity authorized under the Insurance Code to provide health insurance or health benefits in this state, including an insurance company, a group hospital service corporation under Insurance Code Chapter 842, a health maintenance organization under Insurance Code Chapter 843, and a stipulated premium company under Insurance Code Chapter 884.

(6) Limited benefit policy--A policy that meets the requirements of "limited benefit policy," as defined in §26.4 of this title (relating to Definitions).

History

Source Note: The provisions of this §3.601 adopted to be effective January 5, 1994, 18 TexReg 9854; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.602 Plain Language Requirements

(a) All health benefit plan certificates, policies, evidences of coverage, endorsements, amendments, applications, or riders shall be written in plain language and shall comply with the requirements set forth in this subchapter.

(b) A health benefit plan certificate, policy, evidence of coverage, endorsement, amendment, rider, or application form, or a provision of such health benefit plan form shall comply with the following.

(1) The text shall achieve a minimum score of 40 on the Flesch reading ease test as provided in this subchapter. For purposes of this section, a Flesch reading ease test score shall be measured by the following method.

(A) The number of words and sentences in the test shall be counted and the total number of words divided by the total number of sentences. The figure obtained shall be multiplied by a factor of 1.015.

(B) The total number of syllables shall be counted and divided by the total number of words. The figure obtained shall be multiplied by a factor of 84.6.

(C) The sum of the figures computed under paragraphs (A) and (B) of this section, subtracted from 206.835, equals the Flesch reading ease score for the form.

(D) The entire health benefit plan, including applications, endorsements, riders, and amendments shall be analyzed in determining the Flesch reading ease test score; however:

(i) forms submitted independently of the health benefit plan shall be analyzed independently and subject to all requirements of this subchapter; and

(ii) endorsement, amendment, or rider forms submitted independently of the health benefit plan that contain fewer than 150 words are not subject to the analysis.

(2) The form, except for specification pages, schedules, and tables, shall be printed in not less than 10-point type, one-point leaded.

(3) The style, arrangement, and overall appearance of the form shall give no undue prominence to any portion of the text. The form shall be appropriately divided and captioned in meaningful sequence such that each section contains an underlined, boldfaced, or otherwise conspicuous title or caption at the beginning of the section that indicates the nature of the subject matter included in or covered by the section of the form.

(4) The health benefit plan shall contain a table of contents or an index of the principal sections of the plan, if it has more than 3,000 words printed on three or fewer pages of text, or if it has more than three pages regardless of the number of words.

(5) The form shall be written in a clear and coherent manner and wherever practical, words with common and everyday meanings shall be used to facilitate readability and to aid the insured or policyholder in understanding the coverage provided.

(6) The form shall be written on paper that does not measure more than 8 1/2 inches by 11 inches, if at all possible.

(c) For purposes of determining the Flesch readability score provided under this subchapter, the following procedures shall be used.

(1) A contraction, hyphenated word, or numbers and letters, when separated by spaces, shall be counted as one word.

(2) A unit of words ending with a period, semicolon, or colon, but excluding headings and captions, shall be counted as a sentence.

(3) A syllable means a unit of spoken language consisting of one or more letters of a word as divided by an accepted dictionary. Where the dictionary shows two or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used.

(d) The term "text" as used in this section shall include all printed matter except the following:

(1) the name and address of the health carrier; the name or title of the form; the table of contents or index; captions and subcaptions; specification pages, schedules, or tables; and

(2) any language required by any federal or state law, or regulation; any medical terminology; or any words which are defined in the form; provided that the health carrier identifies the language or terminology excepted by this subsection and certifies in writing that the language or terminology is entitled to be excepted by this subsection and the grounds for such exception.

(e) Form filings subject to this subchapter shall be accompanied by a certification signed by an officer of the health carrier stating the Flesch score of the form, and stating that it meets or exceeds the minimum readability score established by the commissioner. To confirm the accuracy of any certification, the commissioner may require the submission of further information to verify the certification of compliance. Any form filing that does not meet the minimum score shall not be approved by the commissioner, and shall not be issued by the health carrier.

History

Source Note: The provisions of this §3.602 adopted to be effective January 5, 1994, 18 TexReg 9854.

Subchapter K MAXIMUM GUARANTEED INTEREST RATES FOR ANNUITIES, PURE ENDOWMENT CONTRACTS, AND MISCELLANEOUS FUNDS

28 Tex. Admin. Code § 3.1001 Authority

This subchapter is prescribed and promulgated in respect to the provisions of Insurance Code §982.114; Chapter 425, Subchapter B; Chapter 1701; Chapter 404; and other applicable provisions.

History

Source Note: The provisions of this §3.1001 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.1002 Purpose

It is the purpose of this subchapter:

(1) to encourage a company's awareness that imprudent guarantees on annuity contracts and miscellaneous funds may lead to a hazardous financial condition, and to call attention of the fact that the commissioner of insurance may wish to make use of the early warning system;

(2) to provide for proper disclosure of benefits provided by annuity contracts and miscellaneous funds; and

(3) to clarify the interpretation of Insurance Code Chapter 425, Subchapter B, as it relates to the computation of reserves for annuity contracts and miscellaneous funds.

History

Source Note: The provisions of this §3.1002 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.1003 Unallocated Group Annuity

An unallocated group annuity is a contract covering multiple lives issued to an employer or trustee as the policyholder or contract holder or similar term where the values under the contract are not allocated to specific individuals. This definition specifically includes deposit administration contracts where no allocation of funds to specific individuals is made except to provide a cash benefit such as at death, termination of employment, or retirement.

History

Source Note: The provisions of this §3.1003 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

28 Tex. Admin. Code § 3.1004 Policy Form Review

Annuity and miscellaneous fund submissions which at any point of time make use of an interest rate in excess of the applicable maximum valuation interest rate as defined in the standard valuation law for that type of annuity or pure endowment contract in determining policyholder values will be reviewed and approved or disapproved in accordance with the following standard.

(1) Either of the following alternatives in subparagraphs (A) or (B) of this paragraph, to be selected at the option of the insurance company, must be met at the time the contract is filed for review, except that only the alternative in subparagraph (A) of this paragraph is acceptable for a fixed premium deferred annuity.

(A) A detailed statement of the reserves to be held for such contracts may be furnished prior to policy form approval. The form will not be approved unless the reserves comply with the minimum standards specified herein.

(B) A certification by a qualified actuary may be furnished stating that the reserves to be held on the contract will be equal to or greater than the minimum standards specified in §3.1005 of this title (relating to Reserve Requirements). Submission of a detailed statement of methods will then be required subsequent to form approval, and this detailed statement may be checked for compliance with the minimum standards specified herein.

(2) If any interest rate guarantee exceeding the maximum described in the Standard Valuation Law for the calculation of minimum reserves for that type of annuity or pure endowment contract will apply to future premiums of unspecified amounts or unspecified timing and the contract does not meet the definition of an unallocated group annuity contract, then the company may be required, at the discretion of the commissioner of insurance, to submit supplemental early warning data as specified in the early warning requirements of §3.1006 of this title (relating to Early Warning Requirements) with each subsequent filing of its annual convention blank.

(3) Any interest rate "material" specified in a contract is permitted to be "variable material" and will therefore not require a resubmission of the form. However, any insurer wishing to guarantee a different interest rate than the one specified in the contract when approved with its policy form must file for information with this agency a separate specifications page for each different interest rate it intends to use and the date it intends to use that interest rate.

History

Source Note: The provisions of this §3.1004 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

28 Tex. Admin. Code § 3.1005 Reserve Requirements

The Standard Valuation Law, as it appears in Texas statutes, discusses interest rates appropriate for the calculation of minimum reserves. The Standard Valuation Law also defines the commissioner's annuity reserve method which is required to be used to compute the minimum reserves for annuity and pure endowment contracts. Reserves must never be less than corresponding cash values.

History

Source Note: The provisions of this §3.1005 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

28 Tex. Admin. Code § 3.1006 Early Warning Requirements

The commissioner may, at the commissioner's discretion, require the data specified in this section from any insurance companies which are subject to this subchapter. These requirements apply to individual annuities, group annuities, and any supplemental provisions of riders attached to an individual life insurance policy or a group life insurance policy whenever on any valuation date contracts of the nature described are in force which guarantee interest rates in excess of the applicable maximum reserve valuation interest rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract to future premiums or other deposits of unspecified amounts or timing for or at any period of time subsequent to the valuation date. (Foreign companies will be required to furnish this data only with respect to their Texas issues.) Required data:

(1) number of individuals covered under such contracts;

(2) the actual premium received under such contracts during the 12 months preceding the applicable valuation date;

(3) the reserves held on such contracts on the valuation date; and

(4) an evaluation of the potential liability with respect to premiums or other deposits which may be received subsequent to the valuation date calculated in the following manner. Potential liability is the excess, if any, of the present value of the future cash value generated by "assumed future premiums" at the end of the last period of interest guarantees higher than the maximum reserve valuation rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract over the present value of "assumed future premiums" all valued at the maximum reserve valuation rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract. (If interest rate guarantees higher than the applicable maximum reserve valuation interest rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract extend beyond attained age 70 of the applicable individual, then the present value of future cash values may be calculated at the 10th anniversary of the contract or on the anniversary nearest age 70, whichever is later.)

(A) "Assumed annual future premiums" must be level and equal in amount to the average annual premium received over the duration of the contract, counting any contract which is less than one year old as being a full year old.

(B) The assumed future payment period terminates on the earliest of the following:

(i) the end of the period during which guarantees are made regarding future premiums or deposits;

(ii) the end of the continuous period from date of valuation during which interest rates greater than the applicable maximum reserve valuation interest rate as defined in the Standard Valuation Law for that type of annuity or pure endowment contract;

(iii) the maturity date or retirement date specified in the contract; or

(iv) the later to occur of the 10th contract anniversary or the contract anniversary nearest age 65 of the prospective annuitant under the contract.

(i) annually on each July 1 succeeding the valuation date;

(ii) annually on the contract anniversary; or

(iii) monthly in the amount of 1/12th of the annual assumed premium, on a day of the month to be chosen by the company.

(D) If the probability of death is introduced into the above calculation, a statement of methods of application, including any subsequent changes, must be filed with the Texas Department of Insurance along with a certification by a qualified actuary that introduction of such probability is appropriate to the contracts to which it is to be applied.

(E) Group methods and approximations which yield substantially the same potential liability valuation may be used.

(5) The validity of all such data and methods as specified in paragraphs (1) - (4) of this section must be attested to by the actuary signing the annual convention blank.

History

Source Note: The provisions of this §3.1006 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.1007 Disclosure Requirements

(a) For the deferred annuities, except unallocated group annuities, within the scope of these sections, interest rates, whether guaranteed or subject to future determinations by the company, must not be presented in a manner which might lead the prospect to believe that the complete premium or other consideration under the contract will accumulate at those rates unless such is the case. The sales presentation and any sales material must clearly disclose any loading, policy fees, charges or other items of the contract which represent expenses to the policyholder.

(b) If written material stating the guaranteed interest rate (or current or illustrated rate, if a higher rate than the guarantee may be actually applied subject to future determination by the company) is presented to the prospect, then such material must prominently illustrate the actual cash value which would be generated by level periodic premiums and the use of the guaranteed interest rates.

History

Source Note: The provisions of this §3.1007 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

28 Tex. Admin. Code § 3.1008 Application

These sections apply to all insurers licensed to transact insurance business in the State of Texas unless exempted by controlling law.

History

Source Note: The provisions of this §3.1008 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

28 Tex. Admin. Code § 3.1009 Effective Date

These sections are effective beginning August 20, 1975. These sections apply to any contract issued on and after that date; they do not, however, apply to reserves to be held for contracts issued prior to that date.

History

Source Note: The provisions of this §3.1009 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106.

Subchapter M DISCRETIONARY CLAUSES

28 Tex. Admin. Code § 3.1201 Applicability, Effective Dates, and Severability

(a) This subchapter applies to any form filed under the Insurance Code Chapters 1701 or 1271, including forms filed by Lloyd's plans and fraternal benefit societies.

(b) Except as specified in subsections (c) and (d) of this section, this subchapter applies to forms offered, issued, renewed, or delivered on or after June 1, 2011, including forms that include premium waiver provisions based upon a disability determination.

(c) For forms that include disability income protection coverage providing for periodic payments during disability due to sickness and/or accident, whether provided through a policy, certificate, or rider, this subchapter applies to forms offered, issued, renewed, or delivered on or after February 1, 2011.

(d) For forms issued or delivered prior to the effective date of this subchapter that do not contain a renewal date, this subchapter applies on or after the effective date of any rate increase applicable to the form or any change, modification, or amendment of the form occurring on or after June 1, 2011.

(e) If any section or portion of a section of this subchapter is held to be invalid for any reason, all valid parts are severable from the invalid parts and remain in effect. If any section or portion of a section is held to be invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications. To this end, all provisions of this subchapter (relating to Discretionary Clauses) are declared to be severable.

History

Source Note: The provisions of this §3.1201 adopted to be effective December 23, 2010, 35 TexReg 11259.

28 Tex. Admin. Code § 3.1202 Discretionary Clauses Defined

For the purpose of this subchapter, a discretionary clause is a provision that:

(1) purports or acts to bind the claimant to, or grant deference in subsequent proceedings to, adverse claim decisions or policy interpretations by the insurer or health maintenance organization;

(2) specifies that a policyholder or other claimant may not contest or appeal a denial of a claim;

(3) specifies that the insurer's or health maintenance organization's interpretation of the terms of a form or its decision to deny coverage or the amount of benefits is binding upon a policyholder or other claimant;

(4) specifies that in any appeal the insurer's or health maintenance organization's decision-making power as to the interpretation of the terms of a form or as to coverage is binding; or

(5) specifies or gives rise to a standard of review in any appeal process that gives deference to the original claim decision or provides standards of interpretation or review that are inconsistent with the laws of this state.

History

Source Note: The provisions of this §3.1202 adopted to be effective December 23, 2010, 35 TexReg 11259.

28 Tex. Admin. Code § 3.1203 Discretionary Clauses Prohibited

Inclusion of a discretionary clause in any form to which this subchapter applies is prohibited.

History

Source Note: The provisions of this §3.1203 adopted to be effective December 23, 2010, 35 TexReg 11259.

Subchapter S MINIMUM STANDARDS AND BENEFITS AND READABILITY FOR INDIVIDUAL ACCIDENT AND HEALTH INSURANCE POLICIES

28 Tex. Admin. Code § 3.3001 Applicability and Scope

(a) Unless otherwise specified, this subchapter applies to all individual accident and sickness insurance policies and subscriber contracts of hospital and medical and dental service associations, delivered, issued for delivery, or renewed in this state on and after the effective date of this section, except they do not apply to individual policies or contracts issued pursuant to a conversion privilege under a policy or contract of group insurance; individual policies issued pursuant to a conversion privilege under an individual policy delivered or issued for delivery in this state prior to January 1, 1978; policies issued to employees or members as additions to franchise plans in existence on January 26, 1977; or credit accident and sickness insurance policies written under Insurance Code Chapter 1153. Individual accident and sickness insurance policies and subscriber contracts of hospital and medical and dental service associations, delivered, issued for delivery, or renewed in this state prior to the effective date of this section are subject to the regulations in effect at the time the policy or contract was delivered, issued for delivery, or renewed.

(b) The requirements contained in this subchapter are in addition to any other applicable regulations previously adopted; however, this subchapter governs wherein any conflict or difference exists. The provisions of applicable statutes govern where ambiguity or difference exists between this subchapter and such statutes.

History

Source Note: The provisions of this §3.3001 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3002 Definitions

(a) Unless otherwise provided by law or this subchapter, every individual accident and sickness insurance policy or subscriber contract that is subject to the provisions of this subchapter and that is delivered, issued for delivery or renewed on or after the effective date of this subchapter must comply with and contain definitions in conformance with those in subsection (b) of this subchapter.

(b) The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Aggregate period--Cumulative total of all time covered under creditable coverage without a significant break in coverage.

(2) Church plan--A plan within the meaning of §3(33) of the Employee Retirement and Income Security Act of 1974, codified at 29 USC 1001, et seq. (ERISA).

(3) Commissioner--The commissioner of insurance of the State of Texas.

(4) Creditable coverage--As used in this subchapter, is defined as stated in §21.1101 of this title (relating to Definitions) of Chapter 21, Subchapter K of this title (relating to Certification of Creditable Coverage).

(5) Department--The Texas Department of Insurance.

(6) Excepted benefits--

(A) Under all circumstances:

(i) Coverage only for accident, including accidental death and dismemberment, such as coverage offered in accordance with §3.3076 of this title (relating to Minimum Standards for Accident Only Coverage);

(ii) Disability income insurance, including coverage offered in accordance with §3.3075 of this title (relating to Minimum Standards for Disability Income Protection Coverage);

(iii) Coverage for on-site medical clinics; and

(iv) Short-term limited duration coverage.

(B) Only if the benefits are provided under a separate policy or contract of insurance:

(i) Dental or vision benefits that are limited in scope to a narrow range or type of benefits and that are generally excluded from policies that combine hospital, medical, or surgical benefits.

(ii) Coverage only for a specified disease or illness (for example, cancer policies), or hospital indemnity or other fixed indemnity insurance (for example, "Hospital Confinement Indemnity Coverage," as defined in §3.3073 of this title (relating to Minimum Standards for Hospital Confinement Indemnity Coverage), provided that:

(I) there is no coordination between the provision of benefits and benefits provided under any other policy; and

(II) benefits are paid with respect to a covered event regardless of whether benefits are provided with respect to the same event under any other policy;

(iii) coverage supplemental to the coverage provided under Chapter 55, Title 10, United States Code (also known as CHAMPUS supplemental programs) and similar coverage supplemental to coverage under a group health plan.

(7) Genetic information--Information derived from the results of a genetic test.

(8) Genetic test--A laboratory test of an individual's deoxyribonucleic acid (DNA), ribonucleic acid (RNA), proteins, or chromosomes to identify by analysis the genetic mutations or alterations in the DNA, RNA, proteins, or chromosomes that are associated with a predisposition for a clinically recognized disease or disorder. The term does not include:

(A) a routine physical examination or a routine test performed as a part of a physical examination;

(B) a chemical, blood or urine analysis;

(D) a test for the presence of the human immunodeficiency virus.

(9) Governmental plan--A plan within the meaning of §3(32) of ERISA.

(10) Group health plan--An "employee welfare benefit plan," as defined in §3(1) of ERISA, to the extent that the plan provides "medical care" (as defined in this subsection, and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly, or through insurance, reimbursement or otherwise.

(11) Health status related factors--Health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; and disability.

(12) Individual hospital, medical or surgical coverage--Coverage offered in all policies, contracts, riders or endorsements subject to this subchapter, except when such coverage consists of "excepted benefits," as defined in this subsection. Individual hospital, medical or surgical coverage includes, but is not limited to, coverages described in §§3.3071 of this title (relating to Minimum Standards for Basic Hospital Expense Coverage), 3.3072 of this title (relating to Minimum Standards for Basic Medical-Surgical Expense Coverage) and 3.3074 of this title (relating to Minimum Standards Major Medical Expense Coverage), except when such coverages consist of short term limited duration coverage, as defined in this subsection.

(13) Insured--In regards to policies subject to this subchapter, refers to the individual policyholder, and, if applicable, any spouse or dependents covered under the policy.

(14) Insurer--For the purposes of this subchapter, any "issuer of a health benefit plan," as defined in §21.1101 of this title (relating to Definitions) of Chapter 21, Subchapter K of this title (relating to Certification of Creditable Coverage).

(15) Medical care--Amounts paid for:

(A) The diagnosis, cure, mitigation, treatment or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

(B) transportation primarily for and essential to the medical care described in subparagraph (A) of this paragraph; or

(16) Policy--The entire contract between the insurer and the insured, including the policy, riders, endorsements and the application, if attached.

(17) Policy of accident and sickness insurance--As used in this subchapter, includes any policy or contract providing insurance against loss resulting from sickness or from bodily injury or death by accident or both.

(18) Short-term limited duration coverage--Health insurance coverage provided under a contract with an insurer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the insured without the insurer's consent) that is within 12 months of the date the contract becomes effective.

(19) Significant break in coverage--A period of more than 63 consecutive days during all of which the individual does not have any creditable coverage. A waiting period is not taken into account in determining a significant break in coverage.

(20) Simplified application form--An application form, with or without a question as to the applicant's health at the time of application, but without any questions concerning the insured's health history or medical treatment history.

(21) Waiting period--In regards to an individual who seeks and obtains individual hospital, medical and surgical coverage, the period between the date that the individual files a substantially complete application for coverage and the first day the coverage is effective.

History

Source Note: The provisions of this §3.3002 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3005 Definitions in Policies

Except as otherwise provided by law or these sections, no individual accident and sickness insurance policy or hospital, medical and dental service corporation subscriber contract delivered or issued for delivery in this state may contain definitions respecting the matters set forth in §§3.3006-3.3029 of this title (relating to Minimum Standards and Benefits and Readability for Accident and Health Insurance Policies) unless such definitions comply with the requirements of said sections.

History

Source Note: The provisions of this §3.3005 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3006 Policy Definition of Hospital

The term "hospital" may be defined in relation to its status, facilities, and available services. The definition may not stipulate as a condition that a hospital be incorporated or that it be recognized by any accrediting organizations.

(1) Except as provided in these sections, the definition of the term "hospital" may not be more restrictive than one requiring that the facility:

(A) be licensed as a hospital and operated pursuant to law; and

(B) be primarily engaged in providing or operating (either on its premises or in facilities available to the hospital on a contractual prearranged basis and under the supervision of a staff of one or more duly licensed physicians), medical, diagnostic, and major surgery facilities for the medical care and treatment of sick or injured persons on an inpatient basis for which a charge is made; and

(D) be an institution which maintains and operates a minimum of five beds; and

(E) have x-ray and laboratory facilities either on the premises or available on a contractual prearranged basis; and

(F) maintain permanent medical history records.

(2) Hospitals which meet the following standards must be specifically recognized in policies which do not exclude by name the disease alcoholism:

(A) facilities which are accredited by the Joint Commission on Accreditation of Hospitals; and

(B) facilities which offer medical, therapeutic, and psychiatric care for the treatment of alcoholism.

(3) The definition of the term "hospital" may exclude, except where prohibited by law and subject to the requirement of §3.3040(d) of this title (relating to Prohibited Policy Provisions), any:

(A) military or veteran's hospital or soldier's home or any hospital contracted for or operated by the federal government or any agency thereof for the treatment of members or ex-members of the armed forces; or

(B) convalescent homes, convalescent facilities, rest facilities, or nursing facilities; or

(C) home or facilities primarily for the aged, drug addicts, alcoholics, those primarily affording custodial care, educational care or those primarily affording care for mental and nervous disorders.

History

Source Note: The provisions of this §3.3006 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3007 Policy Definition of Convalescent Nursing Home or Extended Care Facility

The term "convalescent nursing home" or "extended care facility" shall be defined in relation to its status, facilities, and available services.

(1) Except as provided in these sections, a definition of such home or facility may not be more restrictive than one requiring that it:

(A) be an institution licensed and operated pursuant to law; and

(B) be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician; and

(C) provide continuous 24 hours a day nursing service by or under the supervision of a registered graduate professional nurse (RN); and

(D) maintain a daily medical record on each patient.

(2) The definition of such home or facility, except where prohibited by law, may exclude:

(A) any home, facility or part thereof used primarily for rest; or

(B) a home or facility primarily for the aged or for the care of drug addicts or alcoholics; or

(C) a home or facility primarily used for the care and treatment of tuberculosis, mental diseases or disorders or custodial or education care.

History

Source Note: The provisions of this §3.3007 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3008 Policy Definitions of Accident, Accidental Injury, Injury

(a) These terms shall be defined to employ "result" language and may not include words which establish an accidental means test. Except for accidental death or dismemberment, said definitions may not include words such as "external, violent, visible wounds" or similar words of description or characterization and may not be more restrictive than the following: Injury or injuries for which benefits are provided means accidental bodily injuries sustained by an insured person which are the direct cause of the loss independent of disease, bodily infirmity, or any other cause and occurs while the policy is in force.

(b) Such definition may exclude, unless prohibited by law, injuries for which benefits are provided under any workmen's compensation, employer's liability or similar statute or injuries occurring while the insured person is engaged in any activity pertaining to any trade, business, employment, or occupation for wage or profit.

History

Source Note: The provisions of this §3.3008 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3009 Policy Definitions of Sickness

Except as provided in this subchapter, the definition of "sickness" may not be more restrictive than the following: Sickness means illness or disease of an insured person which first manifested itself after the effective date of insurance and while the insurance is in force. A definition of sickness which anticipates the exclusion of coverage of pre-existing conditions subject to the limitations expressed in Insurance Code §1201.208 may not use the phrase "the cause of which originates" or any similar phrase. The definition may be modified to exclude sickness or disease for which benefits are provided under any workmen's compensation, occupational disease, employer's liability, or similar statute.

History

Source Note: The provisions of this §3.3009 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3010 Policy Definition of Physician

This term may be defined by including words such as "duly qualified physician" or "duly licensed physician." The use of such terms requires an insurer to recognize and to accept to the extent of its obligation under the contract all providers of medical care and treatment when such services are within the scope of the providers' licensed authority and are provided pursuant to applicable laws. This definition may not be construed so as to be in conflict with Insurance Code §1451.001.

History

Source Note: The provisions of this §3.3010 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3011 Policy Definition of Nurse

The definition or description of "nurse" may be restricted to a type of nurse, such as registered graduate professional nurse (RN), or a licensed vocational nurse (LVN), or its equivalent under other state laws. If the words "nurse," "trained nurse," or similar terms are used without specific instruction, the use of such terms requires the insurer to recognize the services of any individual who qualifies under such terminology in accordance with the applicable statutes or administrative rules of the licensing or registry board of the state.

History

Source Note: The provisions of this §3.3011 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3012 Policy Definition of Total Disability

(a) A general definition of "total disability" may not be more restrictive than one requiring the individual to be totally disabled from engaging in any employment or occupation for which he or she is or becomes qualified by reason of education, training, or experience, and such individual is not in fact engaged in any employment or occupation for wage or profit.

(b) "Total disability" may be defined in relation to the inability of the person to perform duties, but such inability may not be based solely upon an individual's inability to:

(1) perform "any occupation whatsoever" or "any occupational duty"; or

(2) engage in any training or rehabilitation program; however, an insurer may specify the requirement of the inability of the person to perform all of the substantial and material duties pertaining to his or her regular occupation, or words of similar import.

(c) The definition may reasonably require regular care and attendance by a physician, other than the insured or a member of the insured's immediate family.

(d) The definition may require that the total disability be "continuous" or "uninterrupted" for a specified period of time or to a specified age. If the insured's total disability shall continue to such specified age or for such specified period and shall then and thereafter continue, the definition may predicate continuance of benefits on the insured's inability to perform any work or occupation for which he is reasonably trained or qualified by education or experience.

History

Source Note: The provisions of this §3.3012 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3013 Policy Definition of Partial Disability

This term shall be defined in relation to the insured's inability to perform one or more, but not all, of the "major," "important," or "essential" duties of employment or occupation or may be related to a "percentage" of time worked or to a "specified number of hours" or to "compensation." If a policy provides total disability benefits and partial disability benefits, only one elimination period may be required.

History

Source Note: The provisions of this §3.3013 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3014 Policy Definition of Residual Disability

Residual disability shall be defined in relation to the insured's reduction in earnings and may be related either to the inability to perform one or more, but not all, of the "major," "important," or "essential" duties of employment or occupation, or to the inability to perform all usual business duties for as long as is usually required. A policy which provides for residual disability benefits may require a qualification period, during which the insured must be continuously totally disabled before residual disability benefits are payable. The qualification period for residual disability benefits may be longer than the elimination period for total disability.

History

Source Note: The provisions of this §3.3014 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3015 Policy Definition of Medicare

A definition of "Medicare" shall be included in any hospital, surgical, or medical expense policy which relates its coverage to eligibility for Medicare or Medicare benefits. The term Medicare may not be defined as more restrictive than:

(1) "the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as amended"; or

(2) "Title I, Part I of Public Laws 89-97 as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as amended."

History

Source Note: The provisions of this §3.3015 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3016 Policy Definition of Mental or Nervous Disorders

A definition of "mental or nervous disorder" as used in a policy may not be more restrictive than a neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder of any kind.

History

Source Note: The provisions of this §3.3016 adopted to be effective January 26, 1977, TexReg 159.

28 Tex. Admin. Code § 3.3017 Policy Definition of One Period of Confinement--Continuous Hospital Confinement

One period of confinement-continuous hospital confinement means consecutive days of in-hospital service received as an inpatient, or successive confinements when discharge from and readmission to the hospital occurs within a period of time not more than 90 days or three times the maximum number of days of in-hospital coverage provided by the policy to a maximum of 180 days.

History

Source Note: The provisions of this §3.3017 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3018 Policy Definition of Preexisting Condition

(a) Subject to the conditions set forth in subsection (b) of this section, a policy subject to this subchapter may contain provisions limiting or denying coverage based on the existence of a preexisting condition or conditions. "Preexisting condition" may not be defined to be more restrictive than the following: Preexisting condition means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment within a five year period preceding the effective date of the coverage of the insured person or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a five year period preceding the effective date of the coverage of the insured person. This does not prohibit an insurer, using an application form designed to ask questions concerning the health or medical history of a prospective insured and on the basis of the answers on that application, from fully underwriting in accordance with that insurer's established standards. It does, however, prohibit an insurer that elects to use a simplified application from reducing or denying a claim on the basis of the existence of a preexisting condition that is defined more restrictively than above.

(b) In regards to individual hospital, medical or surgical coverage:

(1) no preexisting condition provision shall apply to an individual who was continuously covered for an aggregate period of 18 months by creditable coverage (as defined in §3.3002 of this title (relating to Definitions)) that was in effect up to a date not more than 63 days before the effective date of the coverage, excluding any waiting period, and whose most recent creditable coverage was under a group health plan, governmental plan or church plan, as such plans are defined in §3.3002 of this title.

(2) In determining whether a preexisting condition provision applies to an individual whose most recent creditable coverage was under a group health plan, governmental plan or church plan, but who does not have aggregate creditable coverage totaling 18 months, the insurer shall credit the time the individual was previously covered under creditable coverage if the previous coverage was in effect at any time during the 18 months preceding:

(A) the first day coverage is effective, if there is not a waiting period; or

(B) the day that the individual files a substantially complete application for coverage, if there is a waiting period.

(3) When determining the applicability of preexisting condition provisions in accordance with paragraphs (1) and (2) of this subsection, an insurer of individual hospital, medical or surgical coverage shall comply with required notices, disclosures and other applicable provisions of Chapter 21, Subchapter K of this title (relating to Certification of Creditable Coverage).

(4) The application of paragraphs (1) and (2) of this subsection are demonstrated by the following examples:

(A) Individual A: Not subject to any preexisting condition limitation:

(i) Relevant insurance history: Individual A was covered under an individual policy for 12 months beginning on January 1, 1996, through December 31, 1996, followed by a gap in coverage of 58 days until February 28, 1997. Individual A then was covered under a group health plan beginning on March 1, 1997, for six months through August 30, 1997, followed by a gap in coverage of 61 days until October 31, 1997.

(ii) Present coverage: Individual A applies for individual hospital, medical and surgical coverage on November 1, 1997, and the insurer issues the coverage on December 1, 1997.

(iii) Applicability of preexisting condition prohibited: Pursuant to paragraph (1) of this subsection, the insurer offering the individual hospital, medical and surgical coverage cannot apply any preexisting condition provision to Individual A because: A's most recent past creditable coverage was under a group health plan; A has 18 months of creditable coverage--six months under the group plan and 12 months under the previous individual plan--up to a date not more than 63 days from the effective date of the coverage (excluding the one-month waiting period); and there were no significant breaks--i.e., more than 63 days--in the 18 months of creditable coverage.

(B) Individual B: Subject to preexisting condition provision:

(i) Relevant insurance history: Individual B had coverage under a group health plan for 12 months beginning on January 1, 1996, through December 31, 1996, followed by a gap in coverage of 58 days until February 28, 1997. Individual B then was covered under an individual health insurance policy beginning on March 1, 1997, for six months through August 30, 1997, followed by a gap in coverage of 61 days until October 31, 1997.

(ii) Present coverage: Individual B applies for a policy offering individual hospital, medical and surgical coverage on November 1, 1997, and is issued coverage on December 1, 1997.

(iii) No exemption from preexisting condition provisions: Under paragraph (1) of this subsection, the insurer offering the individual hospital, medical and surgical coverage can fully apply any preexisting condition provision to Individual B, because B's most recent coverage was under an individual health plan, rather than a group health plan, governmental plan or church plan. Unless an insured's most recent creditable coverage was under a group health plan, governmental plan or church plan, the insurer is not required to take into account any of the insured's past creditable coverage under either paragraphs (1) or (2) of this subsection.

(i) Relevant insurance history: Individual C was covered under an individual health insurance policy for 18 months beginning January 1, 1996, through June 30, 1997, followed by a four-month gap in coverage from July 1, 1997, to October 31, 1997. On November 1, 1997, Individual C was covered under a group health plan for three months, through January 31, 1998, followed by a two-month gap in coverage.

(ii) Present coverage: Individual C applies for a policy offering individual hospital, medical and surgical coverage on March 1, 1998, and is issued coverage on June 1, 1998.

(iii) Twelve-month credit applied: Individual C's most recent creditable coverage was under a group health plan, so the insurer must perform a creditable coverage analysis. However, C is not eligible to be exempt from a preexisting condition provision under paragraph (1) of this subsection, because of the significant break (four months) in C's creditable coverage. Under paragraph (2) of this subsection, an insurer must then total up the creditable coverage in the 18 months preceding the effective date of the policy, excluding the waiting period. Because the waiting period in this scenario is three months, the insurer essentially must look back to the start of the waiting period--i.e., the application date of March 1, 1998--and count back 18 months from there. In the 18 months between September 1, 1996, and March 1, 1998, Individual C had total of 12 months creditable coverage--nine months from September 1, 1996, to June 1, 1997, and three months from October 1, 1997, to January 31, 1998. Accordingly, the insurer must credit 12 months against any preexisting condition period.

(D) Individual D: Six months credit against preexisting condition period:

(i) Relevant insurance history: After being uninsured for a number of years, Individual D was covered under a governmental plan from March 1, 1997, to September 30, 1997, followed by a 31-day gap in coverage.

(ii) Present coverage: Individual D applies for a policy offering individual hospital, medical and surgical coverage on November 1, 1997, and is issued coverage on December 1, 1997.

(iii) Six-month credit applied: Individual D's most recent creditable coverage was under a governmental plan, so the insurer must perform a creditable coverage analysis. However, D is not eligible to be exempt from a preexisting condition provision under paragraph (1) of this subsection, because D has no other past coverage that could count towards an 18-month aggregate total of creditable coverage. Under paragraph (2) of this subsection, an insurer must give Individual D a six-month credit against any preexisting condition period.

History

Source Note: The provisions of this §3.3018 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3019 Policy Definition of Noncancellable

(a) The term "noncancellable" may be used only in a policy which the insured has the right to continue by the timely payment of premiums set forth in the policy until at least age 50, or in the case of a policy issued after age 44, for at least five years. The insurer may not unilaterally make any change in any provision of the policy while the policy is in force. Except in the limited circumstances delineated in subsection (b) of this section, an insurer shall not use the phrase "noncancellable and guaranteed renewable" in relation to coverage that meets the above definition, unless it also meets the definition of "guaranteed renewable" set forth in §3.3020(a) of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter.

(b) In regards to policies offering excepted benefits, an insurer may continue to issue through May 31, 1998, policies from printed stock existing on the day before the effective date of this subchapter that are noncancellable, as defined in subsection (a) of this section, and that refer to the policy as "noncancellable and guaranteed renewable," as was allowed by rule before the effective date of this subchapter. An insurer may not print any new noncancellable policies on or after the effective date of this subchapter which use policy language describing the policy as "noncancellable and guaranteed renewable," unless such policy also meets the definition of guaranteed renewable set forth in §3.3020(a) of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter.

History

Source Note: The provisions of this §3.3019 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3020 Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability

(a) In regards to individual hospital, medical or surgical coverage, the term "guaranteed renewable" shall not be defined more restrictively than set forth in §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions). Unless the policy or coverage also is noncancellable (as defined in §3.3019 of this title (relating to Policy Definition of Noncancellable), the policy definition of guaranteed renewable shall state clearly that the insurer retains the right, at the time of renewal of a policy, to make changes in premium rates by classes.

(b) In regards to excepted benefits:

(1) Except in the limited circumstances delineated in paragraph (4) of this subsection the term "guaranteed renewable" shall not be used unless the term is defined consistently with subsection (a) of this section and mirrors all mandatory provisions of §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions).

(2) An insurer may use the term "limited guarantee of renewability," which shall not be defined more restrictively than the right of the insured to continue the coverage in force by the timely payment of premiums until at least age 50, or in the case of a policy issued after age 44, for at least five years from its date of issue, during which period the insurer has no right to unilaterally make any change in any provision of the policy while the policy is in force, except that the insurer may make changes in premium rates by classes.

(3) Unless the policy or coverage also is noncancellable (as defined in §3.3019 of this title (relating to Policy Definition of Noncancellable), the policy definition of guaranteed renewable or of limited guarantee of renewability shall state clearly that the insurer retains the right, at the time of renewal of a policy, to make changes in premium rates by classes.

(4) An insurer may continue to issue through May 31, 1998, policies from printed stock existing on the day before the effective date of this subchapter that contain a policy definition of "guaranteed renewable" conforming to the definition of the term allowed by rule before the effective date of this subchapter. The previous definition, setting the minimum standard for a guaranteed renewable policy, was the same as the definition of limited guarantee of renewability, as set forth in paragraph (2) of this subsection. An insurer may not print any new policies offering excepted benefits on or after the effective date of this subchapter which use policy language describing the policy as "guaranteed renewable," unless such policy also conforms to the definition of "guaranteed renewable" set forth in subsection (a) of this section and in §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter.

History

Source Note: The provisions of this §3.3020 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3021 Policy Definition of Complication of Pregnancy

Complications of pregnancy shall be treated, in all cases, as any other sickness. Complications of pregnancy mean:

(1) conditions, requiring hospital confinement (when the pregnancy is not terminated), whose diagnoses are distinct from pregnancy but are adversely affected by pregnancy, including, but not limited to, acute nephritis, nephrosis, cardiac decompensation, missed abortion, and similar medical and surgical conditions of comparable severity, but shall not include false labor, occasional spotting, physician prescribed rest during the period of pregnancy, morning sickness, hyperemesis gravidarum, pre-eclampsia and similar conditions associated with the management of a difficult pregnancy not constituting a nosologically distinct complication of pregnancy; and

(2) non-elective cesarean section, termination of ectopic pregnancy, and spontaneous termination of pregnancy, occurring during a period of gestation in which a viable birth is not possible.

History

Source Note: The provisions of this §3.3021 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 2 TexReg 4943.

28 Tex. Admin. Code § 3.3038 Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical, or Surgical Coverage; Exceptions

(a) Except as provided by this section, all individual hospital, medical, or surgical coverage (as defined in §3.3002(b)(12) of this title (relating to Definitions)) must be renewed or continued in force at the option of the insured.

(b) Medicare eligibility or entitlement is not a basis for nonrenewal or termination of individual hospital, medical, or surgical coverage; however, such coverage sold to an insured before the insured attains Medicare eligibility may contain a clause that excludes payments for benefits under the policy to the extent that Medicare pays for such benefits.

(c) Individual hospital, medical, or surgical coverage may only be discontinued or nonrenewed based on one or more of the following circumstances:

(1) the policyholder has failed to pay premiums or contributions in accordance with the terms of the policy, including any timeliness requirements;

(2) the policyholder has performed an act or practice that constitutes fraud, or has made an intentional misrepresentation of material fact, relating in any way to the policy, including claims for benefits under the policy;

(3) the insurer is ceasing to offer individual hospital, medical, or surgical coverage under the particular type of policy, or is ceasing to offer any form of individual hospital, medical, or surgical coverage in this state or in the insurer's service area, in accordance with subsections (d) and (e) of this section;

(4) in regard only to coverage offered by an issuer under Insurance Code Chapter 842, concerning Group Hospital Service Corporations, or Chapter 1301, concerning Preferred Provider Benefit Plans, the insured no longer resides, lives, or works in the service area of the issuer, or area for which the issuer is authorized to do business, but only if coverage is terminated uniformly without regard to any health-status-related factor of covered individuals.

(d) An insurer may elect to discontinue offering a particular type of individual hospital, medical, or surgical coverage plan in the individual market only if the insurer:

(1) provides written notice to the commissioner and each covered individual of the discontinuation before the 90th day preceding the date of the discontinuation of the coverage;

(2) offers to each covered individual on a guaranteed issue basis the option to purchase any other individual hospital, medical, or surgical insurance coverage offered by the insurer at the time of the discontinuation; and

(3) acts uniformly without regard to any health-status related factors of a covered individual or dependents of a covered individual who may become eligible for the coverage.

(e) An insurer may elect to refuse to renew all individual hospital, medical, or surgical coverage plans delivered or issued for delivery by the insurer in this state or in the insurer's service area, only if the insurer:

(1) notifies the commissioner of the election not later than the 180th day before the date coverage under the first individual hospital, medical, or surgical health benefit plan terminates;

(2) notifies each affected covered individual not later than the 180th day before the date on which coverage terminates for that individual; and

(3) acts uniformly without regard to any health-status related factor of covered individuals or dependents of covered individuals who may become eligible for coverage.

(f) An insurer that elects not to renew all individual hospital, medical, or surgical coverage in Texas or in the insurer's service area in accordance with subsection (e) of this section may not issue any such coverage in Texas or in the insurer's service area during the five-year period beginning on the date of discontinuation of the last such coverage not renewed.

(g) Nothing in this section prohibits or restricts an insurer's ability to make changes in premium rates by classes in accordance with applicable laws and regulations.

(h) Nothing in this section may be interpreted as prohibiting an insurer from making policy modifications mandated by state law, or, acting consistently with §3.3040(b) of this title (relating to Prohibited Policy Provisions), from honoring requests from a policyholder for modifications to an individual policy or offering policy modifications uniformly to all insureds under a particular policy form, if:

(1) the modification meets the definition of a uniform modification under subsection (i) of this section; and

(2) the notice describes the uniform modifications and includes any rate change notice required under Insurance Code §1201.109, concerning Notice of Rate Increase for Major Medical Expense Insurance Policy.

(i) For the purposes of this section, a "uniform modification" is a change to coverage that is made at the time of coverage renewal, applies uniformly for all insureds covered under the policy form, and complies with the requirements of 45 CFR §147.106(e) and (f), concerning Guaranteed Renewability of Coverage.

(j) A notice that is required to be provided to the commissioner under this section must be submitted as an informational filing consistent with the procedures specified in Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(k) If a nonrenewal addressed under this section occurs in connection with a change to the insurer's service area, the insurer must make network configuration filings consistent with requirements in Chapter 3, Subchapter X, of this title (relating to Preferred and Exclusive Provider Plans).

History

Source Note: The provisions of this §3.3038 adopted to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758; amended to be effective April 25, 2024, 49 TexReg 2497.

28 Tex. Admin. Code § 3.3039 Other Mandatory Policy Provisions

(a) Each individual policy of accident and sickness insurance, including a policy issued by a company subject to Insurance Code Chapter 842, that is delivered, issued for delivery, or renewed in Texas on or after January 1, 1988, must contain a benefit provision which states, "All benefits payable under this policy on behalf of a dependent child insured by this policy for which benefits for financial and medical assistance are being provided by the Texas Health and Human Services Commission will be paid to the Texas Health and Human Services Commission" whenever:

(2) the parent who purchased the individual policy has possession or access to the child pursuant to a court order, or is not entitled to access or possession of the child and is required by the court to pay child support.

(b) The insurer or group nonprofit hospital service company must receive at its home office, written notice affixed to the insurance claim when the claim is first submitted, and the notice must state that all benefits paid pursuant to this section must be paid directly to the Texas Health and Human Services Commission.

(c) With respect to any policy forms approved by the Texas Department of Insurance prior to January 1, 1988, an insurer is authorized to achieve compliance with this section by the use of endorsements or riders, provided such endorsements or riders are approved by the Texas Department of Insurance as being in compliance with this section and the provisions of the Insurance Code.

History

Source Note: The provisions of this §3.3039 adopted to be effective November 22, 1988, 13 TexReg 5647; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3040 Prohibited Policy Provisions

(a) No policies or riders for additional coverage may be issued as a dividend unless an equivalent cash payment is offered to the policyholder as an alternative to such a dividend policy or rider.

(b) All riders or endorsements added after date of issue, except those by which the insurer effectuates a request made in writing by the policyholder or exercises a specifically reserved right under the policy or those which increase benefits, shall require signed acceptance by the policyholder.

(c) A disability policy or a specified disease policy may contain a "return of premium" or "cash value benefit" so long as:

(1) the policy provides for return of 100% of all premiums paid less the claims paid by the time the insured attains age 65;

(2) the policy contains a reasonable nonforfeiture benefit and provides for the value to be paid automatically upon lapse or death;

(3) the surrender value percentages are not less than those calculated assuming 1958 CSO Mortality, 5.0% interest, five-year preliminary term;

(4) an acceptable method of reserving is approved by this department concurrent with approval of the policy. Reserves should equal or exceed the cash value at all durations;

(5) the nonforfeiture values are calculated assuming a zero percent future claim offset;

(6) the nonforfeiture values are defined for all policy years (nonforfeiture values may be shown only for the first 20 policy years, but under these conditions the contract must define the method used to determine the nonforfeiture values after the 20th contract year);

(7) the interim nonforfeiture values are defined when premiums are paid within a contract year (i.e., date premium paid as a death benefit);

(8) the policy does not require the insured to wait until a certain attained age without providing any interim nonforfeiture benefits; and

(9) the policy does not tie the return of premium to anything less than 100% of the premiums paid less claims paid.

(d) Policies providing hospital confinement indemnity coverage may not contain provisions excluding coverage because of confinement in a hospital operated by the federal government.

(e) No policy may contain a provision for the reduction of disability benefits payable if the insured is not employed at the time disability commences or is not employed away from his or her place of residence at the time disability commences. However, this section shall not be construed to preclude the use of a provision for reduction in disability benefits payable to an insured who has retired by actively leaving the job market and who has not actively sought employment within 90 days prior to the commencement of disability.

(f) Policies providing convalescent or extended care benefits following hospitalization may not condition such benefits upon admission to the convalescent or extended care facility within a period of less than 14 days after discharge from the hospital.

(g) When accidental death and dismemberment coverage is part of the insurance coverage offered under the contract, the insured shall have the option to include all eligible insureds under such coverage.

(h) Any policy providing a specific benefit for the recipient in a transplant operation shall also provide reimbursement of any medical expense of a live donor to the extent that the benefits remain and are available under the recipient's policy, after benefits for the recipient's own expenses have been paid. In the event of such coverage, the otherwise existing coverage of a donor shall be secondary to benefits under the recipient's policy.

(i) The previous enumeration of specifically prohibited policy provisions shall in no way be construed as a limitation on the authority of the commissioner to disapprove other policy provisions including, but not limited to, provisions respecting limitations, exceptions, reductions, or eliminations of coverage not otherwise specifically authorized by statute or regulation, which policy provisions are deemed by the commissioner to be unjust, unreasonable, or unfairly discriminatory either to the policyholder, subscriber, beneficiary, or to any person insured under the policy.

(j) A noncancellable disability income policy may contain a premium refund benefit which does not provide a withdrawal value if and only if all of the conditions in paragraphs (1)-(8) of this subsection are met. Those conditions are as follows:

(1) the amount of premium being refunded is equal to all or a stated portion of the premiums paid, less claims paid, during a specified time or interval during the premium-paying period for the policy;

(2) a premium refund may be paid at one or more specified times or intervals during the premium-paying period of the policy;

(3) the interval between successive possible payments is no greater than 10 years;

(4) the policy provides for the benefit to be paid automatically upon death of the insured or termination of the policy on account of age or duration;

(5) the policy provides that the insured may discontinue the benefit on any anniversary date with a corresponding reduction of premiums;

(6) an acceptable method of reserving is approved by the board concurrent with the approval of the policy;

(7) the premium to be paid for the benefit is fully disclosed to a prospective insured and is stated separately in the policy specifications page; and

(8) the benefit is not to be marketed or titled as a cash-value or return-of-premium benefit.

History

Source Note: The provisions of this §3.3040 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective April 3, 1991, 16 TexReg 1750.

28 Tex. Admin. Code § 3.3050 Standards for Renewability Provisions

(a) Each policy subject to this subchapter:

(1) Shall include a renewal, continuation, or nonrenewal provision, consistent with the requirements of this subchapter. The language or specifications of such provision must be consistent with the type of contract to be issued (e.g., guaranteed renewable, noncancellable, limited guarantee of renewability, limited renewability at the option of the insurer, single term nonrenewable, etc.). Such provision must be appropriately captioned and commence or be referenced on the first page of the policy. All limitations on renewability must be clearly stated.

(2) Which contains a provision reserving the right of the insurer to increase the premium charged for such policy at the time such policy is renewed shall have printed at the top of the first page of such policy, and may not be preceded by any language except the company name, logo, or masthead (and address if shown) in not less than 10 point type, a statement that the premium may be increased upon the renewal date.

(3) Which contains a provision reserving the right of the insurer to nonrenew the policy upon the insured's attaining a certain age or a provision whereby the policy terminates upon attainment of a certain age shall have printed at the top of the first page of such policy, and may not be preceded by any language except the company name, logo, or masthead (and address, if shown) in not less than 10 point type, a statement that such policy may be subject to nonrenewal upon attainment of a certain age or that the policy will be terminated upon attainment of a specified age. This requirement may be combined into one statement with the requirement in paragraph (2) of this subsection, if the policy is subject to change in premium upon renewal and to nonrenewal or termination upon the insured's attainment of a specified age.

(b) Standards for specific types of renewability provisions.

(1) Noncancellable Policy--A renewal provision of a policy characterized as "noncancellable" must be consistent with the minimum requirements set forth in §3.3019 of this title (relating to Policy Definition of Noncancellable Policies). In a family policy covering both husband and wife the age of the younger spouse must be used as the basis for fulfilling the age (at least to age 50) or durational (for at least five years if issued after age 44) requirements for the definition of a noncancellable policy for the purpose of defining the period of noncancellability of the policy. This requirement shall not prevent termination of coverage of the older spouse upon attainment of the stated age limit (e.g., age 65), so long as the termination is not otherwise prohibited by law and the policy may be continued in force as to the younger spouse to the age or for the durational period as specified in said definition. Except as otherwise provided in §3.3019(b), a policy shall not refer to a noncancellable policy as "noncancellable and guaranteed renewable," unless the policy also meets the definition of guaranteed renewable set forth in §3.3020(a) of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter.

(2) Guaranteed renewable policy--Except as provided in §3.3020(b)(4) of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability), the renewal provision used in a policy which is characterized as a "guaranteed renewable policy" must be consistent with the minimum requirements relating to use of the term guaranteed renewable set forth in §3.3020 and the provisions of §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter. Every policy offering individual hospital, medical or surgical coverage shall contain a guaranteed renewability provision applicable to such coverage.

(3) Limited guarantee of renewability policy--The renewal provision used in a policy which is characterized as having a "limited guarantee of renewability" must be consistent with the minimum requirements relating to use of the term "limited guarantee of renewability" set forth in §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability). The renewal provision will be the same as that contained in a "noncancellable policy" except for the reservation of the right to the insurer to change premium on a class basis. Such right shall be clearly expressed within the renewal provision and referenced in the caption of such provision. A limited guarantee of renewability may apply to excepted benefits, but shall not apply to individual hospital, medical or surgical coverage.

(4) Renewable subject to consent of company and variants thereof. The renewability options set forth below may apply to excepted benefits, but shall not apply to individual hospital, medical or surgical coverage.

(A) The renewal provision of a policy which is renewable at the option of the company shall be appropriately captioned. The provision shall clearly declare that renewal of the policy is subject to the consent of the insurer and that the premium rate applicable to such policy shall be that currently in use on each renewal date of the policy. If the insurer reserves the right of cancellation, notice of the existence of the provision shall be cross-referenced in the renewal provision.

(B) Conditional or limited continuance--A policy which provides a qualified right of continuance (after expiration of the period during which such policy is noncancellable or subject to a limited guarantee of renewability) must clearly specify the conditions which must be fulfilled to permit continuance of the policy. If premiums are to be based on an attained age or on a step-rate basis, such must be declared in the renewal provision. The age limit, if any, to which any policy is renewed shall be declared in the renewal provision.

(C) Qualified right of renewal--A renewal provision, other than enumerated above, may grant to the insured the right of renewal by timely payment of premium up to a stated age, if any, subject to the reserved right of the insurer to nonrenew all such policies on a specified basis upon the giving of a specified period of notice, which shall be set forth in the appropriate provision of the policy. The right of the insured to renew the policy may be conditioned upon the continuation of a reasonable specified status (e.g., an employee of a named employer, member of a named organization, while engaged in a specific occupation associated with such employment or such organization, residence in a given state or geographic area, insured under a given form of insurance having like form number identification). The rights of the insured and of the insurer shall be clearly set forth in the renewal provision. Such provision shall include, where applicable, the specified age limit, requirements as to the professional or occupational status, and requirements as to the continuing relationship of the employee or member. Continuance of insurance after the insured ceases to be eligible for coverage under the plan may be at the option of the insurer. If a different table of premium rates is to be applicable with respect to renewals occurring thereafter, such fact shall be declared in the renewal provision.

(D) Single term nonrenewable policy--A policy characterized as a "single term nonrenewable policy" shall include a provision appropriately captioned (e.g., "This policy is not renewable" or words of similar import). Such provision must identify or reference the proper part of the contract within which the duration of the coverage is specified.

(5) Limited renewability at the option of the insured--A policy which may not be characterized as noncancellable or as having a limited guarantee of renewability solely because such policy may not be continuable to age 50 or for a minimum period of five years, may use a renewal provision caption, subject to the approval of the commissioner, which states that the right of the renewal is vested in the insured for a stated period of years, to a stated age, to the occurrence of a stated event or during the continuance of a given status. Such a provision may apply to excepted benefits, but shall not apply to individual hospital, medical or surgical coverage. A policy printed on or after the effective date of this subchapter shall not refer to such a renewability provision as "renewable at the option of the insured." However, in regards to excepted benefits, an insurer may continue to issue through May 31, 1998, policies from printed stock existing on the day before the effective date of this subchapter that refer to such a renewability provision as "renewable at the option of the insured," as was previously allowed by rule.

History

Source Note: The provisions of this §3.3050 adopted to be effective January 26, 1977, 7 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3051 Initial and Subsequent Conditions of Eligibility Provision

A family policy providing hospital, surgical, medical expense, hospital confinement indemnity, or accident only insurance shall include provisions which specify the indemnity and qualifications applicable to those family members who may become insured under the policy initially or by subsequent addition.

(1) Eligible family members may include:

(A) the insured;

(B) the insured's spouse;

(C) children of the insured or of the insured's spouse who are over a specified age and under a specified age not to exceed 25, unless a dependency test is specified; and

(D) any other person dependent upon the insured.

(2) The provisions concerning eligibility shall state the conditions under which coverage will become effective for persons who become insured subsequent to policy issuance. Such conditions include:

(A) qualifications for automatic coverage and the duration thereof;

(B) required evidence of insurability;

(D) any requirements as to the payment of premiums as to such addition; and

(E) the time within which action is to be taken by the insured.

(3) In family policies providing for the addition of newly eligible family members, the "Time Limit on Certain Defenses" provision may be modified to provide for a new contestable period for each new member so added, other than newborn children of the insured, but may not provide for a new contestable period for the policy.

History

Source Note: The provisions of this §3.3051 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3052 Standards for Termination of Insurance Provision

(a) A policy subject to this subchapter must include termination provisions that specify as to each eligible family member, as set out in §3.3051 of this title (relating to Initial and Subsequent Conditions of Eligibility Provision), the age, or event, if any, upon which coverage under the policy will terminate.

(b) In regard to individual hospital, medical or surgical coverage, a policy may only contain the following bases for termination of coverage:

(1) the bases for nonrenewal contained in §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical, or Surgical Coverage; Exceptions);

(2) in regard to policies covering a spouse of the primary insured or dependents:

(A) coverage of the spouse may terminate upon the dissolution of the marriage through divorce or other lawful means, subject to this section, §21.407 of this title (relating to Continuance of Coverage), and other applicable law; and

(B) coverage of a dependent may terminate upon the dependent's attainment of a limiting age, subject to Insurance Code §1201.059, concerning Termination of Coverage Based on Age of Child in Individual, Blanket, or Group Policy; this section; and other applicable law.

(c) A policy containing noncancellable, guaranteed renewable or limited guarantee of renewability provisions may not provide for termination of coverage of the spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than nonpayment of premium. The provision must stipulate that in the event of the insured's death the spouse of the insured, if covered under the policy, will become the insured.

(d) The provision must stipulate that if the insurer accepts premium for coverage extending beyond the date, age, or event specified for termination as to an insured family member, then coverage as to such person will continue during the period for which an identifiable premium was accepted, except where such acceptance was predicated on a misstatement of age outlined in Insurance Code §1201.011, concerning Coverage for Premium Period with Limitations by Age or Date; Misstatement of Age of Insured.

(e) In the event of cancellation by the insurer or refusal to renew by the insurer of a policy providing pregnancy benefits, the provision must provide for an extension of benefits as to pregnancy commencing while the policy is in force and for which benefits would have been payable had the policy continued in force.

(f) The provision must stipulate that termination of the policy by the insurer will be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period the policy was in force may be predicated upon the continuous total disability of the insured person limited to the duration of the policy benefit period, payment of the maximum benefits, or to a time period of not less than three months.

(g) The provision may provide for the termination or suspension of family members who become eligible for coverage provided by the federal government.

(h) A policy may not provide for termination of coverage of a dependent child on attainment of the limiting age for dependent children specified in the policy while the child is:

(1) incapable of self-sustaining employment due to intellectual disability or physical handicap; and

(2) chiefly dependent upon the insured for support and maintenance. Proof of the incapacity and dependency must be furnished to the insurer by the insured within 31 days of the child's attainment of the limiting age and subsequently as may be required but not more frequently than annually after the two-year period following the child's attainment of the limiting age. Upon the attainment of the limiting age, the applicable adult premium may be charged.

History

Source Note: The provisions of this §3.3052 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758; amended to be effective November 18, 2025, 50 TexReg 7419.

28 Tex. Admin. Code § 3.3054 Preexisting Conditions Provisions

(a) The policy must clearly disclose the intent of the insurer as to the applicability or nonapplicability of coverage to preexisting conditions. In accordance with §3.3018 of this title (relating to Policy Definition of Preexisting Condition), a policy offering individual hospital, medical or surgical coverage also must clearly disclose and explain the conditions under which Texas law requires an insurer to not apply a preexisting condition provision, or to limit application of the provision, to an individual who has previous creditable coverage. If coverage of the policy is not to be applicable to preexisting conditions, the policy shall specify, in substance, that coverage applies only to accidental bodily injuries resulting from accidents occurring after the effective date of coverage and sicknesses which first manifest themselves subsequent to the effective date of coverage or expiration of any applicable probationary period.

(b) In regards to individuals who are not exempt from preexisting condition provisions under §3.3018 of this title (relating to Policy Definition of Preexisting Condition):

(1) If an insurer elects to use a simplified application form for individual applicants, the policy must cover any loss occurring after 12 months which results from any preexisting condition not specifically excluded from coverage by the terms of the policy.

(2) No individual policy of accident and sickness insurance delivered or issued for delivery in this state to a person age 65 or over may contain a provision excluding from coverage any loss due to a preexisting condition, not specifically excluded from coverage by name or specific description in an exclusion endorsement or rider effective on the date of the loss, for a period in excess of six months from the effective date of the coverage under the policy; provided, however, that if the commissioner finds that the public interest would be served thereby, it may authorize a policy provision excluding coverage for preexisting conditions for a period in excess of six months but in no event shall such period exceed one year.

History

Source Note: The provisions of this §3.3054 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3055 Standards for Probationary or Waiting Period Provision

A probationary or waiting period, if one is specified in the policy, is that period of time commencing with the date a person is initially insured under the policy to the date the coverage or coverages of the policy shall become effective as to such person.

(1) A probationary or waiting period shall not apply to any loss resulting from accidental injuries as defined in the policy; however, a policy may specify a probationary or waiting period for coverage of sickness which shall not exceed 30 days except as follows:

(A) for pregnancy, childbirth, miscarriage, or complications of pregnancy, the probationary or waiting period when expressed in terms of the inception of the pregnancy shall be no more than 30 days;

(B) six months for losses resulting from hernia, disorder of reproductive organs, varicose veins, hemorrhoids, appendix, tonsils, adenoids, and gall bladder;

(2) The limitations set out in this section do not apply to benefits for dental or vision care.

(3) Probationary waiting periods do not affect limitations for pre-existing conditions.

History

Source Note: The provisions of this §3.3055 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3056 Standards for Limitations Provision

The limitations on the risk undertaken, whether applicable to amounts, durations of benefits (age, or other matters) must be specified with clarity and certainty in the appropriate provision of the contract.

History

Source Note: The provisions of this §3.3056 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3057 Standards for Exceptions, Exclusions, and Reductions Provision

(a) An exception or exclusion is any provision in a policy whereby coverage for a specified hazard in entirely eliminated. It is a statement of a risk not assumed under the terms and provisions of the contract. Extensive listing of diseases to be excluded will not be acceptable unless the insurer can show that such are necessary and proper to the coverage provided.

(b) A reduction is a provision which takes away some portion, but not all of the coverage of the policy under certain specific conditions. Such relates to a risk assumed by the insurer but payment upon the occurrence of such loss is limited to some amount or period less than would be otherwise payable had such reduction clause not been used.

(c) Exceptions, exclusions, and reductions must be clearly expressed as a part of the benefit provision to which such applies or, if applicable to more than one benefit provision, must be set forth as a separate provision and appropriately captioned. Policies containing the specified exclusionary subjects appearing in Exhibit A will be acceptable; however, this may not preclude the consideration or approval of other exceptions or exclusions if such are deemed reasonable and appropriate to the risk undertaken and are approved by the commissioner. Exhibit A is adopted herein by reference. Copies of Exhibit A may be obtained by contacting the Texas Department of Insurance, Life and Health Division, Filings Intake, MC-LH-LHL, P.O. Box 12030, Austin, Texas 78711-2030, or by accessing the department's website at www.tdi.texas.gov/forms.

(d) The acceptable exclusions set forth in Exhibit A may not impair or limit the use of waivers to exclude, limit, or reduce coverage or benefits for named or specifically described pre-existing disease, physical condition, or extra hazardous activity. If waivers are required as a condition of issuance, renewal, or reinstatement, signed acceptance by the insured is required unless on initial issuance the full text of the waiver is contained either on the first page or specification page of the policy or unless notice of the waiver appears on the first page or specification page.

(e) If a policy contains a military service exclusion or a provision suspending coverage during military service, and if the premiums are either reduced or refunded for the period of such military service, such must be clearly stated in the policy.

(1) As to coverage that is not noncancellable, subject to limited renewability at option of the insured or subject to a limited guarantee of renewability:

(A) if the policy contains a "status" type of exclusion which excludes all coverages applicable to an insured person while in military service on full-time active duty, the policy must provide, upon receipt of written request, for refund of premiums as applicable to such person on a pro rata basis;

(B) if the policy contains a "causation" type exclusion (loss resulting from military service) while an insured person is on full-time active duty in the military, refund of premium is not required since the policy would be operative as to any other loss not resulting from military service causes;

(C) if a policy contains a provision for voluntary suspension of coverage during military service and an identifiable premium is charged for such coverage upon written request for suspension, a pro rata premium must be refunded.

(2) As to coverage that is noncancellable, subject to limited renewability at option of the insured or a limited guarantee of renewability:

(A) the policy may provide for refund of the entire premium for the period of military service or for a partial refund of the premium from the date the insurer receives notice and it may adjust any such refund for any change in reserves during the period of suspension;

(B) the policy may contain a military service exclusion or a provision for suspension of coverage upon entry into military service with the right of reinstatement upon termination of such service without evidence of insurability, if applied for within a specified period of not less than 60 days;

(C) the insurer may charge a partial premium during the period of suspension which will anticipate accumulation of reserves required by law or regulation and related cost factors.

History

Source Note: The provisions of this §3.3057 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3058 Standards for Elimination Period Provision

Elimination period shall relate to the initial period of time, during the continuance of a condition insured against, for which such benefit will not be paid. Such periods must be clearly expressed in the policy schedule of benefits page and clearly expressed or referenced in the benefit provision to which such elimination period applies.

History

Source Note: The provisions of this §3.3058 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3059 Standards for Recurrent Disabilities Provision

A policy may contain provisions relating to recurrent disability; provided, however, a recurrent disability provision may not specify that such disabilities be separated by a period greater than six months.

History

Source Note: The provisions of this §3.3059 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3060 Standards for Conversion Privileges Provision

(a) If a policy contains a conversion privilege, the caption shall be "Conversion Privilege," or words of similar import. The provision shall indicate the persons eligible for conversion. The circumstances applicable to the conversion privilege, including any limitations on the conversion, and the person by whom the conversion privilege may be exercised, shall be described. The provision may indicate that the privilege is subject to the underwriting standards of the insurer relating to overinsurance.

(b) A business overhead expense policy issued on either a guaranteed renewable basis, or on a non-cancellable basis, or renewable at the option of the company basis may contain a conversion privilege exercisable upon termination of the business interest, or it may provide for its continuation as a loss of time policy.

(c) A policy issued pursuant to the exercise of a conversion privilege contained in an individual family or other individual policy, the converted policy, or a rider attached thereto shall reflect the relative rights of each person covered under the converted policy.

History

Source Note: The provisions of this §3.3060 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3061 Standards for Requirements for Replacement Provision

(a) Application forms shall include a question relating to replacement designed to elicit information as to whether the insurance to be issued is intended to replace any other accident and sickness insurance presently in force. A supplementary application or other form to be signed by the applicant containing such a question or statement may be used.

(b) Upon determining that a sale will involve replacement, an insurer (other than a direct response insurer) or its agent shall furnish the applicant, prior to issuance or delivery of the policy, the notice described in subsection (c) of this section. One copy of such notice shall be provided to the applicant and an additional copy signed by the applicant shall be retained by the insurer. A direct response insurer shall deliver one copy of the notice described in subsection (d) of this section to the applicant upon issuance of the policy. In no event, however, will such a notice be required in the solicitation of the following types of policies:

(1) accident only;

(2) single premium nonrenewable;

(3) conversion to another policy in the same insurer with continuous coverage;

(4) conversion to an individual or family policy to replace group, blanket, or group type coverage.

(c) The notice required for an insurer, other than a direct response insurer is as follows: "NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS INSURANCE According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness insurance and replace it with a policy to be issued by (Company Name) Insurance Company. For your own information and protection, you should be aware of and seriously consider certain facts which may affect the insurance protection available to you under the new policy.

(1) Health conditions which you may presently have may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy. (This subsection may be modified if pre-existing conditions are covered under a new policy.)

(2) You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interests to make sure you understand all the relevant factors involved in replacing your present coverage.

(3) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical/health history. Failure to include all material medical information on any application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, re-read it carefully to be certain that all information has been properly recorded. The above Notice to Applicant was delivered to me on: (Date) (Applicant's Signature)"

(d) The notice required for a direct response insurer is as follows: "NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS INSURANCE According to (your application) (information that you have furnished), you intend to lapse or otherwise terminate existing accident and sickness insurance and replace it with the policy delivered herewith issued by (Company Name) Insurance Company. You have a period of 10 days from receipt of the new policy within which you may decide without cost whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

(3) (To be included only if the application is attached to the policy.) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (Company Name and Address) within 10 days if any information is not correct and complete or if any past medical history has been left out of the application. (Company Name)

History

Source Note: The provisions of this §3.3061 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3062 Conditional Receipts

The following provisions shall apply to conditional receipts.

(1) A conditional receipt which requires a determination of insurability as a condition precedent to coverage shall include an agreement to provide:

(A) coverage subject to any limit regarding the amount of insurance specified in the receipt, contingent upon insurability; and

(B) that such insurability be determined as of a date no later than the date of completion of all parts of the application, including completion of the first medical examination if one is required by the company's underwriting rules, and the required premium has been paid. Completion of a second medical examination may be required as a condition precedent to coverage if initially required by the company's underwriting rules because of the amount of insurance applied for or the age of the proposed insured.

(2) A determination of insurability means a determination by the company as to whether the proposed insured is insurable under its underwriting rules and practices for the plan and amount of insurance applied for and at the company's standard premium rate.

(3) If the proposed insured is insurable as of the date provided for in paragraph (1)(B) of this section, coverage shall begin not later than such date, except as provided in paragraph (5) of this section.

(4) A company must determine the insurability of the proposed insured as of the date specified in paragraph (1) of this section, even though the proposed insured dies or undergoes a change in health after the date provided for in paragraph (1) of this section but before the application is approved or rejected, and before the expiration of any time limit specified in the receipt.

(5) A company may honor a written request from the applicant that coverage is to commence as of a specified date later than the date provided for in paragraph (1) of this section.

(6) Only in mail order cases, and in cases where a premium is paid in advance and certain participation requirements must be met, is it permissible for a company to postpone the effective date of coverage to the date of issuance of the policy.

History

Source Note: The provisions of this §3.3062 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3070 Minimum Standards for Benefits Generally

The following minimum standards for benefits are prescribed for the categories noted in §§3.3071 - 3.3077 and §3.3079 of this title (relating to Minimum Standards and Benefits and Readability for Accident and Health Insurance Policies). No individual policy of accident and sickness insurance, or a subscriber contract of a hospital, medical, or dental services corporation, may be delivered or issued for delivery in this state which does not meet the required minimum standards for the specified categories except as otherwise provided by law or this subchapter. Such policies must also meet the requirements of Insurance Code Chapter 1701. Nothing in this section will preclude the issuance of any policy or contract combining two or more of the categories of coverage as set forth in Insurance Code §1201.104.

History

Source Note: The provisions of this §3.3070 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3071 Minimum Standards for Basic Hospital Expense Coverage

(a) "Basic hospital expense insurance" is a policy of accident and health insurance which provides coverage for a period of not less than 31 days during any one period of confinement for each person insured under the policy for the expense incurred for necessary treatment and services rendered as a result of an injury or sickness for at least the following:

(1) daily hospital room and board in an amount not less than:

(A) 80% of the charges for semi-private room accommodations; or

(B) $30 per day;

(2) miscellaneous hospital services for expenses incurred for the charges made by the hospital for services and supplies which are customarily rendered by the hospital and provided for use only during the period of continuous hospital confinement in an amount not less than either 80% of the charges incurred up to at least $1,000 or 10 times the daily hospital room and board benefit rate;

(3) hospital outpatient services:

(A) hospital services on the day surgery is performed in an amount not less than $50; and

(B) hospital services rendered within 72 hours after accidental injury, in an amount not less than $50; and

(C) x-ray and laboratory tests to the extent that benefits for such services would have been provided, in an amount not less than $100, if rendered to an inpatient of the hospital;

(4) benefits provided under paragraphs (1) and (2) of this section may be provided subject to a combined deductible amount not in excess of $100 per period of confinement;

(5) if hospital confinement maternity benefits are included within the scope of policy coverage then the amount of the minimum benefits for each covered pregnancy shall be the actual expenses incurred according to the policy terms up to an amount that is equal to 10 times the minimum daily hospital room and board benefit.

(b) Basic hospital expense insurance must be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter, unless such insurance constitutes short-term limited duration coverage, as defined in §3.3002(b)(18) of this title (relating to Definitions).

History

Source Note: The provisions of this §3.3071 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 2 TexReg 4943; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3072 Minimum Standards for Basic Medical-Surgical Expense Coverage

(a) "Basic medical-surgical expense coverage" is a policy of accident and sickness insurance which provides coverage for each person insured under the policy for the expenses incurred for the necessary services rendered by a physician for treatment of an injury or sickness for at least the following:

(1) surgical services:

(A) in amounts not less than those provided on a fee schedule based on the relative values contained in the 1969 California Relative Value Schedule or other acceptable value scale of surgical procedures, up to a maximum of at least $500 for any on e procedure; or

(B) not less than 80% of the usual, customary and reasonable charges. Surgical schedules shall include a provision stipulating coverage for procedures not specifically listed in the schedules and not otherwise excluded by the policy, and benefits therefore shall be consistent with the benefits for comparable procedures;

(2) anesthetic services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical services rendered by a physician other than the physician (or his or her assistant) performing the surgical services:

(A) in an amount not less than 80% of the usual, customary and reasonable charges; or

(B) 15% of the "surgical services" benefit;

(3) in-hospital medical services, consisting of attending physician services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than:

(A) 80% of the usual, customary and reasonable charges; or

(B) $5.00 per call, one call per day, for at least 21 such calls during "one period of confinement";

(4) if obstetrical-surgical benefits are included within the scope of policy coverage then the benefits for each covered pregnancy for obstetrical-surgical expenses incurred shall be based upon the relative value scale of surgical procedures referred to in paragraph (1) of this section.

(b) Basic medical-surgical expense coverage must be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter, unless such insurance constitutes short-term limited duration coverage, as defined in §3.3002(b)(18) of this title (relating to Definitions).

History

Source Note: The provisions of this §3.3072 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 2 TexReg 4943; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3073 Minimum Standards for Hospital Confinement Indemnity Coverage

(a) "Hospital Confinement Indemnity Coverage" is a policy of accident and sickness insurance which provides daily benefits for hospital confinement on an indemnity basis in an amount not less than $15 per day or $100 per week and not less than 31 days during any "one period of confinement" for each person insured under the policy. A one day or two day elimination period may be used when "one period of confinement" is not less than 31 days and not more than 364 days. A three day elimination period may be used when "one period of confinement" is 365 days or more. If a hospital confinement policy, whether styled as an indemnity policy or however styled, includes confinement for pregnancy within the scope of its coverage, then the minimum benefits payable for each covered pregnancy shall be the insured loss or expense up to an amount no less than 10 times the minimum daily benefit of the policy.

(b) Hospital confinement indemnity coverage is not required to be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter, provided that it meets the criteria for "excepted benefits" defined in relation to such coverage in §3.3002(b)(6)(B)(ii) of this title (relating to Definitions).

History

Source Note: The provisions of this §3.3073 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 3 TexReg 4943; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3074 Minimum Standards for Major Medical Expense Coverage

(a) "Major Medical Expense Coverage" is an accident and sickness insurance policy which provides hospital, medical, and surgical expense coverage as follows:

(1) an aggregate maximum of not less than $10,000;

(2) a co-payment by the covered person, shall not exceed 20% of covered charges in policies providing aggregate maximum benefits of $10,000 and 25% in all other policies;

(3) a deductible stated on a basis of one or more of the following:

(A) per person;

(B) per family;

(D) per benefit period; or

(4) policies which contain a variable deductible provision, i.e., a provision which in addition to a stated basic or minimum deductible amount chosen by the policyholder, includes a deductible amount to the extent of any other medical and hospital expense benefits available to the policyholder under any other policy, if any, shall conform to the following criteria:

(A) the right of renewal shall be no more limited than the applicable minimum standards for renewability set forth in §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability);

(B) the policy provides for an increase in the maximum amount of benefits in a sum of at least $3.00 for each $1.00 of other medical expense benefits used as part of the deductible.

(5) benefits shall be provided under major medical expense coverage for each covered person for at least:

(A) daily hospital room and board expenses, prior to application of the co-payment percentage, for not less than $50 daily (or in lieu thereof the average daily cost of semi-private room rate in the area where the insured is confined) for a period of not less than 31 days during continuous hospital confinement;

(B) miscellaneous hospital services, prior to application of the co-payment percentage, for an aggregate maximum of not less than $1500 or 15 times the daily room and board rate if specified in dollar amounts;

(C) surgical fees, prior to application of co-payment percentage, to a maximum of not less than $600 for the most severe operation with the amounts provided for other operations reasonably related to such maximum amount;

(D) anesthesia services, prior to application of the co-payment percentage, for a maximum of not less than 15% of the covered surgical fees or, alternatively, if the surgical schedule is based on relative values, not less than the amount provided therein for anesthesia services at the same unit value as used for the surgical schedule;

(E) doctor visits, in or out of the hospital, with minimum dollar amounts per visit, prior to application of the co-payment percentage, equal to not less than $10 per visit, covering at least one visit per day and for an aggregate maximum of such covered charges of not less than $600;

(F) out-of-hospital diagnostic x-ray and tests, prior to application of the co-payment percentage, for an aggregate maximum of such covered charges of not less than $600;

(G) no fewer than three of the following additional benefits, prior to application of the co-payment percentage, for an aggregate maximum of such covered of not less than $1,000:

(i) in-hospital private duty registered nurse services;

(ii) convalescent nursing home care;

(iii) diagnosis and treatment by a radiologist or physiotherapist;

(iv) rental of special medical equipment, as defined by the insurer in the policy;

(v) artificial limbs or eyes, casts, splints, trusses, or braces;

(vi) treatment for functional nervous disorders, and mental and emotional disorders;

(vii) out-of-hospital prescription drugs and medications;

(6) if hospital confinement maternity benefits are included within the scope of policy coverage then the amount of the minimum benefits for each covered pregnancy, prior to application of the co-payment percentage, shall be the actual expenses incurred according to the policy terms up to an amount that is equal to 10 times the minimum daily hospital room and board benefit.

(b) Major medical expense coverage must be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter, unless such insurance constitutes short-term limited duration coverage, as defined in §3.3002(b)(18) of this title (relating to Definitions).

History

Source Note: The provisions of this §3.3074 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 3 TexReg 4943; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3075 Minimum Standards for Disability Income Protection Coverage

"Disability income protection coverage" is a policy which provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from either sickness or accident or a combination thereof, which:

(1) provides for periodic payments in an amount of at least $100 per month payable at ages through 62 and $50 per month at ages after 62;

(2) contains an elimination period no greater than:

(A) 90 days in the case of a coverage providing a benefit period of one year or less;

(B) 365 days if the benefit is payable for not less than two years and is payable in an amount of at least $200 per month; or

(3) has a maximum period of time for which it is payable during disability of at least six months;

(4) this section does not apply to those policies providing business buy out coverage.

History

Source Note: The provisions of this §3.3075 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3076 Minimum Standards for Accident Only Coverage

"Accident only coverage" is a policy of accident insurance which provides coverage, singularly or in combination, for death, dismemberment, disability, or hospital and medical care caused by accident. Such coverage provided shall meet the following criteria.

(1) Accidental death and double dismemberment amounts shall be at least $1,000.

(2) Single dismemberment amounts shall be at least $500.

(3) Accidental death and dismemberment benefits shall be payable if the loss occurs within a period of time not less than 90 days from the date of the accident, irrespective of total disability.

(4) Specific dismemberment(s) benefit(s) may not be provided in lieu of other benefits unless the specific dismemberment(s) benefit(s) equals or exceeds the other benefit.

(5) Disability income benefits, where provided, may not require the loss to commence less than 30 days after the date of accident nor shall any policy which the insurer cancels or refuses to renew require that it be in force at the time disability commences if the accident occurred while the policy was in force and the disability commenced within the time limit specified in the policy.

History

Source Note: The provisions of this §3.3076 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3077 Minimum Standards for Specified Disease and Specified Accident Coverage

(a) "Specified disease coverage" is a policy written on a guaranteed renewable basis as prescribed in §3.3050(b) of this title (relating to Standards for Renewability Provisions) which meets one of the following definitions.

(1) A policy which provides coverages for each person insured under the policy for a specifically named disease (or diseases) with a deductible amount not to exceed 5.0% of the aggregate maximum benefit and an overall aggregate benefit limit of no less than $5,000 per person and a benefit period of not less than two years. If the benefits are subject to be scheduled inside dollar limits, such limits shall meet the minimum requirements for major medical coverage as prescribed in §3.3074 of this title (relating to Minimum Standards for Major Medical Expense Coverage).

(2) A policy which provides coverage for each person insured under the policy for a specifically named disease (or diseases) with no deductible amount and an overall aggregate benefit limit of not less than $25,000 payable at the rate of not less than $50 a day while confined in a hospital and a benefit period of not less than 500 days.

(3) In lieu of the minimum benefits specified in paragraphs (1) and (2) of this subsection, a specified disease policy or rider, limited to cancer, may provide minimum benefits not less than the following:

(A) $50 a day for the first 10 days of hospitalization without any elimination period, deductible or coinsurance factor and $30 a day for each day of continuous hospitalization thereafter with no limit on the number of days of hospitalization;

(B) x-ray, radium, and cobalt therapy up to a total of $1,500;

(C) attending physician(s) charges in hospital (other than the operating surgeon) of $7.50 per day up to a total of $500;

(D) surgical charges in accordance with the 1969 California Relative Value Schedule or other acceptable relative value scale of surgical procedure, up to a maximum of at least $600;

(E) anesthetist services for an operation in an amount not less than:

(i) 80% of the usual, customary and reasonable charges; or

(ii) 15% of the surgical charges benefit;

(F) nursing expenses of $24 per shift for not less than one shift per day up to $750;

(G) blood transfusions and plasma up to $500;

(H) prescribed drugs and medicine up to $250. If an overall aggregate limit on all benefits is used, it shall be not less than $10,000 per person.

(b) "Specified accident coverage" is an accident insurance policy which provides coverage for a specifically identified kind of accident (or accidents) for each person insured under the policy for accidental death or accidental death and dismemberment combined, disability or hospital and medical care with a benefit amount not less than $1,000 for accidental death; $1,000 for double dismemberment and $500 for single dismemberment.

History

Source Note: The provisions of this §3.3077 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3079 Minimum Standards for Limited Benefit Coverage

(a) Limited benefit coverage is a policy of accident and sickness insurance providing the types of coverage set forth in §3.3071 of this title (relating to Minimum Standards for Basic Hospital Expense Coverage), §3.3072 of this title (relating to Minimum Standards for Basic Medical-Surgical Expense Coverage), and §3.3075 of this title (relating to Minimum Standards for Disability Income Protection Coverage), but the types and/or amounts of benefits are less than those prescribed in such sections. Such policies delivered or issued for delivery in this state in addition to meeting all other applicable requirements of these sections must prominently display at the top of the outline of coverage and on the face page of the policy in no less than 14 point type the notice set out in §3.3091 of this title (relating to Notice Requirements for Outline of Coverage of Limited Benefit, Supplemental and Nonconventional Coverages).

(b) Any limited benefit basic hospital expense coverage or limited benefit basic medical-surgical expense coverage offered pursuant to this section must be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter, unless such insurance constitutes short-term limited duration coverage, as defined in §3.3002(b)(18) of this title (relating to Definitions).

History

Source Note: The provisions of this §3.3079 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3080 Supplemental Coverage

Supplemental coverage is a policy of accident and sickness insurance which may be issued only to supplement in-force policies of individual and group accident and sickness insurance, employee benefit plans, hospital, medical, and dental service organization subscriber contracts, any state or federally sponsored coverages and health maintenance organization contracts.

History

Source Note: The provisions of this §3.3080 adopted to be effective January 26, 1977, 2 TexReg 159.

28 Tex. Admin. Code § 3.3081 Nonconventional Coverage

The commissioner may authorize approval of a policy that does not correspond with one of the categories as described in §§3.3071-3.3077 and 3.3079-3.3080 of this title (relating to Minimum Standards and Benefits and Readability for Accident and Health Insurance Policies) if such policy is determined to be a type of coverage that is experimental in nature or a type of coverage that will in the opinion of the commissioner fulfill a reasonable public need and is appropriately and prominently described in the outline of coverage. Unless such coverage falls within the definition of excepted benefits set forth in §3.3002(b)(6) of this title (relating to Definitions), the coverage must be guaranteed renewable in accordance with §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions) of this subchapter.

History

Source Note: The provisions of this §3.3081 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 22, 1997, 22 TexReg 12503.

28 Tex. Admin. Code § 3.3090 Outline of Coverage Generally

(a) In order to facilitate public understanding of coverages and to provide full and fair disclosure in the sale of individual accident and sickness insurance policies, no such policy may be delivered or issued for delivery in this state unless an appropriate outline of coverage, as prescribed in these sections is delivered.

(1) in the case of a direct response insurance product, the outline of coverage shall be delivered with the policy; and

(2) in all other cases, the outline of coverage shall be delivered to the applicant at the time application is made and acknowledgment of receipt or certificate of delivery of such outline of coverage is provided to the insurer. The insurer may secure acknowledgment of delivery of the outline of coverage by an acknowledgment receipt attached to or made a part of the application; or by a certificate of delivery signed by the insured.

(b) In the event that a policy is issued on a basis other than that applied for which would require revision of the outline of coverage, a substitute, properly describing the policy, must be delivered with the policy and contain the following statement, in no less than 14-point type, at the top of the page: "NOTICE: READ THIS OUTLINE OF COVERAGE CAREFULLY. It is not the same as the outline of coverage given to you upon application because you have not been issued the coverage for which you first applied."

(c) Insurers issuing individual accident and sickness policies that contain preferred provider benefits are not required to deliver the outline of coverage prescribed in subsection (a) of this section if the written description prescribed in §3.3704(7) of this title (relating to Freedom of Choice) is delivered at the time of application, or no more than 14 days prior to application. If the insurer does deliver the written description prescribed in §3.3704(7), it must be modified to include the information required by §3.3092(b)(5) and (6) of this title (relating to Format, Content, and Readability for Outline of Coverage). Modifications may be achieved by providing a supplemental attachment.

History

Source Note: The provisions of this §3.3090 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858; amended to be effective May 13, 1997, 22 TexReg 3990.

28 Tex. Admin. Code § 3.3091 Notice Requirements for Outline of Coverage of Limited Benefit, Supplemental and Non-conventional Coverages

(a) The outline of coverage for policies that are approved under §3.3079 of this title (relating to Minimum Standards for Limited Benefit Coverage) shall prominently display in no less than 14-point type that the policy is "limited benefit basic hospital expense coverage," "limited benefit basic medical-surgical expense coverage," or "limited benefit disability income protection coverage." The outline of coverage shall further state at the top of the page in capital letters the following: "THE POLICY DESCRIBED IN THIS OUTLINE PROVIDES LIMITED BENEFITS ONLY WHICH ARE LESS THAN THE MINIMUM STANDARD FOR BENEFITS FOR (STATE CATEGORY OF COVERAGE) AS PRESCRIBED BY THE INSURANCE REGULATORY AUTHORITY OF YOUR STATE."

(b) The outline of coverage for policies approved under §3.3080 of this title (relating to Supplemental Coverage) shall prominently display at the top of the page in no less than 14-point type, in capital letters, the following: "THE POLICY DESCRIBED IN THIS OUTLINE PROVIDES SUPPLEMENTAL COVERAGE ISSUED ONLY TO SUPPLEMENT INSURANCE ALREADY IN FORCE."

(c) The outline of coverage for policies approved under §3.3081 of this title (relating to Non-conventional Coverage) shall prominently display at the top of the page in no less that 14-point type, in capital letters, the following: "THE POLICY DESCRIBED IN THIS OUTLINE DOES NOT MEET THE MINIMUM STANDARDS FOR BENEFITS ESTABLISHED FOR BASIC CATEGORIES OF COVERAGE REQUIRED BY THE INSURANCE REGULATORY AUTHORITY OF YOUR STATE."

(d) When no prescribed outline of coverage is appropriate for the coverage provided by the policy, an outline of coverage most appropriate to the categories of coverage offered shall be used.

History

Source Note: The provisions of this §3.3091 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858.

28 Tex. Admin. Code § 3.3092 Format, Content, and Readability for Outline of Coverage

(a) Format.

(1) Each outline of coverage must contain the appropriate text and be in the appropriate format of the outlines of coverage set forth in this subchapter and may not contain any material of an advertising nature, except for the insurer's logotype.

(2) The outline of coverage must be plainly printed in light-faced type of a style in general use, the size of which must be uniform except as provided in paragraph (4) of this subsection and not less than 12 point with a lowercase unspaced alphabet length not less than 130 point, with a minimum of one-point leading.

(3) The contrast and legibility of the color of ink and the color of paper of the outline of coverage must be substantially the equivalent of that of black ink on white paper.

(4) Text that is capitalized or underscored in the outline of coverage may be of a different style type the size of which may be the same as or larger than that of other text.

(5) When an outline of coverage is integrated with a sales brochure, multi-colored ink may be used on all portions of the brochure except the outline of coverage.

(b) Content.

(1) Drafting instructions for paragraph 1. The following language must appear in each outline of coverage: READ YOUR POLICY CAREFULLY. This outline of coverage provides a very brief description of the important features of your policy. This is not the insurance contract and only the actual policy provisions will control. The policy itself sets forth, in detail, the rights and obligations of both you and your insurance company. It is, therefore, important that you READ YOUR POLICY CAREFULLY!

(2) Drafting instructions for paragraph 2. This paragraph must be in the applicable form set out in §3.3093 of this title (relating to Prescribed Outlines of Coverage) for the category of coverage provided.

(3) Drafting instructions for paragraph 3. This paragraph must set forth a brief specific description of the benefits (including dollar amounts and number of days duration where applicable) provided by the policy with which the outline of coverage is to be used. The description must be stated clearly and concisely, and include a description of any elimination periods, deductible amounts, inner limits or co-payment requirements, and any other items applicable to the benefits described. If a benefit is stated in the outline of coverage but not provided in the policy as applied for or issued, a notation must be made in the outline of coverage to the effect that no coverage is provided for that benefit.

(4) Drafting instructions for paragraph 4. This paragraph must briefly describe any policy provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in paragraph (3) of this subsection. The circumstances under which any reduction becomes operative must be included. Limitations on coverage for pre-existing conditions that qualify payment of benefits must be summarized. Provisions which reduce benefits otherwise payable due to other coverage must be described.

(5) Drafting instructions for paragraph 5. This paragraph must include a description of the provisions regarding renewability including any limitation by age, time, or event, status requirements, any reservation by the insurer of a right to change premiums or right of cancellation, and any other matter appropriate to the terms and conditions of renewability. If the policy, or any part of the policy, consists of individual hospital, medical, or surgical coverage, paragraph 5 must include language regarding guaranteed renewability substantially similar to the following: "This (policy/coverage) is guaranteed renewable. That means that you have the right to keep the policy in force with the same benefits, except that we may discontinue or terminate the policy if: 1. You fail to pay premiums as required under the policy; 2. You have performed an act or practice that constitutes fraud, or have made an intentional misrepresentation of material fact, relating in any way to the policy, including claims for benefits under the policy; or 3. We stop issuing the (policy/coverage) in Texas, but only if we notify you in advance." (Include, if coverage offered by an issuer under the Insurance Code, Chapter 842: "4. You no longer reside, live, or work in our service area, as described in the policy.") (Include, if applicable: "This policy will not terminate when a covered person becomes eligible for Medicare. However, the policy excludes any benefits that are paid to a covered person by Medicare.") "Unless the policy is 'noncancellable,' as defined in the policy, we have the right to raise rates on your policy at each time of renewal, in a manner consistent with the policy and Texas law. If the policy is noncancellable, our right to raise rates is limited by the definition of 'noncancellable' contained in the policy, and by Texas law."

(6) Drafting instructions for paragraph 6. The total premium payable must be stated. In the event the mode stated is not an exact multiple of the annual premium, then the annual premium must also be stated. Initial policy fees must be stated separately. If premiums are "step-rated," they must either be disclosed for each step or the initial premium may be disclosed accompanied by a statement as follows: "Renewal premiums for this policy will increase periodically depending upon (your age) (the policy year)." Unless a policy is issued with guaranteed premium rates, this paragraph must contain the statement "premiums are subject to change." This paragraph must also include a statement of the policy grace period.

(1) Insurers must utilize an appropriate test of readability in gauging the readability of paragraphs 3 through 6 of the Outline of Coverage prescribed in this section and §§3.3090, 3.3091, and 3.3093 of this title (relating to Outline of Coverage Generally; Notice Requirements for Outline of Coverage of Limited Benefit, Supplemental and Non-conventional Coverages; and Prescribed Outlines of Coverage). Such test may be selected from any one of the following:

(A) "Flesch" Formula, Rudolf Flesch, The Art of Readable Writing (1949, as revised in 1974);

(B) Fry Graph, Edward Fry, Journal of Reading (April 1968);

(C) Chall Readability, Jean Chall and Edgar Dale, "A Formula for Predicting Readability"; Educational Research Bulletin (January 1948);

(D) FOG Index, Robert Gunning, "The Technique of Clear Writing" and "How to Take the Fog Out of Writing," Dartnell Press;

(E) Farr-Jenkins-Paterson, "Simplification of Flesch Reading Ease Formula," Journal of Applied Psychology (October 1951);

(F) any other test which may from time to time be established or approved by the commissioner.

(2) In utilizing a readability test, insurers must establish a specific minimum level of readability which may not be more difficult than the equivalent of a ninth-grade reading level. In determining the readability level, all prescribed language, any medical terms, or formal names may be deleted as a criteria of readability.

(3) Each insurer must notify the commissioner as to the readability test adopted in compliance with this section and any changes made or intended to be made in the use of such text.

(4) The insurer must file the readability score of the outline of coverage along with the outline of coverage.

(5) This subsection does not apply to outlines of coverage used in connection with policies providing business buy out agreements or key man coverage.

History

Source Note: The provisions of this §3.3092 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3093 Prescribed Outlines of Coverage

An outline of coverage in the following prescribed form and drafted in accordance with the instructions set forth in §3.3092 of this title (relating to Format, Content, and Readability for Outline of Coverage) shall be issued in connection with policies meeting the standards of §§3.3071-3.3080 of this title (relating to Minimum Standards and Benefits and Readability for Accident and Health Insurance Policies). The items included in the outline of coverage shall appear in the following prescribed sequence.

(1) Basic hospital expense coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(2) Basic medical-surgical expense coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(3) Hospital confinement indemnity coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(4) Major medical expense coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(5) Disability income protection coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(6) Accident only coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(7) Specified disease or specified accident coverage policies shall be accompanied by an outline of coverage in either of the following forms as specified in subparagraphs (A) or (B) of this paragraph, whichever is appropriate.

Attached Graphic

(8) Limited benefit coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

(9) Supplemental coverage policies shall be accompanied by an outline of coverage in the following form.

Attached Graphic

History

Source Note: The provisions of this §3.3093 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective December 7, 1983, 8 TexReg 4858.

28 Tex. Admin. Code § 3.3100 Policy Readability Generally

(a) In order to increase policyholder understanding of individual accident and sickness policies, insurers are encouraged to draft individual accident and sickness policies in a readable manner. To maintain the value of the policy as a legal document, the utmost care and caution must be used in its preparation. Insurance Code Chapter 1201, Subchapter E, concerning Required Policy Provisions, requires the use of certain policy provisions in particular language or provisions that are as favorable to the insured or beneficiary as those set forth in that subchapter. Even with these requirements of law, insurers are encouraged to experiment with new language in these areas.

(b) The standards for plain language and readability set forth in Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings) apply to forms filed under this subchapter.

History

Source Note: The provisions of this §3.3100 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective May 11, 2022, 47 Texreg 2758; amended to be effective April 17, 2025, 50 TexReg 2383.

28 Tex. Admin. Code § 3.3110 Effective Date; Applicability of Certain Provisions to Policies Deemed Continuous under Insurance Code

(a) The sections of this subchapter, as amended and adopted by the commissioner, will be effective 20 days from the date they are filed with the Office of the Secretary of State and be applicable to all individual accident and sickness insurance policies and subscriber contracts of hospital and medical and dental service associations delivered, issued for delivery, or renewed on and after such date. Individual accident and sickness insurance policies and subscriber contracts of hospital and medical and dental service associations, delivered, issued for delivery, or renewed in this state prior to the effective date of this section are subject to the regulations in effect at the time the policy or contract was delivered, issued for delivery, or renewed.

(b) In regard to policies issued before December 22, 1997, and deemed continuous and not annually renewed pursuant to Insurance Code §1202.001:

(1) Such policies will be considered "renewed" for the purposes of complying with the mandatory guaranteed renewability provisions of this subchapter, if applicable to the coverage offered in such policies, as set forth in §3.3020 of this title (relating to Policy Definition of Guaranteed Renewable and Limited Guarantee of Renewability) and §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical or Surgical Coverage; Exceptions), on the first policy anniversary date after December 22, 1997.

(2) Such policies will not be subject to any other provisions of this subchapter, unless the statutory period of continuity prescribed by Insurance Code §1202.001 ends, and the policy is then renewed. During such period of continuity, the policies will continue to be subject to applicable rules as they existed prior to December 22, 1997.

History

Source Note: The provisions of this §3.3110 adopted to be effective January 26, 1977, 2 TexReg 159; amended to be effective January 2, 1978, 2 TexReg 4943; amended to be effective December 22, 1997, 22 TexReg 12503; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3111 Severability Clause

If any provision of these sections or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the sections which can be given effect without the invalid provision or application, and to this end the provisions of each section are declared to be severable.

History

Source Note: The provisions of this §3.3111 adopted to be effective January 26, 1977, 2 TexReg 159.

Subchapter T MINIMUM STANDARDS FOR MEDICARE SUPPLEMENT POLICIES

28 Tex. Admin. Code § 3.3301 Purpose

The purpose of these sections is to provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies; to facilitate public understanding and comparison of such policies; to eliminate provisions contained in such policies which may be misleading or confusing in connection with the purchase of such policies or with the settlement of claims; and to provide for full disclosures in the sale of accident and sickness insurance coverages to persons eligible for Medicare.

History

Source Note: The provisions of this §3.3301 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective April 15, 1992, 17 TexReg 2238.

28 Tex. Admin. Code § 3.3302 Applicability and Scope

(a) Except as otherwise specifically provided, this subchapter applies to:

(1) all Medicare supplement policies as defined in Insurance Code §1652.002 and §3.3303 of this title (relating to Definitions) delivered or issued for delivery in this state on or after the effective date of this subchapter; and

(2) all certificates issued under group Medicare supplement policies, for which certificates have been delivered or issued for delivery in this state regardless of the place where the policy was delivered or issued for delivery. In this subchapter, the required minimum standards for Medicare supplement insurance, which make specific reference to a policy or policies, are equally applicable to a group certificate or certificates.

(b) Policies and certificates delivered or issued for delivery before June 1, 2010, are subject to the laws and rules as they existed at the time the policy was delivered or issued for delivery and those sections or portions of sections are continued in effect for that purpose.

History

Source Note: The provisions of this §3.3302 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3303 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) 1990 Standardized Medicare supplement benefit plan, 1990 Standardized benefit plan, or 1990 plan--A group or individual policy of Medicare supplement insurance issued or issued for delivery on or after March 1, 1992, and with an effective date for coverage before June 1, 2010.

(2) 2010 Standardized Medicare supplement benefit plans, 2010 Standardized benefit plan, or 2010 plan--A group or individual policy of Medicare supplement insurance with an effective date for coverage on or after June 1, 2010.

(3) 2020 newly eligible individual--An individual who is newly eligible for Medicare on or after January 1, 2020:

(A) by reason of attaining age 65 on or after January 1, 2020; or

(B) by reason of entitlement to benefits under Part A under section 42 U.S.C. §426(b) or 42 U.S.C. §426-1, or who is deemed to be eligible for benefits under section 42 U.S.C. §426(a) on or after January 1, 2020. An individual who becomes Medicare eligible or turns 65 before January 1, 2020, is not a 2020 newly eligible individual.

(4) Applicant--

(A) In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance or other health benefits.

(B) In the case of a group Medicare supplement policy, the proposed certificate holder.

(5) Bankruptcy--The situation that occurs when a Medicare Advantage organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in Texas.

(6) Certificate--Any certificate issued under a group Medicare supplement policy, for which a certificate has been delivered or issued for delivery in this state regardless of the place where the policy was delivered or issued for delivery.

(7) Continuous period of creditable coverage--The period during which an individual was covered by creditable coverage, if, during the period of the coverage, the individual had no breaks in coverage greater than 63 days.

(8) Creditable coverage--Any coverage of an individual as defined in §21.1101 of this title (relating to Definitions).

(9) Employee welfare benefit plan--A plan, fund, or program of employee benefits as defined in 29 U.S.C. §1002 (Employee Retirement Income Security Act).

(10) Health Maintenance Organization (HMO)--An entity as defined in 42 U.S.C. §300e(a).

(11) Insolvency--The situation that occurs when an issuer has had an order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer's state of domicile.

(12) Issuer--An insurance company, fraternal benefit society, health care service plan, health maintenance organization, or any other entity delivering or issuing for delivery in this state Medicare supplement policies or certificates.

(13) Medicaid--Grants to States for Medical Assistance Programs, Title XIX of the Social Security Act Amendments of 1965 as then constituted or later amended.

(14) Medicare--The Health Insurance for the Aged Act, Title XVIII of the Social Security Act Amendments of 1965 as then constituted or later amended.

(15) Medicare Advantage organization--An entity as defined in 42 U.S.C. §1395w-28(a)(1).

(16) Medicare Advantage plan--A plan of coverage for health benefits under Medicare Part C as defined in 42 U.S.C. §1395w-28(b)(1), and includes:

(A) coordinated care plans that provide health services, including but not limited to HMO plans (with or without a point of service option), plans offered by provider-sponsored organizations, and preferred provider organization plans;

(B) medical savings account plans coupled with a contribution into a Medicare Advantage medical savings account; and

(17) Medicare Advantage private fee-for-service plan--An entity as defined in 42 U.S.C. §1395w-28(b)(2).

(18) MMA--The Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

(19) Medicare Select policy or Medicare Select certificate--A Medicare supplement policy or certificate, respectively, that contains restricted network provisions.

(20) Medicare supplement policy--A group or individual policy of accident and sickness insurance or a subscriber contract of a group hospital service corporation subject to Insurance Code Chapter 842 (concerning Group Hospital Service Corporations), or, to the extent required by federal law, an evidence of coverage issued by an HMO subject to Insurance Code Chapter 843 (concerning Health Maintenance Organizations), for which a policy, subscriber contract, or evidence of coverage is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare. The term does not include:

(A) a policy, contract, subscriber contract, or evidence of coverage of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organizations, or combination thereof, for employees or former employees, or combination thereof, or for members or former members, or combination thereof, of the labor organizations;

(B) a policy or health care benefit plan including a policy or contract of group insurance or group contract of a group hospital service corporation subject to Insurance Code Chapter 842, or group evidence of coverage issued by an HMO subject to Insurance Code Chapter 843, when such policy or plan is not marketed or held to be a Medicare supplement policy or benefit plan; or

(C) an individual or group evidence of coverage issued under a contract in accordance with the Federal Social Security Act, §1876 (42 U.S.C. §§1395, et seq.) by an HMO subject to Insurance Code Chapter 843;

(D) a Medicare Advantage plan established under Medicare Part C;

(E) an Outpatient Prescription Drug plan established under Medicare Part D; or

(F) a Health Care Prepayment Plan (HCPP) that provides benefits under an agreement under §1833(a)(1)(A) of the Federal Social Security Act (42 U.S.C. §§1395, et seq.)

(21) Point of service--A benefit option as defined in 42 C.F.R. §422.2.

(22) Pre-Standardized Medicare supplement benefit plan, Pre-Standardized benefit plan or Pre-Standardized plan--A group or individual policy of Medicare supplement insurance issued or issued for delivery before March 1, 1992.

(23) Provider-sponsored organization--An entity as defined in 42 U.S.C. §1395w-25(d)(1).

(24) Qualified actuary--An actuary who is a member of either the Society of Actuaries or the American Academy of Actuaries.

(25) Secretary--The Secretary of the United States Department of Health and Human Services.

History

Source Note: The provisions of this §3.3303 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective July 6, 2009, 34 TexReg 4532; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3304 Policy Definitions and Terms

No insurance policy, subscriber contract, certificate, or evidence of coverage may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy unless the policy, subscriber contract, certificate, or evidence of coverage contains definitions or terms that conform to the requirements of this section.

(1) "Accident" or "Accidental Injury" or "Accidental Means" must be defined to employ "result" language and may not include words that establish an accidental means test or use words such as "external, violent, visible wounds," or similar words of description or characterization.

(A) The definition may not be more restrictive than the following: "Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person that is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance or health coverage is in force."

(B) The definition may provide that injuries do not include injuries for which benefits are provided under any workers' compensation, employer's liability, or similar law, or motor vehicle no-fault plan, unless prohibited by law.

(2) "Benefit Period" or "Medicare Benefit Period" may not be defined as more restrictive than as that defined in the Medicare program.

(3) "Convalescent Nursing Home," "Extended Care Facility," or "Skilled Nursing Facility" may not be defined more restrictively than as defined in the Medicare program.

(4) "Health Care Expenses" are, for purposes of §3.3307 of this title (relating to Loss Ratio Standards and Refund or Credit of Premiums), those expenses of health maintenance organizations associated with the delivery of health care services and analogous to incurred losses of insurers.

(5) "Hospital" may be defined in relation to its status, facilities, and available services, or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as defined in the Medicare program.

(6) "Medicare" must be defined in the policy, certificate, or evidence of coverage. Medicare may be substantially defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended" or "Title I, Part I of Public Law 89-97, as enacted by the 89th Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted, and any later amendments or substitutes."

(7) "Medicare-Approved Amounts" refer to the level of service or amount of health care reimbursement recognized and approved for a particular medical or health care service or procedure by Medicare.

(8) "Medicare-Eligible Expenses" are health care expenses of the kinds covered by Medicare Parts A and B, to the extent recognized as reasonable and medically necessary by Medicare.

(9) "Nurses" may be defined so that the description of nurse is restricted to a type of nurse, such as registered graduate professional nurse (RN), a licensed practical nurse (LPN), or a licensed vocational nurse (LVN). If the words "nurse," "trained nurse," or "registered nurse" are used without specific instruction, then the use of the terms requires the issuer to recognize the services of any individual who qualifies under such terminology in accordance with the applicable statutes or administrative rules of the Texas Board of Nursing.

(10) "Physician" may not be defined more restrictively than as defined in the Medicare program. An issuer must recognize and accept, to the extent of its obligation under the contract, all providers of medical care and treatment, when such services are within the scope of the provider's licensed authority and are provided under applicable laws.

(11) "Sickness" may not be defined to be more restrictive than the following: "Sickness means illness or disease of a covered person that first manifests itself after the effective date of insurance or health coverage and while the insurance or health coverage is in force." The definition may not be construed to limit §3.3306(b)(1) of this title (relating to Minimum Benefit Standards). The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers' compensation, occupational disease, employer's liability, or similar law.

History

Source Note: The provisions of this §3.3304 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3305 Policy Provisions

(a) Except for permitted preexisting condition clauses described in §3.3306(b)(1)(A) of this title (relating to Minimum Benefit Standards), no policy or certificate may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy if the policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare.

(b) No Medicare supplement policy or certificate may use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.

(c) No Medicare supplement policy, contract, or certificate in force in this state may contain benefits that duplicate benefits provided by Medicare.

(d) Subject to §3.3306(b)(1)(D) and (E) of this title, a Medicare supplement policy with benefits for outpatient prescription drugs in existence before January 1, 2006, must be renewed for current policyholders who do not enroll in Part D at the option of the policyholder.

(e) A Medicare supplement policy with benefits for outpatient prescription drugs may not be issued after December 31, 2005.

(f) After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:

(1) the policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual's coverage under a Part D plan; and

(2) premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.

History

Source Note: The provisions of this §3.3305 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3306 Minimum Benefit Standards

(a) Benefit standards for standardized Medicare supplement benefit plan policies or certificates issued to 2020 newly eligible individuals. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) provides that no policy or certificate that provides coverage of the Medicare Part B deductible may be advertised, solicited, delivered, or issued for delivery in this state as a Medicare supplement policy or certificate to individuals newly eligible for Medicare on or after January 1, 2020. Benefit standards applicable to Medicare supplement policies and certificates issued to individuals eligible for Medicare before January 1, 2020, remain subject to the requirements of subsections (b) and (c) of this section. All policies issued to a 2020 newly eligible individual, as defined in this subchapter, must comply with the following benefit standards:

(1) Benefit requirements. The standards and requirements of subsections (b) and (c) of this section apply to all Medicare supplement policies or certificates delivered or issued for delivery to 2020 newly eligible individuals, with the exception of subsections (b)(3)(C), (c)(5)(C), (c)(5)(E), and (c)(5)(F) of this section.

(2) Eligibility to purchase. A 2020 newly eligible individual is only eligible to purchase standardized Medicare supplement benefit plans A, B, D, G, High Deductible G, K, L, M, and N. Standardized Medicare supplement benefit plans C, F, and High Deductible F may not be offered to 2020 newly eligible individuals.

(b) Benefit standards for 2010 Standardized Medicare supplement benefit plan policies or certificates issued or issued for delivery with an effective date for coverage on or after June 1, 2010. This section specifies the minimum standards applicable to all Medicare supplement policies or certificates issued or issued for delivery in this state with an effective date for coverage on or after June 1, 2010. No insurance policy, subscriber contract, certificate, or evidence of coverage may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy unless the policy, contract, certificate, or evidence of coverage meets the applicable standards in paragraphs (1) - (3) of this subsection. No issuer may offer or issue any 1990 Standardized Medicare supplement benefit plan for sale on or after June 1, 2010. Benefit standards applicable to Medicare supplement policies and certificates issued or issued for delivery with an effective date before June 1, 2010, remain subject to the laws and rules in effect when the policy or certificate was delivered or issued for delivery. These are minimum standards and do not prevent the inclusion of other provisions or benefits that are not inconsistent with these standards.

(1) General standards. The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this subchapter, Insurance Code Chapter 1652, and any other applicable law.

(A) A Medicare supplement policy or certificate must not exclude or limit benefits for losses incurred more than six months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage.

(i) If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer must waive any time applicable to preexisting condition waiting periods, elimination periods, and probationary periods in the new Medicare supplement policy or certificate to the extent the time was spent under the original policy.

(ii) If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate that has been in effect for at least six months, the replacing policy or certificate must not provide any time period applicable to preexisting conditions, waiting periods, elimination periods, and probationary periods for benefits.

(iii) If a Medicare supplement policy or certificate is issued or issued for delivery to an applicant who qualifies under §3.3312(b) of this title (relating to Guaranteed Issue for Eligible Persons) or §3.3324(a) of this title (relating to Open Enrollment), the issuer must reduce the period of any preexisting condition exclusion as required by §3.3312(a)(2) of this title and §3.3324(c) and (d) of this title.

(B) A Medicare supplement policy or certificate may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.

(C) A Medicare supplement policy or certificate must provide that benefits designed to cover cost-sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts. Premiums may be modified to correspond with such changes.

(D) A Medicare supplement policy or certificate may not:

(i) provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or

(ii) be canceled or nonrenewed by the insurer solely on the grounds of deterioration of health.

(E) Each Medicare supplement policy must be guaranteed renewable and must comply with the provisions of clauses (i) - (vi) of this subparagraph.

(i) The issuer may not cancel or nonrenew the policy solely on the ground of health status of the individual.

(ii) The issuer may not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.

(iii) If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided in clause (v) of this subparagraph, the issuer must offer certificate holders an individual Medicare supplement policy that, at the option of the certificate holder:

(I) provides for continuation of the benefits contained in the group policy; or

(II) provides for benefits that otherwise meet the requirements of this subparagraph.

(iv) If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer must:

(I) offer the certificate holder the conversion opportunity described in clause (iii) of this subparagraph; or

(II) at the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.

(v) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy must offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

(vi) If an individual is issued a certificate in Texas in a group Medicare supplement policy and the individual moves out of the state, the issuer may replace the Texas certificate with a certificate of the same standardized benefit plan type, approved by the new state of residence, if the issuer acts uniformly in its treatment of certificate holders who move out of Texas.

(F) Termination of a Medicare supplement policy or certificate must be without prejudice to any continuous loss that commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned on the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits must not be considered in determining a continuous loss.

(G) A Medicare supplement policy or certificate must comply with clauses (i) - (iv) of this subparagraph:

(i) A Medicare supplement policy or certificate must provide that benefits and premiums under the policy or certificate will be suspended at the request of the policyholder or certificate holder for the period, not to exceed 24 months, in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within 90 days after the date the individual becomes entitled to that assistance.

(ii) If suspension occurs and if the policyholder or certificate holder loses entitlement to medical assistance, the policy or certificate must be automatically reinstituted effective as of the date of termination of entitlement if the policyholder or certificate holder provides notice of loss of entitlement within 90 days after the date of loss and pays the premium attributable to the period, effective as of the date of termination of entitlement.

(iii) Each Medicare supplement policy must provide that benefits and premiums under the policy will be suspended (for any period that may be provided by federal regulation) at the request of the policyholder or certificate holder if the policyholder or certificate holder is entitled to benefits under Section 226(b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862(b)(1)(A)(v) of the Social Security Act). If suspension occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy must be automatically reinstituted, effective as of the date of loss of coverage, if the policyholder or certificate holder provides notice of loss of coverage within 90 days after the date of the loss.

(iv) Reinstitution of coverages must comply with subclauses (I) - (III) of this clause.

(I) Reinstitution of coverage must not provide for any waiting period with respect to treatment of preexisting conditions.

(II) Reinstitution of coverage must provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension.

(III) Reinstitution of coverage must provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.

(2) Standards for basic (core) benefits common to Medicare supplement insurance benefit plans A, B, C, D, F, F with High Deductible, G, G with High Deductible, M, and N. Every issuer of Medicare supplement insurance benefit plans must make available a policy or certificate including only the following basic "core" package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic core package, but not instead of it. These plans include:

(A) coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;

(B) coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(C) on exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider must accept the issuer's payment as payment in full and may not bill the insured for any balance;

(D) coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced in accordance with federal regulations;

(E) coverage for the coinsurance amount or, in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount of Medicare eligible expenses under Part B, regardless of hospital confinement, subject to the Medicare Part B deductible;

(F) coverage of cost sharing for all Part A Medicare-eligible hospice care and respite care expenses.

(3) Standards for additional benefits. The following additional benefits must be included in Medicare supplement benefit Plans B, C, D, F, F with High Deductible, G, G with High Deductible, M, and N as provided by subsection (c) of this section.

(A) Medicare Part A deductible:

(i) coverage for 100 percent of the Medicare Part A inpatient hospital deductible amount per benefit period; or

(ii) coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period.

(B) Skilled nursing facility care: coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A.

(C) Medicare Part B deductible: coverage for 100 percent of the Medicare Part B deductible amount per calendar year regardless of hospital confinement.

(D) One hundred percent of the Medicare Part B excess charges: coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.

(E) Medically necessary emergency care in a foreign country: coverage to the extent not covered by Medicare for 80 percent of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, which would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000. For purposes of this benefit, "emergency care" means care needed immediately because of an injury or an illness of sudden and unexpected onset.

(c) Standard Medicare supplement benefit plans for 2010 Standardized Medicare supplement benefit plan policies or certificates issued or issued for delivery with an effective date for coverage on or after June 1, 2010. The following standards are applicable to all Medicare supplement policies or certificates issued or issued for delivery in this state with an effective date for coverage on or after June 1, 2010. No insurance policy, subscriber contract, certificate, or evidence of coverage may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy unless the policy, contract, certificate, or evidence of coverage complies with these benefit plan standards. Benefit plan standards applicable to Medicare supplement policies and certificates issued or issued for delivery with an effective date for coverage before June 1, 2010, remain subject to the laws and rules in effect when the policy or certificate was delivered, or issued for delivery.

(1) An issuer of a Medicare supplement policy or certificate must comply with subparagraphs (A) and (B) of this paragraph:

(A) An issuer must make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic (core) benefits, as defined in subsection (b)(2) of this section.

(B) If an issuer makes available any of the additional benefits described in subsection (b)(3) of this section, or offers standardized benefit Plans K or L (as described in paragraph (5)(I) and (J) of this subsection), then the issuer must make available to each prospective policyholder and certificate holder who first became eligible for Medicare before January 1, 2020, in addition to a policy form or certificate form with only the basic (core) benefits as described in subparagraph (A) of this paragraph, a policy form or certificate form containing either:

(i) standardized benefit Plan C (as described in paragraph (5)(C) of this subsection); or

(ii) standardized benefit Plan F (as described in paragraph (5)(E) of this subsection).

(2) No groups, packages, or combinations of Medicare supplement benefits other than those listed in this subsection may be offered for sale in this state, except as may be permitted in paragraph (6) of this subsection and in §3.3325 of this title (relating to Medicare Select Policies, Certificates, and Plans of Operation).

(3) Benefit plans must be uniform in structure, language, and format, as well as designation, to the standard benefit plans listed in this paragraph and conform to the definitions in §3.3303 of this title (relating to Definitions). Each benefit plan must be structured in accordance with the format provided in subsection (b)(2) and (b)(3) of this section or, in the case of Plans K or L, in accordance with the format provided in paragraph (5)(I) or (J) of this subsection, and list the benefits in the order shown. For purposes of this subsection, "structure, language, and format" means style, arrangement, and overall content of a benefit.

(4) In addition to the benefit plan designations required in paragraph (3) of this subsection, an issuer may use other designations to the extent permitted by law.

(5) The make-up of 2010 Standardized Benefit Plans is as specified in subparagraphs (A) - (L) of this paragraph.

(A) Standardized Medicare supplement benefit Plan A must include only the following: The basic (core) benefits as defined in subsection (b)(2) of this section.

(B) Standardized Medicare supplement benefit Plan B must include only the following: The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible as defined in subsection (b)(3)(A)(i) of this section.

(C) Standardized Medicare supplement benefit Plan C must include only the following: The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B deductible, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), (C), and (E) of this section, respectively.

(D) Standardized Medicare supplement benefit Plan D must include only: The basic (core) benefits (as defined in subsection (b)(2) of this section), plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), and (E) of this section, respectively.

(E) Standardized Medicare supplement (regular) Plan F must include only the following: The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, the skilled nursing facility care, 100 percent of the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), (C), (D), and (E) of this section, respectively.

(F) Standardized Medicare supplement Plan F with High Deductible must include 100 percent of covered expenses following the payment of the annual deductible set forth in clause (ii) of this subparagraph.

(i) The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), (C), (D), and (E) of this section, respectively.

(ii) The annual deductible in Plan F with High Deductible must consist of out-of-pocket expenses, other than premiums, for services covered by regular Plan F, and must be in addition to any other specific benefit deductibles. The basis for the deductible is $2,240 for 2018, and will be adjusted annually by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.

(G) Standardized Medicare supplement benefit Plan G must include only the following: The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), (D), and (E), respectively. Effective January 1, 2020, Plan G with a High Deductible, as described in subsection (c)(5)(H), may be offered to any individual who is eligible for Medicare before January 1, 2020.

(H) Standardized Medicare supplement Plan G with High Deductible must include 100 percent of the covered expenses following the payment of the annual deductible set forth in clause (ii) of this subparagraph, but will not provide coverage for any portion of the Medicare Part B deductible. The Medicare Part B deductible paid by the beneficiary will be considered an out-of-pocket expense in meeting the annual high cost deductible.

(i) The basic (core) benefits as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), (D), and (E), respectively.

(ii) The annual deductible in Plan G with High Deductible must consist of out-of-pocket expenses, other than premiums, for services covered by regular Plan G, and must be in addition to any other specific benefit deductibles. The basis for the deductible is $2,240 for 2018, and will be adjusted annually by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.

(I) Standardized Medicare supplement Plan K must include only the following:

(i) Part A hospital coinsurance, 61st through 90th days: Coverage of 100 percent of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;

(ii) Part A hospital coinsurance, 91st through 150th days: Coverage of 100 percent of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;

(iii) Part A hospitalization after 150 days: On exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable PPS rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider must accept the issuer's payment as payment in full and may not bill the insured for any balance;

(iv) Medicare Part A deductible: Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in clause (x) of this subparagraph;

(v) Skilled nursing facility care: Coverage for 50 percent of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for posthospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in clause (x) of this subparagraph;

(vi) Hospice care: Coverage for 50 percent of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in clause (x) of this subparagraph;

(vii) Blood: Coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the first three pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in clause (x) of this subparagraph;

(viii) Part B cost sharing: Except for coverage provided in clause (ix) of this subparagraph, coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in clause (x) of this subparagraph;

(ix) Part B preventive services: Coverage of 100 percent of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and

(x) Cost sharing after out-of-pocket limits: Coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $5,240 in 2018, indexed each year by the appropriate inflation adjustment specified by the Secretary.

(J) Standardized Medicare supplement Plan L must include only the following:

(i) the benefits described in subparagraph (I)(i), (ii), (iii), and (ix) of this paragraph;

(ii) the benefit described in subparagraph (I)(iv), (v), (vi), (vii), and (viii) of this paragraph, but substituting 75 percent for 50 percent; and

(iii) the benefit described in subparagraph (I)(x) of this subsection, but substituting $2,620 for $5,240.

(K) Standardized Medicare supplement Plan M must include only the following: The basic (core) benefit as defined in subsection (b)(2) of this section, plus 50 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(ii), (B), and (E) of this section, respectively.

(L) Standardized Medicare supplement Plan N must include only the following: The basic (core) benefit as defined in subsection (b)(2) of this section, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in subsection (b)(3)(A)(i), (B), and (E) of this section, respectively, with copayments in the following amounts:

(i) the lesser of $20 or the Medicare Part B coinsurance or copayment for each covered health care provider office visit (including visits to medical specialists); and

(ii) the lesser of $50 or the Medicare Part B coinsurance or copayment for each covered emergency room visit; however, this copayment must be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense.

(6) An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits, in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available, and are cost effective. Approval of new or innovative benefits must not adversely impact the goal of Medicare supplement simplification. New or innovative benefits may not include an outpatient prescription drug benefit. New or innovative benefits may not be used to change or reduce benefits, including a change of any cost-sharing provision, in any standardized plan.

History

Source Note: The provisions of this §3.3306 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective July 28, 1989, 14 TexReg 3401; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective July 3, 1990, 15 TexReg 3581; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective February 19, 2001 26 TexReg 1544; amended to be effective April 4, 2002, 27 TexReg 2498; amended to be effectiveMay 10, 2005, 30 TexReg 2669; amended to be effective July 6, 2009, 34 TexReg 4532; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3307 Loss Ratio Standards and Refund or Credit of Premiums

(a) Minimum aggregate loss ratio standard. A Medicare supplement individual or group policy form may not be delivered or issued for delivery unless the individual or group policy form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregated benefits (not including anticipated refunds or credits) provided under the individual policy form or group policy form, on the basis of incurred claims experience or incurred health care expenses where coverage is provided by an HMO on a service, rather than reimbursement, basis and earned premiums for the applicable period, not including any changes in additional reserves and in accordance with generally accepted actuarial principles and practices:

(1) at least 75% of the aggregate amount of premiums earned in the case of group policies; or

(2) at least 65% of the aggregate amount of premiums earned in the case of individual policies.

(b) HMO loss ratio standard. An HMO loss ratio, where coverage is provided on a service rather than reimbursement basis, must be calculated on the basis of incurred claims experience or incurred health care expenses and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by an HMO may not include:

(1) home office and overhead costs;

(2) advertising costs;

(3) commissions and other acquisition costs;

(4) taxes;

(5) capital costs;

(6) administrative costs; and

(7) claims processing costs.

(c) Calendar-year experience loss ratio standard. For the most recent calendar year, the ratio of incurred losses to earned premiums for all policies or certificates that have been in force for three years or more, as of December 31st of the most recent year, must be equal to or greater than:

(1) at least 75% in the case of group policies; and

(2) at least 65% in the case of individual policies.

(d) Filing of rates and rating schedules. All filings of rates and rating schedules must demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions must also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards. For individual or group policies issued before March 1, 1992, the provisions of paragraph (3) of this subsection must be met with respect to expected claims in relation to premiums. For purposes of submitting a rate filing under this section, policy forms, whether for open or closed blocks of business, providing for similar benefits must be combined. But for purposes of the required combination set out in this section, issuers may distinguish between policy forms providing for similar benefits for individuals 65 years of age or over and policy forms providing for similar benefits for individuals under age 65. Once policy forms have been combined, they remain so for all rating purposes. When forms have been combined, a rate revision request must not differentiate between the experience of the individual forms. Where significant inconsistencies between rate levels exist among forms providing similar benefits, some deviation in rate revision must be allowed to reduce the significant inconsistencies.

(1) Each Medicare supplement policy or certificate form must be accompanied, on submission for approval, by an actuarial memorandum. The memorandum must be prepared and signed by a qualified actuary in accordance with generally accepted actuarial principles and practices, and must contain the information listed in the following subparagraphs:

(A) the form number that the actuarial memorandum addresses;

(B) a brief description of benefits provided;

(D) a complete explanation of the rating process, including assumptions, claims data, methodology, and formulae used in developing the gross premium rates;

(E) a statement of what experience base will be used in future rate adjustments;

(F) a certification that the anticipated aggregate loss ratio is at least 65% (for individual coverage) or at least 75% (for group coverage), which should include a statement of the period over which the aggregate loss ratio is expected to be realized;

(G) a table of anticipated loss ratio experience for representative issue ages for each year from issue over the period during which the aggregate loss ratio is to be realized; and

(H) a certification that the premiums are reasonable in relation to the benefits provided.

(2) Subsequent rate adjustment filings, except for those rates filed solely due to a change in the Part A calendar year deductible, must also provide an actuarial memorandum, prepared by a qualified actuary in accordance with generally accepted actuarial principles and practices, which must contain the following information:

(A) the form number addressed by the actuarial memorandum;

(B) a brief description of benefits provided;

(D) a statement of the reason and basis for the rate change;

(E) a demonstration and certification by the qualified actuary to show that the past plus future expected experience after the rate change, will result in an aggregate loss ratio equal to, or greater than, the required minimum aggregate loss ratio;

(i) this rate change and demonstration must be based on the experience of the named form in Texas only, if that experience is fully credible, as set out in paragraph (3) of this subsection;

(ii) this rate change and demonstration must be based on experience of the named form nationwide, with credibility factors as set out in paragraph (3) of this subsection applied, if the named form is used nationwide and the Texas experience is not fully credible;

(iii) this rate change and demonstration must be based on experience of the named form in Texas only, with credibility factors as set out in paragraph (3) of this subsection applied, if the named form is used in Texas only and the Texas experience is not fully credible;

(F) for policies or certificates in force less than three years, a demonstration to show that the third-year loss ratio is expected to be equal to or greater than the applicable percentage; and

(G) a certification by the qualified actuary that the resulting premiums are reasonable in relation to the benefits provided.

(3) For purposes of this subsection, if a group or individual policy form has 2,000 or more policies in force, then full credibility (100%) must be given to the experience. If fewer than 500 policies are in force, then no credibility (0%) must be given to the experience. The principle of linear interpolation must be used for in force numbers between 500 and 2,000. For group policy forms, the reference in this paragraph to the number of in force policies means the number of in force certificates under group policies. For purposes of this section, "in force" means either the average number of policies in force for the experience period used to support the need for a rate revision, or the number of policies in force as of the ending date of the experience period used to support the need for a rate revision. Once an issuer makes a decision as to which definition it will apply to a particular policy form, the decision is irrevocable. An issuer may submit specific alternate credibility standards to the department for consideration. In order for an alternate standard of credibility to be acceptable for application, the issuer must demonstrate that the standards are based on sound actuarial principles, and that the resulting loss ratios are in substantial compliance with the requirements of subsections (a), (b), and (c) of this section.

(4) For individual policies issued before March 1, 1992, the expected claims in relation to premiums must meet:

(A) the originally filed anticipated loss ratio when combined with the actual experience since inception;

(B) a loss ratio of at least 65% when combined with actual experience beginning with June 1, 1996, to date; and

(e) Annual filing of premium rates required. Every issuer of Medicare supplement policies and certificates issued before or after March 1, 1992, in this state must file annually its rates, rating schedule, and supporting documentation, including ratios of incurred losses to earned premiums, for the most recent calendar year broken down by calendar year of issue or by policy duration, for purposes of demonstrating that the issuer is in compliance with the loss ratio standards and for approval by the department in accordance with the filing requirements of this section and the requirements of §3.3323 of this title (relating to Increases to Premium Rates). The supporting documentation must also demonstrate, in accordance with actuarial standards of practice using reasonable assumptions, that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration must exclude active life reserves. An expected third-year loss ratio that is greater than or equal to the applicable percentage must be demonstrated for policies or certificates in force less than three years. The annual filing requirements in this subsection must be as follows:

(1) the NAIC Medicare supplement experience exhibit, which summarizes the experience of each individual form with business in force in Texas;

(2) the NAIC Medicare supplement experience exhibit, which summarizes the experience of each group form with business in force in Texas;

(3) rates and rating schedules for each form with business in force in Texas;

(4) a certification by the qualified actuary that the policies or certificates in force less than three years are anticipated to produce a third-year loss ratio that is greater than or equal to the applicable loss ratio percentage; and

(5) a certification by the qualified actuary that the expected losses in relation to premiums over the entire period for which the policy is rated comply with the required minimum aggregate loss ratio standard.

(f) Refund or credit calculation. An issuer must perform the refund or credit calculation consistent with the instructions contained in Figure: 28 TAC §3.3307(f) of this section. Issuers must retain documentation supporting the calculations required by this subsection for a period of five years and provide the calculations and supporting documentation to the Commissioner on request and in the manner prescribed by the Commissioner.

Attached Graphic

(1) If, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation must be done on a statewide basis for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year must be excluded.

(2) A refund or credit will be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund must include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary, but in no event may it be less than the average rate of interest for 13-week treasury notes. A refund or credit against premiums due must be made by September 30 following the experience year on which the refund or credit is based.

(3) For an individual or group policy or certificate issued before March 1, 1992, the issuer, for purposes of complying with this subsection, must make the refund or credit calculation separately for all individual policies combined and all group policies combined for experience after June 1, 1996.

(g) Premium adjustments to conform with minimum standards for loss ratios. As soon as practicable, but before the effective date of enhancements to Medicare benefits, every issuer of Medicare supplement insurance policies, contracts, or coverage in this state must file with the Commissioner, in accordance with the applicable filing procedures of this state, the items required in paragraphs (1) and (2) of this subsection.

(1) Issuers must file the appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or contracts. Documents necessary to justify the adjustment must accompany the filing.

(A) Every issuer of Medicare supplement insurance or benefits to a resident of this state under Insurance Code Chapter 1652 must make premium adjustments:

(i) necessary to produce an expected loss ratio under the policy or contract that will conform with the minimum loss ratio standards for Medicare supplement policies; and

(ii) expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premium by the issuer for the Medicare supplement insurance policies or contracts.

(B) No premium adjustment that would modify the loss ratio experience under the policy, other than the adjustments described in this subsection, should be made with respect to a policy at any time other than on its renewal date or anniversary date.

(C) If an issuer fails to make premium adjustments that are acceptable to the Commissioner, the Commissioner may order premium adjustments, refunds, or premium credits deemed necessary to achieve the loss ratio required by this section.

(2) Any appropriate riders, endorsements, or policy forms needed to accomplish the Medicare supplement insurance modifications necessary to eliminate benefit duplications with Medicare must be filed. The riders, endorsements, or policy forms must provide a clear description of the Medicare supplement benefits provided by the policy or contract.

(h) Maintenance of data. Incurred claims and earned premium experience must be maintained for each policy form with business in force in Texas, by calendar year of issue, and must be made available to the department.

History

Source Note: The provisions of this §3.3307 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective June 13, 2018, 43 TexReg 3787; amended to be effective August 9, 2021, 46 TexReg 4856.

28 Tex. Admin. Code § 3.3308 Required Disclosure Provisions

(a) General rules.

(1) Medicare supplement policies and certificates must include a renewal or continuation provision. The language or specifications of the renewal or continuation provision must be consistent with the type of contract issued. The provision must be appropriately captioned, appear on the first page of the policy, and include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the age of the policyholder.

(2) Except for riders or endorsements by which the issuer effectuates a request made in writing by the policyholder, or by which the issuer exercises a specifically reserved right under a Medicare supplement policy, or by which the issuer is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after the date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy must require signed acceptance by the policyholder. After the date of issue of the policy or certificate, any rider or endorsement that increases benefits or coverage with concomitant increase in premium during the policy term must be agreed to in writing and signed by the policyholder unless the benefits are required by the minimum standards for Medicare supplement insurance policies, or unless the increased benefits or coverage is required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge must be set forth in the policy.

(3) Medicare supplement policies may not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or similar words and phrases.

(4) If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions:

(A) the limitations must appear as a separate paragraph of the policy or certificate and be labeled as "Preexisting Condition Limitations;"

(B) the policy or certificate must define the term "preexisting condition" and must provide an explanation of the term in its accompanying outline of coverage; and

(C) the policy or certificate must include a provision explaining the reduction of the preexisting condition limitation for individuals who qualify under §3.3306(b)(1)(A) of this title (relating to Minimum Benefit Standards), §3.3312(a)(2) of this title (relating to Guaranteed Issue for Eligible Persons), or §3.3324(c) and (d) of this title (relating to Open Enrollment).

(5) Medicare supplement policies and certificates must have a notice prominently printed on the first page or attached to the first page stating in substance that the policyholder or certificate holder has the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination, the insured person is not satisfied for any reason.

(6) Issuers of accident and sickness policies, certificates, or subscriber contracts that provide hospital or medical-expense coverage on an expense-incurred or indemnity basis, to persons eligible for Medicare must provide to those applicants a Guide to Health Insurance for People with Medicare (Guide) in the form developed jointly by the National Association of Insurance Commissioners and the Centers for Medicare and Medicaid Services of the United States Department of Health and Human Services in no smaller than 12-point type.

(A) For purposes of this section, "form" means the language, format, style, type size, type proportional spacing, bold character, and line spacing.

(B) If a Guide incorporating the latest statutory changes is not available from a government agency, companies may comply with this provision by modifying the latest available Guide to the extent required by applicable law.

(C) Except as provided in this section, delivery of the Guide must be made whether or not any policies, certificates, subscriber contracts, or evidences of coverage are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this regulation.

(D) Except in the case of direct response issuers, delivery of the Guide must be made to the applicant at the time of application, and acknowledgment of receipt of the Guide must be obtained from the applicant by the issuer. Issuers must deliver the Guide to the applicant for a direct response Medicare supplement policy on request, but not later than at the time the policy is delivered.

(7) Except as otherwise provided in this section, the terms "Medicare Supplement," "Medigap," "Medicare Wrap-Around," and similar words or phrases may not be used unless the policy is issued in compliance with §3.3306 of this title.

(b) Outline of coverage requirements for Medicare supplement policies.

(1) Issuers of Medicare supplement coverage in this state must provide an outline of coverage to all applicants, including certificate holders under group policies, at the time application is presented to the prospective applicant and, except for direct-response policies, must obtain an acknowledgment of receipt of the outline from the applicant.

(2) If a Medicare supplement policy or certificate is issued on a basis that would require revision of the outline of coverage delivered at the time of application, a substitute outline of coverage properly describing the policy or certificate actually issued must accompany the policy or certificate when it is delivered. The outline of coverage must contain the following statement in no less than 12-point type, immediately above the company name: "Notice: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

(c) Form for outline of coverage. In providing outlines of coverage to applicants under the requirements of subsection (b)(1) of this section, insurers must use a form that complies with the requirements of this subsection. The outline of coverage must contain each of the following four parts in the following order: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage must be in the language and format prescribed in paragraphs (1) and (2) of this subsection in no less than 12-point type.

(1) All plans must be shown on the cover page, and the plans that are offered by the issuer must be prominently identified. Premium information for plans that are offered must be shown on the cover page or immediately following the cover page and must be prominently displayed. The premium and mode must be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant must be illustrated.

(2) The items in subparagraphs (A) - (C) of this paragraph must be included in the outline of coverage in addition to the items specified in the plan-specific outline-of-coverage forms.

(A) Dollar amounts that are shown in parentheses for each of the plan-specific charts on the following pages are for the calendar year in which the charts were published. Issuers must, for each plan offered, appropriately complete outline-of-coverage-chart statements about amounts to be paid by Medicare, the plan, and the covered person by replacing the amount in parentheses with the dollar amount corresponding to each covered service for the applicable calendar year benefit period.

(B) The outline of coverage must include an explanation of any limitations and exclusions. Those limitations and exclusions resulting from Medicare program provisions may be disclosed by reference and need not be explained in their entirety. All limitations and exclusions related to preexisting conditions and all other limitations and exclusions not resulting from Medicare regulations must be fully explained in the outline of coverage.

(C) The outline of coverage must include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium on the death of an insured or on the surrender of the policy or certificate. If the policy contains these provisions, a description of the provisions must be included.

(D) The outline of coverage for Medicare Select policies or certificates must include information regarding grievance procedures that meet the requirements of §3.3325(m) of this title (relating to Medicare Select Policies, Certificates, and Plans of Operation).

(E) The Commissioner adopts the Outline of Coverage form, LHL 050 Rev. 06/18. This form contains a chart of benefits for each of the standard Medicare supplement plans and required disclosures applicable to policies sold with an effective date for coverage of June 1, 2010, or later. Issuers must begin using form LHL 050 Rev. 06/18 no later than July 1, 2019.

Attached Graphic

(d) Notice requirements.

(1) As soon as practicable, but no later than 30 days before the annual effective date of any Medicare benefit changes, every issuer providing Medicare supplement coverage to a resident of this state must notify its policyholders, contract holders, and certificate holders of modifications it has made to Medicare supplement insurance policies, contracts, or certificates. The notice must:

(A) include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy, contract, or certificate; and

(B) inform each covered person as to when any premium adjustment is to be made due to changes in Medicare.

(2) The notice of benefit modifications and any premium adjustments must be in outline form and in clear and simple terms so as to facilitate comprehension.

(3) The notice may not contain or be accompanied by any solicitation.

(4) Issuers must comply with any notice requirements of the MMA.

History

Source Note: The provisions of this §3.3308 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective July 11, 1988, 13 TexReg 3295; amended to be effective July 28, 1989, 14 TexReg 3401; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective July 3, 1990, 15 TexReg 3581; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective February 19, 2001 26 TexReg 1544; amended to be effective April 4, 2002, 27 TexReg 2498; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective July 6, 2009, 34 TexReg 4532; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3309 Requirements for Application Forms and Replacement Coverage

(a) Application forms shall include the following information, statements and questions designed to elicit information as to whether, as of the date of the application, the applicant currently has another Medicare supplement, Medicare Advantage, Medicaid coverage, or other health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate currently in force. A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing such questions may be used.

(1) The information shall be provided to prospective covered persons in statement form conforming to subparagraphs (A) - (F) of this paragraph.

(A) You do not need more than one Medicare supplement policy.

(B) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need more than one type of coverage in addition to your Medicare benefits.

(D) If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(E) If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(F) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB).

(2) Information shall be elicited from prospective covered persons by asking the questions as follows: If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS. Please mark Yes or No below with an "X" to the best of your knowledge.

(A) Did you turn age 65 in the last 6 months? Yes____ No____

(B) Did you enroll in Medicare Part B in the last 6 months? Yes____ No____

(D) Are you covered for medical assistance through the state Medicaid program?

(i) {NOTE TO APPLICANT: If you are participating in a "Spend-Down Program" and have not met your "Share of Cost," please answer NO to this question.} Yes____ No____

(ii) If yes;

(I) Will Medicaid pay your premiums for this Medicare supplement policy? Yes____ No____

(II) Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare Part B premium? Yes____ No____

(E) If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave "END" blank. START //__ END //__

(i) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy? Yes____ No____

(ii) Was this your first time in this type of Medicare plan? Yes____ No____

(iii) Did you drop a Medicare supplement policy to enroll in the Medicare plan? Yes____ No____

(F) Do you have another Medicare supplement policy in force? Yes____ No____

(i) If so, with what company, and what plan do you have {optional for Direct Mailers}?

(ii) If so, do you intend to replace your current Medicare supplement policy with this policy? Yes____ No____

(G) Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan) Yes____ No____

(i) If so, with what company and what kind of policy?

(ii) What are your dates of coverage under the other policy? START //__ END //__ (If you are still covered under the other policy, leave "END" blank.)

(b) Application forms shall include questions to elicit information as to whether the applicant is an eligible person as defined in §3.3312(b) of this title (relating to Guaranteed Issue for Eligible Persons), or whether the applicant is eligible for reduction of any applicable preexisting condition limitation under §3.3324(c) and (d) of this title (relating to Open Enrollment).

(1) any other health insurance policies or coverages sold to the applicant which are still in force; and

(2) any other health insurance policies or coverages sold to the applicant in the past five years which are no longer in force.

(d) In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the issuer, shall be returned to the applicant by the issuer upon delivery of the policy.

(e) Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One copy of such notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. A direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.

(f) The notice required by subsection (e) of this section shall be provided in substantially the following form and shall be in a typeface no smaller than 12-point type.

Attached Graphic

(g) Subsection (f)(1) and (2) of this section (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation.

History

Source Note: The provisions of this §3.3309 adopted to be effective June 1, 1982, 7 TexReg 1303; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective May 10, 2005, 30 TexReg 2669.

28 Tex. Admin. Code § 3.3310 Severability

If any provision of these sections or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of these sections and the application of such provision to other persons or circumstances will not be affected thereby.

History

Source Note: The provisions of this §3.3310 adopted to be effective June 1, 1982, 7 TexReg 1303.

28 Tex. Admin. Code § 3.3312 Guaranteed Issue for Eligible Persons

(a) Guaranteed issue.

(1) Eligible persons are those individuals described in subsection (b) of this section who seek to enroll under the Medicare supplement policy during the period specified in subsection (d) of this section, and who submit evidence of the date of termination, disenrollment, or Medicare Part D enrollment with the application for a Medicare supplement policy.

(2) With respect to eligible persons, an issuer must not deny or condition the issuance or effectiveness of a Medicare supplement policy described in subsection (c) of this section that is offered and is available for issuance to newly enrolled individuals by the issuer, and must not discriminate in the pricing of a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and must not impose an exclusion of benefits based on a preexisting condition under a Medicare supplement policy.

(b) Eligible persons. An eligible person is an individual described in any of the following paragraphs:

(1) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide supplemental health benefits to the individual; or the individual is enrolled under an employee welfare benefit plan that is primary to Medicare and the plan terminates or the plan ceases to provide all health benefits to the individual because the individual leaves the plan.

(2) The individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under §1894 of the Social Security Act, and there are circumstances similar to the following that would permit discontinuance of the individual's enrollment with the provider if the individual were enrolled in a Medicare Advantage plan:

(A) the certification of the organization or plan has been terminated; or

(B) the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides;

(C) the individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the Secretary, but not including termination of the individual's enrollment on the basis described in §1851(g)(3)(B) of the Social Security Act (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under §1856), or the plan is terminated for all individuals within a residence area;

(D) the individual demonstrates, in accordance with guidelines established by the Secretary, that:

(i) the organization offering the plan substantially violated a material provision of the organization's contract under 42 U.S.C. Chapter 7, Subchapter XVIII, Part D in relation to the individual, including the failure to provide an individual on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accord with applicable quality standards; or

(ii) the organization, or agent, or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or

(E) the individual meets other exceptional conditions as the Secretary may provide.

(3) The individual is enrolled with an entity listed in subparagraphs (A) - (D) of this paragraph and enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under paragraph (2) of this subsection:

(A) an eligible organization under a contract under §1876 of the Social Security Act (Medicare cost);

(B) a similar organization operating under demonstration project authority, effective for periods before April 1, 1999;

(D) an organization under a Medicare Select policy; and

(4) the individual is enrolled under a Medicare supplement policy and the enrollment ceases because:

(A) of the insolvency of the issuer or bankruptcy of the nonissuer organization; or of other involuntary termination of coverage or enrollment under the policy;

(B) the issuer of the policy substantially violated a material provision of the policy; or

(C) the issuer, an agent, or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual;

(5) the individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, any eligible organization under a contract under §1876 of the Social Security Act (Medicare cost), any similar organization operating under demonstration project authority, any PACE provider under §1894 of the Social Security Act, or a Medicare Select policy; and the subsequent enrollment is terminated by the individual during any period within the first 12 months of the subsequent enrollment (during which time the individual is permitted to terminate the subsequent enrollment under §1851(e) of the Social Security Act); or

(6) the individual, on first becoming enrolled in Medicare Part B for benefits at age 65 or older, enrolls in a Medicare Advantage plan under Part C of Medicare, or with a PACE provider under §1894 of the Social Security Act, and disenrolls from the plan or program no later than 12 months after the effective date of enrollment.

(7) The individual enrolls in a Medicare Part D plan during the initial enrollment period and, at the time of enrollment in Part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in subsection (c)(4) of this section.

(8) The individual loses eligibility for health benefits under Title XIX of the Social Security Act (Medicaid).

(9) The individual meets the following requirements:

(A) the individual was enrolled in both the federal Medicare program and the Texas Health Insurance Pool on December 31, 2013; and

(B) the individual's Pool coverage terminated on or after December 31, 2013.

(1) Persons described by subsection (b)(1), (2), (3), (4), (8), and (9) of this section are entitled to a Medicare supplement policy that has a benefit package classified as follows:

(A) Plan A, B, C, F (including F with a High Deductible), K, or L offered by any issuer, for an individual 65 years of age or older who first became eligible for Medicare before January 1, 2020, except that for persons under 65 years of age, it is a policy that has a benefit package classified as Plan A; or

(B) Plan A, B, D, G (including G with a High Deductible), K, or L offered by any issuer, for a 2020 newly eligible individual who is 65 years of age or older, except that for persons under 65 years of age, it is a policy that has a benefit package classified as Plan A.

(2) Persons described by subsection (b)(5) of this section are entitled to the same Medicare supplement policy in which the individual was most recently enrolled, if available from the same issuer or, if not available, a policy described in paragraph (1) of this subsection. If the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, the Medicare supplement policy described in this paragraph is the policy available from the same issuer but modified to remove outpatient prescription drug coverage, or at the election of the policyholder, a policy described in paragraph (1) of this subsection.

(3) Persons described by subsection (b)(6) of this section are entitled to any Medicare supplement policy offered by any issuer, with the exception of plans C or F (including F with a High Deductible) for a 2020 newly eligible individual.

(4) Persons described by subsection (b)(7) of this section are entitled to a Medicare supplement policy that has a benefit package classified as follows:

(A) Plan A, B, C, F (including F with a High Deductible), K, or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage, for an individual who first became eligible for Medicare before January 1, 2020; or

(B) Plan A, B, D, G (including G with a High Deductible), K, or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage, for a 2020 newly eligible individual.

(d) Guaranteed issue time period.

(1) In the case of an individual described in subsection (b)(1) of this section:

(A) for a plan that supplements the benefits under Medicare, the guaranteed issue period begins on the later of:

(i) the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if a notice is not received, the date the individual receives notice that a claim has been denied because of the termination or cessation); or

(ii) the date the applicable coverage terminates or ceases; and ends 63 days later; or

(B) for a plan that is primary to the benefits under Medicare, the guaranteed issue period begins on the later of:

(i) the date the individual receives a notice of termination or cessation of all health benefits (or if a notice is not received, the date the individual receives notice that a claim has been denied because of the termination or cessation); or

(ii) the date the applicable coverage terminates or ceases; and ends 63 days later.

(2) In the case of an individual described in subsection (b)(2), (3), (5), or (6) of this section whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends 63 days after the date the applicable coverage is terminated.

(3) In the case of an individual described in subsection (b)(4)(A) of this section, the guaranteed issue period begins on the earlier of the date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other such similar notice, if any, and the date that the applicable coverage is terminated, and ends on the date that is 63 days after the date the coverage is terminated.

(4) In the case of an individual described in subsection (b)(2), (4)(B) and (C), (5), or (6) of this section, who disenrolls voluntarily, the guaranteed issue period begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date of disenrollment.

(5) In the case of an individual described in subsection (b)(7) of this section, the guaranteed issue period begins on the date the individual receives notice under §1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the 60-day period immediately preceding the initial Part D enrollment period and ends on the date that is 63 days after the effective date of the individual's coverage under Medicare Part D.

(6) In the case of an individual described in subsection (b) of this section, but not described in paragraphs (1) - (5) of this subsection, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is 63 days after the effective date of disenrollment.

(7) In the case of an individual described in subsection (b)(9) of this section, the guaranteed issue period begins on the date that the individual's coverage in the Texas Health Insurance Pool terminates and ends 63 days later.

(e) Extended Medicare supplement access for interrupted trial periods.

(1) In the case of an individual described in subsection (b)(5) of this section (or deemed to be so described under this paragraph), whose enrollment with an organization or provider described in subsection (b)(5) of this section is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another organization or provider, the subsequent enrollment will be deemed to be an initial enrollment as described in subsection (b)(5) of this section.

(2) In the case of an individual described in subsection (b)(6) of this section (or deemed to be so described under this paragraph), whose enrollment with a plan or in a program described in subsection (b)(6) of this section is involuntarily terminated within the first 12 months of enrollment, and who, without an intervening enrollment, enrolls with another plan or program, the subsequent enrollment will be deemed to be an initial enrollment as described in subsection (b)(6) of this section.

(3) For purposes of subsection (b)(5) and (6) of this section, no enrollment of an individual with an organization or provider described in subsection (b)(5) of this section, or with a plan or in a program described in subsection (b)(6) of this section, may be deemed to be an initial enrollment under this paragraph after the 2-year period beginning on the date on which the individual first enrolled with the organization, provider, plan, or program.

History

Source Note: The provisions of this §3.3312 adopted to be effective April 14, 1999, 24 TexReg 3353; amended to be effective February 19, 2001 26 TexReg 1544; amended to be effective April 4, 2002, 27 TexReg 2498; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective March 4, 2014, 39 TexReg 1396; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3313 Filing Requirements for Advertising

A Medicare supplement policy shall not be deemed to meet the standards and requirements set forth in this subchapter unless the filing company has complied with the requirements of the following paragraphs.

(1) Every issuer providing Medicare supplement insurance or benefits in this state shall provide to the department for review a copy of any Medicare supplement advertisement, as defined in §21.102 of this title (relating to Scope), other than an institutional advertisement, as defined in §21.102(6) that only references "Medicare supplement" as a line of coverage offered, but which does not otherwise describe Medicare supplement insurance or benefits. The copy of the advertisement shall be submitted to the department no later than 60 days prior to its first use. At the expiration of the 60-day period provided by this paragraph, any advertisement filed with the department shall be deemed acceptable, unless before the end of that 60-day period the department has notified the entity of its nonacceptance.

(2) All advertisements shall comply with all applicable federal and state laws and shall be submitted in accordance with §21.120 of this title (relating to Filing for Review). This section does not require prior departmental approval of the advertisement. Nothing in this section relieves any person from otherwise complying with all applicable laws or from any sanction imposed by law.

History

Source Note: The provisions of this §3.3313 adopted to be effective July 28, 1989, 14 TexReg 3401; amended to be effective February 14, 1990, 15 TexReg 540; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective July 8, 2008, 33 TexReg 5319.

28 Tex. Admin. Code § 3.3315 Standards for Claims Payment

(a) Every issuer of Medicare supplement policies, contracts, certificates, or coverage for delivery in this state shall comply with the Social Security Act, §1882(c)(3) (as enacted by the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, §4081(b)(2)(C) (Public Law Number 100-203), by:

(1) accepting a notice from a Medicare carrier on duly assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice;

(2) notifying the participating physician or supplier and the beneficiary of the payment determination;

(3) paying the participating physician or supplier directly;

(4) furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number, and a central mailing address to which notices from a Medicare carrier may be sent;

(5) paying user fees for claim notices that are transmitted electronically or otherwise; and

(6) providing to the secretary of health and human services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers.

(b) Compliance with the requirements set forth in subsection (a) of this section shall be certified on the Medicare supplement insurance experience reporting form.

History

Source Note: The provisions of this §3.3315 adopted to be effective February 14, 1990, 15 TexReg 540; amended to be effective April 15, 1992, 17 TexReg 2238.

28 Tex. Admin. Code § 3.3316 Filing Requirements for Out-of-State Group Policies

Every issuer providing group Medicare supplement insurance benefits to a resident of this state under Insurance Code Chapter 1652 must, for information purposes, file with the department's Life and Health Lines Office a copy of any master policy issued in connection with any certificate used in this state; all such certificates must be filed in accordance with the filing requirements and procedures applicable to group Medicare supplement policies issued in this state.

History

Source Note: The provisions of this §3.3316 adopted to be effective February 14, 1990, 15 TexReg 540; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3317 Permitted Compensation Arrangements

(a) An issuer or other entity designated in Insurance Code §1652.003 may provide commission or other compensation to an agent for the sale of a Medicare supplement policy or certificate only if the first-year commission or other first-year compensation is no more than 200 percent of the commission or other compensation paid for selling or servicing the policy or certificate in the first renewal year, or the first 12-month service period immediately following the initial 12-month service period of the policy in instances where premium payment is other than on an annual basis.

(b) The commission or other compensation provided in the second and subsequent renewal years where payment of premium is on an annual basis, or the second and subsequent 12-month service periods of the policy in instances where premium payment is other than on an annual basis, must be the same as that provided in the first renewal year, or first 12-month service period of the policy in instances where premium payment is other than on an annual basis, and must be provided for a reasonable number of renewal years, or successive 12-month service periods, but not less than six years following the inception of the first renewal year in the instance of premium payment on an annual basis, or the 12-month service period immediately following the initial 12-month service period of the policy in instances where premium payment is other than on an annual basis.

(c) No issuer may provide compensation to its agents and no agent may receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced.

(d) For purposes of this section, "compensation" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including, but not limited to, bonuses, gifts, prizes, awards, and finders fees.

History

Source Note: The provisions of this §3.3317 adopted to be effective February 14, 1990, 15 TexReg 540; amended to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3319 Standards for Marketing

(a) Every issuer marketing Medicare supplement coverage in this state, directly or through its agents, shall establish marketing procedures to ensure that:

(1) any comparison of policies by its agents will be fair and accurate;

(2) excessive insurance is not sold or issued;

(3) all prospective policyholders are advised prior to the time an application is taken, that the basic "core" benefit package is available, including the contents of such basic "core" benefit package;

(4) every reasonable effort and inquiry is made to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of any such insurance; and

(5) auditable procedures for verifying compliance with provisions of this section are in place and utilized.

(b) Every issuer marketing Medicare supplement coverage in this state, directly or through its agents, shall ensure that the following notice is prominently displayed by type, stamp, or other appropriate means on the first page of the policy: "Notice to buyer: This policy may not cover all of your medical expenses."

(c) In addition to the practices prohibited in the Insurance Code Chapter 541, the following acts and practices are prohibited in the marketing of Medicare supplement policies or coverages in this state.

(1) Twisting--Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer.

(2) High pressure tactics--Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

(3) Cold lead advertising--Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company. This requirement is in addition to other regulations applicable to lead card advertising.

(4) Issuers may utilize additional benefit designations in the marketing of the benefit plans; however, such designations shall be accompanied by a clear statement as to the applicable benefit plan being marketed. Additional benefit designations shall not be deceptive or misleading.

History

Source Note: The provisions of this §3.3319 adopted to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective July 6, 2009, 34 TexReg 4532.

28 Tex. Admin. Code § 3.3320 Appropriateness of Recommended Purchase and Excessive Insurance

(a) In recommending the purchase or replacement of any Medicare supplement policy or certificate, an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

(b) Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited.

(c) An issuer shall not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual's Part C coverage.

History

Source Note: The provisions of this §3.3320 adopted to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective May 10, 2005, 30 TexReg 2669.

28 Tex. Admin. Code § 3.3321 Reporting of Multiple Policies

(a) On or before March 1 of every year, every issuer of Medicare supplement coverage in this state must report the following information to the Texas Department of Insurance for every individual resident of this state for whom the insurer or entity has more than one Medicare supplement policy or certificate in force:

(1) policy and/or certificate number; and

(2) date of issuance.

(b) The items set forth in subsection (a) of this section must be grouped by individual policyholder and reported on a form substantially similar in layout, design, and wording to the form entitled "Form for Reporting Multiple Medicare Supplement Insurance Policies," which the Texas Department of Insurance adopts and incorporates herein by reference. Copies of this form are available from and on file at the office of the Consumer Protection and Services Program and reports of multiple Medicare supplement policies should be made to the Texas Department of Insurance, Consumer Protection and Services, MC-CO-CPS, P.O. Box 12030, Austin, Texas 78711-2030.

History

Source Note: The provisions of this §3.3321 adopted to be effective December 1, 1990, 15 TexReg 6594; amended to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3322 Filing and Approval of Policies, Certificates and Premium Rates; Discontinuance of Forms

(a) An issuer shall not deliver or issue for delivery a policy or certificate to a resident of this state unless the policy form or certificate form has been filed with and approved by the commissioner in accordance with filing requirements and procedures prescribed by the Insurance Code and applicable regulations.

(b) An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the MMA only with the commissioner in the state in which the policy or certificate was issued.

(c) An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule and supporting documentation have been filed with and approved by the commissioner in accordance with the filing requirements and procedures prescribed by the Insurance Code and this subchapter.

(d) Except as provided in paragraphs (1) - (4) of this subsection, an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan. For the purposes of this section, a "type" means an individual policy, a group policy, an individual Medicare Select policy, or a group Medicare Select policy. An issuer may offer, with the approval of the commissioner, up to four policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:

(1) the inclusion of new or innovative benefits;

(2) the addition of either direct response or agent marketing methods;

(3) the addition of either guaranteed issue or underwritten coverage; and

(4) the offering of coverage to individuals eligible for Medicare by reason of disability.

(e) Except as provided in paragraph (1) of this subsection, an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this regulation that has been approved by the commissioner. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous 12 months.

(1) An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the commissioner in writing its decision at least 30 days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the commissioner, the issuer shall no longer offer for sale the policy form or certificate form in this state.

(2) An issuer that discontinues the availability of a policy form or certificate form pursuant to paragraph (1) of this subsection shall not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five years after the issuer provides notice to the commissioner of the discontinuance. The period of discontinuance may be reduced if the commissioner determines that a shorter period is appropriate.

(f) The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this subsection.

(g) A change in the rating structure or methodology shall be considered a discontinuance under subsection (e)(1) of this section, unless the issuer complies with the following requirements:

(1) The issuer provides an actuarial memorandum, in a form and manner prescribed by the commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates.

(2) The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The commissioner may approve a change to the differential which is in the public interest.

(h) The experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in §3.3307 of this title (relating to Loss Ratio Standards and Refund or Credit of Premiums), except that forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation.

History

Source Note: The provisions of this §3.3322 adopted to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective July 6, 2009, 34 TexReg 4532.

28 Tex. Admin. Code § 3.3323 Increases to Premium Rates

Premium rates, rating schedules, and supporting documentation for a Medicare supplement policy or certificate to be used in this state must be filed with the department and approved by the Commissioner. Any request for an increase to rates for Medicare supplement policies or certificates issued before or after March 1, 1992, is subject to review by and hearing before the Commissioner if one or more of the following conditions, as determined by an actuary for the department, is present:

(1) The increase, exclusive of any increase occasioned by changes in the laws regulating Medicare supplement coverages, is not necessary to maintain an anticipated lifetime loss ratio at least equal to the minimum that is required by statute and set out in §3.3307 of this title (relating to Loss Ratio Standards and Refund or Credit of Premiums).

(2) An increase to premium has been effected on the same block or blocks of business within the preceding 12 months.

(3) An increase to premium would result in unfair discrimination, as provided in Insurance Code Chapter 544, between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for a policy or contract.

(4) An increase to premium would result in the benefits offered under the policy form to be unreasonable in relation to the premiums charged.

(5) An increase to premium would have the practical effect of altering the rating structure of the policy form to which it is applied, or would create a new set of rating criteria under the policy form.

(6) A contemplated increase to premium has the practical effect of resulting in a series of planned future increases to premium rather than a one-time increase.

History

Source Note: The provisions of this §3.3323 adopted to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3324 Open Enrollment

(a) No issuer may deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant where an application for a policy or certificate is submitted before or during the six-month period beginning with the first day of the first month in which an individual is first enrolled for benefits under Medicare Part B. No issuer may engage in a premium rating practice that results in higher premiums for any policy solely because the policy is issued under the provisions of this section. For individuals 65 years of age or older when first enrolled for benefits under Medicare Part B who apply for Medicare supplement coverage under this subsection, each Medicare supplement policy and certificate currently available from an issuer must be made available to all applicants without regard to age.

(b) The provisions of paragraphs (1) and (2) of this subsection apply to Medicare supplement issuers with respect to persons who qualify for Medicare before attaining 65 years of age.

(1) An issuer must comply with the first two sentences of subsection (a) of this section with respect to a person who:

(A) qualifies for Medicare before attaining 65 years of age, who first enrolls for benefits under Medicare Part B on or after January 1, 1997, and who applies for a Medicare supplement policy or certificate during the period of eligibility described in subsection (a) of this section; or

(B) enrolled in Medicare Part B before attaining 65 years of age, who applies for a Medicare supplement policy or certificate upon attaining 65 years of age, during the period of eligibility described in subsection (a) of this section that would apply if the person first enrolled in Medicare Part B on attaining 65 years of age.

(2) An issuer must make available, at a minimum, Plan A of the standard Medicare supplement plans to individuals who qualify under this subsection.

(c) If an applicant qualifies under subsection (a) of this section, is 65 years of age or older, and submits an application during the period referenced in subsection (a) of this section and, as of the date of application:

(1) has had a continuous period of creditable coverage of at least six months, the issuer may not exclude benefits based on a preexisting condition; or

(2) has had a continuous period of creditable coverage that is less than six months, the issuer must reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date.

(d) Except as provided in subsection (c) of this section, §3.3312 of this title (relating to Guaranteed Issue for Eligible Persons), and §3.3306(b)(1)(A) of this title (relating to Minimum Benefit Standards), subsection (a) of this section may not be construed as preventing the exclusion of benefits under a policy during the first six months based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six months before the coverage became effective.

(e) The following examples illustrate the application of subsection (c)(1) and (2) of this section, as prescribed by the Secretary:

(1) Individual A--" No preexisting condition exclusion period. Relevant creditable coverage history: Individual A had coverage under an individual policy for four months beginning on May 1, 1998, through August 31, 1998, followed by a gap in coverage of 61 days until October 31, 1998. Individual A had coverage under an individual health plan beginning on November 1, 1998, for three months through January 31, 1999, followed by a gap in coverage of 59 days or until March 31, 1999, on which date Individual A submitted an application for a Medicare supplement policy. Under this example, the Medicare supplement issuer may not apply a preexisting condition exclusion period because Individual A has seven months of creditable coverage without a gap in coverage greater than 63 days.

(2) Individual B--" Subject to a three-month preexisting condition exclusion period. Relevant creditable coverage history: Individual B is covered under an individual health insurance policy for one month beginning May 1, 1998, through May 31, 1998, followed by a gap in coverage of 61 days from June 1, 1998, through July 31, 1998. On August 1, 1998, Individual B is covered under an association health plan for two months through September 30, 1998, followed by a gap in coverage of 31 days or until October 31, 1998, on which date Individual B submitted an application for Medicare supplement coverage. Individual B has three months of creditable coverage. Under this example, the issuer of a Medicare supplement policy must give Individual B a three-month credit against any preexisting condition exclusion period.

(3) Individual C--" Subject to a six-month preexisting condition exclusion period. Relevant creditable coverage history: Individual C is covered under an individual health insurance policy for one month beginning May 1, 1998, through May 31, 1998, followed by a gap in coverage of 61 days from June 1, 1998, through July 31, 1998. On August 1, 1998, Individual C is covered under an association health plan for two months through September 30, 1998, followed by a gap in coverage of 64 days or until November 4, 1998, on which date Individual C submitted an application for Medicare supplement coverage. Individual C has a gap in coverage of greater than 63 days. As a result, under this example, the Medicare supplement issuer can fully apply the preexisting condition exclusion provision to Individual C.

(f) Invitation to contract advertisements, as defined in §21.113(b) of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising), must include the following statement: "Benefits and premiums under this policy may be suspended for up to 24 months if you become entitled to benefits under Medicaid. You must request that your policy be suspended within 90 days of becoming entitled to Medicaid. If you lose (are no longer entitled to) benefits from Medicaid, this policy can be reinstated if you request reinstatement within 90 days of the loss of such benefits and pay the required premium."

History

Source Note: The provisions of this §3.3324 adopted to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective April 14, 1999, 24 TexReg 3353; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3325 Medicare Select Policies, Certificates and Plans of Operation

(a) This section applies to Medicare Select policies, certificates, and plans of operation, as defined in this section.

(b) No policy or certificate may be advertised as a Medicare Select policy or certificate unless it meets the requirements of this section.

(c) The following words and terms, when used in this section, have the following meanings, unless the context indicates otherwise. These words and terms must be defined and included in all Medicare Select policies, certificates, and plans of operation.

(1) Complaint--Any dissatisfaction expressed by an individual concerning a Medicare Select issuer or its network providers.

(2) Emergency care--Bona fide emergency services provided after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, such that the absence of immediate medical attention could reasonably be expected to result in:

(A) placing the patient's health in serious jeopardy;

(B) serious impairment to bodily functions; or

(3) Grievance--Dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers.

(4) Medicare Select issuer--An issuer offering, or seeking to offer, a Medicare Select policy or certificate.

(5) Medicare Select policy or Medicare Select certificate--A Medicare supplement policy or certificate, respectively that contains restricted network provisions.

(6) Network provider--A provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits covered under a Medicare Select policy.

(7) Nonnetwork provider--A provider of health care, or a group of providers of health care, that has not entered into a written agreement with the issuer to provide benefits covered under a Medicare Select policy.

(8) Restricted network provisions--Any provision that conditions the payment of benefits, in whole or in part, on the use of network providers.

(9) Service area--The geographic area approved by the Commissioner as part of the plan of operation or amended plan of operation, within which an issuer is authorized to offer a Medicare Select policy.

(d) The Commissioner may authorize an issuer to offer a Medicare Select policy or certificate, under this section and the Omnibus Budget Reconciliation Act (OBRA) of 1990, §4358, if the Commissioner finds that the issuer has satisfied all of the requirements of this subchapter.

(e) A Medicare Select issuer may not issue a Medicare Select policy or certificate in this state until the Commissioner approves its plan of operation. A Medicare Select issuer may not file a Medicare Select policy under Insurance Code Chapter 1701, Subchapter B, until the Commissioner has approved its plan of operation.

(f) A Medicare Select issuer must file a proposed plan of operation with the department, the form and content of which is subject to approval by the Commissioner. The plan of operation must contain, at a minimum, the information in paragraphs (1) - (7) of this subsection, and at the time of submission must have a form number printed or typed on the lower left hand corner of the face page.

(1) The plan must contain evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration of each of the items referenced in subparagraphs (A) - (E) of this paragraph.

(A) Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation and after-hour care. The hours of operation and availability of after-hour care must reflect usual practice in the local area. Geographic availability must reflect the usual travel times within the community.

(B) The number of network providers in the service area must be documented by credible statistics to be sufficient, with respect to current and expected policyholders, either:

(i) to deliver adequately all services that are subject to a restricted network provision; or

(ii) to make appropriate referrals.

(D) Emergency care availability 24 hours per day and seven days a week must be demonstrated.

(E) In the case of covered services subject to a restricted-network provision and that are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual covered under a Medicare Select policy or certificate. This subparagraph does not apply to supplemental charges or coinsurance amounts as stated in the Medicare Select policy or certificate.

(2) A clear description of the service area must be provided by narrative statement or a map.

(3) The grievance procedure used must be described.

(4) The quality assurance program must be described, including:

(A) the formal organizational structure;

(B) the written criteria for selection, retention, and removal of network providers; and

(C) the procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted.

(5) Network providers must be listed and described by specialty.

(6) Copies of the written information proposed to be used by the issuer to comply with subsection (k) of this section must be provided.

(7) Any other information requested by the Commissioner must be provided.

(g) A Medicare Select issuer must file any proposed changes to the plan of operation, except for changes to the list of network providers, with the Commissioner 60 days before implementing the changes. Changes will be considered approved by the Commissioner after 30 days unless specifically disapproved or unless the issuer requests an extension of the 30-day period and the Commissioner grants the requested extension.

(h) An updated list of network providers must be filed with the Commissioner at least quarterly. If there is no change to the list of network providers within a particular calendar quarter, correspondence indicating no change from the prior reporting period to the current reporting period must, at a minimum, be filed to meet the reporting requirements of this subchapter.

(i) A Medicare Select policy or certificate may not restrict payment for covered services provided by nonnetwork providers if:

(1) the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or a condition; and

(2) it is not reasonable to obtain the services through a network provider.

(j) A Medicare Select policy or certificate must provide payment for full coverage under the policy for covered services that are not available through network providers.

(k) A Medicare Select issuer must make full and fair disclosure, in writing, of the provisions, restrictions, and limitations of the Medicare Select policy or certificate to each applicant. This disclosure must include at least the following:

(1) an outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare Select policy or certificate with other Medicare supplement policies or certificates offered by the issuer and with other Medicare Select policies or certificates;

(2) a description (including address, phone number, and hours of operation) of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers;

(3) a description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are utilized (except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L);

(4) a description of coverage for emergency and urgently needed care and other out-of-service area coverage;

(5) a description of limitations on referrals to restricted network providers and to other providers;

(6) a description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer; and

(7) a description of the Medicare Select issuer's quality assurance program and grievance procedure.

(8) For hospital network providers, the statement in 12-point bold-face type: "Only certain hospitals are network providers under this policy. Check with your physician to determine if he or she has admitting privileges at the network hospital. If he or she does not, you may be required to use another physician at time of hospitalization or you will be required to pay for all expenses." This statement must also be included in the "invitation to contract" advertisement, as that term is defined in §21.113(b) of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising).

(l) Before the sale of a Medicare Select policy or certificate, a Medicare Select issuer must obtain from the applicant a signed and dated form stating that the applicant has received the information provided under subsection (k) of this section and that the applicant understands the restrictions of the Medicare Select policy or certificate.

(m) A Medicare Select issuer must have and use procedures for hearing complaints and resolving written grievances from the subscribers. Such procedures must be aimed at mutual agreement for settlement and may include arbitration procedures. If a binding arbitration procedure is included, the insured must have made an informed choice to accept binding arbitration after having been advised of the right to reject this method of dispute or claim resolution.

(1) The grievance procedure must be described in the policy and certificates and in the outline of coverage. The in-hospital grievance procedure must be outlined separately from the grievance procedures for other treatments or services, or both. All grievances should be addressed immediately and resolved as soon as possible. Grievances relating to ongoing hospital treatment should be addressed immediately on receipt of any written or oral grievance, and be resolved as quickly as possible in a manner that does not interfere with, obstruct, or interrupt continued proper medical treatment and care of the patient. The timetable for their resolution must comply with all applicable provisions of the Insurance Code.

(2) At the time the policy or certificate is issued, the issuer must provide detailed information to the policyholder describing how a grievance may be registered with the issuer, both during the period of care and after care.

(3) Grievances must be considered in a timely manner and must be transmitted to appropriate decision makers who have authority to fully investigate the issue and take corrective action.

(4) If a grievance is found to be valid, corrective action must be taken promptly.

(5) All concerned parties must be notified about the results of a grievance.

(6) The issuer must report no later than each March 31st to the Commissioner regarding its grievance procedure. The report must be in a format prescribed by the Commissioner, must contain the number of grievances filed in the past year, and must include a summary of the subject, nature, and resolution of the grievances.

(n) At the time of initial purchase, a Medicare Select issuer must make available to each applicant for a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer.

(o) At the request of an individual covered under a Medicare Select policy or certificate, a Medicare Select issuer must make available to the individual covered the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer that has comparable or lesser benefits and that does not contain a restricted network provision. The issuer must make the policies or certificates available without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for six months.

(p) For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services, or coverage for Part B excess charges.

(q) Medicare Select policies and certificates must provide for continuation of coverage in the event the Secretary determines that Medicare Select policies and certificates issued under this section should be discontinued due to either the failure of the Medicare Select Program to be reauthorized under law or its substantial amendment.

(1) Each Medicare Select issuer must make available to each individual covered under a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer that has comparable or lesser benefits and that does not contain a restricted network provision. The issuer must make these policies and certificates available without requiring evidence of insurability.

(2) For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purpose of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services, or coverage for Part B excess charges.

(r) A Medicare Select issuer must comply with reasonable requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare Select Program.

History

Source Note: The provisions of this §3.3325 adopted to be effective April 15, 1992, 17 TexReg 2238; amended to be effective January 1, 1997, 21 TexReg 10753; amended to be effective May 10, 2005, 30 TexReg 2669; amended to be effective June 13, 2018, 43 TexReg 3787.

28 Tex. Admin. Code § 3.3326 Prohibition Against Use of Genetic Information and Requests for Genetic Testing in Medicare Supplement Policies

This section applies to all Medicare supplement policies and certificates with policy years beginning on or after July 1, 2009.

(1) The definitions in subparagraphs (A) - (F) of this paragraph apply to this section only.

(A) "Issuer of a Medicare supplement policy or certificate" includes a third-party administrator, or other person acting for or on behalf of such issuer.

(B) "Family member" means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual.

(C) "Genetic information" means, with respect to any individual, information about such individual's genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual. Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman, includes genetic information of any fetus carried by such pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term "genetic information" does not include information about the sex or age of any individual.

(D) "Genetic services" means a genetic test, genetic counseling (including obtaining, interpreting, or assessing genetic information), or genetic education.

(E) "Genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term "genetic test" does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved.

(F) "Underwriting purposes" means:

(i) rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the policy;

(ii) the computation of premium or contribution amounts under the policy;

(iii) the application of any pre-existing condition exclusion under the policy; and

(iv) other activities related to the issuance, renewal, or replacement of a contract of health insurance or health benefits.

(2) An issuer of a Medicare supplement policy or certificate must comply with subparagraphs (A) and (B) of this paragraph.

(A) The issuer shall not deny or condition the issuance or effectiveness of the policy or certificate including the imposition of any exclusion of benefits under the policy based on a pre-existing condition on the basis of the genetic information with respect to such individual; and

(B) The issuer shall not discriminate in the pricing of the policy or certificate, including the adjustment of premium rates, of an individual on the basis of the genetic information with respect to such individual.

(3) Nothing in paragraph (2) of this section shall be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from:

(A) denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or

(B) increasing the premium for any policy issued or issued for delivery to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy; in such case, the manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members and to further increase the premium for the group.

(4) An issuer of a Medicare supplement policy or certificate shall not request or require an individual or a family member of such individual to undergo a genetic test.

(5) Paragraph (4) of this section shall not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment, as defined for the purposes of applying the regulations promulgated under part C of Title XI and section 264 of the Health Insurance Portability and Accountability Act of 1996, as may be revised from time to time. The payment must be consistent with paragraph (2) of this section.

(6) In implementing paragraph (5) of this section, an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.

(7) Notwithstanding paragraph (4) of this section, an issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of such individual undergo a genetic test if each of the conditions specified in subparagraphs (A) - (E) of this paragraph is met:

(A) the request is made pursuant to research that complies with part 46 of Title 45, Code of Federal Regulations, or equivalent federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research;

(B) the issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that:

(i) compliance with the request is voluntary; and

(ii) non-compliance will have no effect on enrollment status or premium or contribution amounts;

(C) no genetic information collected or acquired under this subsection shall be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate;

(D) the issuer notifies the commissioner in writing that the issuer is conducting activities pursuant to the exception provided for under this paragraph, including a description of the activities conducted; and

(E) the issuer complies with such other conditions as the commissioner may by rule require for activities conducted under this paragraph.

(8) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information for underwriting purposes.

(9) An issuer of a Medicare supplement policy or certificate shall not request, require, or purchase genetic information with respect to any individual prior to such individual's enrollment under the policy in connection with such enrollment.

(10) If an issuer of a Medicare supplement policy or certificate obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase shall not be considered a violation of paragraph (9) of this section if such request, requirement, or purchase is not in violation of paragraph (8) of this section.

History

Source Note: The provisions of this §3.3326 adopted to be effective July 6, 2009, 34 TexReg 4532.

Subchapter U NEWBORN CHILDREN COVERAGE

28 Tex. Admin. Code § 3.3401 Purpose

The purpose of this subchapter is implementation of Insurance Code §1367.003, so as to clarify the applicability of §1367.003 to insurance policies to be issued in the future and to existing policies.

History

Source Note: The provisions of this §3.3401 adopted to be effective January 1, 1976; amended to be effective June 2, 1982, 7 TexReg 1903; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3402 Applicability and Scope

This subchapter applies to all individual or group policies of accident and sickness insurance (including policies issued by companies subject to Insurance Code Chapter 842, as amended) delivered or issued for delivery to any person in this state which provides for either accident and sickness coverage of additional newborn children or for maternity benefits.

History

Source Note: The provisions of this §3.3402 adopted to be effective January 1, 1976; amended to be effective June 2, 1982, 7 TexReg 1903; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.3403 General Rules of Application

(a) No individual policy or group policy of accident and sickness insurance which provides for accident and sickness coverage of additional newborn children may be issued in this state if it contains any provisions excluding or limiting initial coverage of a newborn infant for a period of time, or limitations or exclusions for congenital defects of a newborn child.

(b) No individual policy or group policy of accident and sickness insurance which provides for maternity benefits may be issued in this state if it contains any provisions excluding or limiting initial coverage of a newborn infant for a period of time, or limitations or exclusions for congenital defects of a newborn child.

(c) If the policy provides accident and sickness coverage for newborn children, such coverage must be at least as comprehensive as the coverage provided under the policy for other children for loss as a result of an accident or sickness.

(d) If the policy provides maternity benefits, and included in such benefits are coverages for newborn infants, such policy may not contain any provision excluding or limiting initial coverage of newborn infants for a period of time, or limit or exclude coverage for congenital defects of a newborn child.

(e) The initial coverage provided newborn children must continue for a period of at least 31 days. The insurer may require that before the coverage continues beyond this initial 31-day period, the policyholder must notify the insurer of the birth of the newborn child and pay any additional premium required to maintain the coverage in force. Any additional premium required for the initial period of coverage may be charged.

(f) Insurance Code §1367.003 applies to all accident and sickness policies issued or issued for delivery, renewed, extended, or amended in the State of Texas on and after January 1, 1974. The insurer, upon a renewal, extension, or amendment, may charge such additional premiums as are just and reasonable for the additional risk incurred by compliance with Insurance Code §1367.003. With respect to any policy forms approved by the Texas Department of Insurance prior to the effective date of §1367.003, an insurer is authorized to achieve compliance with §1367.003 by the use of endorsements or riders provided such endorsements or riders are approved by the Texas Department of Insurance as being in compliance with Insurance Code §1367.003 and other provisions of the Texas Insurance Code.

(g) Insurance Code §1367.003 applies to policies written before January 1, 1974, if and when such a policy is "renewed, extended or amended" after January 1, 1974. If the provisions of a policy written before January 1, 1974, allow the insurer to renegotiate the terms of the policy after January 1, 1974, or allow the insurer to adjust the premiums charged under the policy after January 1, 1974, and if at the time such renegotiation or adjustment could be accomplished and is accomplished, the policy continues in force or a policy with substantially similar coverage is agreed to by the insured and insurer, then the policy will be said to have been "renewed, extended or amended" for purposes of Insurance Code §1367.003, and the requirements of §1367.003 will attach to the policy.

(h) Insurance Code §1367.003 applies to any policy except a "non-cancellable and guaranteed renewable" policy written before January 1, 1974, if such policy is "renewed, extended or amended" or a rate adjustment could be made after January 1, 1974. If a group policy is written in conjunction with a collective bargaining agreement, such policy will be considered "renewed, extended or amended" upon the expiration of any applicable collective bargaining agreement.

(i) Nothing in this subchapter will be deemed to extend the provisions of Insurance Code §1367.003 to insurance contracts providing benefits only for specified diseases, pure accident policies, disability only policies, or loss of time only policies.

History

Source Note: The provisions of this §3.3403 adopted to be effective January 1, 1976; amended to be effective June 2, 1982, 7 TexReg 1903; amended to be effective May 11, 2022, 47 TexReg 2758.

Subchapter V COORDINATION OF BENEFITS

28 Tex. Admin. Code § 3.3501 Purpose

(a) The purpose of this subchapter is to:

(1) permit carriers to include a coordination of benefits (COB) provision in their plans;

(2) identify plans with which COB is allowed;

(3) establish an order in which plans with a COB provision must pay their claims;

(4) reduce duplication of benefits by permitting a reduction of the benefits to be paid by plans that do not have to pay their benefits first; and

(5) provide greater efficiency in the processing of claims when a person is covered under more than one plan.

(b) Severability. If a court of competent jurisdiction holds that any provision of this subchapter or its application to any person or circumstance is invalid for any reason, the invalidity does not affect other provisions or applications of this subchapter that can be given effect without the invalid provision or application, and to this end the provisions of this subchapter are severable.

History

Source Note: The provisions of this §3.3501 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3502 Applicability

(a) This subchapter applies to:

(1) group, blanket, or franchise accident and health insurance policies as described by Insurance Code Chapter 1251, concerning Group and Blanket Health Insurance;

(2) individual and group health maintenance organization (HMO) evidences of coverage as defined by Insurance Code §843.002, concerning Definitions;

(3) individual accident and health insurance policies as defined by Insurance Code §1201.001, concerning Definitions;

(4) individual and group preferred provider benefit plans and exclusive provider benefit plans as described by Insurance Code Chapter 1301, concerning Preferred Provider Benefit Plans;

(5) group insurance contracts, individual insurance contracts, and subscriber contracts that pay or reimburse for the cost of dental care;

(6) individual and group health benefit plans or vision benefit plans, as described by Insurance Code Chapter 1203, Subchapter C, concerning Vision and Eye Care Benefits; and

(7) the medical care components of individual and group long-term care contracts.

(b) This subchapter does not apply to:

(1) disability income protection coverage;

(2) workers' compensation insurance coverage;

(3) hospital indemnity coverage benefits or other fixed indemnity coverage;

(4) accident only coverage;

(5) specified disease or specified accident coverage;

(6) school accident-type coverages that cover students for accidents only, including athletic injuries, either on a "24-hour" or a "to and from school" basis;

(7) benefits provided in long-term care insurance policies for nonmedical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care, custodial care, or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services;

(8) Medicare supplement policies;

(9) a state plan under Medicaid;

(10) a governmental plan, which, by law, provides benefits that are in excess of those of any private insurance plan or other nongovernmental plan; or

(11) an individual accident and health insurance policy that is designed to fully integrate with other policies through a variable deductible.

(c) This subchapter does not apply to individual policies issued before March 25, 2014, that are noncancellable or guaranteed renewable.

History

Source Note: The provisions of this §3.3502 adopted to be effective March 25, 2014, 39 TexReg 2086; amended to be effective May 19, 2024, 49 TexReg 3580.

28 Tex. Admin. Code § 3.3503 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Allowable expense--Except as otherwise provided in §3.3505 of this title (relating to Allowable Expenses), or where a statute requires a different definition, any health care expense, including coinsurance or copayments and without reduction for any applicable deductible, that is covered in full or in part by any of the plans covering the person.

(2) Allowed amount--The amount of a billed charge that a carrier determines to be covered for services provided by a noncontracted health care provider or physician. The allowed amount includes the carrier's payment and any applicable deductible, copayment, or coinsurance amounts for which the insured is responsible.

(3) Birthday--Refers only to the month and day in a calendar year and does not include the year in which the individual is born.

(4) Carrier--An entity authorized under the Insurance Code to provide coverage subject to this subchapter, including an insurer, health maintenance organization, group hospital service corporation, or stipulated premium company.

(5) Certificate holder--An insured or enrollee who is covered other than as a dependent under a group plan or a group-type plan.

(6) Claim--A request that benefits be provided or paid. The benefits claimed may be in the form of:

(A) services, including supplies;

(B) payment for all or a portion of the expenses incurred;

(D) an indemnification.

(7) Closed panel plan--A plan that provides health benefits to covered persons primarily in the form of services through a panel of health care providers and physicians that have contracted with or are employed by the plan, and that excludes benefits for services provided by other health care providers or physicians, except in cases of emergency or referral by a panel member.

(8) Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)--Coverage provided under a right of continuation under federal law.

(9) Contract--Refers to an insurance policy, insurance certificate, or health maintenance organization evidence of coverage.

(10) Coordination of benefits (COB)--A provision establishing an order in which plans pay their claims and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.

(11) Custodial parent--

(A) the parent with the right to designate the primary residence of a child by a court order under the Family Code or other applicable law; or

(B) in the absence of a court order, the parent with whom the child resides more than one-half of the calendar year without regard to any temporary visitation.

(12) Group-type contract--A contract that is not available to the public and is obtained and maintained only because of membership in or a connection with a particular organization or group, including blanket coverage.

(13) High-deductible health plan--A high-deductible health plan under §223 of the Internal Revenue Code of 1986, as amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and Insurance Code Chapter 1653, concerning High Deductible Health Plan.

(14) Hospital indemnity benefits--Benefits not related to expenses incurred. This term does not include reimbursement-type benefits, even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim.

(15) Plan--A form of coverage with which coordination is allowed. For purposes of this subchapter:

(A) plan includes:

(i) any contract to which this subchapter applies;

(ii) limited benefit policies under §3.3079 of this title (relating to Minimum Standards for Limited Benefit Coverage), excluding Disability Income Protection Coverage under §3.3075 of this title (relating to Minimum Standards for Disability Income Protection Coverage);

(iii) uninsured (i.e., self-funded or self-insured) arrangements of group or group-type coverage;

(iv) the medical benefits coverage in automobile insurance contracts;

(v) Medicare or other governmental benefits, as permitted by law;

(vi) group insurance contracts, individual insurance contracts, and subscriber contracts that pay or reimburse for the cost of dental care; and

(vii) individual and group health benefit plans or vision benefit plans, as described by Insurance Code Chapter 1203, Subchapter C, concerning Vision and Eye Care Benefits;

(B) plan does not include:

(i) disability income protection coverage;

(ii) workers' compensation insurance coverage;

(iii) hospital confinement indemnity coverage or other fixed indemnity;

(iv) specified disease coverage;

(v) supplemental benefit coverage under §3.3080 of this title (relating to Supplemental Coverage) and as described in Insurance Code Chapter 1203, concerning Coordination of Benefits Provisions;

(vi) accident-only coverage;

(vii) specified accident coverage;

(viii) school accident-type coverages that cover students for accidents only, including athletic injuries, either on a "24-hour basis" or on a "to and from school" basis;

(ix) benefits provided in long-term care insurance contracts for nonmedical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care, and custodial care or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services;

(x) Medicare supplement policies;

(xi) a state plan under Medicaid;

(xii) a governmental plan which, by law, provides benefits that are in excess of those of any private insurance plan or other nongovernmental plan; or

(xiii) an individual accident and health insurance policy that is designed to fully integrate with other policies through a variable deductible.

(16) Policyholder--The primary insured named in an individual health insurance policy or evidence of coverage.

(17) Primary plan--A plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if:

(A) the plan either has no order of benefit determination rules, or its rules differ from those permitted by this subchapter; or

(B) all plans that cover the person use the order of benefit determination rules required by this subchapter, and under those rules, the plan determines its benefits first.

(18) Secondary plan--A plan that is not a primary plan.

History

Source Note: The provisions of this §3.3503 adopted to be effective March 25, 2014, 39 TexReg 2086; amended to be effective May 19, 2024, 49 TexReg 3580.

28 Tex. Admin. Code § 3.3504 General Prohibition

A carrier may not coordinate benefits to reduce the benefits paid under a plan regulated by this subchapter in the absence of a COB provision in the contract that meets the requirements of this subchapter. Despite §11.511(1)(B) of this title (relating to Optional Provisions), and subject to the requirements of Insurance Code Chapter 1203 and this subchapter, an HMO group plan may coordinate benefits with an individual or conversion plan.

History

Source Note: The provisions of this §3.3504 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3505 Allowable Expenses

(a) If a covered person advises a plan that all plans covering the person are high-deductible health plans and the person intends to contribute to a health savings account established in accord with §223 of the Internal Revenue Code of 1986, the primary high-deductible plan's deductible is not an allowable expense, except for any health care expense incurred that may not be subject to the deductible as described in §223(c)(2)(C) of the Internal Revenue Code of 1986.

(b) An expense or a portion of an expense that is not covered by any of the plans is not an allowable expense.

(c) Any expense that a health care provider or physician is prohibited from charging a covered person by law or in accord with a contractual agreement is not an allowable expense.

(d) If a person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room is not an allowable expense, unless one of the plans provides coverage for private hospital room expenses.

(e) If a person is covered by two or more plans that do not have negotiated fees and that compute their benefit payments on the basis of usual and customary fees, allowed amounts, relative value schedule reimbursement, or other similar reimbursement methodology, any amount charged by the health care provider or physician in excess of the highest reimbursement amount for a specified benefit is not an allowable expense.

(f) If a person is covered by two or more plans that provide benefits or services based on negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense.

(g) If a person is covered by one plan that does not have negotiated fees and that calculates its benefits or services based on usual and customary fees, allowed amounts, relative value schedule reimbursement, or other similar reimbursement methodology and another plan that provides its benefits or services based on negotiated fees, the primary plan's payment arrangement must be the allowable expense for all plans. However, if the health care provider or physician has contracted with the secondary plan to provide the benefit or service for a specific negotiated fee or payment amount that is different than the primary plan's payment arrangement and if the health care provider's or physician's contract permits, that negotiated fee or payment must be the allowable expense used by the secondary plan to determine its benefits.

(h) The definition of "allowable expense" may exclude certain types of coverage or benefits such as dental care, vision care, prescription drugs, or hearing aids. A plan that limits the application of COB to certain coverages or benefits may limit the definition of "allowable expenses" in its contract to expenses that are similar to the expenses that it provides. When COB is restricted to specific coverages or benefits in a contract, the definition of "allowable expense" must include similar expenses to which COB applies.

(i) When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered as both an allowable expense and a benefit paid.

(j) The amount of the reduction of benefits under a primary plan may be excluded from allowable expense when a covered person's benefits are reduced under a primary plan because:

(1) the covered person does not comply with the plan provisions concerning second surgical opinions or prior authorization of admissions or services; or

(2) the covered person has a lower benefit because the covered person did not use a preferred health care provider or preferred physician.

History

Source Note: The provisions of this §3.3505 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3506 Use of the Term "Plan" in Contracts

(a) Separate parts of a plan for members of a group that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan, and there is no COB among the separate parts of the plan.

(b) If a plan coordinates benefits, its contract must state the types of coverage that will be considered in applying the COB provision of that contract. Whether the contract uses the term "plan" or some other term such as "program," the contractual definition may be no broader than the definition of "plan" in this subchapter. The model COB contract provisions provide an example of how to define "plan" in §3.3510(d) of this title (relating to Model COB Contract Provisions).

(c) A contract may apply one COB provision to certain benefits, such as dental benefits, coordinating only with like benefits, and may apply other separate COB provisions to coordinate other benefits.

History

Source Note: The provisions of this §3.3506 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3507 Rules for COB and Order of Benefits

(a) Coverage by two or more plans. When a person is covered by two or more plans, the rules for determining the order of benefit payments will be determined as provided in paragraphs (1) - (5) of this subsection.

(1) The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist.

(2) A plan may take into consideration the benefits paid or provided by another plan only when, under this subchapter, it is secondary to that other plan.

(3) If the primary plan is a closed panel plan and the secondary plan is not, the secondary plan must pay or provide benefits as if it were the primary plan when a covered person uses a noncontracted health care provider or physician, except for emergency services or authorized referrals that are paid or provided by the primary plan.

(4) When multiple contracts providing coordinated coverage are treated as a single plan under this subchapter, this section applies only to the plan as a whole, and coordination among the component contracts is governed by the terms of the contracts. If more than one carrier pays or provides benefits under the plan, the carrier designated as primary within the plan must be responsible for the plan's compliance with this subchapter.

(5) If a person is covered by more than one secondary plan, the order of benefit determination rules of this subchapter decide the order in which secondary plans' benefits are determined in relation to each other. Each secondary plan must take into consideration the benefits of the primary plan or plans and the benefits of any other plan, that, under the rules of this subchapter, has its benefits determined before those of that secondary plan.

(b) Exception. Except as provided by subsection (c) of this section and §3.3509(b) of this title (relating to Miscellaneous Provisions), a plan that does not contain order of benefit determination provisions that are consistent with this subchapter is always the primary plan unless the provisions of both plans state that the complying plan is primary.

(c) Coverage by membership in a group. Coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage must be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance-type coverages that are written in connection with a closed panel plan to provide out-of-network benefits.

(d) Order of benefit determination. Each plan determines its order of benefits using the first of the following rules that apply.

(1) Nondependent or dependent.

(A) Subject to this subparagraph and subparagraph (B) of this paragraph, the plan that covers the person other than as a dependent, for example, as an employee, member, subscriber, policyholder, certificate holder, or retiree, is the primary plan, and the plan that covers the person as a dependent is the secondary plan.

(B) If the person is a Medicare beneficiary, subparagraph (C) of this paragraph applies if, and as a result of the provisions of Title XVIII of the Social Security Act and implementing regulations, Medicare is:

(i) secondary to the plan covering the person as a dependent; and

(ii) primary to the plan covering the person as other than a dependent, for example, a retired employee.

(C) Under subparagraph (B) of this paragraph, as applicable, the order of benefits is reversed so that the plan covering the person as an employee, member, subscriber, policyholder, certificate holder, or retiree is the secondary plan and the other plan covering the person as a dependent is the primary plan.

(2) Dependent child covered under more than one plan. Unless there is a court order stating otherwise, plans covering a dependent child must determine the order of benefits using the following rules that apply.

(A) For a dependent child whose parents are married or are living together, whether or not they have ever been married:

(i) the plan of the parent whose birthday falls earlier in the calendar year is the primary plan; or

(ii) if both parents have the same birthday, the plan that has covered the parent longest is the primary plan.

(B) For a dependent child whose parents are divorced or are not living together, whether or not they have ever been married:

(i) if a court order states that one of the parents is responsible for the dependent child's health care expenses or health care coverage, and the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with responsibility has no health care coverage for the dependent child's health care expenses, and that parent's spouse does, then the spouse's plan is the primary plan. This clause must not apply with respect to any plan year during which benefits are paid or provided before the entity has actual knowledge of the court order provision.

(ii) if a court order states that both parents are responsible for the dependent child's health care expenses or health care coverage, the provisions of subparagraph (A) of this paragraph must determine the order of benefits.

(iii) if a court order states that the parents have joint custody without specifying that one parent has responsibility for the health care expenses or health care coverage of the dependent child, the provisions of subparagraph (A) of this paragraph must determine the order of benefits.

(iv) if there is no court order allocating responsibility for the child's health care expenses or health care coverage, the order of benefits for the child is as follows:

(I) the plan covering the custodial parent;

(II) the plan covering the custodial parent's spouse;

(III) the plan covering the noncustodial parent; then

(IV) the plan covering the noncustodial parent's spouse.

(C) For a dependent child covered under more than one plan of individuals who are not the parents of the child, the order of benefits must be determined, as applicable, under subparagraph (A) or (B) of this paragraph as if the individuals were parents of the child.

(D) For a dependent child who has coverage under either or both parents' plans and has his or her own coverage as a dependent under a spouse's plan, subsection (e) of this section applies.

(E) In the event the dependent child's coverage under the spouse's plan began on the same date as the dependent child's coverage under either or both parents' plans, the order of benefits must be determined by applying the birthday rule in subparagraph (A) of this paragraph to the dependent child's parent(s) and the dependent's spouse.

(3) Active employee, retired, or laid-off employee.

(A) The plan that covers a person as an active employee who is neither laid off nor retired, or as a dependent of an active employee, is the primary plan. The plan that covers that same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee is the secondary plan.

(B) If the plan that covers the same person as a retired or laid-off employee or as a dependent of a retired or laid-off employee does not conform to the requirements of subparagraph (A) of this paragraph, and as a result, the plans do not agree on the order of benefits, this paragraph does not apply.

(4) COBRA or state continuation coverage.

(A) If a person whose coverage is provided under COBRA or under a right of continuation under state or other federal law is covered under another plan, the plan covering the person as an employee, member, subscriber, or retiree or covering the person as a dependent of an employee, member, subscriber, or retiree is the primary plan, and the plan covering that same person under COBRA or under a right of continuation under state or other federal law is the secondary plan.

(B) If the plan that covers the same person under COBRA or under a right of continuation does not conform to the requirements of subparagraph (A) of this paragraph, and as a result, the plans do not agree on the order of benefits, this paragraph does not apply.

(e) Length of time. If subsection (d) of this section does not determine the order of benefits, the plan that has covered the person for the longer period of time is the primary plan. The plan that has covered the person for the shorter period of time is the secondary plan.

(1) To determine the length of time a person has been covered under a plan, two successive plans must be treated as one if the covered person was eligible under the second plan within 24 hours after the first plan ended.

(2) The start of a new plan does not include:

(A) a change in the amount or scope of a plan's benefits;

(B) a change in the entity that pays, provides, or administers the plan's benefits; or

(3) The person's length of time covered under a plan is measured from the person's first date of coverage under that plan. If that date is not readily available for a group plan, the date the person first became a member of the group must be used as the date from which to determine the length of time the claimant's coverage under the present plan has been in force.

(f) Sharing equally between the plans. If subsections (a) - (e) of this section do not determine the order of benefits, the allowable expenses must be shared equally between the plans.

History

Source Note: The provisions of this §3.3507 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3508 Procedure to be Followed by Secondary Plan

In determining the amount to be paid by the secondary plan on a claim, should the plan wish to coordinate benefits, the secondary plan must calculate the benefits it would have paid on the claim in the absence of other health care coverage and apply that calculated amount to any allowable expense under its plan that is unpaid by the primary plan. The secondary plan may reduce its payment by the amount that, when combined with the amount paid by the primary plan, results in the total benefits paid or provided by all plans for the claim equaling 100 percent of the total allowable expense for that claim. In addition, the secondary plan must credit to its plan deductible any amounts it would have credited to its deductible in the absence of other health care coverage.

History

Source Note: The provisions of this §3.3508 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3509 Miscellaneous Provisions

(a) A secondary plan that provides benefits in the form of services may recover the reasonable cash value of providing the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. This subsection does not require a plan to reimburse a covered person in cash for the value of services provided by a plan that provides benefits in the form of services.

(b) A plan with order of benefit determination rules that comply with this subchapter may coordinate its benefits with a noncompliant plan that is "excess" or "always secondary" or that uses order of benefit determination rules that are inconsistent with those contained in this subchapter on the following basis:

(1) if the complying plan is the primary plan, it must pay or provide its benefits first;

(2) if the complying plan is the secondary plan, it must pay or provide its benefits first, but the amount of the benefits payable must be determined as if the complying plan were the secondary plan. In such a situation, the payment must be the limit of the complying plan's liability; and

(3) if the noncompliant plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan must assume that the benefits of the noncompliant plan are identical to its own, and must pay its benefits accordingly. If, within two years of payment, the complying plan receives information as to the actual benefits of the noncompliant plan, it must adjust payments accordingly.

(c) If a noncomplying plan reduces its benefits so that the covered person receives less in benefits than the covered person would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan, and applicable state law allows the right of subrogation, as provided in this section, then the complying plan must advance to the covered person, or to an assignee on behalf of the covered person, an amount equal to the difference. However, the complying plan may not advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid for the same expense or service. In consideration of such advance, the complying plan must be subrogated to all rights of the covered person against the noncomplying plan, in accord with applicable subrogation provisions. The advance by the complying plan must also be without prejudice to any claim it may have against the noncomplying plan in the absence of subrogation.

(d) A carrier to which this subchapter is applicable is required to provide reasonable information to a secondary carrier that is needed to determine the benefits to be paid under this subchapter seven days after it is requested. Provisions for COB or subrogation may each be included in health care benefits contracts without compelling the inclusion or exclusion of the other.

(e) A plan must, in its explanation of benefits provided to covered persons, include the following language, "If you are covered by more than one health benefit plan, you should file all your claims with each plan."

(f) If the plans cannot agree on the order of benefits within 30 calendar days after the plans have received all of the information needed to pay the claim, the plans must immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan will be required to pay more than it would have paid had it been the primary plan.

(g) Despite the provisions of this subchapter, a carrier must comply with the prompt pay requirements of Chapter 21, Subchapter T of this title (relating to Submission of Clean Claims).

(h) A contract may not reduce benefits on the basis that:

(1) another plan exists and the covered person did not enroll in that plan;

(2) a person is or could have been covered under another plan, except with respect to Part B of Medicare; or

(3) a person has elected an option under another plan providing a lower level of benefits than another option that could have been elected.

(i) No plan may contain a provision that its benefits are "always excess" or "always secondary" to any plan as defined in this subchapter, except in accord with the rules permitted by this subchapter.

(j) Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel plan health care provider or physician. COB does not occur if a covered person is enrolled in two or more closed panel plans and obtains services from a health care provider or physician in one of the closed panel plans because the other closed panel plan for which health care providers or physicians were not used has no liability. However, COB may occur during the plan year when the covered person receives emergency services that would have been covered by both plans, and the secondary plan must comply with §3.3508 of this title (relating to Procedure to be Followed by Secondary Plan) to determine the amount it should pay for the benefit.

(k) No plan may use a COB provision, or any other provision that allows it to reduce its benefits based on the existence of any other coverage its insured or enrollee may have that does not meet the definition of plan under this subchapter.

History

Source Note: The provisions of this §3.3509 adopted to be effective March 25, 2014, 39 TexReg 2086.

28 Tex. Admin. Code § 3.3510 Model COB Contract Provisions

(a) Subsection (d) of this section contains an optional model COB provision form for use in contracts. The use of this model form is subject to the provisions of §3.3509 of this title (relating to Miscellaneous Provisions) and the provisions of §3.3507 of this title (relating to Rules for COB and Order of Benefits).

(b) Subsection (e) of this section contains an optional model plain language description of the COB process that explains to the covered person how health plans will implement COB. It is not intended to replace or change the provisions that are set forth in the contract. Its purpose is to explain the process by which two or more plans will pay for or provide benefits.

(c) A COB provision or a plain language description does not have to use the words and format shown in the model forms. Changes may be made to fit the language and style of the rest of the contract or to reflect the difference among plans that provide services, pay benefits for expenses incurred, and indemnify. No substantive changes are allowed.

(d) The model COB contract provisions are as follows:

Attached Graphic

(e) The model COB notice publication is as follows:

Attached Graphic

History

Source Note: The provisions of this §3.3510 adopted to be effective March 25, 2014, 39 TexReg 2086; amended to be effective May 19, 2024, 49 TexReg 3580.

28 Tex. Admin. Code § 3.3520 Uniform Coordination of Benefits Questionnaire

(a) Notwithstanding §3.3502 of this title (relating to Applicability), this section applies to a health benefit plan issuer that is subject to Insurance Code Chapter 1203, Subchapter D, concerning Coordination of Benefits Questionnaire.

(b) The commissioner adopts by reference LHL138 and LHL139, which contain two versions of a uniform coordination of benefits questionnaire, effective January 1, 2026, to be used and accepted by a health benefit plan issuer in compliance with this section. Both versions of the form are posted on the TDI website at www.tdi.texas.gov/forms.

(1) a health benefit plan issuer that requires a health care provider to maintain information on coordination of benefits must use and accept the Patient Health Plan Coverage Form that is adopted by this section as LHL138; and

(2) a health benefit plan issuer that requires an enrollee to provide information on other health coverage must use and accept the Enrollee's Other Health Plan Coverage Form that is adopted by this section as LHL139.

History

Source Note: The provisions of this §3.3520 adopted to be effective January 1, 2026, 50 TexReg 8611.

Subchapter W MISCELLANEOUS RULES FOR GROUP AND INDIVIDUAL ACCIDENT AND HEALTH INSURANCE

28 Tex. Admin. Code § 3.3601 Orthodontic Coverages

No policy or certificate of insurance may be delivered or issued for delivery in this state on or after January 1, 1987, if the policy or certificate excludes orthodontic coverage on the ground that overbite, overjet, openbite, or arch length discrepancies measure less than four millimeters or any other arbitrary unit of measurement or qualifications which are not reasonably supported by accepted orthodontic practice.

History

Source Note: The provisions of this §3.3601 adopted to be effective January 1, 1987, 11 TexReg 2384.

28 Tex. Admin. Code § 3.3602 Requirements for Short-Term Limited-Duration Coverage

(a) The purpose of this section is to define short-term limited-duration insurance and address requirements for short-term limited-duration coverage. This section applies to any individual or group accident and health insurance policy or certificate issued under Insurance Code Chapters 1201 or 1251.

(b) For the purposes of Chapters 3, 21, and 26 of this title, "short-term limited-duration insurance" has the meaning given in Insurance Code §1509.001.

(c) An individual policy or group certificate of short-term limited-duration insurance must provide benefits consistent with the minimum standards for the type of coverage offered.

(d) Short-term limited-duration coverage, including individual policies and group certificates:

(1) may not be marketed as guaranteed renewable;

(2) must be marketed either as nonrenewable, or renewable (without new underwriting) at the option of the policyholder or enrollee, if the enrollee contributes to the premium;

(3) must clearly state the duration of the initial term and the total maximum duration including any renewal options;

(4) may not be modified after the date of issue, except by signed acceptance of the policyholder or the enrollee, if the enrollee contributes to the premium; and

(5) if coverage is renewable, a short-term limited-duration individual policy or group certificate must:

(A) include a statement that the enrollee has a right to continue the coverage in force by timely payment of premiums for the number of terms listed;

(B) include a statement that the issuer will not increase premium rates or make changes in provisions in the policy, or certificate, on renewal based on individual health status;

(C) if applicable, include a statement that the issuer retains the right, at the time of policy renewal, to make changes to premium rates by class; and

(D) include a statement that the issuer, at the time of renewal, may not deny renewal based on individual health status.

(e) An issuer offering short-term limited-duration insurance must include an accurate written disclosure form that is consistent with the form and instructions prescribed in Figure: 28 TAC §3.3602(e) and the requirements of this section.

Attached Graphic

(f) In creating a disclosure form, issuers must follow all instructions provided in this subsection:

(1) The disclosure must be produced for each plan option that the issuer makes available and reflect the specific terms of the plan.

(2) The disclosure form must accurately represent the short-term limited-duration coverage being provided.

(3) If the disclosure form provided in Figure 28 TAC §3.3602(e) does not accurately represent the plan being offered, the issuer may modify the form as necessary. When filing the form with the department, the issuer must clearly identify any changes made and explain the reason for modifying the form.

(4) The chart under disclosure form paragraph (9) may be supplemented to include cost-sharing information for each benefit.

(5) The disclosure form provided in Figure 28 TAC §3.3602(e) (the disclosure form) may be combined with the outline of coverage required under §3.3093(4) of this title (the outline of coverage) only if the combined disclosure form and outline of coverage is assembled and combined in the following order:

(A) "Is this short-term health insurance plan right for me?" followed by the plan marketing name, name of issuer, and paragraph (1) of the outline of coverage;

(B) paragraph (2) of the outline of coverage is replaced with paragraphs (1) through (8) of the disclosure form;

(C) paragraph (3) of the outline of coverage is combined with paragraph (9) of the disclosure form, using as a minimum, the information contained in the chart in paragraph (9) of the disclosure form;

(D) paragraph (4) of the outline of coverage;

(E) paragraph (5) of the outline of coverage may be removed, as it is addressed in paragraph (3) of the disclosure form;

(F) paragraph (6) of the outline of coverage; and

(G) paragraphs (10), (11), and (12) of the disclosure form.

(g) A disclosure form under this section must be:

(1) filed with the department for review before use, consistent with filing procedures in Subchapter A of this chapter;

(2) provided in writing to a prospective enrollee:

(A) before the individual completes an application or makes an initial premium payment, application fee, or other fee; and

(B) at the time the policy or certificate is issued; and

(3) signed by the enrollee to acknowledge receipt at the time of application. An electronic signature is acceptable if the issuer's procedures comply with Insurance Code Chapter 35.

History

Source Note: The provisions of this §3.3602 adopted to be effective January 16, 2020, 45 TexReg 340.

28 Tex. Admin. Code § 3.3603 Purpose and Scope

(a) The purpose and scope of these sections is to codify the notice requirements for the content and format of seven disclosure statements which must be provided to inform prospective buyers of health insurance policies about the extent to which benefits under such policies duplicate Medicare benefits. The disclosure statements in these sections have been developed by the National Association of Insurance Commissioners and approved by the U.S. Secretary of Health and Human Services. Health insurance policy issuers subject to the requirements to provide such disclosure must comply with such requirements on and after August 11, 1995. These sections in no way impact the effective date on which issuers must provide affirmative disclosure of Medicare duplication to prospective insureds.

(b) On and after the effective date set out by federal requirements, issuers of the policies that duplicate Medicare benefits must display the applicable statement in a prominent manner as part of, or together with, the application for the policy.

(c) Each of the statements applies to one of seven different types of health insurance policy identified as needing a disclosure based on its potential to duplicate Medicare benefits, even if only incidentally.

(d) Issuers who fail to provide the duplication notice are in violation of both federal and state law, and subject to both federal and state penalties.

(e) The seven separate types of health insurance policies which must be accompanied by an individualized statement of the extent to which the policy duplicates Medicare are listed in paragraphs (1)-(7) of this subsection. Each of these listed policy types must contain the disclosure statement, which may not vary from the statements set out in sections 3.3604-3.3309 and 3.3613 of this title (relating to Required Disclosure Statements for Policies That Duplicate Medicare) in terms of language or format, including type size, spacing, boldfacing, line spacing, and use of boxes to surround text. The specific policy types are:

(1) policies that provide benefits for expenses incurred for an accidental injury only;

(2) policies that provide benefits for specified limited services;

(3) policies that reimburse expenses incurred for specified disease or other specified impairments (including cancer policies, specified disease policies and other policies that limit reimbursement to named medical conditions);

(4) policies that pay fixed dollar amounts for specified disease or other specified impairments (including cancer, specified disease policies and other policies that pay a scheduled benefit or specified payment based on diagnosis of the conditions named in the policy);

(5) indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies;

(6) policies that provide benefits for both expenses incurred and fixed indemnity;

(7) other health insurance policies not specifically identified in paragraphs (1)-(6) of this subsection.

(f) Providing the notice and disclosure addressed in these sections has no impact on the continuing application and effectiveness of §21.113(l) of this title (relating to Acknowledgment of Nonduplication and Provision of Notice to Consumer).

History

Source Note: The provisions of this §3.3603 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3604 Notice for Policies That Provide Benefits for Expenses Incurred for an Accidental Injury Only

The notice in this section is for policies that provide benefits for expenses incurred for an accidental injury only, and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3604 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3605 Policies That Provide Benefits for Specified Limited Services

The notice in this section is for policies that provide benefits for specified limited services, and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3605 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3606 Policies That Reimburse Expenses Incurred for Specified Diseases or Impairments

The notice in this section is for policies that reimburse expenses incurred for specified diseases or other specified impairments (including expense-incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions), and shall follow the content and format of one of the two statements (but not both simultaneously) of this section as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3606 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3607 Policies That Pay Fixed Dollar Amounts for Specified Diseases or Impairments

The notice in this section is for policies that pay fixed dollar amounts for specified diseases or other specified impairments (including cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy), and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3607 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3608 Indemnity or Other Policies That Pay a Fixed Dollar Amount Per Day

The notice in this section is for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies, and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3608 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3609 Policies That Provide Benefits upon Both an Expense-Incurred and Fixed Indemnity Basis

The notice in this section is for policies that provide benefits upon both an expense-incurred and fixed indemnity basis, and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3609 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3613 Other Health Insurance Policies

The notice in this section is for other health insurance policies not specifically identified in §§3.3604-3.3609 of this title (relating to Required Disclosure Statements for Policies that Duplicate Medicare), and shall follow the content and format of one of the two statements (but not both simultaneously) set out in this section, as follows:

(1) Original disclosure statement: Attached Graphic

(2) Alternative disclosure statement: Attached Graphic

History

Source Note: The provisions of this §3.3613 adopted to be effective April 25, 1996, 21 TexReg 3370; amended to be effective April 14, 1999, 24 TexReg 3353.

28 Tex. Admin. Code § 3.3614 Notice Regarding Policies or Certificates Which Are Not Medicare Supplement Policies

Any accident and sickness insurance policy, subscriber contract, or evidence of coverage other than a Medicare supplement policy, disability income policy, or a policy issued pursuant to a contract under Section 1876 of the Federal Social Security Act (42 USC §§1395ss, et seq) issued for delivery in this state to persons eligible for Medicare shall be accompanied by a notice to the insureds under the policy, subscriber contract, or evidence of coverage that the policy, subscriber contract, or evidence of coverage is not a Medicare supplement policy or certificate. The notice shall either be printed on or attached to the first page of the outline of coverage delivered to insureds under the policy or subscriber contract, or if no outline of coverage is delivered, to the first page of the policy, certificate, subscriber contract, or evidence of coverage delivered to insureds. The notice shall be in no less than 12-point type and shall contain the following language: "THIS (POLICY, CERTIFICATE, SUBSCRIBER CONTRACT, OR EVIDENCE OF COVERAGE) IS NOT A MEDICARE SUPPLEMENT (POLICY OR CERTIFICATE). If you are eligible for Medicare, review the Guide to Health Insurance for People with Medicare available from the company."

History

Source Note: The provisions of this §3.3614 adopted to be effective October 9, 1996, 21 TexReg 9237.

Subchapter Z EXEMPTION FROM REVIEW AND APPROVAL OF CERTAIN LIFE, ACCIDENT, HEALTH AND ANNUITY FORMS AND EXPEDITION OF REVIEW

28 Tex. Admin. Code § 3.4001 Purpose

The purpose of this subchapter is to exempt certain life and accident and sickness policy forms and annuity contract forms from certain of the requirements of Insurance Code Chapter 1701. Chapter 1701 requires that these forms may not be delivered, issued, or used in Texas unless they have been filed for review for approval with the Texas Department of Insurance as provided in §1701.054. Insurance Code §1701.005(b) provides for exemption by the commissioner of policy forms from the requirements of Chapter 1701 under certain circumstances. This subchapter exempts the forms specified from the requirement that they either be approved before being used or reviewed after being used as provided in §1701.054. However, this subchapter does not exempt such forms from the requirement that they be filed before being used. An additional purpose of this subchapter is to expedite the review process of forms filed under Insurance Code Chapter 1701.

History

Source Note: The provisions of this §3.4001 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective September 24, 1985, 10 TexReg 3436; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.4002 All Forms To Be Filed for Review Unless Specifically Exempted

All life and accident and sickness policy forms and annuity contract forms intended for use in this state, including application, rider, or endorsement forms not specifically exempted by this subchapter, must be filed to be reviewed and approved in accordance with Insurance Code §1701.051 and §1701.054.

History

Source Note: The provisions of this §3.4002 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective September 24, 1985, 10 TexReg 3436; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.4004 Exempt Forms

(a) Group and individual life forms. The group and individual life insurance forms specified in this subsection are exempt from the review and approval requirements of Insurance Code Chapter 1701, concerning Policy Forms, unless the forms are required by the laws of Texas, another state, or the United States, to be specifically approved or are otherwise excepted in subsection (b) of this section:

(1) group and individual term life insurance forms;

(2) individual variable life policies with a separate account only;

(3) rider forms listed in subparagraphs (A) - (K) of this paragraph:

(A) accidental death benefit riders;

(B) waiver of premium riders;

(D) individual retirement account (IRA) riders (to include Roth and Simple IRAs);

(E) preliminary term riders;

(F) conversion riders;

(G) exchange riders;

(H) waiver of cost riders, including waiver of cost and monthly expense charge, and waiver of cost and premium payment;

(I) dividend option riders;

(J) additional insured riders; and

(K) additional insurance on base insured riders;

(4) endorsement forms listed in subparagraphs (A) - (K) of this paragraph:

(A) optional retirement program (ORP) endorsements;

(B) nontransferability endorsements;

(D) tax sheltered annuity endorsements;

(E) nonassignability endorsements;

(F) settlement option endorsements;

(G) individual retirement account endorsements (to include Roth and Simple IRAs);

(H) unisex endorsements;

(I) loan endorsements;

(J) waiver of surrender charges on disability or confinement in a hospital or nursing home endorsements; and

(K) step-up or roll-up death benefit endorsements; and

(5) limited refilings for changes to the separate account for variable products.

(b) Exceptions. A filing identified in subsection (a)(1) of this section is not permitted to be filed as exempt for any group or individual life insurance forms providing the types of coverages set out in paragraphs (1) - (13) of this subsection:

(1) universal life, including flexible premium adjustable life;

(2) whole life;

(3) endowment life;

(4) variable life with a fixed account;

(5) business value;

(6) any forms containing a market value adjustment;

(7) deposit term;

(8) forms subject to Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance;

(9) any life insurance product used to fund prepaid funeral contracts;

(10) any form containing a persistency bonus provision, no-lapse premium provision, or other additional interest credit to the policy value provision (guaranteed or non-guaranteed), index-linked crediting provision, residual death benefit provision, accelerated death benefit provision, long-term care or other accident- and health-related benefit provision;

(11) applications for use with variable life or index-linked life, or forms that contain a market value adjustment provision, a long-term care or other accident- and health-related benefit provision;

(12) forms issued under the authority of Insurance Code §1131.064, concerning Other Groups, that are related to discretionary groups; or

(13) limited refilings for life insurance that indicate a change in the mortality table or interest rates for new issues under the policy form.

(c) Group and individual annuity forms. The group and individual annuity forms specified in paragraphs (1) - (7) of this subsection are exempt from the review and approval requirements of Insurance Code Chapter 1701, unless the forms are required by the laws of Texas, another state, or of the United States to be specifically approved or are otherwise excepted in subsection (d) of this section:

(1) single premium immediate annuities (including variable immediate annuities);

(2) deferred annuities used as structured settlement options;

(3) individual deferred annuities that do not include persistency bonuses or additional interest credits of any type, waiver of surrender charges (except for death, disability, or confinement in a hospital or nursing home); two-tier values; or a market value adjustment:

(A) for purposes of this paragraph, and paragraph (4) of this subsection, "waiver of surrender charges" means a waiver of surrender charges that is applied to any amount greater than 10% of the surrender value;

(B) for purposes of this paragraph, and paragraph (4) of this subsection, "two-tier values" means values on an annuity available at the maturity date of the contract that are different, depending on whether the value is taken from the contract in a lump sum or left with the issuer for periodic payments, regardless of whether the different values are available at issue or later;

(4) group annuities that do not include persistency bonuses or additional interest credits of any type, waiver of surrender charges (except for death, disability, or confinement in a hospital or nursing home), two-tier values, or a market value adjustment; group annuities that are guaranteed investment contracts (GICs), synthetic GICs, funding agreements, and unallocated group annuities funding pension plans;

(5) limited refilings for annuity products that indicate only a change in the mortality table or interest rates for new issues under the policy form, or changes to the separate account for variable products;

(6) variable annuities with a separate account only, which do not include a provision for guaranteed living benefits; and

(7) reversionary annuities.

(d) Exceptions. A filing identified in subsection (c) of this section may not be filed as exempt for any of the following annuity forms:

(1) annuities used to fund prepaid funeral contracts;

(2) variable annuities that contain guaranteed living benefit provisions;

(3) annuities that contain an index-linked crediting, long-term care, or other accident- and health-related benefit provision;

(4) applications for use with variable annuities, index-linked crediting annuities, annuities that contain a market-value-adjustment, or that contain a long-term care or other accident- and health-related provision;

(5) group annuity forms issued under the authority of Insurance Code §1131.064, relating to discretionary groups; or

(6) contingent deferred annuities.

(e) Group and individual accident and health forms. The group and individual accident and health insurance forms specified in paragraphs (1) and (2) of this subsection are exempt from the review and approval requirements of Insurance Code Chapter 1701, unless the forms are required by the laws of Texas, another state, or the United States, to be specifically approved or are otherwise excepted in subsection (f) of this section:

(1) the group accident and health forms set out in subparagraphs (A) - (C) of this paragraph:

(A) a group accident and health form issued to employers under Insurance Code §1251.051, concerning Employers, or to a labor union or association of labor unions under Insurance Code §1251.052, concerning Associations;

(B) group forms issued under Insurance Code §§1251.051; 1251.052; or 1251.053, concerning Funds Established by Employers, Labor Unions, or Associations, respectively, that provide Medicare Supplement coverage to an employer, multiple employer arrangement, or a labor union and that are exempt from regulation under Insurance Code §1652.002(b)(1), concerning Medicare Supplement Benefit Plan;

(C) group forms issued under Insurance Code §1251.051 and §1251.052 that provide long-term care coverage to a single employer, a labor union, or an association of labor unions through a policy that is delivered or issued for delivery outside of Texas;

(2) group and individual accident and health forms that provide the following coverages:

(A) accident only (including occupational accident and other specified accident);

(B) accidental death and dismemberment;

(D) vision;

(E) specified disease (including cancer, heart attack, stroke, and other specifically named diseases);

(F) disability coverages (including income replacement, key-man, buy/sell, and overhead expense);

(G) policies designed to provide conversion coverages;

(H) other permitted coverages that are designed to supplement other in-force health insurance; and

(I) group stop loss/excess loss policies containing an attachment point of $5,000 or more.

(f) Exceptions. A filing identified in subsection (e) of this section is not permitted to be filed as exempt for any of the following insurance forms or rates:

(1) a group or individual health insurance policy that provides, on a comprehensive basis for illness and injury, a combination of hospital, medical, and surgical coverages, including any guaranteed renewable or short-term limited-duration major medical policies;

(2) a Medicare supplement policy as defined in Insurance Code Chapter 1652, concerning Medicare Supplement Benefit Plans, except as specifically provided in subsection (e)(1)(C) of this section;

(3) a long-term care policy as defined in Insurance Code Chapter 1651, concerning Long-Term Care Benefit Plans, (including any policies providing nursing home or home health care coverages), except as specifically provided in subsection (e)(1)(D) of this section;

(4) a form containing preferred provider or exclusive provider benefit plan provisions as defined in Insurance Code Chapter 1301, concerning Preferred Provider Benefit Plans;

(5) a group form that is issued under Insurance Code §1251.056, concerning Other Groups;

(6) a conversion policy subject to the provisions of Chapter 21, Subchapter SS of this title, (relating to Continuation and Conversion Provisions), except for policies providing conversion from a policy included as an exempt form in this section;

(7) a policy that provides fixed indemnity coverage for more than hospital confinement, including a policy that provides limited long-term care coverage for a period of less than 12 months;

(8) rate or actuarial information that is required to be filed, even if the form is filed exempt as permitted by this section; and

(9) a dental policy.

(g) Copies of previously approved forms. Except for filings not eligible to be filed exempt under subsection (f)(4) of this section, a form not otherwise exempted under this subchapter that is an exact copy of a form is exempt from the review and approval requirements of Insurance Code Chapter 1701. These forms must be filed in accordance with and accompanied by the required certification as prescribed in Subchapter A of this chapter (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(h) Copies of previously approved forms subsequently submitted in braille or a non-English language. Any form not otherwise exempted under this subchapter that is submitted in braille as an exact copy of a previously approved form, or any form that has been translated into a non-English language from its previously approved English version, is exempt from the review and approval requirements of Insurance Code Chapter 1701. These forms must be filed in accordance with and accompanied by the required certification as prescribed in Subchapter A of this chapter.

History

Source Note: The provisions of this §3.4004 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective March 12, 1996, 21 TexReg 1673; amended to be effective January 9, 2000, 25 TexReg 124; amended to be effective May 11, 2022, 47 TexReg 2758; amended to be effective April 17, 2025, 50 TexReg 2383.

28 Tex. Admin. Code § 3.4005 General Information

(a) This section does not relieve any insurer or other licensee from complying with the Insurance Code or the rules and regulations of the Texas Department of Insurance.

(b) Insurers must cause all forms to comply with all required provisions of all applicable law, including the Insurance Code and the rules and regulations of the department. In addition to other legal requirements:

(1) forms may not contain any ambiguous, deceptive, misleading, unfair, inequitable, or unjust wording or terminology;

(2) title headings or other indications of a form's provisions may not be misleading;

(3) forms may not contain any exception, exclusion, limitation, or reduction that is deceptive, unjust, unfair, encourages misrepresentation, or is inequitable or that would deceptively affect the risk understood to be assumed in the general coverage of the contract; and

(4) forms may not be printed or otherwise reproduced in such a manner as to render any provision of the form substantially illegible or not easily legible to persons of normal vision.

(c) Every filing exempted from review by this subchapter must be accompanied by each item of information set out in paragraphs (1) - (3) of this subsection.

(1) The certifications for exempt filings required in §3.16 of this title (relating to Filing Modes, Categories, and Certifications).

(2) Any additional information or documentation generally required under the provisions of Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(3) A cover letter setting out the items in subparagraphs (A) - (C) of this paragraph, as follows:

(A) that the filing is exempt;

(B) the particular section, subsection, paragraph, and subparagraph of the section under which the filing is exempt; and

History

Source Note: The provisions of this §3.4005 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective March 12, 1996, 21 TexReg 1673; amended to be effective May 11, 2022, 47 TexReg 2758; amended to be effective April 17, 2025, 50 TexReg 2383.

28 Tex. Admin. Code § 3.4006 New, Uncommon, and Unusual Forms

Any form intended for use in Texas which contains provisions or will create conditions or concepts which may be construed as new, uncommon, or unusual must be filed for review and approval whether or not it falls within one of the exempt filing categories as specified in these sections.

History

Source Note: The provisions of this §3.4006 adopted to be effective April 14, 1983, 8 TexReg 1067.

28 Tex. Admin. Code § 3.4007 Newly Licensed Insurers

All forms intended for use in Texas for all newly licensed insurers shall be filed for review and approval for a period of two years from the date the insurer receives a certificate of authority to do business in Texas.

History

Source Note: The provisions of this §3.4007 adopted to be effective April 14, 1983, 8 TexReg 1067.

28 Tex. Admin. Code § 3.4008 Procedures for Corrections to Non-Compliant Exempt Forms

(a) In order to monitor the appropriateness and effectiveness of the exemption provisions, the department will conduct periodic random and targeted audits of forms filed under these sections. Any compliance deficiencies identified during the audit process will be communicated to the insurer with a request for corrective action. Any failure to acknowledge a request and provide a plan for corrective action will be subject to the provisions of §3.4009 of this title (relating to Sanctions).

(b) In the event that an insurer becomes aware, without notification by the department, that a form filed as exempt under the provisions of this subchapter (relating to Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review) does not comply with the Insurance Code or the rules of the Texas Department of Insurance or the laws or regulations of the United States, the insurer shall promptly notify the department in writing of the form number, the nature of the non-compliance, and the insurer's plan for corrective action to remedy the non-compliance situation.

(c) In the event that an insurer becomes aware, without notification by the department, that a form filed as exempt under the provisions of this subchapter was not eligible to be filed exempt, the insurer shall promptly notify the department, withdraw the form filed as exempt and refile the form in accordance with the applicable filing requirements of this chapter.

History

Source Note: The provisions of this §3.4008 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective March 12, 1996, 21 TexReg 1673; amended to be effective January 9, 2000, 25 TexReg 124.

28 Tex. Admin. Code § 3.4009 Sanctions and Cancellation of Exempt Filing Privileges

(a) The privileges under this subchapter that permit an insurer to make exempt filings may be canceled if the insurer makes an exempt filing that fails to comply with one or more provisions of this title or the Insurance Code that results in the department determining that the filing has failed audit. If the issuer disagrees with TDI's determination under this section, it may request a hearing. The department will issue a notice of failed audit consistent with §3.4008 of this title (relating to Procedures for Corrections to Non-Compliant Exempt Forms) that explains:

(1) the compliance deficiencies identified during the audit process;

(2) the corrective action required;

(3) the cancellation of the insurer's exempt filing privileges; and

(4) how those privileges may be reinstated.

(b) If an insurer's privileges to make exempt filings under this subchapter are cancelled, the insurer is required to file for review and approval any and all forms intended for use in Texas, until the privileges under these sections are reinstated.

(c) Reinstatement of any privilege canceled under these sections will occur after a period of not more than one year, as provided in the notice of failed audit under subsection (a) of this section. An insurer may make application for reinstatement prior to the passage of the period specified in the notice of failed audit under subsection (a) of this section.

(d) Nothing in these sections limits the commissioner from imposing any other sanction authorized by the Insurance Code or other applicable law.

History

Source Note: The provisions of this §3.4009 adopted to be effective April 14, 1983, 8 TexReg 1067; amended to be effective March 12, 1996, 21 TexReg 1673; amended to be effective April 17, 2025, 50 TexReg 2383.

Subchapter AA LIMITED EXEMPTION FOR INSURANCE COVERAGE FROM THE REQUIREMENTS OF THE INSURANCE CODE, ARTICLE 3.42

28 Tex. Admin. Code § 3.4101 Purpose

This subchapter provides for exempting certain contracts or coverage from the requirement in Insurance Code Chapter 1701 that such contracts or coverage be filed for review with the Texas Department of Insurance before being delivered, issued, or used in this state; this exemption is applicable only if the coverage is otherwise authorized for use in this state and is appropriate under Insurance Code Chapter 1701, as if no provision for exemption existed. The exemption is for 45 days from the effective date of the coverage or until a later date as provided in this subchapter. The department has determined that the filing of certain forms or coverage before it goes into effect is not desirable or necessary for the protection of the public, and further that the requirement in Insurance Code Chapter 1701 that such forms be filed for review with the Texas Department of Insurance before being delivered, issued, or used in this state may not practicably be applied to such forms or coverage prior to its issuance or delivery in Texas.

History

Source Note: The provision of this §3.4101 adopted to be effective September 13, 1982, 7 TexReg 3145; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.4102 Coverage Which May Be Exempted

The following classes of insurance coverage may be exempted:

(1) group life or accident or health insurance coverage delivered or issued for delivery to the groups authorized by Insurance Code §§1131.051, 1131.052, 1251.051, and 1251.052, insofar as it applies to a labor union as group policyholder if the coverage conforms to the following:

(A) it is a result of a collective bargaining agreement between a labor organization and an employer;

(B) it is required by the collective bargaining agreement to go into effect within 60 days of the final agreement;

(C) it is the subject of aggressive and knowledgeable bargaining in a fully arms-length fashion on the part of the policyholder; and

(D) due to the economic posture of the parties involved, it is impracticable to obtain prior approval before the policy is issued and delivered;

(2) group life or accident or health insurance coverage delivered or issued for delivery to the groups authorized by Insurance Code §1131.060 and §1251.052, if the coverage conforms to the following:

(A) it is the result of extensive bargaining over the benefits to be afforded and the rates to be charged;

(B) it is required by the policyholder to go into effect within 60 days of the final agreement between the parties;

(C) it is the subject of aggressive and knowledgeable bargaining in a fully arms-length fashion on the part of the policyholder; and

(D) due to the economic posture of the parties involved, it is impracticable to obtain prior approval before the policy is issued and delivered.

History

Source Note: The provisions of this §3.4102 adopted to be effective September 13, 1982, 7 TexReg 3145; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.4103 Obtaining Exemptions

The exemption specified in §3.4102 of this title (relating to Coverage Which May Be Exempted) is conditioned as follows.

(1) The insurer has an affirmative duty to comply with the following:

(A) the insurer must file with the Texas Department of Insurance a statement signed by an officer of the company certifying that each of the conditions specified in either §3.4102(1) or (2) of this title (relating to Coverage Which May Be Exempted) is satisfied, and stating the name of the insured, the nature and extent of benefits, the date the parties concluded the agreement respecting insurance coverage, and the effective date of coverage;

(B) the insurer must inform the group policyholder in writing that the coverage is exempted from review by the Texas Department of Insurance for a limited time;

(C) the insurer must file the statement required by subparagraph (A) of this paragraph and a copy of the communication required by subparagraph (B) of this paragraph with the Texas Department of Insurance by the later of:

(i) 10 days from the date the parties concluded the agreement respecting the insurance coverage; or

(ii) 10 days from the effective date of coverage; and

(D) the insurer must submit the exempted forms for review with the Texas Department of Insurance in the usual manner prescribed by Insurance Code Chapter 1701, as soon as possible after:

(i) the effective date of coverage; or

(ii) the date the parties concluded the agreement respecting the insurance coverage. In no event may the insurer delay submission of the forms for review more than 45 days from the later of:

(I) the effective date of coverage; or

(II) the date the parties concluded the agreement respecting the insurance coverage.

(2) The insurance coverage must be authorized by and comply with the laws of this state.

History

Source Note: The provisions of this §3.4103 adopted to be effective September 13, 1982, 7 TexReg 3145; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.4104 Duration of Exemptions

Contracts submitted in accordance with §3.4103 of this title (relating to Obtaining Exemption) will be reviewed in the normal course. The duration of the period of an exemption provided for in these sections, unless otherwise determined on either an individual or class basis by the board, expires on the later of the following:

(1) 45 days from the date coverage becomes effective;

(2) 45 days from the date the parties reached an agreement on the insurance coverage; or

(3) 20 days after the form is either approved or disapproved.

History

Source Note: The provisions of this §3.4104 adopted to be effective September 13, 1982, 7 TexReg 3145.

28 Tex. Admin. Code § 3.4105 Disciplinary Measures

The Texas Department of Insurance may at any time revoke the exemption specified in this subchapter on the grounds that a company:

(1) has not complied with this subchapter; or

(2) by failing to abide by other applicable law is found to be unworthy of the exemption. The department may, after hearing, revoke that company's right to future exemptions under this subchapter and may also administer any sanction provided by law.

History

Source Note: The provisions of this §3.4105 adopted to be effective September 13, 1982, 7 TexReg 3145; amended to be effective May 11, 2022, 47 TexReg 2758.

Subchapter BB PHARMACEUTICAL SERVICES

28 Tex. Admin. Code § 3.4201 Scope

This subchapter applies to a health insurance policy, including a health insurance policy that incorporates a preferred provider benefit plan, issued, delivered, issued for delivery, entered into or renewed in this state in which an insurer provides benefits for pharmaceutical services under a contract or agreement entered into with a group contract holder or beneficiary of the policy and requires or encourages policy beneficiaries to use pharmaceutical services, pharmacies or pharmacists designated by the insurer.

History

Source Note: The provisions of this §3.4201 adopted to be effective December 25, 1996, 21 TexReg 11947; transferred effective April 16, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 3.4202 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Health insurance policy--An individual, group, blanket, or franchise insurance policy, insurance policy or agreement, or group hospital service contract that provides benefits for pharmaceutical services that are necessary as a result of or to prevent an accident or sickness. The term does not include evidence of coverage provided by a health maintenance organization under the Health Maintenance Organization Act (the Insurance Code, Chapter 20A). The term includes a health insurance policy that incorporates a preferred provider benefit plan.

(2) Insurer--Any life, health and accident; health and accident; or health insurance company or company operating pursuant to the Insurance Code, Chapters 3, 10, 20, 22 and 26 authorized to issue, deliver, issue for delivery or renew in this state health insurance policies approved under the Insurance Code, Article 3.42.

(3) Pharmaceutical services--Services, including dispensing prescription drugs as defined in the Pharmacy Act, Texas Civil Statutes, Article 4542a-1, §5, that are ordinarily and customarily rendered by a pharmacy or pharmacist licensed to practice pharmacy under the Pharmacy Act, Texas Civil Statutes, Article 4542a-1. The term does not include mail order services.

(4) Pharmacist--A person licensed to practice pharmacy under the Pharmacy Act, Texas Civil Statutes, Article 4542a-1.

(5) Pharmacy--A facility licensed under the Pharmacy Act, Texas Civil Statutes, Article 4542a-1, §29.

History

Source Note: The provisions of this §3.4202 adopted to be effective December 25, 1996, 21 TexReg 11947; transferred effective April 16, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 3.4203 Notification and Information to Pharmacies and Pharmacists

(a) An insurer shall, upon request, provide information concerning the application process and qualification requirements for participation in providing pharmaceutical services under a health insurance policy.

(b) An insurer must notify a pharmacy or pharmacist of acceptance or non-acceptance of an application to participate as a contract provider under a health insurance policy, in writing, no later than 90 days from receipt of an application.

History

Source Note: The provisions of this §3.4203 adopted to be effective December 25, 1996, 21 TexReg 11947; transferred effective April 16, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 3.4204 Pharmacy Application and Recertification

(a) An insurer may establish reasonable application and recertification fees for each licensed pharmacy which participates or applies to participate as a contract provider under a health insurance policy. An application or recertification fee charged under this section shall be considered reasonable provided:

(1) the fee does not exceed $50 per licensed pharmacy;

(2) the fee shall be uniformly charged per application or recertification to each pharmacy holding a license issued by the Texas State Board of Pharmacy;

(3) an insurer that contracts for the pharmaceutical services of more than one licensed pharmacy under common ownership or affiliation shall charge a separate fee for each licensed pharmacy;

(4) no more than one fee per licensed pharmacy is charged by an insurer for processing an application for participation as a contract provider under all health insurance policies and in any or all networks utilized by the insurer; and

(5) no more than one fee per licensed pharmacy is charged by a health maintenance organization or insurer within an insurance holding company system, as defined in Insurance Code, Article 21.49-1, §2, utilizing common networks.

(b) An insurer shall not require any pharmacy or pharmacist participating or applying to participate as a contract provider under a health insurance policy:

(1) to provide financial statements to the insurer; and

(2) to deposit with the insurer any monies or other forms of compensation except for reasonable application and recertification fees.

History

Source Note: The provisions of this §3.4204 adopted to be effective December 25, 1996, 21 TexReg 11947; transferred effective April 16, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 3.4205 Contracts for Pharmaceutical Services

(a) An insurer must apply the same administrative, financial and professional conditions to all pharmacies and pharmacists participating or applying to participate as contract providers under a health insurance policy.

(b) An insurer may establish additional compensation or reimbursement rates for the following pharmaceutical services or products as long as the rates are uniformly applied to pharmacies and pharmacists participating as contract providers under a health insurance policy:

(1) compounding as defined under the Pharmacy Act, Texas Civil Statutes, Article 4542a-1, §5;

(2) dispensing of controlled substances as defined under the Pharmacy Act, Texas Civil Statutes, Article 4542a-1, §5; and

(3) preparing and dispensing injectable drug therapies.

(c) In order to enhance accessibility to pharmaceutical services, an insurer may establish additional compensation or reimbursement rates for pharmaceutical services in counties with a population of less than 40,000 (as determined by the most recent published findings from the State Data Center of the Texas Department of Commerce) as long as the rates are uniformly applied within each county to pharmacies and pharmacists participating as contract providers under a health insurance policy.

(d) As an alternative to subsections (b) and (c) of this section, an insurer may establish different terms and conditions, including additional compensation and reimbursement rates for pharmaceutical services, for the purpose of enhancing accessibility to pharmaceutical services. A copy of the contract between the insurer and pharmacy or pharmacist, which includes such terms and conditions, shall be filed with the department and the insurer must demonstrate how the different terms and conditions will enhance accessibility to pharmaceutical services. The terms and conditions shall be disclosed to potential applicants in the application process.

History

Source Note: The provisions of this §3.4205 adopted to be effective December 25, 1996, 21 TexReg 11947; transferred effective April 16, 1999, 24 TexReg 3092.

Subchapter GG MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP ACCIDENT AND HEALTH INSURANCE

28 Tex. Admin. Code § 3.7001 Introduction

(a) Scope and general standards.

(1) Pursuant to Insurance Code §425.072, all individual and group accident and health insurance coverages, including single premium credit accident and health insurance contracts, issued on and after January 1, 2017, are required to follow the standards and reserve requirements provided in the valuation manual adopted by the department pursuant to Insurance Code §425.073.

(2) In establishing claim reserves for all individual and group accident and health insurance coverages issued before January 1, 2017, and single premium credit accident and health insurance contracts issued on or after January 1, 2009, and before January 1, 2017, the provisions of this paragraph apply. An insurer may use applicable requirements in the valuation manual for claim reserves for valuations after December 31, 2016, and before January 1, 2019, and must use applicable requirements in the valuation manual for claim reserves for valuations after December 31, 2018.

(3) Unless paragraph (1) or (2) of this subsection applies, the standards in this subchapter apply to all individual and group accident and health insurance coverages issued before January 1, 2017, as well as single premium credit accident and health insurance contracts issued on or after January 1, 2009, and before January 1, 2017. All other credit insurance is not subject to the requirements provided by this paragraph.

(4) When an insurer determines that adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified in this subchapter, such increased reserves must be held and must be considered the minimum reserves for that insurer.

(5) With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. Such a gross premium valuation would take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.

(6) Such a gross premium valuation must be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition must be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium, and contract reserves, if any) must be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under the standards required under this subchapter.

(7) Whenever minimum reserves, as defined in this subchapter, exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under these standards.

(b) Categories of reserves. The following sections set forth minimum standards for three categories of health insurance reserves: §3.7002 of this title (relating to Claim Reserves); §3.7003 of this title (relating to Premium Reserves); and §3.7004 of this title (relating to Contract Reserves). Adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, the standards in these sections emphasize the importance of determining appropriate reserves for each of the three categories separately.

(c) Sections 3.7006, 3.7007, 3.7008, and 3.7009. Section 3.7006 and §3.7007 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality; and Glossary of Technical Terms Used) are an integral part of the standards specified in §§3.7001 - 3.7005 of this title (relating to Introduction; Claims Reserves; Premium Reserves; Contract Reserves and Reinsurance). Section 3.7008 of this title (relating to Reserves for Waiver of Premium) is supplementary and is not part of the standards as such, but is included for explanatory and illustrative purposes only. Section 3.7006 of this title contains specific minimum standards with respect to morbidity, interest, and mortality, which apply to claim reserves according to year of incurral and to contract reserves according to year of issue. Section 3.7007 of this title consists of a glossary of technical terms used. Section 3.7008 of this title is supplementary and deals with waiver of premium reserves. For the purchase of existing business under certain circumstances, see §3.7009 of this title (relating to Purchase or Assumption of Existing Business).

History

Source Note: The provisions of this §3.7001 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective January 26, 2010, 35 TexReg 485; amended to be effective December 3, 2018, 43 TexReg 7792.

28 Tex. Admin. Code § 3.7002 Claim Reserves

(a) General.

(1) Claim reserves are required for all incurred but unpaid claims on all health insurance policies.

(2) Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims.

(3) All such reserves for prior valuation years must be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.

(4) Claim reserves for single premium credit accident and health insurance contracts issued on or after January 1, 2009, must comply with the claim reserve requirements in this section. Claim reserves for all other credit accident and health insurance contracts must comply with the claim reserve requirements in §3.6102 of this chapter (relating to Claims Reserves).

(b) Minimum standards for claim reserves.

(1) Disability income.

(A) Interest. The maximum interest rate for claim reserves is specified in §3.7006 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality).

(B) Morbidity. Minimum standards with respect to morbidity are those specified in §3.7006 of this title, except that, at the option of the insurer:

(i) for claims with a duration from date of disablement of less than two years, reserves may be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.

(ii) For group disability income claims with a duration from date of disablement of more than two years but less than five years, reserves may, with the approval of the commissioner, be based on the insurer's experience for which the insurer maintains underwriting and claim administration control. The request for such approval of a plan of modification to the reserve basis must include:

(I) an analysis of the credibility of the experience;

(II) a description of how all of the insurer's experience is proposed to be used in setting reserves;

(III) a description and quantification of the margins to be included;

(IV) a summary of the financial impact that the proposed plan of modification would have had on the insurer's last filed annual statement;

(V) any other information deemed necessary by the commissioner.

(C) Duration of disablement. For contracts with an elimination period, the duration of disablement should be measured as dating from the time that benefits would have begun to accrue had there been no elimination period.

(D) Credibility. For experience to be considered credible for purposes of subparagraph (B)(ii) of this paragraph, the company should be able to provide claim termination patterns over no more than six years reflecting at least 5,000 claims terminations during the third through fifth claims durations on reasonably similar applicable policy forms. For claim reserves to reflect "sound values" and/or reasonable margins, reserve tables based on credible experience should be adjusted regularly to maintain reasonable margins. Demonstrations may be required by the commissioner based on published literature.

(2) All other benefits.

(A) Interest. The maximum interest rate for claim reserves is specified in §3.7006 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality).

(B) Morbidity or other contingency. The reserve must be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.

(c) Claim reserve methods generally. Any generally accepted or reasonable actuarial method or combination of methods may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate.

History

Source Note: The provisions of this §3.7002 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective June 26, 1995, 20 TexReg 4269; amended to be effective January 26, 2010, 35 TexReg 485.

28 Tex. Admin. Code § 3.7003 Premium Reserves

(a) General.

(1) Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation.

(2) Single premium credit accident and health insurance, both individual and group, is excluded from the unearned premium reserve requirements of this subchapter.

(3) If premiums due and unpaid are carried as an asset, such premiums must be treated as premiums in force, subject to unearned premium reserve determination. The value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums must be carried as an offsetting liability.

(4) The gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation may be appropriately discounted to the valuation date and shall be held either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum.

(b) Minimum standards for unearned premium reserves.

(1) The minimum unearned premium reserve with respect to any contract is an amount which is not in excess of the amount or inconsistent with the methods established by the Insurance Code §862.102. The minimum standard shall be the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with such premium determined on the basis of:

(A) the valuation net modal premium on the contract reserve basis applying to the contract; or

(B) the gross modal premium for the contract if no contract reserve applies.

(2) However, in no event may the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements be less than the gross modal unearned premium reserve on all such contracts, as of the date of valuation. The reserve shall never be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve to the extent not provided for elsewhere.

(c) Premium reserve methods generally. The insurer may employ suitable approximations and estimates, including, but not limited to, groupings, averages, and aggregate estimation, in computing premium reserves. Such approximations or estimates should be tested periodically to determine their continuing adequacy and reliability.

History

Source Note: The provisions of this §3.7003 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective March 20, 2003, 28 TexReg 2353; amended to be effective January 26, 2010, 35 TexReg 485.

28 Tex. Admin. Code § 3.7004 Contract Reserves

(a) General.

(1) Contract reserves are required, unless otherwise specified in paragraph (2) of this subsection, for:

(A) all individual and group contracts with which level premiums are used; or

(B) all individual and group contracts with respect to which, due to the gross premium pricing structure at issue, the value of the future benefits at any time exceeds the value of any appropriate future valuation net premiums at that time. This evaluation may be applied on a rating block basis if the total premiums for the block were developed to support the total risk assumed and expected expenses for the block each year, and a qualified actuary certifies the premium development. The values specified in this subparagraph must be determined on the basis specified in subsection (b) of this section.

(2) Contracts not requiring a contract reserve are as follows:

(A) contracts which cannot be continued after one year from issue; or

(B) contracts where each year's premium is priced to cover that year's cost without any prefunding. This evaluation may be applied on a rating block basis if the total premiums for the block were developed to support the total risk assumed and expected expenses for the block each year. For either a contract specific or rating block basis, the actuary must certify the premium development and should state in the certification that premiums were developed such that each year's premium was intended to cover that year's costs without any prefundings.

(3) The contract reserve is in addition to claim reserves and premium reserves.

(4) The methods and procedures for contract reserves must either be consistent with those for claim reserves for any contract, or else appropriate adjustment must be made when necessary to assure provision for the aggregate liability. The definition of the date of incurral must be the same in both determinations.

(b) Minimum standards for contract reserves.

(1) Morbidity or other contingency. Minimum standards with respect to morbidity are those set forth in §3.7006 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality).

(A) Valuation net premiums used under each contract must have a structure consistent with the gross premium structure at issue of the contract as this relates to advancing age of insured, contract duration, and period for which gross premiums have been calculated.

(B) Contracts for which tabular morbidity standards are not specified in §3.7006 of this title shall be valued using tables established for reserve purposes by a qualified actuary and acceptable to the commissioner. The morbidity tables shall contain a pattern of incurred claims cost that reflects the underlying morbidity and shall not be constructed for the primary purpose of minimizing reserves.

(2) Interest. The maximum interest rate is specified in §3.7006 of this title (relating to Specific Standards for Morbidity, Interest, and Mortality).

(3) Termination rates. Termination rates used in the computation of reserves shall be on the basis of a mortality table as specified in §3.7006 of this title (relating for Specific Standards for Morbidity, Interest, and Mortality) except as noted in this subparagraph.

(A) Under contracts for which premium rates are not guaranteed, and where the effects of insurer underwriting are specifically used by policy duration in the valuation morbidity standard or for return of premium or other deferred cash benefits, total termination rates may be used at ages and durations where these exceed specified mortality table rates, but not in excess of the lesser of: 80% of the total termination rate used in the calculation of the gross premiums, or 8.0%.

(B) For long-term care individual policies or group certificates issued after December 31, 2002, the contract reserve may be established on a basis of separate mortality as specified in §3.7006 of this title and terminations other than mortality, where the terminations are not to exceed:

(i) For policy years one through four, the lesser of 80% of the voluntary lapse rate used in the calculation of gross premiums or 8%;

(ii) For policy years five and later, the lesser of 100% of the voluntary lapse rate used in the calculation of gross premiums or 4%;

(C) Where a morbidity standard specified in §3.7006 of this title is on an aggregate basis, such morbidity standard may be adjusted to reflect the effect of insurer underwriting by policy duration. The adjustments must be appropriate to the underwriting and be acceptable to the commissioner.

(4) Reserve method.

(A) For insurance, except long-term care and return of premium or other deferred cash benefits issues after December 31, 2002, the minimum reserve is the reserve calculated on the two-year full preliminary term method; that is, under which the terminal reserve is zero at the first and also the second contract anniversary.

(B) For long-term care insurance issued after December 31, 2002, the minimum reserve is the reserve calculated on the one-year full preliminary term method.

(C) For return of premium or other deferred cash benefits issued after December 31, 2002, the minimum reserve is the reserve calculated as follows:

(i) on the one year preliminary term method if the benefits are provided at any time before the twentieth anniversary

(ii) on the two year preliminary term method if the benefits are only provided on or after the twentieth anniversary.

(D) The preliminary term method may be applied only in relation to the date of issue of a contract or a rider. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions (e.g., projected inflation rates) or for other reasons, are to be applied immediately as of the effective date of adoption of the adjusted basis.

(5) Negative reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero.

(6) Nonforfeiture Benefits for Long-term Care Insurance. The contract reserve on a policy basis shall not be less than the net single premium for the nonforfeiture benefits at the appropriate policy duration, where the net single premium is computed according to paragraph (4) of this subsection.

(c) Alternative valuation methods and assumptions generally. Provided the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in subsection (b) of this section, an insurer may use any reasonable assumptions as to interest rates, termination and/or mortality rates, and rates of morbidity or other contingency. Also, subject to the preceding condition, the insurer may employ methods other than the methods stated in subsection (b) of this section in determining a sound value of its liabilities under such contracts, including, but not limited to, the following: the net level premium method; the one-year full preliminary term method; prospective valuation on the basis of actual gross premiums with reasonable allowance for future expenses; the use of approximations such as those involving age groupings, groupings of several years of issue, average amounts of indemnity, grouping of similar contract forms; the computation of the reserve for one contract benefit as a percentage of, or by other relation to, the aggregate contract reserves exclusive of the benefit or benefits so valued; and the use of a composite annual claim cost for all or any combination of the benefits included in the contracts valued.

(d) Tests for adequacy and reasonableness of contract reserves. Annually, an appropriate review must be made of the insurer's prospective contract liabilities on contracts valued by tabular reserves, to determine the continuing adequacy and reasonableness of the tabular reserves giving consideration to future gross premiums. The insurer shall make appropriate increments to such tabular reserves if such tests indicate that the basis of such reserves is no longer adequate; subject, however, to the minimum standards of subsection (b) of this section. In the event a company has a contract or a group of related similar contracts, for which future gross premiums will be restricted by contract, insurance department regulations, or for other reasons, such that the future gross premiums reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the company shall establish contract reserves for such shortfall in the aggregate.

History

Source Note: The provisions of this §3.7004 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective March 20, 2003, 28 TexReg 2353.

28 Tex. Admin. Code § 3.7005 Reinsurance

Increases to, or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, must be determined in a manner consistent with these minimum reserve standards and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities.

History

Source Note: The provisions of this §3.7005 adopted to be effective July 6, 1992, 17 TexReg 4541.

28 Tex. Admin. Code § 3.7006 Specific Standards for Morbidity, Interest, and Mortality

(a) Morbidity.

(1) Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows.

(A) Disability income benefits due to accident or sickness.

(i) Contract reserves.

(I) Contracts issued on or after January 1, 1965, and prior to January 1, 1987: the 1964 Commissioners Disability Table (64 CDT). The 1964 Commissioners Disability Table (64 CDT) is adopted by reference for use in the manner indicated in these sections.

(II) Contracts issued on or after January 1, 1994: the 1985 Commissioners Individual Disability Tables A (85CIDA); or the 1985 Commissioners Individual Disability Tables B (85CIDB). The 1985 Commissioners Individual Disability Tables A (85CIDA) and the 1985 Commissioners Individual Disability Tables B (85CIDB) are adopted by reference for use in the manner indicated in these sections.

(III) Contracts issued during the years 1987 through 1993: optional use of either the 1964 table or the 1985 tables.

(IV) Each insurer shall elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A (85CIDA) or Tables B (85CIDB) as the minimum standard. The insurer may, however, elect to use the other tables with respect to any subsequent statement year.

(ii) Claim reserves.

(I) For claims incurred after December 31, 2002, the 1985 Commissioners Individual Disability Tables A (85CIDA) with claim termination rates multiplied by the following adjustment factors:

Attached Graphic

(II) For claims incurred on or before December 31, 2002, each insurer may elect to use item (-a-) or (-b-) of this subclause as the minimum standard for claims incurred on or before December 31, 2002.

(-a-) The minimum morbidity standard in effect for the contract reserves on currently issued contracts, as of the date the claim is incurred, or

(-b-) The standard as defined in clause (i) of this subparagraph, applied to all open claims. Once an insurer elects to calculate reserves for all open claims on the standard defined in clause (i) of this subparagraph, all future valuations must be on that basis.

(B) Hospital benefits, surgical benefits, and maternity benefits (scheduled benefits or fixed time period benefits only).

(i) Contract reserves.

(I) Contracts issued on or after January 1, 1955, and before January 1, 1982: the 1956 Intercompany Hospital-Surgical Tables. The 1956 Intercompany Hospital-Surgical Tables are adopted by reference for use as indicated in these sections.

(II) Contracts issued on or after January 1, 1982: the 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, page 63. Refer to the paper (in the same volume, page 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: "Development of the 1974 Medical Expense Benefits," Houghton and Wolf. The 1974 Medical Expense Tables, Table A is adopted by reference for use in the manner indicated in these sections.

(ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph.

(i) Contract reserves. Contracts issued on or after January 1, 1986: the 1985 NAIC Cancer Claim Cost Tables. The 1985 NAIC Cancer Claim Cost Tables are adopted by reference for use in the manner specified in these sections.

(ii) Claim reserves. No specific standard. See subparagraph (E) of this paragraph.

(D) Accidental death benefits.

(i) Contract reserves. Contracts issued on or after January 1, 1965: the 1959 Accidental Death Benefits Table. The 1959 Accidental Death Benefits Table is adopted by reference for use in the manner specified in these sections.

(ii) Claim reserves. Actual amount incurred.

(E) Single premium credit accident and health.

(i) Contract reserves.

(I) For contracts issued on or after January 1, 2009:

(-a-) for plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent.

(-b-) for plans having a 30-day and greater elimination period, the 85CIDA for a 14-day elimination period with the adjustment specified in item (-a-) of this subclause.

(II) For contracts issued prior to January 1, 2009, the minimum contract reserve requirements are specified in §3.6101(b) of this chapter (relating to Policy Reserves).

(ii) Claim reserves. Claim reserves are to be determined in accordance with §3.7002(c) of this subchapter (relating to Claim Reserves).

(F) Other individual contract benefits.

(i) Contract reserves. For all other individual contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.

(ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards.

(2) Minimum morbidity standards for valuation of specified group contract health insurance benefits are as follows.

(A) Disability income benefits due to accident or sickness.

(i) Contract reserves. Contracts issued prior to January 1, 1994: the same basis, if any, as that employed by the insurer as of January 1, 1994. Contracts issued on or after January 1, 1994: the 1987 Commissioners Group Disability Income Table (87CGDT). The 1987 Commissioners Group Disability Income Table (87CGDT) is adopted herein by reference.

(ii) Claim reserves. For claims incurred on or after January 1, 1994: the 1987 Commissioners Group Disability Income Table (87CGDT); for claims incurred prior to January 1, 1994: use of the 87CGDT is optional.

(B) Single premium credit accident and health.

(i) Contract reserves.

(I) For contracts issued on or after January 1, 2009:

(-a-) for plans having less than a 30-day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent.

(-b-) for plans having a 30-day and greater elimination period, the 85CIDA for a 14-day elimination period with the adjustment specified in item (-a-) of this subclause.

(II) For contracts issued prior to January 1, 2009, the minimum contract reserve requirements are specified in §3.6101(b) of this chapter.

(ii) Claim reserves. Claim reserves are to be determined in accordance with §3.7002(c) of this subchapter.

(i) Contract reserves. For all other group contract benefits, morbidity assumptions are to be determined as provided in the reserve standards.

(ii) Claim reserves. For all benefits other than disability, claim reserves are to be determined as provided in the standards.

(b) Interest.

(1) For contract reserves the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the health insurance contract.

(2) For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of whole life insurance issued on the same date as the claim incurral date. For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate permitted by law in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one percentage point.

(1) Except as provided in paragraphs (2), (3), and (4) of this subsection, the mortality basis used must be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract.

(2) Other mortality rates may be used in the calculation of the minimum reserves, if appropriate for the type of benefits and if approved by the commissioner. The request for such approval must include the proposed mortality basis and the reason that the standard specified in paragraph (1) of this subsection is inappropriate.

(3) For long-term care insurance individual policies or group certificates the mortality basis used shall be the 1983 Group Annuity Mortality Table without projection.

(4) For single premium credit accident and health insurance using the 85CIDA table, no separate mortality shall be assumed.

History

Source Note: The provisions of this §3.7006 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective March 20, 2003, 28 TexReg 2353; amended to be effective January 26, 2010, 35 TexReg 485.

28 Tex. Admin. Code § 3.7007 Glossary of Technical Terms Used

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Annual-claim cost--The net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6.00 would cover expenses and profit or contingencies.

(2) Claims accrued--That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. This liability is sometimes referred to as a liability for "accrued" benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established.

(3) Claims reported--When an insurer has been informed that a claim has been incurred, if the date reported is on or prior to the valuation date, the claim is considered as a reported claim for annual statement purposes.

(4) Claims unaccrued--That portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established.

(5) Claims unreported--When an insurer has not been informed, on or before the valuation date, concerning a claim that has been incurred on or prior to the valuation date, the claim is considered as an unreported claim for annual statement purposes.

(6) Date of disablement--The earliest date the insured is considered as being disabled under the definition of disability in the contract, based on a doctor's evaluation or other evidence. Normally this date will coincide with the start of any elimination period.

(7) Elimination period--A specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable.

(8) Gross premium--The amount of premium charged by the insurer. It includes the net premium (based on claim-cost) for the risk, together with any loading for expenses, profit, or contingencies.

(9) Group insurance--The term "group insurance" includes blanket insurance and franchise insurance and any other forms of group insurance.

(10) Long-term care insurance--Any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis: for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations; or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage.

(11) Modal premium--This refers to the premium paid on a contract based on a premium term which could be annual, semiannual, quarterly, monthly, or weekly. Thus if the annual premium is $100 and if, instead, monthly premiums of $9.00 are paid then the modal premium is $9.00.

(12) Negative reserve--Normally the terminal reserve is a positive value. However, if the values of the benefits are decreasing with advancing age or duration it could be a negative value, called a negative reserve.

(13) Preliminary term reserve method--Under this method of valuation the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserves will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium (or stream of changing valuation premiums) becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period.

(14) Present value of amounts not yet due on claims--The reserve for "claims unaccrued" (see definition), which may be discounted at interest.

(15) Qualified actuary--An individual who:

(A) is a member in good standing of the American Academy of Actuaries;

(B) is familiar with the valuation requirements applicable to health insurance companies; and

(C) is qualified to calculate reserves for health insurance contracts in accordance with the American Academy of Actuaries qualification standards.

(16) Reserve--Used to include all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. An insurer under its contracts promises benefits which result in:

(A) claims which have been incurred, that is, for which the insurer has become obligated to make payment, on or prior to the valuation date. On these claims, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or

(B) claims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves.

(17) Terminal reserve--This is the reserve at the end of a contract year, and is defined as the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums.

(18) Unearned premium reserve--This reserve values that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Thus, if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis.

(19) Valuation net modal premium--This is the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium.

(20) Level premium--The premium calculated to remain unchanged throughout either the lifetime of the policy or for some shorter projected period of years. The premium need not be guaranteed; in which case, although it was calculated to remain level, it may be changed if any of the assumptions on which it is based are revised at a later time. Generally, the annual claim costs are expected to increase each year and the insurer instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case the benefit portion of the premium is more than needed to provide for the costs of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums.

(21) Rating block--A grouping of contracts determined by the valuation actuary based on common characteristics, such as policy form or forms having similar benefit designs.

History

Source Note: The provisions of this §3.7007 adopted to be effective July 6, 1992, 17 TexReg 4541; amended to be effective March 20, 2003, 28 TexReg 2353.

28 Tex. Admin. Code § 3.7008 Reserves for Waiver of Premium

(a) This section contains supplementary explanatory material.

(b) Waiver of premium reserves involve several special considerations. First, the disability valuation tables promulgated by the National Association of Insurance Commissioners are based on exposures that include contracts on premium waiver as in-force contracts. Hence, contract reserves based on these tables are not reserves on "active lives" but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables. Accordingly, tabular reserves using any of these tables should value reserves on the following basis.

(1) Claim reserves should include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.

(2) Premium reserves should include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived.

(3) Contract reserves should include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived.

(c) If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using such a true "active life" basis should carefully consider, however, whether or not additional liability should be recognized on account of premiums waived during periods of disability or during claim continuation.

History

Source Note: The provisions of this §3.7008 adopted to be effective July 6, 1992, 17 TexReg 4541.

28 Tex. Admin. Code § 3.7009 Purchase or Assumption of Existing Business

Notwithstanding any other provision of these sections, including §3.7004 of this title (relating to Contract Reserves), any company licensed in Texas purchasing or assuming by assumption certificate any existing business on or after the effective date of these rules must establish reserves based upon the original dates of issue for such business in accordance with these sections.

History

Source Note: The provisions of this §3.7009 adopted to be effective July 6, 1992, 17 TexReg 4541.

28 Tex. Admin. Code § 3.7010 Severability

If any provision of §§3.7001-3.7009 of this title (relating to Introduction; Claim Reserves; Premium Reserves; Contract Reserves; Reinsurance; Specific Standards for Morbidity, Interest, and Mortality; Glossary of Technical Terms Used; Reserves for Waiver of Premium; and Purchase or Assumption of Existing Business) or the applicability of those sections to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of those sections which can be given effect without the invalid provisions or application. To this end, any and all provisions of these sections are declared to be severable.

History

Source Note: The provisions of this §3.7010 adopted to be effective July 6, 1992, 17 TexReg 4541.

Subchapter HH STANDARDS FOR REASONABLE COST CONTROL AND UTILIZATION REVIEW FOR CHEMICAL DEPENDENCY TREATMENT CENTERS

28 Tex. Admin. Code § 3.8001 Chemical Dependency Treatment Standards

(a) Purpose. This section implements Insurance Code §1368.007, concerning Treatment Standards.

(b) Applicability. This section applies to a group health benefit plan that is subject to Insurance Code Chapter 1368, concerning Availability of Chemical Dependency Coverage.

(c) Treatment standards. For the purpose of this section, the department adopts the treatment standards in the 27th edition of the MCG Care Guidelines; the 3rd edition of the American Society of Addiction Medicine (ASAM) Criteria; and the 4th edition Volume I, Adults, of the ASAM Criteria.

(d) Coverage required. For any treatment for which coverage is required under Insurance Code Chapter 1368, a group health benefit plan must use the MCG Care Guidelines or ASAM Criteria, as applicable to the treatment and care provided.

History

Source Note: The provisions of this §3.8001 adopted to be effective June 11, 2024, 48 TexReg 8371.

Subchapter KK EXCLUSIVE PROVIDER BENEFIT PLAN

28 Tex. Admin. Code § 3.9201 Application

This subchapter applies to an exclusive provider benefit plan (EPP) written by an issuer which has contracted with the Health and Human Services Commission (HHSC) to provide services under the Texas Children's Health Insurance Program (CHIP), Medicaid or with the Statewide Rural Health Care System (the System). An issuer may only use an EPP in the System and/or by contract with HHSC for CHIP or Medicaid. This subchapter applies to new or renewed contracts on or after the effective date of this subchapter.

History

Source Note: The provisions of this §3.9201 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9202 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

(1) Adverse determination--A determination by a utilization review agent that the health care services furnished or proposed to be furnished to a patient are not medically necessary or not appropriate.

(2) Complaint--Any dissatisfaction, expressed by a complainant orally or in writing to the issuer, with any aspect of the issuer's operation, including plan administration; the denial, or termination of a service for reasons not related to medical necessity; the way a service is provided; or disenrollment decisions, expressed by a complainant. The term does not include a misunderstanding or problem of misinformation that is resolved promptly by clearing up the misunderstanding or supplying the appropriate information to the satisfaction of the insured and does not include a provider's or insured's oral or written dissatisfaction with an adverse determination.

(3) Credentialing--The process of collecting, assessing, and validating qualifications and other relevant information pertaining to a health care provider to determine eligibility to deliver health care services.

(4) Emergency care--Health care services provided in a hospital emergency facility or comparable facility to evaluate and stabilize medical conditions of a recent onset and severity, including but not limited to severe pain, that would lead a prudent layperson possessing an average knowledge of medicine and health to believe that his or her condition, sickness, or injury is of such a nature that failure to get immediate medical care could result in:

(A) placing the patient's health in serious jeopardy;

(B) serious impairment to bodily functions;

(D) serious disfigurement; or

(E) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

(5) Exclusive provider--A health care provider or an organization of health care providers who contract or subcontract to provide health care services to covered persons.

(6) Exclusive provider benefit plan (EPP)--A type of health care plan offered by an issuer that arranges for or provides benefits to covered persons through a network of exclusive providers, and that limits or excludes benefits for services provided by other providers, except in cases of emergency or approved referral.

(7) Health care provider--Any person, corporation, facility, or institution licensed by the State of Texas (including physicians and practitioners listed in Insurance Code Chapter 1451) to provide health care services.

(8) Health care services--Any episodic or ongoing services such as pharmaceutical, diagnostic, behavioral health, medical, dental care, or chiropractic in either an inpatient or outpatient setting rendered by a health care provider for the purpose of treating, preventing, alleviating, curing, or healing illness, injury, or disease.

(9) Hospital--A licensed public or private institution as defined in Chapter 241, Health and Safety Code, or in Subtitle C, Title 7, Health and Safety Code.

(10) Independent review organization--An entity that is certified by the commissioner to conduct independent review under the authority of Insurance Code Chapter 4202.

(11) Institutional provider--A hospital, nursing home, or any other medical or health-related service facility caring for the sick or injured or providing care for other coverage which may be provided in a health insurance policy.

(12) Insured--For purposes of this subchapter, a person covered under an EPP.

(13) Issuer--An insurance company authorized to do business in Texas that contracts with the Health and Human Services Commission (HHSC) to provide CHIP or Medicaid coverage or contracts with or is sponsored by the System to issue an exclusive provider benefit plan.

(14) Life-threatening--A disease or condition for which the likelihood of death is probable unless the course of the disease or condition is interrupted.

(15) Limited provider network--A subnetwork within a network in which contractual relationships exist between health care providers, physician associations and/or physician groups which limit the insureds' access to only those health care providers in the subnetwork.

(16) Out-of-area benefits--Benefits that the EPP covers when its insureds are outside the geographical limits of the EPP service area.

(17) Physician--Anyone licensed to practice medicine in the State of Texas.

(18) Primary care physician or primary care provider--A health care provider who has been selected by the insured to provide initial and primary care, maintain the continuity of patient care, and who may initiate referrals for care.

(19) Quality improvement--A system to continuously examine, monitor, and revise processes and systems that support and improve administrative and clinical functions.

(20) Service area--A defined geographic area within which health care services are available and accessible to EPP insureds who live, reside, or work within that geographic area.

(21) Urgent care--Health care services provided in a situation other than an emergency which are typically provided in settings such as a health care provider's office or urgent care center, as a result of an acute injury or illness that is severe or painful enough to lead a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, illness, or injury is of such a nature that failure to obtain treatment within a reasonable period of time would result in serious deterioration of the current health condition.

(22) Utilization review--A system for prospective or concurrent review of the medical necessity and appropriateness of health care services being provided or proposed to be provided to an individual within this state. Utilization review will not include elective requests for clarification of coverage.

History

Source Note: The provisions of this §3.9202 adopted to be effective September 17, 2003, 28 TexReg 7993; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.9203 Policy and Premium Rates

(a) Disclosure of complaint system. An EPP policy or certificate must contain the Complaints and Appeals Process found in this subchapter. This information must include a clear and understandable description of the issuer's methods for resolving complaints. An issuer must provide any subsequent changes to the complaint system to insureds, which it may include in a separate document issued to the insured.

(b) Medically necessary covered services. If medically necessary covered services are not available through exclusive providers, the issuer, on the request of an exclusive provider, must allow referral within a reasonable period to a non-network health care provider and must fully reimburse the non-network health care provider at the usual and customary or an agreed rate. The policy must provide for a review by a health care provider of the same specialty or a similar specialty as the type of health care provider to whom a referral is requested before the issuer may deny a referral.

(c) Schedule of premiums. An issuer must file the schedule of premium rates and formula or method for calculating the schedule of premium rates for covered health care services along with supporting documentation with the commissioner before it is used in conjunction with any EPP. The issuer must establish the formula or method in accordance with accepted actuarial principles and must produce premium rates that are not excessive, inadequate, or unfairly discriminatory, as well as premium rates that are reasonable with respect to benefits. An issuer may not alter the premium rates resulting from the application of the formula or method for an individual insured based on the status of that insured's health.

(1) An issuer must accompany each schedule of premium rates and formula or method for calculating the schedule of premium rates with the certification of a qualified actuary that, based on reasonable assumptions, the formula is appropriate to produce premium rates that are not excessive, inadequate, or unfairly discriminatory. An actuary is considered qualified if he or she:

(A) is a member of the American Academy of Actuaries; or

(B) is a Fellow of the Society of Actuaries.

(2) An issuer must accompany each formula or method for calculating the schedule of premium rates with adequate detail including assumptions to justify that the premium rates produced by the formula or method are not excessive, inadequate, or unfairly discriminatory.

(3) If the formula or method for calculating the schedule of premium rates and the resulting rates are to be continued beyond a one-year period, the issuer must file with the commissioner, no later than the anniversary of the effective date of the original filing, an actuarial statement stating that the issuer has applied the previously filed formula or method consistently, and that the rates charged have proven and are expected to continue to be adequate, not excessive, nor unfairly discriminatory. The issuer must include with this filing a reconciliation of actual benefits to a schedule of premium rates.

(4) To the extent that an entity contracting with the insured predetermines the schedule of premium rates, the issuer must submit the information described in this subsection and demonstrate that the issuer is able to provide the services for the contracted rates.

History

Source Note: The provisions of this §3.9203 adopted to be effective September 17, 2003, 28 TexReg 7993; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.9204 Contracting with Health Care Providers

(a) An issuer shall notify, by publication or in writing, all health care providers in the service area of its intent to offer an EPP and of the opportunity to participate. The issuer shall provide such notice prior to issuance of the initial EPP and yearly thereafter.

(b) An issuer shall on request make available and disclose to any health care provider the issuer's written application procedures, qualifications and information concerning requirements for participation as an exclusive provider. An issuer shall provide written notice of the reasons it denied the application to each health care provider who applies to contract and who is denied.

(c) An issuer may not, on the sole basis of category or specific type of license or authorization, deny to any health care provider licensed or otherwise authorized to practice in this state, participation to provide health care services that are covered by the issuer, and within the scope of licensure or authorization of that health care provider.

(d) This subsection does not prohibit the issuer from rejecting an application from a health care provider based on the determination that the plan has sufficient qualified health care providers.

(e) Each exclusive provider contract (or subcontract) must provide that, before terminating a contract with an exclusive provider, the contracting entity must provide a written explanation to the exclusive provider of the reasons for termination. On request and before the effective date of the termination, but within a period not to exceed 60 days, a provider will be entitled to a review of the issuer's proposed termination by an advisory review panel, except in a case in which there is imminent harm to patient health or an action by a state medical or dental board, other medical or dental licensing board, or other licensing board or other government entity, that effectively impairs the health care provider's ability to practice medicine, dentistry, or another profession, or in a case of fraud or malfeasance. The advisory review panel shall be composed of exclusive providers, including at least one representative in the health care provider's specialty or a similar specialty, if available, appointed to serve on the standing quality assurance committee or utilization review committee of the issuer. The issuer must consider the decision of the advisory review panel, but it is not binding on the issuer. The issuer will provide to the affected health care provider, on request, a copy of the recommendation of the advisory review panel and the issuer's determination.

(f) Each exclusive provider contract (or subcontract) must provide that an issuer or provider shall give reasonable advance notice to an insured of the impending termination from the plan of an exclusive provider who is currently treating the insured. Each contract must also provide that the termination of the exclusive provider's contract, except for reason of medical competence or professional behavior, does not release the issuer from the obligation to reimburse the exclusive provider who is treating a patient of special circumstance, such as a person who has a disability, acute condition, or life-threatening illness or is past the twenty-fourth week of pregnancy, at no less than the contract rate for that insured's care in exchange for continuity of ongoing treatment of an insured then receiving medically necessary treatment in accordance with the dictates of medical prudence. For purposes of this subsection, "special circumstance" means a condition such that the treating health care provider reasonably believes that discontinuing care by the treating health care provider could cause harm to the patient. The treating health care provider must identify the special circumstance and must request that the insured be permitted to continue treatment under the health care provider's care and agree not to seek payment from the patient of any amounts for which the insured would not be responsible if the exclusive provider were still in the EPP network. Each exclusive provider contract shall provide procedures for resolving disputes regarding the necessity for continued treatment by the exclusive provider. This section does not extend the obligation of the issuer to reimburse the terminated health care provider for ongoing treatment of an insured beyond the 90th day after the effective date of the termination, or beyond nine months in the case of an insured who at the time of the termination has been diagnosed with a terminal illness. However, the obligation of the issuer to reimburse the terminated health care provider for services to an insured who at the time of the termination is past the 24th week of pregnancy, extends through delivery of the child, immediate postpartum care, and any follow-up checkup within the first six weeks of delivery.

(g) On request by the exclusive provider, an issuer must provide an expedited review process to any exclusive provider who is terminated or deselected. If the exclusive provider is deselected for reasons other than at the provider's request, the issuer may not notify insureds of the exclusive provider's deselection until the effective date of the termination or the time a review panel makes a formal recommendation. If an exclusive provider is deselected for reasons related to imminent harm, the issuer may notify insureds immediately.

(h) An exclusive provider contract (or subcontract) may not contain any clause purporting to indemnify the issuer for any tort liability resulting from acts or omissions of the issuer.

(i) An exclusive provider contract (or subcontract) shall specify that the exclusive provider will hold an insured harmless for payment of the cost of covered health care services in the event the issuer fails to pay the provider for health care services.

(j) An issuer that conducts or uses economic profiling of exclusive providers must make available upon request from a network provider the economic profile of that provider, including the standards by which the provider is measured. An economic profile must recognize the characteristics of an exclusive provider's practice that may account for variations from expected costs.

(k) An exclusive provider contract must require the health care provider to post, in the office of the health care provider, a notice to insureds of the process for resolving complaints with the issuer. The notice must include the Texas Department of Insurance's toll-free telephone number for filing non-Medicaid complaints.

(l) An exclusive provider contract may not prohibit, attempt to prohibit, or discourage an exclusive provider from discussing with or communicating in good faith to a current, prospective, or former patient, or a party designated by a patient, with respect to:

(1) information or opinions regarding the patient's health care, including the patient's medical condition or treatment options;

(2) information or opinions regarding the provisions, terms, requirements, or services of the EPP as they relate to the medical needs of the patient; or

(3) the fact that the exclusive provider's contract has terminated or that the exclusive provider will otherwise no longer be providing health care services under the EPP.

(m) An issuer may not in any way penalize, terminate, or refuse to compensate an exclusive provider for communicating with a current, prospective, or former patient, or a party designated by a patient, in any manner protected by this subchapter.

History

Source Note: The provisions of this §3.9204 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9205 Compliance of Limited Provider Network

An issuer that uses subcontractors to perform one or more function(s) remains responsible for ensuring compliance with all applicable regulatory compliance requirements. A limited provider network shall comply with all statutory and regulatory requirements.

History

Source Note: The provisions of this §3.9205 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9206 Quality Improvement and Utilization Management

(a) An issuer must establish and maintain procedures to assure that the health care services provided to insureds are rendered under reasonable standards of quality of care consistent with prevailing professionally recognized standards of medical practice. These procedures must include:

(1) mechanisms to assure availability, accessibility, quality, and continuity of care;

(2) an ongoing internal quality improvement program to monitor and evaluate its health care services, including primary and specialist physician services, and ancillary and preventive health care services, in all institutional and non-institutional contexts;

(3) a record of formal proceedings of quality improvement program activities and a means for maintaining documentation in a confidential manner. Quality improvement program minutes must be made available to the commissioner;

(4) a physician review panel to assist in reviewing medical guidelines or criteria and to assist in determining the prescription drugs to be covered by the EPP, if the plan contains a prescription drug benefit;

(5) an adequate patient record system that will facilitate documentation and retrieval of clinical information for the purpose of the issuer's evaluation of continuity and coordination of patient care and assessment of the quality of health care services provided to insureds;

(6) a mechanism for making available to the commissioner the clinical records of insureds for examination and review. Such records are confidential and privileged, and are not subject to Government Code, Chapter 552, Public Information, or to subpoena, except to the extent necessary to enable the commissioner to enforce this title; and

(7) a mechanism for the periodic reporting of quality improvement program activities to its governing body, providers, and appropriate organization staff. An issuer is also subject to the same quality improvement requirements as outlined in §11.1901 of this title (relating to Quality Improvement Structure).

(b) An issuer must establish a mechanism for utilizing independent review organizations as outlined in Insurance Code Chapter 4201.

History

Source Note: The provisions of this §3.9206 adopted to be effective September 17, 2003, 28 TexReg 7993; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.9207 Credentialing Requirements for Health Care Providers

An issuer is subject to the same credentialing criteria as outlined in §11.1902(4) of this title (relating to Quality Improvement Program).

History

Source Note: The provisions of this §3.9207 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9208 Provider Network: Accessibility and Availability

An issuer is subject to the same network accessibility and availability requirements as outlined in §11.1607 of this title (relating to Accessibility and Availability Requirements). Issuers must comply with this section; any requirements under a Medicaid contract, subject to Government Code, Chapter 533; and any other applicable law.

History

Source Note: The provisions of this §3.9208 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9209 Mandatory Disclosure Requirements

(a) An issuer must write all policies, health benefit plan certificates, endorsements, amendments, applications, and riders in plain language, in a readable and understandable format, and in compliance with all applicable requirements relating to minimum readability requirements as found in §3.602 of this title (relating to Plain Language Requirements).

(b) The issuer shall provide to current or prospective insureds on request an accurate written description of the terms and conditions of the policy to allow current or prospective insureds to make comparisons and informed decisions before selecting among health care plans. The written description must be in a readable and understandable format as prescribed by the commissioner and must include a current list of exclusive providers. The issuer's handbook may satisfy this requirement if it is substantively similar to and achieves the same level of disclosure as the written description prescribed by subsection (e) of this section and it contains the current list of health care providers.

(d) No issuer, or agent or representative of an issuer, may cause or permit the use or distribution to prospective insureds of information which is untrue or misleading.

(e) The written plan description must be in a readable and understandable format that includes a clear, complete and accurate description of paragraphs (1) - (11) of this subsection in the following order:

(1) a statement that the plan providing the coverage is an EPP;

(2) a toll-free number, unless exempted by statute or rule, and address for the prospective or current group contract holder or prospective or current enrollee to obtain additional information, including provider information;

(3) all covered services and benefits, including a description of the options (if any) for prescription drug coverage, both generic and brand name;

(4) emergency care services and benefits, including coverage for out-of-area emergency care services and information on access to after-hours care;

(5) out-of-area services and benefits (if any);

(6) an explanation of enrollee financial responsibility for payment of premiums, copayments, deductibles, and any other out-of-pocket expenses for noncovered or out-of-plan services, and an explanation that exclusive providers have agreed to look only to the issuer and not to its insureds for payment of covered services, except as set forth in the description of the plan;

(7) any limitations or exclusions, including the existence of any drug formulary limitations;

(8) any description of prior authorization requirements, including limitations or restrictions thereon, and a summary of procedures to obtain approval for referrals to providers other than primary care physicians or dentists, and other review requirements, including preauthorization review, concurrent review, post service review, and post payment review, and the consequences resulting from the failure to obtain any required authorizations;

(9) provision for continuity of treatment in the event of the termination of a primary care physician or dentist in those instances where an insured has selected one;

(10) a summary of the complaint and appeal procedures of the EPP, a statement of the availability of the independent review process as applicable, and a statement that the EPP is prohibited from retaliating against insureds because the group contract holder or insured has filed a complaint against the EPP or appealed a decision of the EPP, and is prohibited from retaliating against a health care provider because the health care provider has, on behalf of an insured, reasonably filed a complaint against the EPP or appealed a decision of the EPP; and

(11) a statement that female insureds shall have direct access to an OB/GYN (who is an exclusive provider) for female services.

History

Source Note: The provisions of this §3.9209 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9210 Complaints System

(a) Complaints System. Issuers must comply with this section; any requirements under a Medicaid contract, subject to Government Code, Chapter 533; and any other applicable law. The complaint system must provide reasonable procedures for the resolution of oral and written complaints initiated by insureds or providers concerning health care services, including a process for the notice and appeal of complaints.

(1) If a complainant notifies the issuer orally or in writing of a complaint, the issuer, not later than the fifth business day after the date of the receipt of the complaint, shall send to the complainant a letter acknowledging the date of receipt of the complaint that includes a description of the organization's complaint procedures and time frames. If the complaint is received orally, the issuer shall also enclose a one-page complaint form. The one-page complaint form must prominently and clearly state that the complaint form must be returned to the issuer for prompt resolution of the complaint.

(A) The issuer shall investigate each oral and written complaint received in accordance with its policies and in compliance with this subchapter.

(B) Investigation and resolution of complaints concerning emergencies or denials of continued stays for hospitalization shall be concluded in accordance with the medical or dental immediacy of the case and may not exceed one business day from receipt of the complaint.

(C) For all other complaints, the total time for acknowledgment, investigation, and resolution of the complaint by the issuer may not exceed 30 calendar days after the date the issuer receives the written complaint or one-page complaint form from the complainant.

(D) After the issuer has investigated a complaint, the issuer shall send a response letter to the complainant explaining the issuer's resolution of the complaint within the time frame as set forth in this section. The letter must include a statement of the specific medical and contractual reasons for the resolution and the specialization of any health care provider consulted. The response letter must contain a full description of the process for appeal, including the time frames for the appeal process and the time frames for the final decision on the appeal.

(2) If the complaint is not resolved to the satisfaction of the complainant, the issuer shall provide an appeals process that includes the right of the complainant either to appear in person before a complaint appeal panel at a location where the insured normally receives health care services, unless another site is agreed to by the complainant, or to address a written appeal to the complaint appeal panel. The issuer shall complete the appeals process under this section not later than the 30th calendar day after the date of the receipt of the written request for appeal.

(A) The issuer shall send an acknowledgment letter to the complainant not later than the fifth business day after the date of receipt of the written request for appeal.

(B) The issuer shall appoint members to the complaint appeal panel, which shall advise the issuer on the resolution of the dispute. The complaint appeal panel shall be composed of equal numbers of issuer staff, physicians or other providers, and insureds. Each member on the complaint appeal panel must not have been previously involved in the disputed decision. The health care providers must have experience in the area of care that is in dispute and must be independent of any health care provider who made any prior determination. If specialty care is in dispute, the appeal panel must include a person who is a specialist in the field, or related field, of care to which the appeal relates. Panel members that are insureds may not be employees of the issuer.

(C) Not later than the fifth business day before the scheduled meeting of the panel, unless the complainant agrees otherwise, the issuer shall provide to the complainant or the complainant's designated representative:

(i) any documentation to be presented to the panel by the issuer staff;

(ii) the specialization of any health care providers consulted during the investigation; and

(iii) the name and affiliation of each issuer representative on the panel.

(D) The complainant, or designated representative if the insured is a minor or disabled, is entitled to:

(i) appear in person before the complaint appeal panel;

(ii) present alternative expert testimony; and

(iii) request the presence of and question any person responsible for making the prior determination that resulted in the appeal.

(b) Notice of the final decision of the issuer on the appeal must include a statement of the specific contractual and clinical criteria used to reach the final decision. The notice must also include the toll-free telephone number and the address of the Texas Department of Insurance.

(c) In compliance with Chapter 21, Subchapter Q of this Title (relating to Complaint Records to be Maintained), the issuer shall maintain a record of each complaint and any complaint proceeding and any actions taken on a complaint for three years from the date of the receipt of the complaint. The record must include complaints relating to limited provider networks. A complainant is entitled to a copy of the record on the applicable complaint and any complaint proceeding.

(1) Each issuer shall maintain a complaint and appeal log regarding each complaint.

(2) Each issuer shall maintain documentation on each complaint received and the action taken on each complaint until the third anniversary of the date of receipt of the complaint. The Texas Department of Insurance may review documentation maintained under this subsection, including original documentation, during any investigation of the issuer.

(d) The commissioner may examine the complaint system for compliance with this subchapter and may require the issuer to make necessary corrections.

History

Source Note: The provisions of this §3.9210 adopted to be effective September 17, 2003, 28 TexReg 7993.

28 Tex. Admin. Code § 3.9211 Filing of Complaints

Any person, including a person who has attempted to resolve complaints through an issuer complaint system process and who is dissatisfied with the resolution, may report an alleged violation of this subchapter to the Texas Department of Insurance at www.tdi.texas.gov or 1-800-252-3439.

History

Source Note: The provisions of this §3.9211 adopted to be effective September 17, 2003, 28 TexReg 7993; amended to be effective May 11, 2022, 47 TexReg 2758.

28 Tex. Admin. Code § 3.9212 Appeal of Non-Medicaid Adverse Determinations

An issuer must perform utilization review in compliance with Insurance Code Chapter 4201 and must maintain procedures for notification, review, and appeal of an adverse determination, as defined by this section. An issuer must implement and maintain an internal appeal system for non-Medicaid adverse determinations that provides reasonable procedures for the resolution of an oral or written appeal initiated by an insured, a person acting on behalf of an insured, or an insured's provider of record concerning dissatisfaction or disagreement with an adverse determination.

History

Source Note: The provisions of this §3.9212 adopted to be effective September 17, 2003, 28 TexReg 7993; amended to be effective May 11, 2022, 47 TexReg 2758.

Subchapter LL HEALTH COVERAGE AWARENESS AND EDUCATION PROGRAM

28 Tex. Admin. Code § 3.9301 Purpose

This subchapter establishes procedures for the acceptance of donations by the Texas Department of Insurance to assist with the funding of the Health Coverage Awareness and Education Program and to establish procedures to govern the relationships between employees of the department, offerees, and donors regarding the acceptance of such donations, as authorized in the Insurance Code §524.005.

History

Source Note: The provisions of this §3.9301 adopted to be effective December 27, 2006, 31 TexReg 10307.

28 Tex. Admin. Code § 3.9302 Definitions

For purposes of this subchapter, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bid response--A response to a departmental request for goods or services, including a formal bid response, a formal bid proposal, an informal price quote, a submission of specifications or qualifications, direct contract negotiations, or any other similar submission or communication.

(2) Commissioner--The Commissioner of Insurance.

(3) Department--The Texas Department of Insurance.

(4) Donation--Money, real or personal property, or any other tangible or intangible thing of value delivered to the department by gift or grant.

(5) Donation agreement--A written document executed by the commissioner or the commissioner's designee and an offeree that includes the information required in §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations).

(6) Donor--An individual, corporation, association, firm, partnership, committee, club organization, person, group of persons, or other entity that has made a donation to the department.

(7) Employee--An individual employed by the department in a full or part time capacity.

(8) Offeree--An individual, corporation, association, firm, partnership, committee, club organization, person, group of persons, or other entity that offers or seeks to make a donation to the department.

(9) Program--The Health Coverage Awareness and Education Program, as authorized in the Insurance Code Chapter 524.

(10) Seeking to contract--Submitting a bid response to the department.

History

Source Note: The provisions of this §3.9302 adopted to be effective December 27, 2006, 31 TexReg 10307.

28 Tex. Admin. Code § 3.9303 Acceptance of Donations

(a) The commissioner or the commissioner's designee may accept a donation only for the purposes authorized in the Insurance Code Chapter 524 in the manner authorized in this subchapter. The commissioner or the commissioner's designee must accept all donations on behalf of the department and not in an individual capacity.

(b) The commissioner, in the commissioner's sole discretion, may decline to accept any donation.

(c) Donations the commissioner or the commissioner's designee accept become state property and are subject to all applicable federal and state laws and regulations.

History

Source Note: The provisions of this §3.9303 adopted to be effective December 27, 2006, 31 TexReg 10307.

28 Tex. Admin. Code § 3.9304 Limitations on Offerees and Donors

(a) Prior to executing the donation agreement described by §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations), an offeree seeking to contract with the department shall:

(1) notify the department, in a form acceptable to the department, that the offeree is seeking to contract with the department; and

(2) disclose all previous donations made to the department or any other state agency within the preceding two years. The disclosure shall be in a form acceptable to the department and shall include the nature and value of the donation and the date the donation was made. If the donation is ongoing, the date of the donation shall be the last date the donation was delivered to the department or other state agency.

(b) An offeree who has submitted a bid response to the department may not make a donation from the date the offeree submits the bid response until a date subsequent to the award of the bid, as paragraphs (1) and (2) of this subsection specify.

(1) If the department awards the bid to the offeree, one year after the award of the bid; or

(2) if the department does not award the bid to the offeree, the 90th day after the award of the bid.

(c) A donor who has made a donation to the department may not submit a bid response to the department for a period of one year following the date the donation agreement was executed by the donor and the commissioner or by the donor and the commissioner's designee.

History

Source Note: The provisions of this §3.9304 adopted to be effective December 27, 2006, 31 TexReg 10307.

28 Tex. Admin. Code § 3.9305 Limitations on Entities Subject to Department Regulation

(a) Prior to executing the donation agreement described by §3.9306 of this subchapter (relating to Procedures for Acceptance of Donations), an offeree subject to department regulation pursuant to the Insurance Code, the Labor Code, or federal law, must notify the department, on a completed form that is acceptable to the department, whether the offeree:

(1) is the subject of an open investigation or enforcement action of the department;

(2) has applied for a certificate of authority, license, or other department issued permit;

(3) is seeking a letter of consent pursuant to 18 U.S.C. §1033; or

(4) is the subject of an enforcement action of another state agency.

(b) Individuals and entities subject to subsection (a) of this section include:

(1) licensees; certificate holders; permit holders; applicants for a license, certificate of authority, or other department issued permit;

(2) individuals requesting letters of consent pursuant to 18 U.S.C. §1033; and

(3) employers, employees, and providers who engage in the business of insurance or participate in the worker's compensation system in this state.

(c) The notification required in subsection (a) of this section must include the docket number, style, and filing date of the enforcement action, if applicable.

(d) An offeree subject to subsection (a) of this section may not make a donation to the department from the date the department initiates an open investigation or enforcement action against the offeree; the offeree applies for a certificate of authority, license, or other department issued permit; the offeree requests a letter of consent pursuant to 18 U.S.C. §1033; or another state agency initiates an enforcement action against the offeree; until the 90th day after the date the department or other state agency closes its open investigation or reaches final disposition in its enforcement action; the department issues or denies the certificate of authority, license, or other department issued permit; or the department provides or refuses to provide a letter of consent pursuant to 18 U.S.C. §1033.

(e) A notification pursuant to subsection (a) of this section is not required for form filings, data calls, or other matters not specified in subsection (a) of this section.

History

Source Note: The provisions of this §3.9305 adopted to be effective December 27, 2006, 31 TexReg 10307.

28 Tex. Admin. Code § 3.9306 Procedures for Acceptance of Donations

(a) Donation agreement. Prior to accepting any donation, the offeree and the commissioner or the commissioner's designee shall execute a donation agreement that includes the following information:

(1) the name of the offeree;

(2) a description of the donation, including a determination of the value;

(3) a statement by the offeree attesting to its ownership rights in the property, including intellectual property ownership rights;

(4) the signature of the offeree if the offeree is an individual or its official representative if the offeree is a business organization;

(5) the signature of the commissioner or the commissioner's designee;

(6) the purpose of the donation;

(7) the mailing address of the offeree and principal place of business if the offeree is a business entity;

(8) a statement identifying any official relationship between the offeree and the department;

(9) a statement identifying whether the disclosures required by §3.9304 and §3.9305 of this subchapter (relating to Limitations on Offeree and Donors and Limitations on Entities Subject to Department Regulation) are applicable to the offeree, and, if so, whether the offeree has tendered the disclosures to the department in a form acceptable to the department; and

(10) a statement advising the offeree to seek any desired legal and/or tax advice from its own legal counsel.

(b) Grants. The commissioner or the commissioner's designee may accept grant money only after the offeree and the commissioner or the commissioner's designee have executed the donation agreement required in subsection (a) of this section.

(c) Deposited funds. The commissioner or commissioner's designee shall deposit in accordance with state law all monetary contributions received from donations made pursuant to the Insurance Code §524.005 and shall use all such contributions for purposes consistent with §524.005.

History

Source Note: The provisions of this §3.9306 adopted to be effective December 27, 2006, 31 TexReg 10307.

Subchapter QQ PROVIDER NETWORK CONTRACT REGISTRATION

28 Tex. Admin. Code § 3.9801 Definitions and General Provisions

(a) Terms in this subchapter have the same meaning as defined and used in Insurance Code Chapter 1458.

(b) The following words and terms when used in this subchapter have the following meanings unless the context clearly indicates otherwise:

(1) Affiliate--Includes each person that is an affiliate under Insurance Code Chapter 823.

(2) Fee schedule--Includes payment or reimbursement terms of the provider network contract.

(3) Primary provider network--A provider network in which the contracting entity submitting the form is the contracting entity for the provider network.

(4) Other provider network--A provider network that may be accessed by the contracting entity submitting the form or the submitting entity's affiliate, but in which the contracting entity for the provider network is not an affiliate of the entity submitting the form.

(5) Subsidiary provider network--A provider network in which the contracting entity or entities for the provider network are an affiliate of the entity submitting the form, except for provider networks that also qualify as a primary provider network.

(6) TDI--Texas Department of Insurance.

(1) the term "provider network contracting entity" has the same meaning as contracting entity;

(2) a person begins acting as a contracting entity in this state when the person enters into or offers to enter into direct contracts with one or more providers for the delivery of health care services to covered individuals that serve to create a provider network or networks to be accessed by another party; and

(3) access to a provider network or networks by another party includes access by an affiliate.

History

Source Note: The provisions of this §3.9801 adopted to be effective November 19, 2014, 39 TexReg 9020.

28 Tex. Admin. Code § 3.9802 Provider Network Contracting Entity Registration Form Required

(a) TDI adopts the Provider Network Contracting Entity Registration Form by reference.

(b) Except as provided in subsection (c) of this section, each person operating as a contracting entity must submit to TDI a fully completed Provider Network Contracting Entity Registration Form with the required fee established under §3.9804 of this title before the later of:

(1) the 30th day after the date on which the person begins acting as a contracting entity in this state; or

(2) December 1, 2014.

(1) a health maintenance organization operating under Insurance Code Chapter 843;

(2) an entity holding a certificate of authority issued by TDI to engage in the business of insurance in this state; or

(3) an affiliate named on the Provider Network Contracting Entity Exemption of Affiliates Form submitted under §3.9803 of this title and granted an exemption by the commissioner in writing under §3.9803(d) of this title.

(d) A contracting entity registered under this section must report any changes to the information submitted in the Provider Network Contracting Entity Registration Form submitted under subsection (b) of this section not later than the 30th day after the date on which the change takes effect.

(e) The contracting entity must submit the Provider Network Contracting Entity Registration Form and subsequent change reports in a written or electronic format at the address TDI will provide on the Provider Network Contracting Entity Registration Form.

History

Source Note: The provisions of this §3.9802 adopted to be effective November 19, 2014, 39 TexReg 9020.

28 Tex. Admin. Code § 3.9803 Provider Network Contracting Entity Exemption of Affiliates Form Required

(a) TDI adopts the Provider Network Contracting Entity Exemption of Affiliates Form by reference.

(b) Unless the commissioner has granted an affiliate exemption to the contracting entity under this section, each contracting entity that is a health maintenance organization or other entity holding a certificate of authority issued by TDI to engage in the business of insurance in this state must submit to TDI a fully completed Provider Network Contracting Entity Exemption of Affiliates Form and the required fee established under §3.9804 of this title before the later of:

(1) the 30th day after the date on which the submitting person begins acting as a contracting entity in this state; or

(2) December 1, 2014.

(1) list each affiliate of the contracting entity that will access the provider networks disclosed in the submission or state that the contracting entity has no affiliates;

(2) disclose the provider network contracting relationships between the person who holds a certificate of authority and all affiliates of the person, including:

(A) primary provider networks and the affiliates that have access to the primary provider networks;

(B) subsidiary provider networks and the affiliates that have access to the subsidiary provider networks; and

(3) disclose if the contracting entity or an affiliate allows a nonaffiliate to access any network of the contracting entity or affiliate and the name of the contracting entity or affiliate allowing such access.

(d) An affiliate exemption under this section is not effective until the commissioner grants the exemption in writing. The commissioner may grant the requested exemption to all listed affiliates, grant the exemption to some listed affiliates, or deny the requested exemption for one or more affiliates.

(e) Not later than August 1 of each year, a contracting entity that has submitted the Provider Network Contracting Entity Exemption of Affiliates Form under this section must report to the commissioner any changes to the information the contracting entity provided in its Provider Network Contracting Entity Exemption of Affiliates Form or subsequent annual reports, including the addition or removal of any affiliates.

(f) A contracting entity must submit the Provider Network Contracting Entity Exemption of Affiliates Form and subsequent annual reports in a written or electronic format to the address TDI will provide on the Provider Network Contracting Entity Exemption of Affiliates Form.

History

Source Note: The provisions of this §3.9803 adopted to be effective November 19, 2014, 39 TexReg 9020.

28 Tex. Admin. Code § 3.9804 Required Fees

(a) A Provider Network Contracting Entity Registration Form under §3.9802 of this title or a Provider Network Contracting Entity Exemption of Affiliates Form under §3.9803 of this title must be accompanied by the required fee of $1,000.

(b) No fee is required for submitting a change in information under §3.9802 of this title or the annual registration update under §3.9803 of this title.

History

Source Note: The provisions of this §3.9804 adopted to be effective November 19, 2014, 39 TexReg 9020.

28 Tex. Admin. Code § 3.9805 Express Authority

(a) Except as provided in subsection (c) of this section, the grant of express authority of a provider for access to their fee schedules cannot be presumed for any line of business for the purposes of compliance with Insurance Code §1458.101.

(b) The contracting entity must notify the provider about all applicable fee schedules, but such notification is not to be, and must not be, construed as:

(1) prohibiting a provider network contracting entity from only contracting with providers who agree to all fee schedules; or

(2) requiring providers to agree to all fee schedules.

(1) the provider network contract is in existence before September 1, 2013;

(2) on the first renewal after September 1, 2013, the contracting entity sends a written renewal notice by United States mail to the provider;

(3) the notice described by paragraph (2) of this subsection:

(A) contains a statement that failure to timely respond serves as assent to the renewal;

(B) contains separate signature lines for each line of business applicable to the contract; and

(C) specifies the separate fee schedule for each line of business applicable to the contract, described in any reasonable manner and which may be provided electronically; and

(4) the provider fails to respond within 60 days of receipt of the notice and has not objected to the renewal.

History

Source Note: The provisions of this §3.9805 adopted to be effective November 19, 2014, 39 TexReg 9020.

Subchapter RR VALUATION MANUAL

28 Tex. Admin. Code § 3.9901 Valuation Manual

(a) The commissioner adopts by reference the National Association of Insurance Commissioners (NAIC) Valuation Manual, including subsequent changes that were adopted by the NAIC through August 13, 2025, as required by Insurance Code §425.073.

(b) The operative date of the NAIC Valuation Manual in Texas is January 1, 2017.

History

Source Note: The provisions of this §3.9901 adopted to be effective January 18, 2017, 42 TexReg 65; amended to be effective December 27, 2017, 42 TexReg 7409; amended to be effective March 4, 2019, 44 TexReg 1161; amended to be effective March 3, 2020, 45 TexReg 1437; amended to be effective December 29, 2020, 45 TexReg 9569; amended to be effective December 28, 2021, 46 TexReg 9056; amended to be effective January 16, 2023, 48 TexReg 139; amended to be effective December 31, 2023, 48 TexReg 7998; amended to be effective December 23, 2024, 49 TexReg 10388; amended to be effective December 30, 2025, 50 TexReg 8612.

28 Tex. Admin. Code § 3.9902 Single State Company Exemptions

(a) Single state company. A single state company is a domestic company that is licensed and doing business only in this state. A domestic company is doing business only in this state if the company does not have direct or assumed risks for policies issued outside of this state.

(b) Single state exemption. The commissioner may grant a single state company a single state exemption from the NAIC Valuation Manual principle-based valuation requirements for specific product forms or product lines. This exemption is a single state exemption.

(1) To request approval for a single state exemption, a company must submit a written request to TDI and include detailed information regarding the request for the exemption. The request should identify the product forms or product lines proposed for the single state exemption. An exemption is not considered approved until written approval is issued by the commissioner or his designee.

(2) A single state company granted a single state exemption must compute reserves using the assumptions and methods that it used before January 1, 2017. Single state company business exempted by the commissioner with a single state exemption must be reserved with assumptions and methods required by the NAIC Valuation Manual other than the principle-based valuation requirements.

(3) A single state company granted a single state exemption must comply with all other requirements of the NAIC Valuation Manual, including the actuarial opinion and memorandum requirements of the NAIC Valuation Manual.

(4) The commissioner may revoke a single state exemption by revoking the exemption in writing if the reserving methods and assumptions do not adequately reflect the company's risks or if the company no longer qualifies for the exemption under Insurance Code §425.077. A single state exemption may also be revoked if the commissioner determines that the NAIC Valuation Manual principle-based reserving would be more appropriate for protection of Texas policyholders and industry.

(c) Adequacy analysis requirement exemption. A single state company may be granted an exemption by the commissioner from the asset adequacy analysis requirement for the actuarial opinion in the NAIC Valuation Manual. This exemption is an asset adequacy analysis exemption.

(1) A single state company must request an asset adequacy analysis exemption in writing to the commissioner and provide support as to why an asset adequacy analysis is not needed for its business. An exemption is not considered approved until written approval is issued by the commissioner or his designee.

(2) A single state company granted an asset adequacy analysis exemption must comply with other requirements for the actuarial opinion in the NAIC Valuation Manual.

(3) The commissioner may revoke an asset adequacy analysis exemption by revoking the exemption in writing if the asset adequacy analysis is needed to assess risks or if it is needed for the protection of Texas policyholders and industry. The commissioner may also revoke an asset adequacy analysis exemption if the company no longer qualifies as a single state company.

History

Source Note: The provisions of this §3.9902 adopted to be effective January 18, 2017, 42 TexReg 65.

Chapter 4 LIFE AND ANNUITY

Subchapter C CONSUMER NOTICES FOR LIFE INSURANCE POLICY AND ANNUITY CONTRACT REPLACEMENTS

28 Tex. Admin. Code § 4.201 Purpose

The purpose of this subchapter is to specify the content and procedural requirements for consumer notices for life insurance policy and annuity contract replacements as required by Insurance Code §1114.006, concerning Consumer Notice Documents.

History

Source Note: The provisions of this §4.201 adopted to be effective December 27, 2007, 32 TexReg 9690; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.202 Definitions

When used in this subchapter, the words "agent" and "producer" mean, unless the context clearly indicates otherwise, an individual who holds a license under Insurance Code Chapter 4054, concerning Life, Accident, and Health Agents, and who sells, solicits, or negotiates life insurance or annuities in this state.

History

Source Note: The provisions of this §4.202 adopted to be effective December 27, 2007, 32 TexReg 9690; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.203 Consumer Notice Content and Format Requirements

(a) The text contained in Figure: 28 TAC §4.204(b), Figure: 28 TAC §4.205(1), and Figure: 28 TAC §4.205(2) must be in at least 10-point type and presented in the same order as indicated in each figure and without any change to the specified text, including bolding effects, except as provided in subsections (b), (c), and (d) of this section.

(b) Under §4.206 of this title (relating to Filing Procedures for Substantially Similar Consumer Notices), in lieu of using the notices contained in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1), an insurer may file a notice with the department that is substantially similar to the text contained in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1) for review and approval by the commissioner. The commissioner will approve the notice if, in the commissioner's opinion, the notice protects the rights and interests of applicants to at least the same extent as the notices adopted in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1). An insurer required to send the notice specified in Figure: 28 TAC §4.205(2) may not file a notice that is substantially similar to that figure for review and approval by the commissioner.

(c) Commissioner approval of a notice is not required if a notice promulgated or approved under this subchapter is used and amendments to that notice are limited to the omission of references not applicable to the product being sold or replaced. For purposes of this subchapter, a reference in any notice required under this subchapter to a product that is being sold or replaced is applicable if the reference could be applicable under any possible circumstances and therefore may not be omitted from the required notice.

(d) An insurer may add a company name and identifying form number to notices specified under this subchapter without obtaining commissioner approval.

(e) The promulgated forms specified in this subchapter are available upon request from the Life and Health Division, Life and Health Lines, MC: LH-LHL, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or by accessing the department website at www.tdi.texas.gov/forms.

History

Source Note: The provisions of this §4.203 adopted to be effective December 27, 2007, 32 TexReg 9690; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.204 Consumer Notice Regarding Replacement for Insurers Using Agents

(a) An agent who initiates an application for a life insurance policy or annuity contract must submit to the insurer, with or as part of the application, a statement signed by both the applicant and the agent as to whether the applicant has existing life insurance policies or annuity contracts.

(b) If the applicant states that the applicant does have existing policies or contracts, the agent must present and read to the applicant, not later than at the time of taking the application, a notice regarding replacement that contains the text contained in Figure: 28 TAC §4.204(b), or substantially similar notice filed with the department and approved under this subchapter. The notice must be signed by both the applicant and the agent attesting that the notice has been read aloud by the agent or that the applicant did not wish the notice to be read aloud, in which case the agent is not required to read the notice aloud.

Attached Graphic

History

Source Note: The provisions of this §4.204 adopted to be effective December 27, 2007, 32 TexReg 9690; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.205 Direct Response Consumer Notices

In the case of a life insurance or annuity application initiated as a result of a direct response solicitation, the insurer must inquire whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue, or change an existing life insurance policy or annuity contract. The inquiry may be included with, or submitted as a part of, each completed application for such policy or contract.

(1) If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer must send a notice that contains the text in Figure: 28 TAC §4.205(1), or a substantially similar notice filed with the department and approved under this subchapter.

Attached Graphic

(2) If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer must send the applicant, with the policy or contract, a new policy or contract notice that contains the statements in Figure: 28 TAC §4.205(2).

Attached Graphic

History

Source Note: The provisions of this §4.205 adopted to be effective December 27, 2007, 32 TexReg 9690; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.206 Filing Procedures for Substantially Similar Consumer Notices

(a) An insurer may not use, issue, or deliver a notice that is substantially similar to a promulgated consumer notice specified in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1) until it has been approved.

(1) An insurer subject to Insurance Code Chapter 1114, concerning Replacement of Certain Life Insurance Policies and Annuities, using agents must either use the text of the notice contained in Figure: 28 TAC §4.204(b), which is not subject to filing and approval, or a consumer notice substantially similar to the text contained in Figure: 28 TAC §4.204(b), which has been filed under this section and approved.

(2) In the case of an applicant responding to a direct response solicitation, an insurer subject to Insurance Code Chapter 1114 must either use the text contained in Figure: 28 TAC §4.205(1), which is not subject to filing and approval, or a consumer notice substantially similar to the text contained in Figure: 28 TAC §4.205(1), which has been filed under this section and approved.

(b) A filing of a consumer notice that is substantially similar to a promulgated consumer notice specified in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1) must be filed in accordance with the submission requirements of Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(c) Insurers subject to Chapter 1114 who elect not to use a consumer notice specified in this subchapter must file a notice that is substantially similar to a promulgated consumer notice specified in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1) no later than 60 days before use. A consumer notice that is substantially similar to a promulgated consumer notice specified in Figure: 28 TAC §4.204(b) or Figure: 28 TAC §4.205(1) is subject to Insurance Code §1701.054, concerning Approval of Form. Insurers that have filed and received approval of a consumer notice may continue to use the approved consumer notice unless and until such time as the commissioner withdraws approval of the notice.

History

Source Note: The provisions of this §4.206 adopted to be effective December 27, 2007, 32 TexReg 9690; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter F INDIVIDUAL LIFE INSURANCE POLICY FORM CHECKLIST AND AFFIRMATIVE REQUIREMENTS

28 Tex. Admin. Code § 4.601 Payment of Premiums

(a) The policy must provide that premiums are payable in advance. The policy may provide that the premium is payable at the home office; it may provide that the premium is payable to an agent of the company; or it may provide that the premium is payable at the home office of the company or to an agent of the company.

(b) The policy must provide that a receipt signed by one or more of the officers of the company will be delivered upon payment of the premium. The policy must designate the officers who may sign the receipt. Any manner of "designation" is acceptable if it will enable the policyholder to determine that the receipt has been signed by an authorized person.

(c) A policy that permits a change in the manner of payment of premium (e.g., from annual to semiannual, quarterly, etc.):

(1) may either specify the amount of premiums required for the periods authorized or the formula for the determination of such premiums; or

(2) may define the amounts by appropriate reference to rates being charged at the date of issue.

(d) The policy may provide that any unpaid premiums or installments at the end of the current policy year will be deducted from the proceeds payable on death.

History

Source Note: The provisions of this §4.601 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.602 Grace Period

(a) The policy must provide for a grace period of at least one month for the payment of every premium after the first, during which period the policy must remain in full force and effect. If the grace period is expressed in days, at least 31 days of grace must be granted.

(b) The policy may provide for an interest charge on the unpaid premium during the grace period. If an interest charge is provided for, the interest rate must be specified.

(c) The policy may stipulate that if the insured should die during the grace period, the overdue premium or overdue installment will be deducted from any settlement under the policy. If an interest charge is provided against the overdue payment, the accrued interest may also be deducted.

(d) This section is not applicable to single premium policies.

History

Source Note: The provisions of this §4.602 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.603 Entire Contract

(a) The policy must provide that the policy, or policy and application, constitute the entire contract between the parties. Regardless of any statement to the contrary, the policy will be deemed incomplete if it attempts to incorporate by reference the provisions of any instrument that changes or adds to the terms of the policy.

(b) Some policy forms contain a provision that the application, if attached, constitute a part of the contract. If a policy containing such a provision is submitted without the application, the approval will authorize its issuance only without the application.

History

Source Note: The provisions of this §4.603 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.604 Incontestable Clause

(a) The policy must provide that it will be incontestable not later than two years from its date as provided in Insurance Code §1101.006, concerning Incontestability. If a reinstatement is contested for misrepresentation, then no representation other than one causing the reinstatement may be used to contest the policy. Any contest of the reinstatement may be for a material and fraudulent misrepresentation only and reinstatement may not be contested more than two years after it is effectuated, provided that this provision does not affect the company's right to contest a policy for a representation respecting the initial policy issuance or a different reinstatement during the incontestable period applicable to such issuance or reinstatement. Accidental death benefits and disability benefits need not be subject to such provision.

(b) Any provision that could lengthen the contestable period of a policy beyond two years from its date is prohibited. For example, the policy may not state that it is incontestable after two years "while the policy is continuously in force."

(1) nonpayment of premium; or

(2) violation of the conditions of the policy relating to naval or military services in time of war. Note: War clauses are discussed in §4.621(e) of this title (relating to Settlement at Maturity).

(d) If the form under review contains no reference to contest after reinstatement, it will also be acceptable.

(e) If more than one person is insured, the policy form must state that it is incontestable with respect to each insured.

History

Source Note: The provisions of this §4.604 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.605 Statements of the Insured

(a) The policy must provide that all statements made by the insured will, in the absence of fraud, be deemed representations and not warranties. The policy may provide that statements made on behalf of the insured will also, in the absence of fraud, be deemed representations and not warranties.

(b) Policy applications sometimes contain agreements that call attention to some, or all, of the elements that must be proved in avoiding the policy for misrepresentation. Such agreements are acceptable, provided:

(1) they do not attempt to burden the insured's representations with the legal consequences of warranties;

(2) they do not attempt to require the insured to prove the nonexistence of grounds upon which the insurer could contest the policy; and

(3) they do not attempt to permit the insurer to avoid liability on grounds less stringent than under Insurance Code §705.004, concerning Policy Provision: Misrepresentation in Policy Application, or other applicable law.

History

Source Note: The provisions of this §4.605 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.606 Misstatement of Age

(a) The policy must provide that if the age of the insured has been understated, the amount payable under the policy is the amount that the premium paid would have purchased at the correct age. The word "misstated" may be used instead of "understated."

(b) If more than one life is insured (e.g., by inclusion of premium payor benefits or under family group plan), the amount payable on the death of deceased may be adjusted because of a misstatement in the age of a surviving insured if the actuarial construction of the contract so requires.

History

Source Note: The provisions of this §4.606 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.607 Policy Loans

(a) A policy loan provision is not required in term insurance policies, nor in pure endowments issued or granted as original policies or in exchange for lapsed or surrendered policies.

(b) Loans must be made available at any time while the policy is in force after premiums for three full years have been paid and a cash value is available.

(d) The policy must be the sole security for the loan.

(e) Insurance Code Chapter 1110, concerning Interest Rates on Certain Policy Loans, deals with interest rates. Insurers may comply with Chapter 1110 by refiling reprinted and renumbered policies with a new loan provision or by filing a loan endorsement that may be attached to newly issued policies on and after an effective date specified by the insurer. The maximum rate of interest must be specified in the policy or loan endorsement. The policy may provide that interest may be made payable in advance to the end of the current policy year.

(f) The loan clause must provide for lending a sum equal to or, at the option of the policy owner, less than the cash value of the policy and any dividend additions to the policy.

(g) The policy may provide that the company may deduct from such loan value any existing indebtedness on the policy and any unpaid balance of the premium for the current policy year and may collect interest in advance on the loan to the end of the current year.

(h) The policy may provide that loans may be deferred for not more than six months after application for the loan is made. The six-month period may commence with the date of receipt of the request by the company, if the policy so provides.

(i) The loan clause must provide that failure to repay any such advance, or to pay interest on the loan, will not void the policy until the total indebtedness to the company equals or exceeds the cash value of the policy. The policy may not be terminated merely for failure to pay loan interest when due. Since the policy may be voided when the indebtedness equals or exceeds the cash value, this provision may be so worded that benefits cease upon the precise moment that the indebtedness equals such value.

(j) No condition other than as provided in this subchapter will be exacted as a prerequisite to any such loan.

History

Source Note: The provisions of this §4.607 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.608 Automatic Nonforfeiture Benefits

(a) Nonforfeiture values are governed by Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance.

(b) Occasionally, the cash value (because of the inclusion of accumulated dividends, coupon benefits, or other guaranteed returns) is more than sufficient to purchase the maximum amount of extended term insurance available under the policy. In such cases, the policy must clearly provide for the equitable disposition of the entire cash value.

History

Source Note: The provisions of this §4.608 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.609 Automatic Premium Loans

(a) Automatic premium loans do not constitute a stipulated form of insurance, and the automatic premium loan provision must not be classified as a nonforfeiture value. Provisions for automatic premium loans must be revocable at the option of the owner of the policy.

(b) If the automatic premium loan provision remains operative after loan values are insufficient to pay the next premium or installment thereof, the policy must define the premium rate to be charged in such a manner as to make possible the determination of the expiry date of the coverage.

History

Source Note: The provisions of this §4.609 adopted to be effective January 1, 1976; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.610 Cash Value

The policy must stipulate that the company may defer payment of cash surrender values for not more than six months after the application therefor is made. The six-month period may commence with the date of receipt of the request by the company, if the policy so provides.

History

Source Note: The provisions of this §4.610 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.611 Reinstatement

(a) All policies that have nonforfeiture benefits must provide that if, in the event of default in premium payments, the value of the policy must be applied for the purchase of other insurance, and if such insurance is in force and the original policy has not been surrendered to the company and cancelled, the policy may be reinstated within three years, or longer at the option of the company, from such default upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest. Evidence of insurability need not be restricted to evidence of good health only.

(b) If more than one life is insured, evidence of insurability may be required on each individual as a condition precedent to reinstatement of the policy, but the policy may provide for reinstatement of only those lives which are insurable.

History

Source Note: The provisions of this §4.611 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.612 Payment of Claims

The policy must provide that settlement will be made upon receipt of or not later than two months after due proof of death of the insured and the right of the claimant to the proceeds.

History

Source Note: The provisions of this §4.612 adopted to be effective January 1, 1976; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.613 Family Group Special Requirements

(a) A family group life insurance policy is considered to be any life insurance policy, other than a regular joint life insurance policy, that grants benefits upon the death of each of the insured members of the family. This does not include individual policies with payor death benefits or beneficiary death benefits when such benefits are provided as a part of the basic policy, or by supplementary agreement and when such additional benefits are designed primarily to promote the continuance of the basic policy. The requirements pertaining to family group policies may not be avoided, however, by merely adding insureds under an individual contract by means of riders or supplementary agreements.

(b) There must be included on the face of the policy the name and age of each insured; the name of the beneficiary; the maximum amount that is payable to the payee in the policy in the case of death of such insured person or persons; and designation of all paragraphs or provisions limiting or reducing the payment to less than the maximum provided in the policy. Suicide clauses are the most common type of reduction provision. The suicide clause, if used, should clearly indicate any effect that the suicide of one insured would have on the insurance of other insureds.

(c) Premiums deductible by the terms of the policy and indebtedness to the company on the policy are considered as counterclaims by the company against the beneficiary. It is not necessary that provisions for such deductions be placed on the face of the policy.

(d) The "face" of the policy means the first page of the policy.

(e) If the policy provides for coverage that will become effective on the lives of persons who become members of the family group (by birth or adoption) after the policy is issued, information relative to these future members need not be stated on the face of the policy. The policy form will be acceptable if the provisions relative to these additional members are clear and unambiguous.

History

Source Note: The provisions of this §4.613 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.614 Dependent Child Riders and Family Term Riders

(a) The rider must specify the effect on the rider of the death of the insured(s) under the base policy before the expiry date(s) of the rider. The following are acceptable:

(1) the rider may terminate, in which case no incontestability provision is required;

(2) the rider may convert to paid-up term insurance;

(3) if paid-up term insurance can be surrendered for its cash value, the rider must contain the "surrender within 30 days" statement required by Insurance Code §1105.007, concerning Computation of Cash Surrender Value Following Default; or

(4) the premium for the rider may be waived to the expiry date(s).

(b) If paid-up term insurance is available on the death of the insured under the base policy, the rider or the policy may not provide an incontestable provision for the rider less favorable than specified in Insurance Code §1101.006, concerning Incontestability, with respect to the coverage for each insured from the date the coverage for that insured becomes effective.

History

Source Note: The provisions of this §4.614 adopted to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.615 Requirements for a Package Consisting of a Deferred Life Policy with an Accidental Death Rider Attached

(a) The application must contain a statement that discloses the deferred nature of the insurance and that reflects the amount of insurance in force during the deferred period. It may not state only the ultimate amount.

(b) The brief description on the face page and filing back, if any, must call attention to the deferred nature of the insurance, and in no way refer to the accidental death benefit.

(c) If a separate premium is charged for the accidental death benefit, the schedule page must reflect the gross premium broken down in such a manner as to reflect the gross premium for the deferred life insurance and the accidental death benefit independently.

(d) The policy schedule page must reflect the reduced death benefit payable each year the reduction in benefits is maintained, as well as the ultimate face amount payable after the full face amount becomes available. This provision may be in the form of actual figures, a percentage of the ultimate face amount, the premiums plus interest, if applicable, or other provision not in violation of Insurance Code Chapter 1701, concerning Policy Forms, or other laws.

(e) The death benefit during the period of deferred insurance must be as great as the sum of the gross premiums paid (with or without interest). The death benefit may be based on the gross annual premium even though other modes are available under the policy.

(f) The accidental death benefit must be made a part of the entire contract.

(g) The contract of deferred insurance and accidental death benefit must reflect a different form number from any other contract of deferred insurance the company offers.

History

Source Note: The provisions of this §4.615 adopted to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.616 Substitute or Change of Insured Riders

(a) The rider must contain a statement requiring submission of an application signed by both the owner and the substitute insured.

(b) The rider may require evidence of insurability of the substitute insured.

(1) policy date;

(2) face amount;

(3) premium structure, including a description of the determination of premiums for a substitute insured; and

(4) the plan of insurance.

(d) The disposition of the following items must be clearly described:

(1) indebtedness under the old policy;

(2) inclusion or exclusion of any supplementary benefits upon exchange;

(3) dividends, if a participating policy; and

(4) adjustments of reserves and cash values.

History

Source Note: The provisions of this §4.616 adopted to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.617 Preliminary Term Life Insurance

The following requirements apply to a contract of life insurance containing a preliminary term insurance rider:

(1) a grace period must be allowed for payment of the first premium due on the principal policy; and

(2) the date of commencement of the preliminary term insurance, which is the date of inception of the contract as a whole, must be used to measure the period of contestability and suicide.

History

Source Note: The provisions of this §4.617 adopted to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.618 Conversion Provision

A conversion provision in a policy must comply with the following:

(1) the conversion provision must state the plan and face amount of the new policy;

(2) the text of the provision must state what premium rates will apply to the new policy;

(3) the text of the provision must discuss the settlement of cash values under the original contract if the policy is converted on a date other than the expiry date; and

(4) the provision must specify that evidence of insurability is not required.

History

Source Note: The provisions of this §4.618 adopted to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.619 Limitations of Lawsuits

The policy must not contain a provision limiting the time within which any action at law or in equity may be commenced to less than two years after the cause of action accrues.

History

Source Note: The provisions of this §4.619 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.620 Backdating Policies

(a) The policy must not contain a provision by which it is issued or takes effect more than six months before the original application for the insurance was made, if the insured would rate at an age younger than their age at the date when the application was made, according to their age at the nearest birthday.

(b) The restrictions against backdating are not violated by the exercise of conversion privileges contained in the original policy and that relate back to the original issue date of the policy, even though the conversion privilege by its terms is such that the amount of insurance at the conversion may exceed what was in force before conversion.

History

Source Note: The provisions of this §4.620 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.621 Settlement at Maturity

(a) If the policy provides that proceeds may be paid in installments, it must contain a representative table showing the amounts of such installments.

(b) If the settlement options provision indicates that modes of payment other than monthly may be available, then the amount of such payments must be determinable from the text. If the settlement option indicates a commuted value or present value, to be paid upon death of a payee, the interest rate used to determine this value must be given.

(c) No policy may contain a provision for any mode of settlement at maturity of less value than the amount insured on the face of the policy, plus dividend additions, if any, less any indebtedness to the company on the policy, and less any premium that may, by the terms of the policy, be deducted. The policy may provide an exception to this general rule, and reduce the amount of insurance payable on maturity if death occurs from the following causes:

(1) suicide, while sane or insane;

(2) by following stated hazardous occupations; or

(3) from aviation activities under conditions specified by the policy.

(d) Status clauses that attempt an exception if death occurs while the insured is engaged in the hazardous occupation or aviation activity are prohibited.

(e) Military service may be classed as a hazardous occupation, and benefits may be reduced under authority of this exception. In the alternative, the insurer may, in the incontestable clause, make provisions for contesting the validity of the policy for violations of conditions relating to naval and military services in time of war.

(f) Policies with graded death benefits, such as juvenile policies, will not be approved if they provide for reduction in the amount insured on the face of the policy. Such policies can properly be written by providing the lower amount of insurance in the face of the policy, and making appropriate provisions for increases; or, in the alternative, the in-force insurance at the various durations may be stated in the face of the policy.

(g) The policy must not provide for deduction of all indebtedness of the holder of the contract to the company. The only allowable deduction for indebtedness is an indebtedness on account of and secured by the policy.

History

Source Note: The provisions of this §4.621 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.622 Tontine Provisions

Any life insurance policy that is a tontine policy or that contains a tontine provision will be disapproved. Provisions by which dividends during the participating period are not allocated or paid annually are prohibited as being within the tontine principle unless the policyholder acquires, on termination of the policy, a vested interest in the dividends that have accrued.

History

Source Note: The provisions of this §4.622 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.623 Assignment Provisions

There is no prohibition against a provision that permits the assignment of the policy benefits or proceeds. However, policies that make provision for dividends, coupon accumulations, or other guaranteed returns, and that also contain provision for the assignment of these funds to a third party for the purpose of establishing an investment for the policyholder are prohibited.

History

Source Note: The provisions of this §4.623 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.624 Provisions Relating to Dividends, Coupon Benefits, or Other Guaranteed Returns

(a) Any provision by which the insurer undertakes to pay specific amounts will be treated as definite contract benefits and valued in accordance with Insurance Code §841.253, concerning Life Insurance Company's Payment of Dividends.

(b) Any policy that contains a provision promising to pay "dividends" from specified sources must clearly state that the payment of such dividends must be made from profits or expense loading.

(c) Any policy that provides for the payment of dividends, coupon benefits, or other guaranteed returns must specify the disposition that will be made of such accumulations if no option is exercised by the policyholder either on their maturity or in the event of default in premium payments. Acceptable dispositions are that they be:

(1) applied to the purchase of additional insurance;

(2) left to accumulate at interest;

(3) withdrawn in cash; or

(4) applied to the payment of premiums.

History

Source Note: The provisions of this §4.624 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.625 Premiums Paid in Advance

(a) The policy may contain provisions under which the company will accept advance payments of premiums; but in no event may the company undertake to accept deposits that would exceed the maximum amount required to pay all future premiums that will become due under the policy, including any options contained in the policy. The contract may permit the insured to withdraw excess deposits in cash, but any provisions that would cause a forfeiture of principal or exact a surrender charge are prohibited. The contract must state the interest rate used to discount the future premiums and must provide for disposition of any unused premiums on surrender of the contract or death of the insured.

(b) This section is not applicable to single premium policies.

History

Source Note: The provisions of this §4.625 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.626 Annuity Contracts

All sections in Subchapter F of this chapter (relating to Individual Life Insurance Policy Form Checklist and Affirmative Requirements) apply to the review of ordinary life insurance policies and are not applicable to annuity contracts. Any contract that provides death benefits in excess of the total premium paid, without interest or with interest at a specified rate, or the cash value at time of death, if greater, will be considered a life insurance policy. This requirement cannot be avoided by combining riders or endorsements to a basic annuity, as all pertinent instruments collectively constitute the contract.

History

Source Note: The provisions of this §4.626 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.627 Certain Prohibited Provisions

(a) Any policy that contains a title, heading, or other indication of its provisions that is misleading will be disapproved. For example, a title, heading, etc., will be misleading if it contradicts the provisions of the policy. A life insurance policy may not be described or referred to as a "bond," nor may premiums be described or referred to as "deposits."

(b) The policy may not contain the words "Approved by the Texas Department of Insurance," "Approved by TDI," "Approved by the commissioner of insurance," or words of a similar import or nature.

History

Source Note: The provisions of this §4.627 adopted to be effective January 1, 1976; amended to be effective September 20, 1982, 7 TexReg 3244; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.628 Renewal Premium on Term Policies

Renewable term policies may specify rates for renewal terms in dollars and cents, by reference to rates in use by the company on the original issue date or by reference to the rates in use by the company on the renewal date. If such rates are specified by reference to the rates in effect on the date of issue, such rates must be submitted with the policy.

History

Source Note: The provisions of this §4.628 adopted to be effective January 1, 1976; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter J INDETERMINATE PREMIUM REDUCTION POLICIES

28 Tex. Admin. Code § 4.1001 Purpose and Scope

(a) This subchapter is promulgated to regulate life insurance policies that have the following characteristics:

(1) the premium for the policy is guaranteed for an initial period of time but after such initial period, a maximum premium charge is specified in the policy; thereafter, the insurer reserves the right to charge a lesser unspecified amount (this type of policy is hereinafter referred to as "an indeterminate premium reduction policy"); and

(2) one of the purposes of the policy is to provide insureds with insurance coverage at a lower initial premium than would be obtainable from the insurer if the premiums were required to be unchangeable by the insurer for the life of the policy.

(b) A major purpose of this subchapter is to promote an accurate presentation and description to the insurance-buying public of the indeterminate premium reduction policy. Adequate disclosure is one of the principal objectives of the sections. The sections attempt to ensure that prospective insureds receive a fair, adequate, and accurate impression of the true nature of the indeterminate premium reduction policy. Some of the sections also give notice of certain legal interpretations. The sections are supplementary to and cumulative of other statutes and rules including those promulgated under authority of Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices. This subchapter is applied and interpreted in accordance with the foregoing purposes.

History

Source Note: The provisions of this §4.1001 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective October 23, 1980, 5 TexReg 4091; amended to be effective July 28, 1982, 7 TexReg 2662; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1002 Policy Form Submission

(a) No indeterminate premium reduction policy may be approved for use in Texas unless the insurer files with the Texas Department of Insurance, in conjunction with such indeterminate premium reduction policy, a statement:

(1) that, to the best of the insurer's knowledge and belief, the policy submitted is in compliance with this subchapter;

(2) that advertising and solicitation will be in compliance with this subchapter;

(3) that any premium redetermination will not reflect a distribution of company surplus nor a return of previously collected premiums; and

(4) that any nonguaranteed premium rates used to market the policy are lower than rates that the insurer is willing to guarantee in a fixed premium policy with the same or similar benefits for insureds of essentially the same class of risk.

(b) A nonguaranteed premium means any charge for insurance, including any percentage deviation from a maximum charge, that an insurer or insurance agent mentions or illustrates as a possible charge for coverage other than the maximum guaranteed premium specified in the policy.

History

Source Note: The provisions of this §4.1002 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1003 Solicitation and Advertising

(a) The initial premium charge and its period of guarantee, the maximum premium charge, the fact that the maximum premium charge might be charged, and the frequency of premium redetermination dates must be set forth prominently in:

(1) any advertising containing an application or any advertisement used with a solicitation; and

(2) any oral or written solicitation. In any such solicitation or advertisement the insurer or insurance agent must also furnish the prospective insured with a written statement containing language substantially as follows: The company reserves the right to charge the maximum premium beginning with any premium redetermination date. The premium at redetermination date, if less than the maximum premium stated in the policy, is not guaranteed beyond the current redetermination period. Also, the premium at redetermination date is subject to the company's expectations as to one or more future cost factors including persistency, expenses, mortality, and interest. Any increase in premium will not result in an increase in your benefits or cash values, if any, or other nonforfeiture values.

(b) No insurer or agent may, in marketing an indeterminate premium reduction policy, mention, illustrate, or refer in any fashion to any possible or likely specific future charge for the coverage unless the illustration, mentioning, or reference is made on the basis of current, stated and official company projections such as interest, persistency, mortality, or expense factors. Upon request of a prospective applicant, the insurer or agent must provide an explanation of the basis of any illustration.

(c) If nonguaranteed premium rates are displayed in advertising and disclosure material, the maximum premium rate(s) must be displayed with equal prominence.

History

Source Note: The provisions of this §4.1003 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective October 23, 1980, 5 TexReg 4091; amended to be effective January 27, 1983, 8 TexReg 185; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1004 Summary of Provisions

(a) Upon application for an indeterminate premium reduction policy or group certificate, a separate form containing a summary that adequately describes the contractual premium provisions must be signed by the applicant and submitted to the insurer in conjunction with the application. A portion of the summary must include the following information:

(1) the fact that the premium might be changed in the policy;

(2) the frequency of the possible changes;

(3) the fact that the nonguaranteed premium (if used in solicitation or advertising) is not guaranteed but the full maximum could be charged; and

(4) for participating policies, a statement that dividends are only payable if declared by the insurer. If it is not likely that dividends will be paid, a statement to that effect must be included.

(b) The summary required by these sections must be kept with a copy of the application after its receipt by the insurer and maintained in the insurer's files during the existence of the contract.

History

Source Note: The provisions of this §4.1004 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective July 28, 1982, 7 TexReg 2662; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1005 Relation of Initial to Later Premium Charge

If the policy offers an initial premium that is different from the maximum guaranteed premium specified in the policy for later policy years, no solicitation or advertisement may display or state the smaller premium in such a fashion that the larger premium charge is rendered obscure or deemphasized. The smaller premium may not be displayed more prominently than the larger premium charge.

History

Source Note: The provisions of this §4.1005 adopted to be effective May 8, 1980, 5 TexReg 1579; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1006 Premium Redetermination

No policy may provide for premium changes more often than once per policy year.

History

Source Note: The provisions of this §4.1006 adopted to be effective May 8, 1980, 5 TexReg 1579; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1007 Reclassification of Policyholders

No insurer may, for premium redetermination purposes, reclassify into subclasses or new classes the original class established for an indeterminate premium reduction policy at date of issue.

History

Source Note: The provisions of this §4.1007 adopted to be effective May 8, 1980, 5 TexReg 1579; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1008 Minimum Nonforfeiture Values

The minimum basis for cash values is stated in Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, which requires the adjusted premiums to be computed as a "uniform percentage of the respective premiums specified by the policy." Maximum guaranteed premiums in the policy are specified premiums as defined by the Insurance Code. Cash values, if any, will not be required to be redetermined when premiums are reduced for in-force policies. Minimum nonforfeiture values for indeterminate premium group policies on other than the term plan must be calculated in accordance with this section.

History

Source Note: The provisions of this §4.1008 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective October 23, 1980, 5 TexReg 4091; amended to be effective January 27, 1983, 8 TexReg 185; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1010 Artificial Maximum Premiums Prohibited

(a) No insurer may incorporate an increment into a maximum premium in an indeterminate premium reduction policy in order to be able to show an increased reduction in later policy years or to reduce cash values, if any, as provided in Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, or reserves as provided in Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law.

(b) As a condition precedent to policy form approval, there must accompany each submission of an indeterminate premium reduction policy a certification by a qualified actuary to the following: that the maximum premiums specified in the policy do not incorporate an increment as specified in subsection (a) of this section. An approval of a policy form after receipt of the foregoing certification may not be construed as a determination by the Texas Department of Insurance that the certification is true and accurate.

History

Source Note: The provisions of this §4.1010 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective October 23, 1980, 5 TexReg 4091; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1011 General Enforcement

A failure to follow and abide by the representations and disclosure provisions required by this subchapter in marketing the indeterminate premium reduction policy is grounds for a withdrawal of approval of the insurer's previously approved indeterminate premium reduction policy forms and is grounds for disapproval of subsequently filed indeterminate premium reduction policy forms. The provisions of this section are additional to and cumulative of all other enforcement provisions provided by law including Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices.

History

Source Note: The provisions of this §4.1011 adopted to be effective May 8, 1980, 5 TexReg 1579; amended to be effective January 27, 1983, 8 TexReg 185; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter K STANDARDS FOR ACCELERATION-OF-LIFE-INSURANCE BENEFITS FOR INDIVIDUAL AND GROUP POLICIES AND RIDERS

28 Tex. Admin. Code § 4.1101 Purpose; Severability

(a) The commissioner enacts this subchapter to:

(1) expand the circumstances under which insurers can offer acceleration-of-life-insurance benefits, thus enhancing financial choices for insureds facing terminal or life-threatening illnesses or conditions;

(2) implement revised statutory requirements for certain group and individual life insurance contracts;

(3) set uniform standards for offering acceleration-of-life-insurance benefits that will be applicable to all group and individual life insurance plans, creating a level playing field for insurers and key protections for consumers;

(4) allow insurers, with proper disclosures, to offer benefits that will qualify for favorable tax treatment under federal law, as well as benefits that may not qualify for favorable tax treatment, but that are available to a broader class of insureds; and

(5) ensure that acceleration-of-life-insurance benefit provisions that fund long-term care expenses conform basic definitions and eligibility triggers to those in rules setting minimum standards for long-term care insurance contracts.

(b) If a court of competent jurisdiction holds that any provision of this subchapter is inconsistent with any statutes of this state, is unconstitutional or for any other reason is invalid, the remaining provisions remain in full effect. If a court of competent jurisdiction holds that the application of any provision of this subchapter to particular persons, or in particular circumstances, is inconsistent with any statutes of this state, is unconstitutional or for any other reason is invalid, the provision remains in full effect as to other persons or circumstances.

History

Source Note: The provisions of this §4.1101 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1102 Acceleration-of-Life-Insurance: Scope of Benefits

(a) An acceleration-of-life-insurance benefit provision provides a special benefit under a life insurance contract that prepays all or a portion of the death benefit based on a long-term care illness, specified disease, or terminal illness.

(b) The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Life insurance contract--An individual life insurance policy, a group life insurance policy or certificate of insurance, or a rider to an individual or group life insurance policy or group certificate of insurance.

(2) Long-term care illness--An illness or physical condition that results in the inability to perform the activities of daily living or the substantial and material duties of any occupation. Evidence of a long-term care illness includes, but is not limited to, illnesses or conditions that require:

(A) confinement in a convalescent nursing home, residential care or intermediate nursing facility, defined consistently with the provisions of §3.3812 of this title (relating to Policy Standards for Provider); or

(B) adult day care services, as defined and provided consistently with §3.3804(b) of this title (relating to Definitions), and home health care services, as defined and provided consistently with §3.3804(b) of this title.

(3) Specified disease--An illness or physical condition that is likely to cause permanent disability or premature death, including, but not limited to, the following:

(A) AIDS;

(B) a malignant tumor;

(D) a coronary artery disease resulting in acute infarction or requiring surgery;

(E) a permanent neurological deficit resulting from cerebral vascular accident; or

(F) a condition of similar severity as specified in the life insurance contract that would be expected to impair the insured's quality or length of life in the absence of appropriate medical attention.

(4) Terminal illness--An illness or physical condition, including a physical injury, that can reasonably be expected to result in death in two years or less.

(c) Any portion of the death benefit remaining after reduction of the death benefit due to payment of any acceleration-of-life-insurance benefit referred to in this section and related charges, interest or liens, as allowed by §4.1106(3) of this title (relating to Methods for Determining Benefits and Allowable Charges and Fees) must be paid upon the death of the insured.

(d) Prepayment of acceleration-of-life-insurance benefits may be in a single sum or in installments.

(e) The acceleration-of-life-insurance benefits, related charges, interest, discounts, or liens allowed under this subchapter, and the balance of the death benefit of the life insurance contract will constitute full settlement on maturity of the face amount of the contract.

(f) Specific additional requirements for life insurance contracts that pay for long-term care expenses through acceleration-of-life-insurance benefit provisions are contained in §4.1114 of this title (relating to Requirements for Acceleration-of-Life-Insurance Benefits That Fund Long-Term Care Expenses).

History

Source Note: The provisions of this §4.1102 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1103 Required Policy Definitions; Evidence of Total and Permanent Disability

(a) Acceleration-of-life-insurance benefits, and the illness, condition, care, or confinement necessary to evidence that the insured has a long-term care illness, specified disease, or terminal illness, must be clearly defined in the life insurance contract consistently with this subchapter.

(b) Such illness, condition, care, or confinement is evidence of total and permanent disability for purposes of meeting the standards for providing acceleration-of-life-insurance benefits set forth in Insurance Code §1111.052, concerning Authority to Pay Accelerated Term Life Benefits, and §1201.003, concerning Applicability of Chapter, and §4.1102 of this title (relating to Acceleration-of-Life-Insurance: Scope of Benefits).

History

Source Note: The provisions of this §4.1103 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1104 Standards for Medical Diagnoses

The acceleration-of-life-insurance benefit provision may require a medical diagnosis of conditions and/or documentation of care or confinement as defined in the life insurance contract to establish eligibility for acceleration-of-life-insurance benefits. This may include a written medical opinion, satisfactory to the company, that the insured has a terminal illness, a long-term care illness, or a specified disease. If additional diagnoses by a physician selected by the company are required, the acceleration-of-life-insurance benefit provision, or a disclosure statement attached to the front of the policy or rider, must specify that the additional diagnoses are at the expense of the company and how conflicting diagnoses will be reconciled. The specific standards sufficient to meet such eligibility requirements must be defined in the life insurance contract, and any acceleration-of-life-insurance benefit must be conditioned only upon such requirement or requirements as defined.

History

Source Note: The provisions of this §4.1104 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1105 Termination of Benefit upon Exercise of Nonforfeiture Option

The life insurance contract may contain a provision terminating the acceleration-of-life-insurance benefit if the contract is continued under a nonforfeiture option.

History

Source Note: The provisions of this §4.1105 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1106 Methods for Determining Benefits and Allowable Charges and Fees

The acceptable methods for determining an acceleration-of-life-insurance benefit, and allowable charges and fees associated with the benefit, are as specified in this section.

(1) Additional premium or cost of insurance charge method. The acceleration-of-life-insurance benefit provision must specify and define any separately identifiable additional premium or cost-of-insurance charge, if applicable to the life insurance contract, for any acceleration-of-life-insurance benefit, and, upon payment of such benefit, reduce the death benefit of the contract in an amount equal to the acceleration-of-life-insurance benefit paid.

(2) Actuarial discount methods. The acceleration-of-life-insurance benefit provision must specify or define any administrative fee, not to exceed $150, and any sound and reasonable actuarial discount, calculated in accordance with either subparagraph (A) or (B) of this paragraph, as applicable, that may reduce the amount of the acceleration-of-life-insurance benefit in instances where no additional premium or cost-of-insurance charge is payable in advance by the policy or certificate holder. Upon payment of such benefit, the death benefit of the life insurance contract will be reduced by no more than an amount equal to the acceleration-of-life-insurance benefit paid, plus the actuarial discount and any administrative fee deducted to provide the benefit. Each subsequently approved acceleration-of-life-insurance benefit request may provide for an administrative fee and discount, subject to the limits defined in this paragraph. The acceleration-of-life-insurance benefit may be calculated based on either the present value actuarial discount as described in subparagraph (A) of this paragraph, or, in regard to an insured with a terminal illness, on the interest-only actuarial discount as described in subparagraph (B) of this paragraph.

(A) Present value actuarial discount. The acceleration-of-life-insurance benefit may be based upon the present value of future benefits provided under the life insurance contract, less the present value of future premiums, plus the present value of future dividends, if applicable. The actuarial discount used to reach this present value calculation must be appropriate to the life insurance contract design and based on sound actuarial principles. For an insured with a terminal illness, the present value actuarial discount may not reduce the amount of benefits accelerated by more than 15% of the face amount of such benefits. For other insureds eligible for acceleration-of-life-insurance benefits, the interest rate used to derive the present value actuarial discount applied to the face amount of the benefits accelerated may not exceed the greater of:

(i) the current yield on 90-day treasury bills;

(ii) the current maximum adjustable policy loan interest rate based on Moody's Corporate Bond Yield Averages, or any successor thereto;

(iii) the life insurance contract's guaranteed cash value interest rate plus 1% per year; or

(iv) an alternate rate approved by the commissioner.

(B) Interest-only actuarial discount. This discount may be applied only in regard to the death benefit of an insured with a terminal illness. The interest-only actuarial discount may not reduce the amount of the acceleration-of-life-insurance benefit by more than 10% per year.

(3) Lien method. In instances where no additional premium or cost of insurance charge is payable in advance by the policy or certificate holder, and the acceleration-of-life-insurance benefit is not reduced by a present value or interest-only actuarial discount, the insurer may consider the acceleration-of-life-insurance benefit, any administrative expense charges, any due and unpaid premiums and any accrued interest as a lien against the death benefit of the life insurance contract, in accordance with the following.

(A) The acceleration-of-life-insurance provision must specify or define any administrative fee, not to exceed $150, and any interest charge on the amount of the acceleration-of-life-insurance benefit.

(B) Access to cash value, if any, may be restricted to any excess of the cash value over the sum of the lien and any outstanding loans. Future access to additional policy loans and any partial withdrawals may also be limited to any excess of the cash values over the sum of the lien and any other outstanding policy loans.

(C) The lien cannot exceed the value of the death benefit of the life insurance contract. The contract must state that coverage will terminate at such time as the lien equals the value of the death benefit.

(D) The interest rate and interest rate methodology used in the calculation must be based on sound actuarial principles and disclosed in the contract and actuarial memorandum. The interest rate accrued on the portion of the lien equal to the cash value of the life insurance contract at the time of the benefit acceleration must be no more than the policy loan interest rate stated in the contract. Each subsequently approved acceleration-of-life-insurance benefit request may provide for an administrative fee and lien, subject to the limits set forth in this paragraph. The maximum interest rate used may not exceed the greater of:

(i) the current yield on 90-day treasury bills;

(ii) the current maximum adjustable policy loan interest rate based on Moody's Corporate Bond Yield Averages, or any successor thereto;

(iii) the policy's guaranteed cash value interest rate plus 1% per year; or

(iv) an alternate rate approved by the commissioner.

History

Source Note: The provisions of this §4.1106 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1107 Limitations on Reduction of Cash Values

Except as otherwise authorized under the lien method for determining benefits under §4.1106(3) of this title (relating to Methods for Determining Benefits and Allowable Charges and Fees), if the cash values are reduced by the acceleration-of-life-insurance benefit, related charges, and interest, the reduction may not be unjust and may not exceed an amount equal to the pro rata portion of the cash value associated with the death benefit used in providing the acceleration-of-life-insurance benefit. Future cash values may not be less than the minimum cash values required by Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, for the reduced future guaranteed death benefits. These minimum cash values are equal to the present value of the reduced future guaranteed benefits less the present value of future adjusted premiums, decreased by the amount of any indebtedness, including liens, under the life insurance contract. The mortality and interest used in calculating the minimum cash values will be as provided in Insurance Code Chapter 1105, for life insurance coverage, disregarding any acceleration-of-life-insurance benefits.

History

Source Note: The provisions of this §4.1107 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1108 Pro Rata Reduction of Loan upon Acceleration of Benefits

Unless the insurer is using the lien method for determining benefits under §4.1106(3) of this title (relating to Methods for Determining Benefits and Allowable Charges and Fees), if there is a loan on the life insurance contract, the insurer may deduct up to a pro rata portion of the loan from the amount of the acceleration-of-life-insurance benefit.

History

Source Note: The provisions of this §4.1108 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1109 Effect of Acceleration of Benefits on Nonforfeiture Calculations

An acceleration-of-life-insurance benefit provision or rider must be disregarded in ascertaining nonforfeiture benefits under Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance.

History

Source Note: The provisions of this §4.1109 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1110 Calculation of Reserves

(a) Reserves for an acceleration-of-life-insurance benefit must be based on tables of disablement, morbidity, or mortality appropriate for determining liability for the benefits provided. Such disablement or morbidity tables must be certified as appropriate by a member of the American Academy of Actuaries and approved by the Texas Department of Insurance under Insurance Code §425.058(k), concerning Computation of Minimum Standard: General Rule, and §425.069, concerning Reserve Computation: Indeterminate Premium Plans and Certain Other Plans. Reserves for the death benefits or other supplementary benefits provided by a life insurance contract that includes an acceleration-of-life-insurance benefit must be calculated disregarding such benefit, using mortality and interest rates as provided in Insurance Code Chapter 425, concerning Reserves and Investments for Life Insurance. The basis of reserves for any life insurance contract that contains an acceleration-of-life-insurance benefit provision must accompany the filing of the contract with the Texas Department of Insurance.

(b) Reserves for an acceleration-of-life-insurance benefit under the lien method for determining benefits under §4.1106(3) of this title (relating to Methods for Determining Benefits and Allowable Charges and Fees), including accrued interest, represent assets of the company for statutory reporting purposes. For any life insurance contract on which the lien exceeds the policy's statutory reserve liability, such excess must be held as a non-admitted asset.

History

Source Note: The provisions of this §4.1110 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1111 Unfair, Discriminatory or Deceptive Practices Prohibited

(a) Acceleration-of-life-insurance benefit provisions are subject to Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices, and rules promulgated under Chapter 541.

(b) Insurers offering acceleration-of-life-insurance benefits may not engage in unfair, discriminatory, or deceptive practices in relation to the offer, sale, or administration of acceleration-of-life-insurance benefits, including, but not limited to, the following practices:

(1) reclassification of the insured as a result of payment of the benefit specified in an acceleration-of-life-insurance benefit provision to a class of risk less favorable than the class of risk to which the insured originally belonged;

(2) unfair discrimination among insureds with differing qualifying events; or

(3) unfair discrimination among insureds with similar qualifying events.

History

Source Note: The provisions of this §4.1111 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1112 Notice and Disclosure Requirements for Life Insurance Contracts Containing Acceleration-of-Life-Insurance Benefits

(a) Except as otherwise stated in this section, every life insurance contract containing an acceleration-of-life-insurance benefit provision is subject to the notice and disclosure requirements in paragraphs (1) - (5) of this subsection.

(1) Except as otherwise provided in this paragraph, the face of every such life insurance contract must contain a prominent notice printed, over-printed or stamped, as appropriate, substantially as follows: "Death benefits, cash values, and loan values will be reduced if an acceleration-of-life-insurance benefit is paid." This statement must be appropriately modified for contracts that have no cash or loan values, or in which the cash value is not reduced.

(2) The title of any acceleration-of-life-insurance benefit must be descriptive of the coverage provided and must use such terms as "acceleration-of-life-insurance benefit," "accelerated benefit," or words of similar import.

(3) At the time of the payment of a lump sum acceleration-of-life-insurance benefit, or, if periodic payments are being made, no less frequently than every 12 months, the insurer must send a statement to the owner or holder of the life insurance contract, specifying:

(A) the amount of benefits paid (or the amount of benefits paid since the last report);

(B) the effect of the acceleration-of-life-insurance benefit payment on the death benefit, face amount, specified amount, accumulation values, cash values, loan amounts, future charges, and future premiums; and

(4) Notice that the owner of the life insurance contract will receive the statement described in paragraph (3) of this subsection must be included in the acceleration-of-life-insurance benefit provisions of the life insurance contract.

(5) As appropriate, the disclosures contained in either subsection (a) or (b) of §4.1116 of this title (relating to Disclosures Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance), and the disclosure contained in subsection (c) of §4.1116, or disclosures substantially similar to these disclosures, must be included on or attached to the front page of each life insurance contract subject to this subchapter, except as provided in subsection (e) of §4.1116.

(b) The notice and disclosure requirements in subsection (a) must be provided only with the document actually containing the acceleration-of-life-insurance provisions. For example, if acceleration-of-life insurance benefits are provided through a rider to a life policy, the disclosures must only be provided with the rider, not the policy.

History

Source Note: The provisions of this §4.1112 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1113 Notice and Disclosure Requirements for Marketing Materials

(a) Any "invitation to contract," as defined in §21.102 of this title (relating to Scope), used in the marketing, solicitation, or sale of a life insurance contract containing an acceleration-of-life-insurance provision must clearly and concisely disclose the following:

(1) the illness, condition, care, or confinement necessary to trigger eligibility for any acceleration-of-life-insurance benefit;

(2) the effect that an acceleration-of-life-insurance benefit provision will have on the death benefit and other values available under the life insurance contract; and

(3) the tax-related disclosures contained in either subsection (a) or (b) of §4.1116 of this title (relating to Disclosures Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance), as appropriate, and the disclosure contained in subsection (c) of §4.1116, or disclosures substantially similar to these disclosures.

(b) No insurer or agent, in marketing a life insurance contract that provides acceleration-of-life-insurance benefits, may mention, illustrate, or refer to the contract as an alternative or substitute for catastrophic major medical health insurance.

History

Source Note: The provisions of this §4.1113 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; amended to be effective June 23, 2008, 33 TexReg 4884; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1114 Requirements for Acceleration-of-Life-Insurance Benefits That Fund Long-Term Care Expenses

When a life insurance contract provides for payment of long-term care expenses funded through an acceleration-of-life-insurance benefit provision, the long-term care provisions of the contract must meet the following requirements of Chapter 3, Subchapter Y of this title (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies that Provide Long-Term Care Benefits Within the Policy):

(1) terms must be defined consistently with §3.3804 of this title (relating to Definitions);

(2) definitions and descriptions of providers must be consistent with the requirements of §3.3812 of this title (relating to Policy Standards for Provider);

(3) to the extent that the acceleration-of-life-insurance provisions provide for payment of home health or adult day care expenses, such provisions must meet applicable standards contained in §3.3815 of this title (relating to Standards for Home Health and Adult Day Care Benefits);

(4) conditions triggering eligibility for benefits must comply with §3.3818 of this title (relating to Standards for Eligibility for Benefits); and

(5) to the extent that the acceleration-of-life-insurance benefit is intended to fund long-term care expenses that will qualify for favorable tax treatment under federal law, the long-term care provisions of the contract must further comply with the provisions of §4.1115 of this title (relating to Requirements for Benefits Represented to Be Qualified for Favorable Federal Tax Treatment) that are applicable to expenses paid for a "qualified long-term care illness," as defined in §4.1115, and any additional federal requirements for favorable tax treatment.

History

Source Note: The provisions of this §4.1114 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1115 Requirements for Benefits Represented To Be Qualified for Favorable Federal Tax Treatment

(a) On or after the effective date of this subchapter, no life insurance contract providing for acceleration-of-life-insurance benefits may be represented to be tax-qualified under federal law governing taxation of such benefits unless such benefits meet the requirements set forth in subsections (b) - (d) of this section.

(b) Acceleration-of-life-insurance benefits described as tax-qualified must be limited to insureds who have a "qualified terminal illness" or a "qualified long-term care illness," as those terms are defined (and terms used within the definitions are defined) in paragraphs (1) - (3) of this subsection.

(1) An insured has a "qualified terminal illness" if a physician certifies that, as of the date of the certification, the insured has a terminal illness, as defined in §4.1102(b) of this title (relating to Acceleration-of-Life-Insurance: Scope of Benefits).

(2) An insured has a "qualified long-term care illness" if the insured has a "long-term care illness" as defined in §4.1102(b) of this title, and a licensed health care practitioner, acting within the scope of their license, certifies, within 12 months before the approval of the insured's request to exercise the acceleration-of-life-insurance provision, that the insured's illness or physical condition has caused the insured to:

(A) be unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to functional incapacity;

(B) be disabled at a level similar to the level described in subparagraph (A) of this paragraph, as determined by rules promulgated by the United States Secretary of the Treasury, in consultation with the United States Secretary of Health and Human Services, under section 7702B of the Internal Revenue Code of 1986, as amended by the Health Insurance Portability and Accountability Act of 1996; or

(C) require substantial supervision to protect the insured from threats to the insured's health and safety due to the impairment of cognitive ability.

(3) The following words and terms, when used in this section, have the following meanings unless the context clearly indicates otherwise.

(A) Activities of daily living--Bathing, continence, dressing, eating, toileting and transferring, as those terms are defined in §3.3804(b) of this title (relating to Definitions).

(B) Impairment of cognitive ability--The deterioration or loss in intellectual capacity requiring substantial supervision for protection of self and others, as established by the clinical diagnosis of any licensed practitioner in this state authorized to make such a diagnosis. Such diagnosis must include the patient's history and physical, neurological, psychological and/or psychiatric evaluations, and laboratory findings.

(C) Substantial supervision--Continual supervision (that may include cueing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect a cognitively impaired individual from threats to the individual's health or safety.

(c) Any acceleration-of-life-insurance benefit paid to an insured with a qualified long-term care illness is limited in use to payment for instances in which the individual has incurred expenses for qualified long-term care services, as defined in section 7702B of the Internal Revenue Code of 1986, as amended by the Health Insurance Portability and Accountability Act of 1996. Such payments will not fail to meet this test solely because they are made on a per diem or periodic basis without regard to expenses incurred during the period.

(d) Any acceleration-of-life-insurance benefit provision providing for payment of expenses incurred for qualified long-term care services by an insured with a qualified long-term care illness:

(1) may not pay or reimburse expenses incurred under Medicare or that would be reimbursable under Medicare but for the application of a deductible or coinsurance amount, except expenses that are reimbursable under Medicare only as a secondary payor;

(2) may coordinate benefits with Medicare benefits; and

(3) must meet all requirements of §4.1114 of this title (relating to Requirements for Acceleration-of-Life-Insurance Benefits That Fund Long-Term Care Expenses).

History

Source Note: The provisions of this §4.1115 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1116 Disclosures Related to Tax Qualification of Benefits and Benefits' Effect on Public Assistance

(a) Except as provided in subsection (e) of this section, on or after the effective date of this subchapter, if an insurer markets, delivers, issues for delivery, or renews a life insurance contract in Texas that provides only acceleration-of-life-insurance benefits that are intended to qualify for favorable tax treatment under federal law, the contract, and any invitation to contract as provided under §4.1113 of this title (relating to Notice and Disclosure Requirements for Marketing Materials), must include a disclosure substantially similar to the disclosure set forth in this subsection. When a series of words are separated by slashes (e.g., policy/certificate/rider), the insurer should choose the most appropriate word or words under the circumstances. DISCLOSURE: "The acceleration-of-life-insurance benefits offered under this policy/certificate/rider are intended to qualify for favorable tax treatment under the Internal Revenue Code of 1986. If the acceleration-of-life-insurance benefits qualify for such favorable tax treatment, the benefits will be excludable from your income and not subject to federal taxation. Tax laws relating to acceleration-of-life-insurance benefits are complex. You are advised to consult with a qualified tax advisor about circumstances under which you could receive acceleration-of-life-insurance benefits excludable from income under federal law."

(b) Except as provided in subsection (e) of this section, on or after the effective date of this subchapter, if an insurer markets, delivers, issues for delivery, or renews a life insurance contract in Texas that contains an acceleration-of-life-insurance benefits provision that meets the requirements of this subchapter, but that allows benefits to be accelerated in circumstances in which such benefits would not qualify for favorable tax treatment under federal law, the contract, and any invitation to contract as provided under §4.1113 of this title, must include a disclosure substantially similar to the disclosure set forth in this subsection. When a series of words are separated by slashes (e.g., policy/certificate/rider), the insurer should choose the most appropriate word or words under the circumstances. DISCLOSURE: "The acceleration-of-life-insurance benefits offered under this policy/certificate/rider may or may not qualify for favorable tax treatment under the Internal Revenue Code of 1986. Whether such benefits qualify depends on factors such as your life expectancy at the time benefits are accelerated or whether you use the benefits to pay for necessary long-term care expenses, such as nursing home care. If the acceleration-of-life-insurance benefits qualify for favorable tax treatment, the benefits will be excludable from your income and not subject to federal taxation. Tax laws relating to acceleration-of-life-insurance benefits are complex. You are advised to consult with a qualified tax advisor about circumstances under which you could receive acceleration-of-life-insurance benefits excludable from income under federal law."

(c) Except as provided in subsection (e) of this section, on or after the effective date of this subchapter, if an insurer markets, delivers, issues for delivery, or renews a life insurance contract in Texas that provides acceleration-of-life-insurance benefits, the contract, and any invitation to contract as provided under §4.1113 of this title, must include a disclosure substantially similar to the disclosure set forth in this subsection. DISCLOSURE: "Receipt of acceleration-of-life-insurance benefits may affect your, your spouse or your family's eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect you, your spouse and your family's eligibility for public assistance."

(d) The disclosure requirements of this section must be provided only with the document actually containing the acceleration-of-life-insurance provisions. For example, if acceleration-of-life-insurance benefits are provided through a rider to a life policy, the disclosures must only be provided with the rider, not the policy.

(e) In regard to certificates of coverage for group life insurance policies, the disclosures required by this section must be provided only to certificate holders obtaining group life coverage on or after the effective date of this subchapter.

History

Source Note: The provisions of this §4.1116 adopted to be effective March 1, 1998, 23 TexReg 1585; transferred effective April 16, 1999, 24 TexReg 3092; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter L INSURANCE SOLD IN CONNECTION WITH PREPAID FUNERAL CONTRACTS

28 Tex. Admin. Code § 4.1201 Introduction to Joint Memorandum of Understanding

(a) Occupations Code §651.159, concerning Memorandum of Understanding: Prepaid Funeral Services, mandates the Texas Department of Insurance, the Texas Funeral Service Commission, and the Texas Department of Banking to adopt by rule a joint memorandum of understanding relating to prepaid funeral services and transactions that:

(1) outlines the responsibilities of each agency in regulating these services and transactions;

(2) establishes procedures to be used by each agency in referring complaints to one of the other agencies;

(3) establishes procedures to be used by each agency in investigating complaints;

(4) establishes procedures to be used by each agency in notifying the other agencies of a complaint or of the investigation of a complaint;

(5) describes actions the agencies regard as deceptive trade practices;

(6) specifies the information the agencies provide consumers and when that information is to be provided; and

(7) sets the administrative penalties each agency imposes for violations.

(b) Any revisions to the joint memorandum of understanding will be adopted by rule by each agency.

(c) The joint memorandum of understanding entered into by the three agencies is found at §4.1202 of this title (relating to Joint Memorandum of Understanding).

History

Source Note: The provisions of this §4.1201 adopted to be effective July 19, 1993, 18 TexReg 4321; amended to be effective May 13, 2012, 37 TexReg 3413; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1202 Joint Memorandum of Understanding

(a) Pursuant to Occupations Code §651.159 the Texas Funeral Service Commission (TFSC), the Texas Department of Insurance (TDI), and the Texas Department of Banking (DOB) adopt the following joint memorandum of understanding (JMOU) relating to prepaid funeral benefits as defined in Finance Code Chapter 154. The TFSC, TDI, and DOB intend this memorandum of understanding to assist the three agencies in their regulatory activities, and to make it as easy as possible for a consumer with a complaint to have the complaint acted upon by all three agencies, where appropriate. To accomplish this, where not statutorily prohibited, the three agencies will share information among the agencies that may not be available to the public generally under the Public Information Act, Government Code Chapter 552. Such information will be transmitted among agencies with the understanding that it is considered confidential, is being furnished to the other agencies in furtherance of their joint responsibilities as state agencies in enforcing their respective statutes, and that it may not be disseminated to others except as required.

(b) Responsibilities of each agency in regulating prepaid funeral benefits.

(1) The Texas Funeral Service Commission is responsible for the following:

(A) licensing funeral directors, embalmers, provisional funeral directors, provisional embalmers, crematory, and funeral establishments. The TFSC may refuse to license a person or establishment that violates Finance Code Chapter 154, under Occupations Code §651.460(b)(3);

(B) taking action under Occupations Code §651.460(b)(3) against any licensee violating Finance Code Chapter 154; and

(C) taking action under Occupations Code §651.460(b)(3) against any funeral director in charge, crematory owner, and/or funeral establishment owner for violations of Finance Code Chapter 154 by persons directly or indirectly connected to the crematory or funeral establishment.

(2) The Texas Department of Banking is responsible for administering Finance Code Chapter 154 and 7 Texas Administrative Code (TAC) Chapter 25, including, but not limited to, the following:

(A) bringing enforcement actions against any person, including licensees of TFSC and TDI, who violates Finance Code Chapter 154 and/or 7 TAC Chapter 25; and

(B) all other actions authorized by Finance Code Chapter 154 and 7 TAC Chapter 25.

(3) The Texas Department of Insurance is responsible for the following:

(A) regulating insurers that issue or propose to issue life insurance policies or annuity contracts that may fund prepaid funeral contracts;

(B) regulating any person performing the acts of an insurance agent as defined in Insurance Code Chapter 4001 and Insurance Code Chapter 101;

(D) regulating unfair trade practices relating to the insurance policies and annuity contracts that may fund prepaid funeral contracts pursuant to Insurance Code Chapter 542; and

(E) regulating unfair claims settlement practices by insurance companies pursuant to the Insurance Code Chapter 542.

(1) Exchanging information. If, upon receipt of a complaint, or during the course of an investigation, an agency (referred to as the receiving agency) receives any information that might be deemed of value to another of the agencies (referred to as the reviewing agency), the receiving agency will contact the reviewing agency and will forward the relevant information to the reviewing agency at its request.

(2) Referral of complaints for handling. When an agency receiving a complaint refers the complaint to another agency for handling, the receiving agency will contact the complainant in writing informing him or her of the referral, provide the complainant contact information for the reviewing agency, and encourage the complainant to re-contact the receiving agency concerning the reviewing agency's processing of the complaint.

(d) Procedures to be used by each agency in investigating a complaint.

(1) All agencies.

(A) Each agency will develop internal complaint procedures for violations relating to prepaid funeral benefits. The procedures should at a minimum provide for:

(i) identification of necessary data and documents to be obtained from the complainant; and

(ii) such other steps deemed necessary for the agency to perform an adequate and appropriate investigation.

(B) Each agency may assist either of the other agencies with investigations relating to prepaid funeral benefits.

(2) The Texas Funeral Service Commission.

(A) The TFSC will log in and investigate complaints received as required under Occupations Code Chapter 651. A complaint about violations of Finance Code Chapter 154 and/or 7 TAC Chapter 25 will be referred to the DOB.

(B) If disciplinary action against a licensee of the TFSC is appropriate, the matter will be referred to the Administrator of Consumer Affairs and Compliance Division of TFSC.

(C) If the complaint involves a matter handled by either the DOB or TDI, as well as a violation of the TFSC statutes or regulations, it will be referred to the appropriate agency for further action. The DOB will be primarily responsible for enforcing violations of Finance Code Chapter 154 or 7 TAC Chapter 25. The agencies will coordinate their investigations to avoid duplication of effort.

(D) If the TFSC issues an order against a person or entity that also sells or provides prepaid funeral benefits or is a licensee under the jurisdiction of TDI, the TFSC will send the DOB and the TDI a copy of the order.

(3) Texas Department of Banking.

(A) Complaints received by the Special Audit Division will be entered into a complaint log and assigned a reference number. If, after agency notice to the subject of the complaint, the complaint is not resolved, the DOB will investigate.

(B) If disciplinary action against a person who violated Finance Code Chapter 154 or 7 TAC Chapter 25 is appropriate, the matter will be referred to the agency's legal staff.

(C) If the complaint involves a matter handled by either the TDI or TFSC, as well as a violation of the Finance Code Chapter 154 or 7 TAC Chapter 25, the DOB will coordinate with those agencies. The DOB will be primarily responsible for enforcing violations of the Finance Code Chapter 154 or 7 TAC Chapter 25.

(D) If the DOB issues an order against a person or entity that is a licensee under the jurisdiction of the TFSC or the TDI, the DOB will send the TFSC and the TDI a copy of the order.

(4) Texas Department of Insurance.

(A) The Consumer Protection Section of the TDI will log in and investigate complaints received, except that if a complaint is solely about violations of Finance Code Chapter 154 and/or 7 TAC Chapter 25, the complaint will be referred to the DOB. Other areas of the TDI may provide assistance in the investigation of the complaint where appropriate.

(B) If disciplinary or other regulatory action against a licensee of the TDI is appropriate, the matter will be referred to the Compliance Intake Unit of TDI.

(C) If the complaint involves a matter handled by either the DOB or TFSC, as well as a violation of the TDI statutes or regulations, it will be referred to the appropriate agency for further action. The DOB will be primarily responsible for enforcing violations of the Finance Code Chapter 154 or 7 TAC Chapter 25. The agencies will coordinate their investigations to avoid duplication of effort.

(D) If the commissioner issues an order against a person that also sells, funds, or provides prepaid funeral benefits, or is subject to the jurisdiction of the DOB or the TFSC, the TDI will send the DOB and the TFSC a copy of the order.

(e) Actions the agencies regard as deceptive trade practices.

(1) The TFSC, the DOB, and the TDI regard as deceptive trade practices those actions found under the Business and Commerce Code §17.46.

(2) With respect to trade practices within the business of insurance, the TDI regards as deceptive trade practices those actions found under Insurance Code Chapter 541, other chapters of the Code, and the rules adopted by the TDI to implement those laws.

(f) Information the agencies will provide consumers and when that information is to be provided.

(1) The TFSC, DOB, and TDI will continue to provide consumers with the brochure entitled "Facts About Funerals" developed by TFSC (in Spanish and in English). The DOB will continue to provide consumers with information on its website in accordance with Finance Code §154.132, including the informational brochure developed in accordance with Finance Code §154.131.

(2) The DOB, TDI, and TFSC will maintain their toll-free numbers.

(3) The TFSC, DOB, and TDI, as state agencies, are subject to the Public Information Act, Government Code Chapter 552. Upon written request, the three agencies will provide consumers with public information that is not exempt from disclosure under that Act. As noted in the preamble to this JMOU, the agencies may, where not statutorily prohibited, exchange information necessary to fulfill their statutory responsibilities among each other, without making such information public information under the Public Information Act.

(g) Administrative penalties each agency imposes for violations.

(1) Texas Funeral Service Commission. The TFSC may impose an administrative penalty, issue a reprimand, or revoke, suspend, or place on probation any licensee who violates Finance Code Chapter 154. TFSC administrative penalties vary based on the violation; TFSC sanctions are imposed under Occupations Code Chapter 651.

(2) Texas Department of Banking. DOB administrative penalties vary based on the violation; DOB sanctions are imposed under the Finance Code Chapter 154.

(3) Texas Department of Insurance. TDI administrative penalties vary based on the violation; TDI sanctions are imposed under Insurance Code Chapter 82.

History

Source Note: The provisions of this §4.1202 adopted to be effective July 19, 1993, 18 TexReg 4321; amended to be effective May 13, 2012, 37 TexReg 3413; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

Subchapter O VARIABLE LIFE INSURANCE

28 Tex. Admin. Code § 4.1501 Purpose and Scope

These sections are promulgated to regulate individual variable life insurance contracts issued or delivered for issue in this state, on and after the effective date of these sections.

History

Source Note: The provisions of this §4.1501 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1502 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Affiliate of an insurer--Any person, directly or indirectly, controlling, controlled by, or under common control with such insurer; any person who regularly furnishes investment advice to such insurer with respect to its separate accounts for which a specific fee or commission is charged; or any director, officer, partner, or employee of such insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of such person.

(2) Agent--Any person, corporation, partnership, or other legal entity that is licensed by this state as a life insurance agent.

(3) Assumed investment rate--The rate of investment return that would be required to be credited to a variable life contract, after deduction of charges for taxes, investment expenses, and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.

(4) Benefit base--The amount to which the net investment return is applied.

(5) Cash surrender value--The net cash surrender value plus any amounts outstanding as contract loans.

(6) Commissioner--The commissioner of insurance of this state.

(7) Contract cost factors--Those amounts that affect the price per thousand of life insurance coverage or other benefits. They include interest, mortality, expense charges, and fees, including any surrender charges, but not persistency assumptions.

(8) Contract processing day--The day on which charges authorized in the contract are deducted from the contract value.

(9) Contract value--The amount to which interest is credited, and against which separately identified mortality charges, expense charges, fees, and other charges are debited.

(10) Control (including the terms "controlling," "controlled by," and "under common control with")--The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than 10% of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the commissioner that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest with notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

(11) Flexible premium contract--Any variable life contract other than a scheduled premium variable life contract as defined in the definition of scheduled premium variable life contract.

(12) General account--All assets of the insurer other than assets in separate accounts established under Insurance Code Chapter 1152, concerning Separate Accounts, Variable Contracts, and Related Products, or under the corresponding sections of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable life insurance.

(13) Incidental insurance benefit--All insurance benefits in a variable life contract, other than the variable death benefit and the minimum death benefit, including, but not limited to, accidental death and dismemberment benefits, disability benefits, guaranteed insurability options, family income, or term riders.

(14) Minimum death benefit--The amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life contract regardless of the investment performance of the separate account.

(15) Net cash surrender value--The maximum amount payable to the contract owner upon surrender.

(16) Net investment return--The rate of investment return in a separate account to be applied to the benefit base.

(17) Person--An individual, corporation, partnership, association, trust, or fund.

(18) Scheduled premium contract--Any variable life contract under which both the amount and timing of premium payments are fixed by the insurer.

(19) Separate account--A separate account established under Insurance Code Chapter 1152, or under the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

(20) Structural changes--Those changes that are separate from the automatic workings of the contract. Such changes usually would be initiated by the contract owner and include changes in the guaranteed benefits, changes in latest maturity date, or changes in allowable premium payment period.

(21) Variable death benefit--The amount of the death benefit, other than incidental benefits payable under a variable life contract dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.

(22) Variable life contract--Any individual variable life insurance contract that provides for life insurance the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to such contract, under Insurance Code Chapter 1152, or under the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

Source Note: The provisions of this §4.1502 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1503 Qualifications of Insurer to Issue Variable Life Insurance

The following requirements are applicable to all insurers either seeking authority to issue variable life insurance in this state or having the authority to issue variable life insurance in this state.

(1) Licensing and approval to do business in this state. An insurer may not deliver or issue for delivery in this state any variable life insurance contracts unless:

(A) the insurer is licensed or organized to do life insurance business in this state; and

(B) after having complied with the provisions of Insurance Code Chapter 1152, concerning Separate Accounts, Variable Contracts, and Related Products, the commissioner has authorized, either as part of the insurer's original certificate of authority or by charter amendment, the insurer to issue, deliver, and use variable life contracts, and only after the commissioner has considered, among other things, the following:

(i) whether the plan of operation for the issuance of variable life contracts is sound;

(ii) whether the general character, reputation, and experience of the management and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer are such as to reasonably assure competent operation of the variable life business of the insurer in this state; and

(iii) whether the present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of such contracts is not likely to render its operation hazardous to the public or its contract holders in this state. The commissioner will consider, among other things:

(I) the history of operation and financial condition of the insurer;

(II) the qualifications, fitness, character, responsibility, reputation, and experience of the officers and directors and other management of the insurer and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer;

(III) the applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life contracts. The state of entry of an alien insurer will be deemed its state of domicile for this purpose; and

(IV) if the insurer is a subsidiary of, or is affiliated by common management or ownership with, another company, its relationship to such other company and the degree to which the requesting insurer, as well as the other company, meets these standards.

(2) Filing for approval to do business in this state. Before any insurer may deliver or issue for delivery any variable life contract in this state, it must file with the Texas Department of Insurance the following information, and any other information specifically requested, for the consideration of the commissioner, on making the determination required by paragraph (1)(B) of this section:

(A) copies of and a general description of the variable life contracts it intends to issue;

(B) a general description of the methods of operation of the variable life insurance business of the insurer, including methods of distribution of contracts and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial, or distributive services to the insurer;

(C) with respect to any separate account maintained by an insurer for any variable life contract, a statement of the investment policy the insurer intends to follow for the investment of the assets held in such separate account, and a statement of procedures for changing such investment policy. The statement of investment policy must include a description of the investment objectives intended for the separate account;

(D) a description of any investment advisory services contemplated as required by §4.1506 of this title (relating to Separate Accounts);

(E) a copy of the statutes and regulations of the state of domicile of a foreign or alien insurer under which it is authorized to issue variable life contracts;

(F) biographical data not previously filed with the commissioner with respect to officers and directors of the insurer on the appropriate biographical form used in Texas;

(G) a statement of the insurer's actuary describing the mortality and expense risks that the insurer will bear under the contract; and

(H) the provisions of subparagraphs (A) - (G) of this paragraph will be deemed to have been satisfied to the extent that the information required by the commissioner is provided in form identical to the insurer's registration statement filed under 15 United States Code §77a, et seq.

(3) Standards of suitability. Every insurer seeking approval to enter into the variable life insurance business in this state must establish and maintain a written statement specifying the standards of suitability to be used by the insurer. Such standards of suitability must specify that no recommendation will be made to an applicant to purchase a variable life contract and that no variable life contract will be issued in the absence of reasonable grounds to believe that the purchase of such contract is not unsuitable for such applicant on the basis of information furnished after reasonable inquiry of such applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or the agent making the recommendation.

(4) Use of sales material. An insurer authorized to transact variable life insurance business in this state may not use any sales material, advertising material, or descriptive literature or other materials of any kind in connection with its variable life insurance business in this state unless it complies with Chapter 21, Subchapter B, Division 1 of this title (relating to Insurance Advertising). An insurer issuing flexible premium variable life contracts must provide, to all prospective purchasers, an illustration of cash surrender values before or at the time of delivery of the contract. Any illustration of cash surrender values delivered to an applicant or prospective applicant under this section must:

(A) include a hypothetical gross investment return of 0.0%, and when other hypothetical gross investment returns are included, the current gross investment return must, to the extent permitted by federal law, be included;

(B) give equal prominence to both guaranteed and non-guaranteed aspects of the contract if guarantees are included in the contract;

(C) prominently display, by way of written statement, the hypothetical nature of the illustration as it relates to investment returns;

(D) prominently state that a contract may terminate due to insufficient premiums and/or poor investment performance; and

(E) prominently show, by way of written statement, that excessive loans or withdrawals may cause the contract to lapse due to insufficient cash surrender value and, at the option of the insurer, prominently display the effects of loans or withdrawals on contract values.

(5) Requirements applicable to contractual services. Any material contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial, or other services with respect to variable life insurance operations must be in writing and provide that the supplier of such services furnish the commissioner with any information or reports in connection with such services that the commissioner may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with these regulations, and any other applicable law or regulations.

(6) Reports to the commissioner. Any insurer authorized to transact the business of variable life insurance in this state must submit to the commissioner, in addition to any other materials that may be required by this subchapter or any other applicable laws or rules:

(A) an annual statement of the business of its separate account or accounts in such forms as may be prescribed by the National Association of Insurance Commissioners;

(B) before use in this state, any information furnished to applicants as provided for in §4.1507 of this title (relating to Information Furnished to Applicants);

(C) before use in this state, the form of any of the reports to contract holders as provided for in §4.1509 of this title (relating to Reports to Contract Holders); and

(D) such additional information concerning its variable life insurance operations or its separate accounts as the commissioner deems necessary.

(7) Treatment of material reported under paragraph (6) of this section. Receipt of the material specified in paragraph (6) of this section does not imply approval or acceptance of the material. The commissioner will require the redistribution of any previously distributed material that is found to be false, misleading, deceptive, or inaccurate in any material respect.

(8) Authority of the commissioner to disapprove. Any material required to be filed with the commissioner, or approved by the commissioner, will be subject to disapproval if at any time it is found by the commissioner not to comply with the standards established by these rules.

History

Source Note: The provisions of this §4.1503 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective January 4, 2001, 25 TexReg 12981; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1504 Insurance Contract and Filing Requirements

The commissioner will not approve any variable life insurance form filed under these rules unless it conforms to the requirement of applicable law.

(1) Filing of variable life contracts. All variable life contracts, and all riders, endorsements, applications, and other documents that are to be attached to and made a part of the contract and that relate to the variable nature of the contract, must be filed with the commissioner and approved or exempted, as applicable, by the commissioner before delivery or issuance for delivery in this state.

(A) Each variable life contract, rider, endorsement, and application must be filed in accordance with Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings). A flexible premium variable life contract submission must be accompanied by the following:

(i) a mathematical demonstration comparing the specimen contract's cash surrender values, assuming the contract's assumed investment rate, if any, or in the absence of an assumed investment rate, on a rate not to exceed the maximum interest rate allowed by Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, to the minimum cash surrender value described in paragraph (2)(F) of this section. The specimen contract should be for the minimum initial face amount permitted to be issued to a male age 35. The demonstration should not assume changes in face amount that are optional to the contract holder. The maturity date and the premium paying period should be the maximum permitted by the contract. The premium for each year should be the greater of the minimum premium permitted for that year or the premium that will allow the contract to mature at the maturity date assuming guaranteed charges and the assumed investment rate, if any, or, in the absence of an assumed investment rate, a rate not to exceed the maximum interest rate permitted by Insurance Code Chapter 1105;

(ii) an actuarial description that sets forth maximum expense charges, loads, and surrender charges, applicable to the contract at issue and upon a change in basic coverage for all ages, bands, and classes of risk, will be provided in conjunction with the contract.

(B) The commissioner may approve variable life contracts and related forms with provisions the commissioner deems to be not less favorable to the contract holder and the beneficiary than those required by these rules.

(2) Mandatory contract benefit and design requirements. Variable life contracts delivered or issued for delivery in this state must comply with the following minimum requirements.

(A) Mortality and expense risks must be borne by the insurer. The expense charges must be subject to the maximums stated in the contract. The charge for mortality must be stated in the contract and may not exceed a mortality rate for the attained age of the insured in a table specified for the calculation of cash surrender values in Insurance Code Chapter 1105. Provided, for insurance issued on a substandard basis, the charge for mortality may be the mortality rate for the attained age of the insured in such other tables as may be specified by the company and approved by the Texas Department of Insurance.

(B) For scheduled premium contracts, a minimum death benefit must be provided in an amount at least equal to the initial face amount of the contract so long as premiums are duly paid (subject to paragraph (4) of this section).

(C) The contract must reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer must demonstrate that the reflection of investment experience in the variable life contract is actuarially sound.

(D) Each variable life contract must be credited with the full amount of the net investment return applied to the benefit base.

(E) Any changes in variable death benefits of each variable life contract must be determined at least annually.

(F) The cash surrender value of each variable life contract must be determined at least monthly. The method of computation of cash surrender values and other nonforfeiture benefits, as described in the contract and in a statement filed with the commissioner in this state in which the contract is delivered, or issued for delivery, must be in accordance with recognized actuarial procedures that recognize the variable nature of the contract. The method of computation must be such that if the net investment return credited to the contract at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the contract, then the resulting cash surrender values and other nonforfeiture benefits must be at least equal to the minimum values required by Insurance Code Chapter 1105, for a general account contract with such premiums and benefits. The assumed investment rate may not exceed the maximum interest rate permitted under Insurance Code Chapter 1105. If the contract does not contain an assumed investment rate, this demonstration must be based on a rate not to exceed the maximum interest rate permitted under Insurance Code Chapter 1105. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not limited to, a guarantee that the amount payable at death or maturity is at least equal to the amount that otherwise would have been payable if the net investment return credited to the contract at all times from the date of issue had been equal to the assumed investment rate.

(3) Mandatory contract provisions. Every variable life contract filed for approval in this state must contain at least the following.

(A) The cover page or pages corresponding to the cover page of each contract must contain:

(i) a prominent statement in either contrasting color or in boldface type that the amount or duration of death benefit may be variable or fixed under specified conditions;

(ii) a prominent statement in either contrasting color or in boldface type that cash surrender values may increase or decrease in accordance with the experience of the separate account, subject to any specified minimum guarantees;

(iii) a statement describing any minimum death benefit required under paragraph (2)(B) of this section;

(iv) the method, or a reference to the contract provision that describes the method, for determining the amount of insurance payable at death;

(v) a captioned provision that the contract holder may return the variable life contract within 10 days of receipt of the contract by the contract holder, and receive a refund equal to the premiums paid;

(vi) such other items as are currently required for fixed benefit life contracts and that are not inconsistent with this subchapter.

(B) A grace period in accordance with this subparagraph.

(i) For scheduled premium contracts, a provision for a grace period of not less than 31 days from the premium due date that must provide that when the premium is paid within the grace period, cash surrender values will be the same, except for the deduction of any overdue premium, as though the premium were paid on or before the due date.

(ii) For flexible premium contracts, a provision for a grace period beginning on the contract processing day when the total charges authorized by the contract that are necessary to keep the contract in force until the next contract processing day exceed the amounts available under the contract to pay such charges in accordance with the terms of the contract. Such grace period must end on a date not less than the later of the date 61 days after the contract processing day when the grace period begins, or the date that is 31 days after the mailing date of the report to contract holders required by §4.1509(3) of this title (relating to Reports to Contract Holders). The death benefit payable during the grace period will equal the death benefit in effect immediately before such period less any overdue charges. If the contract processing days occur monthly, the insurer may require payment of an amount equal to the greater of:

(I) not more than three times the charges that were due on the contract processing day on which the amounts available under the contract were insufficient to pay all charges authorized by the contract that are necessary to keep such contract in force until the next contract processing day; or

(II) the amount necessary to keep such contract in force for a period of three calendar months from the contract processing day on which the amounts available under the contract were insufficient to pay all charges authorized by the contract.

(C) For scheduled premium contracts, a provision that the contract will be reinstated at any time within two years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising after the end of the grace period following the date of default together with accrued interest on the contract to the date of reinstatement and payment of an amount not exceeding the greater of:

(i) all overdue premiums at an interest rate not exceeding the contract loan interest rate in effect for the period during and after the lapse of the contract, and any indebtedness in effect at the end of the grace period following the date of default with interest at a rate not exceeding the contract loan interest rate in effect for the period during and after the lapse of the contract; or

(ii) 110% of the increase in cash surrender value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding the contract loan interest rate in effect for the period during and after the lapse of the contract.

(D) A full description of the benefit base and the method of calculation and application of any factors used to adjust variable benefits under the contract.

(E) A provision designating the separate account to be used and stating that:

(i) the assets of such separate account must be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life contracts supported by the separate account; and

(ii) the assets of such separate account must be valued at least as often as any contract benefits vary but at least monthly.

(F) A provision specifying what documents constitute the entire insurance contract.

(G) A designation of the officers who are empowered to make an agreement or representation on behalf of the insurer and an indication that statements by the insured, or on the insured's behalf, are considered as representations and not warranties.

(H) An identification of the owner of the insurance contract.

(I) A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation.

(J) A statement of any conditions or requirements concerning the assignment of the contract.

(K) A description of any adjustments in benefits under the contract to be made in the event of misstatement of age or sex of the insured.

(L) A provision that the contract will be incontestable by the insurer after it has been in force for two years during the lifetime of the insured, provided, however, that any increase in the amount of the contract's death benefits after the contract issue date, which increase occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured's insurability, will be incontestable after any such increase has been in force, during the lifetime of the insured, for two years from the date of issue of such increase.

(M) A provision stating that the investment policy of the separate account may not be changed without the approval of the insurance commissioner of the state of domicile of the insurer, and that the approval process is on file with the commissioner of this state.

(N) A provision that the payment of variable death benefits in excess of any minimum death benefits, cash surrender values, contracts loans, or partial withdrawals (except when used to pay the premiums) or partial surrenders may be deferred:

(i) for up to two months for death benefit payments or six months for all other payments from the date of request, if such payments are based on contract values that do not depend on the investment performances of the separate accounts; or

(ii) for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists that may make such payment impractical.

(O) If settlement options are provided, at least one such option must be provided on a fixed basis only.

(P) A detailed and complete definition for the basis for computing the contract value and the cash surrender value of the contract. For flexible premium variable life contracts, the definition must include the following:

(i) the guaranteed maximum expense charges and loads;

(ii) any limitation on the crediting of additional interest. Interest credits may not remain conditional for a period longer than 12 months;

(iii) any assumed investment rate or rates;

(iv) the guaranteed maximum mortality charges;

(v) any other guaranteed charges; and

(vi) any surrender or partial withdrawal charges.

(Q) Premiums or charges for incidental insurance benefits must be stated separately.

(R) Any other contract provisions required by this subchapter.

(S) Such other items as are currently required for fixed benefit life insurance contracts and are not inconsistent with this subchapter.

(T) A provision for nonforfeiture insurance benefits. The insurer may establish either a reasonable minimum cash surrender value amount or a reasonable death benefit that may be purchased under any nonforfeiture option, below which any nonforfeiture option will not be available.

(U) If a flexible premium contract does not provide for a guarantee of death benefit coverage, but does provide for a "maturity date," "end date," or similar date, then the contract must also contain a statement, in close proximity to that date, that it is possible that the coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner.

(4) Contract loan provision. Every variable life contract, other than term insurance contracts and pure endowment contracts, delivered or issued for delivery in this state must contain provisions that are not less favorable to the contract holders than the following.

(A) A provision for contract loans after the contract has been in force for one full year that provides the following:

(i) at least 75% of the contract's cash surrender value may be borrowed;

(ii) the amount borrowed must bear interest at a rate not to exceed that permitted by Insurance Code Chapter 1110, concerning Interest Rates on Certain Policy Loans;

(iii) any indebtedness must be deducted from the proceeds payable on death; and

(iv) any indebtedness must be deducted from the cash surrender value upon surrender or in determining any nonforfeiture benefit.

(B) For scheduled premium contracts, whenever the indebtedness exceeds the cash surrender value, the insurer must give notice of any intent to cancel the contract if the excess indebtedness is not repaid within 31 days after the date of mailing of such notice. For flexible premium contracts, whenever the total charges authorized by the contract that are necessary to keep the contract in force until the next following contract processing day exceed the amounts available under the contract to pay such charges, a report must be sent to the contract holder containing the information specified by §4.1509(3) of this title.

(C) The contract may provide that if, at any time, so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the contract holder may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110% of the corresponding increase in cash surrender values and by furnishing such evidence of insurability as the insurer may require.

(D) The contract may specify a reasonable minimum amount that may be borrowed at any time, but such minimum may not apply to any automatic premium loan provision.

(E) No contract loan provision is required if the contract is under extended insurance nonforfeiture option.

(F) The contract loan provisions must be constructed so that variable life insurance contract holders who have not exercised such provisions are not disadvantaged by the exercise of those provisions.

(G) Amounts paid to the contract holders upon the exercise of any contract loan provision must be withdrawn from the separate account and must be returned to the separate account upon repayment except that a stock insurer may provide the amounts for contract loans from the general account.

(5) Other contract provisions. The following provisions may in substance be included in a variable life contract or related form delivered or issued for delivery in this state:

(A) an exclusion for suicide within two years of the issue date of the contract, provided, however, that to the extent of the increased death benefits only, the contract may provide an exclusion for suicide within two years of any increase in death benefits that results from an application or request of the owner after the contract issue date;

(B) incidental insurance benefits may be offered on a fixed or variable basis;

(C) contracts issued on a participating basis must offer to pay dividend amounts in cash. In addition, such contracts may offer the following dividend options:

(i) the amount of the dividend may be credited against premium payments;

(ii) the amount of the dividend may be applied to provide amounts of additional fixed or variable benefit life insurance;

(iii) the amount of the dividend may be deposited in the general account at a specified minimum rate of interest;

(iv) the amount of the dividend may be applied to provide paid-up amounts of fixed benefit one-year term insurance; or

(v) the amount of the dividend may be deposited as a variable deposit in the separate account or separate accounts;

(D) a provision allowing the contract holder to elect in writing in the application for the contract or thereafter an automatic premium loan on a basis not less favorable than that required of contract loans under paragraph (4) of this section, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed;

(E) a provision allowing the contract holder to make partial withdrawals; and/or

(F) any other contract provision approved by the commissioner.

History

Source Note: The provisions of this §4.1504 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1505 Reserve Liabilities for Variable Life Insurance

(a) Reserve liabilities for variable life insurance contracts must be established under Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law, in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

(b) For scheduled premiums contracts, reserve liabilities for the guaranteed minimum death benefit must be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and be maintained in the general account of the insurer and must not be less than the greater of the following minimum reserve:

(1) the aggregate total of the term costs, if any, covering a period of one full year from the valuation date, of the guarantee on each variable life contract, assuming an immediate one-third depreciation in the current value of the assets in the separate account followed by a net investment return equal to the assumed investment rate; or

(2) the aggregate total of the "attained age level" reserves on each variable life insurance contract. The "attained age level" reserve on each variable life insurance contract must not be less than zero and must equal the "residue," as described in subparagraph (A) of this paragraph, of the prior year's "attained age level" reserve in the contract, with any such "residue," increased or decreased by a payment computed on an attained-age basis as described in subparagraph (B) of this paragraph.

(A) The "residue" of the prior year's "attained age level" reserve on each variable life insurance contract may not be less than zero and must be determined by adding interest at the valuation interest rate to such prior year's reserve, deducting the tabular claims based on the "excess," if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of such guarantee, and dividing the net result by the tabular probability of survival. The "excess" referred to in the preceding sentence must be based in the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year.

(B) The payment referred to in this paragraph must be computed so that the present value of a level of that amount each year over the future premium paying period of the contract is equal to (i) minus (iii), where:

(i) is the present value of the future guaranteed minimum death benefits;

(ii) is the present value of the future death benefits that would be payable in the absence of such guarantee; and

(iii) is any "residue," as described in subparagraph (A) of this paragraph, of the prior year's "attained age level" reserve on such variable life insurance contract. If the contract is paid-up, the payment must equal (i) minus (ii) minus (iii). The amounts of the future death benefits referred to in clause (ii) of this paragraph must be computed assuming a net investment return of the separate account that may differ from the assumed investment rate and/or the valuation interest but in no event may exceed the maximum interest rate permitted for the valuation of life contracts.

(3) The valuation interest rate and mortality table used in computing the two minimum reserves described in paragraph (2)(A) and (B) of this subsection must conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserve, the insurer may employ suitable approximations and estimates, including, but not limited to, groupings and averages.

(c) For flexible premium contracts, reserve liabilities for any guaranteed minimum death benefit must be maintained in the general account of the insurer and may not be less than the aggregate total of the term costs, if any, covering the period provided for in the guarantee not otherwise provided for by the reserves held in the separate account assuming an immediate one-third depreciation in the current value of the assets of the separate account followed by a net investment return equal to the valuation interest rate. The valuation interest rate and mortality table used in computing this additional reserve, if any, must conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserve, the insurer may employ suitable approximations and estimates, including, but not limited to, groupings and averages.

(d) Reserve liabilities for all fixed incidental insurance benefits and any guarantees associated with variable incidental insurance benefits must be maintained in the general account, and reserve liabilities for all variable aspects of the variable incidental insurance benefits must be maintained in a separate account, in amounts determined in accordance with the actuarial procedures appropriate to such benefit.

History

Source Note: The provisions of this §4.1505 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1506 Separate Accounts

The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer.

(1) Establishment of separate accounts. Any domestic life insurance company issuing variable life contracts must establish one or more separate accounts under Insurance Code Chapter 1152, concerning Separate Accounts, Variable Contracts, and Related Products.

(A) If no law or other regulation provides for the custody of separate account assets and if such insurer is not the custodian of such separate account assets, all contracts for custody of such assets must be in writing and the commissioner has authority to review and approve of both the terms of any such contract and the proposed custodian before the transfer of custody.

(B) In connection with the handling of separate account assets, such insurer may not, without prior written approval of the commissioner, employ in any material manner any person who:

(i) within the last 10 years has been convicted of any felony or a misdemeanor arising out of such person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of 18 United States Code §§1341, 1342, or 1343, as amended;

(ii) within the last 10 years had been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit, or knowing misrepresentation; or

(iii) within the last 10 years has been found by federal or state regulatory authorities to have violated or has acknowledged violation of any provision of federal or state laws involving fraud, deceit, or knowing misrepresentation.

(C) All persons with access to the cash, securities, or other assets allocated to or held by the separate account must be under bond in the amount of not less than $100,000.

(2) Amounts in the separate account. The insurer must maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance contracts or the benefit base for such contracts.

(3) Investments by the separate account.

(A) No sale, exchange, or other transfer of assets may be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts unless:

(i) in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made; and

(ii) such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the commissioner in advance.

(B) The separate account must have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under contracts funded by the account.

(4) Limitations on ownership.

(A) A separate account may not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after such purchase or acquisition the value of such investment, together with prior investment of such account in such security valued as required by these rules, would exceed 10% of the value of the assets of the separate account. Upon appropriate documentation by the company that evidences that a waiver of this limitation will not render the operation of the separate account hazardous to the public or contract holders in this state, the commissioner may in writing waive this limitation.

(B) No separate account may purchase or otherwise acquire the voting securities of any issuer if, as a result of such acquisition, the insurer and its separate accounts in the aggregate will own more than 10% of the total issued and outstanding voting securities of such issuer. Upon appropriate documentation by the company evidencing that a waiver of this limitation will not render the operation of the separate account hazardous to the public or the contract holders in this state, the commissioner may in writing waive this limitation.

(C) The percentage limitations specified in subparagraph (A) of this paragraph may not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered under 15 United States Code §§80b-1 - 80b-21, as amended, or other pools of investment assets if the investments and investment policies of such investment companies or asset pools comply substantially with the provisions of paragraph (3) of this section and other applicable portions of this regulation.

(5) Valuation of separate account assets. Investments of the separate account must be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.

(6) Separate account investment policy. The investment policy of a separate account operated by a domestic insurer filed under §4.1503(2)(C) of this title (relating to Qualifications of Insurer to Issue Variable Life Insurance) may not be changed without first filing such change with the commissioner.

(A) Any change filed under this paragraph will be effective 60 days after the date it was filed with the commissioner, unless the commissioner notifies the insurer before the end of such 60-day period of the commissioner's disapproval of the proposed change. At any time, the commissioner may, after notice and public hearing, disapprove any change that has become effective under this paragraph.

(B) The commissioner may disapprove the change if the commissioner determines that the change would be detrimental to the interests of the contract holders participating in such separate accounts.

(7) Charges against separate account. The insurer must disclose in writing, before or contemporaneously with delivery of the contract, all charges that may be made against the separate account, including, but not limited to, the following:

(A) taxes or reserves for taxes attributable to investment gains and income of the separate account;

(B) actual cost of reasonable brokerage fees and similar direct acquisition and sale costs incurred in the purchase or sale of separate account assets;

(C) actuarially determined costs of insurance (tabular costs) and the release of separate account liabilities. The tabular costs of insurance may not exceed the mortality rate for the attained age of the insured in the table specified for the calculation of cash surrender values in Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, provided, for insurance issued on a substandard basis, the charge for mortality may be the mortality rate for the attained age of the insured in such other table as may be specified by the company and approved by the Texas Department of Insurance;

(D) charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;

(E) a charge, at a rate specified in the contract, for mortality and expense guarantees;

(F) any amounts in excess of those required to be held in the separate accounts; and

(G) charges for incidental insurance benefits.

(8) Standards of conduct. Every insurer seeking approval to enter into the variable life insurance business in this state must adopt by formal action of its board of directors a written statement specifying the standards of conduct of the insurer, its officers, directors, employees, and affiliates with respect to the purchase or sale of investments of separate accounts. Such standards of conduct are binding on the insurer and those to whom it refers. A code of ethics meeting the requirements of 15 United States Code §80a-17, as amended, and applicable rules and regulations adopted under that section satisfies the provisions of this paragraph.

(9) Conflicts of interest. Rules under any provision of the Insurance Code or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest also apply to members of any separate account's committee or other similar body.

(10) Investment advisory services to a separate account. An insurer may not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable life insurance contracts unless:

(A) the person providing such advice is registered as an investment advisor under 15 United States Code §§80b-1 - 80b-21, as amended;

(B) the person providing such advice is an investment manager under 29 United States Code §1001, et seq., as amended, with respect to the assets of each employee benefit plan allocated to the separate account; or

(C) the insurer has filed with the commissioner and continues to file annually the following information and statements concerning the proposed advisor:

(i) the name and form of the organization, and its principal place of business;

(ii) the names and addresses of its partners, officers, directors, and persons performing similar functions or, if such an investment advisor be an individual, of such individual;

(iii) a written standard of conduct complying in substance with requirements of paragraph (8) of this section that has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors, and affiliates; and

(iv) a statement provided by the proposed advisor as to whether the advisor or any person associated therewith:

(I) has been convicted within 10 years of any felony or misdemeanor arising out of such person's conduct as an employee, salesman, officer or director of an insurance company, a banker, an insurance agent, a securities broker, or an investment advisor involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of 18 United States Codes §§1341, 1342, or 1343, as amended;

(II) has been permanently or temporarily enjoined by an order, judgment, or decree of any court of competent jurisdiction from acting as an investment advisor, underwriter, broker, or dealer, or as an affiliated person or as an employee of any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;

(III) has been found by federal or state regulatory authorities to have willfully violated or have acknowledged willful violation of any provision of federal or state securities laws or state insurance laws or of any rule or regulation under such laws; or

(IV) has been censored, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of federal or state regulatory authorities; and

(D) such investment advisory contract must be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days' written notice to the investment advisor. The commissioner may, after notice and opportunity for hearing, by order require such investment advisory contract to be terminated if the commissioner deems continued operation under the contract to be hazardous to the public or the insurer's contract holders.

History

Source Note: The provisions of this §4.1506 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1507 Information Furnished to Applicants

An insurer delivering or issuing for delivery in this state any variable life insurance contracts must deliver to the applicant for such contract and obtain a written acknowledgment of receipt from such applicant coincident with or before the execution of the application, the following information. The requirements of this section will be deemed to have been satisfied to the extent that a disclosure containing information required by this section is delivered, either in the form of a prospectus included in the requirements of 15 United States Code §77a, et seq., that was declared effective by the Securities and Exchange Commission; or all information and reports required by 29 United States Code §1001 et seq., if the policies are exempted from the registration requirements of 15 United States Code §77a, et seq.:

(1) a summary explanation in nontechnical terms, of the principal features of the contract, including a description of how the variable benefits will reflect the investment experience of the separate account and the factors that affect such variation. Such explanation must include notices of the provision required by §4.1504(3)(A)(v) and (3)(F) of this title (relating to Insurance Contract and Filing Requirements);

(2) a statement of the investment policy of the separate account, including:

(A) a description of the investment objectives intended for the separate account and the principal types of investments intended to be made; and

(B) any restrictions or limitations on how the operations of the separate account are intended to be conducted;

(3) a statement of the net investment return of the separate account for each of the last 10 years or such lesser period as the separate account has been in existence;

(4) a statement of the charges levied against the separate account during the previous year;

(5) a summary of the method to be used in valuing assets held by the separate account;

(6) a summary of the federal income tax aspects of the contract applicable to the insured, the contract holder, and the beneficiary;

(7) illustrations of benefits payable under the variable life insurance contract. Such illustrations must be prepared by the insurer and may not include projections of past investment experience into the future or attempted predictions of future investments experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that such assumed rates are hypothetical only.

History

Source Note: The provisions of this §4.1507 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1508 Application

The application for a variable life contract must contain:

(1) a prominent statement that the death benefit may be variable or fixed under specified conditions;

(2) a prominent statement that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees); and

(3) questions designed to elicit information that enables the insurer to determine the suitability of variable life insurance for the applicant.

History

Source Note: The provisions of this §4.1508 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1509 Reports to Contract Holders

Any insurer delivering or issuing for delivery in this state any variable life contracts must mail to each variable life insurance contract holder at their last known address the following reports.

(1) Within 30 days after each anniversary of the contract, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or contract loan, any interest charge, any optional payments allowed under §4.1504(4) of this title (relating to Insurance Contract and Filing Requirements) under the contract computed as the contract anniversary date. Provided, however, that such statement may be furnished within 30 days after a specified date in each contract year so long as the information contained in the statement is computed as of a date not more than 60 days before the mailing of such notice. This statement must state that, in accordance with the investment experience of the separate account, the cash surrender values and the variable death benefit may increase or decrease, and must prominently identify any value described in the statement that may be recomputed before the next statement required by this section. If the contract guarantees that the variable death benefit on the next contract anniversary date will not be less than the variable death benefit specified in such statement, the statement must be modified to so indicate. For flexible premium contracts, the report must contain a reconciliation of the change since the previous report in contract value and cash surrender value, if different, because of payments made less deduction for expense charges, withdrawals, investment experience, insurance charges, and any other charges made against the contract value. In addition, the report must show the projected contract value and cash surrender value, if different, as of one year from the end of the period covered by the report assuming that:

(A) planned periodic premiums, if any, are paid as scheduled;

(B) guaranteed costs of insurance are deducted; and

(C) the net return is equal to the assumed rate or, in the absence of an assumed rate, is not greater than zero. If the projected value is less than zero, a warning message must be included that states that the contract may be in danger of terminating without value in the next 12 months unless additional premium is paid.

(2) Annually, a statement or statements including:

(A) a summary of the financial statement of the separate account based on the annual statement last filed with the commissioner;

(B) the net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five years when available;

(C) a list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the commissioner;

(D) any charges levied against the separate account during the previous year; and

(E) a statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment advisor of the separate account.

(3) For flexible premium contracts, a report must be sent to the contract holder if the amounts available under the contract on any contract processing day to pay the charges authorized by the contract are less than the amount necessary to keep the contract in force until the next following contract processing day. The report must indicate the minimum payment required under the terms of the contract to keep it in force and the length of the grace period for payment of such amount.

History

Source Note: The provisions of this §4.1509 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1510 Separability

If any provision of this chapter (relating to Life - Variable Life Insurance) or the application of such provisions to any person or circumstance is for any reason held to be invalid, the remainder of the sections and the application of such provision to other persons or circumstances will not be affected.

History

Source Note: The provisions of this §4.1510 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1511 Savings Clause

Each cause of action, pending litigation, or matter in process before the Texas Department of Insurance or commissioner of insurance will be determined in accordance with and governed by the applicable statutes, rules, orders, or interpretations of the Texas Department of Insurance in effect at the time of the occurrence of the subject event; and this section operates to save the application of such past procedure and law to any such event from amendment, change, or repeal, notwithstanding any provision of this subchapter or any conflict or ambiguity therein.

History

Source Note: The provisions of this §4.1511 adopted to be effective June 5, 1985, 10 TexReg 1676; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

Subchapter P REQUIRED REINSTATEMENT RELATING TO MENTAL INCAPACITY OF THE INSURED FOR INDIVIDUAL LIFE POLICIES WITHOUT NONFORFEITURE BENEFITS

28 Tex. Admin. Code § 4.1601 Purpose and Scope

The purpose of this subchapter is to address the reinstatement requirements for individual life policies that lapse due to the mental incapacity of the insured under certain conditions as prescribed in this subchapter.

History

Source Note: The provisions of this §4.1601 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1602 Applicability

This subchapter applies to all individual life policies that do not provide nonforfeiture benefits issued to Texas residents by insurers licensed in this state, including stipulated premium companies and fraternal benefit societies, that lapse due to the mental incapacity of the insured and that qualify for reinstatement under the eligibility requirements set forth in §4.1605 of this title (relating to Eligibility Requirements).

History

Source Note: The provisions of this §4.1602 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1603 Severability

Where any term or section of this subchapter is determined by a court of competent jurisdiction to be inconsistent with the statutes of this state or to be unconstitutional, the remaining terms and provisions of this subchapter remain in effect.

History

Source Note: The provisions of this §4.1603 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1604 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Commissioner--The commissioner of insurance.

(2) Department--The Texas Department of Insurance.

(3) Insured--The person whose life is insured under the policy. For purposes of this subchapter, the insured is the owner, unless the insured and owner are different parties as set forth in the policy.

(4) Mental incapacity--Lacking the ability, based on reasonable medical judgment, to understand and appreciate the nature and consequences of a decision regarding failure to pay a premium when due and the ability to reach an informed decision in the matter.

(5) Owner--The person who has all the rights and all the responsibilities of the policy.

(6) Policyholder--The owner of the policy.

(7) Proof of mental incapacity--The clinical diagnosis of a physician licensed in this state and qualified to make the diagnosis.

History

Source Note: The provisions of this §4.1604 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1605 Eligibility Requirements

An eligible policy that is subject to this subchapter must be reinstated, without evidence of insurability, on payment of past due premiums and interest if it meets the following requirements:

(1) it has been in force continuously for at least five years immediately before the date of lapse;

(2) all premiums have been paid during such period, or within the grace period;

(3) there is a subsequent unintentional default in premium payments caused by the mental incapacity of the insured; and

(4) proof and request for reinstatement are submitted within one year from the date of lapse.

History

Source Note: The provisions of this §4.1605 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1606 Payment of Past Due Premiums

The insurer may require, as a condition of reinstatement, payment of past due premiums, plus interest at a rate not to exceed 6.0% per year.

History

Source Note: The provisions of this §4.1606 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1607 Coverage Dates Back to Date of Lapse

Upon reinstatement, the policy will continue in force as though it had not lapsed.

History

Source Note: The provisions of this §4.1607 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1608 Exceptions to Reinstatement

An insurer is not required to reinstate coverage or pay benefits under this subchapter if the insured first became mentally incapacitated after the expiration of the grace period contained in the policy.

History

Source Note: The provisions of this §4.1608 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1609 Notification and Disclosure Requirements

(a) The insurer is required to send notice of the conditions set forth in this subchapter under which the policy may qualify for reinstatement due to the mental incapacity of the insured. The notice must be sent to the owner of any individual life policy that does not provide nonforfeiture benefits if the policy is in force, renewed, or issued on or after September 1, 1995. The notice required to be provided by this subsection must be provided within 90 days following lapse of an eligible policy.

(b) For all policies issued on or after September 1, 1995, disclosure of the conditions set forth in this subchapter under which the policy may qualify for reinstatement due to the mental incapacity of the insured may be made by incorporating the language of §4.1613 of this title (relating to Notice and Disclosure Form), either in the policy or in an endorsement attached to the policy, in lieu of the notice requirements set forth in subsection (a) of this section.

(c) The notice required to be provided by this subsection will be deemed to be in compliance if mailed by first class mail to the last known address of the policyholder or if contained in the policy or included as an endorsement to the policy.

(d) The notice required by this subsection must be provided in the form set forth in §4.1613 of this title.

History

Source Note: The provisions of this §4.1609 adopted to be effective January 10, 1996, 20 TexReg 11121; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1610 Reinstatement Procedures

(a) The insurer must accept a request for reinstatement and proof of mental incapacity that is filed by:

(1) the insured, or the owner, if the insured and owner are not the same party;

(2) the legal guardian of the insured;

(3) other legal representative of the insured; or

(4) the legal representative of the estate of the insured.

(b) Proof of mental incapacity and the request for reinstatement must be submitted within one year after the date of lapse of the policy.

History

Source Note: The provisions of this §4.1610 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1611 Reduced Benefits

The insurer must pay the death benefit under an eligible policy if the insured dies within one year of the date of lapse and the requirements for submitting proof of mental incapacity and request for reinstatement are met. The insurer must reduce the death benefit under a policy that is eligible for reinstatement under this subchapter by the amount of premiums due and unpaid on the date of death, plus interest on such premiums at the reinstatement interest rate, if there is an uncontroverted claim for benefits that exceeds the amount of premiums and interest owed.

History

Source Note: The provisions of this §4.1611 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1612 Form Filing Procedures

(a) For all new forms subject to this subchapter filed on or after September 1, 1995, the insurer must include with the form filing written notification to the department specifying the method of notification as set forth in §4.1609 of this title (relating to Notification and Disclosure Requirements) by which the notice requirements of §4.1613 of this title (relating to Notice and Disclosure Form) will be met.

(b) For all forms subject to this subchapter approved or filed before September 1, 1995, the insurer must submit to the department a certification, signed by an officer of the company, specifying the method or methods of notification as set forth in §4.1609 of this title by which the notice requirements of §4.1613 of this title will be met.

(c) All policies and endorsements are subject to the filing requirements of Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

History

Source Note: The provisions of this §4.1612 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1613 Notice and Disclosure Form

(a) If the elected method of compliance is notification to all existing policyholders as described in §4.1609(b) of this title (relating to Notification and Disclosure Requirements), the notice required by this subchapter must be provided in the following manner:

Attached Graphic

(b) If the elected method of compliance is notification within 90 days following the lapse of an eligible policy as described in §4.1609(a) of this title, the notice required by this subchapter must be provided in the following manner:

Attached Graphic

(c) If the elected method of compliance is incorporating the language of this section in the policy or in an endorsement, the insurer may incorporate the text of subsection (a) of this section, omitting the titles referencing "Notice" and substituting an appropriate prominent title, such as "Reinstatement Due to the Mental Incapacity of the Insured."

History

Source Note: The provisions of this §4.1613 adopted to be effective January 10, 1996, 20 TexReg 11121; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter Q NONFORFEITURE STANDARDS FOR INDIVIDUAL LIFE INSURANCE IN EMPLOYER PENSION PLANS

28 Tex. Admin. Code § 4.1701 Purpose

The purpose of these sections is to permit individual life insurance policies to provide the same cash values and paid up nonforfeiture benefits to both men and women. (No change in minimum valuation standards is implied by these sections. For example, the reserve held for any policy must be at least as large as the corresponding cash value for that particular policy, calculated on an individual policy basis.)

History

Source Note: The provisions of this §4.1701 adopted to be effective November 30, 1984, 9 TexReg 5919; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.1702 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) 1980 CET Table--That mortality table consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, incorporated in the 1980 National Association of Insurance Commissioners (NAIC) amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the Commissioners 1980 Extended Term Insurance Table.

(2) 1980 CET Table (F)--That mortality table consisting of the rates of mortality for female lives from the 1980 CET Table.

(3) 1980 CET Table (M)--That mortality table consisting of the rates of mortality for male lives from the 1980 CET Table.

(4) 1980 CSO Table, with or without Ten-Year Select Mortality Factors--That mortality table, consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality for Valuation of Standard Individual Ordinary Life Insurance, incorporated in the 1980 NAIC amendments to the Model Standard Valuation Law and Standard Nonforfeiture Law for Life Insurance, and referred to in those models as the Commissioners 1980 Standard Ordinary Mortality Table, with or without Ten-Year Select Mortality Factors.

(5) 1980 CSO Table (F), with or without Ten-Year Select Mortality Factors--That mortality table consisting of the rates of mortality for female lives from the 1980 CSO Table, with or without Ten-Year Select Mortality Factors.

(6) 1980 CSO Table (M), with or without Ten-Year Select Mortality Factors--That mortality table consisting of the rates of mortality for male lives from the 1980 CSO Table, with or without Ten-Year Select Mortality Factors.

(7) 1980 CSO and 1980 CET smoker and nonsmoker mortality tables--The mortality tables derived from the 1980 CSO and 1980 CET mortality tables by the Society of Actuaries Task Force on Smoker/Nonsmoker Mortality and adopted by the NAIC in December 1983.

(8) Norris decision--The decision of the United States Supreme Court in the case of Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983).

History

Source Note: The provisions of this §4.1702 adopted to be effective November 30, 1984, 9 TexReg 5919; amended to be effective November 1, 1987, 12 TexReg 3839; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1703 Standard

(a) For any policy of insurance on the life of either a male or female insured, delivered, or issued for delivery in this state after the operative date of former Insurance Code Article 3.44a, §8 (recodified in Insurance Code Chapter 1105, Subchapter B, concerning Computation of Adjusted Premiums Using Nonforfeiture Net Level Premium Method), and before January 1, 2017, for that policy form, the following tables described in paragraphs (1) and (2) of this subsection may be used as specified in subsection (b) of this section in determining minimum cash surrender values, amounts of paid-up nonforfeiture benefits, or benefits under extended term insurance provisions included in the policy. For policies issued on or after January 1, 2017, the valuation manual, adopted under Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law, provides the tables to be used.

(1) A mortality table that is a blend of the 1980 CSO Table (M) and 1980 CSO Table (F), with or without Ten-Year Select Mortality Factors, may, at the option of the company, be substituted for the 1980 CSO Table, with or without Ten-Year Select Mortality Factors.

(2) A mortality table that is of the same blend as used in paragraph (1) of this subsection, but applied to form a blend of the 1980 CET Table (M) and the 1980 CET Table (F), may, at the option of the company, be substituted for the 1980 CET Table.

(b) The following tables are to be considered as the basis for acceptable tables:

(1) 100% male, 0% female for tables to be designated as the "1980 CSO-A" and "1980 CET-A" Tables;

(2) 80% male, 20% female for tables to be designated as the "1980 CSO-B" and "1980 CET-B" Tables;

(3) 60% male, 40% female for tables to be designated as the "1980 CSO-C" and "1980 CET-C" Tables;

(4) 50% male, 50% female for tables to be designated as the "1980 CSO-D" and "1980 CET-D" Tables;

(5) 40% male, 60% female for tables to be designated as the "1980 CSO-E" and "1980 CET-E" Tables;

(6) 20% male, 80% female for tables to be designated as the "1980 CSO-F" and "1980 CET-F" Tables; and

(7) 0% male, 100% female for tables to be designated as the "1980 CSO-G" and "1980 CET-G" Tables.

(c) Values of 1,000 qx for the blended tables as specified in subsection (b)(2) - (6) of this section can be found in "Proceedings of the NAIC," Volume 1, 1984, pages 396 - 400. "Proceedings of the NAIC," Volume 1, 1984, page 457, shows the method by which ten-year select mortality factors may be obtained. The tables specified in subsection (b)(1) of this section are the same as the 1980 CSO Table (M) or the 1980 CET Table (M), as applicable. The tables specified in subsection (b)(7) of this section are the same as the 1980 CSO Table (F) or the 1980 CET Table (F), as applicable. The tables specified in subsection (b)(2) - (6) of this section are adopted by reference. Copies of those tables may be obtained by contacting Life and Health Division, Life and Health Actuarial, MC: LH-ACT, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030. The tables in subsection (b)(1) and (7) of this section are already adopted by statutory law under alternate names.

(d) The tables specified in subsection (b)(1) and (7) of this section may not be used with respect to policies issued on or after January 1, 1985, except where the proportion of persons insured is anticipated to be 90% or more of one sex or the other or except for certain policies converted from group insurance. Such group conversions issued on or after January 1, 1986, must use mortality tables based on the blend of lives by sex expected for such policies if such group conversions are considered as extensions of the decision in Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983). This consideration has not been clearly defined by court or legislative action in all jurisdictions, as of the date of promulgation of this section.

(e) Notwithstanding any other provision of this subchapter, an insurer may not use these blended tables unless the Norris decision is known to apply to the policies involved, or unless there exists a bona fide concern on the part of the insurer that the Norris decision might reasonably be construed to apply by a court having jurisdiction.

History

Source Note: The provisions of this §4.1703 adopted to be effective November 30, 1984, 9 TexReg 5919; amended to be effective January 3, 1989, 13 TexReg 6272; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1704 Alternate Rule

(a) In determining minimum cash surrender value and amounts of paid-up nonforfeiture benefits for any policy of insurance on either a male or a female insured on a form of insurance with separate rates for smokers and nonsmokers delivered or issued for delivery in this state after the operative date of former Insurance Code Article 3.44a, §8 (recodified in Insurance Code Chapter 1105, Subchapter B, concerning Computation of Adjusted Premiums Using Nonforfeiture Net Level Premium Method), and before January 1, 2017, for that policy form, in addition to the mortality tables that may be used according to §4.1703 of this title (relating to Standard), the tables in paragraphs (1) and (2) of this subsection may be used. For policies issued on or after January 1, 2017, the valuation manual, adopted under Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law, provides the tables to be used.

(1) A mortality table that is a blend of the male and female rates of mortality according to the 1980 CSO Smoker Mortality Table, in the case of lives classified as smokers, or the 1980 CSO Nonsmoker Mortality Table, in the case of lives classified as nonsmokers, with or without 10-year select mortality factors, may, at the option of the company, be substituted for the 1980 CSO Table, with or without 10-year select mortality factors.

(2) A mortality table that is of the same blend as used in paragraph (1) of this subsection but applied to form a blend of the male and female rates of mortality according to the corresponding 1980 CET Smoker Mortality Table or 1980 CET Nonsmoker Mortality Table or 1980 CET Nonsmoker Mortality Table may, at the option of the company, be substituted for the 1980 CET Table.

(b) The following blended mortality tables are considered as the basis for acceptable tables according to subsection (a) of this section:

(1) 100% male, 0% female for smoker tables to be designated as the 1980 CSO-SA and 1980 CET-SA Tables;

(2) 80% male, 20% female for smoker tables to be designated as the 1980 CSO-SB and 1980 CET-SB Tables;

(3) 60% male, 40% female for smoker tables to be designated as the 1980 CSO-SC and 1980 CET-SC Tables;

(4) 50% male, 50% female for smoker tables to be designated as the 1980 CSO-SD and 1980 CET-SD Tables;

(5) 40% male, 60% female for smoker tables to be designated as the 1980 CSO-SE and 1980 CET-SE Tables;

(6) 20% male, 80% female for smoker tables to be designated as the 1980 CSO-SF and 1980 CET-SF Tables;

(7) 0% male, 100% female for smoker tables to be designated as the 1980 CSO-SG and 1980 CET-SG Tables;

(8) 100% male, 0% female for nonsmoker tables to be designated as the 1980 CSO-NA and 1980 CET-NA Tables;

(9) 80% male, 20% female for nonsmoker tables to be designated as the 1980 CSO-NB and 1980 CET-NB Tables;

(10) 60% male, 40% female for nonsmoker tables to be designated as the 1980 CSO-NC and 1980 CET-NC Tables;

(11) 50% male, 50% female for nonsmoker tables to be designated as the 1980 CSO-ND and CET-ND Tables;

(12) 40% male, 60% female for nonsmoker tables to be designated as the 1980 CSO-NE and 1980 CET-NE Tables;

(13) 20% male, 80% female for nonsmoker tables to be designated as the 1980 CSO-NF and 1980 CET-NF Tables; and

(14) 0% male, 100% female for nonsmoker tables to be designated as the 1980 CSO-NG and 1980 CET-NG Tables.

(c) The Texas Department of Insurance adopts and incorporates into this subchapter by reference the tables to which subsection (b) of this section refers as tables to be used in conjunction with the section adopted under this subchapter. Copies of these tables can be obtained from the Life and Health Division, Life and Health Actuarial, MC: LH-ACT, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.

(d) The tables specified in subsection (b)(1), (7), (8), and (14) of this section may not be used except where the proportion of persons insured is anticipated to be 90% or more of one sex or the other.

(e) Notwithstanding any other provision of this subchapter, an insurer may not use the blended mortality tables in subsection (b) of this section unless the Norris decision is known to apply to the policies involved, or unless there exists a bona fide concern on the part of the insurer that the Norris decision might reasonably be construed to apply by a court having jurisdiction.

History

Source Note: The provisions of this §4.1704 adopted to be effective November 1, 1987, 12 TexReg 3839; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1705 Unfair Discrimination

It is not a violation of Insurance Code §541.057, concerning Unfair Discrimination in Life Insurance and Annuity Contracts, for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis, as permitted by this subchapter.

History

Source Note: The provisions of this §4.1705 adopted to be effective November 30, 1984, 9 TexReg 5919; amended to be effective November 1, 1987, 12 TexReg 3839; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1706 Severability

If any provision of these sections or the application of these provisions to any person or circumstance is for any reason held to be invalid, the remainder of the provisions of this subchapter and the application of such provisions to other persons or circumstances will not be affected.

History

Source Note: The provisions of this §4.1706 adopted to be effective November 30, 1984, 9 TexReg 5919; amended to be effective November 1, 1987, 12 TexReg 3839; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.1707 2001 CSO Mortality Table

The 2001 CSO Mortality Table must be used for purposes of this subchapter under the requirements of Subchapter AA, Division 3 of this chapter (relating to 2001 CSO Mortality Table).

History

Source Note: The provisions of this §4.1707 adopted to be effective April 14, 2003, 28 TexReg 3056; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Subchapter U VARIABLE ANNUITIES

28 Tex. Admin. Code § 4.2101 Purpose and Scope

These sections are promulgated to regulate individual and group variable annuity contracts and certificates delivered or issued for delivery in this state, on and after the effective date of these sections.

History

Source Note: The provisions of this §4.2101 adopted to be effective February 5, 1985, 10 TexReg 250; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127.

28 Tex. Admin. Code § 4.2102 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Agent--Any person, corporation, partnership, or other legal entity that is licensed as a life insurance agent.

(2) Commissioner--The commissioner of insurance of this state.

(3) Flexible premium contract--Any variable annuity contract other than a scheduled premium variable annuity contract.

(4) General account--All assets of the insurer other than assets in separate accounts established under Insurance Code Chapter 1152, concerning Separate Accounts, Variable Contracts, and Related Products, or under the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable annuities.

(5) Net investment return--The rate of investment return to be credited to the variable annuity contract in accordance with the terms of the contract after deductions for tax charges, if any, and for asset charges either at a rate not in excess of that stated in the contract, or in the case of a contract issued by a nonprofit corporation under which the contract holder participates fully in the investment, mortality, and expense experience of the account, in an amount not in excess of the actual expense not offset by other deductions. The net investment return to be credited to a contract must be determined at least monthly.

(6) Scheduled premium contract--Any variable contract under which both the timing and amount of premium payments are fixed.

(7) Separate account--A separate account established under Insurance Code Chapter 1152, or under the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

(8) Variable annuity contract--Any individual annuity contract or group annuity contract or certificate issued in connection with a group annuity master contract that provides for benefits that vary according to the investment experience of a separate account established and maintained by the insurer as to such contract, under Insurance Code Chapter 1152. Annuity benefits may be payable in fixed or variable amounts or both.

History

Source Note: The provisions of this §4.2102 adopted to be effective February 5, 1985, 10 TexReg 250; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.2103 Qualifications of Insurer To Issue Variable Annuities

The following requirements are applicable to all insurers either seeking authority to issue variable annuities in this state or having the authority to issue variable annuity products in this state.

(1) Licensing and approval to do business in this state. An insurer may not deliver or issue for delivery in this state any variable annuity unless:

(A) the insurer is licensed or organized to do a life insurance business in this state; and

(B) after notice and hearing, the commissioner has authorized, either as part of the insurer's original certificate of authority or by charter amendment, the insurer to issue, deliver, and use variable annuity contracts, and only after the commissioner has considered, among other things, the following:

(i) whether the plan of operation for the issuance of variable annuity contracts is sound;

(iii) whether the present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of such contracts is likely to render its operation hazardous to the public or its contract holders in this state. The commissioner will consider, among other things:

(I) the history of operation and financial condition of the insurer;

(III) the applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable annuity contracts. The state of entry of an alien insurer will be deemed its state of domicile for this purpose; and

(IV) if the insurer is a subsidiary of or is affiliated by common management or ownership with another company, its relationship to such other company, and the degree to which the requesting insurer, as well as the other company, meets the standards specified in this subparagraph.

(2) Filing for approval to do business in this state. Before any insurer may deliver or issue for delivery any variable annuity contract in this state, it must file with the Department of Insurance the following information and any other information specifically requested, for the consideration of the commissioner, on making the determination required by paragraph (1)(B) of this section:

(A) copies of and a general description of the variable annuity contracts it intends to issue;

(B) a general description of the methods of operation of the variable annuity business of the insurer, including methods of distribution of contracts and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial, or distributive services to the insurer;

(C) with respect to any separate account maintained by an insurer for any variable annuity, a statement of the investment policy the insurer intends to follow for the investment of the assets held in such separate account, and a statement of procedures for changing such investment policy. The statement of investment policy must include a description of the investment objectives intended for the separate account;

(D) a description of any investment advisory services contemplated as required by §4.2104 of this title (relating to Separate Accounts);

(E) a copy of the statutes and regulations of the state of domicile of a foreign or alien insurer under which it is authorized to issue variable annuity contracts;

(F) biographical data not previously filed with the commissioner with respect to officers and directors of the insurer on the appropriate biographical form used in Texas; and

(G) a statement of the insurer's actuary describing the mortality and expense risks that the insurer will bear under the contract.

History

Source Note: The provisions of this §4.2103 adopted to be effective February 5, 1985, 10 TexReg 250; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.2104 Separate Accounts

(a) Establishment of separate account. Any domestic life insurance company issuing variable annuity contracts must establish one or more separate accounts under Insurance Code Chapter 1152, concerning Separate Accounts, Variable Contracts, and Related Products.

(1) If no law or other regulation provides for the custody of separate account assets, and if such insurer is not the custodian of such separate account assets, all contracts for custody of such assets must be in writing, and the commissioner has authority to review and disapprove both the terms of any such contract and the proposed custodian before the transfer of custody.

(2) In connection with the handling of separate account assets, such insurer may not, without prior written approval of the commissioner, employ in any material manner any person who:

(A) within the last 10 years has been convicted of any felony or a misdemeanor arising out of such person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of 18 United States Code §§1341, 1342, or 1343, as amended;

(B) within the last 10 years has been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit, or knowing misrepresentation; or

(C) within the last 10 years has been found by federal or state regulatory authorities to have violated or has acknowledged violation of any provision of federal or state laws involving fraud, deceit, or knowing misrepresentation.

(3) All persons with access to the cash, securities, or other assets allocated to or held by the separate account must be under bond in the amount of not less than $100,000.

(b) Amounts in the separate account. The insurer must maintain in each separate account assets with a value at least equal to the valuation reserves for the variable portion of the variable annuity insurance contracts and other contractual liabilities.

(c) Investments by the separate account. No sale, exchange, or other transfer of assets may be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts, unless:

(1) in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made; and

(2) such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the commissioner in advance.

(d) Limitations on ownership.

(1) A separate account may not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after such purchase or acquisition the value of such investment, together with prior investments of such account in such security valued as required by this subchapter, would exceed 10% of the value of the assets of the separate account. Upon appropriate documentation by the company, which evidences that a waiver of this limitation will not render the operation of the separate account hazardous to the public or the contract holders in this state, the commissioner may in writing waive this limitation.

(2) No separate account may purchase or otherwise acquire the voting securities of any issuer if, as a result of such acquisition, the insurer and its separate accounts in the aggregate will own more than 10% of the total issued and outstanding voting securities of such issuer. Upon appropriate documentation by the company, which evidences that a waiver of this limitation will not render the operation of the separate account hazardous to the public or the contract holders in this state, the commissioner may in writing waive this limitation.

(3) The percentage limitation specified in paragraph (1) of this subsection may not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered under 15 United States Code §§80b-1 to 80b-21, as amended, or other pools of investment assets if the investments and investment policies of such investment companies or asset pools comply substantially with the provisions of subsection (c) of this section and other applicable portions of this regulation.

(e) Valuation of separate account assets. Investments of the separate account must be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.

(f) Separate account investment policy. The investment policy of a separate account operated by a domestic insurer filed under §4.2103(2)(C) of this title (relating to Qualifications of Insurer to Issue Variable Annuities) may not be changed without first filing such change with the commissioner.

(1) Any change filed under this subsection will be effective 60 days after the date it was filed with the commissioner, unless the commissioner notifies the insurer before the end of such 60-day period of disapproval of the proposed change. At any time, the commissioner may, after notice and public hearing, disapprove any change that has become effective under this subsection.

(2) The commissioner may disapprove the change if the commissioner determines that the change would be detrimental to the interest of the contract holders participating in such separate account.

(g) Charges against separate accounts. The insurer must disclose in writing, before or contemporaneously with delivery of the contract, all charges that may be made against the separate account, including, but not limited to, the following:

(1) taxes or reserves for taxes attributable to investment gains and income of the separate account;

(2) actual cost of reasonable brokerage fees and similar direct acquisition and sale costs incurred in the purchase or sale of separate account assets;

(3) charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;

(4) a charge, at a rate specified in the policy, for any mortality and expense guarantees;

(5) any amounts in excess of those required to be held in the separate account; and

(6) charges for incidental insurance benefits.

(h) Standards of conduct. Every insurer seeking approval to enter into the variable annuity business in this state must adopt by formal action of its board of directors a written statement specifying the standards of conduct of the insurer, its officers, directors, employees, and affiliates with respect to the purchase or sale of investments of separate accounts. Such standards of conduct are binding on the insurer and those to whom it refers. A code of ethics meeting the requirements of 15 United States Code §80a-17, as amended, and applicable rules and regulations adopted under that section will satisfy the provisions of this subsection.

(i) Conflicts of interest. Rules adopted under any provisions of the Insurance Code or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interests also apply to members of any separate account's committee or other similar body.

(j) Investment advisory services to a separate account. An insurer may not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable annuity contracts unless:

(1) the person providing such advice is registered as an investment advisor under 15 United States Code §§80b-1 to 80b-21, as amended;

(2) the person providing such advice is an investment manager under 29 United States Code §1001, et seq., as amended, with respect to the assets of each employee benefit plan allocated to the separate account; or

(3) the insurer has filed with the commissioner and continues to file annually the following information and statements concerning the proposed advisor:

(A) the name and form of organization, and its principal place of business;

(B) the names and addresses of its partners, officers, directors, and persons performing similar functions or, if such an investment advisor be an individual, the name and address of such individual;

(C) a written standard of conduct complying in substance with the requirements of subsection (h) of this section that has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors, and affiliates; and

(D) a statement provided by the proposed advisor as to whether the advisor or any person associated therewith:

(i) has been convicted within 10 years of any felony or misdemeanor arising out of such person's conduct as an employee, salesman, officer, or director of an insurance company, a banker, an insurance agent, a securities broker, or an investment advisor involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of 18 United States Code §§1341, 1342, or 1343;

(ii) has been permanently or temporarily enjoined by an order, judgment, or decree of any court of competent jurisdiction from acting as an investment advisor, underwriter, broker, or dealer, or as an affiliated person or as an employee of any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;

(iii) has been found by federal or state regulatory authorities to have willfully violated or have acknowledged willful violation of any provision of federal or state securities laws or state insurance laws or of any rule or regulation under such laws; or

(iv) has been censored, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of federal or state regulatory authorities; and

(4) such investment advisory contract must be in writing and provide that it is subject to review and termination by the commissioner at any time, and that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days' written notice to the investment advisor. The commissioner may, after notice and opportunity for hearing, by order require such investment advisory contract to be terminated if the commissioner deems continued operation under the contract to be hazardous to the public or the insurer's contract holders.

History

Source Note: The provisions of this §4.2104 adopted to be effective February 5, 1985, 10 TexReg 250; amended to be effective May 11, 2022, 47 TexReg 2758; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.2105 Contract Requirements

Variable annuity contracts must conform to the requirements of this section in order to obtain the commissioner's approval.

(1) Filing of variable annuity contracts. All variable annuity contracts, all riders, endorsements, applications, and other documents that are attached to and made a part of the contract and that relate to the variable nature of the contract, must be filed with the commissioner and approved, as applicable, by the commissioner before delivery or issuance for delivery in this state.

(A) Each variable annuity contract and related forms must be filed according to Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(B) The commissioner may approve variable annuity contracts and related forms with provisions the commissioner deems to be not less favorable to the contract holder, certificate holder, and the beneficiary than those required by these sections.

(2) Mandatory contract provisions. Every variable annuity contract must contain at least the following.

(A) The cover page or page corresponding to the cover page of each contract must contain:

(i) a prominent statement that the benefits under the contract are on a variable basis; and

(ii) a prominent statement that the dollar amounts will vary to reflect the investment experience of a separate account or separate accounts.

(B) A full description of the investment increment factors to be used in computing dollar amounts of variable benefits or variable contractual payments of values, and may guarantee that expense and/or mortality results will not adversely affect such dollar amounts. In the case of an individual variable annuity contract under which the expense and mortality results may adversely affect the dollar amount of benefits, the expense and mortality factors must be stipulated in the contract. In computing the dollar amount of variable benefits or other contractual payments or values under an individual variable annuity contract:

(i) the annual net investment increment assumption may not exceed 5.0% except with the approval of the commissioner;

(ii) to the extent that the level of benefits may be affected by future mortality results, the mortality factor must be determined from the Annuity Mortality Table for 1949, Ultimate, or any modification of that table not having a higher mortality rate at any age, or, if approved by the commissioner, from another table.

(C) A provision designating the separate account to be used and stating that the portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account may not be chargeable with liabilities arising out of any other business the company may conduct.

(D) As appropriate, a provision for a grace period.

(i) For individual variable annuities that provide for the payment of periodic stipulated payments, a grace period of 31 days within which any stipulated payment to the insurer falling due after the first may be made, during which period of grace the contract must continue in force. The contract may include a statement of the basis for determining the date that any such payment received during the period of grace will be applied to produce the values under the contract arising therefrom.

(ii) For group variable annuities, a provision that the contract holder or premium payor is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the contract must continue in force, unless the contract holder or premium payor has given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the contract. The contract may provide that the contract holder or premium payor will be liable to the insurer for the payment of pro rata premium for the time the contract was in force during such grace period.

(E) A provision that, at any time within two years from the date of default in making periodic stipulated payments to the insurer during the life of the annuitant and unless the cash surrender value has been paid, the contract may be reinstated upon payment to the insurer of such overdue payments as required by contract, and of all indebtedness to the insurer on the contract, including interest. The contract may include a statement of the basis for determining the date that the amount to cover such overdue payments and any indebtedness will be applied to produce the values under the contract arising therefrom.

(F) A unique definition of any cash surrender values available under the contract.

(G) A provision for nonforfeiture benefits as defined in paragraph (3) of this section.

(H) A provision defining the documents that make up the entire contract.

(I) An identification of the owner of the contract.

(J) A provision stating that the company must mail to the individual contract holder or group contract holder at least once each year after the first at the contract holder's last address known to the company a statement reporting the investments held in the separate account.

(K) For individual variable annuities, a provision that the company must mail to the contract holder at least once in each contract year, after the first at the contract holder's last address known to the company, a statement reporting the status of the policy as of a date not more than four months before the date of mailing. In the case of an annuity contract under which payments have not yet commenced, the statement must contain:

(i) the number of accumulation units credited to such contract and the dollar value of a unit; or

(ii) the value of the contract holder's account.

(3) Reserves and nonforfeiture benefits.

(A) The reserve liability for variable annuities must be established under Insurance Code Chapter 425, Subchapter B, concerning Standard Valuation Law, in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

(B) The provisions of this paragraph relating to nonforfeiture benefits do not apply to any:

(i) reinsurance;

(ii) group annuity contract purchases in connection with one or more retirement plan or plans of deferred compensation established or maintained by or for one or more employers (including partnerships or sole proprietorships), employee organizations, or any combination thereof, or other plans providing individual retirement accounts or individual retirement annuities under Internal Revenue Code §408, as now or hereafter amended;

(iii) premium deposit fund;

(iv) investment annuity;

(v) immediate annuity;

(vi) deferred annuity contract after annuity payments have commenced;

(vii) reversionary annuity; or

(viii) to any contract that is to be delivered outside this state through an agent or other representative of the company issuing the contract.

(C) To the extent that any variable annuity contract provides benefits that do not vary in accordance with the investment performance of a separate account before the annuity commencement date, such contract must contain provisions that satisfy the requirements of Insurance Code Chapter 1107, concerning Standard Nonforfeiture Law for Certain Annuities, and may not otherwise be subject to this section.

(D) No variable annuity contract, except as stated in subparagraphs (B) and (C) of this paragraph, may be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions that in the opinion of the commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract.

(i) That upon cessation of payment of considerations under a contract, the company will grant a paid-up annuity benefit on a plan described in the contract that complies with subparagraph (H) of this paragraph. Such description must include a statement of the mortality table, if any, and guaranteed or assumed interest rates used in calculating annuity payments.

(ii) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or before the commencement of any annuity payments, the company will pay in lieu of any paid-up annuity benefit a cash surrender benefit as described in the contract that complies with subparagraph (I) of this paragraph. The contract may provide that the company reserves the right, at its option, to defer the determination and payment of any cash surrender benefit for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists that may make such determination and payment impractical.

(iii) A statement that any paid-up annuity, cash surrender, or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract, or any prior withdrawals from or partial surrenders of the contract.

(E) The minimum values as specified in this section of any paid-up annuity, cash surrender, or death benefits available under a variable annuity contract must be based upon nonforfeiture amounts meeting the requirements of this paragraph. The minimum nonforfeiture amount on any date before the annuity commencement date must be an amount equal to the percentages of net considerations (as specified in subparagraph (F) of this paragraph) increased (or decreased) by the net investment return allocated to the percentages of net considerations, that amount must be reduced to reflect the effect of:

(i) any partial withdrawals from or partial surrenders of the contract;

(ii) the amount of any indebtedness on the contract, including interest due and accrued;

(iii) an annual contract charge not less than zero nor greater than $30 less the amount of any annual contract charge deducted from any gross considerations credited to the contract during such contract year; and

(iv) a transaction charge of $10 for each transfer to another separate account or to another investment division within the same separate account.

(F) The percentages of net considerations used to define the minimum nonforfeiture amount in subparagraph (E) of this paragraph must meet the requirements of this subparagraph.

(i) With respect to contracts providing for periodic considerations, the net considerations for a given contract year used to define the minimum nonforfeiture amount must be an amount not less than zero and must be equal to the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of $30 and less a collection charge of $1.25 per consideration credited to the contract during that contract year. The percentages of net considerations must be 65% for the first contract year and 87.5% for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage must be 65% of the portion of the total net consideration for any renewal contract year that exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was 65%.

(ii) With respect to contracts providing for a single consideration, the net consideration used to define the minimum nonforfeiture amount must be the gross consideration less a contract charge of $75. The percentage of net consideration must be 90%.

(G) Demonstration that a contract's nonforfeiture amounts comply with this paragraph must be based on the following assumptions:

(i) values should be tested at the ends of each of the first 20 contract years;

(ii) a net investment return of 7.0% per year should be used;

(iii) if the contract provides for transfers to another separate account or to another investment division within the same separate account, one transfer per contract year should be assumed;

(iv) with respect to contracts providing for periodic considerations, monthly considerations of $100 should be assumed for each of the first 240 months;

(v) with respect to contracts providing for a single consideration, a $10,000 single consideration should be assumed; and

(vi) if the contract provides for allocation of considerations to both fixed and variable accounts, 100% of the considerations should be assumed to be allocated to the variable account.

(H) Any paid-up annuity benefit available under a variable annuity contract must be such that its present value on the annuity commencement date is at least equal to the minimum nonforfeiture amount on the date. Such present value must be computed using the mortality table, if any, and the guaranteed or assumed interest rates used in calculating the annuity payments.

(I) For variable annuity contracts that provide cash surrender benefits, the cash surrender benefit at any time before the annuity commencement date may not be less than the minimum nonforfeiture amount next computed after the request for surrender is received by the company. The death benefit under such contracts must be at least equal to the cash surrender benefit.

(J) Any variable annuity contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount before the annuity commencement date must include a statement in a prominent place in the contract that such benefits are not provided.

(K) Notwithstanding the requirements of this section, a variable annuity contract may provide under the situations specified in clause (i) or clause (ii) of this subparagraph that the company, at its option, may cancel the annuity and pay the contract holder its accumulated value and by such payment be released of any further obligation under such contract:

(i) if at the time the annuity becomes payable the accumulated value is less than $2,000, or would provide an income the initial amount of which is less than $20 per month; or

(ii) if before the time the annuity becomes payable under a periodic payment variable annuity contract no considerations have been received under the contract for a period of two full years, and both:

(I) the total considerations paid before such period, reduced to reflect any partial withdrawals from or partial surrenders of the contract; and

(II) the accumulated value amounts to less than $2,000.

(L) For any variable annuity contract that provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits must be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subparagraph (E) of this paragraph, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other contract benefits additional to life insurance, endowment, and annuity benefits, must be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits required by this section. The inclusion of such additional benefits may not be required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.

(4) Applications. The application for a variable annuity contract must contain:

(A) a prominent statement that the benefits may increase or decrease in accordance with the experience of a separate account; and

(B) the portion of the premium allocable on the date of issue to any fixed dollar benefits and the portion allocable on the date of issue to the variable benefits.

History

Source Note: The provisions of this §4.2105 adopted to be effective February 5, 1985, 10 TexReg 250; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

28 Tex. Admin. Code § 4.2106 Separability

If any provision of these sections or the application of these sections to any person or circumstance is for any reason held to be invalid, the remainder of these sections and the application of such provision to other persons or circumstances will not be affected.

History

Source Note: The provisions of this §4.2106 adopted to be effective February 5, 1985, 10 TexReg 250; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250.

Chapter 5 PROPERTY AND CASUALTY INSURANCE

Subchapter C TEXAS MEDICAL LIABILITY INSURANCE UNDERWRITING ASSOCIATION

28 Tex. Admin. Code § 5.2001 Definitions

(a) Words defined in the Insurance Code. Unless the context clearly dictates the contrary, words defined in Insurance Code Chapter 2203 and Insurance Code Article 21.49-3, §2, and not specifically defined in this section have the same definition when used in this subchapter as they have in the Insurance Code.

(b) Words defined in this subchapter. The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise:

(1) Act--The Texas Medical Liability Insurance Underwriting Association Act, codified as Insurance Code Chapter 2203 and Insurance Code Article 21.49-3, §§2,11, 12, and 13.

(2) Application--An application for medical liability insurance and general liability insurance issued in connection with medical liability insurance.

(3) Association--Texas Medical Liability Insurance Underwriting Association.

(4) Board of directors--The board of directors of the Texas Medical Liability Insurance Underwriting Association.

(5) Chairman of the board--The chairman of the board of directors of the Texas Medical Liability Insurance Underwriting Association.

(6) Charter member of the association--An insurer authorized to write and engaged in writing, in Texas on a direct basis, automobile liability and/or liability other than automobile insurance at any time between January 1, 1975, and the effective date of the Act.

(7) Commissioner--Commissioner of Insurance.

(8) Department--Texas Department of Insurance.

(9) Member--An insurer required to be a member of the association by Insurance Code §2203.055 or, where the context indicates, any duly authorized agent or representative of such insurer. "Members" means more than one member.

(10) Secretary--The secretary of the Texas Medical Liability Insurance Underwriting Association.

(11) Treasurer--The treasurer of the Texas Medical Liability Insurance Underwriting Association.

(12) Vice chair or vice chair of the board--The vice chair of the board of directors of the Texas Medical Liability Insurance Underwriting Association.

History

Source Note: The provisions of this §5.2001 adopted to be effective January 1, 1976; amended to be effective October 31, 1984, 9 TexReg 5426; amended to be effective March 18, 1993, 18 TexReg 1411; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective September 16, 2020, 45 TexReg 6363.

28 Tex. Admin. Code § 5.2002 Operation of the Texas Medical Liability Insurance Underwriting Association

(a) Membership. The association is governed by Insurance Code Chapter 2203. Any insurer authorized to write and engaged in writing any insurance, the writing of which requires the insurer to become a member of the association under Insurance Code §2203.055, will become a member of the association on the first day of January immediately following the date the insurer started writing such insurance. The determination of the insurer's participation in the association will be made as of the date of such membership in the same manner as for all members of the association. Any member that ceases to be authorized to write or that ceases to engage in the writing of any insurance that would require such insurer to become a member of the association will remain a member of the association until midnight of December 31 next following the date the insurer ceases to be authorized to write or ceases to write such insurance, and the insurer's participation in the association will cease as of that time; provided, however, that each member must participate in any financial deficit of the association for all calendar years subsequent to December 31, 1976, during which the insurer was a member of the association, whenever such deficit is determined. The member must be charged or credited in due course with its proper share of all expenses or losses and any recoupment or reimbursement allocable to the member. If a member is merged or consolidated with another insurer, the continuing insurer will become a member of the association in place of the merged or consolidated member, provided that such member will be deemed to have become a member of the association on the date the merged or consolidated member became a member and provided, further, that such member will pay no initial expense fee.

(b) Expense fees.

(1) Initial expense fee. Each member must pay to the association an initial expense fee of $100. All members of the association must pay such fees on or before the date they become members of the association.

(2) Annual expense fee. In addition to the initial expense fee, each member must pay to the association an annual expense fee in an amount to be determined by the board of directors and approved by the Commissioner. All members of the association must pay such annual expense fee on or before the first of January for each year during which the association exists.

(3) Remedy for failure to pay fees. If any member fails or refuses to pay either the initial expense fee or the annual expense fee after receipt of written notice by the association that such fee is due and payable, then such member will be subject to the same remedies as provided in §5.2003(d)(4) of this title (relating to Property and Casualty Insurance) for the failure of the member to pay any assessment levied by the association.

(4) Use of fees. All expense fees paid to the association will be used in such manner as the board of directors may from time to time direct in accordance with this subchapter.

(1) Notice of meetings. Written or printed notice stating the place, date, hour, subjects of the meeting, and the purpose or purposes for which the meeting is called, must be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chair of the board of directors, the secretary, or other person calling the meeting, to each member entitled to vote at such meeting. Public notice of meetings must be given as required by Government Code Chapter 551.

(2) Meetings.

(A) Annual meeting. The annual meeting of the members must be held not later than the 30th day of September of each year at an hour and place to be determined by the board of directors for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors is not held on the day designated for any annual meeting of the members, the board of directors must cause the election to be held at a special meeting of the members as soon as may be convenient after the annual meeting.

(B) Special meetings. The board of directors, the chair of the board of directors, or 20% of the members may call a special meeting of the members and designate any place as the place of the special meeting.

(3) Quorum. Fifty members, represented by person or by proxy, is a quorum at a meeting of the members. If fewer than 50 members are represented at a meeting, a majority of the members represented may adjourn the meeting from time to time without further notice. At the next meeting after adjournment at which a quorum is present or represented, any business may be transacted at the meeting as originally notified. The members represented at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough persons to leave less than a quorum.

(4) Voting.

(A) Each member is entitled to one vote at the annual meeting and each special meeting.

(B) A member may vote by proxy executed in writing by the member. No proxy will be valid after the next annual meeting after the date of its execution unless otherwise provided in the proxy. Each proxy is revocable.

(C) Each member's vote may be voted by such officer, agent, or proxy as the bylaws of such member may authorize or, in the absence of such authorization, as such member may determine.

(D) Voting on any question or in any election may be by voice vote or by show of hands unless the presiding officer orders, or any member demands, that voting be by written ballot.

(5) Rules. To the extent applicable, Robert's Rules of Order govern the conduct of and procedure at all meetings of the members.

(d) Directors.

(1) Selection. At each annual meeting of members or as otherwise provided in subsection (c)(2) of this section, the members must elect five directors from member companies for the categories set forth in paragraph (2)(B) and (C) of this subsection. Four directors must be selected in the manner set forth in paragraph (2)(D) - (F) of this subsection. Directors take office on October 1 of each year and will hold office until the next election of directors or until a successor has been selected and qualified.

(2) Membership.

(A) The number of the directors of the association must be nine.

(B) Three directors to be elected in accordance with paragraph (1) of this subsection must be elected by the members and be separate members of the association representing each of the following:

(i) the American Property Casualty Insurers Association;

(ii) the National Association of Mutual Insurance Companies; and

(iii) the Insurance Council of Texas.

(i) a member insurer organized under the laws of and domiciled in Texas; and

(ii) a member insurer that is either (or both):

(I) not a member of those associations described in subparagraph (B) of this paragraph, or

(II) an insurer that is not domiciled in Texas.

(D) One director must be a physician who is appointed by the Texas Medical Association or its successor.

(E) One director must be a representative of hospitals appointed by the Texas Hospital Association or its successor.

(F) Two directors must be members of the public to be appointed by the Commissioner.

(G) No director may fill more than one seat on the board of directors, and no member affiliated by ownership, management, or control may simultaneously occupy seats on the board of directors. No later than 60 days before the annual meeting, the board of directors must select a nominating committee of three member companies. The three directors who will represent the organizations set forth in subparagraph (B) of this paragraph must be nominated by the nominating committee. The two directors described in subparagraph (C) of this paragraph must be nominated by any member of the association by submitting the nominee's name to the nominating committee. To be eligible for selection to the board of directors by the members, a member must be nominated at least 30 days before the annual meeting at which such directors are selected.

(3) Term of office. Unless removed in accordance with this subchapter, each director will hold office until the next election of directors or until a successor has been selected and qualified.

(4) Regular meetings. A regular meeting of the board of directors must be held with notice as provided for in this subsection, immediately after and at the same place as the annual meeting of the members. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings with notice to the directors at least 10 days before each regular meeting as provided in this subsection.

(5) Notice of regular or special meeting. Notice of any regular or special meeting must be given at least 10 days before the meeting. The association must provide notice by personal delivery, mail, electronic, or other means to each director. If mailed, notice will be deemed to be delivered when deposited in the United States mail, addressed with postage prepaid. If the notice is by other reasonable means, the association must maintain a written record of the method of notification. Any director may waive notice of any meeting. The attendance of a director at a meeting is a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objection to the transaction of any business because the meeting is not lawfully called or convened.

(6) Special meetings. Special meetings of the board of directors may be called by the chair of the board, or at the request of any two directors. The person or persons who call special meetings of the board of directors may fix any place that is accessible to the public as the place for holding any special meeting of the board of directors called by them.

(7) Statement of purpose of meeting required. The business to be transacted at, and the purpose of, any regular or special meeting of the board of directors must be specified in the notice, or waiver of notice, of the meeting, and in the notice required by Government Code Chapter 551.

(8) Quorum. A majority of directors is a quorum for the transaction of business at any meeting of the board of directors. Action taken by a majority of directors present at a meeting at which a quorum is present will be the act of the board of directors. If at any meeting of the board of directors there is less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice need be given other than by announcement at the meeting that will be adjourned.

(9) Presumption of assent. A director of the association who is present at the meeting of the board of directors at which action on any matter is taken is presumed to have assented to the action taken unless the director's dissent is entered in the minutes of the meeting, or unless a written dissent to the action is filed with the person acting as secretary of the meeting before the adjournment. The right to dissent is not available to a director who voted in favor of the action.

(10) Compensation. By resolution of the board of directors, the directors and members of committees of the association may be paid their expenses, if any, of attendance at each meeting of the board of directors or each meeting of a committee of the association. No other payment may be made to directors other than that provided in this paragraph except that nothing in this subchapter may be construed as preventing any director from receiving compensation for serving the association in any other capacity.

(11) General powers. The board of directors must manage the business and affairs of the association subject to the supervision and control, at all times, of the Commissioner and the department as set forth in this subchapter and in the Act. Included among the powers of the board of directors, but not in limitation thereof, are the following:

(A) to purchase or otherwise acquire for the association any property, rights, or privileges that the association is authorized to acquire;

(B) to remove any officer summarily for cause, or without cause and, in their discretion, from time to time to dissolve the powers and duties of any officers and to confer the powers and duties upon any other person;

(C) to appoint and remove or suspend such subordinate officers, agents, employees, or representatives as they may deem necessary and to determine their duties, and fix, and from time to time change, their salaries or remuneration, and to require security as and when they think fit;

(D) to confer upon any officer of the association the power to appoint, remove, and suspend subordinate officers or employees;

(E) to determine who may be authorized on the association's behalf to make and sign bills, notes, acceptances, endorsements, checks, releases, receipts, contracts, and other instruments;

(F) to delegate any of the powers of the board of directors in relation to the ordinary business of the association to any standing or special committee, or to any officers or agent (with power to subdelegate) upon such terms as they think fit;

(G) to contract, from time to time, with one or more members for single or multiyear terms, to act as servicing carriers to perform all policy functions of the association, including, without limitation to, underwriting, issuance of policy, coding and premium accounting, settlement of claims to conclusion, and reporting to the association, as may be directed by the association, subject to provisions of law and this subchapter, upon the terms and for the consideration expressed. Such contracts may not become effective until the contracts have been approved by the department;

(H) to approve expenses and levy assessments, including preliminary assessments for initial expenses necessary to commence operations, and assessments to defray losses and expenses;

(I) to establish necessary facilities;

(J) to enter into commission arrangements with agents regarding the sale of medical liability insurance through the association;

(K) to promulgate reasonable and objective underwriting standards;

(L) to either or both accept and refuse the assumption of reinsurance from its members and cede and purchase reinsurance, provided, however, that the reinsurance is governed by rules promulgated by the Commissioner; and

(M) to direct the collection, administration, investment, and valuation of the stabilization reserve funds consistent with the Act and this subchapter.

(12) Committees.

(A) The board of directors, by resolution or resolutions passed by a majority of the board of directors, may designate one or more committees, each committee to consist of two or more of the directors of the association that, to the extent provided in the resolution or resolutions, will have and may exercise the powers of the board of directors in the management of the business and affairs of the association. The committee or committees will have the name or names as may be determined from time to time by appropriate resolution. All committees must keep regular minutes of their proceedings and report the minutes to the board of directors when required.

(B) The chair may appoint the members of the committees as may be appropriate to carry out the business of the association.

(C) The delegation to a committee of authority consistent with this section may not operate to relieve the board of directors, or any director, of any responsibility imposed upon the board of directors or director by law.

(13) Removal. Any person serving as a director may be removed from a position as director either with or without cause at any special meeting of members if notice of intention to remove the director has been stated as one of the purposes of the meeting. This paragraph may not be construed to allow the removal of any member from the board of directors.

(14) Vacancies.

(A) A director position is considered vacant upon the resignation of the member serving as director.

(B) Any vacancy occurring in the board of directors may be filled at the next meeting of the board of directors following the occurrence of such vacancy. Subject to the provisions of paragraph (2) of this subsection, such vacancy must be filled by the affirmative vote of a majority of the remaining directors though less than a quorum. A director elected to fill a vacancy must be elected for the unexpired term of its predecessor.

(15) Executive committee. The board of directors, by resolution or resolutions passed by a majority of the board of directors, may designate an executive committee to consist of a chair, a vice chair, a secretary, a treasurer, and the immediate past chair, provided the immediate past chair is a director. The general manager must be an ex officio member of the executive committee. To the extent provided in the resolution or resolutions, the executive committee has and may exercise the powers of the board of directors in the management of the business and affairs of the association. The executive committee must keep regular minutes of its proceedings and report the minutes to the board of directors. The delegation authority consistent with this section does not operate to relieve the board of directors, or any director, of any responsibility imposed by law upon the board of directors or any director.

(e) Officers.

(1) Number. The officers of the association are the chair of the board of directors, the vice chair of the board of directors, the secretary, the treasurer, and other officers as the Commissioner may desire, all of whom are elected by the board of directors. No two offices may be held by the same person except for the offices of secretary and treasurer.

(2) Election and term of office. The officers of the association are elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of the members or as soon as practical following the annual meeting. Each officer must hold office until a successor has been duly elected and qualified or until the officer's resignation, death, or removal.

(3) Removal and vacancies. Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever, in its judgment, the best interests of the association would be served or otherwise in accordance with this subchapter, but such removal is without prejudice to the contract rights, if any, of the person so removed. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the board of directors for the unexpired portion of the term.

(4) Chair of the board. The chair of the board must preside at all meetings of the members and at all meetings of the directors, appoint and discharge employees and agents of the association subject to the approval of the directors, fix the compensation of employees and agents, make and sign contracts and agreements in the name of the association, and appoint committees. The chair of the board must ensure that the books, reports, statements, and certificates are properly kept, made, and filed, if necessary, and the chair of the board must generally do and perform all acts incident to the office of chair of the board or that may be authorized or required by law, by this subchapter, or by the board of directors, not inconsistent with this subchapter.

(5) Vice chair of the board. The vice chair, elected by the board of directors, has powers and must perform duties as assigned to the vice chair, not inconsistent with this subchapter.

(6) Secretary. The secretary must:

(A) keep the minutes of the members and of the board of directors' meetings in one or more books provided for that purpose;

(B) provide all notices as required by the provisions of this subchapter. In case of the secretary's absence or refusal or neglect to give the required notice, notice may be given at the direction of the chair of the board of directors, or of the members upon whose request the meeting is called;

(D) keep a register of the post office address of each member;

(E) annually determine each member's participation in the association in the manner required by the Act and this subchapter and keep a register of each member's percentage of participation; and

(F) in general, perform all duties incident to the office of secretary and such other duties as from time to time may be delegated to the secretary by the chair of the board or by the board of directors.

(7) Treasurer. The treasurer must have custody of all funds, securities, evidences of indebtedness, and other valuable documents of the association, including those attributable to the stabilization reserve funds. The treasurer must receive and give, or cause to be given, receipts and acquittances for money paid in on account of the association, and pay out of the funds on hand all just debts of the association, of whatever nature, upon maturity of the debts. The treasurer must enter, or cause to be entered, in books of the association to be kept for that purpose, full and accurate accounts of all money received and paid out on account of the association, and whenever required by the board of directors, the treasurer must keep, or cause to be kept, other books as would show a true record of the reserves, expenses, losses, gains, assets, and liabilities of the association.

(f) Fiscal year. The fiscal year of the association is the calendar year.

(g) Waiver of notice. Whenever any notice is required to be given to any members or director of the association under the provisions of this subchapter, a waiver in writing signed by the person or persons entitled to notice is deemed equivalent to the giving of such notice.

(h) Protection of directors and officers.

(1) Any person or insurer made or threatened to be made a party to any civil, criminal, administrative, or investigative action, suit, or proceeding (other than an action by or in the right of the association) because such person or insurer is or was a member or is serving or served on a committee or is or was an officer or employee of the association or is or was serving any other entity or organization at the request of the association is entitled to be indemnified by the association against all judgments, fines, amounts paid in settlement, reasonable costs and expenses (including attorneys' fees), and other liabilities actually and reasonably incurred (other than for amounts paid to the association itself) as a result of such threatened or actual action, suit, or proceeding except in relation to matters as to which that person or insurer is finally adjudged in such action, suit, or proceeding to be liable by reason of willful misconduct in the performance of that person's or insurer's duties or obligations to the association or other entity as previously provided and, with respect to any criminal actions or proceedings, except when such person or insurer believed or had reasonable cause to believe that their conduct was unlawful.

(2) Indemnification must be provided whether or not such person or insurer is a member or is holding office or is employed or serving at the time of such action, suit, or proceeding, and whether or not any such liability was incurred prior to the adoption of this subchapter.

(3) Indemnification is not exclusive of other rights such person or insurer may have, and passes to the successors, heirs, executors, or administrators of such person or insurer.

(4) The termination of any such action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent will not in itself create a presumption that such person or insurer was liable by reason of willful misconduct or that they had reasonable cause to believe that their conduct was unlawful.

(5) In each instance that a question of indemnification arises, entitlements thereto, pursuant to the condition set forth in this subsection, must be determined by the board of directors by a majority vote of a quorum consisting of directors that were not parties to such action, suit, or proceeding or by the board of directors, whether interested or disinterested, if based upon a written opinion of legal counsel that the action, suit, or proceeding could qualify for indemnification because of reasonable doubt that the directors were liable by reason of willful misconduct in the performance of duties or obligations to the association or other entity as provided in this subsection, or that there was reasonable doubt that the directors believed or had reasonable cause to believe that the conduct was unlawful, and the board of directors must also determine the time and manner of payment of such indemnification; provided, however, if any such action, suit, or proceeding is terminated by compromise settlement, indemnification in respect of such disposition must be made only if such settlement had the prior approval of the board of directors, and provided further that a person or insurer who or that has been wholly successful, on the merit or otherwise, in the defense of a civil or criminal action, suit, or proceeding of the character described in this subsection will be entitled in every instance to indemnification as authorized in this subchapter.

(6) Expense incurred in defending a civil or criminal action, suit, or proceeding may be paid by the association in advance of the final disposition of the action, suit, or proceeding, as authorized by the board of directors in the specific case, upon receipt of an undertaking by or on behalf of the person or insurer to repay the amount, unless it is determined that the person or insurer is not entitled to be indemnified by the association.

(7) Nothing in this subsection is deemed to preclude a person or insurer who or that the board of directors has determined not to be entitled to indemnification from asserting the right to such indemnification by legal proceedings.

(8) Indemnification as provided in this subsection is apportioned among all members, including any named in any such action, suit, or proceeding, in the same manner as other operating expenses of the association.

(i) Annual report. The treasurer must file with the department annually, on or before the first day of March, a statement that contains information on the association's transactions, condition, operations, and affairs during the preceding calendar year. Such statement must be in the form and contain the matters and information prescribed by the department. The department may, at any time, require the association to furnish additional information with respect to its transactions, condition, or any matter considered to be material and of assistance in evaluating the scope, operation, and experience of the association.

(j) Examinations. The department must examine the affairs of the association in accordance with Insurance Code Chapter 401.

History

Source Note: The provisions of this §5.2002 adopted to be effective January 1, 1976; amended to be effective October 31, 1984, 9 TexReg 5426; amended to be effective August 27, 1987, 12 TexReg 2680; amended to be effective January 5, 1990, 14 TexReg 6788; amended to be effective March 2, 1992, 17 TexReg 1309; amended to be effective March 18, 1993, 18 TexReg 1411; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective September 16, 2020, 45 TexReg 6363.

28 Tex. Admin. Code § 5.2003 Members' and Policyholders' Participation in the Texas Medical Liability Insurance Underwriting Association

(a) Powers of the association. The association is created by the Act and will be governed by the provisions of the Act and this subchapter.

(b) Collection and investment of funds.

(1) Collection. The treasurer is responsible for the collection of all the premiums received by the association, all assessments levied against the members, all assessments and charges levied against policyholders (including contributions to the stabilization reserve funds), and all proceeds from the investment of funds.

(2) Investment.

(A) All funds collected by the association must be retained in appropriate accounts in any bank or banks doing business in Texas and may be invested only in the following:

(i) interest-bearing time deposits or certificates of deposit in any bank or banks doing business in Texas that are members of the Federal Deposit Insurance Corporation;

(ii) treasury bills, notes, or bonds of the government of the United States of America; or

(iii) other investments as may be proposed by the board of directors and approved by the Commissioner.

(B) The board of directors must determine what portion of such funds should be retained in a checking account or accounts and what portion of such funds should be invested in the investments set forth in subparagraph (A) of this paragraph, as well as which specific investments, if any, should be made.

(c) Stabilization reserve funds. Insurance Code §2203.301 creates a policyholder's stabilization reserve fund for physicians and certain health care providers (§2203.301 fund), and Insurance Code §2203.303 creates a stabilization reserve fund for for-profit and not-for-profit nursing homes and assisted living facilities (§2203.303 fund) and further provides that these funds must be administered as provided in Insurance Code Chapter 2203 and this subchapter and that the advisory directors must be chosen as provided in this subchapter.

(1) General provisions.

(A) In accordance with Insurance Code §2203.101 and §2203.103, the Commissioner will establish by order the categories of physicians and other health care providers, including health care practitioners, and health care facilities, who are eligible to obtain coverage from the association. The order may indicate the stabilization reserve fund appropriate to the new category and may be revised from time to time to include or exclude from eligibility some categories of health care providers and physicians.

(B) The following provisions also govern the stabilization reserve funds under Insurance Code §2203.301 and §2203.303:

(i) Within 15 days after the effective date of any Commissioner order establishing eligibility, the board of directors must extend invitations to the appropriate Texas organizations representing eligible §2203.301 fund health care providers and physicians and §2203.303 fund for-profit and not-for-profit nursing homes and assisted living facilities to each designate an advisory director to represent each eligible category of §2203.301 fund health care provider and physician and §2203.303 fund for-profit and not-for-profit nursing home and assisted living facility, and advise the association of its choice of director.

(ii) Each designated advisory director has a vote on any matter coming before any meeting of the entire body of advisory directors for the §2203.301 fund or §2203.303 fund to which the advisory director has been designated. That vote will be weighted in the proportion that the net written premium collected during the most recent calendar year from policies issued to each category of §2203.301 fund health care provider and physician or §2203.303 fund for-profit or not-for-profit nursing home and assisted living facility bears to the total net written premiums collected from all categories of §2203.301 fund health care providers and physicians or to all categories of §2203.303 fund for-profit and not-for-profit nursing homes and assisted living facilities as applicable during the same calendar year. The proportion of weighting of the advisory directors' votes for the §2203.301 fund and the §2203.303 fund respectively must be determined annually by the association, not later than August 31.

(iii) The designated advisory directors for the §2203.301 fund and the §2203.303 fund respectively must meet not later than September 15 of each year, at a place in Texas stipulated by the board of directors to consider the amount of funds available and the status of the respective §2203.301 fund or §2203.303 fund. The designated advisory directors for the respective §2203.301 fund and §2203.303 fund must inform the board of directors of the percentage to be charged to all policyholders of all policies issued or renewed by the association for the respective §2203.301 fund or §2203.303 fund during the next calendar year. This percentage must be communicated to the board of directors no later than September 20, annually.

(iv) If any organization described in clause (i) of this subparagraph fails to designate an advisory director, the directors designated by the remaining organizations constitute the entire body of advisory directors for the respective §2203.301 fund or §2203.303 fund, and their establishment of the respective §2203.301 fund or §2203.303 fund charge must be accepted as valid by the association and imposed pursuant to the operational procedures of the association, upon approval of the department.

(v) In the event that the advisory directors fail to establish a specific percentage charge for the respective §2203.301 fund or §2203.303 fund to be collected for the coming calendar year before the applicable deadline, the board of directors must immediately submit for approval by the Commissioner a charge to be collected from the respective §2203.301 fund or §2203.303 fund policyholders of each new and renewal policy during the upcoming calendar year in accordance with the provisions of the Insurance Code.

(vi) The advisory directors serve without salary or other fee, and they may not be reimbursed for any expenses. The advisory directors, in the performance of their duties, will be afforded the protection of §5.2002(h) of this title (relating to Operation of the Texas Medical Liability Insurance Underwriting Association).

(C) The respective §2203.301 fund or §2203.303 fund charge must be collected annually from each policyholder of the applicable §2203.301 or §2203.303 fund, as may be appropriate, and must be stated as a percentage of the annual premium due for all coverages on all policies issued or renewed on or after the effective date of the charge. The percentage charge will remain in effect until changed in accordance with subparagraph (B) of this paragraph.

(D) The respective §2203.301 fund or §2203.303 fund charge must be separately stated in the policy, but may not constitute a part of premium or be subject to premium taxation, servicing fees, acquisition costs, commissions, or any other such charges. Further, the respective fund charge will not be considered premiums for the purpose of any assessments levied under subsection (d) of this section.

(E) The respective §2203.301 fund or §2203.303 fund charges must be collected and administered by the association and must be treated as a liability of the association along with and in the same manner as premium and loss reserves. The §2203.301 fund and the §2203.303 fund must be valued annually by the board of directors within 90 days of the last day of the preceding calendar year.

(F) Collections of the respective §2203.301 fund or §2203.303 fund charge must continue throughout each calendar year for which they are established, provided that no charge will be made during the next succeeding calendar year if the net balance in the respective fund after recoupment of any prior year's deficit equals or exceeds the association's estimate of the projected sum of premiums to be written in the calendar year following the valuation date of the respective fund.

(2) §2203.301 fund or §2203.303 fund charge. The respective proportionate §2203.301 fund or §2203.303 fund charge must be based on the total annual written premium for all coverages provided by the association to the applicable §2203.301 fund or §2203.303 fund policyholders. The respective §2203.301 fund or §2203.303 fund charges are not be refundable if the policy is cancelled after the 90th day of coverage. If cancelled within the 90th day of coverage, the earned charge will be based on the same earned percentage charged for the insurance premium.

(3) Disbursements from the respective §2203.301 fund or §2203.303 fund. Disbursements from the respective §2203.301 fund or §2203.303 fund may not be made for any purpose other than to recoup a deficit from operations as defined in subsection (d) of this section. Upon suspension of the association by the Commissioner, any funds remaining in the §2203.301 fund must be added to the special fund created by the Commissioner, acting as receiver, or a special deputy receiver acting on behalf of the receiver. Any investment income earned on the funds of the §2203.301 fund must be added to that fund. Upon termination of the §2203.303 fund, all assets of the fund must be transferred as provided in the Act.

(d) Participation by members and policyholders of the association.

(1) Deficit and remedy of a deficit.

(A) The association must have sustained a deficit from operations whenever the aggregate of the incurred losses (reported and unreported), plus all loss adjustment expenses incurred, plus commissions and plus other administrative expenses (including servicing carrier fees) incurred by the association in a given calendar year, exceed the aggregate of the net premiums earned and other net income (including investment income earned) realized by the association in the same calendar year.

(B) Any deficits sustained by the association in any one calendar year with respect to any category of physicians or health care providers subject to Insurance Code §2203.101 or for-profit or not-for-profit nursing homes or assisted living facilities subject to Insurance Code §2203.102 must be recouped, pursuant to this subchapter and the rating plan in effect, by one or more of the following procedures in this sequence:

(i) first, a contribution from the §2203.301 fund or §2203.303 fund, as appropriate, until the respective fund is exhausted;

(ii) second, an assessment upon the policyholders pursuant to paragraph (3) of this subsection and Insurance Code §2203.252;

(iii) third, an assessment upon the members of the association pursuant to paragraph (4) of this subsection and Insurance Code §2203.053.

(2) Surplus and disposition of a surplus.

(A) The association must have sustained a surplus from operations whenever the aggregate of the incurred losses (reported and unreported), plus all loss adjustment expenses incurred, plus commissions and plus other administrative expenses (including servicing carrier fees) incurred by the association in a given calendar year, do not exceed the aggregate of the net premiums earned and other net income (including investment income earned) realized by the association in the same calendar year.

(B) Upon approval by the board of directors, surplus from operations must be ratably distributed as reimbursements to members who have been assessed pursuant to paragraph (4) of this subsection and have paid such assessments, but have not been previously reimbursed and have not been allowed the premium tax credit (offset) pursuant to subsection (e) of this section.

(C) Upon approval of the Commissioner, the association must reimburse the state to the extent that the members have recouped their assessments using premium tax credits pursuant to subsection (e) of this section, with interest at a rate to be approved by the Commissioner.

(D) 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 approved reimbursement of members' contributions, must be added to the reserves of the association.

(3) Participation by policyholders of the association.

(A) Assessment of policyholders; contingent liability. Each policyholder within either the §2203.301 fund or §2203.303 fund must have contingent liability for a proportionate share of any assessment of policyholders in the applicable §2203.301 fund or §2203.303 fund made by the association pursuant to Insurance Code §2203.252 and the provisions of the plan of operation set forth in this subchapter.

(B) Procedure for assessment of policyholders. Assessment of policyholders shall be made in accordance with the following:

(i) Notice of assessment must be sent by certified mail, return receipt requested, to each policyholder being assessed within 30 days of the board of directors meeting at which such assessment was levied. Notice must be forwarded to the address of each policyholder as it appears on the books of the association. The notice must state the policyholder's allocated amount of assessment and must inform each policyholder of the sanctions imposed by clause (ii) of this subparagraph for the failure to pay such assessment within the time prescribed by this section.

(ii) Each policyholder must remit to the association payment in full of an assessment within 30 days of receipt of notice of assessment. However, a policyholder that is not delinquent on any prior assessments, stabilization reserve fund charge, or premium may remit payment of an assessment levied for a deficit incurred in a calendar year in two installments with at least one-half of the assessment paid within 30 days after receipt of notice of assessment and the remaining balance paid within 30 days thereafter. If the association has not received payment of the policyholder's assessment or any installment payment within 10 days after the payment is due, then the association must promptly cancel any policy of insurance that the policyholder at that time has in force with the association, and the association may offset any unearned premium otherwise refundable on such policy against the amount of that policyholder's unpaid assessment. Such cancellation of current insurance coverage will in no way affect the right of the association to proceed against the policyholder in any court of law or equity in the United States for any remedy provided by law or contract to the association, including, but not limited to, the right to collect the policyholder's assessment.

(4) Participation by members of the association.

(A) Assessment of members. Insurance Code Chapter 2203 provides that 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 set forth in this subchapter and contributions from the stabilization reserve funds, all members must, on a basis authorized by the Commissioner, as long as the Commissioner deems it necessary contribute to the financial requirements of the association in the manner provided for in this section and Insurance Code §2203.254. Any assessment or contribution must be reimbursed to the members as provided in Insurance Code §2203.255.

(B) Procedure for assessment of members.

(i) All insurers that are members of the association must participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written in this state during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the association during the same calendar year. Each insurer's participation in the association must be determined annually on the basis of net direct premiums written during the preceding calendar year as reported in the annual statements and other reports filed by that insurer that may be required by the department. No member may be obligated in any one year to reimburse the association on account of its proportionate share in the unrecouped deficit from operations of the association in that year in excess of 1.0% of its surplus to policyholders. The aggregate amount not reimbursed must be reallocated among the remaining members in accordance with the method of determining participation prescribed in this subsection, after excluding from the computation the total net direct premiums of all members not sharing in such excess deficit. In the event that the deficit from operations allocated to all members of the association in any calendar year exceeds 1.0% of their respective surplus to policyholders, the amount of the deficit must be allocated to each member in accordance with the method of determining participation prescribed in this subsection.

(ii) Notice of assessment must be sent by certified mail, return receipt requested, to each member within 30 days of the board of directors' meeting at which the assessment was levied. Notice shall be forwarded to the office address of the member as it appears on the books of the association. The notice must state the member's allocated amount of assessment and must inform each member of the sanctions imposed by clause (iii) of this subparagraph for the failure to pay the assessment within the time prescribed by this section.

(iii) Each member must remit to the association payment in full of its assessed amount within 30 days of receipt of notice of assessment. If the association has not received payment in full of a member's allocated amount of assessment within 40 days of notice of the receipt by the member of the notice of assessment, then the association must report to the Commissioner the fact that the assessment has not been paid. The Commissioner may take such actions as are permitted under the Insurance Code, including, but not limited to, actions authorized by Insurance Code Chapter 82, to consider revocation of the certificate of authority of the delinquent member. Any action by the Commissioner will in no way affect the right of the association to proceed against the member in any court of law or equity in the United States for any remedy provided by law or contract to the association, including, but not limited to, the right to collect the member's assessment. A member, by mailing payment of its allocated amount of assessment as provided by this section, does not waive any right it may have to contest the computation of its allocated amount of assessment. A contest does not, however, toll the time in which the assessment must be paid, or the report is made to the Commissioner.

(5) Basis of computation of deficit, surplus, and assessments. The computation of the deficit or surplus in operations of the association and the computation of assessment of members and policyholders must be computed on a calendar-year basis in accordance with the reporting requirements of the annual statement filed with the department.

(e) Premium tax credit (offset) for member assessments. To the extent that a member has been assessed and has paid one or more assessments as contemplated by this subchapter and has not received reimbursement from the association for the assessments, that member, as provided for in Insurance Code §2203.251, must be allowed a credit against its premium taxes under Insurance Code Chapter 221, for all lines of insurance that the member is writing in Texas that are subject to a premium tax under Insurance Code Chapter 221. The tax credit, in the aggregate amount of the assessments, plus interest at a rate to be approved by the Commissioner, must be allowed at a rate of 20% per year for five successive years following the year in which the deficit was sustained and, at the option of the member, may be taken over an additional number of years. For purposes of this premium tax offset, expense fees paid pursuant to §5.2002(b)(1) and (2) of this title (relating to Operation of the Texas Medical Liability Insurance Underwriting Association) are deemed to be assessments.

(f) Auditing of members. The association may audit the policies, records, book of accounts, documents, and related material of any member that are necessary to carry out its functions. Such material must be provided by the members in the form and with the frequency reasonably required by rules adopted by the Commissioner.

History

Source Note: The provisions of this §5.2003 adopted to be effective October 31, 1984, 9 TexReg 5427; amended to be effective June 27, 1986, 11 TexReg 2744; amended to be effective January 19, 1988, 13 TexReg 124; amended to be effective June 17, 1988, 13 TexReg 2836; amended to be effective March 18, 1993, 18 TexReg 1411; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective September 16, 2020, 45 TexReg 6363.

28 Tex. Admin. Code § 5.2004 Medical Liability Insurance and General Liability Insurance

(a) The policy.

(1) Approval. The procedures regarding rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and related statistics must comply with Insurance Code Chapter 2203, Subchapter E.

(2) Duration of policies.

(A) All policies issued by the association must be written for a term of one year or less, as determined by the association, to begin at 12:01 a.m. on their respective effective dates.

(B) The association may not issue a policy with an effective date after a date set under Insurance Code Article 21.49-3, §11 for a plan of suspension to become effective and operative.

(C) All policies must be written on forms approved by the department, and must contain a provision that requires, as a condition precedent to settlement or compromise of any claim, the consent or acquiescence of the insured. If, however, the insured refuses to consent to any settlement recommended in writing by the association and elects to contest or continue any legal proceedings, the liability of the association must not exceed the amount for which the claim could have been settled plus the cost and expenses incurred up to the date of the refusal.

(3) Installment payment plan. The association may offer an installment plan for coverage obtained through the association or for payment of the stabilization reserve fund charge. The association may require the policyholder to pay the stabilization reserve fund charge as an annual lump sum.

(4) Limits of liability.

(A) No individual or organization may be insured by a policy issued, or caused to be issued, by the association for an amount exceeding a total of $1 million per occurrence (for all coverages combined) and $3 million aggregate per annum (for all coverages combined). As used in this paragraph, the terms "individual" and "organization" mean each physician, health care provider, health care practitioner, and health care facility holding a separate license or accreditation from the appropriate licensing or accrediting agency as applicable.

(B) If provided, general liability limits must be the same as medical liability limits subject to the maximum policy limits specified in subparagraph (A) of this paragraph.

(5) Special provisions.

(A) The association may issue policies with deductibles.

(B) The association may issue policies subject to retrospective rating plans.

(C) Policies of excess medical liability insurance and excess general liability insurance written by the association must:

(i) be on a following form basis to the underlying medical liability insurance or underlying general liability insurance coverage over which it is written;

(ii) be issued subject to review of the underlying coverage if review is deemed necessary by the association or its representatives;

(iii) not be issued in those cases where the net retention at risk by the primary carrier is less than $100,000 per occurrence or less than $300,000 aggregate per annum after applying any applicable deductible;

(iv) be issued only when the underlying insurance coverage is underwritten by a member of the association and the underlying insurance coverage does not have a deductible in excess of $25,000;

(v) terminate automatically if the underlying primary medical liability insurance policy or underlying primary general liability insurance is not maintained for any reason, except exhaustion by payment of a loss or losses. If the aggregate underlying primary medical liability insurance or general liability insurance is exhausted by the payment of a loss or losses occurring during the policy period, the insurance provided by the excess policy must apply in the same manner as if the underlying primary insurance was in full force and effect;

(vi) not be accepted for a hospital or other institutional health care provider or health care facility if the applicant does not provide evidence that all physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners with staff privileges are insured for their individual medical liability with limits of liability of at least $100,000 per occurrence and $300,000 aggregate per annum; and

(vii) not be accepted for physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners who employ or contract with other physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners if the applicant does not provide evidence that all employed physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners who are eligible to obtain coverage from the association are insured for their individual medical liability with limits of liability of at least $100,000 per occurrence and $300,000 aggregate per annum.

(D) No hospital or other institutional health care provider, health care facility or physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners that have employed or contracted physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers or health care practitioners can be accepted for coverage in the association without evidence that all physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, or other health care providers, or health care practitioners with staff privileges or employed or contracted by the applicant are insured for their individual medical liability with limits of at least $100,000 per occurrence and $300,000 aggregate per annum.

(E) For purposes of this section, the term "health care providers or health care practitioners" does not include personnel at or below the level of employed registered nurse. Insurance required for physicians, surgeons, podiatrists, dentists, pharmacists, chiropractors, health care practitioners, or other health care providers with hospital staff privileges or employed or contracted by the applicant must be limited to any one of the following entities:

(i) an insurance company authorized and licensed to write and writing health care liability or medical liability insurance in Texas under Insurance Code Chapter 801;

(ii) an insurance company eligible to write and writing health care liability or medical liability insurance in Texas as a surplus lines carrier under Insurance Code Chapter 981;

(iii) the Texas Medical Liability Insurance Underwriting Association, established under Insurance Code Chapter 2203;

(iv) a self-insurance trust created to provide health care liability or medical liability insurance, established under Insurance Code Chapter 2212;

(v) a risk retention group or purchasing group writing health care liability or medical liability insurance in Texas, registered under Insurance Code Chapter 2201;

(vi) a plan of self-insurance of an institution of higher education that provides health care liability or medical liability coverage, established under Education Code Chapter 59; or

(vii) a plan of self-insurance that meets each of the following criteria:

(I) the plan's liabilities must be fully funded, and the plan must be solvent. The plan must have a minimum net worth equal to the lesser of $1 million or that amount of net worth that results in a capitalization ratio of 5%. As used in this subclause, "net worth" is calculated by determining the excess, if any, of the plan's total assets over the plan's total liabilities. As used in this subclause, "capitalization ratio" means the ratio of the plan's net worth (as the numerator) to the plan's total assets (as the denominator). Notwithstanding the preceding, the net worth requirements in this subclause do not apply to a plan that lawfully has taxing authority over a segment of the Texas public, provided that the taxing authority may be used to meet the plan's liabilities and other obligations;

(II) the plan must annually obtain from a qualified actuary who is a member in good standing of the American Academy of Actuaries an actuarial analysis that reflects that its operations are viable. Notwithstanding the preceding, an actuarial opinion filed with the department under Insurance Code §802.002 may be accepted for purposes of this subsection;

(III) financial statements of the plan must annually be audited by an independent certified public accountant who is a member in good standing of the American Institute of Certified Public Accountants (AICPA). The audits must use generally accepted auditing standards and must result in a report that attests to whether the financial statements comply with generally accepted accounting principles adopted by the AICPA. Notwithstanding the preceding, an audit report filed with the department under Insurance Code Chapter 401 may be accepted for purposes of this subsection; and

(IV) the plan must have competent and trustworthy management who are generally knowledgeable of insurance matters. A plan is not eligible if a plan officer or member of the plan's board of directors or similar governing body has been convicted of a felony involving moral turpitude or breach of fiduciary duty.

(6) Rates, rating plans, and rating rules applicable. The rates, rating plans, rating rules, rating classifications, and territories applicable must be those established under Insurance Code Chapter 2203, Subchapter E.

(b) Application, underwriting standards, and acceptance or rejection.

(1) Eligibility and forms.

(A) Any physician and any health care provider as defined in Insurance Code §2203.002 and any health care practitioner and health care facility as defined in Insurance Code §2203.103 that falls within any of the categories of physicians, health care providers, health care practitioners, or health care facilities established by order of the Commissioner from time to time as being eligible to obtain coverage from the association is entitled to apply to the association for a medical liability insurance policy. However, if the applicant is a partnership, professional association, or corporation (other than a nonprofit corporation certified under Occupations Code Chapter 162) composed of eligible health care providers or health care practitioners (such as physicians, dentists, or podiatrists), all of the partners, professional association members, or shareholders must also be individually insured in the association.

(i) Any category of physician or health care provider, which by order of the Commissioner has been excluded from eligibility to obtain coverage from the association, may be eligible for coverage in the association if, after at least 10 days' notice and an opportunity for a hearing, the Commissioner determines that medical liability insurance is not available for the category of physician or health care provider. In addition, a for-profit or not-for-profit nursing home or assisted living facility not otherwise eligible 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.

(ii) All applications for medical liability and general liability insurance must be made on forms prescribed by the board of directors of the association and approved by the department. The application forms must contain a statement as to whether or not there are any unpaid premiums, assessments, or stabilization reserve fund charges due from the applicant for prior insurance. Application may be made on behalf of the applicant by an agent authorized under Insurance Code Chapter 4051. The agent need not be appointed by a servicing company.

(B) The association may issue a general liability insurance policy to an applicant specified in subparagraph (A) of this paragraph only if the association issues to that applicant a medical liability insurance policy.

(2) Licensed agent. If a liability insurance policy is written through a licensed agent, then:

(A) the commission paid to the licensed agent must be 10% of the first $1,000 of the policy premium, 5% of the next $9,000 of the policy premium, and 2% of the policy premium in excess of $10,000 for policies written by the association on the form approved for physicians and noninstitutional health care providers;

(B) the commission paid to the licensed agent must be 12.5% of the first $2,000 of the policy premium, 7.5% of the next $3,000 of the policy premium, 5% of the next $15,000 of the policy premium, and 2% of the policy premium in excess of $20,000 for policies written by the association on the form approved for hospitals and other institutional health care providers;

(C) the commission paid to the licensed agent must be 10% of the policy premium for an excess liability insurance policy written by the association for a physician or any other health care provider as defined in Insurance Code §2203.002. The commission, however, may not exceed $250 for a policy written on the form approved for physicians and other noninstitutional health care providers, and may not exceed $500 for a policy written on the form approved for hospitals and other institutional health care providers; and

(D) no commission may be payable for any assessment payable by the policyholder by reason of a deficit incurred by the association, including charges for the stabilization reserve funds. On cancellation, the agent must refund any unearned portion of the commission to the association.

(3) Submission. Application for medical liability or general liability insurance on the prescribed form must be accompanied by tender of the amount of the deposit premium and the charge for the stabilization reserve fund required to bind the policy.

(4) Underwriting standards.

(A) On initial application and every reapplication to the association, the following underwriting standards must apply for policies of medical liability insurance written by the association:

(i) all applicants to the association must be currently licensed, chartered, certified, or accredited to practice or provide their respective health care services in Texas;

(ii) all health care provider, practitioner and facility and physician applicants to the association must provide evidence of inability to obtain medical liability coverage. The evidence must be two written rejections by carriers licensed and engaged in writing the coverage applied for in Texas or by a self-insurance trust created under Insurance Code Chapter 2212;

(iii) all for-profit and not-for-profit nursing home and assisted living facility applicants to the association must provide evidence of inability to obtain coverage from authorized insurers and eligible surplus lines insurers for substantially equivalent coverage and rates. The evidence must be two written rejections by insurers licensed and engaged in writing the coverage applied for in Texas or by eligible surplus lines insurers. For purposes of this subsection, a rejection has occurred if the applicant:

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

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

(iv) any material misrepresentation in the application for coverage must be cause to decline coverage on discovery by the association or its authorized representative;

(v) each application must be accompanied by authorization for and consent to investigations of material information bearing on the moral character, professional reputation, and fitness to engage in the activities embraced by the applicant's license with respect to applicants who are to be provided coverage on the form approved for physicians and noninstitutional health care providers, or the reputation, method of operation, accident prevention programs, and fitness to engage in the activities embraced by the applicant's license, charter, certificate, or accreditation for applicants who are to be provided coverage on the form approved for hospitals and other institutional health care providers, including authorization to every person or entity, public or private, to release to the association any documents, records, or other information bearing on this information;

(vi) no coverage may be afforded either by binder or by policy issuance to any applicant whose license, charter, certificate, or accreditation has been ordered canceled, revoked, or suspended, provided that, if the order has been probated by the appropriate regulatory body or licensing agency, then the probation may be reviewed by the association for a determination whether and on what basis coverage may be afforded in the association;

(vii) the applicant, to be eligible for coverage in the association, must comply with all significant recommendations arising out of a loss control or risk management report either before binding coverage or as soon as practicable concurrently with coverage;

(viii) there must be no unpaid, uncontested premium; assessment; or charge due from the applicant; and

(ix) there must be no unpaid deductible, in whole or part, owed to the association.

(5) Receipt of the application. On receipt of the application, the required deposit premium, and the applicable stabilization reserve fund charge, the association must, within 30 days:

(A) cause a binder or insurance policy to be issued; or

(B) advise the agent or applicant that the applicant does not meet the underwriting standards of the association, in which case the association must indicate the reasons the applicant does not meet the underwriting standards.

(1) Cancellation by the association. The association may not cancel an insurance policy except for:

(A) nonpayment of premium;

(B) nonpayment of the applicable stabilization reserve fund charge;

(D) evidence of fraud or material misrepresentation;

(E) cause that would have been grounds for nonacceptance of the risk under this subchapter had the cause been known to the association at the time the policy was issued;

(F) any cause arising after the policy is issued that would have been grounds for nonacceptance of the risk under this subchapter had the cause existed at the time of acceptance; or

(G) noncompliance with reasonable loss control or risk management recommendations under subsection (b)(4)(A)(vii) of this section. On cancellation of an insurance policy by the association, the association must refund to the insured the unearned portion of any paid premium and, if canceled within the 90th day of coverage, the unearned portion of the paid fund charges under Insurance Code Chapter 2203, Subchapter G on a pro rata basis, provided that all assessments and fund charges earned under Insurance Code Chapter 2203, Subchapter G have been fully paid; otherwise, only that portion of unearned premium over any unpaid assessment and fund charges under Insurance Code Chapter 2203, Subchapter G will be refunded. Policyholder assessments and fund charges under Insurance Code Chapter 2203, Subchapter G are fully earned on payment; therefore, except as provided in Insurance Code Chapter 2203 or §5.2003(c)(2) of this title (relating to Members and Policyholders Participation in the Texas Medical Liability Insurance Underwriting Association), no portion is refundable.

(2) Cancellation by the insured. An insurance policy may be canceled at any time:

(A) by the insured, on written request for cancellation of the policy; or

(B) by an insurance premium finance company in accordance with Insurance Code Chapter 651.

(3) Refund of unearned portion of paid premium. The association must refund the unearned portion of any paid premium and, if canceled within the 90th day of coverage, the unearned portion of the paid fund charges under Insurance Code Chapter 2203, Subchapter G according to the approved short-rate table, provided all assessments and fund charges under Insurance Code Chapter 2203, Subchapter G earned have been fully paid; otherwise, only that portion of the unearned premium over any unpaid assessment and fund charges under Insurance Code Chapter 2203, Subchapter G will be refunded. Policyholder assessments and fund charges under Insurance Code Chapter 2203, Subchapter G are fully earned on payment; therefore, except as provided in Insurance Code Chapter 2203 or §5.2003(c)(2) of this title, no portion is refundable.

(4) Exhausted policy limits. If there is an outstanding claim or claims under any insurance policy on which a reserve or reserves have been established, which in the aggregate or when combined with losses previously paid under the policy equal or exceed the aggregate limits of coverage under the policy, the association must notify the insured. At the insured's option, the policy may be canceled. If the policy is canceled, the premium must be considered fully earned and the insured may apply for a new policy to be effective concurrently with the termination date of the canceled policy.

(5) Notice of cancellation, nonrenewal, or premium increase.

(A) The association may cancel a medical liability insurance policy and general liability insurance policy, or decline to renew a policy for any reason listed in paragraph (1) of this subsection at any time within the first 90 days from the effective date of the policy by sending 90 days written notice to the insured.

(B) The association may cancel a medical liability insurance policy and general liability insurance policy or decline to renew a policy for nonpayment of premium, assessments, or fund charges under Insurance Code Chapter 2203, Subchapter G, or for loss of license, charter, certification, or accreditation at any time during the policy period by sending 10 days' written notice to the insured.

(C) Notice of cancellation or nonrenewal under subparagraphs (A) and (B) of this paragraph must contain a statement of the reason for the cancellation or nonrenewal and a statement that the insured has the right to appeal under Insurance Code Chapter 2203, Subchapter I.

(D) The association must give at least 90 days' written notice to an insured before increasing the premium by reason of a rate increase on the insured's medical liability insurance policy. The notice must state the amount of the increase.

(6) General liability insurance. A general liability insurance policy issued by the association under Insurance Code §2203.151(b) automatically terminates on the same effective date and time as the termination of the medical liability insurance policy.

(d) Suspension of policy. The association must, on written request from a policyholder subject to the Servicemembers Civil Relief Act of 2003 (50 United States Code App. §§501, et seq.), suspend the policy issued by the association, in accordance with the Servicemembers Civil Relief Act of 2003.

(e) Removal of risks. Any member, or self-insurance trust established under Insurance Code Chapter 2212, at any time, on written consent from the insured filed with the association, may write the risk as regular business, in which event the association must cancel its policy pro rata as of a date and time specified by the manager of the association. The association will require written confirmation that the member or self-insurance trust is taking the risk out of the association before allowing pro rata cancellation.

(f) Payment of claims.

(1) Report of loss. All losses must be reported to the association in the manner prescribed by the board of directors.

(2) Adjustment of loss. All losses must be adjusted in the manner designated by the board of directors subject to the provisions of this plan of operation and the insurance laws of Texas.

History

Source Note: The provisions of this §5.2004 adopted to be effective January 1, 1976; amended to be effective October 31, 1984, 9 TexReg 5426; amended to be effective January 19, 1988, 13 TexReg 124; amended to be effective March 18, 1993, 18 TexReg 1411; amended to be effective April 7, 1997, 22 TexReg 3039; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective August 27, 2017, 42 TexReg 4139; amended to be effective September 16, 2020, 45 TexReg 6363.

28 Tex. Admin. Code § 5.2005 Amendments

Amendments to this subchapter may be recommended by the board of directors, subject to the approval of the Commissioner, or may be made at the direction of the Commissioner.

History

Source Note: The provisions of this §5.2005 adopted to be effective January 1, 1976; amended to be effective October 31, 1984, 9 TexReg 5426; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective September 16, 2020, 45 TexReg 6363.

28 Tex. Admin. Code § 5.2006 Reinsurance

Pursuant to Insurance Code §2203.151(a)(3) and (4), the Texas Medical Liability Insurance Underwriting Association may cede and purchase reinsurance. The purpose of this section is to implement Insurance Code §2203.151(a)(3) and (4).

(1) The association may develop a reinsurance program that will provide for the purchase of reinsurance and that will maintain the purpose of the association to provide medical liability insurance and general liability insurance on a self-supporting basis.

(2) A reinsurance program is subject to prior approval by the Commissioner, and such prior approval must be obtained before implementation of the reinsurance program. The program must include, but is not limited to, the proposed reinsurance program structure and terms, including the reinsurance proposal and proposed reinsurance contract terms and conditions; cost of the proposed reinsurance program; the recommended percentage of reinsured business to be assumed by each individual reinsurer; a summary of the financial condition of each recommended reinsurer; the association's costs to administer the reinsurance program; compliance with Subchapter F of Chapter 7 of this title (relating to Reinsurance), to the extent that provisions do not conflict with this section or Chapter 2203 of the Insurance Code, or unless such provisions are waived by the Commissioner; and any other information the Commissioner deems necessary to enable the Commissioner to determine whether to approve or disapprove the reinsurance program. The association must submit to the Commissioner, no later than 90 days before expiration of the reinsurance contract, the proposed renewal reinsurance program or a statement of the reasons why a reinsurance program is no longer necessary.

(3) The association must submit written notice of any amendment to any existing reinsurance contract to the Commissioner at least 60 days prior to the effective date of the proposed amendment. The notice must include an explanation of the reason for the amendment and a copy of the draft amendment. The amendment will be deemed approved by the Commissioner unless within 60 days following the submission of the written notice the Commissioner disapproves the amendment.

History

Source Note: The provisions of this §5.2006 adopted to be effective June 13, 2000, 25 TexReg 5657; amended to be effective January 23, 2005, 30 TexReg 76; amended to be effective September 16, 2020, 45 TexReg 6363.

Subchapter I RULES SUPPLEMENTARY TO THE INSURANCE CODE, CHAPTER 5, SUBCHAPTER L

28 Tex. Admin. Code § 5.8001 Purpose and Scope

These sections supplement the Insurance Code, Chapter 5, Subchapter L. The sections contain certain additional interpretations, requirements, and procedures which are appropriate to accomplish the purposes of that subchapter.

History

Source Note: The provisions of this §5.8001 adopted to be effective March 19, 1984, 9 TexReg 1357.

28 Tex. Admin. Code § 5.8003 Written Petitions

In reviewing a petition under the Insurance Code, Article 5.96 or Article 5.97, the State Board of Insurance may require a written description of the matters and information required by Article 5.96, §(b), or Article 5.97, §(b), apart from the text of the matter proposed.

History

Source Note: The provisions of this §5.8003 adopted to be effective March 19, 1984, 9 TexReg 1357.

28 Tex. Admin. Code § 5.8004 Interpretations

(a) After entering an order with respect to any matter specified in the Insurance Code, Article 5.96, §(a), or Article 5.97, §(a), the board is required by Article 5.96, §(h), or Article 5.97, §(i), to file a notice of its action for publication in the Texas Register. Matters specified in Article 5.96, §(a), and Article 5.97, §(a), do not include the denial of a petition.

(b) Before the effective date of action, the board is required by the Insurance Code, Article 5.96, §(h), and Article 5.97, §(i), to cause notice of its order to be sent to various persons as specified in the statute. The statute in those sections refers to matters specified in Article 5.96, §(a), or Article 5.97, §(a). Those matters do not include the denial of a petition.

(c) Under the Insurance Code, Article 5.96, §(h), and Article 5.97, §(i), the board may cause notice of affirmative action taken to be mailed to the persons and parties specified by statute either through its own offices or by direction to or arrangement with a checking office, advisory organization, or other entity.

(d) Except for emergency matters, the board may not act on a petition until it has been available for public inspection for at least 15 days after the date of its filing. The petitioner may change a petition after it is filed but before the board takes action. The 15-day period will begin to run again after such a change, unless the changes are clearly nonsubstantive and editorial in nature, in which case the original filing date remains effective.

History

Source Note: The provisions of this §5.8004 adopted to be effective March 19, 1984, 9 TexReg 1357.

Subchapter J RULES TO IMPLEMENT THE AMUSEMENT RIDE SAFETY INSPECTION AND INSURANCE ACT

28 Tex. Admin. Code § 5.9001 Purpose and Scope

It is the purpose of this subchapter to aid in implementing the Amusement Ride Safety Inspection and Insurance Act (Occupations Code, Chapter 2151, concerning Regulation of Amusement Rides). The provisions of this subchapter are in addition to, and not in lieu of, the provisions of Occupations Code Chapter 2151. This subchapter applies to:

(1) any amusement ride as defined in Occupations Code §2151.002, concerning Definitions;

(2) the owner and operator of any amusement ride;

(3) any agent or representative of the owner or operator of any amusement ride;

(4) any insurer, including any surplus lines insurer, as defined in Insurance Code Chapter 981, concerning Surplus Lines Insurance, and any other nonadmitted company;

(5) any agent or representative of any insurer, including surplus lines agents, as defined in Insurance Code Chapter 981 and agents of any nonadmitted company;

(6) any independently procured policy subject to Insurance Code Chapter 101, concerning Unauthorized Insurance, §101.001 et seq., providing bodily injury liability insurance for amusement rides; and

(7) any inspector working as an independent contractor or as an employee of an insurance carrier performing amusement ride inspections on behalf of or under contract with an insurance carrier.

History

Source Note: The provisions of this §5.9001 adopted to be effective November 9, 1984, 9 TexReg 5543; amended to be effective February 24, 1989, 14 TexReg 793; amended to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective March 6, 2008, 33 TexReg 1815; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9002 Definitions

The following words and terms, when used in this subchapter, have the following meanings.

(1) Act--The Amusement Ride Safety Inspection and Insurance Act, (Occupations Code Chapter 2151, concerning Regulation of Amusement Rides).

(2) Amusement ride--As defined in Occupations Code §2151.002, concerning Definitions.

(3) ASTM--The American Society for Testing and Materials.

(4) Class A amusement ride--As defined in Occupations Code §2151.002.

(5) Class B amusement ride--As defined in Occupations Code §2151.002.

(6) Class B motorized train amusement ride--A Class B amusement ride that:

(A) consists of a motorized vehicle that tows one or more separate passenger cars in a manner similar to a train but without regard to whether the vehicle and cars operate on a fixed track or course;

(B) does not travel under its own power in excess of 5 miles per hour;

(D) does not run on an elevated track;

(E) has passenger seating areas enclosed by guardrails or doors; and

(F) does not have passenger cars that rotate independently from the motorized vehicle.

(7) Commissioner--The commissioner of insurance.

(8) Inspector--A person qualified by training, education, or experience to conduct safety inspections of amusement rides or devices on behalf of an insurance company and in accordance with the ASTM, the manufacturer's standards and criteria, or standards established by the insurance company.

(9) Inspection--A procedure to be conducted by an inspector to determine whether an amusement ride or device is being assembled, maintained, tested, operated, and inspected in accordance with the current ASTM standards, the manufacturer's, or insurer's standards, whichever is the most stringent, and that determines the current operational safety of the ride or device.

(10) Interlocal agreement--An interlocal contract as defined in Government Code §791.003(2), concerning Definitions.

(11) Local government--A county, municipality, or special district; a junior college district, or other political subdivision of this state or another state; a local government corporation created under Transportation Code, Chapter 431, Subchapter D, concerning Local Government Corporations; a political subdivision corporation created under Local Government Code Chapter 304, concerning Energy Aggregation Measures for Local Governments; a local workforce development board created under Government Code §2308.253, concerning Creation of Local Workforce Development Boards; or a combination of two or more of such entities.

(12) Mobile amusement ride--As defined in Occupations Code §2151.002.

(13) Owner/operator--The person or entity responsible for an amusement ride and that person or entity's agents or representatives. A separate reference to owner or operator is deemed to include owner/operator.

(14) TDI--The Texas Department of Insurance.

History

Source Note: The provisions of this §5.9002 adopted to be effective November 9, 1984, 9 TexReg 5543; amended to be effective February 24, 1989, 14 TexReg 793; amended to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective March 6, 2008, 33 TexReg 1815; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9003 Administration and Enforcement

TDI is required by the Act to administer and enforce the Act. Owners/operators operating amusement rides must pay a fee of $40 per year for each amusement ride subject to the Act. The fees must be paid by check or money order made payable to TDI; or, if paying online, the fee must be submitted through the following website: https://feepay.txapps.texas.gov/tdi/amusement-ride-sticker-payments, which may add a surcharge for the transaction. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable and nontransferable.

History

Source Note: The provisions of this §5.9003 adopted to be effective November 9, 1984, 9 TexReg 5543; amended to be effective February 24, 1989, 14 TexReg 793; amended to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective November 16, 2014, 39 TexReg 9030; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9004 Amusement Ride Operation Requirements

(a) Operational Requirements. An owner/operator may not operate an amusement ride unless the owner/operator has satisfied and is continuing to satisfy the requirements in subsections (a) - (f) of this section.

(b) Insurance. The owner/operator must file with TDI the insurance policy or a photocopy of the insurance policy certifying that the policy is a true copy of the insurance policy provided to the insured as required by Occupations Code Chapter 2151, concerning Regulation of Amusement Rides.

(1) Occupations Code §2151.101, concerning Requirements for Operation, requires that any person who operates an amusement ride must have currently in force a combined single limit or split limit insurance policy written by an insurance company authorized to do business in this state or by a surplus lines insurer, as defined by Insurance Code Chapter 981, concerning Surplus Lines Insurance, or have an independently procured policy subject to Insurance Code Chapter 101, concerning Unauthorized Insurance, insuring the owner or operator against liability for injury to persons arising out of use of the amusement ride in an amount of not less than:

(A) for Class A amusement rides:

(i) $100,000 bodily injury and $50,000 property damage per occurrence with a $300,000 annual aggregate; or

(ii) $150,000 per occurrence combined single limit with a $300,000 annual aggregate;

(B) for Class B amusement rides, except for Class B motorized train amusement rides:

(i) $1,000,000 bodily injury and $500,000 property damage per occurrence; or

(ii) $1,500,000 per occurrence combined single limit.

(2) Occupations Code §2151.1011, concerning Liability Insurance for Certain Amusement Rides, requires that any person who operates a Class B motorized train amusement ride must have an insurance policy currently in effect written by an insurance company authorized to conduct business in this state or by a surplus lines insurer, as defined by Insurance Code Chapter 981, or have an independently procured policy subject to Insurance Code Chapter 101, insuring the owner or operator against liability for injury to persons arising out of the use of the amusement ride in an amount of not less than $1 million in aggregate for all liability claims occurring in a policy year.

(3) A local government may satisfy the insurance requirements prescribed by paragraphs (1) and (2) of this subsection by obtaining liability coverage through an interlocal agreement.

(4) The policy or certified photocopy of the policy must be complete, including all applicable coverage forms and endorsements. Certificates of insurance will not be acceptable for this purpose.

(5) The policy must contain a schedule listing by name and serial number if applicable to each amusement ride insured by the policy. In the event of additions or deletions of amusement rides during the policy term, such changes must be shown on a change endorsement, a copy of which must be submitted to TDI. Additions will also require an inspection certificate (TDI Form AR-100 (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022) and a $40 fee for each amusement ride to be submitted to TDI before any operation of the added amusement ride. Additions or deletions must be filed not later than 10 days after the change.

(6) In the event of policy cancellation by either the insured owner/operator or the insurance company, the company must furnish notice of cancellation to TDI as soon as possible, but not later than 10 days before the cancellation.

(7) The owner/operator will provide to any sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public a photocopy of the inspection certificate and the insurance policy required by this section.

(8) If the owner/operator obtains an additional amusement ride device, the ride must be added to the insurance policy and a copy of the endorsement submitted to TDI along with the required inspection certificate (TDI Form AR-100) and the $40 fee before operation in Texas.

(c) Inspection/Reinspection Certificate. The owner/operator must also file the original amusement ride inspection certificate (TDI Form AR-100) certifying with respect to each amusement ride the matters required by the Act. A separate inspection certificate is required for each amusement ride that shows the ride's name, serial number, and manufacturer, as well as the inspector's name, the owner/operator, a picture of the ride in an operable state taken at the time of the inspection, and other information as requested. The serial number, name, and description of the amusement ride must coincide with the same information identified on the insurance policy. If major components of the ride (for example, the crane used in a bungee operation) are interchangeable, then the name, serial number, and manufacturer of the inspected component must be included on the inspection certificate. The inspection certificate is valid for a period of one year, and for expedience in processing, it should, if possible, coincide with the effective date of the insurance policy. The inspection must be conducted by the insurer or a person with whom the insurer has contracted. The inspector must provide both the insurer and owner/operator with a written certificate that the inspection has been made and that the amusement ride meets the standards for coverage.

(1) The inspection certificate may not be submitted to TDI until all discrepancies have been resolved and all necessary repair(s) or replacement(s) required for the amusement ride to meet the standards for coverage have been made.

(2) The inspection required by Occupations Code §2151.101(a) must include a method to test the stress- and wear-related damage of critical parts of a ride that the manufacturer of the amusement ride determines are reasonably subject to failure as the result of stress and wear and could cause injury to a member of the public as a result of a failure. The inspection must include a review of the owner/operator's daily inspection records and inspection and maintenance program in accordance with ASTM practice or the manufacturer's guidelines/inspection criteria. The inspection must be conducted with the amusement ride or device in an operable state and include an evaluation of the device for a minimum of one complete operating cycle.

(3) If the amusement ride or device consists of interchangeable major components, such as cranes used in bungee jumping operations, the crane or major component used during the inspection is considered an integral part of the amusement ride and the inspection certificate must include the manufacturer and serial number of the crane or major component inspected with the amusement ride. If the inspected crane or major component is replaced by another unit, a new inspection is required to include the new identification and serial number of the replacement unit.

(4) Any bungee jumping amusement device must include a safety net or air bag as an integral part of the ride. The safety net or air bag must be of sufficient size to cover the jump zone. The safety net or air bag must be rated for the maximum free-fall height possible from the jump platform used. If the jump area is over water, the water must be of sufficient depth to provide an adequate safety cushion. The safety net or air bag must be inspected as an integral part of the amusement ride.

(5) The inspection certificate must be signed by a representative of the insurer.

(6) If the amusement ride or device does not meet the inspection standards, the amusement ride may not be operated until all necessary repair(s) and/or replacement(s) have been made and the ride reinspected and an inspection/reinspection certificate issued.

(7) It is the responsibility of the amusement ride owner/operator to complete the following before any operation of the ride:

(A) to request the insurer to certify that the insurance policy and the inspection certificate are true copies by an official of the insurer;

(B) to receive the completed policy and inspection certificate from the insurer if they elect to provide coverage; and

(C) to submit a certified copy of the insurance policy, the original inspection certificate, and the fee to TDI for review. A planning factor of 10 days should be allowed for TDI review and approval before any operation of the ride. Errors of omission or commission on either the policy or inspection certificate may delay TDI approval.

(8) Immediately after any injury or death involving equipment failure, structural failure, or operator error, the amusement ride/device must be closed for public use until a new inspection is performed and an inspection/reinspection certificate is submitted to TDI.

(9) In addition to the requirements of paragraphs (7) and (8) of this subsection, a mobile amusement ride on which a death occurs may not be operated until the requirements of Occupations Code §2151.1526, concerning Prohibition of Mobile Amusement Ride Operation, are met.

(10) In addition to the requirements of this subsection, an amusement ride whose operation has been prohibited by a municipal, county, or state law enforcement official under Occupations Code §2151.152, concerning Other Enforcement Actions, or §2151.1525, concerning Prohibition of Amusement Ride Operation, may not be operated until the requirements of that section are met. Any on-site corrections that are made under the requirements of Occupations Code §2151.1525 must be presented to the appropriate municipal, county, or state law enforcement official.

(11) TDI Form AR-100 (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022, is adopted by reference and must be used for each filing of an amusement ride inspection certificate required by this section. This form is published by TDI and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html.

(12) The inspection/reinspection certificate, insurance policy, and fee must be submitted to the Inspections Office for review. If the inspection/reinspection certificate and insurance policy meet the requirements of this subchapter, the certificate will be date-stamped and forwarded to the owner/operator with TDI Form AR-101 (Texas Amusement Ride Compliance Sticker), effective May 2000, and adopted by reference. TDI Form AR-101 will indicate the expiration date of the inspection certificate and must be affixed to a major component of the amusement ride in a location visible to the ride participants.

(13) The records of the inspections required by this section will be made available for inspection by any municipal, county, or state law enforcement official at the location where the amusement ride is operated.

(d) Insurance Policy and Inspection Certificate Renewal. Renewal of the policy or inspection certificate must be completed with sufficient lead time to provide these documents to TDI with a minimum of 10 working days to review and approve the documents before the expiration of either the policy or the inspection certificate.

(1) In the event of policy cancellation or expiration, the policy must promptly be replaced or renewed without any lapse in coverage while the amusement ride is offered for use by the public. Any operation without a valid and current insurance policy and current inspection certificate constitutes an illegal operation and is subject to the enforcement provisions and penalties under Occupations Code §§2151.151, concerning Injunction; 2151.152; 2151.1525; 2151.1526; and 2151.153, concerning Criminal Penalties. The sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public must be notified by the owner/operator of the coverage discontinuance.

(2) A renewal certificate of insurance will be acceptable for the purpose of this subsection, if the renewal certificate shows:

(A) insurance coverage insuring the owner or operator against liability arising out of the use of the amusement ride/device in an amount of not less than:

(i) for Class A amusement rides:

(I) $100,000 bodily injury and $50,000 property damage per occurrence with a $300,000 annual aggregate; or

(II) $150,000 per occurrence combined single limit with a $300,000 annual aggregate;

(ii) for Class B amusement rides, except for Class B motorized train amusement rides:

(I) $1,000,000 bodily injury and $500,000 property damage per occurrence; or

(II) $1,500,000 per occurrence combined single limit;

(iii) for Class B motorized train amusement rides, $1,000,000 in aggregate for all liability claims occurring in a policy year; and

(B) a policy term that includes the period of time during which the amusement ride will be offered for public use.

(e) Daily Inspections. In addition to the inspection required under this section, the owner/operator who operates a mobile amusement ride must perform and record daily inspections of the mobile amusement ride including safety restraints on each mobile amusement ride.

(1) Records of the daily inspections must be available for inspection by any municipal, county, or state law enforcement official at the location where the amusement ride is operated, and the records must be maintained with the amusement ride for a period of one year.

(2) The daily inspection record must include an inspection of the following:

(A) safety belts, bars, locks, and other passenger restraints;

(B) all automatic and manual safety devices;

(D) safety pins and keys;

(E) fencing, guards, barricades, stairways, and ramps;

(F) ride structure and moving parts;

(G) tightness of bolts and nuts;

(H) blocking, support braces, and jackstands;

(I) electrical equipment;

(J) lubrication as per manufacturer's instructions;

(K) hydraulic and/or pneumatic equipment;

(L) communication equipment necessary for operation (if applicable);

(M) operation of ride prior to opening through one complete cycle of proper functioning; and

(N) any other component that is included in the manufacturer's specific ride maintenance and safety checks or current ASTM standards, or that the operator or person performing the daily inspection deems necessary for inspection.

(3) TDI adopts and incorporates by reference TDI Form AR-300 (Texas Amusement Ride Safety Inspection and Insurance Act Daily Inspection Record), revised effective May 2022. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. This form sets forth the inspection requirements of this subsection and also includes the name of the device, location (city, state), date of the inspection, manufacturer and serial number, and owner/operator. The form must be signed by the person performing the daily inspection and the inspector's supervisor.

(4) Daily inspection record forms used by industry associations, individual operators, or individual manufacturers may be used to fulfill the requirements of this subsection if the forms contain all of the inspection items and elements set forth in this subsection and the TDI Form AR-300.

(5) In addition to the requirements of this subsection, the owner/operator who operates a mobile amusement ride must also follow the manufacturer's specific checklist for specific ride maintenance and safety checks.

(f) Schedule of Operations. In addition to the inspection requirements of this section, TDI Form AR-102 (Amusement Ride Schedule of Operations in Texas), revised effective May 2022, which is adopted by reference, must be used to provide a schedule of operating locations and dates for each six-month period for mobile operations. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. This information must be provided by the owner/operator to the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, a minimum of 10 days before each six-month period. Any changes in the schedule must be submitted on an amended TDI Form AR-102 to TDI by the owner/operator within 10 days of the change.

History

Source Note: The provisions of this §5.9004 adopted to be effective November 9, 1984, 9 TexReg 5543; amended to be effective February 24, 1989, 14 TexReg 793; amended to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective March 6, 2008, 33 TexReg 1815; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9005 Personnel Conducting Safety Inspections of Amusement Rides and Devices

To conduct required safety inspections on amusement rides and devices in accordance with the Act, the insurer must employ inspectors, retain inspectors who are independent contractors, or contract with the insured to have the amusement ride or device inspected by an inspector.

History

Source Note: The provisions of this §5.9005 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787.

28 Tex. Admin. Code § 5.9006 Public Information Sign

An owner/operator who operates an amusement ride in this state must post a sign to inform the public how to report an amusement ride that appears to be unsafe or to report an amusement ride operator who appears to be violating the law.

(1) The sign must be at least 20 inches in width and 30 inches in length and must be in at least 50-point block letters, bold-faced red-on-white-background type and must be readable from a distance of 25 feet.

(2) The sign must be printed in both English and Spanish.

(3) The sign must be posted at the principal entrance(s) to the site at which an amusement ride is located or at any location on that site where tickets for an amusement ride are available.

(4) The sign must state the following:

Attached Graphic

History

Source Note: The provisions of this §5.9006 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9007 Quarterly Reports

(a) An owner/operator who operates an amusement ride (the operator) must maintain accurate records of each injury caused by the ride in any state in which the injury results in death or requires medical treatment. An injury is caused by the ride if the injury occurs on the ride or is in any way associated with the ride.

(1) TDI adopts and incorporates by reference TDI Form AR-800 (Quarterly Injury Report Amusement Ride Safety Inspection and Insurance Act), revised effective May 2022. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/formlisting.html. The operator must file an injury report on TDI Form AR-800 with TDI on a quarterly basis and must include in the report a description of each verifiable injury caused by a ride that results in death or an injury that requires medical treatment.

(2) For purposes of this section, the term "medical treatment" includes treatment (other than first aid) administered by a physician or by registered professional personnel under the standing orders of a physician.

(3) For purposes of this section, the term "medical treatment" does not include first-aid treatment (one-time treatment and subsequent observation of minor scratches, cuts, burns, splinters, and any other minor injuries that do not ordinarily require medical care) even though treatment is provided by a physician or by registered professional personnel.

(4) The quarterly injury report is not required of the operator for any quarter in which no reportable injury occurs in any state.

(b) An owner/operator who operates an amusement ride must maintain accurate records of any governmental action taken in any state relating to that particular amusement ride, including an inspection resulting in the repair or replacement of equipment used in the operation of the amusement ride.

(1) TDI adopts and incorporates by reference TDI Form AR-801 (Quarterly Governmental Action Report Amusement Ride Safety Inspection and Insurance Act), revised effective May 2022. This form is published by TDI, and copies of the form may be obtained from the Inspections Office, MC: PC-INSP, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or on TDI's website at www.tdi.texas.gov/forms/form13amusement.html. The owner/operator must file a governmental action report on TDI Form AR-801 with TDI on a quarterly basis and must include in the report a description of each governmental action taken in any state during the quarter covered by the report relating to that particular amusement ride, including an inspection resulting in the repair or replacement of equipment used in the operation of the amusement ride.

(2) For purposes of this section, the term "governmental action" includes an action in the exercise of police power or in the exercise of constitutional, legislative, administrative, or judicial powers conferred on federal, state, or local government, and that results in any notification to the owner/operator relating to the amusement ride, including notifications of any perceived deficiencies regarding the safety of the amusement ride or the possibility of actual or imminent noncompliance with applicable laws, or any action taken in an administrative law forum or court of law, including private civil lawsuits.

(3) The quarterly governmental action report is not required of the owner/operator for any quarter in which no reportable governmental action was taken in any state.

(c) An owner/operator who operates an amusement ride must maintain for not less than two years at the location where the ride is operated, for inspection by a municipal, county, or state law enforcement official, a photocopy of any quarterly report required under subsection (a) or (b) of this section to be filed with the commissioner.

History

Source Note: The provisions of this §5.9007 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9008 Filing Affidavit

In addition to the requirements of Occupations Code §2151.101(b), concerning Requirements for Operation, the following requirements apply.

(1) In the event a contract for use of an amusement ride provides that the amusement ride will not be operated until after July 1 but before December 31 of any year, then timely filing of the insurance policy and inspection certificate must be made with TDI prior to the operation of the amusement ride. In no event may an amusement ride be operated before the inspection certificate, insurance policy, and fee are submitted to TDI as required by §5.9004 of this title (relating to Amusement Ride Operation Requirements).

(2) If the amusement ride is inspected more than once a year due to the requirements of this subchapter, a supplemental inspection certificate (TDI Form AR-100 (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022) must be submitted to TDI not later than 15 days after each subsequent inspection. An additional annual $40 fee is not required for supplemental inspection certificates.

History

Source Note: The provisions of this §5.9008 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9009 Information Request

TDI may request from the owner/operator, sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public information concerning whether insurance in the amount required by Occupations Code Chapter 2151, concerning Regulation of Amusement Rides, or this subchapter is in effect for the amusement ride. The owner/operator, sponsor, lessor, landowner, or other person to whom the information request is made must respond to TDI within 15 days after the request is made. The response must be by written verification. For the purpose of verification, the written response must include a copy of the declarations page of the policy insuring the amusement ride owner/operator.

History

Source Note: The provisions of this §5.9009 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9010 Confirmation of Required Insurance and Inspection Certificate; Rule Construction

(a) After the required insurance policy and inspection certificate, including certified check or money order for the total amount of annual fee have been received by TDI and found to be in compliance with the Act and this subchapter, the original amusement ride inspection certificate (TDI Form AR-100 (Amusement Ride Certificate of Inspection/Reinspection), revised effective February 2022,) will be stamped "Texas Department of Insurance Amusement Ride Program," will include the date of approval, and will be returned to the insured owner or operator as evidence of compliance with filing requirements. The returned inspection certificate must be kept on the premises where the amusement ride is offered for public use and made available to any person granted authority under the Act to investigate compliance with the Act. A TDI Form AR-101 (Texas Amusement Ride Compliance Sticker), effective May 2000, will be returned with each inspection certificate. This weatherproof form must be affixed to the appropriate ride or device in a place easily visible to all ride participants.

(b) If the required insurance policy, inspection certificate, and/or annual fee is found not to be in compliance with the Act, this subchapter, or other applicable law, notice will be provided to the insured owner or operator or their insurer by TDI indicating the necessary action(s) for compliance. If noncompliance is due to mechanical problems or failure to meet insurance standards, another TDI Form AR-100 must be submitted to TDI for approval after the necessary corrective action(s) or repair(s) have been completed by the owner or operator. After the necessary actions have been completed by the owner/operator to the satisfaction of TDI, the TDI Form AR-100 will be stamped and mailed to the insured owner or operator as described in subsection (a) of this section.

(c) Nothing in this subchapter may be construed to authorize the operation of an amusement ride until all applicable requirements of law are met.

History

Source Note: The provisions of this §5.9010 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9011 Standards and Compliance

An amusement ride covered by the Act that is sold, maintained, or operated in this state must comply with current standards established by the ASTM. Those standards are minimum standards. To the extent that the standards of the ASTM conflict with the requirements of the Act, the more stringent requirement or standard applies.

History

Source Note: The provisions of this §5.9011 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9012 Denial of Entry to Amusement Rides; Prohibiting Operation of Amusement Rides

(a) The owner/operator of an amusement ride or device must have the ability to view patrons so that no one is permitted on a ride or device who appears to be in an intoxicated, drugged, or other condition of health that could be detrimental to the safety of the patron, other patrons, the operator, or spectators.

(b) The owner/operator must exercise reasonable control to prohibit the wearing of improper attire or lack of attire as deemed appropriate for the ride or device.

(c) The owner/operator must prohibit the carrying of any article that might be dropped or thrown from the ride or device.

(d) The restrictions in this section and others that will preclude participation on an amusement ride or device must be posted in plain view at the entrance to the ride. No operator may waive these restrictions.

(e) A municipal, county, or state law enforcement official may enter and inspect without notice any amusement ride or device at any time to ensure public safety, and the owner/operator of an amusement ride must comply with the requirements of Occupations Code §2151.152, concerning Other Enforcement Actions, including providing copies of the inspection certificate and insurance policy and cooperating in the prohibiting of the operation of the amusement ride, if applicable.

(f) A municipal, county, or state law enforcement official may immediately prohibit operation of an amusement or device ride as set forth in Occupations Code §§2151.152; 2151.1525, concerning Prohibition of Amusement Ride Operation; or 2151.1526, concerning Prohibition of Mobile Amusement Ride Operation, and a person may not operate the amusement ride until the requirements of Occupations Code §§2151.152, 2151.1525, and 2151.1526 are met.

History

Source Note: The provisions of this §5.9012 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2005, 30 TexReg 7049; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9013 Injunctions

Any person who operates an amusement ride, amusement attraction, or amusement device, and offers such for the public, must meet the requirements of the Act. Failure to comply with or violations of the Act constitute a Class B misdemeanor. Each day of public operation constitutes a separate and distinct offense. The district attorney of each county in which an amusement ride or device is operated or, on request of the commissioner of insurance, the state attorney general, or one of the state attorney general's agents, may seek an injunction against any person operating an amusement ride or device in violation of the Act or in violation of this subchapter.

History

Source Note: The provisions of this §5.9013 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2024, 49 TexReg 8587.

28 Tex. Admin. Code § 5.9014 Penalties; Enforcement

(a) An amusement ride owner/operator commits an offense if the owner/operator fails to comply with any requirement under §5.9004 of this title (relating to Amusement Ride Operation Requirements), §5.9006 of this title (relating to Public Information Sign), §5.9007 of this title (relating to Quarterly Reports), or §5.9008 of this title (relating to Filing Affidavit). An owner/operator, sponsor, lessor, landowner, or other person responsible for an amusement ride offered for use by the public commits an offense if the owner/operator fails to provide information required by this subchapter or provides false information under §5.9004(a)(2)(G) of this title. Any offense under this subchapter is considered a Class B misdemeanor. Each time a violation of this subchapter is committed it constitutes a separate offense.

(b) In addition to action by the state attorney general, local municipal, county, or state law enforcement officials may be solicited to determine compliance with this subchapter or with Occupations Code Chapter 2151, Subchapter C, concerning Operation of Amusement Rides, other than Occupations Code §2151.104, concerning Access to Rides, in conjunction with TDI, and may institute an action in a court of competent jurisdiction to enforce the Act and this subchapter.

(c) The prosecuting attorney in a case in which a person is convicted of an offense under Occupations Code §2151.153, concerning Criminal Penalties, must report the offense to TDI not later than the 90th day after the date of the conviction.

History

Source Note: The provisions of this §5.9014 adopted to be effective September 29, 1993, 18 TexReg 6315; amended to be effective May 4, 2000, 25 TexReg 3787; amended to be effective November 3, 2024, 49 TexReg 8587.

Subchapter K TERMINATION OF FINANCIAL ASSURANCE FOR UNDERGROUND STORAGE TANKS

28 Tex. Admin. Code § 5.9101 Purpose

In accordance with the Water Code §26.352(e-1), this subchapter specifies the requirements and procedures for an insurer or other entity providing financial assurance for the purposes of meeting financial responsibility requirements for underground storage tank owners or operators under the Water Code §26.352 to provide notice to the Texas Commission on Environmental Quality (TCEQ) after insurance or other financial assurance for an underground storage tank is canceled or not renewed.

History

Source Note: The provisions of this §5.9101 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9102 Definitions

The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise:

(1) Financial assurance--A financial instrument that as provided by rules adopted by the TCEQ may be used to comply with financial responsibility requirements established under the Water Code §26.352.

(2) Insurer--An entity operating under the Insurance Code providing insurance or other financial assurance to an owner or operator of underground storage tanks for the purposes of meeting financial responsibility requirements established under the Water Code §26.352, including all entities operating under the Insurance Code Chapters 941 (Lloyd's plans), 942 (reciprocals and interinsurance exchanges), 981 (surplus lines insurers), and 2201 (risk retention groups and purchasing groups).

(3) TCEQ--Texas Commission on Environmental Quality.

History

Source Note: The provisions of this §5.9102 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9103 Applicability

(a) This subchapter is applicable to all insurers providing insurance or other financial assurance to owners or operators of underground storage tanks for the purposes of meeting financial responsibility requirements established under the Water Code §26.352.

(b) All provisions of this subchapter except §5.9107 (relating to Disciplinary Actions by the Commissioner of Insurance) also apply to any other entity providing, holding, or maintaining financial assurance for the owners or operators of underground storage tanks for the purposes of meeting financial responsibility requirements established under the Water Code §26.352.

(c) This subchapter applies only to notices required to be issued under the Water Code §26.352(e-1) and that are issued on or after May 1, 2008, regardless of when the insurance policy or other form of financial assurance was issued or created.

History

Source Note: The provisions of this §5.9103 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9104 Content of Notice

(a) Pursuant to the Water Code §26.352(e-1), an insurer or other entity that provides insurance coverage or another form of financial assurance to an owner or operator of an underground storage tank for the purpose of showing or maintaining evidence of financial responsibility must send written notice to the TCEQ if the insurance coverage or other financial assurance for an underground storage tank is canceled or not renewed as provided in §5.9105 of this title (relating to Submission of Notice). The notice must contain the following information:

(1) the name of the insured, or assured, as appropriate;

(2) the street address or specific location of each underground storage tank for which insurance or financial assurance is being canceled or not renewed;

(3) the business address of the named insured or assured;

(4) the name, address, and telephone number of the insurer or other entity providing, holding, or maintaining the financial assurance;

(5) the effective date that the insurance coverage or financial assurance was terminated;

(6) the insurer's or other entity's reason(s) for the cancellation or non-renewal of the insurance or other financial assurance;

(7) the policy number or other financial assurance identification number; and

(8) the facility identification number assigned by the TCEQ for each underground storage tank that insurance coverage or other financial assurance was canceled or not renewed.

(b) The notice must be accurate and contain all the information required under subsection (a) of this section. It is the sole responsibility of the insurer or other entity providing, holding, or maintaining financial assurance to obtain and maintain the information necessary to complete the required notice.

History

Source Note: The provisions of this §5.9104 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9105 Submission of Notice

(a) As provided under the Water Code §26.352(e-1), the insurer or other entity providing, holding, or maintaining financial assurance for an underground storage tank must send the notice required pursuant to the Water Code §26.352(e-1) and §5.9104(a) and (c) (relating to Content of Notice) not later than the 30th day after the date the coverage terminates.

(b) As provided under the Water Code §26.352(e-1), the insurer, or other entity providing, holding, or maintaining financial assurance for an underground storage tank shall mail, fax, or email the notice required under the Water Code §26.352(e-1) and §5.9104(a) and (c) of this subchapter (relating to Content of Notice) to the TCEQ. The notice must be submitted to one of the following addresses, or as otherwise directed by the executive director of the TCEQ:

(1) TCEQ, Financial Assurance Cancellations, MC-234, P.O. Box 13087, Austin, Texas 78711-3087 (mail);

(2) TCEQ, Financial Assurance Cancellations, MC-234, 12100 Park 35 Circle, Austin, Texas 78753 (overnight delivery);

(3) (512) 239-6242 (fax); or

(4) txustfa@tceq.state.tx.us (email).

History

Source Note: The provisions of this §5.9105 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9106 Rescindment of Cancellation or Non-Renewal

(a) An insurer or other entity that rescinds a cancellation or non-renewal noticed to the TCEQ pursuant to the Water Code §26.352(e-1) and §5.9104 of this subchapter (relating to Content of Notice) must send written notice to the TCEQ of such rescindment in accordance with §5.9105(b) of this subchapter (relating to Submission of Notice) not later than the 10th day after the cancellation or non-renewal is rescinded.

(b) The notice of rescindment required in subsection (a) of this section must include:

(1) a copy of the notice under §5.9104 of this subchapter that is being rescinded; or

(2) both of the following:

(A) the policy number or other financial assurance identification number, and

(B) the facility identification number(s) assigned by the TCEQ for the underground storage tank(s) insured or otherwise financially assured.

(c) The notice required by subsection (a) of this section must be accurate and contain all the information required under subsection (b) of this section. It is the sole responsibility of the insurer or other entity providing, holding, or maintaining financial assurance to obtain and maintain the information necessary to complete the required notice.

History

Source Note: The provisions of this §5.9106 adopted to be effective April 9, 2008, 33 TexReg 2820.

28 Tex. Admin. Code § 5.9107 Disciplinary Actions by the Commissioner of Insurance

The Commissioner of Insurance may, after notice and an opportunity for a hearing, discipline an insurer under the Insurance Code Chapters 82, 83, 84, and 2201 for violations of the requirements of this subchapter and any other applicable law the Commissioner determines the insurer to be in violation of, or with which the insurer has failed to comply.

History

Source Note: The provisions of this §5.9107 adopted to be effective April 9, 2008, 33 TexReg 2820.

Subchapter O STATISTICAL PLANS

28 Tex. Admin. Code § 5.9501 Texas Commercial Lines Statistical Plan

(a) Purpose and Applicability.

(1) The purpose of this section is to establish requirements for the reporting of premium and loss data by direct commercial lines insurers under Insurance Code Chapter 38, Subchapter E.

(2) Under Insurance Code §38.202, the commissioner has designated a statistical agent for commercial lines of insurance.

(3) As provided by Insurance Code §38.205, all insurers writing direct commercial lines business in Texas are required to provide a report of their premium and loss cost experience to the commissioner or the statistical agent designated under Insurance Code §38.202. The report must comply with the reporting requirements and instructions specified in the Texas Commercial Lines Statistical Plan adopted by reference in subsection (b) of this section.

(4) This section applies to all reports required to be filed with the department under this section for reporting periods beginning on or after July 1, 2017.

(b) Adoption by Reference. The commissioner adopts by reference the Texas Commercial Lines Statistical Plan, effective July 1, 2017. This document is published by the department and is available on the department's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §5.9501 adopted to be effective December 8, 2009, 34 TexReg 8730; amended to be effective June 23, 2016, 41 TexReg 4488.

28 Tex. Admin. Code § 5.9502 Texas Catastrophe Event Statistical Plan for Personal and Commercial Risks

(a) Purpose and applicability.

(1) The purpose of this section is to establish requirements for the reporting of catastrophe-related data by insurers under Insurance Code Chapter 38, Subchapter E and Insurance Code §38.001.

(2) This section applies to all reports required to be filed under the Texas Catastrophe Event Statistical Plan for Personal and Commercial Risks for reporting dates beginning on or after the effective date of the plan. Insurers must report their claim and loss experience after each specified catastrophe event. Insurers are not required to report data under the statistical plan until TDI has activated the statistical plan for a specific event and requested information under Insurance Code §38.001 through a bulletin on TDI's website at www.tdi.texas.gov.

(b) Data reporting notice. TDI will notify insurers, including surplus lines and farm mutual insurers, of data reporting under the Texas Catastrophe Event Statistical Plan for Personal and Commercial Risks by posting a data request under Insurance Code §38.001 through a bulletin on TDI's website at www.tdi.texas.gov.

(c) Response requirements. A response must comply with the reporting requirements and instructions specified in the Texas Catastrophe Event Statistical Plan for Personal and Commercial Risks adopted by reference in subsection (e) of this section.

(d) Confidential information. Under Insurance Code §38.001(d), a response made under this section, whether to a statistical agent or to TDI, that is otherwise privileged or confidential by law remains privileged or confidential until introduced into evidence at an administrative hearing or in a court. Insurers should identify what documents are privileged or confidential in their responses.

(e) Adoption by reference. The Commissioner adopts by reference the Texas Catastrophe Event Statistical Plan for Personal and Commercial Risks, First Edition, August 2020. This document is published by TDI and is available on TDI's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §5.9502 adopted to be effective October 6, 2020, 45 TexReg 7042.

28 Tex. Admin. Code § 5.9503 Texas Statistical Plan for Residential Risks

(a) Purpose and Applicability.

(1) The purpose of this section is to establish requirements for the reporting of data by residential property insurers under Insurance Code Chapter 38, Subchapter E, concerning Statistical Data Collection; Insurance Code §38.001, concerning Inquiries; and Insurance Code §551.006, concerning Report Required.

(2) Insurers writing direct residential property business in Texas must provide the required reports described in the Texas Statistical Plan for Residential Risks adopted by reference in subsection (b) of this section to the commissioner or the statistical agent designated under Insurance Code §38.202, concerning Statistical Agent.

(3) The reports must comply with the reporting requirements and instructions specified in the Texas Statistical Plan for Residential Risks adopted by reference in subsection (b) of this section.

(4) This section applies to all reports required to be filed with the department under this section for reporting periods beginning on or after April 1, 2026.

(b) Adoption by Reference. The commissioner adopts by reference the Texas Statistical Plan for Residential Risks , effective April 1, 2026. This document is published on the department's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §5.9503 adopted to be effective February 4, 2026, 51 TexReg 595.

28 Tex. Admin. Code § 5.9504 Texas Private Passenger Auto Statistical Plan

(a) Purpose and Applicability.

(1) The purpose of this section is to establish requirements for the reporting of data by private passenger automobile insurers under Insurance Code Chapter 38, Subchapter E, concerning Statistical Data Collection; Insurance Code §38.001, concerning Inquiries; and Insurance Code §551.006, concerning Report Required.

(2) Insurers writing direct private passenger automobile business in Texas must provide the required reports described in the Texas Private Passenger Auto Statistical Plan adopted by reference in subsection (b) of this section to the commissioner or the statistical agent designated under Insurance Code §38.202, concerning Statistical Agent.

(3) The reports must comply with the reporting requirements and instructions specified in the Texas Private Passenger Auto Statistical Plan adopted by reference in subsection (b) of this section.

(4) This section applies to all reports required to be filed with the department under this section for reporting periods beginning on or after April 1, 2026.

(b) Adoption by Reference. The commissioner adopts by reference the Texas Private Passenger Auto Statistical Plan , effective April 1, 2026. This document is published on the department's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §5.9504 adopted to be effective February 4, 2026, 51 TexReg 595.

Subchapter U USE OF CREDIT INFORMATION OR CREDIT SCORES

28 Tex. Admin. Code § 5.9940 Disclosure Form Required Concerning Use of Credit Information

(a) This subchapter applies to an insurer that writes personal insurance coverage and uses credit information or credit reports for the underwriting or rating of that coverage.

(b) The definitions adopted under Insurance Code Article 21.49-2U apply to this subchapter.

(c) The commissioner adopts by reference disclosure form, Form CD-1, which may be obtained from the department's website at www.tdi.state.tx.us or from the Automobile/Homeowners Section, Mail Code 104-1A, Texas Department of Insurance 333 Guadalupe, P.O. Box 149104 Austin, Texas 78714-9104.

(d) In accordance with Section 7(d) of Article 21.49-2U, Insurance Code, an insurer subject to this subchapter or its agents shall issue Form CD-1 indicating whether or not credit information pertaining to the applicant or the insured or other household member(s) will be obtained and used as part of the insurance credit scoring process.

(e) An insurer may use a disclosure form that:

(1) is allowed or approved for use in another state, and

(2) complies with all requirements of this section and Form CD-1.

(f) The disclosure form, unless identical to Form CD-1, must be filed prior to use with the Texas Department of Insurance, Property & Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin, Texas 78714-9104 or with the Texas Department of Insurance, Property & Casualty Intake Unit, 333 Guadalupe, Austin, Texas 78701.

(g) The written disclosure shall:

(1) contain the name, address and telephone number (toll-free if available) of the insurer;

(2) contain a statement indicating that if credit information is obtained or used, the insurer shall provide more detailed information concerning how the credit information was used to underwrite or rate the policy. This detailed information may be provided in the disclosure form itself;

(3) be printed in reasonably conspicuous type;

(4) be provided by the insurer or the agent electronically, by U.S. mail or by hand delivery;

(5) be provided to the applicant with the application or immediately upon receipt of a complete application, but no later than ten days after receipt of the complete application;

(6) be provided to insureds at renewal if credit information will be obtained and used as part of the insurance credit scoring process;

(7) be written in English and be provided to the applicant or insured in Spanish, if requested; and

(8) contain the summary of consumer protections set forth in Insurance Code Article 21.42-2U as provided in Form CD-1, including information on prohibited use of credit information, negative factors, effect of extraordinary events, dispute resolution, error correction and notice of action resulting in adverse effect.

(h) Insurers are subject to all other disclosure requirements in Insurance Code Article 21.49-2U.

History

Source Note: The provisions of this §5.9440 adopted to be effective November 30, 2003, 28 TexReg 10765.

28 Tex. Admin. Code § 5.9941 Differences in Rates Charged Due Solely to Difference in Credit Scores

(a) An insurer may vary its rates charged to applicants or insureds for personal insurance policies due solely to credit scoring. The differences in rates charged due solely to credit scoring shall be based on sound actuarial principles and supported by data filed with the department.

(b) Filings under this section must be submitted to the Texas Department of Insurance no later than March 1, 2004 to the Property & Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin, Texas 78714-9104 or to the Texas Department of Insurance, Property & Casualty Intake Unit, 333 Guadalupe, Austin, Texas 78701.

History

Source Note: The provisions of this §5.9441 adopted to be effective November 30, 2003, 28 TexReg 10765.

Subchapter V TERRITORY RATING REQUIREMENTS

28 Tex. Admin. Code § 5.9960 Exception to Rating Territory Requirements under §2253.001 of the Insurance Code

(a) The purpose of this section is to provide an exception to §2253.001 of the Insurance Code for an insurer that writes residential property insurance or personal automobile insurance in the State of Texas.

(b) This section applies to an insurer that writes residential property insurance or personal automobile insurance in the State of Texas. This section applies to a county mutual insurance company, a Lloyd's plan, or a reciprocal or interinsurance exchange effective January 1, 2004.

(c) The following words and terms, when used in this section have the following meanings, unless the context clearly indicates otherwise.

(1) County--A county in the State of Texas.

(2) Insurer--An insurance company, reciprocal or interinsurance exchange, mutual insurance company, capital stock company, county mutual insurance company, Lloyd's plan, or other legal entity authorized to write residential property insurance or personal automobile insurance in the State of Texas. The term includes an appointed managing general agent, district, or local chapter program of a county mutual insurance company described by the Insurance Code §912.056(d) that manages a portion of that county mutual company's business independent of all other business of that county mutual insurance company and that is to be treated as a separate insurer for the purposes of Chapters 544, 2251, 2253, and 2254 of the Insurance Code as provided in §912.056(e) of the Insurance Code. The term does not include:

(A) the Texas Windstorm Insurance Association under Chapter 2210 of the Insurance Code;

(B) the FAIR Plan Association under Chapter 2211 of the Insurance Code; or

(3) Personal automobile insurance--Motor vehicle insurance coverage for the ownership, maintenance or use of a private passenger, utility or miscellaneous type motor vehicle, including a motor home, mobile home, trailer or recreational vehicle, that is:

(A) owned or leased by an individual or individuals; and

(B) not primarily used for the delivery of goods, materials, or services, other than for use in farm or ranch operations.

(4) Rate--The cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost, with an adjustment to account for the treatment of expenses, profit, and individual insurer variation in loss experience, and before any application of individual risk variations based on loss or expense considerations.

(5) Residential property insurance--Insurance against loss to real property at a fixed location or tangible personal property provided in a homeowners policy, a tenant policy, a condominium owners policy, or a residential fire and allied lines policy.

(d) Except as provided by subsection (e) of this section, an insurer may not use rating territories that subdivide a county unless the county is subdivided and the rate for any subdivisions within that county is not greater than 15% higher than the rate used in any other subdivisions in the county by that insurer for identical coverage for insureds having, aside from rating territory, identical risk characteristics.

(e) For residential property insurance or personal automobile insurance, an insurer may not use a rate for a subdivision within a county that is greater than 15% higher than the rate used in any other subdivision within that county unless the rate is based on sound actuarial principles, is supported by data filed with the department, and is in compliance with all statutory and regulatory requirements.

(f) Notwithstanding statutory or regulatory filing exception requirements that would otherwise apply, an insurer must file with the department a rate for a subdivision within a county that is greater than 15% higher than the rate used in any other subdivision within that county in accordance with the statutory filing requirements applicable to residential property insurance or personal automobile insurance.

(g) Filings under this section must be submitted to the Texas Department of Insurance, Property & Casualty Intake Unit, Mail Code 104-3B, 333 Guadalupe, Austin, Texas 78701 or to the Texas Department of Insurance, Property & Casualty Intake Unit, Mail Code 104-3B, P.O. Box 149104, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §5.9960 adopted to be effective November 30, 2003, 28 TexReg 10769; amended to be effective June 30, 2011, 36 TexReg 3923.

Subchapter W CONSUMER RIGHTS NOTICES

28 Tex. Admin. Code § 5.9970 Personal Automobile Insurance Consumer Bill of Rights

(a) For purposes of this section, "insurer" means an insurance company, reciprocal or interinsurance exchange, mutual insurance company, capital stock company, county mutual insurance company, Lloyd's plan, or other legal entity authorized to write personal automobile insurance in this state. The term includes an affiliate, as described by Insurance Code §823.003(a), if that affiliate is authorized to write and is writing personal automobile insurance in this state.

(b) The Texas Department of Insurance adopts the 2024 version of the Consumer Bill of Rights - Personal Automobile Insurance (Auto Bill of Rights), and the Spanish language translation, as developed and submitted by the Office of Public Insurance Counsel:

Attached Graphic

(c) All insurers writing personal automobile insurance policies must provide with each new policy of personal automobile insurance a copy of the 2024 version of the Auto Bill of Rights. At the consumer's request, the insurer may provide an electronic copy of the Auto Bill of Rights instead of a hard copy. The insurer must provide the Auto Bill of Rights with each renewal notice for personal automobile insurance unless the insurer has previously provided the policyholder with the 2024 version of the Auto Bill of Rights.

(d) The Auto Bill of Rights must appear in no less than 10-point type and be on separate pages with no other text on those pages.

(e) Insurers must provide the Spanish language version of the 2024 version of the Auto Bill of Rights to any consumer who requests it.

(f) Insurers must provide the applicable Auto Bill of Rights included in this section beginning November 1, 2024. Before that date, insurers may provide the Auto Bill of Rights either as it currently is included in this section or as it was included in the section as the section was amended to be effective May 16, 2021.

History

Source Note: The provisions of this §5.9970 adopted to be effective April 19, 2005, 30 TexReg 2231; amended to be effective January 31, 2013, 37 TexReg 9096; amended to be effective May 16, 2021, 46 TexReg 3141; amended to be effective November 1, 2024, 49 TexReg 2544.

28 Tex. Admin. Code § 5.9971 Homeowners, Dwelling, and Renters Insurance Consumer Bill of Rights

(a) For purposes of this section, "insurer" means an insurance company, reciprocal or interinsurance exchange, mutual insurance company, capital stock company, county mutual insurance company, Lloyd's plan, or other legal entity authorized to write residential property insurance in this state. The term includes an affiliate, as described by Insurance Code §823.003(a), if that affiliate is authorized to write and is writing residential property insurance in this state. The term does not include the Texas Windstorm Insurance Association or the Texas Fair Plan Association.

(b) The Texas Department of Insurance adopts the 2024 version of the Consumer Bill of Rights - Homeowners, Dwelling, and Renters Insurance (Homeowners Bill of Rights), and the Spanish language translation, as developed and submitted by the Office of Public Insurance Counsel:

Attached Graphic

(c) All insurers writing homeowners, dwelling, or renters insurance must provide with each new policy of any such insurance a copy of the 2024 version of the Homeowners Bill of Rights. At the consumer's request, the insurer may provide an electronic copy of the Homeowners Bill of Rights instead of a hard copy. The insurer must provide the Homeowners Bill of Rights with each renewal notice for any such insurance unless the insurer has previously provided the policyholder with the 2024 version of the Homeowners Bill of Rights.

(d) The Homeowners Bill of Rights must appear in no less than 10-point type and be on separate pages with no other text on those pages.

(e) The insurer must provide the Spanish language version of the 2024 version of the Homeowners Bill of Rights to any consumer who requests it.

(f) Insurers must provide the applicable Homeowners Bill of Rights included in this section beginning November 1, 2024. Before that date, insurers may provide the Homeowners Bill of Rights either as it is currently included in this section or as it was included in the section as the section was amended to be effective May 16, 2021.

History

Source Note: The provisions of this §5.9971 adopted to be effective May 16, 2021, 46 TexReg 3141; amended to be effective November 1, 2024, 49 TexReg 2544.

Subchapter X PRIOR APPROVAL OF RATES UNDER CERTAIN CIRCUMSTANCES

28 Tex. Admin. Code § 5.9980 Financial Conditions

(a) The following financial conditions may require an insurer to file with the department for the commissioner's approval all rates, supplementary rating information, and any supporting information:

(1) a finding by the commissioner that an insurer is in a hazardous financial condition under Insurance Code Chapter 404 and §8.3 of this title (relating to Hazardous Conditions and remedy of Hazardous Conditions);

(2) an insurer has been placed in supervision or conservatorship under Insurance Code Chapter 441;

(3) an insurer has been seized or placed in rehabilitation or receivership under Insurance Code Chapter 443; or

(4) an insurer has been required to make a special deposit with the comptroller under Insurance Code Chapter 406.

(b) An insurer subject to this section must continue to file all rates, supplementary rating information, and any supporting information until the commissioner issues an order finding that the financial condition that subjected the insurer to this section no longer exists.

History

Source Note: The provisions of this §5.9980 adopted to be effective December 10, 2013, 38 TexReg 8904.

28 Tex. Admin. Code § 5.9981 Rating Practices

(a) The commissioner may order an insurer to file with the department for the commissioner's approval all rates, supplementary rating information, and any supporting information for a rating practice if the commissioner has disapproved a rate by order because:

(1) an insurer filed a rate that was found to be excessive, inadequate, unreasonable, or unfairly discriminatory for the risks to which the rates applied in violation of Insurance Code §2251.052; or

(2) the insurer has repetitively used rates that differ from the rates filed under Insurance Code §2251.101.

(b) The commissioner will periodically assess whether the rating practices that subjected the insurer to this section continue to exist. If the conditions no longer exist, the commissioner will issue an order excusing the insurer from prior approval.

History

Source Note: The provisions of this §5.9981 adopted to be effective December 10, 2013, 38 TexReg 8904.

28 Tex. Admin. Code § 5.9982 Statewide Insurance Emergency

(a) The commissioner may order an insurer to file with the department for the commissioner's approval all rates, supplementary rating information, and any supporting information if the commissioner determines that a statewide emergency exists affecting the availability of insurance and impacting a significant part of the state.

(b) The commissioner will consider the following factors in determining whether a statewide insurance emergency exists that impacts the availability of insurance:

(1) there is a substantial increase in policies in a particular line of insurance being written by surplus or residual insurers;

(2) the commissioner has determined that a line of insurance is not offered in a quantity or manner to adequately protect the residents and policyholders in this state as a result of a withdrawal plan or restriction plan filed under Chapter 827; or

(3) the governor declares a natural disaster or the commissioner declares a weather-related catastrophe.

(c) If the commissioner determines a statewide insurance emergency exists, the commissioner may order insurers to file all rates, supplementary rating information, and any supporting information for approval. The commissioner will periodically assess whether a statewide insurance emergency continues to exist.

(d) After the commissioner issues an order under this section, the commissioner will hold a public hearing within 60 days after the issuance of the order declaring a statewide insurance emergency.

(1) At the public hearing, the commissioner will accept comments as to whether a statewide insurance emergency still exists.

(2) If the commissioner finds that a statewide insurance emergency does not exist, the commissioner will issue an order excusing insurers from filing rates under this section.

History

Source Note: The provisions of this §5.9982 adopted to be effective December 10, 2013, 38 TexReg 8904.

Chapter 6 CAPTIVE INSURANCE

Subchapter A GENERAL MATTERS

28 Tex. Admin. Code § 6.1 Definitions

(a) The definitions in Insurance Code §964.001 apply to this chapter.

(b) The following words and terms when used in this chapter have the following meanings unless the context clearly indicates otherwise:

(1) Administrative services--Insurance-related services necessary for the operation of a captive insurance company, including: claims adjustment; underwriting; accounting; investment advice; risk management; regulatory compliance; compiling statistics and preparing premium, loss, and tax reports; maintaining books and records; handling reinsurance matters; and processing premiums.

(2) Annual report--The annual report includes the following information, as required in the Texas Captive Annual Report form and instructions adopted under §6.401 of this title:

(A) the captive insurance company's financial statements, including disclosures and supporting schedules;

(B) an actuarial opinion completed by a qualified actuary that provides an opinion relating to policy reserves and other actuarial items for risks insured; and

(3) Captive management company--A legal entity, not an individual, that has oversight responsibility for providing any administrative service to a captive insurance company.

(4) Certificate of filing--Evidence of the acceptance and filing of an instrument authorized to be filed with the Texas Secretary of State under the Business Organizations Code, Insurance Code Chapter 964, and this chapter.

(5) Commissioner--The Texas Commissioner of Insurance.

(6) Department--The Texas Department of Insurance.

(7) General partnership--The term includes a general partnership designated as a limited liability partnership. The term does not include a limited partnership, including a limited partnership designated as a limited liability partnership.

(8) Governing body--The individuals designated by the captive insurance company, or attorney in fact, who comprise the ultimate decision-making body of a captive insurance company, or attorney in fact, including a board of directors or officers of the captive insurance company, or attorney in fact. This definition applies to the use of the term in this chapter and the relationship of the captive insurance company, or attorney in fact, to the department. To the extent that the term has a different meaning under the Business Organizations Code related to the formation of entities and filings with the Texas Secretary of State, this definition does not apply.

(9) Licensed attorney--A person licensed and eligible to practice law.

(10) Qualified accountant--An independent certified public accountant or accounting firm that meets the requirements of Insurance Code §401.011.

(11) Qualified actuary--A person who meets the basic education, experience, and continuing education requirements set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, promulgated by the American Academy of Actuaries, and is either:

(A) a member of the American Academy of Actuaries who has demonstrated actuarial competence to the satisfaction of the Commissioner; or

(B) a member of the Casualty Actuarial Society.

(12) Qualified United States financial institution--An institution that:

(A) is organized under the laws of the United States or any state of the United States;

(B) is regulated, supervised, and examined by a federal or state authority that has regulatory authority over banks and trust companies; and

(13) Service providers--Captive management companies that provide administrative services and individuals or entities providing legal, actuarial, or auditing services.

(14) Texas Captive Annual Report--The forms, instructions, and requirements adopted by reference in §6.401 of this title that are necessary for completing the annual report and other submissions under this chapter.

(15) Ultimate controlling person--Person or persons who control a captive insurance company and who are not controlled by another person.

History

Source Note: The provisions of this §6.1 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.2 Submissions and Notifications to the Commissioner and Department

Except as otherwise provided in this chapter or the Texas Captive Annual Report, all submissions to the Commissioner or the department referenced in this chapter must be sent to the address and by the means specified on:

(1) the applicable department form;

(2) the department's website; or

(3) if the address is not specified:

(A) electronically, to Captives@tdi.texas.gov;

(B) by hand delivery, to Captives, Texas Department of Insurance, 333 Guadalupe, Mail Code 103-CL, Austin, Texas 78701; or

History

Source Note: The provisions of this §6.2 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

Subchapter B CAPTIVE MANAGEMENT COMPANIES

28 Tex. Admin. Code § 6.101 Registration of Captive Management Companies

(a) A captive management company may not provide administrative services to a captive insurance company prior to obtaining the commissioner's written approval of its registration as a captive management company.

(b) An individual may not provide administrative services or be registered to provide such services unless the individual is:

(1) a member of the governing body or officer of the captive insurance company; or

(2) an employee of the captive insurance company or an affiliate.

(c) To register as a captive management company, the entity must submit the following information to the department in manner that is acceptable to the department:

(1) the name of the entity;

(2) the entity's federal employer identification number;

(3) information regarding the location and means of contacting the entity; and

(4) the name and biographical information, including fingerprints, of a designated responsible party, who qualifies under §6.103 of this title (relating to Designated Responsible Party), and who will be the contact for the department.

(d) The department may provide a form the registrant can use to comply with this section.

History

Source Note: The provisions of this §6.101 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.102 Maintenance and Duration of the Registration

(a) The captive management company must notify the department of changes to the information required for registration not later than 30 days after the change.

(b) A captive management company may not operate without a designated responsible party except as provided in this subsection. If a designated responsible party leaves a captive management company, the captive management company must notify the department of a replacement designated party and provide all information required under §6.103 of this title (relating to Designated Responsible Party) within the 30-day period specified in subsection (a) of this section.

(c) The captive management company's registration will expire if the captive management company does not provide administrative services to at least one Texas domestic captive insurance company for a period of more than 180 days.

(d) If a captive management company's registration expires, the captive management company must submit a new registration to the department, which the commissioner must approve in writing before the entity can act as a captive management company. The captive management company may submit a written request for the commissioner to waive any portion of the registration requirement under this section. At the commissioner's sole discretion, the commissioner may grant the waiver in writing if the commissioner determines that the requirement or information is not applicable or provides no additional value in reviewing the registration submission.

History

Source Note: The provisions of this §6.102 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.103 Designated Responsible Party

A designated responsible party must:

(1) be an individual;

(2) provide the designated responsible party's current name and any names the individual may have used in the past, social security number, date of birth, and current mailing addresses, phone numbers, and email addresses;

(3) provide professional background information and criminal history information;

(4) provide a complete set of fingerprints using the procedures set forth in §1.509 of this title (relating to Fingerprint Format and Complete Application), unless the individual meets the exemption in §1.504(b)(1) of this title (relating to Fingerprint Requirement); and

(5) be eligible for licensure based on the guidelines established in §1.502 of this title (relating to Licensing Persons with Criminal Backgrounds).

History

Source Note: The provisions of this §6.103 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.104 Administrative Services Contracts

(a) A captive insurance company through its governing body may retain one or more captive management companies registered under this chapter to provide administrative services and implement the governing body's policies.

(b) With the written consent of the captive insurance company, a captive management company may contract with another captive management company to provide administrative services.

(c) The captive insurance company retains ultimate accountability and responsibility for compliance with all statutory and regulatory requirements. The captive insurance company may not enter into an agreement with a captive management company or other person that in any way limits, or may be construed to limit, the captive insurance company's ultimate accountability and responsibility for compliance with all statutory and regulatory requirements.

(d) Subsection (c) of this section does not limit the captive management company's obligations under any contract or the captive management company's duty to comply with all statutory and regulatory requirements.

(e) If an administrative service requires a license or certificate of authority under the Insurance Code or other law, a captive management company must have the required license or certificate of authority to provide the service.

History

Source Note: The provisions of this §6.104 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.105 Agreements to Provide Administrative Services

(a) An agreement with a captive management company described in §6.104 of this title (relating to Administrative Services Contracts) must be in writing and include the following:

(1) a requirement that all parties to the agreement must comply with the applicable requirements of the Insurance Code and department rules, including holding the appropriate licenses or certificates of authority;

(2) a requirement that the captive management company must permit the commissioner or the captive insurance company to examine at any time:

(A) the financial solvency of the captive management company; and

(B) the captive management company's ability to perform its responsibilities under the written agreement;

(3) a description of the duties or services that the captive management company is to provide;

(4) a provision relating to continuation of services following termination and the transfer of the books and records of a captive insurance company from one captive management company to another captive management company;

(5) a requirement that the books and records of the captive insurance company:

(A) remain the property of the captive insurance company at all times;

(B) are available to the captive insurance company or its designee at any time while in the custody of a captive management company; and

(i) on request of the captive insurance company;

(ii) at the termination or cancellation of a written agreement entered into by a captive management company; and

(iii) in compliance with all applicable statutory and rule requirements;

(6) a requirement that the books and records must be maintained as required in §6.306 of this title (relating to Books and Records); and

(7) a provision that the captive management company has no automatic right to terminate the agreement if all terms of the agreement are being met and the captive insurance company is placed in receivership under Insurance Code Chapter 443.

(b) Under this chapter, a written agreement includes an agreement that is prepared, signed, or stored electronically.

History

Source Note: The provisions of this §6.105 adopted to be effective April 27, 2014, 39 TexReg 3232.

Subchapter C CAPTIVE INSURANCE COMPANY APPLICATION PROCESS

28 Tex. Admin. Code § 6.201 Captive Insurance Company Certificate of Authority Required

(a) A person seeking a certificate of authority to act as a captive insurance company must submit an application and payment of the application fee in a format acceptable to the department and provide the information required in §6.202 of this title (relating to Captive Insurance Company Certificate of Authority Application Contents and Process).

(b) The application fee is $1,500.

History

Source Note: The provisions of this §6.201 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.202 Captive Insurance Company Certificate of Authority Application Contents and Process

(a) An applicant seeking to redomesticate an existing captive insurance company or to form a new captive insurance company must provide the following information to the department:

(1) the name of the entity, the entity's federal employer identification number, and the location and means of contacting the entity;

(2) the physical location of the books and records and means of maintaining the books and records;

(3) the registered agent for service;

(4) a list of the service providers that the captive insurance company will use, including qualified accountants, qualified actuaries, and licensed attorneys;

(5) biographical affidavits for the individuals described in §6.303 of this title who provide necessary functions to operate and govern the captive insurance company;

(6) the name of the ultimate controlling person;

(7) the organizational documents for the captive insurance company, other than a captive insurance company formed as a captive exchange, including:

(A) a certificate of filing from the Texas Secretary of State indicating that the entity has been formed or redomesticated to Texas as an entity under the Business Organizations Code, other than a risk retention group or general partnership, for the purpose of providing captive insurance;

(B) an affidavit satisfactory to the Commissioner from the incorporators, organizers, or officers of the captive insurance company stating that:

(i) the capital and surplus are the bona fide property of the company; and

(ii) the certificate of filing is true and correct; and

(i) the number of shares or other type of equity instrument without par value that are subscribed; and

(ii) the actual consideration received by the captive insurance company for those shares or other type of equity instrument;

(8) a description of how the captive insurance company fits into the affiliated group's risk management plan and the group's significant operations in the State of Texas;

(9) if the application is for the redomestication of a captive insurance company, information listed in subsection (b) of this section;

(10) if the applicant proposes to insure controlled unaffiliated business, the information listed in subsection (c) of this section;

(11) a plan of operation, including:

(A) the asset page; liability, capital, and surplus page; income statement page; and cash flow page for the applicant from the Texas Captive Annual Report that are certified by two principal officers who have submitted biographical affidavits and:

(i) four years of financial projections, with a disclosure of the assumptions the applicant is using to develop the projected financial statements; and

(ii) if applicable, the most recent three years of operational results, in United States dollars; however, if the applicant has not been in operation for three or more years, the applicant must submit operational results, in United States dollars, for each year it has been in operation;

(B) a description of the lines of business and perils that the captive insurance company proposes to cover and the limits of coverage;

(D) a description of the reinsurance programs proposed including the lines of business that are affected, limits of reinsurance coverage, and the counterparties that will be involved;

(E) an organizational chart listing all affiliates of the applicant's affiliated group;

(F) agreements with any captive management companies the applicant proposes to use;

(G) a copy of the applicant's investment strategy;

(H) an explanation of how the applicant intends to handle profits, including a statement about how dividends will be evaluated;

(I) an independent actuarial report that evaluates the feasibility of the applicant's plan of operation;

(J) details of how the parent entity will maintain and support the captive insurance company, including ensuring compliance with Texas statutes and rules; and

(K) evidence of the financial wherewithal of the affiliate group, including affiliated persons, to retain the risk using the captive insurance company; and

(12) an affidavit by two principal officers or members of the governing committee who have submitted biographical affidavits that the information provided in paragraphs (1) - (11) of this subsection is true and correct.

(b) An application for a redomestication must include:

(1) the applicant's current domicile jurisdiction;

(2) if the applicant has been examined:

(A) the date of the most recent examination; and

(B) a copy of the most recent examination report;

(3) information required in §6.407 and §6.408 of this title for existing loans to affiliates; and

(4) a letter of no objection or release from the captive insurance company's current domicile.

(c) If the applicant proposes to insure a controlled unaffiliated business, the following documentation must be provided with the application:

(1) copies of the agreement(s) that evidence an existing contractual relationship between the parties, one of which must be a captive insurance company affiliate;

(2) a description and any supporting documentation that evidences that the captive insurance company affiliate bears the risk of a potential financial loss associated with the contract beyond the affiliate having to pay a fee; and

(3) a description and any supporting policies that document that a captive insurance company affiliate controls the risk management function of the controlled unaffiliated business.

(d) If the applicant proposes to form as a captive exchange under Insurance Code Chapter 964, Subchapter C, the applicant must provide the following information:

(1) A copy of the power of attorney executed by each subscriber appointing the attorney in fact;

(2) A copy of the subscriber declaration meeting the requirements of Insurance Code §964.101(a)(2) and §964.106;

(3) A copy of the attorney in fact's articles of incorporation, or other governing document, that details the composition of the governing body and what constitutes a quorum;

(4) a certificate of filing from the Texas Secretary of State indicating that the attorney in fact has been formed or redomesticated to Texas as an entity under the Business Organizations Code, other than a risk retention group or general partnership, for the purpose of providing captive insurance;

(e) The department may accept similar information prepared in a similar format for a nonaffiliated third party, including a regulator, bank, or similar user, to the extent that the information satisfies one or more of the requirements in subsections (a) - (d) of this section to the satisfaction of the Commissioner.

(f) The applicant may submit a written request for the Commissioner to waive or grant a conditional exception to any portion of the application or information required under this section. At the Commissioner's sole discretion, the Commissioner may grant the waiver in writing, if the Commissioner determines the requirement or information is not applicable or provides no additional value in reviewing the application. At the Commissioner's sole discretion, the Commissioner may grant a conditional exception that will be listed in the certificate of authority issued as described in §6.203(b) of this title.

History

Source Note: The provisions of this §6.202 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.203 Issuance of Captive Insurance Company Certificate of Authority

(a) Following submission of the information and documentation described under §6.202 of this title the Commissioner will review the information for compliance with Insurance Code Chapter 964 and this chapter. If requested, the applicant must provide the Commissioner with updated information during this review.

(b) If the Commissioner determines that the applicant meets the requirements for issuance of a certificate of authority, the Commissioner will issue the certificate as described in Insurance Code §964.059(d). If the department has granted conditional exceptions under §6.202(f) of this title, the certificate of authority will list the exceptions and be issued on a consent basis, requiring the written agreement of the captive insurance company.

(c) If the Commissioner determines that the applicant has not met the requirements for issuance of a certificate of authority under Insurance Code §964.059 and this chapter, the Commissioner will deny the application. Following denial of the application, the applicant may proceed under Insurance Code §964.059(c).

History

Source Note: The provisions of this §6.203 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

Subchapter D MAINTENANCE OF A CAPTIVE INSURANCE COMPANY'S CERTIFICATE OF AUTHORITY

28 Tex. Admin. Code § 6.301 Ongoing Requirements

A captive insurance company must comply with Insurance Code Chapter 964, the Business Organizations Code, and this chapter, including:

(1) providing biographical information as required under §6.303 of this title (relating to Captive Insurance Company Biographical Information);

(2) writing an annual premium amount of at least $100,000;

(3) having an affiliate or ultimate controlling person with the financial wherewithal to continue placing the risk in the captive insurance company;

(4) complying with §6.306 and §7.1403 of this title (relating to Books and Records and Service on Domestic Insurance Companies Licensed by the State Board of Insurance and on Related Entities Authorized To Conduct Business in Texas);

(5) submitting annual reports and audited financial statements as described in §§6.401, 6.403, and 6.404 of this title (relating to Annual Report, Audited Financial Statements, and Captive Insurance Companies Using Other Than Calendar Year Fiscal Years);

(6) notifying the department of any material change in the captive insurance company's plan of operation, as described in §6.304 of this title (relating to Material Change in the Plan of Operations);

(7) maintaining minimum capital and surplus as established by the department;

(8) except as provided in paragraph (6) of this section, notifying the department of any change to the information provided in the application within 30 days following the change; and

(9) timely payment of all required fees and registrations, including payments required by the Texas Secretary of State to maintain the captive insurance company in good standing.

History

Source Note: The provisions of this §6.301 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.302 Governing Body

(a) The captive insurance company, or attorney in fact, must designate individuals to form a governing body. Collectively, the members of the governing body must have the ability and experience necessary to oversee the captive insurance company's operations. The ability and experience needed will vary with the size and complexity of the captive insurance company's operations.

(b) The governing body is responsible for the following:

(1) establishing and documenting the internal control procedures used by the captive insurance company, or attorney in fact. If a captive insurance company, or attorney in fact, uses an affiliate's procedures, the governing body must review the procedures for appropriateness and modify where needed;

(2) documenting a conflict-of-interest policy and procedure, and monitoring it to verify compliance;

(3) overseeing all entities providing captive management services to the captive insurance company;

(4) monitoring counterparty risk, which could include banking institutions and reinsurers;

(5) setting the captive insurance company investment policy; and

(6) managerial control, insurance information, and compliance with the Insurance Code and department rules.

History

Source Note: The provisions of this §6.302 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.303 Captive Insurance Company Biographical Information

(a) With the initial captive insurance company application, and within 30 days of employment, contract, or other association with the captive insurance company, or attorney in fact, the following individuals must complete a biographical affidavit and submit it to the department:

(1) with the exception of functions provided by a captive management company, individuals, including individual representatives of the attorney in fact, who oversee the management of the captive insurance company, including the following functions, must complete a biographical affidavit addressing:

(A) risk management;

(B) financial reporting;

(D) claims; and

(E) investments;

(2) members of the governing body; and

(3) corporate officers.

(b) Biographical affidavits required of individuals under subsection (a) of this section must include the following information and disclosures:

(1) the affiant's current name and any names the individual may have used in the past, social security number, date of birth, and current mailing addresses, phone numbers, email addresses;

(2) the name and address of the captive insurance company;

(3) the affiant's position or title at the captive insurance company;

(4) information regarding the affiant's education, memberships in professional organizations, and any professional, occupational, or vocational licenses held;

(5) the affiant's employment history for the previous 10 years; and

(6) the affiant's fidelity bond coverage history, criminal history, and ownership or control of entities involved in the business of insurance.

History

Source Note: The provisions of this §6.303 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.304 Material Change in the Plan of Operations

(a) A material change in the plan of operations involves a change in operations of the captive insurance company that results in a significant modification in the risk profile of the captive insurance company, including:

(1) adding one or more new lines of business or perils;

(2) modifying policy limit(s) or policy coverage(s);

(3) changing captive management companies;

(4) entering into new reinsurance programs including loss portfolio transfers;

(5) modifying reinsurance programs, including:

(A) changing counterparties;

(B) changing the attachment point or amount of business ceded or assumed; and

(6) changing the captive insurance company's ultimate controlling person;

(7) any changes to the information associated with controlled unaffiliated business submitted under §6.202(c) of this title (relating to Captive Insurance Company Certificate of Authority Application Contents and Process); and

(8) entering into a runoff mode or eliminating one or more lines of business or perils, including winding up operations.

(b) All material changes to the plan of operation require prior approval of the commissioner.

(c) The captive insurance company must provide updated financial projections if a material change in the plan of operation will result in a variation in the most recently filed projections equal to an amount greater than 15 percent of projected net equity. The updated financial projections must be submitted with the notice of a material change.

(d) The department will reassess the captive insurance company's minimum capital and surplus when there is an update to the captive insurance company's plan of operations. The captive insurance company must provide an actuarial opinion on the effect of the change in the plan of operation if requested by the department.

History

Source Note: The provisions of this §6.304 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.305 Sale of a Covered Affiliate

(a) Except as provided in subsection (b) of this section, a captive insurance company is prohibited from providing insurance coverage to a former affiliate or reinsurance to an insurer covering the operational risks of the former affiliate after the effective date on which the affiliation ceases, including the effective date of the sale of the affiliate.

(b) The captive insurance company may provide insurance coverage to the former affiliate if the captive insurance company provides information acceptable to the commissioner that the coverage being provided meets the requirements to be categorized as a controlled unaffiliated business under §6.202(c) of this title (relating to Captive Insurance Company Certificate of Authority Application Contents and Process).

History

Source Note: The provisions of this §6.305 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.306 Books and Records

(a) The books and records of a captive insurance company must be located and maintained within the United States and its territories at all times. The books and records of a captive insurance company must be located and maintained within the State of Texas, unless the commissioner authorizes in writing that the books and records may be located or maintained outside the state. A captive insurance company may not locate or maintain records outside of the state until after the captive insurance company receives the commissioner's written authorization, and then may only locate or maintain those records outside of the state in the manner and to the extent that the commissioner has authorized.

(b) The captive insurance company must provide the department with a complete list of all of the locations where its records are located or maintained. Record location and maintenance locations outside of the state must comply with the commissioner's authorization described in subsection (a) of this section.

(c) A captive insurance company must make a written request for authorization from the commissioner to locate or maintain records outside of the state. The written request must:

(1) identify the specific physical address outside the State of Texas where the captive insurance company's books and records will be located or maintained;

(2) identify the types of books and records that will be located or maintained outside the state, including books and records in an electronic format;

(3) if applicable, identify the vendor of a leased or purchased software or electronic platform that will provide services to the captive insurance company related to the maintenance of the captive insurance company's books and records; and

(4) if applicable, include the captive insurance company's continuity plan in the event of cancellation or termination of the arrangement with a vendor identified by the captive insurance company under paragraph (3) of this subsection.

(d) All books and records of a captive insurance company must be:

(1) electronically or physically accessible to the department on the department's request; and

(2) maintained in a manner that provides an audit trail between the captive insurance company's general ledger and the captive insurance company's source documents.

(e) A captive insurance company's books and records must be maintained with reasonable controls to ensure the integrity, accuracy, and reliability of the storage system and to prevent the deterioration of the books and records.

(f) A captive insurance company must ensure that it can recover its electronic books and records up to one week before the loss of it primary source of records.

(g) A captive insurance company must be able to access a complete and current set of its electronic books and records or a complete and current recovery of its electronic books and records from a location within the state at all times.

History

Source Note: The provisions of this §6.306 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.307 Changes to Formation Documents

To comply with Insurance Code §964.062, the captive insurance company must submit any proposed change of information in its formation documents to the department and request approval of the change in advance. If the commissioner approves the change, the department will notify the captive insurance company in writing. Submission to the department is not a filing with the Texas Secretary of State, and the commissioner's approval does not constitute acceptance or affect any review of the proposed amendment by the Texas Secretary of State.

History

Source Note: The provisions of this §6.307 adopted to be effective April 27, 2014, 39 TexReg 3232.

Subchapter E FINANCIAL INFORMATION AND REPORTING

28 Tex. Admin. Code § 6.401 Annual Report

(a) The department adopts, by reference, the Texas Captive Annual Report, including all forms, instructions, and requirements. The adopted forms and instructions will be available on the department's website. The adopted forms, instructions, and requirements are for use by all captive insurance companies that are subject to the provisions of this chapter and Insurance Code Chapter 964. Bracketed information in the forms, including the department submission locations, submission formats and methods, and contact information, is subject to change and persons submitting the forms must confirm that they are using the most recent online version before submitting.

(b) Except as provided in §6.404 of this title, on or before March 1 of each year, a captive insurance company must electronically submit its annual report of the captive insurance company's financial condition as of December 31 of the prior year using the adopted Texas Captive Annual Report form and instructions.

(c) A request to waive the actuarial opinion required to be filed with the annual report must be submitted to the department no later than 30 days prior to the end of the fiscal year subject to the waiver request. If approved, the approved actuarial opinion waiver must be submitted with the Texas Captive Annual Report. The request must include:

(1) the name of the captive insurance company;

(2) the name and contact information of a representative of the captive insurance company with knowledge of the information disclosed in the request;

(3) the time period that the captive insurance company has been in operation;

(4) the amount of net written premium or reinsurance assumed; and

(5) the signature of an officer of the captive insurance company, or attorney in fact, certifying the information contained in the request is true and correct to the best of the signing individual's knowledge and belief.

History

Source Note: The provisions of this §6.401 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.402 Basis of Accounting

Under Insurance Code §964.054(c), the basis of accounting for captive insurance company financial statements is current and future generally accepted accounting principles issued by the Financial Accounting Standards Board for use in the United States.

History

Source Note: The provisions of this §6.402 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.403 Audited Financial Statements

(a) As required in Insurance Code §964.060(b)(2) and subject to the filing requirements of Insurance Code Chapter 401, Subchapter A, the captive insurance company must file with the department by June 1 of each year, a report of the captive insurance company's financial condition at last year end. The report must include a qualified accountant's opinion of the captive insurance company's financial condition.

(b) The opinion must meet the requirements of Insurance Code Chapter 401, Subchapter A, and §7.85 and §7.88 of this title (relating to Audited Financial Reports and Independent Audits of Insurer and HMO Financial Statements and Insurer and HMO Internal Control over Financial Reporting).

History

Source Note: The provisions of this §6.403 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.404 Captive Insurance Companies Using Other Than Calendar Year Fiscal Years

(a) A captive insurance company may submit a written request to the commissioner for permission to use a fiscal year end other than a calendar year end. The commissioner may grant the request in writing at the commissioner's sole discretion. A captive insurance company may not use a fiscal year other than a calendar year without the commissioner's written authorization.

(b) As required under Insurance Code §964.060(c)(3), to support the premium tax return due March 1 of each year, a captive insurance company that is granted a fiscal year end date other than December 31, must submit the asset page and the liability, capital, and surplus page; income statement; and statement of cash flow, as verified by two executive officers, on or before March 1 of each year for the prior calendar year, and in the annual report format established in the Texas Captive Annual Report adopted under §6.401 of this title (relating to Annual Report). The executive officers verifying the report must have submitted biographical affidavits under §6.303 of this title (relating to Captive Insurance Company Biographical Information).

(c) Under Insurance Code §964.060(c), a captive insurance company granted a fiscal year end date other than December 31 must:

(1) not later than the 60th day after the captive insurance company's fiscal year end, submit to the department the captive insurance company's annual report for the prior fiscal year using the Texas Captive Annual Report form and instructions under §6.401 of this title; and

(2) not later than the 150th day after the date the annual report is due, submit to the department the captive insurance company's audited financial statements as required under §6.403 of this title (relating to Audited Financial Statements).

History

Source Note: The provisions of this §6.404 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.405 Capital and Surplus Requirements

(a) Capital and surplus requirements will be determined by the commissioner under Insurance Code §964.056. In addition to the factors listed in Insurance Code §964.056, the commissioner may consider any factor the commissioner deems relevant in making this determination, including:

(1) net writings to policyholders' surplus ratio;

(2) net reserves to policyholders' surplus ratio; and

(3) net retention of an individual loss per occurrence as a percentage of policyholders' surplus.

(b) Following the captive insurance company's submission of the annual report or any material change in the plan of operation, the commissioner may require increased capital and surplus after considering factors in Insurance Code §964.056 and this section.

History

Source Note: The provisions of this §6.405 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.406 Financial Projections

(a) A captive insurance company must provide financial projections covering the next four years of operations:

(1) with its application under §6.202 of this title (relating to Captive Insurance Company Certificate of Authority Application Contents and Process);

(2) as required under §6.304(c) of this title (relating to Material Change in the Plan of Operations);

(3) not later than 30 days after a request by the department; and

(4) with its annual report every third year, except as provided in subsection (b) of this section.

(b) The financial projections must be in the format required for the annual report and include the projected:

(1) asset page;

(2) liability, capital, and surplus page;

(3) income statement page; and

(4) cash flow page.

(c) A captive insurance company is not required to submit financial projections under subsection (a)(4) of this section if:

(1) the captive insurance company provides the department with financial projections covering the next four years of operations during the calendar or fiscal year that will be covered by the annual report described in subsection (a)(4) of this section; or

(2) the department waives the requirement in writing.

(d) The captive must note the reason for not including the financial projections in its annual report as requested under subsection (a)(4) of this section.

(e) The department will reassess the captive insurance company's minimum capital and surplus when there is an update to the captive insurance company's projections. The captive insurance company must provide an actuarial opinion on the effect of the change in the projections if requested by the department.

History

Source Note: The provisions of this §6.406 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.407 Loans to Affiliates

(a) Except as provided in subsection (d) of this section, the captive insurance company must submit a written request to the commissioner for prior approval of a loan agreement with an affiliate.

(b) Terms of the loan agreement under subsection (a) of this section must:

(1) be fair and equitable;

(2) prohibit advancement of funds by the captive insurance company to the affiliate except as defined in the agreement;

(3) include standards for termination of the agreement with and without cause; and

(4) specify that, if the captive insurance company is placed in receivership or seized by the commissioner under Insurance Code Chapter 443:

(A) all of the rights of the captive insurance company under the agreement extend to the receiver or commissioner; and

(B) all books and records will immediately be made available to the receiver or the commissioner and must be turned over to the receiver or commissioner immediately on the receiver's or the commissioner's request.

(c) The request under subsection (a) of this section must be labeled as "Loans to Affiliates - Captives" and include the following information:

(1) the name of the captive insurance company and affiliate;

(2) the home office address of the affiliate;

(3) the relationship of the affiliate to the captive insurance company, for example, parent entity or affiliate;

(4) a description of the loan, including:

(A) a statement of the nature of the loan and the reasons for entering into or changing the loan;

(B) a statement of how the loan complies with subsection (b) of this section;

(D) the financial impact of the loan on the captive insurance company;

(E) a description of the maximum amount the captive insurance company will be obligated to make available under the loan, the date on which the loan will terminate, and any provisions for the accrual or deferral of interest; and

(F) a description of the amount and source of funds or any other assets for the loan.

(d) If the captive insurance company is affiliated with an insurer that is part of an insurance holding company system and subject to Insurance Code Chapter 823, the captive insurance company must comply with the requirements under §6.410 of this title (relating to Application of Holding Company Requirements).

History

Source Note: The provisions of this §6.407 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.408 Letters of Credit

(a) A letter of credit must comply with this subsection to be reported as an asset of the captive insurance company.

(1) The letter of credit cannot be supported or collateralized by a guaranty of an affiliate.

(2) The beneficiary of the letter of credit must be the commissioner as beneficiary for the security of the captive insurance company's policyholders.

(3) The letter of credit must:

(A) be clean, irrevocable, and unconditional, and issued by a qualified United States financial institution;

(B) contain an issue date and stipulate that the beneficiary (the commissioner) need only draw a draft under the letter of credit and present it to obtain funds and that no other document need be presented;

(D) be readily available for viewing by the department on request, including at any time to the department in conducting an examination under Insurance Code Chapter 401;

(E) indicate that it is not subject to any condition or qualifications outside of the letter of credit. In addition, the letter of credit itself must not contain reference to any other agreements, documents, or entities;

(F) contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent on reimbursement; and

(G) state that it is subject to and governed by either the laws of the State of Texas, or the laws of the state of domicile of the issuing bank, and in the event of any conflict must specify whether the laws of Texas or the laws of the state in which the issuing bank is domiciled will apply, and all drafts drawn on the letter of credit will be presentable at an office in the United States of a qualified United States financial institution;

(4) The letter of credit must not:

(A) have a schedule of periodic payments;

(B) name any beneficiary other than the commissioner; and

(C) in aggregate of all letters of credit issued to any one captive insurer by one financial institution, exceed 10% of the financial institution's total equity capital, as shown in its most recent report of condition as filed with the appropriate federal or state financial institution regulatory agency.

(5) The term of the letter of credit must be for at least one year and must contain an evergreen clause that prevents the expiration of the letter of credit without written notice from the issuer. The evergreen clause will provide for a period of no less than 30 days' written notice to the commissioner prior to expiry date or nonrenewal.

(6) In the event a letter of credit is not renewed or replaced, the commissioner must not be prevented from withdrawing the balance of the letter of credit and placing such sums in trust to secure continuing obligations until a renewal letter of credit or a substitution in lieu thereof has been received.

(7) In the event that a letter of credit is not renewed, replaced, or is suspended, the captive insurance company and the issuing bank must give immediate notice to the commissioner of such nonrenewal, replacement, or inactive status.

(b) A letter of credit used for reinsurance purposes must meet the requirements of §7.610 of this title (relating to Letter of Credit Qualified under Insurance Code, Article 3.10, §(d)(3), or Article 5.75-1, §(d)(3)).

History

Source Note: The provisions of this §6.408 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.409 Dividends and Distributions

(a) A captive insurance company must notify the Commissioner of a policyholder dividend or distribution within 30 days of issuing the dividend.

(b) Dividends and distributions to holders of equity interests that are not policyholder dividends or distributions under subsection (a) of this section must be approved by the Commissioner before payment. The captive insurance company must notify the Commissioner of its intent to make such a payment at least 30 days prior to the payment date. The notice must include:

(1) The amount of the declared dividend or distribution;

(2) The declaration date;

(3) The proposed payment date;

(4) The net writings to policyholders' surplus ratio before and after the payment is made; and

(5) The net reserves to policyholders' surplus ratio before and after the payment is made.

History

Source Note: The provisions of this §6.409 adopted to be effective April 27, 2014, 39 TexReg 3232; amended to be effective December 30, 2018, 43 TexReg 8432.

28 Tex. Admin. Code § 6.410 Application of Holding Company Requirements

A captive insurance company must comply with Insurance Code Chapter 823 and regulations implementing that chapter if the captive insurance company is affiliated with another insurance company that is part of a holding company and subject to Insurance Code Chapter 823. The regulations include §§7.201 - 7.205 and §§7.209 - 7.214 of this title (relating to Forms Filings, Definitions, Registration of Insurers; Transactions Subject to Prior Notice; Acquisition or Divestiture Statements--Filing Requirements, Form A, Form B, Form C, Form D, Form E, and Form F).

History

Source Note: The provisions of this §6.410 adopted to be effective April 27, 2014, 39 TexReg 3232.

28 Tex. Admin. Code § 6.411 Reinsurance under Insurance Code §964.052(f)

(a) A qualified jurisdiction under Insurance Code §964.052(f)(1) is determined to be acceptable under §7.624 of this title.

(b) A nationally recognized statistical rating organization under Insurance Code §964.052(f)(3) is determined to be acceptable under §7.622(a)(4)(C) or §7.627 of this title.

History

Source Note: The provisions of this §6.411 adopted to be effective December 30, 2018, 43 TexReg 8432.

Subchapter F WORKERS' COMPENSATION

28 Tex. Admin. Code § 6.501 Workers' Compensation

(a) A captive insurance company may not write, issue, or provide any form of workers' compensation insurance coverage to policyholders.

(b) A captive insurance company that issues a reimbursement policy for claims paid under a workers' compensation insurance policy written and issued by an authorized insurance company, may not participate in the adjudication, settlement, or payment of any claims made under that workers' compensation insurance policy.

(c) Claims incurred by a certified self-insured employer may not be paid directly by a captive insurance company, but must continue to be paid by a qualified claims servicing contractor as required in Labor Code §407.061.

(d) The existence of a contractual reimbursement policy issued by a captive insurance company to an affiliate does not alter any statutory requirements related to workers' compensation insurance, including the statutory requirement under Insurance Code §2053.203 that:

(1) the insurance company writing a workers' compensation policy with a negotiated deductible is required to pay all benefits, including those benefits payable, wholly or partly, from the deductible amount; and

(2) the policyholder must make reimbursements to the insurance company writing the workers' compensation policy with a negotiated deductible periodically, rather than at the time claim costs are incurred.

History

Source Note: The provisions of this §6.501 adopted to be effective April 27, 2014, 39 TexReg 3232.

Subchapter G TAXES

28 Tex. Admin. Code § 6.601 Waiver of Taxes

(a) A foreign or alien captive insurance company redomesticating from another jurisdiction may request that the commissioner postpone or waive the imposition of any tax or fee under the Insurance Code for a period not to exceed two tax reporting years from the date of redomestication.

(b) The request must be in writing and submitted to the department with the application.

(c) The request must state and provide support of the benefit that licensing the captive insurance company will have for Texas, including, as applicable, employment of Texas residents, the development of real estate in Texas, economic activity in Texas, and additional taxes that will be paid in Texas.

(d) The commissioner may in writing grant or deny the waiver request in whole or in part at the commissioner's sole discretion, including granting a waiver for all or part of the two-year period and all or part of one or more of the following taxes or fees:

(1) the maintenance tax;

(2) the premium tax; or

(3) licensing fees.

History

Source Note: The provisions of this §6.601 adopted to be effective April 27, 2014, 39 TexReg 3232.

Subchapter H DISCIPLINARY ACTION

28 Tex. Admin. Code § 6.701 Disciplinary Action

Disciplinary action may be taken against a captive insurance company, captive insurance manager, or other person if, after notice and opportunity for hearing, it is determined that the captive insurance company, captive insurance manager, or other person has violated the Insurance Code, or other law subject to department enforcement, or regulation by the department, including:

(1) a captive insurance company that violates §6.501 of this title (relating to Workers' Compensation); and

(2) an insurance carrier, as defined by Labor Code §401.011, if it allows an employer, other than a certified self-insured employer, to dictate the methods by which and the terms on which a claim is handled and settled in violation of statute.

History

Source Note: The provisions of this §6.701 adopted to be effective April 27, 2014, 39 TexReg 3232.

Chapter 7 CORPORATE AND FINANCIAL REGULATION

Subchapter A EXAMINATION AND FINANCIAL ANALYSIS

28 Tex. Admin. Code § 7.1 Scope

These sections are supplementary to and cumulative of existing statutes and sections of the State Board of Insurance. In the case of an ambiguity or contradiction between these sections and any statute, the provisions of the statute control.

History

Source Note: The provisions of this §7.1 adopted to be effective August 19, 1976, 1 TexReg 2214; amended to be effective January 17, 1984, 9 TexReg 279.

28 Tex. Admin. Code § 7.2 Savings Clause

Each cause of action, pending litigation, matter in process before the State Board of Insurance or commissioner of insurance, or matter hereafter arising from an event occurring prior to the time these sections become effective shall be determined in accordance with and governed by the provisions of statutes, sections, orders, or interpretations of the State Board of Insurance in effect at the time of the occurrence of the subject event; and this section operates to save the application of such past procedure and law to any such event from amendment, change, or repeal notwithstanding any provision of these sections or any conflict or ambiguity therein.

History

Source Note: The provisions of this §7.2 adopted to be effective August 19, 1976, 1 TexReg 2214.

28 Tex. Admin. Code § 7.4 Admissible Assets

The portion of any asset not qualifying as a legal investment shall not be admitted. The companies shall dispose of such inadmissible assets or take such action as is necessary to bring the investment into legal compliance. Companies will not be required to dispose of inadmissible contributed assets. After notice and hearing, the commissioner of insurance may order a company to dispose of assets (other than contributed assets) not qualifying as a legal investment. Any commissioner's order requiring disposition of assets shall, however, provide in such order for the company to have a reasonable period of time (taking into account the nature, complexity and size of the inadmissible assets, the then prevailing economic conditions, and the effect of the disposal of such assets relative to the going concern solvency of the company) to dispose of the inadmissible assets.

History

Source Note: The provisions of §7.4 adopted to be effective August 19, 1976, 1 TexReg 2214; amended to be effective January 17, 1984, 9 TexReg 279; amended to be effective September 30, 1993, 18 TexReg 6324.

28 Tex. Admin. Code § 7.5 Discrimination as to Premium Notices to Accident or Health Insurance Policyholders

There shall be no discrimination between individuals of the same class and of essentially the same hazard holding policies or contracts of accident or health insurance respecting notification to individuals of premiums due or about to become due. The discrimination as between policyholders in the expenditure of company funds for such items as postage, office supplies, clerical salaries, machine and equipment time, etc., or in any other manner concerning the notification of such policyholders of premiums due or about to become due constitutes a violation of the Insurance Code, Article 21.21. Therefore, if any company elects to follow the practice of furnishing premium notices to any policyholder, it is incumbent upon such company to follow a uniform practice of sending such premium notices to all policyholders. Wherever in the course of an examination the State Board of Insurance finds that an insurer follows the practice of not sending notices to certain individuals with the apparent intention of bringing about a lapse of the policy by reason of failure of the policyholder to pay his premium within the period required by the contract, it shall accumulate such facts as necessary to show a violation, if any, of the Insurance Code, Article 21.21. In this connection, reference is made to the Insurance Code, Article 1.10, §7, which provides the State Board of Insurance with authority to take disciplinary action against any company for failure to comply with applicable law.

History

Source Note: The provisions of this §7.5 adopted to be effective August 19, 1976, 1 TexReg 2214; amended to be effective January 17, 1984, 9 TexReg 279.

28 Tex. Admin. Code § 7.6 Unearned Premium Reserve for Inland Marine Insurance

In accordance with the Insurance Code, Articles 6.02 and 6.12, inland marine and inland marine connected transportation coverages of transit or cargo risks will be reserved at 100% of the premium charged on unexpired risks. The coverages subject to the 100% reserve will ordinarily be identified as coverages written on flat rate bases and without stipulated terms other than expiration limits. All other inland marine coverages will be reserved in accordance with the Insurance Code, Article 6.01.

History

Source Note: The provisions of this §7.6 adopted to be effective August 19, 1976, 1 TexReg 2214.

28 Tex. Admin. Code § 7.7 Subordinated Indebtedness, Surplus Debentures, Surplus Notes, Premium Income Notes, Bonds, or Debentures, and Other Contingent Evidences of Indebtedness

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Affiliate or affiliated--Has the same meaning as the term affiliate is used, defined, or applied in the Insurance Code §823.003.

(2) Minimum surplus or floor--The amount of surplus specified in the written agreement evidencing the subordinated indebtedness which may not be used for payments or repayments of subordinated indebtedness and which amount must exceed the greater of the following:

(A) a minimum surplus stated and fixed in the agreement; or

(B) a minimum surplus of $500,000 for that insurer.

(3) Subordinated indebtedness, surplus notes, surplus debenture, contribution certificates, surplus capital notes, and premium income notes, bonds, or debentures--Any contingent indebtedness issued by an insurer for which such insurer assumes a subordinated liability for repayment of principal and payment of interest pursuant to a written agreement providing for payment only out of that portion of an insurer's surplus that exceeds a minimum surplus stated in such agreement. Subordinated indebtedness includes advances or loans made in accordance with the Insurance Code §§882.253, 883.162, 912.309, 942.158, and 961.206.

(b) General Provisions.

(1) A subordinated indebtedness agreement issued by an insurer on or after September 1, 1995, is subject to the prior approval of the commissioner, as to form and content, regardless of amount.

(2) An insurer may not issue a subordinated indebtedness until the commissioner has approved the subordinated indebtedness agreement under Insurance Code, Chapter 823, Subchapter C or Article 1.39.

(3) All written applications and notices contemplated by this section shall be filed with Financial Analysis/Examinations, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104.

(4) The consideration received by an insurer in return for the issuance of subordinated indebtedness shall be in the form of cash, cash equivalent securities, or other assets that have a readily determinable value and are satisfactory to the commissioner. In the instance of an issuer required by the department to increase its surplus as regards policyholders, the subordination of a current liability owed by the issuer to the prospective holder of the subordinated indebtedness, may be considered in an amount acceptable to the commissioner.

(c) Written Agreements. When issuing subordinated indebtedness, the insurer must execute a written agreement with the creditor, providing the following:

(1) the creditor may be paid only out of the portion of the insurer's surplus that exceeds the minimum surplus stated in the agreement;

(2) the minimum surplus or floor shall exceed the greater of the following:

(A) a minimum surplus stated and fixed in the agreement; or

(B) a minimum surplus of $500,000 for that insurer;

(3) repayment provisions shall be clearly set forth in the written agreement;

(4) if the subordinated indebtedness is in the form of a premium note, bond, or debenture, which includes a provision for the payment or repayment only out of a sinking fund established by the insurer by setting aside a specified amount during a specified period, all payments must be made from the established sinking fund, subject to the minimum surplus stated in the written agreement, and such amount accumulated and held in the sinking fund shall be a legal liability and financial statement liability of the insurer.

(5) in the event of liquidation, any payment of interest and repayment of principal under the written agreement shall be made in accordance with the provisions of the Insurance Code Chapter 21A.

(d) Written Application.

(1) The written application for approval of the issuance of the subordinated indebtedness agreement shall include information including, but not limited to, the following:

(A) the identity of all parties to the transaction;

(B) the nature and purpose of the transaction including a description of how the subordinated indebtedness relates to the future business plans of the insurer;

(C) a description of the consideration to be received by the insurer in exchange for the issuance of the subordinated indebtedness;

(D) a description of how the value of the consideration was determined;

(E) a statement as to whether any officers or directors of a party are pecuniarily interested in the transaction;

(F) a copy of the proposed written agreement; and

(G) a signed and notarized affidavit of an executive officer of the insurer which states that the insurer is aware of the requirements of the Insurance Code, Article 1.39(e) and subsection (e) of this section regarding notices to the Texas Department of Insurance relating to the payment of interest or the repayment of principal corresponding to subordinated indebtedness and agrees to comply with such requirements. The affidavit shall contain an affirmation that the insurer agrees to issue the subordinated indebtedness and receive funding within 15 days of the date the order of the commissioner is entered approving the subordinated indebtedness, and that the executive officer further agrees to provide the Texas Department of Insurance with written evidence that the subordinated indebtedness has been funded.

(2) No application for the issuance of subordinated indebtedness shall be deemed filed with the commissioner until the date that all material listed in subsection (d)(1) of this section has been provided.

(e) Payments of Interest and Repayments of Principal.

(1) An insurer may not repay principal or pay interest on a subordinated indebtedness issued under either the Insurance Code, Chapter 823, Subchapter C or Article 1.39, on or after September 1, 1995, unless either:

(A) such payment or repayment complies with a specific schedule of payments contained within the terms of the previously approved written agreement; or

(B) written notice is provided to the commissioner at least 15 days before the date scheduled for any payment or repayment if either a schedule of payments is not contained within the terms of the previously approved agreement, or such payment or repayment does not comply with the specific schedule of payments contained within the terms of the previously approved agreement.

(2) Notice required by this subsection

(f) Accounting Requirements.

(1) A loan or advance made under the written agreement, and any interest accruing on the loan or advance, is a legal liability and financial statement liability of the insurer only to the extent provided by the terms and conditions of the loan or advance agreement, and the loan or advance may not otherwise be a legal liability or financial statement liability of the insurer. Such a loan or advance agreement, whether or not containing a provision for a minimum sum certain payable, repayment schedule, maturity date, prepayment or any combination thereof, shall not be considered a legal liability or financial statement liability of the insurer, and shall be considered a subordinated indebtedness to be recorded with the capital and surplus items in the financial statements of the insurer. If such a written agreement provides specific terms for the payment of principal and interest, and only after such payment of principal or interest is due, and the minimum surplus requirements for such payment of principal and interest have been met, then there shall be a financial statement liability only to the extent of such payment that is due of principal or interest and only to the extent the minimum surplus requirements have been met. Assuming such terms have been satisfied, then any provision providing that no financial statement liability exists shall be considered to be in conflict with the specific terms for the payment of principal and interest; and, for financial statement purposes, the terms for the payment of principal and interest shall result in the reflection of a financial statement liability.

(2) All agreements shall be clearly reported in an insurer's "Notes to Financial Statements" of the Annual Statement and shall disclose all pertinent aspects of payment and prepayment provisions.

(3) An insurer may invest in, purchase, acquire, own, and hold as an admitted asset a subordinated indebtedness of a non-affiliated insurer that meets the requirements for rated and non-rated notes under the NAIC's Accounting Practices and Procedures Manual, Statement of Statutory Accounting Principles No. 41. An insurer shall calculate such subordinated indebtedness pursuant to the NAIC's Accounting Practices and Procedures Manual, Statement of Statutory Accounting Principles No. 41. An insurer may report such subordinated indebtedness as an admitted asset on its financial statements in an amount authorized by the Insurance Code.

(4) An insurer may invest in, purchase, acquire, own, and hold a subordinated indebtedness of an affiliated insurer and may report it as an admitted asset on its financial statements in an amount equal to the amount then due and payable under the terms of the subordinated indebtedness agreement.

(g) Applicability to Foreign Insurers. The provisions of this section shall apply to insurers domiciled in another state unless such other state regulates the issuance of subordinated indebtedness under laws, rules, or bulletins that the commissioner finds are substantially similar in substance and effect to Texas law and rules. To pursue this exception, the insurer shall provide, upon request, to the commissioner evidence of similarity in the form of statutes, regulations, and interpretation of the standards utilized by the state of domicile.

History

Source Note: The provisions of this §7.7 adopted to be effective August 19, 1976, 1 TexReg 2214; amended to be effective January 17, 1984, 9 TexReg 279; amended to be effective December 6, 1984, 9 TexReg 6003; amended to be effective August 3, 1992, 17 TexReg 5087; amended to be effective April 6, 1994, 19 TexReg 2064; amended to be effective May 20, 1996, 21 TexReg 3943; amended to be effective November 27, 2006, 31 TexReg 9616.

28 Tex. Admin. Code § 7.9 Examination of Actuarial Opinion for Property and Casualty Insurers

(a) Scope. This section applies to all insurers that are required to file an actuarial opinion with the property and casualty annual statement adopted by the commissioner under Insurance Code §802.001, including fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, county mutual insurance company, mutual insurance company other than a life insurance company, Lloyd's plan, reciprocal or inter-insurance exchange, domestic risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed a property and casualty annual statement that had gross written premiums in excess of $5,000,000, any Mexican non-life insurer licensed under any provision of the Insurance Code other than, or in addition to, Insurance Code Chapter 984, domestic joint underwriting association, the Texas Mutual Insurance Company, and the Texas FAIR Plan Association.

(b) Purpose. The section will facilitate the examination of the statement of actuarial opinion required to be attached to an insurer's annual statement under Insurance Code §802.002. The Actuarial Opinion Summary will provide information which will assist the department in identifying those insurers which require additional analysis to determine their financial condition.

(c) Actuarial Opinion Summary. By March 15th of each year a domestic insurer subject to this section shall submit to the department an Actuarial Opinion Summary completed in accordance with applicable National Association of Insurance Commissioners Annual Statement Instructions, Property and Casualty.

(d) Additional Documents. Upon request of the commissioner:

(1) a domestic insurer shall submit the Actuarial Report and Workpapers that support its actuarial opinion, and

(2) a foreign insurer shall submit its Actuarial Opinion Summary and/or Actuarial Report and Workpapers that support its actuarial opinion.

(e) Submission of Documents. The documents described in subsections (c) and (d) of this section shall be submitted to the Actuarial Division, Financial Program, M.C. 302-3A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104, or they may be submitted electronically to ActuarialDivision@tdi.state.tx.us.

(f) Confidentiality. The Actuarial Opinion Summary, Actuarial Report and Workpapers, and any documents, materials or other information provided by an insurer under subsections (c) or (d) of this section to the department will be used to examine the company's financial condition. The documents will be considered information obtained during the course of an examination under Insurance Code Article 1.15 and treated as confidential.

(g) Applicability. This section is applicable to the actuarial opinion included with an insurer's 2005 Property and Casualty Annual Statement and thereafter.

History

Source Note: The provisions of this §7.9 adopted to be effective January 26, 2006, 31 TexReg 402.

28 Tex. Admin. Code § 7.18 National Association of Insurance Commissioners Accounting Practices and Procedures Manual

(a) The commissioner reserves all authority and discretion to resolve any issues in Texas concerning the proper accounting treatment for an insurance or health plan transaction. When determining the proper accounting treatment for an insurance or health plan transaction, the commissioner, insurers, and health maintenance organizations will refer to the sources in paragraphs (1) - (6) of this subsection in the respective order of priority listed for guidance on how to properly record business transactions for the purpose of accurate statutory reporting and for preparing all financial statements filed with TDI. The sources in paragraphs (1) - (3) of this subsection preempt any contrary provisions in the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual (manual).

(1) Texas statutes;

(2) TDI rules;

(3) directives, instructions, and orders of the commissioner;

(4) except as provided in the exceptions, modifications, and exemptions set forth in subsections (c) and (d) of this section, the manual;

(5) other NAIC handbooks, manuals, and instructions adopted by TDI; and

(6) Generally Accepted Accounting Principles.

(b) The manual described in subsection (a)(4) of this section includes the manual as amended from time to time, and all the substantive and nonsubstantive changes to the manual that have been adopted since its last publication. TDI will maintain a copy of the current manual and all substantive and nonsubstantive changes that have been adopted since the last publication for public inspection at its offices.

(1) Settlement requirements for intercompany transactions are subject to the accounting treatment in Statement of Statutory Accounting Principles (SSAP) No. 25 (previously SSAP No. 96 located in Appendix H), except that amounts owed to the reporting entity must be settled by the due date in accord with the written agreement and the requirements of §7.204 of this title. Intercompany balances must be settled within 90 days of the period for which the amounts are being billed or the balances will be nonadmitted.

(2) Electronic machines, constituting a data processing system or systems, and operating systems software used in connection with the business of an insurance company acquired after December 31, 2000, may be admitted assets as permitted by Insurance Code §§841.004, 861.255, 862.001, and any other applicable law and must be amortized as provided by the manual.

(3) Furniture, labor-saving devices, machines, and all other office equipment may be admitted as assets as permitted by Insurance Code §§841.004, 861.255, 862.001, and any other applicable law and, for property acquired after December 31, 2000, depreciated in full over a period not to exceed five years.

(d) A farm mutual insurance company, statewide mutual assessment company, local mutual aid association, or mutual burial association that has less than $6 million in annual direct written premiums is not required to comply with the manual.

(e) Preemptions.

(1) Insurance Code provisions preempting any contrary provisions in the manual include: §§2551.251 - 2551.261 and 3503.202.

(2) TDI rules preempting any contrary provisions in the manual include: §§3.1501 - 3.1505, 3.1601 - 3.1608, 3.4505(f), 3.6101, 3.6102, 3.7001 - 3.7009, 3.9101 - 3.9106, 3.9401 - 3.9404, 7.7, 7.85, and 11.803 of this title.

(f) In the event a domestic insurer or health maintenance organization desires to deviate from the accounting guidance in a Texas statute or any applicable regulation, the insurer or health maintenance organization must file a written request for a permitted accounting practice and obtain approval prior to using the accounting deviation in a financial statement. The filing must be sent to: Deputy Commissioner, Financial Regulation Division, Texas Department of Insurance, Mail Code 305-2A, P.O. Box 149104, Austin, Texas 78714-9104, at least 30 days before filing the financial statement that would be affected by the deviated accounting practice. A domestic insurer or health maintenance organization must not use a deviated accounting practice without TDI's prior approval.

(g) This section must not be construed to either broaden or restrict the authority provided under the Insurance Code to insurers or health maintenance organizations.

History

Source Note: The provisions of this §7.18 adopted to be effective January 1, 2001, 25 TexReg 12806; amended to be effective January 1, 2002, 26 TexReg 10897; amended to be effective January 1, 2003, 27 TexReg 12281; amended to be effective March 15, 2004, 29 TexReg 2647; amended to be effective March 7, 2005, 30 TexReg 1287; amended to be effective February 26, 2006, 31 TexReg 1035; amended to be effective October 22, 2007, 32 TexReg 7470; amended to be effective April 27, 2008, 33 TexReg 3293; amended to be effective August 6, 2009, 34 TexReg 5134; amended to be effective January 9, 2011,35 TexReg 11866; amended to be effective October 22, 2012, 37 TexReg 8329; amended to be effective February 11, 2013, 38 TexReg 661; amended to be effective December 2, 2014, 39 TexReg 9358.

28 Tex. Admin. Code § 7.20 Premium Notes and Premium Income, Chapter 17 Companies

Any and all charges, by whatever name called, made, imposed, and/or collected from an insured and/or premium payor by a county mutual insurance company, shall constitute taxable premiums to the county mutual; except any interest or finance charge clearly identified in a premium note or other evidence of premium payable shall not be included as taxable premiums. The provisions of this section shall not apply to any county mutual insurance company whose business is devoted exclusively to the writing of industrial fire insurance policies covering dwellings, household goods, and wearing apparel on a weekly, monthly, or quarterly basis on a continuous premium payment plan.

History

Source Note: The provisions of this §7.20 adopted to be effective January 1, 1976; amended to be effective January 13, 1983, 7 TexReg 4565.

28 Tex. Admin. Code § 7.22 Certification of Assessments/Claims Paid, and Credit against Premium Taxes for Members of the Texas Catastrophe Property Insurance Association under the Insurance Code, Article 21.49

(a) On or before the 15th day of February of each year, the Texas Catastrophe Property Insurance Association shall certify to the State Board of Insurance the total amount of assessments paid by members and the total amount of claims paid by the association during the preceding calendar year, which certification shall include a summary of the total amount of claims paid during the preceding calendar year showing the year or years in which the losses were incurred. In the event the aggregate amount of either assessments paid or claims paid on losses that were incurred in a single calendar year exceeds $100 million, the association shall list the dollar amount of such excess of $100 million that is attributable to each individual insurer. For the purpose of determining the amount attributable to each individual member insurer of a member group composed of two or more individual member insurers, the association shall obtain from each member group a certification of the following: the percentage participation of each individual member insurer in the member group's assessment or assessments during the previous calendar year; and the total amount of money paid by each individual insurer of the member group for each assessment during the previous calendar year. On or before the first day of February of each year, each individual insurer of a member group shall cause the foregoing information to be certified to the association. The books and records of each individual insurer must reflect the amounts as certified to the association.

(b) An insurer is eligible for a tax credit under the Insurance Code, Article 21.49, §19, only to the extent its share or a portion of its share of the assessment (as determined by the association) of total insured losses exceeding $100 million in the year for which the tax credit is claimed has been paid. No insurer is entitled to a greater amount of aggregate tax credit than its share of total insured losses exceeding $100 million which have been paid.

(c) Any dispute between an insurer and the association as to the amount allowable as an admitted asset or for credit against premium taxes, is subject to the appeal provisions of the Insurance Code, Article 21.49, §9.

History

Source Note: The provisions of §7.22 adopted to be effective June 22, 1984, 9 TexReg 3122.

28 Tex. Admin. Code § 7.24 Valuation Date for Investments under the Insurance Code, Article 4.11

The value to be reported for each investment under the Insurance Code, Article 4.11, shall be admitted value reflected in the insurer's annual statement as of December 31 of the tax year, except demand deposits of banks, savings and loans, or other financial institutions. Such demand deposits shall be reported at the average of the month-end balance for each of the 12 months of the tax year. The month-end balances of demand deposits shall be determined from the insurer's ledger accounts. This section applies to taxes on premiums collected on and after January 1, 1985.

History

Source Note: The provisions of this §7.24 adopted to be effective April 8, 1985, 10 TexReg 1035.

28 Tex. Admin. Code § 7.25 Out of State Books and Records

(a) Purpose and Scope. The purpose of this section is to describe the procedure an eligible insurer must follow when it desires to relocate and maintain all or any portion of its books, records, and accounts and its principal offices outside this state at a location within the United States. To facilitate brevity, "all or any portion of its books, records, and accounts and its principal offices" will be referred to as "records" in this section. Insurance Code Article 1.28 and this section describe the standards that an insurer must meet to be eligible to relocate its records outside this state and sets forth the information an eligible insurer must provide to the department in its notice of intent to relocate records so that the Commissioner of Insurance (Commissioner) can make an informed decision to approve or disapprove the proposed relocation. The normal records relating to the business produced by an agency of an eligible insurer are not subject to Insurance Code Article 1.28. The department interprets the term "agency" in Insurance Code Article 1.28 to mean a person described in Insurance Code Article 21.02. An eligible insurer that desires to relocate its records to an out of state location must provide the information required by subsection (d) of this section. An eligible insurance company that desires to deliver possession of its records to another person located out of state who is an affiliate of the eligible insurer must also provide the information required by subsections (e) and (f) of this section. When that person is not affiliated with the eligible insurer, the person must comply with the provisions of subsections (e) - (g) of this section. Records of a health maintenance organization relating to its quality assurance program are not subject to this section.

(b) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Affiliate--As defined in Insurance Code §823.003.

(2) Domestic insurance company--As defined in Insurance Code §803.001.

(3) Eligible insurer--A domestic insurance company that is:

(A) an affiliate of an insurance holding company system; or

(B) a health maintenance organization that is an affiliate of another health maintenance organization or health care provider.

(4) Health care provider--Is the same as the term "provider" in Insurance Code §843.002.

(5) Insurance holding company system--As defined in Insurance Code §823.006.

(c) Notice of Intent to Relocate Records. An eligible insurer desiring to change the location of its records to a location outside this state must file with Financial Analysis and Examinations, 333 Guadalupe, Austin, Texas 78701 or P.O. Box 149099, Austin, Texas 78714-9099, Mail Code 303-1A an original and one copy of a notice of intent to relocate records setting forth the information required by subsection (d) of this section, accompanied by the required filing fee established in §7.1301(d)(18) of this title (relating to Fees). Alternatively, an eligible insurer complies with this section when it provides the department the information required by this section in an agreement with an affiliate, and such agreement has been approved or not disapproved as required by Insurance Code Article 21.49-1, §4.

(d) Contents of Notice of Intent to Relocate Records. The notice of intent to relocate records required by Insurance Code Article 1.28 and subsection (c) of this section must provide:

(1) the name of the eligible insurer desiring to relocate its records outside the state;

(2) the street address of the eligible insurer's principal office or offices (if there is more than one principal office, identify the activities that are performed at each principal office; e.g., accounting, actuarial, investments, underwriting, claims, marketing, data processing, human resources and corporate matters);

(3) the street address of the location or locations of the eligible insurer's records before the proposed relocation of records (if there is more than one location, identify the records that are maintained at each location; e.g., accounting, actuarial, investments, underwriting, claims, marketing, data processing, human resources and corporate matters);

(4) the street address of the eligible insurer's principal office or offices after the proposed relocation of records (if there is more than one principal office, identify the activities that will be performed at each principal office; e.g., accounting, actuarial, investments, underwriting, claims, marketing, data processing, human resources and corporate matters);

(5) the street address of the proposed location or locations of the eligible insurer's records;

(6) a detailed description of the records that will be maintained at the proposed location or locations named in paragraph (5) of this subsection;

(7) the anticipated effective date of the proposed relocation of the eligible insurer's records;

(8) a description of the eligible insurer's affiliation with an insurance holding company system or health maintenance organizations or health care providers;

(9) if the eligible insurer is affiliated with an insurance holding company system, a statement that the eligible insurer has made the necessary filings required by the Insurance Code Article 21.49-1;

(10) if the eligible insurer is affiliated with an insurance holding company system, a statement that the eligible insurer is in compliance with the Insurance Code Article 21.49-1;

(11) if the eligible insurer is a health maintenance organization that is not affiliated with an insurance holding company system, but is affiliated with other health maintenance organizations or health care providers, the health maintenance organization must furnish the information as set forth in §7.210 of this title (relating to Form B);

(12) a description of any actual, proposed, or contemplated financial involvement with respect to the relocation of the records by an officer, director or employee or a person who is the beneficial owner, directly or indirectly, of 10% or more of the voting securities of the eligible insurer or affiliated insurance holding company system or health maintenance organization;

(13) an analysis of the benefits to the eligible insurer anticipated as a result of the relocation of the records, including the effect on the location being abandoned;

(14) a description of the effect of the relocation of the records on policyholders and claimants;

(15) a service of process form executed by the eligible insurer (see subsection (l) of this section to obtain an example of an acceptable form);

(16) a service of process form executed by a controlling person of the eligible insurer (see subsection (l) of this section to obtain an example of an acceptable form);

(17) if the records of the eligible insurer will be maintained by a person other than the eligible insurer, state the name of the person who will be maintaining the records of the eligible insurer;

(18) if a person is named in paragraph (17) of this subsection, provide the information in subsection (e) of this section; and

(19) such other related information as the department may require so that an informed determination can be made to approve or disapprove the proposed relocation of records out of state.

(e) Additional Information Required for the Relocation and Possession of Records with a Person Other than the Eligible Insurer. If the eligible insurer intends for a person other than the eligible insurer to possess and maintain its records, the following information must be included in the notice of intent to relocate records:

(1) the name of the person who will possess and maintain the records;

(2) the names of the directors, executive officers, principals or principal shareholders of the person named in paragraph (1) of this subsection;

(3) a statement describing the person's affiliation with the insurance holding company system or health maintenance organization or health care providers named in subsection (d)(8) of this section, if any;

(4) an explanation and description of control mechanisms in place to assure the effective and efficient reconciliation of the records to be maintained by the person with those corporate records maintained by the eligible insurer;

(5) an explanation of how the eligible insurer will maintain direct supervision, management and control of the records that are relocated;

(6) a copy of the agreement between the eligible insurer and the person possessing and maintaining the records. The agreement must comply with the requirements of subsection (f) of this section;

(7) a description of the additional management reporting systems and internal controls that the eligible insurer will use relative to its arrangement with the person possessing and maintaining the records of the eligible insurer; and

(8) a description of any existing computer link-up that will permit on-line access to the eligible insurer by departmental examiners, or an explanation acceptable to the Commissioner why such link-up would not be practical.

(f) Agreement Between Eligible Insurer and Person to Maintain Records. An eligible insurer must have a written agreement with the person possessing and maintaining the records of the eligible insurer.

(1) The agreement shall include:

(A) a description of the functions to be performed by the person possessing and maintaining the records;

(B) a provision that requires the records of the eligible insurer be under the eligible insurer's direct supervision, management and control;

(C) a provision authorizing the department to examine, at the eligible insurer's expense, the records and operations of the person possessing and maintaining the records of the eligible insurer at the location of such records, regarding the arrangement with the eligible insurer; and

(D) a provision requiring the person possessing and maintaining the records to fully cooperate with the department staff during an examination conducted pursuant to subparagraph (C) of this paragraph.

(2) The agreement required by this section is subject to the standards in Insurance Code Article 21.49-1, §4.

(3) If the person possessing and maintaining the records of the eligible insurer is not an affiliate of the eligible insurer under Insurance Code Article 21.49-1, the agreement between the nonaffiliated person and the eligible insurer must also comply with subsection (g) of this section.

(g) Requirements and Restrictions Applicable to Nonaffiliated Person Maintaining Records. When an eligible insurer desires to have a nonaffiliated person maintain its records, there must be a written agreement between the eligible insurer and the nonaffiliated person that contains the provisions described in subsection (f) of this section and paragraphs (1) - (8) of this subsection.

(1) Only records related to policyholder claims, policy administration and related processes may be maintained by the nonaffiliated person.

(2) Only active claims files may be maintained by a nonaffiliated person.

(3) Claim files, when closed, must be returned to the eligible insurer within 60 days of closing.

(4) Copies of active claim files will be maintained by the eligible insurer at all times, unless the Commissioner's approval of the relocation of the records finds that it would not be practical and specifically waives this requirement.

(5) Active claim files maintained by the nonaffiliated person must be provided to examiners representing the department on site within three days of request.

(6) Representatives of the nonaffiliated person responsible for the maintenance of the eligible insurer's records must be reasonably available at the location of the eligible insurer's records when examiners representing the department are at the location.

(7) The nonaffiliated person must be licensed by the department to perform the services contemplated by the arrangement with the eligible insurer.

(8) A requirement that the eligible insurer must audit the nonaffiliated person at least once each 6 months to evaluate the internal controls and compliance with the agreement between the eligible insurer and the nonaffiliated person (performance audit) with regard to the records of the eligible insurer maintained by the nonaffiliated person. Such audits shall be conducted by persons who are knowledgeable in the claims adjusting process and internal controls; auditors should include representatives of the eligible insurer's internal audit department and/or the audit committee of the board of directors of the eligible insurer; and the audit reports must be reviewed by the board of directors of the eligible insurer and the nonaffiliated person.

(h) Accepted Filing of Notice of Intent. The Commissioner may approve or disapprove the notice of intent to relocate records within 30 days after a complete notice is filed with the department. The written notice required under this section shall be considered complete and filed with the department only when all materials sufficient to allow the Commissioner to conduct an informed decision on the application, including any information subsequently requested by the Commissioner, are filed. If within 30 days after the date that the eligible insurer files its complete notice of intent to relocate records, including the applicable filing fee, the Commissioner does not request additional information and has not disapproved such notice, the notice shall be deemed approved.

(i) Relocation of Records Approved to be Located Out of State. An eligible insurer that has relocated records out of state pursuant to Insurance Code Article 1.28 and this section and desires to relocate those records to another location, must file with the department the notice of intent to relocate records required by subsection (c) of this section. The eligible insurer may use the previously approved notice of intent to relocate records to comply with this subsection to the extent there has been no change in the information previously submitted.

(j) Articles of Incorporation or Charter. An eligible insurer that relocates its records out of state is not required to amend its articles of incorporation, charter or other organizational document to reflect the relocation to the extent there has been no change in such documents as a result of the relocation.

(k) Revocation of Authority to Relocate Records. The Commissioner, upon notice and opportunity for hearing, may limit or revoke the authority of an eligible insurer to maintain records outside this state if the eligible insurer or person possessing and maintaining the records of the eligible insurer fails or refuses to comply with a request to provide information as part of an examination, or if the Commissioner determines that the continued operations of the eligible insurer might be hazardous to policyholders, creditors or the general public.

(l) Examples of the service of process form to be executed by the eligible insurer (TDI/SOP (2000)) and the controlling person (TDI/SOP-CP (2000)) under subsection (d)(15) & (16) of this section are available from the Company Licensing and Registration Division, Texas Department of Insurance, 333 Guadalupe. P.O. Box 149104, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §7.25 adopted to be effective July 11, 2000, 25 TexReg 6517; amended to be effective April 26, 2021, 46 TexReg 2823.

28 Tex. Admin. Code § 7.31 Annual Statement Instructions for Farm Mutual Insurance Companies

Companies operating under the Insurance Code, Chapter 16, which file the annual statement form adopted by the board for farm mutual insurance companies and that have less than $750,000 total direct plus assumed written premiums during a calendar year, are not required to comply with the Insurance Code, Article 1.11(c), by filing an actuarial opinion with the annual statement. Farm mutual insurance companies writing less than $750,000 direct plus assumed written premium may be required to file an actuarial opinion if requested by the commissioner.

History

Source Note: The provisions of this §7.31 adopted to be effective November 30, 1992, 17 TexReg 8009.

28 Tex. Admin. Code § 7.65 Requirements for Filing the 2008 Annual Statements, the 2009 Quarterly Statements, Other Reporting Forms, and Electronic Data Filings with the Texas Department of Insurance and the NAIC

(a) Scope. This section specifies the requirements for insurers and other regulated entities for filing the 2008 annual statement, the 2009 quarterly statements, other reporting forms, and electronic data filings, with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Risk Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. The commissioner adopts by reference the 2008 annual statement blanks, the 2009 quarterly statement blanks, and the related instruction manuals published by the NAIC, and other supplemental reporting forms specified in this section. The forms are available from the Texas Department of Insurance, Financial Analysis Division, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. The NAIC annual and quarterly statement blanks and other NAIC supplemental reporting forms can be printed or filed electronically using annual statement software available from vendors. Insurers and other regulated entities shall properly report to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate hard copy annual and quarterly statement blanks, other reporting forms, and electronic data filings.

(b) Definition. In this section "Texas Edition" refers to the blanks and forms promulgated by the commissioner.

(c) Conflicts with other laws. In the event of a conflict between the Insurance Code, any currently existing department rule, form, instructions, or any specific requirement of this section and the NAIC instructions listed in this section, the Insurance Code, the department rule, form, instruction, or the specific requirements of this section shall take precedence and in all respects control.

(d) Filing requirements for life, accident and health insurers. Each life; life and accident; life and health; accident; accident and health; mutual life; or life, accident and health insurance company; stipulated premium company; group hospital service corporation; and the Texas Health Insurance Risk Pool shall complete and file the blanks, forms, or electronic data filings as directed in this subsection. This subsection does not apply to entities licensed as health maintenance organizations under the Insurance Code Chapter 843. Insurers specified in this subsection and engaged in business authorized under the Insurance Code Chapter 843 may have additional reporting requirements under subsection (h) of this section. Insurers described under this subsection may elect to file on the 2008 Health Annual Statement for year-end 2008, and on the 2009 Health Quarterly Statement for the three quarters of 2009, if the insurer passes the Health Statement Test as outlined in the "2008 Annual Statement, Health Instructions." If a reporting entity qualifies under this subsection to use the 2008 Health Annual Statement, it must continue to use that annual statement for a minimum of three years or obtain written approval from the department to change to another type of annual statement. Insurers filing the 2008 Life, Accident and Health Annual Statement, the 2009 Life, Accident and Health Quarterly Statements, and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2008 Annual Statement Instructions, Life, Accident and Health," and the "2009 Quarterly Statement Instructions, Life, Accident and Health," as applicable. Life insurers meeting the test set forth in this subsection to file the 2008 Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2008 Annual Statement Instructions, Health," and the "2009 Quarterly Statement Instructions, Health," as applicable. The electronic filings of these forms or reports with the NAIC shall be in accordance with the NAIC data specifications and instructions for electronic filing and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2008 Life, Accident and Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2009 (stipulated premium companies, April 1, 2009);

(B) 2008 Life, Accident and Health Annual Statement of the Separate Accounts for the 2008 calendar year (required of companies maintaining separate accounts), due on or before March 1, 2009;

(C) 2009 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2009. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2008 Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2009 if the company qualifies as described in this subsection;

(E) 2009 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2009 if the company qualifies as described in this subsection;

(F) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(G) Management's Discussion and Analysis, due on or before April 1, 2009;

(H) Statement of Actuarial Opinion, due on or before March 1, 2009 (stipulated premium companies, April 1, 2009). The actuarial opinion shall be prepared in accordance with paragraph (4) of this subsection;

(I) Schedule SIS, due on or before March 1, 2009. This filing is also required if filing a Health Annual Statement, as applicable;

(J) Supplemental Compensation Exhibit, due on or before March 1, 2009 (stipulated premium companies, April 1, 2009). This filing is also required if filing a Health Annual Statement, as applicable;

(K) The Texas Health Insurance Risk Pool shall file the 2008 Health Annual Statement, and the 2009 Quarterly Statements as follows:

(i) 2008 Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1, 2009;

(ii) 2009 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2009; and

(iii) The Texas Health Insurance Risk Pool is not required to file any reports, diskettes, or electronic data filings with the NAIC.

(L) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2009 (stipulated premium companies, April 1, 2009). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(M) Analysis of Surplus (Texas Edition) for life, accident and health insurers, due on or before March 1, 2009 (stipulated premium companies, April 1, 2009).

(2) Foreign companies filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2008 Life, Accident and Health Annual Statement electronic filing and PDF filing, due on or before March 1, 2009 (stipulated premium companies, April 1, 2009);

(B) 2008 Life, Accident and Health Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2009;

(C) 2009 Life, Accident and Health Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2009. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years.

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are filed by domestic insurers only with the department in paper copy) due on the dates specified in the forms and instructions.

(4) Statement of Actuarial Opinion required by paragraph (1)(H) of this subsection shall be prepared in accordance with the following:

(A) Unless exempted, the Statement of Actuarial Opinion, attached to either the 2008 Life, Accident and Health Annual Statement or the 2008 Health Annual Statement, should follow the applicable provisions of §§3.1601 - 3.1608 of this title (relating to Actuarial Opinion and Memorandum Regulation).

(B) For those companies exempted from §§3.1601 - 3.1608 of this title, instructions 1 - 12, established by the NAIC, must be followed.

(C) Any company required by §3.4505(b)(3)(I) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, shall attach this opinion to the 2008 Life, Accident and Health Annual Statement or the 2008 Health Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(e) Requirements for property and casualty insurers. Each fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, county mutual insurance company, mutual insurance company other than life, Lloyd's plan, reciprocal or inter insurance exchange, domestic risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed a property and casualty annual statement for the 2007 calendar year or had gross written premiums in 2008 in excess of $6 million, domestic joint underwriting association, the Texas Mutual Insurance Company, the Texas Windstorm Insurance Association, and the Texas FAIR Plan Association shall complete and file the following blanks, forms, and diskettes or electronic data filings as described in this subsection. The forms and reports identified in this subsection shall be completed in accordance with the "2008 Annual Statement Instructions, Property and Casualty," and the "2009 Quarterly Statement Instructions, Property and Casualty," as applicable. The electronic filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing, as applicable. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2008 Property and Casualty Annual Statement, due on or before March 1, 2009, including the printed investment schedule detail;

(B) 2009 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2009;

(C) 2008 Combined Property/Casualty Annual Statement, due on or before May 1, 2009. This statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in calendar year 2008, as disclosed in Schedule T of the Annual Statement(s);

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) The actuarial opinion submitted shall be prepared in accordance with the "2008 Annual Statement Instructions, Property and Casualty";

(F) Schedule SIS, due on or before March 1, 2009;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2009;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2009. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(I) Texas Supplement for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2009;

(J) Texas Supplemental "A" for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2009;

(K) Analysis of Surplus (Texas Edition) for property and casualty insurers except Texas county mutual insurance companies, due on or before March 1, 2009;

(L) Actuarial Opinion Summary prepared in accordance with §7.9 of this title (relating to Examination of Actuarial Opinion for Property and Casualty Insurers);

(M) The Texas Windstorm Insurance Association shall complete and file the following:

(i) 2008 Property and Casualty Annual Statement, due on or before March 1, 2009;

(ii) 2009 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2009; and

(iii) Management's Discussion and Analysis, due on or before April 1, 2009.

(iv) The Texas Windstorm Insurance Association is not required to file any reports with the NAIC.

(N) The Texas FAIR Plan Association shall complete and file the following:

(i) 2008 Property and Casualty Annual Statement, due on or before March 1, 2009;

(ii) 2009 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2009;

(iii) Statement of Actuarial Opinion, due on or before March 1, 2009;

(iv) Actuarial Opinion Summary prepared in accordance with §7.9 of this title; and

(v) Management's Discussion and Analysis, due on or before April 1, 2009.

(vi) The Texas FAIR Plan Association is not required to file any reports with the NAIC.

(2) Foreign property and casualty insurers filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2008 Property and Casualty Annual Statement electronic filing and PDF filing, due on or before March 1, 2009;

(B) 2009 Property and Casualty Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2009;

(C) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for electronic Schedule SIS and Supplemental Compensation Exhibit, required of domestic insurers only) due on the dates specified in the forms and instructions;

(D) Electronic combined insurance exhibit, due on or before May 1, 2009; and

(E) Combined annual statement electronic filing and PDF filing, due on or before May 1, 2009.

(4) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(5) A foreign insurer that files an application with the department for approval of a policyholder dividend shall file an Analysis of Surplus (Texas Edition) for property and casualty insurers with the application.

(6) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for property and casualty insurers with the department, on or before March 1, 2009.

(f) Requirements for fraternal benefit societies. Each fraternal benefit society shall complete and file the following blanks, forms, and electronic data filings for the 2008 calendar year, and the first three quarters for the 2009 calendar year. The forms and reports identified in this subsection shall be completed in accordance with the "2008 Annual Statement Instructions, Fraternal," and the "2009 Quarterly Statement Instructions, Fraternal," as applicable. The electronic data filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department, as follows:

(A) 2008 Fraternal Annual Statement, including the printed investment schedule detail, due on or before March 1, 2009;

(B) 2008 Fraternal Annual Statement of the Separate Accounts (required of companies maintaining separate accounts), due on or before March 1, 2009;

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Management's Discussion and Analysis, due on or before April 1, 2009;

(F) Statement of Actuarial Opinion, due on or before March 1, 2009;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2009;

(I) Analysis of Surplus (Texas Edition) for fraternal benefit societies, due on or before March 1, 2009.

(2) Foreign fraternal insurers filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2008 Fraternal Annual Statement electronic filing and PDF filing, due on or before March 1, 2009;

(B) 2008 Fraternal Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2009;

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for the Supplemental Compensation Exhibit) due on the dates specified in the forms.

(4) Statement of Actuarial Opinion required by paragraph (1)(F) of this subsection shall be prepared in accordance with the following:

(A) Unless exempted, the Statement of Actuarial Opinion, attached to the 2008 Fraternal Annual Statement, should follow the applicable provisions of §§3.1601 - 3.1608 of this title.

(B) For those companies exempted from §§3.1601 - 3.1608 of this title, instructions 1 - 12, established by the NAIC, must be followed.

(C) Any company required by §3.4505(b)(3)(I) of this title to opine on the application of X factors, shall attach this opinion to the 2008 Fraternal Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(6) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for fraternal benefit societies with the department on or before March 1, 2009.

(g) Requirements for title insurers. Each title insurance company shall complete and file the following blanks and forms for the 2008 calendar year, and the first three quarters of the 2009 calendar year. The reports and forms identified in this subsection shall be completed in accordance with the "2008 Annual Statement Instructions, Title," and the "2009 Quarterly Statement Instructions, Title," as applicable. The electronic version of the filings with the NAIC identified in this subsection shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2008 Title Annual Statement, including printed investment schedule details, due on or before March 1, 2009;

(B) 2009 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2009;

(C) All the paper copies of the annual and quarterly supplements prepared and filed on dates described in the forms and instructions;

(D) Management's Discussion and Analysis, due on or before April 1, 2009;

(E) Statement of Actuarial Opinion, due on or before March 1, 2009;

(F) Supplemental Compensation Exhibit, due on or before March 1, 2009;

(G) Schedule SIS, due on or before March 1, 2009;

(I) Analysis of Surplus (Texas Edition) for title companies, due on or before March 1, 2009.

(2) Foreign companies filing electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2008 Title Annual Statement electronic filings and PDF filings, due on or before March 1, 2009;

(B) 2008 Title Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2009;

(C) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are only filed by domestic insurers with the department in paper copy) due on the dates specified in the forms and instructions;

(D) Management Discussion and Analysis, due on or before April 1, 2009; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2009.

(4) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(5) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for title insurers on or before March 1, 2009.

(h) Requirements for health maintenance organizations. Each health maintenance organization licensed pursuant to the Insurance Code Chapter 843 shall complete the 2008 Health Annual Statement, and the 2009 Quarterly Statements. Insurers that are subject to life insurance statutes and are permitted or allowed to do the business of health maintenance organizations shall file the Texas HMO supplement forms as part of their annual and quarterly statement filings. The forms and reports required in this subsection shall be completed in accordance with the "2008 Annual Statement Instructions, Health," and the "2009 Quarterly Statement Instructions, Health," as applicable. The Texas supplemental forms required in this subsection and provided by the department shall be completed in accordance with the instructions on the forms. The Statement of Actuarial Opinion shall include the additional requirements of the department set forth in paragraph (1)(D) of this subsection. The electronic data filings with the NAIC shall be in accordance with NAIC data specifications and instructions and shall include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department shall be filed in accordance with the instructions provided by the department. The filings for insurers described in this subsection are as follows:

(1) Domestic and foreign insurer reports and forms in paper copy to be filed only with the department:

(A) 2008 Health Annual Statement, including printed investment schedule detail, due on or before March 1, 2009;

(B) 2009 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2009. With each quarterly filing, include an up-to-date and completed Schedule E - Part 3 - Special Deposits, utilizing the format from the 2008 Health Annual Statement;

(D) Statement of Actuarial Opinion, due on or before March 1, 2009. In addition to the requirements set forth in the "2008 Annual Statement Instructions, Health," the department requires that the actuarial opinion include the following:

(i) The Statement of Actuarial Opinion must include assurance that an actuarial report and underlying actuarial work papers supporting the actuarial opinion will be maintained at the company and available for examination for seven years. The foregoing must be available by May 1 of the year following the year end for which the opinion was rendered or within two weeks after a request from the commissioner. The suggested wording used will depend on whether the actuary is employed by the company or is a consulting actuary. The wording for an actuary employed by the company should be similar to the following: "An actuarial report and any underlying actuarial work papers supporting the findings expressed in this Statement of Actuarial Opinion will be retained for a period of seven years in the administrative offices of the company and available for regulatory examination." The wording for a consulting actuary retained by the company should be similar to the following: "An actuarial report and any underlying actuarial work papers supporting the findings expressed in this Statement of Actuarial Opinion have been provided to the company to be retained for a period of seven years in the administrative offices of the company and available for regulatory examination."

(ii) Under the scope paragraph requirements of section 5 of the "2008 Annual Statement Instructions, Health," relating to the Actuarial Certification, the department requires that the actuarial opinion specifically list the premium deficiency reserve as an item and disclose the amount of such reserve.

(2) Domestic insurer reports and forms to be filed with the department:

(A) Supplemental Compensation Exhibit in paper copy only, due on or before March 1, 2009;

(B) Texas Overhead Assessment Exemption Form (Texas Edition) in paper copy only, due on or before March 1, 2009. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(C) Texas HMO Supplement Annual (Texas Edition), in paper copy and electronic filing, containing annual data for calendar year 2008, to be completed according to the instructions provided by the department, due on or before March 1, 2009;

(D) Texas HMO Supplement Quarterly (Texas Edition), in paper copy and electronic filings, containing quarterly statement data for calendar-year 2009, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2009.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2008 Health Annual Statement electronic filing, and PDF filing, due on or before March 1, 2009;

(B) 2009 Health Quarterly Statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2009;

(D) Statement of Actuarial Opinion, due on or before March 1, 2009; and

(E) Management Discussion and Analysis, due on or before April 1, 2009.

(i) Requirements for farm mutual insurers not subject to the provisions of subsection (e) of this section. Farm mutual insurance companies not subject to subsection (e) of this section shall file the following blanks and forms for the 2008 calendar year with the department only, on or before March 1, 2009:

(1) Annual Statement (Texas Edition);

(2) Texas Overhead Assessment Exemption Form (Texas Edition). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(3) Statement of Actuarial Opinion, unless exempted under §7.31 of this title (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(j) Requirements for statewide mutual assessment associations, local mutual aid associations, mutual burial associations and exempt associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association and exempt association shall complete and file the following blanks and forms for the 2008 calendar year with the department only, on or before April 1, 2009:

(1) Annual Statement (Texas Edition) (exempt companies are required to complete all pages except lines 22, 23, 24, 25, and 26 on page 3, the special instructions at the bottom of page 3, and pages 4 - 7);

(3) Release of Contributions Form (Texas Edition);

(4) 3-1/2 Percent Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3-1/2 Percent) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(k) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 shall complete and file the following blanks and forms for the 2008 calendar year with the department only. An actuarial opinion is not required. The following forms are to be filed on or before March 1, 2009:

(1) Annual Statement (Texas Edition); and

(l) Requirements for Mexican casualty insurance companies. Each Mexican casualty insurance company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, shall complete and file the following blanks and forms for the 2008 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed to the extent specified in paragraph (1) of this subsection and in accordance with the "2008 Annual Statement Instructions, Property and Casualty." An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1, 2009:

(1) 2008 Property and Casualty Annual Statement; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) A copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) A copy of the official documents issued by the Comision Nacional de Seguros y Fianzas approving the 2008 annual statement; and

(4) A copy of the current license to operate in the Republic of Mexico.

(m) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department.

History

Source Note: The provisions of this §7.65 adopted to be effective March 19, 2009, 34 TexReg 1853.

28 Tex. Admin. Code § 7.66 Requirements for Filing the 2009 Annual Statements, the 2010 Quarterly Statements, Other Reporting Forms, and Electronic Data Filings with the Texas Department of Insurance and the NAIC

(a) Scope. This section specifies the requirements for insurers and other regulated entities for filing the 2009 annual statement, the 2010 quarterly statements, other reporting forms, and electronic data filings with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Risk Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. The commissioner adopts by reference the 2009 annual statement blanks, the 2010 quarterly statement blanks, and the related instruction manuals published by the NAIC, and other supplemental reporting forms specified in this section. The forms are available from the Texas Department of Insurance, Financial Analysis Division, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. The NAIC annual and quarterly statement blanks and other NAIC supplemental reporting forms can be printed or filed electronically using annual statement software available from vendors. Insurers and other regulated entities shall properly report to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate hard copy annual and quarterly statement blanks, other reporting forms, and electronic data filings.

(b) Definition. In this section "Texas Edition" refers to the blanks and forms promulgated by the commissioner.

(d) Filing requirements for life, accident and health insurers. Each life; life and accident; life and health; accident; accident and health; mutual life; or life, accident and health insurance company; stipulated premium company; group hospital service corporation; and the Texas Health Insurance Risk Pool shall complete and file the blanks, forms, or electronic data filings as directed in this subsection. This subsection does not apply to entities licensed as health maintenance organizations under the Insurance Code Chapter 843. Insurers specified in this subsection and engaged in business authorized under the Insurance Code Chapter 843 may have additional reporting requirements under subsection (h) of this section. Insurers described under this subsection may elect to file on the 2009 Health Annual Statement for year-end 2009, and on the 2010 Health Quarterly Statement for the three quarters of 2010, if the insurer passes the Health Statement Test as outlined in the "2009 Annual Statement, Health Instructions." If a reporting entity qualifies under this subsection to use the 2009 Health Annual Statement, it must continue to use that annual statement for a minimum of three years or obtain written approval from the department to change to another type of annual statement. Insurers filing the 2009 Life, Accident and Health Annual Statement, the 2010 Life, Accident and Health Quarterly Statements, and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2009 Annual Statement Instructions, Life, Accident and Health," and the "2010 Quarterly Statement Instructions, Life, Accident and Health," as applicable. Life insurers meeting the test set forth in this subsection to file the 2009 Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2009 Annual Statement Instructions, Health," and the "2010 Quarterly Statement Instructions, Health," as applicable. The electronic filings of these forms or reports with the NAIC shall be in accordance with the NAIC data specifications and instructions for electronic filing and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2009 Life, Accident and Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010);

(B) 2009 Life, Accident and Health Annual Statement of the Separate Accounts for the 2009 calendar year (required of companies maintaining separate accounts), due on or before March 1, 2010;

(C) 2010 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2010. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2009 Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2010 if the company qualifies as described in this subsection;

(E) 2010 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2010 if the company qualifies as described in this subsection;

(F) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(G) Management's Discussion and Analysis, due on or before April 1, 2010;

(H) Statement of Actuarial Opinion, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010). The actuarial opinion shall be prepared in accordance with paragraph (4) of this subsection;

(I) Schedule SIS, due on or before March 1, 2010. This filing is also required if filing a Health Annual Statement, as applicable;

(J) Supplemental Compensation Exhibit, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010). This filing is also required if filing a Health Annual Statement, as applicable;

(K) The Texas Health Insurance Risk Pool shall file the 2009 Health Annual Statement, and the 2010 Quarterly Statements as follows:

(i) 2009 Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1, 2010;

(ii) 2010 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2010; and

(iii) The Texas Health Insurance Risk Pool is not required to file any reports, diskettes, or electronic data filings with the NAIC.

(L) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2010 (stipulated premium companies, April 1, 2010). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(M) Analysis of Surplus (Texas Edition) for life, accident and health insurers, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010).

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2009 Life, Accident and Health Annual Statement electronic filing and PDF filing, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010);

(B) 2009 Life, Accident and Health Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2010;

(C) 2010 Life, Accident and Health Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2010. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years.

(E) Statement of Actuarial Opinion, due on or before March 1, 2010 (stipulated premium companies, April 1, 2010). The actuarial opinion shall be prepared in accordance with paragraph (4) of this subsection.

(4) Statement of Actuarial Opinion required by paragraphs (1)(H) and (3)(E) of this subsection shall be prepared in accordance with the following:

(A) For companies filing the 2009 Life, Accident and Health Annual Statement, the Statement of Actuarial Opinion, attached to the 2009 Life, Accident and Health Annual Statement, must follow the applicable provisions of §§3.1601 - 3.1608 of this title (relating to Actuarial Opinion and Memorandum Regulation), except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the "2009 Annual Statement Instructions, Life, Accident and Health", must be followed.

(B) For companies filing the 2009 Health Annual Statement, the Statement of Actuarial Opinion, attached to the 2009 Health Annual Statement, must follow the "2009 Annual Statement Instructions, Health." In addition, for those companies not exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the Statement of Actuarial Opinion must follow the applicable provisions of §§3.1601 - 3.1608 of this title that are not covered in the "2009 Annual Statement Instructions, Health", including those provisions relating to asset adequacy analysis.

(C) Any company required by §3.4505(b)(3)(G) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, shall attach this opinion to the 2009 Life, Accident and Health Annual Statement or the 2009 Health Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(e) Requirements for property and casualty insurers. Each fire; fire and marine; general casualty; fire and casualty; or U.S. branch of an alien insurer; county mutual insurance company; mutual insurance company other than life; Lloyd's plan; reciprocal or inter insurance exchange; domestic risk retention group; life insurance company that is licensed to write workers' compensation; any farm mutual insurance company that filed a property and casualty annual statement for the 2008 calendar year or had gross written premiums in 2009 in excess of $6 million; domestic joint underwriting association; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association shall complete and file the following blanks, forms, and diskettes or electronic data filings as described in this subsection. The forms and reports identified in this subsection shall be completed in accordance with the "2009 Annual Statement Instructions, Property and Casualty," and the "2010 Quarterly Statement Instructions, Property and Casualty," as applicable. The electronic filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing, as applicable. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2009 Property and Casualty Annual Statement, due on or before March 1, 2010, including the printed investment schedule detail;

(B) 2010 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2010;

(C) 2009 Combined Property/Casualty Annual Statement, due on or before May 1, 2010. This statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in calendar year 2009, as disclosed in Schedule T of the Annual Statement(s);

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Statement of Actuarial Opinion, due on or before March 1, 2010, and prepared in accordance with the "2009 Annual Statement Instructions, Property and Casualty";

(F) Schedule SIS, due on or before March 1, 2010;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2010;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2010. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(I) Texas Supplement for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2010;

(J) Texas Supplemental "A" for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2010;

(K) Analysis of Surplus (Texas Edition) for property and casualty insurers except Texas county mutual insurance companies, due on or before March 1, 2010;

(L) Actuarial Opinion Summary prepared in accordance with §7.9 of this subchapter (relating to Examination of Actuarial Opinion for Property and Casualty Insurers);

(M) The Texas Windstorm Insurance Association shall complete and file the following:

(i) 2009 Property and Casualty Annual Statement, due on or before March 1, 2010;

(ii) 2010 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2010; and

(iii) Management's Discussion and Analysis, due on or before April 1, 2010.

(iv) The Texas Windstorm Insurance Association is not required to file any reports with the NAIC.

(N) The Texas FAIR Plan Association shall complete and file the following:

(i) 2009 Property and Casualty Annual Statement, due on or before March 1, 2010;

(ii) 2010 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2010;

(iii) Statement of Actuarial Opinion, due on or before March 1, 2010, and prepared in accordance with the "2009 Annual Statement Instructions, Property and Casualty";

(iv) Actuarial Opinion Summary prepared in accordance with §7.9 of this subchapter; and

(v) Management's Discussion and Analysis, due on or before April 1, 2010.

(vi) The Texas FAIR Plan Association is not required to file any reports with the NAIC.

(3) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2009 Property and Casualty Annual Statement electronic filing and PDF filing, due on or before March 1, 2010;

(B) 2010 Property and Casualty Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2010;

(D) Electronic combined insurance exhibit, due on or before May 1, 2010;

(E) Combined annual statement electronic filing and PDF filing, due on or before May 1, 2010; and

(F) Statement of Actuarial Opinion, due on or before March 1, 2010, and prepared in accordance with the "2009 Annual Statement Instructions, Property and Casualty".

(4) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(f) Requirements for fraternal benefit societies. Each fraternal benefit society shall complete and file the following blanks, forms, and electronic data filings for the 2009 calendar year, and the first three quarters for the 2010 calendar year. The forms and reports identified in this subsection shall be completed in accordance with the "2009 Annual Statement Instructions, Fraternal," and the "2010 Quarterly Statement Instructions, Fraternal," as applicable. The electronic data filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department, as follows:

(A) 2009 Fraternal Annual Statement, including the printed investment schedule detail, due on or before March 1, 2010;

(B) 2009 Fraternal Annual Statement of the Separate Accounts (required of companies maintaining separate accounts), due on or before March 1, 2010;

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Management's Discussion and Analysis, due on or before April 1, 2010;

(F) Statement of Actuarial Opinion, due on or before March 1, 2010, and prepared in accordance with paragraph (4) of this subsection;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2010;

(I) Analysis of Surplus (Texas Edition) for fraternal benefit societies, due on or before March 1, 2010.

(3) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2009 Fraternal Annual Statement electronic filing and PDF filing, due on or before March 1, 2010;

(B) 2009 Fraternal Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2010;

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for the Supplemental Compensation Exhibit) due on the dates specified in the forms; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2010, and prepared in accordance with paragraph (4) of this subsection.

(4) Statement of Actuarial Opinion required by paragraph (1)(F) and (3)(E) of this subsection shall be prepared in accordance with the following:

(A) The Statement of Actuarial Opinion, attached to the 2009 Fraternal Annual Statement, must follow the applicable provisions of §§3.1601 - 3.1608 of this title, except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the "2009 Annual Statement Instructions, Fraternal", must be followed.

(B) Any company required by §3.4505(b)(3)(G) of this title to opine on the application of X factors, shall attach this opinion to the 2009 Fraternal Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(g) Requirements for title insurers. Each title insurance company shall complete and file the following blanks and forms for the 2009 calendar year, and the first three quarters of the 2010 calendar year. The reports and forms identified in this subsection shall be completed in accordance with the "2009 Annual Statement Instructions, Title," and the "2010 Quarterly Statement Instructions, Title," as applicable. The electronic version of the filings with the NAIC identified in this subsection shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2009 Title Annual Statement, including printed investment schedule details, due on or before March 1, 2010;

(B) 2010 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2010;

(C) All the paper copies of the annual and quarterly supplements prepared and filed on dates described in the forms and instructions;

(D) Management's Discussion and Analysis, due on or before April 1, 2010;

(E) Statement of Actuarial Opinion, due on or before March 1, 2010;

(F) Supplemental Compensation Exhibit, due on or before March 1, 2010;

(G) Schedule SIS, due on or before March 1, 2010;

(I) Analysis of Surplus (Texas Edition) for title companies, due on or before March 1, 2010.

(2) Foreign companies filing electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2009 Title Annual Statement electronic filings and PDF filings, due on or before March 1, 2010;

(B) 2010 Title Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2010;

(D) Management Discussion and Analysis, due on or before April 1, 2010; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2010.

(4) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(h) Requirements for health maintenance organizations. Each health maintenance organization licensed pursuant to the Insurance Code Chapter 843 shall complete the 2009 Health Annual Statement, and the 2010 Quarterly Statements. Insurers that are subject to life insurance statutes and are permitted or allowed to do the business of health maintenance organizations shall file the Texas HMO supplement forms as part of their annual and quarterly statement filings. The forms and reports required in this subsection shall be completed in accordance with the "2009 Annual Statement Instructions, Health," and the "2010 Quarterly Statement Instructions, Health," as applicable. The Texas supplemental forms required in this subsection and provided by the department shall be completed in accordance with the instructions on the forms. The electronic data filings with the NAIC shall be in accordance with NAIC data specifications and instructions and shall include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department shall be filed in accordance with the instructions provided by the department. The filings for insurers described in this subsection are as follows:

(1) Domestic and foreign insurer reports and forms in paper copy to be filed only with the department:

(A) 2009 Health Annual Statement, including printed investment schedule detail, due on or before March 1, 2010;

(B) 2010 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2010. With each quarterly filing, include an up-to-date and completed Schedule E, Part 3 - Special Deposits, utilizing the format from the 2009 Health Annual Statement;

(D) Statement of Actuarial Opinion, due on or before March 1, 2010, prepared in accordance with the "2009 Annual Statement Instructions, Health."

(2) Domestic insurer reports and forms to be filed with the department:

(A) Supplemental Compensation Exhibit in paper copy only, due on or before March 1, 2010;

(B) Texas Overhead Assessment Exemption Form (Texas Edition) in paper copy only, due on or before March 1, 2010. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(C) Texas HMO Supplement Annual (Texas Edition), in paper copy and electronic filing, containing annual data for calendar year 2009, to be completed according to the instructions provided by the department, due on or before March 1, 2010.

(D) Texas HMO Supplement Quarterly (Texas Edition), in paper copy and electronic filings, containing quarterly statement data for calendar-year 2010, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2010.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2009 Health Annual Statement electronic filing, and PDF filing, due on or before March 1, 2010;

(B) 2010 Health Quarterly Statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2010;

(D) Statement of Actuarial Opinion, due on or before March 1, 2010, prepared in accordance with the "2009 Annual Statement Instructions, Health;" and

(E) Management Discussion and Analysis, due on or before April 1, 2010.

(i) Requirements for farm mutual insurers not subject to the provisions of subsection (e) of this section. Farm mutual insurance companies not subject to subsection (e) of this section shall file the following blanks and forms for the 2009 calendar year with the department only, on or before March 1, 2010:

(1) Annual Statement (Texas Edition);

(3) Statement of Actuarial Opinion, unless exempted under §7.31 of this subchapter (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(j) Requirements for statewide mutual assessment associations, local mutual aid associations, mutual burial associations and exempt associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association and exempt association shall complete and file the following blanks and forms for the 2009 calendar year with the department only, on or before April 1, 2010:

(3) Release of Contributions Form (Texas Edition);

(4) 3-1/2 Percent Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3-1/2 Percent) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(k) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 shall complete and file the following blanks and forms for the 2009 calendar year with the department only. An actuarial opinion is not required. The following forms are to be filed on or before March 1, 2010:

(1) Annual Statement (Texas Edition); and

(l) Requirements for Mexican casualty insurance companies. Each Mexican casualty insurance company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, shall complete and file the following blanks and forms for the 2009 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed to the extent specified in paragraph (1) of this subsection and in accordance with the "2009 Annual Statement Instructions, Property and Casualty." An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1, 2010:

(1) 2009 Property and Casualty Annual Statement; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) A copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) A copy of the official documents issued by the Comision Nacional de Seguros y Fianzas approving the 2009 annual statement; and

(4) A copy of the current license to operate in the Republic of Mexico.

(m) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department.

History

Source Note: The provisions of this §7.66 adopted to be effective June 10, 2010, 35 TexReg 4718.

28 Tex. Admin. Code § 7.67 Requirements for Filing the 2010 Annual Statements, the 2011 Quarterly Statements, Other Reporting Forms, and Electronic Data Filings with the Texas Department of Insurance and the NAIC

(a) Scope. This section specifies the requirements for insurers and other regulated entities for filing the 2010 annual statement, the 2011 quarterly statements, other reporting forms, and electronic data filings with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Risk Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. The commissioner adopts by reference the 2010 annual statement blanks, the 2011 quarterly statement blanks, and the related instruction manuals published by the NAIC, and other supplemental reporting forms specified in this section. The forms are available from the Texas Department of Insurance, Financial Analysis Division, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. The NAIC annual and quarterly statement blanks and other NAIC supplemental reporting forms can be printed or filed electronically using annual statement software available from vendors. Insurers and other regulated entities shall properly report to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate paper copy annual and quarterly statement blanks, other reporting forms, and electronic data filings.

(b) Definition. In this section "Texas Edition" refers to the blanks and forms promulgated by the commissioner.

(c) Conflicts with Other Laws. In the event of a conflict between the Insurance Code, any currently existing department rule, form, instructions, or any specific requirement of this section and the NAIC instructions listed in this section, the Insurance Code, the department rule, form, instruction, or the specific requirements of this section shall take precedence and in all respects control.

(d) Filing Requirements for Life, Accident and Health Insurers. Each life; life and accident; life and health; accident; accident and health; mutual life; or life, accident and health insurance company; stipulated premium company; group hospital service corporation; and the Texas Health Insurance Risk Pool shall complete and file the blanks, forms, or electronic data filings as directed in this subsection. This subsection does not apply to entities licensed as health maintenance organizations under the Insurance Code Chapter 843. Insurers specified in this subsection and engaged in business authorized under the Insurance Code Chapter 843 may have additional reporting requirements under subsection (h) of this section. Insurers described under this subsection may elect to file on the 2010 Health Annual Statement for year-end 2010, and on the 2011 Health Quarterly Statement for the three quarters of 2011, if the insurer passes the Health Statement Test as outlined in the "2010 Annual Statement, Health Instructions." If a reporting entity qualifies under this subsection to use the 2010 Health Annual Statement, it must continue to use that annual statement for a minimum of three years or obtain written approval from the department to change to another type of annual statement. Insurers filing the 2010 Life, Accident and Health Annual Statement, the 2011 Life, Accident and Health Quarterly Statements, and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2010 Annual Statement Instructions, Life, Accident and Health," and the "2011 Quarterly Statement Instructions, Life, Accident and Health," as applicable. Life insurers meeting the test set forth in this subsection to file the 2010 Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2010 Annual Statement Instructions, Health," and the "2011 Quarterly Statement Instructions, Health," as applicable. The electronic filings of these forms or reports with the NAIC shall be in accordance with the NAIC data specifications and instructions for electronic filing and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2010 Life, Accident and Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011);

(B) 2010 Life, Accident and Health Annual Statement of the Separate Accounts for the 2010 calendar year (required of companies maintaining separate accounts), due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection;

(C) 2010 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2011. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2010 Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection, if the company qualifies as described in this subsection;

(E) 2011 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2011 if the company qualifies as described in this subsection;

(F) all the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(G) Management's Discussion and Analysis, due on or before April 1, 2011;

(H) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002 and other provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011). The actuarial opinion shall be prepared in accordance with paragraph (4) of this subsection;

(I) Schedule SIS, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection. This filing is also required if filing a Health Annual Statement, as applicable;

(J) Supplemental Compensation Exhibit, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011). This filing is also required if filing a Health Annual Statement, as applicable;

(K) The Texas Health Insurance Risk Pool shall file the 2010 Health Annual Statement, and the 2011 Quarterly Statements as follows:

(i) 2010 Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1, 2011, in accordance with the Insurance Code Chapter 1506;

(ii) 2011 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2011; and

(iii) The Texas Health Insurance Risk Pool is not required to file any reports, diskettes, or electronic data filings with the NAIC;

(L) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(M) Analysis of Surplus (Texas Edition) for life, accident and health insurers, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011).

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2010 Life, Accident and Health Annual Statement electronic filing and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B, and other provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011);

(B) 2010 Life, Accident and Health Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B, and other provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection;

(C) 2011 Life, Accident and Health Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2011. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) all annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are filed by domestic insurers only with the department in paper copy) due on the dates specified in the forms and instructions; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002, and other provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection (stipulated premium companies not subject to the Insurance Code §884.406, April 1, 2011). The actuarial opinion shall be prepared in accordance with paragraph (4) of this subsection.

(4) Statement of Actuarial Opinion required by paragraphs (1)(H) and (3)(E) of this subsection shall be prepared in accordance with the following:

(A) For companies filing the 2010 Life, Accident and Health Annual Statement, the Statement of Actuarial Opinion, attached to the 2010 Life, Accident and Health Annual Statement, must follow the applicable provisions of §§3.1601 - 3.1608 of this title (relating to Actuarial Opinion and Memorandum Regulation), except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the "2010 Annual Statement Instructions, Life, Accident and Health," must be followed.

(B) For companies filing the 2010 Health Annual Statement, the Statement of Actuarial Opinion, attached to the 2010 Health Annual Statement, must follow the "2010 Annual Statement Instructions, Health." In addition, for those companies not exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the Statement of Actuarial Opinion must follow the applicable provisions of §§3.1601 - 3.1608 of this title that are not covered in the "2010 Annual Statement Instructions, Health," including those provisions relating to asset adequacy analysis.

(C) Any company required by §3.4505(b)(3)(G) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, shall attach this opinion to the 2010 Life, Accident and Health Annual Statement or the 2010 Health Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(6) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for life, accident and health insurers with the department, on or before March 1, 2011, in accordance with provisions of the Texas Insurance Code applicable to the type of insurer described under this subsection.

(e) Requirements for Property and Casualty Insurers. Each fire; fire and marine; general casualty; fire and casualty; or U.S. branch of an alien insurer; county mutual insurance company; mutual insurance company other than life; Lloyd's plan; reciprocal or inter insurance exchange; domestic risk retention group; life insurance company that is licensed to write workers' compensation; any farm mutual insurance company that filed a property and casualty annual statement for the 2009 calendar year or had gross written premiums in 2010 in excess of $6 million; domestic joint underwriting association; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association shall complete and file the following blanks, forms, and diskettes or electronic data filings as described in this subsection. The forms and reports identified in this subsection shall be completed in accordance with the "2010 Annual Statement Instructions, Property and Casualty," and the "2011 Quarterly Statement Instructions, Property and Casualty," as applicable. The electronic filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing, as applicable. The filings for insurers described in this subsection are as follows:

(1) domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2010 Property and Casualty Annual Statement, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer, including the printed investment schedule detail;

(B) 2011 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2011;

(C) 2010 Combined Property/Casualty Annual Statement, due on or before May 1, 2011. This statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in calendar year 2010, as disclosed in Schedule T of the Annual Statement(s);

(D) all the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002, and other provisions of the Texas Insurance Code applicable to the type of property and casualty insurer, and prepared in accordance with the "2010 Annual Statement Instructions, Property and Casualty;"

(F) Schedule SIS, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(I) Texas Supplement for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2011, in accordance with the Insurance Code Chapter 912;

(J) Texas Supplemental "A" for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2011, in accordance with the Insurance Code Chapter 912;

(K) Analysis of Surplus (Texas Edition) for property and casualty insurers except Texas county mutual insurance companies, due on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer;

(L) Actuarial Opinion Summary prepared in accordance with §7.9 of this subchapter (relating to Examination of Actuarial Opinion for Property and Casualty Insurers);

(M) Management's Discussion and Analysis, due on or before April 1, 2011;

(N) The Texas Windstorm Insurance Association shall complete and file the following:

(i) 2010 Property and Casualty Annual Statement, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 2210;

(ii) annual financial statements for year-end 2010 prepared in accordance with generally accepted accounting principles as prescribed or modified by the Governmental Accounting Standards Board or its successor, and in compliance with the Government Code §2101.011(d) and any related regulations, guidelines, procedures, or reporting requirements prescribed by the Comptroller of Public Accounts, due on or before March, 1, 2011, in accordance with the Insurance Code Chapter 2210;

(iii) quarterly financial statements for the first three quarters of calendar year 2011 prepared in accordance with generally accepted accounting principles as prescribed or modified by the Governmental Accounting Standards Board or its successor, due on or before May 15, August 15, and November 15, 2011;

(iv) 2011 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2011;

(v) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002 and Chapter 2210, and prepared in accordance with the "2010 Annual Statement Instructions, Property and Casualty;"

(vi) Actuarial Opinion Summary prepared in accordance with §7.9 of this subchapter;

(vii) Management's Discussion and Analysis, due on or before April 1, 2011;

(viii) Supplemental Compensation Exhibit, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 2210; and

(ix) all the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions, as applicable.

(O) Notwithstanding §5.9927 of this title (relating to Annual and Quarterly Financial Statements), the Texas FAIR Plan Association shall complete and file the following:

(i) 2010 Property and Casualty Annual Statement, due on or before March 31, 2011, in accordance with the Insurance Code Chapter 2211;

(ii) 2011 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2011;

(iii) Statement of Actuarial Opinion, due on or before March 31, 2011, in accordance with the Insurance Code §802.002 and Chapter 2210, and prepared in accordance with the "2010 Annual Statement Instructions, Property and Casualty;"

(iv) Actuarial Opinion Summary prepared in accordance with §7.9 of this subchapter, due on or before April 15, 2011;

(v) Management's Discussion and Analysis, due on or before April 1, 2011;

(vi) Supplemental Compensation Exhibit, due on or before March 31, 2011; and

(vii) all the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions, as applicable.

(3) Electronic filings by domestic and foreign insurers, except Texas Windstorm Insurance Association and the Texas FAIR Plan Association, to be filed with the NAIC:

(A) 2010 Property and Casualty Annual Statement electronic filing and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Chapter 802, Subchapter B and other provisions of the Texas Insurance Code applicable to the type of property and casualty insurer;

(B) 2011 Property and Casualty Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2011;

(C) all annual and quarterly supplemental electronic filings together with the related PDF filings (except for electronic Schedule SIS and Supplemental Compensation Exhibit, required of domestic insurers only) due on the dates specified in the forms and instructions;

(D) electronic combined insurance exhibit, due on or before May 1, 2011;

(E) combined annual statement electronic filing and PDF filing, due on or before May 1, 2011; and

(F) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance §802.002 and other provisions of the Texas Insurance Code applicable to the type of property and casualty insurer, and prepared in accordance with the "2010 Annual Statement Instructions, Property and Casualty."

(4) Notwithstanding §5.9927 of this title, electronic filings by the Texas Windstorm Insurance Association and the Texas FAIR Plan Association to be filed with the NAIC:

(A) 2010 Property and Casualty Annual Statement electronic filing and PDF filing, due on or before March 1, 2011, for the Texas Windstorm Insurance Association, in accordance with the Insurance Code Chapter 802, Subchapter B and Chapter 2210; and due on or before March 31, 2011, for the Texas FAIR Plan Association, in accordance with the Insurance Code Chapter 802, Subchapter B and Chapter 2211;

(B) 2011 Property and Casualty Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2011;

(C) all annual and quarterly supplemental electronic filings together with the related PDF filings (except for electronic Supplemental Compensation Exhibit) due on the dates specified in the forms and instructions, as applicable; and

(D) Statement of Actuarial Opinion, due on or before March 1, 2011, for the Texas Windstorm Insurance Association, in accordance with the Insurance Code §802.002 and Chapter 2210; and due on or before March 31, 2011, for the Texas FAIR Plan Association, in accordance with the Insurance §802.002 and Chapter 2211 and prepared in accordance with the "2010 Annual Statement Instructions, Property and Casualty."

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(6) A foreign insurer that files an application with the department for approval of a policyholder dividend shall file an Analysis of Surplus (Texas Edition) for property and casualty insurers with the application.

(7) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for property and casualty insurers with the department, on or before March 1, 2011, in accordance with the provisions of the Texas Insurance Code applicable to the type of property and casualty insurer.

(f) Requirements for Fraternal Benefit Societies. Each fraternal benefit society shall complete and file the following blanks, forms, and electronic data filings for the 2010 calendar year, and the first three quarters for the 2011 calendar year. The forms and reports identified in this subsection shall be completed in accordance with the "2010 Annual Statement Instructions, Fraternal," and the "2011 Quarterly Statement Instructions, Fraternal," as applicable. The electronic data filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) domestic insurer reports and forms in paper copy to be filed only with the department, as follows:

(A) 2010 Fraternal Annual Statement, including the printed investment schedule detail, due on or before March 1, 2011, in accordance with the Insurance Code §885.401;

(B) 2010 Fraternal Annual Statement of the Separate Accounts (required of companies maintaining separate accounts), due on or before March 1, 2011, in accordance with the Insurance Code §885.401;

(D) all the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Management's Discussion and Analysis, due on or before April 1, 2011;

(F) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002 and §885.401, and prepared in accordance with paragraph (4) of this subsection;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2011, in accordance with the Insurance Code §885.401;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2011, in accordance with the Insurance Code §885.401. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(I) Analysis of Surplus (Texas Edition) for fraternal benefit societies, due on or before March 1, 2011, in accordance with the Insurance Code §885.401.

(3) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2010 Fraternal Annual Statement electronic filing and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B and §885.401;

(B) 2010 Fraternal Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B and §885.401;

(D) all annual and quarterly supplemental electronic filings together with the related PDF filings (except for the Supplemental Compensation Exhibit) due on the dates specified in the forms; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002, Chapter 802, Subchapter B and §885.401, and prepared in accordance with paragraph (4) of this subsection.

(4) Statement of Actuarial Opinion required by paragraphs (1)(F) and (3)(E) of this subsection shall be prepared in accordance with the following:

(A) The Statement of Actuarial Opinion, attached to the 2010 Fraternal Annual Statement, must follow the applicable provisions of §§3.1601 - 3.1608 of this title, except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the "2010 Annual Statement Instructions, Fraternal," must be followed.

(B) Any company required by §3.4505(b)(3)(G) of this title to opine on the application of X factors, shall attach this opinion to the 2010 Fraternal Annual Statement, as applicable.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(g) Requirements for Title Insurers. Each title insurance company shall complete and file the following blanks and forms for the 2010 calendar year, and the first three quarters of the 2011 calendar year. The reports and forms identified in this subsection shall be completed in accordance with the "2010 Annual Statement Instructions, Title," and the "2011 Quarterly Statement Instructions, Title," as applicable. The electronic version of the filings with the NAIC identified in this subsection shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2010 Title Annual Statement, including printed investment schedule details, due on or before March 1, 2011, in accordance with the Insurance Code §2551.152;

(B) 2011 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2011;

(C) All the paper copies of the annual and quarterly supplements prepared and filed on dates described in the forms and instructions;

(D) Management's Discussion and Analysis, due on or before April 1, 2011;

(E) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002 and §2551.152;

(F) Supplemental Compensation Exhibit, due on or before March 1, 2011, in accordance with the Insurance Code §2551.152;

(G) Schedule SIS, due on or before March 1, 2011, in accordance with the Insurance Code §2551.152;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2011, in accordance with the Insurance Code §2551.152. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed; and

(I) Analysis of Surplus (Texas Edition) for title companies, due on or before March 1, 2011, in accordance with the Insurance Code §2551.152.

(2) Foreign companies filing electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(3) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2010 Title Annual Statement electronic filings and PDF filings, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B and §2551.152;

(B) 2011 Title Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2011;

(D) Management Discussion and Analysis, due on or before April 1, 2011; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002, Chapter 802, Subchapter B and §2551.152.

(4) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(h) Requirements for Health Maintenance Organizations. Each health maintenance organization licensed pursuant to the Insurance Code Chapter 843 shall complete the 2010 Health Annual Statement, and the 2011 Quarterly Statements. Insurers that are subject to life insurance statutes and are permitted or allowed to do the business of health maintenance organizations shall file the Texas HMO supplement forms as part of their annual and quarterly statement filings. The forms and reports required in this subsection shall be completed in accordance with the "2010 Annual Statement Instructions, Health," and the "2011 Quarterly Statement Instructions, Health," as applicable. The Texas supplemental forms required in this subsection and provided by the department shall be completed in accordance with the instructions on the forms. The electronic data filings with the NAIC shall be in accordance with NAIC data specifications and instructions and shall include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department shall be filed in accordance with the instructions provided by the department. The filings for insurers described in this subsection are as follows:

(1) domestic and foreign insurer reports and forms in paper copy to be filed only with the department:

(A) 2010 Health Annual Statement, including printed investment schedule detail, due on or before March 1, 2011, in accordance with the Insurance Code §843.155;

(B) 2011 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2011. With each quarterly filing, include an up-to-date and completed Schedule E, Part 3 - Special Deposits, utilizing the format from the 2010 Health Annual Statement;

(D) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.002 and §843.155, prepared in accordance with the "2010 Annual Statement Instructions, Health."

(2) domestic insurer reports and forms to be filed with the department:

(A) Supplemental Compensation Exhibit in paper copy only, due on or before March 1, 2011, in accordance with the Insurance Code §843.155;

(B) Texas Overhead Assessment Exemption Form (Texas Edition) in paper copy only, due on or before March 1, 2011, in accordance with the Insurance Code §843.155. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(C) Texas HMO Supplement Annual (Texas Edition), in paper copy and electronic filing, containing annual data for calendar year 2010, to be completed according to the instructions provided by the department, due on or before March 1, 2011, in accordance with the Insurance Code §843.155; and

(D) Texas HMO Supplement Quarterly (Texas Edition), in paper copy and electronic filings, containing quarterly statement data for calendar year 2011, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2011.

(3) electronic filings with the NAIC by domestic and foreign insurers:

(A) 2010 Health Annual Statement electronic filing, and PDF filing, due on or before March 1, 2011, in accordance with the Insurance Code Chapter 802, Subchapter B and §843.155;

(B) 2011 Health Quarterly Statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2011;

(C) all annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are only filed by domestic insurers with the department in paper copy) due on the dates specified in the forms and instructions;

(D) Statement of Actuarial Opinion, due on or before March 1, 2011, in accordance with the Insurance Code §802.022, Chapter 802, Subchapter B, and §843.155, and prepared in accordance with the "2010 Annual Statement Instructions, Health;" and

(E) Management Discussion and Analysis, due on or before April 1, 2011.

(i) Requirements for Farm Mutual Insurers not Subject to the Provisions of Subsection (e) of this Section. Farm mutual insurance companies not subject to subsection (e) of this section shall file the following blanks and forms for the 2010 calendar year with the department only, on or before March 1, 2011, in accordance with the Insurance Code Chapters 802 and 911:

(1) Annual Statement (Texas Edition);

(3) Statement of Actuarial Opinion, unless exempted under §7.31 of this subchapter (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(j) Requirements for Statewide Mutual Assessment Associations, Local Mutual Aid Associations, Mutual Burial Associations, and Exempt Associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association, and exempt association shall complete and file the following blanks and forms for the 2010 calendar year with the department only, on or before April 1, 2011, in accordance with the Insurance Code §887.060:

(3) Release of Contributions Form (Texas Edition);

(4) 3-1/2 Percent Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3-1/2 Percent) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(k) Requirements for Nonprofit Legal Service Corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 shall complete and file the following blanks and forms for the 2010 calendar year with the department only. An actuarial opinion is not required. The following forms are to be filed on or before March 1, 2011, in accordance with the Insurance Code §961.202:

(1) Annual Statement (Texas Edition); and

(l) Requirements for Mexican Casualty Insurance Companies. Each Mexican casualty insurance company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, shall complete and file the following blanks and forms for the 2010 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed to the extent specified in paragraph (1) of this subsection and in accordance with the "2010 Annual Statement Instructions, Property and Casualty." An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1, 2011, in accordance with the Insurance Code §984.153:

(1) 2010 Property and Casualty Annual Statement; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) a copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) a copy of the official documents issued by the Comision Nacional de Seguros y Fianzas approving the 2010 annual statement; and

(4) a copy of the current license to operate in the Republic of Mexico.

(m) Other Financial Reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department.

(n) In any event, insurers and other regulated entities subject to this section shall file their 2010 annual financial statements and related annual hard copy and electronic filings with the department and the NAIC, as applicable, not later than five days after the effective date of this section.

History

Source Note: The provisions of this §7.67 adopted to be effective April 20, 2011, 36 TexReg 2405.

28 Tex. Admin. Code § 7.68 Requirements for Filing the Annual Statements, the Quarterly Statements, Other Reporting Forms, and Electronic Filings with the Texas Department of Insurance and the NAIC

(a) Purpose. This section specifies the requirements for insurers and other regulated entities to file the annual statements, the quarterly statements, other reporting forms, and electronic data filings with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers.

(b) Scope and applicability. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; limited purpose subsidiary life insurance companies under the Insurance Code Chapter 841, Subchapter I; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. Insurers and other regulated entities must properly report each calendar year to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate paper copy annual and quarterly statement blanks, other reporting forms, and electronic filings specified in this section. This section shall be applicable to annual filings with the department and the NAIC, beginning with the year ending December 31, 2011, and each year thereafter; and to the quarterly filings with the department and the NAIC, beginning with the quarter ending on March 31, 2012, and each quarter thereafter.

(d) NAIC and TDI specific forms and instructions. The commissioner adopts by reference the annual statement blanks, the quarterly statement blanks, the annual and quarterly supplemental reporting forms, and the related instruction manuals as adopted and published by the NAIC each year; and the Texas-specific reporting forms specified in this section. The Texas-specific forms are available from the Texas Department of Insurance, Financial Regulation Division, Financial Analysis, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. Copies of the latest editions of the blanks, supplemental reporting forms, and related instruction manuals adopted and published by the NAIC may be obtained from the NAIC, and can be filed electronically using software available from vendors.

(e) Conflicts with other laws. In the event of a conflict between the Insurance Code, any currently existing department rule, form, instructions, or any specific requirement of this section and the NAIC instructions listed in this section, the Insurance Code, the department rule, form, instruction, or the specific requirements of this section shall take precedence and in all respects control.

(f) General filing requirements for domestic insurers and other domestic regulated entities. Every domestic insurer and other domestic regulated entity must complete and file the following reports and forms using the latest editions of the annual and quarterly statement blanks, forms, and related instruction manuals adopted by the NAIC that are appropriate for the type of business written by the insurer or regulated entity:

(1) an annual statement, in paper copy with the department and electronically with the NAIC, due on or before March 1 for the preceding year ending December 31;

(2) quarterly statements, in paper copy with the department and electronically with the NAIC, due on or before May 15, August 15, and November 15;

(3) all the annual and quarterly supplements adopted by the NAIC including, but not limited to, the Management's Discussion and Analysis, in paper copies with the department and electronically with the NAIC, prepared and filed in accordance with and on or before dates specified in the latest editions of the forms, instructions, and guidelines adopted by the NAIC;

(4) a Statement of Actuarial Opinion, in paper copy with the department and electronically with the NAIC, due on or before March 1 for the preceding year ending December 31;

(5) a Schedule SIS, in paper copy only with the department, due on or before March 1 for the preceding year ending December 31;

(6) a Supplemental Compensation Exhibit, in paper copy only with the department, due on or before March 1 for the preceding year ending December 31;

(7) a Texas Overhead Assessment Exemption Form (Texas Edition), in paper copy only with the department, due on or before March 1 for the preceding year ending December 31. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(8) an Analysis of Surplus (Texas Edition), in paper copy only with the department, due on or before March 1 for the preceding year ending December 31; and

(9) an advertising certificate of compliance with its annual statement filing, in paper copy only with the department, prepared and filed in accordance with §21.116 of this title (relating to Special Enforcement Procedures for Rules Governing Advertising and Solicitation of Insurance).

(g) General filing requirements for foreign health maintenance organizations and foreign insurers doing health maintenance organization business. Every foreign health maintenance organization and foreign insurer permitted or allowed to do the business of health maintenance organizations must file the filings specified in subsection (f)(1) - (4) of this section electronically with the NAIC and in paper copy with the department; and the filings specified in subsection (m) of this section electronically and in paper copy with the department.

(h) General filing requirements for foreign insurers and other foreign regulated entities. Each foreign insurer or other foreign regulated entity described in subsections (i) - (l) of this section:

(1) must prepare and file electronically with the NAIC the filings specified in subsection (f)(1) - (4) of this section on or before the due dates required under those provisions;

(2) if filing only electronically with the NAIC and not filing a paper copy with the department, must file with the department, in paper copy, a signed annual statement jurat page, along with the advertising certificate of compliance required under §21.116 of this title, on or before March 1; and a signed jurat page for each quarter on or before May 15, August 15, and November 15, respectively, in lieu of filing the entire paper filings;

(3) the commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC; and

(4) a foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 annually must file an Analysis of Surplus (Texas Edition) in paper copy with the department, on or before March 1 for the prior year ending December 31.

(i) Filing requirements for life, accident and health insurers. Each domestic life; life and accident; life and health; accident; accident and health; mutual life; or life, accident, and health insurance company and each domestic stipulated premium company, limited purpose subsidiary life insurance company, group hospital service corporation, and the Texas Health Insurance Pool must complete and file the blanks, forms, and electronic filings as directed in subsection (f) of this section and this subsection. Each foreign life; life and accident; life and health; accident; accident and health; mutual life; or life, accident and health insurance company and each foreign stipulated premium company and foreign group hospital service corporation must complete and file the blanks, forms, and electronic filings as directed in subsection (h) of this section and this subsection. The electronic filings of these forms or reports with the NAIC must be completed and filed in accordance with the NAIC data specifications and instructions for electronic filing and must include PDF format filing. Insurers and other regulated entities specified in this subsection and engaged in business authorized under the Insurance Code Chapters 843 or 848 may have additional reporting requirements under subsections (g) and (m) of this section. Domestic insurers or other regulated entities described in this subsection, and foreign insurers or other regulated entities described in this subsection must prepare and file the reports and forms specified in subsections (f) and (h) of this section, respectively, with the following exceptions or additional filings:

(1) a separate accounts annual statement (required of companies maintaining separate accounts), in paper copy with the department and electronically with the NAIC, due on or before March 1 for the preceding year ending December 31.

(2) for stipulated premium companies not subject to the Insurance Code §884.406, all filings with due dates of March 1 under subsections (f) or (h) of this section, are due on or before April 1. Additionally, a stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the department or with the NAIC, if it meets all three of the following conditions:

(A) it is authorized to write only life insurance on its certificate of authority;

(B) it collected premiums in the prior calendar year of less than $1 million; and

(3) The Statement of Actuarial Opinion required under subsections (f)(4) and (h)(1) of this section must be prepared and filed in accordance with the following:

(A) Companies filing the NAIC Life, Accident and Health Annual Statement and the Statement of Actuarial Opinion, attached to the NAIC Life, Accident and Health Annual Statement must follow the applicable provisions of Chapter 3, Subchapter Q, of this title (relating to Actuarial Opinion and Memorandum Regulation), except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title (relating to Asset Adequacy Analysis Exemption). Notwithstanding §3.1608 of this title, limited purpose subsidiary life insurance companies annually must prepare and file the asset adequacy analysis required under Chapter 3, Subchapter Q of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the NAIC Annual Statement Instructions, Life, Accident and Health, must be followed.

(B) Companies filing the NAIC Health Annual Statement and the Statement of Actuarial Opinion attached to the NAIC Health Annual Statement must follow the NAIC Annual Statement Instructions, Health. In addition, for those companies not exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the Statement of Actuarial Opinion must follow the applicable provisions of §§3.1601 - 3.1608 of this title that are not covered in the NAIC Annual Statement Instructions, Health, including those provisions relating to asset adequacy analysis.

(C) Any company required by §3.4505(b)(3)(G) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, must attach this opinion to the NAIC Life, Accident and Health Annual Statement or the NAIC Health Annual Statement, as applicable.

(4) The Texas Health Insurance Pool must prepare and file the following, in paper copies only with the department:

(A) the NAIC Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1 for the preceding year ending December 31; and

(B) the NAIC Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15;

(5) Each limited purpose subsidiary life insurance company must complete and file:

(A) the paper copy filings with the department and the electronic filings with the NAIC specified under subsection (f)(1) - (9) of this section; and

(B) an actuarial memorandum and a regulatory asset adequacy issues summary, in paper copy only with the department, in accordance with and on or before the due dates provided in Chapter 3, Subchapter Q, of this title; and

(6) An insurer ceding business to a limited purpose subsidiary life insurance company must file the actuarial certification required under the Insurance Code §841.419, in paper copy only with the department, due on or before March 1 for the preceding year ending December 31.

(j) Requirements for certain property and casualty insurers. Each domestic fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, a domestic county mutual insurance company, a domestic mutual insurance company other than life, a domestic Lloyd's plan, a domestic reciprocal or inter insurance exchange, a domestic risk retention group, a domestic life insurance company that is licensed to write workers' compensation; any domestic farm mutual insurance company that filed a property and casualty annual statement for the previous calendar year or had gross written premiums in excess of $6 million for the current calendar year, a domestic joint underwriting association, the Texas Mutual Insurance Company, the Texas Windstorm Insurance Association, and the Texas FAIR Plan Association must complete and file the blanks, forms, and electronic filings as described in subsection (f) of this section and this subsection. Each foreign fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, a foreign county mutual insurance company, a foreign mutual insurance company other than life, a foreign Lloyd's plan, a foreign reciprocal or inter insurance exchange, a foreign life insurance company that is licensed to write workers' compensation, and any foreign farm mutual insurance company that filed a property and casualty annual statement for the previous calendar year or had gross written premiums in excess of $6 million for the current calendar year must complete and file the blanks, forms, and electronic filings as described in subsection (h) of this section and this subsection. The electronic filings with the NAIC must be completed and filed in accordance with the NAIC data specifications and instructions and must include PDF format filing, as applicable. Domestic insurers or other regulated entities described in this subsection and foreign insurers or other regulated entities described in this subsection annually must prepare and file the reports and forms specified in subsections (f) and (h) of this section, respectively, with the following exceptions or additional filings:

(1) a combined property/casualty annual statement, if required, due on or before May 1, for the preceding year ending December 31, in paper copy with the department and electronically with the NAIC. The combined property/casualty annual statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in the previous calendar year, as disclosed in Schedule T of the NAIC annual statement(s).

(2) an Actuarial Opinion Summary prepared and filed in accordance with §7.9 of this subchapter (relating to Examination of Actuarial Opinion for Property and Casualty Insurers).

(3) for Texas county mutual insurance companies, a Texas Supplement for County Mutuals (Texas Edition) and a Texas Supplemental "A" for County Mutuals (Texas Edition), in paper copy only with the department, due on or before March 1. Texas county mutual insurance companies are not required to file an Analysis of Surplus (Texas Edition) as described in subsection (f)(8) of this section.

(4) The Texas Windstorm Insurance Association must complete and file in paper copy with the department and electronically with the NAIC the filings specified under subsection (f) of this section and paragraph (2) of this subsection, on or before the due dates required under those provisions. Additionally, the Texas Windstorm Insurance Association must prepare and file in paper copy with the department only:

(A) annual financial statements for each year ending December 31, due on or before March 1, in accordance with the Insurance Code Chapter 2210, prepared in accordance with generally accepted accounting principles as prescribed or modified by the Governmental Accounting Standards Board or its successor, and in compliance with the Government Code §2101.011(d) and any related regulations, guidelines, procedures, or reporting requirements prescribed by the Comptroller of Public Accounts; and

(B) quarterly financial statements for the first three quarters of each calendar year, due on or before May 15, August 15, and November 15, prepared in accordance with generally accepted accounting principles as prescribed or modified by the Governmental Accounting Standards Board or its successor.

(5) Notwithstanding §5.9927 of this title (relating to Annual and Quarterly Financial Statements), the Texas FAIR Plan Association must complete and file in paper copy with the department and electronically with the NAIC the filings specified under subsection (f) of this section and paragraph (2) of this subsection, except that the annual statements, the Statement of Actuarial Opinions, and all annual supplements due on or before March 1 under the NAIC instructions are due on or before March 31; and the Actuarial Opinion Summary is due on or before April 15.

(6) An insurer that files an application with the department for approval of a policyholder dividend must file an Analysis of Surplus (Texas Edition) for property and casualty insurers with the application.

(k) Requirements for fraternal benefit societies. Each domestic fraternal benefit society must complete and file the blanks, forms, and electronic filings as described in subsection (f) of this section and this subsection. Each foreign fraternal benefit society must complete and file the blanks, forms, and electronic filings as described in subsection (h) of this section and this subsection. The electronic data filings with the NAIC must be completed and filed in accordance with the NAIC data specifications and instructions and must include PDF format filing. Domestic insurers or other regulated entities described in this subsection and foreign insurers or other regulated entities described in this subsection must prepare and file the reports and forms specified in subsections (f) and (h) of this section, respectively, with the following exceptions or additional filings:

(2) The Statement of Actuarial Opinion required under subsections (f)(4) and (h)(1) of this section must be prepared in accordance with the following:

(A) The Statement of Actuarial Opinion, attached to the Fraternal Annual Statement, must follow the applicable provisions of §§3.1601 - 3.1608 of this title, except for companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title. For those companies exempted from the asset adequacy analysis pursuant to §3.1608 of this title, the format provided by instructions 1 - 12 of the NAIC Fraternal Annual Statement Instructions must be followed; and

(B) Any company required by §3.4505(b)(3)(G) of this title to opine on the application of X factors, shall attach this opinion to the NAIC Fraternal Annual Statement, as applicable.

(l) Requirements for title insurers. Each domestic title insurance company must complete and file the blanks, forms, and electronic filings as described in subsection (f) of this section and this subsection. Each foreign title insurance company must complete and file the blanks, forms, and electronic filings as described in subsection (h) of this section and this subsection. The electronic filings with the NAIC must be completed and filed in accordance with the NAIC data specifications and instructions and must include PDF format filing.

(m) Requirements for health maintenance organizations. Each domestic health maintenance organization licensed pursuant to the Insurance Code Chapter 843 and each insurer that is subject to life insurance statutes and is permitted or allowed to do the business of health maintenance organizations must complete and file the following blanks, forms, and electronic filings as described in subsection (f) of this section and this subsection. Each foreign health maintenance organization licensed pursuant to the Insurance Code Chapter 843 and each foreign insurer that is subject to life insurance statutes and is permitted or allowed to do the business of health maintenance organizations must complete and file the following blanks, forms, and electronic filings as described in subsection (g) of this section and this subsection. The electronic filings with the NAIC must be completed and filed in accordance with NAIC data specifications and instructions and must include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department must be completed and filed in accordance with the instructions provided by the department. Domestic health maintenance organizations and insurers described in this section and foreign health maintenance organizations and insurers described in this section must prepare and file the reports and forms specified in subsections (f) and (g) of this section, respectively, with the following additional filings:

(1) with each quarterly statement filing with the department and the NAIC, include an up-to-date and completed Schedule E, Part 3 - Special Deposits, utilizing the format from the Health Annual Statement;

(2) a Texas HMO Supplement Annual (Texas Edition), in paper copy and electronically only with the department, due on or before March 1, containing annual data for the preceding year ending December 31, to be completed according to the instructions provided by the department; and

(3) a Texas HMO Supplement Quarterly (Texas Edition), due on or before May 15, August 15, and November 15, in paper copy and electronically only with the department, containing quarterly statement data, to be completed according to the instructions provided by the department.

(n) Requirements for farm mutual insurers not subject to the provisions of subsection (j) of this section. Farm mutual insurance companies not subject to subsection (j) of this section annually must complete and file the following blanks and forms with the department only, on or before March 1 for the preceding year ending December 31:

(1) Annual Statement (Texas Edition);

(3) Statement of Actuarial Opinion, unless exempted under §7.31 of this subchapter (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(o) Requirements for statewide mutual assessment associations, local mutual aid associations, mutual burial associations, and exempt associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association, and exempt association must complete and file the following blanks and forms with the department only, on or before April 1 for the preceding year ending December 31:

(3) Release of Contributions Form (Texas Edition);

(4) 3-1/2 Percent Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3-1/2 Percent) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(p) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 annually must complete and file with the department only the following blanks and forms for the preceding year ending December 31. An actuarial opinion is not required. The following forms are to be filed on or before March 1:

(1) Annual Statement (Texas Edition); and

(q) Requirements for Mexican casualty insurance companies. Each Mexican casualty insurance company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, annually must complete and file the following blanks and forms with the department only for the preceding year ending December 31. All submissions must be printed or typed in English and all monetary values must be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection must be completed to the extent specified in paragraph (1) of this subsection and in accordance with the latest edition of the property and casualty annual statement instructions adopted by the NAIC. An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1:

(1) an annual statement using the latest edition of the property and casualty annual statement blank adopted by the NAIC; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) a copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) a copy of the official documents issued by the Comisión Nacional de Seguros y Fianzas approving the annual statement for the preceding year ending December 31; and

(4) a copy of the current license to operate in the Republic of Mexico.

(r) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department or the NAIC.

(s) Annual notice and opportunity to petition for adoption of a rule amendment to this section. The department annually will publish notice of the annual, quarterly, and supplemental filing checklists that reference the latest editions of the annual statement, quarterly statement, forms and instructions adopted by the NAIC and the Texas-specific filing forms and instructions. On or before 30 days after the department publishes its notice, any interested person may petition the department for the adoption of a rule amendment to this section under §1.60 of this title (relating to Petition for Adoption of Rules), or its successor, for exceptions to the latest editions of the blanks, supplemental reporting forms, and instructions adopted by the NAIC or the department.

History

Source Note: The provisions of this §7.68 adopted to be effective February 29, 2012, 37 TexReg 1337.

28 Tex. Admin. Code § 7.69 Requirements for Filing the 2006 Quarterly and 2006 Annual Statements, Other Reporting Forms, and Electronic Data Filings with the Texas Department of Insurance and the NAIC

(a) Scope. This section specifies the requirements for insurers and other regulated entities for filing the 2006 quarterly statements, 2006 annual statement, other reporting forms, and electronic data filings with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Risk Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. The commissioner adopts by reference the 2006 quarterly statement blanks, the 2005 annual statement blanks and the related instruction manuals published by the NAIC, and other supplemental reporting forms specified in this section. The forms are available from the Texas Department of Insurance, Financial Analysis and Examinations Division, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. The NAIC annual and quarterly statement blanks and other NAIC supplemental reporting forms can be printed or filed electronically using annual statement software available from vendors. Insurers and other regulated entities shall properly report to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate hard copy annual and quarterly statement blanks, other reporting forms, and electronic data filings.

(b) Definition. In this section "Texas Edition" refers to the blanks and forms promulgated by the commissioner.

(c) Conflicts with other laws. In the event of a conflict between the Insurance Code, any currently existing department rule, form, instructions, or any specific requirement of this section and the NAIC instructions listed in this section, the Insurance Code, the department rule, form, instruction, or the specific requirement of subsections of this section shall take precedence and in all respects control.

(d) Filing requirements for life, accident and health insurers. Each life, life and accident, life and health, accident, accident and health, mutual life, or life, accident and health insurance company, stipulated premium insurance company, group hospital service corporation, and the Texas Health Insurance Risk Pool shall complete and file the blanks, forms, or electronic data filings as directed in this subsection. This subsection does not apply to entities licensed as health maintenance organizations under the Insurance Code Chapter 843. Insurers specified in this subsection and engaged in business authorized under the Insurance Code Chapter 843 may have additional reporting requirements under subsection (h) of this section. Insurers described under this subsection may elect to file on the 2006 Health Quarterly Statement for the three quarters of 2006 and the 2006 Health Annual Statement if the insurer passes the Health Statement Test as outlined in the "2006 Annual Statement, Health Instructions." If a reporting entity qualifies under this subsection to use the 2006 Health Annual Statement, it must continue to use that annual statement for a minimum of three years or obtain written approval from the department to change to another type of annual statement. Insurers filing the 2006 Life, Accident and Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2006 Annual Statement Instructions, Life, Accident and Health." Life insurers meeting the test set forth in this subsection to file the 2006 Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2006 Annual Statement Instructions, Health." The electronic filings of these forms or reports with the NAIC shall be in accordance with the NAIC data specifications and instructions for electronic filing and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC as follows:

(A) 2006 Life, Accident and Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2007 (stipulated premium insurance companies, April 1, 2007);

(B) 2006 Life, Accident and Health Annual Statement of the Separate Accounts for the 2006 calendar year (required of companies maintaining separate accounts), due on or before March 1, 2007;

(C) 2006 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2006. A Texas stipulated premium insurance company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2006 Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2007 if the company qualifies as described in this subsection;

(E) 2006 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2006 if the company qualifies as described in this subsection;

(F) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions. Schedule SIS and the Supplemental Compensation Exhibit are filed only with the department;

(G) Management's Discussion and Analysis, due on or before April 1, 2007; and

(H) Statement of Actuarial Opinion, due on or before March 1, 2007. The actuarial opinion shall be prepared in accordance with paragraph (5) of this subsection.

(2) Domestic insurer reports and forms to be filed in paper copy only with the department:

(A) Schedule SIS and Stockholder Information Supplement, due on or before March 1, 2007. This filing is also required if filing a Health Annual Statement, as applicable;

(B) Supplemental Compensation Exhibit, due on or before March 1, 2007 (stipulated premium insurance companies, April 1, 2007). This filing is also required if filing a Health Annual Statement, as applicable;

(C) The Texas Health Insurance Risk Pool shall file the 2006 Health Annual Statement and 2006 Quarterly Statements as follows:

(i) 2006 Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1, 2006;

(ii) 2006 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1-Cash, and Part 2-Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2006; and

(iii) The Texas Health Insurance Risk Pool is not required to file any reports, diskettes, or electronic data filings with the NAIC.

(D) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2007 (stipulated premium insurance companies, April 1, 2007). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §451.151 effective April 1, 2007); otherwise, this form should not be filed;

(E) Analysis of Surplus (Texas Edition) for life, accident and health insurers, due on or before March 1, 2007 (stipulated premium insurance companies, April 1, 2007).

(3) Foreign companies filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(4) Electronic filings with the NAIC by domestic and foreign insurers:

(A) Annual statement electronic filing and PDF filing, due on or before March 1, 2007 (stipulated premium insurance companies, April 1, 2007);

(B) Separate accounts electronic filing and PDF filing, due on or before March 1, 2007;

(C) Quarterly statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2006. A Texas stipulated premium insurance company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(5) Statement of Actuarial Opinion required by paragraph (1)(H) of this subsection shall be prepared in accordance with the following:

(A) Unless exempted, the Statement of Actuarial Opinion, attached to either the 2006 Life, Accident and Health Annual Statement or the 2006 Health Annual Statement, should follow the applicable provisions of §§3.1601 - 3.1608 of this title (relating to Actuarial Opinion and Memorandum Regulation).

(B) For those companies exempted from §§3.1601 - 3.1608 of this title, instructions 1 - 12, established by the NAIC, must be followed.

(C) Any company required by §3.4505(b)(3)(I) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, shall attach this opinion to the 2006 Life, Accident and Health Annual Statement or the 2006 Health Annual Statement, as applicable.

(6) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(7) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for life, accident and health insurers with the department, on or before March 1, 2007.

(e) Requirements for property and casualty insurers. Each fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, county mutual insurance company, mutual insurance company other than life, Lloyd's plan, reciprocal or inter insurance exchange, domestic risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed a property and casualty annual statement for the 2005 calendar year or had gross written premiums in 2006 in excess of $5 million, any Mexican casualty insurance company licensed under Insurance Code Chapter 984, domestic joint underwriting association, the Texas Mutual Insurance Company, the Texas Windstorm Insurance Association, and the Texas FAIR Plan Association shall complete and file the following blanks, forms, and diskettes or electronic data filings as described in this subsection. The forms and reports identified in this subsection shall be completed in accordance with the "2006 Annual Statement Instructions, Property and Casualty." The electronic filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing, as applicable. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC as follows:

(A) 2006 Property and Casualty Annual Statement, due on or before March 1, 2007;

(B) 2006 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2006;

(C) 2006 Combined Property/Casualty Annual Statement, due on or before May 1, 2007. This statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in calendar year 2006, as disclosed in Schedule T of the Annual Statement(s); and

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions. Schedule SIS and the Supplemental Compensation Exhibit are filed only with the department.

(E) The actuarial opinion submitted shall be prepared in accordance with the "2006 Annual Statement Instructions, Property and Casualty."

(2) Domestic insurer reports and forms to be filed in paper copy only with the department:

(A) Schedule SIS and the Stockholder Information Supplement, due on or before March 1, 2007;

(B) Supplemental Compensation Exhibit, due on or before March 1, 2007;

(C) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2007. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed;

(D) Supplement for County Mutuals (Texas Edition) (required of Texas county mutual companies only), due on or before March 1, 2007;

(E) Texas Supplemental A for county mutuals (Texas Edition) (required of Texas county mutual companies only), due on or before March 1, 2007;

(F) Analysis of Surplus (Texas Edition) for property and casualty insurers except Texas county mutual companies, due on or before March 1, 2007; and

(G) Actuarial Opinion Summary prepared in accordance with §7.9 of this title (relating to Examination of Actuarial Opinion for Property and Casualty Insurers).

(H) The Texas Windstorm Insurance Association shall complete and file the following:

(i) 2006 Property and Casualty Annual Statement, due on or before March 1, 2007;

(ii) 2006 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2006; and

(iii) Management's Discussion and Analysis, due on or before April 1, 2007.

(iv) The Texas Windstorm Insurance Association is not required to file any reports with the NAIC.

(I) The Texas FAIR Plan Association shall complete and file the following:

(i) 2006 Property and Casualty Annual Statement, due on or before March 1, 2007;

(ii) 2006 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2006;

(iii) Statement of Actuarial Opinion, due on or before March 1, 2007;

(iv) Actuarial Opinion Summary prepared in accordance with §7.9 of this title; and

(v) Management's Discussion and Analysis, due on or before April 1, 2007.

(vi) The Texas FAIR Plan Association is not required to file any reports with the NAIC.

(3) Foreign property and casualty insurers filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(4) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) Annual statement electronic filing and PDF filing, due on or before March 1, 2007;

(B) Quarterly statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2006;

(D) Electronic combined insurance exhibit, due on or before May 1, 2007;

(E) Combined annual statement electronic filing and PDF filing, due on or before May 1, 2007.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(f) Requirements for fraternal benefit societies. Each fraternal benefit society shall complete and file the following blanks, forms, and electronic data filings for the 2006 calendar year and the three quarters for the 2006 calendar year. The forms and reports identified in this subsection shall be completed in accordance with the "2006 Annual Statement Instructions, Fraternal." The electronic data filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC as follows:

(A) 2006 Fraternal Annual Statement, including the printed investment schedule detail, due on or before March 1, 2007;

(B) 2006 Fraternal Annual Statement of the Separate Accounts (required of companies maintaining separate accounts), due on or before March 1, 2007;

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions. The Supplemental Compensation Exhibit is filed only with the department by domestic insurers.

(2) Domestic insurer paper copy reports and forms to be filed only with the department:

(A) Supplemental Compensation Exhibit, due on or before March 1, 2007;

(B) Texas Assessment Exemption Form (Texas Edition), due on or before March 1, 2007. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed; and

(3) Foreign fraternal insurers filing only electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(4) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) Annual statement electronic filing and PDF filing, due on or before March 1, 2007;

(B) Separate accounts electronic filing and PDF filing, due on or before March 1, 2007;

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for the Supplemental Compensation Exhibit) due on the dates specified in the forms.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(g) Requirements for title insurers. Each title insurance company shall complete and file the following blanks and forms for the 2006 calendar year and the three quarters of the 2006 calendar year. The reports and forms identified in this subsection shall be completed in accordance with the "2006 Annual Statement Instructions, Title." The electronic version of the filings with the NAIC identified in this subsection shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC as follows:

(A) 2006 Title Annual Statement, including printed investment schedule details, due on or before March 1, 2007;

(B) 2006 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2006;

(C) All the paper copies of the annual and quarterly supplements prepared and filed on dates described in the forms and instructions. The Schedule SIS and the Supplemental Compensation Exhibit are filed only with the department.

(D) Management's Discussion and Analysis, due on or before April 1, 2007; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2007.

(2) Domestic insurer paper copy filings and reports to be filed only with the department:

(A) Supplemental Compensation Exhibit, due on or before March 1, 2007;

(B) Schedule SIS and Stockholder Information Supplement, due on or before March 1, 2007;

(C) Texas Overhead Assessment Form (Texas Edition), due on or before March 1, 2007. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed; and

(D) Analysis of Surplus (Texas Edition) for title companies, due on or before March 1, 2007.

(3) Foreign companies filing electronically with the NAIC and not filing paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(4) Electronic filings with the NAIC by domestic and foreign insurers:

(A) Annual statement electronic filing and PDF filing, due on or before March 1, 2007;

(B) Quarterly statements electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2006;

(D) Management Discussion and Analysis, due on or before April 1, 2007; and

(E) Statement of Actuarial Opinion, due on or before March 1, 2007.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(6) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for title insurers on or before March 1, 2007.

(h) Requirements for health maintenance organizations. Each health maintenance organization licensed pursuant to the Insurance Code Chapter 843 shall complete the 2006 Health Annual Statement and the 2006 Quarterly Statements. Insurers that are subject to life insurance statutes and are permitted or allowed to do the business of health maintenance organizations shall file the Texas HMO supplement form as part of their annual and quarterly statement filings. The forms and reports required in this subsection shall be completed in accordance with the "2006 Annual Statement Instructions, Health." The Texas supplemental forms required in this subsection and provided by the department shall be completed in accordance with the instructions on the forms. The Statement of Actuarial Opinion shall include the additional requirements of the department set forth in paragraph (1)(D) of this subsection. The electronic data filings with the NAIC shall be in accordance with NAIC data specifications and instructions and shall include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department shall be filed in accordance with the instructions provided by the department. The filings for insurers described in this subsection are as follows:

(1) Domestic and foreign insurer reports and forms in paper copy to be filed with the department and the NAIC:

(A) 2006 Health Annual Statement, including printed investment schedule detail, due on or before March 1, 2007;

(B) 2006 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2006. With each quarterly filing, include a completed copy of Schedule E-part 3-Special Deposits, from the 2006 Health Annual Statement;

(D) Statement of Actuarial Opinion, due on or before March 1, 2007. In addition to the requirements set forth in the "2006 Annual Statement Instructions, Health," the department requires that the actuarial opinion include the following:

(i) The Statement of Actuarial Opinion must include assurance that an actuarial report and underlying actuarial work papers supporting the actuarial opinion will be maintained at the company and available for examination for seven years. The foregoing must be available by May 1 of the year following the year-end for which the opinion was rendered or within two weeks after a request from the commissioner. The suggested wording used will depend on whether the actuary is employed by the company or is a consulting actuary. The wording for an actuary employed by the company should be similar to the following: "An actuarial report and any underlying actuarial work papers supporting the findings expressed in this Statement of Actuarial Opinion will be retained for a period of seven years in the administrative offices of the company and available for regulatory examination." The wording for a consulting actuary retained by the company should be similar to the following: "An actuarial report and any underlying actuarial work papers supporting the findings expressed in this Statement of Actuarial Opinion have been provided to the company to be retained for a period of seven years in the administrative offices of the company and available for regulatory examination."

(ii) Under the scope paragraph requirements of section 5 of the "2006 Annual Statement Instructions, Health," relating to the Actuarial Certification, the department requires that the actuarial opinion specifically list the premium deficiency reserve as an item and disclose the amount of such reserve.

(2) Domestic insurer paper copy and Texas specific filings and reports to be filed with the department:

(A) Supplemental Compensation Exhibit, due on or before March 1, 2007;

(B) Texas HMO Supplement (Texas Edition), due on or before May 15, August 15, and November 15, 2006, and March 1, 2007;

(C) Electronic filings with the department containing annual statement data, to be completed according to the instructions provided by the department, due on or before March 1, 2007;

(D) Electronic filings with the department containing quarterly statement data, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2006; and

(E) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2007. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed.

(3) Electronic filings with the NAIC by domestic and foreign insurers.

(A) Annual statement electronic filing, and PDF filing, due on or before March 1, 2007;

(B) Quarterly statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2006;

(D) Statement of Actuarial Opinion, due on or before March 1, 2007; and

(E) Management Discussion and Analysis, due on or before April 1, 2007.

(i) Requirements for farm mutual insurers not subject to the provisions of subsection (e) of this section. Farm mutual insurance companies not subject to subsection (e) of this section shall file the following blanks and forms for the 2006 calendar year with the department only, on or before March 1, 2007:

(1) Annual Statement (Texas Edition);

(2) Texas Overhead Assessment Exemption Form (Texas Edition). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed; and

(3) Electronic filings with the NAIC by domestic and foreign insurers; and

(4) Statement of Actuarial Opinion, unless exempted under §7.31 (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(j) Requirements for statewide mutual assessment associations, local mutual aid associations, mutual burial associations and exempt associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association and exempt association shall complete and file the following blanks and forms for the 2006 calendar year with the department only, on or before April 1, 2007:

(2) Texas Overhead Assessment Exemption Form (Texas Edition). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed;

(3) Release of Contributions Form (Texas Edition);

(4) 3 1/2 % Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3 1/2 %) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(k) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 shall complete and file the following blanks and forms for the 2006 calendar year with the department only. An actuarial opinion is not required. The following forms are to be filed on or before March 1, 2007:

(1) Annual Statement (Texas Edition); and

(2) Texas Overhead Assessment Exemption Form (Texas Edition). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code Article 1.16(b) (revised as §401.151 effective April 1, 2007); otherwise, this form should not be filed.

(l) Requirements for Mexican casualty companies. Each Mexican casualty company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, shall complete and file the following blanks and forms for the 2006 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed in to the extent specified in paragraph (1) of this subsection and in accordance with the "2006 Annual Statement Instructions, Property and Casualty." An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1, 2007:

(1) 2006 Property and Casualty Annual Statement; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) A copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) A copy of the official documents issued by the Comision Nacional De Seguros Y Fianzas approving the 2006 annual statement; and

(4) A copy of the current license to operate in the Republic of Mexico.

(m) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department.

History

Source Note: The provisions of this §7.69 adopted to be effective July 1, 2007, 32 TexReg 3848.

28 Tex. Admin. Code § 7.70 Requirements for Filing the 2007 Quarterly and 2007 Annual Statements, the 2008 Quarterly Statements, Other Reporting Forms, and Electronic Data Filings, with the Texas Department of Insurance and the NAIC

(a) Scope. This section specifies the requirements for insurers and other regulated entities for filing the 2007 quarterly statements, 2007 annual statement, 2008 quarterly statement blanks, other reporting forms, and electronic data filings, with the department and the National Association of Insurance Commissioners (NAIC) necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and certain other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life insurers; accident insurers; life and accident insurers; life and health insurers; accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; U.S. branches of alien insurers; Mexican casualty insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; statewide mutual assessment companies; local mutual aid associations; mutual burial associations; exempt associations; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; domestic risk retention groups; domestic joint underwriting associations; title insurers; fraternal benefit societies; farm mutual insurers; health maintenance organizations; nonprofit health corporations; nonprofit legal services corporations; the Texas Health Insurance Risk Pool; the Texas Mutual Insurance Company; the Texas Windstorm Insurance Association; and the Texas FAIR Plan Association. The commissioner adopts by reference the 2007 quarterly statement blanks, the 2007 annual statement blanks, the 2008 quarterly statement blanks, and the related instruction manuals published by the NAIC, and other supplemental reporting forms specified in this section. The forms are available from the Texas Department of Insurance, Financial Analysis and Examination Division, Mail Code 303-1A, P.O. Box 149104, Austin, Texas 78714-9104. The NAIC annual and quarterly statement blanks and other NAIC supplemental reporting forms can be printed or filed electronically using annual statement software available from vendors. Insurers and other regulated entities shall properly report to the department and the NAIC by completing, in accordance with applicable instructions, the appropriate hard copy annual and quarterly statement blanks, other reporting forms, and electronic data filings.

(b) Definition. In this section "Texas Edition" refers to the blanks and forms promulgated by the commissioner.

(c) Conflicts with other laws. In the event of a conflict between the Insurance Code, any currently existing department rule, form, instructions, or any specific requirement of this section and the NAIC instructions listed in this section, the Insurance Code, the department rule, form, instruction, or the specific requirements of subsections of this section shall take precedence and in all respects control.

(d) Filing requirements for life, accident and health insurers. Each life, life and accident, life and health, accident, accident and health, mutual life, or life, accident and health insurance company, stipulated premium company, group hospital service corporation, and the Texas Health Insurance Risk Pool shall complete and file the blanks, forms, or electronic data filings as directed in this subsection. This subsection does not apply to entities licensed as health maintenance organizations under the Insurance Code Chapter 843. Insurers specified in this subsection and engaged in business authorized under the Insurance Code Chapter 843 may have additional reporting requirements under subsection (h) of this section. Insurers described under this subsection may elect to file on the 2007 Health Quarterly Statement for the three quarters of 2007, the 2007 Health Annual Statement for year-end 2007, and on the 2008 Health Quarterly Statement for the three quarters of 2008, if the insurer passes the Health Statement Test as outlined in the "2007 Annual Statement, Health Instructions." If a reporting entity qualifies under this subsection to use the 2007 Health Annual Statement, it must continue to use that annual statement for a minimum of three years or obtain written approval from the department to change to another type of annual statement. Insurers filing the 2007 Life, Accident and Health Annual Statement, the 2007 Life, Accident and Health Quarterly Statements, and the 2008 Life, Accident and Health Quarterly Statements, and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2007 Annual Statement Instructions, Life, Accident and Health," the "2007 Quarterly Statement Instructions, Life, Accident and Health," and the "2008 Quarterly Statement Instructions, Life, Accident and Health," as applicable. Life insurers meeting the test set forth in this subsection to file the 2007 Health Annual Statement and the supplemental forms and reports identified in these subsections shall complete filings in accordance with the "2007 Annual Statement Instructions, Health," the "2007 Quarterly Statement Instructions, Health," and the "2008 Quarterly Statement Instructions, Health," as applicable. The electronic filings of these forms or reports with the NAIC shall be in accordance with the NAIC data specifications and instructions for electronic filing and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC: 2007 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2007. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(A) it is authorized to write only life insurance on its certificate of authority;

(B) it collected premiums in the prior calendar year of less than $1 million; and

(2) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2007 Life, Accident and Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2008 (stipulated premium companies, April 1, 2008);

(B) 2007 Life, Accident and Health Annual Statement of the Separate Accounts for the 2007 calendar year (required of companies maintaining separate accounts), due on or before March 1, 2008;

(C) 2008 Life, Accident and Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2008. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2007 Health Annual Statement, including the printed investment schedule detail, due on or before March 1, 2008, if the company qualifies as described in this subsection;

(E) 2007 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2007, if the company qualifies as described in this subsection;

(F) 2008 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2008, if the company qualifies as described in this subsection;

(G) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(H) Management's Discussion and Analysis, due on or before April 1, 2008;

(I) Statement of Actuarial Opinion, due on or before March 1, 2008 (stipulated premium companies, April 1, 2008). The actuarial opinion shall be prepared in accordance with paragraph (5) of this subsection;

(J) Schedule SIS, due on or before March 1, 2008. This filing is also required if filing a Health Annual Statement, as applicable;

(K) Supplemental Compensation Exhibit, due on or before March 1, 2008 (stipulated premium companies, April 1, 2008). This filing is also required if filing a Health Annual Statement, as applicable;

(L) The Texas Health Insurance Risk Pool shall file the 2007, Health Annual Statement, the 2007 Quarterly Statements, and the 2008 Quarterly Statements as follows:

(i) 2007 Health Annual Statement with only pages 1 - 6, and Schedule E Part 1, Part 2, and Part 3 to be completed and filed on or before March 1, 2008;

(ii) 2007 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2007;

(iii) 2008 Health Quarterly Statements, with only pages 1 - 6, Schedule E, Part 1 - Cash, and Part 2 - Cash Equivalents to be completed and filed on or before May 15, August 15, and November 15, 2008; and

(iv) The Texas Health Insurance Risk Pool is not required to file any reports, diskettes, or electronic data filings with the NAIC.

(M) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2008. (stipulated premium companies, April 1, 2008). This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §451.151; otherwise, this form should not be filed; and

(N) Analysis of Surplus (Texas Edition) for life, accident and health insurers, due on or before March 1, 2008 (stipulated premium companies, April 1, 2008).

(4) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2007 Life, Accident and Health Annual Statement electronic filing and PDF filing, due on or before March 1, 2008 (stipulated premium companies, April 1, 2008);

(B) 2007 Life, Accident and Health Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2008;

(C) 2007 Life, Accident and Health Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2007. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years;

(D) 2008 Life, Accident and Health Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2008. A Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly electronic data filings with the NAIC if it meets all three of the following conditions:

(i) it is authorized to write only life insurance on its certificate of authority;

(ii) it collected premiums in the prior calendar year of less than $1 million; and

(iii) it had a profit from operations in the prior two calendar years.

(E) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are filed by domestic insurers only with the department in paper copy) due on the dates specified in the forms and instructions.

(5) Statement of Actuarial Opinion required by paragraph (2)(I) of this subsection shall be prepared in accordance with the following:

(A) Unless exempted, the Statement of Actuarial Opinion, attached to either the 2007 Life, Accident and Health Annual Statement or the 2007 Health Annual Statement, should follow the applicable provisions of §§3.1601 - 3.1608 of this title (relating to Actuarial Opinion and Memorandum Regulation).

(B) For those companies exempted from §§3.1601 - 3.1608 of this title, instructions 1 - 12, established by the NAIC, must be followed.

(C) Any company required by §3.4505(b)(3)(I) of this title (relating to General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves) to opine on the application of X factors, shall attach this opinion to the 2007 Life, Accident and Health Annual Statement or the 2007 Health Annual Statement, as applicable.

(6) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(e) Requirements for property and casualty insurers. Each fire, fire and marine, general casualty, fire and casualty, or U.S. branch of an alien insurer, county mutual insurance company, mutual insurance company other than life, Lloyd's plan, reciprocal or inter insurance exchange, domestic risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed a property and casualty annual statement for the 2006 calendar year or had gross written premiums in 2007 in excess of $6 million, any Mexican casualty insurance company licensed under the Insurance Code Chapter 984, domestic joint underwriting association, the Texas Mutual Insurance Company, the Texas Windstorm Insurance Association, and the Texas FAIR Plan Association shall complete and file the following blanks, forms, and diskettes or electronic data filings as described in this subsection. The forms and reports identified in this subsection shall be completed in accordance with the "2007 Annual Statement Instructions, Property and Casualty," the "2007 Quarterly Statement Instructions, Property and Casualty," and the "2008 Quarterly Statement Instructions, Property and Casualty," as applicable. The electronic filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing, as applicable. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC: 2007 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2007.

(2) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2007 Property and Casualty Annual Statement, due on or before March 1, 2008, including the printed investment schedule detail;

(B) 2008 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2008;

(C) 2007 Combined Property/Casualty Annual Statement, due on or before May 1, 2008. This statement is required only for those affiliated insurers that wrote more than $35 million in direct premiums as a group in calendar year 2007, as disclosed in Schedule T of the Annual Statement(s);

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) The actuarial opinion submitted shall be prepared in accordance with the "2007 Annual Statement Instructions, Property and Casualty;"

(F) Schedule SIS, due on or before March 1, 2008;

(G) Supplemental Compensation Exhibit, due on or before March 1, 2008;

(H) Texas Overhead Assessment Exemption Form (Texas Edition), due on or before March 1, 2008. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(I) Texas Supplement for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2008;

(J) Texas Supplemental "A" for County Mutuals (Texas Edition) (required of Texas county mutual insurance companies only), due on or before March 1, 2008;

(K) Analysis of Surplus (Texas Edition) for property and casualty insurers except Texas county mutual insurance companies, due on or before March 1, 2008;

(L) Actuarial Opinion Summary prepared in accordance with §7.9 of this title (relating to Examination of Actuarial Opinion for Property and Casualty Insurers);

(M) The Texas Windstorm Insurance Association shall complete and file the following:

(i) 2007 Property and Casualty Annual Statement, due on or before March 1, 2008;

(ii) 2007 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2007;

(iii) 2008 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2008; and

(iv) Management's Discussion and Analysis, due on or before April 1, 2008.

(v) The Texas Windstorm Insurance Association is not required to file any reports with the NAIC.

(N) The Texas FAIR Plan Association shall complete and file the following:

(i) 2007 Property and Casualty Annual Statement, due on or before March 1, 2008;

(ii) 2007 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2007;

(iii) 2008 Property and Casualty Quarterly Statements, due on or before May 15, August 15, and November 15, 2008;

(iv) Statement of Actuarial Opinion, due on or before March 1, 2008;

(v) Actuarial Opinion Summary prepared in accordance with §7.9 of this title; and

(vi) Management's Discussion and Analysis, due on or before April 1, 2008.

(vii) The Texas FAIR Plan Association is not required to file any reports with the NAIC.

(4) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2007 Property and Casualty Annual Statement electronic filing and PDF filing, due on or before March 1, 2008;

(B) 2007 Property and Casualty Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2007;

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for electronic Schedule SIS and Supplemental Compensation Exhibit, required of domestic insurers only) due on the dates specified in the forms and instructions;

(E) Electronic combined insurance exhibit, due on or before May 1, 2008; and

(F) Combined annual statement electronic filing and PDF filing, due on or before May 1, 2008.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(f) Requirements for fraternal benefit societies. Each fraternal benefit society shall complete and file the following blanks, forms, and electronic data filings for the three quarters for the 2007 calendar year, the 2007 calendar year, and the three quarters for the 2008 calendar year. The forms and reports identified in this subsection shall be completed in accordance with the "2007 Annual Statement Instructions, Fraternal," the "2007 Quarterly Statement Instructions, Fraternal," and the "2008 Quarterly Statement Instructions, Fraternal," as applicable. The electronic data filings with the NAIC shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC: 2007 Fraternal Quarterly Statements, due on or before May 15, August 15, and November 15, 2007.

(2) Domestic insurer reports and forms in paper copy to be filed only with the department, as follows:

(A) 2007 Fraternal Annual Statement, including the printed investment schedule detail, due on or before March 1, 2008;

(B) 2007 Fraternal Annual Statement of the Separate Accounts (required of companies maintaining separate accounts), due on or before March 1, 2008;

(D) All the paper copies of the annual and quarterly supplements prepared and filed on dates specified in the forms and instructions;

(E) Management's Discussion and Analysis, due on or before April 1, 2008;

(F) Statement of Actuarial Opinion, due on or before March 1, 2008.

(G) Supplemental Compensation Exhibit, due on or before March 1, 2008;

(I) Analysis of Surplus (Texas Edition) for fraternal benefit societies, due on or before March 1, 2008.

(4) Electronic filings by domestic and foreign insurers to be filed with the NAIC:

(A) 2007 Fraternal Annual Statement electronic filing and PDF filing, due on or before March 1, 2008;

(B) 2007 Fraternal Annual Statement of the Separate Accounts electronic filing and PDF filing, due on or before March 1, 2008;

(D) 2008 Fraternal Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2008; and

(E) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for the Supplemental Compensation Exhibit) due on the dates specified in the forms.

(5) Statement of Actuarial Opinion required by paragraph (2)(F) of this subsection shall be prepared in accordance with the following:

(A) Unless exempted, the Statement of Actuarial Opinion, attached to the 2008 Fraternal Annual Statement, should follow the applicable provisions of §§3.1601 - 3.1608 of this title.

(B) For those companies exempted from §§3.1601 - 3.1608 of this title, instructions 1 - 12, established by the NAIC, must be followed.

(C) Any company required by §3.4505(b)(3)(I) of this title to opine on the application of X factors, shall attach this opinion to the 2007 Fraternal Annual Statement, as applicable.

(6) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(7) A foreign insurer that is classified as a commercially domiciled insurer under the Insurance Code §823.004 shall file an Analysis of Surplus (Texas Edition) for fraternal benefit societies with the department on or before March 1, 2008.

(g) Requirements for title insurers. Each title insurance company shall complete and file the following blanks and forms for the three quarters of the 2007 calendar year, the 2007 calendar year, and the three quarters of the 2008 calendar year. The reports and forms identified in this subsection shall be completed in accordance with the "2007 Annual Statement Instructions, Title," the "2007 Quarterly Statement Instructions, Title," and the "2008 Quarterly Statement Instructions, Title," as applicable. The electronic version of the filings with the NAIC identified in this subsection shall be in accordance with the NAIC data specifications and instructions and shall include PDF format filing. The filings for insurers described in this subsection are as follows:

(1) Domestic insurer reports and forms in paper copy to be filed with the department and the NAIC: 2007 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2007.

(2) Domestic insurer reports and forms in paper copy to be filed only with the department as follows:

(A) 2007 Title Annual Statement, including printed investment schedule details, due on or before March 1, 2008;

(B) 2008 Title Quarterly Statements, due on or before May 15, August 15, and November 15, 2008;

(C) All the paper copies of the annual and quarterly supplements prepared and filed on dates described in the forms and instructions;

(D) Management's Discussion and Analysis, due on or before April 1, 2008;

(E) Statement of Actuarial Opinion, due on or before March 1, 2008;

(F) Supplemental Compensation Exhibit, due on or before March 1, 2008;

(G) Schedule SIS, due on or before March 1, 2008;

(I) Analysis of Surplus (Texas Edition) for title companies, due on or before March 1, 2008.

(3) Foreign companies filing electronically with the NAIC and not filing a paper copy with the department shall file a signed jurat page with the department in lieu of filing the entire paper filing.

(4) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2007 Title Annual Statement electronic filings and PDF filings, due on or before March 1, 2008;

(B) 2007 Title Quarterly Statement electronic filings and PDF filings, due on or before May 15, August 15, and November 15, 2007;

(D) All annual and quarterly supplemental electronic filings together with the related PDF filings (except for Schedule SIS and Supplemental Compensation Exhibit which are only filed by domestic insurers with the department in paper copy) due on the dates specified in the forms and instructions;

(E) Management Discussion and Analysis, due on or before April 1, 2008; and

(F) Statement of Actuarial Opinion, due on or before March 1, 2008.

(5) The commissioner reserves the right to request paper copies of any paper or electronic filings made by foreign companies in their state of domicile or the NAIC.

(h) Requirements for health maintenance organizations. Each health maintenance organization licensed pursuant to the Insurance Code Chapter 843 shall complete the 2007 Quarterly Statements, the 2007 Health Annual Statement, and the 2008 Quarterly Statements. Insurers that are subject to life insurance statutes and are permitted or allowed to do the business of health maintenance organizations shall file the Texas HMO supplement forms as part of their annual and quarterly statement filings. The forms and reports required in this subsection shall be completed in accordance with the "2007 Annual Statement Instructions, Health," and the "2007 Quarterly Statement Instructions, Health," and the "2008 Quarterly Statement Instructions, Health," as applicable. The Texas supplemental forms required in this subsection and provided by the department shall be completed in accordance with the instructions on the forms. The Statement of Actuarial Opinion shall include the additional requirements of the department set forth in paragraph (2)(D) of this subsection. The electronic data filings with the NAIC shall be in accordance with NAIC data specifications and instructions and shall include PDF format filing. The Texas specific electronic filings regarding HMO data requested by the department shall be filed in accordance with the instructions provided by the department. The filings for insurers described in this subsection are as follows:

(1) Domestic and foreign insurer reports and forms in paper copy to be filed with the department and the NAIC: 2007 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2007. With each quarterly filing, include an up-to-date and completed Schedule E - Part 3 - Special Deposits, utilizing the format from the 2006 Health Annual Statement.

(2) Domestic and foreign insurer reports and forms in paper copy to be filed only with the department:

(A) 2007 Health Annual Statement, including printed investment schedule detail, due on or before March 1, 2008;

(B) 2008 Health Quarterly Statements, due on or before May 15, August 15, and November 15, 2008. With each quarterly filing, include an up-to-date and completed Schedule E - Part 3 - Special Deposits, utilizing the format from the 2007 Health Annual Statement;

(D) Statement of Actuarial Opinion, due on or before March 1, 2008. In addition to the requirements set forth in the "2007 Annual Statement Instructions, Health," the department requires that the actuarial opinion include the following:

(ii) Under the scope paragraph requirements of section 5 of the "2007 Annual Statement Instructions, Health," relating to the Actuarial Certification, the department requires that the actuarial opinion specifically list the premium deficiency reserve as an item and disclose the amount of such reserve.

(3) Domestic insurer reports and forms to be filed with the department:

(A) Supplemental Compensation Exhibit in paper copy only, due on or before March 1, 2008;

(B) Texas Overhead Assessment Exemption Form (Texas Edition) in paper copy only, due on or before March 1, 2008. This form is to be filed only by domestic insurance companies that have qualified pension contracts under the Insurance Code §401.151; otherwise, this form should not be filed;

(C) Texas HMO Supplement Annual (Texas Edition), in paper copy and electronic filing, containing annual data for calendar year 2007, to be completed according to the instructions provided by the department, due on or before March 1, 2008.

(D) Texas HMO Supplement Quarterly (Texas Edition), in paper copy and electronic filings;

(i) containing quarterly statement data for calendar-year 2007, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2007; and

(ii) containing quarterly statement data for calendar-year 2008, to be completed according to the instructions provided by the department, due on or before May 15, August 15, and November 15, 2008.

(4) Electronic filings with the NAIC by domestic and foreign insurers:

(A) 2007 Health Annual Statement electronic filing, and PDF filing, due on or before March 1, 2008;

(B) 2007 Health Quarterly statement electronic filing and PDF filing, due on or before May 15, August 15, and November 15, 2007;

(E) Statement of Actuarial Opinion, due on or before March 1, 2008; and

(F) Management Discussion and Analysis, due on or before April 1, 2008.

(i) Requirements for farm mutual insurers not subject to the provisions of subsection (e) of this section. Farm mutual insurance companies not subject to subsection (e) of this section shall file the following blanks and forms for the 2007 calendar year with the department only, on or before March 1, 2008:

(1) Annual Statement (Texas Edition);

(3) Statement of Actuarial Opinion, unless exempted under §7.31 of this title (relating to Annual Statement Instructions for Farm Mutual Insurance Companies).

(j) Requirements for statewide mutual assessment associations, local mutual aid associations, mutual burial associations and exempt associations. Each statewide mutual assessment association, local mutual aid association, mutual burial association and exempt association shall complete and file the following blanks and forms for the 2007 calendar year with the department only, on or before April 1, 2008:

(3) Release of Contributions Form (Texas Edition);

(4) 3-1/2 Percent Chamberlain Reserve Table (Reserve Valuation) (Texas Edition);

(5) Reserve Summary (1956 Chamberlain Table 3-1/2 Percent) (Texas Edition);

(6) Inventory of Insurance in Force by Age of Issue or Reserving Year (Texas Edition); and

(7) Summary of Inventory of Insurance in Force by Age and Calculation of Net Premiums (Texas Edition).

(k) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 961 shall complete and file the following blanks and forms for the 2007 calendar year with the department only. An actuarial opinion is not required. The following forms are to be filed on or before March 1, 2008:

(1) Annual Statement (Texas Edition); and

(l) Requirements for Mexican casualty insurance companies. Each Mexican casualty insurance company doing business as authorized by a certificate of authority issued under the Insurance Code Chapter 984, shall complete and file the following blanks and forms for the 2007 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed to the extent specified in paragraph (1) of this subsection and in accordance with the "2007 Annual Statement Instructions, Property and Casualty." An actuarial opinion is not required. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any department rule or the Insurance Code. The following blanks or forms are to be filed on or before March 1, 2008:

(1) 2007 Property and Casualty Annual Statement; provided, however, only pages 1 - 4, and 104 (Schedule T) are required to be completed;

(2) A copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English);

(3) A copy of the official documents issued by the Comisión Nacional de Seguros y Fianzas approving the 2007 annual statement; and

(4) A copy of the current license to operate in the Republic of Mexico.

(m) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department.

History

Source Note: The provisions of this §7.70 adopted to be effective February 27, 2008, 33 TexReg 1555.

28 Tex. Admin. Code § 7.83 Appeal of Examination Reports

(a) Purpose and scope. This section implements Insurance Code Chapter 401 which directs the Commissioner to adopt procedures for filing and adoption of examination reports and for hearings to be held under Insurance Code Chapter 401 and guidelines governing orders issued under Insurance Code Chapter 401. The section provides an appeals process to preserve both the right of a company to a fair and impartial examination and promote respect for the independence and the importance of the on-site examiner who actually observes the conditions being reported. The purpose of an appeal process is not to replace the examination in the field, nor is it to substitute the judgment of the supervisory or management personnel for that of the examiner. It is to properly weigh the examination report, and to determine whether there is any error or bias which should be corrected. This section applies to all examinations conducted of any entity examined under Insurance Code Chapter 401, except for entities that are subject to another examination appeals process under the Insurance Code.

(b) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Adopted examination report--An examination report that has been adopted by the department under this section.

(2) Appeal--The process by which a company requests that the department review a final examination report for error or bias before adoption of the final examination report.

(3) Company--Any entity examined by the department under Insurance Code Chapter 401.

(4) Examination report--A report prepared by or on behalf of the department as a result of an examination under Insurance Code Chapter 401. An examination report does not include work papers related to the examination.

(5) Final examination report--An examination report that has been reviewed by the chief examiner or designee, and transmitted to the examined company.

(6) Department--Texas Department of Insurance.

(c) Computation of time. A day is a calendar day. In computing any period of time prescribed or allowed by these sections, by order of the agency, or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to run is not included, but the last day of the period so computed is included, unless it is a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day which is neither a Saturday, Sunday, nor a legal holiday.

(d) Exit conference. At the conclusion of an examination, the examiner-in-charge will provide company management the opportunity to participate in an exit conference on the findings and conclusions of the examination. Following the exit conference, the examiner-in-charge will complete the examination report and file it with the chief examiner or designee.

(e) Transmittal of final examination report. After the chief examiner or designee has reviewed an examination report, the final examination report will be transmitted to the examined company with a cover letter identifying the report as a final examination report and notifying the company that it has the right to appeal the report under subsection (f) of this section.

(f) Appeal of examination report.

(1) First level appeal. The first level of appeal is to the chief examiner or designee. Within 14 days of the receipt by the company of a final examination report, the company may file with the chief examiner or designee:

(A) a written rebuttal to the final examination report specifying the error or bias in the examination report,

(B) documentation demonstrating the error or bias, and

(2) Consideration of first level appeal. The chief examiner or designee will consider the written rebuttal and documentation submitted by the company and any information received at a first level appeal hearing, if the examined company requests one. No later than 14 days following receipt of a written rebuttal under paragraph (1) of this subsection or the conclusion of a first level appeal hearing, the chief examiner or designee may make changes to the report to correct error or bias. After any changes are made, the chief examiner or designee will transmit a copy of the amended examination report to the company or notify the company that no changes have been made.

(3) Second level appeal. Second level appeals may be made to the deputy commissioner, Financial Regulation Division, or designee only after a company has completed an appeal under paragraph (2) of this subsection. Within 14 days of the receipt by the company of the amended examination report or notice described in paragraph (2) of this subsection, the company may file with the appropriate deputy commissioner or designee:

(A) a written rebuttal to the final examination report specifying the error or bias in the examination report,

(B) documentation demonstrating the error or bias, and

(4) Consideration of second level appeal. The deputy commissioner or designee will consider the written rebuttal and the documentation submitted by the company and any information received at a second level hearing, if the examined company requests one. No later than 14 days following receipt of a written rebuttal to the examination report under paragraph (3) of this subsection or the conclusion of a second level hearing, the deputy commissioner or designee may make changes to the examination report to correct error or bias. After any changes are made, the deputy commissioner or designee will transmit a copy of the amended examination report to the company or notify the company that no changes have been made.

(g) Adoption of examination reports. An examination report is deemed adopted if no appeal is pursued under subsection (f)(1) or (3) of this section. An examination report appealed to the deputy commissioner or designee will be adopted by the deputy commissioner or designee under the provisions of subsection (f)(4) of this section.

(h) Review of report by board of directors. The board of directors of the company must review the adopted examination report. The minutes of the meeting of the board of directors at which the adopted examination report is considered must reflect that each member of the board of directors has reviewed the adopted examination report.

(i) Examination reports of foreign and alien companies.

(1) Examination reports of foreign and alien insurance companies authorized to transact business in this state which are prepared by other jurisdictions and filed with the department may be accepted by the department in lieu of examining such foreign or alien company.

(2) Examination reports of foreign or alien insurance companies authorized to transact business in this state which are filed with the department under paragraph (1) of this subsection are deemed adopted when received.

(j) Extensions of time. Any of the deadlines in this section may be extended by mutual agreement of the company and the department's employee assigned to conduct that portion of the appeal.

(k) Other matters.

(1) Commissioner's authority. Notwithstanding this section, the Commissioner may take regulatory action at any time against a company, using any information obtained during the course of any examination. Nothing contained in this section will be construed to limit the Commissioner's authority to use any final or preliminary examination report, any examiner or company work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the Commissioner may, in his or her sole discretion, deem appropriate.

(2) Disclosure by Commissioner. Nothing contained in this section will be construed to prohibit the Commissioner from disclosing the content of an examination report, preliminary examination report or results, or any related matter, to the insurance department of any other state or country in which the examined company does business, or to law enforcement officials of this or any other state, or to an agency of the federal government at any time. The Commissioner may request any recipient of such reports or related matters to agree in writing to hold it confidential in a manner consistent with Insurance Code Chapter 401.

History

Source Note: The provisions of this §7.83 adopted to be effective June 10, 1999, 24 TexReg 4238; amended to be effective February 7, 2019, 44 TexReg 480.

28 Tex. Admin. Code § 7.84 Examination Frequency

(a) Purpose. This section governs the frequency of examinations conducted under Insurance Code §401.052. The section implements Insurance Code §401.052(b), which directs the Commissioner to adopt rules governing the frequency of examinations of carriers that have been organized or incorporated for less than five years.

(b) Applicability. This section applies only to examinations commenced after the effective date of this section.

(c) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Carrier--For the purposes of this section, carrier includes any entity subject to examination under Insurance Code §401.051. The term does not include a workers' compensation self-insurance group as that term is defined by Labor Code Chapter 407A.

(2) Commissioner--The Commissioner of Insurance.

(3) Department--The Texas Department of Insurance.

(4) Insurance holding company system--As described in Insurance Code §823.006.

(5) Redomesticated carrier--A carrier that redomesticates to this state from another state under Insurance Code §983.051.

(6) Self-insurance group--An unincorporated association or business trust composed of five or more private employers holding a certificate of approval to act as a workers' compensation self-insurance group issued by the department under the Labor Code Chapter 407A.

(d) Examination of Texas domestic carriers organized or incorporated for five years or more under the laws of this state. Except as provided in subsections (f) and (g) of this section, Insurance Code §401.052(a) governs the frequency of examinations for Texas domestic carriers organized or incorporated for five years or more under the laws of this state.

(e) Examination of Texas domestic carriers incorporated or organized for less than five years under the laws of this state.

(1) Except as provided in paragraph (2) of this subsection and subsections (f), (g), and (h) of this section, the department will conduct an examination of a Texas domestic carrier incorporated or organized for less than five years under the laws of this state in the carrier's first, third, and fifth years. For a Texas domestic carrier that receives a certificate of authority or other authorization from the department on or before June 30, the first year to be examined will be the calendar year in which the carrier received the certificate of authority or other authorization from the department. For a Texas domestic carrier that receives a certificate of authority or other authorization from the department after June 30, the first year to be examined will be the calendar year immediately following the calendar year in which the carrier received the certificate of authority or other authorization from the department and will include the first partial year. After the fifth year, Insurance Code §401.052(a) will govern the frequency of examination.

(2) If a Texas domestic carrier incorporated or organized for less than five years under the laws of this state is a member of an insurance holding company system with one or more affiliated Texas domestic carriers, the department may conduct an examination of the Texas domestic carrier at the same time it conducts the examination of the affiliated Texas domestic carrier or carriers, provided one or more of the Texas domestic affiliated carriers has conducted the business of insurance in Texas continuously for 10 or more consecutive calendar years. In making this determination, the department will consider whether:

(A) any affiliated carriers of the Texas domestic carrier are in a hazardous condition or conditions, including the conditions described in §8.3 of this title;

(B) any affiliated carriers of the Texas domestic carrier are the subject of pending administrative action by a regulatory agency of this state, the United States, or another state; and

(C) the department has any financial or other regulatory concerns regarding any affiliated carriers of the Texas domestic carrier.

(f) Examination of redomesticated carriers. The department will conduct an examination of a redomesticated carrier no later than five years from the carrier's last examination by a prior state of domicile or three years from the date the carrier redomesticates to Texas, whichever is less. The department will conduct an examination of a redomesticated carrier as often as the department considers necessary.

(g) Examination of self-insurance groups. This section does not apply to self-insurance groups governed by Labor Code §407A.252.

(h) Examination of captive insurance companies. This section does not apply to captive insurance companies governed by Insurance Code Chapter 964, unless the department determines an examination of a captive insurance company is necessary.

(i) Commissioner's authority. This section does not in any way limit the Commissioner's authority to visit or examine a carrier as often as the Commissioner considers necessary.

(j) Conflicts. In the event of a conflict between this section and the Insurance Code or the Labor Code, the provisions of the Insurance Code or the Labor Code prevail.

History

Source Note: The provisions of this §7.84 adopted to be effective August 31, 2010, 35 TexReg 7832; amended to be effective February 7, 2019, 44 TexReg 480.

28 Tex. Admin. Code § 7.85 Audited Financial Reports

(a) Definitions. The following words and terms, when used in this section, will have the following meanings, unless the context clearly indicates otherwise.

(1) Accountant--An independent certified public accountant or accounting firm that meets the requirements of Insurance Code §401.014.

(2) Audited Financial Report--The annual audit report required by Insurance Code Chapter 401, Subchapter A.

(3) Commissioner--The commissioner of insurance.

(4) TDI--The Texas Department of Insurance.

(5) Examiner--Staff appointed by the commissioner under Insurance Code Chapter 401, Subchapter C.

(6) GAAS--Generally Accepted Auditing Standards. The standards adopted by the American Institute of Certified Public Accountants or Public Company Accounting Oversight Board to conduct an audit and to ensure the quality of the performance by accountants who are engaged in an audit of financial statements.

(7) Material--As defined in the NAIC's Accounting Practices and Procedures Manual under §7.18 of this title.

(8) NAIC--The National Association of Insurance Commissioners.

(9) Statutory Examination--An examination performed by TDI's examiners or other persons or firms retained by TDI specifically for examination of insurers, corporations, or associations.

(10) Work Papers--The records kept by the accountant supporting that accountant's audit opinion, including the audit records and the accountant's audit planning records; and any record of communications related to the audit between the accountant and the insurer under Insurance Code §401.020.

(b) Priority of Accounting Guidance. The priority for determining accounting standards is set out in §7.18 of this title.

(c) Applicability. This section applies only to audited financial reports with audit dates as of December 31, 1995, or later. A foreign or alien insurer may be exempt from this rule if the foreign or alien insurer files an audited financial report in another state and the requirements for that state's audited financial reports are determined by the commissioner under Insurance Code §401.007 to be substantially similar to the requirements in Insurance Code Chapter 401. A foreign or alien insurer is exempt from this rule if the foreign or alien insurer files an audited financial report in another state and the requirements for that state's audited financial reports have already been determined by the commissioner under Insurance Code §401.007 to be substantially similar to the requirements in Insurance Code Chapter 401.

(d) Purpose. Insurance Code Chapter 401 requires audited financial reports to be prepared, and that statutory examinations are periodically conducted under the Insurance Code. To improve coordination between the audited financial reports and statutory examinations, and to promote the utilization of work papers to the fullest extent during the conduct of statutory examinations, certain minimum standards, guidelines, and procedures must be incorporated by the accountant during the preparation of the work papers and the audited financial report. The purpose of this section is to establish those requirements.

(e) Conduct of audit. The annual audit required by Insurance Code Chapter 401 must be conducted in accord with GAAS. It is not TDI's intent to expand audit testing beyond the requirements of GAAS. The accountant conducting the audit must consider the procedures and conventions set out in paragraphs (1) - (4) of this subsection, as follows:

(1) audit procedures and format contained in the NAIC Examiners Handbook;

(2) accounting treatments for the particular line(s) of insurance contained in §7.18 of this title and the NAIC Annual Statement Instructions adopted by the commissioner under §7.68 of this title;

(3) valuation procedures contained in the NAIC Investment Analysis Office's Purposes and Procedures Manual and §7.18 of this title; and

(4) any orders of the commissioner issued to a particular company.

(f) Contents of audited financial reports. In addition to the contents specified in Insurance Code §401.009, audited financial reports must contain the statements and reports set out in paragraphs (1) - (3) of this subsection.

(1) Audit procedures and format contained in the NAIC Examiners Handbook.

(2) The balance sheet, statement of gain or loss from operations, statement of changes in capital and surplus, and statement of cash flow prepared in accord with the Texas Administrative Code, including the NAIC Annual Statement Instructions adopted by the commissioner in §7.68 of this title.

(3) In addition to the items that must be recorded in the notes to the financial statements under Insurance Code §401.009(b), the notes must include:

(A) any exceptions to compliance with the financial, investment, and holding company provisions of the Insurance Code or the Texas Administrative Code noted during the audit;

(B) a schedule and explanation of material nonadmitted assets;

(C) any and all items required by the NAIC Annual Statement Instructions and the NAIC Accounting Practices and Procedures Manual under §7.68 and §7.18 of this title; and

(D) a reconciliation of any differences between the audited statutory financial statements and the Annual Statement filed with TDI, with a written description of the nature of the differences.

(g) Contents of work papers.

(1) For those items subjected to detailed tests by the accountant during the course of the audit, the work papers must contain a notation of whether any material exceptions exist for each of the items set out in subparagraphs (A) and (B) of this paragraph.

(A) For invested assets:

(i) compliance as an authorized investment has been determined and does not exceed statutory limitations;

(ii) ownership and possession have been verified; and

(iii) securities are valued in accord with the instructions of the NAIC Investment Analysis Office's Purposes and Procedures Manual and §7.18 of this title.

(B) For assets other than invested assets:

(i) the assets are admitted in accord with the appropriate provision of the Insurance Code or Texas Administrative Code; and

(ii) the assets are valued in accord with the Texas Administrative Code and §7.18 of this title.

(2) If the regulated entity subject to the audit has any material reinsurance agreement or agreements, the work papers must contain an outline addressing the items set out in subparagraphs (A) - (E) of this paragraph as follows:

(A) a summary of the insurer's overall reinsurance program;

(B) an explanation of relevant provisions by which liabilities are transferred to the reinsurer and any contingency provisions by which the reinsurer can cause the ceding insurer to reassume liabilities previously transferred to the reinsurer;

(C) an explanation about assets held in trust, depositories, or letters of credit by which any reserve liabilities are collateralized;

(D) a verification of any material reinsurance balance ceded or assumed; and

(E) an explanation of amounts recoverable from unlicensed reinsurers that are not collateralized, or disputed reinsurance recoverables.

(3) The work papers of any audited entity must contain:

(A) any letters from the accountant to management commenting on or explaining internal management operating procedures;

(B) computer-generated work papers;

(D) reports prepared by outside consultants;

(E) for policy liabilities, a note that reserves are established in accord with policy and statutory provisions, and that required payments were made under any contract provisions;

(F) for all other liabilities, a note that all material liabilities of the company have been properly recorded; and

(G) internal control work papers.

(4) The work papers of any audited entity must contain a notation that the accountant has determined that the entity has:

(A) met the filing requirements in Insurance Code Chapter 823 and the Texas Administrative Code, including the requirements that all shareholder dividends have been reported to TDI within two business days after declaration and at least 10 days prior to payment as required under Insurance Code §823.053; and that all other dividends have been declared and paid in accord with the applicable provisions of the Insurance Code and the Texas Administrative Code, including Chapter 403, Chapter 1112, §841.253, and §884.253; and

(B) maintained unencumbered assets in an amount at least equal to reserve liabilities as required under Insurance Code Chapter 422.

(h) Accessibility of work papers. The accountant must provide all work papers to the examiner, whether during or after the preparation of the audited financial report. The examiner may obtain, if necessary, photocopies of work papers, as provided by Insurance Code §401.020(c), so as not to burden the accountant if a statutory examination is occurring at the same time as an annual audit. Information obtained under this section is subject to the confidentiality standards imposed by Insurance Code §§401.020(c), 401.057, 401.105, 401.106, and 823.011.

(i) Sanction. Failure to comply with this section may result in the commissioner initiating action under Insurance Code §401.012 and Chapter 82.

History

Source Note: The provisions of this §7.85 adopted to be effective July 13, 1995, 20 TexReg 4689; amended to be effective January 1, 2001, 25 TexReg 12806; amended to be effective February 26, 2006, 31 TexReg 1036; amended to be effective December 2, 2014, 39 TexReg 9358.

28 Tex. Admin. Code § 7.86 Custodied Securities

(a) Purpose. The purpose of this section is to enable insurers and HMOs to demonstrate ownership of securities held by a custodian in a manner consistent with the common practices of securities exchanges and markets while protecting the public interest. An insurer or HMO may demonstrate its ownership of other securities in accordance with Insurance Code Article 21.39-B.

(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Clearing corporation--A corporation or system that provides for the book entry settlement and custody of securities and is further defined in Insurance Code, Article 21.39-B, §5(b) and Texas Business and Commerce Code, §8.102(a)(5).

(2) Custodian--A qualified bank, qualified broker/dealer or a clearing corporation that accepts deposits of securities from an insurer or HMO and safeguards, holds and reports on such securities pursuant to a written custodial or trust agreement with an insurer or HMO.

(3) Custodied Securities--An insurer's or HMO's securities deposited with a custodian or redeposited with a subcustodian.

(4) Insurer--A domestic insurance company.

(5) Qualified bank--A bank, federal home loan bank or trust company with trust powers, organized under the laws of the United States or any state thereof, which either is a member of the Federal Reserve System, a member of, or is eligible to receive deposits which are insured by the Federal Deposit Insurance Corporation, or maintains an account with a Federal Reserve Bank and is subject to supervision and examination by the Board of Governors of the Federal Reserve System, or is subject to supervision and examination by the Federal Housing Finance Board, and is no less than "adequately capitalized" as defined by standards promulgated by the appropriate federal bank regulatory agency.

(6) Qualified Broker/Dealer--A securities firm which has, as shown by its most recent audited financial statement, a tangible net worth of at least $250 million, is registered with and subject to the jurisdiction of the Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation.

(7) Securities--Shares, participations, or other interests in property or an enterprise as defined in the Texas Business and Commerce Code, §8.102(a). The term includes certificated and uncertificated securities.

(8) Subcustodian--A qualified bank, qualified broker dealer or a clearing corporation that accepts deposits of securities from a custodian for safeguarding and holding.

(9) HMO--A health maintenance organization as defined in the Insurance Code Article 20A.02(n).

(1) An insurer or HMO may demonstrate ownership of its securities by having them held by a custodian pursuant to subsection (d) of this section.

(2) An insurer or HMO shall maintain evidence that the custodian meets the requirements to be a qualified bank or a qualified broker/dealer as defined in subsection (b) of this section.

(d) Required Provisions For Custodial Agreements. Any arrangement involving an insurer's or HMO's deposit of its securities with a custodian must be evidenced by an agreement signed by the insurer or HMO and the custodian. The agreement signed by the insurer or HMO and the custodian must provide for the conditions described in paragraphs (1) - (13) of this subsection:

(1) The custodian shall exercise the same due care that is in accordance with reasonable commercial standards expected of a custodian with the responsibility for the safeguarding of the insurer's or HMO's custodied securities and for compliance with all provisions of the custodial agreement, whether the insurer's or HMO's custodied securities are in the custodian's possession or have been redeposited by the custodian with a subcustodian.

(2) The custodian shall indemnify the insurer or HMO for any loss of custodied securities occasioned by the negligence or dishonesty of custodian's officers and employees, or burglary, robbery, hold-up, theft or mysterious disappearance, including loss by damage or destruction. In the event of such loss, the custodian must promptly replace the custodied securities or the value thereof, and the value of any loss of rights or privileges resulting from said loss of custodied securities.

(3) Custodied securities shall be segregated at all times from the proprietary assets of the custodian and subcustodian.

(4) The custodian's official records shall separately identify custodied securities owned by the insurer or the HMO, whether held by the custodian or subcustodian. If held by a subcustodian, the custodian's records shall also identify the subcustodian.

(5) Custodied securities that are in registered form shall be registered only in the name of the insurer or HMO, the custodian or its nominee, or the subcustodian or its nominee.

(6) All activities involving the insurer's or HMO's custodied securities shall be subject to the insurer's or HMO's instructions and the custodied securities shall be withdrawable upon demand of the insurer or HMO.

(7) The custodian shall furnish, upon request by the insurer or HMO, a confirmation of all transfers of custodied securities to or from the account of the insurer or HMO, and reports of custodied securities sufficient to verify information reported in the insurer's or HMO's annual statement filed with the Texas Department of Insurance and supporting schedules and information required in any audit of the insurer's or HMO's financial statements whether the custodied securities are held by the custodian or by a subcustodian.

(8) The insurer, HMO or its designee shall be entitled to examine all records maintained by the custodian or subcustodian relating to the insurer's or HMO's custodied securities during the course of the custodian's regular business hours. This paragraph does not apply to a clearing corporation or the Federal Reserve Book Entry System.

(9) Upon request of the insurer or HMO, the custodian shall be required to send to the insurer or HMO all reports it receives from a clearing corporation or the Federal Reserve book-entry system on their respective systems of internal accounting control, and all reports prepared on the custodian's and subcustodian's systems of internal accounting control of custodied securities.

(10) The custodian shall not use any of the insurer's or HMO's custodied securities for the custodian's benefit and none of the insurer's or HMO's custodied securities shall be loaned, pledged, or hypothecated by the custodian or subcustodian without a written contract executed by the insurer or HMO separate and apart from the custodial agreement.

(11) The custodian is authorized and instructed by the insurer or HMO to honor any requests made by the Texas Department of Insurance for information concerning the insurer's or HMO's custodied securities. The department, from time to time, may request, and the custodian shall furnish, a detailed listing of the insurer's or HMO's custodied securities (whether in the possession of the custodian or with a subcustodian). The custodian's response to such requests shall be made directly to the department and shall encompass all of the insurer's or HMO's custodied securities (whether in the possession of the custodian or with a subcustodian).

(12) The custodian and subcustodian shall maintain the usual and customary insurance coverage for custodial banking risks at levels considered reasonable and customary for the custodian banking industry covering the custodian's duties and activities as custodian for the insurer's or HMO's assets and shall describe the nature and extent of such insurance protection. Any change in such insurance protection during the term of the custodial agreement shall be promptly disclosed to the insurer or HMO.

(e) Effective Date. All insurers and HMOs subject to this section shall comply with subsection (d) of this section no later than 90 days after the effective date of this section.

History

Source Note: The provisions of this §7.86 adopted to be effective June 12, 1996, 21 TexReg 4887; amended to be effective December 15, 2002, 27 TexReg 11559.

28 Tex. Admin. Code § 7.87 Risk Pool Audits

(a) The Local Government Code, Chapter 172, Texas Political Subdivisions Uniform Group Benefits Program, authorizes certain political subdivisions to create risk pools to provide health and accident coverage for political subdivision officials, employees, and retirees.

(b) The Local Government Code, §172.010, requires that an independent auditor perform an annual audit of a risk pool, and that the trustees of the risk pool file a copy of the independent auditor's report with the Texas Department of Insurance.

(c) The independent auditor's report of the risk pool required by the Local Government Code shall be filed within six months of the end of the fiscal year of the risk pool with the Financial Monitoring Division, Financial Program, Texas Department of Insurance, P.O. Box 149104, MC 303-1A, Austin, Texas 78714-9104.

(d) The risk pool audit reports can be inspected during regular business hours at the Texas Department of Insurance, Financial Monitoring Division, 333 Guadalupe, Austin, Texas.

(e) Persons desiring copies of such audit reports can obtain copies from the Texas Department of Insurance, Financial Monitoring Division, Financial Program, P.O. Box 149104, MC 303-1A, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §7.87 adopted to be effective May 14, 1994, 19 TexReg 3250.

28 Tex. Admin. Code § 7.88 Independent Audits of Insurer and HMO Financial Statements and Insurer and HMO Internal Control over Financial Reporting

(a) Purpose. The purpose of this section is to improve the Texas Department of Insurance's surveillance of the financial condition of insurers and HMOs by:

(1) specifying the requirements of an annual audit by an accountant of the financial statements reporting the financial condition and the results of operations of each insurer or HMO;

(2) requiring communication of internal control related matters noted in an audit;

(3) requiring an insurer or HMO that is required to file an annual audited financial report under Insurance Code Chapter 401, Subchapter A, to have an audit committee; and

(4) requiring certain insurer or HMO management to report on internal control over financial reporting.

(b) Applicability.

(1) Except as otherwise specified in this section and in Insurance Code Chapter 401, Subchapter A, this section applies to insurers and HMOs and takes effect beginning with the annual reporting period ending December 31, 2010, which period is reflected in reports and communications required to be filed with the Commissioner during calendar year 2011, and continues in effect each year thereafter.

(2) Subsection (h)(1) of this section, relating to lead audit partner limitation, is in effect for audits of the year beginning January 1, 2010, which audits are reflected in reports and communications required to be filed with the Commissioner during calendar year 2011, and continues in effect each year thereafter.

(3) Subsection (k) of this section, relating to audit committee requirements, takes effect on September 1, 2010.

(4) Subsection (l) of this section, relating to internal audit committee requirements, is applicable beginning January 1, 2021.

(c) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Accountant--An independent certified public accountant or accounting firm that meets the requirements of Insurance Code §401.011.

(2) Affiliate--Has the meaning assigned by Insurance Code §823.003.

(3) Audit committee--A committee established by the board of directors of an entity for the purpose of overseeing the accounting and financial reporting processes of an insurer or HMO or group of insurers or HMOs and audits of financial statements of the insurer or HMO or group of insurers or HMOs. At the election of the controlling person, the audit committee of an entity that controls a group of insurers or HMOs may be the audit committee for one or more of the controlled insurers or HMOs solely for the purposes of this section. If an audit committee is not designated by the insurer or HMO, the insurer's or HMO's entire board of directors constitutes the audit committee.

(4) Audited financial report--The annual audit report required by Insurance Code Chapter 401, Subchapter A.

(5) Group of insurers or HMOs--Those authorized insurers or HMOs included in the reporting requirements of Insurance Code Chapter 823, or a set of insurers or HMOs as identified by management, for the purpose of assessing the effectiveness of internal control over financial reporting.

(6) Health maintenance organization (HMO)--A health maintenance organization authorized to engage in business in this state.

(7) Insurer--An insurer authorized to engage in business in this state, including:

(A) a life, health, or accident insurance company;

(B) a fire and marine insurance company;

(D) a title insurance company;

(E) a fraternal benefit society;

(F) a mutual life insurance company;

(G) a local mutual aid association;

(H) a statewide mutual assessment company;

(I) a mutual insurance company other than a mutual life insurance company;

(J) a farm mutual insurance company;

(K) a county mutual insurance company;

(L) a Lloyd's plan;

(M) a reciprocal or interinsurance exchange;

(N) a group hospital service corporation; and

(O) a stipulated premium company.

(8) Internal control over financial reporting--A process implemented by an entity's board of directors, management, and other personnel designed to provide reasonable assurance regarding the reliability of the entity's financial statements. The term includes policies and procedures that:

(A) relate to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

(B) provide reasonable assurance that:

(i) transactions are recorded as necessary to permit preparation of the financial statements; and

(ii) receipts and expenditures are made only in accordance with authorizations of management and directors; and

(C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.

(9) Management--The management of an insurer or HMO or group of insurers or HMOs subject to this section.

(10) SEC--The United States Securities and Exchange Commission.

(11) Section 404--Section 404, Sarbanes-Oxley Act of 2002 (15 U.S.C. §7262), and rules adopted under that section.

(12) Section 404 report--Management's report on internal control over financial reporting as determined by the SEC and the related attestation report of an accountant.

(13) SOX-compliant entity--An entity that is required to comply with or voluntarily complies with:

(A) the preapproval requirements provided by 15 U.S.C. §78j-1(i);

(B) the audit committee independence requirements provided by 15 U.S.C. §78j-1(m)(3); and

(C) the internal control over financial reporting requirements provided by 15 U.S.C. §7262(b) and Item 308, SEC Regulation S-K.

(14) Subsidiary--Has the meaning assigned by Insurance Code §823.003.

(d) Filing and extensions for filing of audited financial report.

(1) Except as provided in paragraphs (2), (3), and (4) of this subsection, an insurer or HMO that is required to have an annual audit performed by an accountant and to file an audited financial report with the Commissioner under Insurance Code Chapter 401, Subchapter A, shall file the audited financial report with the Commissioner on or before June 1 for the preceding calendar year.

(2) Except as provided in paragraphs (3) and (4) of this subsection, an insurer or HMO that, along with any affiliated insurers or HMOs, is licensed in and does business only in Texas shall file the audited financial report with the Commissioner on or before June 30 for the preceding calendar year. This paragraph does not apply to an insurer or HMO that is a member of a group comprised of one or more insurers or HMOs authorized and actually doing the business of insurance in another state that requires that an audited financial report be filed on or before June 1 for the preceding calendar year.

(3) In accordance with Insurance Code §401.004(b), the Commissioner may require an insurer or HMO to file an audited financial report on a date that precedes the June 1 deadline in paragraph (1) of this subsection or the June 30 deadline in paragraph (2) of this subsection. The Commissioner must notify the insurer or HMO of the filing date not later than the 90th day before that date.

(4) The Commissioner may grant an extension of the filing date in accordance with Insurance Code §401.004(c). An extension granted under Insurance Code §401.004(c), relating to the filing date for an audited financial report, also applies to the filing of management's report on internal control over financial reporting required under subsection (n) of this section.

(5) An insurer or HMO required to file an annual audited financial report under Insurance Code Chapter 401, Subchapter A, and this section must designate a group of individuals to serve as its audit committee. The audit committee of an entity that controls an insurer or HMO may, at the election of the controlling person, be the insurer's or HMO's audit committee for purposes of this section.

(e) Exemption for certain foreign or alien insurers or HMOs.

(1) A foreign or alien insurer or HMO exempt under Insurance Code §401.007(a) must file with the commissioner a copy of:

(A) the audited financial report and the accountant's letter of qualifications filed with the insurer's or HMO's state of domicile at the same time these documents are filed with the state of domicile;

(B) the communication of internal control-related matters noted in the audit that is substantially similar to the communication required under subsection (j) of this section, not later than the 60th day after the date the copy of the audited financial report and accountant's letter of qualifications are filed with the commissioner; and

(C) any notification of adverse financial conditions report filed with the other state, in accordance with the filing date prescribed by Insurance Code §401.017.

(2) A foreign or alien insurer or HMO required to file management's report of internal control over financial reporting in another state is exempt from filing the report in this state under subsection (n)(1) of this section if the other state has substantially similar reporting requirements and the report is filed with the commissioner in that state in the time specified.

(f) Requirements for financial statements in audited financial report. The financial statements included in the audited financial report must be prepared in a form and use language and groupings substantially the same as the relevant sections of the annual statement of the insurer or HMO filed with the Commissioner. The financial statements must be comparative, including amounts on December 31 of the current year and amounts as of the immediately preceding December 31, except for the first year in which an insurer or HMO is required to file the report.

(g) Scope of audit and report of accountant. An accountant must audit the financial reports provided by an insurer or HMO for purposes of an audit conducted under Insurance Code Chapter 401, Subchapter A. In addition to complying with the requirements of the Insurance Code §401.010, the accountant shall obtain an understanding of internal control sufficient to plan the audit, in accordance with "Consideration of Internal Control in a Financial Statement Audit," AU Section 319, Professional Standards of the American Institute of Certified Public Accountants. To the extent required by AU Section 319, for those insurers or HMOs required to file a management's report of internal control over financial reporting under subsection (n) of this section, the accountant shall consider the most recently available report in planning and performing the audit of the statutory financial statements. In this subsection, "consider" has the meaning assigned by Statement on Auditing Standards No. 102, "Defining Professional Requirements in Statements on Auditing Standards," or a successor document.

(h) Qualifications and independence of accountant; acceptance of audited financial report. Except as provided by Insurance Code §401.011(b) and (d), and paragraphs (1), (3), (4), (5), and (10) of this subsection, the Commissioner will accept an audited financial report from an independent certified public accountant or accounting firm that is a member in good standing of the American Institute of Certified Public Accountants; is in good standing with all states in which the accountant or firm is licensed to practice, as applicable; and conforms to the American Institute of Certified Public Accountants Code of Professional Conduct and to the rules of professional conduct and other rules of the Texas State Board of Public Accountancy or a similar code.

(1) A lead partner or other person responsible for rendering an audited financial report for an insurer or HMO may not act in that capacity for more than five consecutive years and may not, during the five-year period after that fifth year, render an audited financial report for the insurer or HMO or for a subsidiary or affiliate of the insurer or HMO that is engaged in the business of insurance. On application made at least 30 days before the end of the calendar year, the Commissioner may determine that the limitation provided by this paragraph does not apply to an accountant for a particular insurer or HMO if the insurer or HMO demonstrates to the satisfaction of the Commissioner that the limitation's application to the insurer or HMO would be unfair because of unusual circumstances. In making the determination, the Commissioner may consider:

(A) the number of partners or individuals the accountant employs, the expertise of the partners or individuals the accountant employs, or the number of the accountant's insurance clients;

(B) the premium volume of the insurer or HMO; and

(2) On filing its annual statement, an insurer or HMO for which the Commissioner has approved an exemption under paragraph (1) of this subsection must file the approval with the states in which it is doing business or is authorized to do business and with the National Association of Insurance Commissioners. If a state other than this state accepts electronic filing with the National Association of Insurance Commissioners, the insurer or HMO must file the approval in an electronic format acceptable to the National Association of Insurance Commissioners.

(3) In providing services, the accountant may not:

(A) function in the role of management, audit the accountant's own work, or serve in an advocacy role for the insurer or HMO; or

(B) directly or indirectly enter into an agreement of indemnity or release from liability regarding the audit of the insurer or HMO.

(4) The Commissioner may not recognize as qualified or independent an accountant, or accept an annual audited financial report that was prepared wholly or partly by an accountant, who provides an insurer or HMO at the time of the audit:

(A) bookkeeping or other services related to the accounting records or financial statements of the insurer or HMO;

(B) services related to financial information systems design and implementation;

(D) actuarially oriented advisory services involving the determination of amounts recorded in the financial statements;

(E) internal audit outsourcing services;

(F) management or human resources services;

(G) broker or dealer, investment adviser, or investment banking services;

(H) legal services or other expert services unrelated to the audit; or

(I) any other service that the Commissioner determines to be inappropriate.

(5) Notwithstanding paragraph (4)(D) of this subsection, an accountant may assist an insurer or HMO in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement if it is reasonable to believe that the advisory service will not be the subject of audit procedures during an audit of the insurer's or HMO's financial statements. An accountant's actuary may also issue an actuarial opinion or certification on an insurer's or HMO's reserves if:

(A) the accountant or the accountant's actuary has not performed management functions or made any management decisions;

(B) the insurer or HMO has competent personnel, or engages a third-party actuary, to estimate the reserves for which management takes responsibility; and

(C) the accountant's actuary tests the reasonableness of the reserves after the insurer's or HMO's management has determined the amount of the reserves.

(6) An insurer or HMO that has direct written and assumed premiums of less than $100 million in any calendar year may request an exemption from the requirements of paragraph (4) of this subsection by filing with the Commissioner a written statement explaining why the insurer or HMO should be exempt. The Commissioner may grant the exemption if the Commissioner finds that compliance with paragraph (4) of this subsection would impose an undue financial or organizational hardship on the insurer or HMO.

(7) An accountant who performs an audit may perform non-audit services, including tax services, that are not described in paragraph (4) of this subsection or that do not conflict with paragraph (3) of this subsection, only if the activity is approved in advance by the audit committee in accordance with paragraph (8) of this subsection.

(8) The audit committee must approve in advance all auditing services and non-audit services that an accountant provides to the insurer or HMO. The prior approval requirement is waived with respect to non-audit services if the insurer or HMO is a SOX-compliant entity or a direct or indirect wholly owned subsidiary of a SOX-compliant entity or:

(A) the aggregate amount of all non-audit services provided to the insurer or HMO is not more than five percent of the total amount of fees paid by the insurer or HMO to its accountant during the fiscal year in which the non-audit services are provided;

(B) the services were not recognized by the insurer or HMO at the time of the engagement to be non-audit services; and

(C) the services are promptly brought to the attention of the audit committee and approved before the completion of the audit by the audit committee or by one or more members of the audit committee who are the members of the board of directors to whom the audit committee has delegated authority to grant approvals.

(9) The audit committee may delegate to one or more designated members of the audit committee the authority to grant the prior approval required by paragraph (7) of this subsection. The decisions of any member to whom this authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.

(10) The Commissioner may not recognize an accountant as qualified or independent for a particular insurer or HMO if a member of the board, the president, chief executive officer, controller, chief financial officer, chief accounting officer, or any individual serving in an equivalent position for the insurer or HMO, was employed by the accountant and participated in the audit of that insurer or HMO during the one-year period preceding the date on which the most current statutory opinion is due. This paragraph applies only to partners and senior managers involved in the audit. An insurer or HMO may apply to the Commissioner for an exemption from the requirements of this paragraph on the basis of unusual circumstances.

(11) The Commissioner will not accept an audited financial report prepared wholly or partly by an individual or firm who the commissioner finds:

(A) has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §1961 et seq. ), or a state or federal criminal offense involving dishonest conduct;

(B) has violated the insurance laws of this state with respect to a report filed under Insurance Code Chapter 401, Subchapter A, or this section;

(C) has demonstrated a pattern or practice of failing to detect or disclose material information in reports filed under Insurance Code Chapter 401, Subchapter A, or this section; or

(D) has directly or indirectly entered into an agreement of indemnity or release of liability regarding an audit of an insurer.

(12) The insurer or HMO must file, with its annual statement filing, the approval of an exemption granted under paragraph (6) or (10) of this subsection with the states in which it does business or is authorized to do business and with the National Association of Insurance Commissioners. If a state, other than this state, in which the insurer or HMO does business or is authorized to do business accepts electronic filing, the insurer or HMO must file the approval in an electronic format acceptable to the National Association of Insurance Commissioners.

(i) Accountant's letter of qualifications. The audited financial report required under Insurance Code §401.004 must be accompanied by a letter, provided by the accountant who performed the audit, that includes the representations and statements required under Insurance Code §401.013, and a representation that the accountant is in compliance with the requirements specified in subsection (h) of this section.

(j) Communication of internal control matters noted in audit.

(1) In addition to the audited financial report required by Insurance Code Chapter 401, Subchapter A, and this section, each insurer or HMO shall provide to the Commissioner a written communication prepared by an accountant in accordance with the Professional Standards of the American Institute of Certified Public Accountants that describes any unremediated material weaknesses in its internal controls over financial reporting noted during the audit. The insurer or HMO must annually file with the Commissioner the communication required by this subsection not later than the 60th day after the date the audited financial report is filed. The communication must contain a description of any unremediated material weaknesses, as defined by Statement on Auditing Standards No. 112, "Communicating Internal Control Related Matters Identified in an Audit," or a successor document, as of the immediately preceding December 31, in the insurer's or HMO's internal control over financial reporting that was noted by the accountant during the course of the audit of the financial statements. The communication must affirmatively state if unremediated material weaknesses were not noted by the accountant.

(2) The insurer or HMO shall also provide a description of remedial actions taken or proposed to be taken to correct unremediated material weaknesses, if the actions are not described in the accountant's communication.

(k) Requirements for audit committees.

(1) This subsection does not apply to the following:

(A) a foreign or alien insurer or HMO;

(B) an insurer or HMO that is a SOX-compliant entity;

(D) a non-stock insurer that is under the direct or indirect control of a SOX-compliant entity, including pursuant to the terms of an exclusive management contract.

(2) Except as provided in paragraphs (1) and (3) of this subsection, an insurer or HMO to which Insurance Code Chapter 401, Subchapter A, applies must establish an audit committee conforming to the following criteria:

(A) an insurer or HMO with over $500 million in direct written and assumed premiums for the preceding calendar year shall establish an audit committee with an independent membership of at least 75 percent;

(B) an insurer or HMO with $300 million to $500 million in direct written and assumed premiums for the preceding calendar year shall establish an audit committee with an independent membership of at least 50 percent; and

(C) except as provided in paragraph (3) of this subsection, an insurer with less than $300 million in direct and assumed premiums for the preceding calendar year is not required to comply with the independence requirements in this subsection for its audit committee.

(3) Notwithstanding subsection (k)(1) and (10) of this section, the Commissioner may require the insurer's or HMO's board to enact improvements to the independence of the audit committee membership if the insurer or HMO:

(A) is in a risk-based capital action level event, as described by or provided in Insurance Code Chapters 822, 841, 843, or 884 or rules adopted thereunder, including §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs);

(B) meets one or more of the standards of an insurer or HMO considered to be in hazardous financial condition as described by or provided in Insurance Code Chapter 404, 441, or 843 or rules adopted thereunder, including Chapter 8 of this title (relating to Hazardous Condition) and §11.811 of this title (relating to Action under Insurance Code §843.157 and Insurance Code §843.461); or

(4) An insurer or HMO with direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of less than $500 million may apply to the Commissioner for a waiver from the requirements of paragraphs (1), (2), (5), (6) and (8) - (13) of this subsection based on hardship. The insurer or HMO shall file, with its annual statement filing, the approval of a waiver under this paragraph with the states in which it does business or is authorized to do business and with the National Association of Insurance Commissioners. If a state other than this state accepts electronic filing, the insurer or HMO shall file the approval in an electronic format acceptable to the National Association of Insurance Commissioners.

(5) In this subsection, direct written and assumed premiums for the preceding calendar year must be the combined total of direct premiums and assumed premiums from non-affiliates for the reporting entities.

(6) The audit committee is directly responsible for the appointment, compensation, and oversight of the work of any accountant, including the resolution of disagreements between the management of the insurer or HMO and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work under Insurance Code Chapter 401, Subchapter A, and this section. Each accountant shall report directly to the audit committee.

(7) The audit committee of an insurer or HMO or group of insurers or HMOs must be responsible for overseeing the insurer's or HMO's internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by subsection (l) of this section, relating to internal audit function requirements.

(8) Each member of the audit committee must be a member of the board of directors of the insurer or HMO or, at the election of the controlling person, a member of the board of directors of an entity that controls the group of insurers or HMOs as provided under paragraph (11) of this subsection and described under subsection (c)(3) of this section.

(9) To be independent for purposes of this subsection, a member of the audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory, or other compensatory fee from the entity or be an affiliate of the entity or an affiliate of any subsidiary of the entity. To the extent of any conflict with a statute requiring an otherwise non-independent board member to participate in the audit committee, the other statute prevails and controls, and the member may participate in the audit committee unless the member is an officer or employee of the insurer or HMO or an affiliate of the insurer or HMO.

(10) Except as provided in paragraph (3) of this subsection, if a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, the member may remain an audit committee member of the responsible entity, if the responsible entity gives notice to the Commissioner, until the earlier of:

(A) the next annual meeting of the responsible entity; or

(B) the first anniversary of the occurrence of the event that caused the member to be no longer independent.

(11) To exercise the election of the controlling person to designate the audit committee under this section, the ultimate controlling person must provide written notice of the affected insurers or HMOs to the Commissioner. Notice must be made before the issuance of the statutory audit report and must include a description of the basis for the election. The election may be changed through a notice to the Commissioner by the insurer or HMO, which must include a description of the basis for the change. An election remains in effect until changed by later election.

(12) The audit committee must require the accountant who performs an audit required by Insurance Code Chapter 401, Subchapter A, and this section to report to the audit committee in accordance with the requirements of Statement on Auditing Standards No. 114, "The Auditor's Communication With Those Charged With Governance," or a successor document, including:

(A) all significant accounting policies and material permitted practices;

(B) all material alternative treatments of financial information in statutory accounting principles that have been discussed with the insurer's or HMO's management officials;

(C) ramifications of the use of the alternative disclosures and treatments, if applicable, and the treatment preferred by the accountant; and

(D) other material written communications between the accountant and the management of the insurer or HMO, such as any management letter or schedule of unadjusted differences.

(13) If an insurer or HMO is a member of an insurance holding company system, the report required by paragraph (12) of this subsection may be provided to the audit committee on an aggregate basis for insurers or HMOs in the holding company system if any substantial differences among insurers or HMOs in the system are identified to the audit committee.

(l) Internal audit function requirements.

(1) An insurer or HMO is exempt from the requirements of this subsection if:

(A) the insurer or HMO has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500 million; and

(B) the insurer or HMO is a member of a group of insurers or HMOs, the group has annual direct written and unaffiliated assumed premium including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1 billion.

(2) An insurer or HMO or group of insurers or HMOs subject to this subsection must establish an internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer or HMO management regarding the insurer's or HMO's governance, risk management, and internal controls. This assurance must be provided by performing general and specific audits, reviews, and tests, and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.

(3) In order to ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function cannot defer ultimate judgment on audit matters to others and must appoint an individual to head the internal audit function who has direct and unrestricted access to the board of directors. Organizational independence does not prevent dual-reporting relationships.

(4) The head of the internal audit function must report to the audit committee regularly but no less than annually on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits, and the appropriateness of corrective actions implemented by management as a result of audit findings.

(5) If an insurer or HMO is a member of an insurance holding company system or included in a group of insurers or HMOs, the insurer or HMO may satisfy the internal audit function requirements set forth in this section at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level.

(m) Prohibited conduct in connection with preparation of Required Reports and documents.

(1) A director or officer of an insurer or HMO may not, directly or indirectly:

(A) make or cause to be made a materially false or misleading statement to an accountant in connection with an audit, review, or communication required by Insurance Code Chapter 401, Subchapter A, or this section; or

(B) omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review, or communication required under Insurance Code Chapter 401, Subchapter A, or this section.

(2) An officer or director of an insurer or HMO, or another person acting under the direction of an officer or director of an insurer or HMO, may not directly or indirectly coerce, manipulate, mislead, or fraudulently influence an accountant performing an audit under Insurance Code Chapter 401, Subchapter A, or this section if that person knew or should have known that the action, if successful, could result in rendering the insurer's or HMO's financial statements materially misleading. For purposes of this paragraph, actions that could result in rendering the insurer's or HMO's financial statements materially misleading include actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead, or fraudulently influence an accountant:

(A) to issue or reissue a report on an insurer's or HMO's financial statements that is not warranted and would result in material violations of statutory accounting principles prescribed by the Commissioner, generally accepted auditing standards, or other professional or regulatory standards;

(B) not to perform an audit, review, or other procedure required by generally accepted auditing standards or other professional standards;

(D) not to communicate matters to an insurer's or HMO's audit committee.

(n) Report of internal control over financial reporting.

(1) Each insurer or HMO required to file an audited financial report under Insurance Code Chapter 401, Subchapter A, and this section that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of $500 million or more must prepare a report of the insurer's or HMO's or group of insurers' or HMOs' internal control over financial reporting. The report must be filed with the Commissioner with the communication described by subsection (j) of this section. The report of internal control over financial reporting shall be filed with the Commissioner as of the immediately preceding December 31.

(2) Notwithstanding the premium threshold under paragraph (1) of this subsection, the Commissioner may require an insurer or HMO to file the management's report of internal control over financial reporting if the insurer or HMO is in any risk-based capital level event or meets one or more of the standards of an insurer or HMO considered to be in hazardous financial condition as described by or provided in Insurance Code Chapter 404, 441, 822, 841, 843, or 884 or rules adopted thereunder, including §7.402 of this title, Chapter 8 of this title, and §11.811 of this title.

(3) An insurer or HMO or a group of insurers or HMOs may file the insurer's or HMO's or the insurer's or HMO's parent's Section 404 report and an addendum if the insurer or HMO or group of insurers or HMOs is:

(A) directly subject to Section 404;

(B) part of a holding company system whose parent is directly subject to Section 404;

(D) a member of a holding company system whose parent is not directly subject to Section 404 but is a SOX-compliant entity.

(4) A Section 404 report described by paragraph (3) of this subsection must include those internal controls of the insurer or HMO or group of insurers or HMOs that have a material impact on the preparation of the insurer's or HMO's or group of insurers' or HMOs' audited statutory financial statements, including those items listed in Insurance Code §401.009(a)(3)(B) - (H) and (b). The addendum must be a positive statement by management that there are no material processes excluded from the Section 404 report with respect to the preparation of the insurer's or HMO's or group of insurers' or HMOs' audited statutory financial statements, including those items specified in Insurance Code §401.009(a)(3)(B) - (H) and (b). If there are internal controls of the insurer or HMO or group of insurers or HMOs that have a material impact on the preparation of the insurer's or HMO's or group of insurers' or HMOs' audited statutory financial statements and those internal controls are not included in the Section 404 report, the insurer or HMO or group of insurers or HMOs may either file:

(A) a report under this subsection; or

(B) the Section 404 report and a report under this subsection for those internal controls that have a material impact on the preparation of the insurer's or HMO's or group of insurers' or HMOs' audited statutory financial statements not covered by the Section 404 report.

(5) The insurer's or HMO's management report of internal control over financial reporting must include:

(A) a statement that management is responsible for establishing and maintaining adequate internal control over financial reporting;

(B) a statement that management has established internal control over financial reporting and an opinion concerning whether, to the best of management's knowledge and belief, after diligent inquiry, its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles;

(C) a statement that briefly describes the approach or processes by which management evaluates the effectiveness of its internal control over financial reporting;

(D) a statement that briefly describes the scope of work that is included and whether any internal controls were excluded;

(E) disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of the immediately preceding December 31;

(F) a statement regarding the inherent limitations of internal control systems; and

(G) signatures of the chief executive officer and the chief financial officer or an equivalent position or title.

(6) For purposes of paragraph (5)(E) of this subsection, an insurer's or HMO's management may not conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting.

(7) Management must document, and make available upon financial condition examination, the basis of the opinions required by paragraph (5) of this subsection. Management may base opinions, in part, on its review, monitoring, and testing of internal controls undertaken in the normal course of its activities.

(8) Management has discretion about the nature of the internal control framework used, and the nature and extent of the documentation required by paragraph (7) of this subsection, in order to form its opinions in a cost-effective manner and may include an assembly of or reference to existing documentation.

(9) The management's report of internal control over financial reporting required by this subsection and any supporting documentation provided in the course of a financial condition examination are considered examination information pursuant to Insurance Code §401.058 and information described by Insurance Code §401.201.

(o) Transition dates.

(1) An insurer or HMO or group of insurers or HMOs whose audit committee as of September 1, 2010, is not subject to the independence requirements of subsection (k) of this section because the total written and assumed premium is below the threshold specified in subsection (k)(2)(A) or (B) of this section and that later becomes subject to one of the independence requirements because of changes in the amount of written and assumed premium, has one year following the year in which the written and assumed premium exceeds the threshold amount to comply with the independence requirements. An insurer or HMO that becomes subject to one of the independence requirements as a result of a business combination must comply with the independence requirements not later than the first anniversary of the date of the acquisition or combination.

(2) An insurer or HMO required to file an audited financial report under Insurance Code Chapter 401, Subchapter A, and this section that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and the National Flood Insurance Program, of $500 million or more for the reporting period ending December 31, 2010, and that has not had total written premium at the $500 million or more premium threshold amount in any prior calendar year reporting period must comply with the reporting requirements in subsection (n) of this section no later than two years after the year in which the written premium exceeds the threshold amount required to file a report.

(3) An insurer or HMO or group of insurers or HMOs that is not required by subsection (n)(1) of this section to file a report beginning with the reporting period ending December 31, 2010, because the total written premium is below the threshold amount, and that later becomes subject to the reporting requirements, has two years after the year in which the written premium exceeds the threshold amount required to file a report. An insurer or HMO acquired in a business combination must comply with the reporting requirements not later than the second anniversary of the date of the acquisition or combination.

(4) An insurer or HMO or group of insurers or HMOs that no longer qualifies for the exemption in subsection (l)(1) of this section has one year after the year the threshold is exceeded to comply with the requirements of subsection (l)(1) of this section.

(p) Severability. If any subsection or portion of a subsection of this section is held to be invalid for any reason, all valid parts are severable from the invalid parts and remain in effect. If any subsection or portion of a subsection is held to be invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications. To this end, all provisions of this section are declared to be severable.

History

Source Note: The provisions of this §7.88 adopted to be effective August 31, 2010, 35 TexReg 7833; amended to be effective November 25, 2020, 45 TexReg 8344; amended to be effective April 26, 2021, 46 TexReg 2823.

28 Tex. Admin. Code § 7.89 Corporate Governance Annual Disclosure

(a) Purpose. The purpose of this section is to implement Insurance Code Chapter 831 by providing the procedures for filing and the content of the corporate governance annual disclosures.

(b) Definitions. The definitions in Insurance Code §831.0002 apply to this section. Consistent with Insurance Code §831.0002(3), when used in this section the term "insurer" includes Health Maintenance Organizations. In addition, the following terms are defined as used in this section:

(1) Board--insurer's board of directors;

(2) CGAD--Corporate Governance Annual Disclosure;

(3) Senior Management--any corporate officer reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators, and includes, but is not limited to, the chief executive officer, chief financial officer, chief operations officer, chief procurement officer, chief legal officer, chief information officer, chief technology officer, chief revenue officer, chief visionary officer, or any other senior level executive;

(4) TDI--Texas Department of Insurance.

(1) Filing deadline. An insurer required to file a CGAD under Insurance Code §831.0001 must file it with TDI no later than June 1 of each calendar year.

(2) Signature. The CGAD must include a signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer or insurance group has implemented the corporate governance practices and that a copy of the CGAD has been provided to the insurer's or insurance group's board of directors or appropriate committee.

(3) Submitting. Insurers and HMOs must submit the CGAD in an electronic format acceptable to TDI. The electronic filing address is provided on TDI's website at www.tdi.texas.gov.

(4) Format of CGAD. The insurer or insurance group have discretion over the format of the information required by this section and can customize the CGAD to provide the most relevant information necessary as long as it allows TDI to gain an understanding of the corporate governance structure, policies, and practices used by the insurer or insurance group.

(5) Level providing information.

(A) For purposes of completing the CGAD, the insurer or insurance group may choose to provide information on governance activities that occur at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level, depending on how the insurer or insurance group has structured its system of corporate governance.

(B) The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer's or insurance group's risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed.

(C) If the insurer or insurance group determines the level of reporting based on the criteria in paragraph (5)(B) of this subsection, it must indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.

(6) Filing if CGAD is completed on insurance group level. If the CGAD is completed at the insurance group level, then it must be filed with the lead state of the group as determined by the procedures outlined in the most recent financial analysis handbook adopted by the National Association of Insurance Commissioners. In these instances, a copy of the CGAD must also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, on request.

(7) Annual filing of amended versions. Each year following the initial filing of the CGAD, the insurer or insurance group must file:

(A) an amended version of the previously filed CGAD indicating where changes have been made; or

(B) a letter stating that no changes were made in the information or activities reported by the insurer or insurance group since the previously filed CGAD. The letter must state the date of the previously filed CGAD.

(d) Content of CGAD. The insurer or insurance group must be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process, since these may provide a means to demonstrate the strengths of their governance framework and practices. The insurer or insurance group may reference other filings that were previously submitted to TDI instead of resubmitting similar information.

(e) CGAD considerations. The CGAD must describe the insurer's or insurance group's corporate governance framework and structure including consideration of the following:

(1) the board and various board committees ultimately responsible for overseeing the insurer or insurance group and the level at which that oversight occurs. The level of oversight may be at the ultimate controlling parent level, intermediate holding company control level, or the individual legal entity control level, depending on how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group must describe and discuss the rationale for the current board size and structure; and

(2) the duties of the board and each of its significant committees and how they are governed under the bylaws, charters, and informal mandates, as well as how the board's leadership is structured, including a discussion of the roles of chief executive officer and chairman of the board within the organization.

(f) Factors. The insurer or insurance group must describe the policies and practices of the most senior governing entity and its significant committees, including a discussion of the following factors:

(1) How the qualifications, expertise, and experience of each board member meet the needs of the insurer or insurance group.

(2) How an appropriate amount of independence is maintained on the board and its significant committees.

(3) The number of meetings held by the board and its significant committees over the past year as well as information on director attendance.

(4) How the insurer or insurance group identifies, nominates, and elects members to the board and its committees. The discussion should include:

(A) Whether a nomination committee is in place to identify and select individuals for consideration.

(B) Whether term limits are placed on directors.

(D) Whether a board diversity policy is in place and if so, how it functions.

(5) The processes in place for the board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance, including any board or committee training programs that have been put in place.

(g) Additional factors. The insurer or insurance group must describe the policies and practices for directing senior management, including a description of the following factors:

(1) Any processes or practices (suitability standards) to determine whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their prospective roles, including:

(A) identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and

(B) any changes in an officer's or key person's suitability as outlined by the insurer's or insurance group's standards and procedures to monitor and evaluate such changes.

(2) The insurer's or insurance group's code of business conduct and ethics, the discussion of which considers, for example:

(A) compliance with laws, rules, and regulations; and

(B) proactive reporting of any illegal or unethical behavior.

(3) The insurer's or insurance group's processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description must include enough detail to allow the director to understand how the organization ensures that compensation programs do not encourage and reward excessive risk taking. Elements to be discussed may include:

(A) the board's role in overseeing management compensation programs and practices;

(B) the various elements of compensation awarded in the insurer's or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

(D) whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

(E) any "clawback provisions" built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and

(F) any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.

(4) The insurer's or insurance group's plans for chief executive officer and senior management succession.

(h) Oversight. The insurer or insurance group must describe the processes by which the board, its committees, and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of:

(1) how oversight and management responsibilities are delegated between the board, its committees, and senior management;

(2) how the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; and

(3) how reporting responsibilities are organized for each critical risk area. The description should allow the board to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description may include the following critical risk areas of the insurer:

(A) risk management processes. An ORSA summary report filer may refer to its ORSA summary report under Insurance Code Chapter 30;

(B) actuarial function;

(D) reinsurance decision-making processes;

(E) business strategy/finance decision-making processes;

(F) compliance function;

(G) financial reporting/internal auditing; and

(H) market conduct decision-making processes.

(i) Severability. If any portion of this section, or its application to any person or circumstance, is held invalid, the determination does not affect other portions of this section or its applications that can be given effect without the invalid portion or application. To this end, the provisions of this rule are severable.

History

Source Note: The provisions of this §7.89 adopted to be effective November 25, 2020, 45 TexReg 8344.

Subchapter B INSURANCE HOLDING COMPANY SYSTEMS

28 Tex. Admin. Code § 7.201 Forms Filings

(a) General requirements.

(1) The forms specified in §§7.209 - 7.214 of this title (relating to Form A, Form B, Form C, Form D, Form E, and Form F, respectively) are guides for preparing the statements, notices, and applications required by Insurance Code Chapter 823. They provide notice of the information required and the location the department expects to find it. In preparing any statement, notice, or application, the text of the form need not be repeated so long as it is clear to which matter the answer or material applies. Unless expressly provided otherwise, if any item is inapplicable or the answer is in the negative, an appropriate statement to that effect must be made. The forms specified in §§7.209 - 7.214 of this title are also referred to in this subchapter as Forms A - F. Form A is also referred to as the acquisition or divestiture statement, Form B as the registration statement, Form C as the summary of changes to the registration statement, Form D as prior notice of a transaction, Form E as a notice of dividend or distribution, and Form F as an enterprise risk report. For use in accord with §7.209(d) and (f) of this title, the department adopts by reference the latest version of the biographical affidavit form published by and available from the National Association of Insurance Commissioners and available on the department website.

(2) Two complete originally signed copies (unless additional copies are requested by the commissioner) of each statement, notice, or application, including exhibits and all other papers and documents filed in connection with any acquisition statement filed under §7.209 of this title, and one complete originally signed copy of every other statement, notice, or application, including exhibits and all other papers and documents filed, must be filed with the commissioner by personal delivery or by mail addressed to: Financial Analysis, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. Each statement, notice, or application will be subject to the appropriate filing fee provided in §7.1301 of this title (relating to Regulatory Fees). The appropriate filing fee must be forwarded to the Cashier's Office, Mail Code 9999, at the previously stated address under separate cover along with the Fee Transmittal Form available on the department website.

(3) Statements, notices, and applications should be prepared on paper 8 1/2 inches by 11 inches or 8 1/2 inches by 14 inches in size and preferably bound at the top or top lefthand corner. All copies of any statement, notice, application, exhibit, or financial statement must be clear, easily readable, and suitable for photocopying. Debit in credit categories and credits in debit categories must be designated so as to be clearly distinguishable on photocopies. Statements, notices, and applications must be in English and monetary values must be stated in United States currency. If any exhibit or other paper or document filed with a statement, notice, or application is in a foreign language, it must be accompanied by a translation into English and any monetary value shown in a foreign currency must be converted into United States currency with the rate of exchange disclosed in the submission.

(4) Every statement, notice, or application must state on the cover page the names and addresses of all persons on whose behalf it is made.

(b) Incorporation by reference, summaries, and omissions.

(1) Information required by any item of any statement, notice, or application may be incorporated by reference in answer or partial answer to another item. Information contained in any instrument or document filed with the commissioner within five years and currently remaining on file may be incorporated by reference. The reference must clearly identify the material and indicate it is incorporated by reference.

(2) The right to incorporate by reference does not apply to §7.209 of this title or to a completely restated up-to-date registration statement filed in accord with §7.203(g) of this title (relating to Registration of Insurers) and §7.210 of this title.

(3) Where an item requires a summary or outline of the provisions of any document, only a brief statement must be made as to the most important provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document for which reference is allowed by these sections. The particular page and paragraph of the exhibit or document to which reference is made must be specified. If two or more documents required to be attached as exhibits are substantially identical in all material respects, a copy of only one of the documents need be filed. A schedule must be attached identifying and detailing the ways the other document differs from the filed exhibit.

(4) By use of a reference, the person filing is deemed to have verified the accuracy of the information referred to as though it was an original statement, unless the person filing identifies the information as being not verified by the person filing.

(c) Additional information and exhibits. In addition to the information expressly required to be included in the forms set out in these sections the filer must add any further material information needed to make the information contained not misleading. The person filing may also file exhibits in addition to those expressly required. The exhibits must be so marked as to indicate clearly the subject matters to which they refer.

(d) Amendment. Any amendment to a statement, notice, or application must include on the top of the cover page the phrase "Amendment No." and must indicate the date of amendment and not the date of the original filing.

(e) Information unknown or unavailable. If any required information is unknown and not reasonably available to the person filing, either because obtaining the information would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions:

(1) The person filing must give the information on the subject as the person possesses or can acquire without unreasonable effort or expense, together with the sources.

(2) The person filing must include a statement either demonstrating that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

History

Source Note: The provisions of this §7.201 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective December 24, 1993, 18 TexReg 9310; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.202 Definitions

(a) The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Insurance Code, Chapter 823.

(2) Affiliate--An affiliate of, or person affiliated with, a specific person is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. If the controlling person includes a member of the immediate family of a person, any other person that is an affiliate of the family member is deemed to be an affiliate of the controlling person.

(3) Commercially domiciled insurer--A foreign or alien insurer authorized to do business in this state, that during its three preceding fiscal years taken together, or any lesser period if it has been licensed to transact business in this state only for that lesser period, has written an average of more gross premiums in this state than it has written in its state of domicile during the same period, and such gross premiums constitute 30 percent or more of its total gross premiums everywhere in the United States for that three-year or lesser period, as reported in its three most recent annual statements. To determine if an insurer is a commercially domiciled insurer, the annual average ratio for premium receipts addressed in subparagraphs (A) and (B) of this paragraph must be calculated, as follows:

(A) total Texas premium for the preceding three fiscal years (or any lesser period if licensed in Texas less than three years) divided by total premium countrywide for the preceding three years; and

(B) total premium in the state of domicile for the preceding three years divided by total premium countrywide for the preceding three years.

(4) Commissioner--The commissioner of insurance of the State of Texas, the commissioner's associates or deputies, or their designees, as appropriate.

(5) Control--The term "control," including the terms "controlling," "controlled by," and "under common control with," means the power, direct or indirect, to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, or with members of the person's immediate family, owns, controls, or holds the power to vote, or if any person other than a corporate officer or director of a person holds proxies representing 10 percent or more of the voting securities or authority of any other person, or if any person by contract or agreement is designated as an attorney-in-fact for a Lloyd's plan insurer under Insurance Code Chapter 941, or for a reciprocal or interinsurance exchange under Insurance Code Chapter 942. This presumption may be rebutted by a showing made in the manner provided by Insurance Code §823.005, that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest with notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect, where a person exercises, directly or indirectly, either alone or under an agreement with one or more other persons such a controlling influence over the management or policies of an authorized insurer as to make it necessary or appropriate in the public interest or for the protection of the policyholders of the insurer that the person be deemed to control the insurer.

(6) Controlled insurer--An insurer controlled directly or indirectly by a holding company (as a holding company is defined in this section).

(7) Controlled person--Any person, other than a controlled insurer, who is controlled directly or indirectly by a holding company (as a holding company is defined in this section).

(8) Controlling producer--An insurance broker or brokers or any person, firm, association, or corporation domiciled, licensed, or operating in a state other than Texas, when, for any compensation, commission, or other thing of value, the person, firm, association, or corporation acts or aids in any manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of an insured other than the person, firm, association, or corporation, and who, directly or indirectly:

(A) controls or seeks to control a property and casualty insurer as the term control is defined in paragraph (5) of this subsection; and

(B) writes or places, in any calendar year, an aggregate amount of gross written premiums with the controlled property and casualty insurer which is equal to or greater than 5.0 percent of the admitted assets of the insurer as reported in the insurer's quarterly statement filed as of September 30 of the prior year. The term "producer" or "controlling producer" as used in these sections is not intended to include an agent or any independent agent acting on behalf of the controlled insurer, licensed under Insurance Code Chapter 4001, Subchapter A, and any subagent or representative of the agent, who acts in the solicitation of, negotiation for, or procurement or making of an insurance contract, if the agent is not also acting on behalf of an insured as set forth in this paragraph, in the transaction in question. The term "producer" or "controlling producer" as used in these sections is not intended to include an attorney-in-fact acting on behalf of a licensed Lloyd's or licensed reciprocal or interinsurance exchange.

(9) Director--A person elected or appointed as a member of a board of directors responsible for the management of an insurer. The term must also include an attorney-in-fact of a Lloyds or reciprocal or interinsurance exchange who is charged with responsibility for the management of an insurer.

(10) Divesting person--A person who has control of a domestic insurer and who intends to divest control of the domestic insurer.

(11) Divestiture--An abandonment of control of a domestic insurer by a divesting person that does not result in the transfer of control to another person.

(12) Enterprise risk--Any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole, including anything:

(A) that would cause the insurer's risk-based capital to fall into company action level; or

(B) that would cause the insurer to be in hazardous financial condition.

(13) Executive officer--The chairman of the board of directors, the president, any vice-president of an applicant in charge of a principal business unit, division, or function (such as sales, administration, finance, or underwriting), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for an applicant. Executive officers of subsidiaries may be deemed executive officers of an applicant if they perform policy-making functions for an applicant.

(14) Foreign insurer--Includes an alien insurer.

(15) Holding company--Any person who directly or indirectly controls any insurer, but not including any agency, authority, or instrumentality of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state or any corporation which is wholly owned, directly or indirectly, by any of them.

(16) Immediate family--A person's spouse, father, mother, children, brothers, sisters, and grandchildren, the father, mother, brothers, and sisters of the person's spouse, and the spouse of the person's child, brother, sister, mother, father, or grandparent.

(17) Insurance holding company system--Two or more affiliated persons, one or more of which is an insurer.

(18) Insurer--Includes all insurance companies organized or chartered under the laws of this state, commercially domiciled insurers, or insurers licensed to do business in this state, including capital stock companies, mutual companies, farm mutual insurance companies, title insurance companies, fraternal benefit societies, local mutual aid associations, local mutual burial associations, statewide mutual assessment companies, county mutual insurance companies, Lloyds' plan companies, reciprocal or interinsurance exchanges, stipulated premium insurance companies, group hospital service companies and health maintenance organizations, and any other entity which is subject to Insurance Code Chapter 823 by applicable law, but does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

(19) Person--An individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or similar entity or combination of them acting in concert, but not a securities broker performing only the usual and customary broker's function.

(20) Security holder of a specified person--One who owns any security of the person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. The term "debt obligation" does not include trade, commercial, or open accounts, matured claims, or agents' commissions.

(21) Subsidiary of a specified person--An affiliate controlled by the person directly or indirectly through one or more intermediaries.

(22) Ultimate controlling person--That person which is not controlled by another person (as defined in this subsection).

(23) Voting security--Any security or other instrument giving or granting to the holder the power to vote at a meeting of shareholders, for or against the election of directors, or any other matter involving the direction of the management and policies of the person, or any other security or instrument the department deems to be of similar nature including, but not limited to, those described in the rules and regulations the department may prescribe in the public interest as a voting security.

(b) Exemption--Commercially Domiciled Insurer.

(1) The commissioner may exempt from the provisions of Insurance Code Chapter 823 and these sections, except the registration requirement, any commercially domiciled insurer if the commissioner determines the insurer has assets physically located in this state or an asset to liability ratio sufficient to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to the policyholders of this state. The exemption granted under this subsection must set forth the specific criteria under which it is granted and will be subject to annual review. The commissioner may, after notice and opportunity for hearing, rescind an exemption granted to a commercially domiciled insurer under the provisions of Insurance Code Chapter 823 and these sections. A rescission of an exemption must set forth the rationale for the rescission. Requests for an exemption under this subsection must be filed with Financial Analysis, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. The request must contain a signed and notarized affidavit of an executive officer of the insurer that, should the exemption be granted, the insurer will notify Financial Analysis within 10 days after it no longer meets the criteria set out in this section on which the exemption is based. In determining that a commercially domiciled insurer has sufficient assets to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to policyholders of this state, the commissioner must give consideration to the matters contacted in subparagraphs (A) - (D) of this paragraph in connection with an exemption requested under Insurance Code §823.015, and these sections.

(A) Assets in Texas, which are either:

(i) permanent, free, and unencumbered and physically located in Texas in an amount equal to the total unpaid losses attributable to Texas risks; or

(ii) qualifying authorized investments under the Insurance Code comprising 20 percent of the insurer's admitted assets and physically located in Texas.

(B) Adequacy of policyholder surplus, based upon:

(i) an asset-to-liability ratio of two to one, if the insurer is a property and casualty insurer;

(ii) an asset-to-liability ratio of one and one-half to one, if the insurer is a life, accident and health insurer;

(iii) the insurer having capital and surplus equal to 250 percent of the minimum risk-based capital described in §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs); or

(iv) the insurer having total capital and surplus of at least $50 million.

(C) Consideration may be given to financial conditions specified in §8.3 of this title (relating to Hazardous Conditions) to justify the conclusion that there is no reasonable danger that the operations or conduct of the business of the insurer could present a danger of loss to the policyholders of this state.

(D) Consideration may be given to other positive factors with regard to an insurer's operations or conduct.

(2) The provisions of this subchapter do not apply to a foreign or alien insurer if the commissioner has approved a total withdrawal plan from writing all lines of insurance for the insurer under Insurance Code Chapter 827.

History

Source Note: The provisions of §7.202 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective December 24, 1993, 18 TexReg 9310; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective October 26, 2009, 34 TexReg 7309; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.203 Registration of Insurers

(a) Registration. Except as provided by the Act, every insurer authorized or incorporated to do business in this state and is a member of an insurance holding company system must register in accord with the Act. The exemption from registration for a foreign insurer does not apply to a commercially domiciled insurer doing business in this state; nor to a commercially domiciled insurer granted an exemption under §7.202 of this title (relating to Definitions). The commissioner must terminate the registration of a commercially domiciled insurer when it is demonstrated that it no longer meets the definition of commercially domiciled insurer in §7.202 of this title.

(b) Information filing from insurers. Every insurer which is authorized to do business in this state and which is a member of an insurance holding company system and is not required to register under subsection (a) of this section must furnish to the commissioner a copy of the registration statement or other information filed by such insurer with the insurance regulatory authority of its domiciliary jurisdiction and all amendments, if required by the commissioner.

(c) Information and forms required. Every insurer subject to registration must file a registration statement in accord with §7.210 of this title (relating to Form B), §7.211 of this title (relating to Form C), and as applicable, to §7.214 of this title (relating to Form F), providing current information about the requested matters.

(d) Materiality. Information which is not material for the purposes of the Act, need not be filed under the Act, §823.054, for certain requirements respecting materiality. See subsection (f) of this section for the rule on material changes.

(e) Amendments to registration statements. Each registered insurer must keep current the information required to be disclosed in its registration statement by reporting all material changes or additions (whether single transactions or cumulative in total). The amendment must be in accord with §7.210 of this title, the registration statement, the cover page requirements of §7.201(d) of this title (relating to Forms Filings), and with a positive statement as to the items of the form not being amended instead of setting out the unamended portions. The amendment must be filed within 15 days after the end of the month in which the registered insurer learns of the change or addition. Any transaction that is approved by the commissioner is deemed to be an amendment to the registration statement without further action or filing.

(f) Material changes. The following occurrences are, without limiting the meaning of the phrase "material changes," deemed material changes for purposes of filing an amendment to the registration statement:

(1) any acquisition of a voting security of a domestic insurer, directly or indirectly, by a person in control of the domestic insurer if, after the acquisition, the person, directly or indirectly, owns or controls less than 50 percent of the then issued and outstanding voting securities of the domestic insurer, in which case §7.210(b) and (c) of this title must be made current;

(2) any acquisition of a voting security of a domestic insurer, directly or indirectly, by a person that prior, directly or indirectly, owns or controls more than 50 percent of the then issued and outstanding voting securities of the domestic insurer, in which case §7.210(b) and (c) of this title must be made current;

(3) a change in the control of the registrant, in which case the entire registration statement must be made current (notwithstanding any other provision of this subchapter);

(4) a change in the information required by §7.210(f) and (g) of this title, in which case the respective subsection must be made current;

(5) a change of the chief executive officer, president, or more than one-third of the directors reported in §7.210(e) of this title, in which case the respective subsection must be made current;

(6) any transaction with an affiliate or affiliates which, when taken together with all other transactions with affiliates excluding those transactions approved under §7.204(a)(1) of this title (relating to Transactions Subject to Prior Notice) and those transactions for which notification is given under §7.204(a)(2) occurring within 12 months next preceding, under Subchapter C of the Act. In this case, §7.210(c) and (f) of this title must be made current together with a report of all transactions with affiliates regardless of size within 12 months next preceding. After the transactions are reported and the filings under §7.210(c) and (f) are made current, each subsequent transaction with an affiliate which, when taken together with those transactions which occurred within the 12 months next preceding, were reported under this subsection and Subchapter C of the Act, must be reported under subsection (e) of this section.

(g) Annual amendment. Within 120 days after the end of each fiscal year of the ultimate controlling person (that person which is not controlled by another person) of the insurance holding company system, the registrant must file an annual registration statement. An insurer required to file an annual registration statement must also furnish a summary of material changes from the prior year's annual registration statement under §7.211 of this title.

(h) Termination of registration. The commissioner must terminate the registration of any insurer as provided in Insurance Code §823.056.

(i) Consolidated filing. Any licensed insurer may file a consolidated registration statement or any amendment on behalf of itself and any affiliated insurer or insurers which are required to register under subsection (a) of this section, if so authorized by the affiliates. Each registration statement may include information regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state. Each licensed insurer in the filing must determine the correctness of the entire statement and amendments and is bound by the terms of the entire statement and amendment. The statement may be made under the provisions of subsection (j) of this section.

(j) Alternative registration.

(1) In lieu of filing a registration statement as specified in §7.210 of this title, a licensed insurer may file a copy of the registration statement or similar report it is required to file in its state of domicile (or a report it is required to file in another state where it is licensed if its state of domicile requires no such report) provided:

(A) the statement or report contains information substantially similar to information required in §7.210 of this title and any of the information not in the statement or report is provided by supplement; and

(B) the filing insurer is the principal insurer in the insurance holding company system or, in the case of a consolidated statement, the statement is in the form required by the principal insurer's domicile.

(2) Whether the filing insurer is the principal insurer in the insurance holding company system is a question of fact. An insurer filing a registration statement (or report in lieu of the information specified in §7.210 of this title) on behalf of an affiliated insurer must set forth a simple statement of facts which will substantiate the filing insurer's claim that it is the principal insurer in the insurance holding company system.

(3) With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures which could be done by an authorized insurer under paragraph (1) of this subsection.

(4) The commissioner may require under this subsection or subsection (i) of this section separate filings if the commissioner deems the filings necessary in the interest of clarity, ease of administration, or the public good.

(k) Enterprise Risk Report. The ultimate controlling person of an insurer required to file an enterprise risk report under Insurance Code §823.0595 must furnish the required information on Form F, which is made a part of these regulations.

(l) Exemptions. The provisions of this section do not apply to any insurer, information, or transaction if and to the extent exempted by the commissioner by rule, regulation, or order.

(m) Disclaimer.

(1) Any person may file with the commissioner a disclaimer of control or affiliation with any insurer, or the disclaimer may be filed by the insurer or any member of an insurance holding company system as a separate filing.

(2) A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (referred to as the "subject") must contain the following information:

(A) the number of authorized, issued, and outstanding voting securities or rights of the subject;

(B) with respect to the person whose control is denied and all affiliates of the person, the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly;

(C) all material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of the person; and

(D) a statement explaining why the person should not be considered to control the subject.

(3) The applicant must simultaneously furnish a copy of any disclaimer filed with the commissioner to the insurer, if the affected insurer is not a party to it. The insurer must, within 15 business days after receipt, unless the time is extended by the commissioner for good cause, respond to the matters raised in the disclaimer.

(4) The applicant of a disclaimer which has been allowed must notify the commissioner within 15 days after the end of the month if any information constituting the basis for the disclaimer is incomplete, inaccurate, or no longer accurate. The commissioner may disallow the disclaimer for failure to provide the information.

(5) After a disclaimer has been filed, the insurer is relieved of the duty to register or report under subsection (a) of this section which may arise out of the insurer's relationship with the person unless and until the commissioner disallows the disclaimer. If the commissioner disallows a disclaimer, the party who filed the disclaimer may request an administrative hearing which must be granted by the commissioner.

(6) After a disclaimer of control or affiliation has been filed by any person, any acquisition, in any manner, directly or indirectly, of a voting security of the domestic insurer by the person is subject to the Act, in the absence of the filing within 15 days after the end of the month in which the acquisition of an additional voting security occurs, of an amendment makes current the disclaimer of control or affiliation previously filed under this subsection.

(n) Violations. The failure to file a registration statement or any amendment to a Form B (relating to Registration Statement) or Form F (relating to Enterprise Risk Report) within the time specified for the filing is a violation of this section.

(o) Dividends and distributions. Each registered insurer must, by personal delivery, by facsimile, or by mail addressed to: Financial Analysis, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104, provide notice to the commissioner of all dividends and other distributions to shareholders under Insurance Code §823.053 in Form E (relating to Notice of Dividend or Distribution) and the notice is deemed an amendment to the registration statement without further action or filing. Prepayment notices will be considered promptly. Each prepayment notice must be accompanied by documentation supporting each of the standards specified in Insurance Code, §823.008, unless the documentation has previously been provided during the current calendar year and the person to whom the documentation was sent is identified. Dividends and distributions must be reviewed by the commissioner and, if the standards in the Act, §823.008 are not met, the commissioner will take appropriate action, including, but not limited to, that provided under Insurance Code §§82.001 - 82.056, 83.001 - 83.153 and Chapters 403, 404, 441, and 443. All reported dividends and distributions must be reviewed annually in the registration statement filed under §7.210 of this title. See §7.204(d) of this title for requirements regarding extraordinary dividends and distributions.

History

Source Note: The provisions of this §7.203 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798.; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.204 Transactions Subject to Prior Notice

(a) Prior approval and notice.

(1) The prior written approval of the commissioner is required for the transactions specified in the Act, §823.102. This section only applies to sales, purchases, exchanges, loans or extensions of credit or guarantees, or investments, including an amendment or modification of an affiliate agreement previously filed under this section.

(2) The following transactions under the Act, §823.103, including any amendments or modification of an agreement as previously filed between a domestic insurer and any person in its holding company system may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into any like transaction at least 30 days prior, or a shorter period as the commissioner may permit, and the commissioner has not disapproved it within the period:

(A) sales, purchases, exchanges, loans or extensions of credit or guarantees, or investments;

(B) reinsurance agreements, including reinsurance treaties, or pooling agreements, or any amendments or modification to any agreement, and those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer;

(C) any contract, agreement, or arrangement for the furnishing or receiving of services or facilities on a regular or systematic basis; or

(D) management or service agreements, cost sharing agreements, rental or leasing agreements must at a minimum, to the extent not inconsistent with applicable law or regulation, and as applicable:

(i) identify the person providing services and the nature of the services;

(ii) set forth the methods to allocate costs to include Insurance Code §823.101(e);

(iii) require timely settlement, at least every 90 days, and compliance with the requirements in the Accounting Practices and Procedures Manual published by the National Association of Insurance Commissioners;

(iv) prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

(v) state that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

(vi) define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;

(vii) specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;

(viii) state that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;

(ix) include standards for termination of the agreement with and without cause;

(x) include indemnifying the insurer in the event of gross negligence or willful misconduct by the affiliate providing the services;

(xi) specify that, if the insurer is placed in receivership or seized by the commissioner under Insurance Code Chapter 443:

(I) all of the rights of the insurer under the agreement extend to the receiver or commissioner; and

(II) all books and records will immediately be made available to the receiver or the commissioner, and must be turned over to the receiver or commissioner immediately upon the receiver or the commissioner's request;

(xii) specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership under Insurance Code Chapter 443; and

(xiii) specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the commissioner under Insurance Code Chapter 443, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered;

(E) agreements to consolidate federal income tax returns, which agreements must provide that a domestic insurer will be adequately indemnified in the event the Internal Revenue Service levies upon the insurance company's assets for unpaid taxes in excess of the amount paid under the agreement;

(F) transactions with affiliated financial institutions, other than fully insured deposits;

(G) participation in an investment pool by a property and casualty insurer under Insurance Code Chapter 424; and

(H) any material transactions which the commissioner has determined after notice may adversely affect the interest of the insurer's policyholders or of the public.

(3) A domestic insurer may not enter into transactions that are part of a plan or series of similar transactions with persons within the holding company system to avoid the statutory threshold amount and avoid review. If the commissioner determines that the transactions were entered into over any 12-month period for that purpose, the commissioner may consider the series of transactions with regard to their cumulative effect and may apply the applicable statutory thresholds or the commissioner may apply sanctions under the Code.

(4) Nothing in this rule will authorize or permit any transactions which, in the case of a noncontrolled insurer, would be otherwise contrary to law.

(5) The commissioner, in reviewing transactions, must consider whether the transactions comply with the standards set forth in subsection (c) of this section and whether they may adversely affect the interest of policyholders. Any disapproval by the commissioner of any of the transactions must set forth the specific reasons for the disapproval.

(6) The approval of any transaction under this subsection is deemed an amendment under §7.203(e) of this title (relating to Registration of Insurers) to an insurer's registration statement without further filing.

(b) Transactions. An insurer required to request approval of transactions under subsection (a)(1) of this section and give notices of proposed transactions under subsection (a)(2) of this section, must furnish the required information on Form D (relating to Prior Notice of a Transaction) including the applicable filing fee provided for in §7.1301(d)(23) of this title (relating to Regulatory Fees). The descriptions must in all cases include at least the following: the nature and purpose of the transaction; the nature and amounts of any payments or transfers of assets between the parties; the identities of all parties to the transactions; whether any officers or directors of a party are pecuniarily interested, and copies of any proposed contracts, agreements, or memoranda of understanding between the parties relating to the transaction along with sufficient competent documentation evidencing compliance with the standards specified in Insurance Code §823.101, and evidencing that the transaction will not adversely affect the interest of policyholders. Proposed contracts, agreements, or memoranda of understanding must provide for settlement within 90 days. No request or notice is deemed filed with the commissioner until the date all of the material has been provided.

(c) Transactions with affiliates and others. Material transactions by registered insurers with their holding companies, subsidiaries, or affiliates are subject to the standards specified in the Act, §823.101.

(d) Extraordinary dividends and other distributions.

(1) An insurer subject to registration under §7.203(a) of this title must not pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until:

(A) 30 days after the commissioner has received written notice in accord with §7.213 of this title (relating to Form E) of the declaration, including the applicable filing fee under §7.1301(d)(23) of this title, provided the commissioner has not disapproved the payment; or

(B) the commissioner approves the payment within the 30-day period. The written notice required under this paragraph will be deemed filed with the commissioner only when all material sufficient to constitute a complete filing, including documentation to support each of the standards set forth in the Act, §823.008, and the payment of any required filing fee under §7.1301(d)(23) of this title have been provided.

(2) For purposes of these sections:

(A) an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding 12 months under the Act, §823.107;

(B) an extraordinary dividend or distribution must not include pro rata distributions of any class of an insurer's own securities;

(C) in determining the 12-month cumulative amount for dividends or distributions, the calculation must be based on the payment date(s) of the dividends or distributions.

(3) Notwithstanding any other provision of law, an insurer may declare an extraordinary dividend or distribution under the conditions specified in the Act, §823.107.

(e) Adequacy of surplus. For the purposes of these sections, in determining whether an insurer's surplus as regards policyholders is reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the factors specified in the Act, §823.008, among others, must be considered.

History

Source Note: The provisions of this §7.204 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.205 Acquisition or Divestiture Statements--Filing Requirements

(a) Filing Requirements. Filing and other regulatory requirements for acquisitions, changes of control, or divestitures and certain other matters as specified in the Act, §823.153 and §823.154, are governed by the Act, §823.153 and §823.154. For purposes of this subsection, a domestic insurer as defined in the Act, §823.153, includes any person controlling a domestic insurer, including a commercially domiciled insurer, unless the person is, either directly or through its affiliates, primarily engaged in business other than the business of insurance. A change or substitution of an attorney-in-fact of a Lloyds' or reciprocal or interinsurance exchange is subject to the Act, §823.154. A failure to file complete and accurate information in all material respects is grounds for a denial by the commissioner under the Act, §823.157.

(b) Form and content of statement. The statement required by subsection (a) of this section (elsewhere referred to as acquisition or divestiture statement) must be made in accord with §7.209 of this title (relating to Form A), the acquisition or divestiture statement, §7.209(a) - (n) and §7.209(o), respectively. The acquiring party must provide additional financial information in form or substance as required by the commissioner which is material to the finding required by the Act, §823.157. Any financial information required under the Act, §823.203, may be waived by the commissioner if the information is not deemed material. No statement required by subsection (a) of this section will be deemed filed with the commissioner until the date all material required and sufficient to constitute a full statement has been provided.

(c) Partnerships and corporate filings. If the person required to file the acquisition statement is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information called for by §7.209 of this title be given with respect to each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If any partner, member, or person is a corporation or if the person required to file the statement referred to in subsection (a) of this section is a corporation, the commissioner may require that the information called for by §7.209 be given with respect to the corporation and by each executive officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10 percent of the outstanding voting securities of the corporation.

(d) Amendment. If any material change occurs in the facts set forth in the acquisition or divestiture statement filed with the commissioner, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, must be filed with the commissioner and sent to the domestic insurer within two business days after the person learns of the change.

(e) Acquisition or divestiture of a domestic insurer as defined in subsection (a) of this section.

(1) If the person being acquired or divested is a domestic insurer solely because of the provisions of subsection (a) of this section, the name of the domestic insurer on the cover page should be indicated as follows: "ABC Insurance Company, a subsidiary of XYZ Holding Company."

(2) Where a domestic insurer as defined in subsection (a) of this section is being acquired or divested, references to "the insurer" contained in §7.209 of this title refer to both the domestic subsidiary insurer and the person being acquired or divested.

(f) Approval or denial by commissioner; hearings. All mergers, acquisitions, changes of control, or divestitures and other matters specified in the Act, §823.154, and mergers contemplated by Insurance Code §441.006, are subject to the Act, §823.157. The acquiring or divesting party has the burden of providing sufficient competent evidence for the commissioner to make the determinations required under the Act, §823.157.

(g) Notices; payment of expenses.

(1) Notices, payments of expenses, and other matters specified in the Act, §823.156, must comport with that subsection.

(2) All provisions of Insurance Code Chapter 823, and this subchapter relating to the timely mailing of a copy of the acquisition or divestiture statement, and relating to the timely mailing of a copy of a notice of hearing before the commissioner to an insurer, may be waived by the written unanimous consent of the insurer and the person or persons filing such acquisition or divestiture statement. The written waiver must acknowledge receipt of a copy of the acquisition or divestiture statement.

(h) Exemptions. The provisions of this section do not apply to transactions and other matters exempted under the Act, §823.164. A restructuring within an insurance holding company system which results in a direct or indirect change in control of a domestic insurer is subject to the Act, §823.164(h)(1). An acquisition of a voting security of a domestic insurer specified in the Act, §823.164(f)(1) and (2), must be disclosed by amendment to the registration statement as provided in §7.203(f) of this title (relating to Registration of Insurers). An acquisition of a voting security of a domestic insurer by a security holder controlling, directly and indirectly, 50 percent of the then issued and outstanding voting securities of the domestic insurer, is subject to the Act, §823.164(g). An acquisition of a voting security of an insurer domiciled in this state which is not subject to the Act, §823.154, by virtue of the Act, §823.153, is subject to the Act, §823.164(h)(2).

(i) Retention of control. For certain matters relating to retention of control and certain violations of the Act, see the Act, §823.163.

(j) Duty of insurer. Authorized insurers must notify the commissioner of control of, or of actions to acquire control of, an insurer as required by the Act, §823.161.

(k) Preliminary filings. Any acquisition or divestiture statement may be preliminarily filed with the commissioner to obtain a preliminary review by the commissioner. It must be clearly marked or designated as a preliminary filing. The preliminary filing must not invoke the requirements of this subchapter or Insurance Code Chapter 823, requiring that notice be given to the affected insurer involved. The preliminary filing will have no legal effect and does not constitute compliance with Insurance Code Chapter 823, and this subchapter. The commissioner is not bound by the preliminary review nor deemed to have in any manner approved the filing.

(l) Violations. The following are violations of this section:

(1) the failure to file any statement, amendment, or other material required to be filed under this section; or

(2) the effectuation of, or any attempt to effectuate, an acquisition, change of control of, divestiture, or merger with, a domestic insurer unless the commissioner has approved it.

(m) Additional violations. Each director or officer of an insurance company subject to these sections, or of an insurance holding company system subject to these sections, who knowingly and willfully violates, participates in, or assents to or who knowingly and willfully permits any of the officers, agents, or employees of the insurer or holding company system to engage in transactions or make investments that have not been properly reported or submitted under these sections or that knowingly and willfully violate these sections, is subject to administrative penalty under Insurance Code §§84.001-84.051.

(n) Additional sanctions. An entity that holds a certificate of authority granted by the department or the commissioner and that violates the Insurance Code is subject to the sanctions authorized under Insurance Code §§82.001-82.056.

(o) Producer-controlled property and casualty insurer.

(1) For purposes of this section, a controlling producer, as defined in §7.202(a)(8) of this title (relating to Definitions), is subject to the filing requirements of the Act, in addition to the following requirements.

(A) No acquisition of an insurer by a controlling producer in another state may be approved by the commissioner under the Act, §823.157, unless the acquiring party demonstrates, to the satisfaction of the commissioner, compliance with the requirements contained in subparagraph (B) of this paragraph.

(B) Approval of the acquisition of an insurer by a controlling producer in another state may not be approved unless the following requirements are met.

(i) Required contract provisions. A controlled insurer must not accept business from a controlling producer and a controlling producer must not place business with a controlled insurer unless there is a written contract between the controlling producer and the controlled insurer specifying the responsibilities of each party, which contract has been approved by the board of directors of the controlled insurer and which contains the following:

(I) a provision that the controlled insurer may terminate the contract for cause, upon written notice to the controlling producer. The controlled insurer must suspend the authority of the controlling producer to write business during the pendency of any dispute regarding the cause for the termination;

(II) a provision that the controlling producer render accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by, or owing to, the controlling producer;

(III) a provision that the controlling producer remit all funds due under the terms of the contract to the controlled insurer on at least a monthly basis. The due date must be fixed so that the premiums or installments collected are remitted no later than 90 days after the effective date of any policy placed with the controlled insurer under this contract;

(IV) a provision that all funds collected for the controlled insurer's account must be held by the controlling producer in a fiduciary capacity, in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System;

(V) a provision that the controlling producer maintain separately identifiable records of business written for the controlled insurer;

(VI) a provision that the contract not be assigned in whole or in part by the controlling producer;

(VII) a provision that the controlled insurer provide the controlling producer with its underwriting standards, rules, procedures, manuals setting forth the rates to be charged, and the conditions for the acceptance or rejection of risks. The controlling producer must adhere to the standards, rules, procedures, rates, and conditions. The standards, rules, procedures, rates, and conditions must be the same as those applicable to comparable business placed with the controlled insurer by a producer other than the controlling producer;

(VIII) a provision establishing the rate and terms of the controlling producer's commissions, charges, or other fees and the purposes for those charges or fees. The rates of the commissions, charges, and other fees must be no greater than those applicable to comparable business placed with the controlled insurer by producers other than controlling producers. For purposes of this subclause and subclause (VII) of this clause, examples of "comparable business" include the same lines of insurance, same kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business;

(IX) a provision that, if the contract provides that the controlling producer, on insurance business placed with the insurer, is to be compensated contingent upon the insurer's profits on that business, the compensation must not be determined and paid until at least five years after the premiums on liability insurance are earned and at least one year after the premiums are earned on any other insurance. No commissions may be paid until the adequacy of the controlled insurer's reserves on remaining claims has been independently verified;

(X) a provision limiting the controlling producer's writings in relation to the controlled insurer's surplus and total writings. The controlled insurer may establish a different limit for each line or subline of business. The controlled insurer must notify the controlling producer when the applicable limit is approached and must not accept business from the controlling producer if the limit is reached. The controlling producer must not place business with the controlled insurer if it has been notified by the controlled insurer that the limit has been reached; and

(XI) a provision that the controlling producer may negotiate but must not bind reinsurance on behalf of the controlled insurer on business the controlling producer places with the controlled insurer, except that the controlling producer may bind facultative reinsurance contracts pursuant to obligatory facultative agreements if the contract with the controlled insurer contains underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which the automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured, and commission schedules.

(ii) Audit committee. Every controlled insurer must have an audit committee of the board of directors composed of independent directors. The audit committee must annually meet with management, the controlled insurer's independent certified public accountants, and an independent casualty actuary or other independent loss reserve specialist acceptable to the commissioner to review the adequacy of the controlled insurer's loss reserves.

(iii) Reporting requirements.

(I) In addition to any other required loss reserve certification, the controlled insurer must annually, on April 1 of each year, file with the commissioner an opinion of an independent casualty actuary, or other independent loss reserve specialist acceptable to the commissioner, reporting loss ratios for each line or subline of business written and attesting to the adequacy of loss reserves established for losses incurred and outstanding as of year-end, including incurred but not reported losses, on business placed by the controlling producer.

(II) The controlled insurer must annually report to the commissioner in its registration statement filed under §7.203(g) of this title the amount of commissions paid to the controlling producer, the percentage the amount represents of the net premium written, and comparable amounts and percentages paid to noncontrolling producers for placements of the same kinds of insurance.

(iv) Disclosure requirements. The controlling producer, prior to the effective date of the policy, must deliver written notice to the prospective insured disclosing the relationship between the controlling producer and the controlled insurer, except that, if the business is placed through a subproducer who is not a controlling producer, the controlling producer must retain in the records a signed commitment from the subproducer that the subproducer is aware of the relationship between the controlled insurer and the controlling producer and that the subproducer has notified or will notify the insured.

(2) The contract referred to in paragraph (1)(B)(i) of this subsection does not provide to or expand any rights or privileges of a controlling producer, including, but not limited to, authority to place or write business, that do not otherwise exist or could not otherwise be exercised under the laws of the State of Texas or another state.

(p) A producer controlled insurer is subject to all the provisions of the Act absent a determination that the laws of its domiciliary state are substantially similar as provided by the Act, §823.014.

History

Source Note: The provisions of this §7.205 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective December 24, 1993, 18 TexReg 9310; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.209 Form A

(a) Statement regarding the acquisition or change of control of a domestic insurer. Submit information concerning the acquisition or change of control of a domestic insurer as specified in subsections (b) - (n) and (p) of this section. Provide the information required in subsections (o) and (p) of this section for a divestiture of control. Separately submit supplemental information, necessary to evaluate the enterprise risk to the insurer under Insurance Code §823.201(e), as specified in subsections (r) - (z) of this section. An applicant may submit its application and supplemental information on a form made available by the department.

(b) Insurers and method of acquisition.

(1) State the name of the acquiring person (applicant), the date the application is filed, and the name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed.

(2) State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

(1) State the name and address of the applicant seeking to acquire control over the insurer.

(2) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as the person and any predecessors have been in existence and fully describe any business the person intends to commence.

(d) Identity and background of individuals associated with the applicant. Furnish only the information requested under Insurance Code §823.201(b) for the applicant if the person is an individual, or for all persons who are directors, executive officers, or direct or indirect owners of 10 percent or more of the voting securities of the applicant if the applicant is not an individual.

(e) Nature, source, and amount of funds or other consideration.

(1) Describe the nature, source, and amount of funds or other consideration used or to be used in effecting the merger or other acquisition of control. If any part is represented or is to be represented by funds or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties, the relationship, if any, between the borrower and the lender, and the amounts borrowed or to be borrowed.

(2) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity of the lender to remain confidential, the applicant must specifically request that the identity of the lender be kept confidential and not include the identity of the lender with the information required by this section.

(f) Future plans for insurer.

(1) Describe any plans or proposals which the applicant may have or may contemplate making to cause the insurer to pay dividends or make other distributions, liquidate the insurer, sell any of its assets, merge or consolidate it with any person or persons, make any other material change in its business operations or corporate structure or management, or cause the insurer to enter into material agreements, arrangements, or transactions of any kind with any party.

(2) Describe any other arrangement or agreement, oral or written, entered into by any acquiring party or any of its affiliates and the domestic insurer during the immediately preceding 12 months.

(g) Voting securities to be acquired. State the number of shares of the insurer's voting securities and the amount or number of shares convertible into voting securities which the applicant, its affiliates, and any person listed in subsection (d) of this section plan to acquire, and the terms of the offer, request, invitation, agreement, or acquisition.

(h) Ownership of voting securities. State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates, or any person listed in subsection (d) of this section.

(i) Contracts, arrangements, or understandings with respect to voting securities of the insurer. Give a full description of any contracts, arrangements, or understandings with respect to any voting security of the insurer in which the applicant, its affiliates, or any persons listed in subsection (d) of this section is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies.

(j) Recent purchases of voting securities. Describe any purchases of any voting securities of the insurer by the applicant, any of its affiliates, or any person listed in subsection (d) of this section during the 12 calendar months preceding the filing of this statement. Include in the description the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid. State whether any shares so purchased are hypothecated.

(k) Recent recommendations to purchase. Provide a copy of any written, or a confirmed description of any oral, recommendations to purchase any voting security of the insurer made by the applicant, any of its affiliates, or any person listed in subsection (d) of this section, or by anyone based on interviews with or at the suggestion of the applicant, any of its affiliates, or any person listed in subsection (d) of this section during the 12 calendar months preceding the filing of this statement.

(l) Agreements with broker-dealers. Provide a copy of any written, or a confirmed description of any oral, agreement, arrangement, or understanding made with any broker-dealer as to the solicitation of voting securities of the insurer for tender, and the amount of any fees, commissions, or other compensation to be paid to broker-dealers.

(m) Financial statements and exhibits.

(1) Under this subsection provide only a list of the financial statements, financial projections, and exhibits submitted under subsection (w) of this section.

(2) The financial statements must include the annual financial statements of the applicant for the preceding three fiscal years (or for such lesser period as the applicant and any predecessors have been in existence), and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that the unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by the Act, from the date of the financial statement to the date of the affidavit or certification. The statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis if the consolidated statements are prepared in the usual course of business. A link to where the information is located can be provided as an alternative to hard copy or electronic attachments with the Form A. This only pertains to files that already have been filed with the department, the National Association of Insurance Commissioners, or another regulatory agency that easily can be accessed electronically.

(3) Unless exempted by the commissioner, the annual financial statements of the applicant must be made in accord with generally accepted auditing standards and accompanied by the certificate of an independent certified public accountant that the statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the certificate is not available, then the financial statement must be sworn to by the applicant as correctly reflecting its financial condition, and in that case, the commissioner at the commissioner's discretion may require the financial statement to be certified by an independent public accountant.

(4) If the applicant is an insurer which is actively engaged in the business of insurance and licensed to do business in this state, it may provide financial statements which conform to the annual statements of the insurer filed with the insurance department of the insurer's domiciliary state and which are in accord with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the domiciliary state.

(5) File as exhibits copies of all tender offers for, requests or invitations for, tenders of, exchange offers for, and agreements to acquire or exchange any voting securities of the insurer and (if distributed) of additional soliciting material.

(n) Enterprise risk management. Applicant agrees to provide, to the best of its knowledge and belief, the information required by Form F under Insurance Code §823.0595, as applicable, within 15 days after the end of the month in which the acquisition of control occurs.

(o) Notice regarding divestiture of control under Insurance Code §823.154.

(1) Provide the name of the domestic insurer and divesting person (applicant), the date the application is filed, and the name, title, address, and telephone number of the individual to whom notices and correspondence concerning this statement should be addressed.

(2) Provide notice that applicant is divesting control of the above-named insurance companies and describe how control is being divested and include the percentage of control being divested.

(3) Describe and state the name of the person in control of the insurer before and after the divestiture of control.

(4) Supplemental information required under Insurance Code §823.201(e) to evaluate the enterprise risk to the insurer must be submitted separately under subsection (y) of this section.

(p) Signature and certification. Signature and certification of the Form A in the following form, except for alien applicants, which must submit a certification acceptable in their jurisdiction:

Attached Graphic

(q) Supplemental information to evaluate enterprise risk. Separately submit supplemental information, necessary to evaluate the enterprise risk to the insurer under Insurance Code §823.201(e), as specified in subsections (r) - (z) of this section, which is confidential under Insurance Code §823.011.

(r) Identity and background of the applicant to evaluate enterprise risk.

(1) Fully describe any business that affiliates of the applicant intend to commence.

(2) Furnish a chart or listing clearly identifying the interrelationships between the ultimate controlling party, applicant, and all other affiliates of the applicant. Indicate in the chart or listing the percentage of voting securities of each person controlled by the applicant or by any other person. If control of any person is maintained other than by the ownership or control of voting securities, indicate the basis of control. As to each person specified in the chart or listing, indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings looking toward a reorganization or liquidation are pending with respect to any person, indicate which person, and set forth the title of the court, nature of proceedings, and the date when commenced.

(s) Identity and background of individuals associated with the applicant to evaluate enterprise risk.

(1) Provide biographical data of the applicant if the person is an individual, or for all persons who are directors, executive officers, or direct or indirect owners of 10 percent or more of the voting securities of the ultimate controlling person and applicant if the ultimate controlling person or applicant is not an individual, in the form of the latest version of the biographical affidavit form published by and available from the National Association of Insurance Commissioners and adopted by reference under §7.201(a)(1) of this title.

(2) The applicant, if the person is an individual, or for persons who are the chair of the board, chief executive officer, president, chief financial officer, treasurer, and controller of the ultimate controlling person and applicant if the ultimate controlling person and applicant are not individuals, must comply with the fingerprint requirements of Chapter 1, Subchapter D of this title, and provide an independent third party background investigation report from a list of vendors furnished by the National Association of Insurance Commissioners or as acceptable to the commissioner.

(t) Nature, source, and amount of funds or other consideration to evaluate enterprise risk.

(1) Provide copies of all agreements, promissory notes, and security arrangements as described in subsection (e)(1) of this section.

(2) Explain the criteria used in determining the nature and amount of the consideration.

(u) Future plans for insurer to evaluate enterprise risk.

(1) Describe any financial or employment guarantees given to present and contemplated management as part of the plans or proposals submitted under subsection (f)(1) of this section.

(2) Describe applicant's business plans for the domestic insurer and the ultimate controlling person's business plans for the holding company system covering the period equal to the greater of three years or the length of time of debt service required by applicant in its acquisition of control including, but not limited to, change of location, change of name, change in capital or surplus, reinsurance activity, type of business to be written, and anticipated premium volume. Applicant may provide the business plan on the National Association of Insurance Commissioners Uniform Certificate of Authority Application.

(3) For the domestic insurer, provide the full name of each individual proposed to be an executive officer or director of the domestic insurer and the full name of each individual who will be responsible for major areas of operations of the domestic insurer, including, but not limited to, supervision of agents, underwriting, advertising, production of business through agents and through reinsurance, policyholder services, premium accounting, claims processing and litigation, reinsurance cessions, investments, and financial accounting and reporting. For each position, evidence of the individual's ability and experience to perform same by providing biographical data in the form of the latest version of the biographical affidavit form published by and available from the National Association of Insurance Commissioners and adopted by reference under §7.201(a)(1) of this title.

(v) Voting securities to be acquired. Provide a statement of the method by which the fairness of the proposal to acquire the voting securities was determined under subsection (g) of this section to evaluate enterprise risk.

(w) Financial statements and exhibits to evaluate enterprise risk.

(1) Provide the financial projections for the ultimate controlling person, applicant, and domestic insurer for a period equal to the greater of three years or the length of time of debt service required by the applicant in its acquisition of control and any additional document or papers required by regulation, except that financial projections are not required for individuals and the commissioner may provide for a lesser period for publicly traded companies.

(2) Provide the financial statements of the ultimate controlling person if the ultimate controlling person is not a publicly traded company. The financial statements of the ultimate controlling person of the applicant as described in subsection (m)(2) and (3) of this section must include their annual financial statements.

(3) Unless exempted by the commissioner, if the applicant is an individual person, the applicant must provide a reviewed financial statement accompanied by the certificate of an independent public accountant that the accountant is not aware of any material modifications that should be made to the accompanying financial statement for it to be in conformity with generally accepted accounting principles. Applicant must provide a balance sheet as of a date not earlier than 120 days prior to the filing of the statement and balance sheets for the second and third fiscal years preceding the filing of the statement accompanied by affidavit or certification that each balance sheet is true and correct as of its date.

(4) File as exhibits copies of all proposed employment, consultation, advisory, or management contracts concerning the insurer.

(5) In addition to the other material required to be filed by this section, a person described in §7.205(a) of this title must file, as an exhibit, annual reports to the stockholders of the insurer and the applicant for the last two fiscal years.

(x) Cybersecurity information to evaluate enterprise risk. Describe the cybersecurity plan, including systems, policies and procedures, reviews, incident responses, trainings, and strategies of the ultimate controlling person and applicant, and future cybersecurity plans for the insurer.

(y) Notice regarding divestiture of control to evaluate enterprise risk.

(1) State the name and address of the recipient(s) of the divestiture of control.

(2) Provide copies of any sales contracts and an organizational chart before and after the divestiture of control.

(z) Signature and certification. Signature and certification of the supplemental information in the following form, except for alien applicants, which must submit a certification acceptable in their jurisdiction:

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History

Source Note: The provisions of this §7.209 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 15, 1996, 21 TexReg 3798; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective October 23, 2006, 31 TexReg 8682; amended to be effective May 26, 2013, 38 TexReg 3033; amended to be effective July 18, 2016, 41 TexReg 5177.

28 Tex. Admin. Code § 7.210 Form B

(a) Insurance holding company system registration statement.

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(b) Identity and control of registrant. Furnish the exact name of each insurer registering or being registered ("the registrant"), the home office address and principal executive offices of each; the date on which each registrant became part of the insurance holding company system; and the method(s) by which control of each registrant was acquired and is maintained.

(c) Organizational chart. Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system, including all affiliated persons as defined in §7.202(a)(2) of this title (relating to Definitions). The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of the control. As to each person specified in the chart or listing, indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile.

(d) The ultimate controlling person. As to the ultimate controlling person (that person which is not controlled by another person) in the insurance holding company system, furnish the following information:

(1) name;

(2) home office address;

(3) principal executive office address;

(4) the organizational structure of the person, i.e., corporation, partnership, individual, trust, etc.; together with a conformed copy of the charter or articles of incorporation and its bylaws;

(5) the principal business of the person;

(6) the name and address of any person who holds or owns 10 percent or more of any class of voting security, the class of the security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned; and

(7) if court proceedings looking toward a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings, and the date when commenced.

(e) Biographical information. If the ultimate controlling person is a corporation, organization, limited liability company, or other legal entity, furnish the following information for the directors and executive officers of the ultimate controlling person: the individual's name and address, his or her principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations. If the ultimate controlling person is an individual, furnish the individual's name and address, his or her principal occupation and all offices and positions held during the past five years, and any conviction of crimes other than minor traffic violations.

(f) Transactions, relationships, and agreements.

(1) Briefly describe the following agreements in force, relationships subsisting, and transactions currently outstanding between the registrant and its holding company, its subsidiaries, and its affiliates:

(A) loans, other investments or purchases, sales or exchanges of securities of the affiliates by the registrant, or of the registrant by its affiliates;

(B) purchase, sales, or exchanges of assets;

(C) investment activities of an investment pool and transactions between pools and participants (Insurance Code Chapters 424 and 425);

(D) transactions not in the ordinary course of business;

(E) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the registrant's business;

(F) all management and service contracts and all cost sharing arrangements;

(G) reinsurance agreements covering all or substantially all of one or more lines of insurance of the ceding company;

(H) all dividends and other distributions to shareholders;

(I) agreements with affiliates to consolidate federal income tax returns;

(J) all transactions with affiliated financial institutions;

(K) the amount of commissions paid to the controlling producer, the percentage such amount represents of the net premium written, and comparable amounts and percentages paid to noncontrolling producers for placements of the same kinds of insurance;

(L) all surplus debentures, surplus notes, premium income notes, bonds, or debentures, and other contingent evidences of indebtedness outstanding;

(M) any affiliated transaction not disclosed in subparagraphs (A) - (L) of this paragraph which is subject to the Act;

(N) any pledge of an insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of its insurance holding company system;

(O) the corporate governance and internal control responsibilities of the insurer's board of directors, including a statement that:

(i) the insurer's senior management or officers have approved and implemented, and continue to maintain and monitor, corporate governance and internal control procedures; and

(ii) the insurer's board of directors oversees corporate governance and internal controls; and

(P) any other information the commissioner requires.

(2) No information need be disclosed if such information is not material. See §7.203(d) of this title (relating to Registration of Insurers). The description must be in a manner permitting the proper evaluation by the commissioner, and must include at least the following: the nature and purpose of the transaction; the nature and amounts of any payments or transfers of assets between the parties; the identity of all parties to the transaction; relationship of the affiliated parties to the registrant; and the holding company section number and/or commissioner's order number.

(g) Litigation or administration proceedings. Furnish a brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any person is or was the subject; give the names of the parties and the court or agency in which the litigation or proceeding is or was pending:

(1) criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party; and

(2) proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to, bankruptcy, receivership, or other corporate reorganizations.

(h) Required statement. The insurer must furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

(i) Financial statements and exhibits.

(1) Financial statements and exhibits should be attached to this statement as an appendix. List under this item the financial statements and exhibits attached.

(2) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements must include the annual financial statements of the ultimate controlling person and, on request of the commissioner, the annual financial statements of the affiliates in the insurance holding company system as of the end of the person's latest fiscal year or any other period as determined by the commissioner.

(3) If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information must be filed for any subsequent period to the extent available. Financial statements may be prepared on either an individual basis or, unless the commissioner otherwise requires on a consolidated basis if consolidated statements are prepared in the usual course of business.

(4) Other than with respect to the preceding, the financial statement must be filed in a standard form and format adopted by the National Association of Insurance Commissioners, unless an alternative form is accepted by the commissioner. Documentation and financial statements filed with the Securities and Exchange Commission or audited GAAP financial statements are deemed to be an appropriate form and format.

(5) Unless the commissioner permits otherwise, the annual financial statements must be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the Annual Statement of the insurer's domiciliary state and are in accord with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

(6) Unless the commissioner permits otherwise, any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review must be conducted in accord with standards for review of personal financial statements as issued by the American Institute of Certified Public Accountants. Personal financial statements must be accompanied by the independent public accountant's Standard Review Report stating that the accountant is not aware of any material modifications that should be made to the financial statements for the statements to be in conformity with generally accepted accounting principles.

(7) Exhibits must include copies of the latest annual reports to shareholders of the ultimate controlling person, proxy material used by the ultimate controlling person, and any additional documents or papers required by regulation.

(j) Form C required. A Form C, Summary of Changes to Registration Statement, must be prepared and filed with this Form B.

(k) Signature and certification. Furnish signature and certification of the following form:

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History

Source Note: The provisions of this §7.210 adopted to be effective January 1, 1976; amended to be effective November 30, 1984, 9 TexReg 5926; amended to be effective April 29, 1988, 13 TexReg 1761; amended to be effective April 13, 1992, 17 TexReg 2273; amended to be effective December 24, 1993, 18 TexReg 9310; amended to be effective July 14, 1994, 19 TexReg 5098; amended to be effective May 5, 2002, 27 TexReg 3559; amended to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.211 Form C

(a) Summary of Material Changes to Registration Statement is required as follows.

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(b) Furnish a brief description of all items in the current annual registration statement which represent material changes from the prior year's annual registration statement. The description must be in a manner permitting proper evaluation by the commissioner, and must include specific references to the items in the annual registration statement and to the terms contained.

(c) Changes occurring under §7.210(c) of this title (relating to Form B) in the percentage of each class of voting securities held by each affiliate need only be included where the changes result in ownership or holdings of 10 percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

(d) Changes occurring under §7.210(e) of this title need only be included where an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates his or her responsibilities with the ultimate controlling person; or in the event an individual is named president of the ultimate controlling person.

(e) If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of the change must be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

(f) The insurer must furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose is to avoid statutory threshold amounts and the review that might otherwise occur.

(g) Signature and certification are required as follows.

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History

Source Note: The provisions of this §7.211 adopted to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.212 Form D

(a) Prior notice of a transaction. Prior notice of a transaction is required as follows.

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(b) Identity of parties to transaction. Furnish the following information for each of the parties to the transaction:

(1) name;

(2) home office address;

(3) principal executive office address;

(4) the organizational structure, i.e. corporation, partnership, individual, trust, etc.;

(5) a description of the nature of the parties' business operations;

(6) relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties;

(7) where the transaction is with a non-affiliate, the name(s) of the affiliate(s) which will receive, in whole or in substantial part, the proceeds of the transaction.

(1) a statement identifying the statute under which the transaction is filed;

(2) a statement of the nature of the transaction and the reasons for entering into or changing the transaction;

(3) a statement of how the transaction complies with Insurance Code §823.101;

(4) the proposed effective date of the transaction; and

(5) the financial impact of the transaction on the domestic insurer.

(d) Sales, purchases, exchanges, loans, extensions of credit, guarantees or investments.

(1) Furnish a brief description of the amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services, consulting agreements, and the like. If the transaction involves other than cash, furnish a description of the consideration, its cost, and its fair market value, together with an explanation of the basis for evaluation.

(2) If the transaction involves a loan, extension of credit or a guarantee, furnish a description of the maximum amount the insurer will be obligated to make available under the loan, extension of credit, or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.

(3) If the transaction involves an investment, guarantee, or other arrangement, state the period during which the investment, guarantee, or other arrangement will remain in effect, together with any provisions for extensions or renewals of the investments, guarantees, or arrangements. Furnish a brief statement as to the effect of the transaction upon the insurer's surplus.

(e) Loans or extensions of credit to a non-affiliate. If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding through which the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, purchase the assets of, or make investments in, any affiliate of the insurer making loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in any affiliate. Describe the amount and source of funds, securities, property, or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction on the insurer's surplus.

(f) Reinsurance. If the transaction is a reinsurance agreement or modification or a reinsurance pooling agreement or modification described in Insurance Code §823.103(a)(2), furnish a description of the known or estimated amount of liability to be ceded or assumed in each calendar year, the period the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and non-affiliate that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction upon the insurer's surplus.

(g) Management agreements, service agreements, and cost sharing arrangements.

(1) For management and service agreements, furnish:

(A) a brief description of the managerial responsibilities or services to be performed;

(B) a brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

(2) For cost-sharing arrangements, furnish:

(A) a brief description of the purpose of the agreement;

(B) a description of the period of time during which the agreement is to be in effect;

(D) a brief description of the accounting basis to be used in calculating each party's costs under the agreement;

(E) a brief statement as to the effect of the transaction upon the insurer's policyholder surplus;

(F) a statement regarding the cost allocation methods specifying whether proposed charges are cost or market based. If market based, include the rationale for using market instead of cost, including justification for the company's determination that amounts are fair and reasonable; and

(G) a statement regarding compliance with the NAIC Accounting Practices and Procedure Manual regarding expense allocation.

(h) Signature and certification. Signature and certification are required as follows.

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History

Source Note: The provisions of this §7.212 adopted to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.213 Form E

(a) Notice of Ordinary and Extraordinary Dividends and Other Distributions. Complete subsections (a) and (b) of this section for an Ordinary Dividend under §7.203(o) of this title (relating to Registration of Insurers) and complete subsections (a) - (c) of this section for an Extraordinary Dividend under §7.204(d) of this title (relating to Transactions Subject to Prior Notice).

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(b) Dividend or distribution.

(1) Name of insurer.

(2) Address of insurer.

(3) Declaration of dividend:

(A) Amount of declared dividend or distribution: $

(B) Recipient of declared dividend or distribution.

(D) Proposed payment date.

(4) The dividend or distribution is in compliance with the Act and is indicated in subparagraphs (A) and (B) of this paragraph:

(A) Calculation.

(i) Amount of current dividend or distribution: $

(ii) Dividends or distributions paid during preceding 12 months, excluding current dividend or distribution but including declaration date, payment date, type of dividend or distribution, and amount: $

(iii) Total of (i) and (ii): $

(iv) Surplus as regards policyholders (net worth for HMO) as of preceding December 31: $

(I) 10 percent of (iv) for Life, P&C, and HMO: $

(II) 20 percent of (iv) for Title: $

(v) Operating income:

(I) Net gain from operations before realized capital gains as of preceding December 31 for Life, Title and HMO: $

(II) Net income as of preceding December 31 for P&C: $

(vi) Greater of calculated surplus from (iv) or the operating income from (v): $

(B) If the amount from (iii) exceeds the amount from (vi), then provide the information required by subsection (c) relating to extraordinary dividend and distribution.

(5) Earned surplus, defined as the unassigned funds (surplus), must be greater than the current dividend or distribution amount stated in (4)(A)(i) of this subsection. Earned surplus must be calculated as of the most recent financial information available.

(6) Supporting documentation of the balance sheet, summary of operations including capital and surplus account, and cash flow statement of the most recently filed monthly, quarterly, or annual statement, together with documentation to support the standards specified in Insurance Code §823.008.

(7) Additional requirements are as follows:

(A) Identify property, including bank accounts, to be used to pay the dividend or distribution or to be converted to pay the dividend or distribution.

(B) Provide insurer's ratio of net written premium to capital and surplus for 12 months as of the end of the last calendar year. In addition, provide the same ratio after deducting the total amount of the present dividend or distribution.

(D) Identify any investment or contribution by the insurer to subsidiaries made since the last calendar year or to be made in the immediate future.

(E) Give a brief statement as to the effect upon the insurer's capital and surplus or HMO's net worth and the reasonableness of remaining capital and surplus or net worth after payment of dividend or distribution in relation to the insurer's outstanding liabilities and the adequacy of capital and surplus or net worth relative to the insurer's financial needs.

(8) Certification that there has been no material adverse change in the financial condition of the insurer since the date of the most recent financial statement filed with the department and the payment of the dividend or distribution does not adversely affect the interest of policyholders.

(9) Certification that the declaration or payment of the dividend or distribution does not violate any of the provisions of Insurance Code Chapter 403 or §841.253, as applicable, and that the amount of the dividend or distribution declared was calculated based on the amount of cash and the current fair market value of any other property to be paid or distributed.

(10) Signature.

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(1) State purpose of dividend or distribution.

(2) On request of the commissioner, furnish a copy of directors' resolution declaring dividend and any shareholders resolution supporting the declaration are to be attached to this form.

(3) Effect of declaration.

(A) Give the total amount of dividend or distribution in dollars when so expressed, or if declared in some other terms, the approximate dollar value and identify the exact property in which the dividend or distribution is payable if not cash (include method of valuing the property other than cash).

(B) Explain any difference in treatment and basis with regard to any share of issued and outstanding stock that will not be treated equally in distribution of dividend, excluding treatment of classes of stock.

(D) Give number of shares by class to whom proposed dividend is payable, the dividend per share of each class and total amount of dividend by class of stock.

(E) By class of stock, give total amount of each dividend declared, the amount payable per share, and the date of declaration for the five calendar years preceding this notice.

(F) Give the net gain or loss from operations after dividends to policyholders and federal income taxes, excluding capital gains and losses of the insurer for each of the last five calendar years as reported in the insurer's annual statement to the department.

(4) Provide a balance sheet, income statement, and cash flow statement for the interim period from the last annual statement to the end of the month preceding the month in which this application is submitted.

(5) Provide the National Association of Insurance Commissioners authorized control level Risk Based Capital Ratio before and after dividend or distribution and projected for year end and the following year end.

(6) Explain any restrictions on the volume of the insurer's underwritings within the last year or in the immediate future that did not previously exist.

(7) Explain any limitations and reasons for limitations established for geographical underwriting within the last year or in immediate future that did not previously exist.

(8) Describe the existing reinsurance program of insurer, including limits of retention.

(9) Identify and describe any deviation of more than 10 percent in value of any loans or investments held by insurer (other than replacement of maturing securities with comparable securities) from that disclosed in your last annual statement.

(10) Signature and certification of the following form is required:

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History

Source Note: The provisions of this §7.213 adopted to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.214 Form F

(a) Enterprise Risk Report is required as follows.

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(b) The registrant/applicant, to the best of its knowledge and belief, must provide information regarding the following areas that could produce enterprise risk as defined in §7.202 of this title (relating to Definitions), provided such information is not disclosed in the Insurance Holding Company System Annual Registration Statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:

(1) any material developments regarding strategy, internal audit findings, compliance, or risk management affecting the insurance holding company system;

(2) acquisition or disposal of insurance entities and reallocation of existing financial or insurance entities within the insurance holding company system;

(3) any changes of shareholders of the insurance holding company system exceeding 10 percent or more of voting securities;

(4) developments in various investigations, regulatory activities, or litigation that may have a significant bearing or impact on the insurance holding company system;

(5) business plan of the insurance holding company system and summarized strategies for the next 12 months;

(6) identification of material concerns of the insurance holding company system raised by supervisory college, if any, in the last year;

(7) identification of insurance holding company system capital resources and material distribution patterns;

(8) identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings and individual insurer financial strength ratings assessment of the insurance holding company system (including both the rating score and outlook);

(9) information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should the guarantees be called; and

(10) identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.

(c) The registrant/applicant may attach the appropriate form most recently filed with the U.S. Securities and Exchange Commission, provided the registrant/applicant includes specific references to those areas listed under subsection (b) of this section for which the form provides responsive information. If the registrant/applicant is not domiciled in the U.S., it may attach its most recent public audited financial statement filed in its country of domicile, provided the registrant/applicant includes specific references to those areas listed under subsection (b) of this section for which the financial statement provides responsive information.

(d) If the registrant/applicant has not disclosed any information under subsection (b) of this section, the registrant/applicant must include a statement affirming that, to the best of its knowledge and belief, it has not identified enterprise risk subject to disclosure under subsection (b) of this section.

(e) As added by §18 of Acts 2011, 82nd Leg., ch. 922 (S.B. 1431), the commissioner of insurance has determined that the National Association of Insurance Commissioners has completed an enterprise risk form and has proposed a master confidentiality agreement.

History

Source Note: The provisions of this §7.214 adopted to be effective May 26, 2013, 38 TexReg 3033.

28 Tex. Admin. Code § 7.215 Group Capital Calculation

(a) The ultimate controlling person of an insurer in an insurance holding company system for which Texas is the lead state and that is described by paragraphs (1) or (2) of this subsection must annually file a group capital calculation report:

(1) an insurance holding company system that is subject to a covered agreement, defined by Insurance Code Chapter 493, Subchapter C, concerning Credit for Reinsurance; or

(2) an insurance holding company system that is required by the United States Federal Reserve Board to perform a group capital assessment, unless the Federal Reserve Board shares that group capital assessment with the Texas Department of Insurance and under terms of an information sharing agreement.

(b) Except as provided by subsection (e) of this section, the Commissioner may require the ultimate controlling person of an insurer in an insurance holding company system for which Texas is the lead state and that is not subject to subsection (a) of this section to annually file a group capital calculation. In exercising this discretion, the Commissioner will consider the following factors:

(1) whether any insurer in the insurance holding company system is in a risk-based capital action-level event described by §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs) or a similar standard for a non-U.S. insurer;

(2) whether any insurer in the insurance holding company system meets one or more of the standards of an insurer found to be in hazardous financial condition under §8.3 of this title (relating to Hazardous Conditions and Remedy of Hazardous Conditions);

(3) whether the Commissioner finds that any insurer in the insurance holding company system otherwise exhibits qualities of a troubled insurer on the basis of any unique circumstances, including the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests;

(4) whether the insurance holding company system's annual direct written and unaffiliated assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, exceeded $1,000,000,000 in its last filed financial statement;

(5) whether the insurance holding company system has any insurers within its holding company structure that are domiciled outside of the United States or one of its territories;

(6) whether the insurance holding company system has any banking, depository, or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;

(7) whether the insurance holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group; and

(8) whether any of the non-insurers in the insurance holding company system pose a material financial risk to the insurer's ability to honor policyholder obligations.

(c) The group capital calculation filing must be made concurrently with the registration statement, unless given an extension by the Commissioner on the basis of reasonable grounds shown. The person submitting the group capital calculation must confirm that it was completed in accordance with the latest version of the Group Capital Calculation Instructions published by the National Association of Insurance Commissioners (NAIC) and available on the NAIC website. The Commissioner may allow a controlling person who is not the ultimate controlling person to file the group capital calculation.

(d) The Commissioner may accept an annual limited group capital filing in lieu of the group capital calculation described in subsection (c) of this section if the factors listed in subsection (b)(4) - (8) of this section are present.

(e) The ultimate controlling person of an insurer in an insurance holding company system for which Texas is the insurer's lead state is exempt from filing a group capital calculation if the insurance holding company system meets any of the following criteria:

(1) an insurance holding company system that has in its holding company structure only one insurer that:

(A) writes business in Texas only; and

(B) assumes no business from any other insurer;

(2) an insurance holding company system whose non-U.S. group-wide supervisor is located in a reciprocal jurisdiction under Insurance Code Chapter 493, Subchapter C, that recognizes the U.S. state regulatory approach to group supervision and group capital;

(3) an insurance holding company system whose non-U.S. jurisdiction provides confirmation by a competent regulatory authority in that jurisdiction that information about the insurer and any parent, subsidiary, or affiliated entity, if applicable, will be provided in accordance with a memorandum of understanding or similar document; or

(4) an insurance holding company system:

(A) that provides information to its lead state commissioner and that meets the requirements for accreditation under the NAIC financial standards and accreditation program, directly or indirectly, through the group-wide supervisor, who has determined the information is satisfactory to allow the lead state to comply with group supervision requirements; and

(B) whose non-U.S. group-wide supervisor that is not in a reciprocal jurisdiction under Insurance Code Chapter 493, Subchapter C, recognizes and accepts the group capital calculation as the worldwide group capital assessment for U.S. insurance groups that operate in that jurisdiction. A non-U.S. jurisdiction is considered to recognize and accept the group capital calculation if:

(i) the non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital by providing confirmation by a competent regulatory authority in that jurisdiction that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program:

(I) will be subject only to worldwide prudential insurance group supervision, including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state; and

(II) will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

(ii) where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction notifies in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard.

(f) Notwithstanding subsection (e) of this section, the Commissioner, after consultation with other supervisors or officials, may require the group capital calculation filing for the U.S. operations of a non-U.S.-based insurance holding company system for which Texas is the lead state if the Commissioner finds the filing appropriate for prudential oversight and solvency monitoring purposes.

(g) The Commissioner may consult a list of non-U.S. jurisdictions that recognize and accept the group capital calculation published through the NAIC Committee Process (NAIC List) to determine whether the ultimate controlling person of an insurer is exempt under subsection (e)(4) of this section.

(h) The Commissioner may recommend to the NAIC that a non-U.S. jurisdiction where no U.S. insurance groups operate be included on the NAIC List if that jurisdiction provides to the Commissioner confirmation under subsection (e)(4) of this section.

(i) If the Commissioner's determination under subsection (e)(4) of this section differs from the NAIC List, the Commissioner will provide thoroughly documented justification for the determination to the NAIC and other states.

(j) If the Commissioner determines that a non-U.S. jurisdiction no longer meets one or more of the requirements to recognize and accept the group capital calculation, the Commissioner may recommend to the NAIC that the non-U.S. jurisdiction be removed from the NAIC List.

(k) Nothing in this section precludes an insurer from voluntarily providing the Commissioner with information related to Insurance Code Chapter 823, Subchapter B, concerning Registration.

History

Source Note: The provisions of this §7.215 adopted to be effective October 16, 2022, 47 TexReg 6885.

28 Tex. Admin. Code § 7.216 Liquidity Stress Test Framework

(a) Purpose. This section specifies the requirements for the ultimate controlling person of an insurance holding company system to submit a liquidity stress test framework necessary to report information as required by Insurance Code §823.0596.

(b) Liquidity stress test framework. The commissioner adopts by reference the liquidity stress test framework as adopted and published by the National Association of Insurance Commissioners (NAIC). The liquidity stress test framework is available on the department's website.

(c) Scope criteria. The scope criteria are the designated criteria and thresholds described in the liquidity stress test framework as adopted by reference in subsection (b) of this section.

(d) Reporting template. The reporting template an insurer must use is described in the liquidity stress test framework as adopted in subsection (b) of this section.

(e) Filing. Using the reporting template described in the liquidity stress test framework adopted by reference in subsection (b) of this section, the ultimate controlling person of an insurer must submit a liquidity stress test framework filing on or before June 30 of each year, using the appropriate reporting template in an electronic format acceptable to TDI. The electronic filing address is provided on TDI's website at www.tdi.texas.gov. Copies of the latest editions of the reporting templates and related instruction manuals adopted and published by the NAIC may be obtained from the NAIC or from the Texas Department of Insurance, Financial Regulation Division.

(f) Exemption. Only after consultation with other state insurance commissioners will the commissioner exempt from the filing requirement a data year that an insurer would otherwise be required to submit under subsection (e) of this section.

(g) Conflicts. In the event of a conflict between the liquidity stress test framework adopted and published by the NAIC and the Insurance Code, any TDI rule, or any specific requirement of this section, the Insurance Code, TDI rule, or specific requirement of this section takes precedence and in all respects controls. The requirements of this section do not repeal, modify, or amend any TDI rule or any Insurance Code provision.

History

Source Note: The provisions of this §7.216 adopted to be effective June 3, 2024, 49 TexReg 3926.

Subchapter D RISK-BASED CAPITAL AND SURPLUS AND OTHER REQUIREMENTS

28 Tex. Admin. Code § 7.402 Risk-Based Capital and Surplus Requirements for Insurers and HMOs

(a) Purpose. The purpose of implementing a risk-based capital and surplus provision is to require a minimum level of capital and surplus to absorb the financial, underwriting, and investment risks assumed by a carrier.

(b) Scope.

(1) Life companies. This section applies to any carrier authorized to do business in Texas as an insurance company that writes or assumes a life insurance or annuity contract or assumes liability on or indemnifies one person for any risk under an accident and health insurance policy, or any combination of these policies, in an amount that exceeds $10,000 including: capital stock companies, mutual life companies, limited purpose subsidiary life insurance companies, and stipulated premium insurance companies.

(2) Property and casualty companies. This section applies to all domestic, foreign, and alien property and casualty companies subject to the provisions of Insurance Code §822.210 and §982.106, including county mutual insurance companies that do not meet the express criteria contained in Insurance Code §912.056(f), but excluding monoline financial guaranty insurers, monoline mortgage guaranty insurers, title insurers, and those insurers subject to Insurance Code §822.205.

(3) Health maintenance organizations and certain health carriers. This section applies to all domestic and foreign health maintenance organizations subject to the provisions of Insurance Code Chapter 843 and carriers that file the NAIC Health Annual Statement with TDI under TDI filing requirements.

(4) Fraternal benefit societies. This section applies to all domestic and foreign fraternal benefit societies.

(c) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Annual financial statement--The annual statement to be used by carriers under §7.68 of this title.

(2) Authorized control level--The result determined using the sources of information under subsection (d) of this section, including the RBC formula in accord with the RBC instructions.

(3) Carrier--An insurer, health maintenance organization, or fraternal benefit society included within the scope of subsection (b) of this section.

(4) NAIC--National Association of Insurance Commissioners.

(5) RBC--Risk-based capital.

(6) RBC formula--NAIC risk-based capital formula.

(7) RBC instructions--NAIC Risk-Based Capital Report Including Overview and Instructions for Companies.

(8) Total adjusted capital--A carrier's adjusted statutory capital and surplus as determined using the sources of information under subsection (d) of this section, including the RBC formula in accord with the RBC instructions.

(d) Sources of information for determining RBC. The commissioner reserves all authority and discretion to resolve any issues in Texas concerning RBC. The commissioner and carriers will refer to the sources in paragraphs (1) - (4) of this subsection in the respective order of priority listed to determine RBC:

(1) Texas statutes;

(2) TDI rules;

(3) commissioner orders; and

(4) except as provided in this section, as applicable to the carrier:

(A) the NAIC Life Risk-Based Capital Report Including Overview and Instructions for Companies, which includes the RBC formula, for the period being reported.

(B) the NAIC Fraternal Risk-Based Capital Report Including Overview and Instructions for Companies, which includes the RBC formula, for the period being reported.

(C) the NAIC Property and Casualty Risk-Based Capital Report Including Overview and Instructions for Companies, which includes the RBC formula, for the period being reported.

(D) the NAIC Health Risk-Based Capital Report Including Overview and Instructions for Companies, which includes the RBC formula, for the period being reported.

(e) Filing requirements. All carriers must file electronic versions of the RBC reports and any supplemental RBC forms and reports with the NAIC in accord with and by the due dates specified in sources of information for determining RBC listed in subsection (d) of this section, including the RBC instructions.

(f) Conflicts. In the event of a conflict between the Insurance Code, any TDI rule, any specific requirement of this section, and the RBC formula or the RBC instructions, the Insurance Code, rule, or specific requirement of this section takes precedence and in all respects controls. The requirements of this section do not repeal, modify, or amend any TDI rule or any Insurance Code provision.

(g) Actions of commissioner. The level of risk-based capital is calculated and reported annually. Depending on the results computed by the risk-based capital formula, the commissioner of insurance may take a number of remedial actions, as considered necessary. The ratio result of the total adjusted capital-to-authorized control level risk-based capital requires the following actions related to a carrier within the specified ranges:

(1) A carrier reporting total adjusted capital of 150 percent to 200 percent of authorized control level risk-based capital triggers a company action level under which the carrier must prepare a comprehensive financial plan that identifies the conditions that contribute to the carrier's financial condition. The plan must contain proposals to correct areas of substantial regulatory concern and projections of the carrier's financial condition, both with and without the proposed corrections. The plan must list the key assumptions underlying the projections and identify the concerns associated with the carrier's business. The RBC plan must be submitted within 45 days of filing the RBC report with the NAIC. After review, the commissioner will notify the carrier if the plan is satisfactory or not satisfactory. If the commissioner notifies the carrier that the plan is not satisfactory, the carrier must prepare a revised plan and submit it to the commissioner. Failure to file this comprehensive financial plan triggers the regulatory action level described in this subsection.

(2) A carrier reporting total adjusted capital of 100 percent to 150 percent of authorized control level risk-based capital triggers a regulatory action level initiative. At this action level, a carrier must file an RBC plan or revised RBC plan within 45 days of filing the RBC report with the NAIC, and the commissioner must perform any examinations or analyses to the carrier's business and operations that are deemed necessary. The commissioner may issue orders specifying corrective actions to be taken or may require other appropriate action.

(3) A carrier reporting total adjusted capital of 70 percent to 100 percent of authorized control level risk-based capital triggers an authorized control level. In addition to the remedies available at the carrier and regulatory action levels described in this subsection, the commissioner may take other action deemed necessary, including initiating a regulatory intervention to place a carrier under regulatory control.

(4) A carrier reporting total adjusted capital of less than 70 percent of authorized control level triggers a mandatory control level that subjects the carrier to one of the following actions:

(A) being placed in supervision or conservation;

(B) being determined to be in hazardous financial condition as provided by Insurance Code Chapter 404 and §8.3 of this title regardless of percentage of assets in excess of liabilities;

(D) any other applicable sanctions under the Insurance Code.

(5) A life company described in subsection (b)(1) of this section is subject to a trend test described in the RBC formula and RBC instructions, if its total adjusted capital-to-authorized control level risk-based capital is between 200 percent and 300 percent. Any life insurer that trends below 190 percent of total adjusted capital-to-authorized control level risk-based capital triggers the company action level.

(6) A property and casualty company described in subsection (b)(2) of this section is subject to a trend test if its total adjusted capital-to-authorized control level risk-based capital is between 200 percent and 300 percent. If the result of the trend test as determined by the RBC formula and RBC instructions is "YES," the insurer triggers regulatory attention at the company action level.

(7) A health maintenance organization or health carrier described in subsection (b)(3) of this section is subject to a trend test if its total adjusted capital-to-authorized control level risk-based capital is between 200 percent and 300 percent and triggers the trend test determined in accord with the trend test calculation included in the Health RBC instructions. If the result of the trend test as determined by the RBC formula and RBC instructions is "YES," the health maintenance organization or certain health carrier triggers regulatory attention at the company action level.

(8) A fraternal benefit society described in subsection (b)(4) of this section is subject to a trend test described in the RBC formula and RBC instructions, if its total adjusted capital-to-authorized control level risk-based capital is between 200 percent and 300 percent. Any fraternal benefit society that trends below 190 percent of total adjusted capital-to-authorized control level risk-based capital triggers the company action level.

(h) Prohibition on announcements. Except as required under this section, a carrier, agent, or other person engaged in the business of insurance under the Insurance Code is prohibited from making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, poster, over any radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to any component derived in the calculation. Any violation of this subsection may be considered a violation of Insurance Code Chapter 541, regulating unfair methods of competition and unfair or deceptive acts or practices.

(i) Prohibition on use in ratemaking. The RBC instructions and any related filings are intended solely for use by the commissioner in monitoring the solvency of carriers and in taking corrective action with respect to carriers. The RBC instructions and any related filings may not be:

(1) used by the commissioner for ratemaking;

(2) considered or introduced as evidence in any rate proceeding; or

(3) used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that a carrier or any affiliate is authorized to write.

(j) Limitations. The requirements of this section do not reduce the amount of capital and surplus otherwise required by the Insurance Code, TDI rules, or by authority of the commissioner as provided by law.

History

Source Note: The provisions of this §7.402 adopted to be effective February 7, 2008, 33 TexReg 927; amended to be effective October 26, 2009, 34 TexReg 7309; amended to be effective December 12, 2010, 35 TexReg 10961; amended to be effective February 29, 2012, 37 TexReg 1346; amended to be effective August 11, 2013, 38 TexReg 5106; amended to be effective March 12, 2014, 39 TexReg 1720; amended to be effective July 1, 2015, 40 TexReg 4215.

28 Tex. Admin. Code § 7.403 Transition Period for Certain County Mutual Insurance Companies

(a) This section applies to a county mutual insurance company that cedes 85 percent or more of the company's direct and assumed risks to one or more nonaffiliated reinsurers and the company is otherwise required to comply with the Insurance Code §912.056(f).

(b) A county mutual insurance company shall comply with §7.402 of this subchapter (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs) unless the company meets the express criteria contained in the Insurance Code §912.056(f).

(c) A county mutual insurance company subject to the Insurance Code §912.056(f) that on December 31, 2009, had less than the minimum unencumbered surplus required by §912.056(f) must:

(1) not later than December 31, 2010, have increased the amount of its unencumbered surplus by at least 20 percent of the difference between the minimum amount required by §912.056(f) and the amount held by the company on December 31, 2009;

(2) not later than December 31, 2011, have increased the amount of its unencumbered surplus by at least 40 percent of the difference between the minimum amount required by §912.056(f) and the amount held by the company on December 31, 2009;

(3) not later than December 31, 2012, have increased the amount of its unencumbered surplus by at least 60 percent of the difference between the minimum amount required by §912.056(f) and the amount held by the company on December 31, 2009;

(4) not later than December 31, 2013, have increased the amount of its unencumbered surplus by at least 80 percent of the difference between the minimum amount required by §912.056(f) and the amount held by the company on December 31, 2009; and

(5) not later than December 31, 2014, have increased the amount of its unencumbered surplus by at least 100 percent of the difference between the minimum amount required by §912.056(f) and the amount held by the company on December 31, 2009.

History

Source Note: The provisions of this §7.403 adopted to be effective December 12, 2010, 35 TexReg 10961.

28 Tex. Admin. Code § 7.404 Transition Period for Stipulated Premium Insurance Companies

(a) A stipulated premium insurance company shall comply with §7.402 of this subchapter (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs).

(b) A stipulated premium insurance company that on December 31, 2009, had less than the minimum amount of capital and surplus required for a newly incorporated company under the Insurance Code §884.054 must:

(1) not later than December 31, 2010, have increased the amount of its capital and surplus by at least 10 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under the Insurance Code §884.054(a) and (c) and the amount of the company's capital and surplus on December 31, 2009;

(2) not later than December 31, 2011, have increased the amount of its capital and surplus by at least 20 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054(a) and (c) and the amount of the company's capital and surplus on December 31, 2009;

(3) not later than December 31, 2012, have increased the amount of its capital and surplus by at least 30 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(4) not later than December 31, 2013, have increased the amount of its capital and surplus by at least 40 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(5) not later than December 31, 2014, have increased the amount of its capital and surplus by at least 50 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(6) not later than December 31, 2015, have increased the amount of its capital and surplus by at least 60 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(7) not later than December 31, 2016, have increased the amount of its capital and surplus by at least 70 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(8) not later than December 31, 2017, have increased the amount of its capital and surplus by at least 80 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009;

(9) not later than December 31, 2018, have increased the amount of its capital and surplus by at least 90 percent of the difference between the amount of minimum capital and surplus required for a newly incorporated company under §884.054 and the amount of the company's capital and surplus on December 31, 2009; and

(10) not later than December 31, 2019, have at least the minimum amount of capital and surplus required under §884.054 for a newly incorporated company.

History

Source Note: The provisions of this §7.404 adopted to be effective December 12, 2010, 35 TexReg 10961.

Subchapter E ADMISSION PROCEDURES FOR FOREIGN INSURANCE COMPANIES

28 Tex. Admin. Code § 7.501 Reservation of Name

A foreign or alien insurance carrier seeking admission to Texas must request a reservation of name and submit such fees therefor as are required by law.

History

Source Note: The provisions of this §7.501 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.502 General Requirements

The applicant is required to comply with the following.

(1) Fees. Submit such other fees as are required by law.

(2) Certificate of authority. The applicant must submit an application for a certificate of authority. The commissioner of insurance will provide forms for this purpose (see §7.507(a) of this title (relating to Forms Incorporated by Reference)). The applicant must submit a certified copy of the certificate of authority issued by its state of domicile.

(3) Documents required by law. The applicant must submit all documents required by law. The commissioner will provide a listing of these documents.

(4) Financial condition. The applicant must satisfy the agency that its financial condition is such that it meets the requirements of applicable law. The commissioner will provide a listing of these requirements. It also must submit the latest examination report certified under original seal by the proper state official of its home state.

(5) Officers, directors, and other executives. The applicant must submit information which demonstrates in a credible fashion that its officers, directors, and other executives are fit, competent, and possess a good reputation such that the officers, directors, and other executives meet the requirements of law. The commissioner will provide forms to the applicant to be completed to facilitate this purpose (see §7.507(b) of this title (relating to Forms Incorporated by Reference)).

(6) Agent for service. The applicant must appoint, if required by law, an agent in Texas for acceptance on its behalf of service of process in any legal action in which it is involved. The commissioner will provide forms for this purpose (see §7.507(c) of this title (relating to Forms Incorporated by Reference)).

(7) Certification of deposit. The applicant must submit a certification of deposits held by any other state where applicable and required by law.

(8) Plan of operation in Texas. The applicant must submit a detailed written statement of its plan for operation in Texas.

History

Source Note: The provisions of this §7.502 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.503 Certificate of Similarity

Unless precluded by controlling law, if a document is required to be certified and certification is not available, the applicant, in lieu thereof, may submit a certificate of similarity stating under oath that the document submitted therewith is the same as the document required. The commissioner will provide forms for this purpose (see §7.507(d) of this title (relating to Forms Incorporated by Reference)). Should any alteration be made in the document, the applicant is required to immediately file such alteration with the State Board of Insurance.

History

Source Note: The provisions of this §7.503 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.504 Disposition of Applications

(a) The commissioner shall appoint an admissions examiner to review applications for admission. After review, if the admissions examiner can recommend that the application be approved in all respects, the admissions examiner shall prepare and forward to the commissioner a memorandum specifying a recommendation. A copy of the memorandum shall be sent to the applicant. If unable to recommend that the application should be approved based on all relevant information, the admissions examiner shall cause a hearing to be set on the commissioner's hearings docket for determination of the application. The commissioner may cause a hearing to be set on his own motion.

(b) Subsequent to the procedure specified in subsection (a) of this section, the commissioner shall enter an order approving or disapproving the application.

(c) The commissioner's order may be appealed to the board as provided in Chapter 1, Subchapter A of this title (relating to Rules of Practice and Procedure) and the Insurance Code, Article 1.04(d).

(d) At any time, the commissioner or admissions examiner may request additional information from the applicant to determine compliance with applicable law.

History

Source Note: The provisions of this §7.504 adopted to be effective October 19, 1982, 7 TexReg 3581; amended to be effective July 4, 1986, 11 TexReg 2884.

28 Tex. Admin. Code § 7.505 Applicant To Submit Information

The applicant is obligated to submit any information requested by the commissioner for the purpose of determining whether the application meets all requirements for admission (see §7.507(e) of this title (relating to Forms Incorporated by Reference)). The applicant must satisfy the commissioner that all requirements of the retaliatory provisions of the Insurance Code, Article 21.46, are met.

History

Source Note: The provisions of this §7.505 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.506 Documents To Be Verified

Each application submitted shall be accompanied by a sworn affidavit from the president or secretary of the applicant stating that the matters contained and assertions made in the application are true, correct, and complete.

History

Source Note: The provisions of this §7.506 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.507 Forms Incorporated by Reference

(a) A form to be used for applications by stock and mutual life insurance companies and entitled "Application for Certificate of Authority to Do Business in the State of Texas" is incorporated herein by reference. A form to be used for applications by stock and mutual fire and casualty insurance companies and title insurance companies which is titled "Application for Certificate of Authority to Do Business in the State of Texas" and to which is attached a "standard coverage" sheet is incorporated herein by reference. A form to be used for applications by fraternal benefit societies and entitled "Application for License to Do Business in the State of Texas," to which are attached the forms, "Affidavit, Investment of Funds," "Affidavit, Lodge System," and a supplement to the annual statement, is incorporated herein by reference. A form to be used for applications by Lloyds underwriters and entitled "Lloyds Underwriters, Application to the Commissioner of Insurance of the State of Texas for Authority to Transact Business Pursuant to the Insurance Code, Chapter 18," to which a "standard coverage" sheet is attached, is incorporated herein by reference. A form to be used for applications by reciprocals or interinsurance exchanges and titled "Application to the Commissioner of Insurance of the State of Texas for Authority to Transact Business Pursuant to the Insurance Code, Chapter 19," to which a "standard coverage" sheet is attached, is incorporated herein by reference.

(b) A form to be used by all companies in supplying information respecting officers and directors and titled "Biographical Affidavit," is incorporated herein by reference. A form to be used by all companies in supplying information respecting officers and directors and titled "Officers' and Directors' Page" is incorporated herein by reference.

(c) A form to be used by stock or mutual life insurance companies and title companies respecting service of process is incorporated herein by reference. A form to be used by stock fire and casualty companies respecting service of process is incorporated herein by reference. A form to be used by mutual fire and casualty companies respecting service of process is incorporated herein by reference. A form to be used by Mexican casualty insurance companies respecting service of process is incorporated herein by reference. A form to be used by fraternal benefit societies respecting service of process and titled "Appointment by Fraternal Beneficiary Association of Commissioner of Insurance as Attorney upon Whom Legal Process May Be Served" is incorporated herein by reference. A form to be used by Lloyds underwriters respecting service of process and titled "Appointment of the Commissioner of Insurance for the Purpose of Service of Legal Process" is incorporated herein by reference. A form to be used by reciprocals or interinsurance exchanges respecting service of process and titled "Appointment of the Commissioner of Insurance for the Purpose of Service of Legal Process" is incorporated herein by reference.

(d) A form to be used by stock or mutual life insurance companies, fraternal benefit societies, Lloyds underwriters, title insurance companies and reciprocals or interinsurance exchanges and titled "Certificate of Similarity" is incorporated herein by reference. A form to be used by stock and mutual fire and casualty companies and titled "Certificate of Similarity" is incorporated herein by reference.

(e) A form to be used by Lloyds underwriters and reciprocals or interinsurance exchanges and requiring a verification respecting Board Order 26043 (corrected) is incorporated herein by reference. A form to be used by mortgage guaranty insurers and titled "Affidavit to Be Completed by All Companies Writing Mortgage Guaranty Insurance under the Provisions of the Insurance Code, Article 21.50," is incorporated herein by reference.

(f) The forms referred to in this section may be obtained from the Corporate Custodian and Tax Division of the State Board of Insurance, 1110 San Jacinto Street, Austin, Texas 78786.

History

Source Note: The provisions of this §7.507 adopted to be effective October 19, 1982, 7 TexReg 3581.

28 Tex. Admin. Code § 7.508 Biographical Affidavit Requirements

Form Number FIN354, Biographical Affidavit and Fingerprint Requirements, adopted in §7.507 of this title (relating to Forms Incorporated by Reference), is only required on request from the Texas Department of Insurance.

History

Source Note: The provisions of this §7.508 adopted to be effective February 2, 2021, 46 TexReg 823.

Subchapter F REINSURANCE

28 Tex. Admin. Code § 7.601 Scope

(a) This subchapter implements Insurance Code Chapter 493.

(b) This subchapter applies to all insurers engaged in the business of ceding and assuming insurance in this state.

(c) This subchapter does not apply to the reinsurance of all or part of the liability of a policy of title insurance, except as provided under Insurance Code §2551.3055.

History

Source Note: The provisions of this §7.601 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.602 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Assuming insurer--An insurer as defined in Insurance Code §493.001. The term includes an insurer that assumes:

(A) the insurance risk of loss of the ceding insurer under the ceding insurer's indemnity reinsurance agreement, or

(B) the policy obligations of the ceding insurer under an assumption reinsurance agreement.

(2) Assumption reinsurance--A reinsurance agreement under which the assuming insurer assumes in writing the direct policy obligations of the ceding insurer in substitution for the obligations of the ceding insurer.

(3) Ceding insurer--The insurer that transfers an insurance risk of loss or part of an insurance risk of loss to an assuming insurer pursuant to a reinsurance agreement.

(4) Commissioner--Texas Commissioner of Insurance.

(5) GAAP--United States Generally Accepted Accounting Principles.

(6) Indemnity reinsurance--A reinsurance agreement that transfers an insurance risk of loss between insurers for a consideration commensurate with the risk transferred and under which an assuming insurer indemnifies a ceding insurer against all or part of the insurance risk of loss that the ceding insurer may sustain under the insurance policy or policies that the ceding insurer has issued or assumed.

(7) Insurer--A person legally organized in and authorized by its domiciliary jurisdiction to do the business of insurance, including those types of entities listed in Insurance Code §493.002, a title insurer operating under Insurance Code Title 11, or a domestic surplus lines insurance company operating under Insurance Code Chapter 981.

(8) NAIC--National Association of Insurance Commissioners.

(9) Nationally recognized statistical rating organization (NRSRO)--A credit rating agency currently registered as such with the United States Securities and Exchange Commission to issue credit ratings for insurance companies.

(10) Person--An individual, corporation, partnership, or other legal entity.

(11) Qualified United States financial institution--Those institutions as defined in the Insurance Code §493.001.

(12) Reinsurance agreement--A written contract that transfers an insurance risk of loss between insurers for a consideration commensurate with the risk transferred.

(13) Surplus as regards policyholders--The excess of net admitted assets over the sum of total liabilities.

(14) TDI--Texas Department of Insurance.

History

Source Note: The provisions of this §7.602 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.603 Prohibition against Reinsurance with Assuming Insurers not Authorized to do the Business of Insurance in Texas

Notwithstanding any other section in this subchapter, an insurer operating under Insurance Code §841.204 having less than the minimum capital and surplus required for the formation of new companies under Insurance Code §841.054 is prohibited from ceding an insurance risk of loss or part of an insurance risk of loss with any assuming insurer not authorized to do the business of insurance in Texas.

History

Source Note: The provisions of this §7.603 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.604 Assumption Reinsurance

(a) An insurer authorized to do the business of insurance in this state must, prior to entering into an assumption reinsurance agreement for its entire outstanding business, submit to TDI the written plan of reinsurance, including the assumption reinsurance agreement, and all necessary documents to allow the Commissioner to determine that the interests of all policyholders are fully protected as follows:

(1) a letter signed by a company officer, and including the phone number and email of the appropriate company contact individual:

(A) explaining the transaction;

(B) identifying all parties involved and specifying which are affiliates;

(D) stating whether the assumption reinsurance transaction is all of the ceding company's direct insurance exposure or only a portion and whether the transaction cedes all direct insurance exposure, the ceding company's plans going forward to maintain its certificate of authority or dissolve the entity;

(E) providing the date that any required assumption certificate or endorsement was filed with TDI;

(F) stating whether the policy reserves associated with the assumption reinsurance agreement are greater than 10 percent of the assuming insurer's total policyholder surplus or 25 percent of the ceding insurer's total assets;

(G) stating whether there is a settlement fee or consideration associated with the assumption reinsurance agreement;

(H) stating whether any parties to the agreement have assets deposited with or pledged to TDI and, if applicable, the party's expectations related to such deposits; and

(I) addressing any due diligence issues, including disclosure of any currently owned assets that may be nonadmitted as a result of the assumption reinsurance;

(J) stating the number of policies to be reinsured broken down by type of policy, form number, or other appropriate means;

(K) specifying in detail any changes in the policy coverage, provisions, rights or privileges, or in the actuarial reserving basis; and

(L) specifying a "date certain" for the effective date and contain the date by which all of the assumption certificates will be delivered or mailed (for group policies, each individual certificate holder must receive an assumption certificate);

(2) a copy of the assumption reinsurance agreement to be signed by officers of the parties to the agreement;

(3) a copy of any agreement governing the settlement fee or consideration reflecting the acquisition cost;

(4) if associated policy reserves of the business being ceded is greater than 10 percent of assuming insurer's total policyholder surplus or greater than 25 percent of ceding insurer's total assets, a four column balance sheet reflecting historical numbers from the most recently filed annual or quarterly statement, consistent with the following subparagraphs:

(A) the first column should reflect the ceding insurer's financial position pre-transaction;

(B) the second column should reflect assuming insurer's financial position pre-transaction;

(D) the fourth column should reflect the financial position of the assuming insurer post-transaction;

(5) if one of the companies involved in the transaction is a foreign domiciled insurer, provide evidence that the state of domicile has approved the assumption reinsurance, or if no approval is required in the state of domicile, an original letter from the domiciliary state insurance department stating such; and

(6) a copy of the letter appointing agents of the ceding insurer to the assuming insurer.

(b) If the assumption reinsurance agreement is between only foreign domiciled insurers that have policyholders or certificate holders located in Texas, the insurer must submit only the information and documents listed in subsection (a)(1), (2), (3), and (5) of this section.

History

Source Note: The provisions of this §7.604 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.605 Fees

The fees for submitting assumption reinsurance agreements are set forth in §7.1301 of this title.

History

Source Note: The provisions of this §7.605 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.606 Accredited Assuming Insurer

(a) An assuming insurer authorized by its state of domicile to assume the kind or kinds of insurance ceded to it, but which is not authorized to transact the business of insurance in this state, may apply for accreditation and such assuming insurer may be referred to as the "applicant" where appropriate in this section. A ceding insurer which cedes business to an accredited assuming insurer may receive the same credit for reinsurance as either an asset or a deduction from liability that the ceding insurer would be entitled to receive from ceding to an authorized assuming insurer.

(b) To apply for accreditation, the applicant must submit to TDI the following:

(1) applicant information, including the applicant's:

(A) full name;

(B) physical address for its principal place of business;

(D) NAIC number, United States federal tax identification number, and International Securities Identification Number, as applicable; and

(E) contact individual's name, phone number, and email;

(2) a list of states where the applicant currently transacts business;

(3) a list of all lines and classifications of insurance business the applicant is authorized to insure or reinsure;

(4) the most recent financial statement the applicant submitted to its state of domicile;

(5) a copy of the applicant's certificate or letter of authority or of compliance issued by the state of domicile; and

(6) Form AR-1, signed by the applicant's president or chief executive officer, which submits the assuming insurer to both this state's jurisdiction and to this state's right to examine the applicant's books and records.

(c) Accreditation will not be granted by the Commissioner until the applicant has submitted all information and documents required under subsection (b) of this section, and has demonstrated to the satisfaction of the Commissioner that the applicant qualifies for accreditation under Insurance Code Chapter 493 and this subchapter.

(d) To maintain accreditation, the accredited assuming insurer must submit to TDI:

(1) annually on or before March 1 of each year, an annual financial statement, as filed with the insurance regulator of the accredited assuming insurer's state of domicile; and

(2) quarterly on or before March 1, May 15, August 15, and November 15 of each year, a listing of ceding insurers with whom reinsurance agreements have been entered during that calendar quarter, including the complete name and address of each ceding insurer.

(e) Renewal of accreditation will occur annually, subject to continuing compliance with Insurance Code Chapter 493 and this subchapter.

(f) As provided in Insurance Code §493.1038, the Commissioner may suspend or revoke an assuming insurer's accreditation after notice and opportunity for hearing.

(g) The Commissioner may allow up to 90 days for an order suspending or revoking an assuming insurer's accreditation to become effective. No credit will be allowed a ceding insurer with respect to reinsurance ceded after the effective date an assuming insurer's accreditation has been suspended or revoked, except as provided under Insurance Code §493.1038. TDI will maintain a list of accredited assuming insurers on the TDI website. The assuming insurer must notify all affected ceding insurers at the time an order is entered that the assuming insurer's accreditation is withdrawn, suspended, or revoked.

History

Source Note: The provisions of this §7.606 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.607 Trusteed Assuming Insurer

(a) Credit for ceded insurance. Pursuant to Insurance Code §493.102(a)(3), a ceding insurer may be allowed credit for insurance risk of loss ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns, and successors in interest. Initially on establishing the trust and not later than March 1 of each subsequent year the assuming insurer must report to TDI information substantially the same as that required to be reported on the NAIC annual statement form by authorized insurers to enable TDI to determine the sufficiency of the trust fund, and the following information:

(1) the assuming insurer's:

(A) full name;

(B) physical address for its principal place of business;

(D) NAIC number, United States federal tax identification number, and International Securities Identification Number, as applicable; and

(E) contact individual's name, phone number, and email; and

(2) the trustee report required under Insurance Code §493.155(a) and subsection (c)(5) of this section.

(b) Three types of trusteed assuming insurers.

(1) A single assuming insurer must have a trust fund consisting of a trusteed account representing the assuming insurer's liabilities attributable to business written in the United States and, in addition, include a trusteed surplus of not less than $20 million, except as provided in Insurance Code §493.152(a)(2) and (a-1).

(2) A group of individual unincorporated underwriters must have a trust fund consisting of a trusteed account representing the group's liabilities attributable to business written in the United States and, include a trusteed surplus of not less than $100 million. The group must make available to TDI an annual certification by the group's domiciliary regulator and its independent public accountants of the solvency of each underwriter.

(3) A group of incorporated insurers under common administration which has continuously transacted an insurance business for at least three years, which is under the supervision of the Department of Trade and Industry of the United Kingdom, and which has aggregate policyholders' surplus of $10 billion, must consist of a trusteed account representing the group's several liabilities attributable to business written in the United States pursuant to reinsurance agreements issued in the name of the group and include a trusteed surplus of not less than $100 million that must be held jointly for the benefit of United States insurers ceding business to any member of the group. Each member of the group must make available to TDI an annual certification by the member's domiciliary regulator and its independent public accountants of the solvency of each member.

(c) Form of trust. Each trust must be established in a form approved by TDI or the chief insurance regulatory official of another state who, under the trust agreement has principal oversight over the trust. A copy of the trust and any amendments to the trust must be submitted to TDI and the chief insurance regulatory official of each state in which the ceding insurer beneficiaries of the trust are domiciled. If the Commissioner has principal regulatory oversight over the trust, the form of the trust must provide as follows:

(1) Contested claims are valid and enforceable out of funds in trust to the extent remaining unsatisfied 30 days after entry of the final order of any court of competent jurisdiction in the United States.

(2) Legal title to the assets of the trust must be vested in the trustees for the benefit of the grantor's United States policyholders and ceding insurers, their assigns, and successors in interest.

(3) The trust and the assuming insurer are subject to examination as determined by TDI.

(4) The trust must remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust.

(5) Not later than February 28 of each year, the trustees of the trust must report to TDI in writing and set forth the balance of the trust, list the trust's investments at the preceding year end, certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December 31.

(6) The grantor of the trust must notify TDI of any amendment to the trust within 10 business days of adoption of the amendment. If the Commissioner determines subsequent to receipt of this notice that the amendment is not acceptable and the amendment is not brought into compliance with Insurance Code and TDI rules, the trusteed status of the assuming insurer will be automatically revoked. TDI will provide notice by certified mail to the most recent address of the trusteed assuming insurer according to TDI records. The trusteed assuming insurer may request a public hearing to show compliance and seek reinstatement within 20 days of notification.

History

Source Note: The provisions of this §7.607 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.608 Insurance Ceded to Assuming Insurers not Authorized in Texas, or Accredited, Trusteed, or Certified under this Subchapter

(a) A ceding insurer domiciled in this state may not take credit for insurance ceded to an insurer that is not authorized in Texas, accredited in Texas, trusteed in Texas, or certified in Texas, except as authorized under Insurance Code §493.104.

(b) The funds held by or on behalf of the ceding insurer must be held as required under Insurance Code §493.104(b) and must be segregated from other operating accounts and securities invested by the ceding insurer. The segregated account must clearly acknowledge ownership by the company on whose annual statement these assets are listed. The ceding insurer must maintain at all times a subsidiary ledger detailing by each assuming insurer all transactions pertinent to each cash account or security held under the respective reinsurance agreements.

History

Source Note: The provisions of this §7.608 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.609 Trust Agreement Requirements

(a) Definitions for this section. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise.

(1) Beneficiary--The entity for whose benefit the trust has been established; the ceding insurer and any successor by operation of law of the ceding insurer including, without limitation, any liquidator, receiver, conservator, or supervisor.

(2) Grantor--The entity that has established a trust for the sole benefit of the beneficiary; the assuming insurer.

(3) Obligations--The sum total of trust property as set forth in subsection (b)(11) of this section which, unless specifically excluded under the reinsurance agreement is:

(A) reinsured losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer;

(B) reserves for reinsured losses reported and outstanding;

(D) reserves for unearned premiums; and

(E) reserves for mortality and morbidity.

(4) Trustee--A qualified United States financial institution.

(b) Required conditions in trust agreements.

(1) The agreement must be in the form of a written trust agreement made and entered into among the beneficiary, the grantor, and a trustee, which must be a qualified United States financial institution.

(2) The trust agreement must create a trust account into which assets must be deposited.

(3) All assets in the trust account must be held by the trustee at the trustee's office in the United States. The written notice described in paragraph (4) of this subsection must be presentable at the trustee's office in the United States.

(4) The trust agreement must comply with subparagraphs (A)-(C) of this paragraph.

(A) The trust agreement must stipulate that the beneficiary will have the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee and the terms of the trust agreement.

(B) No statement or document, other than the written notice from the beneficiary to the trustee, will be accepted to withdraw assets; the beneficiary may be required to acknowledge receipt of withdrawn assets.

(C) The trust agreement must indicate that it is not subject to any conditions or qualifications outside of the trust agreement and must not be conditioned on any other agreements or documents except as provided in paragraph (11) of this subsection.

(5) The trust agreement must be established for the sole benefit of the beneficiary.

(6) The trust agreement must provide for the trustee to:

(A) receive assets and hold all assets in safekeeping;

(B) determine that all assets are in such form that the beneficiary, or the trustee on direction by the beneficiary, may, whenever necessary, negotiate any such assets, without consent or signature from the grantor or any other person;

(C) furnish to the grantor and the beneficiary a statement of all assets in the trust account on its inception and at intervals no less frequent than the end of each calendar year quarter;

(D) notify the grantor and the beneficiary, within 10 days, of any deposits to or withdrawals from the trust account;

(E) on written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of such assets to the beneficiary; and

(F) allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary; or the trustee may, without the consent of but with written notice to the beneficiary, on call or maturity of any trust asset, withdraw such asset on condition that the proceeds are paid or deposited into the trust account.

(7) The trust agreement must provide that at least 30 days prior to termination of the trust account, written notification of termination must be delivered by the trustee via certified mail to the beneficiary and TDI.

(8) The trust agreement must specify whether it is subject to and governed by the laws of either the state in which the trust is established or the state in which the ceding insurer is domiciled as specified in the trust agreement.

(9) The trust agreement must prohibit invasion of the trust corpus in excess of one percent of the corpus per annum for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.

(10) The trust agreement must provide that the trustee will be liable for its own negligence, willful misconduct, lack of good faith, or breach of fiduciary duty.

(11) When a trust agreement is established in conjunction with a reinsurance agreement and where it is customary practice to provide a trust agreement for a specific purpose, such trust agreement must, notwithstanding any other conditions in this section, provide that the ceding insurer must undertake to use and apply amounts drawn on the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:

(A) to pay or reimburse such ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer, but not recovered from the assuming insurer or for unearned premiums due to the ceding insurer, if not otherwise paid by the assuming insurer;

(B) to make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or

(C) where the ceding insurer has received notification of termination of the trust account and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged 10 days prior to such termination date, the ceding insurer withdraws amounts equal to such obligations and deposits such amounts in a separate account, in the name of the ceding insurer in any qualified United States financial institution apart from its general assets, in trust for such uses and purposes specified in subparagraphs (A) and (B) of this paragraph as may remain executory after such withdrawal and for any period after such termination date.

(12) The reinsurance agreement entered into in conjunction with such a trust agreement may, but need not, contain the provisions required by subsection (d)(1)(B) of this section, provided that these provisions are included in the trust agreement.

(13) The assuming insurer agrees in the trust agreement to comply with the requirements of Insurance Code §493.1561.

(1) The trust agreement must provide that the trustee may resign on delivery of a written notice of resignation, effective not less than 90 days after receipt by the beneficiary and grantor of the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than 90 days after receipt by the trustee and the beneficiary of the notice, provided that no such resignation or removal will be effective until a successor trustee has been duly appointed and approved by the beneficiary and the grantor and all assets in the trust have been duly transferred to the new trustee.

(2) The trustee must be given authority to invest any of the funds in the account, provided that no investment may be made without prior approval of the beneficiary, unless the trust agreement specifies categories of investments acceptable to the beneficiary that are consistent with the restrictions in subsection (d)(1)(B) of this section.

(3) The trust agreement must provide that, on termination of the trust account, all assets not previously withdrawn by the beneficiary must, with written approval by the beneficiary, be delivered over to the grantor.

(4) The trust agreement must require the assuming insurer, prior to depositing assets with the trustee, to execute assignments, endorsements in blank, or transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the beneficiary, or the trustee on the direction of the beneficiary may, whenever necessary, negotiate any such assets without consent or signature from the assuming insurer or any other entity.

(d) Additional conditions applicable to reinsurance agreements.

(1) A reinsurance agreement, which is entered into in conjunction with a trust agreement and the establishment of a trust account, must contain provisions that:

(A) require the assuming insurer to enter into a trust agreement and to establish a trust account for the benefit of the ceding insurer, and specifying what such agreement is to cover;

(B) stipulate that assets deposited in the trust account must be valued, according to their current fair market value, and must consist only of, in any combination, cash (United States legal tender), certificates of deposit (issued by a bank organized under the laws of the United States, or located in the United States, and payable in United States legal tender), or investments of the types permitted by Insurance Code §493.104 provided that such investments are issued by an institution that is not the parent, subsidiary, or affiliate of either the grantor or the beneficiary;

(C) require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and

(D) stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance agreement, and must be utilized and applied by the ceding insurer or its successors in interest by operation of law, including any liquidator, rehabilitator, receiver, or conservator of such company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:

(i) to reimburse the ceding insurer for the assuming insurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies;

(ii) to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer pursuant to the provisions of the policies reinsured under the reinsurance agreement;

(iii) in the event of notice of termination of the trust, to fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer's liabilities for policies ceded under the agreement, such account must include amounts for policy reserves, claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums reserves; and

(iv) to pay any other amounts due the ceding insurer under the reinsurance agreement.

(2) The reinsurance agreement may also contain provisions that:

(A) give the assuming insurer the right to seek approval from the ceding insurer to withdraw from the aforementioned trust account all or any part of the assets contained therein and transfer such assets to the assuming insurer, provided:

(i) the assuming insurer must at the time of such withdrawal, replace the withdrawn assets with other qualified assets having a market value equal to the market value of the assets withdrawn so as to maintain at all times the deposit in the required amount; or

(ii) after such withdrawal and transfer, the market value of the trust account is no less than 102 percent of the required amount; and

(iii) the ceding insurer must be the sole judge as to the application of this subparagraph, but must not unreasonably or arbitrarily withhold its approval;

(B) provide for the return of any amount withdrawn in excess of the actual amounts required for paragraph (1)(D)(i)-(iii) of this subsection or, in the case of paragraph (1)(D)(iv) of this subsection, any amounts that are subsequently determined not to be due;

(C) provide for interest payments to the assuming insurer, at a rate not in excess of the rate of interest earned, on the amounts held pursuant to paragraph (1)(D)(iii) of this subsection; or

(D) permit the award by any arbitration panel or court of competent jurisdiction of:

(i) interest at a rate different from that provided in subparagraph (C) of this paragraph;

(ii) court or arbitration costs;

(iii) attorney's fees; and

(iv) any other reasonable expenses.

(e) Reduction in liability for reinsurance ceded to an unauthorized insurer. A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with TDI in compliance with the provisions of this section when established on or before the date of the financial statement of the ceding insurer. Further, the reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but such reduction must be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.

History

Source Note: The provisions of this §7.609 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.610 Letter of Credit Requirements

(a) The letter of credit must be clean, irrevocable, and unconditional, and issued or confirmed by a qualified United States financial institution. The letter of credit must contain an issue date and must stipulate that the beneficiary need only draw a draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit must also indicate that it is not subject to any condition or qualifications outside of the letter of credit. In addition, the letter of credit itself must not contain reference to any other agreements, documents, or entities, except as provided in subsection (h)(1) of this section.

(b) The heading of the letter of credit may include a boxed section that contains the name of the applicant and other appropriate notations to provide a reference for such letter of credit. If included, the boxed section must be clearly marked to indicate that such information is for internal identification purposes only. Neither the boxed section nor the internal identification may affect the terms of the letter of credit.

(c) The letter of credit must contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent on reimbursement.

(d) The term of the letter of credit must be for at least one year and must contain an evergreen clause that prevents the expiration of the letter of credit without written notice from the issuer. The evergreen clause must provide for a period of no less than 30 days' written notice prior to expiry date or nonrenewal.

(e) The letter of credit must state that:

(1) it is subject to and governed by either the laws of the State of Texas, the laws of the state of domicile of the issuing bank, or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (UCP);

(2) in the event of any conflict, whether the laws of Texas or the laws of the state in which the issuing bank is domiciled will apply; and

(3) all drafts drawn under the letter of credit are presentable at an office in the United States of a qualified United States financial institution.

(f) If the letter of credit is made subject to the UCP, then the letter of credit must specifically address and make provision for an extension of time to draw against the letter of credit in the event that one or more of the force majeure occurrences specified in the UCP occur.

(g) If the letter of credit is confirmed by a qualified United States financial institution authorized to issue letters of credit, then the following additional requirements in paragraphs (1) and (2) of this subsection must be met.

(1) The issuing financial institution must formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts.

(2) The evergreen clause must provide for 60 days' written notice prior to expiry date or nonrenewal.

(h) Reinsurance agreement provisions applicable with letters of credit must comply with the requirements of paragraphs (1)-(4) of this subsection.

(1) The reinsurance agreement, in conjunction with the letter of credit provided pursuant to applicable credit for reinsurance statutes and rules, must contain provisions that:

(A) require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover; or

(B) stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer, pursuant to the provisions of the reinsurance agreement, may be drawn on at any time, notwithstanding any other provisions in such agreement, and may be utilized by the ceding insurer or its successors in interest for the following purposes: to pay any other amounts due to the ceding insurer under the reinsurance agreement.

(ii) to reimburse the ceding insurer for the assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer under the terms and provisions of the policies reinsured under the reinsurance agreement;

(iii) in the event of notice of nonrenewal of the letter of credit, to fund an account with the ceding insurer in an amount at least equal to the deduction, for reinsurance ceded, from the ceding insurer's liabilities for policies ceded under the agreement (such amount must include amounts for policy reserves, claims and losses incurred, and unearned premium reserves); and

(iv)

(2) All of the provisions of paragraph (1) of this subsection must be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.

(3) The reinsurance agreement may, if applicable, provide for the ceding insurer and assuming insurer to:

(A) make an interest payment to the assuming insurer, at a rate not in excess of the prime rate of interest on the amounts held pursuant to paragraph (1)(B)(iii) of this subsection; or

(B) return any amounts drawn down on the letters of credit in excess of the actual amounts required, or in the case of paragraph (1)(B)(iv) of this subsection any amounts that are subsequently determined not to be due.

(4) When a letter of credit is obtained in conjunction with a reinsurance agreement and where it is customary practice to provide a letter of credit for a specific purpose, then such reinsurance agreement may, in lieu of paragraph (1)(B) of this subsection, require that the parties enter into a trust agreement that is incorporated into the reinsurance agreement or be a separate document.

(i) A letter of credit may not be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with TDI unless an acceptable letter of credit specifying the filing ceding insurer as beneficiary has been issued on or before the date of the financial statement. Further, the reduction for the letter of credit may be up to the amount available under the letter of credit but no greater than the specific obligation under the reinsurance agreement which the letter of credit was intended to secure.

(j) Only one expiration date may appear on the letter of credit and the date must be clearly noted on the face of the letter of credit and must set forth the specific month, day, time, and year that the letter of credit will expire.

(k) The aggregate of all letters of credit issued or confirmed to any one ceding insurer by one financial institution on behalf of any one assuming insurer must not exceed 10 percent of the financial institution's total equity capital, as shown in its most recent report of condition as filed with the appropriate federal financial institution regulatory agency. As used in this subsection, the term "any one ceding insurer" also includes all affiliated insurers that are named as beneficiaries in accordance with subsection (l) of this section.

(l) Only one beneficiary may be named on the letter of credit except that, in the event of affiliated insurers all of whom are members of the same holding company system and are participants in a specific intercompany reinsurance pooling arrangement, each affiliate ceding insurer through participation in the pool to the same assuming insurer may be named as beneficiary.

(m) Only one amount may appear on the letter of credit except that, in the event of affiliated beneficiaries, the letter of credit must show an aggregate amount covering the total reserve credit taken by all such affiliated beneficiaries and also must specifically designate for each named beneficiary, by dollar amount or percentage of the aggregate, the maximum amount that each named beneficiary may draw down.

(n) The term "beneficiary" must include any successor by operation of law of the named beneficiary including, without limitation, any liquidator, receiver, conservator, or supervisor.

(o) The account holder must be the assuming insurer.

(p) No schedule of periodic payments must appear on the letter of credit.

(q) If a letter of credit is issued by a financial institution which does not qualify as a qualified United States financial institution but is confirmed by a qualified United States financial institution, the following requirements in paragraphs (1)-(4) of this subsection must be met.

(1) The letter of credit that is being confirmed must comply in substance and form with Insurance Code §493.104 and §493.105 and this subchapter, except that the period of the evergreen clause as referenced in subsection (g)(2) of this section shall be increased to 60 days.

(2) The confirmation letter must show on its face:

(A) the office in the United States, inclusive of complete name and address, where presentations for draws are to be made; and

(B) the specific month, day, time, and year that the confirmation letter will expire.

(3) The confirmation letter must:

(A) contain an evergreen clause that prevents expiration of the confirmation letter without some affirmative action by the issuer;

(B) coincide with the term of the letter of credit being confirmed; and

(C) provide that the confirmation letter automatically will be extended for a like term unless, prior to the end of the stated term, the confirming bank has given the ceding insurer (beneficiary), the assuming insurer, and the issuing bank not less than 60 days' written notice of nonrenewal by either certified or registered mail, or other mutually agreed means.

(4) The confirming bank must comply with subsection (k) of this section.

(r) Qualifying foreign branches of Federal Deposit Insurance Corporation banks may issue letters of credit, and such letters of credit will be acceptable if the face of the letter of credit clearly shows that the letter of credit may be drawn down at a United States office of the bank and specifically lists the street address of that office. Similarly, qualifying foreign branches of Federal Deposit Insurance Corporation banks may confirm letters of credit. A confirmation letter will be acceptable if the face of the confirmation letter clearly shows that the letter of credit may be drawn down at a United States office of the confirming bank and specifically lists the street address of that office.

(s) In the event a letter of credit is not renewed or replaced under a reinsurance arrangement between the ceding insurer and assuming insurer, the ceding insurer must not be precluded from withdrawing the balance of the letter of credit and placing such sums in trust to secure continuing obligations under the reinsurance agreement until a renewal letter of credit or a substitution in lieu thereof has been received.

(t) All letters of credit must be readily available for viewing by TDI on request; letters of credit must be available at any time to TDI examiners in connection with the preparation of reports of examination. All confirming letters must be attached to the letters of credit that they confirm.

(u) In the event that either a letter of credit or a confirming letter of credit is not renewed or replaced or is suspended to become inactive, the ceding insurer and the issuing bank must give immediate notice of such nonrenewal or inactive status and the ceding insurer must advise TDI of any amount still outstanding and unsettled under the reinsurance agreement(s). This required notice must be sent to TDI by certified mail, return receipt requested (or by registered mail).

History

Source Note: The provisions of this §7.610 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective September 30, 1993, 18 TexReg 6329; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.611 Indemnity Reinsurance Agreements--Required Provisions

Credit will not be granted to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of Insurance Code Chapter 493 or otherwise in compliance with this subchapter unless the reinsurance agreement:

(1) includes a proper insolvency clause pursuant to Insurance Code §493.106;

(2) includes a provision that the assuming insurer, if not authorized to transact insurance or reinsurance in this state, has submitted to a court of jurisdiction within the United States, has agreed to comply with all requirements necessary to give such court jurisdiction, has designated an agent on whom service of process may be effected, and has agreed to abide by the final decision of such court or an appellate court to which such court's decision is appealed;

(3) includes a provision for a periodic accounting and cash settlement at quarterly intervals or more frequently as required by the reinsurance agreement, or quarterly accrual for annual settlements for those agreements that are not susceptible to other than annual payments, such periodic accounting and cash settlement to be unconditional on the performance of any other agreement or person;

(4) provides that the operation of any offsetting provisions must be to limit offset to reinsurance agreements between the ceding insurer and the assuming insurer;

(5) includes an effective date on which the inception of the assuming insurer's liabilities commence;

(6) includes a termination date or description of duration;

(7) provides for a final accounting and settlement; and

(8) provides that if payments are made to a reinsurance intermediary, then the assuming insurer assumes all credit risk of the reinsurance intermediary related to payments made to the reinsurance intermediary. The following will be deemed acceptable for evidencing compliance with this subsection: payments by the ceding insurer to the intermediary must be deemed to constitute payments to the assuming insurer and that payments by the assuming insurer to the intermediary must be deemed to constitute payment to the ceding insurer only to the extent that such payments are actually received by the ceding insurer;

(9) includes a provision indicating that the written agreement must constitute the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement;

(10) includes a provision whereby any change or modification to the agreement be made by amendment to the agreement and signed by the parties, except that facultative certificates duly executed by a property and casualty reinsurer or its duly appointed agent are excluded from this requirement; and

(11) complies with any other Texas Department of Insurance rules in effect.

History

Source Note: The provisions of this §7.611 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 30, 1995, 20 TexReg 4407; amended to be effective September 16, 1996, 21 TexReg 8508; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.612 Reinsurance Agreements Affected

The requirements of this subchapter, as amended, apply to all reinsurance agreements entered into or renewed on or after July 1, 2018, or such earlier date as the parties may agree. Unless the parties have agreed to be covered by the requirements of this subchapter prior to July 1, 2018, the requirements for a reinsurance agreement that was entered into or renewed before July 1, 2018, are governed by §§7.601-7.612, and §7.614 of this title as those sections existed immediately prior to that date and those rules are continued in effect for that purpose.

History

Source Note: The provisions of this §7.612 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.614 Posting of Information, Submissions, and Adoption of Forms by Reference

(a) Information and filings required under this subchapter must be submitted to the Commissioner or TDI on paper or in an electronic format that is acceptable to TDI. TDI will specify acceptable electronic submission formats and methods on the TDI website or the form.

(b) TDI adopts by reference the following standard forms for use by all insurers that are subject to the provisions of this subchapter and Insurance Code Chapter 493. Bracketed information in the forms, including TDI submission locations, submission formats and methods, and contact information, is subject to change, and persons submitting the forms must confirm that they are using the most recent online version before submitting. These forms are available on the TDI website. These forms are more specifically identified as follows:

(1) Form AR-1, Certificate of Accredited Assuming Insurer;

(2) Form CR-1, Certificate of Certified Reinsurer;

(3) Form CR-F Reinsurance - Property/Casualty Business;

(4) Form CR-S Reinsurance - Life Insurance, Annuities, Deposit Funds and Other Liabilities, and Accident and Health Insurance; and

(5) Form RJ-1, Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction.

(1) specified on the applicable TDI form being used;

(2) listed on the TDI website for a particular submission; or

(3) if the address for the submission is not listed, sent electronically to CLRfilings@tdi.texas.gov.

History

Source Note: The provisions of this §7.614 adopted to be effective August 16, 1990, 15 TexReg 4435; amended to be effective June 19, 2018, 43 TexReg 3888; amended to be effective January 1, 2022, 46 TexReg 8069.

28 Tex. Admin. Code § 7.615 Credit for Reinsurance--Reciprocal Jurisdictions

(a) The Commissioner, under Insurance Code §493.108, concerning Credit Allowed for Certain Eligible Assuming Insurers, shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that:

(1) is licensed to write reinsurance by a reciprocal jurisdiction described by subsection (b) of this section;

(2) has its principal office or is domiciled in that reciprocal jurisdiction; and

(3) meets the other conditions of this section.

(b) A "reciprocal jurisdiction" is a jurisdiction listed by the Commissioner under subsection (d) of this section, that is:

(1) a jurisdiction located outside of the United States that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and the European Union, is a member state of the European Union. For purposes of this subsection, a "covered agreement" is an agreement entered into under the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §313 and §314, that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this state or for allowing the ceding insurer to recognize credit for reinsurance;

(2) a jurisdiction located in the United States that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or

(3) a qualified jurisdiction listed by the Commissioner, under Insurance Code §493.1035, concerning Qualified Jurisdictions, and §7.624 of this title (relating to Qualified Jurisdictions), that is not described in paragraph (1) or (2) of this subsection and that the Commissioner determines meets the following additional requirements. The qualified jurisdiction:

(A) must provide that an insurer that has its principal office or is domiciled in the qualified jurisdiction will receive credit for reinsurance ceded to a U.S.-domiciled assuming insurer in the same manner credit is received for reinsurance assumed by insurers domiciled in the qualified jurisdiction;

(B) may not require a U.S.-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer regulated by the non-U.S. jurisdiction or allowing the ceding insurer to recognize credit for the reinsurance;

(C) must recognize the U.S. state regulatory approach to group supervision and group capital by providing written confirmation. The confirmation must be by a competent regulatory authority in the qualified jurisdiction and state that insurers and insurance groups that are domiciled or maintain their principal office in this state or another jurisdiction accredited by the NAIC are subject only to worldwide prudential insurance group supervision, including worldwide group governance, solvency and capital, and reporting, as applicable, by the Commissioner or the commissioner of the domiciliary state and will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and

(D) must provide written confirmation by a competent regulatory authority in the qualified jurisdiction that information about insurers and their parents, subsidiaries, or affiliated entities, if applicable, will be provided to the Commissioner in accordance with a memorandum of understanding or similar document between the Commissioner and the qualified jurisdiction, including the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding that the NAIC coordinates.

(c) Credit for reinsurance will be allowed if the reinsurance is ceded from an insurer domiciled in this state to an assuming insurer meeting the following conditions.

(1) The assuming insurer must be licensed to transact reinsurance by, and have its principal office in or be domiciled in, a reciprocal jurisdiction.

(2) The assuming insurer must have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated at least annually as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction in the amounts stated in subparagraphs (A) and (B) of this paragraph. Satisfaction of this requirement must be confirmed as required by paragraph (7) of this subsection, according to the methodology of the assuming insurer's domiciliary jurisdiction. The amounts are:

(A) not less than $250,000,000; or

(B) if the assuming insurer is an association, including incorporated and individual unincorporated underwriters:

(i) minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250,000,000; and

(ii) a central fund containing a balance of the equivalent of at least $250,000,000.

(3) The assuming insurer must have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:

(A) if the assuming insurer has its principal office or is domiciled in a reciprocal jurisdiction described by subsection (b)(1) of this section, the ratio specified in the applicable covered agreement;

(B) if the assuming insurer is domiciled in a reciprocal jurisdiction described by subsection (b)(2) of this section, a risk-based capital ratio of 300% of the authorized control level, calculated with use of the formula developed by the NAIC; or

(C) if the assuming insurer is domiciled in a reciprocal jurisdiction described by subsection (b)(3) of this section, a solvency or capital ratio that the Commissioner, after consulting with the reciprocal jurisdiction and considering any recommendations published through the NAIC committee process, determines to be an effective measure of solvency.

(4) The assuming insurer must agree to the following requirements and provide adequate assurance of its agreement by presenting a properly executed Form RJ-1, adopted by reference in §7.614 of this title (relating to Posting of Information, Submissions, and Adoption of Forms by Reference).

(A) The assuming insurer must agree to provide prompt written notice and explanation to the Commissioner if it fails to meet the minimum requirements of paragraph (2) or (3) of this subsection, or if any regulatory action is taken against it for serious noncompliance with applicable law.

(B) The assuming insurer must consent in writing to the jurisdiction of this state's courts and the appointment of the Commissioner as agent for service of process.

(i) The Commissioner may require that the consent be provided and included in each reinsurance agreement under the Commissioner's jurisdiction.

(ii) Nothing in this provision limits or in any way alters the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent the agreement to an alternative dispute resolution mechanism is unenforceable under applicable insolvency or delinquency laws.

(C) The assuming insurer must agree in writing to pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the jurisdiction where the judgment was obtained.

(D) Each reinsurance agreement must require the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded under the relevant agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable.

(E) The assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement involving this state's ceding insurers. The assuming insurer must agree to notify the ceding insurer and the Commissioner and to provide 100% security to the ceding insurer consistent with the terms of the scheme should the assuming insurer enter into a solvent scheme of arrangement. The security must be in a form consistent with the provisions of Insurance Code §493.104, concerning Credit for Funds Security Reinsurance Obligations, and §493.105, concerning Acceptability of Certain Letters of Credit, and §7.609 of this title (relating to Trust Agreement Requirements) and §7.610 of this title (relating to Letter of Credit Requirements). In this section, the term "solvent scheme of arrangement" means a foreign or alien statutory or regulatory compromise procedure subject to majority creditor approval and judicial sanction in the assuming insurer's domiciliary jurisdiction that finally commutes liabilities of duly noticed class members or creditors of a solvent debtor, or reorganizes or restructures the debts and obligations of a solvent debtor on a final basis, and which may be subject to judicial recognition and enforcement by a governing authority outside the ceding insurer's domiciliary jurisdiction.

(F) The assuming insurer must agree in writing to comply with paragraph (5) of this subsection.

(5) The assuming insurer or its legal successor on behalf of itself and any legal predecessors must provide to the Commissioner, on the Commissioner's request, the following documentation:

(A) for the two years before entering into the reinsurance agreement and subsequently on an annual basis, the assuming insurer's annual audited financial statements, including the external audit report, prepared under the law of the jurisdiction of the assuming insurer's principal office or domiciliary jurisdiction, as applicable;

(B) for the two years before entering into the reinsurance agreement, the solvency and financial condition reports or actuarial opinion, if filed with the assuming insurer's supervisor;

(C) before entering into the reinsurance agreement and subsequently not more than semiannually, an updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the United States; and

(D) before entering into the reinsurance agreement and subsequently not more than semiannually, information about the assuming insurer's assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the prompt payment criteria under paragraph (6) of this subsection.

(6) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment is evidenced by any of the following criteria:

(A) more than 15% of the reinsurance recoverables from the assuming insurer is overdue and in dispute as reported to the Commissioner;

(B) more than 15% of the assuming insurer's ceding insurers or reinsurers have undisputed reinsurance recoverables on paid losses that are overdue by 90 days or more and exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or

(C) the undisputed aggregate amount of reinsurance recoverable on paid losses is overdue by 90 days or more and exceeds $50,000,000, or as otherwise specified in a covered agreement.

(7) The assuming insurer's supervisory authority must confirm to the Commissioner annually that the assuming insurer complies with paragraphs (2) and (3) of this subsection.

(8) Nothing in this subsection precludes an assuming insurer from voluntarily providing the Commissioner with information.

(d) The Commissioner shall timely create and publish on TDI's website a list of reciprocal jurisdictions.

(1) The Commissioner's list shall include any reciprocal jurisdiction described by subsection (b)(1) and (2) of this section. The Commissioner shall consider any other reciprocal jurisdiction on the list of reciprocal jurisdictions published through the NAIC committee process. The Commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions as provided by applicable law or rule or under criteria published through the NAIC committee process.

(2) The Commissioner may remove a jurisdiction from the Commissioner's list of reciprocal jurisdictions if the Commissioner determines that the jurisdiction no longer meets any requirement of a reciprocal jurisdiction under applicable law, rule, or in accordance with a process published through the NAIC committee process. However, the Commissioner may not remove from the Commissioner's list a reciprocal jurisdiction described by subsection (b)(1) and (2) of this section. On removal of a reciprocal jurisdiction from the Commissioner's list, credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction must be allowed if otherwise allowed under Insurance Code Chapter 493 or this subchapter.

(e) The Commissioner shall timely create and publish on TDI's website a list of assuming insurers that have satisfied the conditions of this section. Cessions to an assuming insurer on the list must be granted credit in accordance with this section.

(1) If an NAIC accredited jurisdiction has determined that an assuming insurer meets the conditions in subsection (c) of this section, the Commissioner may defer to that jurisdiction's determination, and add the assuming insurer to the Commissioner's list of assuming insurers. The Commissioner may accept financial documentation filed with another NAIC accredited jurisdiction or the NAIC to satisfy the requirements of subsection (c) of this section.

(2) When an assuming insurer requests that the Commissioner defer to another NAIC accredited jurisdiction's determination, the assuming insurer must submit a properly executed Form RJ-1 adopted by reference in §7.614 of this title and any additional information the Commissioner requires. If TDI receives a request, TDI will notify other states through the NAIC committee process and provide relevant information about the Commissioner's eligibility determination.

(f) If the Commissioner determines that an assuming insurer no longer meets any requirement under this section, the Commissioner may revoke or suspend the eligibility of the assuming insurer from the Commissioner's list of eligible assuming insurers.

(1) While an assuming insurer's eligibility is suspended, the assuming reinsurer's reinsurance agreements issued, amended, or renewed after the effective date of the suspension do not qualify for credit except to the extent that the assuming insurer's obligations under the agreements are secured in accordance with Insurance Code §493.104 and §7.608(b) of this title (relating to Insurance Ceded to Assuming Insurers not Authorized in Texas, or Accredited, Trusteed, or Certified under this Subchapter), §7.610 of this title (relating to Letter of Credit Requirements), and §7.611 of this title (relating to Indemnity Reinsurance Agreements--Required Provisions).

(2) If an assuming insurer's eligibility is revoked, no credit for the assuming reinsurer's reinsurance, including reinsurance agreements entered into before the date of revocation, may be granted after the effective date of the revocation except to the extent that the assuming insurer's obligations under the agreements are secured in a form acceptable to the Commissioner and consistent with Insurance Code §493.104 and §§7.608(b), 7.610, and 7.611 of this title.

(g) Before denying statement credit, imposing a requirement to post security under subsection (f) of this section, or adopting any similar requirement that has substantially the same regulatory impact as security, the Commissioner shall:

(1) communicate with the ceding insurer, the assuming insurer, and the assuming insurer's supervisory authority that the assuming insurer no longer satisfies one of the conditions in subsection (c) of this section;

(2) allow the assuming insurer 30 days after the initial communication under paragraph (1) of this subsection to submit a plan to remedy the defect, and 90 days after that communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection;

(3) after the expiration of the 90-day period or, if applicable, the shorter period for exceptional circumstances described by paragraph (2) of this subsection, if the Commissioner determines that the assuming insurer took no or insufficient action to remedy the defect, the Commissioner may impose any requirement in this subsection; and

(4) provide a written explanation to the assuming insurer of any requirement in this subsection.

(h) If a ceding insurer is subject to a legal process of rehabilitation, liquidation, or conservation, the ceding insurer or its representative may seek and, if determined appropriate by the court in which the proceedings are pending, obtain an order requiring that the assuming insurer post security for all outstanding liabilities.

History

Source Note: The provisions of this §7.615 adopted to be effective January 1, 2022, 46 TexReg 8069.

28 Tex. Admin. Code § 7.616 Term and Universal Life Insurance Reserve Financing

(a) Definitions. The following words and terms have the following meanings when used in this section unless the context clearly indicates otherwise.

(1) Actuarial method--the methodology used to determine the required level of primary security under subsection (d) of this section.

(2) Covered policy--subject to the exemptions described in subsection (c) of this section, a covered policy, other than a grandfathered policy, that is one of the following policy types:

(A) a life insurance policy with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, or both, but not a flexible premium universal life insurance policy except as provided by subparagraph (B) of this paragraph; or

(B) a flexible premium universal life insurance policy with provisions allowing a policyholder to keep the policy in force over a secondary guarantee period.

(3) Grandfathered policy--a policy described by paragraph (2)(A) and (B) of this subsection that is:

(A) issued before January 1, 2015; and

(B) ceded, as of December 31, 2014, as part of a reinsurance agreement that would not have been exempt under subsection (c) of this section had that subsection been in effect for the reinsurance agreement.

(4) Non-covered policy--a policy that does not meet the definition of covered policy, including grandfathered policy.

(5) Other security--any security, other than primary security, acceptable to the Commissioner.

(6) Primary security--

(A) cash as described by Insurance Code §493.104;

(B) securities listed by the Securities Valuation Office as described by Insurance Code §493.104, excluding:

(i) any synthetic letters of credit, contingent notes, credit-linked notes, or other similar securities that operate in a manner similar to a letter of credit; and

(ii) any securities issued by the ceding insurer or any of its affiliates; and

(i) commercial loans in good standing with a risk-based capital risk category of CM3 or higher category;

(ii) policy loans; and

(iii) derivatives acquired in the normal course and used to support and hedge liabilities related to the actual risks in the policies ceded under the reinsurance agreement.

(7) Required level of primary security--the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.

(8) Valuation manual--the valuation manual defined by Insurance Code §425.052 and described by §3.9901 of this title (relating to Valuation Manual) in effect for the financial statement date on which credit for reinsurance is claimed.

(9) VM-20--"Requirements for Principle-Based Reserves for Life Products," including all relevant definitions, from the valuation manual.

(b) Applicability. This section applies only to reinsurance agreements that cede liabilities related to covered policies issued by a life insurance company domiciled in this state. In the event of a direct conflict between this section and another provision in Chapter 7, Subchapter F, of this title, this section applies to the extent of the conflict.

(1) reinsurance of:

(A) policies that satisfy the criteria for exemption in §3.4506 of this title (relating to Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies)), subsections (f) or (g) of this section; and that are issued before the later of:

(i) the effective date of this section; or

(ii) the date on which the ceding insurer begins to apply VM-20 to establish the ceded policies' statutory reserves, but not later than January 1, 2020;

(B) portions of policies that satisfy the criteria for exemption in §3.4506(e) of this title and that are issued before the later of:

(i) the effective date of this section; and

(ii) the date on which the ceding insurer begins to apply VM-20 to establish the ceded policies' statutory reserves, but not later than January 1, 2020;

(i) secondary guarantee period, if any, is five years or less;

(ii) specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the Commissioners' Standard Ordinary valuation tables and valuation interest rate applicable to the issue year of the policy; and

(iii) the initial surrender charge is not less than 100% of the first-year annualized specified premium for the secondary guarantee period;

(D) credit life insurance;

(E) any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or

(F) any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required to continue coverage in force for more than one year;

(2) reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Code Chapter 493, Subchapter D;

(3) reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Code §493.102, concerning Credit for Reinsurance Generally, and §493.103, concerning Accredited Reinsurer, and that:

(A) prepares statutory financial statements that comply with the NAIC Accounting Practices and Procedures Manual, without any departures from NAIC statutory accounting practices and procedures related to the admissibility or valuation of assets or liabilities that:

(i) increase the assuming insurer's reported surplus; and

(ii) are material enough that they must be disclosed in the financial statement of the assuming insurer under Statement of Statutory Accounting Principles No. 1; and

(B) is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event as described in §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs) when the assuming insurer's Risk-Based Capital is calculated in accordance with the life risk-based capital report including overview and instructions for companies, under §7.402 of this title;

(4) reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Code §493.102 and §493.103, and that:

(A) is not an affiliate, as defined in Insurance Code §823.003, concerning Classification as Affiliate or Subsidiary, of:

(i) the insurer ceding the business to the assuming insurer; or

(ii) any insurer that directly or indirectly ceded the business to that ceding insurer;

(B) prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;

(i) licensed or accredited in at least 10 states, including the assuming insurer's state of domicile; and

(ii) not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and

(D) is not or would not be below 500% of the authorized control level risk-based capital as that term is described in §7.402 of this title when its risk-based capital is calculated in accordance with the life risk-based capital report, including overview and instructions for companies under §7.402 of this title, and without recognition of any departures from NAIC statutory accounting practices and procedures related to the admission or valuation of assets or liabilities that increase the assuming insurer's reported surplus;

(5) reinsurance ceded to an assuming insurer that:

(A) meets the conditions of Insurance Code §493.108;

(B) is certified under Insurance Code Chapter 493, Subchapter C; or

(C) maintains at least $250 million in capital and surplus when determined in accordance with the NAIC Accounting Practices and Procedures Manual, including all amendments adopted by the NAIC, excluding the impact of any permitted or prescribed practices; and is

(i) licensed in at least 26 states; or

(ii) licensed in at least 10 states, and licensed or accredited in a total of at least 35 states; or

(6) reinsurance not otherwise exempt under paragraphs (1) - (5) of this subsection if the Commissioner, after consulting with the NAIC Financial Analysis Working Group or other group of regulators designated by the NAIC, as applicable, determines under all the facts and circumstances that:

(A) the risks are clearly outside the intent and purpose of this section;

(B) the risks are included within the scope of this section only as a technicality; and

(7) The Commissioner will publicly disclose any decision made under this subsection to exempt a reinsurance agreement from this section. The disclosure will include the general basis for the decision and a summary description of the reinsurance agreement.

(d) The actuarial method.

(1) Requirements generally. The actuarial method to establish the required level of primary security for each reinsurance agreement subject to this section is VM-20, applied on a reinsurance agreement-by-reinsurance agreement basis, including all relevant definitions, from the valuation manual as then in effect, applied as follows:

(A) For covered policies described in subsection (a)(2)(A) of this section, the actuarial method is the greater of the deterministic reserve or the net premium reserve regardless of whether the criteria for exemption testing can be met, except:

(i) if the covered policies do not meet the requirements of the Stochastic Reserve exclusion test in the valuation manual, then the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the net premium reserve; and

(ii) if the covered policies are reinsured in a reinsurance agreement that contains covered policies described in subsection (a)(2)(B) of this section, in addition to those described in subsection (a)(2)(A) of this section, the ceding insurer may elect to use the method set out in subparagraph (B) of this paragraph as the actuarial method for the entire reinsurance agreement. Whether the method set out in subparagraph (A) or (B) of this paragraph is used, the actuarial method must comply with any requirements or restrictions that the valuation manual imposes when aggregating these policy types for purposes of principle-based reserve calculations.

(B) For covered policies described in subsection (a)(2)(B) of this section, the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the net premium reserve, regardless of whether the criteria for exemption testing can be met.

(C) Except as provided in subparagraph (D) of this paragraph, the actuarial method must be applied on a gross basis to all risks related to the covered policies as originally issued or assumed by the ceding insurer.

(D) If the reinsurance agreement cedes less than 100% of the risk related to the covered policies, the required level of primary security may be reduced as follows:

(i) if a reinsurance agreement cedes only a quota share of some or all of the risks related to the covered policies, the required level of primary security and any adjustment under clause (iii) of this subparagraph may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;

(ii) if the reinsurance agreement in a nonexempt arrangement cedes only the risks related to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the covered policies, except that for covered policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on those covered policies, where the retained reserve of those covered policies should reflect any reduction under the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;

(iii) if a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount determined by applying the actuarial method, including the reinsurance section of VM-20, to the portion of the covered policy risks ceded in the exempt arrangement, except that for covered policies issued before January 1, 2017, this adjustment may not exceed {cx/ (2 * number of reinsurance premiums per year)} where cx is calculated using the same mortality table used in calculating the net premium reserve; and

(iv) for any other reinsurance agreement ceding a portion of risk to a different reinsurer, including stop loss, excess of loss, and other nonproportional reinsurance agreements, the required level of primary security may not be reduced.

(v) if any combination of clauses (i), (ii), (iii), and (iv) of this subparagraph applies, the adjustments to the required level of primary security must be made in the sequence that accurately reflects the portion of the risk ceded under the reinsurance agreement. The ceding insurer should document the rationale and steps taken to accomplish the adjustments to the required level of primary security due to the cession of less than 100% of the risk.

(vi) the adjustments for other reinsurance may be made with respect only to reinsurance agreements that the ceding insurer directly entered into. The ceding insurer may make no adjustment as a result of a retrocession treaty that the assuming insurers enter into.

(E) The required level of primary security resulting from application of the actuarial method may never exceed the amount of statutory reserves ceded.

(F) If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance agreement subject to this section, the aggregate required level of primary security for those reinsurance agreements may not be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those reinsurance agreements were ceded in a single agreement subject to this section.

(G) If a reinsurance agreement subject to this section cedes risks on both covered and non-covered policies, credit for the ceded reserves will be determined as follows:

(i) the actuarial method must be used to determine the required level of primary security for the covered policies, and subsection (e) of this section must be used to determine the reinsurance credit for the covered policy reserves; and

(ii) credit for the non-covered policy reserves will be granted only to the extent that security, in addition to the security held to satisfy the requirements of clause (i) of this subparagraph, is held by or on behalf of the ceding insurer in accordance with Insurance Code §§493.102, 493.104, and 493.108, as well as §493.1033, concerning Credit Allowed for Certain Certified Reinsurers; §493.1034, concerning, concerning Certain Associations May Be Certified Reinsurers; §493.1035, concerning Qualified Jurisdictions, §493.1036, concerning Requirements for Certified Reinsurer; §493.1037, concerning Certification by National Association of Insurance Commissioners; and §493.1038, concerning Suspension or Revocation of Accreditation or Certification; Inactive Status. Any primary security used to meet the requirements of this clause may not be used to satisfy the required level of primary security for the covered policies.

(2) Valuation used for purposes of calculations. For calculating the required level of primary security under the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following valuations apply:

(A) for assets, including assets held in trust, that would be admitted under the NAIC Accounting Practices and Procedures Manual if the ceding insurer held the assets, the valuations are to be determined according to statutory accounting procedures as if the assets were held in the ceding insurer's general account and without taking into consideration the effect of any prescribed or permitted practices; and

(B) for all other assets, the valuations are those assigned to the assets for determining the amount of reserve credit taken. In addition, the asset spread tables and asset default cost tables required by VM-20 must be included in the actuarial method if the tables are adopted by the NAIC's Life Actuarial (A) Task Force not later than the December 31st on or immediately preceding the valuation date for which the required level of primary security is being calculated. The tables of asset spreads and asset default costs must be incorporated into the actuarial method in accordance with VM-20.

(e) Requirements applicable to covered policies to obtain credit for reinsurance; opportunity for remediation.

(1) General requirements. Subject to subsection (c) of this section and paragraph (2) of this subsection, credit for reinsurance will be allowed with respect to ceded liabilities related to covered policies under Insurance Code §§493.102, 493.1033 - 493.1038, 493.104, and 493.108, only if, in addition to all other requirements imposed by law or rule, the following requirements are met on a reinsurance agreement-by-reinsurance agreement basis:

(A) the ceding insurer's statutory policy reserves with respect to the covered policies are established in full and in accordance with Insurance Code Chapter 425, Subchapter B, and related rules and actuarial guidelines. Credit claimed for any reinsurance agreement subject to this section may not exceed the proportionate share of those reserves ceded under the reinsurance agreement;

(B) the ceding insurer determines the required level of primary security with respect to each reinsurance agreement subject to this section and provides support for its calculation that the Commissioner finds acceptable;

(C) funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance agreement within the meaning of Insurance Code §493.104 on a funds withheld, trust, or modified coinsurance basis;

(D) funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held under subparagraph (C) of this paragraph, are held by or on behalf of the ceding insurer as security under the reinsurance agreement within the meaning of Insurance Code §493.104;

(E) any trust used to satisfy the requirements of this subsection must comply with all of the conditions and qualifications of §7.609 of this title, except that:

(i) funds consisting of primary security or other security held in trust, must be valued for subsection (d)(2) of this section according to the valuation rules in subsection (d)(2) of this section, as applicable;

(ii) there are no affiliate investment limitations for any security held in the trust if the security is not needed to satisfy the requirements of paragraph (1)(C) of this subsection;

(iii) the reinsurance agreement must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security in the trust when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner paragraph (1)(C) of this subsection requires at less than 102% of the level that paragraph (1)(C) of this subsection requires at the time of the withdrawal or substitution; and

(iv) the determination of reserve credit under §7.609 of this title will be determined according to the valuation rules in subsection (d)(2) of this section, as applicable; and

(F) the Commissioner has approved the reinsurance agreement.

(2) Requirements at inception date and on an ongoing basis; remediation.

(A) The requirements of paragraph (1) of this subsection must be satisfied as of the date that risks under covered policies are ceded if that date is on or after the effective date of this section and on an ongoing basis after that date. A ceding insurer may never take or consent to any action or series of actions that would result in a deficiency under paragraph (1)(C) or (D) of this subsection with respect to any reinsurance agreement under which covered policies have been ceded. In the event a ceding insurer becomes aware at any time that such a deficiency exists, it must use its best efforts to arrange to eliminate the deficiency as expeditiously as possible.

(B) Before the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance within the scope of subsection (b) of this section must perform an analysis, on a reinsurance agreement-by-reinsurance agreement basis, to determine, as to each reinsurance agreement under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of paragraph (1)(C) and (D) of this subsection were satisfied. The ceding insurer must establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held under paragraph (1)(C) of this subsection, unless:

(i) the requirements of paragraph (1)(C) and (D) of this subsection were fully satisfied as of the valuation date as to the reinsurance agreement; or

(ii) any deficiency has been eliminated before the due date of the quarterly or annual statement to which the valuation date relates through the addition of primary security or other security, or both, in the amount and in the form that would have caused the requirements of paragraph (1)(C) and (D) of this subsection to be fully satisfied as of the valuation date.

(C) Nothing in paragraph (2)(B) of this subsection may be construed to allow a ceding company to maintain any deficiency under paragraph (1)(C) and (D) of this subsection longer than is reasonably necessary to eliminate the deficiency.

History

Source Note: The provisions of this §7.616 adopted to be effective January 1, 2022, 46 TexReg 8069.

28 Tex. Admin. Code § 7.621 Certified Assuming Insurers

(a) Except as provided under Insurance Code §493.002(a-1) for certain county mutual insurance companies operating under Insurance Code §912.056, an insurer may take credit for reinsurance ceded to an assuming insurer that has been certified as an assuming insurer in this state pursuant to Insurance Code §493.1033 and this subchapter. The assuming insurer must be certified at all times for which statutory financial statement credit for reinsurance is claimed by the ceding insurer.

(b) The credit allowed will be based on the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified assuming insurer by the Commissioner. The security must be in a form consistent with the provisions of Insurance Code §493.1033(a)(2) and §493.1036(d) and this subchapter.

(c) The amount of security required in order for full credit to be allowed must correspond with the following requirements:

(1) The minimum reduced amounts of security that must be withheld for full credit are stated in Figure: 28 TAC §7.621(c)(1):

Attached Graphic

(2) Affiliated reinsurance agreements are eligible for the same reduced security requirements as non-affiliated reinsurance agreements.

(3) A certified assuming insurer may defer posting security for catastrophe recoverables for a period up to one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence that is recognized by the Commissioner. The one-year deferral period is contingent on the certified assuming insurer continuing to pay claims in a timely manner. Deferral of posting collateral for reinsurance recoverables related to a catastrophic occurrence under this subsection are permitted for only the following lines of business as reported on the NAIC annual financial statement:

(A) Line 1: Fire;

(B) Line 2: Allied lines;

(D) Line 4: Homeowners multiple peril;

(E) Line 5: Commercial multiple peril;

(F) Line 9: Inland marine;

(G) Line 12: Earthquake; and

(H) Line 21: Auto physical damage.

(4) A ceding insurer may take credit for reinsurance under this section only with respect to a reinsurance agreement entered into or renewed on or after the effective date that the assuming insurer is certified under this subchapter. Any reinsurance agreement entered into prior to the effective date of the assuming insurer's certification that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance agreement, covering any risk for which collateral was provided previously, will only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new agreement.

(5) Nothing in this section prohibits the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified assuming insurers under this section.

History

Source Note: The provisions of this §7.621 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.622 Certification and Rating

(a) Certification.

(1) A certification issued under this section is valid for the following calendar year. To continue the certification, the certified assuming insurer must reapply on or before July 1 of the year that the certification expires.

(2) Following receipt of a certification application, TDI will post on the TDI website notice of the application and instructions on how the public may respond to or comment on the application. The notice will remain posted on the website for at least 30 days before the Commissioner will take final action on the application.

(3) TDI will provide written notice to an assuming insurer stating whether the assuming insurer's application to be a certified assuming insurer has been approved. If the application is approved, the notice will include the certified insurer's assigned rating. TDI will publish on the TDI website a list of all certified assuming insurers and their assigned ratings.

(4) To be eligible for certification, the assuming insurer must:

(A) be domiciled and authorized to transact the business of insurance or reinsurance in a qualified jurisdiction, as determined under Insurance Code §493.1035 and §7.624 of this subchapter;

(B) maintain capital and surplus, or its equivalent, of no less than $250 million calculated in accordance with subsection (b) of this section. An association including incorporated and individual unincorporated underwriters may satisfy the requirement by having minimum capital and surplus equivalents, net of liabilities, of at least $250 million and a joint central fund containing a balance of at least $250 million;

(C) maintain financial strength ratings from two or more NRSROs that the Commissioner has determined to be acceptable. The NRSRO must base its financial strength rating on interactive communication between the NRSRO and the assuming insurer and must not be based solely on publicly available information. The financial strength ratings will be a factor used by the Commissioner in determining the rating that the Commissioner assigns to the assuming insurer. Acceptable NRSROs include the following:

(i) A.M. Best Rating Services, Inc. (Best);

(ii) Fitch Ratings, Inc. (Fitch);

(iii) Kroll Bond Rating Agency, Inc. (Kroll);

(iv) Moody's Investors Service, Inc. (Moody's);

(v) S&P Global Ratings; (S&P) and

(vi) any other NRSRO that the Commissioner determines to be acceptable under §7.627 of this title;

(D) agree to post 100 percent security for the benefit of the ceding insurer, or its estate, on the entry of an order of rehabilitation, liquidation, or conservation, against the ceding insurer;

(E) meet, or agree to, the requirements in Insurance Code §493.1033 and Form CR-1; and

(F) provide additional information necessary to demonstrate the creditworthiness of the assuming insurer.

(b) Rating.

(1) The Commissioner will rate each certified assuming insurer on a legal entity basis with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified assuming insurer may be evaluated on the basis of its group rating. In determining the rating, the Commissioner will consider relevant factors and review appropriate materials, including:

(A) the certified assuming insurer's financial strength rating from an acceptable NRSRO. The maximum rating that a certified assuming insurer may be assigned will correspond to its financial strength rating level in the security table in Figure: 28 TAC §7.622(b)(1)(A) of this section and as the security table is amended for additional NRSROs determined to be acceptable in accordance with §7.627 of this title. The Commissioner must use the lowest financial strength rating received from an acceptable NRSRO in establishing the maximum rating of a certified assuming insurer. The financial strength rating must be dated within 15 months of the certified assuming insurer's submission. An insurer that fails to obtain or maintain at least two financial strength ratings from acceptable NRSROs will lose the insurer's eligibility for certification.

Attached Graphic

(B) the business practices of the certified assuming insurer in dealing with its ceding insurers, including its record of compliance with reinsurance agreement terms and obligations;

(C) for certified assuming insurers domiciled in the United States, the most recent applicable reinsurance schedule filed with the certified assuming insurer's state of domicile;

(D) for certified assuming insurers not domiciled in the United States, the most recent Form CR-F, for property and casualty assuming insurers, or Form CR-S, for life and health assuming insurers, which are adopted by reference;

(E) the reputation of the certified assuming insurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in supervision, conservation, receivership or similar proceeding;

(F) regulatory actions against the certified assuming insurer;

(G) the report of the independent auditor on the financial statements of the certified assuming insurer;

(H) for a certified assuming insurer not domiciled in the United States:

(i) its audited financial statements consisting of audited United States GAAP basis statements, if available; audited International Financial Reporting Standards (IFRS) basis statements with an audited footnote reconciling equity and net income to a United States GAAP basis; or with the written permission of the Commissioner, audited IFRS statements with reconciliation to United States GAAP certified by an officer of the company;

(ii) its actuarial opinion and other regulatory filings as filed with the non-United States jurisdiction supervisor; and

(iii) with the initial application for certification, its three prior years' audited financial statements filed with its non-United States jurisdiction supervisor;

(I) the liquidation priority of obligations to a ceding insurer in the certified assuming insurer's domiciliary jurisdiction in the context of an insolvency proceeding;

(J) a certified assuming insurer's participation in any solvent scheme of arrangement, or similar procedure, which involves United States ceding insurers. A certified assuming insurer that proposes participation in a solvent scheme of arrangement must provide the Commissioner with prior written notice, not less than 30 days prior to such participation; and

(K) any other information the Commissioner deems relevant.

(2) As directed by the Commissioner, a certified assuming insurer must adjust the security posted to protect its liabilities to United States ceding insurers as the Commissioner deems appropriate based on TDI's analysis of a certified assuming insurer's reputation for prompt payment of claims under subsection (b)(1)(E) of this section. Subject to any additional adjustments that the Commissioner may deem under this paragraph, the certified assuming insurer must, at a minimum, increase the security posted by one rating level under subsection (b)(1) of this section if:

(A) more than 15 percent of the certified assuming insurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and which exceed $100,000 for each ceding insurer; or

(B) the aggregate amount of reinsurance recoverables on paid losses that are not in dispute and are overdue by 90 days or more exceeds $50 million.

(c) Form CR-1 Submission Requirement. The certified assuming insurer applicant must submit with each certification application, a properly executed Form CR-1 as evidence of its:

(1) submission to the jurisdiction of any court of competent jurisdiction in any state of the United States;

(2) appointment of the Commissioner as an agent for service of process in this state;

(3) agreement to provide security for 100 percent of the assuming insurer's liabilities attributable to reinsurance ceded by United States ceding insurers if the assuming insurer resists enforcement of a final United States judgment. The Commissioner may not certify any assuming insurer that is domiciled in a jurisdiction that the Commissioner has determined does not adequately and promptly enforce final United States judgments or arbitration awards;

(4) agreement to notify the Commissioner within 10 days of any regulatory actions taken against it, any change in the provisions of its domiciliary license, or any change in its rating by an approved rating agency, including a statement describing such changes and the reasons for the changes;

(5) agreement to annually file:

(A) information comparable to relevant provisions of the NAIC financial statement for use by insurance markets in accordance with §7.622(d)(3) of this title;

(B) the report of the independent auditor on the financial statements of the insurance enterprise in accordance with §7.622(d)(4) of this title;

(C) audited financial statements, regulatory filings, and actuarial opinion in accordance with §7.622(d)(4) and (5) of this title;

(D) an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers in accordance with §7.622(d)(6) of this title; and

(E) a statement of its good standing as an insurer or reinsurer with the supervisor of its domiciliary jurisdiction in accordance with §7.622(d)(7) of this title.

(d) Submissions. The certified assuming insurer applicant must comply with the applicable information filing requirements in this subsection and submit the information it agreed to submit under subsection (c) of this section, with any certification application and in a manner consistent with the agreements included in Form CR-1. All information submitted by certified assuming insurers and applicants that is not otherwise public information subject to disclosure will be exempt from disclosure if provided by the Public Information Act, Government Code Chapter 552 and will be withheld from public disclosure. The certified assuming insurer applicant must submit with each certification application:

(1) a statement of any regulatory actions taken against the applicant within three years prior to the application including:

(A) fines and penalties; and

(B) changes in the provisions of the applicant's domiciliary license.

(2) a statement of changes in the applicant's financial strength rating by an acceptable NRSRO including any reports or supporting documentation provided by the NRSRO;

(3) for United States domiciled applicants, the most recent applicable reinsurance schedule filed with the applicant's domestic jurisdiction, or for applicants not domiciled in the United States, the most recent Form CR-F or CR-S, as applicable;

(4) for applicants not domiciled in the United States, the report of the independent auditor on the financial statements of the insurance enterprise. The basis for the auditor's report must be:

(A) audited United States GAAP basis statements, if available;

(B) audited IFRS basis statements with an audited footnote reconciling equity and net income to a United States GAAP basis; or

(C) with the permission of the Commissioner, audited IFRS statements with reconciliation to United States GAAP certified by an officer of the company;

(5) for applicants not domiciled in the United States, the following filings made with the applicant's domestic supervisor:

(A) the actuarial opinion and other regulatory filings; and

(B) audited financial statements for the prior three years;

(6) an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from United States domestic ceding insurers. If the applicant's reinsurance obligations:

(A) to United States ceding insurers that are in dispute or more than 90 days past due exceed five percent of its total reinsurance obligations to United States cedents as of the end of its prior financial reporting year; or

(B) to any of the applicant's top 10 United States ceding insurers (based on the amount of outstanding reinsurance obligations as of the end of its prior financial reporting year) that are in dispute or more than 90 days past due exceed 10 percent of its reinsurance obligations to that United States ceding insurers; and

(i) submit notice to the Commissioner of the fact and a detailed explanation regarding the reasons for the amount of disputed or overdue claims exceeding either or both of the levels listed in subparagraphs (A) and (B) of this paragraph;

(ii) a description of the applicant's business practices in dealing with United States ceding insurers;

(iii) a statement that the applicant commits to comply with all contractual requirements applicable to reinsurance contracts with United States ceding insurers; and

(iv) any such additional information concerning the applicant's claims practices with regard to any or all United States ceding insurers that the Commissioner may request following receipt of the notice;

(7) a certification from the certified assuming insurer's domestic regulator that the certified assuming insurer is in good standing and maintains capital in excess of the jurisdiction's highest regulatory action level;

(8) evidence of the applicant's financial strength by:

(A) confirming all interactive financial strength ratings currently maintained by the applicant;

(B) specifying the type of financial strength rating; and if the financial strength rating is not on a stand-alone basis, provide the rationale for the group rating;

(C) submitting copies of full NRSRO reports dated within 15 months of the application date all financial strength ratings currently maintained by the applicant, except if a full report is not available, the applicant must provide a letter from the applicable NRSRO affirming its current financial strength rating; and

(D) providing an explanation of any changes in the financial strength rating during the last three years;

(9) the mechanisms the applicant will use to secure obligations incurred as a certified assuming insurer in accordance with Insurance Code §§493.1033-493.1038 and this subchapter. If the applicant intends to utilize a multibeneficiary trust for this purpose, the applicant must submit:

(A) a copy of the approval from the domiciliary regulator with regulatory oversight of the 100 percent collateral and reduced collateral multibeneficiary trusts or its intention to secure the approval of the domiciliary regulator of the trust before either trust can be used;

(B) the form of the trust that will be used to secure obligations incurred as a certified assuming insurer; and

(C) the form of the trust that will be used to secure obligations incurred outside of the applicant's certified assuming insurer status; and

(10) a description of the applicant's past, present or proposed future participation in any solvent scheme of arrangement, or similar procedure, involving United States ceding insurers and a statement that the applicant will notify the Commissioner in writing of any future proposed participation by the certified assuming insurer in a solvent scheme of arrangement, or similar procedure, not less than 30 days prior to such participation;

(11) applicant information, including the applicant's:

(A) full name;

(B) physical address for its principal place of business;

(D) NAIC number, United States federal tax identification number, and ISI number; and

(E) contact individual's name, phone number, and email; and

(12) other information that the Commissioner may reasonably require.

History

Source Note: The provisions of this §7.622 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.623 Change in Rating and Suspension or Revocation of Certification

(a) In the case of a downgrade by an NRSRO or other negative change to rating criteria, the Commissioner will assign a new rating to the certified assuming insurer in accordance with the requirements of this subchapter and notify the certified assuming insurer in writing.

(b) If the Commissioner upgrades the assigned rating of a certified assuming insurer, the certified assuming insurer may meet the security requirements applicable to its new rating on a prospective basis, provided that the certified assuming insurer posts security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the Commissioner downgrades the assigned rating of a certified assuming insurer, the certified assuming insurer is subject to and must meet the security requirements applicable to its new rating for all business it has assumed as a certified assuming insurer.

(c) The Commissioner may, after notice and opportunity for hearing as required under Insurance Code §493.1038(b), suspend or revoke a certified assuming insurer's certification at any time if the certified assuming insurer fails to meet its obligations or security requirements under Insurance Code Chapter 493 or this subchapter, including the certified assuming insurer's financial or operating results, or documented delays in payment by the certified assuming insurer that lead the Commissioner to reconsider the certified assuming insurer's ability or willingness to meet its contractual obligations.

(d) If the Commissioner suspends or revokes the certification of a certified assuming insurer, the ceding insurer may not continue to take credit for reinsurance ceded to the assuming insurer unless the assuming insurer posts security in accordance with Insurance Code §493.1038. The Commissioner may allow up to 90 days for an order suspending or revoking an assuming insurer's certification to become effective.

History

Source Note: The provisions of this §7.623 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.624 Qualified Jurisdictions

(a) If the Commissioner determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction under Insurance Code §493.1035 and this section, the Commissioner will publish notice of such recognition on the TDI website. The Commissioner may suspend recognition of a jurisdiction that is no longer qualified and will provide notice of the suspension on the TDI website.

(b) The Commissioner will evaluate the reinsurance supervisory system of the non-United States jurisdiction and determine whether the jurisdiction is eligible to be recognized as a qualified jurisdiction, both initially and on an ongoing basis. The Commissioner must consider the rights, benefits, and the extent of reciprocal recognition afforded by the non-United States jurisdiction to assuming insurers licensed and domiciled in the United States. A qualified jurisdiction must agree to share information and cooperate with the Commissioner with respect to all certified assuming insurers domiciled within that jurisdiction. A jurisdiction may not be considered to be a qualified jurisdiction if the Commissioner has determined that it does not adequately and promptly enforce final United States judgments or arbitration awards. The Commissioner may, in the Commissioner's discretion, consider additional factors in determining whether to recognize a qualified jurisdiction, including:

(1) the framework under which the assuming insurer is regulated;

(2) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

(3) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

(4) the form and substance of financial reports required to be filed or made publicly available by assuming insurers in the domiciliary jurisdiction and the accounting principles used;

(5) the domiciliary regulator's willingness to cooperate with United States regulators in general and the Commissioner in particular;

(6) the history of performance by assuming insurers in the domiciliary jurisdiction;

(7) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or successor organization; and

(8) any other matters deemed relevant by the Commissioner.

(c) The Commissioner will consider the list of qualified jurisdictions published through the NAIC Committee Process in developing a list of qualified jurisdictions. If the Commissioner includes a jurisdiction as qualified that does not appear on the NAIC list of qualified jurisdictions, the Commissioner will provide documented justification for the approval with respect to the criteria provided under subsection (b) of this section.

(d) A United States jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program will be deemed to be a qualified jurisdiction in accordance with Insurance Code §493.1035(f) and included on the list.

History

Source Note: The provisions of this §7.624 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.625 Recognition of Certification Issued by an NAIC Accredited Jurisdiction

(a) An assuming insurer that has been certified as an assuming insurer in an NAIC-accredited jurisdiction may apply for certification in Texas under this section. A certification issued under this section is valid for the following calendar year. To continue the certification, the certified assuming insurer must reapply to TDI on or before July 1 of the year that the certification expires. The certified assuming insurer applicant must submit:

(1) Form CR-1 as required under §7.622(c) of this title;

(2) all information required under §7.622(d) of this title that is not available to TDI from the certifying jurisdiction; and

(3) when prepared a copy of the approval letter or other documentation provided to the applicant by an accredited jurisdiction, confirming the following information:

(A) the name of all states in which applicant is currently certified;

(B) the rating and collateral percentage assigned by the accredited jurisdiction with respect to the applicant;

(D) the lines of business to which the certification is applicable; and

(E) the applicant's commitment to comply with all requirements necessary to maintain certification;

(b) Following receipt of a certification application, TDI will post on the TDI website notice of the application and instructions on how the public may respond to or comment on the application. The notice will remain posted on the website for at least 30 days before the Commissioner takes final action on the application.

(c) If the Commissioner makes a determination to accept another jurisdiction's certification and rating under this subsection, the assuming insurer will be considered to be a certified assuming insurer in this state. The Commissioner may also certify the assuming insurer and assign a rating in accordance with Insurance Code §493.1036 and §7.622 of this title.

(d) Any change in the certified assuming insurer's rating in another jurisdiction will apply in this state as of the date it takes effect in the other jurisdiction without the necessity for further action of the Commissioner. The change will be effective as described in §7.623 of this title. The certified assuming insurer must notify the Commissioner of any change in its status or rating within 10 days after receiving notice of the change.

(e) The Commissioner may withdraw recognition of another jurisdiction's rating at any time and assign a new rating in accordance with Insurance Code §493.1036 and §7.622 of this title.

(f) The Commissioner may withdraw recognition of another jurisdiction's certification at any time in accordance with Insurance Code §493.1038(b) and §7.623 of this title. Unless the Commissioner suspends or revokes the certified assuming insurer's certification in accordance with Insurance Code §493.1038 and §7.623 of this title, the certified assuming insurer's certification will remain in good standing in this state for a period of 90 days. This period may be extended if additional time is necessary to consider the assuming insurer's application for certification in this state, as provided under Insurance Code §493.1036(h).

History

Source Note: The provisions of this §7.625 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.626 Section Mandatory Funding Clause

In addition to the clauses required under Insurance Code Chapter 493 and this subchapter, a ceding insurer may not enter into or renew a reinsurance agreement with a certified assuming insurer under this subchapter, unless the reinsurance agreement includes a funding clause that requires the certified assuming insurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer for reinsurance ceded to the certified assuming insurer.

History

Source Note: The provisions of this §7.626 adopted to be effective June 19, 2018, 43 TexReg 3888.

28 Tex. Admin. Code § 7.627 Additional NRSRO

(a) In addition to those NRSROs listed in §7.622(a)(4)(C) of this title, the Commissioner may determine that additional NRSROs are acceptable. An applicant must be an NRSRO and demonstrate to the satisfaction of the Commissioner that the applicant's:

(1) rating structure is reliable and suitable for rating the solvency of assuming insurers, including not less than five years' experience in rating insurers engaged primarily in assuming insurance from United States domiciled ceding insurers;

(2) financial strength ratings are based on interactive communication between the NRSRO and the assuming insurer and must not be based solely on publicly available information; and

(3) ratings correlate to the rating structure and security levels shown in Figure: 28 TAC §7.622(b)(1)(A) of this title.

(b) The applicant must submit an application with TDI demonstrating that the applicant meets the requirements listed in subsection (a) of this section. On receipt of the application, TDI will post notice of the application, the application, and instructions on how the public may respond to or comment on the application. The notice will remain posted on the website for at least 30 days before the Commissioner will take final action on the application.

(1) list the applicant with other acceptable NRSROs; and

(2) add applicant's rating structures and security table to those shown in Figure: 28 TAC §7.622(b)(1)(A).

(d) The Commissioner may withdraw recognition of an NRSRO that has been determined to be acceptable under this section if the Commissioner determines that the NRSRO no longer meets the requirements of this section.

History

Source Note: The provisions of this §7.627 adopted to be effective June 19, 2018, 43 TexReg 3888.

Subchapter G REVIEW OF CORPORATE NAMES

28 Tex. Admin. Code § 7.701 Standards Governing Approval of Corporate Names

If, after giving consideration to each of the matters enumerated in paragraphs (1)-(8) of this section, the commissioner determines that the proposed name is so similar to that of any other insurance company as to be likely to mislead the public, he shall disapprove the name; otherwise, he shall approve it.

(1) Mere similarity is not a ground for disapproval, nor is the mere possibility that the similarity may mislead the public. Disapproval must be predicated on a finding that the similarity is likely to mislead the public.

(2) No misleading similarity will be found because the name contains words which are required by statute.

(3) Certain words are commonly used in insurance company names to denote strength, stability, geographic region, type of insurer, or some similar concept. Unless such a word is found to be the key or predominant identifying portion of the name, its use may be permitted even though the identical word appears in the name of another insurer.

(4) A coined word, or a word not commonly used in insurance company names, is generally to be regarded as a predominant or identifying portion of a name. Therefore, the use of such identical words in two or more company names will be not permitted unless it is clearly shown that the likelihood of misleading is eliminated by including other predominant and distinguishing words in the name or names.

(5) The tendency to mislead is reduced if the similarly named companies are not authorized to insure the same types of risk.

(6) The tendency to mislead is reduced if the similarly named companies are affiliated through stock ownership or are otherwise under common control and management.

(7) If offered, evidence that the names under consideration have been concurrently used in other states without having misled the public will be received and considered.

(8) In cases where trademarks, trade names, copyrights, slogans or unusual plans, policies, or programs have been so used as to identify an insurer, the board or commissioner may consider such trademarks, etc., in conjunction with the official corporate name in determining whether there is a similarity likely to mislead the public.

History

Source Note: The provisions of this §7.701 adopted to be effective January 1, 1976; amended to be effective April 1, 1983, 8 TexReg 922.

28 Tex. Admin. Code § 7.702 General Rules and Policies

In addition to the specific standards heretofore enumerated for the approval or disapproval of names, the board hereby adopts and records the following general rules and policies respecting name approval.

(1) The provisions of these statutes are not a statutory restatement of the common law as respects the rights to a name or the rights not to have a name used by another, and the determination of the board is only on the basis of whether the name is so similar to another as to mislead the public. An example of one of the reasons for that determination is that no statutory provision is made for notification of companies with similar names.

(2) The board will not give an advisory opinion of the common law rights of parties or possible parties to a name controversy.

(3) The sole question of whether the name is so similar as to be likely to mislead the public will be made by the agency without consideration of the common law decisions heretofore made by courts of record.

History

Source Note: The provisions of this §7.702 adopted to be effective January 1, 1976; amended to be effective April 1, 1983, 8 TexReg 922.

Subchapter H VOLUNTARY DEPOSITS REQUIRED BY THE FEDERAL GOVERNMENT OR ITS AGENCIES

28 Tex. Admin. Code § 7.801 Voluntary Deposits

In the event any insurance company organized and doing business under the laws of Texas and the provisions of the Insurance Code shall be required by the United States government to have and maintain funds or securities on deposit with the State Board of Insurance, commissioner of insurance, or other state insurance regulatory authority in order that the insurer be qualified and enabled to perform certain insurances, such deposit may be made with the State of Texas, and the deposit is hereby authorized to be received and held in accordance with provisions reciting the purposes of the deposit, and further in a manner and procedure similar to that by which the state holds other insurance company deposits. The deposit may not be withdrawn except as provided by the appropriate governmental authority responsible for the requirement or condition and unless the purposes of the deposit have been effected. The deposit may be made, received, handled, and maintained by the commissioner in accordance with the purposes of its deposits and it shall be a separate class of deposit for such purposes.

History

Source Note: The provisions of this §7.801 adopted to be effective January 1, 1976; amended to be effective December 24, 1982, 7 TexReg 4317.

28 Tex. Admin. Code § 7.802 Interpretation of Article 1.10, §17

The board is of the opinion that the provisions for voluntary deposits under Article 1.10, §17, are applicable to deposits required by federal authority and that such deposits are made under the purposes and provisions of such section, and that the statute does not prohibit additional deposits being made for special purposes, particularly those required by the federal government, and further that the statute is not an injunction as respects the board making provision by rule and regulation in matters not prohibited by statute and which are in fact a logical interpretation of statute in the board's regulation of insurance.

History

Source Note: The provisions of this §7.802 adopted to be effective January 1, 1976; amended to be effective December 24, 1982, 7 TexReg 4317.

Subchapter I INSIDER TRADING AND PROXY SOLICITATION

28 Tex. Admin. Code § 7.901 Insider Trading and Proxy Solicitation

The State Board of Insurance adopts by reference an amendment as of May 1, 1982, to the amendment of the permanent and general rules and regulations of the State Board of Insurance by adoption of rules of administrative construction and interpretation, insurance company reporting and filing rules, annual statement blanks and supplements, including Schedule SIS, supplemental reports, regulations affecting foreign and domestic insurance companies, rules and regulations on proxies, consents, and authorizations of domestic stock insurance companies, rules and regulations governing insurance company insider trading, and provisions for codification.

History

Source Note: The provisions of this §7.901 adopted to be effective January 1, 1976; amended to be effective May 1, 1982, 7 TexReg 1598.

Subchapter J EXAMINATION EXPENSES AND ASSESSMENTS

28 Tex. Admin. Code § 7.1001 Examination Assessments for Domestic and Foreign Insurance Companies and Self-Insurance Groups Providing Workers' Compensation Insurance

(a) Under Insurance Code §843.156 and for purposes of this section, the term "insurance company" includes a health maintenance organization as defined in Insurance Code §843.002.

(b) An insurer not organized under the laws of Texas (foreign insurance company) must pay the costs of an examination as specified in this subsection.

(1) Under Insurance Code §401.152, a foreign insurance company must reimburse the department for the salary and examination expenses of each examiner and other department employee participating in an examination of the insurance company allocable to an examination of the company. To determine the allocable salary for each examiner and other department employee, the department divides the average annual examiner's and other department employee's salary by the number of working hours in a year. The department assesses the company the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses the department assesses are those actually incurred by the examiner and other department employee to the extent permitted by law.

(2) Under Insurance Code §401.152(a-1), a foreign insurance company examined entirely in a single year, or an exam beginning in one year and completed in the next year will be assessed using the rate for the year the exam began, and must pay an annual assessment in an amount sufficient to meet all other expenses and disbursements necessary to comply with the laws of this state relating to the examination of insurers. The amount imposed must be computed in the same manner as the amount imposed for domestic insurers as applicable under subsection (c) of this section.

(3) A foreign insurance company must pay the reimbursements and payments required by this subsection to the department as specified in each itemized bill the department provides to the foreign insurance company.

(c) Under Insurance Code §401.151, §401.155, and Chapter 803, a domestic insurance company must pay examination expenses and rates of overhead assessment in accordance with this subsection.

(1) A domestic insurance company must pay the salaries and expenses of the examiners and other department employees allocable to an examination of the company. The department divides the average annual examiner's and other department employee's salary by the number of working hours in a year, and assesses the company the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses assessed must be those actually incurred by the examiner and other department employee to the extent permitted by law.

(2) Except as provided in paragraphs (3) and (4) of this subsection, the overhead assessment to cover administrative departmental expenses attributable to examination of companies is:

(A) a percentage, as specified in the Commissioner order addressed in subsection (e) of this section, of the admitted assets of the company as of December 31 each relevant year, taking into consideration the annual admitted assets that are not attributable to 90 percent of pension plan contracts as defined in §818(a) of the Internal Revenue Code of 1986 (26 U.S.C. §818(a)); and

(B) a percentage, as specified in the Commissioner order addressed in subsection (e) of this section, of the gross premium receipts of the company for each relevant year, taking into consideration the annual premium receipts that are not attributable to 90 percent of pension plan contracts as defined in §818(a) of the Internal Revenue Code of 1986 (26 U.S.C. §818(a)).

(3) Except as provided in paragraph (4) of this subsection, if a company was a domestic insurance company for less than a full year during a calendar year, the overhead assessment for the company is the overhead assessment required under paragraph (2)(A) and (B) of this subsection divided by 365 and multiplied by the number of days the company was a domestic insurance company during that calendar year.

(4) If the overhead assessment required under paragraph (2)(A) and (B) of this subsection or paragraph (3) of this subsection produces an overhead assessment of less than $25, a domestic insurance company must pay a minimum overhead assessment of $25.

(5) The department will base the overhead assessments on the assets and premium receipts, including direct written and assumed premiums, reported in the annual statements.

(6) For the purpose of applying paragraph (2)(B) of this subsection, the term "gross premium receipts" does not include insurance premiums for insurance contracted for by a state or federal government entity to provide welfare benefits to designated welfare recipients or contracted for in accordance with or in furtherance of the Human Resources Code, Title 2, or the federal Social Security Act (42 U.S.C. §§301 et seq.).

(d) Under Labor Code §407A.252, a workers' compensation self-insurance group must pay the salaries and expenses of the examiners and other department employees allocable to an examination of the group. To determine the allocable salary for each examiner and other department employee, the department divides the average annual examiner's and other department employee's salary by the number of working hours in a year. The department assesses the group the part of the annual salary attributable to each working hour the examiner and other department employee examines the company during a year. The expenses the department assesses are those actually incurred by the examiner and other department employee to the extent permitted by law.

(e) The Commissioner will set the average annual examiner's and other department employee's salary rate and overhead assessment rates for each year by Commissioner order.

(f) The overhead assessment rates set in the Commissioner order addressed in subsection (e) of this section are calculated as described in paragraphs (1) and (2) of this subsection.

(1) Overhead assessment revenue need is calculated as the amount of revenue needed to reach the targeted year-end fund balance, taking into account the beginning balance, expected direct billing revenues, and estimated expenditures.

(2) To calculate the assessment rates, the department allocates a percentage of the revenue need to admitted assets and a percentage to gross premium receipts, the assessment bases. Then the department divides the revenue need allocated to each assessment base by the assessment base.

(g) A domestic insurance company must pay the overhead assessment required under subsection (c) of this section to the Texas Department of Insurance as provided in the invoice not later than 30 days from the invoice date.

History

Source Note: The provisions of this §7.1001 adopted to be effective February 1, 2012, 37 TexReg 329; amended to be effective January 30, 2013, 38 TexReg 378; amended to be effective January 6, 2014, 39 TexReg 84; amended to be effective January 6, 2015, 40 TexReg 70; amended to be effective January 5, 2016, 41 TexReg 256; amended to be effective January 4, 2017, 41 TexReg 10622; amended to be effective January 3, 2018, 42 TexReg 7716; amended to be effective January 3, 2019, 43 TexReg 8601; amended to be effective January 5, 2020, 45TexReg159; amended to be effective December 29, 2020, 45 TexReg 9570.

Subchapter L PROCEDURES AND REQUIREMENTS FOR LIFE INSURANCE COMPANIES WRITING REINSURANCE FOR PROPERTY AND CASUALTY RISKS

28 Tex. Admin. Code § 7.1201 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: Reinsurance--Indemnity reinsurance contracts only.

History

Source Note: The provisions of this §7.1201 adopted to be effective November 3, 1989, 14 TexReg 5625.

28 Tex. Admin. Code § 7.1202 Application Process; Notice of Intention

(a) Any authorized life insurance company which, pursuant to the Insurance Code, Article 5.75-1(h), intends to enter into the reinsurance business shall file a notice of intention with the commissioner of insurance for prior approval and shall include each treaty or request to act as a property and casualty reinsurer.

(b) Such notice of intention shall set forth the following items:

(1) the amount of surplus the life insurance company proposes to allocate to the reinsurance program;

(2) the company's proposed plan of operations and budgetary forecast;

(3) the qualifications of the company's staff to engage in reinsurance for property and casualty insurance subject to the provisions of the Insurance Code, Chapter 5;

(4) the company's prior three years' IRIS ratios with an explanation of any unusual results (this information will be considered confidential);

(5) proof that the company's place of domicile authorizes it to engage in such kind of business;

(6) proof, in the case of a foreign or alien life insurance company, that the insurance regulatory authorities of the company's place of domicile have been informed of its intended participation and have not objected to such participation; and

(7) any additional documents or information which the commissioner of insurance or the commissioner's staff has requested to support the proposed entry-transaction and/or compliance with applicable law.

History

Source Note: The provisions of this §7.1202 adopted to be effective November 3, 1989, 14 TexReg 5625.

28 Tex. Admin. Code § 7.1203 Financial Requirements

(a) The conventional operations of any life insurance company shall be accounted for separately from the company's property and casualty reinsurance business. Accordingly, each life insurance company proposing to engage in property and casualty reinsurance shall account for this business as a separate line of business with its own allocated surplus. Life insurance companies transacting the business of property and casualty reinsurance shall be subject to the same statutory provisions and administrative rules relating to the maintenance of reserves for unearned premiums, unpaid losses, and loss adjustment expenses as are applicable to property and casualty insurers transacting the same kind of business.

(b) As a condition precedent to the approval of and continuation of a life insurance company in the business of property and casualty reinsurance, the life insurance company shall demonstrate that 20% of its total capital and surplus, as of the end of the preceding year, is at least equal to the sum of the capital and surplus required of a property and casualty insurer transacting the same kind of business, with such amount to be a minimum of $2 million.

(c) The life insurance company must make a statutory deposit in the State of Texas of $50,000 either in securities as described in the Insurance Code, Article 2.10, or in cash with the Texas state treasurer.

(d) A special or contingency reserve, equal to 1.0% of net annual premium volume at the end of the preceding year, must be established and maintained in its separate account on an annual basis. If not used, this fund may be taken into operations at the end of 10 years at the rate of 0.25% of the 1.0% net annual premium volume or any portion up to that amount.

History

Source Note: The provisions of this §7.1203 adopted to be effective November 3, 1989, 14 TexReg 5625.

28 Tex. Admin. Code § 7.1204 Risk Limitations

(a) No risk, as determined by reserves for unearned premiums, nor any reserve for unpaid losses nor any loss adjustment expenses shall exceed 10% of the life insurance company's total capital and surplus as of the end of the preceding year or impair the dedicated capital and surplus as defined in §7.1203(B) of this title (relating to Financial Requirements).

(b) No part of any risk assumed or accepted by a life insurance company according to this regulation may be retroceded or further reinsured in any manner without receiving prior written approval of the commissioner of insurance.

History

Source Note: The provisions of this §7.1204 adopted to be effective November 3, 1989, 14 TexReg 5625.

28 Tex. Admin. Code § 7.1205 Records

Each life insurance company engaging in property and casualty reinsurance shall maintain accounting records which adequately reflect the operations of this line of business in a manner similar to that of a property and casualty insurer doing the same kind of business.

History

Source Note: The provisions of this §7.1205 adopted to be effective November 3, 1989, 14 TexReg 5625.

28 Tex. Admin. Code § 7.1206 Forms Required for Life Insurance Companies Reinsuring Property and Casualty Insurance Risks

(a) Requirement for use of specific forms. Life insurance companies reinsuring property and casualty risks under the Insurance Code, Article 5.75-1(h), must effect any reinsurance by using forms promulgated by the State Board of Insurance.

(b) Adoption of forms by reference. The State Board of Insurance adopts by reference standard forms for use by life insurance companies which are subject to the provisions of this subchapter and the Insurance Code, Article 5.75-1. These forms are published by the State Board of Insurance and copies of the forms for life insurance are available from Property and Casualty Financial Analysis Unit of the Corporate Activity Division, 1110 San Jacinto Boulevard, Austin, Texas 78701-1998.

(1) The following forms utilized in the Casualty Annual Statement Form 2A are adopted by reference under this section and must be utilized, as applicable, under the provisions of this subchapter and/or the Insurance Code, Article 5.75-1:

(A) Underwriting and Investment Exhibit--Statement of Income--Page 4;

(B) Underwriting and Investment Exhibit--Part 2 and Part 2-A--Premiums in Force--Page 7;

(D) Underwriting and Investment Exhibit--Part 3--Losses Paid and Incurred--Page 9, Columns 2, 5, 6, 7, and 8;

(E) Underwriting and Investment Exhibit--Part 3A--Unpaid Losses and Loss Adjustment Expenses--Page 10, Columns 1(B), 3, 4(B), 5, and 6;

(F) Underwriting and Investment Exhibit--Part 4--Expenses--Page 11;

(G) General Interrogatories--Page 15;

(H) Notes to Financial Statements--Page 17; and

(I) Five-Year Historical Data--Pages 20 and 21.

(2) The following supportive schedules from the casualty annual statements are adopted by reference under this section and should be completed if applicable by the life insurance companies which are subject to the provisions of this subchapter and the Insurance Code, Article 5.75-1(h):

(A) Schedule F--Part 1A--Section 1--for retrocessions if applicable;

(B) Schedule F--Part 1A--Section 2;

(D) Schedule K;

(E) Schedule O--Parts 1, 2, 3, and 5; and

(F) Schedule P.

(c) Actuarial attestation and filing of forms. The applicable forms listed in subsection (B) of this section must be completed, actuarially attested as to accuracy, and filed with the Property and Casualty Financial Analysis Unit of the Corporate Activities Division, State Board of Insurance, 1110 San Jacinto Boulevard, Austin, Texas 78701-1998. These forms must be filed no later than April 1 of each year.

History

Source Note: The provisions of this §7.1206 adopted to be effective November 3, 1989, 14 TexReg 5625.

Subchapter M REGULATORY FEES

28 Tex. Admin. Code § 7.1301 Regulatory Fees

(a) Regulated entities subject to fees. The regulated entities subject to the fees imposed by this section include all authorized insurers writing any class of insurance in this state that are regulated by Insurance Code Title 2, concerning Texas Department of Insurance; Title 6, concerning Organization of Insurers and Related Entities; Title 7, concerning Life Insurance and Annuities; Title 8, concerning Health Insurance and Other Health Coverages; Title 9, concerning Provisions Applicable to Life and Health Coverages; Title 10, concerning Property and Casualty Insurance; Title 11, concerning Title Insurance; and Title 12, concerning Other Coverage. For filings and other actions received by the Texas Department of Insurance (department) on and after the effective date of this section, the department will charge these entities fees in amounts in accordance with the provisions of this section. Filings or other actions received by the department before the effective date of this section will be governed by this subchapter as it existed immediately prior to that date.

(b) Fees for insurers with annual gross premium receipts less than $450,000. As provided in Insurance Code §202.004, concerning Reduced Fees for Certain Insurers, any insurer to which Insurance Code Chapter 202, concerning Fees, applies and whose gross premium receipts are less than $450,000 according to its annual statement for the preceding year ending December 31, is required to pay only one-half the amount of the fees required to be paid under subsection (d) or subsection (e) of this section. The fees will be collected at the higher rate unless the applicant can provide the department with satisfactory documentation that gross premium receipts were less than $450,000.

(c) Fees for specified filings under Insurance Code Chapter 1701, concerning Policy Forms. Fees for specified filings under Insurance Code Chapter 1701 are set forth in and governed by Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).

(d) Fees for authorized insurers writing classes of insurance in this state that are regulated by Insurance Code Titles 2 and 6 - 12. For the following filings and actions, the fees are as follows.

(1) For classes of insurance for which statutory authority exists for collecting annual statement fees, the fee for filing annual statements is $250 unless otherwise specified.

(2) For filing amendments to certificate of authority if charter is not amended, the fee is $0.

(3) For reservation of name, the fee is $0.

(4) For renewal of reservation of name, the fee is $0.

(5) For filing application for admission of a foreign or alien insurance company, including issuance of certificate of authority, the fee is $0.

(6) For filing original charter, including issuance of certificate of authority, the fee is $0.

(7) For filing amendment to charter, including issuance of certificate of authority, if a hearing is held, the fee is $0.

(8) For filing amendment to charter, including issuance of certificate of authority, if a hearing is not held, the fee is $0.

(9) For filing designation of attorney for service of process or amendment to that, the fee is $0.

(10) For filing a total reinsurance agreement, the fee is $0.

(11) For filing a partial reinsurance agreement, the fee is $0.

(12) For filing a direct reinsurance agreement under Insurance Code Chapter 884, Subchapter K, concerning Direct Reinsurance Agreements, the fee is $0.

(13) For filing for approval of reinsurance agreement under Insurance Code Chapter 828, concerning Purchase of Stock for Total Assumption Reinsurance, the fee is $0.

(14) For filing for approval of merger under Insurance Code Chapter 824, concerning Merger and Consolidation of Stock Insurance Corporations, the fee is $0.

(15) For accepting a security deposit, excluding deposits made under Insurance Code §425.002, concerning Certain Insurers: Deposit of Securities, Money, or Property in Amount of Legal Reserves, the fee is $0.

(16) For substitution/amendment of a security deposit, excluding deposits made under Insurance Code §425.002, the fee is $0.

(17) For certification of statutory deposit, the fee is $0.

(18) For filing notice of intent to relocate the books/records under Insurance Code Chapter 803, concerning Location of Books, Records, Accounts, and Offices Outside of This State, the fee is $0.

(19) For filing restated articles of incorporation for domestic/foreign companies, the fee is $0.

(20) For filing a statement under Insurance Code Chapter 823, Subchapter D, concerning Control of Domestic Insurer; Acquisition or Merger, and Subchapter E, concerning Acquisition Statement, for the first $9,900,000 of the purchase price or consideration, the fee is $0.

(21) For filing a statement under Insurance Code Chapter 823, Subchapters D and E, if the purchase price or consideration exceeds $9,900,000, the fee is $0.

(22) For filing registration statement under Insurance Code Chapter 823, Subchapter B, concerning Registration, the fee is $0.

(23) For filing for review under Insurance Code Chapter 823, Subchapter C, concerning Transactions of Registered Insurer, or Chapter 884, Subchapter L, concerning Direct Reinsurance Agreements with Mutual Assessment Companies, the fee is $0.

(24) For filing for an exemption under Insurance Code §823.164, concerning Exemptions from Subchapter, the fee is $0.

(e) Other fees established by Insurance Code Chapter 202. For the following filings, the fee is as follows.

(1) For filing joint control agreement, the fee is $0.

(2) For filing substitution/amendment to the joint control agreement, the fee is $0.

(3) For filing a change in attorney in fact, the fee is $0.

(f) Administrative procedures.

(1) When a reinsurance agreement or merger agreement is filed with the department, as enumerated in subsection (d)(10) - (14) of this section, the appropriate fee will be determined based on the ceding or merged company.

(2) The fee relating to reinsurance transactions entered into under Insurance Code Chapter 823, Subchapter C, and subsection (d)(23) of this section will be based on the ceding company.

(3) When an amendment to a reinsurance agreement between affiliated insurers is filed with the department, as mentioned in paragraph (1) of this subsection, the appropriate fee will be based on the ceding company.

(4) An amendment to the charter would constitute any change in the original charter, including name change, home office change, increase in capital, conversion, and increase in lines.

(5) The fee relating to affixing the official seal and certifying to the seal will be applied to all requests for certification, irrespective of requesting party.

(6) The fees for filing an acquisition statement under Insurance Code Chapter 823, Subchapters D and E, and subsection (d)(20) and (21) of this section will apply to and be collected from the applicant whenever:

(A) the applicant is a regulated entity subject to this section; or

(B) the company being acquired is a regulated entity subject to this section.

(g) Fees under the Texas Health Maintenance Organization Act, Insurance Code Chapter 843, concerning Health Maintenance Organizations. For the following filings and actions, the fees are as follows.

(1) For filing original application for certificate of authority, the fee is $0.

(2) For filing annual report, the fee is $250.

(3) For all examinations made on behalf of the State of Texas by the department or under its authority, the fee will be an amount the commissioner certifies to be just and reasonable.

(4) For a filing governed by Chapter 3, Subchapter A of this title, fees are set forth in and governed by §3.13 of this title (relating to Filing Fees).

(h) Fees for filings under Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance. Fees for filings under Insurance Code Chapter 1153 are set forth in and governed by Chapter 3, Subchapter A of this title.

(i) Fee for filing an annual statement under Insurance Code Chapter 841, concerning Life, Health, or Accident Insurance Companies. The fee for filing an annual statement is $250.

History

Source Note: The provisions of this §7.1301 adopted to be effective March 8, 1988, 13 TexReg 919; amended to be effective June 4, 1992, 17 TexReg 3784; amended to be effective March 22, 1995, 20 TexReg 1656; amended to be effective April 23, 1996, 21 TexReg 3190; amended to be effective June 1, 2003, 28 TexReg 3961; amended to be effective February 2, 2021, 46 TexReg 823; amended to be effective April 17, 2025, 50 TexReg 2415.

Subchapter N SERVICES OF PROCESS

28 Tex. Admin. Code § 7.1401 Purpose

The purpose of this subchapter is to clarify and consolidate the procedure for effecting service of process on persons, companies, and other entities doing the business of insurance or conducting related business in the state of Texas, whether licensed or not; to provide general instructions for unique circumstances; and to establish fees for service of legal process and related documentation.

History

Source Note: The provisions of this §7.1401 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1402 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: Commissioner--The commissioner of insurance.

History

Source Note: The provisions of this §7.1402 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1403 Service on Domestic Insurance Companies Licensed by the State Board of Insurance and on Related Entities Authorized to Conduct Business in Texas

(a) Person and place for service. Except as provided by subsection (b) and subsection (c) of this section, a domestic insurance carrier, including a casualty, county mutual, farm mutual, fire, fraternal, life, Lloyd's, mutual other than life, reciprocal, stipulated premium, or title insurance company, and any mutual assessment company, carrier providing job protection insurance, risk retention group, third-party administrators (in accordance with Insurance Code Chapter 4151), group hospital service corporation, health maintenance organization, and exempt association under Insurance Code §887.102, authorized to conduct the business of insurance in this state, and any other company domiciled in Texas and engaged in the business of insurance as a principal, may be served with legal process, notice, or demand required or permitted by law by:

(1) serving the president, any active vice-president, secretary, or attorney in fact at the office or principal place of business of that carrier; or

(2) leaving a copy of the process, notice, or demand at the home office or principal business office of the carrier during regular business hours.

(b) Article 1.28 exception. A domestic carrier and the controlling person of the affiliated insurance holding company system that has moved its principal offices and any portion of its books, records, and accounts outside this state under the Insurance Code, Article 1.28, must have appointed the commissioner as their attorney for service for all judicial and administrative processes, notices, or demands.

(c) Domestic purchasing group exception. A domestic purchasing group registered in Texas pursuant to the Insurance Code, Article 21.54, must appoint the commissioner as its agent for service of process and receipt of legal documents.

History

Source Note: The provisions of this §7.1403 adopted to be effective August 11, 1989, 14 TexReg 3690; amended to be effective April 26, 2021, 46 TexReg 2823.

28 Tex. Admin. Code § 7.1404 Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers

(a) Person, place, and time for service. If service of legal process, notice, or demand is to be effected on a company or organization by serving the commissioner, the process, notice, or demand may be served personally or by certified or registered mail. Personal service must be effected by a disinterested person over 18 years of age by leaving two copies of the process, notice, or demand with the commissioner or with any appointee of the commissioner authorized to receive process at the offices of the State Board of Insurance during regular business hours.

(b) Required fee. A fee of $50, payable by check or money order to the Texas Department of Insurance, must be provided for each legal process, notice, or demand served on the commissioner, and the fee must accompany each service of legal process, notice, or demand filed with the commissioner.

(c) Requirements for the citation filed with the commissioner. The citation must be directed to the defendant insurance company or organization, must be served through the commissioner, and must include the following:

(1) for a licensed company, the name and address of the company or organization as it appears in the records of the State Board of Insurance;

(2) for an unauthorized person or insurer, the name and address of the person or insurer to be served;

(3) for a surplus lies insurer, the name and address of the company to be served;

(4) for a risk retention group, the name and address of the group to be served;

(5) for a purchasing group, foreign or domestic, the name and address of the group to be served;

(6) for a third party administrator, the name and address of the entity to be served; or

(7) for an unincorporated association, trust, or other organization formed under the Insurance Code, Article 3.71, the name and address of the association, trust, or organization.

(d) Forwarding by commissioner. If the process, notice, or demand served on the commissioner is in full compliance with the requirements of subsections (a)-(c) of this section, the commissioner shall immediately have one copy forwarded by certified or registered mail to:

(1) the home office or principal business office of the company, if licensed, as indicated in the records of the State Board of Insurance; or

(2) the defendant at the address supplied in the citation as provided by subsection (c)(2), (3), (4), (5), (6), or (7) of this section.

(e) Effect of failure to comply with filing requirements. Failure to fully comply with the filing requirements of subsections (a)-(c) of this section will result in the return of the citation and related documents to the plaintiff or petitioner, to a representative of the plaintiff or petitioner, or to the appropriate court official involved. The fee will not be reimbursed in such instances. An explanation of the action taken will accompany the documents being returned.

(f) Commissioner's record of service. The commissioner shall keep a record of any process, notice, or demand served on the commissioner under this subchapter and of the action taken by the commissioner with reference to the process, notice, or demand.

(g) Certificate of service and fee therefor. Upon receiving the return receipt, the commissioner shall mail a certificate of service and proof of delivery by a return receipt for certified or registered mail to the plaintiff and clerk of the court or agency where the case is pending, at the address provided by the plaintiff. The commissioner shall provide on request additional certificates issued by the commissioner showing the service and proof of delivery by a return receipt for certified or registered mail. The fee for each such additional certificate of service shall be the same fee normally charged for affixing the official seal and certifying to the seal.

(h) Effect of service on the commissioner. Service on the commissioner acting as attorney for service constitutes service on the principal.

History

Source Note: The provisions of this §7.1404 adopted to be effective August 11, 1989, 14 TexReg 3690; amended to be effective October 27, 1995, 20 TexReg 8453; amended to be effective April 23, 1996, 21 TexReg 3190.

28 Tex. Admin. Code § 7.1405 Service of Process on Foreign and Alien Insurance Companies Licensed by State Board of Insurance

(a) Requirements for appointment of person in Texas for service of process. As a condition of being issued a certificate of authority to conduct the business of insurance in this state, foreign or alien insurance carriers, including a life, mutual life, nonprofit life, fire, mutual fire and/or casualty, fire and casualty, casualty, Mexican casualty, Lloyd's, reciprocal, fraternal, or title insurance company, a health maintenance organization, a risk retention group, and any other foreign or alien insurance company regardless of its type or category authorized to conduct the business of insurance in this state, shall appoint a person in this state as attorney for service of process on whom any process, notice, or demand required or permitted by law to be served on the insurance company or other entity may be served.

(b) Failure to appoint or maintain person in state; action when certificate is revoked. If a foreign or alien insurance company authorized to transact business in this state fails to appoint or maintain an attorney for service in this state, or if an attorney for service cannot with reasonable diligence be found, or if the certificate of authority of a foreign insurance company is revoked, the commissioner shall be the attorney for service of the company on whom process, notice, or demand may be served as provided by §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1405 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1406 Service of Process on Foreign Risk Retention Groups Registered with the State Board of Insurance

A foreign risk retention group registered in this state under the Insurance Code, Article 21.54, must designate the commissioner as its agent for service of process and receipt of legal documents. Procedures and fees for service of process on a risk retention group are governed by §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1406 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1407 Service of Process on Foreign Purchasing Groups Doing Business in Texas Pursuant to the Insurance Code, Article 21.54

Foreign purchasing groups registered to do business in Texas under the Insurance Code, Article 21.54, must appoint the commissioner as their agent for service of process and receipt of legal documents. Procedures and fees for service of process on purchasing groups are governed by §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1407 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1408 Service Process on Third Party Administrators Doing Business in Texas Pursuant to the Insurance Code, Article 21.07-5

Foreign third party administrators doing business in Texas under the Insurance Code, Article 21.07-5, must appoint the commissioner as their agent for service of process and receipt of legal documents. The procedures and fees for service on a third party administrator are governed by §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1408 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1409 Service of Process on Persons, Insurers, or Other Entities in Receivership

If a court of competent jurisdiction has appointed the liquidator as receiver of any person, insurer, or other entity, service of process with respect to that person, insurer, or other entity must be made on the person designated liquidator as receiver. This service of process has no effect if it is made on the commissioner or the secretary of state. Furthermore, if service is made upon the commissioner under these circumstances, it will be returned in the manner described in §7.1404(e) of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1409 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1410 Service of Process on Commissioner on Behalf of Unauthorized Persons or Insurers

(a) Any act of doing an insurance business as provided by the Insurance Code, Article 1.14-1, §2, by an unauthorized person or insurer is equivalent to and constitutes an irrevocable appointment by that person or insurer of the commissioner to be the lawful attorney for service of that person or insurer. This irrevocable appointment of the commissioner as attorney for service is binding on that person or insurer, on the executor, administrator, or personal representative of that person or insurer, and, if that person or insurer is a corporation, on any successor in interest to that person or insurer. The commissioner may be served any process, notice, or demand arising out of doing an insurance business in this state by that person or insurer, except in an action, suit, or proceeding by the State Board of Insurance or by the State of Texas.

(b) Any act of doing an insurance business as provided by the Insurance Code, Article 1.14-1, §2, by an unauthorized person or insurer signifies the persons's or insurer's agreement that legal process served under this section has the same legal force and validity as personal service of process in this state on that person or insurer or on that person's or insurer's executor, administrator, or personal representative, or, if a corporation, on its successor in interest.

(c) In addition to service under §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed Under the Insurance Code, Article 3.71, and Surplus Lines Insurers) and subsection (a) of this section, service of process, notice, or demand on an unauthorized person or insurer is valid if served on any person in this state who on behalf of that unauthorized person or insurer is doing any act of an insurance business as provided by the Insurance Code, Article 1.14-1, §2.

(d) A plaintiff or complainant is not entitled to a judgment by default in any action, suit, or proceeding in which process, notice, or demand is served under this section earlier than the 30th day after the date on which the copy of the process, notice, or demand served is mailed to the defendant.

(e) The courts of this state have jurisdiction over any person defined by the Insurance Code, Article 21.49-1, §2(i), who is not resident, domiciled, or authorized to do business in this state and who files a statement with the commissioner under the Insurance Code, Article 21.49-1, and over actions involving any person defined by the Insurance Code, Article 21.49-1, §2(i), arising out of violations of that article. Any person defined by the Insurance Code, Article 21.49-1, §2(i), is considered to have performed acts equivalent to and constituting an appointment of the commissioner by that person to be that person's lawful attorney on whom process in any action, suit, or proceeding arising out of violations of the Insurance Code, Article 21.49-1, may be served. Copies of process shall be served on the commissioner and transmitted by the commissioner by certified or registered mail to that person at that person's last known address. Procedures and fees for service of process are governed by §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1410 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1411 Service of Process, Notice, Order, or Pleading on Secretary of State on Behalf of Unauthorized Persons and Insurers

(a) Service of process may be effected on the secretary of state in those actions, suits, or other proceedings brought:

(1) in court by the State Board of Insurance or by the state against unauthorized persons or insurers; or

(2) before the State Board of Insurance by notice, order, pleading, or other process against unauthorized persons or insurers.

(b) Any act of doing an insurance business as provided by the Insurance Code, Article 1.14-1, §2, by an unauthorized person or insurer is equivalent to and constitutes an irrevocable appointment by that person or insurer of the secretary of state to be the lawful attorney for service of that person or insurer. Such appointment is binding on that person or insurer, on the executor, administrator, or personal representative of that person or insurer, or, if that person or insurer is a corporation, on any successor in interest to that person or insurer to be the lawful attorney for service of that person or insurer. The secretary of state may be served legal notice, order, pleading, or other process in any proceeding described by subsection (a) of this section that arises out of doing an insurance business in this state by that person or insurer.

(c) Any act of doing an insurance business as provided by the Insurance Code, Article 1.14-1, §2, by any unauthorized person or insurer signifies that the person or insurer agrees that a notice, order, pleading, or other legal process in the proceeding described by subsection (a) of this section has the same legal force and validity as personal service of process in this state on that person or insurer or on the executor, administrator, or personal representative of that person or insurer, or, if that person or insurer is a corporation, on its successor in interest.

(d) Service of a notice, order, pleading, or other process in a proceeding described by subsection (a) of this section must be made by leaving two copies of the notice, order, pleading, or other process with the secretary of state or with any appointee of the secretary of state authorized to receive service at the office of the secretary of state during regular business hours.

(e) The secretary of state shall mail one copy of the notice, order, pleading, or other process in the proceeding to the defendant in a court proceeding or to the person, company, or other entity to whom the notice, order, pleading, or process in an administrative proceeding is addressed or directed at the person's or entity's last known home office or principal place of business. The secretary of state shall keep a record of the notices, orders, pleadings, and other process served on the secretary of state.

(f) A plaintiff or complainant is not entitled to a judgment or determination by default in any court or administrative proceeding in which a notice, order, pleading, or other process in proceedings is served under this section earlier than the 30th day after the date the copy of the service is mailed to the defendant.

History

Source Note: The provisions of this §7.1411 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1412 Other Methods of Service

Section 7.1410 and §7.1411 of this title (relating to Service of Process on Commissioner on Behalf of Unauthorized Persons or Insurers; and Service of Process, Notice, Order, or Pleading on Secretary of State on Behalf of Unauthorized Persons and Insurers) do not limit or abridge the right to serve process, notice, or other pleading or demand on any person or insurer in any other manner provided by law.

History

Source Note: The provisions of this §7.1412 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1413 Service of Process on Surplus Lines Insurers

(a) A surplus lines insurer may be sued on any cause of action arising in this state under any surplus lines insurance contract issued by it or under any certificate, cover note, or other confirmation of that insurance issued by the surplus lines agent, under the same procedure provided for unauthorized insurers in §§7.1404, 7.1410, and 7.1411 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers; Service of Process on Commissioner on Behalf of Unauthorized Persons or Insurers; and Service of Process, Notice, Order, or Pleading on Secretary of State on Behalf of Unauthorized Persons and Insurers).

(b) Any policy issued by the surplus lines insurer or any certificate of insurance issued by the surplus lines agent must contain a provision stating the substance of this section and designating the person to whom the commissioner is to mail process. This address must be supplied by the plaintiff in the citation that is served.

(c) Each surplus lines insurer assuming a surplus lines risk under this subchapter is considered to have made itself subject to the terms of this section.

(d) This section is cumulative of any other methods that may be provided by law for service of process on a surplus lines insurer, including §7.1404 of this title (relating to Service of Process Procedure for Domestic Insurers Approved To Operate under the Insurance Code, Article 1.28, Foreign and Alien Insurance Companies, Risk Retention Groups, Purchasing Groups, Third Party Administrators, Unauthorized Persons or Insurers, Organizations Formed under the Insurance Code, Article 3.71, and Surplus Lines Insurers).

History

Source Note: The provisions of this §7.1413 adopted to be effective August 11, 1989, 14 TexReg 3690.

28 Tex. Admin. Code § 7.1414 Administrative Procedures

(a) Citations served on the commissioner shall be forwarded by certified mail to the address provided by the plaintiff.

(b) Citations received by certified or registered mail must be served in accordance with the Texas Rules of Civil Procedure, Rule 103 and Rule 106.

(d) Citations received after 2 p.m. shall be forwarded the next working day.

(e) Citations will be returned to the attorney of record or other appropriate official for any one of the following reasons.

(1) Filing fee of $25 was not submitted.

(2) Mailing address of the defendant was not provided in typed written form on the face of the citation.

(3) Two copies of the citation were not received.

(f) If the citation is returned to the attorney of record, it will be returned by first class mail together with a letter of explanation and the $25 fee submitted.

(g) Citations which were previously returned to the attorney of record may be forwarded, after the necessary corrections have been effected, by certified mail, directly to the commissioner. Any corrections to the citation must be typed, not printed.

History

Source Note: The provisions of this §7.1414 adopted to be effective August 11, 1989, 14 TexReg 3690; amended to be effective November 16, 1990, 15 TexReg 6300.

28 Tex. Admin. Code § 7.1415 Forms Required To Administer Service of Process

(a) Requirement for use of specific forms designating commissioner as attorney for service. When, by meeting the requirements of this subchapter and of the Insurance Code, Article 1.36, a person, insurer, or other entity qualifies to appoint the commissioner as attorney and agent for accepting and acknowledging service of legal process, such appointment must be effected by using forms promulgated by the State Board of Insurance.

(b) Adoption by reference of forms for appointments for service of process. The State Board of Insurance adopts by reference standard forms for use when the commissioner or some other person is to be appointed as attorney and agent for accepting and acknowledging service of legal process under the provisions of this subchapter and/or the Insurance Code, Article 1.36. Copies of these forms are available from the Company Licensing Section, Division Code 0731, State Board of Insurance, 1110 San Jacinto Boulevard, Austin, Texas 78701-1998. The following forms must be utilized, as applicable, when the commissioner or another person, located in this state, is to be appointed as attorney for service of legal process under the provisions of this subchapter and/or the Insurance Code, Article 1.36.

(1) Foreign or alien life, fire and/or casualty, and title companies which are licensed to do business in this state must utilize Form L/FC/T/1987/SP.

(2) Foreign or alien risk retention groups and third party administrators and foreign, alien, or domestic purchasing groups doing business in Texas must utilize For RRG/PG/TPA/1987/SP.

(3) Foreign or alien reciprocal and Lloyd's companies which are licensed to do business in this state must utilize Form R/L/1987/SP.

(4) Foreign or alien fraternal benefit societies which are licensed to do business in this state must utilize Form F/1987/SP.

(5) Domestic companies qualifying for relocation of books and records under the Insurance Code, Article 1.28, must utilize Form D/C/1987/SP, with attachment Form D/C/1987/SP for signature of controlling person or attachment Form SBI/BR-85/A-26 for corporate controlling persons.

History

Source Note: The provisions of this §7.1415 adopted to be effective August 11, 1989, 14 TexReg 3690.

Subchapter P ADMINISTRATORS

28 Tex. Admin. Code § 7.1601 Scope

(a) Except as otherwise provided by this subchapter or the Insurance Code Chapter 4151, this subchapter applies to a person acting as or holding itself out as an administrator in any capacity, regardless of whether the person holds another authorization under the Insurance Code or the Labor Code.

(b) In accordance with the Insurance Code §1272.058 and the Labor Code §407A.009, an administrator performing administrative services on behalf of an HMO or a workers' compensation self-insurance group shall meet the same requirements under the Insurance Code Chapter 4151 and this subchapter as an administrator performing administrative services on behalf of an insurer or plan sponsor.

(c) A person acting as or holding itself out as an administrator must meet the requirements of the Insurance Code Chapter 4151 and this subchapter in addition to any other requirements applicable to that person under the Insurance Code Chapters 1272 or 1305 or the Labor Code Chapters 407 or 407A and any rules adopted thereunder.

(d) This subchapter does not apply to a person acting as or holding itself out as an administrator for an ERISA qualified employee welfare benefit plan that is exempt from regulation by this state with respect to that particular employee welfare benefit plan.

History

Source Note: The provisions of this §7.1601 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1602 Definitions

The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise.

(1) Administrator--As defined in the Insurance Code §4151.001(1). The term includes administrator contractors and administrator subcontractors. The term does not include a person described by the Insurance Code §4151.002 or §4151.0021.

(2) Administrative services--Services offered or performed by an administrator.

(3) Administrator contractor--An administrator as defined in the Insurance Code §4151.001(1) who contracts or enters into an agreement with an administrator subcontractor for the performance of all or a portion of the administrative services the administrator contractor previously agreed to perform on behalf of an insurer, HMO, plan sponsor, or group. The term does not include a person described by the Insurance Code §4151.002 or §4151.0021.

(4) Administrator subcontractor--An administrator as defined in the Insurance Code §4151.001(1) who contracts or enters into an agreement with an administrator contractor for the performance of all or a portion of the administrative services the administrator contractor previously agreed to perform on behalf of an insurer, HMO, plan sponsor, or group. The term does not include a person described by the Insurance Code §4151.002 or §4151.0021.

(5) Authorization--A license, permit, certificate of authority, certificate of approval, certificate of registration, or other authorization issued by the department or the division of workers' compensation to engage in an activity regulated under the Insurance Code or the Labor Code.

(6) Claim--A demand for payment, services, or benefits under a plan.

(7) ERISA--The Employee Retirement Income Security Act of 1974, 29 United States Code §1001, et seq., including all implementing federal regulations.

(8) Fiduciary bank account--An account used to hold a premium.

(9) Generally Accepted Accounting Principles--As defined in §7.85(a)(6) of this chapter (relating to Audited Financial Reports).

(10) Generally Accepted Auditing Standards--As defined in §7.85(a)(7) of this chapter.

(11) Group--A workers' compensation self-insurance group under the Labor Code Chapter 407A.

(12) Health maintenance organization (HMO)--As defined in the Insurance Code §843.002(14).

(13) Independent Certified Public Accountant--A person meeting the standards prescribed in the Insurance Code §401.011(a) and (d).

(14) Insurer--As defined in the Insurance Code §4151.001(2).

(15) Master services agreement--A written agreement between an administrator and an insurer that generally describes the administrative services to be performed by the administrator on behalf of the insurer but which also addresses additional or customized administrative services to be provided by the administrator for certain specified clients of the insurer.

(16) Person--As defined in the Insurance Code §4151.001(3).

(17) Plan--A plan, fund, or program established, adopted, or maintained by an insurer, HMO, plan sponsor, or group to the extent that the plan, fund, or program is established, adopted, or maintained to provide:

(A) indemnification or expense reimbursement for any type of life, health, accident, or pharmacy benefit, including health care benefits, health care services, or health insurance;

(B) an individual or group annuity benefit; or

(C) workers' compensation benefits, including a medical benefit, an income benefit, a death benefit, or a burial benefit.

(18) Plan sponsor--A person, other than an insurer, HMO, or group who establishes, adopts, or maintains a plan that covers residents of this state, including a plan established, adopted, or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, an association, a committee, a joint board of trustees, or any similar group of representatives who establish, adopt, or maintain a plan.

(19) Premium--A premium, contribution, return premium, or return contribution.

(20) Records--Books, accounts, records, documents, written agreements, contracts, papers, correspondence, claims files, receipts, bills, accounting and financial information, notes, pleadings, investigatory files, trading partner agreements, or any other written or electronic material directly or indirectly relating to the business of an administrator.

History

Source Note: The provisions of this §7.1602 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1603 Certificate of Authority Required

(a) Unless a person meets an exemption under Insurance Code §§4151.002, concerning Exemptions, 4151.004, concerning Applicability to Certain Insurers and Health Maintenance Organizations, or 4151.0021, concerning Applicability to Certain Processing Agents, a person acting as or holding themselves out as an administrator must hold a certificate of authority under Insurance Code Chapter 4151, concerning Third-Party Administrators.

(b) An administrator contractor and an administrator subcontractor must hold a certificate of authority under Insurance Code Chapter 4151.

History

Source Note: The provisions of this §7.1603 adopted to be effective June 25, 2009, 34 TexReg 4143; amended to be effective February 6, 2020, 45 TexReg 911; amended to be effective February 29, 2024, 49 TexReg 1094.

28 Tex. Admin. Code § 7.1604 Application for Certificate of Authority

(a) Filing of Application. An applicant who seeks a certificate of authority under the Insurance Code Chapter 4151 must file an application with the department, accompanied by the non-refundable fee of $1,000. The applicant must verify the application by attesting to the truth and accuracy of the information in the application.

(b) Forms and Fee.

(1) The commissioner adopts by reference the following forms, which comprise the application for a certificate of authority under the Insurance Code Chapter 4151, and which are available at http://www.tdi.state.tx.us/forms/form5tpa.html:

(A) Form Number FIN 489, Application for a Certificate of Authority;

(B) Form Number FIN 306, Officers and Directors Form;

(D) Form Number LHL 082, Service of Process Form.

(2) As authorized by the Insurance Code §4151.206(a)(1), the commissioner adopts a filing fee of $1,000 to be paid by an applicant for processing an original application for a certificate of authority for an administrator. The fee is non-refundable.

(c) Registration of Name. An applicant must register its official name with the department and the Office of the Secretary of State, as applicable. If the commissioner determines that an applicant's name is too similar to a name already registered with the department, the applicant must register an alternative name with the department and the Office of the Secretary of State, as applicable.

(d) Biographical Affidavit.

(1) Each executive officer or other comparable responsible person of an applicant shall provide the department with a completed Form Number LHL 081, Biographical Affidavit, as referenced in subsection (b)(1)(C) of this section. A biographical affidavit is not required if a biographical affidavit from the individual has been filed with the department within the prior three years and contains substantially accurate information. A biographical affidavit contains substantially accurate information if the responses given by the individual in the affidavit on file with the department continue to indicate sufficient experience, ability, standing, and good record to make success of the applicant probable.

(2) Each person filing a biographical affidavit under paragraph (1) of this subsection shall comply with the requirements of Chapter 1, Subchapter D of this title (relating to Effect of Criminal Conduct).

(e) Other Information. Pursuant to the Insurance Code §4151.052(a)(5), the commissioner may require the submission of any other information the commissioner reasonably requires in determining whether to approve or disapprove an application for a certificate of authority.

History

Source Note: The provisions of this §7.1604 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1605 Notification Requirements

(a) An insurer or HMO that is acting as or holding itself out as an administrator and that is not exempt under the Insurance Code §4151.002(3) or (4) is subject to all provisions of this subchapter, except §§7.1603, 7.1604, and 7.1609(c) and (d)(1) and (2) of this subchapter (relating to Certificate of Authority Required, Application for Certificate of Authority, and Annual Report).

(b) An insurer or HMO meeting the requirements of subsection (a) of this section must provide written notification to the department that it will be acting as or holding itself out as an administrator. The notice must include:

(1) the insurer's or HMO's contact information, including its TDI company number;

(2) a narrative describing the insurer's or HMO's facilities, personnel, and experience relating to the functions the insurer or HMO will be performing as an administrator; and

(3) a list of any other states in which the insurer or HMO will be acting as or holding itself out as an administrator.

History

Source Note: The provisions of this §7.1605 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1606 Requirements Related to Ownership Interest and Change of Control

(a) For purposes of this section only, control:

(1) means the power to direct, or cause the direction of, the management and policies of a person, other than the power that results from an official position with or corporate office held by the person;

(2) may be possessed by various means, including through:

(A) ownership of voting securities;

(B) ownership by contract; or

(3) exists if an individual or a member of an individual's immediate family, directly or indirectly, owns, controls, or holds with the power to vote 10 percent or more of the voting securities or authority of:

(A) an administrator; or

(B) another person that directly or indirectly controls an administrator, including when a person holds proxies representing 10 percent or more of the voting securities or authority of the person.

(b) Pursuant to the Insurance Code §4151.052(b), an applicant or an administrator shall notify the department in writing of a change of control in the ownership of the applicant or administrator not later than the 30th day after the effective date of the change.

(c) An applicant or administrator may not file the notification required by subsection (b) of this section until a proposed acquisition of control has been approved under the Insurance Code §4151.211.

History

Source Note: The provisions of this §7.1606 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1607 Facts and Circumstances Affecting Issuance of Certificate of Authority

(a) For purposes of this section only, a material change in fact or circumstance means any fact or circumstance that impacts the accuracy or completeness of the information filed in an applicant's or administrator's initial application for a certificate of authority under the Insurance Code Chapter 4151, including:

(1) a change in an applicant's or administrator's mailing address;

(2) a felony conviction of any executive officer or other comparable responsible person of an applicant or administrator or of any other person who directly or indirectly controls the applicant or administrator; and

(3) any administrative action, order, or judgment issued against an applicant or administrator.

(b) An administrator shall notify the department in writing of a material change in fact or circumstance not later than the 30th day from the date the administrator first becomes aware of the material change in fact or circumstance.

(c) Except as provided by §7.1606(b) of this subchapter (relating to Requirements Related to Ownership Interest and Change of Control), an applicant shall continually update the information filed in its initial application for a certificate of authority under the Insurance Code Chapter 4151, including notifying the department in writing of a material change in fact or circumstance, while the application is pending with the department.

(d) An applicant or administrator must meet the requirements of the Insurance Code Chapter 4151 and this subchapter as those requirements apply to any material change of fact or circumstance identified by an administrator pursuant to subsection (b) of this section and to any change in information identified by an applicant pursuant to subsection (c) of this section.

(e) An applicant or administrator is required to maintain the qualifications necessary to obtain a certificate of authority under the Insurance Code Chapter 4151 at all times.

History

Source Note: The provisions of this §7.1607 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1608 Fidelity Bond

(a) An applicant must obtain, and an administrator must maintain, a fidelity bond that complies with the requirements of the Insurance Code §4151.055 and this section.

(b) Applicants and administrators may only obtain a fidelity bond from a surety company authorized to engage in business in this state as a surety or an eligible surplus lines insurer in compliance with the Insurance Code Chapter 981 and rules adopted thereunder.

(c) An applicant or administrator whose fidelity bond is cancelled or terminated and not replaced with new coverage that meets the requirements of the Insurance Code §4151.055 and this section and that is effective concurrently upon the date of the cancellation or termination shall immediately inform the commissioner in writing, which in no event shall be later than ten business days from the date the applicant or administrator first becomes aware of the cancellation or termination.

History

Source Note: The provisions of this §7.1608 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1609 Annual Report

(a) Filing of Annual Report. An administrator must file an annual report with the department no later than June 30 each year, accompanied by the non-refundable fee of $200.

(b) Forms and Fee.

(1) The commissioner adopts by reference the following forms, which are available at www.tdi.state.tx.us/forms/form5tpa.html:

(A) Form Number FIN 486, Annual Report Form for Administrators Holding a Certificate of Authority under TIC 4151;

(B) Form Number FIN 487, Annual Report Form for Insurers and HMOs Subject to 28 TAC §7.1605;

(D) Form Number FIN 490, Certification of Financial Statement.

(2) As authorized by the Insurance Code §4151.206(a)(3), the commissioner adopts a fee of $200 to be paid with the filing of the annual report. The fee is non-refundable.

(c) Audit Report. The annual report required by subsection (a) of this section must also include an audit report on the financial statements prepared by an independent certified public accountant that:

(1) reflects an audit conducted in accordance with generally accepted auditing standards or with the standards adopted by the Public Company Accounting Oversight Board, as applicable; and

(2) includes a balance sheet, an income statement, a cash flow statement; and a statement of equity.

(d) Exemption.

(1) An administrator who receives less than $10 million in compensation for providing administrative services in Texas during the preceding calendar year is exempt from complying with subsection (c) of this section for that year.

(2) An administrator qualifying for the exemption in paragraph (1) of this subsection must file a financial statement with the department that:

(A) includes a completed Form Number FIN 490, Certification of Financial Statement, as referenced in subsection (b)(1)(D) of this section; and

(B) is verified by at least two officers or other comparable responsible persons of the administrator.

(3) An administrator qualifying for the exemption in paragraph (1) of this subsection must meet all other requirements of this section.

(e) The commissioner may request additional information as necessary to determine if an administrator is operating or conducting business in a hazardous or injurious manner.

History

Source Note: The provisions of this §7.1609 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1610 Financial Statements under the Education Code

(a) This section applies only to an insurer or HMO that:

(1) meets the requirements of §7.1605 of this subchapter (relating to Notification Requirements); and

(2) is subject to the requirements of the Education Code §22.004(g).

(b) An administrator meeting the requirements of subsection (a) of this section may comply with the requirement for an audited financial statement under the Education Code §22.004(h) by providing a copy of the financial statement filed with the Department for the preceding calendar year that:

(1) was prepared by an independent certified public accountant and;

(2) was filed in compliance with the requirements of §7.18 of this chapter (relating to the National Association of Insurance Commissioners Accounting Practices and Procedures Manual) and §7.85 of this chapter (relating to Audited Financial Reports).

History

Source Note: The provisions of this §7.1610 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1611 Operational Review and On-Site Audit

(a) No less than two times each fiscal year, an insurer shall review the operations of each of its administrators that, in the aggregate, administers benefits in Texas on behalf of the insurer for more than 100 certificate holders, injured employees, plan participants, or policyholders. A review may be conducted on the premises of the insurer or at another location designated by the insurer and may be conducted by electronic means.

(b) No less than once every two fiscal years, an insurer shall conduct an on-site audit of each of its administrators that, in the aggregate, administers benefits in Texas on behalf of the insurer for more than 100 certificate holders, injured employees, plan participants, or policyholders.

(c) Notwithstanding subsection (a) of this section, an insurer is not required to review the operations of an administrator under subsection (a) of this section more than one time in the same fiscal year in which the insurer conducts an on-site audit of that administrator pursuant to subsection (b) of this section.

(d) Both a review and on-site audit required under subsections (a) and (b) of this section must:

(1) assess the business practices and procedures of the administrator to ensure competent administration, including evaluating:

(A) the administrator's compliance with the Insurance Code, the Labor Code, and any rules adopted thereunder, as applicable;

(B) the administrator's compliance with the provisions of the written agreement with the insurer;

(D) the adequacy of the financial security maintained by the administrator, if any; and

(E) the administrator's practices and procedures for establishing the adequacy of the insurer's reserves, if any; and

(2) include a written summary of the objectives and scope of the review or on-site audit and the results of the review or on-site audit, including a corrective action plan addressing any deficiencies found during the review or on-site audit.

(e) The purpose of the on-site audit required by subsection (b) of this section is to verify the accuracy, integrity, and completeness of the information received during a review conducted by the insurer pursuant to subsection (a) of this section. In addition to the requirements of subsection (d) of this section, an on-site audit conducted by an insurer pursuant to subsection (b) of this section must also:

(1) include a physical inspection of the administrator's place of business; and

(2) include a written assessment of the reliability of the information provided to the insurer and relied upon by the insurer when conducting a review or on-site audit of the administrator under this section.

(f) A review or on-site audit required under this section may be performed by an insurer or the insurer's designated representative.

(g) An insurer may meet the requirements of this section for an administrator subcontractor by reviewing and auditing the administrator contractor only, provided that:

(1) the information supplied to the insurer by the administrator contractor includes all necessary and relevant information relating to the administrator subcontractor; and

(2) no evidence of material non-compliance by the administrator subcontractor exists.

(h) All information and documentation related to a review or on-site audit shall be made available to the commissioner upon request and must remain on file with the insurer for at least five years from the date of the review or on-site audit.

History

Source Note: The provisions of this §7.1611 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1612 Fiduciary Bank Accounts

(a) Pursuant to the Insurance Code §4151.106(b), an administrator shall hold all premium in a fiduciary capacity.

(b) An administrator collecting or receiving any premium shall comply with the Insurance Code §§4151.105, 4151.106, 4151.107, and 4151.108 and this section. An administrator who receives any premium on behalf of an insurer, HMO, plan sponsor, or group shall report the receipt of that premium to the insurer, HMO, plan sponsor, or group within a reasonable amount of time.

(c) An administrator shall establish at least one fiduciary bank account to hold any premium collected or received pursuant to this section.

(d) A fiduciary bank account required by subsection (c) of this section must be established and styled as an escrow account.

(e) An administrator shall maintain each fiduciary bank account at a financial institution that is organized under the laws of the United States or any state thereof, and is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks and trust companies. A fiduciary bank account may only consist of one or more of the following types of investments:

(1) cash and cash equivalents, including savings accounts, checking accounts, money market accounts, and certificates of deposit;

(2) non-assessable money market mutual funds that are primarily invested in United States government securities; and

(3) other investments of substantially similar quality, as approved by the commissioner.

(f) An administrator shall maintain detailed accounting records for each fiduciary bank account that separately:

(1) record each deposit and withdrawal from the account; and

(2) identify each insurer, HMO, plan sponsor, or group for whom the account is maintained.

(g) Upon the reasonable request of an insurer, HMO, plan sponsor, or group, an administrator shall provide the insurer, HMO, plan sponsor, or group a copy of all records relating to the account activity of the insurer, HMO, plan sponsor, or group in a fiduciary bank account established or maintained by the administrator on behalf of the insurer, HMO, plan sponsor, or group.

(h) All records maintained by an administrator relating to any premium shall be subject to examination by the commissioner upon request.

(i) Pursuant to the Insurance Code §4151.109, an administrator may not pay a claim from a fiduciary bank account.

(j) This subsection does not authorize any transaction that is otherwise prohibited by law.

History

Source Note: The provisions of this §7.1612 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1613 Written Agreements Between Administrators and Insurers

(a) An administrator may not provide administrative services in Texas on behalf of an insurer unless the administrator has entered into a written agreement with the insurer that meets the requirements of the Insurance Code Chapter 4151 and this section.

(b) An administrator subcontractor may meet the requirements of this section by entering into a written agreement with the administrator contractor only, provided the written agreement meets the requirements of the Insurance Code Chapter 4151 and this section, as applicable.

(c) A written agreement entered into under this section may not be construed to limit, in any way, an insurer's ultimate accountability and responsibility for compliance with all statutory and regulatory requirements under the Insurance Code, the Labor Code, and rules adopted thereunder.

(d) A written agreement entered into under this section shall include:

(1) a requirement that the administrator must comply with all statutory, contractual, and regulatory requirements related to a function assumed or carried out by the administrator and related to a plan for which the administrator performs or offers to perform administrative services;

(2) a description of the administrative services the administrator is expected to provide and any applicable instructions related to the performance of those services, including references to an insurer's claims handling practices or procedures;

(3) a provision relating to the continuity of services and addressing the obligations of the administrator and the insurer under §7.1615 of this subchapter (relating to Transfer of Books and Records), including the method and manner in which the insurer and administrator will meet those requirements; and

(4) a provision addressing an insurer's obligation to review and audit the performance of its administrators under §7.1611 of this subchapter (relating to Operational Review and On-Site Audit), including the method and manner in which the insurer will meet those requirements.

(e) A written agreement entered into under this section shall also ensure that the books and records of the insurer:

(1) remain the property of the insurer at all times; and

(2) are available to the insurer or its designee at any time while in the custody of the administrator.

(f) Notwithstanding subsection (e) of this section, an administrator may retain a proprietary interest in the books and records of an insurer pursuant to the Insurance Code §4151.113(c), provided that the written agreement between the administrator and the insurer specifically identifies the items that will be subject to the administrator's proprietary interest. An administrator may not withhold, based upon a claim of proprietary interest, any portion of an insurer's books and records that would restrict the ability of the insurer to comply with statutory, regulatory, or contractual obligations.

(g) A master services agreement may be used to meet the requirements of this section.

(h) If a particular requirement under this section does not apply to an administrative service offered or performed by an administrator on behalf of an insurer, that particular requirement may be omitted from the written agreement between the administrator and the insurer. However, the remainder of the written agreement between the administrator and the insurer must comply with the Insurance Code Chapter 4151 and this section.

(i) A written agreement required under this section shall meet the requirements of this section no later than September 1, 2009.

History

Source Note: The provisions of this §7.1613 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1614 Prohibited Acts

(a) An administrator is prohibited from:

(1) misrepresenting the terms or nature of an agreement with an insurer, HMO, plan sponsor, or group;

(2) making false, misleading, or incomplete comparisons to the agreements of other administrators or persons in order to induce any person to enter into, continue, or discontinue an agreement;

(3) accepting or rejecting risk, other than under the authority of, and in accordance with, a written agreement with an insurer, HMO, plan sponsor, or group;

(4) publishing or circulating any advertising or informational material, benefit descriptions, certificates, booklets, or brochures pertaining to business underwritten by an insurer, HMO, plan sponsor, or group without advance written approval of the insurer, HMO, plan sponsor, or group;

(5) pursuant to the Labor Code §415.0036, offering to pay, paying, soliciting, or receiving an improper inducement relating to the delivery of benefits to an injured employee, if the administrator performs administrative services on behalf of a person who is a participant in the workers' compensation system of this state; and

(6) pursuant to the Labor Code §415.0036, improperly attempting to influence the delivery of benefits to an injured employee, including through the making of improper threats, if the administrator performs administrative services on behalf of a person who is a participant in the workers' compensation system of this state.

(b) An administrator may be subject to other prohibitions under the Insurance Code, the Labor Code, and rules adopted thereunder that are not specified in subsection (a) of this section.

History

Source Note: The provisions of this §7.1614 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1615 Transfer of Books and Records

(a) Unless otherwise approved by the commissioner, no later than 30 days from the date of the termination of the relationship or written agreement between an insurer, HMO, plan sponsor, or group and an administrator, the administrator shall provide a complete and accurate original set or a complete and accurate copy or image of the original set of the insurer's, HMO's, plan sponsor's, or group's books and records:

(1) to a successor administrator; or

(2) if there is not a successor administrator or if the successor administrator is unknown at the time of the required transfer, to the insurer, HMO, plan sponsor, or group.

(b) The books and records must be transferred in an organized and usable manner.

(c) The allocation of the payment of costs associated with providing a complete and accurate original set or a complete and accurate copy or image of the original set of an insurer's books and records shall be addressed in the written agreement between the insurer and the administrator under §7.1613 of this subchapter (relating to Written Agreements Between Administrators and Insurers).

(d) An administrator shall provide written notice to the department of the termination of a relationship or written agreement with an insurer, HMO, plan sponsor, or group no later than 30 days from the date the administrator first learns of the termination.

(e) If a relationship between an administrator subcontractor and an administrator contractor terminates, the administrator subcontractor may meet the requirements of this section by:

(1) providing a complete and accurate original set or a complete and accurate copy or image of the original set of the insurer's, HMO's, plan sponsor's, or group's books and records to the administrator contractor; and

(2) providing written notice to the department of the termination of the relationship or written agreement with the administrator contractor no later than 30 days from the date the administrator subcontractor first learns of the termination.

History

Source Note: The provisions of this §7.1615 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1616 Hazardous or Injurious Operating Conditions

(a) An applicant or administrator may be considered to be operating or conducting business in a hazardous or injurious manner if the administrator or applicant:

(1) has failed to file financial statements, documents, records, or reports required under the Insurance Code Chapter 4151 or this subchapter within the time periods prescribed by the Insurance Code Chapter 4151, this subchapter, or as requested by the department pursuant to law;

(2) has filed any false or misleading financial information;

(3) is unable to pay its obligations as they become due and payable;

(4) has not maintained records sufficient to permit examiners to determine its financial condition or compliance with the Insurance Code, the Labor Code, and rules adopted thereunder;

(5) does not employ management staff with the experience, competence, or trustworthiness to conduct its operations in a safe or sound manner;

(6) employs management staff that has engaged in any unlawful activity;

(7) has not complied or is not complying with the terms of a written agreement with an insurer, HMO, plan sponsor, or group;

(8) has engaged or is engaged in a pattern of failing to settle claims in accordance with contractual, regulatory, or statutory requirements; or

(9) has engaged or is engaged in fraudulent or dishonest practices or acts.

(b) Other facts and circumstances not specified in subsection (a) of this section, as determined by the commissioner, that relate to the financial condition or business operations or conduct of an applicant or administrator in this state may also indicate that an applicant or administrator is operating in a hazardous or injurious manner.

History

Source Note: The provisions of this §7.1616 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1617 Examinations

(a) As authorized by the Insurance Code §4151.206(a)(2), the commissioner adopts a fee of $500 to be paid by an administrator for an examination under the Insurance Code §4151.201. The fee is non-refundable.

(b) Pursuant to the Insurance Code §4151.202, prior to an examiner entering the property of an administrator, written notice shall be given to the administrator. The written notice shall include the date and estimated time the examiner will enter the property of the administrator.

History

Source Note: The provisions of this §7.1617 adopted to be effective June 25, 2009, 34 TexReg 4143.

28 Tex. Admin. Code § 7.1618 Severability

If any section or portion of a section of this subchapter is held to be invalid for any reason, all valid parts are severable from the invalid parts and remain in effect. If any section or portion of a section is held to be invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications. To this end, all provisions of this subchapter (relating to Administrators) are declared to be severable.

History

Source Note: The provisions of this §7.1618 adopted to be effective June 25, 2009, 34 TexReg 4143.

Subchapter R WITHDRAWAL PLAN REQUIREMENTS AND PROCEDURES

28 Tex. Admin. Code § 7.1801 Purpose

The purpose of this subchapter is to provide orderly and uniform procedures, as required by law and dictated by sound public policy, for any authorized insurer or HMO filing a plan of withdrawal with the Commissioner of Insurance under Insurance Code Chapter 827. Nothing in this subchapter authorizes or allows an insurer or HMO to withdraw from any coverage if such withdrawal would violate any federal or state law or any provisions contained in a contract or evidence of coverage or a policy or certificate of insurance itself.

History

Source Note: The provisions of this §7.1801 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1802 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Annual Statement--Annual statement most recently filed by the insurer or HMO with the Texas Department of Insurance.

(2) Association coverage--Coverage under a health benefit plan issued to an association or bona fide association as those terms are defined in §21.2702 of this title (relating to Association Plans).

(3) Commissioner--Commissioner of Insurance.

(4) Department--Texas Department of Insurance.

(5) Individual coverage--Coverage issued by an HMO that provides an individual health care plan as defined in Insurance Code §1271.004.

(6) Large employer coverage--Coverage under a health benefit plan issued to a large employer as those terms are defined in §26.4 of this title (relating to Definitions).

(7) Line of insurance--Each line of business as specified in §7.1803 of this title (relating to What Constitutes a Line of Insurance).

(8) HMO--A health maintenance organization licensed under Insurance Code Chapter 843.

(9) Medicaid--The Medicaid program under Title XIX of the Social Security Act of 1965.

(10) Medicare--Has the same meaning as specified in §3.3303 of this title (relating to Definitions).

(11) Medicare+Choice plan--Has the same meaning as specified in §3.3303 of this title.

(12) Small employer coverage--Coverage under a health benefit plan issued to a small employer as those terms are defined in §26.4 of this title.

(13) Enrollees of special circumstances--As described in Insurance Code §§1301.152 - 1301.154 and §843.362.

(14) CHIP--The Texas Children's Health Insurance Program under Texas Health and Safety Code Chapter 62.

(15) Withdrawal--The event that occurs when the actions of an insurer or HMO meets the criteria under Insurance Code §827.003.

(16) Rating territory--A county in Texas.

History

Source Note: The provisions of this §7.1802 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1803 What Constitutes a Line of Insurance

(a) For purposes of this subchapter, a line of insurance is defined as each line of business as specified in paragraphs (1)(A)-(P), (2)(A)-(PP), and (3)(A)-(K) of this subsection, and including any line written in by the insurer or HMO on the annual statement pages specified in this section, for which financial data was reported by the individual withdrawing insurer or HMO filing any of the annual statement pages specified in this section, or any duly promulgated equivalent pages, of the annual statement forms specified in this section, or any duly promulgated equivalent forms, and including any line of business that is duly promulgated to be added to the annual statement pages specified in this section or to any duly promulgated equivalent page.

(1) For an insurer that is required to file the Life and Accident and Health Annual Statement, Texas State Page 21, Reporting Direct Business in the State of Texas During the Year, or the Health Statement, Exhibit of Premiums, Enrollment and Utilization, reporting direct business in the State of Texas (page 34 of the Health Statement), in addition to any line of insurance written in by the insurer, each of the following is a line of insurance:

(A) ordinary life;

(B) group and individual credit life;

(D) industrial life;

(E) ordinary annuity;

(F) group annuity;

(G) ordinary annuity and other fund deposits;

(H) group annuity and other fund deposits;

(I) small employer coverage;

(J) group and individual credit accident and health;

(K) individual accident and health coverage including collectively renewable accident and health, noncancellable accident and health, guaranteed renewable accident and health, non-renewable for stated reasons only accident and health, and other accident only;

(L) group accident and health other than association, large employer or small employer coverage;

(M) Medicare+Choice plan;

(N) CHIP coverage;

(O) association coverage; or

(P) large employer coverage.

(2) For an insurer that is required to file the Property and Casualty Annual Statement, Exhibit of Premiums and Losses, page 15, (coded "Statutory Page 14"), in addition to any line written in by the insurer, each of the following is a line of insurance:

(A) fire;

(B) allied lines;

(D) flood;

(E) farmowners multiple peril;

(F) homeowners multiple peril;

(G) Texas commercial multiple peril (non-liability portion);

(H) growing crops (all other);

(I) multiple peril crop;

(J) inland marine;

(K) ocean marine;

(L) small employer coverage;

(M) group and individual credit accident and health;

(N) individual accident and health coverage including collectively renewable accident and health, noncancellable accident and health, guaranteed renewable accident and health, non-renewable for stated reasons only accident and health, and other accident only;

(O) group accident and health other than association, large employer or small employer coverage;

(P) Medicare+Choice plans;

(Q) CHIP coverage;

(R) association coverage;

(S) large employer coverage;

(T) workers compensation;

(U) Texas commercial multiple peril (liability portion);

(V) financial guaranty;

(W) medical malpractice liability (physicians--including surgeons and osteopaths);

(X) medical malpractice liability (all other health care professionals);

(Y) medical malpractice liability--hospitals;

(Z) medical malpractice liability (all other health care facilities);

(AA) product liability;

(BB) other general liability;

(CC) fidelity;

(DD) surety;

(EE) glass;

(FF) burglary and theft;

(GG) boiler and machinery;

(HH) credit guaranty;

(II) mortgage guaranty;

(JJ) aircraft (all perils);

(KK) private passenger auto no-fault personal injury protection;

(LL) other private passenger auto liability;

(MM) commercial auto no-fault personal injury protection;

(NN) other commercial auto liability;

(OO) private passenger auto physical damage; or

(PP) commercial auto physical damage.

(3) For an HMO that is required to file the Health Statement, Exhibit of Premiums, Enrollment and Utilization, reporting direct business in the State of Texas (page 34 of the Health Statement), in addition to any line of insurance written in by the HMO, each of the following is a line of insurance for the purposes of this subchapter:

(A) small employer coverage;

(B) large employer coverage;

(D) health care services for Medicare or a Medicare+Choice plan delivered under a contract with the federal Centers for Medicare and Medicaid Service;

(E) CHIP coverage;

(F) individual coverage;

(G) association coverage;

(H) limited service group coverage;

(I) limited service individual coverage;

(J) single service group coverage; and

(K) single service individual coverage.

(b) Nothing in this section authorizes or allows an insurer or HMO to cancel or non-renew any coverage that would violate any law or provisions contained in a contract or evidence of coverage or a policy or certificate of insurance itself.

History

Source Note: The provisions of this §7.1803 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610.

28 Tex. Admin. Code § 7.1804 When a Withdrawal Plan is Required

(a) Any authorized insurer or HMO must file with the Commissioner of Insurance a plan of orderly withdrawal before the insurer or HMO undertakes a withdrawal.

(1) The insurer or HMO undertakes a withdrawal when it takes any action on its own initiative that will result in the insurer or HMO meeting the criteria under Insurance Code §827.003.

(2) An insurer or HMO will not be held to have acted on its own initiative in effecting a withdrawal when it acts under a Commissioner disciplinary or administrative directive or order, or when the insurer or HMO acts under a directive of a supervisor, conservator, or receiver. If an out-of-state directive or order is not provided to the Commissioner within 30 days of the issuance of such directive or order, the insurer or HMO will be held to have acted on its own initiative.

(b) An insurer or HMO is not required to file a plan of orderly withdrawal, but must instead notify the department, when:

(1) the line of business is written by a stipulated premium company unless such line is written under Insurance Code §884.303 and §884.307 or Chapter 884, Subchapter I; or

(2) the line of insurance from which the HMO is withdrawing is Medicare, a Medicare+Choice plan or a Medicaid contract as provided in §7.1803(a) of this title (relating to What Constitutes a Line of Insurance).

(c) If an insurer or HMO comes within an exception provided in subsection (b) of this section, such notification must be sent to the department simultaneously with any notification required to be provided to any other state or federal agency. The notification will be accepted for information only and must affirm that any appropriate state or federal agency has been notified of the company's intent to withdraw, and must include the effective date of nonrenewal, the names of the Texas counties affected, and the number of insureds or enrollees affected.

(d) This subchapter does not modify or supercede any requirement under the Insurance Code or any other state or federal law to notify policyholders or enrollees that an insurer or HMO will not renew any coverage; however, before any such notice is given a withdrawal plan must be filed with the department and approved by the department under §7.1806 of this title (relating to Withdrawal Plan Submission and Approval Procedures) when a plan is required by this section.

History

Source Note: The provisions of this §7.1804 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1805 Contents of Withdrawal Plan

(a) Except for withdrawing HMOs, which are addressed under subsection (b) of this section and insurers meeting the criteria under §7.1804(b) of this title (relating to When a Plan is Required), a withdrawing insurer must file a plan of orderly withdrawal with the Commissioner that is constructed to protect the interests of the people of this state. The plan must be signed by at least one officer of the insurer and must contain the following:

(1) identification, in accordance with the line of insurance designations in §7.1803 of this title (relating to What Constitutes a Line of Insurance), of the line or lines of insurance being withdrawn;

(2) identification of the policy forms by number and type affected by the withdrawal;

(3) the dates the insurer intends to begin and complete its withdrawal;

(4) an explanation of the reasons for the withdrawal;

(5) provisions for notifying all of the affected Texas policyholders and certificate holders of the dates of the beginning and completion of the withdrawal and how the withdrawal will affect them, including, but not limited to:

(A) a copy of the notice and an explanation of the manner in which the notice will be provided to policyholders and certificate holders;

(B) either affirmation that such notice will be provided within 30 days of the approval of the withdrawal plan or a request to provide the notice at some other specified date or time, and such request must be approved by the Commissioner; and

(6) provisions for meeting all of the insurer's contractual obligations, including, but not limited to:

(A) notification of all affected agents of the insurer of the date the insurer intends to begin and complete the withdrawal;

(B) for fire and casualty insurers, a statement affirming the insurer's compliance with the provisions of Insurance Code Chapter 4051, Subchapter H, relating to cancellation of agency contracts;

(C) for insurers writing liability coverage as specified in Insurance Code Chapter 551, Subchapter B, a statement affirming the insurer's compliance with the provisions of Insurance Code Chapter 551, Subchapter B, relating to cancellation and nonrenewal of certain liability insurance coverage;

(D) for insurers writing property and casualty coverage as specified in Insurance Code Chapter 551, Subchapter C, a statement affirming the insurer's compliance with the provisions of Insurance Code Chapter 551, Subchapter C, relating to cancellation and nonrenewal of certain property and casualty policies; and

(E) for insurers writing guaranteed renewable or noncancelable coverage, a statement affirming the insurer's compliance with the provisions of Insurance Code §1202.051, concerning renewability and continuation of individual health insurance policies, and Insurance Code §1501.109, concerning refusal to renew and discontinuation of coverage, and any corresponding regulations;

(7) provisions for providing service to the insurer's Texas policyholders and claimants;

(8) information on Texas business, including:

(A) the total annual premium volume and the number of policies and certificates and covered persons in Texas by county for each line to be withdrawn and the estimated total annual premium volume and number of policies and certificates and covered persons in Texas by county after withdrawal;

(B) an estimate of what percentage of the market for each affected line of insurance in each county the withdrawal impacts;

(C) any other information necessary to assist the Commissioner in determining whether a market availability problem is created by the withdrawal; and

(D) if an insurer is unable to provide the exact number of policies and certificates and covered persons, the insurer must provide estimates and explain how the estimates were determined;

(9) provisions for identifying policyholders or certificate holders of special circumstances;

(10) identification of any third party contracts which may provide for the continuity of care to enrollees of special circumstances;

(11) number of and estimated amount of all losses outstanding in Texas, including claims incurred but not reported;

(12) a plan to handle the losses specified in paragraph (11) of this subsection, including, but not limited to:

(A) identification of what assets will be available for paying outstanding incurred but not reported claims, claims in the course of settlement, and associated loss adjustment expenses; and

(B) identification of who specifically will administer the run off of the business;

(13) if Texas policyholders or certificate holders are to be reinsured, the filing of a reinsurance agreement under all statutory and regulatory requirements and, when applicable, the filing of an assumption certificate;

(14) provisions for meeting any applicable statutory obligations, including, but not limited to:

(A) payment of any guaranty fund assessments;

(B) participation in any assigned risk plan, pool, fund, facility, or joint underwriting arrangement; and

(15) a list of any other products the insurer will continue to offer in Texas; and

(16) affirmation that the insurer will comply with §7.1808 of this title (relating to Requirements to Resume Writing Insurance), as applicable.

(b) Unless it meets the criteria under §7.1804(b) of this title, a withdrawing HMO must file a plan of orderly withdrawal with the Commissioner that is constructed to protect the interests of the people of Texas. The plan must be signed by at least one officer of the HMO and must contain the following:

(1) identification, in accordance with the line of insurance designations in §7.1803 of this title, of the line or lines of insurance being withdrawn;

(2) identification by form number of the evidences of coverage affected by withdrawal;

(3) the dates the HMO intends to begin and complete its withdrawal;

(4) an explanation of the reasons for the withdrawal;

(5) provisions for notifying all of the affected Texas enrollees and contract holders of the dates of the beginning and completion of the withdrawal and how the withdrawal will affect them, including, but not limited to:

(A) a copy of the notice and an explanation of the manner in which the notice will be provided to enrollees or contract holders;

(B) either an affirmation that such notice will be provided within 30 days of the approval of the withdrawal plan or a request to provide the notice at some other specified date or time, and such request must be approved by the Commissioner; and

(C) identification of any provisions of the Insurance Code or the Texas Administrative Code under which notice is mandated;

(6) provisions for meeting all of the HMO's contractual obligations, including, but not limited to:

(A) notification to all affected agents of the HMO of the dates the HMO intends to begin and complete the withdrawal; and

(B) for HMOs writing guaranteed renewable or noncancelable coverage, a statement affirming the HMO's compliance with the provisions of Insurance Code §843.208, concerning cancellation or nonrenewal of coverage; §1271.307, concerning renewability of coverage for individual health care plans and conversion contracts; and §1501.109, concerning refusal to renew and discontinuation of coverage, and any corresponding regulations;

(7) provisions for providing service to the HMO's Texas enrollees and providers;

(8) information on Texas business, including:

(A) the total annual premium volume and the number of affected contract holders and enrollees in Texas by county in all service areas for each line to be withdrawn and the estimated total annual premium volume and number of enrollees and contract holders in Texas by county in all service areas after withdrawal;

(B) an estimate of what percentage of the market for each affected line of insurance by county in all service areas the withdrawal impacts, as measured by enrollee; and

(C) any other information necessary to assist the Commissioner in determining whether a market availability problem is created by the withdrawal;

(9) provisions for identifying enrollees of special circumstance;

(10) identification of any third-party contracts that may provide for the continuity of care to enrollees of special circumstance;

(11) number of and estimated amount of all losses outstanding in Texas, including claims incurred but not reported;

(12) a plan to handle the losses specified in paragraph (11) of this subsection, including, but not limited to:

(A) identification of what assets will be available for paying outstanding incurred but not reported claims, claims in the course of settlement, and associated loss adjustment expenses; and

(B) identification of who specifically will administer the run off of the business, if any;

(13) provisions for meeting any applicable statutory obligations;

(14) affirmation that the HMO will comply with §7.1808 of this title, as applicable; and

(15) a list of any other products the HMO will continue to sell in Texas in each service area.

(c) The filing of a single consolidated withdrawal plan for all withdrawing insurance companies or HMOs in the same holding company system, as defined in Insurance Code §823.006, does not meet the requirements of this subchapter. A separate withdrawal plan must be filed for each insurance company or HMO intending to withdraw from a line or lines of insurance.

History

Source Note: The provisions of this §7.1805 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1806 Withdrawal Plan Submission and Approval Procedures

(a) The department will post forms and instructions on its website to assist persons in complying with the requirements of this subchapter. Any insurer or HMO filing a plan of orderly withdrawal must submit the plan at the location specified on the department website.

(b) The withdrawal plan will be deemed approved if the Commissioner has not held a hearing within 60 days after the complete plan is filed or has not been denied approval within 60 days after the hearing.

(c) No plan will be considered "filed" until such date as the withdrawing insurer or HMO has provided to the Commissioner all information and material necessary to constitute a completed plan of orderly withdrawal, as required under this subchapter.

History

Source Note: The provisions of this §7.1806 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1807 Filing of Annual Financial Statement and Other Required Data and Information

Any insurer or HMO filing a withdrawal plan must continue to file all annual financial statement data, other required statistical and data filings, other reporting, and any other department-requested information applicable to any withdrawn line until all policyholder obligations for such line in this state are fulfilled. This section does not exempt an insurer or HMO from any filings or information requests required by the department.

History

Source Note: The provisions of this §7.1807 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1808 Requirements To Resume Writing Insurance

Any insurer or HMO withdrawing from writing all premium in all lines of insurance in this state and required to file a plan of orderly withdrawal under Insurance Code Chapter 827, may not resume writing the withdrawn lines in this state before the fifth anniversary of the date of the withdrawal without complying with all applicable statutory and regulatory provisions governing authorization to write such lines of insurance in this state and receiving the written approval of the Commissioner to resume such writing. The five-year ban under Insurance Code §827.006, for the resumption of writing insurance after a withdrawal, takes effect the later of the date the insurer or HMO intends to begin its withdrawal as stated in the plan approved by the Commissioner or discovery by the department of the insurer's or HMO's failure to file a withdrawal plan.

History

Source Note: The provisions of this §7.1808 adopted to be effective July 22, 1993, 18 TexReg 4504; amended to be effective January 30, 2002, 27 TexReg 610; amended to be effective June 19, 2018, 43 TexReg 3902.

28 Tex. Admin. Code § 7.1809 Restriction Plan Contents and Submission Requirements

(a) An insurer that meets the criteria under Insurance Code §827.008 must file a proposed restriction plan with the Commissioner for review and approval.

(b) The plan must be signed by at least one officer of the insurer and must contain the following:

(1) identification, in accordance with the line of insurance designations in §7.1803 of this title (relating to What Constitutes a Line of Insurance), as applicable to personal automobile or residential property insurance being restricted;

(2) the dates the insurer intends to begin and complete its restriction;

(3) an explanation of the reasons for restricting the writing of new business;

(4) a list of the affected rating territories; and

(5) information on Texas business, including any information necessary to assist the Commissioner in determining how market availability of the line of business proposed to be restricted may be affected including, but not limited to, the following:

(A) a description of how restricting writing new business in a rating territory may affect other related residential property or personal automobile insurance lines of business written by the insurer, such as the potential effect of discounts no longer provided to insureds;

(B) a list of any other products within the line the insurer will continue to offer in Texas; and

(c) The department will post forms and instructions on its website to assist persons in compliance with the requirements of this subchapter. Any insurer filing a restriction plan must submit the plan at the location specified on the department website.

(d) The Commissioner may modify, restrict, or limit a restriction plan as provided for under Insurance Code §827.008(b).

(e) An insurer may not revise its underwriting guidelines in response to a catastrophic natural event that occurred within the previous six months without receiving Commissioner approval of its restriction plan under Insurance Code §827.008.

(f) If a restriction plan results in a withdrawal under Insurance Code §827.003 and §827.004, the insurer must file a withdrawal plan.

History

Source Note: The provisions of this §7.1809 adopted to be effective June 19, 2018, 43 TexReg 3902.

Subchapter S MULTIPLE EMPLOYER WELFARE ARRANGEMENTS REQUIREMENTS FOR OBTAINING AND MAINTAINING CERTIFICATE OF AUTHORIZATION

28 Tex. Admin. Code § 7.1901 Scope and Applicability

(a) This subchapter applies to any multiple employer welfare arrangement that is subject to Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements.

(b) This subchapter does not apply to any arrangement or plan that is established or maintained:

(1) under one or more agreements that the United States Secretary of Labor finds to be a collective bargaining agreement; or

(2) by a rural electric cooperative or a rural telephone cooperative association, as those terms are defined in the Employee Retirement Income Security Act of 1974 (29 United States Code §1002(40)).

History

Source Note: The provisions of this §7.1901 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1902 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Business plan--The comprehensive, detailed plan by which the multiple employer welfare arrangement conducts or proposes to conduct its business.

(2) Comprehensive health benefit plan--Any health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness. The term does not include:

(A) accident-only or disability income insurance coverage, or a combination of accident-only and disability income insurance coverage;

(B) credit-only insurance coverage;

(D) coverage for a specified disease or illness;

(E) Medicare services under a federal contract;

(F) Medicare supplement and Medicare Select policies regulated in accordance with federal law;

(G) long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community-based care coverage or benefits, or any combination of those coverages or benefits;

(H) coverage that provides limited-scope dental or vision benefits;

(I) coverage provided by a single service health maintenance organization;

(J) workers' compensation insurance coverage or similar insurance coverage;

(K) coverage provided through a jointly managed trust authorized under 29 United States Code §141 et seq. that contains a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 United States Code §157;

(L) hospital indemnity or other fixed indemnity insurance coverage;

(M) reinsurance contracts issued on a stop-loss, quota-share, or similar basis;

(N) short-term major medical contracts;

(O) liability insurance coverage, including general liability insurance coverage and automobile liability insurance coverage;

(P) coverage issued as a supplement to liability insurance coverage;

(Q) automobile medical payment insurance coverage;

(R) coverage for on-site medical clinics;

(S) coverage that provides other limited benefits specified by federal regulations; or

(T) other coverage that is:

(i) similar to the coverage described by subparagraphs (A) - (S) of this paragraph under which benefits for medical care are secondary or incidental to other coverage benefits; and

(ii) specified in federal regulations.

(3) Department--Texas Department of Insurance.

(4) Employee welfare benefit plan--Has the meaning assigned by Insurance Code §846.001, concerning Definitions.

(5) Multiple employer welfare arrangement--An employee welfare benefit plan, or any other arrangement that is established or maintained for the purpose of offering or providing any benefit described in Insurance Code §846.201, and restated in §7.1909 of this title (relating to Benefits Allowed To Be Provided by Multiple Employer Welfare Arrangements), to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries, provided that the arrangement meets either or both of the following criteria:

(A) one or more of the employer members in the multiple employer welfare arrangement is either domiciled in this state or has its principal headquarters or principal administrative office in this state; or

(B) the multiple employer welfare arrangement solicits an employer that is domiciled in this state or has its principal headquarters or principal administrative office in this state.

History

Source Note: The provisions of this §7.1902 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1904 Application for Initial Certificate of Authority

(a) Any person seeking to establish a multiple employer welfare arrangement (MEWA) that is not fully insured, as that term is defined in Insurance Code §846.002(a), concerning Applicability of Chapter, must submit a complete application for initial certificate of authority to the commissioner and may use the MEWA forms accessible on the department's website at www.tdi.texas.gov/forms as a resource to comply.

(b) In order to be considered complete, the application must contain the following items:

(1) a name application form signed and dated by an authorized representative of the applicant that includes:

(A) the name of the MEWA; the physical address where the MEWA is incorporated; contact information, including telephone number and email address; and title or relationship of each organizer to the proposed MEWA, along with the same information about any affiliated organizations;

(B) a statement that the applicant is seeking to reserve a name as a MEWA and whether the purpose of the application is to change the name of an existing MEWA, form a new MEWA, or seek to be admitted to the State of Texas as a foreign MEWA;

(C) a list of all the states where the MEWA holds a certificate of authority or license, whether the MEWA is fully insured or not; and

(D) a list of all the states where the MEWA holds a certificate of authority or license under an assumed name, whether the MEWA is fully insured or not;

(2) a notarized affidavit signed by the president, secretary, and treasurer, or all of the trustees, that contains:

(A) information about the MEWA, including:

(i) the MEWA's full name;

(ii) the physical address of the MEWA's home office;

(iii) the employer identification number;

(iv) the point of contact's name and contact information; and

(v) the association's seal, if applying as an association. If not applying as an association, a notation that the affiant is a group of employers;

(B) information about the officers, directors, and trustees, as applicable, including:

(i) the full name, social security number, and appointment or election date of the president, secretary, and treasurer; and

(ii) the full name, social security number, and appointment or election date of any other directors or trustees; and

(C) a statement that affirms the following: "We hereby apply for an initial Certificate of Authority authorizing {MEWA name} to act as a Multiple Employer Welfare Arrangement in the State of Texas for a period of twelve (12) months. We know of no reason under the provisions of the Texas Insurance Code why {MEWA name} is not entitled to such a Certificate of Authority";

(3) a biographical affidavit that is completed and filed for each trustee, officer, director, or administrator of the MEWA that includes the following information:

(A) the affiant's current legal name and any names the individual may have used in the past, social security number, date of birth, citizenship(s), and current mailing addresses, phone numbers, and email addresses;

(B) the name and address of the MEWA;

(D) information regarding the affiant's education, memberships in professional organizations, and any professional, occupational, or vocational licenses held (current and past), including a statement whether any were refused, suspended, or revoked in the last 10 years;

(E) the affiant's employment history for the previous 10 years; and

(F) the affiant's fidelity bond coverage history, criminal history, any bankruptcy history, lawsuit history in the past five years, and any previous or current ownership or control of entities involved in the business of insurance, including a statement whether any became insolvent or were placed under supervision or in receivership, rehabilitation, liquidation, or conservatorship, or had their certificate of authority suspended or revoked;

(4) a notarized service of process form signed by the president and secretary or the trustees that designates the commissioner as the MEWA's resident agent for purposes of service of process and includes the following:

(A) the mailing address of the MEWA;

(B) a statement substantially similar to the following: "{MEWA Name} hereby appoints the commissioner of insurance, located at 1601 Congress Ave., Austin, Texas 78701, as its resident agent for service of process under Texas Insurance Code Section 846.059. All process or pleadings in any civil suit or action against {MEWA Name} may be served on the commissioner as though served on {MEWA Name} directly. {MEWA Name} waives all claims of error by reason of this appointment and admits or agrees that this appointment of the commissioner of insurance as its resident agent for service of process will be taken and held as valid and sufficient as though served directly on {MEWA Name}. This appointment will continue for as long as any liability remains outstanding against {MEWA Name} pertaining to any such matters."; and

(5) a certified copy of the articles of incorporation, if applicable;

(6) a certified copy of the bylaws, constitution, or rules or regulations establishing and operating the MEWA;

(7) trust agreements created in connection with the MEWA, which must be signed by all trustees;

(8) a welfare benefit plan document, including documentation or instruments describing the rights and obligations of employers, employees, and beneficiaries with respect to the MEWA;

(9) a summary plan description, consistent with 29 United States Code §1022, that:

(A) is written in a manner calculated to be understood by the average plan participant and is sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan; and

(B) contains the following information:

(i) the name and type of administration of the plan;

(ii) the name and address of the administrator;

(iii) the names and addresses of any trustee or trustees if they are persons different from the administrator;

(iv) the plan requirements with respect to eligibility for participation and benefits;

(v) a description of provisions relating to nonforfeitable benefits if any are included in the plan;

(vi) a description of circumstances that may result in disqualification, ineligibility, or denial or loss of benefits;

(vii) the source of financing of the plan;

(viii) the identity of any organization through which benefits are provided;

(ix) the date of the end of the plan year and whether the records of the plan are kept on a calendar, policy, or fiscal year basis;

(x) the procedures to be followed in presenting claims for benefits under the plan;

(xi) remedies available under the plan for the redress of claims that are denied in whole or in part; and

(xii) a statement of guaranty fund nonparticipation, if applicable, in the same form as set out for insurers and health maintenance organizations in §1.1001 of this title (relating to Disclosure of Guaranty Fund Nonparticipation);

(10) financial statements, including:

(A) a current financial statement. If the MEWA is already in business, the financial statement must include an annual balance sheet and income statement, developed on generally accepted accounting principles, for the past five years, or since the inception of the MEWA, whichever time period is shorter;

(B) a projected balance sheet for a minimum of three years on a quarterly basis, including assumptions used in producing projections. The projected balance sheet must be developed according to generally accepted accounting principles;

(C) a projected income statement, providing income forecasts for a minimum interval of three years, detailed on a quarterly basis. The projected income statement must be developed according to generally accepted accounting principles;

(D) a projected cash flow analysis on a quarterly basis, for a minimum of three years. Line by line documentation of anticipated cash inflow and outflow by specific account type must be submitted;

(E) a statement of the proposed initial cash and cash reserves summary. This statement must include all items of funding, including but not limited to loan receipts, loan repayments, and stock sales. The statement must include a description of the source and terms of the funding; and

(F) if an existing MEWA, a copy of its Federal Form 5500 for the past five years, or since the inception of the MEWA, whichever time period is shorter;

(11) a copy of the fidelity bond issued in the name of the MEWA protecting against acts of fraud and dishonesty by its trustees, directors, officers, employees, administrator, or other individuals responsible for servicing the employee welfare benefit plan, including, for MEWAs that are not bona fide associations or groups under ERISA, those individuals with access to funds held by the MEWA on behalf of separate employee welfare benefit plans established or maintained by the MEWA's employer-members. Such bond must be in an amount equal to the greater of 10% of the premiums and contributions received by the MEWA, or 10% of the benefits paid, during the preceding calendar year, with a minimum of $10,000 and a maximum of $500,000. No additional bond will be required of a third-party administrator licensed to engage in business in this state;

(12) a business plan that includes the following six major areas.

(A) Current or proposed operations must be outlined with information by the applicant identifying the number of employers in the group currently participating or proposed to participate in the MEWA. The outline must also include the number of participating units. To the extent such information is available, it also must include the number of dependents covered or to be covered by the MEWA. A specific list of the benefits being provided or proposed to be provided must also be included.

(B) Specific information about individuals providing or proposed to provide management services is required. The applicant must indicate whether each trustee is an owner, partner, officer, or director, and/or employee of a participating employer or is committed to participate in the MEWA. In addition, the applicant must provide the name and address of the employer represented by each trustee and by each officer and provide the association of the trustee or officer with such employer. The applicant must list the individuals responsible for managing or handling funds or assets of the MEWA.

(C) With respect to administration of the present or proposed plan, the applicant must give the names and qualifications of individuals or the third-party administrator responsible for or proposed to be responsible for servicing the program of the MEWA. If a third-party administrator is to service the plan, a copy of the third-party administrator's Texas license must be attached. In addition, a copy of the agreement between the MEWA and the third-party administrator must be submitted, signed by the third-party administrator and trustees or directors of the MEWA.

(D) The applicant must provide documentation that the MEWA has provided or will provide a sufficient number of competent persons to service its program in the areas of claims adjusting and underwriting. The applicant must also describe the present or proposed plan to service billings, claims, and underwriting. The criteria for underwriting must be actuarially justified.

(E) The applicant must provide a specific outline and description of the MEWA's marketing efforts. The applicant must list the names of all persons directly employed or proposed to be employed by the arrangement who solicit participants or adjust claims, indicating the qualifications and credentials of such individuals and whether such persons hold any license issued by the department. The applicant must specify any such licenses by type.

(F) The applicant must provide documentation showing that a procedure has been established for handling claims for benefits in the event of dissolution of the MEWA;

(13) subject to Insurance Code §846.157(b), concerning Renewal of Certificate; Additional Actuarial Review, an actuarial opinion prepared by an actuary who is not an employee of the MEWA, an employee of the MEWA's employer-members, an affiliate of the MEWA, or an affiliate of the MEWA's employer-members, or an employee of an affiliate of the MEWA; and who is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries, or an enrolled actuary under the Employee Retirement Income Security Act of 1974 (29 United States Code §1241 and §1242). The actuarial opinion must include the following:

(A) a description of the actuarial soundness of the MEWA, including any recommended actions that the MEWA should take to improve its actuarial soundness;

(B) the recommended amount of cash reserves the MEWA should maintain.

(i) For all MEWAs, the recommended amount may not be less than the greater of 20% of the total contributions in the preceding plan year or 20% of the total estimated contributions for the current plan year; cash reserves must be calculated with proper actuarial regard for known claims, paid and outstanding, a history of incurred but not reported claims, claims handling expenses, unearned premium, an estimate for bad debts, a trend factor, and a margin for error (cash reserves required by Insurance Code §846.154, concerning Cash Reserve Requirements, must be maintained in cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount, or such other investments as the commissioner may authorize by rule); and

(ii) For a MEWA that provides a comprehensive health benefit plan under Insurance Code §846.0035, concerning Applicability of Certain Laws to Associations Providing Health Benefits, the MEWA must also comply with Insurance Code Chapter 421, concerning Reserves in General.

(14) if the MEWA is in existence at the time of its application, annual reports meeting the substantive requirements of 29 United States Code §1023 and §1024 must be filed. To the extent that such annual reporting requirements are not otherwise met by existing MEWAs when complying with other provisions of this subchapter, a filing under this paragraph must be made, and must include, at a minimum:

(A) the administrator's report of essential information for the most recent year ending, detailing the size and nature of the plan, and the number of participating employees in the plan;

(B) the statement from any insurance company, insurance service, or other similar organization that sells or guarantees plan benefits. The statement must detail:

(i) the premium rate or subscription charge and the total of such premiums or subscription charges in relation to the approximate number of persons covered by each class of benefits; and

(ii) the total amount of premiums received, approximate number of persons covered by each class of benefits, and total claims paid by such company, service, and other organization; and

(15) documentation indicating that the MEWA has applications from not less than five employers and will provide similar benefits for not less than 200 separate participating employees, and that the annual gross premiums of or contributions to the plan will be not less than $20,000 for a vision-benefit-only plan, $75,000 for a dental-benefits-only plan, and $200,000 for all other plans;

(16) for a MEWA that is formed according to Insurance Code §846.053(b)(2), concerning Eligibility Requirements for Initial Certificate of Authority, documentation demonstrating that the employers in the MEWA applicant each have a principal place of business in the same region that does not exceed the boundaries of this state or the boundaries of a metropolitan statistical area designated by the United States Office of Management and Budget;

(17) documentation that the MEWA possesses a written commitment, binder, or policy for stop-loss insurance issued by an insurer authorized to do business in this state that provides:

(A) at least 30 days' notice to the commissioner of any cancellation or nonrenewal of coverage; and

(B) both specific and aggregate coverage with an aggregate retention of no more than 125% of the amount of expected claims for the subsequent plan year and the specific retention amount determined by the actuarial report required by Insurance Code §846.153, concerning Required Filings, and paragraph (13) of this subsection;

(18) documentation demonstrating that the MEWA is in compliance with all applicable federal and state laws, including, at a minimum, the following:

(A) for all plans sponsored by the applicant, whether operating in Texas or in any other state, a list of and access to all reports for the last five years filed with the United States Department of Labor in compliance with the Employee Retirement Income Security Act of 1974, 29 United States Code §§1021(g), 1023, and 1024;

(B) if the MEWA is an employee welfare benefit plan for purposes of the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.), either:

(i) an advisory opinion from the United States Department of Labor that is no more than three years old recognizing the employer group or association as a bona fide employer association or group if the relevant MEWA structure addressed by the advisory opinion has not changed and will not change after licensure; or

(ii) an opinion from an attorney attesting that the employer group or association as it will be structured after licensure qualifies as a bona fide employer association or group for purposes of the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.). An attorney attestation must adequately explain how and why the employer group or association meets all of the factors to be a bona fide employer association or group, based on the facts and circumstances of the employer group's or association's governance and operations during the 12 months immediately preceding submission of the application, and on how the MEWA will be structured after licensure, with explicit references to relevant language drawn from the employer group's or association's bylaws, trust agreement, or other organizational documents, which must be submitted to the department with the attorney's attestation; and

(C) for each plan that will be provided by the applicant, an opinion from an attorney attesting to the fact that the plan is in compliance with all applicable federal and state laws. The opinion must adequately explain how each plan complies with the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.) and the Patient Protection and Affordable Care Act (42 United States Code §18001 et seq.), including how each plan complies with federal requirements applicable to large group, small group, or individual markets, as applicable; and

(19) if the MEWA will provide a comprehensive health benefit plan, the MEWA must provide additional information in accordance with §7.1917 of this title, concerning Comprehensive Health Benefit Plans.

(c) On finding of good cause, the commissioner may order an actuarial review of a MEWA in addition to the actuarial opinion required by Insurance Code §846.153. The cost of any such additional actuarial review must be paid by the MEWA.

(d) Upon application of a MEWA, the commissioner may waive or reduce the requirement for aggregate stop-loss coverage and the amount of reserves required by Insurance Code §846.154, if it is determined that the interests of the participating employers and employees are adequately protected.

History

Source Note: The provisions of this §7.1904 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1905 Commissioner Review of Application; Issuance of Initial Certificate of Authority

(a) The commissioner will promptly review the documentation submitted by the applicant and may conduct any necessary investigation and examine under oath any persons interested in or connected with the multiple employer welfare arrangement (MEWA). Within 60 days of the filing of a completed application, the commissioner will issue an initial certificate of authority, which is a temporary certificate of authority for a term of one year, to the MEWA, provided that all of the following conditions have been met:

(1) the employers in the MEWA:

(A) are members of an association or group of five or more businesses that are the same trade or industry, including closely related businesses that provide support, services, or supplies primarily to that trade or industry; or

(B) for a MEWA that is formed based under Insurance Code §846.053(b)(2), concerning Eligibility Requirements for Initial Certificate of Authority, each has a principal place of business in the same region that does not exceed the boundaries of this state or the boundaries of a metropolitan statistical area designated by the United States Office of Management and Budget;

(2) if the applicant is an association, that the association in the MEWA is engaged in substantial activity for its members other than sponsorship of an employee welfare benefit plan;

(3) if the applicant is an association and Insurance Code §846.0035, concerning Applicability of Certain Laws to Association Providing Health Benefits, does not apply to the MEWA, that the association in the MEWA has been in existence for a period of not less than two years before engaging in any activities relating to the provision of employer health benefits to its members;

(4) the employee welfare plan of the association or group in the MEWA is controlled and sponsored directly by participating employers, participating employees, or both;

(5) the association or group of employers in the MEWA is a not-for-profit organization;

(6) the MEWA has within its own organization adequate facilities and competent personnel, as determined by the commissioner, to service the employee benefit plan or has contracted with a third-party administrator that holds a current certificate of authority to engage in business in the State of Texas;

(7) the MEWA has applications from not less than five employers and will provide similar benefits for not less than 200 separate participating employees, and the annual gross premiums or contributions to the plan will be not less than $20,000 for a plan that provides only vision benefits, $75,000 for a plan that provides only dental benefits, and $200,000 for all other plans;

(8) the MEWA possesses a written commitment, binder, or policy for stop-loss insurance issued by an insurer that has a certificate of authority to engage in business in the State of Texas that provides:

(A) at least 30 days' notice to the commissioner of any cancellation or nonrenewal of coverage;

(B) both specific and aggregate coverage with an aggregate retention of no more than 125% of the amount of expected claims for the next plan year and a specific retention amount annually determined by the actuarial report required by Insurance Code §846.153(a)(2), concerning Required Filings, and verified by the signature of the actuary who prepared the report; and

(C) both the specific and aggregate coverage will require all claims to be submitted within 90 days after the claim is incurred and provide a 12-month claims incurred period and a 15-month paid claims period for each policy year;

(9) the contributions must be set to fund at least 100% of the aggregate retention plus all other costs of the MEWA;

(10) if the reserves required by Insurance Code §846.154, concerning Cash Reserve Requirements, exceed the greater of 40% of the total contributions for the preceding plan year or 40% of the total contributions expected for the current plan year, the contributions may be reduced to fund less than 100% of the aggregate retention plus all other costs of the MEWA, but in no event less than the level of contributions necessary to fund the minimum reserves required under Insurance Code §846.154, and Insurance Code Chapter 421, concerning Reserves in General, for comprehensive health benefit plans;

(11) the minimum reserves required by Insurance Code §846.154, and Insurance Code Chapter 421 for comprehensive health benefit plans have been established or will be established before the final certificate of authority is issued;

(12) the MEWA has established a procedure for handling claims for benefits in the event of dissolution of the MEWA;

(13) the MEWA has obtained the required fidelity bond;

(14) the MEWA has submitted its plan document or any instrument describing the rights and obligations of the employers, employees, and beneficiaries with respect to the MEWA;

(15) the MEWA has submitted a summary plan description and has filed for review any notifications such as an identification card, policy, or contract, in connection with the employee welfare benefit plan. These notifications include any of the disclosures in the following:

(A) that individuals covered by the plan are only partially insured;

(B) that in the event the plan or the MEWA does not ultimately pay medical expenses that are eligible for payment under the plan for any reason, the participating employer or its participating employee covered by the plan may be liable for those expenses;

(C) that, if applicable, the plan does not participate in the guaranty fund; such disclosure must be provided in the same notice format required of insurers and health maintenance organizations in §1.1001 of this title (relating to Disclosure of Guaranty Fund Nonparticipation); and

(D) the toll-free telephone number and website for the department as required under Insurance Code §521.005, concerning Notice to Accompany Policy; and

(16) for a MEWA that will provide a comprehensive health benefit plan, the MEWA has submitted documentation that adequately demonstrates compliance with applicable requirements, as specified in §7.1917 of this title (relating to Comprehensive Health Benefit Plans).

(b) Unless excepted by statute, a MEWA may commence doing business in this state only after it receives its initial certificate of authority.

(c) The MEWA must appoint the commissioner of insurance as its registered agent for service of process, by filing the form as described in §7.1904(b)(4) of this title (relating to Application for Initial Certificate of Authority).

History

Source Note: The provisions of this §7.1905 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1906 Application for Final Certificate of Authority

(a) A multiple employer welfare arrangement (MEWA) that has received its initial certificate of authority must apply for a final certificate of authority no later than one year after the issuance of its initial certificate of authority. The MEWA must submit a complete application for final certificate of authority to the commissioner and may use the MEWA forms accessible on the department's website at www.tdi.texas.gov/forms as a resource to comply.

(b) The application must include only the following information:

(1) the names and addresses of:

(A) the association or group of employers sponsoring the MEWA;

(B) as applicable, the members of the board of trustees or directors of the MEWA; and

(C) at least five employers, if the arrangement is not an association, whose information will be retained by the commissioner as confidential;

(2) evidence that the fidelity bond requirements have been met;

(3) copies of all plan documents and agreements with service providers, which will be retained by the commissioner as confidential. (Indicate on what pages the specific benefits are listed);

(4) a funding report containing:

(A) a statement certified by the board of trustees or directors, as applicable, and an actuarial opinion that all applicable requirements of Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, have been met;

(B) an actuarial opinion that describes the extent to which contributions or premium rates:

(i) are not excessive;

(ii) are not unfairly discriminatory; and

(iii) are adequate to provide for the payment of all obligations and the maintenance of required cash reserves and surplus of the MEWA;

(C) a certified statement of the current value of the assets and liabilities accumulated by the MEWA (unless the application for final certificate of authority is filed 90 days or later following the close of the fiscal year for the MEWA, in which case the financial statement must be an audited statement), and a projection of the assets, liabilities, income, and expenses of the MEWA for the next 12-month period and that reflects that the MEWA has maintained adequate cash reserves; and

(D) a statement of the costs of coverage to be charged, including an itemization of amounts for administration, reserves, and other expenses associated with operation of the MEWA; and

(5) a notarized statement signed by an authorized director, officer, or trustee that affirms the following: "I know of no reason under the provisions of the Texas Insurance Code why {MEWA Name} is not entitled to a final certificate of authority."

(c) After examination, investigation, and determination that all the requirements of Insurance Code Chapter 846, other applicable Insurance Code provisions, and this subchapter have been met, the commissioner will issue a final certificate of authority to the MEWA.

History

Source Note: The provisions of this §7.1906 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1907 Denial of Final Certificate of Authority and Extension of Initial Certificate of Authority

(a) If the commissioner refuses to grant a final certificate of authority to an applicant that fails to meet the requirements of §7.1906 of this title (relating to Application for Final Certificate of Authority), notice of refusal will be in writing. Such notice will set forth the basis for the refusal, and constitutes 30 days' advance notice of revocation of the initial certificate of authority.

(b) If the applicant submits a written request for a hearing within 30 days after the notice of refusal to grant a final certificate of authority is sent, revocation of the initial certificate of authority will be temporarily stayed. The commissioner will promptly conduct a hearing in which the applicant will be given an opportunity to show compliance with the requirements of this subchapter.

(c) The term of the multiple employer welfare arrangement's (MEWA's) initial certificate of authority does not expire during the department's review of a timely filed application for a final certificate of authority.

(d) If a timely filed application is not complete, the MEWA must timely respond to a notice of deficiency from the department. If a MEWA fails to timely respond to a notice of deficiency, the MEWA's initial certificate of authority expires five days after the date the response was due or on the one-year anniversary of the date that the MEWA's initial certificate of authority was issued, whichever occurs later.

(e) A response to a notice of deficiency is timely if the response provides all information requested by the department and is made in writing:

(1) not later than the 15th day after the date the notice of deficiency is received;

(2) not later than the 25th day if the department receives written notice from the MEWA that additional time is required to respond to the inquiry; or

(3) within a reasonable time period as agreed to by the department based on the MEWA's circumstances.

(f) Before the end of the one-year term of its initial certificate of authority, a MEWA may request an extension of its initial certificate of authority. The request must be in writing and must explain in detail the basis for an extension. The initial certificate of authority may be extended for up to one year at the discretion of the commissioner on a determination that the MEWA is likely to meet the requirements of this subchapter within the granted extension period. No more than one extension of the initial certificate of authority will be granted, regardless of the length of time for which an extension was granted under this subsection.

History

Source Note: The provisions of this §7.1907 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1908 Required Filing Fees

The commissioner will collect, and the applicant affected must pay to the commissioner, the following fees:

(1) filing fee for filing an application for the initial certificate of authority--$5,000;

(2) filing fee for final certificate of authority--$1,500;

(3) filing fee for appointment of commissioner of insurance as the attorney for service of process--$50; and

(4) annual filing fee for filing audited financial statement and actuarial opinion--$0.

History

Source Note: The provisions of this §7.1908 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1909 Benefits Allowed To Be Provided by Multiple Employer Welfare Arrangements

(a) A multiple employer welfare arrangement (MEWA) licensed under Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, and this subchapter will be limited to providing any one or more of the benefits described as follows:

(1) medical, dental, vision, surgical, or hospital care;

(2) benefits in the event of sickness, accident, disability, or death; and

(3) any other benefit authorized for health insurers in this state.

(b) A MEWA may only provide benefits to active or retired owners, officers, directors, or employees of or partners in participating employers, or the beneficiaries of such persons, except as may otherwise be limited by provisions of the Employer Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.).

History

Source Note: The provisions of this §7.1909 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective April 26, 2021, 46 TexReg 2823; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1910 Required Notice to Participants

(a) In addition to any other notices required by law, a multiple employer welfare arrangement (MEWA), in connection with an employee welfare benefit plan, must provide to each participating employee or former employee covered by the plan a written notice at the time the coverage of such participating employee or former employee becomes effective. The written notice must contain, at a minimum, the following:

(1) that individuals covered by the plan are only partially insured;

(2) that in the event the plan or the MEWA does not ultimately pay medical expenses that are eligible for payment under the plan for any reason, the participating employer or its participating employee covered by the plan may be liable for those expenses;

(3) that, if applicable, the plan does not participate in the guaranty fund; such disclosure must be provided in the same notice format required of insurers and health maintenance organizations in §1.1001 of this title (relating to Disclosure of Guaranty Fund Nonparticipation);

(4) the toll-free telephone number and website for the department as required under Insurance Code §521.005, concerning Notice to Accompany Policy; and

(5) that a copy of the summary plan description may be obtained from the plan administrator, employer, or trustee, as applicable.

(b) The notice must also briefly explain the types of information in the summary plan description.

History

Source Note: The provisions of this §7.1910 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1911 Name Eligibility and Proof of Existence

(a) A multiple employer welfare arrangement (MEWA) licensed under this subchapter may not take any name that is the same as or closely resembles the name of another MEWA possessing a certificate of authority and doing business in this state. A MEWA must complete a name application form, as described in §7.1904(b)(1) of this title (relating to Application for Initial Certificate of Authority), to transact business under its own name and may not adopt any assumed name, except that a MEWA by amending its articles may change its name or take a new name with the approval of the commissioner.

(b) Whenever it is necessary in any legal proceeding to prove the existence of a MEWA, a certified copy of the MEWA's certificate of authority is prima facie evidence of the existence of the MEWA.

History

Source Note: The provisions of this §7.1911 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1912 Filings by Multiple Employer Welfare Arrangements; Report of Cash Reserves; Approval by Commissioner; Additional Actuarial Review

(a) Each multiple employer welfare arrangement (MEWA) transacting business in this state must file annually with the commissioner statements and reports described as follows:

(1) within 90 days of the end of the MEWA's fiscal year, financial statements audited by a certified public accountant; and

(2) within 90 days of the end of the MEWA's fiscal year, an actuarial opinion prepared and certified by an actuary who is not an employee of the MEWA, an employee of the MEWA's employer-members, an affiliate of the MEWA, or an affiliate of the MEWA's employer-member, or an employee of an affiliate of the MEWA; and who is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries, or an enrolled actuary under the Employee Retirement Income Security Act of 1974 (29 United States Code §1241 and §1242). The actuarial opinion must include:

(A) a description of the actuarial soundness of the MEWA, including any recommended actions that the MEWA should take to improve its actuarial soundness;

(B) the recommended amount of cash reserves the MEWA should maintain, as follows:

(i) for all MEWAs, the recommended amount may not be less than the greater of 20% of the total contributions in the preceding plan year or 20% of the total estimated contributions for the current plan year; and

(ii) for a MEWA that provides a comprehensive health benefit plan under Insurance Code §846.0035, concerning Applicability of Certain Laws to Associations Providing Health Benefits, the MEWA must also comply with Insurance Code Chapter 421, concerning Reserves in General;

(C) a calculation of cash reserves with proper actuarial regard for known claims, paid and outstanding, a history of incurred by not reported claims, claims handling expenses, unearned premium, an estimate for bad debts, a trend factor, and a margin for error; and

(D) the recommended level of specific and aggregate stop-loss insurance the MEWA should maintain.

(b) The cash reserves required by Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, and this subchapter must be maintained in cash or federally guaranteed obligations of less than five-year maturity that have a fixed or recoverable principal amount or such other investments as the commissioner has authorized by rule.

(c) The commissioner will review the statements and reports required by subsection (a) of this section. The commissioner will automatically renew a MEWA's certificate of authority unless the commissioner finds that the MEWA does not meet the requirements of Insurance Code Chapter 846, and this subchapter.

(d) On a finding of good cause, the commissioner may order an actuarial review of a MEWA in addition to the actuarial opinion required by Insurance Code §846.153(a)(2), concerning Required Filings. The cost of any such additional actuarial review must be paid by the MEWA.

(e) A MEWA must file updated information within 30 days when a material change occurs to information provided in the application for an initial or final certificate of authority according to the requirements of Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, and this subchapter.

History

Source Note: The provisions of this §7.1912 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1913 Examination of Multiple Employer Welfare Arrangements

(a) The commissioner or any person appointed by the commissioner will have the power to examine the affairs and conduct of any multiple employer welfare arrangement (MEWA) and for such purposes will have free access to all the books, records, and documents that relate to the business of the plan and may examine under oath its trustees or directors, officers, agents, and employees in relation to the affairs, transactions, and condition of the MEWA. Examinations of a MEWA will be made in the same manner and with the same frequency that applies to domestic and foreign insurers licensed to transact the business of insurance in this state, including as provided in Insurance Code §1301.0056, concerning Examinations and Fees, for a MEWA that provides a comprehensive health benefit plan that is determined by the commissioner to be structured in the manner of a preferred provider benefit plan or an exclusive provider benefit plan as defined in Insurance Code §1301.001, concerning Preferred Provider Benefit Plans.

(b) Expenses of examination must be paid by each MEWA in the same manner and to the same extent as is provided for domestic insurance companies in Insurance Code §§401.151, concerning Expenses of Examination of Domestic Insurer; 401.152, concerning Expenses of Examination of Other Insurers; 401.155, concerning Additional Assessments; 401.156, concerning Deposit and Use of Assessment and Fee; and 1301.0056.

History

Source Note: The provisions of this §7.1913 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1914 Duties and Compensation of Trustees, Officers, or Directors

(a) The trustees or directors of a multiple employer welfare arrangement (MEWA) must give the attention and exercise the vigilance, diligence, care, and skill that prudent persons use in like or similar circumstances. Trustees or directors are responsible for all operations of the MEWA and must take all necessary precautions to safeguard the assets of the MEWA.

(b) The board of trustees or directors must select such officers as designated in the articles or bylaws or trust agreement and may appoint agents as deemed necessary for the transaction of the business of the MEWA. All officers and agents may exercise the authority and perform the duties required in the management of the property and affairs of the MEWA as may be delegated by the board of trustees or directors. Any officer or agent may be removed by the board of trustees or directors whenever, in their judgment, the business interests of the MEWA will be served by the removal. The board of trustees or directors must secure the fidelity of any or all such officers or agents who handle the funds of the MEWA by bond or otherwise.

(c) Trustees or directors must serve without compensation from the MEWA except for actual and necessary expenses. A MEWA may not pay any salary, compensation, or emolument to any officer of the MEWA unless the payment is first authorized by a majority vote of the board of trustees or directors of the MEWA.

(d) An officer, employee, or agent of a MEWA may not be compensated unreasonably. The compensation of any officer or employee of a MEWA may not be calculated directly or indirectly as a percentage of money or premium collected. The compensation of any agent may not exceed 5.0% of the money or premium collected.

History

Source Note: The provisions of this §7.1914 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1915 Suspension, Revocation, or Limitation of Certificate of Authority and Other Remedies

In addition to any requirements or remedies set out in Insurance Code §846.003, concerning Limited Exemption from Insurance Laws; Applicability of Certain Laws, the commissioner may suspend, revoke, or limit the certificate of authority of a multiple employer welfare arrangement (MEWA) if the commissioner finds, after notice and hearing, that the MEWA does not meet the requirements of Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, and this subchapter.

History

Source Note: The provisions of this §7.1915 adopted to be effective May 27, 1994, 19 TexReg 3686; amended to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1916 Election for the Application of Certain Laws

(a) A multiple employer welfare arrangement (MEWA) that was issued a certificate of authority under Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements, before January 1, 2024, may elect to be subject to certain Insurance Code provisions under Insurance Code §846.0035, concerning Applicability of Certain Laws to Association Providing Health Benefits.

(b) A MEWA that makes an election under this section is bound to the provisions enumerated in Insurance Code §846.0035.

(c) To make an election, the MEWA must submit to the department a statement that is substantially similar to the following that is signed and dated by an authorized officer or trustee: "{MEWA name} hereby makes an election under Texas Insurance Code §846.0035 to be subject to additional Texas Insurance Code provisions." The MEWA may use the MEWA forms accessible on the department's website at www.tdi.texas.gov/forms as a resource to comply.

(d) In addition to the statement required in subsection (c) of this section, the MEWA must submit the following:

(1) documentation demonstrating that the MEWA is in compliance with all applicable federal and state laws, including, at a minimum, the following:

(A) for all plans sponsored by the MEWA, whether operating in Texas or in any other state, a list of and access to all reports for the last five years filed with the United States Department of Labor in compliance with the Employee Retirement Income Security Act of 1974, 29 United States Code §§1021(g), 1023, and 1024;

(B) a copy of its Federal Form 5500 for the past five years, or since the inception of the MEWA, whichever time period is shorter;

(C) if the MEWA is and will continue to be an employee welfare benefit plan for purposes of the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.), either:

(i) an advisory opinion from the U.S. Department of Labor that is no more than three years old recognizing the employer group or association as a bona fide employer association or group if the relevant MEWA structure addressed by the opinion has not changed and will not change after the election under this section; or

(ii) an opinion from an attorney attesting to the fact that the employer group or association as it will be structured after the election under this section qualifies as a bona fide employer association or group for purposes of the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.). An attorney attestation must adequately explain how and why the employer group or association meets all of the factors to be a bona fide employer association or group, based on the facts and circumstances of the employer group's or association's governance and operations during the 12 months immediately preceding submission of the election under this section, and on how the MEWA will be structured after the election under this section, with explicit references to relevant language drawn from the employer group's or association's bylaws, trust agreement, or other organizational documents, which must be submitted to the department with the attorney's attestation; and

(D) for each plan that will be provided by the MEWA, an opinion from an attorney attesting to the fact that the plan is in compliance with all applicable federal and state laws. The opinion must adequately explain how each plan complies with the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.) and the Patient Protection and Affordable Care Act (42 United States Code §18001 et seq.), including how each plan complies with federal requirements applicable to large group, small group, or individual markets, as applicable; and

(2) if the MEWA will provide a comprehensive health benefit plan, the MEWA must also comply with §7.1917 of this title (relating to Comprehensive Health Benefit Plans).

History

Source Note: The provisions of this §7.1916 adopted to be effective November 6, 2024, 49 TexReg 8721.

28 Tex. Admin. Code § 7.1917 Comprehensive Health Benefit Plans

(a) This section applies only to a multiple employer welfare arrangement (MEWA) that offers or seeks to offer a comprehensive health benefit plan and that:

(1) was issued an initial certificate of authority under §846.054, concerning Issuance of Initial Certificate of Authority, on or after January 1, 2024; or

(2) elects to be bound by Insurance Code §846.0035, concerning Applicability of Certain Laws to Association Providing Health Benefits, under §7.1916 of this title (relating to Election for the Application of Certain Laws).

(b) The MEWA must submit a form signed and dated by an authorized officer or trustee to the department that includes the following:

(1) a statement that is substantially similar to the following: "This document is being submitted in accordance with 28 Texas Administrative Code §7.1917. {MEWA Name} will provide a comprehensive health benefit plan as defined by 28 Texas Administrative Code §7.1902"; and

(2) if the comprehensive health benefit plan is not structured as a preferred provider benefit plan or an exclusive provider benefit plan as defined in Insurance Code §1301.001, concerning Definitions, a description of the health care provider and benefit structure of the plan and an explanation of how it does not qualify as a preferred provider benefit plan or an exclusive provider benefit plan.

(1) a detailed compliance plan addressing the following requirements:

(A) Insurance Code Chapter 421, concerning Reserves in General;

(B) Insurance Code Chapter 422, concerning Asset Protection Act;

(C) Insurance Code Chapter 1451, Subchapter C, concerning Selection of Practitioners; Subchapter F, concerning Access to Obstetrical or Gynecological Care; and Subchapter K, concerning Health Care Provider Directories; and

(D) Insurance Code Chapter 4201, concerning Utilization Review Agents;

(2) if the MEWA provides a comprehensive health benefit plan that is structured in the manner of a preferred provider benefit plan or an exclusive provider benefit plan as defined in Insurance Code §1301.001, concerning Definitions, a detailed compliance plan addressing the following requirements:

(A) Insurance Code Chapter 1301, concerning Preferred Provider Plans; and

(B) Insurance Code Chapter 1467, concerning Out-of-Network Claim Dispute Resolution; and

(3) for each comprehensive health benefit plan that will be sponsored by the MEWA, an opinion from an attorney attesting to the fact that the plan is in compliance with all applicable federal and state laws. The opinion must adequately explain how each plan complies with the Employee Retirement Income Security Act of 1974 (29 United States Code §1001 et seq.) and the Patient Protection and Affordable Care Act (42 United States Code §18001 et seq.), including how each plan complies with federal requirements applicable to large group, small group, or individual markets, as applicable.

(d) A MEWA may use the MEWA forms accessible on the department's website at www.tdi.texas.gov/forms as a resource to comply with the requirements in subsections (b) and (c) of this section.

History

Source Note: The provisions of this §7.1917 adopted to be effective November 6, 2024, 49 TexReg 8721.

Subchapter T PERMISSIBLE PAYMENTS TO INSURERS, AGENTS AND SPONSORING ORGANIZATIONS

28 Tex. Admin. Code § 7.2001 Solicitation of Voluntary Contributions by Sponsoring Organizations

Sponsoring organizations governed by Insurance Code, Article 21.35-B, may solicit voluntary contributions with a membership renewal solicitation when the membership renewal solicitation is separate from an insurance billing.

History

Source Note: The provisions of this §7.2001 adopted to be effective January 23, 1995, 20 TexReg 67.

Chapter 8 HAZARDOUS CONDITION

Subchapter A HAZARDOUS CONDITIONS AND REMEDY OF HAZARDOUS CONDITIONS

28 Tex. Admin. Code § 8.1 Authority, Scope, and Purpose

This subchapter of the rules and regulations of the State Board of Insurance is promulgated and adopted pursuant to the authority provided in the Insurance Code, Articles 1.32, 3.55-1, and 21.28-A. The sections in this subchapter apply to any person, organization, association, or company (authorized or unauthorized, admitted or nonadmitted) acting as an insurer, or as principal or agent of an insurer, including stock companies, reciprocals or interinsurance exchanges, Lloyd's associations, fraternal benefit societies, stipulated premium companies, title insurance companies, and mutual companies of all kinds, including statewide mutual assessment corporations, local mutual aid associations, burial associations, county mutual insurance companies, and farm mutual insurance companies. The purpose of these rules and regulations is to enumerate conditions which may indicate an insurer is in hazardous condition and which may be a basis for the commissioner of insurance to initiate an action against an insurer under the Insurance Code, Articles 1.32, 3.55-1. or 21.28-A. In evaluating any of these conditions, all circumstances concerning the insurer's operation must be evaluated in making an ultimate conclusion that an insurer is in hazardous condition. The evaluation of the information relating to these conditions is part of the examination process. The conditions enumerated in this subchapter do not conclusively indicate that an insurance company is in hazardous conditions. One or more of the conditions can exist in an insurance company which is in satisfactory condition; however, one or more of these conditions has often been found in an insurance company which was unable to perform its obligations to policyholders, claimants, creditors, or shareholders, or has required the commissioner of insurance to initiate regulatory action to protect policyholders, claimants, creditors, and shareholders.

History

Source Note: The provisions of this §8.1 adopted to be effective December 27, 1989, 14 TexReg 6550.

28 Tex. Admin. Code § 8.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Agency--Commissioner of insurance and all divisions, departments, and employees of the commissioner of insurance or of the State Board of Insurance.

(2) Insurer--Any person, organization, association, or company (authorized or unauthorized, admitted or nonadmitted) acting as an insurer, or as principal or agent of an insurer, including stock companies, reciprocals or interinsurance exchanges, Lloyds associations, fraternal benefit societies, stipulated premium companies, title insurance companies, and mutual companies of all kinds, including statewide mutual assessment corporations, local mutual aid associations, burial associations, county mutual insurance companies, and farm mutual insurance companies.

(3) Surplus--The remainder of statutorily admitted assets less statutorily required liabilities. The term also includes mortuary fund and expense fund combined of statewide mutual assessment companies, burial associations, and mutual aid associations.

History

Source Note: The provisions of this §8.2 adopted to be effective December 27, 1989, 14 TexReg 6550.

28 Tex. Admin. Code § 8.3 Hazardous Conditions and Remedy of Hazardous Conditions

(a) An insurer may be found to be in hazardous condition when one or more of the following conditions are found to exist by the commissioner:

(1) an insurer does not file a financial statement within the time required by the Insurance Code, or as requested by the agency;

(2) an insurer files financial information which is false or misleading; releases false or misleading financial information to lending institutions or the general public; or makes a false or misleading entry or omits an entry of material amount in the insurer's books;

(3) an insurer fails to respond to inquiries related to the condition of the insurer or furnishes false and misleading information concerning an inquiry;

(4) an insurer does not amend its financial statement when requested by the agency;

(5) an insurer overstates its surplus by 25 percent or more;

(6) an insurer's unassigned surplus has a deficit which is in excess of 20 percent of surplus;

(7) an insurer's financial ratios are outside the acceptable ranges as established by the National Association of Insurance Commissioners or the insurer's financial condition is otherwise hazardous as identified in the financial analysis tools and reports of the National Association of Insurance Commissioners;

(8) adverse findings are reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports, or summaries of an insurer;

(9) the net reduction (excluding net income and change in paid-in capital and change in paid-in or contributed surplus) to the insurer's surplus is greater than 25 percent of beginning surplus on the insurer's annual financial statements;

(10) an insurer's operating loss in the last 12-month period or any shorter period of time, including net capital gain or loss, change in non-admitted assets and cash dividends paid to shareholders, is greater than 50 percent of the insurer's remaining surplus in excess of the minimum required;

(11) an insurer's operating loss in the last 12-month period or any shorter period of time, excluding net capital gains, is greater than 20 percent of the insurer's remaining surplus in excess of the minimum required;

(12) a projection by the agency of an insurer's current financial condition indicates that the sum of its paid-in capital, paid-in surplus, and contributed surplus will be reduced within the next 12 months;

(13) an insurer has grown so rapidly and to such an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(14) an insurer has experienced, or will experience in the foreseeable future, cash flow or liquidity problems;

(15) an insurer's aggregate net retained risk, direct or assumed, under any one insurance policy or certificate of insurance under a group policy, is more than 10 percent of the insurer's surplus, except where otherwise permitted by law;

(16) contingent liabilities, pledges, or guaranties which, either individually or collectively, involve a total amount which, in the opinion of the commissioner, may affect the solvency of the insurer;

(17) an insurer has not made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts;

(18) management establishes reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles and standards of practice, or persistently engages in material under-reserving that results in adverse development;

(19) an insurer's reserves for losses and loss adjustment expenses are discounted more than 10 percent of surplus without the commissioner's prior written approval;

(20) an insurer has reinsurance reserve credits, recoverables, or receivables which are disputed by the reinsurer, or are due and payable and remain unpaid, and such reinsurance credits, recoverables, and receivables are more than 10 percent of an insurer's surplus; or a reinsurer does not have the ability to perform and the insurer's reinsurance program does not provide sufficient protection for the insurer's remaining surplus, after taking into account the insurer's cash flow, the classes of business written, and the financial condition of the reinsurer; or the reinsurer is insolvent or threatened with insolvency or delinquent in payment of its monetary or other obligations and which, in the opinion of the commissioner, may affect the solvency of the insurer;

(21) in the opinion of the commissioner, the age and collectability of the insurer's receivables may affect the solvency of the insurer;

(22) any entity within the insurer's insurance holding company system is unable to pay its obligations as they become due and payable, is insolvent, threatened with insolvency, or delinquent in payment of its monetary or other obligations and which, in the opinion of the commissioner, may affect the solvency of the insurer;

(23) an entity conducting business with the insurer is delinquent in the transmitting or payment of net premiums to the insurer;

(24) a life, accident, and health insurer has premium writings which result in surplus being less than 5 percent of the aggregate general account reserves for the life insurance in force plus 25 percent of the net annualized accident and health premium writings;

(25) a property and casualty insurer has net premium writings which, if annualized, would be an amount more than 300 percent of surplus;

(26) an insurer consistently issues subordinate premium or surplus debentures to finance its operations;

(27) an insurer does not maintain books and records sufficient to permit examiners to determine the financial condition of the insurer, examples of which include, but are not limited to:

(A) books and records of a domestic insurer maintained outside the state of Texas in violation of the Insurance Code Chapter 803;

(B) person(s) responsible for generating or maintaining books of original entry for a domestic insurer are officed outside the state of Texas; or

(C) an insurer moves, or maintains, the location of the books and records necessary to conduct an examination without notifying the agency of such location;

(28) an insurer has reinsurance agreements affecting 20 percent or more of the insurer's gross written premiums, direct or assumed, and the assuming insurers are not licensed to do insurance business in the state of Texas;

(29) an insurer has reinsurance credits taken or assets claimed on which there is not complete evidence of reinsurance agreements with insurers, signed by the reinsurer, and which are more than 10 percent of surplus;

(30) an insurer has transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains that do not provide sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature, or which require all surplus funds which are in excess of an insurer's statutory minimum capital and surplus, or equivalent, to be distributed;

(31) an insurer's management, including officers, directors, or any other person who directly or indirectly controls the operation of an insurer, does not have the experience, competence, fitness, reputation, or trustworthiness to operate the insurer in a safe and sound manner;

(32) an insurer's management engages in unlawful transactions, including, but not limited to, failing to meet financial and holding company filing requirements, in the absence of a reason satisfactory to the commissioner;

(33) an insurer or an affiliate does not comply with the terms of an agreement entered into between the insurer and affiliate;

(34) the administration of an insurer's business is delegated to a person who, directly or indirectly, produces more than 25 percent of the insurer's gross written premiums, or an insurer delegates an insurance function necessary to the insurer's survival without adequate controls or which creates a conflict of interest;

(35) one person, other than a full time, salaried employee, controls production of more than 10 percent of the gross written premiums of an insurer;

(36) an insurer has a pattern of not settling valid claims within a reasonable time after due proofs of loss have been received;

(37) an insurer does not follow a policy on rating and underwriting standards appropriate to the risk;

(38) an insurer violates the Insurance Code Chapters 422 and 423;

(39) a final administrative or judicial order, initiated by an insurance regulatory agency of another state, is issued against an insurer;

(40) an insurer is in any condition that the commissioner of insurance finds to present a hazard to policyholders, creditors, or the general public.

(b) For purposes of making a determination of an insurer's financial condition under this section, the commissioner may take action, including:

(1) disregard any credit or amount receivable resulting from transactions with a reinsurer that is insolvent, impaired, or otherwise subject to a delinquency proceeding;

(2) make appropriate adjustments, including disallowance to asset values attributable to investments or transactions consistent with the NAIC Accounting Policies and Procedures Manual, state laws and regulations;

(3) refuse to recognize the stated value of accounts receivable if the ability to collect receivables is highly speculative in view of the age of the account or the financial condition of the debtor; or

(4) increase the insurer's liability in an amount equal to any contingent liability, pledge, or guarantee not otherwise included if there is a substantial risk that the insurer will be called on to meet the obligation undertaken within the next 12-month period.

(c) If the commissioner determines that the continued operation of the insurer licensed to transact business in this state may be hazardous to its policyholders, creditors, or the general public, then the commissioner may take any action the commissioner considers reasonably necessary to remedy the hazardous condition, including, but not limited to, those actions set forth in Insurance Code §404.003(c) and the following additional actions:

(1) require the insurer to reduce, suspend, or limit the volume of business being renewed;

(2) suspend or limit the declaration and payment of dividends by an insurer to its stockholders or to its policyholders;

(3) require the insurer to file reports, in a form acceptable to the commissioner, concerning the market value of an insurer's assets;

(4) require the insurer to limit or withdraw from certain investments or discontinue certain investment practices, to the extent the commissioner deems necessary;

(5) require the insurer to file, in addition to regular annual statements, interim financial reports on the form adopted by the National Association of Insurance Commissioners, or in a format acceptable to the commissioner;

(6) require the insurer to provide a business plan to the commissioner, in order to continue to transact business in this state;

(7) adjust rates for any non-life insurance product written by the insurer that the commissioner considers necessary to improve the financial condition of the insurer, notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustment;

(8) document the adequacy of premium rates in relation to the risks insured; and

(9) correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the commissioner.

History

Source Note: The provisions of this §8.3 adopted to be effective December 27, 1989, 14 TexReg 6550; amended to be effective September 19, 2012, 37 TexReg 7296.

28 Tex. Admin. Code § 8.4 Hazardous Conditions Related to Negotiated Deductible Workers' Compensation Policies

(a) This section applies to insurers that offer negotiated deductible workers' compensation policies in Texas and is to be followed in conjunction with The Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers' Compensation and Employers' Liability Insurance. This section, along with conditions set out in §8.3 of this chapter relating to hazardous conditions, sets forth the various conditions that the Department will consider to determine whether an insurer issuing workers' compensation policies with a negotiated deductible is in a hazardous financial condition. The existence of one or more of the following conditions does not necessarily mean that an insurer issuing workers' compensation policies with a negotiated deductible is in hazardous financial condition. When one or more of the conditions are found to exist, they will be considered in the context of the state of affairs of an insurer. If the Department determines that the insurer is in a condition hazardous to policyholders, creditors, and the general public, it will initiate appropriate regulatory action.

(b) The insurer remains liable for all valid claims even if it appears that the insurer will ultimately not be reimbursed as provided in the workers' compensation policy with a negotiated deductible as referenced in Rule XIX - Deductible Programs of The Texas Basic Manual of Rules, Classifications and Experience Rating Plan for Workers Compensation and Employers' Liability Insurance.

(c) In order to mitigate the risk of being in a potentially hazardous financial condition, this section addresses the insurer's maintenance of the fund of money over and above surplus and premiums to serve as security to protect the workers and the insurer in the event of a policyholder failure to reimburse the insurer for losses. This security shall be used to secure the policyholder's reimbursement of the negotiated deductible amount owed to the insurer.

(d) The following words and terms used in this section shall have the following meanings unless the context clearly indicates otherwise:

(1) Department--Texas Department of Insurance.

(2) Workers' compensation policy with a negotiated deductible--A policy in which the insurer assumes full liability for the statutory obligation of the employer policyholder within the scope of workers' compensation coverage while the policyholder assumes a contractual obligation to the insurer to reimburse the insurer for claims paid up to the deductible amount under Insurance Code Article 5.55C.

(3) First dollar losses--Total losses before applying the negotiated deductible.

(4) Gross premium--Premium calculated before factoring in the negotiated deductible.

(e) An insurer who writes a workers' compensation policy with a negotiated deductible may be found to be in hazardous condition when one or more of the conditions described in paragraphs (1) - (10) of this subsection are found to exist by the Department:

(1) the insurer fails to produce a written report with conclusions that is signed by an authorized insurer representative that is derived from a credit analysis performed as a part of the insurer's initial underwriting function and thereafter annually to determine the policyholder's ability to pay the obligations under the policy;

(2) the insurer fails to perform a quarterly review of the sufficiency of the security maintained by the insurer to secure the policyholder's obligations to reimburse the insurer for claims paid and credit taken against reserves for each policy up to the negotiated deductible amount;

(3) the insurer issues a workers' compensation policy that contains a negotiated deductible that does not state a specific dollar amount;

(4) the insurer issues a per accident negotiated deductible policy and fails to include an actuarially supported calculation of the total amounts owed by the policyholder and credit taken against reserves for all amounts through ultimate loss development;

(5) from the inception of the policy through ultimate loss development, the insurer fails to maintain security for 100% of claims paid and credit taken against reserves for each policy;

(6) the insurer fails to maintain security for any asset or credit taken against reserves in the following forms:

(A) cash;

(B) securities readily marketable over a national exchange with maturity date of not later than one year, listed by the Securities Valuation Office of the National Association of Insurance Commissioners, and qualifying as admitted assets; or

(C) clean, irrevocable, unconditional letters of credit, issued or confirmed by a qualified United States financial institution, as defined in Insurance Code Article 5.75-1. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; provided however, that a letter of credit must be replaced within three months after the date of the institution's failure to meet applicable standards of issuer acceptability;

(7) the insurer fails to provide to the policyholder documentation separate from the workers' compensation policy explaining the financial responsibility of both the insurer's obligation to pay all claims and the policyholder's obligation to reimburse the insurer for any negotiated deductible amounts paid by the insurer;

(8) the insurer fails to maintain or produce upon the Department's request, gross premium data and first-dollar loss data for each workers' compensation policy with a negotiated deductible on a quarterly basis in accordance with, or in a substantially similar format as, the Texas Negotiated Deductible Workers' Compensation Form. Information provided by insurers in accordance with the Texas Negotiated Deductible Workers' Compensation Form is considered confidential under Insurance Code Article 1.15B and is not subject to disclosure under the Texas Public Information Act. The Texas Negotiated Deductible Workers' Compensation Form, herein adopted by reference, is available from the Department at: Financial Analysis and Examinations, Mail Code 303-1A, P.O. Box 149099, Austin, Texas 78714-9099;

(9) the insurer's assets or credits taken against the loss reserves in the financial statements are greater than the deductible amounts that are probable and expected to be recovered; or

(10) the administration or adjustment of claims is performed by a person or entity that is not licensed by the Department in accordance with §65.10(1)(I) and (M) of this title (relating to Actions by Carrier, Claimant's Attorney, or Agent).

History

Source Note: The provisions of this §8.4 adopted to be effective January 30, 2005, 30 TexReg 401.

Chapter 9 TITLE INSURANCE

Subchapter A BASIC MANUAL OF RULES, RATES, AND FORMS FOR THE WRITING OF TITLE INSURANCE IN THE STATE OF TEXAS

28 Tex. Admin. Code § 9.1 Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas

The Texas Department of Insurance adopts by reference the Basic Manual of Rules, Rates, and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual) as amended, effective March 1, 2026. The Basic Manual is available on the TDI website at www.tdi.texas.gov.

History

Source Note: The provisions of this §9.1 adopted to be effective January 1, 1976; amended to be effective June 20, 1977, 2 TexReg 2203; amended to be effective May 25, 1978, 3 TexReg 1709; amended to be effective July 2, 1979, 4 TexReg 2196; amended to be effective July 1, 1980, 5 TexReg 1378; amended to be effective January 20, 1981, 6 TexReg 54; amended to be effective February 24, 1981, 6 TexReg 615; amended to be effective April 21, 1981, 6 TexReg 1284; amended to be effective May 1, 1982, 7 TexReg 1567; amended to be effective October 1, 1982, 7 TexReg 3328; amended to be effective January 3, 1983, 7 TexReg 4462; amended to be effective March 1, 1983, 8 TexReg 520; amended to be effective January 1, 1984, 8 TexReg 5280; amended to be effective March 1, 1984, 9 TexReg 906; amended to be effective October 1, 1984, 9 TexReg 4826; amended to be effective March 1, 1985, 10 TexReg 335; amended to be effective March 1, 1986, 11 TexReg 853; amended to be effective May 1, 1987, 12 TexReg 1177; amended to be effective August 1, 1988, 13 TexReg 3578; amended to be effective March 3, 1989, 14 TexReg 899; amended to be effective September 6, 1989, 14 TexReg 4243; amended to be effective March 14, 1990, 15 TexReg 1151; amended to be effective November 15, 1990, 15 TexReg 6244; amended to be effective May 21, 1991, 16 TexReg 2535; amended to be effective October 30, 1992, 17 TexReg 7232; amended to be effective May 27, 1994, 19 TexReg 3695; amended to be effective August 1, 1995, 20 TexReg 5246; amended to be effective April 23, 1996, 21 TexReg 3190; amended to be effective October 1, 1997, 22 TexReg 9001; amended to be effective January 12, 1998, 23 TexReg 350; amended to be effective October 1, 1998, 23 TexReg 8834; amended to be effective October 28, 1999, 24 TexReg 9291; amended to be effective June 5, 2000, 25 TexReg 5350; amended to be effective April 4, 2002, 27 TexReg 2499; amended to be effective April 1, 2004, 29 TexReg 1664; amended to be effective November 1, 2004, 29 TexReg 9196; amended to be effective November 1, 2005, 30 TexReg 6929; amended to be effective January 20, 2006, 31 TexReg 290; amended to be effective April 2, 2008, 33 TexReg 2696; amended to be effective December 6, 2009, 34 TexReg 8731; amended to be effective January 3, 2014, 38 TexReg 7440; amended to be effective June 10, 2018, 43 TexReg 3595; amended to be effective March 7, 2019, 43 TexReg 8437; amended to be effective February 1, 2021, 46 TxReg 826; amended to be effective November 1, 2024, 49 TexReg 8394; amended to be effective May 7, 2026, 51 TexReg 2954.

28 Tex. Admin. Code § 9.2 Texas Disclosure

The Texas Department of Insurance adopts by reference Form T-64 and Procedural Rule P-73 as part of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas as amended, effective August 1, 2015. The documents are available from the Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. The documents are also available on the TDI website at www.tdi.texas.gov.

History

Source Note: The provisions of this §9.2 adopted to be effective August 1, 2015, 40 TexReg 4691.

Subchapter C TEXAS TITLE INSURANCE STATISTICAL PLAN

28 Tex. Admin. Code § 9.401 Texas Title Insurance Statistical Plan

The Texas Department of Insurance adopts by reference the rules in the Texas Title Insurance Statistical Plan as amended effective January 1, 2025. This document is published by and is available from the Texas Department of Insurance, MC: PC-ACT, P.O. Box 12030, Austin, Texas 78711-2030. This document is also available on the TDI website at www.tdi.texas.gov.

History

Source Note: The provisions of this §9.401 adopted to be effective July 1, 1978, 3 TexReg 2011; amended to be effective December 4, 1980, 5 TexReg 4737; amended to be effective September 2, 1985, 10 TexReg 3177; amended to be effective January 23, 1990, 15 TexReg 117; amended to be effective December 9, 1991, 16 TexReg 6752; amended to be effective April 4, 2002, 27 TexReg 2499; amended to be effective November 1, 2004, 29 TexReg 9196; amended to be effective November 1, 2005, 30 TexReg 6929; amended to be effective April 2, 2008, 33 TexReg 2696; amended to be effective December 6, 2009, 34 TexReg 8731; amended to be effective January 3, 2014, 38 TexReg7440; amended to be effective April 1, 2020, 45 TexReg 2002; amended to be effective January 1, 2025, 49 TexReg 8394.

28 Tex. Admin. Code § 9.402 Annual Submission of Title Insurance Statistical Reports

(a) Each title insurance company and title insurance agent must submit its statistical report required by Insurance Code §2703.153, concerning Collection of Data for Fixing Premium Rates; Annual Statistical Report, in the form and manner TDI prescribes. Instructions for submission and reporting forms will be available on TDI's website by:

(1) March 1 for title agents, and

(2) April 1 for title companies.

(b) Title agents must submit their statistical report by May 1 of each year.

(d) TDI will publish on its website compilation reports summarizing the submitted statistical reports by:

(1) October 1 of each year for title agents; and

(2) November 1 of each year for title companies.

History

Source Note: The provisions of this §9.402 adopted to be effective December 31, 2025, 50 TexReg 8613.

Chapter 10 WORKERS' COMPENSATION HEALTH CARE NETWORKS

Subchapter A GENERAL PROVISIONS AND DEFINITIONS

28 Tex. Admin. Code § 10.1 Purpose and Scope

(a) This chapter implements provisions of the Workers' Compensation Health Care Network Act, Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, and provides standards for the certification, administration, evaluation, and enforcement of the delivery of health care services to injured employees by networks contracting with or established by:

(1) workers' compensation insurance carriers;

(2) employers certified to self-insure under Labor Code Chapter 407, concerning Self-Insurance Regulation;

(3) groups of employers certified to self-insure under Labor Code Chapter 407A, concerning Group Self-Insurance Coverage; and

(4) except as described in subsection (d) of this section, governmental entities that self-insure, either individually or collectively, under:

(A) Labor Code Chapter 501, concerning Workers' Compensation Insurance Coverage for State Employees, Including Employees Under the Direction or Control of the Board of Regents of Texas Tech University;

(B) Labor Code Chapter 502, concerning Workers' Compensation Insurance Coverage for Employees of the Texas A&M University System and Employees of Institutions of the Texas A&M University System;

(C) Labor Code Chapter 503, concerning Workers' Compensation Insurance Coverage for Employees of the University of Texas System and Employees of Institutions of the University of Texas System;

(D) Labor Code Chapter 504, concerning Workers' Compensation Insurance Coverage for Employees of Political Subdivisions; and

(E) Labor Code Chapter 505, concerning Workers' Compensation Insurance Coverage for Employees of Texas Department of Transportation.

(b) This chapter applies to:

(1) each person who performs a function or service of a workers' compensation health care network as defined by §10.2 of this title (relating to Definitions), including a person who performs a function or service delegated by or through a workers' compensation health care network; and

(2) an insurance carrier as defined by Labor Code §401.011, concerning General Definitions, that establishes or contracts with a workers' compensation health care network.

(c) A person that performs the functions of an administrator for an insurance carrier under Insurance Code Chapter 1305 must hold a certificate of authority under Insurance Code Chapter 4151, concerning Third-Party Administrators.

(d) This chapter does not apply to health care services provided to injured employees of a self-insured political subdivision or injured employees of the members of a pool established under Government Code Chapter 791, concerning Interlocal Cooperation Contracts, if the political subdivision or pool elects to provide health care services to its injured employees in the manner authorized under Labor Code §504.053(b)(2), concerning Workers' Compensation Insurance Coverage for Employees of Political Subdivisions.

(e) This chapter does not authorize a workers' compensation insurance policyholder, including a policyholder who purchases a deductible plan under Insurance Code Chapter 2053, Subchapter E, concerning Optional Deductible Plans, to contract directly with a workers' compensation health care network for the provision of health care services to injured employees.

(f) If a court of competent jurisdiction holds that any provision of this chapter is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this chapter remain in full effect.

History

Source Note: The provisions of this §10.1 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.2 Definitions

(a) The following words and terms when used in this chapter have the following meanings unless the context clearly indicates otherwise.

(1) Administrator--Has the meaning assigned by Insurance Code §4151.001, concerning Definitions.

(2) Adverse determination--A determination by a URA made on behalf of a payor that the health care services provided or proposed to be provided to an injured employee are not medically necessary or appropriate. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review. For the purposes of this subchapter, an adverse determination does not include a determination that health care services are experimental or investigational.

(3) Affiliate--Has the meaning assigned by Insurance Code §1305.004, concerning Definitions.

(4) Capitation--Has the meaning assigned by Insurance Code §1305.004. The term includes predetermined payment to cover the average costs of services for a defined episode of care.

(5) Complainant--Has the meaning assigned by Insurance Code §1305.004.

(6) Complaint--Has the meaning assigned by Insurance Code §1305.004.

(7) Concurrent utilization review--A form of utilization review for ongoing health care or for an extension of treatment beyond previously approved health care.

(8) Credentialing--Has the meaning assigned by Insurance Code §1305.004.

(9) Division of Workers' Compensation--Has the meaning assigned to the "Division" by Labor Code §401.011, concerning General Definitions.

(10) Emergency--Has the meaning assigned by Insurance Code §1305.004.

(11) Employee--Has the meaning assigned by Labor Code §401.012, concerning Definition of Employee.

(12) Fee dispute--Has the meaning assigned by Insurance Code §1305.004.

(13) HMO--A health maintenance organization licensed and regulated under Insurance Code Chapter 843, concerning Health Maintenance Organizations.

(14) Independent review--Has the meaning assigned by Insurance Code §1305.004.

(15) Independent review organization--Has the meaning assigned by Insurance Code §1305.004.

(16) Life-threatening--Has the meaning assigned by Insurance Code Chapter 4201, concerning Utilization Review Agents.

(17) Live or lives--Where an employee lives includes:

(A) the employee's principal residence for legal purposes, including the physical address that the employee represented to the employer as the employee's address;

(B) a temporary residence necessitated by employment; or

(C) a temporary residence taken by the employee primarily for the purpose of receiving necessary assistance with routine daily activities because of a compensable injury.

(18) MCQA--The Office of Managed Care Quality Assurance, or a successor office at the department.

(19) Medical emergency--Has the meaning assigned by Insurance Code §1305.004.

(20) Medical records--Has the meaning assigned by Insurance Code §1305.004.

(21) Mental health emergency--Has the meaning assigned by Insurance Code §1305.004.

(22) Network or workers' compensation health care network--Has the meaning assigned by Insurance Code §1305.004.

(23) Occupational medicine specialist--A doctor who has received a board certification in occupational medicine from the American Board of Preventive Medicine or who has completed all the requirements of the American Board of Preventive Medicine in order to take the board examination.

(24) Person--Has the meaning assigned by Insurance Code §1305.004.

(25) Physician--Has the meaning assigned by Insurance Code §4201.002, concerning Definitions.

(26) Preauthorization--A form of prospective utilization review by a payor or a payor's URA of health care services proposed to be provided to an injured employee.

(27) Provider--A health care provider.

(28) Quality improvement program--Has the meaning assigned by Insurance Code §1305.004.

(29) Retrospective review--A form of utilization review for health care services that have been provided to an injured employee. Retrospective review does not include review of services for which prospective or concurrent utilization reviews were previously conducted or should have been previously conducted.

(30) Routine daily activities""Activities a person normally does in daily living, including sleeping, eating, bathing, dressing, grooming, and homemaking.

(31) Rural area--Has the meaning assigned by Insurance Code §1305.004.

(32) Screening criteria--Has the meaning assigned by Insurance Code §1305.004.

(33) Service area--Has the meaning assigned by Insurance Code §1305.004.

(34) Telehealth service, telemedicine medical service, and teledentistry dental service--Have the meanings assigned by Occupations Code §111.001, concerning Definitions.

(35) Transfer of risk--Has the meaning assigned by Insurance Code §1305.004.

(36) Utilization review--Has the meaning assigned by Insurance Code Chapter 4201.

(37) Utilization review agent or URA--Has the meaning assigned by Insurance Code Chapter 4201.

(b) When used in this chapter, the following terms have the meanings assigned by Labor Code §401.011:

(1) administrative violation;

(2) case management;

(3) compensable injury;

(4) doctor;

(5) employer;

(6) evidence-based medicine;

(7) health care;

(8) health care facility;

(9) health care practitioner;

(10) health care provider;

(11) impairment rating;

(12) injury;

(13) insurance carrier;

(14) maximum medical improvement; and

(15) treating doctor.

History

Source Note: The provisions of this §10.2 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.3 Contact Information

Current email addresses, mailing addresses, and telephone numbers for the Division of Workers' Compensation and MCQA are available on the department's website. This contact information should be used when an email address, mailing address, or telephone number is referenced in a section in this chapter.

History

Source Note: The provisions of this §10.3 adopted to be effective August 2, 2022, 47 TexReg 4534.

Subchapter B CERTIFICATION

28 Tex. Admin. Code § 10.20 Certification Required

Except as provided by Labor Code §504.053(b)(2), concerning Election:

(1) A person may not operate or perform any act of a workers' compensation health care network in this state:

(A) unless the person holds a certificate issued under Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, and this chapter; or

(B) except in accordance with the specific authorization of Insurance Code Chapter 1305 or this chapter.

(2) A person, including an insurance carrier, who provides or arranges to provide workers' compensation health care network services to injured employees within a service area, must be certified as a workers' compensation health care network under Insurance Code Chapter 1305 and this chapter.

(3) An entity performing any act of a workers' compensation health care network may not use in a network's name or in any informational literature distributed about a network any combination or variation of the words "workers' compensation," "certified," "managed care," or "network" to describe a network that is not certified in accordance with this chapter.

History

Source Note: The provisions of this §10.20 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.21 Certificate Application

(a) A person who seeks a certificate to operate as a workers' compensation health care network must file an application on the forms prescribed under this subchapter, accompanied by a non-refundable fee of $5,000.

(b) The applicant, an officer, or other authorized representative of the applicant must verify the application by attesting to the truth and accuracy of the information in the application.

(1) the department's website; or

(2) the MCQA mailing address.

History

Source Note: The provisions of this §10.21 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.22 Contents of Application

Each certificate application must include:

(1) a description or a copy of the applicant's basic organizational structure documents and other related documents, including organizational charts or lists that show:

(A) the relationships and contracts between the applicant and any affiliates of the applicant; and

(B) the internal organizational structure of the applicant's management and administrative staff;

(2) a completed biographical affidavit, NAIC UCAA Form 11 (Rev. 12/8/2020), from each person who governs or manages the affairs of the applicant, including the members of the governing board of the applicant, the chief executive officer, president, secretary, treasurer, chief financial officer and controller, and any other individuals with substantially similar responsibilities, provided that a biographical affidavit is not required if a biographical affidavit from the person is already on file with the department;

(3) a copy of the form of any contract between the applicant and any provider or group of providers as required under Insurance Code Chapter 1305, Subchapter D, concerning Contracting Provisions, and §10.41 and §10.42 of this title (relating to Network-Carrier Contracts and Network Contracts with Providers);

(4) a copy of any agreement with any third party performing delegated functions on behalf of the applicant as required under Insurance Code §1305.154, concerning Network-Carrier Contracts, and §10.41 of this title (relating to Network-Carrier Contracts);

(5) a copy of the form of each contract with an insurance carrier, as described by Insurance Code §1305.154 and §10.41 of this title;

(6) each management contract as described in §10.40 of this title (relating to Management Contracts), if applicable;

(7) a financial statement, current as of the date of the application that includes the most recent calendar quarter, prepared using generally accepted accounting principles, and including:

(A) a balance sheet that reflects a solvent financial position;

(B) an income statement;

(D) the sources and uses of all funds;

(8) a statement acknowledging that lawful process in a legal action or proceeding against the network on a cause of action arising in this state is valid if served in the manner provided by Insurance Code Chapter 804, concerning Service of Process, for a domestic company;

(9) a description and a map of the applicant's proposed service area or areas, with key and scale, that identifies each county, ZIP code, partial ZIP code, or part of a county to be served;

(10) a description of programs and procedures to be utilized, including:

(A) a complaint system, as required under Insurance Code Chapter 1305, Subchapter I, concerning Complaint Resolution, and Chapter 10, Subchapter G, of this title (relating to Complaints);

(B) a quality improvement program, including return-to-work and medical case management programs, as required under Insurance Code Chapter 1305, Subchapter G, concerning Provision of Services by Network; Quality Improvement Program, and §10.81 of this title (relating to Quality Improvement Program);

(D) the utilization review program described in Insurance Code Chapter 1305, Subchapter H, concerning Utilization Review, and Chapter 10, Subchapter F, of this title (relating to Utilization Review), if applicable; and

(E) criteria and procedures for employees to select or change the employee's treating doctor, including procedures for employees to select as the employee's treating doctor a doctor who the employee selected, prior to injury, as the employee's HMO primary care physician or provider;

(11) a description of the network configuration that demonstrates the adequacy of the network to provide comprehensive health care services sufficient to serve the population of injured employees within the service area and maps that demonstrate compliance with the access and availability standards under Insurance Code Chapter 1305, Subchapter G, and §10.80 of this title (relating to Accessibility and Availability Requirements). This description must include, at a minimum, the following:

(A) a map for each specialty providing services to injured employees in accordance with §10.80 of this title, each of which must include:

(i) each location of health care providers and facilities within the proposed service area, indicating each location by symbols of the network's own choosing; and

(ii) the distance from any point in the network's designated service area to each location;

(B) names; addresses, including ZIP codes; specialty or specialties; board certifications, if any; professional license numbers; and hospital affiliations of network providers, including treating doctors, in sufficient number and specialty to provide all required health care services in a timely, effective, and convenient manner;

(C) names; addresses; federal employer identification number (FEIN); licenses; and types of health care facilities, including hospitals, rehabilitation facilities, diagnostic and testing facilities, ambulatory surgical centers, and interdisciplinary pain rehabilitation programs or interdisciplinary pain rehabilitation treatment facilities. The network must also demonstrate adequate access to emergency care;

(D) information indicating whether each network provider is accepting new patients from the workers' compensation health care network;

(E) information indicating which network doctors are trained and certified to perform maximum medical improvement determinations and impairment rating services;

(F) information identifying which network providers provide telehealth service, telemedicine medical service, or teledentistry dental service, indicating which of these providers will provide telehealth service, telemedicine medical service, or teledentistry dental service only; and

(G) for any service area in which the network does not meet accessibility and availability requirements described in §10.80 of this title, an access plan that complies with §10.80(a) and (f) of this title;

(12) the physical location of the applicant's books and records, including:

(A) financial and accounting records;

(B) investment records;

(D) minutes of all meetings of the applicant's governing board and executive or management committees;

(13) a business plan that describes the applicant's intended operations in this state, including both a narrative description and projections related to anticipated revenue and profitability for the first two years of operation after certification;

(14) a completed financial authorization form sufficient to allow the department to confirm directly with appropriate financial institutions the reported assets of the applicant, unless the entity is already licensed by the department;

(15) the applicant's plan for provision of care to injured employees who live temporarily outside the service area, if applicable;

(16) the applicant's plan for provision of maximum medical improvement determinations and impairment rating services, including verification that the network doctors reported under paragraph (11)(E) of this section have completed the training and testing required under Labor Code §408.023, concerning List of Approved Doctors; Duties of Treating Doctors, and rules adopted by the Commissioner of Workers' Compensation;

(17) the applicant's plan for obtaining certification by doctors and health care practitioners of filing the required financial disclosure with the Division of Workers' Compensation under Labor Code §408.023 and §413.041, concerning Disclosure;

(18) the form of the notice of network requirements and employee information, and the acknowledgment form required under Insurance Code §1305.005, concerning Participation in Network; Notice of Network Requirements, and §10.60 of this title (relating to Notice of Network Requirements; Employee Information);

(19) the applicant's plan for monitoring whether providers have been provided and are following treatment guidelines, return-to-work guidelines, and individual treatment protocols as required under Insurance Code §1305.304, concerning Guidelines and Protocols, and §10.83 of this title (relating to Guidelines and Protocols);

(20) a description of treatment guidelines and return-to-work guidelines, and the network medical director's certification that the guidelines are evidence-based, scientifically valid, and outcome-focused, and be designed to reduce inappropriate or unnecessary health care while safeguarding necessary care, as required under Insurance Code §1305.304 and §10.83(a) of this title; and

(21) a certification that:

(A) the network's medical director is an occupational medicine specialist; or

(B) the network employs or contracts with an occupational medicine specialist.

History

Source Note: The provisions of this §10.22 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.23 Action on Application

The Commissioner will approve or disapprove an application for certification of a network in accordance with Insurance Code §1305.054, concerning Action on Application; Renewal of Certification.

History

Source Note: The provisions of this §10.23 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.24 Network Financial Requirements

(a) On at least a calendar year basis, each network must prepare financial statements in accordance with generally accepted accounting principles, which must include:

(1) a balance sheet;

(2) an income statement;

(3) a cash flow statement;

(4) a statement of equity; and

(5) a supplemental description of the network's basic organizational structure, general business relationships, and management.

(b) On or before April 1st of each year, each network must provide the network's financial statement required by subsection (a) of this section to:

(1) each carrier with which the network contracts to facilitate carrier and network compliance under Insurance Code §1305.154(c), concerning Network-Carrier Contracts; and §1305.155, concerning Compliance Requirements; and §10.41 of this title (relating to Network-Carrier Contracts); and

(2) the department by sending the financial statement to the department's workers' compensation network email address.

History

Source Note: The provisions of this §10.24 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.25 Filing Requirements

(a) A network must file with the department as soon as practicable but not later than 30 days prior to implementation, a written request for approval and must receive department approval before implementation of changes to the following:

(1) management contracts and information regarding fidelity bonds as described in Insurance Code §1305.102, concerning Management Contracts, and §10.40 of this title (relating to Management Contracts), including information regarding cancellation of fidelity bonds, new fidelity bonds, or amendments to fidelity bonds;

(2) the physical location of the network's books and records as described in §10.22(12) of this title (relating to Contents of Application); and

(3) material modification of network configuration in accordance with §10.27 of this title (relating to Modifications to Network Configuration).

(b) A network must file an expansion, elimination, or reduction of an existing service area, or addition of a new service area with the department for approval before implementation and in accordance with §10.26 of this title (relating to Modifications to Service Area).

(c) A network must file with the department any information other than the information in subsection (a) of this section that amends, supplements, or replaces the items required under §10.22 of this title. The information must be filed no later than 30 days after implementation of any change.

(d) Notwithstanding subsections (a) and (b) of this section, a network must notify the department of the sale of the network, the merger of the network with another entity, or any other organizational change at least 30 days before implementing the sale, merger, or organizational change.

History

Source Note: The provisions of this §10.25 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.26 Modifications to Service Area

(a) A network must file a modification request with and receive approval from the department before the network may expand, eliminate, or reduce an existing service area, or add a new service area. An officer or other authorized representative of the network must verify the modification request by attesting to the truth and accuracy of the information in the modification request.

(b) A modification request for a service area modification must include:

(1) a description and a map with key and scale, showing both the currently approved service area and the proposed new service area, as required under §10.22(9) of this title (relating to Contents of Application);

(2) network configuration information, as required under §10.22(11) of this title; and

(3) separate and consolidated projections as described in §10.22(13) of this title for the existing network, the proposed new service area, and the proposed network.

(c) If a modification request for a service area changes any of the following items, the applicant must file the new item or any amendments to an existing item with the modification request filed under this section:

(1) a copy of the form of any new contracts or amendment of any existing contracts as described by and required under §10.22(3), (4), and (5) of this title;

(2) a brief narrative description of the administrative arrangements, organizational charts as required under §10.22(1) of this title, and other pertinent information;

(3) biographical data, on a form prescribed by the department, regarding each individual who governs or manages the affairs of the network as required under §10.22(2) of this title; and

(4) a copy of each management contract as described under §10.22(6) of this title.

(d) A modification request is not considered complete and reviewable until the department has received all information required under this section, including any additional information the department requests as needed to make that determination.

(e) Before the department considers a service area modification request, the applicant must be in good standing with the department and in compliance with all applicable requirements under this chapter; Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks; and Labor Code Title 5, concerning Workers' Compensation, in the existing service areas and in each proposed service area.

(f) A corrected notice of network requirements and employee information form and acknowledgment form that comply with Insurance Code §1305.005, concerning Participation in Network; Notice of Network Requirements; and §1305.451, concerning Employee Information; Responsibilities of Employee; and §10.60 of this title (relating to Notice of Network Requirements; Employee Information) must be provided to affected employees.

(g) Prescribed modification request forms may be obtained from:

(1) the department's website;

(2) the department's workers' compensation network email address; or

(3) the MCQA mailing address.

History

Source Note: The provisions of this §10.26 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.27 Modifications to Network Configuration

(a) A network must file a modification request with and receive approval from the department before the network makes a material modification to its network configuration. The modification request must be filed not later than 30 days prior to implementation of the material modification.

(b) A modification request for a modification to network configuration must include:

(1) a description and a map of the network's service area or areas, with key and scale, that identifies each county, ZIP code, partial ZIP code, or part of a county to be served as required by §10.22 of this title (relating to Contents of Application);

(2) network configuration information, as required by §10.22(11) of this title; and

(3) if the modification involves adding or modifying telehealth service, telemedicine medical service, or teledentistry dental service, an explanation of how the network would update its provider directory, and any statements or restrictions on services that can be provided via telehealth service, telemedicine medical service, or teledentistry dental service.

(c) The applicant must file a copy of the form of any new contracts or amendment of any existing contracts as described by and required under §10.22(3), (4), and (5) of this title if the modification of network configuration causes changes.

(e) Before the department considers a modification request to modify a network's configuration, the applicant must be in good standing with the department and in compliance with all applicable requirements under this chapter; Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks; and Labor Code Title 5, concerning Workers' Compensation.

(f) Prescribed modification request forms may be obtained from:

(1) the department's website;

(2) the department's workers' compensation network email address; or

(3) the MCQA mailing address.

(g) For purposes of this section, a material modification includes a change to the network configuration that alters the ability of the network to comply with the availability and accessibility requirements described in §10.80 of this title (relating to Accessibility and Availability Requirements).

History

Source Note: The provisions of this §10.27 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter C CONTRACTING

28 Tex. Admin. Code § 10.40 Management Contracts

(a) A network may not enter into a contract with another entity for management services, or modify a previously approved management contract, unless the proposed contract or modification is first filed with the department and approved by the Commissioner in accordance with Insurance Code §1305.102, concerning Management Contracts.

(b) For purposes of this chapter, management services include management control and decision-making, and contracting on behalf of the network under a delegation of management authority, power of attorney, or other arrangement.

(c) If a person is serving as both a management contractor or a third party to which the network delegates a function and as an agent of the health care provider, the contract between the management contractor or third party and the health care provider must comply with Insurance Code §1305.153, concerning Provider Reimbursement.

(d) A management contractor or a third party that is also serving as an agent for one or more health care providers in the certified network must meet the disclosure requirements with the certified network under Insurance Code §1305.153.

History

Source Note: The provisions of this §10.40 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.41 Network-Carrier Contracts

(a) A network's contract with a carrier must include the following:

(1) a description of the functions to be performed by the network or its delegated entity, consistent with the requirements of Insurance Code §1305.154(b), concerning Network-Carrier Contracts, and the reporting requirements for each function;

(2) a statement that the network will perform all delegated functions in full compliance with all requirements of the Workers' Compensation Health Care Network Act, Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks; the Texas Workers' Compensation Act, Labor Code Title 5, Subtitle A, concerning Workers' Compensation; and the rules of the department and the Division of Workers' Compensation;

(3) a provision that the contract:

(A) may not be terminated without cause by either party without 90 days' prior written notice; and

(B) must be terminated immediately if cause exists;

(4) a hold-harmless provision stating that the network, a management contractor, a third party to which the network delegates a function, and the network's contracted providers are prohibited from billing or attempting to collect any amounts from an employee for health care services for compensable injuries under any circumstances, including the insolvency of the carrier or the network;

(5) a statement that the carrier and the network retain ultimate responsibility for ensuring that all delegated functions and all management contractor functions are performed in accordance with applicable statutes and rules, and that the contract may not be construed to limit in any way the carrier's or network's responsibility, including financial responsibility, to comply with all statutory and regulatory requirements;

(6) a statement that the network's role is to provide the services listed in Insurance Code §1305.154(b) as well as any other services or functions the carrier delegates, including functions delegated to a management contractor, subject to the carrier's oversight and monitoring of the network's performance;

(7) a requirement that the network provide the carrier, on at least a monthly basis and in a form that is usable for audit purposes, the data necessary for the carrier to comply with reporting requirements of the department and the Division of Workers' Compensation of the department with respect to any services provided pursuant to the carrier-network contract, including the following data:

(A) last name, first name, date of injury, date of birth, sex, address, telephone number, claim number, and social security number of each injured employee who is being served by the network, and name and license number of the injured employee's treating doctor;

(B) initial date of health care services delivered by the network for each employee; and

(C) any other data, as determined by the contract, necessary to assure proper monitoring of functions delegated to the network by the carrier;

(8) a requirement that the carrier, the network, any management contractor, and any third party to which the network delegates a function comply with a provision that requires the network to provide to the insurance carrier and department the license number of a management contractor or any delegated third party performing any function that requires a license under the Insurance Code or another insurance law of this state, including a license as a utilization review agent under Insurance Code Chapter 4201, concerning Utilization Review Agents;

(9) a contingency plan under which the carrier would, in the event of termination of the contract or a failure to perform, reassume one or more functions of the network under the contract, including functions related to:

(A) payment to providers and notification to employees, as applicable;

(B) quality of care;

(D) continuity of care, including a plan for identifying and transitioning employees to new providers; and

(E) collecting and reporting of data necessary to comply with the reporting requirements described in paragraph (7) of this subsection;

(10) a provision that requires that any agreement by which the network delegates any function to a third party be in writing, and that such agreement require the delegated third party to be subject to all the requirements under Insurance Code Chapter 1305 and this chapter;

(11) a provision that requires the network to provide to the department the license number of a management contractor or any delegated third party performing any function that requires a license under the Insurance Code or another insurance law of this state, including a license as a utilization review agent under Insurance Code Chapter 4201;

(12) an acknowledgment that:

(A) any management contractor or third party to whom the network delegates a function must comply with this chapter and other applicable statutes and rules, and that the management contractor or third party is subject to the carrier's and the network's oversight and monitoring of its performance; and

(B) if the management contractor or third party fails to meet monitoring standards established to ensure that functions delegated or assigned to the management contractor or third party under the delegation contract are in full compliance with all statutory and regulatory requirements, the carrier or network may cancel delegation of any or all delegated functions;

(13) a requirement that the network and any management contractor or third party to which the network delegates a function provide all necessary information to allow the carrier to provide the information required by §10.60 of this title (relating to Notice of Network Requirements; Employee Information) to employers or employees;

(14) a provision that requires the network to require any third party with which it contracts, whether directly or through another third party, to permit the Commissioner to examine at any time any information the Commissioner believes is relevant to the third party's financial condition or the ability of the network to meet the network's responsibilities in connection with any function the third party performs or that has been delegated to the third party.

(15) a requirement that if the network delegates the complaint function, the delegate must:

(A) implement and maintain a complaint system in accordance with requirements under Insurance Code §1305.401, concerning Complaint System Required, and §10.120 of this title (relating to Complaint System Required); and

(B) make the complaint log and complaint files available to the carrier and the network upon request to the extent permitted by law;

(16) a statement that the contract and any network contract with a provider, management contractor, or other third party must not be interpreted to involve a transfer of risk as defined under Insurance Code §1305.004(a)(26), concerning Definitions;

(17) a statement that any network contract with a provider or third party must allow the carrier to effect a contingency plan in the event that the carrier is required to reassume functions from the network as contemplated under Insurance Code §1305.155, concerning Compliance Requirements;

(18) a statement that any network contract with a provider or third party must comply with all applicable statutory and regulatory requirements under federal and state law, including Insurance Code §1305.152, concerning Network Contracts with Providers, and §10.42 of this title (relating to Network Contracts with Providers); and

(19) a statement that if a network's delegate subdelegates a network function, the delegate must first obtain the network's consent to the subdelegation and have a delegation agreement that complies with this section.

(b) Except for the functions described under Insurance Code §1305.154(b) and §10.121 of this title (relating to Complaints; Deadlines for Responses and Resolution), a network's authority to perform a function under a network-carrier contract is conditioned upon whether:

(1) the carrier has delegated the function to the network by contract; and

(2) the network is appropriately licensed to perform the function.

(c) A network must not act as a network for any entity regarding an insurance plan being operated in violation of Insurance Code §101.102, concerning Unauthorized Insurance Prohibited.

History

Source Note: The provisions of this §10.41 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.42 Network Contracts with Providers

(a) A network is not required to accept an application for participation in the network from a health care provider that otherwise meets the requirements specified in this chapter if the network determines that the network has contracted with a sufficient number of qualified health care providers, including health care providers of the same license type or specialty.

(b) Provider contracts and subcontracts must include, at a minimum, the following provisions:

(1) except as provided in Insurance Code §1305.451(b)(6), concerning Employee Information; Responsibilities of Employee, a hold-harmless clause stating that the provider and the provider network will not bill or attempt to collect any amounts of payment from an employee for health care services for compensable injuries under any circumstances, including the insolvency of the insurance carrier or the network;

(2) a statement that the provider agrees to follow treatment guidelines, return-to-work guidelines, and individual treatment protocols adopted by the network pursuant to §10.83 of this title (relating to Guidelines and Protocols) and the pharmacy closed formulary adopted by the Division of Workers' Compensation under §134.540 of this title (relating to Requirements for Use of the Closed Formulary for Claims Subject to Certified Networks), as applicable to an employee's injury;

(3) a statement that the insurance carrier or network may not deny treatment solely on the basis that a treatment for a compensable injury in question is not specifically addressed by the treatment guidelines used by the insurance carrier or network;

(4) a provision that the network will not engage in retaliatory action, including termination of or refusal to renew a contract, against a provider because the provider has, on behalf of an employee, reasonably filed a complaint against, or appealed a decision of, the network, or requested reconsideration or independent review of an adverse determination;

(5) a continuity of treatment clause that states that:

(A) if a provider leaves the network, upon the provider's request, the insurance carrier or network is obligated to continue to reimburse the provider for a period not to exceed 90 days at the contracted rate for care of an employee with a life-threatening condition or an acute condition for which disruption of care would harm the employee; and

(B) a dispute concerning continuity of care must be resolved through the complaint resolution process under Insurance Code Chapter 1305, Subchapter I, concerning Complaint Resolution, and Subchapter G of this title (relating to Complaints);

(6) a clause regarding appeal by the provider of termination of network provider status, except for termination due to contract expiration, and applicable written notification to employees receiving care regarding such a termination, including requirements that:

(A) the network must provide notice to the provider at least 90 days before the effective date of a termination;

(B) the network must provide an advisory review panel that consists of at least three providers of the same licensure and the same or similar specialty as the provider;

(C) upon receipt of the written notification of termination, a provider may request a review by the network's advisory review panel not later than 30 days after receipt of the notification;

(D) the network must complete the advisory panel review before the effective date of the termination;

(E) a network may not notify patients of the termination until the earlier of the effective date of the termination or the date the advisory review panel makes a formal recommendation;

(F) in the case of imminent harm to patient health, suspension or loss of license to practice, or fraud, the network may terminate the provider immediately and must notify employees immediately of the termination; and

(G) if the provider terminates the contract, the network must provide notification of the termination to employees receiving care from the terminating provider. The network must give such notice immediately upon receipt of the provider's termination request or as soon as reasonably possible before the effective date of termination;

(7) a provision that requires the provider to post, in the office of the provider, a notice to employees on the process for resolving workers' compensation health care network complaints in accordance with Insurance Code §1305.405, concerning Posting of Information on Complaint Process Required. The notice must include the department's toll-free telephone number for filing a complaint and must list all workers' compensation health care networks with which the provider contracts;

(8) a statement that the network agrees to furnish to the provider, and the provider agrees to abide by, the list of any treatments and services that require the network's preauthorization and any procedures to obtain preauthorization;

(9) a statement that the contract and any subcontract within the provider network must not be interpreted to involve a transfer of risk as defined under Insurance Code §1305.004(a)(26), concerning Definitions;

(10) a statement that the provider and any subcontracting provider within the provider network must comply with all applicable statutory and regulatory requirements under federal and state law;

(11) the schedule of fees that will be paid to the contracting provider;

(12) a statement specifying whether the provider whose specialty has been designated by the network as a treating doctor agrees to be a network treating doctor and, if so, any additional provisions applicable to the provider;

(13) a statement that billing by and payment to the provider will be made in accordance with Labor Code §408.027, concerning Payment of Health Care Provider, and other applicable statutes and rules, including rules governing the billing and payment for certifications of maximum medical improvement and impairment rating examinations;

(14) a statement that the provider specifically agrees to provide treatment for injured employees who obtain workers' compensation health care services through the network that is specifically identified in the contract as a contracting party; and

(15) a statement that the provider will receive written notice from the carrier if the carrier contests compensability of an injury the provider is treating as required under Insurance Code §1305.153(e), concerning Provider Reimbursement, including that the carrier may not deny payment for services provided prior to the issuance of the notice on the grounds that the injury was not compensable.

(c) An insurance carrier and a network may not use any financial incentive or make a payment to a health care provider that acts directly or indirectly as an inducement to limit medically necessary services. The adoption of treatment guidelines, return-to-work guidelines, and individual treatment protocols by a network under Insurance Code §1305.304, concerning Guidelines and Protocols, and §10.83(a) of this title (relating to Guidelines and Protocols) is not a violation of this section.

(d) An insurance carrier or a network must provide written notice to a network provider or group of network providers before the carrier or network conducts economic profiling, including utilization management studies comparing the provider to other providers, or other profiling of the provider or group of providers.

History

Source Note: The provisions of this §10.42 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter D NETWORK REQUIREMENTS

28 Tex. Admin. Code § 10.60 Notice of Network Requirements; Employee Information

(a) An insurance carrier that establishes or contracts with a network must deliver to the employer, and the employer or carrier, as applicable under subsection (g) of this section, must deliver to the employer's employees in the manner and at the times prescribed by Insurance Code §1305.005, concerning Participation in Network; Notice of Network Requirements:

(1) the notice of network requirements and employee information required by Insurance Code §1305.005 and §1305.451, concerning Employee Information; Responsibilities of Employee, and this section; and

(2) the employee acknowledgment form described by Insurance Code §1305.005 and this section.

(b) An employee who lives within the service area of a network and who is being treated by a non-network provider for an injury that occurred before the employer's insurance carrier established or contracted with the network may:

(1) select a network treating doctor from the list of contracted doctors who contracted with the workers' compensation network; or

(2) request a doctor who the employee selected, prior to the injury, as the employee's HMO primary care physician or provider under Insurance Code Chapter 843, concerning Health Maintenance Organizations.

(c) The carrier must provide to the employee all information required by Insurance Code §1305.451. The notice must include an employee acknowledgment form and comply with all requirements under subsections (d) - (i) of this section, as applicable.

(d) The notice of network requirements and employee acknowledgment form:

(1) must be in English, Spanish, and any other language common to 10 percent or more of the employer's employees;

(2) must be in a readable and understandable format that meets the plain language requirements under §10.63 of this title (relating to Plain Language Requirements); and

(3) may be in an electronic format as long as a paper version is available upon request.

(e) The insurance carrier and employer may use an employee acknowledgment form that complies with this section or a sample acknowledgment form that may be obtained from the department's website.

(f) The employee acknowledgment form must include:

(1) a statement that the employee has received information that describes what the employee must do to receive health care under workers' compensation insurance;

(2) a statement that if the employee is injured on the job and lives in the service area described in the information, the employee understands that:

(A) the employee:

(i) must select a treating doctor from the list of doctors who contracted with the workers' compensation network; or

(ii) ask the employee's HMO primary care physician to agree to serve as the employee's treating doctor; and

(iii) must obtain all health care and specialist referrals for a compensable injury through the treating doctor except for emergency services;

(B) the network provider will be paid by the insurance carrier and will not bill the employee for a compensable injury; and

(C) if the employee seeks health care, other than emergency care, from someone other than a network provider without network approval, the insurance carrier may not be liable, and the employee may be liable, for payment for that health care;

(3) separate lines for the employee to fill in the date and employee's signature, printed name, and where the employee lives;

(4) a separate line that indicates the name of the employer; and

(5) a separate line that indicates the name of the network.

(g) The employer must obtain a signed employee acknowledgment form from each employee, and a carrier required to provide employee information to an employee under Insurance Code §1305.103(c), concerning Treating Doctor; Referrals, and subsection (b) of this section must obtain a signed employee acknowledgment form from that employee. For purposes of this subsection, an employer or carrier, as applicable, may obtain an acknowledgment of the notice required under this section through electronic means from an employee who makes an electronic signature in accordance with applicable law.

(h) The notice of network requirements must comply with Insurance Code §1305.005 and §1305.451 and include:

(1) a statement that the entity providing health care to employees is a certified workers' compensation health care network;

(2) the network's toll-free number and address for obtaining additional information about the network, including information about network providers;

(3) a description and map of the network's service area, with key and scale, that clearly identifies each county or ZIP code area or any parts of a county or ZIP code area that are included in the service area;

(4) a statement that an employee who does not live within the network's service area may notify the carrier as described under §10.62 of this title (relating to Dispute Resolution for Employee Requirements Related to In-Network Care);

(5) a statement that an employee who asserts that he or she does not currently live in the network's service area may choose to receive all health care services from the network during the pendency of the insurance carrier's review under §10.62 of this title and the pendency of the department's review of a complaint; and the employee may be liable, and the carrier may not be liable, for payment for health care services received out of network if it is ultimately determined that the employee lives in the network's service area;

(6) a statement that, except for emergency services, the employee must obtain all health care and specialist referrals through the employee's treating doctor;

(7) an explanation that network providers have agreed to look only to the network or insurance carrier and not to employees for payment of providing health care for a compensable injury, except as provided by paragraph (8) of this subsection;

(8) a statement that if the employee obtains health care from non-network providers without network approval, except for emergency care, the insurance carrier may not be liable, and the employee may be liable, for payment for that health care;

(9) information about how to obtain emergency care services, including emergency care outside the service area, and after-hours care;

(10) a list of the health care services for which the insurance carrier or network requires preauthorization or concurrent review;

(11) an explanation regarding continuity of treatment in the event of the termination from the network of a treating doctor;

(12) a description of the network's complaint system, including:

(A) a statement that an employee must file complaints with the network regarding dissatisfaction with any aspect of the network's operations or with network providers;

(B) any deadline for the filing of complaints, provided that the deadline may not be less than 90 days after the date of the event or occurrence that is the basis for the complaint;

(C) a single point of contact within the network for receipt of complaints, including the address and email address of the contact; and

(D) a statement that the network is prohibited from retaliating against:

(i) an employee, employer, or person acting on behalf of the employee or employer if the employee, employer, or person acting on behalf of the employee or employer files a complaint against the network or appeals a decision of the network; or

(ii) a provider if the provider, on behalf of an employee, reasonably files a complaint against the network or appeals a decision of the network; and

(E) a statement explaining how an employee may file a complaint with the department as described under §10.122 of this title (relating to Submitting Complaints to the Department);

(13) a summary of the insurance carrier's or network's procedures relating to adverse determinations and the availability of the independent review process;

(14) a list of network providers updated at least quarterly, including:

(A) the names and addresses of network providers grouped by specialty. Treating doctors must be identified and listed separately from specialists. Providers who are authorized to assess maximum medical improvement and render impairment ratings and providers who provide a telehealth service, telemedicine medical service, or teledentistry dental service must be clearly identified;

(B) a statement of limitations of accessibility and referrals to specialists; and

(15) a statement that, except for emergencies, the network must arrange for services, including referrals to specialists, to be accessible to an employee on a timely basis on request and within the time appropriate to the circumstances and condition of the injured employee, but not later than 21 days after the date of the request.

(i) An employer or carrier, as applicable, must deliver the notice of network requirements and acknowledgment form to the employer's employees, and document:

(1) the method of delivery;

(2) to whom the notice was delivered;

(3) the location of the delivery; and

(4) the date or dates of delivery.

(j) The failure of an employer or carrier, as applicable, to establish a standardized process for complying with subsection (i) of this section creates a rebuttable presumption that the employee has not received the notice of network requirements and is not subject to network requirements.

(k) A dispute regarding whether an employer or carrier provided the information required by this section to an employee may be resolved by requesting a benefit review conference as provided by Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference).

History

Source Note: The provisions of this §10.60 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.61 Employees Who Live Within the Network Service Area, Employee Access, and Insurance Carrier Liability for Health Care

(a) The employees of an employer who elects to contract with an insurance carrier for network health care services, and who live within the network's service area, must obtain medical treatment for a compensable injury from in-network providers, except as provided in Insurance Code §1305.006(1) and (3), concerning Insurance Carrier Liability for Out-of-Network Health Care; subsection (e)(1), (3), and (4) of this section; and the rules of the Division of Workers' Compensation.

(b) An employee is presumed to live at the physical address he or she has represented to the employer as his or her address or, if the employee no longer works for the employer, the physical address of record on file with the insurance carrier.

(c) At any time after the receipt of the notice of network requirements, an employee who no longer lives at the physical address described in subsection (b) of this section, or who otherwise asserts that he or she does not live in the network's service area, may notify the insurance carrier and request a review under §10.62 of this title (relating to Dispute Resolution for Employee Requirements Related to In-Network Care).

(d) An employee who does not live within a network's service area may choose to participate in a network established by the insurance carrier or with which the insurance carrier has a contract upon mutual agreement between the employee and insurance carrier.

(e) An employee who is found to have fraudulently claimed to live outside the network's service area or made an intentional misrepresentation regarding where he or she lives and receives health care outside the network's service area may be liable for payment for that health care.

(f) An insurance carrier that establishes or contracts with a network is liable for in-network health care for a compensable injury that is provided to an injured employee in accordance with Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, and out-of-network care as follows:

(1) emergency care;

(2) health care provided to an injured employee who does not live within the service area of any network established by the insurance carrier or with which the insurance carrier has a contract;

(3) health care provided by an out-of-network provider pursuant to a referral from the injured employee's treating doctor that has been approved by the network as follows:

(A) if an injured employee's treating doctor requests a referral to an out-of-network provider for medically necessary health care services that are not available from network providers, the network must approve or deny a referral to an out-of-network provider within the time appropriate under the circumstances, but, under any circumstance, not later than seven days after the date the referral is requested;

(B) if the network denies the referral request under subsection (a) of this section because the requested service is available from network providers, the employee may file a complaint in accordance with the network's complaint process under Insurance Code §1305.402, concerning Complaint Initiation and Initial Response; Deadlines for Response and Resolution, and §10.121 of this title (relating to Complaints; Deadlines for Response and Resolution);

(C) if the network denies the referral request under subparagraph (A) of this paragraph because the specialist referral is not medically necessary, the employee may file a request for independent review as described in §10.104 of this title (relating to Independent Review of Adverse Determination); and

(4) health care services provided to an injured employee before the employee received the notice of network requirements and the employee information for the appropriate network and service area under Insurance Code §1305.005, concerning Participation in Network; Notice of Network Requirements, and §10.60 of this title (relating to Notice of Network Requirements; Employee Information).

History

Source Note: The provisions of this §10.61 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.62 Dispute Resolution for Employee Requirements Related to In-Network Care

(a) If an employee asserts that he or she does not currently live in the network's service area, the employee may request a review by contacting the insurance carrier and providing evidence to support the employee's assertion.

(b) An insurance carrier must review the employee's request for review, including any evidence provided by the injured employee and any evidence collected by the insurance carrier, and make a determination regarding whether the employee lives within the network's service area or lives within the service area of any other workers' compensation network contracted with or established by the insurance carrier (alternate network). If an insurance carrier makes a determination that the employee lives within the service area of an alternate network, the insurance carrier must provide the employee with the notice of network requirements as described under §10.60 of this title (relating to Notice of Network Requirements; Employee Information) for the alternate network. Upon receipt of the notice of network requirements, the employee must select a treating doctor from the list of the alternate network's treating doctors in the network's service area.

(c) Not later than seven calendar days after the date the insurance carrier receives notice of the injured employee's request for review, the insurance carrier must notify the employee, in writing, of the carrier's determination. This notice must include a brief description of the evidence the carrier considered when making the determination, a copy of the carrier's determination, and a description of how an employee may file a complaint regarding this issue with the department. The insurance carrier must also send a copy of the carrier's determination to the employee's employer.

(d) If an employee disagrees with the insurance carrier's determination, the employee may file a complaint with the department in accordance with §10.122 of this title (relating to Submitting Complaints to the Department). To be considered complete, the employee's complaint must include:

(1) the employee's contact information, including the employee's name, current physical address, and telephone number;

(2) a copy of the insurance carrier's determination; and

(3) any evidence the employee provided to the insurance carrier for consideration.

(e) An injured employee who disputes whether he or she lives within a network's service area may seek all medical care from the network during the pendency of the insurance carrier's review and the department's investigation of a complaint.

History

Source Note: The provisions of this §10.62 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.63 Plain Language Requirements

(a) The notice of network requirements and employee information form and acknowledgment form required by Insurance Code §1305.451, concerning Employee Information; Responsibilities of Employee, and §10.60 of this title (relating to Notice of Network Requirements; Employee Information) must be written in plain language and comply with the following requirements:

(1) the text must achieve a minimum level of readability that may not be more difficult than the equivalent of a ninth grade reading level as measured by the Flesch reading ease test, a test referenced in the list of standardized tests contained in §3.3092(c)(1) of this title (relating to Format, Content, and Readability for Outline of Coverage), or other standardized test as approved by the department;

(2) the form must be printed in not less than 12-point type;

(3) the form must be appropriately divided and captioned in a meaningful sequence such that each section contains an underlined, boldfaced, or otherwise conspicuous title or caption at the beginning of the section that indicates the nature of the subject matter included in or covered by the section; and

(4) the form must be written in a clear and coherent manner and wherever practical, words with common and everyday meanings must be used to facilitate readability.

(b) The notice of network requirements and employee information form described at §10.22(18) of this title (relating to Contents of Application) must be filed with the department in accordance with §10.21 of this title (relating to Certificate Application) and must be accompanied by a certification signed by an officer or other authorized representative of the network stating the reading level of the form, the standardized test used to determine the reading level, and that the form meets or exceeds the minimum readability standards established by the Commissioner. To confirm the accuracy of any certification, the Commissioner may require the submission of additional information.

History

Source Note: The provisions of this §10.63 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter E NETWORK OPERATIONS

28 Tex. Admin. Code § 10.80 Accessibility and Availability Requirements

(a) All services specified by this section must be provided by a provider who holds a current appropriate Texas license, unless the provider is exempt from license requirements.

(b) The network must ensure that the network's provider panel includes:

(1) an adequate number of contracted treating doctors and specialists, who must be available and accessible to employees 24 hours a day, seven days a week, within the network's service area;

(2) sufficient numbers and types of health care providers to ensure choice, access, and quality of care to injured employees;

(3) an adequate number of treating doctors and specialists who have admitting privileges at one or more network hospitals located within the network's service area to make any necessary hospital admissions;

(4) hospital services that are available and accessible 24 hours a day, seven days a week, within the network's service area. The network must provide for the necessary hospital services by contracting with general, special, and psychiatric hospitals, as applicable;

(5) physical and occupational therapy services and chiropractic services that are available and accessible within the network's service area;

(6) emergency care that is available and accessible 24 hours a day, seven days a week, without restrictions as to where the services are rendered; and

(7) an adequate number of doctors who are qualified to provide maximum medical improvement and impairment rating services as required under Labor Code §408.023, concerning List of Approved Doctors; Duties of Treating Doctors.

(c) Except for emergencies, a network must arrange for services, including referrals to specialists, to be accessible to injured employees within the time appropriate to the circumstances and condition of the injured employee, but not later than 21 calendar days after the date of the original request.

(d) Each network must provide that network services are sufficiently accessible and available as necessary to ensure that the distance from any point in the network's service area to a point of service by a treating doctor or general hospital is not greater than:

(1) 30 miles in nonrural areas; and

(2) 60 miles in rural areas.

(e) Each network must provide that network services are sufficiently accessible and available as necessary to ensure that the distance from any point in the network's service area to a point of service by a specialist or specialty hospital is not greater than:

(1) 75 miles in nonrural areas; and

(2) 75 miles in rural areas.

(f) For portions of the service area in which the network or department identifies noncompliance with this section, the network must file an access plan with the department for approval at least 30 days before implementation of the plan if any health care service or a network provider is not available to an employee because:

(1) providers are not located within the required distances;

(2) the network is unable to obtain provider contracts after good faith attempts; or

(3) providers meeting the network's minimum quality-of-care and credentialing requirements are not located within the required distances.

(g) The access plan required under subsection (f) of this section must include:

(1) a description of the geographic area in which services or providers are not available, identified by county, city, ZIP code, mileage, or other identifying data;

(2) a map, with key and scale, which identifies the areas in which such health care services or providers are not available;

(3) documentation that demonstrates how the network determined that providers are not located within the required distances;

(4) the network's general plan for making health care services and providers available to injured employees in each geographic area identified in the access plan, including:

(A) the names, addresses, and specialties of the network providers and a listing of the services to be provided through the network that meet the health care needs of the employees; and

(B) a network development and provider contracting plan through which health care services or providers will be made available and accessible to employees in these geographic areas in the future;

(5) if a general hospital is not available in an approved nonrural county, or a general acute hospital is available in an approved nonrural area but refuses to contract with the network, lists of:

(A) contracted providers who have admitting privileges in a general hospital in each approved nonrural area who may admit injured employees; and

(B) alternative but contracted nonacute care facilities that can provide required acute hospital services to injured employees;

(6) a list of the physicians, providers, and facilities within the relevant service area that the network attempted to contract with, identified by name and specialty or facility type, with:

(A) a description of how and when the network last contacted each physician, provider, or facility; and

(B) a description of the reason each physician, provider, or facility gave for declining to contract with the network; and

(7) any other information necessary to allow the department to assess and approve the network's access plan.

(h) The network may make arrangements with providers outside the service area to enable employees to receive skilled or specialty care not available within the network service area.

(i) The network is not required to expand services outside the network's service area to accommodate employees who live outside the service area.

History

Source Note: The provisions of this §10.80 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.81 Quality Improvement Program

(a) A network must develop and maintain a continuous and comprehensive quality improvement program designed to monitor and evaluate objectively and systematically the quality and appropriateness of health care and network services, and to pursue opportunities for improvement. The quality improvement program must include return-to-work and medical case management programs. The network must dedicate adequate resources, including personnel and information systems, to the quality improvement program.

(b) Required documentation of the quality improvement program, at a minimum, includes:

(1) Written description. The network must develop a written description of the quality improvement program that outlines the program's organizational structure, functional responsibilities, and committee meeting frequency;

(2) Work plan. The network must develop an annual quality improvement work plan designed to reflect the type of services and the population served by the network in terms of age groups, disease or injury categories, and special risk status, such as type of industry. The work plan must include:

(A) objective and measurable goals, planned activities to accomplish the goals, time frames for implementation, individuals responsible, and evaluation methodology;

(B) evaluation of each program, including:

(i) network adequacy, which encompasses availability and accessibility of care and assessment of providers who are and are not accepting new patients;

(ii) continuity of health care and related services;

(iii) clinical studies;

(iv) the adoption and periodic updating of treatment guidelines, return-to-work guidelines, individual treatment protocols, and the list of services requiring preauthorization;

(v) employee and provider satisfaction;

(vi) the complaint-and-appeal process, complaint data, and identification and removal of communication barriers that may impede employees and providers from effectively making complaints against the network;

(vii) provider billing and provider payment processes, if applicable;

(viii) contract monitoring, including delegation oversight, if applicable, and compliance with filing requirements;

(ix) utilization review processes, if applicable;

(x) credentialing;

(xi) employee services, including after-hours telephone access logs;

(xii) return-to-work processes and outcomes; and

(xiii) medical case management outcomes.

(3) Annual evaluation. The network must prepare an annual written report on the quality improvement program that includes:

(A) completed activities;

(B) trending of clinical and service goals;

(D) conclusions regarding the effectiveness of the program.

(c) The network is presumed to be in compliance with statutory and regulatory requirements regarding quality improvement requirements, including credentialing, if:

(1) the network has received nonconditional accreditation or certification by the National Committee for Quality Assurance, The Joint Commission, URAC, or the Accreditation Association for Ambulatory Health Care;

(2) the accreditation includes all quality improvement requirements set forth in this section;

(3) the certification for a function, including credentialing, includes all requirements set forth in this section;

(4) the national accreditation organization's requirements are the same as, substantially similar to, or more stringent than the department's quality improvement requirements; and

(5) the network has and will maintain documentation demonstrating that doctors who provide certifications of maximum medical improvement or assign impairment ratings to injured employees are authorized under §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment).

(d) The network governing body is ultimately responsible for the quality improvement program and must:

(1) appoint a quality improvement committee that includes network providers;

(2) approve the quality improvement program;

(3) approve an annual quality improvement work plan;

(4) meet no less than annually to receive and review reports of the quality improvement committee or group of committees, and take action when appropriate; and

(5) review the annual evaluation of the quality improvement program.

(e) The quality improvement committee must evaluate the overall effectiveness of the quality improvement program. The committee may delegate and oversee quality improvement activities to subcommittees that may, if applicable, include practicing doctors and employees from the service area. All subcommittees must:

(1) collaborate and coordinate efforts to improve the quality, availability, and accessibility of health care services; and

(2) meet regularly and routinely report findings, recommendations, and resolutions in writing to the quality improvement committee for the network.

(f) The network must have a medical case management program with certified case managers whose certifying organization must be accredited by an established accrediting organization, including the National Commission for Certifying Agencies, the American Board of Nursing Specialties, or another national accrediting agency with similar standards. In accordance with Labor Code §413.021(a), concerning Return-to-Work Coordination Services, a claims adjuster may not serve as a case manager. The case manager must work with providers, employees, doctors, and employers to facilitate cost-effective health care and the employee's return to work, and must be certified in one or more of the following areas:

(1) case management;

(2) case management administration;

(3) rehabilitation case management;

(4) continuity of care;

(5) disability management; or

(6) occupational health.

History

Source Note: The provisions of this §10.81 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.82 Credentialing

(a) Networks must have a documented process for selection and retention of preferred providers sufficient to ensure that preferred providers are adequately credentialed. At a minimum, a network's credentialing standards must meet the standards promulgated by the National Committee for Quality Assurance (NCQA) or URAC to the extent that those standards do not conflict with other laws of this state. Networks will be presumed to be in compliance with statutory and regulatory requirements regarding credentialing if they have received nonconditional accreditation or certification by the NCQA, The Joint Commission, URAC, or the Accreditation Association for Ambulatory Health Care; maintain evidence of that accreditation or certification; and provide it to the department on request.

(b) The requirements of §10.41 of this title (relating to Network-Carrier Contracts) apply to delegation of credentialing.

(1) If the network delegates credentialing functions to other entities, it must have:

(A) a process for developing delegation criteria and for performing pre-delegation and annual audits;

(B) a delegation agreement;

(D) a procedure for termination of the delegation agreement for non-performance.

(2) If the network delegates credentialing functions to an entity accredited by one of the national accreditation organizations as described in §10.81(c) of this title (relating to Quality Improvement Program), the annual audit of that entity is not required for the function(s) listed in the accreditation; however, evidence of this accreditation must be made available to the department for review.

(3) The network must maintain and must make available for the department to review:

(A) documentation of pre-delegation and annual audits;

(B) executed delegation agreements;

(D) evidence of evaluation of the reports;

(E) current rosters or copies of signed contracts with doctors and health care practitioners who are affected by the delegation agreement; and

(F) documentation of ongoing monitoring.

(4) Credentialing files maintained by the other entities to which the network has delegated credentialing functions must be made available to the department for examination upon request.

(5) In all cases, the network must maintain the right to approve credentialing, suspension, and termination of doctors and health care practitioners.

(d) Compliance. Until January 1, 2023, entities subject to this section will be deemed to be in compliance with the section if they are in compliance with the section as adopted to be effective December 5, 2005. Entities subject to this section must make a filing attesting to compliance no later than January 1, 2023.

History

Source Note: The provisions of this §10.82 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.83 Guidelines and Protocols

(a) Each network must adopt treatment guidelines, return-to-work guidelines, and individual treatment protocols, which must be evidence-based, scientifically valid, outcome-focused, and be designed to reduce inappropriate or unnecessary health care while safeguarding access to necessary care.

(b) An insurance carrier or network may not deny treatment for a compensable injury solely because its treatment guidelines do not specifically address the treatment or injury.

(c) A network must, through its quality improvement program under §10.81 of this title (relating to Quality Improvement Program), assure that all treatment guidelines, return-to-work guidelines, and individual treatment protocols are made accessible to all network providers. The network must contractually require providers to follow treatment guidelines, return-to-work guidelines, and individual treatment protocols pursuant to §10.42(b)(2) of this title (relating to Network Contracts with Providers).

History

Source Note: The provisions of this §10.83 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.84 Treating Doctor

In addition to the duties and requirements placed upon treating doctors under Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, and this chapter, a doctor designated as a treating doctor by a network must comply with Labor Code §§408.0041(c) and (g), concerning Designated Doctor Examination; 408.025(c), concerning Reports and Records Required from Health Care Providers; 408.023(l) - (p), concerning List of Approved Doctors; Duties of Treating Doctors; and rules adopted by the Commissioner of Workers' Compensation.

History

Source Note: The provisions of this §10.84 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.85 Selection of Treating Doctor; Change of Treating Doctor

(a) Selection of treating doctor. An injured employee who lives within the service area is entitled to the employee's initial choice of a treating doctor from the list provided by the network of all treating doctors under contract with the network who provide services within the service area in which the injured employee lives in accordance with Insurance Code §1305.104(a), concerning Selection of Treating Doctor.

(b) Change of treating doctor. An injured employee who is dissatisfied with the employee's initial choice of treating doctor or with an alternate treating doctor may select an alternate or subsequent treating doctor in accordance with Insurance Code §1305.104(b) - (e).

(c) Use of specialist as treating doctor. An injured employee with a chronic, life-threatening injury or chronic pain related to a compensable injury may apply to the network's medical director to use a specialist that is in the same network as the injured employee's treating doctor in accordance with Insurance Code §1305.104(f) - (i).

(d) Request for an HMO primary care physician or provider as the employee's treating doctor. An injured employee required to receive health care services within a network may select as the employee's treating doctor a doctor who the employee selected, prior to injury, as the employee's primary care physician or provider under Chapter 843, as the terms "physician" and "provider" are defined in that chapter. The network must grant an employee's request for an HMO primary care physician or provider to serve as the employee's treating doctor if the physician or provider agrees to abide by the terms of the network's contract and comply with Insurance Code Chapter 1305, Subchapters D - I, and rules adopted under those subchapters, as applicable to treating doctors.

History

Source Note: The provisions of this §10.85 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.86 Telephone Access

Each network must establish and maintain telephone access logs for calls received other than during regular business hours that accurately record the following:

(1) the date the network received the telephone call;

(2) detailed information necessary for the network to respond to the telephone call;

(3) the date the network responded to the telephone call; and

(4) identifying information for the telephone call.

History

Source Note: The provisions of this §10.86 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter F UTILIZATION REVIEW AND RETROSPECTIVE REVIEW

28 Tex. Admin. Code § 10.100 Applicability

In addition to the requirements under this subchapter, the requirements of Insurance Code Chapter 4201, concerning Utilization Review Agents, apply to utilization review conducted in relation to a workers' compensation health care network. In the event Chapter 4201 conflicts with this chapter and Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, this chapter and Insurance Code Chapter 1305 control.

History

Source Note: The provisions of this §10.100 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.101 General Standards for Utilization Review

(a) Screening criteria used for utilization review related to a workers' compensation health care network must be consistent with the network's treatment guidelines, return-to-work guidelines, and individual treatment protocols.

(b) The carrier's utilization review program must include a process for a treating doctor or specialist to request approval from the network for deviation from the treatment guidelines, return-to-work guidelines, and individual treatment protocols where required by the particular circumstances of an employee's injury.

(c) Under Insurance Code §4201.152, concerning Utilization Review Under Physician, a network that uses doctors to perform reviews of health care services provided under this chapter, including utilization review, or peer reviews under Labor Code §408.0231(a), concerning Maintenance of List of Approved Doctors; Sanctions and Privileges Relating to Health Care, may only use doctors licensed to practice in this state.

(d) Physicians and doctors conducting utilization review must hold a professional certification in a health care specialty appropriate to the type of health care the injured employee is receiving as required by Labor Code §§408.0043 - 408.0045, concerning Professional Specialty Certification Required for Certain Review, Review of Dental Services, and Review of Chiropractic Services. Physicians, doctors, and other health care providers conducting utilization review must have the appropriate credentials as required by Chapter 180 of this title (relating to Monitoring and Enforcement).

(e) The preauthorization requirements of Labor Code §413.014, concerning Preauthorization Requirements; Concurrent Review and Certification of Health Care, and rules adopted under that section do not apply to health care provided through a workers' compensation network. If a carrier or network uses a preauthorization process within a network, the requirements of Insurance Code Chapter 1305, Subchapter H, concerning Utilization Review, and this chapter apply.

(f) Insurance Code Chapter 1305, Subchapter H, and applicable network requirements in Chapter 19, Subchapter U, of this title (relating to Utilization Reviews for Health Care Provided Under Workers' Compensation Insurance Coverage), apply to utilization review for health care provided through a workers' compensation network that is conducted by insurance carriers, utilization review agents, and networks that perform utilization review for or on behalf of insurance carriers and utilization review agents.

(g) In addition to the requirements in subsection (f) of this section, the reconsideration procedures must include a method for expedited reconsideration procedures in accordance with Insurance Code §1305.354(b) and (c), concerning Reconsideration of Adverse Determination.

History

Source Note: The provisions of this §10.101 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.104 Independent Review of Adverse Determination

(a) Requirements for independent review of an adverse determination are governed by Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks, and department and Division of Workers' Compensation rules, including Chapter 10, Subchapter F, of this title (relating to Utilization Review), Chapter 12 of this title (relating to Independent Review Organizations), Chapter 19 of this title (relating to Licensing and Regulation of Insurance Professionals), and §133.308 of this title (relating to MDR of Medical Necessity Disputes).

(b) The person who performs utilization review; denies a referral request because the referral is not medically necessary; or denies a request for deviation from treatment guidelines, individual treatment protocols, or screening criteria must:

(1) permit the employee, person acting on behalf of the employee, or the employee's requesting provider to seek review of the referral denial or reconsideration denial within the period prescribed by subsection (c) of this section by an independent review organization assigned in accordance with Insurance Code Chapter 4202, concerning Independent Review Organizations, and department and Division of Workers' Compensation rules; and

(2) provide to the appropriate independent review organization the information and documents listed in §133.308(k) of this title (relating to MDR of Medical Necessity Disputes) and the response letter described by Insurance Code §1305.354(a)(4), concerning Reconsideration of Adverse Determination, not later than the third business day after the date the person receives notification of the assignment of the request to an independent review organization.

(1) for a request regarding preauthorization or concurrent review, not later than the 45th day after the date of denial of a reconsideration; or

(2) for a request regarding retrospective medical necessity review, not later than the 45th day after the denial of reconsideration.

(d) The insurance carrier must pay for the independent review provided under this subchapter.

(e) The department will assign the review request to an independent review organization.

(f) A decision of an independent review organization related to a request for preauthorization or concurrent review is binding during any review under this section. The carrier is liable for health care during the pendency of any appeal, and the carrier and network must comply with the decision.

(g) A party to a medical dispute that remains unresolved after a review under this section is entitled to a contested case hearing. A hearing under this section will be conducted by the Division of Workers' Compensation in the same manner as a hearing conducted under Labor Code §413.0311, concerning Review of Medical Necessity Disputes; Contested Case Hearing, and Division of Workers' Compensation rules.

(h) The department and the Division of Workers' Compensation are not considered to be parties to the medical dispute.

(i) If review is not sought under subsection (g) of this section, the carrier and network must comply with the independent review organization's decision.

History

Source Note: The provisions of this §10.104 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter G COMPLAINTS

28 Tex. Admin. Code § 10.120 Complaint System Required

(a) Each network must implement and maintain a complaint system compliant with Insurance Code Chapter 1305, Subchapter I, concerning Complaint Resolution, and this subchapter that provides reasonable procedures for resolving an oral or written complaint.

(b) For purposes of this subchapter, a complaint relating to a fee dispute is a complaint from a provider regarding failure to pay a claim in accordance with the contract between the network and provider.

History

Source Note: The provisions of this §10.120 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.121 Complaints; Deadlines for Response and Resolution

(a) Not later than seven calendar days after receipt of an oral or written complaint, a network must:

(1) acknowledge receipt of the complaint in writing;

(2) acknowledge the date of receipt; and

(3) provide a description of the network's complaint procedures and deadlines.

(b) A network must investigate each oral or written complaint received in accordance with the network's policies and in compliance with this subchapter.

(c) After a network has investigated a complaint, the network must issue a resolution letter to the complainant not later than the 30th calendar day after the network receives the written complaint that:

(1) explains the network's resolution of the complaint;

(2) states the specific reasons for the resolution;

(3) states the specialization of any health care provider consulted;

(4) explains the network's procedures and deadlines for filing an appeal of the complaint; and

(5) states that, if the complainant is dissatisfied with the resolution of the complaint or the complaint process, the complainant may file a complaint with the department as described in §10.122 of this title (relating to Submitting Complaints to the Department).

(d) A network must maintain a complaint-and-appeal log regarding each complaint and categorize each complaint and appeal as one or more of the following:

(1) quality of care or services;

(2) accessibility and availability of services or providers;

(3) utilization review;

(4) complaint procedures;

(5) health care provider contracts;

(6) bill payment, as applicable;

(7) fee disputes; and

(8) miscellaneous.

(e) Each network must maintain the complaint-and-appeal log required under subsection (d) of this section and documentation on each complaint, appeal, complaint proceeding, and action taken on the complaint until the third anniversary after the date the complaint was received.

History

Source Note: The provisions of this §10.121 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

28 Tex. Admin. Code § 10.122 Submitting Complaints to the Department

(a) Any person, including a person who has attempted to resolve a complaint through a network's complaint system process or attempted to resolve a dispute regarding whether the employee lives within the network's service area through the insurance carrier, who is dissatisfied with resolution of the complaint, may submit a complaint to the department.

(b) The department's complaint form may be obtained from the department's website.

History

Source Note: The provisions of this §10.122 adopted to be effective December 5, 2005, 30 TexReg 8099; amended to be effective August 2, 2022, 47 TexReg 4534.

Subchapter H EXAMINATIONS

28 Tex. Admin. Code § 10.200 Fee for Examination of a Certified Workers' Compensation Health Care Network

(a) As provided in Insurance Code §1305.251, concerning Examination of Network, a network must pay to the department an examination fee set by the Commissioner for expenses directly attributable to an examination of the network conducted pursuant to Insurance Code §1305.251 or §1305.252, concerning Examination of Provider or Third Party.

(b) The examination fee includes the actual salary and expenses of the examiners directly attributable to the examination.

(1) The actual salary of an examiner is determined by dividing the annual salary of the examiner by the total number of working days in a year, then dividing that amount by the number of hours in a working day. The actual salary included in an examination fee is the part of the annual salary attributable to each hour the examiner examines the network.

(2) The expenses included in an examination fee are those actually incurred by the examiner and directly attributable to the examination, including the actual cost of:

(A) transportation;

(B) lodging;

(D) subsistence expenses;

(E) parking fees; and

(F) department overhead expenses.

(c) An examination fee paid pursuant to this section is payable and due to the Texas Department of Insurance at the address given on the invoice no later than 30 days from the invoice date.

History

Source Note: The provisions of this §10.200 adopted to be effective March 25, 2008, 33 TexReg 2541; amended to be effective August 2, 2022, 47 TexReg 4534.

Chapter 11 HEALTH MAINTENANCE ORGANIZATIONS

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 11.1 General Provisions

(a) Severability. If a court of competent jurisdiction holds that any provision of this chapter or its application to any person or circumstance is invalid for any reason, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application. To this end, all provisions of this chapter are severable.

(b) Effect of rules. The sections in this chapter are prescribed to govern the performance of appropriate statutory and regulatory functions and are not to be construed as limitations on the exercise of statutory authority by the commissioner of insurance.

(c) Effective date. This chapter is effective on August 1, 2017. Actions taken before the effective date of this chapter are governed by the regulations in effect on the date the action was taken, and the former regulations are continued in effect for that purpose.

History

Source Note: The provisions of this §11.1 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2 Definitions

(a) Except as otherwise provided, words and terms defined in Insurance Code Chapters 823 (concerning Insurance Holding Company Systems), 843 (concerning Health Maintenance Organizations), 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), 1272 (concerning Delegation of Certain Functions of Health Maintenance Organizations), 1367 (concerning Coverage of Children), 1452 (concerning Physician and Provider Credentials), 1501 (concerning Health Insurance Portability and Availability Act), and 1507 (concerning Consumer Choice of Benefits Plans) have the same meanings when used in this subchapter.

(b) The following words and terms, when used in this chapter, have the meaning indicated below unless the context clearly indicates otherwise:

(1) Admitted assets--Assets as defined by statutory accounting principles, as permitted and valued under Chapter 11, Subchapter I, of this title (relating to Financial Requirements).

(2) Adverse determination--A determination by a health maintenance organization or a utilization review agent that health care services provided or proposed to be provided to an enrollee are not medically necessary or appropriate, or are experimental or investigational. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review.

(3) Affiliate--A person defined as an affiliate in §7.202 of this title (relating to Definitions).

(4) Agent--A person licensed under the Insurance Code to act as an agent for the sale of a health benefit plan.

(5) ANHC or approved nonprofit health corporation--A nonprofit health corporation certified under Occupations Code §162.001 (concerning Certification by Board) and defined in Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations).

(6) Basic health care service--A health care service that an enrolled population might reasonably require to maintain good health, as prescribed in §11.508 and §11.509 of this title (relating to Basic Health Care Services and Mandatory Benefit Standards: Group, Individual, and Conversion Agreements; and relating to Additional Mandatory Benefit Standards: Individual and Group Agreements).

(7) Clinical director--A health professional who is:

(A) appropriately licensed and credentialed in compliance with §11.1606 of this title (relating to Organization of an HMO);

(B) an employee of, or party to a contract with, an HMO; and

(C) responsible for clinical oversight of the utilization review program, the credentialing of professional staff, and quality improvement functions.

(8) Consumer choice health benefit plan--A health benefit plan authorized by Insurance Code Chapter 1507 and described in Chapter 21, Subchapter AA, of this title (relating to Consumer Choice Health Benefit Plans).

(9) Contract holder--An individual, association, employer, trust, or organization to which an individual or group contract for health care services has been issued.

(10) Control--As defined in §7.202 of this title.

(11) Copayment--A charge, which may be expressed in terms of a dollar amount or a percentage of the contracted rate, in addition to premium attributed to an enrollee for a service that is not fully prepaid.

(12) Credentialing--The process of collecting, assessing, and validating qualifications and other relevant information pertaining to a physician or provider to determine eligibility to deliver health care services.

(13) Dentist--An individual provider licensed to practice dentistry by the Texas State Board of Dental Examiners.

(14) Department--Texas Department of Insurance.

(15) Emergency care--As defined in Insurance Code §843.002 (concerning Definitions).

(16) Facility-based physician--A radiologist, anesthesiologist, pathologist, emergency department physician, neonatologist, or assistant surgeon:

(A) to whom a facility has granted clinical privileges; and

(B) who provides services to patients of the facility under those clinical privileges.

(17) Freestanding emergency medical care facility--A facility, licensed under Health and Safety Code Chapter 254 (concerning Freestanding Emergency Medical Care Facilities), structurally separate and distinct from a hospital, that receives an individual and provides emergency care as defined in Insurance Code §843.002.

(18) General hospital--An establishment, licensed under Health and Safety Code Chapter 241 (concerning Hospitals), that:

(A) offers services, facilities, and beds for use for more than 24 hours for two or more unrelated individuals requiring diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy; and

(B) regularly maintains, at a minimum, clinical laboratory services, diagnostic X-ray services, treatment facilities including surgery or obstetrical care or both, and other definitive medical or surgical treatment of similar extent.

(19) HMO--A health maintenance organization as defined in Insurance Code §843.002.

(20) Health status-related factor--Any of the following in relation to an individual:

(A) health status;

(B) medical condition (including both physical and mental illnesses);

(D) receipt of health care;

(E) medical history;

(F) genetic information;

(G) evidence of insurability (including conditions arising out of acts of domestic violence, including family violence as defined by Insurance Code Chapter 544, Subchapter D (concerning Family Violence); or

(H) disability.

(21) Individual provider--Any person, other than a physician or institutional provider, who is licensed or otherwise authorized to provide a health care service. This includes, but is not limited to, licensed doctors of chiropractic, dentists, registered nurses, advanced practice registered nurses, physician assistants, pharmacists, optometrists, and acupuncturists.

(22) Insert page--A page used to replace an existing page of a previously approved or reviewed evidence of coverage or written plan description, including a member handbook.

(23) Institutional provider--A provider that is not an individual, such as any medical or health related service facility caring for the sick or injured or providing care or supplies for other coverage that may be provided by the HMO. This includes, but is not limited to:

(A) general hospitals;

(B) psychiatric hospitals;

(D) nursing homes;

(E) skilled nursing facilities;

(F) home health agencies;

(G) rehabilitation facilities;

(H) dialysis centers;

(I) free-standing surgical centers;

(J) diagnostic imaging centers;

(K) laboratories;

(L) hospice facilities;

(M) residential treatment centers;

(N) community mental health centers;

(O) pharmacies; and

(P) freestanding emergency medical care facilities.

(24) Insurance Code--The Texas Insurance Code.

(25) Limited provider network--A subnetwork within an HMO delivery network in which contractual relationships between physicians, certain providers, independent physician associations, physician groups, or any combination thereof, limit enrollees' access to only the physicians and providers in the subnetwork.

(26) Limited service HMO--An HMO that has been issued a certificate of authority to issue a limited health care service plan as defined in Insurance Code §843.002.

(27) Matrix filing--A filing consisting of individual provisions, each with its own unique identifiable form number, which allows an HMO the flexibility to create multiple evidences of coverage by using combinations of approved individual provisions.

(28) NAIC--The National Association of Insurance Commissioners.

(29) NAIC UCAA--The National Association of Insurance Commissioners' Uniform Certificate of Authority Application.

(30) NCQA--The National Committee for Quality Assurance.

(31) Net worth--The amount by which total admitted assets exceed total liabilities, excluding liability for subordinated debt issued in compliance with Insurance Code Chapter 427 (concerning Subordinated Indebtedness).

(32) Out of area benefits or services--Benefits or services that an HMO covers when enrollees are outside the geographical limits of the HMO service area.

(33) Pharmaceutical services--Services, including dispensing prescription drugs, under the Texas Pharmacy Act, Occupations Code, Title 3, Subtitle J, Chapters 551 - 569 (concerning Pharmacy and Pharmacists), that are ordinarily and customarily rendered by a pharmacy or pharmacist.

(34) Pharmacist--An individual provider licensed to practice pharmacy under the Texas Pharmacy Act, Occupations Code, Title 3, Subtitle J, Chapters 551 - 569.

(35) Pharmacy--A facility licensed under the Texas Pharmacy Act, Occupations Code, Title 3, Subtitle J, Chapters 551 - 569.

(36) Preauthorization--As defined in Insurance Code §843.348(a) (concerning Preauthorization of Health Care Services).

(37) Premium--All amounts payable by a contract holder as a condition of receiving coverage from a carrier, including any fees or other contributions associated with a health benefit plan.

(38) Primary care physician or primary care provider--A physician or individual provider who is responsible for providing initial and primary care to patients, maintaining the continuity of patient care, and initiating referral for care.

(39) Primary HMO--An HMO that contracts directly with, and issues an evidence of coverage to, individuals or organizations to arrange for or provide a basic, limited, or single health care service plan to enrollees on a prepaid basis.

(40) Provider HMO--An HMO that contracts directly with a primary HMO to provide or arrange to provide health care services on behalf of the primary HMO within the primary HMO's defined service area.

(41) Psychiatric hospital--A licensed hospital that offers inpatient services, including treatment, facilities, and beds for use beyond 24 hours, for the primary purpose of providing psychiatric assessment, psychiatric diagnostic services, psychiatric inpatient care, and treatment for mental illness. The services must be more intensive than room, board, personal services, and general medical and nursing care. Although substance abuse services may be offered, a majority of beds must be dedicated to the treatment of mental illness in adults, children, or both.

(42) QI or quality improvement--A system to continuously examine, monitor, and revise processes and systems that support and improve administrative and clinical functions.

(43) Recredentialing--The periodic process by which:

(A) qualifications of physicians and providers are reassessed;

(B) performance indicators, including utilization and quality indicators, are evaluated; and

(44) Schedule of charges--Specific rates or premiums to be charged for enrollee and dependent coverages.

(45) Service area--A geographic area within which direct service benefits are available and accessible to HMO enrollees who live, reside, or work within that geographic area and that complies with §11.1606 of this title.

(46) Single service HMO--An HMO that has been issued a certificate of authority to issue a single health care service plan as defined in Insurance Code §843.002.

(47) Special hospital--An establishment, licensed under Health and Safety Code Chapter 241 (concerning Hospitals), that:

(A) offers services, facilities, and beds for use for more than 24 hours for two or more unrelated individuals who are regularly admitted, treated, and discharged and who require services more intensive than room, board, personal services, and general nursing care;

(B) has clinical laboratory facilities, diagnostic X-ray facilities, treatment facilities, or other definitive medical treatment;

(D) maintains records of the clinical work performed for each patient.

(48) Specialists--Physicians or individual providers who set themselves apart from the primary care physician or primary care provider through specialized training and education in a health care discipline.

(49) State-mandated health benefit plan--An accident or sickness insurance policy or evidence of coverage that provides state-mandated health benefits as defined in §21.3502 of this title (relating to Definitions).

(50) Subscriber--For conversion or individual coverage, the individual who is the contract holder and is responsible for payment of premiums to the HMO. For group coverage, the individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility for enrollment in the HMO.

(51) Subsidiary--As defined in §7.202 of this title.

(52) Telehealth service--As defined in Government Code §531.001 (concerning Definitions).

(53) Telemedicine medical service--As defined in Government Code §531.001.

(54) Urgent care--Health care services provided in a situation other than an emergency that are typically provided in a setting such as a physician or individual provider's office or urgent care center, as a result of an acute injury or illness that is severe or painful enough to lead a prudent layperson, possessing an average knowledge of medicine and health, to believe that his or her condition, illness, or injury is of such a nature that failure to obtain treatment within a reasonable time would result in serious deterioration of the condition of his or her health.

(55) Utilization review--As defined in Insurance Code §4201.002 (concerning Definitions).

(56) Utilization review agent or URA--As defined in Insurance Code §4201.002.

History

Source Note: The provisions of this §11.2 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter B NAME APPLICATION PROCEDURE

28 Tex. Admin. Code § 11.101 How to Obtain Forms

A name application form and other HMO forms may be obtained by contacting the Company Licensing and Registration Office, Mail Code 103-CL, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104, or from the department's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §11.101 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.102 Information Required

The name application form may be submitted with or at any time before submitting the application for certificate of authority, together with a $100 filing fee.

(1) The name, address, and title or relationship to the proposed HMO of each organizer must be shown on the name application form, along with the same information about any affiliated organization.

(2) An organization applying for a certificate of authority as an HMO or an existing HMO is prohibited from using the following words in its name, contracts, or literature: "insurance," "casualty," "surety," or "mutual."

(3) A name application form may be accepted by the commissioner before the proposed HMO's basic organizational document is filed with the Texas secretary of state. Applicants must use the same exact name when filing with the commissioner and the secretary of state.

(4) A certificate of authority will not be granted until the name has been accepted.

History

Source Note: The provisions of this §11.102 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.104 Criteria

The commissioner will review requests for reservation of names in the manner provided for the review of corporate names under Chapter 7, Subchapter G, of this title (relating to Review of Corporate Names).

History

Source Note: The provisions of this §11.104 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.105 Use of the Term "HMO," Service Marks, Trademarks, and Assumed Name

(a) While in the process of planning or development, the term "HMO" may be used as a part of the proposed HMO's name as long as the developmental status of the proposed HMO is made clear in all dealings with employers, individuals, prospective contract holders, news media, and others.

(b) A trademark, service mark, or assumed name must be filed with and approved by the commissioner before use.

(c) After the commissioner issues a certificate of authority, the HMO must use the name as it appears on the certificate of authority on all advertising and forms distributed to the public.

(d) After the commissioner issues a certificate of authority, the HMO must file any new trademark or service mark, or any changes to an existing trademark or service mark, with the commissioner.

History

Source Note: The provisions of this §11.105 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.106 Time Limits; Extension Requirements

Names reserved for use by a proposed HMO are subject to the following time limits and extension requirements:

(1) A requested name is reserved for 365 days from the date the name is accepted by the commissioner.

(2) Before the end of this 365-day period, a proposed HMO that has not submitted an application for a certificate of authority may request that the name reservation be extended for an additional 365 days by submitting the following:

(A) a letter of request for extension; and

(B) a statement explaining the current status of the proposed HMO and the estimated date on which an application for a certificate of authority will be filed.

(3) Extension requests may not be submitted more than 30 days before the end of the 365-day period for which the name is reserved.

(4) If the information detailed in paragraph (2) of this section is not received before the expiration of 365 days, then the name reservation expires and the proposed HMO must wait 30 days before filing a new name application form.

(5) If the extension request is received before the expiration of 365 days and if the statement of status sufficiently explains why the proposed HMO has not yet filed an application for a certificate of authority, then the name reservation may be extended for another 365 days.

(6) The requirements of paragraph (2) of this section must be met every 365 days until an application for certificate of authority is filed, or the extension expires and the proposed HMO must wait 30 days before filing a new name application form.

History

Source Note: The provisions of this §11.106 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.107 Effect of Filing for or Receiving Certificate of Authority

Once a proposed HMO has filed an application for a certificate of authority, the name application no longer must be extended. If the commissioner denies a certificate of authority, then the name application is canceled on the date the denial order becomes final. If a certificate of authority is granted, then the name is reserved for use by the HMO as long as the certificate of authority is in effect.

History

Source Note: The provisions of this §11.107 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.108 Effect of Withdrawing Application for Certificate of Authority

If an application is filed and then withdrawn or delayed at the request of a proposed HMO, then at the time of the withdrawal or request for delay, the proposed HMO must request that the name continue to be reserved and estimate the date on which the application will be refiled. If a 365-day name application period expires during the withdrawal period, then the requirements of §11.106(2) of this title (relating to Time Limits; Extension Requirements) must be met in order for the name application to be continued.

History

Source Note: The provisions of this §11.108 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.109 Situations in Which Name Applications Will Cease

A name will cease to be reserved when:

(1) a proposed HMO fails to request extension before the end of a 365-day name application period;

(2) the commissioner denies an application for a certificate of authority; or

(3) the commissioner revokes or cancels a certificate of authority.

History

Source Note: The provisions of this §11.109 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter C APPLICATION FOR CERTIFICATE OF AUTHORITY

28 Tex. Admin. Code § 11.201 Filing Fee

A filing fee required by Insurance Code §843.154 (concerning Fees), as determined by §7.1301 of this title (relating to Regulatory Fees), must accompany an application for a certificate of authority, unless the filing is made electronically through the NAIC's System for Electronic Rate and Form Filing, in which case the fees may not be attached to the filing. For filings made electronically, the department will send an invoice for the fees, and the HMO must pay, as provided in §7.1302 of this title (relating to Billing System). The fee is nonrefundable.

History

Source Note: The provisions of this §11.201 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.202 Binding, Indexing, and Numbering Requirements

(a) A proposed HMO may submit an application for a certificate of authority in electronic format, by electronic file transmission or in a data storage format acceptable to the department, or by paper.

(b) If an HMO submits an application in paper format, the applicant must submit three separate copies of the application in separate three-ring binders, so that pages may be easily replaced when necessary. Paper applications must include dividers with identifying subject tabs preceding each separate exhibit.

(c) Applications submitted in an electronic format must include separate file folders with names identifying each exhibit.

(d) Each application must contain a table of contents.

(e) All pages must be clearly legible and numbered.

(f) An HMO should not use identical items in more than one section of the application. Instead of using the same information in more than one place, an application must refer to the file or page on which the required form or list may be found.

(g) An original application becomes the charter file once the applicant submits all required revisions and the commissioner approves the application.

(h) The application is subject to Government Code Chapter 552 (concerning Public Information).

(i) Each item in the application must be identified by a unique number as more fully described in §11.301(2) of this title (relating to Filing Requirements).

History

Source Note: The provisions of this §11.202 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.203 Revisions During Review Process

(a) Revisions during the review of an application for a certificate of authority must be addressed to: Company Licensing and Registration Office, Mail Code 103-CL, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104, or submitted electronically as instructed by the department. The applicant must include a transmittal letter and any revision specified in this subchapter.

(b) Each revision to the basic organizational documents, bylaws, or officers and employees bond must be accompanied by a notarized certification of the corporate secretary or corporate president of the applicant that the revision submitted is true, accurate, and complete, and, if the item is a copy, by a notarized certification that the copy is a true, accurate, and complete copy of the original.

(c) If an electronic file or page is to be revised or replaced, the modified document must be submitted with the changed item or information clearly designated.

(d) Staff will conduct a review of the application and notify the applicant of the need for revisions necessary to meet the requirements of Insurance Code Chapter 843 (concerning Health Maintenance Organizations), this chapter, and other applicable insurance laws and regulations of this state. If the applicant does not make the necessary revisions, the department will deny the application.

(e) If the time required for the revisions will exceed the time limits set out in §1.809 of this title (relating to HMO Certificate of Authority), the applicant must request additional time within which to make the revisions. The applicant must specifically set out the length of time requested, which may not exceed 90 days. The commissioner may grant or deny the request for an extension of time at the commissioner's discretion under §1.809 of this title.

(f) The applicant may request additional extensions, but must set out in writing the need for the additional time for each requested extension. A request must provide sufficient detail for the commissioner to determine if good cause for the extension exists. The commissioner may grant or deny any additional request for an extension of time at the commissioner's discretion.

History

Source Note: The provisions of this §11.203 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.204 Contents

The application for a certificate of authority must contain the following, in this order:

(1) a completed name application form along with any certificate of reservation of corporate name issued by the secretary of state;

(2) a completed certificate of authority application form;

(3) the basic organizational documents and all amendments, complete with the original incorporation certificate with charter number and seal indicating certification by the secretary of state, if applicable;

(4) the bylaws, rules, or any similar document regulating the conduct of the internal affairs of the applicant;

(5) information about officers, directors, and staff, including:

(A) a completed officers and directors page;

(B) NAIC UCAA biographical data forms for all persons who are to be responsible for the day-to-day conduct of the applicant's affairs, including all members of the board of directors, board of trustees, executive committee or other governing body or committee, the principal officers, and controlling shareholders of the applicant if the applicant is a corporation, or all partners or members if the applicant is a partnership or association; and

(C) a complete set of fingerprints for each person to whom the fingerprint requirements of Chapter 1 of this title (relating to General Administration) apply;

(6) organizational information, as follows:

(A) a chart or list clearly identifying the relationships between the applicant and any affiliates, and a list of any currently outstanding loans or contracts to provide services between the applicant and the affiliates;

(B) a chart showing the internal organizational structure of the applicant's management and administrative staff; and

(7) a fidelity bond or deposit for officers and employees that must be:

(A) an original or copy of a bond complying with Insurance Code §843.402 (concerning Officers' and Employees' Bond), which must not contain a deductible; or

(B) a cash deposit held under Insurance Code §843.402 or as provided by Insurance Code §423.004 (concerning Statutory Deposits with Department) in the same amount and subject to the same conditions as the bond described in this paragraph;

(8) information relating to out-of-state licensure and service of legal process for all applicants must be submitted by using the attorney for service form; provided that:

(A) if the applicant is domiciled in another jurisdiction, an agent for service of legal process must be appointed in compliance with Insurance Code Chapter 804 (concerning Service of Process) using Form FIN 312 (rev. 04/00), and the applicant must furnish a copy of the certificate of authority from the domiciliary jurisdiction's licensing authority; and

(B) the applicant must furnish a statement acknowledging that all lawful process in any legal action or proceeding against the HMO on a cause of action arising in this state is valid if served as provided in Insurance Code Chapter 804;

(9) the evidence of coverage to be issued to enrollees and any group agreement that is to be issued to employers, unions, trustees, or other organizations as described in Chapter 11, Subchapter F, of this title (relating to Evidence of Coverage);

(10) financial information, consisting of the following:

(A) a financial statement that includes a balance sheet reflecting the required net worth, assets, and any liabilities;

(B) if the applicant is newly formed, a balance sheet reflecting the HMO's proposed initial funding;

(C) projected financial statements using the NAIC UCAA ProForma Financial Statements for Health Companies, commencing with the proposed beginning of operations and containing at least two full calendar year projections, and including the identity and credentials of the person preparing the projections; and

(D) the most recent audited financial statements of the HMO's immediate parent company, the ultimate holding company parent, and any sponsoring organization;

(11) the schedule of charges, excluding any charges for Medicaid products, with an actuarial certification and supporting documentation meeting the qualifications specified in §11.702 of this title (relating to Actuarial Certification),

(12) if the applicant proposes to write Medicaid products, an actuarial certification and supporting documentation meeting the qualifications specified in §11.702 of this title, and noting whether the proposed rates are the maximum rates allowed by the contracting state agency, if rates less than the maximum rates allowed are being proposed or if the contracting state agency rates are not available;

(13) a description and a map of the applicant's proposed service area, with key and scale, which must identify the county or counties, or portions of counties, to be served; provided that all copies of the map must be in color, if the HMO submits a map on paper and in color;

(14) the form of any contract or monitoring plan between the applicant and:

(A) any person listed on the officers and directors page;

(B) any physician, medical group, association of physicians, or any other provider, and the form of any subcontract between those entities and any physician, medical group, association of physicians, or any other provider to provide health care services, provided that contracts, including subcontracts between physician and provider groups with the individual members of the groups providing health care services to the HMO's enrollees, must include a hold-harmless provision and comply with all other provisions of §11.901 of this title (relating to Required and Prohibited Provisions);

(D) any affiliated person who will perform marketing, administrative, data processing services, or claims processing services;

(E) any affiliated person who will perform management services, together with a deposit or the original or a copy of a bond with no deductible meeting the requirements of Insurance Code §843.105 (concerning Management and Exclusive Agency Contracts);

(F) an ANHC that agrees to arrange for or provide health care services, other than medical care or services ancillary to the practice of medicine, or a provider HMO that agrees to arrange for or provide health care services on a risk-sharing or capitated risk arrangement on behalf of a primary HMO as part of the primary HMO delivery network; together with a monitoring plan, as required by §11.1604 of this title (relating to Requirements for Certain Contracts Between Primary HMOs and ANHCs and Between Primary HMOs and Provider HMOs);

(G) any insurer or group hospital service corporation to offer indemnity benefits under a point-of-service contract; and

(H) any delegated entity or delegated network, as those terms are described in Insurance Code Chapter 1272 (concerning Delegation of Certain Functions by Health Maintenance Organization);

(15) a description of the quality improvement program and work plan that includes a process for medical peer review required by Insurance Code §843.082 (concerning Requirements for Approval of Application) and §843.102 (concerning Health Maintenance Organization Quality Assurance); provided that arrangements for sharing pertinent medical records between physicians, providers, or both, contracting or subcontracting under paragraph (14)(B) of this section with the HMO and ensuring the confidentiality of the records must be explained;

(16) insurance, guarantees, and other protection against insolvency:

(A) any affiliated reinsurance agreement and any other affiliated agreement described in Insurance Code §843.082(4)(C), covering excess of loss, stop-loss, catastrophes, or any combination thereof, which must provide that the Commissioner and HMO will be notified no less than 60 days before termination or reduction of coverage by the insurer;

(B) any conversion policy or policies that will be offered by an insurer to an HMO enrollee in the event of the applicant's insolvency;

(C) any other arrangements offering protection against insolvency, including guarantees, as specified in §11.808 of this title (relating to Liabilities) and §11.810 of this title (relating to Guarantee from a Sponsoring Organization);

(17) authorization for bank disclosure to the Commissioner of the applicant's initial funding;

(18) the written description of health care plan terms and conditions made available by:

(A) an HMO other than an HMO offering a Children's Health Insurance Program (CHIP) plan to any current or prospective group contract holder and current or prospective enrollee of the applicant under Insurance Code §§843.201 (concerning Disclosure of Information About Health Care Plan Terms), 843.078 (concerning Contents of Application), and 843.079 (concerning Contents of Application; Limited Health Care Service Plan), and §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees);

(B) an HMO offering a CHIP plan in the form of the member handbook, for information only, together with a certification from the HMO that the handbook has been approved by the Texas Health and Human Services Commission and a copy of the document approving the handbook;

(19) network configuration information for each of the HMO's physician or provider networks, including limited provider networks, along with:

(A) maps for each product type demonstrating the location and distribution of the physician, dentist, and provider network within the proposed service area by county, with each specialty represented in one map that includes the radii mileage requirements described in §11.1607 of this title (relating to Accessibility and Availability Requirements);

(B) lists for each product type of credentialed and contracted physicians, dentists, and individual providers, in an Excel-compatible format, specifying:

(i) last name;

(ii) first name;

(iii) business address;

(iv) the municipality in which the facility is located or county in which the facility is located if the facility is in the unincorporated area of the county;

(v) state;

(vi) county;

(vii) telephone number;

(viii) Texas license number;

(ix) specialty;

(x) name of the HMO contracted facility, including hospital(s), in which the physician or individual provider has privileges;

(xi) date of last credentialing or recredentialing; and

(xii) an indication of whether they are accepting new patients;

(C) lists for each product type of credentialed and contracted facilities, including hospitals, in an Excel-compatible format, specifying:

(i) name of facility;

(ii) business address;

(iii) the municipality in which the facility is located or county in which the facility is located if the facility is in the unincorporated area of the county;

(iv) state;

(v) county;

(vi) telephone number;

(vii) type of facility;

(viii) name of national accrediting body, if applicable; and

(ix) date of last credentialing or recredentialing;

(D) for each facility listed under subparagraph (C) of this paragraph:

(i) create separate headings under the facility name for radiologists, anesthesiologists, pathologists, emergency department physicians, neonatologists, and assistant surgeons;

(ii) under each heading described by clause (i) of this subparagraph, list each preferred facility-based physician practicing in the specialty corresponding with that heading;

(iii) for the facility and each facility-based physician described by clause (ii) of this subparagraph, clearly indicate each health benefit plan issued by the HMO that may provide coverage for the services provided by that facility, physician, or facility-based physician group;

(iv) for each facility-based physician described by clause (ii) of this subparagraph, include the name, street address, telephone number, and any physician group in which the facility-based physician practices;

(v) include the facility in a listing of all facilities and indicate each health benefit plan issued by the HMO that may provide coverage for the services provided by the facility; and

(vi) the list must list each facility-based physician individually and, if a physician belongs to a physician group, also as part of the physician group;

(20) a written description of the types of compensation arrangements, such as compensation based on fee-for-service arrangements, risk-sharing arrangements, or capitated risk arrangements, made or to be made with physicians and providers in exchange for the provision of or the arrangement to provide health care services to enrollees, including any financial incentives for physicians and providers; provided that such compensation arrangements are confidential under Insurance Code §843.078(l) and not subject to Government Code Chapter 552 (concerning Public Information);

(21) documentation demonstrating that the applicant will pay for emergency care services performed by non-network physicians or providers as provided by Insurance Code §1271.155 (concerning Emergency Care);

(22) a description of the procedures by which:

(A) a member handbook and materials relating to the complaint and appeal process and the independent review process will be provided to enrollees in languages other than English, in compliance with Insurance Code §843.205 (concerning Member's Handbook; Information About Complaints and Appeals); and

(B) access to a member handbook and materials relating to the complaint and appeal process and the independent review process will be provided to an enrollee who has a disability affecting communication or reading, in compliance with Insurance Code §843.205;

(23) notification of the physical address in Texas of all books and records described in §11.205 of this title (relating to Additional Documents to be Available for Review);

(24) a description of the HMO's information systems, management structure, and personnel that demonstrates the applicant's capacity to meet the needs of enrollees and contracted physicians and providers, and to meet the requirements of regulatory and contracting entities;

(25) a written description of the utilization management and utilization review program;

(26) the URA name and certificate or registration number if the applicant performs utilization review under Insurance Code Chapter 4201 (concerning Utilization Review Agents) and Chapter 19, Subchapter R, of this title (relating to Utilization Reviews for Health Care Provided Under a Health Benefit Plan or Health Insurance Policy), or the URA name and certificate number of the certified URA that will perform utilization review on behalf of the applicant if the applicant delegates utilization review;

(27) complaint and appeal procedures, templates of letters, and logs, including the complaint log, which must categorize each complaint using the following categories and noting all that are applicable to the complaint:

(A) quality of care or services;

(B) accessibility and availability of services;

(D) complaint procedures;

(E) physician and provider contracts;

(F) group subscriber contracts;

(G) individual subscriber contracts;

(H) marketing;

(I) claims processing; and

(J) miscellaneous; and

(28) documentation of claim systems and procedures that demonstrates the HMO's ability to pay claims timely and comply with applicable claim payment statutes and rules.

History

Source Note: The provisions of this §11.204 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036.

28 Tex. Admin. Code § 11.205 Additional Documents to be Available for Review

(a) The following documents must be made available for review at the applicant's office in Texas or another location within Texas agreed to by the department and on request during the application process:

(1) administrative: policy and procedure manuals;

(2) health information systems: policies and procedures for accessing enrollee health records and a plan to provide for confidentiality of those records complying with applicable law;

(3) executed agreements, including:

(A) management services agreements;

(B) administrative services agreements; and

(4) executed physician and provider contracts: a copy of the first page, including the form number, and signature page;

(5) executed subcontracts: a copy of the first page, including the form number, and signature page of all contracts with subcontracting physicians and providers;

(6) manuals: current physician manual and current provider manual provided to each contracting physician or provider, which must contain details of the provisions that govern the physicians and providers;

(7) credentialing files: as specified in §11.1902(4) of this title (relating to Quality Improvement Program for Basic, Single Service, and Limited Service HMOs);

(8) reporting system: the statistical reporting system developed and maintained by the applicant that allows for compiling, developing, evaluating, and reporting statistics relating to the cost of operation, the pattern of utilization of services, and the accessibility and availability of services;

(9) claims systems: policies and procedures that demonstrate the capacity to pay claims timely and to comply with all applicable statutes and rules;

(10) financial records: financial information, including statements, ledgers, checkbooks, inventory records, evidence of expenditures, investments, and debts; and

(11) any other records: demonstrating compliance with applicable statutes and rules, including audits or examination reports by other entities, including governmental authorities or accrediting agencies.

(b) After approval of the application, the following documents may be maintained outside Texas if the HMO has received prior approval by the commissioner in compliance with Insurance Code §803.003 (concerning Authority to Locate Out of State):

(1) the financial records listed in subsection (a)(10) of this section;

(2) minutes of HMO organizational meetings, which indicate the type and date of each meeting and the officer or officers who are responsible for the handling of the funds of the applicant;

(3) minutes of meetings of the HMO board of directors; and

(4) management committee meeting minutes.

History

Source Note: The provisions of this §11.205 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.206 Review of Application; Examination

(a) An application for a certificate of authority will be processed in compliance with §1.809 of this title (relating to HMO Certificate of Authority).

(b) After completion of the department's review of documents, the department may perform quality of care and financial examinations. If a hearing is held in compliance with §1.809 of this title, then the examinations must occur before the date of the hearing. The commissioner may request a copy of the most recent financial examination report issued by the domiciliary regulator of an applicant that is a foreign HMO, instead of conducting a financial examination.

History

Source Note: The provisions of this §11.206 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.207 Withdrawal of an Application

(a) On written notice to the department, an applicant may request withdrawal of an application for a certificate of authority from consideration by the department.

(b) The department may close an application if the department determines that the applicant has failed to respond in a timely manner to requests made by the department for additional information or if the application is incomplete.

History

Source Note: The provisions of this §11.207 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter D REGULATORY REQUIREMENTS FOR AN HMO AFTER ISSUANCE OF CERTIFICATE OF AUTHORITY

28 Tex. Admin. Code § 11.301 Filing Requirements

After the commissioner issues an HMO's certificate of authority, the HMO is required to file with the commissioner, either for approval before effect or for information only, any items specified in §11.204 of this title (relating to Contents) that the HMO has deleted, amended, or revised as outlined in paragraphs (4) and (5) of this section and any items specified in §11.302 of this title (relating to Service Area Expansion or Reduction Applications). These requirements include filing changes made necessary by federal or state law or regulations. All requirements in this section apply to both electronic and paper filings unless stated otherwise.

(1) Completeness and format of filings.

(A) The department will not accept a filing for review until the filing is complete. An application to modify an approved application for a certificate of authority that requires the commissioner's approval under Insurance Code §843.080 (concerning Modification or Amendment of Application Information) or Insurance Code Chapter 1271, Subchapter C, (concerning Commissioner Approval) is considered complete when all information required by this section; §11.302; and Chapter 11, Subchapter T, of this title (relating to Quality of Care) that is applicable and reasonably necessary for the department to make a final determination has been filed.

(B) Unless otherwise required by this chapter or the Insurance Code, an HMO may submit a filing electronically through the NAIC's System for Electronic Rate and Form Filing or through any other method acceptable to the department.

(i) be submitted on 8-1/2- by 11-inch paper;

(ii) not be submitted in bound booklets;

(iii) be legible;

(iv) be in typewritten, computer generated, or printer's proof format; and

(v) except for maps, not contain any color highlighting unless accompanied by a clean copy without highlighting.

(D) As provided in this section, an HMO may submit some filings as provided in §7.201 of this title (relating to Forms Filings).

(E) As provided in this section, an HMO may submit some filings as provided in §11.203(a) of this title (relating to Revisions During Review Process).

(2) Identifying form numbers required. Each item required to be filed by paragraphs (4) and (5) of this section must be identified by a printed unique form number, adequate to distinguish it from other items. The identifying form numbers must be composed of a total of no more than 40 letters, numbers, symbols, or spaces.

(A) The identifying form number must appear in the lower left-hand corner of the page. In the case of a multiple-page document, the identifying form number must only appear on the lower left-hand corner of the first page, and page numbers should appear on subsequent pages.

(B) If an item is to be replaced or revised after issuance of a certificate of authority, a new identifying form number must be assigned.

(i) A change in address or phone number on a form will not require a new identifying form number.

(ii) A new edition date added to the original identifying form number is an acceptable way of revising the number so that it is identifiable from any previously approved item; for example, if "G-100" was the originally approved number, then the revision may be numbered "G-100 12/79."

(iii) Changing the case of the suffix is not considered to be a change in the number; for example, "ED" and "ed," or "REV" and "rev" are the same for form numbering purposes.

(3) Attachments for filings. Filings required by paragraphs (4)(A) and (B) and (5)(A) and (B) of this section must be accompanied by the following:

(A) an HMO certification and transmittal form for each new, revised, or replaced item;

(B) the supporting documentation considered necessary by the commissioner to review the filing and, for filings submitted on paper, a cover letter which includes the following:

(i) company name;

(ii) form numbers that are being submitted; and

(iii) a paragraph that describes the type of filing being submitted, along with any additional information that would aid in processing the filing, including the reasons for submitting the filing; and

(C) the applicable filing fee as determined by §7.1301 of this title (relating to Regulatory Fees), unless the filing is made electronically through the NAIC's System for Electronic Rate and Form Filing, in which case the fees should not be attached to the filing. For filings made electronically, the department will send an invoice for the fees, and the HMO must pay, as provided in §7.1302 of this title (relating to Billing System).

(4) Filings requiring approval. After issuance of a certificate of authority, each HMO must file with the commissioner, using the method specified below, a written request to implement or modify the following operations or documents and receive the commissioner's approval before putting the modifications into effect:

(A) electronically through the NAIC's System for Electronic Rate and Form Filing:

(i) evidence of coverage filings, as described in §11.501 of this title (relating to Contents of the Evidence of Coverage);

(ii) a description and a map of the service area, with key and scale, which must identify the county or counties or portions of counties to be served;

(iii) the written description of health care plan terms and conditions made available to any current or prospective group contract holder and current or prospective enrollee of the HMO, including the member handbook for all plans other than Children's Health Insurance Program (CHIP) plans in compliance with the requirements of Insurance Code §843.201 (concerning Disclosure of Information About Health Care Plan Terms) and §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees); and

(iv) any material change in the HMO's emergency care procedures;

(B) on paper or electronically through the NAIC's System for Electronic Rate and Form Filing or any other method acceptable to the department:

(i) any material change in network configuration; and

(ii) if a material change in the network configuration results in the HMO's inability to comply with the network adequacy standards described in §11.1607 of this title (relating to Accessibility and Availability Requirements), an access plan that complies with that section;

(i) the form of all contracts described in §11.204(14)(A), (C), (D), and (E) of this title, including any amendments to those contracts and prior notification of the cancellation of any management contracts in §11.204(14)(E) of this title;

(ii) the form of all contracts or subcontracts between affiliated physician and provider groups with the individual members of the groups providing health care services to the HMO's enrollees described in §11.204(14)(B) of this title, including any amendments to those contracts;

(iii) any new or revised loan agreements or amendments documenting loans made by the HMO to any affiliated person or to any medical or other health care physician or provider, whether providing services currently, previously, or potentially in the future; and any guarantees of any affiliated person's, physician's, or provider's obligations to any third party;

(iv) any agreement by which an affiliate agrees to handle an HMO's investments under §11.806 of this title (relating to Investment Management by Affiliate Corporation);

(v) any change in the physical address of the books and records described in §11.205 of this title (relating to Additional Documents to be Available for Review);

(vi) any change to any of the requirements for guarantees under §11.810 of this title (relating to Guarantee from a Sponsoring Organization);

(vii) any insurance contracts or amendments, guarantees, or other protection against insolvency, including the stop-loss or reinsurance agreements, if changing the carrier or description of coverage, between the HMO and affiliates, as described in §11.204(16) of this title; and

(viii) modifications to any type of affiliate compensation arrangements, such as compensation based on fee-for-service arrangements, risk-sharing arrangements, or capitated risk arrangements, made to physicians and providers in exchange for the provision of, or the arrangement to provide health care services to, enrollees, including any financial incentives for physicians and providers;

(D) as provided in §11.203(a) of this title, a copy of any proposed amendment to basic organizational documents, bylaws, rules, or any similar document regulating the conduct of the internal affairs of the applicant and, if the approved amendment must be filed with the secretary of state, a certified copy of the amendment with the file mark of the secretary of state; and

(E) as provided in Chapter 11, Subchapter B, of this title (relating to Name Application Procedure), any name or assumed name on a form, as specified in §11.105 of this title (relating to Use of the Term "HMO," Service Marks, Trademarks, Assumed Name).

(5) Filings for information. Material filed under this paragraph is not to be considered approved, but may be subject to review for compliance with Texas law and consistency with other HMO documents. Each item filed under this paragraph must be accompanied by a completed HMO certification and transmittal form in addition to those attachments required under paragraph (3) of this section. Within 30 days of the effective date, an HMO must file with the commissioner, for information, deletions and modifications to the following previously approved or filed operations and documents:

(A) electronically through the NAIC's System for Electronic Rate and Form Filing:

(i) the formula or method for calculating the schedule of charges as specified in Chapter 11, Subchapter H, of this title (relating to Schedule of Charges);

(ii) any modification of drug coverage under Insurance Code §1369.0541 (concerning Modification of Drug Coverage Under Plan); and

(iii) the member handbook for CHIP plans, together with a certification from the HMO that the handbook has been approved by the Texas Health and Human Services Commission and a copy of the document approving the handbook;

(B) on paper or electronically through the NAIC's System for Electronic Rate and Form Filing or any other method acceptable to the department:

(i) a copy of the form of any new contract or subcontract or any substantive change to previously filed copies of forms of all contracts between the HMO and any physician or provider described in §11.204(14)(B) of this title, and copies of forms of all contracts between the HMO and an insurer or group hospital service corporation to offer indemnity benefits, whether used with all contracts or on an individual basis. All copies of amended contracts must be marked to indicate revisions. In addition, the HMO must answer all questions listed on the HMO certification and transmittal form;

(ii) a copy of the executed agreement between the HMO and any delegated entities and delegated networks as defined in §11.2602 of this title (relating to Definitions); and

(iii) any change in the quality assurance program, including the peer review program, as required by Insurance Code §843.082(1) (concerning Requirements for Approval of Application) or §843.102 (concerning Health Maintenance Organization Quality Assurance), with descriptions of arrangements for sharing pertinent medical records between physicians and providers contracting or subcontracting under §11.204(14)(B) of this title with the HMO and ensuring the records' confidentiality;

(C) as provided in §7.201 of this title, a copy of any notice of cancellation of fidelity bonds, new fidelity bonds, or amendments to fidelity bonds, for officers and employees, including notarized certification by the corporate secretary or corporate president that the material is true, accurate, and complete, as described in §11.204(7) and (14)(D) of this title;

(D) as provided in §11.203(a) of this title:

(i) a list of officers and directors and a biographical data sheet for each person listed on the officers and directors page under Insurance Code §843.078(b) (concerning Contents of Application) and biographical data forms in §11.204(5)(A), (B), and (C) of this title; and

(ii) any change of the certificate of authority for a domestic or foreign HMO, and, if a foreign HMO, a certified copy of the certificate of authority and power of attorney.

(6) Approval period. Any modification for which the commissioner's approval is required may be considered approved, unless it is disapproved within 30 days from the date the filing is determined by the department to be complete. The commissioner may postpone the action for a period not to exceed 30 days, as necessary for proper consideration. The department will notify the HMO in writing if it postpones a decision on a modification.

(7) Approval, disapproval, and pending.

(A) Filings requiring approval under paragraph (4)(A)(i)- (iii) of this section will be approved or disapproved in writing within the period set forth in paragraph (6) of this section unless, before the department's issuance of notice of proposed negative action under §1.704(a) of this title (relating to Summary Procedure; Notice), the HMO has been contacted by the department regarding corrections or additional information necessary for commissioner's approval, and files a written consent to waive the approval period with the department.

(B) The department may waive the approval period on its receipt of the HMO's written consent.

(C) The department may hold the filing in a pending status for a reasonable period, but not more than 15 calendar days after the date of the department's request.

(D) If the HMO has not addressed the department's request for corrections or additional information within 15 calendar days, then the HMO may withdraw the filing before the end of the applicable review period, which is either the 30th day after filing or the 60th day after filing for an extended review period.

History

Source Note: The provisions of this §11.301 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.302 Service Area Expansion or Reduction Applications

(a) An HMO must file an application with the department for approval before the HMO may expand an existing service area, reduce an existing service area, or add a new service area.

(b) For the purposes of an application to expand an existing service area, reduce an existing service area, or add a new service area, an HMO must file the following items:

(1) a description and a map with key and scale, showing both the currently approved service area and the proposed new service area as required by §11.204(13) of this title (relating to Contents);

(2) network configuration information, as required by §11.204(19) of this title;

(3) combined financial projections as described in §11.204(10)(B) of this title, including a breakdown of the income statement for existing business, and the effect of the proposed service area expansion or reduction; and

(4) if any of the items specified in §11.301 of this title (relating to Filing Requirements) are changed by a service area expansion or reduction application, the new item or any amendments to an existing item must be filed for approval or filed for information, as outlined in §11.301(4) and (5) of this title.

(c) The department will not accept an application for review until the application is complete. An application to modify the certificate of authority that requires the commissioner's approval under Insurance Code §843.080 (concerning Modification or Amendment of Application Information) or Chapter 1271 Subchapter C, (concerning Commissioner Approval) is considered complete when all information required by §11.301 of this title; this section; and Chapter 11, Subchapter T, of this title (relating to Quality of Care) that is reasonably necessary for a final determination by the department has been filed with the department.

(d) Before consideration of a service area expansion or reduction application, an HMO must comply with the requirements of Chapter 11, Subchapter T, of this title, in the existing service areas and in the proposed service areas.

History

Source Note: The provisions of this §11.302 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.303 Examination

(a) The department has authority to conduct examinations of HMOs under Insurance Code Chapters 401 (concerning Audits and Examinations) and 751 (concerning Market Conduct Surveillance), and Insurance Code §843.156 (concerning Examinations) and §843.251 (concerning Complaint System Required; Commissioner Rules and Examination), and such examinations are subject to §7.83 of this title (relating to Appeal of Examination Reports). The department will conduct examinations to determine the financial condition (financial exams), quality of health care services (quality of care exams), or compliance with laws affecting the conduct of business (market conduct exams).

(b) The following documents must be available for review at the HMO's office located within Texas or at a location approved by the department under Insurance Code §803.003 (concerning Authority to Locate Out of State):

(1) administrative: policy and procedure manuals; physician and provider manuals; enrollee materials; organizational charts; key personnel information, for example, resumes and job descriptions; and other items as requested;

(2) quality improvement: program description, work plans, program evaluations, and committee and subcommittee meeting minutes;

(3) utilization management: program description, policies and procedures, criteria used to determine medical necessity, and templates of adverse determination letters; adverse determination logs, including all levels of appeal; and utilization management files;

(4) complaints and appeals: policies and procedures and templates of letters; complaint and appeal logs, including documentation and details of actions taken; and complaint and appeal files;

(5) satisfaction surveys: enrollee, physician, and provider satisfaction surveys, and enrollee disenrollment and termination logs;

(6) health information systems: policies and procedures for accessing enrollee health records and a plan to provide for confidentiality of those records;

(7) network configuration information: as required by §11.204(19) of this title (relating to Contents) demonstrating adequacy of the physician, dentist, and provider network;

(8) executed agreements, including:

(A) management services agreements;

(B) administrative services agreements; and

(9) executed physician and provider contracts: copy of the first page, including form number, and signature page;

(10) executed subcontracts: copy of the first page, including the form number, and signature page of all contracts with subcontracting physicians and providers;

(11) credentialing: credentialing policies and procedures and credentialing files;

(12) reports: any reports submitted by the HMO to a governmental entity;

(13) claims systems: policies and procedures and systems or processes that demonstrate timely claims payments, and reports that substantiate compliance with all applicable statutes and rules regarding claims payment to physicians, providers, and enrollees;

(14) financial records: financial information, including statements, ledgers, checkbooks, inventory records, evidence of expenditures, investments and debts; and

(15) other: any other records requested by the department to demonstrate compliance with applicable statutes and rules.

(1) Entrance conference. The examination team or assigned examiner may hold an entrance conference with the HMO's key management staff or their designee before beginning the examination.

(2) Interviews. Examination team members or the examiner may conduct interviews with key management staff or their designated personnel.

(3) Exit conference. On completion of the examination, the examination team or examiner may hold an exit conference with the HMO's key management staff or their designee.

(4) Written report of examination. The examination team or examiner will prepare a written report of the examination. The department will provide the HMO with the written report, and if any significant deficiencies are cited, the department will issue a letter outlining the time frames for a corrective action plan and corrective actions.

(5) Corrective action plan. If the examination team or examiner cites significant deficiencies, the HMO must provide a signed corrective action plan to the department no later than 30 days from receipt of the written examination report. The HMO's plan must provide for correction of these deficiencies no later than 90 days from the receipt of the written examination report.

(6) Verification of correction. The department will verify the correction of deficiencies by submitted documentation or by on-site examination.

History

Source Note: The provisions of this §11.303 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036.

Subchapter F EVIDENCE OF COVERAGE

28 Tex. Admin. Code § 11.501 Contents of the Evidence of Coverage

(a) An evidence of coverage or an amendment to an evidence of coverage may not be issued, delivered, or used in Texas unless it has been filed for review and has received the approval of the commissioner. The following forms are always considered to be part of the evidence of coverage:

(1) group agreement;

(2) certificate issued to each subscriber who is enrolled through a group (the same form may be used as both the group agreement and the group certificate);

(3) conversion and individual agreements;

(4) group, conversion, and individual applications for coverage;

(5) group subscriber enrollment form;

(6) riders, endorsements, amendments, and letters of agreement;

(7) matrix filings;

(8) schedule of benefits; and

(9) any other form attached to or made a part of the evidence of coverage.

(b) Each of the forms described in subsection (a) of this section must be identified with a unique form number and individually approved by the commissioner before being issued, delivered, or used in Texas. Each form described in subsection (a) of this section will be considered a separate evidence of coverage filing and, except as provided in subsection (c) of this section, is subject to the filing fee prescribed in §7.1301(g)(4) of this title (relating to Regulatory Fees) for initial submissions.

(c) The filing fee for matrix filings is $100 per individual evidence of coverage provision, with a maximum fee of $500, whether the filing is an initial submission or a resubmission.

History

Source Note: The provisions of this §11.501 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.502 Filing Requirements for Evidence of Coverage Filed as Part of an Application for a Certificate of Authority

(a) The filing and formatting requirements of §11.301(1)(B) and (2)(A) of this title (relating to Filing Requirements) apply to an evidence of coverage, when filed as part of the application for a certificate of authority.

(b) During the review period, an applicant must submit each new page or form reflecting any revisions.

(c) No later than the 10th calendar day after approval or issuance of a certificate of authority, an HMO must file a clean, final version of the evidence of coverage with revisions and a copy of the original version of the evidence of coverage showing the new or revised text as redlined. The submission must include:

(1) an explanation that the evidence of coverage was submitted as part of the application for a certificate of authority and is being submitted in compliance with subsection (c) of this section;

(2) a certification that the forms are without deviation and are the exact final evidence of coverage versions that resulted in approval of the certificate of authority application; and

(3) the final version of an approved service area description and map as attached to the evidence of coverage, with key and scale, which must identify the county or counties or portions of counties to be served.

(d) Any discrepancy in content between the final document to be issued and the approved version is grounds for revocation of a certificate of authority.

History

Source Note: The provisions of this §11.502 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.503 Filing Requirements for Evidence of Coverage after Receipt of Certificate of Authority

(a) After receipt of a certificate of authority, no evidence of coverage filing may be amended or altered in any manner, and no new evidence of coverage filing may be used, unless the proposed new or revised evidence of coverage filing has been filed for review and has received the approval of the commissioner. The evidence of coverage must be filed as provided in §11.301 of this title (relating to Filing Requirements).

(b) The department will notify the HMO of the department's action in compliance with §1.704 of this title (relating to Summary Procedure; Notice).

(c) The department will base its approval or disapproval on the content of drafts submitted to the department. Filings must comply with the specifications described in §11.505 of this title (relating to Specifications for the Evidence of Coverage and Matrix Filings). Any discrepancy in content between the final document to be issued and the approved draft is grounds for revocation of the certificate of authority.

(d) The review period for an evidence of coverage filing begins on the date an acceptable, typed draft of the form is received.

(e) The review period may be extended on 30-days written notice of extension to the HMO before the expiration of the initial review period.

(f) At the end of the review period, the evidence of coverage filing is considered approved unless it has already been withdrawn, affirmatively approved, or disapproved by the commissioner.

History

Source Note: The provisions of this §11.503 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.504 Disapproval of an Evidence of Coverage

(a) If the department disapproves any portion of an evidence of coverage, the department will specify the reason for the disapproval. The department may disapprove any form or withdraw any previous approval if a form:

(1) fails to meet the requirements of Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), this chapter, or other applicable statutes and regulations;

(2) does not properly describe the services and benefits;

(3) contains any statements that are unclear, untrue, unjust, unfair, inequitable, misleading, or deceptive or that violate Insurance Code Chapters 541 (concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices), 542 (concerning Processing and Settlement of Claims), 543 (concerning Prohibited Practices Related to Policy or Certificate of Membership), 544 (concerning Prohibited Discrimination), or 547 (concerning False Advertising by Unauthorized Insurers), or any other applicable law or regulations;

(4) provides services or benefits that are too restrictive to achieve the purpose for which the form was designed;

(5) fails to attain a reasonable degree of readability, simplicity, and conciseness;

(6) provides services or benefits or contains other provisions that would endanger the solvency of the issuing HMO; or

(7) is contrary to the law or policy of this state.

(b) If the department disapproves a form, the HMO may file a written request for a hearing on the matter under Insurance Code §1271.102 (concerning Procedures for Approval of Form of Evidence of Coverage or Group Contract; Withdrawal of Approval).

History

Source Note: The provisions of this §11.504 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.505 Specifications for Evidence of Coverage Including Insert Pages and Matrix Filings

(a) The filing and formatting requirements of §11.301 of this title (relating to Filing Requirements) apply to an evidence of coverage.

(b) The style, arrangement, and overall appearance of documents must give no undue prominence to any portion of the text. The text of the group, individual, and conversion agreements, the certificate, and all amendments include all printed matter except:

(1) the HMO's name, address, website address, and phone number;

(2) the name or title of the form;

(3) the captions and subcaptions; and

(4) any brief introduction to or description of the evidence of coverage.

(c) Each evidence of coverage must indicate by example information that will appear in any blanks with the exception of single-case forms, which must be filed complete and ready for use.

(d) An HMO must identify each form by a unique form number in compliance with §11.301(2) of this title. Any change in form number is considered a change in the form and requires approval as a new form.

(e) Certain language must not be varied or changed without resubmitting a form for the commissioner's approval. Changeable language must be enclosed in brackets, include the range of variable information or amounts, and include an explanation of how and under what circumstances the information will vary.

(f) Each evidence of coverage must meet the readability standards of §3.601 of this title (relating to Purpose and Scope, Applicability, and Definitions Used in This Subchapter) and §3.602 of this title (relating to Plain Language Requirements).

(g) A matrix filing must comply with the filing requirements in this section and §11.301 of this title. In addition, an HMO submitting a matrix filing:

(1) must identify each provision with a unique form number that is sufficient to distinguish it as a matrix filing; and

(2) may use the same provision filed under one form number for all HMO products, provided that the language is applicable to each HMO product; however, any changes in the language to comply with the requirements for each HMO product will require a unique form number.

(h) Evidences of coverage, agreements, and contracts may be submitted with insert pages, or an insert page may be filed subsequent to the approval of an evidence of coverage, agreement, or contract.

(i) Any HMO submitting an insert page filing:

(1) must identify each insert page with a unique form number located on the lower left hand corner of the page;

(2) may use the same insert page filed under one form number for all plans, provided the language is applicable to each plan type; however, any changes in the language to comply with the requirements for each plan type will require a unique form number;

(3) may use the same insert page to replace an existing page of a previously approved or reviewed evidence of coverage, agreement, or contract. However, if used in this manner, the replaced page, as originally filed, must reflect a unique form number that distinguishes it from the other pages of the form or contract; and

(4) must list the form number for each insert page on the transmittal checklist and provide a statement indicating how the insert page will be used and the type of plan for which the insert page will be used.

(j) In addition to providing the appropriate certification on the transmittal checklist, an HMO submitting a filing as a matrix filing or as an insert page must provide certifications certifying that, when issued, the evidences of coverage, certificates, contracts, riders, or applications created from the forms comply in all respects with all applicable statutes and regulations with regard to the final plan document that will be issued.

History

Source Note: The provisions of this §11.505 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.506 Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement and Group Certificate

(a) Each enrollee residing in Texas is entitled to an evidence of coverage under a health care plan. An HMO may deliver the evidence of coverage electronically but must provide a paper copy on request.

(b) Each group, individual, and conversion contract and group certificate must contain the following provisions:

(1) Face page. Where applicable, the name, address, website address, and phone number of the HMO must appear. The toll-free number referred to in Insurance Code §521.102, concerning Health Maintenance Organization or Insurer Toll-Free Number for Information and Complaints, must appear on the face page.

(A) The face page of an agreement is the first page that contains any written material.

(B) If the agreements or certificates are in booklet form, the first page inside the cover is considered the face page.

(C) The HMO must provide the information regarding the toll-free number referred to in Insurance Code Chapter 521, Subchapter C, concerning Health Maintenance Organization or Insurer Toll-Free Number for Information and Complaints, in compliance with §1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures).

(2) Benefits. A schedule of all health care services that are available to enrollees under the basic, limited, or single service plan must be included, together with any copayments or deductibles and a description of where and how to obtain services. An HMO may use a variable copayment or deductible schedule. The schedule must clearly indicate the benefit to which it applies.

(A) Copayments. An HMO may require copayments to supplement payment for health care services.

(i) Each basic health care service HMO may establish one or more reasonable copayment options. A reasonable copayment option may not exceed 50% of the total cost of services provided.

(ii) A basic health care service HMO may not impose copayment charges on any enrollee in any calendar year, when the copayments made by the enrollee in that calendar year total 200% of the total annual premium cost which is required to be paid by or on behalf of that enrollee. This limitation applies only if the enrollee demonstrates that copayments in that amount have been paid in that year.

(iii) The HMO must state the copayment, the limit on enrollee copayments, and the enrollee reporting responsibility in the group, individual, or conversion agreement and group certificate.

(B) Deductibles. A deductible must be for a specific dollar amount of the cost of the basic, limited, or single health care service. Except for a consumer choice benefit plan authorized by Insurance Code Chapter 1507, concerning Consumer Choice of Benefits Plans, an HMO may not charge a deductible for services received in the HMO's delivery network. Except in cases involving emergency care and services that are not available in the HMO's delivery network, as described in §11.1611 of this title (relating to Out-of-Network Claims; Non-Network Physicians and Providers), an HMO may charge an out-of-network deductible for services performed out of the HMO's service area or for services performed by a physician or provider who is not in the HMO's delivery network.

(C) Facility-based physicians or other health care practitioners. In compliance with Insurance Code §1456.003, concerning Required Disclosure: Health Benefit Plan, a statement must be included that is consistent with §21.4903 of this title (relating to Out-of-Network Notice and Disclosure Requirements) and that provides notice that:

(i) a facility-based physician or other health care practitioner may not be included in the health benefit plan's provider network;

(ii) unless the enrollee elects to receive out-of-network care and signs a waiver of balance billing protections, a non-network facility-based physician or other health care practitioner may not balance bill the enrollee for amounts not paid by the health benefit plan for covered services or supplies provided in a network facility; and

(iii) if the enrollee receives a balance bill, the enrollee should contact the HMO.

(D) Immunizations. An HMO may not charge a copayment or deductible for immunizations as described in Insurance Code Chapter 1367, Subchapter B, concerning Childhood Immunizations, for a child from birth through the date the child is 6 years of age, except that a small employer health benefit plan as defined by Insurance Code §1501.002, concerning Definitions, that covers the immunizations may charge a copayment, and a consumer choice benefit plan under Insurance Code Chapter 1507 may charge a copayment and a deductible.

(3) Cancellation and nonrenewal. A statement must be included that specifies the following grounds for cancellation and nonrenewal of coverage and the minimum notice period that will apply.

(A) Unless otherwise prohibited by law, an HMO may cancel coverage of a subscriber in a group and the subscriber's enrolled dependents under circumstances described in this subparagraph, so long as the circumstances do not include health status-related factors:

(i) for nonpayment of amounts due under the contract, after not less than 30-days' written notice, except no additional written notice will be required for failure to pay premium;

(ii) after not less than 15-days' written notice, in the case of fraud or intentional misrepresentation of a material fact, except as described in paragraph (13) of this subsection;

(iii) after not less than 15-days' written notice, in the case of fraud in the use of services or facilities;

(iv) immediately, subject to continuation of coverage and conversion privilege provisions, if applicable, for failure to meet eligibility requirements other than the requirement that the subscriber reside, live, or work in the service area; and

(v) after not less than 30-days' written notice, where the subscriber does not reside, live, or work in the service area of the HMO or area for which the HMO is authorized to do business, but only if the HMO terminates coverage uniformly without regard to any health status-related factor of enrollees, except that an HMO may not cancel coverage for a child who is the subject of a medical support order because the child does not reside, live, or work in the service area.

(B) An HMO may cancel a group under circumstances described below, unless otherwise prohibited by law:

(i) for nonpayment of premium, at the end of the grace period as described in paragraph (12) of this subsection;

(ii) in the case of fraud on the part of the group, after 15-days' written notice;

(iii) for employer groups, for violation of participation or contribution rules, under §26.8 of this title (relating to Guaranteed Issue; Contribution and Participation Requirements) and §26.303 of this title (relating to Coverage Requirements);

(iv) for employer groups, under §26.16 of this title (relating to Refusal to Renew and Application to Reenter Small Employer Market) and §26.309 of this title (relating to Refusal to Renew and Application to Reenter Large Employer Market) on discontinuance of:

(I) each of its small or large employer coverages; or

(II) a particular type of small or large employer coverage;

(v) where no enrollee resides, lives, or works in the service area of the HMO or area for which the HMO is authorized to do business, but only if the coverage is terminated uniformly without regard to any health status-related factor of enrollees after 30-days' written notice; and

(vi) if membership of an employer in an association ceases, and if coverage is terminated uniformly without regard to the health status of an enrollee, after 30-days' written notice.

(C) A group or individual contract holder may cancel a contract in the case of a material change by the HMO to any provisions required to be disclosed to contract holders or enrollees under this chapter or other law after not less than 30-days' written notice to the HMO.

(D) An HMO may cancel an individual contract under circumstances described below, unless otherwise prohibited by law:

(i) for nonpayment of premiums under the terms of the contract, including any timeliness provisions, without written notice, subject to paragraph (12) of this subsection;

(ii) in the case of fraud or intentional material misrepresentation, except as described in paragraph (13) of this subsection, after not less than 15-days' written notice;

(iii) in the case of fraud in the use of services or facilities, after not less than 15-days' written notice;

(iv) after not less than 30-days' written notice where the subscriber does not reside, live, or work in the service area of the HMO or area in which the HMO is authorized to do business, but only if coverage is terminated uniformly without regard to any health status-related factor of enrollees, except that an HMO may not cancel coverage for a child who is the subject of a medical support order because the child does not reside, live, or work in the service area;

(v) in case of termination by discontinuance of a particular type of individual coverage by the HMO in that service area, but only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, after 90-days' written notice, in which case the HMO must offer to each enrollee on a guaranteed-issue basis any other individual basic health care coverage offered by the HMO in that service area; and

(vi) in case of termination by discontinuance of all individual basic health care coverage by the HMO in that service area, but only if coverage is discontinued uniformly without regard to health status-related factors of enrollees and dependents of enrollees who may become eligible for coverage, after 180-days' written notice to the commissioner and the enrollees, in which case the HMO may not re-enter the individual market in that service area for five years beginning on the date of discontinuance of the last coverage not renewed.

(4) Claim payment procedure. A provision that sets forth the procedure for paying claims, including any time frame for payment of claims that must comply with Insurance Code Chapter 542, Subchapter B, concerning Prompt Payment of Claims; Insurance Code §1271.005, concerning Applicability of Other Law; and rules adopted under these Insurance Code provisions.

(5) Complaint and appeal procedures. A description of the HMO's complaint and appeal process available to complainants, including internal adverse determination appeal and independent review procedures under Insurance Code Chapter 4201, concerning Utilization Review Agents, and Chapter 19, Subchapter R, of this title (relating to Utilization Reviews for Health Care Provided Under a Health Benefit Plan or Health Insurance Policy).

(6) Definitions. A provision defining any words in the evidence of coverage that have other than the usual meaning. Definitions must be in alphabetical order.

(7) Effective date. A statement of the effective date requirements of various kinds of enrollees.

(8) Eligibility. A statement of the eligibility requirements for membership.

(A) The statement must provide that the subscriber must reside, live, or work in the service area and the legal residence of any enrolled dependents must be the same as the subscriber, or the subscriber must reside, live, or work in the service area and the residence of any enrolled dependents must be:

(i) in the service area with the person having temporary or permanent conservatorship or guardianship of the dependents, including adoptees or children who have become the subject of a suit for adoption by the enrollee, where the subscriber has legal responsibility for the health care of the dependents;

(ii) in the service area under other circumstances where the subscriber is legally responsible for the health care of the dependents;

(iii) in the service area with the subscriber's spouse; or

(iv) anywhere in the United States for a child whose coverage under a plan is required by a medical support order.

(B) The statement must provide the conditions under which dependent enrollees may be added to those originally covered.

(D) The statement must provide a clear statement regarding the coverage of newborn children.

(i) No evidence of coverage may contain any provision excluding or limiting coverage for a newborn child of the subscriber or the subscriber's spouse.

(ii) Congenital defects must be treated the same as any other illness or injury for which coverage is provided.

(iii) The HMO may require that the subscriber notify the HMO during the initial 31 days after the birth of the child and pay any premium required to continue coverage for the newborn child.

(iv) The HMO may not require that a newborn child receive health care services only from network physicians or providers after the birth if the newborn child is born outside the HMO service area due to an emergency or born in a non-network facility to a mother who does not have HMO coverage, but may require that the newborn be transferred to a network facility at the HMO's expense and, if applicable, to a network provider when the transfer is medically appropriate as determined by the newborn's treating physician.

(v) A newborn child of the subscriber or subscriber's spouse is entitled to coverage during the initial 31 days following birth. The HMO must allow an enrollee 31 days after the birth of the child to notify the HMO, either verbally or in writing, of the addition of the newborn as a covered dependent.

(E) The statement must include a clear statement regarding the coverage of the enrollee's grandchildren that complies with Insurance Code §1201.062, concerning Coverage for Certain Children in Individual or Group Policy or in Plan or Program, and §1271.006, concerning Benefits to Dependent Child and Grandchild.

(9) Emergency services. A description of how to obtain services in emergency situations, including:

(A) what to do in case of an emergency occurring outside or inside the service area;

(B) a statement of any restrictions or limitations on out-of-area services;

(C) a statement that the HMO will provide for any medical screening examination or other evaluation required by state or federal law that is necessary to determine whether an emergency medical condition exists in a hospital emergency facility or comparable facility;

(D) a statement that necessary emergency care services will be provided, including the treatment and stabilization of an emergency medical condition;

(E) a statement that where stabilization of an emergency condition originated in a hospital emergency facility or in a comparable facility, as defined in subparagraph (F) of this paragraph, treatment subject to stabilization must be provided to enrollees as approved by the HMO, provided that:

(i) the HMO must approve or deny coverage of poststabilization care as requested by a treating physician or provider; and

(ii) the HMO must approve or deny the treatment within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no case may approval or denial exceed one hour from the time of the request; and

(F) for purposes of this paragraph, "comparable facility" includes the following:

(i) any stationary or mobile facility, including, but not limited to, Level V Trauma Facilities and Rural Health Clinics that have licensed or certified or both licensed and certified personnel and equipment to provide Advanced Cardiac Life Support consistent with American Heart Association and American Trauma Society standards of care and a free-standing emergency medical care facility as that term is defined in Insurance Code §843.002, concerning Definitions;

(ii) for purposes of emergency care related to mental illness, a mental health facility that can provide 24-hour residential and psychiatric services and that is:

(I) a facility operated by the Texas Department of State Health Services;

(II) a private mental hospital licensed by the Texas Department of State Health Services;

(III) a community center as defined by Texas Health and Safety Code §534.001, concerning Establishment;

(IV) a facility operated by a community center or other entity the Texas Department of State Health Services designates to provide mental health services;

(V) an identifiable part of a general hospital in which diagnosis, treatment, and care for persons with mental illness is provided and that is licensed by the Texas Department of State Health Services; or

(VI) a hospital operated by a federal agency.

(10) Entire contract, amendments. A provision stating that the form, applications, if any, and any attachments constitute the entire contract between the parties and that, to be valid, any change in the form must be approved by an officer of the HMO and attached to the affected form and that no agent has the authority to change the form or waive any of the provisions.

(11) Exclusions and limitations. A provision setting forth any exclusions and limitations on basic, limited, or single health care services.

(12) Grace period. A provision for a grace period of at least 30 days for the payment of any premium due after the first premium payment during which the coverage remains in effect. An HMO may add a charge to the premium for late payments received within the grace period.

(A) If payment is not received within the 30 days, coverage may be canceled after the 30th day and the terminated members may be held liable for the cost of services received during the grace period, if this requirement is disclosed in the agreement.

(B) Despite subparagraph (A) of this paragraph, provisions regarding the liability of group contract holder for an enrollee's premiums must comply with Insurance Code §843.210, concerning Terms of Enrollee Eligibility, and §21.4003 of this title (relating to Group Policyholder, Group Contract Holder, and Carrier Premium Payment and Coverage Obligations).

(13) Incontestability:

(A) All statements made by the subscriber on the enrollment application are considered representations and not warranties. The statements are considered truthful and made to the best of the subscriber's knowledge and belief. A statement may not be used in a contest to void, cancel, terminate, or nonrenew an enrollee's coverage or reduce benefits unless:

(i) it is in a written enrollment application signed by the subscriber; and

(ii) a signed copy of the enrollment application is or has been furnished to the subscriber or the subscriber's personal representative.

(B) An individual contract or group certificate may only be contested because of fraud or intentional misrepresentation of material fact made on the enrollment application. For small employer coverage, the misrepresentation must be other than a misrepresentation related to health status.

(C) For a group contract or certificate, the HMO may increase its premium to the appropriate level if the HMO determines that the subscriber made a material misrepresentation of health status on the application. The HMO must provide the contract holder 31-days' prior written notice of any premium rate change.

(14) Out-of-network services. Each contract between an HMO and a contract holder must provide that if medically necessary covered services are not available through network physicians or providers, the HMO must, on the request of a network physician or provider, within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no event to exceed five business days after receipt of reasonably requested documentation, allow a referral to a non-network physician or provider and must fully reimburse the non-network provider at the usual and customary or an agreed rate.

(A) For purposes of determining whether medically necessary covered services are available through network physicians or providers, the HMO must offer its entire network, rather than limited provider networks within the HMO delivery network.

(B) The HMO may not require the enrollee to change primary care physician or specialist providers to receive medically necessary covered services that are not available within the limited provider network.

(C) Each contract must further provide for a review by a specialist of the same or similar specialty as the type of physician or provider to whom a referral is requested before the HMO may deny a referral.

(15) Schedule of charges. A statement that discloses the HMO's right to change the rate charged with 60-days' written notice under Insurance Code §843.2071, concerning Notice of Increase in Charge for Coverage, and Insurance Code Chapter 1254, concerning Notice of Rate Increase for Group Health and Accident Coverage.

(16) Service area. A description and a map of the service area, with key and scale, that identifies the county, or counties, or portions of counties to be served, and indicates primary care physicians, hospitals, and emergency care sites. A ZIP code map and a physician and provider list may be used to meet the requirement.

(17) Termination due to attaining limiting age. A provision that a child's attainment of a limiting age does not operate to terminate the child's coverage while that child is incapable of self-sustaining employment due to intellectual disability or physical disability, and chiefly dependent on the subscriber for support and maintenance. The HMO may require the subscriber to furnish proof of incapacity and dependency within 31 days of the child's attainment of the limiting age and subsequently as required, but not more frequently than annually following the child's attainment of the limiting age.

(18) Termination due to student dependent's change in status. A provision regarding coverage of student dependents that complies with Insurance Code Chapter 1503, concerning Coverage of Certain Students, if applicable.

(19) Conformity with state law. A provision that if the agreement or certificate contains any provision or part of a provision not in conformity with Insurance Code Chapter 1271, concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges, or other applicable laws, the remaining provisions and parts of provisions that can be given effect without the invalid provision or part of a provision are not rendered invalid but must be construed and applied as if they were in full compliance with Insurance Code Chapter 1271 and other applicable laws.

(20) Conformity with Medicare supplement minimum standards and long-term care minimum standards. Each group, individual, and conversion agreement, and group certificate must comply with Chapter 3, Subchapter T, of this title (relating to Minimum Standards for Medicare Supplement Policies), referred to in this paragraph as Medicare supplement rules, and Chapter 3, Subchapter Y, of this title (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies That Provide Long-Term Care Benefits Within the Policy), referred to in this paragraph as long-term care rules, where applicable. If there is a conflict between the Medicare supplement or long-term care rules, or both, and the HMO rules, the Medicare supplement or long-term care rules will govern to the exclusion of the conflicting provisions of the HMO rules. Where there is no conflict, an HMO must follow the Medicare supplement, the long-term care rules, and the HMO rules where applicable.

(21) Nonprimary care physician specialist as primary care physician. A provision that allows enrollees with chronic, disabling, or life threatening illnesses to apply to the HMO's medical director to use a nonprimary care physician specialist as a primary care physician as set out in Insurance Code §1271.201, concerning Designation of Specialist as Primary Care Physician.

(22) Selected obstetrician or gynecologist. Group, individual, and conversion agreements, and group certificates, except small employer health benefit plans as defined by Insurance Code §1501.002, must contain a provision that permits an enrollee to select, in addition to a primary care physician, an obstetrician or gynecologist to provide health care services within the scope of the professional specialty practice of a properly credentialed obstetrician or gynecologist, and subject to the provisions of Insurance Code Chapter 1451, Subchapter F, concerning Access to Obstetrical or Gynecological Care. An HMO may not prevent an enrollee from selecting a family physician, internal medicine physician, or other qualified physician to provide obstetrical or gynecological care.

(A) An HMO must permit an enrollee who selects an obstetrician or gynecologist direct access to the health care services of the selected obstetrician or gynecologist without a referral by the enrollee's primary care physician or prior authorization or precertification from the HMO.

(B) Access to the health care services of an obstetrician or gynecologist includes:

(i) one well-woman examination per year;

(ii) care related to pregnancy;

(iii) care for all active gynecological conditions; and

(iv) diagnosis, treatment, and referral to a specialist within the HMO's network for any disease or condition within the scope of the selected professional practice of a properly credentialed obstetrician or gynecologist, including treatment of medical conditions concerning breasts.

(C) An HMO may require an enrollee who selects an obstetrician or gynecologist to select the obstetrician or gynecologist from within the limited provider network to which the enrollee's primary care physician belongs.

(D) An HMO may require a selected obstetrician or gynecologist to forward information concerning the medical care of the patient to the primary care physician. However, the HMO may not impose any penalty, financial or otherwise, on the obstetrician or gynecologist for failure to provide this information if the obstetrician or gynecologist has made a reasonable and good-faith effort to provide the information to the primary care physician.

(E) An HMO may limit an enrollee in the plan to self-referral to one participating obstetrician and gynecologist for both gynecological care and obstetrical care. The limitation must not affect the right of the enrollee to select the physician who provides that care.

(F) An HMO must include in its enrollment form a space in which an enrollee may select an obstetrician or gynecologist as set forth in Insurance Code Chapter 1451, Subchapter F. The enrollment form must specify that the enrollee is not required to select an obstetrician or gynecologist, but may instead receive obstetrical or gynecological services from the enrollee's primary care physician or primary care provider. The enrollee must have the right at all times to select or change a selected obstetrician or gynecologist. An HMO may limit an enrollee's request to change an obstetrician or gynecologist to no more than four changes in any 12-month period.

(G) An enrollee who elects to receive obstetrical or gynecological services from a primary care physician (a family physician, internal medicine physician, or other qualified physician) must adhere to the HMO's standard referral protocol when accessing other specialty obstetrical or gynecological services.

(23) Diagnosis of Alzheimer's disease. An HMO that provides for the treatment of Alzheimer's disease must provide that a clinical diagnosis of Alzheimer's disease under Insurance Code Chapter 1354, concerning Eligibility for Benefits for Alzheimer's Disease, by a physician licensed in this state satisfies any requirement for demonstrable proof of organic disease.

(24) Drug coverage. An agreement that covers prescription drugs must comply with Insurance Code Chapter 1369, concerning Benefits Related to Prescription Drugs and Devices and Related Services, and Chapter 21, Subchapter V, of this title (relating to Pharmacy Benefits), as applicable.

(25) Inpatient care by nonprimary care physician. If an HMO or limited provider network provides for an enrollee's care by a physician other than the enrollee's primary care physician while the enrollee is in an inpatient facility, for example, hospital or skilled nursing facility, a provision that on admission to the inpatient facility a physician other than the primary care physician may direct and oversee the enrollee's care.

History

Source Note: The provisions of this §11.506 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2025, 50 TexReg 2213.

28 Tex. Admin. Code § 11.507 Additional Mandatory Contractual Provisions: Conversion and Individual Agreements

Conversion and individual agreements must contain the following additional mandatory provisions:

(1) Reinstatement. A provision clearly setting forth the requirements for reinstatement and disclosing how reinstatement changes or affects the rights and coverages originally provided. New evidence of insurability may be required.

(2) Ten days to examine agreement. A provision stating that the contract holder may return the contract within 10 days of receiving it and have the premium paid refunded if, after examination of the contract, the contract holder is not satisfied with it for any reason. If the contract holder returns the contract to the issuing HMO or to the agent through whom it was purchased, then the contract is considered void from the beginning and the parties are in the same position as if no contract had been issued. If services are rendered or claims paid by the HMO during the 10 days, the subscriber is responsible for repaying the HMO for the services or claims.

(3) Consideration. The original consideration, including premiums, application fee, and any other amounts to be paid for coverage, must be expressed in the agreement or in the application.

(4) Continuance of coverage due to change in marital status. A provision stating that if a person loses coverage due to a change in marital status, that person will be issued coverage in compliance with §21.407 of this title (relating to Continuance of Coverage).

History

Source Note: The provisions of this §11.507 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.508 Basic Health Care Services and Mandatory Benefit Standards: Group, Individual, and Conversion Agreements

(a) Each evidence of coverage providing basic health care services must provide the following basic health care services when they are provided by network physicians or providers, or by non-network physicians and providers as set out in §11.506(b)(9) or §11.506(b)(14) of this title (relating to Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement and Group Certificate):

(1) outpatient services, including the following:

(A) primary care and specialist physician services;

(B) outpatient services by other providers;

(D) therapeutic radiology services;

(E) prenatal services, if maternity benefits are covered;

(F) outpatient rehabilitation therapies including physical therapy, speech therapy, and occupational therapy;

(G) home health services, as prescribed or directed by the responsible physician or other authority designated by the HMO;

(H) preventive services, including:

(i) periodic health examinations for adults as required by Insurance Code §1271.153 (concerning Periodic Health Evaluations);

(ii) immunizations for children as required by Insurance Code §1367.053 (concerning Coverage Required);

(iii) well-child care from birth as required by Insurance Code §1271.154 (concerning Well-Child Care From Birth);

(iv) cancer screenings as required by Insurance Code Chapters 1356 (concerning Low-Dose Mammography), 1362 (concerning Certain Tests for Detection of Prostate Cancer), and 1363 (concerning Certain Tests for Detection of Colorectal Cancer);

(v) eye and ear examinations for children through age 17, to determine the need for vision and hearing correction complying with established medical guidelines; and

(vi) immunizations for adults under the United States Department of Health and Human Services Centers for Disease Control Recommended Adult Immunization Schedule by Age Group and Medical Conditions, or its successor;

(I) coverage for outpatient mental health services complying with the mental health parity requirements in Chapter 21, Subchapter P, of this title (relating to Mental Health Parity); and

(J) emergency services as required by Insurance Code §1271.155 (concerning Emergency Care), including emergency transport in an emergency medical services vehicle licensed under Health and Safety Code Chapter 773 (concerning Emergency Medical Services), which is considered emergency care if it is provided as part of the evaluation and stabilization of medical conditions of a recent onset and severity, including severe pain, that would lead a prudent layperson possessing an average knowledge of medicine and health to believe that the individual's condition, sickness, or injury is of such a nature that failure to get immediate care through emergency transport could place the individual's health in serious jeopardy, result in serious impairment to bodily functions, result in serious dysfunction of a bodily organ or part, result in serious disfigurement, or for a pregnant woman, result in serious jeopardy to the health of the fetus;

(2) inpatient hospital services, including room and board, general nursing care, meals and special diets when medically necessary; use of operating room and related facilities; use of intensive care unit and services; X-ray services; laboratory and other diagnostic tests; drugs, medications, biologicals, anesthesia, and oxygen services; private duty nursing when medically necessary; radiation therapy; inhalation therapy; whole blood including cost of blood, blood plasma, and blood plasma expanders, that are not replaced by or for the enrollee; administration of whole blood and blood plasma; and short-term rehabilitation therapy services in the acute hospital setting;

(3) inpatient physician care services, including services performed, prescribed, or supervised by physicians or other health professionals including diagnostic, therapeutic, medical, surgical, preventive, referral, and consultative health care services; and

(4) outpatient hospital services, including treatment services; ambulatory surgery services; diagnostic services, including laboratory, radiology, and imaging services; rehabilitation therapy; and radiation therapy.

(b) Each evidence of coverage must also include coverage for services as follows:

(1) breast reconstruction as required by federal law if the plan provides coverage for mastectomy, which is subject to the same deductible or copayment applicable to mastectomy, and which may not be denied because the mastectomy occurred before the effective date of coverage;

(2) prenatal services, delivery, and postdelivery care for an enrollee and her newborn child as required by federal law, if the plan provides maternity benefits; and

(3) diabetes self-management training, equipment, and supplies as required by Insurance Code Chapter 1358, Subchapter B, (concerning Diabetes).

(c) Benefits described in this section that do not apply to small employer plans are not required to be included in those plans.

(d) A state-mandated health benefit plan must provide coverage for basic health care services as described in subsection (a) of this section, as well as all state-mandated benefits as described in Insurance Code Chapter 1507 (concerning Consumer Choice of Benefit Plans), and must provide the services without limitation as to time and cost, other than limitations specifically prescribed in this subchapter.

(e) Nothing in this title requires an HMO, physician, or provider to recommend, offer advice concerning, pay for, provide, assist in, perform, arrange, or participate in providing or performing any health care service that violates the HMO's, physician's, or provider's religious convictions. An HMO that limits or denies health care services under this subsection must set out the limitations in its evidence of coverage.

History

Source Note: The provisions of this §11.508 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.509 Additional Mandatory Benefit Standards: Individual and Group Agreements

Individual and group agreements must contain the following additional mandatory provisions as applicable:

(1) Certificate. Group agreements must include provisions that the contract holder must be provided with subscriber certificates to be delivered to each subscriber, the certificate is a part of the group contract as if fully incorporated, and any direct conflict between the group agreement and the certificate will be resolved according to the terms most favorable to the subscriber. If the same form is used as both the group contract and the certificate, a copy of the group contract must be delivered to each subscriber.

(2) New enrollees. Group agreements must include a provision specifying the conditions under which new enrollees may be added to those originally covered, including effective date requirements. For coverage issued to employers, group agreements must include a provision for special enrollment under 45 C.F.R. §146.117 (concerning Special Enrollment Periods).

(3) Agreements must comply with the benefit, offer, coverage, and notice requirements contained in Insurance Code Title 8, Subtitle E, (concerning Benefits Payable Under Health Coverages), as applicable.

(4) Inability to undergo dental treatment. Group agreements, except for contracts issued to small employer plans and consumer choice health benefit plans, may not exclude from coverage under the plan an enrollee who is unable to undergo dental treatment in an office setting or under local anesthesia due to a documented physical, mental, or medical reason as determined by the enrollee's physician or the dentist providing the dental care. This benefit does not require an HMO to provide dental services if dental services are not otherwise scheduled or provided as part of the benefits covered by the agreement.

(5) Agreements, including consumer choice health benefit plan agreements, providing coverage for children under 18 must define reconstructive surgery for craniofacial abnormalities as provided by Insurance Code §1367.153 (concerning Reconstructive Surgery for Craniofacial Abnormalities; Definition Required).

(6) Group agreements, including consumer choice health benefit plan agreements, must cover formulas necessary to treat phenylketonuria or a heritable disease to the same extent that the agreement provides coverage for drugs that are available only on the orders of a physician, as required by Insurance Code Chapter 1359 (concerning Formulas for Individuals With Phenylketonuria or Other Heritable Diseases).

History

Source Note: The provisions of this §11.509 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.511 Optional Provisions

Evidences of coverage may contain optional provisions, including, but not limited to, the following:

(1) Coordination of benefits. Plans may contain a provision that the value of any benefits or services provided by the HMO may be coordinated with any other type of insurance plan or coverage under governmental programs so no more than 100 percent of eligible expenses incurred is paid. The coordination of benefits provision applies to the plan when an enrollee has health care coverage under more than one plan. This provision will only apply for the duration of the enrollee's coverage in a plan.

(A) If benefits are covered by more than one plan, any plan or plans that do not have a coordination of benefits provision are primary.

(B) Group plans issued or renewed on or before March 25, 2014, may not coordinate benefits with any type of individual or conversion plan.

(C) Group plans issued or renewed on or after March 25, 2014, may coordinate benefits with other plans subject to the requirements of Insurance Code Chapter 1203 (concerning Coordination of Benefits Provisions) and Chapter 3, Subchapter V, of this title (relating to Coordination of Benefits).

(2) Subrogation. Plans may contain a provision that the HMO is subrogated to and has a right to reimbursement from an individual's recovery for a personal injury for payments made or costs of benefits provided by the HMO as a result of that injury, subject to and limited by the provisions of Civil Practice and Remedies Code Chapter 140 (concerning Contractual Subrogation Rights of Payors of Certain Benefits), as added by Acts 2013, 83rd Leg., R.S., Ch. 180, §1 (HB 1869).

(3) Sale of substitutes to workers' compensation insurance. If the HMO chooses to market a product that provides coverage for on-the-job injuries or illness, it must comply with §5.6302 of this title (relating to Sale of Substitutes to Workers' Compensation Insurance).

(4) Conversion privilege. Group agreements and certificates for an HMO may, at the HMO's option, contain a conversion privilege. If an HMO elects to offer a conversion privilege, it must provide that, on termination of coverage, each enrollee who resides, lives, or works in the service area who has been covered under the group contract for a period of at least three months, or in the case of a court-ordered dependent, lives outside the service area but within the United States, has the right to convert within 31 days to a conversion agreement without presenting evidence of insurability. A single service or limited service HMO must offer a conversion contract without requiring evidence of insurability. Charges must comply with §11.704 of this title (relating to Conversion Rates).

(5) Arbitration. Plans may contain a statement of any arbitration procedure. If enrollee complaints and grievances are resolved through a specified arbitration agreement, the arbitration must be conducted under Texas Civil Practice and Remedies Code Chapter 171 (concerning General Arbitration).

History

Source Note: The provisions of this §11.511 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.512 Optional Benefits

An HMO may provide health services to its enrollees in addition to the services required in §11.508 of this title (relating to Basic Health Care Services and Mandatory Benefit Standards: Group, Individual and Conversion Agreements). An HMO may limit these optional health services as to time and cost. Evidences of coverage may contain optional benefits, including:

(1) corrective appliances and artificial aids;

(2) cosmetic surgery;

(3) care for military service-connected disabilities for which the enrollee is legally entitled to services and for which facilities are reasonably available to the enrollee;

(4) care for conditions that state or local law requires be treated in a public facility;

(5) dental services, except as otherwise required;

(6) vision care;

(7) custodial or domiciliary care;

(8) experimental and investigational medical, surgical, or other experimental or investigational health care procedures, unless approved as a basic health care service by the policymaking body of the HMO, provided that:

(A) a denial of a request for experimental or investigational services is an adverse determination; and

(B) an HMO must comply with Chapter 19, Subchapter R, of this title (relating to Utilization Reviews for Health Care Provided Under a Health Benefit Plan or Health Insurance Policy) if the HMO denies requested services because the HMO determines that the requested services are experimental and investigational;

(9) personal or comfort items and private rooms, unless medically necessary during inpatient hospitalization;

(10) durable medical equipment for home use (such as wheelchairs, surgical beds, ventilators, or dialysis machines);

(11) infertility medical services, including gamete intrafallopian transfer (GIFT), zygote intrafallopian transfer (ZIFT), and outpatient infertility drugs;

(12) reversal of voluntary sterilization;

(13) prescribed drugs and medicines incident to outpatient care; and

(14) noninsurance benefits, provided that the HMO complies with Chapter 21, Subchapter NN, of this title (relating to Noninsurance Benefits and Features).

History

Source Note: The provisions of this §11.512 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter G ADVERTISING AND SALES MATERIAL

28 Tex. Admin. Code § 11.602 HMOs Subject to Insurance Code Chapters 541, 542, and 547, and Related Rules

HMOs must comply with Insurance Code Chapters 541 (concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices), 542 (concerning Processing and Settlement of Claims), and 547 (concerning False Advertising by Unauthorized Insurers) and related rules, to the extent these rules may be applied to HMOs in the same manner as insurance companies.

History

Source Note: The provisions of this §11.602 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.603 Filings

Any HMO licensed to do business in Texas that offers coverage to Medicare beneficiaries under the provisions of Subchapter XVIII of 42 United States Code, Health Insurance for the Aged and Disabled, must file with the department a copy of each advertisement related to the coverage that is produced by the HMO or its agents and is an invitation to inquire or invitation to contract as defined in §21.113 of this title (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising) no later than 45 days before its use. Material must be filed in compliance with §21.120 of this title (relating to Filing for Review). Material filed under this paragraph is not to be considered approved but may be subject to review for compliance with Texas law and consistency with other documents.

History

Source Note: The provisions of this §11.603 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter H SCHEDULE OF CHARGES

28 Tex. Admin. Code § 11.701 Schedule of Charges Must be Filed Before Use

(a) No schedule of charges, formula, or method for calculating the schedule of charges may be used until a copy of the formula or method for calculating the schedule of charges with supporting documentation has been filed with the commissioner, as required by §11.703 of this title (relating to Filings and Supporting Documentation).

(b) The schedule of charges must include all charges made for group, conversion, or individual coverage.

History

Source Note: The provisions of this §11.701 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.702 Actuarial Certification

Each formula or method for calculating the schedule of charges must be accompanied by the certification of a qualified actuary that, based on reasonable assumptions, the formula is appropriate to produce rates that are not excessive, inadequate, or unfairly discriminatory. An actuary is considered qualified if he or she is a member in good standing of both the American Academy of Actuaries and the Society of Actuaries.

History

Source Note: The provisions of this §11.702 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.703 Filings and Supporting Documentation

An HMO must submit schedule of charges information with the certificate of authority application in compliance with §11.204(11) and (12) of this title (relating to Contents). After the commissioner issues a certificate of authority, the HMO must file rates and supporting documentation before use as follows:

(1) rates for a new product:

(A) evidences of coverage to which the rates apply;

(B) for individual and small group plans, a new rate sheet including rates for each plan and each combination of rating factors used by the HMO; and

(i) a brief description of benefits and general marketing method;

(ii) a brief description of how rates were determined, including a general description and source of each assumption used;

(iii) a list of retention components, including, but not limited to, expenses, taxes, fees, and profit expressed as a percent of premium, dollars per policy, or dollars per unit of benefit;

(iv) the target loss ratio, including a brief description of how it was calculated and all components used in its calculation;

(v) a description of the experience used in developing the HMO's rates, including the level of credibility and appropriateness of experience data, and justification for the use of proposed manual rates if the HMO's own experience is not credible;

(vi) the assumptions and support used in developing rates, including, but not limited to, adjustments for trend, morbidity, lapses, risk-mitigating programs, and changes in benefits;

(vii) any other data used to support the proposed rate; and

(viii) an actuarial certification required by §11.702 of this title (relating to Actuarial Certification);

(2) rate adjustments for an existing product:

(A) evidences of coverage to which the rates adjustments apply;

(B) for individual and small group plans, a new rate sheet that includes rates for each plan and each combination of rating factors used by the HMO; and

(i) a brief description of benefits and general marketing method;

(ii) the scope and reason for the rate revision;

(iii) a description of the experience used in developing the HMO's rates, including past experience, loss ratio(s) for all applicable prior experience periods, the level of credibility and appropriateness of experience data;

(iv) a brief description of how revised rates were determined, including a general description and source of each assumption used, which must also include a list of expenses, taxes, fees, and profit, expressed as a percent of premium, dollars per policy or dollars per unit of benefit, or both;

(v) the target loss ratio and description of how it was calculated;

(vi) the assumptions and support used in developing rates, including, but not limited to, adjustments for trend, morbidity, lapses, risk-mitigating programs, and changes in benefits;

(vii) any other data used to support the proposed rate increase; and

(viii) an actuarial certification required by §11.702 of this title.

History

Source Note: The provisions of this §11.703 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.704 Conversion Rates

(a) Charges for any individual's coverage may not be based on the individual's health status.

(b) The charge by an HMO for individual coverage that has been converted from group coverage may not exceed 200 percent of the rate that the individual would be charged for comparable group coverage.

History

Source Note: The provisions of this §11.704 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter I FINANCIAL REQUIREMENTS

28 Tex. Admin. Code § 11.801 Accounting Guidance

To the extent that the accounting guidance given in §7.18 of this title (relating to National Association of Insurance Commissioners Accounting Practices and Procedures Manual) does not conflict with the provisions of this chapter, an HMO must follow that guidance. In the event of a conflict between the provisions of this chapter and §7.18 of this title, the HMO must follow the provisions of this chapter.

History

Source Note: The provisions of this §11.801 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.802 Minimum Net Worth

(a) An applicant for a certificate of authority to operate an HMO must have unencumbered assets that satisfy the requirements of Insurance Code §843.403 (concerning Minimum Net Worth).

(b) For the purpose of calculating assets to satisfy the minimum net worth requirements of Insurance Code §843.403, lawful money of the United States of America includes deposits in an institution that is a member of the Federal Deposit Insurance Corporation. Demand deposits, savings deposits, or time deposits, of the type that are federally insured in solvent banks, savings and loan associations, and their branches, which are organized under the laws of the United States of America or under the laws of any state of the United States of America may not exceed the greater of:

(1) the amount of federal deposit insurance coverage pertaining to the deposit; or

(2) 10 percent of the issuing financial institution's equity, provided that the institution's equity is in excess of $25 million.

(c) The applicant must maintain unencumbered assets in excess of all of its liabilities by an amount equal to or greater than the minimum net worth requirement until it receives its certificate of authority; then the HMO must meet the minimum net worth requirements of Insurance Code §843.403 by maintaining unencumbered assets in excess of its liabilities by an amount equal to or greater than the minimum net worth requirement.

(d) Foreign HMOs seeking admission to this state, which are actively conducting business in other states, and approved nonprofit health corporations authorized under Insurance Code §844.005 (concerning Provision of Certain Services on Behalf of Health Maintenance Organizations), are required, at a minimum, to comply with Insurance Code §843.403.

History

Source Note: The provisions of this §11.802 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.803 Statutory Deposit Requirements

(a) Statutory deposits made under Insurance Code §843.405 (concerning Deposit with Comptroller) consisting of certificates of deposit must be issued by a solvent, federally insured bank.

(b) Before issuance of the certificate of authority, the HMO must submit proof of statutory deposits satisfying the requirements of Insurance Code §843.405 and meeting the investment requirements of §11.802 of this title (relating to Minimum Net Worth), with a completed Statutory Deposit Transaction Form, Form No. FIN407 (rev. 11/15), and Declaration of Trust Form, Form No. FIN453 (rev. 11/15) as adopted in §13.562(b) of this title (relating to Deposit or Letter of Credit Required), as well as a safekeeping receipt showing that the security is pledged to the department, and the applicable fees under §7.1301(d) of this title (relating to Regulatory Fees) to the bond and securities officer of the department.

(c) Each HMO must annually determine the amount of statutory deposit required as specified in Insurance Code §843.405 and adjust the amount of statutory deposit by March 15 of that year.

(d) Any increases, decreases, or substitutions to the deposit funds must be in funds meeting the investment requirements of §11.802 of this title and must be accompanied by the documentation described in subsection (b) of this section.

(e) If the HMO wishes to request a waiver or release, or a waiver and a release, of all or part of the statutory deposit requirements under Insurance Code §843.405, then the request must provide adequate information, including the following, to justify the relief requested:

(1) specification of the pertinent provisions of the Insurance Code under which the relief is being requested;

(2) the amount of the statutory deposit for which the relief is being requested;

(3) supporting documentation that justifies the relief requested including:

(A) reasons for requesting the relief;

(B) discussion of the impact of granting the relief requested and assurance that the HMO and its enrollees will not be harmed if the relief is granted; and

(i) a copy of the guarantee;

(ii) a copy of the most current audited financial statements of the sponsoring organization, unless the sponsoring organization files financial statements with the National Association of Insurance Commissioners or the Securities Exchange Commission;

(iii) disclosure of the number of guarantees that the sponsoring organization has issued; and

(iv) disclosure of the dollar amount of all obligations guaranteed, the amounts reflected as liabilities, and the amounts guaranteed that are not reflected as liabilities in the sponsoring organization's consolidated financial statements;

(4) if the request is based on projected uncovered expenses:

(A) projections for the next calendar year, including an income statement, a balance sheet, a cash flow statement and enrollment, and assumptions on which the projections are based;

(B) an explanation of why expenses are classified as "covered"; and

(C) a reconciliation with explanation for any differences between submitted projections and the previous calendar year's actual experience;

(5) if an HMO requests a release under Insurance Code §843.405(e) or (f):

(A) evidence that the dollar amount of uncovered health care expenses are likely to continue and will not exceed the amount remaining on deposit; and

(B) an explanation of the reasons for the decrease in uncovered health care expenses from that incurred during previous years;

(6) if a waiver is granted by the commissioner, the assets supporting the uncovered medical expenses may be invested under §11.804(3) of this title (relating to Invested Assets).

(f) When the conditions on which a waiver was granted change to the extent that the HMO is no longer able to qualify for the waiver, the HMO must deposit adequate funds to comply with the requirements of Insurance Code §843.405 within 30 days.

(g) All interest income due on the statutory deposit funds may be paid directly to the HMO by the bank.

History

Source Note: The provisions of this §11.803 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.804 Invested Assets

The admitted assets of domestic and foreign HMOs must at all times comply with the provisions of this section.

(1) Investment of minimum net worth. An HMO must have a minimum net worth as required by §11.802 of this title (relating to Minimum Net Worth).

(2) Investment of assets supporting uncovered medical expenses. An HMO must maintain statutory deposits supporting uncovered medical expenses as required by §11.803 of this title (relating to Statutory Deposit Requirements).

(3) Investments of assets in excess of minimum net worth and uncovered medical expenses. An HMO may invest its funds in excess of minimum net worth and uncovered medical expenses only in the following:

(A) any investments allowed in paragraphs (1) or (2) of this section;

(B) direct general obligations of any state of the United States of America for the payment of money, or obligations for the payment of money, to the extent guaranteed or insured as to the payment of principal and interest by any state of the United States of America, provided that:

(i) the state has the power to levy taxes for the prompt payment of the principal and interest of the obligations; and

(ii) the state is not in default in the payment of principal or interest on any of its direct, guaranteed, or insured general obligations at the date of the investment;

(C) bonds, interest-bearing warrants, or other obligations issued by authority of law by any county, city, town, school district, or other municipality or political subdivision that is now or hereafter may be construed or organized under the laws of any state in the United States of America and that is authorized to issue the bonds, warrants, or other obligations under the constitution and laws of the state in which it is situated, provided:

(i) legal provision has been made by a tax to meet the obligations or a special revenue or income to meet the principal and interest payments as they accrue on the obligations has been appropriated, pledged, or otherwise provided; and

(ii) the county, city, town, school district, or other municipality or political subdivision is not in default in the payment of principal or interest on any of its obligations at the date of the investment;

(D) bonds, interest-bearing warrants, or other obligations issued by authority of law by any educational institution that is now or hereafter may be construed or organized under the laws of any state of the United States of America, and that is authorized to issue the bonds and warrants under the constitution and laws of the state in which it is situated, provided:

(ii) the educational institution is not in default in the payment of principal or interest on any of its obligations at the date of the investment;

(E) investments issued by insurers or HMOs subject to the following conditions:

(i) an HMO may not make an investment under this subparagraph in any other HMO or insurer unless the other HMO or insurer is duly licensed to do business in its domestic state and at the time of the investment is in compliance with the minimum capital and surplus requirements then applicable under the provisions of that state's statutes and regulations; however, an HMO may make an investment under this paragraph in another HMO that has not yet received its certificate of authority to conduct the business of an HMO in its domestic state or that does not yet possess the minimum capital and surplus required by its domestic state if the investment will be sufficient to give the investing HMO at least 50 percent control in the other HMO;

(ii) an HMO may not invest, except as provided in subparagraphs (F) and (G) of this paragraph, in any other HMO or insurer unless the investments will result, within 180 days of the first investment, in the investing HMO having control in the other HMO or insurer;

(iii) an HMO may not invest more than 50 percent of its net worth in excess of minimum net worth in any other HMO or insurer;

(iv) the total investments made by an HMO in all other HMOs or insurers under this subparagraph may not exceed 75 percent of the investing HMO's net worth in excess of minimum net worth; and

(v) the restrictions of clauses (iii) and (iv) of this subparagraph do not apply if the HMO is purchasing 100 percent of the stock of another HMO for the purpose of a merger anticipated to take place no later than three months from the purchase date, unless the period is extended by the commissioner, and the resulting assets of the surviving HMO meet the requirements set forth in this subchapter within three months after the merger, unless the period is extended by the commissioner;

(F) bonds, debentures, bills of exchange, commercial notes, or any other bills and obligations of any corporation, incorporated under the laws of any state of the United States of America or of the United States of America, that, at the time of investment, is designated highest quality (NAIC designation 1) or high quality (NAIC designation 2) in compliance with the guidance provided by the NAIC Valuation of Securities Manual;

(G) equity interests, including common stocks issued by any business entity created under the laws of the United States of America or of any state of the United States, provided that:

(i) the business entity is solvent, with a net worth of at least $1 million;

(ii) if the business entity is a dividend paying business entity, no cumulative dividends are in arrears;

(iii) an HMO may not invest in a partnership, as a general partner, except through a wholly owned subsidiary; and

(iv) the restrictions of clauses (i) and (ii) of this subparagraph do not apply if the business entity of which the HMO wishes to purchase the equity interest is, or is to be, a contracted provider of services;

(H) shares of mutual funds doing business under the Investment Company Act of 1940 (15 United States Code §80a-1, et seq.) and shares in real estate investment trusts as defined in Internal Revenue Code of 1986 (26 United States Code §856), provided that the mutual funds and real estate investment trusts be solvent with at least $1 million of net assets as of the date of its latest annual, or more recent, certified audited financial statement;

(I) mortgage loans by an HMO that are secured by valid first liens on improved real estate, provided that:

(i) there is a title insurance policy or attorney's opinion showing that the borrower owns the real estate;

(ii) there is an appraisal of the real estate and its improvements and the loan does not exceed 75 percent of the appraised value;

(iii) there is an executed note evidencing the loan;

(iv) there is a recorded deed of trust;

(v) the value of the improvements is adequately insured by a company authorized to do business in Texas or in the state in which the real estate is located, and the insurance policy is made payable to the HMO in an amount equal to at least 50 percent of the value of the building, but the insurance coverage need not exceed the outstanding balance owed to the HMO when the outstanding balance falls below 50 percent of the value of the building; and

(vi) the commissioner has the right to obtain an independent appraisal, at the HMO's expense, of real estate securing any loan;

(J) loans secured by collateral, of a nature specified in Insurance Code §843.403 (concerning Minimum Net Worth) and §11.802 of this title (relating to Minimum Net Worth), although the amount loaned may not exceed the value of the securities held as collateral;

(K) loans, whether secured or unsecured and that are not in default, to medical and other health care providers under contract with the HMO for the provision of health care services; however, the admitted value of any loan made under this subparagraph may not exceed the maker's ability to repay the loan, which is calculated by only considering assets that an HMO may hold toward determining any excess of assets over all liabilities of the maker;

(L) real estate acquired in satisfaction of debt; all real property not qualifying under any other provisions of this section must be sold and disposed of within five years after the HMO has acquired title unless the time for disposal is extended by the commissioner;

(M) investments in improved, income-producing real estate;

(N) additional investments that are not otherwise specified by this section, provided that:

(i) the amount of any one investment may not exceed 10 percent of the net worth in excess of the HMO's minimum net worth plus uncovered medical expenses at the time of investment; and

(ii) the total amount of investments authorized by this paragraph may not exceed the HMO's net worth in excess of its minimum net worth plus uncovered medical expenses at the time of investment.

(4) Valuation and Amortization. Except where elsewhere specifically provided, assets must be valued and amortized in compliance with §11.801 of this title (relating to Accounting Guidance) as it applies to entities not required to maintain an asset valuation reserve. If no such standard applies, then the valuation must be at fair value.

(5) Evidence of ownership. A domestic HMO may demonstrate ownership of its securities by complying with §7.86 of this title (relating to Custodied Securities).

(6) Sale of investment. Section 7.4 of this title (relating to Admissible Assets) applies to investments not specifically allowed under this subchapter. The commissioner may require any investment to be sold that would otherwise be authorized under the provisions of this section if the commissioner finds that the investment would cause the investing HMO to operate in a condition that is hazardous to its enrollees, creditors, or the general public.

History

Source Note: The provisions of this §11.804 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.805 Other Assets

(a) Other assets an HMO may find necessary in its operations include, but are not limited to, the following:

(1) uncollected premiums or subscriptions with an adequate provision for uncollectable premiums or subscriptions;

(2) advances of capitation or other fees expected to be paid for the next month to medical and other health care service providers under contract with the HMO, provided that no termination of the contract may take place before the end of the period for which advances were paid;

(3) the following items, provided that a detailed inventory is maintained with each item marked by any identifying number and the proof of cost maintained:

(A) furniture, labor-saving devices, machines, and all other office equipment used in the administration of the HMO;

(B) furniture, medical equipment, and vehicles used in connection with the direct provision of health care services; and

(C) electronic machines, constituting a data processing system or systems and operating systems software used directly for the provision of medical services and the administration of the HMO;

(4) inventories of necessary pharmaceutical and surgical supplies used directly in the treatment of medical conditions, it being the duty of the HMO to sufficiently prove the value of the inventories;

(5) real estate and leasehold estates, including buildings and improvements, and leasehold improvements on rented space, for the accommodation of the HMO's current or expected business operations used in the provision or support of health care services, including space for rent to any physician or provider under contract with the HMO, which property will be used in the provision of health care services to members of the HMO by that physician or provider; and

(6) claims overpayments, with the right of offset supported by a contractual agreement, which are specifically identifiable payments, may be admitted to the extent a liability to that physician or provider exists.

(b) All noninvested assets of an HMO must be accounted for in compliance with §11.801 of this title (relating to Accounting Guidance) except that the assets listed in subsection (a) of this section are admissible.

History

Source Note: The provisions of this §11.805 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.806 Investment Management by Affiliate Companies

(a) Subject to compliance with Insurance Code Chapter 843 (concerning Health Maintenance Organizations), this chapter, and other applicable insurance laws and regulations of this state, a domestic HMO, which is a member of a holding company system with assets in an aggregate amount in excess of $1 billion and a tangible net worth of at least $100 million and having affiliates licensed in this state may authorize an affiliated corporation that, if other than the ultimate holding company, is solvent with at least $10 million tangible net worth and whose performance and obligations under a written agreement with the HMO are guaranteed by the ultimate holding company to invest, hold, and administer as agent or nominee on behalf of the domestic HMO bonds, notes, or other evidences of indebtedness that are authorized and permissible investments under Insurance Code Chapter 843 and other applicable insurance laws and regulations of this state that apply to HMOs, and which mature within one year of the date of acquisition. The securities must be invested, held, and administered under a written agreement authorized by the board of directors of the HMO or an authorized committee, and submitted to the commissioner for prior approval. Approval must be based on satisfactory evidence that the agreement will facilitate the operations of the domestic HMO and will not unreasonably diminish the service to or protection of the domestic HMO's enrollees within this state.

(b) The agreement must:

(1) specify in which office location it will maintain records adequate to identify and verify the securities (or proportionate interest therein) belonging to the HMO; and

(2) allow the commissioner or the commissioner's designee to examine all records relating to those securities held subject to the agreement and must agree to furnish these records at the principal office of the HMO within 10 business days of a request by the commissioner or any of the department's commissioned examiners.

(1) hold the securities of the HMO in bulk, in certificates issued in the name of the affiliate or its nominee, and to commingle them with securities owned by other affiliates of the affiliate;

(2) provide for the securities to be held by a custodian, including the custodian of securities of the affiliate, or in a clearing corporation or the Federal Reserve Book Entry System as provided in this subchapter; and

(3) purchase, sell, or otherwise dispose of the securities in compliance with instructions received from the HMO.

(d) If required by the commissioner, the HMO must report annually to the department:

(1) all investments with the affiliate under this section;

(2) the market value of all securities held by the affiliate on behalf of the HMO as of December 31 of the year next preceding or other date as the commissioner may require; and

(3) the financial condition of the affiliate including, at the commissioner's discretion, balance sheets, income statements, and supporting schedules with an opinion on those financial statements by an independent certified public accountant for the most recent fiscal year.

(e) All of the investments and transactions between or among affiliates and the HMO must otherwise comply with all other applicable provisions of Insurance Code Chapters 823 (concerning Insurance Holding Systems) and 843, and other applicable insurance laws and regulations of this state.

(f) If the HMO or the affiliate does not comply with Insurance Code Chapters 823 and 843 and other applicable insurance laws and regulations of this state, or does not comply with the written agreement governing the investing, holding, and administering of securities, then the commissioner's approval will be withdrawn after reasonable notice and ample opportunity to cure the noncompliance. If the HMO wishes to continue the arrangement, it must submit a request to the commissioner for approval.

(g) On the withdrawal of approval of the agreement, the HMO must undertake to obtain, and the affiliated corporation must undertake to return, investments or funds resulting from the sale or maturity of those investments in which the affiliated corporation invested, held, and administered on behalf of the HMO and the return must be accomplished within 90 days unless:

(1) the commissioner determines that the 90-day period creates a hazard to the public, in which case the commissioner may designate that the period may not exceed 30 days from the date of determination; or

(2) the commissioner extends the period for specific investments on request by the HMO and affiliated corporation, but in no event to exceed one year from the date of the withdrawal of approval.

(h) The affiliate must be organized under the laws of one of the states of the United States of America or of the District of Columbia.

History

Source Note: The provisions of this §11.806 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.807 Fiduciary Responsibility

Any director, member of a committee, officer, or any representative of a domestic HMO, who is charged with the duty of handling or investing its funds, may not intentionally:

(1) deposit or invest the funds, except in the corporate name of the HMO or in the name of the nominee of the HMO as may be allowed elsewhere in this subchapter; or

(2) take or receive to his or her own use any fee, brokerage, or commission, on account of a loan made by or on behalf of the HMO, except that reasonable interest may be received on amounts loaned to the HMO.

History

Source Note: The provisions of this §11.807 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.808 Liabilities

(a) Each HMO must account for liabilities as provided for in §11.801 of this title (relating to Accounting Guidance), and must segregate its liabilities into classifications of "covered" or "uncovered." Agreements to loan money or to make future capital or surplus contributions do not, in themselves, cause liabilities to be covered. Any guarantee of future contributions to surplus that are directed and based on the payment of a debt will allow that debt to be reflected as a covered liability. A liability, for which provision is made other than by the assets of the HMO, may qualify as a covered liability if the amount owed is:

(1) based on a physician or provider contract with a hold-harmless clause as provided in §11.901 of this title (relating to Required and Prohibited Provisions);

(2) subordinated in writing to the uncovered health care liabilities of the HMO; or

(3) unconditionally guaranteed and the guarantee is without monetary limit, as specified in §11.810 of this title (relating to Guarantee from a Sponsoring Organization), by a sponsoring organization that has a tangible net worth of at least $10 million in excess of all amounts that the sponsoring organization has guaranteed.

(b) An HMO may not decrease its liabilities or establish an asset on its balance sheet for any capitated risk or other risk-sharing arrangement with a network physician or provider relating to out-of-service area or emergency care provided by any non-network physician or provider. For purposes of this subsection, non-network physician or provider means a physician or provider who has not directly or indirectly contracted with an HMO or an HMO's network physicians or providers to provide medical or health care services to the HMO's enrollees.

History

Source Note: The provisions of this §11.808 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.810 Guarantee from a Sponsoring Organization

(a) The following items must be incorporated into a guarantee from a sponsoring organization for the HMO to report expenses and liabilities as covered:

(1) the guarantee must be approved by a board resolution of the sponsoring organization;

(2) the sponsoring organization must have a tangible net worth of at least $10 million for each guarantee issued;

(3) the sponsoring organization must agree to file audited financial statements annually with the department's Financial Analysis Section within 180 days of the end of the sponsoring organization's fiscal year;

(4) the guarantee must be unconditional and may not be monetarily limited;

(5) the guarantee, at a minimum, must cover otherwise "uncovered" health care expenses and liabilities, including any present or future contingencies that may arise from the delivery of health care. If the HMO is offering Medicaid products, all expenses and liabilities must be covered;

(6) the guarantee must not be limited in duration;

(7) the guarantee must provide for six-months' advance notice to the department before its cancellation; and

(8) the guarantee must be notarized and signed by the president and another officer of the sponsoring organization.

(b) If at any time a guarantee does not comply with every requirement of this section, then the HMO will no longer qualify for covered expenses and liabilities.

(c) If the sponsoring organization has guaranteed the payment of any debts, expenses, or contingent obligations of another person, or guaranteed the performance of any service or other obligation of another person, then the HMO must provide a certification from the sponsoring organization of the following:

(1) the name of each person guaranteed;

(2) the type of business of that person; and

(3) the extent of each guarantee issued, and the dollar amount of debts and contingent obligations guaranteed individually and in the aggregate.

(d) The HMO must also certify that the guaranteed debts are reported as liabilities or contingent liabilities of the guarantor. This certification must be submitted annually with the sponsoring organization's audited financial statements. The certified copy must be notarized and signed by the president or chief financial officer of the sponsoring organization, with an acknowledgment of the guarantee by the HMO's president or chief financial officer.

History

Source Note: The provisions of this §11.810 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.811 Action under Insurance Code §843.157 and Insurance Code §843.461

(a) In addition to any other actions available under the Insurance Code, the commissioner may take action against an HMO under §843.157 (concerning Rehabilitation, Liquidation, Supervision, or Conservation of Health Maintenance Organizations) and Insurance Code §843.461 (concerning Enforcement Actions). In evaluating the conditions in this section, the commissioner will evaluate all relevant circumstances concerning the HMO's operation. The evaluation of the information relating to these conditions is a part of the examination process. The conditions listed in this section do not conclusively indicate that action must be taken. One or more of the conditions can exist in an HMO that is in satisfactory condition; however, one or more of these conditions has often been found in an HMO that was unable to perform its obligations to enrollees, creditors, or the general public, or has required the commissioner to initiate regulatory action to protect enrollees, creditors, and the general public.

(b) The commissioner may take action under this section, if the commissioner finds that one or more of the conditions listed below or in §8.3 of this title (relating to Hazardous Conditions and Remedy of Hazardous Conditions) exist:

(1) an HMO's federal qualification designation, or NCQA accreditation, or both, are revoked or discontinued;

(2) an HMO's reported claims in process exceed 12 percent of annualized medical and hospital expenses (12 percent is approximately a 45-day backlog);

(3) an HMO fails to comply with Insurance Code Chapter 843 (concerning Health Maintenance Organizations), this chapter, or other applicable insurance laws and regulations of this state;

(4) an HMO has an inadequate provider network;

(5) an HMO contracts with a management or administrative company on a capitated or percentage of premium basis and the administrative or management company refuses to submit financial statements to the HMO;

(6) a physician or provider that is under contract, directly or indirectly, with an HMO, has a pattern of balance billing; or

(7) an HMO does not have the minimum net worth required by Insurance Code §843.403 (concerning Minimum Net Worth) and §11.802 of this title (relating to Minimum Net Worth).

(c) This section does not affect the commissioner's authority to take or order any other appropriate action under the commissioner's authority in the Insurance Code.

History

Source Note: The provisions of this §11.811 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter J PHYSICIAN AND PROVIDER CONTRACTS AND ARRANGEMENTS

28 Tex. Admin. Code § 11.900 Nonprimary Care Physician Specialists as Primary Care Physician

(a) An HMO must allow an enrollee with chronic, disabling, or life threatening illnesses to apply to the HMO's medical director to use a nonprimary care physician specialist as a primary care physician, provided that:

(1) the enrollee makes a request for special consideration that includes:

(A) a certification by the nonprimary care physician specialist of the medical need for the enrollee to use the nonprimary care physician specialist as a primary care physician;

(B) a statement signed by the nonprimary care physician specialist that the specialist is willing to accept responsibility for the coordination of all of the enrollee's health care needs; and

(2) the nonprimary care physician specialist meets the HMO's requirements for primary care physician participation, including credentialing;

(3) the HMO has ensured that the contractual obligations of the nonprimary care physician specialist are consistent with the contractual obligations of the HMO's primary care physicians; and

(4) the HMO must provide the nonprimary care physician specialist with a current directory of participating specialist physicians and providers.

(b) An HMO must approve or deny the request for special consideration and provide written notification of the decision to the enrollee not later than 30 days after receiving the request. If the HMO denies the request, the HMO must provide the reasons for denial in the written notification. An HMO must establish written criteria for determining medical need for an enrollee to use a nonprimary care physician specialist as a primary care provider, and must include the criteria in the provider manual.

(c) If the HMO denies a request for special consideration, an enrollee may appeal the decision through the HMO's established complaint and appeal process.

History

Source Note: The provisions of this §11.900 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.901 Required and Prohibited Provisions

(a) Physician and provider contracts, subcontracts, and arrangements must include provisions regarding a hold-harmless clause as described in Insurance Code §843.361, concerning Enrollees Held Harmless.

(1) A hold-harmless clause is a provision in a physician or health care provider agreement that obligates the physician or provider to look only to the HMO and not its enrollees for payment for covered services (except as described in the evidence of coverage issued to the enrollee).

(2) In compliance with Insurance Code §843.002, concerning Definitions, relating to an "uncovered expense," if a physician or health care provider agreement contains a hold-harmless clause, then the costs of the services will not be considered uncovered health care expenses in determining amounts of deposits necessary for insolvency protection under Insurance Code §843.405, concerning Deposit with Comptroller.

(3) The following is an example of an approvable hold-harmless clause: "(Physician or Provider) agrees that in no event, including, but not limited to, nonpayment by the HMO, HMO insolvency, or breach of this agreement, may (Physician or Provider) bill, charge, collect a deposit from, seek compensation, remuneration, or reimbursement from, or have any recourse against subscriber, enrollee, or persons other than the HMO acting on their behalf for services provided under this agreement. This provision does not prohibit collection of supplemental charges or copayments made in compliance with the terms of (applicable agreement) between the HMO and subscriber or enrollee. (Physician or Provider) further agrees that:

(A) this provision will survive the termination of this agreement regardless of the cause giving rise to termination and must be construed to be for the benefit of the HMO subscriber or enrollee; and

(B) this provision supersedes any oral or written contrary agreement now existing or later entered into between (Physician or Provider) and subscriber, enrollee, or persons acting on their behalf. Any modification, addition, or deletion to the provisions of this clause will be effective on a date no earlier than 15 days after the commissioner has received written notice of the proposed changes."

(b) Physician and provider contracts, subcontracts, and arrangements must include provisions:

(1) regarding retaliation as described in Insurance Code §843.281, concerning Retaliatory Action Prohibited;

(2) regarding continuity of treatment, if applicable, as described in Insurance Code §843.309, concerning Contracts with Physicians or Providers: Notice to Certain Enrollees of Termination of Physician or Provider Participation in Plan, and §843.362, concerning Continuity of Care; Obligation of Health Maintenance Organization;

(3) regarding written notification to enrollees receiving care from a physician or provider of the termination of that physician or provider in compliance with Insurance Code §843.308, concerning Notification of Patients of Deselected Physician or Provider, and §843.309;

(4) regarding posting of complaint notices in physician or provider offices as described in Insurance Code §843.283, concerning Posting of Information on Complaint Process Required, provided that a representative notice that complies with this requirement may be obtained from the Managed Care Quality Assurance Office, MC: LH-MCQA, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030, or the department's website at www.tdi.texas.gov;

(5) regarding indemnification of the HMO as described in Insurance Code §843.310, concerning Contracts with Physicians or Providers: Certain Indemnity Clauses Prohibited;

(6) regarding prompt payment of claims as described in Insurance Code Chapter 542, Subchapter B, concerning Prompt Payment of Claims; §1271.005, concerning Applicability of Other Law; and all applicable statutes and rules pertaining to prompt payment of clean claims, including Insurance Code Chapter 843, Subchapter J, concerning Payment of Claims to Physicians and Providers; and Chapter 21, Subchapter T, of this title (relating to Submission of Clean Claims) with respect to payment to the physician or provider for covered services rendered to enrollees;

(7) regarding capitation, if applicable, as described in Insurance Code §843.315, concerning Payment of Capitation; Assignment of Primary Care Physician or Provider, and §843.316, concerning Alternative Capitation System;

(8) regarding selection of a primary care physician or provider, if applicable, as described in Insurance Code §843.203, concerning Selection of Primary Care Physician or Provider;

(9) providing that a podiatrist, practicing within the scope of the law regulating podiatry, is permitted to furnish X-rays and non-prefabricated orthotics covered by the evidence of coverage as described in Insurance Code §843.311, concerning Contracts with Podiatrists;

(10) regarding the requirements of §21.3701 of this title (relating to Electronic Claims Filing Requirements) if the contract requires electronic submission of any information described by that section;

(11) requiring the preferred provider to comply with all applicable requirements of Insurance Code §1661.005, concerning Refund of Overpayment; and

(12) requiring a contracting physician or provider to retain in the contracting physician's or provider's records updated information concerning a patient's other health benefit plan coverage.

(c) Physician and provider contracts and arrangements must include provisions entitling the physician or provider, on request, to all information necessary to determine that the physician or provider is being compensated in compliance with the contract. A physician or provider may make the request for information by any reasonable and verifiable means. The information provided must include a level of detail sufficient to enable a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made under the terms of the contract for covered services rendered to enrollees. The HMO may provide the required information by any reasonable method through which the physician or provider can access the information, including email, computer disks, or other electronic storage and transfer technology, paper, or access to an electronic database. Amendments, revisions, or substitutions of any information provided under this paragraph must comply with paragraph (4) of this subsection. The HMO must provide the fee schedules and other required information by the 30th day after the date the HMO receives the physician's or provider's request.

(1) The information provided must include a physician-specific or provider-specific summary and explanation of all payment and reimbursement methodologies that will be used to pay claims submitted by a physician or provider, including at a minimum, the:

(A) fee schedule, including, if applicable, CPT, HCPCS, CDT, ICD-9-CM, ICD-10-CM, ICD-11-CM, and successor codes, and modifiers:

(i) by which the HMO will calculate and pay all claims for covered services submitted by or on behalf of the contracting physician or provider; or

(ii) that pertains to the range of health care services reasonably expected to be delivered under the contract by that contracting physician or provider on a routine basis, along with a toll-free number or electronic address through which the contracting physician or provider may request the fee schedules applicable to any covered services that the physician or provider intends to provide to an enrollee, and any other information required by this subsection that pertains to the service for which the fee schedule is being requested if the HMO has not previously provided that information to the physician or provider;

(B) all applicable coding methodologies;

(C) all applicable bundling processes, which must be consistent with nationally recognized and generally accepted bundling edits and logic;

(D) all applicable downcoding policies;

(E) a description of any other applicable policy or procedure the HMO may use that affects the payment of specific claims submitted by or on behalf of the contracting physician or provider, including recoupment;

(F) any addenda, schedules, exhibits, or policies used by the HMO in carrying out the payment of claims submitted by or on behalf of the contracting physician or provider that are necessary to provide a reasonable understanding of the information provided under this subsection; and

(G) the published product name and version of any software the HMO uses to determine bundling and unbundling of claims.

(2) In the case of a reference to source information outside the control of the HMO as the basis for fee computation, such as state Medicaid or federal Medicare fee schedules, the information the HMO provides must clearly identify the source and explain the procedure by which the physician or provider may readily access the source electronically, telephonically, or as otherwise agreed to by the parties.

(3) Nothing in this subsection may be construed to require an HMO to provide specific information that would violate any applicable copyright law or licensing agreement. However, the HMO must supply, instead of any information withheld on the basis of copyright law or licensing agreement, a summary of the information that will allow a reasonable person with sufficient training, experience, and competence in claims processing to determine the payment to be made under the terms of the contract for covered services that are rendered to enrollees as required by paragraph (1) of this subsection.

(4) No amendment, revision, or substitution of any of the claims payment procedures or any of the information required to be provided by this subsection will be effective as to the contracting physician or provider, unless the HMO provides at least 90-calendar-days' written notice to the contracting physician or provider identifying with specificity the amendment, revision, or substitution. An HMO may not make retroactive changes to claims payment procedures or any of the information required to be provided by this subsection. Where a contract specifies mutual agreement of the parties as the sole mechanism for requiring amendment, revision, or substitution of the information required by this subsection, the written notice specified in this section does not supersede the requirement for mutual agreement.

(5) The HMO must provide the information required by paragraphs (1) - (4) of this subsection to the contracting physician or provider by the 30th day after the date the HMO receives the contracting physician's or provider's request.

(6) A physician or provider receiving information under this subsection may not:

(A) use or disclose the information for any purpose other than:

(i) the physician's or provider's practice management;

(ii) billing activities;

(iii) other business operations; or

(iv) communications with a governmental agency involved in the regulation of health care or insurance;

(B) use the information to knowingly submit a claim for payment that does not accurately represent the level, type, or amount of services that were actually provided to an enrollee or to misrepresent any aspect of the services; or

(C) rely on information provided under this paragraph about a service as a representation that an enrollee is covered for that service under the terms of the enrollee's evidence of coverage.

(7) A physician or provider that receives information under this subsection may terminate the contract on or before the 30th day after the date the physician or provider receives the information without penalty or discrimination in participation in other health care products or plans. The contract between the HMO and physician or provider must provide for reasonable advance notice to enrollees being treated by the physician or provider before the termination consistent with Insurance Code §843.309.

(8) The provisions of this subsection may not be waived, voided, or nullified by contract.

(d) Physician and provider contracts, subcontracts, and arrangements must include provisions regarding written notification of termination to a physician or provider in compliance with Insurance Code §843.306, concerning Termination of Participation; Advisory Review Panel, and §843.307, concerning Expedited Review Process on Termination or Deselection, including provisions providing that:

(1) the HMO must provide notice of termination by the HMO to the physician or provider at least 90 days before the effective date of the termination;

(2) not later than 30 days following receipt of the written notification of termination, a physician or provider may request a review by the HMO's advisory review panel except in a case involving:

(A) imminent harm to patient health;

(B) an action by a state medical or dental board, another medical or dental licensing board, or another licensing board or government agency that effectively impairs the physician's or provider's ability to practice medicine, dentistry, or another profession; or

(3) within 60 days after receipt of the physician's or provider's request for review, the advisory review panel must make its formal recommendation and the HMO must communicate its decision to the physician or provider.

(e) On request by a participating physician or provider, an HMO must include a provision in the physician's or provider's contract providing that the HMO and the HMO's clearinghouse may not refuse to process or pay an electronically submitted clean claim because the claim is submitted together with or in a batch submission with a claim that is deficient. As used in this section, the term "batch submission" means "a group of electronic claims submitted for processing at the same time within a Health Insurance Portability and Accountability Act (HIPAA) standard ASC X12N 837 Transaction Set and identified by a batch control number." This subsection applies to a contract entered into or renewed on or after August 1, 2017. For a contract entered into or renewed before August 1, 2017, the law and regulations in effect at the time the contract was entered or renewed, whichever is later, governs.

(f) A contract between an HMO and a dentist may not limit the fee the dentist may charge for a service that is not a covered service under Insurance Code §843.3115, concerning Contracts with Dentists.

(g) A contract between an HMO and a provider, as that term is defined in Insurance Code §1458.001, concerning General Definitions, must comply with Insurance Code §1458.101, concerning Contract Requirements, to the extent applicable.

History

Source Note: The provisions of this §11.901 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2025, 50 TexReg 2213.

28 Tex. Admin. Code § 11.902 Prohibited Actions

(a) An HMO may not:

(1) require a physician to use a hospitalist for a hospitalized patient by contract under Insurance Code §843.320, concerning Use of Hospitalist;

(2) refuse to contract with a nurse first assistant to be part of a provider network or refuse to reimburse a nurse first assistant under Insurance Code §843.3045, concerning Nurse First Assistant;

(3) require a physician to use the services of a nurse first assistant as defined by Occupations Code §301.354, concerning Nurse First Assistants; Assisting at Surgery by Other Nurses;

(4) refuse to contract with a podiatrist licensed by the Texas Department of Licensing and Regulation who joins the professional practice of a contracted physician or provider under Insurance Code §843.319, concerning Certain Required Contracts;

(5) refuse a request to identify a physician assistant or advanced practice registered nurse as a provider in the HMO's network under Insurance Code §843.312, concerning Physician Assistants and Advanced Practice Nurses;

(6) employ an optometrist or therapeutic optometrist to provide a vision care product or service, pay an optometrist or therapeutic optometrist for a service not provided, or restrict or limit an optometrist's or therapeutic optometrist's choice of sources or suppliers of services or materials under Insurance Code §1451.156 (concerning Prohibited Conduct); or

(7) contract with a dentist to limit the fee the dentist may charge for a service that is not a covered service under Insurance Code §843.3115, concerning Contracts with Dentists.

(b) An HMO that uses steering or a tiered network to encourage an enrollee to obtain a health care service from a particular provider, as defined under Insurance Code Chapter 1458, concerning Provider Network Contract Arrangements, must do so in a manner that complies with the requirements of the Insurance Code, including the fiduciary duty imposed by Insurance Code §1458.101(i), concerning Contract Requirements, to act only for the primary benefit of the enrollee or contract holder. For the purposes of this section:

(1) "steering" refers to offering incentives to encourage enrollees to use specific physicians or providers;

(2) "tiered network" refers to a network of contracted physicians and providers in which an HMO assigns contracted physicians and providers to tiers within the network that are associated with different levels of cost sharing; and

(3) violations of the fiduciary duty under Insurance Code §1458.101(i) will be determined by TDI based on an assessment of the HMO's conduct. Examples of conduct that would violate the HMO's fiduciary duty include, but are not limited to:

(A) using a steering approach or a tiered network to provide a financial incentive as an inducement to limit medically necessary services, to encourage receipt of lower quality medically necessary services or receipt of services, or in violation of state or federal law;

(B) failing to implement reasonable processes to ensure that the contracted physicians and providers that enrollees are encouraged to use within any steering approach or tiered network are not of a materially lower quality as compared with contracted physicians and providers that enrollees are not encouraged to use;

(C) failing to implement reasonable processes to ensure that the HMO does not make materially false statements or representations about a physician's or provider's quality of care or costs; or

(D) failing to use objectively and verifiably accurate and valid information as the basis of any encouragement or incentive under this subsection.

History

Source Note: The provisions of this §11.902 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2025, 50 TexReg 2213.

28 Tex. Admin. Code § 11.903 Physician or Provider Communication

(a) An HMO may not, as a condition of a contract with a physician or provider, or in any other manner, prohibit, attempt to prohibit, or discourage a physician or provider from discussing with or communicating to a current, prospective, or former patient, or a party designated by a patient, with respect to:

(1) information or opinions regarding the patient's health care, including the patient's medical condition or treatment options, or the availability of facilities both in-network and out-of-network for the treatment of a patient's medical condition;

(2) information or opinions regarding the provisions, terms, requirements, or services of the health care plan as they relate to the medical needs of the patient;

(3) the fact that the physician's or provider's contract with the HMO has terminated or that the physician or provider will otherwise no longer be providing medical care or health care services under the health care plan; or

(4) the fact that, if medically necessary covered services are not available through network physicians or providers, the HMO must, on the request of a network physician or provider and within time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no event to exceed five business days after receipt of reasonably requested documentation, allow referral to a non-network physician or provider.

(b) An HMO may not in any way penalize, terminate, or refuse to compensate for covered services, a physician or provider for communicating with a current, prospective, or former patient, or a party designated by a patient, in any way protected by this section.

(c) An HMO may not require a physician or provider to provide a notification form stating that the physician or provider is an out-of-network provider to a current, prospective, or former patient, or a party designated by a patient, if the form contains additional information that is intended, or is otherwise required to be presented in a manner that is intended, to intimidate the patient.

History

Source Note: The provisions of this §11.903 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.904 Provision of Services Related to Immunizations and Vaccinations

(a) In compliance with Insurance Code Chapter 1353 (concerning Immunization or Vaccination Protocols Under Managed Care Plans), an HMO may not require a physician to issue an immunization or vaccination protocol for an immunization or vaccination to be administered to an enrollee by a pharmacist.

(b) No contract between an HMO and a pharmacy or pharmacist may prohibit a pharmacist from administering immunizations or vaccinations if the immunizations or vaccinations are administered in compliance with the Texas Pharmacy Act, Occupations Code, Title 3, Subtitle J, Chapters 551 - 569 (concerning Pharmacy and Pharmacists), and related rules.

History

Source Note: The provisions of this §11.904 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter K REQUIRED FORMS

28 Tex. Admin. Code § 11.1001 Required Forms

The following forms are to be used in conjunction with the rules adopted under this chapter. Copies of these forms may be obtained by contacting the Company Licensing and Registration Office, Mail Code 103-CL, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104, or from the department's website at www.tdi.texas.gov. Each HMO or other person or entity must use the form or forms required by this title as appropriate to its particular activities. The forms are listed as follows:

(1) Name Application Form, (rev. 03/14);

(2) Application for a Certificate of Authority to do business in the State of Texas, (rev. 09/04);

(3) State of Texas Officers and Directors Page, TDI Form FIN306, (rev. 06/10);

(4) State of Texas Biographical Affidavit, NAIC UCAA Form 11, (rev. 04/13);

(5) HMO Certification and Transmittal Form, TDI Form LHL 259, (rev. 07/14);

(6) Reconciliation of Benefits to Schedule of Charges Form, TDI Form LHL 654, (rev. 01/13);

(7) Statutory Deposit Transaction Form, Form No. FIN407 (rev.11/15); and

(8) Declaration of Trust Form, Form No. FIN453 (rev.11/15).

History

Source Note: The provisions of this §11.1001 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter M ACQUISITION, CONTROL, OR MERGER OF A DOMESTIC HMO

28 Tex. Admin. Code § 11.1201 Acquisition, Control, or Merger of a Domestic HMO

An HMO is subject to the requirements of Insurance Code Chapter 823 (concerning Insurance Holding Company Systems); Insurance Code Chapter 824 (concerning Merger and Consolidation of Stock Insurance Corporations); and Chapter 7, Subchapter B, of this title (relating to Insurance Holding Company Systems).

History

Source Note: The provisions of this §11.1201 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter O ADMINISTRATIVE PROCEDURES

28 Tex. Admin. Code § 11.1401 Commissioner's Authority to Require Additional Information

The commissioner may require additional information as needed to make any determination required by Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), this chapter, and other applicable insurance laws and regulations of this state.

History

Source Note: The provisions of this §11.1401 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1402 Notification to Physicians and Providers

(a) An HMO that provides coverage for health care services or medical care through one or more physicians or providers is required by Insurance Code §843.305 (concerning Annual Application Period for Physician and Providers to Contract) to provide a 20-calendar day period each calendar year during which any provider or physician in the geographic service area may apply to participate in each of the HMO's networks providing health care services or medical care under the terms and conditions established by the HMO for the provision of the services and the designation of the physicians and providers. Section 843.305 may not be construed to:

(1) require that an HMO use a particular type of provider or physician in its operation;

(2) require that an HMO accept a physician or provider of a category or type that does not meet the practice standards and qualifications established by the HMO; or

(3) require that an HMO contract directly with the physicians or providers.

(b) An HMO subject to Insurance Code §843.305 must publish a notice of an application period to physicians and providers both in the public notice section of at least one major newspaper with general circulation in each of its service areas and on the HMO's website. The notice must be published for at least five consecutive days during the period of January 2 through January 23 of each calendar year and must include the caption "Notice to Physicians and Providers" in bold type, the name and address of the HMO, what networks the HMO provides, and the specific dates of the 20-day period during which physicians and providers may make application to be a participating physician or provider in each network.

(c) An HMO must notify a physician or provider of acceptance or nonacceptance, in writing, no later than 90 days from receipt of an application for participation by that physician or provider in a network.

(d) An HMO must file a copy of the published notice with the department in compliance with §11.301 of this title (relating to Filing Requirements), for information, within 30 days of publication. The filing must include the following:

(1) the name of the newspaper and the beginning and ending date of the publication; and

(2) a copy of the website screen shots and the beginning and ending date of the publication.

History

Source Note: The provisions of this §11.1402 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1403 Requirement for Notifying Enrollees of Toll-free Telephone Number for Complaints about Psychiatric or Chemical Dependency Services of Private Psychiatric Hospitals, General Hospitals, and Chemical Dependency Treatment Centers

(a) HMOs must include the following notice in information provided to new subscribers:

Attached Graphic

(b) The entire notice must be in at least 10-point type. If the newsletter or other mailing is in larger than 10-point type, the notice must be in the same type as the rest of the newsletter or mailing. Paragraphs 1 - 4 of the English notice and paragraphs 1 - 4 of the Spanish notice must be in boldface type. Paragraphs 1 and 2 of the English and Spanish notices must be in capital letters. A final print of the mailing must be submitted to the Life and Health Lines Office of the Texas Department of Insurance for filing within 30 days following distribution to enrollees.

History

Source Note: The provisions of this §11.1403 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1404 Pharmacy Application and Recertification

(a) An HMO may not require any pharmacy or pharmacist participating or applying to participate as a contracted provider in an HMO delivery network to:

(1) provide financial statements to the HMO; or

(2) deposit with the HMO any monies or other form of consideration, except for reasonable application and recertification fees.

(b) An HMO or a pharmacy benefit manager may not directly or indirectly charge or hold a pharmacist or pharmacy responsible for a fee for any step of, or component or mechanism related to, the claim adjudication process in violation of Insurance Code §1369.402 (concerning Certain Fees Prohibited).

History

Source Note: The provisions of this §11.1404 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter P PROHIBITED PRACTICES

28 Tex. Admin. Code § 11.1500 Discrimination Based on Health Status-Related Factors

An HMO may not require an enrollee in a group health plan to pay a premium or contribution that is different from the premium or contribution for a similarly situated enrollee based on a health status-related factor. For purposes of this section, the term "similarly situated" has the meaning assigned to it in 45 CFR §146.121 (concerning Prohibiting Discrimination Against Participants and Beneficiaries Based on a Health Factor). An HMO may not establish policies or procedures that are based on health status-related factors for the eligibility of any individual to enroll under a group plan.

History

Source Note: The provisions of this §11.1500 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter Q OTHER REQUIREMENTS

28 Tex. Admin. Code § 11.1600 Information to Prospective and Current Contract Holders and Enrollees

(a) An HMO must provide an accurate written description of health care plan terms and conditions to allow any prospective contract holder or enrollee or current contract holder or enrollee to make comparisons and informed decisions before selecting among health care plans. The HMO may deliver the written description of health care plan terms and conditions electronically but must provide a paper copy on request.

(b) The written or electronic plan description must be filed for approval in compliance with §11.301 of this title (relating to Filing Requirements); be in a readable and understandable format that meets the requirements of §3.602 of this title (relating to Plain Language Requirements), by category; and include these items in the following order:

(1) a statement that the entity providing the coverage is an HMO;

(2) a toll-free number, unless exempted by statute or rule, and address for obtaining additional information, including physician and provider information;

(3) a clear, complete, and accurate description of all covered services and benefits, including a description of the options, if any, for prescription drug coverage, both generic and brand name, and if applicable, an explanation of how to access formulary information consistent with §21.3031(b) of this title (relating to Formulary Information on Issuer's Website);

(4) a clear, complete, and accurate description of emergency care services and benefits, including coverage for out-of-area emergency care services and information on access to after-hours care;

(5) a clear, complete, and accurate description of out-of-area services and benefits (if any);

(6) as provided in Insurance Code §1456.003 (concerning Required Disclosure: Health Benefit Plan), statements that:

(A) a facility-based physician or other health care practitioner may not be included in the health benefit plan's physician and provider network;

(B) the facility-based physician or other health care practitioner may balance bill the enrollee for amounts not paid by the health benefit plan; and

(7) a clear, complete, and accurate explanation of enrollee financial responsibility for payment of premiums, copayments, deductibles, and any other out-of-pocket expenses for noncovered or out-of-plan services, and an explanation that network physicians and providers have agreed to look only to the HMO and not to its enrollees for payment of covered services, except as set forth in this description of the plan;

(8) a clear, complete, and accurate description of any limitations or exclusions, including the existence of any drug formulary limitations;

(9) information regarding preauthorization requirements as required by Insurance Code §843.3481 (concerning Posting of Preauthorization Requirements) and Chapter 19, Subchapter R, of this title (relating to Utilization Reviews for Health Care Provided Under a Health Benefit Plan or Health Insurance Policy);

(10) a provision for continuity of treatment in the event of the termination of a primary care physician or dentist;

(11) a clear, complete, and accurate summary of the HMO's complaint and appeal procedures, a statement of the availability of the independent review process, and a statement that the HMO is prohibited from retaliating against a group contract holder or enrollee because the group contract holder or enrollee has filed a complaint against the HMO or appealed a decision of the HMO, and is prohibited from retaliating against a physician or provider because the physician or provider has, on behalf of an enrollee, reasonably filed a complaint against the HMO or appealed a decision of the HMO;

(12) a current list of physicians and providers, including behavioral health providers and substance abuse treatment providers, if applicable, with the information necessary to fully inform prospective or current enrollees about the network, including the information required by §11.1612 of this title (relating to Mandatory Disclosure Requirements), together with a link to the online directory required under §11.1612(a) of this title;

(13) a clear, complete, and accurate description of the service area;

(14) when the HMO product includes point-of-service coverage, including when such coverage is provided by an insurer, or when the product is explicitly marketed with the option of purchasing point-of-service coverage, a clear, complete, and accurate explanation of the point-of-service coverage, including:

(A) an explanation of how any deductible is calculated, clearly explaining if multiple deductibles may be applied under the plan as a whole;

(B) a method to obtain a real-time estimate of the amount of reimbursement that will be paid to a non-network provider for a particular service;

(C) a clear, complete, and accurate explanation of how reimbursements of non-network point-of-service services will be determined subject to §11.2503 of this title (relating to Coverage Relating to Point-of-Service Rider Plans) for point-of-service riders or §21.2902 of this title (relating to Arrangements between Indemnity Carriers and HMOs to Provide Coverage) for dual and blended point-of-service arrangements;

(D) if point-of-service coverage is provided under a dual or blended point-of-service arrangement, a clear, complete, and accurate explanation of how the coverage will be coordinated and who the enrollee should contact for common issues, including;

(i) the identity and contact information for each entity, the HMO, the indemnity carrier, or any third-party administrator (TPA) that will administer the coverages offered under the point-of-service plan;

(ii) a clear, complete, and accurate description of all duties of the HMO and other carrier to each other relating to the point-of-service plan issued under this subchapter; and

(iii) as applicable, a clear, complete, and accurate explanation of out-of-plan coverage for point-of-service coverage offered in conjunction with plans subject to Insurance Code Chapter 1301 (concerning Preferred Provider Benefit Plans);

(E) a clear, complete, and accurate explanation that for an enrollee in a limited provider network, higher cost-sharing may be imposed only when the enrollee obtains benefits or services outside the HMO delivery network.

(c) An HMO may use its member handbook to satisfy the requirements of this section if the information contained in the handbook is substantially similar to and provides the same level of disclosure as the written or electronic description prescribed by the Commissioner and contains all the information required under this section.

(d) An HMO offering a Children's Health Insurance Program plan that files its plan description in the form of its member handbook in compliance with §11.301 of this title (relating to Filing Requirements), for information only, together with a certification from the HMO that the handbook has been approved by the Texas Health and Human Services Commission and a copy of the document approving the handbook is exempt from the filing and approval requirements of subsection (b) of this section.

(e) If an HMO limits enrollees' access to health care to a limited provider network, then it must provide a notice in substantially the following form to prospective and current group contract holders: "Choosing Your Physician--Now that you have chosen (Name of HMO), your next choice will be deciding who will provide the majority of your health care services. Your Primary Care Physician or Primary Care Provider (PCP) will be the one you call when you need medical advice, when you are sick, and when you need preventive care such as immunizations. Your PCP is also part of a 'network' or association of health professionals who work together to provide a full range of health care services. That means when you choose your PCP, you are also choosing a network and in most instances you are not allowed to receive services from any physician or health care professional, including your obstetrician-gynecologist (OB-GYN), that is not also part of your PCP's network. You will not be able to select any physician or health care professional outside of your PCP's network, even though that physician or health care provider is listed with your health plan. The network to which your PCP belongs will provide or arrange for all of your care, so make sure that your PCP's network includes the specialists and hospitals that you prefer."

(f) If an HMO does not limit an enrollee's selection of an obstetrician or gynecologist to the limited provider network to which that enrollee's primary care physician or provider belongs, then it must provide a notice in compliance with Insurance Code Chapter 1451, Subchapter F, (concerning Access to Obstetrical or Gynecological Care) in substantially the following form to current or prospective enrollees: "ATTENTION FEMALE ENROLLEES: You have the right to select and visit an obstetrician-gynecologist (OB-GYN) without first obtaining a referral from your PCP. (Name of HMO) has opted not to limit your selection of an OB-GYN to your PCP's network. You are not required to select an OB-GYN. You may elect to receive your OB-GYN services from your PCP."

(g) An HMO must clearly identify limited provider networks within its service area by providing a separate listing of its limited provider networks and an alphabetical listing of all the physicians and providers, including specialists, available in each limited provider network. An HMO must include an index of the alphabetical listing of all contracted physicians and providers, including behavioral health providers and substance abuse treatment providers, if applicable, within the HMO's service area, and must indicate the limited provider network(s) to which the physician or provider belongs and the page number where the physician or provider's name can be found.

(h) An HMO must provide notice to enrollees informing them to contact the HMO on receipt of a bill for covered services from any physician or provider, including a facility-based physician or other health care practitioner. The notice must inform enrollees of the method(s) for contacting the HMO for this purpose.

(i) If an HMO or limited provider network provides for an enrollee's care by a physician other than the enrollee's primary care physician while the enrollee is in an inpatient facility (for example, a hospital or skilled nursing facility), the plan description must disclose that on admission to the inpatient facility, a physician other than the primary care physician may direct and oversee the enrollee's care.

(j) An HMO that maintains a website must list the information on its website as required by subsections (b) - (g) of this section and Insurance Code §843.2015 (concerning Information Available Through Internet Site) and §1456.003 (concerning Required Disclosure: Health Benefit Plan). The information must be easily accessible from the home page of the HMO's website.

History

Source Note: The provisions of this §11.1600 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036.

28 Tex. Admin. Code § 11.1601 Enrollee Identification Cards

(a) If an HMO issues identification (ID) cards to enrollees, the HMO must issue the ID cards within 30 calendar days of receiving notice of the enrollee's selection of a primary care physician. The enrollee ID card will include, at a minimum, all necessary information to allow an enrollee to access all services under the certificate or evidence of coverage that require presentation of the card.

(b) All ID cards an HMO issues must comply with the requirements of Insurance Code §843.209 (concerning Identification Card) and §1693.002 (concerning Identification Card and Required Information) and §21.2820 of this title (relating to Identification Cards).

(c) If an evidence of coverage provides benefits for prescription drugs, an HMO must issue an ID card in compliance with Insurance Code §1369.153 (concerning Information Required on Identification Card) and §4151.152 (concerning Identification Cards) and §§21.3002 - 21.3004 of this title (relating to Definitions; Pharmacy Identification Cards, Standard Identification Cards, and Issuance of Standard Identification Cards).

(d) All ID cards issued by an HMO must comply with the requirements of Business and Commerce Code §501.001 (concerning Certain Uses of Social Security Number Prohibited) and §501.002 (concerning Certain Uses of Social Security Number Prohibited; Remedies), which restrict the display of social security numbers on ID cards.

(e) An ID card or other similar document issued by a qualified health plan issuer to an enrollee of a qualified health plan purchased through an exchange must display on the card or document in a location of the issuer's choice the acronym "QHP."

History

Source Note: The provisions of this §11.1601 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1602 Enrollment Form and Access to Certain Information

(a) An HMO must include on its enrollment form a space in which an enrollee may indicate:

(1) the enrollee's primary language; and

(2) whether the enrollee has a disability affecting the enrollee's ability to communicate or read.

(b) The HMO must provide, at its own expense, a member handbook and materials relating to the complaint and appeal process and the availability of the independent review process in the language of the major population of the HMO's enrolled population under Insurance Code §843.205 (concerning Member's Handbook; Information About Complaints and Appeals). The HMO may deliver the member handbook and materials electronically but must provide a paper copy on request.

(c) If a member has a disability affecting the member's ability to communicate or read, then the HMO must provide, at its own expense, a member handbook and materials relating to the complaint and appeal process and the availability of the independent review process in the appropriate format, including, but not limited to:

(1) Braille;

(2) large print, no smaller than 17 point;

(3) audio tape;

(4) TDD access;

(5) an interpreter; or

(6) any combination of the above.

History

Source Note: The provisions of this §11.1602 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1603 Notification of Change in Payment Arrangements

An HMO must provide written notification to affected group contract holders of a substantive change in the payment arrangement for physicians and providers within 30 days of any change in the type of payment arrangement; for example, a change from capitation to fee for service, or from fee for service to capitation, for any type of service. The notification of the change must include a description of the changed payment arrangement and a description of the new payment arrangement.

History

Source Note: The provisions of this §11.1603 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1604 Requirements for Certain Contracts Between Primary HMOs and ANHCs and Between Primary HMOs and Provider HMOs

A primary HMO that enters into a contract with an ANHC in which the ANHC agrees to arrange for or provide health care services other than medical care or services ancillary to the practice of medicine, or with a provider HMO in which the provider HMO agrees to arrange for or provide health care services on a risk-sharing or capitated risk arrangement on behalf of the primary HMO as part of the primary HMO delivery network must:

(1) submit a monitoring plan to the department setting out:

(A) how the primary HMO will ensure that the ANHC or provider HMO has an effective administrative system for providing timely and accurate reimbursement to all physicians and providers under contract with the ANHC or provider HMO; and

(B) how the primary HMO will ensure that all HMO functions delegated or assigned under contract with the ANHC or provider HMO are consistent with full compliance by the primary HMO with all department regulatory requirements;

(2) file with the department a copy of the form of the written contract with an ANHC or provider HMO, in accordance with §11.301(5) of this title (relating to Filing Requirements), that:

(A) requires that the ANHC or provider HMO cannot terminate the contract without 90-days written notice;

(B) contains a hold-harmless provision that prohibits the ANHC or provider HMO and its contracted physicians and providers from billing for or attempting to collect from HMO members, except for authorized copayments and deductibles, charges for covered services under any circumstance, including the insolvency of the primary HMO, ANHC, or provider HMO;

(C) contains a provision stating that nothing in the contract will be construed to in any way limit the HMO's authority or responsibility to comply with all of the department's regulatory requirements;

(D) includes the ANHC's or provider HMO's acknowledgment and agreement that:

(i) the primary HMO is required to establish, operate, and maintain a health care delivery system, quality assurance system, physician and provider credentialing system, and other systems and programs meeting department standards and is directly accountable for compliance with the standards;

(ii) the role of the ANHC or provider HMO in contracting with the primary HMO is limited to implementing certain systems of the primary HMO, utilizing standards approved by the primary HMO, and subject to the primary HMO's oversight and monitoring of the ANHC's or provider HMO's performance; and

(iii) the primary HMO may take necessary action to ensure that all HMO systems and functions that are delegated or assigned under the contract with the ANHC or provider HMO are in full compliance with all department regulatory requirements;

(E) requires the ANHC to make available to the primary HMO the ANHC's contracts with physicians and providers to ensure compliance with contractual requirements set out in subparagraphs (B) and (C) of this paragraph;

(F) requires the ANHC to provide the primary HMO with evidence of both financial solvency and financial ability to perform, such as a certified financial audit of the ANHC conducted by an independent certified public accountant, using generally accepted accounting and auditing principles; and

(G) requires the ANHC or provider HMO to provide the primary HMO, on at least a monthly basis and in a usable form necessary for audit purposes, the data necessary for the HMO to comply with department reporting requirements with respect to any services provided under the HMO-ANHC or HMO-provider HMO agreement, including the following data:

(i) number of primary HMO enrollees served or assigned to the ANHC or primary HMO to receive services, including the number added and terminated since the last reporting period;

(ii) form of the contracts and subcontracts between the ANHC and physicians and providers who will be providing services to enrollees of the primary HMO and any material changes to the contracts and subcontracts;

(iii) copayments received by the ANHC or provider HMO;

(iv) summary of the amounts paid by the ANHC or provider HMO to physicians and providers;

(v) methods by which physicians and providers were paid by the ANHC or provider HMO, for example, capitation, fee-for-services, or other risk-sharing arrangements;

(vi) utilization data;

(vii) summary of the amounts paid by the ANHC or provider HMO for administrative services relating to the primary HMOs;

(viii) the time that claims and debts related to claims owed by the ANHC or provider HMO have been pending;

(ix) information required for the primary HMO to be able to file claims for reinsurance, coordination of benefits, and subrogation;

(x) physician and provider and enrollee satisfaction data;

(xi) complaint data;

(xii) documentation of any inquiry or investigation of the ANHC or provider HMO, or any individual subcontracting physician or provider, made by regulatory agencies, and documentation of the final resolution of the inquiry or investigation; and

(xiii) any other data necessary to ensure proper monitoring and control of the primary HMO delivery network by the primary HMO;

(3) conduct an on-site audit of the ANHC or provider HMO at least annually, or more frequently on indication of material noncompliance, to obtain information necessary to verify compliance with all of the department's regulatory requirements, and provide written documentation of each audit to the department on request; and

(4) take prompt action to correct any failure by the ANHC or provider HMO to comply with the department's regulatory requirements relating to any matters delegated by the primary HMO to the ANHC or provider HMO and necessary to ensure the primary HMO's compliance with the regulatory requirements.

History

Source Note: The provisions of this §11.1604 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1605 Pharmaceutical Services

(a) Prescription drug coverage that includes copayments must do so for both generic drugs and name-brand drugs. If the negotiated or usual and customary cost of the drug is less than the copayment, the enrollee may only be required to pay the lower cost. The copayments may be the same, or if different, must be applied as follows:

(1) if the prescription is for a generic drug, the enrollee may be required to pay no more than the generic copayment;

(2) if the prescription is for a name-brand drug, the enrollee may be required to pay no more than the name-brand copayment if:

(A) the prescription is written "dispense as written"; or

(B) there is no generic equivalent for the prescribed drug;

(3) if the prescription is written "product selection permitted" and the enrollee elects to receive a name-brand drug when a generic equivalent is available, then the enrollee may be required to pay no more than the generic copayment plus the difference between the cost of the generic drug and the cost of the name-brand drug; and

(4) if the enrollee's prescription benefit requires the use of generic-equivalent drugs (required generic) and the enrollee receives a name-brand drug when a generic equivalent is available, then the enrollee may be required to pay no more than the generic copayment plus the difference between the cost of the generic drug and the cost of the name-brand drug, even when the prescription is written "dispense as written."

(b) Pharmacy service must be available and accessible within the service area for the enrolled population through pharmacies licensed by the Texas State Board of Pharmacy. The HMO must offer the pharmacy services directly or through contracts.

History

Source Note: The provisions of this §11.1605 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1606 Organization of an HMO

(a) The governing body of an HMO, as described in Insurance Code §843.004 (concerning Governing Body of Health Maintenance Organization), has ultimate responsibility for the development, approval, implementation, and enforcement of administrative, operational, personnel, and patient care policies and procedures related to the HMO's operation.

(b) The HMO must have a chief executive officer or operations officer who is accountable for the administration of the health plan, including:

(1) developing corporate strategy;

(2) overseeing marketing programs;

(3) overseeing medical management functions; and

(4) ensuring compliance with all applicable statutes and rules pertaining to the operations of the HMO.

(1) is licensed in Texas or otherwise authorized to practice in this state in the field of services offered by the HMO, for example:

(A) a basic HMO must have a physician;

(B) a dental HMO must have a dentist or physician;

(D) a limited services HMO must have a physician;

(2) resides in the state of Texas;

(3) is available at all times to address complaints, clinical issues, utilization review, and any quality of care issues on behalf of the HMO;

(4) demonstrates active involvement in all quality management activities; and

(5) will be subject to the HMO's credentialing requirements and must be credentialed in compliance with NCQA or American Accreditation HealthCare Commission, Inc., standards.

(d) The HMO may establish one or more service areas within Texas; each defined service area must:

(1) demonstrate to the department the ability to provide continuity, accessibility, availability, and quality of services;

(2) specify the counties, or any portions of counties, included in the service area;

(3) provide a complete physician and provider listing for all enrollees residing, living, or working in the service area, as provided in §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees); and

(4) maintain separate cost center accounting for each service area to facilitate the reporting of divisional operations as required for HMO financial reporting.

History

Source Note: The provisions of this §11.1606 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1607 Accessibility and Availability Requirements

(a) Each health benefit plan delivered or issued for delivery by an HMO must include an HMO delivery network that is adequate and complies with Insurance Code §843.082 (concerning Requirements for Approval of Application).

(b) There must be a sufficient number of primary care physicians and specialists with hospital admitting privileges to participating facilities who are available and accessible 24 hours per day, seven days per week, within the HMO's service area to meet the health care needs of the HMO's enrollees.

(c) An HMO must make general, special, and psychiatric hospital care available and accessible 24 hours per day, seven days per week, within the HMO's service area.

(d) If an HMO limits enrollees' access to a limited provider network, it must ensure that the limited provider network complies with all requirements of this section.

(e) An HMO must make emergency care available and accessible 24 hours per day, seven days per week, without restrictions on where the services are rendered.

(f) All covered services that are offered by an HMO must be sufficient in number and location to be readily available and accessible within the service area to all enrollees.

(g) An HMO must arrange for covered health care services, including referrals to specialists, to be accessible to enrollees on a timely basis on request and consistent with these guidelines:

(1) urgent care must be available within 24 hours for medical, dental, and behavioral health conditions;

(2) routine care must be available within:

(A) three weeks for medical conditions;

(B) eight weeks for dental conditions; and

(3) Preventive health services must be available within:

(A) two months for a child;

(B) three months for an adult; and

(h) An HMO is required to provide an adequate network for its entire service area. All covered services must be accessible and available so that travel distances from any point in its service area to a point of service are no greater than:

(1) 30 miles for primary care and general hospital care; and

(2) 75 miles for specialty care, special hospitals, and single health care service plan physicians or providers.

(i) Access to certain institutional providers. An HMO network providing access to more than one institutional provider in a region must make a good-faith effort to have a mix of for-profit, nonprofit, and tax-supported institutional participating providers, unless the mix is not feasible due to geographic, economic, or other operational factors. An HMO must give special consideration to contracting with teaching hospitals and hospitals that provide indigent care or care for uninsured individuals as a significant percentage of their overall patient load.

(j) An HMO that is unable to meet the requirements of subsections (b) - (h) of this section must file an access plan for approval with the department in compliance with §11.301 of this title (relating to Filing Requirements). The access plan must specify:

(1) the geographic area within the service area in which a sufficient number of contracted physicians and providers are not available, including a specification of the class of physician or provider;

(2) a map for each specialty, with key and scale, that identifies the geographic areas within the service area in which the health care services, physicians, and providers are not available;

(3) the reason or reasons that the network does not meet the adequacy requirements specified in this section;

(4) procedures that the HMO will use to assist enrollees in obtaining medically necessary services when no network physician or provider is available, including procedures to coordinate care to hold enrollees harmless and eliminate or limit the likelihood of balance billing;

(5) a list of the physicians and providers within the relevant service area that the HMO attempted to contract with, identified by name and specialty or facility type, with:

(A) a description of how and when the HMO last contacted each physician, provider, or facility; and

(B) a description of the reason each physician, provider, or facility gave for declining to contract with the HMO;

(6) procedures detailing how out-of-network benefit claims will be handled when no physicians or providers are available, including procedures for compliance with §11.1611 of this title (relating to Out-of-Network Claims; Non-Network Physicians and Providers);

(7) steps the HMO will take to attempt to bring its network into compliance with this section; and

(8) a process for negotiating with a non-network physician or provider before services being rendered, when feasible.

(k) An HMO must submit an access plan that complies with subsection (j) of this section along with the annual report on network adequacy under §11.1610 of this title (relating to Annual Network Adequacy Report).

(l) Notwithstanding subsection (h) of this section, an HMO that has a contract with the Health and Human Services Commission is not required to meet the access requirements prescribed in this section for covered services provided to participants in the Children's Health Insurance Program Perinatal Program.

(m) An HMO may make arrangements with physicians or providers outside the service area for enrollees to receive a higher level of skill or specialty than the level available within the HMO service area, such as, but not limited to, transplants and treatment of cancer, burns, and cardiac diseases. An HMO may not require an enrollee to travel out of the service area to receive the services.

(n) An HMO is not required to expand services outside its service area to accommodate enrollees who live outside the service area but work within the service area.

(o) In compliance with Insurance Code Chapter 1455 (concerning Telemedicine and Telehealth), each evidence of coverage or certificate delivered or issued for delivery by an HMO may provide enrollees the option to access covered health care services through a telehealth service or telemedicine service.

(p) Subsections (j) and (k) of this section do not apply to a health benefit plan written for a contract with the Health and Human Services Commission (HHSC) to provide services under the Texas Children's Health Insurance Program (CHIP), Medicaid, or with the State Rural Health Care System.

History

Source Note: The provisions of this §11.1607 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036.

28 Tex. Admin. Code § 11.1610 Annual Network Adequacy Report

(a) An HMO must file a network adequacy report with the department on or before August 15 of each year and before marketing any plan in a new service area after August 15, 2017. The network adequacy report must specify:

(1) the trade name of each HMO plan in which enrollees currently participate;

(2) the applicable service area of each plan; and

(3) whether the HMO service delivery network supporting each plan meets the requirements in §11.1607 of this title (relating to Accessibility and Availability Requirements).

(b) If applicable, the network adequacy report must include an access plan that complies with §11.1607 of this title.

(c) As part of the annual network adequacy report, the HMO must provide additional data specified in this subsection for the previous calendar year. The data must be reported on the basis of each of the geographic regions specified in §3.3711 of this title (relating to Geographic Regions). If none of the HMO's plans include a service area that is located within a particular geographic region, the insurer must specify in the report that there is no applicable data for that region. The HMO report must include the number of:

(1) claims paid for out-of-network benefits that were not based on an emergency or the unavailability of network physicians or providers under Insurance Code §1271.155 (concerning Emergency Care) or §1271.055 (concerning Out-of-Network Services);

(2) claims for out-of-network benefits that were based on an emergency or the unavailability of network physicians or providers under Insurance Code §1271.155 or §1271.055;

(3) complaints by non-network physicians and providers;

(4) complaints by network physicians and providers relating to inability to refer enrollees to network physicians or providers because network physicians or providers are not available;

(5) complaints by enrollees relating to the dollar amount of the HMO's payment for basic health care benefits;

(6) complaints by enrollees concerning balance billing;

(7) complaints by enrollees relating to the unavailability of network physicians or providers;

(8) complaints by enrollees relating to the accuracy of network physician and provider listings; and

(9) complaints by physicians and providers relating to the accuracy of network physician and provider listings.

(d) The annual network adequacy report required under this section must be submitted electronically in a format and by a method acceptable to the department. Unless and until a standardized form and method for submitting the above information is made available by the department, acceptable formats include Microsoft Word and Excel documents. Unless and until another electronic method of submission is required, the report must be submitted to the department's email address, mcqa@tdi.texas.gov, and must indicate in the subject field that the email relates to the filing of the annual network adequacy report.

(e) If the Commissioner determines that the HMO's network and any access plan supporting the network are inadequate to ensure that benefits are available to all enrollees or are inadequate to ensure that all covered health care services are provided in a manner ensuring availability of and accessibility to adequate personnel, specialty care, and facilities, the Commissioner may order one or more of the following sanctions under the Commissioner's authority in Insurance Code Chapter 82 (concerning Sanctions) and Insurance Code Chapter 83 (concerning Emergency Ceases and Desist Orders) to issue cease and desist orders:

(1) reduction of a service area;

(2) cessation of marketing in parts of the state; and

(3) cessation of marketing entirely and withdrawal from the HMO market.

(f) This section does not affect the Commissioner's authority to take or order any other appropriate action under the Commissioner's authority in the Insurance Code.

(g) This section does not apply to a health benefit plan written by an HMO for a contract with the Health and Human Services Commission (HHSC) to provide services under the Texas Children's Health Insurance Program (CHIP), Medicaid, or with the State Rural Health Care System.

History

Source Note: The provisions of this §11.1610 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036.

28 Tex. Admin. Code § 11.1611 Out-of-Network Claims; Non-Network Physicians and Providers

(a) For an out-of-network claim for which the enrollee is protected from balance billing under Insurance Code Chapter 1271, concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges, the HMO must pay the claim according to that chapter and Insurance Code Chapter 1467, concerning Out-of-Network Dispute Resolution, as applicable.

(b) For an out-of-network claim that does not fall under subsection (a) of this section, if the services are medically necessary, covered under the plan, and not available through a network physician or provider within the applicable network adequacy standards, the HMO must pay the claim as required under Insurance Code §1271.055, concerning Out-of-Network Services, and:

(1) facilitate the enrollee's access to care consistent with subsection (c) of this section and the access plan and documented plan procedures specified in §11.1607(j) of this title (relating to Accessibility and Availability Requirements); and

(2) inform the enrollee of their rights under this section, including:

(A) the out-of-network care that the enrollee receives for the identified services will be covered under the same benefit level as though the services were received from a network physician or provider and will not be subject to any service area limitation;

(B) the enrollee can ask the HMO to recommend a physician or provider that the enrollee can use without being responsible for an amount in excess of the cost-sharing under the plan and the enrollee should contact the HMO if they receive a balance bill;

(C) if the enrollee chooses not to use the physician or provider the HMO recommends, they may choose to use an alternative non-network physician or provider with the understanding that the enrollee will be responsible for any balance bill amount the alternative non-network physician or provider may charge in excess of the HMO's usual and customary rate; and

(D) the amount of the HMO's usual and customary rate for the anticipated services.

(c) If medically necessary covered services, other than emergency care, are not available through a network physician or provider within the applicable network adequacy standards, on the request of a network physician or provider the HMO must:

(1) consistent with Insurance Code §1271.055, process a referral to a physician or provider within the time appropriate to the circumstances relating to the delivery of the services and the condition of the patient, but in no event to exceed five business days after receipt of reasonably requested documentation;

(2) concurrent with the referral, approve a network gap exception and facilitate access to care to ensure the enrollee can access a physician or provider that:

(A) has expertise in the necessary specialty;

(B) is reasonably available considering the medical condition and location of the enrollee; and

(C) the enrollee may use without being responsible for an amount in excess of the enrollee's cost-sharing responsibilities for care from a network physician or provider;

(3) if the HMO approves a referral to a physician or provider that meets the criteria in subsection (c)(2) of this section, the HMO must also, upon request from an enrollee or an individual acting on behalf of an enrollee and within the time appropriate to the circumstances, recommend at least one additional physician or provider that meets the criteria in subsection (c)(2) of this section; and

(4) if the HMO approves a referral to a physician or provider that does not meet the criteria in subsection (c)(2) of this section,

(A) the HMO must inform the enrollee of:

(i) why the physician or provider does not meet the criteria in subsection (c)(2) of this section; and

(ii) the enrollee's right to request that the HMO recommend physicians or providers that meet the criteria; and

(B) upon request by the enrollee or an individual acting on behalf of the enrollee and within the time appropriate to the circumstances, the HMO must recommend a choice of at least two physicians or providers that meet the criteria in subsection (c)(2) of this section.

(d) After determining that a claim from a non-network physician or provider for services provided under this section is payable, an HMO must issue payment to the non-network physician or provider at the usual and customary rate or at a rate agreed to by the HMO and the non-network physician or provider. If the rate was not agreed to by the physician or provider, the HMO must provide an explanation of benefits to the enrollee that includes a statement that the HMO's payment is at least equal to the usual and customary rate for the service, that the enrollee should notify the HMO if the non-network physician or provider bills the enrollee for amounts beyond the amount paid by the HMO, of the procedures for contacting the HMO on receipt of a bill from the non-network physician or provider for amount beyond the amount paid by the HMO, and the number for the department's toll-free consumer information help line for complaints regarding payment.

(e) Any methodology used by an HMO to calculate reimbursements of non-network physicians or providers for covered services not available from network physicians or providers must comply with the following:

(1) if based on claims data, then the methodology must be based on sufficient data to constitute a representative and statistically valid sample;

(2) any claims data underlying the calculation must be updated no less than once per year and not include data that is more than 3 years old; and

(3) the methodology must be consistent with nationally recognized and generally accepted bundling edits and logic.

(f) An HMO must cover a clinician-administered drug under the plan's in-network benefit if it meets the criteria under Insurance Code Chapter 1369, Subchapter Q, concerning Clinician-Administered Drugs.

History

Source Note: The provisions of this §11.1611 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2025, 50 TexReg 2213.

28 Tex. Admin. Code § 11.1612 Mandatory Disclosure Requirements

(a) Physician and provider directory. An HMO must develop and maintain a directory of contracting physicians and health care providers, display the directory on a public website maintained by the HMO, and ensure that a direct electronic link to the directory is conspicuously displayed on the electronic summary of benefits and coverage of each plan issued by the HMO. Any directory provided by the HMO, including an online directory, must:

(1) include the name, address, telephone number, and specialty, if any, of each physician and provider and indicate whether each contracted physician and provider is accepting enrollees as new patients or participates in closed provider networks serving only certain enrollees;

(2) include a statement of limitations of accessibility and referrals to specialists, including any limitations imposed by a limited provider network;

(3) be dated and provided in at least 10-point type;

(4) clearly indicate each health benefit plan issued by the HMO that may provide coverage for services provided by each physician or provider included in the directory;

(5) when provided electronically, be searchable by physician or health care provider name and location;

(6) be publicly accessible without the necessity of providing a password, a username, or personally identifiable information;

(7) be reviewed on an ongoing basis and corrected or updated, if necessary, not less than once each month; and

(8) include an email address and a toll-free telephone number through which enrollees may notify the HMO of inaccurate information in the directory.

(b) Identification of limited networks and index. An HMO must clearly identify limited provider networks within its service area by providing a separate listing of its limited provider networks and an alphabetical listing of all the physicians and providers, including specialists, available in the limited provider network. An HMO must include an index of the alphabetical listing of all physicians and providers, including behavioral health providers and substance abuse treatment providers, if applicable, within the HMO's service area, and must indicate the limited provider network or networks the physician or provider belongs to and the page number where the physician's or provider's name can be found.

(c) Notice of rights under an HMO plan required. An HMO must include the notice specified in Figure: 28 TAC §11.1612(c), in all evidences of coverage certificates, disclosures of plan terms, and member handbooks in at least 12-point type:

Attached Graphic

(d) Disclosure concerning access to network physician and provider listing. An HMO must provide notice to all enrollees at least annually describing how the enrollee may access a current listing of all network physicians and providers on a cost-free basis. The notice must include, at a minimum, information about how to obtain a nonelectronic copy of the listing and a telephone number enrollees may call to get help during regular business hours to find available network physicians and providers.

(e) Disclosure concerning network information. An HMO must provide notice to all enrollees at least annually of information that is updated at least annually regarding the following network information for each service area or county, or for the entire state if the plan is offered on a statewide service-area basis:

(1) the number of enrollees in the service area or region;

(2) for each physician and provider area of practice, including at a minimum internal medicine, family or general practice, pediatric practitioner practice, obstetrics and gynecology, anesthesiology, psychiatry, and general surgery, the number of contracted physicians and providers, an indication of whether an active access plan under §11.1607 of this title (relating to Accessibility and Availability Requirements) applies to the services furnished by that class of physician or provider in the service area or region, and how the access plan may be obtained or viewed, if applicable; and

(3) for hospitals, the number of contracted hospitals in the service area or region, an indication of whether an active access plan in compliance with §11.1607 of this title applies to hospital services in that service area or region, and how the access plan may be obtained or viewed, if applicable.

(f) Website disclosures. An HMO must provide information on its website for use by current or prospective enrollees that includes a:

(1) physician and provider listing for use by current and prospective enrollees; and

(2) listing of the state regions, counties, or three-digit ZIP code areas within the HMO's service area, indicating, as appropriate, for each region, county, or ZIP code area, as applicable, that the HMO has:

(A) determined that its network meets the network adequacy requirements of this subchapter; or

(B) determined that its network does not meet the network adequacy requirements of this subchapter.

(g) Reliance on physician and provider listing in certain cases. A claim for services rendered by a noncontracted physician or provider must be paid in the same manner as if no contracted physician or provider had been available under §11.1611 of this title (relating to Out-of-Network Claims; Non-Network Physicians and Providers), as applicable, and the HMO must make restitution to the enrollee for any amounts the enrollee demonstrates that they paid the physician or provider above what they would have paid a network physician or provider, if an enrollee demonstrates that:

(1) in obtaining services, the enrollee reasonably relied on a statement that a physician or provider was a contracted physician or provider as specified in:

(A) a physician and provider listing; or

(B) provider information on the HMO's website;

(2) the physician and provider listing or website information was obtained from the HMO, the HMO's website, or the website of a third party designated by the HMO to provide that information for use by its enrollees; and

(3) the physician and provider listing or website information was obtained not more than 30 days before the date of services.

(h) Additional listing-specific disclosure requirements. In all contracted physician and provider listings, including any web-based postings of information made available by the HMO to provide information to enrollees about contracted physicians and providers, the HMO must comply with the requirements in Insurance Code Chapter 1451, Subchapter K, and paragraphs (1) and (2) of this subsection. The requirements of this subsection do not apply to provider listings for a single health care service that provides coverage only for dental or vision care.

(1) The physician and provider information must provide a method by which enrollees may identify contracted facility-based physicians and providers able to provide services at contracted facilities, consistent with Insurance Code §1451.504, concerning Physician and Health Care Provider Directories.

(2) The physician and provider information must specifically identify any network facility at which the HMO has no contracts with a class of facility-based physician, specifying the applicable type of facility-based physician, consistent with Insurance Code Chapter 1456, concerning Disclosure of Provider Status.

(i) Annual enrollee notice concerning use of an access plan. An HMO operating a plan that relies on an access plan as specified in §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees) and §11.1607 of this title must provide notice of this fact to each enrollee participating in the plan at issuance and at least 30 days before renewal. The notice must include a link to any webpage listing of information on network waivers and access plans made available under subsection (e) of this section.

(j) Disclosure of substantial decrease in the availability of certain contracted physicians or providers. An HMO is required to provide notice as specified in this subsection of a substantial decrease in the availability of contracted facility-based physicians or providers at a contracted facility.

(1) A decrease is substantial if:

(A) the contract between the HMO and any facility-based physician or provider group that comprises 75% or more of the contracted physicians or providers for that specialty at the facility terminates; or

(B) the contract between the facility and any facility-based physician or provider group that comprises 75% or more of the contracted physicians or providers for that specialty at the facility terminates, and the HMO receives notice as required under §11.901 of this title (relating to Required and Prohibited Provisions).

(2) For purposes of this subsection, decreases in numbers of physicians and other providers must be assessed separately, but no notice of a substantial decrease is required if:

(A) alternative contracted physicians or providers of the same specialty as the physician or provider group that terminates a contract as specified in paragraph (1) of this subsection are made available to enrollees at the facility so the percentage level of contracted physicians or providers of that specialty at the facility is returned to a level equal to or greater than the percentage level that was available before the substantial decrease; or

(B) the HMO determines that the termination of the contract has not caused the network to be noncompliant with the adequacy standards specified in §11.1607 of this title, as those standards apply to the applicable physician or provider specialty.

(3) An HMO must prominently post notice of any contract termination specified in paragraph (1)(A) or (B) of this subsection and the resulting decrease in availability of contracted physicians or providers on the portion of the HMO's website where its physician and provider listing is available to enrollees.

(4) Notice of any contract termination specified in paragraph (1)(A) or (B) of this subsection and of the decrease in availability of physicians or providers must be maintained on the HMO's website until the earlier of:

(A) the date on which adequate contracted physicians or providers of the same specialty become available to enrollees at the facility at the percentage level specified in paragraph (2)(A) of this subsection; or

(B) six months from the date that the HMO initially posts the notice.

(5) An HMO must post notice as specified in paragraph (3) of this subsection and update its web-based contracted physician and provider listing as soon as practicable and in no case later than two business days after:

(A) the effective date of the contract termination as specified in paragraph (1)(A) of this subsection; or

(B) the later of:

(i) the date on which an HMO receives notice of a contract termination as specified in paragraph (1)(B) of this subsection; or

(ii) the effective date of the contract termination as specified in paragraph (1)(B) of this subsection.

History

Source Note: The provisions of this §11.1612 adopted to be effective August 1, 2017, 42 TexReg 2169; amended to be effective March 30, 2021, 46 TexReg 2036; amended to be effective March 30, 2025, 50 TexReg 2213.

Subchapter R APPROVED NONPROFIT HEALTH CORPORATIONS

28 Tex. Admin. Code § 11.1702 Requirements for Issuance of Certificate of Authority to an ANHC

(a) Before obtaining a certificate of authority under Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations), an applicant ANHC must:

(1) comply with each requirement for the issuance of a certificate of authority imposed on an HMO under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), this chapter, and other applicable insurance laws and regulations of this state; and

(2) demonstrate by appropriate documentation that the applicant ANHC has established and maintains accreditation by the:

(A) NCQA; or

(B) Joint Commission on Accreditation of Health Care Organizations network accreditation program.

(b) The commissioner may grant a provisional certificate of authority to an applicant ANHC under Insurance Code Chapter 844, if the:

(1) applicant ANHC complies with each requirement for the issuance of a certificate of authority imposed on an HMO under Insurance Code Chapters 843 and 1271, this chapter, and other applicable insurance laws and regulations of this state;

(2) applicant ANHC demonstrates that it has applied for accreditation;

(3) applicant ANHC is diligently pursuing accreditation as determined by the commissioner; and

(4) accrediting organization has not denied the accreditation.

(c) An ANHC with a certificate of authority or a provisional certificate of authority must comply with all the appropriate requirements that an HMO must comply with under Insurance Code Chapter 843 and 1271, this chapter, and other applicable insurance laws and regulations of this state in order to maintain a certificate of authority.

(d) This subchapter does not apply to an activity exempt from regulation under Insurance Code Chapters 843 and 844, including an ANHC that contracts to arrange for or provide only medical care as defined in Insurance Code §843.002 (concerning Definitions).

History

Source Note: The provisions of this §11.1702 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1703 Requirements for Agents of an ANHC Certificate of Authority Holder

Any agent for an ANHC with a certificate of authority or a provisional certificate of authority will be considered an HMO agent and must comply with the applicable requirements of Insurance Code Chapter 4054 (concerning Life, Accident, and Health Agents) and Chapter 19 of this title (relating to Agents' Licensing).

History

Source Note: The provisions of this §11.1703 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1704 Statutes and Rules Applicable to ANHC with a Certificate of Authority

An ANHC with a certificate of authority or provisional certificate of authority under Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations) and this subchapter is subject to the same statutes and rules as an HMO and is considered an HMO for purposes of regulation and regulatory enforcement.

History

Source Note: The provisions of this §11.1704 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter S SOLVENCY STANDARDS FOR MANAGED CARE ORGANIZATIONS PARTICIPATING IN MEDICAID OR CHILDREN'S HEALTH INSURANCE PROGRAM

28 Tex. Admin. Code § 11.1801 Entities Covered

(a) As used in this subchapter, a managed care organization is an entity holding a certificate of authority to operate as an HMO under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), or as an ANHC under Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations).

(b) Any managed care organization or other entity providing the services specified in 42 United States Code §1396b(m)(2)(A) and participating in the State Medicaid Program or Children's Health Insurance Program (CHIP) (MCO) must comply with the requirements of Insurance Code §843.403 (concerning Minimum Net Worth) and §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs).

History

Source Note: The provisions of this §11.1801 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1806 Additional Information That May be Requested from an MCO Participating in Medicaid

(a) Whenever requested by the department, an MCO participating in Medicaid must file with the department a complete set of financial exhibits pertaining to the state Medicaid program, in the format of the Managed Care Financial Statistical Report, as may be modified or amended by the Texas Health and Human Services Commission. When a request is received, the MCO must then file a Managed Care Financial Statistical Report reflecting the state Medicaid program operations for each contract year in the same format as the monthly Managed Care Financial Statistical Report. These reports must comply with the instructions issued by the Texas Health and Human Services Commission.

(b) For any new or modified request to the Texas Health and Human Services Commission for participation in the Medicaid managed care program, all financial projections, including enrollment projections, from the effective or renewal date of a Medicaid contract that are submitted to the Texas Health and Human Services Commission, must also be submitted to the department. The MCO must submit the same financial projections, including a cash flow statement, submitted to the Texas Health and Human Services Commission with the request to participate in the Medicaid program. This information must be submitted with the application for a certificate of authority if the MCO is not already a licensed MCO. If the MCO is a licensed operation, then the financial projections must be sent with the application for service area expansion.

(c) The MCO must notify the department of any similar financial or statistical reports required by other contracting state agencies and must submit copies of these reports to the department when requested by the department.

(d) Information submitted under this section must be sent to the Financial Analysis Section, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §11.1806 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter T QUALITY OF CARE

28 Tex. Admin. Code § 11.1901 Quality Improvement Structure for Basic, Single Service, and Limited Service HMOs

(a) Basic, single service, and limited service HMOs must develop and maintain an ongoing QI program designed to objectively and systematically monitor and evaluate the quality and appropriateness of care and services and to pursue opportunities for improvement. Unless the HMO has no enrollees, the QI program should include the active involvement of one or more enrollee(s) who are not employees of the HMO.

(b) The HMO governing body is ultimately responsible for the QI program. The governing body must:

(1) appoint a quality improvement committee (QIC) that must include practicing physicians and individual providers, and may include one or more enrollee(s) from throughout the HMO's service area, none of whom may be employees of the HMO;

(2) approve the QI program;

(3) approve an annual QI plan;

(4) meet at least annually to receive and review reports of the QIC or group of committees and take action when appropriate; and

(5) review the annual written report on the QI program.

(1) The QIC may delegate QI activities to other committees that may, if applicable, include practicing physicians, individual providers, and enrollees from the service area.

(A) All committees must collaborate and coordinate efforts to improve the quality, availability, and accessibility of health care services.

(B) All committees must meet regularly and report the findings of each meeting, including any recommendations, in writing to the QIC.

(C) If the QIC delegates any QI activity to any subcommittee, then the QIC must establish a method to oversee each subcommittee.

(2) The QIC must use multidisciplinary teams, when indicated, to accomplish QI program goals.

History

Source Note: The provisions of this §11.1901 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.1902 Quality Improvement Program for Basic, Single Service, and Limited Service HMOs

The QI program for basic, single service, and limited service HMOs must be continuous and comprehensive, addressing both the quality of clinical care and the quality of services. The HMO must dedicate adequate resources, such as personnel and information systems, to the QI program.

(1) Written description. The QI program must include a written description of the QI program that outlines program organizational structure, functional responsibilities, and meeting frequency.

(2) Work plan. The QI program must include an annual QI work plan designed to reflect the type of services and the population served by the HMO in terms of age groups, disease categories, and special risk status. The work plan must:

(A) include objective and measurable goals, planned activities to accomplish the goals, time frames for implementation, responsible individuals, and evaluation methodology; and

(B) address each program area, including:

(i) network adequacy, which includes availability and accessibility of care, including assessment of open and closed physician and individual provider panels;

(ii) continuity of health care and related services;

(iii) clinical studies;

(iv) the adoption and periodic updating of clinical practice guidelines or clinical care standards, which the QI program must ensure:

(I) are approved by participating physicians and individual providers;

(II) are communicated to physicians and individual providers; and

(III) include preventive health services;

(v) enrollee, physician, and individual provider satisfaction;

(vi) the complaint and appeals process, complaint data, and identification and removal of communication barriers that may impede enrollees, physicians, and providers from effectively making complaints against the HMO;

(vii) preventive health care through health promotion and outreach activities;

(viii) claims payment processes;

(ix) contract monitoring, including delegation oversight and compliance with filing requirements;

(x) utilization review processes;

(xi) credentialing;

(xii) member services; and

(xiii) pharmacy services, including drug utilization.

(3) Evaluation. The QI program must include an annual written report on the QI program, which includes completed activities, trending of clinical and service goals, analysis of program performance, and conclusions.

(4) Credentialing. An HMO must implement a documented process for selection and retention of contracted physicians and providers. The credentialing process must comply with NCQA or American Accreditation HealthCare Commission, Inc., standards, to the extent that those standards do not conflict with the laws of this state. An HMO must have a documented process for expedited credentialing of physicians, podiatrists, and therapeutic optometrists, including a documented process for payment of claims during the expedited credentialing process, in compliance with Insurance Code Chapter 1452 (concerning Physician and Provider Credentials).

(5) Site visits for cause.

(A) The HMO must have procedures for detecting deficiencies after a site visit. When the HMO identifies new deficiencies, the HMO must reevaluate the site and institute actions for improvement.

(B) An HMO may conduct a site visit to the office of any physician or provider at any time for cause. The HMO may conduct the site visit to evaluate a complaint or other precipitating event, which may include an evaluation of any facilities or services related to a complaint or event and an evaluation of medical records, equipment, space, accessibility, appointment availability, or confidentiality practices, as appropriate.

(6) Peer Review. The QI program must provide for a peer review procedure for physicians and individual providers, as required by the Medical Practice Act, Occupations Code, Chapter 151, Subchapter A, (concerning General Provisions). The HMO must designate a credentialing committee that uses a peer review process to make recommendations regarding credentialing decisions.

(7) Delegation of Credentialing. If the HMO delegates credentialing functions to other entities, its credentialing process must comply with the standards promulgated by the NCQA, to the extent that those standards do not conflict with other laws of this state.

History

Source Note: The provisions of this §11.1902 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter V STANDARDS FOR COMMUNITY MENTAL HEALTH CENTERS

28 Tex. Admin. Code § 11.2101 Community Health Maintenance Organization

A Community Health Maintenance Organization (CHMO) is an entity created by one or more community centers under Health and Safety Code §534.001 (concerning Establishment), and authorized by the department to provide a plan for limited health care services as defined in Insurance Code §843.002(18) (concerning Definitions).

History

Source Note: The provisions of this §11.2101 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2102 General Provisions

(a) Each CHMO must comply with all requirements for a limited health care service plan specified in this subchapter.

(b) Each CHMO must provide coverage for work in progress and must clearly specify that the enrollee must agree to have the work completed by a participating physician or provider in the HMO delivery network, as defined under Insurance Code §843.002(15) (concerning Definitions), or as otherwise arranged by the limited service HMO.

History

Source Note: The provisions of this §11.2102 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2103 Requirements for Issuance of Certificate of Authority to a CHMO

(a) Before obtaining a certificate of authority, an applicant CHMO must comply with each requirement for the issuance of a certificate of authority imposed on a limited health care service plan under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Evidence of Coverage; Charges), this chapter, and other applicable insurance laws and regulations of this state.

(b) A CHMO with a certificate of authority must comply with all the appropriate requirements that a limited health care service plan must comply with under Insurance Code Chapters 843 and 1271, this chapter, and other applicable insurance laws and regulations of this state to maintain a certificate of authority. A CHMO is subject to the same statutes and rules as a limited service HMO and considered a limited service HMO for purposes of regulation and regulatory enforcement.

(c) Nothing in this subchapter prevents one or more community centers from forming a nonprofit corporation under Occupations Code §162.001 (concerning Certification by Board) to provide services on a risk-sharing or capitated basis as permitted under Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations).

(d) This subchapter does not apply to an activity exempt from regulation under Insurance Code §§843.051 (concerning Applicability of Insurance and Group Hospital Service Corporation Laws), 843.053 (concerning Laws Relating to Restraint of Trade), 843.073 (concerning Certificate of Authority Requirement; Applicability to Physicians and Providers), or 843.318 (concerning Certain Contracts of Participating Physicians or Provider Not Prohibited).

History

Source Note: The provisions of this §11.2103 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2104 Minimum Standards for Community Health Centers

Each evidence of coverage providing limited mental health care services by a CHMO must provide benefits as described in Chapter 11, Subchapter Y, of this title (relating to Limited Service HMOs) as minimum covered services for mental illness and chemical dependency.

History

Source Note: The provisions of this §11.2104 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter W SINGLE SERVICE HMOS

28 Tex. Admin. Code § 11.2200 Definitions

The following words and terms, when used in this subchapter, have the meaning indicated below unless the context clearly indicates otherwise:

(1) ADA--The American Dental Association.

(2) CDT--The current dental terminology manual developed and revised periodically by the ADA.

(3) ADA code/dental procedure description--Numerical codes and corresponding descriptions specified in the CDT to describe bona fide dental procedures.

(4) Comparable facility--The location where emergency dental services are rendered, including, but not limited to, the office of a licensed dentist, a dental clinic, hospital, freestanding emergency clinic, urgent care clinic, or other facility.

(5) Emergency dental services--Under a single service plan providing dental care services and benefits, emergency dental services are limited to procedures administered in a comparable facility, to evaluate and stabilize dental conditions of a recent onset and severity accompanied by excessive bleeding, severe pain, or acute infection that would lead a prudent layperson possessing an average knowledge of dentistry to believe that immediate care is needed.

(6) Insurer--An insurance company, a group hospital service corporation operating under Insurance Code Chapter 842 (concerning Group Hospital Service Corporations), a fraternal benefit society operating under Insurance Code Chapter 885 (concerning Fraternal Benefit Societies), or a stipulated premium insurance company operating under Insurance Code Chapter 884 (concerning Stipulated Premium Insurance Companies).

(7) Point-of-service group disclosure statement--A written statement containing information about dental benefits that the HMO must provide to:

(A) an employer, an association, or other private group arrangement to whom the HMO must offer a dental point-of-service plan; and

(B) any prospective enrollees in a dental point-of-service plan, if the employer, association, or private group arrangement accepts the dental point-of-service plan.

(8) Point-of-service plan--A plan provided through a contractual arrangement under which indemnity benefits for the cost of dental care services other than emergency care or emergency dental care are provided by an insurer in conjunction with corresponding benefits arranged or provided by an HMO that provides dental benefits and under which an enrollee may choose to obtain benefits or services under either the indemnity plan or the HMO plan in compliance with Insurance Code §843.112 (concerning Dental Point-of-Service Option).

(9) Qualified actuary--As defined in §11.702 of this title (relating to Actuarial Certification).

History

Source Note: The provisions of this §11.2200 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2201 General Provisions

(a) Each single service HMO must provide uniquely described services with any corresponding copayments for each covered service and benefit and must provide a single health care service plan as defined in Insurance Code §843.002 (concerning Definitions). Each single service HMO must comply with all requirements for a single health care service plan specified in this subchapter.

(b) Each single service HMO schedule of enrollee copayments must specify an appropriate description of covered services and benefits, as required by §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement and Group Certificate), and may specify recognized procedures or other information used for the purpose of maintaining a statistical reporting system.

(c) Each single service HMO evidence of coverage must include a glossary of terminology, including the terms used in the evidence of coverage required by §11.501 of this title (relating to Contents of the Evidence of Coverage). The glossary must be included in the information to prospective and current group contract holders and enrollees, as required by Insurance Code §843.201 (concerning Disclosure of Information About Health Care Plan Terms).

(d) In the event of a conflict between the provisions of this subchapter and other provisions of this chapter, this subchapter prevails with regard to single service HMOs. It is not considered a conflict if a topic that is not addressed in this subchapter appears elsewhere in this chapter.

History

Source Note: The provisions of this §11.2201 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2202 Limitations and Exclusions

Single service HMOs are prohibited from:

(1) excluding services required for preexisting conditions that would otherwise be covered under the plan; and

(2) establishing waiting periods for coverage of preexisting conditions.

History

Source Note: The provisions of this §11.2202 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2203 Minimum Standards - Dental Care Services and Benefits

(a) Each single service HMO evidence of coverage that uses any dental procedure codes must use the codes as specified in the current version of the CDT and certify that the codes referenced in its evidence of coverage are as specified in the current version of the CDT.

(b) Each single service HMO evidence of coverage providing coverage for dental care services must provide benefits for covered dental treatment in progress and may, if clearly disclosed, require the enrollee to have the treatment completed by a participating provider in the HMO delivery network, as defined in Insurance Code §843.002 (concerning Definitions), or as otherwise arranged by the single service HMO.

(c) Each single service HMO evidence of coverage providing coverage for dental care services and benefits must provide services for the purposes of preventing, alleviating, curing, or healing dental disease, including dental caries and periodontal disease. The services may include an infection control (sterilization) fee. Single service HMOs providing coverage for dental care services must provide coverage for the following primary and preventive services provided by a general dentist or hygienist, as applicable:

(1) office visit during and after regularly scheduled hours;

(2) oral evaluations;

(3) X-rays;

(4) bitewings;

(5) panoramic film;

(6) dental prophylaxis (adult and child);

(7) topical fluoride treatment for children;

(8) dental sealants for children;

(9) amalgam fillings (one, two, three, and four or more surfaces, primary and permanent, including polishing);

(10) anterior resin fillings (one, two, three, and four or more surfaces, or involving incisal angle, primary and permanent, including polishing);

(11) simple oral extractions;

(12) surgical incision and drainage of abscess, intraoral soft tissue; and

(13) palliative (emergency) treatment of dental pain, provided that the enrollee may obtain emergency treatment of dental pain in a comparable facility.

(d) Each single service HMO evidence of coverage providing coverage for dental care services and benefits may provide secondary dental care services and benefits. Each single service HMO evidence of coverage providing coverage for dental care services and benefits may include an infection control (sterilization) fee, and may provide secondary dental care services and benefits, including:

(1) posterior resin restorations, one, two, three, and four or more surfaces (to include polishing);

(2) crowns and crown recementation;

(3) composite resin crowns, anterior-primary;

(4) sedative fillings;

(5) core buildup, including any pins, and pin retention;

(6) pulp cap (direct and indirect);

(7) therapeutic pulpotomy;

(8) root canal therapy, anterior, bicuspid, and molar;

(9) gingival curettage;

(10) osseous surgery;

(11) periodontal scaling and root planing;

(12) periodontal maintenance procedures;

(13) complete denture (maxillary and mandibular);

(14) partial denture (maxillary and mandibular);

(15) root removal-exposed roots;

(16) surgical removal of erupted tooth requiring elevation of mucoperiosteal flap and removal of bone or section of tooth;

(17) removal of impacted tooth (soft tissue and completely bony);

(18) tooth reimplantation or stabilization, or both, of accidentally evulsed or displaced tooth or alveolus, or both;

(19) alveoplasty;

(20) occlusal guard (bruxism appliance); or

(21) orthodontia.

(e) Each single service HMO providing coverage for dental care services and benefits may also offer a preventive services plan as a supplement to a basic health care service plan offered by an affiliate or another carrier, as long as a plan described in subsection (c) of this section has first been offered to and rejected in writing by the group contract holder. The preventive plan must include:

(1) oral evaluations;

(2) X-rays;

(3) bitewings;

(4) panoramic film; and

(5) prophylaxis.

History

Source Note: The provisions of this §11.2203 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2204 Minimum Standards - Vision Care Services and Benefits

(a) Each single service HMO evidence of coverage providing vision care services and benefits must provide the following as covered primary and preventive vision services:

(1) comprehensive eye examination to include medical history;

(2) visual acuities, with and without correction (distance and near);

(3) cover test at 20 feet and at 16 inches;

(4) versions;

(5) external examination of the eye lids, cornea, conjunctiva, pupillary reaction (neurological integrity), and muscle function;

(6) binocular measurements for far and near;

(7) internal eye examination (ophthalmoscopy);

(8) autorefraction/refraction (far point and near point);

(9) tonometry (reasonable attempt or equivalent testing if contraindicated);

(10) retinoscopy;

(11) biomicroscopy;

(12) intraocular pressure glaucoma test;

(13) slit lamp examination; and

(14) urgent care.

(b) A single service HMO evidence of coverage providing vision care services and benefits may provide coverage for secondary vision care services, which include:

(1) contact lens examination;

(2) fitting;

(3) training;

(4) follow-up visits; or

(5) eye glasses.

History

Source Note: The provisions of this §11.2204 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2205 Prohibited Practices

(a) Under an individual plan, a single service HMO may not limit or otherwise interfere with an enrollee's right to terminate his or her membership in the plan before the end of the enrollment year.

(b) A single service HMO may not limit coverage for emergency services under a single health care service plan.

History

Source Note: The provisions of this §11.2205 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2206 Mandatory Disclosure Statements; Certification of Compliance

(a) Each point-of-service group enrollment application and, if the employer, association, or private group arrangement elects to offer the point-of-service option, each enrollment form, must include a disclosure statement written in a readable and understandable format that includes the following information:

(1) a statement that the dental indemnity benefits are provided through an insurer and that the dental care services are offered or arranged by the HMO;

(2) the name of the insurer and the name of the HMO offering the benefits; and

(3) an explanation that, in order to receive benefits:

(A) under the HMO, an enrollee must use only network providers, except for emergency dental care, and pay the copayments specified in the evidence of coverage;

(B) under the indemnity plan, an enrollee may use any provider but before receiving reimbursement, the enrollee must meet the required deductible and is responsible for the coinsurance amount specified in the policy or certificate.

(b) Each HMO offering a point-of-service plan must retain on file a certification by an HMO officer that the point-of-service plan includes dental indemnity benefits that correspond to the benefits contained in the HMO evidence of coverage. The HMO may enter into agreement with the insurer or a qualified actuary to prepare the certification, provided that the HMO retains responsibility for obtaining the certification and must keep the certification in its possession.

History

Source Note: The provisions of this §11.2206 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2208 Single Service Accessibility and Availability

A single service HMO that chooses to offer a particular service to an enrolled population must comply with §11.1607 of this title (relating to Accessibility and Availability Requirements). Any single service must be provided directly by the HMO or by contract.

History

Source Note: The provisions of this §11.2208 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter Y LIMITED SERVICE HMOS

28 Tex. Admin. Code § 11.2401 Definitions

The following words and terms, when used in this subchapter, have the meaning indicated below unless the context clearly indicates otherwise:

(1) Acute day treatment--Program-based services focused on the short-term, acute treatment of individuals who require multi-disciplinary treatment to obtain maximum control of psychiatric symptoms. Services are provided in a highly structured and safe environment with constant supervision. Contacts with staff are frequent, activities and services constantly available, and developmental and social supports encouraged and facilitated. Staff receive specialized training in crisis management. Activities are goal oriented, focusing on improving peer interaction, appropriate social behavior, and stress tolerance.

(2) Assessment--The clinical process of obtaining and evaluating historical, social, functional, psychiatric, developmental, or other information from the individual and family seeking services to determine level of need (including urgency) and specific treatment needs (including the preferences of the individual seeking services).

(3) Case management--Case management activities are provided to assist individuals in gaining access to medical, social, educational, and other appropriate services that will help them achieve a quality of life and community participation acceptable to each individual. The role of individuals who provide case management activities is to support and assist the person in achieving goals.

(4) Crisis hotline--A continuously available, staffed telephone service providing information, support, and referrals to callers 24 hours per day, seven days per week.

(5) Crisis respite--Services provided for temporary, short term, periodic relief to individuals or their primary caregivers during a crisis. Program-based respite services involve temporary residential placement outside the usual living situation. Community-based respite services involve introducing respite staff into the usual living situation or providing a place for the individual to go during the day or other services considered to provide respite.

(6) Crisis services-Services, including crisis hotline, crisis intervention, and crisis respite.

(7) Intensive outpatient service--An organized nonresidential service providing structured group and individual therapy, educational services, and life-skills training for less than 24 hours per day.

(8) Medication administration--A service provided to an individual by a licensed nurse or other appropriately trained and certified person under the supervision of a physician or registered nurse as provided by state law to ensure the direct application of a medication to the body of the individual by any means including handing the individual a single dose of medication to be taken orally.

(9) Medication monitoring--A service provided to an individual, family member, or other collateral by a licensed nurse or other appropriately trained and certified person under the supervision of a physician or registered nurse as provided by state law for the purpose of assessment of medication actions, target symptoms, side effects and adverse effects, potential toxicity, and the impact of medication for the individual and family in compliance with the plan of care.

(10) Medication training--A service to an individual, family member, or other collateral by a licensed nurse or other appropriately trained professional or paraprofessional as provided by state law for the purpose of teaching the knowledge and skills needed by the individual, family member, or other collateral in the proper administration and monitoring of prescribed medication in compliance with the individual's plan of care.

(11) Medication-related services--Services, including medication administration, medication monitoring, medication training, and pharmacological management.

(12) Partial hospitalization--The provision of treatment for mental health care or chemical dependency for individuals who require care or support or both in a hospital or chemical dependency treatment center but who do not require 24-hour supervision.

(13) Pharmacological management--Service provided to an individual, family member, or collateral by a physician or other appropriately trained and certified professional as provided by state law for the purpose of determining symptom remission and the medication regimen needed to initiate or maintain an individual's plan of care.

(14) Screening--Gathering triage information necessary to determine a need for in-depth assessment. This information is collected through interview, in person or by phone, with the individual, family member, or collateral as part of the admission or intake process or as necessary.

(15) Treatment planning--Activities for the purpose of medically necessary, prioritized, comprehensive, collaborative, and measurable treatment that reflects the needs and wishes of the individual and builds on the strengths of the individual.

History

Source Note: The provisions of this §11.2401 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2402 General Provisions

(a) A limited service HMO must develop and maintain an ongoing quality improvement structure and program that complies with Chapter 11, Subchapter T, of this title (relating to Quality of Care).

(b) Each limited service HMO must provide uniquely described services with any corresponding copayments for each covered service and benefit, and provide a limited health care service plan as defined in Insurance Code §843.002 (concerning Definitions). Each limited service HMO must comply with all requirements for a limited health care service plan specified in this subchapter.

(c) Each limited service HMO schedule of enrollee copayments must specify an appropriate description of covered services and benefits, as required by §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement and Group Certificate), and may specify recognized procedure codes or other information used for maintaining a statistical reporting system.

(d) Each limited service HMO evidence of coverage must include a glossary of terms, including the terms used in the evidence of coverage required by §11.501 of this title (relating to Contents of the Evidence of Coverage). The glossary must be included in the information to prospective and current group contract holders and enrollees, as required by Insurance Code §843.201 (concerning Disclosure of Information about Health Care Plan Terms).

History

Source Note: The provisions of this §11.2402 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2403 Prohibited Practices

A limited service HMO may not:

(1) exclude services required for preexisting conditions which would otherwise be covered under the plan;

(2) establish waiting periods for coverage of preexisting conditions;

(3) impose a lifetime coverage maximum for any covered service or benefit;

(4) limit or otherwise interfere with an enrollee's right to terminate his or her membership in the plan before the end of the enrollment year;

(5) limit coverage for emergency services under a limited health care service plan;

(6) charge an emergency fee in addition to a copayment for emergency services; or

(7) count medication-related services and services provided by telephone toward the annual outpatient visit total for either serious or nonserious mental illness.

History

Source Note: The provisions of this §11.2403 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2405 Minimum Standards - Mental Health and Chemical Dependency Services and Benefits

Each limited service HMO evidence of coverage providing coverage for mental health and chemical dependency services and benefits must:

(1) cover, in compliance with the limited service HMO's standards of medical necessity, court-ordered mental health and chemical dependency treatment and may, if clearly disclosed, require the enrollee to have the treatment completed by a participating physician or provider in the HMO delivery network, as defined in Insurance Code §843.002 (concerning Definitions), or as otherwise arranged by the limited service HMO;

(2) comply with Chapter 21, Subchapter P, of this title (relating to Mental Health Parity)

(3) provide primary mental health and chemical dependency services and benefits, including:

(A) for treatment of serious mental illness, as defined in Insurance Code Chapter 1355, Subchapter A, (concerning Group Health Benefit Plan Coverage for Certain Serious Mental Illnesses and Other Disorders), up to 45 inpatient days per year and up to 60 outpatient visits per year, which include assessment or screening, treatment planning, and crisis services;

(B) for treatment of nonserious mental illness, up to 30 inpatient days per year and up to 30 outpatient visits per year, which include screening and assessment, treatment planning, and crisis services;

(C) treatment of chemical dependency in compliance with the levels of care and clinical criteria specified in Chapter 3, Subchapter HH, of this title (relating to Standards for Reasonable Cost Control and Utilization Review for Chemical Dependency Treatment Centers); and

(D) any other services necessary and appropriate to treat mental health and chemical dependency services or required by the Insurance Code, Health and Safety Code, and other applicable laws and regulations of this state; and

(4) demonstrate the capacity to provide, and may provide, secondary intensive rehabilitative, and community support services for mental illness and chemical dependency, including, but not limited to, case management, partial hospitalization, residential, acute day treatment, intensive outpatient service, Assertive Community Treatment teams, and habilitative or rehabilitative services for pervasive developmental disorders.

History

Source Note: The provisions of this §11.2405 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2406 Minimum Standards- Long-Term Care Services and Benefits

Each limited service HMO evidence of coverage providing long-term care services and benefits must comply with Insurance Code Chapter 1651 (concerning Long-Term Care Benefit Plans) and Chapter 3, Subchapter Y, of this title (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies That Provide Long-Term Care Benefits Within the Policy).

History

Source Note: The provisions of this §11.2406 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter Z POINT-OF-SERVICE RIDERS

28 Tex. Admin. Code § 11.2501 Definitions

The following words and terms, when used in this subchapter, have the meaning indicated below unless the context indicates otherwise:

(1) Coinsurance--An amount in addition to the premium and copayments due from an enrollee who accesses out-of-plan covered benefits, for which the enrollee is not reimbursed.

(2) Corresponding benefits--Benefits provided under a point-of-service rider or the indemnity portion of a point-of-service plan, as defined in Insurance Code §843.108 (concerning Point-of-Service Rider) and §1273.001 (concerning Definitions), that conform to the nature and kind of coverage provided to an enrollee under the HMO portion of a point-of-service plan.

(3) Cost containment requirements--Provisions in a point-of-service rider requiring a specific action that must be taken by an enrollee or by a physician or provider on behalf of the enrollee, such as the provision of specified information to the HMO, to avoid the imposition of a specified penalty on the coverage provided under the rider for proposed service or treatment.

(4) Coverage--Any benefits available to an enrollee through an indemnity contract or rider, any services available to an enrollee under an evidence of coverage, or combination of the benefits and services available to an enrollee under a point-of-service plan.

(5) Health plan products--Any health care plan issued by an HMO under the Insurance Code or a rule adopted by the commissioner.

(6) In-plan covered services--Health care services, benefits, and supplies to which an enrollee is entitled under the evidence of coverage issued by an HMO, including emergency services, approved out-of-network services, and other authorized referrals.

(7) Nonparticipating physicians and providers--Physicians and providers who are not part of an HMO delivery network.

(8) Out-of-plan covered benefits--All covered health care services, benefits, and supplies that are not in-plan covered services. Out-of-plan covered benefits include health care services, benefits, and supplies obtained from participating physicians and providers under circumstances in which the enrollee fails to comply with the HMO's requirements for obtaining in-plan covered services.

(9) Participating physicians and providers--Physicians and providers that are part of an HMO delivery network.

(10) Point-of-service blended contract plan--A point-of-service plan evidenced by a single contract, policy, certificate, or evidence of coverage that provides a combination of indemnity benefits for which an indemnity carrier is at risk and services that are provided by an HMO under a point-of-service plan.

(11) Point-of-service dual contracts plan--A point-of-service plan providing a combination of indemnity benefits and HMO services through separate contracts, one being the contract, policy, or certificate offered by an indemnity carrier for which the indemnity carrier is at risk and the other being the evidence of coverage offered by the HMO.

(12) Point-of-service rider--A rider issued by an HMO that meets the solvency requirements of §11.2502 of this title (relating to Issuance of Point-of-Service Riders) and that provides coverage for out-of-plan services, including services, benefits, and supplies obtained from participating physicians or providers under circumstances in which the enrollee fails to comply with the HMO's requirements for obtaining approval for in-plan covered services.

(13) Point-of-service rider plan--A point-of-service plan provided by an HMO in compliance with this subchapter under an evidence of coverage that includes a point-of-service rider.

History

Source Note: The provisions of this §11.2501 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2502 Issuance of Point-of-Service Riders

(a) Financial requirements. An HMO that issues a point-of-service rider is subject to the requirements of Insurance Code §843.403 (concerning Minimum Net Worth) and §7.402 of this title (relating to Risk-Based Capital and Surplus Requirements for Insurers and HMOs).

(b) Termination, cancellation, and renewability. An HMO must comply with all state and federal laws and rules applicable to termination, cancellation, and renewability of a point-of-service rider plan.

History

Source Note: The provisions of this §11.2502 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2503 Coverage Relating to Point-of-Service Rider Plans

(a) An HMO may not consider an in-plan covered service to be a benefit provided under the point-of-service rider.

(b) An HMO may not require an enrollee to use either the point-of-service rider benefits or in-plan covered services first.

(1) may not limit the access, under the point-of-service rider, of an enrollee whose in-plan covered services are restricted to the limited provider network, to either participating physicians and providers or nonparticipating physicians and providers;

(2) may not impose cost-sharing arrangements for an enrollee whose in-plan covered services are restricted to a limited provider network, and who, through the point-of-service rider, accesses a participating physician or provider outside the limited provider network, that differ from the cost-sharing arrangements for in-plan covered services obtained by the enrollee from a physician or provider in the limited provider network; and

(3) may provide for cost-sharing arrangements for benefits obtained from nonparticipating physicians and providers that are different from the cost sharing arrangements for in-plan covered services, provided that coinsurance required under a point-of-service rider must never exceed 50 percent of the total amount to be covered.

(d) An HMO that issues or offers to issue a point-of-service rider plan is subject, to the same extent as the HMO is subject in issuing any other health plan product, to all applicable provisions of Insurance Code Chapters 541 (concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices), 542 (concerning Processing and Settlement of Claims), 543 (concerning Prohibited Practices Related to Policy or Certificate of Membership), 544 (concerning Prohibited Discrimination), 547 (concerning False Advertising by Unauthorized Insurers), 843 (concerning Health Maintenance Organizations), and 1273 (concerning Point-Of-Service Plans).

(e) A point-of-service rider plan offered under this subchapter must contain:

(1) a point-of-service rider that:

(A) includes coverage that corresponds to all in-plan covered services provided in the evidence of coverage as well as coverage that is provided to an enrollee as part of the enrollee's in-plan coverage through separate riders attached to the evidence of coverage;

(B) may include benefits in addition to in-plan covered services;

(D) may not limit coverage for benefits that correspond to in-plan covered services except as provided in subparagraphs (E), (F), and (G) of this paragraph;

(E) may include reasonable out-of-pocket limits and annual and lifetime benefit allowances that differ from limits or allowances on in-plan covered services provided under other riders attached to the evidence of coverage so long as the allowances and limits comply with applicable federal and state laws;

(F) may provide for cost-sharing arrangements that are different from the cost-sharing arrangements for in-plan covered services, provided that coinsurance required under a point-of-service rider must never exceed 50 percent of the total amount to be covered;

(G) may be reduced by benefits obtained as in-plan covered services;

(H) may not reduce or limit in-plan covered services in any way by coverage for benefits obtained by an enrollee under the point-of-service rider;

(I) if applicable, must disclose:

(i) how the point-of-service rider cost-sharing arrangements differ from those in the evidence of coverage;

(ii) any reduction of benefits as set forth in subparagraph (G) of this paragraph;

(iii) any deductible that must be met by the enrollee under the point-of-service rider; and

(iv) whether copayments made for in-plan covered services apply toward the point-of-service rider deductible;

(J) must provide coverage for services obtained without the HMO's authorization from a participating physician or provider, but the enrollee must comply with any precertification requirements as set forth in subparagraph (L) of this paragraph that are applicable to the point-of-service rider;

(K) must include a description of how an enrollee may access out-of-plan covered benefits under the point-of-service rider, including coverage contained in other riders attached to the evidence of coverage;

(L) must disclose all precertification requirements for coverage under the point-of-service rider including any penalties for failure to comply with any precertification or cost containment provisions, provided that the penalties will not reduce benefits more than 50 percent in the aggregate;

(M) if it is issued to a group, must contain provisions that comply with Insurance Code Chapter 1251, Subchapter C, (concerning Partnership for Long-Term Care Program); and

(N) if it is issued to an individual, must contain provisions that comply with Insurance Code §§1201.211 - 1201.217 (concerning Policy Provision: Notice of Claim, Policy Provision: Claim Forms, Policy Provision: Proof of Loss, Policy Provision: Time of Payment of Claims, Policy Provision: Payment of Claims, Policy Provision: Physical Examinations and Autopsy, Policy Provision: Legal Actions);

(2) an evidence of coverage that includes a description and reference to the point-of-service rider sufficient to notify a prospective or current enrollee that the plan provides the option of accessing participating physicians and providers as well as nonparticipating physicians and providers for out-of-plan covered benefits, and that accessing these benefits through the point-of-service rider may involve greater costs than accessing corresponding in-plan covered services; and

(3) a side-by-side summary of the schedule of the corresponding coverage for services, benefits, and supplies available under the point-of-service rider and services, benefits, and supplies available in the evidence of coverage that together constitute the point-of-service rider plan.

History

Source Note: The provisions of this §11.2503 adopted to be effective August 1, 2017, 42 TexReg 2169.

Subchapter AA DELEGATED ENTITIES

28 Tex. Admin. Code § 11.2601 General Provisions

(a) A delegating HMO must:

(1) identify all responsibilities relating to the function being delegated;

(2) create an agreement that enables the HMO and department to monitor both the delegated entity's financial solvency and performance or subsequent delegation of all delegated functions; and

(3) retain ultimate responsibility for ensuring that all delegated functions are performed in compliance with applicable statutes and rules.

(b) This subchapter applies to all contracts entered into or renewed on and after the effective date of these rules.

(c) This subchapter does not apply to a group model HMO, as defined in Insurance Code §843.111 (concerning Group Model Health Maintenance Organizations).

History

Source Note: The provisions of this §11.2601 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2602 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Delegated entity--An entity, other than an HMO authorized to do business under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Chapter 1272 (concerning to Delegation of Certain Functions by Health Maintenance Organization) and other applicable insurance laws and regulations of this state, that by itself, or through subcontracts with one or more entities, undertakes to arrange for or to provide medical care or health care to an enrollee in exchange for a predetermined payment on a prospective basis and that accepts responsibility to perform on behalf of the HMO any function regulated by Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state. The term does not include an individual physician or a group of employed physicians practicing medicine under one federal tax identification number and whose total claims paid to physicians and providers not employed by the group is less than 20 percent of the total collected revenue of the group calculated on a calendar-year basis.

(2) Delegated network--Any delegated entity that assumes total financial risk for more than one of the following categories of health care services: medical care, hospital or other institutional services, or prescription drugs, as defined by Occupations Code §551.003 (concerning Definitions). The term does not include a delegated entity that shares risk for a category of services with an HMO.

(3) Delegated third party--A third party other than a delegated entity that contracts with a delegated entity, either directly or through another third party, to:

(A) accept responsibility to perform any function regulated by Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state; or

(B) receive, handle, or administer funds, if the receipt, handling, or administration of the funds is directly or indirectly related to a function regulated by Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state.

(4) Health care--Any services, including the furnishing to any individual of pharmaceutical services, medical, chiropractic, dental care, hospitalization, or incident to the furnishing of the services, care or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing, or healing human illness or injury.

History

Source Note: The provisions of this §11.2602 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2603 Requirements for Delegation by HMOs

(a) Any delegation of any function under Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Chapter 1272 (concerning Delegation of Certain Functions by Health Maintenance Organization), and other applicable insurance laws and regulations of this state by an HMO must comply with this subchapter.

(b) Oversight by the department does not relieve an HMO of responsibility for monitoring and oversight of its delegated entities.

(c) Before entering into, renewing, or amending a delegation agreement, an HMO must make a reasonable effort to evaluate the delegated entity's current and prospective ability to perform the functions to be delegated, including, but not limited to, the solvency and financial operations of the delegated entity and the projected financial effects of the agreement on the delegated entity.

(d) An HMO that delegates functions to a delegated entity must have a written contingency plan to resume any and all delegated functions, including, as applicable:

(1) quality of care;

(2) continuity of care, including a plan for transferring enrollees to new physicians and providers in the event of termination of the delegation agreement; and

(3) processing, adjudication, and payment of claims.

(e) The department may require an HMO to immediately terminate any delegation agreement to ensure that the HMO is in compliance with Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state.

(f) An HMO retains ultimate responsibility for any and all functions delegated.

(g) A delegated entity's failure to comply with applicable statutes or rules constitutes a violation of Insurance Code Chapter 843 and Chapter 1272 and other applicable insurance laws and regulations of this state by the delegating HMO.

(h) An HMO is responsible for monitoring each delegated entity with which it contracts to ensure compliance with all applicable statutes and rules, as well as for solvency.

(i) An HMO must report to the department, within a reasonable time, all penalties assessed against a delegated entity under the provisions of the delegation agreement.

(j) If an HMO cannot ensure that a delegated entity is performing all delegated functions in compliance with all applicable statutes, rules, or an order issued by the department under this subchapter, the HMO must resume all delegated functions from the delegated entity.

(k) If a license is required for any function delegated by an HMO, the HMO must ensure that the delegated entity or third party performing the function has a current appropriate license.

(l) On termination of a delegation agreement by either party, the HMO must notify the department.

History

Source Note: The provisions of this §11.2603 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2604 Delegation Agreements - General Requirements and Information to be Provided to HMO

(a) An HMO that delegates any function required by Insurance Code Chapter 843 (concerning Health Maintenance Organizations) and Chapter 1272 (concerning Delegation of Certain Functions by Health Maintenance Organization), and other applicable insurance laws and regulations of this state to a delegated entity must execute a written agreement with that delegated entity.

(b) Written agreements must include:

(1) a provision that the delegated entity and any delegated third parties must agree to comply with all statutes and rules applicable to the functions being delegated by the HMO;

(2) a provision that the HMO will monitor the acts of the delegated entity through a monitoring plan, which must be set forth in the delegation agreement, and contain, at a minimum:

(A) provisions for the review of the delegated entity's solvency status and financial operations, including, at a minimum, review of the delegated entity's financial statements, consisting of at least a balance sheet, income statement, and statement of cash flows for the current and preceding year;

(B) provisions for the review of the delegated entity's compliance with the terms of the delegation agreement as well as with all applicable statutes and rules affecting the functions delegated by the HMO under the delegation agreement;

(C) a description of the delegated entity's financial practices in sufficient detail that will ensure that the delegated entity tracks and timely reports to the HMO liabilities including incurred but not reported obligations;

(D) a method by which the delegated entity must report monthly a summary of the total amount paid by the delegated entity to physicians and providers under the delegation agreement; and

(E) a monthly log, maintained by the delegated entity, of oral and written complaints from physicians, providers, and enrollees regarding any delay in payment of claims or nonpayment of claims pertaining to the delegated function, including the status of each complaint;

(3) a statement that the HMO will use the monitoring plan on an ongoing basis; compliance with this requirement must be documented by the HMO maintaining, at a minimum:

(A) periodic signed statements from the individual identified by the HMO in paragraph (23) of this subsection that the HMO has reviewed the information required in the monitoring plan; and

(B) periodic signed statements from the chief financial officer of the HMO acknowledging that the most recent financial statements of the delegated entity have been reviewed;

(4) a provision establishing the penalties to be paid by the delegated entity for failure to provide information required by this subchapter;

(5) a provision requiring quarterly assessment and payment of penalties under the agreement, if applicable;

(6) a provision that the agreement cannot be terminated without cause by the delegated entity or the HMO without written notice provided to the other party and the department before the 90th day preceding the termination date, provided that the commissioner may order the HMO to terminate the agreement under §11.2608 of this title (relating to Department May Order Corrective Action);

(7) a provision that requires the delegated entity, and any entity or physician or provider with which it has contracted to perform a function of the HMO, to hold harmless an enrollee under any circumstance, including the insolvency of the HMO or delegated entity, for payments for covered services other than copayments and deductibles authorized under the evidence of coverage;

(8) a provision that the delegation agreement may not be construed to limit in any way the HMO's responsibility, including financial responsibility, to comply with all statutory and regulatory requirements;

(9) a provision that any failure by the delegated entity to comply with applicable statutes and rules or monitoring standards permits the HMO to terminate delegation of any or all delegated functions;

(10) a provision that the delegated entity must permit the commissioner to examine at any time any information the department reasonably considers is relevant to:

(A) the financial solvency of the delegated entity; or

(B) the ability of the delegated entity to meet the entity's responsibilities in connection with any function delegated to the entity by the HMO;

(11) a provision that the delegated entity, in contracting with a delegated third party directly or through a third party, will require the delegated third party to comply with the requirements of paragraph (10) of this subsection;

(12) a provision that the delegated entity must provide the license number of any delegated third party performing any function that requires a license as a third party administrator under Insurance Code Chapter 4151 (concerning Third-Party Administrators), or a license as a utilization review agent under Insurance Code Chapter 4201 (concerning Utilization Review Agents), or that requires any other license under the Insurance Code or another insurance law of this state;

(13) if utilization review is delegated, a provision stating that:

(A) enrollees will receive notification at the time of enrollment identifying the entity that will be performing utilization review;

(B) the delegated entity or delegated third party performing utilization review must do so in compliance with Insurance Code Chapter 4201 and related rules; and

(C) utilization review decisions made by the delegated entity or a delegated third party must be forwarded to the HMO on a monthly basis;

(14) a provision that any agreement in which the delegated entity directly or indirectly delegates to a delegated third party any function delegated to the delegated entity by the HMO under Insurance Code Chapter 843 and Insurance Code Chapter 1272 and other applicable insurance laws and regulations of this state, including any handling of funds, must be in writing;

(15) a provision that on any subsequent delegation of a function by a delegated entity to a delegated third party, the executed updated agreements must be filed with the department and enrollees must be notified of the change of any party performing a function for which notification of an enrollee is required by this chapter or Insurance Code Chapter 843 and Insurance Code Chapter 1272 and other applicable insurance laws and regulations of this state;

(16) an acknowledgment and agreement by the delegated entity that the HMO is not prevented from requiring that the delegated entity provide any and all evidence requested by the HMO or the department relating to the delegated entity's or delegated third party's financial viability;

(17) a provision acknowledging that any delegated third party with which the delegated entity subcontracts will be limited to performing only those functions set forth and delegated in the agreement, using standards approved by the HMO and that are in compliance with applicable statutes and rules;

(18) a provision that any delegated third party is subject to the HMO's oversight and monitoring of the delegated entity's performance and financial condition under the delegation agreement;

(19) a provision that requires the delegated entity to make available to the HMO samples of each type of contract the delegated entity executes or has executed with physicians and providers to ensure compliance with the contractual requirements described by paragraphs (6) and (7) of this subsection, except that the agreement may not require that the delegated entity make available to the HMO contractual provisions relating to financial arrangements with the delegated entity's physicians and providers;

(20) a provision that requires the delegated entity to provide information to the HMO on a quarterly basis and in a format determined by the HMO to permit an audit of the delegated entity and to ensure compliance with the department's reporting requirements with respect to any functions delegated by the HMO to the delegated entity and to ensure that the delegated entity remains solvent to perform the delegated functions, including:

(A) a summary:

(i) describing any payment methods, including capitation or fee for services, that the delegated entity uses to pay its physicians and providers and any other third party performing a function delegated by the HMO; and

(ii) of the breakdown of the percentage of physicians and providers and any other third party paid by each payment method listed in clause (i) of this subparagraph;

(B) the period that claims and any other obligations for health care filed with the delegated entity, under this and any other delegation agreements to which the delegated entity is a party, have been pending but remain unpaid, divided into categories of 0-to-45 days, 46-to-90 days, and 91-or-more days. The summary must include aggregate information for all delegation agreements entered into by the delegated entity and information for the specific delegation agreement entered into between the parties;

(C) the aggregate dollar amount of claims and other obligations for health care owed by the delegated entity to any physician or provider, including estimates for incurred but not reported obligations;

(D) information that the HMO requires in order to file claims for reinsurance, coordination of benefits, and subrogation; and

(E) documentation, except for information, documents, and deliberations related to peer review that are confidential or privileged under Occupations Code, Chapter 160, Subchapter A, (concerning Requirements Relating to Medical Peer Review), that relates to:

(i) any regulatory agency's inquiry or investigation of the delegated entity or of an individual physician or provider with whom the delegated entity contracts that relates to an enrollee of the HMO; and

(ii) the final resolution of any regulatory agency's inquiry or investigation;

(21) a provision relating to enrollee complaints that requires the delegated entity to ensure that on receipt of a complaint, as defined in Insurance Code Chapter 843 and other applicable insurance laws and regulations of this state, a copy of the complaint must be sent to the HMO within two business days, except that in a case in which a complaint involves emergency care, as defined in Insurance Code Chapter 843 and other applicable insurance laws and regulations of this state, the delegated entity must forward the complaint immediately to the HMO, provided that nothing in this paragraph prohibits the delegated entity from attempting to resolve a complaint;

(22) a provision that the HMO, the delegated entity, and any delegated third party must comply with the provisions of Chapter 22 of this title (relating to Privacy);

(23) a provision identifying an officer of the HMO as the representative of the HMO for all matters related to the delegation agreement; and

(24) a provision identifying which party to the agreement will bear the expense of compliance with each requirement set forth in this subsection, including the cost of any examinations performed under this subchapter.

History

Source Note: The provisions of this §11.2604 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2605 Delegation Agreements - Information to be Provided by HMO to Delegated Entity

(a) An HMO must provide to each delegated entity with which the HMO has a delegation agreement, at least monthly unless otherwise stated in the agreement and provided in standard electronic format agreed to by the parties, the following information:

(1) the name and either the date of birth or social security number of each enrollee of the HMO who is eligible or assigned to receive health care from the delegated entity, including the enrollees added and terminated since the previous reporting period;

(2) the age, sex, evidence of coverage, and any riders to that evidence of coverage, and, if applicable, the name of the employer, for the enrollees of the HMO who are eligible or assigned to receive health care from the delegated entity;

(3) a summary of the number and amount of claims paid by the HMO on behalf of the delegated entity during the previous reporting period; provided that an HMO is not prevented from providing, on request, additional nonproprietary information regarding the claims if the HMO pays any claims for the delegated entity;

(4) a summary of the number and amount of pharmacy prescriptions paid for each enrollee for which the delegated entity has taken partial risk during the previous reporting period, provided that an HMO is not prevented from providing, on request, additional nonproprietary information regarding the claims, if the HMO pays any claims for the delegated entity;

(5) information that is needed by the delegated entity to file claims for reinsurance, coordination of benefits, and subrogation; and

(6) patient complaint data that relates to the delegated entity.

(b) An HMO must provide to each delegated entity with which the HMO has a delegation agreement the following information, as applicable, provided in standard electronic format agreed to by the parties at least quarterly unless otherwise stated in the agreement:

(1) detailed risk-pool data, reported quarterly and on settlement, sufficient to allow the delegated entity to adequately monitor its position in the risk pool; and

(2) the percent of premium attributable to hospital or facility costs, if hospital or facility costs impact the delegated entity's costs and, if there are changes in hospital or facility contracts with the HMO, the projected impact of those changes on the percent of premium attributable to hospital and facility costs within 30 days of the changes.

History

Source Note: The provisions of this §11.2605 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2606 Reporting Requirements

(a) On receipt of a financial statement indicating that a delegated entity or delegated third party has an amount of total liabilities greater than its total assets, the HMO must immediately forward a copy of the financial statement to the department.

(b) An HMO that becomes aware of any information, including the information described in subsection (a) of this section, that suggests or indicates that the delegated entity or delegated third party is not operating in compliance with its written agreement or is operating in a condition that may render the continuance of its business hazardous to the enrollees, must immediately:

(1) notify the delegated entity in writing of those findings; and

(2) request, in writing, a written explanation with supporting documentation of:

(A) the delegated entity's or delegated third party's apparent noncompliance with the written agreement; or

(B) the existence of the condition that apparently renders the continuance of the delegated entity's or delegated third party's business hazardous to the enrollees.

(c) A delegated entity must respond in writing to a request from an HMO under subsection (b) of this section not later than the 30th day after the date the request is received. The response must include a corrective action plan.

(d) A copy of all written communications required by subsections (b) and (c) of this section must be sent to the department simultaneously with transmission to the HMO or delegated entity or delegated third party.

(e) The HMO must cooperate with the delegated entity to correct any failure by the delegated entity to comply with the applicable statutes and rules relating to any matters:

(1) delegated to the delegated entity by the HMO; or

(2) necessary for the HMO to ensure compliance with statutory or regulatory requirements.

History

Source Note: The provisions of this §11.2606 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2607 Examinations of Delegated Entities

(a) On receipt of complaints, a notice under §11.2606 of this title (relating to Reporting Requirements), or as otherwise permitted under the Insurance Code or related rules, the department may examine any matter relating to the financial solvency of the delegated entity or delegated third party or the delegated entity's ability to meet its responsibilities under the delegation agreement.

(b) The department may request documents, perform on-site examinations, and require any other action of the delegated entity and any delegated third party that the department determines necessary to perform an examination under this section.

(c) A delegated entity's failure to comply with a request under subsection (b) of this section may result in either or both:

(1) notification to the HMO that the delegated entity is subject to penalties under the delegation agreement; or

(2) entry of an order by the commissioner to resume or redelegate any functions delegated to the delegated entity or terminate the agreement in its entirety.

(d) The department will issue a report to the delegated entity and HMO on completion of the department's examination. The report will detail the results of the examination and any corrective actions necessary by the delegated entity or HMO.

(e) The delegated entity and the HMO must respond to the department's report and submit a corrective action plan to the department not later than the 30th day after the date of receipt of the department's report.

History

Source Note: The provisions of this §11.2607 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2608 Department May Order Corrective Action

(a) The department may require at any time that a delegated entity take corrective action to comply with the department's statutory and regulatory requirements that:

(1) relates to any matters delegated by the HMO to the delegated entity;

(2) is necessary to ensure the HMO's compliance with statutory and regulatory requirements; or

(3) relates to the financial solvency and operations of the delegated entity.

(b) The commissioner may order the HMO to take any action the commissioner determines is necessary to ensure that the HMO maintains compliance with the Insurance Code, this chapter, and other applicable insurance laws and regulations of this state, including but not limited to:

(1) resumption of any or all functions delegated to the delegated entity, including claims processing, adjudication, and payments for health care previously rendered to enrollees of the HMO;

(2) temporarily or permanently ceasing assignment of new enrollees to the delegated entity;

(3) temporarily or permanently transferring enrollees to alternative delivery systems to receive health care; or

(4) termination of the HMO's delegation agreement with the delegated entity.

History

Source Note: The provisions of this §11.2608 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2609 Reserve Requirements for Delegated Networks

In addition to any other requirements set forth in this subchapter, an HMO that contracts with a delegated network must ensure that the delegated network complies with Insurance Code Chapter 1272, Subchapter D, (concerning Reserve Requirements). The HMO's agreement with the delegated network must include a provision:

(1) that records related to the requirements of Insurance Code Chapter 1272, Subchapter D, must be accessible at all times to the HMO;

(2) requiring all financial records and related information necessary to show the delegated network's compliance with the requirements of Insurance Code Chapter 1272, Subchapter D;

(3) making the records described in paragraph (1) of this section available to the department on request; and

(4) that records be kept providing evidence that the HMO has adequately monitored the delegated network for compliance with the requirements of Insurance Code Chapter 1272, Subchapter D.

History

Source Note: The provisions of this §11.2609 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2610 Penalties for Noncompliance

(a) Failure of any party to any agreement under this subchapter to comply with any requirement of this subchapter may result in an order from the commissioner that the HMO must terminate the delegation agreement and resume or redelegate any or all delegated functions as well as the imposition of penalties provided under the Insurance Code and related rules.

(b) Any action by an HMO relating to a delegation agreement that does not comply with this subchapter or takes place under a provision of a delegation agreement not in compliance with this subchapter constitutes a violation under this subchapter.

History

Source Note: The provisions of this §11.2610 adopted to be effective August 1, 2017, 42 TexReg 2169.

28 Tex. Admin. Code § 11.2611 Filing of Delegation Agreements

(a) An HMO must file the written executed agreement described in this subchapter and any subsequently executed amendments to the agreement with the department as required under §11.301 of this title (relating to Filing Requirements).

(b) Every agreement must include as an attachment a completed Delegated Entity Data form, form SN014, (rev. 02/16).

(c) Every agreement must include, as an attachment, a table of contents that allows the department to track the agreement's compliance with the requirements of §11.2604 of this title (relating to Delegation Agreements - General Requirements and Information to be Provided to HMO) and §11.2605 of this title (relating to Delegation Agreements - Information to be Provided by HMO to Delegated Entity).

(d) On notification from the department of a deficiency in a delegation agreement or filing required under this subchapter, the HMO must respond within 10 business days with a proposed correction for the defect.

History

Source Note: The provisions of this §11.2611 adopted to be effective August 1, 2017, 42 TexReg 2169.

Chapter 12 INDEPENDENT REVIEW ORGANIZATIONS

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 12.1 Statutory Basis

This chapter implements Insurance Code Chapter 4202.

History

Source Note: The provisions of this §12.1 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.2 Severability Clause

If a court of competent jurisdiction holds that any provision of this chapter or its application to any person or circumstance is invalid for any reason, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.

History

Source Note: The provisions of this §12.2 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281.

28 Tex. Admin. Code § 12.3 Effect of Chapter

This chapter governs the performance of appropriate statutory and regulatory functions and is not to be construed as limiting the exercise of statutory authority by the commissioner of insurance.

History

Source Note: The provisions of this §12.3 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.4 Applicability

(a) All independent review organizations (IROs) performing independent reviews of adverse determinations made by utilization review agents, health insurance carriers, health maintenance organizations, and managed care entities must comply with this chapter. IROs performing independent reviews of adverse determinations made by certified workers' compensation health care networks and workers' compensation insurance carriers must comply with this chapter, subject to §12.6 of this title (relating to Independent Review of Adverse Determinations of Health Care Provided Under Labor Code Title 5 or Insurance Code Chapter 1305).

(b) All IROs performing independent reviews of adverse determinations regarding preauthorization exemptions made under Insurance Code Chapter 4201, Subchapter N, concerning Exemption From Preauthorization Requirements for Physicians and Providers Providing Certain Health Care Services, must comply with §12.601 of this title (relating to Preauthorization Exemptions).

History

Source Note: The provisions of this §12.4 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538; amended to be effective September 1, 2022, 47 TexReg 5117.

28 Tex. Admin. Code § 12.5 Definitions

The following words and terms, when used in this chapter, will have the following meanings unless the context clearly indicates otherwise.

(1) Adverse determination--A determination by a utilization review agent made on behalf of any payor that the health care services provided or proposed to be provided to a patient are not medically necessary or appropriate, or are experimental or investigational.

(2) Affiliate--A person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the person specified.

(3) Best evidence--Evidence based on:

(A) randomized clinical trials;

(B) if randomized clinical trials are not available, cohort studies or case-control studies;

(D) if subparagraphs (A), (B), and (C) of this paragraph are not available, expert opinion.

(4) Biographical affidavit--National Association of Insurance Commissioners biographical affidavit to be used as an attachment to the IRO application form.

(5) Case-control studies--A retrospective evaluation of two groups of patients with different outcomes to determine which specific interventions the patients received.

(6) Case Series--An evaluation of a series of patients with a particular outcome, without the use of a control group.

(7) Cohort studies--A prospective evaluation of two groups of patients with only one group of patients receiving a specific intervention(s).

(8) Commissioner--The commissioner of insurance or designee.

(9) Control--The power to direct, or cause the direction of, the management and policies of a person, other than power that results from an official position with or corporate office held by the person. The power may be possessed directly or indirectly by any means, including through the ownership of voting securities or by contract, other than a commercial contract for goods or nonmanagement services. A person controls another if the person possesses the power described above with regard to the other person. The commissioner presumes control to exist if any person, directly or indirectly, or with members of the person's immediate family, owns, controls, or holds the power to vote, or if any person other than a corporate officer or director of a person holds proxies representing 10 percent or more of the voting securities or authority of any other person. A person may rebut the presumption by showing that control does not exist in fact. The commissioner may determine that control exists in fact, despite the absence of a presumption to that effect, where a person exercises, either alone or under an agreement with one or more persons, such a controlling influence over the management or policies of an IRO as to make it necessary or appropriate in the public interest that the person be deemed to control the IRO.

(10) Department--Texas Department of Insurance.

(11) Dentist--A licensed doctor of dentistry holding either a D.D.S. or a D.M.D. degree.

(12) Evidence-based medicine--The use of current, best quality scientific and medical evidence formulated from credible scientific studies, including peer-reviewed medical literature and other current scientifically based texts, and treatment and practice guidelines in making decisions about the care of individual patients.

(13) Evidence-based standards--The conscientious, explicit, and judicious use of evidence-based medicine and the current best evidence based on the overall systematic review of the research in making decisions about the care of individual patients.

(14) Experimental or investigational--A service or device for which there is early, developing scientific, or clinical evidence demonstrating the potential efficacy of the treatment, service, or device, but not yet broadly accepted as the prevailing standard of care.

(15) Expert opinion--A belief or an interpretation by a specialist with experience in a specific area about the scientific evidence on a particular service, intervention, or therapy.

(16) Health benefit plan--A plan of benefits that defines the coverage provisions for health care offered or provided by any organization, public or private, other than health insurance.

(17) Health care provider or provider--A person, corporation, facility, or institution that is:

(A) licensed by a state to provide or otherwise lawfully providing health care services; and

(B) eligible for independent reimbursement for those services.

(18) Health insurance policy--An insurance policy, including a policy written by a corporation subject to Insurance Code Chapter 842, that provides coverage for medical or surgical expenses incurred as a result of accident or sickness.

(19) Independent review--A system for final administrative review by a designated IRO of an adverse determination regarding the medical necessity and appropriateness or the experimental or investigational nature of health care services.

(20) Independent review organization or IRO--An entity that is granted a certificate of registration by the commissioner to conduct independent reviews under the authority of Insurance Code Chapter 4202. An IRO must have the capacity for independent review of all specialty classifications and subspecialties contained in the two-tiered structure of specialty classifications set out in §12.402 of this chapter.

(21) Independent review plan--The review criteria and review procedures.

(22) IRO application form--A form for an original application for, renewal of, or reporting a material change to a certificate of registration as an IRO in this state.

(23) Legal holiday--A holiday:

(A) as provided in Government Code §662.003(a), includes New Year's Day; Martin Luther King, Jr. Day; Presidents' Day; Memorial Day; Independence Day; Labor Day; Veterans Day; Thanksgiving Day; and Christmas Day; and

(B) as provided in §102.3(b) of this title.

(24) Life-threatening condition--A disease or condition for which the likelihood of death is probable unless the course of the disease or condition is interrupted.

(25) Medical and scientific evidence--Evidence found in the following sources:

(A) peer-reviewed scientific studies published in or accepted for publication by medical journals that meet nationally recognized requirements for scientific manuscripts, and that submit most of their published articles for review by experts who are not part of the editorial staff;

(B) peer-reviewed medical literature, including literature relating to therapies reviewed and approved by a qualified institutional review board, biomedical compendia, and other medical literature that meet the criteria of the National Institute of Health's National Library of Medicine for indexing in Index Medicus (Medline) and Elsevier Science Ltd. for indexing in Excerpt--Medicus (EMBASE);

(C) medical journals recognized by the Secretary of Health and Human Services, under Section 1861(t)(2) of the federal Social Security Act;

(D) the following standard reference compendia:

(i) the American Hospital Formulary Service Drug Information;

(ii) Drug Facts and Comparisons, current edition as published by Lippincott Williams & Wilkins;

(iii) the American Dental Association Accepted Dental Therapeutics; and

(iv) the United States Pharmacopoeia--Drug Information;

(E) findings, studies, or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes including:

(i) the federal Agency for Healthcare Research and Quality;

(ii) the National Institutes of Health;

(iii) the National Cancer Institute;

(iv) the National Academy of Sciences;

(v) the Centers for Medicare & Medicaid Services;

(vi) the federal Food and Drug Administration; and

(vii) any national board recognized by the National Institutes of Health for the purpose of evaluating the medical value of health care services;

(F) peer-reviewed abstracts accepted for presentation at major medical association meetings;

(G) for independent review of adverse determinations of health care provided under Labor Code Title 5, the treatment guidelines, treatment protocols, and pharmacy closed formulary as provided in applicable orders issued or rules adopted by the TDI-DWC under Labor Code §408.028 and §413.011, including Chapter 134 of this title and Chapter 137 of this title; or

(H) any other medical or scientific evidence that is comparable to the sources listed in subparagraphs (A) - (F) of this paragraph.

(26) Nurse--A registered or professional nurse, a licensed vocational nurse, or a licensed practical nurse.

(27) Patient--The enrollee or an eligible dependent of the enrollee under a health benefit plan or health insurance policy, or an injured employee entitled to receive workers' compensation benefits under Labor Code Title 5.

(28) Payor--

(A) an insurer that writes health insurance policies;

(B) a preferred provider organization, health maintenance organization, or self-insurance plan; or

(C) any other person or entity that provides, offers to provide, or administers hospital, outpatient, medical, or other health benefits, including workers' compensation benefits as provided under Insurance Code §4201.054, to persons treated by a health care provider in this state under a policy, plan, or contract.

(29) Person--An individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, any similar entity, or any combination acting in concert.

(30) Physical address--Location of the IRO's primary office where personnel are reasonably available by telephone at least 40 hours per week during normal business hours in both Central and Mountain time zones to discuss or respond to requests for independent review.

(31) Physician--A licensed doctor of medicine or a doctor of osteopathy.

(32) Primary office--The place where an IRO maintains its physical address in Texas, and where its books and records about independent reviews assigned by the department are maintained and accessible.

(33) Provider of record--The physician or other health care provider that has primary responsibility for the care, treatment, and services rendered or requested on behalf of the patient; or the physician or health care provider that has rendered or has been requested to provide the care, treatment, or services to the patient. This definition includes any health care facility where treatment is rendered on an inpatient or outpatient basis.

(34) Randomized clinical trial--A controlled, prospective study of patients who have been randomized into an experimental group and a control group at the beginning of the study with only the experimental group of patients receiving a specific intervention, which includes study of the groups for variables and anticipated outcomes over time.

(35) Review criteria--The written policies, medical protocols, previous decisions, and guidelines used by the IRO to make decisions about the medical necessity or appropriateness of a treatment, procedure, or service or the experimental or investigational nature of a treatment, procedure, or service.

(36) TDI-DWC--The Texas Department of Insurance, Division of Workers' Compensation.

(37) Utilization review agent--A person holding a certificate under Insurance Code Chapter 4201.

(38) Working day--A weekday that is not a legal holiday.

History

Source Note: The provisions of this §12.5 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.6 Independent Review of Adverse Determinations of Health Care Provided Under Labor Code Title 5 or Insurance Code Chapter 1305

(a) Review of the medical necessity or appropriateness of a health care service provided under Labor Code Chapter 408 or Chapter 413 must be conducted under this chapter in the same manner as reviews of utilization review decisions by health maintenance organizations.

(b) Notwithstanding subsection (a) of this section, for independent review of adverse determinations of health care provided under Labor Code Title 5 or Insurance Code Chapter 1305:

(1) IROs and personnel conducting independent review must comply with Labor Code Title 5 and applicable TDI-DWC rules;

(2) in the event of a conflict between this chapter and the Labor Code, the Labor Code controls; and

(3) in the event of a conflict between this chapter and TDI-DWC rules, TDI-DWC rules control.

History

Source Note: The provisions of this §12.6 adopted to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

Subchapter B CERTIFICATE OF REGISTRATION FOR INDEPENDENT REVIEW ORGANIZATIONS

28 Tex. Admin. Code § 12.101 Certificate of Registration for Independent Review

An application for a certificate of registration and for renewal of a certificate of registration as an IRO and associated fees must be filed with the Texas Department of Insurance at the following address: Texas Department of Insurance, Mail Code 103-6A, P.O. Box 149104, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §12.101 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.102 IRO Application Form

(a) Applicants must submit the IRO application form for an original application for, renewal of, and reporting a material change in an IRO application form for a certificate of registration as an IRO in this state in the format prescribed by the department.

(b) The commissioner adopts the biographical affidavit by reference to be used as an attachment to the IRO application form.

(c) The forms are available at www.tdi.texas.gov/forms. Applicants may also obtain the forms from the Texas Department of Insurance, Mail Code 103-6A, P.O. Box 149104, Austin, Texas 78714-9104.

History

Source Note: The provisions of this §12.102 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.103 Information Required in Original Application for Certificate of Registration

The IRO application form requires information that is necessary for the commissioner to determine whether an applicant is qualified for a certificate of registration as an IRO under Insurance Code §4202.004, including:

(1) a summary of the independent review plan that meets the requirements of §12.201 of this chapter, which must include:

(A) a summary description of review criteria and review procedures to be used to determine medical necessity or appropriateness of health care;

(B) a summary description of review criteria and review procedures to be used to determine the experimental or investigational nature of health care;

(C) a certification signed by the IRO's medical director that the review criteria and review procedures to be applied in review determinations are established with input from appropriate health care providers and approved by physicians under §12.201(3) of this chapter;

(D) procedures ensuring that the information regarding the reviewing physicians and providers is updated under §12.111(a) of this chapter to ensure the independence of each health care provider or physician making review determinations; and

(E) a summary description of criteria and review procedures to be used by the medical director to conduct quality assurance audits under §12.202(c)(2) of this chapter.

(2) copies of policies and procedures that ensure that all applicable state and federal laws to protect the confidentiality of medical records and personal information are followed. These procedures must comply with §12.208 of this chapter;

(3) a certification, signed by an officer, director, or owner of the IRO, that the IRO and any party that performs an IRO function through contracts and subcontracts will comply with Insurance Code Chapter 4202 and this chapter. The certification must include a statement that the IRO is responsible for ensuring that all contracted and subcontracted functions are performed according to Insurance Code Chapter 4202 and this chapter, subject to the IRO's oversight and monitoring, and that the IRO retains ultimate responsibility for compliance;

(4) a description of personnel and their credentials and a completed profile for each physician and provider, as described in §12.202 of this chapter that must include:

(A) the credentialing and recredentialing procedures used by the IRO applicant to verify physician and provider credentials and the computer processes, electronic databases, and records, if any, used to make the verification; and

(B) the credentialing software used by the applicant for managing the processes, databases, and records described in subparagraph (A) of this paragraph;

(5) a description of hours of operation and how the IRO may be contacted after hours and during weekends and holidays, as set out in §12.207 of this chapter;

(6) a description of the applicant's use of communications, records, and computer processes to manage the independent review process;

(7) a description and evidence of accreditation from a nationally recognized accrediting organization, if any, that imposes requirements for accreditation that are the same as, substantially similar to, or more stringent than the department's requirements for a certificate of registration. Evidence of accreditation will be maintained in the department's file for the IRO applicant, and the applicant may request expedited approval of the certificate of registration with evidence of accreditation from a nationally recognized accrediting organization;

(8) the organizational information, documents, and all amendments that must include:

(A) written evidence that the applicant is incorporated in this state, which may include a copy of the Certificate of Formation from the Texas Secretary of State;

(B) for an applicant that is publicly held, the name, address, and Federal Employer Identification Number (EIN) of each stockholder or owner of more than 5 percent of any stock or options;

(D) a chart showing contractual arrangements of the applicant, including all contracts between the applicant and any person and all subcontracts with other persons to perform any business or daily functions of an IRO; and

(E) copies of the contract and subcontract with any person who will perform IRO functions on behalf of the applicant. All contracts and subcontracts must include at a minimum:

(i) a provision that the contracted or subcontracted party will comply with §12.208 of this chapter;

(ii) a provision that the applicant is responsible for ensuring that all contracted and subcontracted functions are performed under Insurance Code Chapter 4202 and this chapter, subject to the applicant's oversight and monitoring;

(iii) a provision that the applicant retains ultimate responsibility for compliance; and

(iv) a provision that, on request, the contracted party will provide the applicant with data necessary for the applicant to comply with department requests for information about IRO functions;

(9) the name of any holder of bonds or notes of the applicant that exceed $100,000;

(10) the name, address, EIN, and type of business of each corporation or other organization that the applicant controls or is affiliated with and the nature and extent of the affiliation or control, and a chart or list clearly identifying the relationships between the applicant and any affiliates;

(11) biographical information about officers, directors, and executives, including information requested in the biographical affidavit as required in §12.102(b) of this chapter:

(A) the applicant must submit a complete set of fingerprints for each director, officer, and executive of the applicant and for each owner or shareholder of the applicant, or if the applicant is publicly held, each owner or shareholder of more than 5 percent of any of the applicant's stock or options as described by Insurance Code §4202.004(a)(1), in compliance with §1.503 and §1.504 of this title;

(B) the applicant must submit the name and biographical information for each director, officer, and executive of the applicant and of any entity listed under paragraph (10) of this section and a description of any relationship the named individual has that represents revenue equal to or greater than 5 percent of that individual's total annual revenue or which represents a holding or investment worth $100,000 or more in any of the following entities:

(i) a health benefit plan;

(ii) a health maintenance organization;

(iii) an insurer;

(iv) a utilization review agent;

(v) a nonprofit health corporation;

(vi) a payor;

(vii) a health care provider;

(viii) another IRO; or

(ix) a group representing any of the entities described by clauses (i) - (viii) of this subparagraph.

(C) the applicant must identify any relationship between the applicant and any affiliate or other organization in which an officer, director, or employee of the applicant holds a 5 percent or more interest;

(D) the applicant must submit a list of any currently outstanding loans or contracts to provide services between the applicant, affiliates, or any other person relating to any functions performed by or on behalf of the applicant;

(12) documentation from the comptroller demonstrating the applicant's good standing and right to transact business in this state;

(13) for an application for a certificate of registration or renewal of a certificate of registration as an IRO in this state made on or after July 7, 2015, a sworn statement from an officer of the organization that:

(A) the applicant's primary office included on the IRO application form is located and maintained at a physical address in this state. As a condition of holding a certificate of registration to conduct the business of independent review in this state, an IRO must locate and maintain its primary office at a physical address in this state;

(B) the primary office is equipped with a computer system capable of:

(i) processing requests for independent review; and

(ii) accessing all electronic records related to the review and the independent review process;

(D) in the case of an office located in a residence, the working office must be located in a room set aside for independent review business purposes and in a manner to ensure confidentiality; and

(E) medical records are maintained according to §12.208 of this chapter;

(14) the percentage of the applicant's revenues that are anticipated to be derived from independent reviews conducted; and

(15) a disclosure of any enforcement actions related to the provision of medical care or conducting of medical reviews taken against a person subject to the fingerprint requirements under §1.503 and §1.504 of this title.

History

Source Note: The provisions of this §12.103 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.104 Review of Original Application

The original application process is as follows:

(1) Original application process. Within 60 days after receipt of a complete original application, the department will process the application and grant or deny an original certificate of registration. The department will send a certificate of registration to an entity that is granted a certificate of registration. The applicant may waive the time limit described in this paragraph.

(2) Omissions or deficiencies.

(A) The department will send the applicant written notice of any omissions or deficiencies in the original application.

(B) The applicant must correct the omissions or deficiencies in the application within 15 days of the date of the department's latest notice of omissions or deficiencies. The applicant may request additional time, not to exceed 30 days, in writing, to correct the omissions or deficiencies. In the request, the applicant must include sufficient detail for the commissioner to determine whether there is good cause to grant additional time for the applicant to correct the omissions or deficiencies. The decision to grant or deny a request for additional time is at the discretion of the commissioner.

(C) If the applicant fails to correct the omissions or deficiencies within 15 days, or 45 days if the applicant requested and was granted the maximum amount of additional time, the department will close the application as incomplete. The application fee is not refundable.

(3) The department will maintain a charter file that will contain the application, notices of omissions or deficiencies, responses, and any written materials generated by any person that were considered by the department in evaluating the application.

History

Source Note: The provisions of this §12.104 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.105 Revisions During Review Process

Revisions made by the applicant during the review of the application must either be submitted electronically in the manner specified by the department in correspondence with the applicant or sent by mail addressed to: Texas Department of Insurance, Mail Code 103-6A, P.O. Box 149104, Austin, Texas 78714-9104. If a page is revised, the revised page submitted by the applicant must contain the changed item or information red-lined.

History

Source Note: The provisions of this §12.105 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.106 Examinations

(a) The commissioner may conduct an on-site examination at the applicant's primary office as a requirement of applying for a certificate of registration.

(b) The commissioner may conduct examinations of an IRO as often as the commissioner deems necessary to determine compliance with Insurance Code Chapter 4202 and this chapter, including on renewal of the certificate of registration.

(c) The following documents must be available for review during an examination at the primary office of the IRO located within this state:

(1) the information required in §12.103 of this chapter;

(2) credentialing files;

(3) case decisions files;

(4) a list of personnel who are available at the IRO's primary office 40 hours a week during normal business hours in both Central and Mountain time zones;

(5) a list of directors, officers, and executives and owners or shareholders, or if the IRO is publicly held, owners or shareholders of more than 5 percent of any of the IRO's stock or options as described by Insurance Code §4202.004(a)(1);

(6) a chart showing the internal organizational structure of the IRO management and administrative staff;

(7) a chart showing the contractual relationships and arrangements of the IRO, as described in §12.103 of this chapter; and

(8) any other documents related to the operation of the IRO.

(d) The owner and IRO staff, including the CEO, medical director, and operations staff, must be available at the IRO's primary office during the on-site examination to answer all questions regarding the IRO's operations, produce documents, and demonstrate to the examiner the operations of the IRO.

History

Source Note: The provisions of this §12.106 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.107 Withdrawal of an Original Application Before Granting a Certificate of Registration and Subsequent Renewal Applications

(a) On written notice to the department, an applicant may request withdrawal of an application from consideration by the department.

(b) On the department's receipt of a request to withdraw an application under this section, the application will be withdrawn from consideration. Subsequent applications by the same applicant must be new submissions in their entirety.

History

Source Note: The provisions of this §12.107 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.108 Renewal of Certificate of Registration

(a) Every two years, the commissioner will renew the certificate of registration of each organization that meets the standards as an IRO.

(b) An IRO must apply for renewal of its certificate of registration every two years, no later than the anniversary date of the issuance of the registration. The IRO application form must be used for this purpose. The IRO application form may be obtained from the department's website and from the address listed in §12.102(c) of this chapter. The completed IRO application form, renewal fee, and a certification that no material changes exist that have not already been filed with the department must be submitted to the department at the address listed in §12.101 of this chapter.

(c) An IRO may continue to operate under its certificate of registration after a completed application form and renewal fee have been received by the department and until the renewal is finally denied or granted by the department. However, independent reviews will not be assigned to an IRO during the 30 days before the anniversary date of the issuance of the IRO's certificate of registration unless a completed renewal application form and the application fee have been received by the department.

(d) If a completed renewal application form is not received before the anniversary date of the year in which the certificate of registration must be renewed, the certificate of registration will automatically expire and the IRO must complete and submit a new application for certificate of registration.

(e) Until the certificate of registration renewal application process is complete or the certificate of registration expires, an IRO must:

(1) continue to perform its duties in compliance with Insurance Code Chapter 4202, the Labor Code, and department and TDI-DWC rules, including maintenance and retention of medical records and patient-specific information under §12.208 of this chapter; and

(2) in regard to reviews of the medical necessity of a health care service provided under Labor Code Title 5 or Insurance Code Chapter 1305, make responses to requests for letters of clarification under §133.308 of this title.

History

Source Note: The provisions of this §12.108 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.109 Appeal of Denial of Application or Renewal

If an original or renewal application is denied under this chapter, the applicant or registrant may appeal the denial under the provisions of Chapter 1, Subchapter A of this title and Government Code, Chapter 2001.

History

Source Note: The provisions of this §12.109 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.110 Effect of Sale or Transfer of Ownership of an Independent Review Organization

(a) An IRO must notify the department of an agreement to sell or transfer the ownership of the IRO, or shares in the IRO, no later than 60 days before the date of the sale or transfer of ownership. The IRO must use the IRO application form. The IRO must file the notification with the department at the following address: Texas Department of Insurance, Mail Code 103-6A, P.O. Box 149104, Austin, Texas 78714-9104. The IRO must submit the following information with the notification:

(1) name of the purchaser and, in compliance with §1.503 and §1.504 of this title, a complete and legible set of fingerprints for each officer of the purchaser and for each owner or shareholder of the purchaser, or if the purchaser is publicly held, each owner or shareholder of more than 5 percent of any of the purchaser's stock or options as described by Insurance Code §4202.004(a)(1), and any additional information necessary to comply with Insurance Code §4202.004(d); and

(2) any material changes including, but not limited to, policies and procedures, physical address, personnel, or operating locations with the notice of intent to sell or transfer ownership.

(b) The IRO may complete the sale or transfer of ownership only after the department has sent written confirmation that the requirements under Insurance Code Chapter 4202 and this chapter have been satisfied.

(c) An IRO must continue to perform all duties before the date the sale or transfer of ownership of the IRO is finalized. Notification of the impending sale of an IRO does not negate the IRO's obligation to continue to perform its duties in compliance with Insurance Code Chapters 1305 and 4202, Labor Code Title 5, and applicable department and TDI-DWC rules.

History

Source Note: The provisions of this §12.110 adopted to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.111 Regulatory Requirements Subsequent to a Certificate of Registration

(a) The IRO must report any material changes to the information required in the IRO application form required by §12.103 and §12.108 of this chapter, including changes relating to physicians and providers performing independent review, no later than the 30th day after the date on which the change takes effect.

(b) If the material change is a relocation of the primary office:

(1) the organization must inform the department that the location is available for inspection by the department at least 30 days before the date of the relocation;

(2) on request of the department, an officer must attend the inspection; and

(3) if the inspection is a result of a sale under §12.110 of this chapter, the inspection may include verification that the IRO complies with the requirements in §12.103(11) of this chapter.

(c) The IRO is exempt from compliance with subsection (a) of this section in the event that a contracted specialist IRO reviewer is unavailable for review on a specific case, and subsequent immediate contracting with a new specialist IRO reviewer is necessary to complete independent review on a specific case within the time frames set out in this chapter.

(d) The IRO must notify the department within 10 days of any contracts entered into under subsection (c) of this section, and must include in the notification a complete explanation of the circumstances necessitating the new contracts.

History

Source Note: The provisions of this §12.111 adopted to be effective July 7, 2015, 40 TexReg 2538.

Subchapter C GENERAL STANDARDS OF INDEPENDENT REVIEW

28 Tex. Admin. Code § 12.201 Independent Review Plan

Independent review must be conducted under an independent review plan that is consistent with standards developed with input from appropriate health care providers, and reviewed and approved by the IRO's medical director. The independent review plan must include the following components:

(1) a description of the elements of review that the IRO provides;

(2) written procedures for:

(A) notification of the IRO's determinations provided to the patient or a representative of the patient, the patient's provider of record, and the utilization review agent, under §12.206 of this chapter;

(B) review, including:

(i) any form used during the review process;

(ii) time frames that must be met during the review;

(D) contacting and receiving information from health care providers under §12.205 of this chapter;

(3) required use of written medically acceptable review criteria that are:

(A) based on medical and scientific evidence and use evidence-based standards, or if evidence is not available, generally accepted standards of medical practice recognized in the medical community;

(B) established and periodically evaluated and updated with appropriate involvement from physicians, including practicing physicians, and other health care providers;

(C) objective, clinically valid, compatible with established principles of health care, and flexible enough to allow for deviations from the norms when justified on a case-by-case basis;

(D) developed based on consideration of the treatment guidelines, treatment protocols, and the pharmacy closed formulary as provided in orders issued or rules adopted by TDI-DWC, including Chapter 134 and Chapter 137 of this title for health care provided under Labor Code Title 5;

(E) used only as a tool in the review process; and

(F) available for review, inspection, and copying as necessary by the commissioner or the commissioner's designated representative so the commissioner can carry out the commissioner's lawful duties under the Insurance Code;

(4) independent review determinations that:

(A) use review procedures that are established and periodically evaluated and updated with appropriate involvement from physicians, including practicing physicians, and other health care providers;

(B) are made with medically accepted review criteria, taking into account the special circumstances of each case that may require a deviation from the norm; and

History

Source Note: The provisions of this §12.201 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.202 Personnel and Credentialing

(a) Personnel employed by or under contract with the IRO to perform independent reviews must be appropriately trained, qualified, and, if applicable, currently licensed, registered, or certified. These personnel must be currently involved in an active practice. An exception to the active practice requirement is the medical director of the IRO. Personnel who obtain information directly from a physician, dentist, or other health care provider, either orally or in writing, and who are not physicians or dentists, must be nurses, physician assistants, or health care providers qualified to provide the service requested by the provider. This provision must not be interpreted to require such qualifications for personnel who perform clerical or administrative tasks.

(1) Personnel conducting independent reviews for health services must hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty health services by a licensing agency in the United States.

(2) Personnel conducting independent reviews for workers' compensation health care services must hold an unrestricted license, an administrative license, or otherwise be authorized to provide the same or similar specialty workers' compensation health care services by a licensing agency in this state.

(b) The IRO is required to provide to the commissioner:

(1) the name, type, license number, state of licensure, date of contract, and minimum qualifications of the personnel either employed or under contract to perform the independent review; and

(2) written procedures used to determine whether physicians or other health care providers used by the IRO are licensed, qualified, in good standing, and appropriately trained.

(c) An IRO must be under the direction of a medical director who is a physician currently licensed and in good standing to practice medicine by a state licensing agency in the United States. The medical director functions must include, but are not limited to, conducting:

(1) annual review and approval of review criteria;

(2) annual quality assurance audits of at least 25 percent of all decisions to ensure appropriate reviews are conducted, and to provide quality assurance reports to the department when requested; and

(3) annual quality assurance audits of at least 25 percent of all assignments to ensure appropriate reviewers are assigned to cases, and to provide quality assurance reports to the department when requested.

(d) The IRO must maintain credentialing and recredentialing files of personnel who are either employed or under contract to perform independent reviews. At a minimum, the IRO must keep the following credentialing and recredentialing information current and available for review by the department and TDI-DWC on request:

(1) verification obtained from the applicable state licensing board that licensure, certification, or registration is in effect at the time of the credentialing decision;

(2) active practice in effect at the time of the credentialing decision;

(3) board certification, if applicable. The IRO may obtain verification from the American Board of Medical Specialties Compendium, the American Osteopathic Association, the American Medical Association MasterFile, or an applicable specialty board. The certification must be in effect at the time of the credentialing decision; and

(4) any sanctions or revocations by any state licensing agencies in the United States or the U.S. Department of Health and Human Services (HHS) in effect at the time of the credentialing decision. The IRO must verify sanctions or revocations with state licensing agencies, TDI-DWC, and the HHS Office of Inspector General.

(e) Notwithstanding subsections (c) and (d) of this section, a physician, dentist, or other person who performs independent review whose license has been revoked by any state licensing agency in the United States is not eligible to direct or conduct independent review.

(f) Notwithstanding subsection (c) of this section, an IRO that performs independent review of a health care service provided under Labor Code Title 5 or Insurance Code Chapter 1305 must comply with the licensing and professional specialty requirements for personnel performing independent review as provided by Labor Code §§408.0043 - 408.0045 and 413.031; Insurance Code §1305.355; and Chapters 133 and 180 of this title.

(g) The IRO must require physicians and other providers who conduct independent reviews to sign and date the certification of independence and qualifications of the reviewer in the format prescribed by the department. The certification of independence and qualifications of the reviewer includes certification that the physician or other provider who conducts the independent review:

(1) holds an unrestricted license, certification, or registration and lists the relevant states, license numbers, and expiration dates;

(2) has no sanctions or revocations of the reviewer's license, certification, or registration by any state licensing agency in the United States or HHS;

(3) currently practices and lists the states;

(4) has no previous knowledge of or participation in the case before it is assigned to the reviewer;

(5) has no disqualifying associations, including business or personal relationships, with any involved parties in the case;

(6) does not have admitting privileges or ownership interest in, and is not a member of the board of directors, advisor to the board of directors, or officer of the health care facilities where care was provided or is recommended to be provided;

(7) does not have a contract with or an ownership interest in the utilization review agent, insurer, health maintenance organization, other managed care entity, payor, or any other party to the case and is not a member of the board or advisor to the board of directors or an officer for any of the above referenced entities; and

(8) performed the review without bias for or against the utilization review agent, the insurer, health maintenance organization, other managed care entity, payor, or any other party to this case.

(h) The information required in this section must be available for examination and review by the department and TDI-DWC personnel on request.

(i) The IRO must require those physicians and other providers who conduct independent reviews to notify the IRO of any changes in the information in subsection (d) of this section.

History

Source Note: The provisions of this §12.202 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.203 Conflicts of Interest Prohibited

A person is not eligible for a certificate of registration under this chapter if any payor, or trade or professional association of payors, has any ownership interest in or control over the person or if the person has any ownership interest in or control over a payor. The department will have the discretion to determine whether any other conflicts exist.

History

Source Note: The provisions of this §12.203 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.204 Prohibitions of Certain Activities and Relationships of Independent Review Organizations and Individuals or Entities Associated with Independent Review Organizations

(a) An IRO must not set or impose any notice or other review procedures that are contrary to the requirements of the health insurance policy or health benefit plan unless those requirements are set out in this chapter or Texas law.

(b) An IRO may not permit or provide compensation or anything of value to its physicians or providers that would affect, directly or indirectly, an independent review decision.

(1) This prohibition extends to the shared use by IROs of the resources and staff that comprise an office, including office space, telephone and fax lines, electronic equipment, supplies, and clerical staff.

(2) This prohibition does not extend to the use of subcontractor services or personnel employed by or under contract with the IRO to perform independent review.

(d) An individual who serves as an officer, director, manager, executive, or supervisor of an IRO may not serve as an officer, director, manager, executive, supervisor, employee, agent, or independent contractor of another IRO.

(e) An individual or entity may not own more than one IRO.

(f) An individual may not own stock in more than one IRO.

(g) An individual may not serve on the board of more than one IRO.

(h) An individual who has served on the board of an IRO that has had its certificate of registration revoked for cause may not serve on the board of another IRO earlier than the fifth anniversary of the date the revocation occurred.

History

Source Note: The provisions of this §12.204 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.205 Independent Review Organization Contact with and Receipt of Information from Health Care Providers and Patients

(a) A health care provider may designate one or more individuals as the initial contact or contacts for IROs seeking routine information or data. In no event will the designation of an individual or individuals as the initial contact prevent an IRO or medical director from also contacting a health care provider or others in his or her employ where a review might otherwise be unreasonably delayed, or where the designated individual is unable to provide the necessary information or data requested by the IRO.

(b) An IRO may not engage in unnecessary or unreasonably repetitive contacts with the health care provider or patient and must base the frequency of contacts or reviews on the severity or complexity of the patient's condition or on necessary treatment and discharge planning activity.

(c) In addition to pertinent files containing medical and personal information, the utilization review agent or the health insurance carrier, health maintenance organization, managed care entity, or other payor requesting the independent review is responsible for timely delivering to and ensuring receipt by the IRO of any written narrative supplied by the patient in compliance with Insurance Code Chapter 4201 and Chapters 19 and 133 of this title. However, in instances of a life-threatening condition, the IRO must contact the patient or patient's representative, and provider directly.

(d) An IRO must notify the department if, within three working days of receipt of the independent review assignment, the IRO has not received the pertinent files containing medical and personal information from the requesting utilization review agent or the health insurance carrier, health maintenance organization, managed care entity, or other payor.

(e) An IRO must reimburse health care providers for the reasonable costs of providing medical information in writing, including copying and transmitting any patient records or other documents requested by the IRO. A health care provider's charge for providing medical information to an IRO must not exceed the cost of copying set by TDI-DWC rules at §134.120 of this title for records, and may not include any costs that are otherwise recouped as a part of the charge for health care. The utilization review agent, health insurance carrier, health maintenance organization, managed care entity, or other payor requesting the review must pay these unreimbursed costs to the health care provider.

(f) Nothing in this section prohibits a patient, the patient's representative, or a provider of record from submitting pertinent records to an IRO conducting independent review.

(g) When conducting independent review, the IRO must request and maintain any information necessary to review the adverse determination not already provided by the utilization review agent, health insurance carrier, health maintenance organization, managed care entity, or other payor. This information may include identifying information about the patient, the benefit plan, the treating health care provider, or facilities rendering care. It may also include clinical information regarding the diagnoses of the patient and the medical history of the patient relevant to the diagnoses, the patient's prognosis, or the treatment plan prescribed by the treating health care provider along with the provider's justification for the treatment plan.

(h) The IRO is required to share all clinical and demographic information on individual patients among its various divisions to avoid duplication of requests for information from patients or providers.

History

Source Note: The provisions of this §12.205 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.206 Notice of Determinations Made by Independent Review Organizations

(a) An IRO must notify the patient or patient's representative, the patient's provider of record, the utilization review agent, the payor, and the department of a determination made in an independent review.

(b) For a situation other than a situation described in subsection (c) of this section, the notification required by this section must be mailed or otherwise transmitted no later than the earlier of:

(1) The 15th day after the date the IRO receives the information necessary to make a determination; or

(2) the 20th day after the date the IRO receives the request for the independent review.

(c) In the case of a life-threatening condition, the provision of prescription drugs or intravenous infusions for which the patient is receiving benefits under a health insurance policy, or a review of a step therapy protocol exception request under Insurance Code §1369.0546, the notification must be by telephone, and followed by facsimile, email, or other method of transmission no later than the earlier of:

(1) the third day after the date the IRO receives the information necessary to make a determination; or with respect to:

(2) a review of a health care service provided to a person eligible for workers' compensation medical benefits, the eighth day after the date the IRO receives the request that the determination be made; or

(3) a review of health care service other than a service described by paragraph (2) of this subsection, the third day after the date the IRO receives the request that the determination be made.

(d) Notification of determination by the IRO is required to include at a minimum:

(1) a listing of all recipients of the notification of determination as described in subsection (a) of this section, identifying for each:

(A) the name; and

(B) as applicable to the manner of transmission used to issue the notification of determination to the recipient:

(i) mailing address;

(ii) facsimile number; or

(iii) email address;

(2) the date of the original notice of the decision, and if amended for any reason, the date of the amended notification of decision;

(3) the independent review case number assigned by the department;

(4) the name of the patient;

(5) a statement about whether the type of coverage is health insurance, workers' compensation, or workers' compensation health care network;

(6) a statement about whether the context of the review is preauthorization, concurrent utilization review, or retrospective utilization review of health care services;

(7) the name and certificate of registration number of the IRO;

(8) a description of the services in dispute;

(9) a complete list of the information provided to the IRO for review, including dates of service and document dates, where applicable;

(10) a description of the qualifications of the reviewing physician or provider;

(11) a statement that the review was performed without bias for or against any party to the dispute and that the reviewing physician or provider has certified that no known conflicts of interest exist between the reviewer and:

(A) the patient;

(B) the patient's employer, if applicable;

(D) the utilization review agent;

(E) any of the treating physicians or providers; or

(F) any of the physicians or providers who reviewed the case for determination before its referral to the IRO, and that the review was performed without bias for or against any party to the dispute;

(12) a statement that the independent review was performed by a health care provider licensed to practice in Texas, if required by applicable law and of the appropriate professional specialty;

(13) a statement that there is no known conflict of interest between the reviewer, the IRO, and any officer or employee of the IRO with:

(A) the patient;

(B) the provider requesting independent review;

(D) the utilization review agent;

(E) the payor; and

(F) the certified workers' compensation health care network, if applicable;

(14) a summary of the patient's clinical history;

(15) the review outcome, clearly stating whether medical necessity or appropriateness exists for each of the health care services in dispute and whether the health care services in dispute are experimental or investigational, as applicable;

(16) a determination of the prevailing party, if applicable;

(17) the analysis and explanation of the decision, including the clinical bases, findings, and conclusions used to support the decision;

(18) a description and the source of the review criteria used to make the determination;

(19) a certification by the IRO of the date the decision was sent to all recipients of the notification of determination as required in subsection (a) of this section by U.S. Postal Service or otherwise transmitted in the manner indicated on the form;

(20) for independent reviews of health care services provided under Labor Code Title 5 or Insurance Code Chapter 1305, any information required by §133.308 of this title; and

(21) notice of applicable appeal rights under Insurance Code Chapter 1305 and Labor Code Title 5, and instructions concerning requesting such appeal.

(e) Example templates for the notification of determination regarding health and workers' compensation cases are on the department's website at tdi.texas.gov/forms.

History

Source Note: The provisions of this §12.206 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538; amended to be effective July 28, 2019, 44 TexReg 3906.

28 Tex. Admin. Code § 12.207 Independent Review Organization Telephone Access

(a) An IRO must have appropriate personnel reasonably available by telephone at least 40 hours per week during normal business hours in both Central and Mountain time zones.

(b) An IRO must have a dedicated telephone system capable of accepting or recording or providing instructions to incoming callers related to independent review during other-than-normal business hours, and must respond to calls no later than one working day from the date the call was received.

History

Source Note: The provisions of this §12.207 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.208 Confidentiality

(a) An IRO must preserve the confidentiality of individual medical records, personal information, and any proprietary information provided by payors. Personal information includes name, address, telephone number, social security number, and financial information.

(b) An IRO is prohibited from publicly disclosing patient information protected by the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.), or transmitting the information to a subcontractor involved in the independent review process that has not signed an agreement similar to the business associate agreement required by regulations adopted under the Health Insurance Portability and Accountability Act of 1996.

(c) An IRO may not disclose or publish individual medical records or other confidential information about a patient without the prior written consent of the patient or as otherwise provided by law, including the Health Insurance Portability and Accountability Act of 1996, if applicable. An IRO may provide confidential information to a provider who is under contract with the IRO for the sole purpose of performing or assisting with independent review. Information provided to a provider who is under contract to perform a review must remain confidential.

(d) The IRO may not publish data identifying a particular payor, physician, or provider, including any quality review studies or performance tracking data, without prior written consent of the involved payor, physician, or provider. This prohibition does not apply to internal systems or reports used by the IRO.

(e) All payor, patient, physician, and provider data must be maintained by the IRO in a confidential manner that prevents unauthorized disclosure to third parties. Nothing in this chapter allows an IRO to take actions that violate state or federal statutes or regulations concerning confidentiality of patient records.

(f) To ensure confidentiality, an IRO must, when contacting a utilization review agent, a physician's or provider's office, or a hospital, provide its certificate of registration number and the caller's name and professional qualifications to the provider or the provider's named independent review representative.

(g) The IRO's procedures must specify that specific information exchanged for the purpose of conducting a review will be considered confidential, be used by the IRO solely for the purposes of independent review, and may be shared by the IRO only with a provider who is under contract with the IRO to perform an independent review. The IRO's plan must specify the procedures in place to ensure confidentiality and must acknowledge that the IRO agrees to abide by any federal and state laws governing the issue of confidentiality. Summary data that does not provide sufficient information to allow identification of individual patients, providers, payors, or utilization review agents is not confidential.

(h) Medical records and patient-specific information must be maintained by the IRO in a secure area with access limited to essential personnel only. IROs must transmit and store records in compliance with the Health Insurance Portability and Accountability Act of 1996.

(i) Information generated and obtained by the IRO in the course of the review must be retained for at least four years. This requirement is not negated by the suspension or surrender of the IRO's certificate of registration or the failure to renew the certificate of registration.

(j) Destruction of documents in the custody of the IRO that contain confidential patient information or payor, physician, or provider financial data must be by a method that ensures complete destruction of the information when the organization determines that the information is no longer needed.

History

Source Note: The provisions of this §12.208 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

Subchapter D ENFORCEMENT OF INDEPENDENT REVIEW STANDARDS

28 Tex. Admin. Code § 12.301 Complaints, Oversight, and Information

(a) Complaints against an IRO must be processed under the department's established procedures for investigation and resolution of complaints.

(b) As part of its oversight of IROs, the department will conduct compliance audits to ensure that IROs are complying with Insurance Code Chapters 1305 and 4202 and the rules and standards in this chapter.

(d) This chapter does not limit the ability of the commissioner of workers' compensation or TDI-DWC to make inquiries, conduct audits, or receive and investigate complaints against IROs or personnel employed by or under contract with IROs to perform independent review to determine compliance with or violations of Labor Code Title 5 or applicable TDI-DWC rules.

History

Source Note: The provisions of this §12.301 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.302 Administrative Violations

(a) If the department believes that any person conducting independent review is in violation of Insurance Code Chapters 1305 or 4202; any provision of Labor Code Chapters 408, 409, or 413; or this chapter or Chapters 19, 133, 134, 140, or 180 of this title, respectively, the department will notify the IRO of the alleged violation and may compel the production of any and all documents or other information necessary to determine whether or not a violation has taken place.

(b) The department or TDI-DWC may initiate appropriate proceedings under this chapter or Labor Code Title 5 and TDI-DWC rules.

(d) If the commissioner determines that an IRO or a person conducting independent reviews has violated or is violating any provision of Insurance Code Chapter 4202 or this chapter, the commissioner may:

(1) impose sanctions under Insurance Code Chapter 82;

(2) issue a cease and desist order under Insurance Code Chapter 83; and

(3) assess administrative penalties under Insurance Code Chapter 84.

(e) If the IRO has violated or is violating any provisions of the Insurance Code other than Chapter 4202, or applicable rules of the department, sanctions may be imposed under Insurance Code Chapters 82, 83, or 84.

(f) The commission of fraudulent or deceptive acts or omissions in obtaining, attempting to obtain, or using a certificate of registration or designation as an IRO is a violation of Insurance Code Chapter 4202.

(g) If the commissioner determines that an IRO or a person conducting independent review has violated or is violating any provision of Labor Code Title 5 or rules adopted under Labor Code Title 5, the commissioner may impose sanctions or penalties under Labor Code Title 5.

(h) This chapter does not limit the ability of the commissioner of workers' compensation or TDI-DWC to make inquiries, conduct audits, receive and investigate complaints, and take all actions permitted by the Labor Code against an IRO or personnel employed by or under contract with an IRO to perform independent review to determine compliance with Labor Code Title 5 and applicable TDI-DWC rules.

History

Source Note: The provisions of this §12.302 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.303 Surrender of Certificate of Registration

(a) Under Insurance Code §4202.002(c)(2)(B) an IRO that enters into an agreed order with the department that includes surrendering its certificate of registration, must surrender the organization's certificate of registration immediately on the request of the department.

(b) Independent reviews will not be assigned to an IRO during a surrender of the IRO's certificate of registration.

(c) Surrender of an IRO's certificate of registration does not negate the requirement in §12.208(i) of this subchapter that an IRO must retain information generated and obtained by the IRO in the course of a review for at least four years or the obligation to complete all independent reviews assigned to the IRO before its the surrender of the certificate of registration.

History

Source Note: The provisions of this §12.303 adopted to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

Subchapter E FEES AND PAYMENT

28 Tex. Admin. Code § 12.401 Fees

(a) The commissioner will establish, administer, and enforce the application and renewal of certificate of registration fees under this section in amounts not greater than necessary to cover the cost of administration of this chapter.

(b) Fees for independent review will be determined by the commissioner, and will reflect in general the market value of services rendered.

History

Source Note: The provisions of this §12.401 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.402 Classification of Specialty

Fees for independent review will be based on a two-tiered structure of specialty classifications as follows:

(1) Tier one fees will be for independent review of medical or surgical care rendered by a doctor of medicine or doctor of osteopathy.

(2) Tier two fees will be for independent review of health care services rendered in the specialties of podiatry, optometry, dental, audiology, speech-language pathology, master social work, dietetics, professional counseling, psychology, occupational therapy, physical therapy, marriage and family therapy, chiropractic, and chemical dependency counseling, and any of their subspecialties.

History

Source Note: The provisions of this §12.402 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.403 Fee Amounts

(a) Fees to be paid to IROs by utilization review agents and other payors for each independent review are as follows:

(1) tier one: $650; and

(2) tier two: $460.

(b) The IRO fees specified in subsection (a) of this section include an amended notification of decision if the department determines the initial notification of decision is incomplete. The amended notification of decision must be filed with the department no later than five working days from the IRO's receipt of notice from the department that the initial notification of decision is incomplete.

History

Source Note: The provisions of this §12.403 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.404 Payment of Fees

(a) IROs must bill utilization review agents or payors, as appropriate, directly for fees for independent review.

(b) IROs may also bill utilization review agents or payors, as appropriate, for copy expenses related to reviews as set out in §12.205 of this chapter.

(c) Utilization review agents or payors, as appropriate, must pay IROs directly within 15 days of receipt of invoice. For workers' compensation network and nonnetwork disputes, the IRO fees must be paid under §133.308 of this title.

(d) Utilization review agents may recover from the payors the costs associated with the independent review.

History

Source Note: The provisions of this §12.404 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.405 Failure To Pay Invoice

Failure by utilization review agents or payors, as appropriate, to pay invoices from an IRO within 15 days of receipt is a violation of §12.404(c) of this subchapter and subject to enforcement action and penalty under §12.302 of this chapter.

History

Source Note: The provisions of this §12.405 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.406 Application and Renewal of Certificate of Registration Fees

The fee to be paid to the department for the original application for a certificate of registration as an IRO is $1000. The fee for renewal of a certificate of registration is $400. There is no fee for reporting a material change to a certificate of registration as an IRO.

History

Source Note: The provisions of this §12.406 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

Subchapter F RANDOM ASSIGNMENT OF INDEPENDENT REVIEW ORGANIZATIONS

28 Tex. Admin. Code § 12.501 Requests for Independent Review

Requests for independent review must be made to the department on behalf of the patient by the utilization review agent under Insurance Code Chapter 4201, Subchapter I and Chapter 19, Subchapters R and U of this title; Chapter 10 of this title; Chapter 133 of this title; Chapter 134 of this title; or by a health insurance carrier, health maintenance organization, or managed care entity under Civil Practice and Remedies Code §88.003(c).

History

Source Note: The provisions of this §12.501 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

28 Tex. Admin. Code § 12.502 Random Assignment

(a) The department will randomly assign each request for independent review to an IRO and will notify the utilization review agent and the health insurance carrier, health maintenance organization, managed care entity, or other payor requesting the independent review, the IRO, the patient or a representative of the patient, and the provider of record of the assignment.

(b) The department will screen payors and utilization review agents for potential conflicts of interest with the IRO before making an assignment to the IRO. The IRO must screen its physicians and other providers conducting independent review for potential conflicts of interest. The department has the discretion to determine whether conflicts exist.

(c) IROs will be added to the list from which random assignments for independent reviews are made in order of the date of issuance of the certificate of registration by the department.

(d) The department will randomly assign IROs chronologically from the list of IROs, with ultimate assignment to the first in line with no apparent conflicts of interest.

(e) Assignment of an independent review to an IRO moves the IRO receiving the assignment to the bottom of the assignment list.

(f) Independent reviews will not be assigned:

(1) to an IRO during the 30 days before the anniversary date of the issuance of the IRO's certificate of registration unless the completed application for renewal of its certificate of registration and the application fee have been received by the department; or

(2) during the time that an IRO has surrendered its certificate of registration under §12.303 of this chapter and Insurance Code §4202.002(c)(2)(B).

(g) Nonselection for presence of conflicts of interest does not move the IRO to the bottom of the assignment list. The IRO retains its chronological position until selected for independent review.

History

Source Note: The provisions of this §12.502 adopted to be effective November 26, 1997, 22 TexReg 11363; amended to be effective December 26, 2010, 35 TexReg 11281; amended to be effective July 7, 2015, 40 TexReg 2538.

Subchapter G INDEPENDENT REVIEW OF PREAUTHORIZATION EXEMPTIONS

28 Tex. Admin. Code § 12.601 Preauthorization Exemptions

(a) In this section, the following words and terms have the following meanings unless context clearly indicates otherwise.

(1) Adverse determination regarding a preauthorization exemption--Has the same meaning as defined in §19.1730 of this title (relating to Definitions).

(2) Issuer--Has the same meaning as defined in §19.1730 of this title.

(3) Physician--Has the same meaning as defined by Insurance Code §843.002, concerning Definitions.

(4) Preauthorization exemption--Has the same meaning as defined in §19.1730 of this title.

(5) Provider--Has the same meaning as defined in Insurance Code §843.002.

(b) An independent review of an adverse determination regarding a preauthorization exemption, the independent review organization (IRO) that performs the review, and the appropriate issuer are subject to Insurance Code Chapter 4201, Subchapter N, concerning Exemption from Preauthorization Requirements for Physicians and Providers Providing Certain Health Care Services, and the associated standards and requirements in this chapter, except as otherwise specified in this section.

(c) For purposes of this section, a physician or provider should be identified using the National Provider Identifier under which a physician or provider makes preauthorization requests.

(d) Notwithstanding §12.501 of this title (relating to Requests for Independent Review), an issuer must submit a request for independent review of an adverse determination regarding a preauthorization exemption to the department on behalf of a physician or provider.

(e) If a second random sample is requested under Insurance Code §4201.656(d), concerning Independent Review of Exemption Determination, and available as provided in §19.1733(e) of this title (relating to Retrospective Reviews and Appeals of Preauthorization Exemption Rescissions), the IRO must identify, from the list of eligible claims provided by the issuer, a second random sample of at least five and no more than 20 claims. The IRO must review each claim that the issuer retrospectively reviewed and determined did not meet the applicable medical necessity criteria and, if applicable, each claim included in the second random sample identified by the IRO. Consistent with Insurance Code §4201.656(b), the IRO may request any medical records needed to evaluate the claims subject to review and must provide at least three business days for receipt of records. Based on the total number of claims in the initial random sample and, if applicable, the second random sample, the IRO must determine whether to affirm or overturn the issuer's determination that less than 90 percent of the claims met the applicable medical necessity criteria.

(f) Appeals for an adverse determination regarding a preauthorization exemption to an IRO follow the department's process for assigning IROs under §12.502 of this title (relating to Random Assignment), except that notification under §12.502(a) will only be made to the IRO, the issuer, and the physician or provider.

(g) Section 12.206 of this title (relating to Notice of Determinations Made by Independent Review Organizations) does not apply to a review by an IRO under this section. An IRO must complete its review and provide timely notice to an issuer regarding its determination, consistent with the timeframe provided under Insurance Code §4201.656(c).

History

Source Note: The provisions of this §12.601 adopted to be effective September 1, 2022, 47 TexReg 5117.

Chapter 13 MISCELLANEOUS INSURERS AND OTHER REGULATED ENTITIES

Subchapter A STATEWIDE MUTUAL ASSESSMENT COMPANIES, LOCAL MUTUAL AID ASSOCIATIONS, AND BURIAL ASSOCIATIONS

28 Tex. Admin. Code § 13.1 Creation of New Groups, Clubs or Classes

No new group, club, or class may be created and made a part of any company or association unless the company or association applying for such new group, club, or class first receives the approval of the State Board of Insurance; nor shall a new group, club, or class be created unless the same is authorized by the Insurance Code. All applications for the creation of a new group, club, or class shall be made in writing to the State Board of Insurance, only when first authorized by proper action taken by the board of directors of the company or association making the application. Such application shall contain at least the following:

(1) A detailed plan for the creation of the proposed new group, club, or class.

(2) A statement setting forth the purposes for the creation of a new group, club, or class and the advantages to result to any and all company or association members who may be affected by the creation of the proposed new group, club, or class.

(3) If a new group, club, or class is to be created and formed from the members, or from a part of the members, of an existing group, club, or class, a full and complete statement and explanation must be submitted to the State Board of Insurance to establish that any proposed division of the mortuary fund or any proposed division of the expense funds owned by the members of all groups, clubs and classes to be affected will be made on a just, fair and equitable basis insofar as such proposed division of funds will affect the rights and interests of all policyholders concerned.

(4) If a new group, club, or class is to be created, it must be established that the same will inure to the best interests of each group, club, or class as may be affected, and that it will not damage the association.

(5) Before the creation of a new group, club, or class is approved, it must first be established:

(A) that the group, club, or class will be able to pay its policy benefits in full within the period of time provided by law;

(B) that the group, club, or class will limit its policy benefits on any one policy to an amount not to exceed $500 ($150 for burial associations) to be paid on any such policy issued by it during the period of its organization; except that the group, club, or class may provide for the payment of benefits up to $5,000 (not including burial associations) if it establishes in advance that it has and will continuously maintain adequate funds with which it can lawfully make full and complete payment of all benefits that may become due and payable during the period of organization;

(C) that the group, club, or class will obtain at least 500 members within the period of six months following the date of its organization, and will maintain at least 500 members at all times thereafter; and

(D) that adequate provision has been made to make refunds of any and all funds collected from applicants for membership in the event that at least 500 bona fide, premium-paying applicants for membership in the proposed new group, club, or class are not received within the six-month period organization.

(6) It must be established that any group, club, or class to be created is authorized by the bylaws of the company or association.

(7) It must be established that all policies issued to a member of any such new group, club, or class are alike with respect to the type of benefit or benefits afforded to every other member of the same group, club, or class.

History

Source Note: The provisions of this §13.1 adopted to be effective February 23, 1983, 8 TexReg 450.

28 Tex. Admin. Code § 13.2 Voting by Proxy

Members may vote by proxy as provided by law, in accordance with the bylaws and the terms of such proxies.

History

Source Note: The provisions of this §13.2 adopted to be effective February 23, 1983, 8 TexReg 450.

28 Tex. Admin. Code § 13.3 Policy Approval

(a) Documents must be submitted for approval.

(1) Forms must be submitted in duplicate, completed as John Doe Specimen. Typewritten forms may be submitted for preliminary review, but only printed forms will be accepted for approval and filing.

(2) The following forms are required to be submitted with each policy form:

(A) the application;

(B) the application for reinstatement; and

(3) No application, application for reinstatement, certificate, or policy of insurance or schedule of rates to be used therewith shall be acted upon until all of such items are in accordance with the Insurance Code and other applicable law, and all of such items will be acted upon simultaneously.

(b) Only approved forms may be used.

(1) No person, whether an organizer, agent, company or association or other legal entity may use, offer or deliver any application, application for reinstatement, certificate or policy of insurance, or endorsement or rider to a policy of insurance in an association or proposed association subject to these sections until such form has been approved by appropriate order of the State Board of Insurance, nor until the rates to be used in connection with such form have been filed with the State Board of Insurance. As to life insurance and burial policies only, see also the Insurance Code, Article 14.20.

(2) No application for a policy or for reinstatement of a policy may contain a proxy; provided, a proxy may appear below the signature of the applicant.

(1) Each form must be designated by a suitable form number which may be composed of numbers or letters or both. The form number should be sufficient to distinguish the form from all others used by the company. When any word, provision, format, or arrangement of a previously approved form is changed, a new form number must be assigned and the form resubmitted for approval. A mere reprinting where no change whatever is made in the policy or other form need not be resubmitted.

(2) The following must appear at the top of each form:

(A) the name of the company or association;

(B) the location of the principal office of the company or association; and

(C) the type of company or association, such as: "A Local Mutual Aid Association," "A Local Mutual Burial Association," or "A Statewide Mutual Assessment Corporation."

(3) The following must be stated on the front page of the policy:

(A) the names and ages of all those insured;

(B) the name of the beneficiary (except for burial association policies providing merchandise and service benefits);

(D) the amount of premium and mode of payment permitted shall be plainly stated. (On a family group policy with individual premiums, the amount of individual as well as the total premium should be shown);

(E) the effective date of the policy; and

(F) attention directed to any reduction or exclusion of benefits provided therein.

(4) Entire contract. The policy must state that the policy, the application therefor, the application for reinstatement, if any, and the constitution and bylaws of the association as it now exists or may be hereafter amended, shall constitute the entire contract, and that a copy of the application for the policy shall be attached thereto.

(5) Incontestable clause. Each certificate must provide that it shall be incontestable, after having been in force during the lifetime of the insured, for a period of two years from date of issue, except for nonpayment of dues or assessments.

(6) Grace period. The grace period shall be stated in the policy and shall be consistent with the provisions regarding same in the constitution and bylaws of the association.

(7) Reinstatement.

(A) If a policy is subject to reinstatement, the conditions under which a member will be reinstated shall be specified in the policy. A statement that a member may be "reinstated at the option of the company," or "by complying with such requirements as may be exacted by the company," or any similar language is not acceptable. A provision that the insured may be reinstated "upon furnishing evidence of good health," or similar language is acceptable.

(B) If nine months have elapsed between termination and reinstatement, a reinstatement fee not in excess of the membership fee may be charged and placed in the expense fund. A reinstatement fee may not be charged unless such nine months have elapsed.

(C) The reinstatement certificate shall be incontestable, after having been in force during the lifetime of the insured, for a period of six months from the date thereof, for any cause except nonpayment of assessments, unless the reinstatement is within the original two-year contestable period, in which case the contestable period may be extended for six months from the date on which the original contestable period would have expired.

(8) Notice of claim. If a policy is to contain a provision fixing the time within which the notice of claim must be given, such time must be fixed at not less than 91 days. The notice may be given to the nearest or any other convenient local agent of the company.

(9) Claim forms. If a policy provides that notice of claims must be filed on forms furnished by the association, it must also provide that written notice of claim given to the association shall be deemed due proof in the event the association fails upon receipt of notice to furnish the claimant, within 15 days, such forms as are usually furnished by it for filing claims.

(10) Action at law. The policy may not contain a provision limiting to less than two years after a cause of action shall accrue the time within which any action at law or in equity may be commenced.

(11) Statements of the insured.

(A) Statements as representations. All statements in the application shall, in the absence of fraud, be regarded as representations and not warranties.

(B) Misstatement of health. If the certificate is to provide that misstatement as to the health or physical condition of the applicant may void the policy within the contestable period, the application must so state in not less than 10-point type in language acceptable to the State Board of Insurance.

(C) Misstatement of age. Each certificate must provide that if the age of the insured has been misstated, the amount of insurance shall be such as the premium would have purchased at the correct age, based on rates in force at the death of the insured.

(12) Policy loans. Except as permitted by the Insurance Code, Article 14.64, the policy shall make no provision for policy loans.

(13) Rates and benefits. Rates must be quoted only for such ages and benefits as are on file with the State Board of Insurance. Benefits shall not be in excess of the amount of the deposit made by such company or association under the provisions of the Insurance Code, Article 14.10.

(14) Reduction of benefits. A policy may provide for reduced benefits only as authorized under the provisions of the Insurance Code, Article 14.20.

(15) The term "natural death" shall not be used in a policy.

(16) Misleading statements. Neither a policy nor any application form shall contain language or be in such form as to mislead the applicant or the policyholder as to the type of insurance afforded.

(17) Family group policies.

(A) Individual premium. There shall be a provision for a reduction of the total premium when a member dies by the amount of the premium being paid on behalf of the deceased member; provided, however, that this requirement shall not extend to policies providing for larger benefits upon the successive deaths of the insured.

(B) Family group premium. Family group premiums may be charged or collected when it has been shown that the company or association making the charge has made provision for keeping proper statistical records for the purpose of determining proper cost of insurance, and that a provision has been made as to the method of calculating any return of premium benefits.

(C) The application. The application must be signed by an applicant unless the applicant is a minor, in which event the application may be signed by a parent or guardian. It shall never be necessary that more than one applicant sign the application.

(18) Term policies. Except as permitted in the Insurance Code, Article 14.64, statewide mutual assessment companies shall not issue any certificate or policy upon a limited payment plan, nor guarantee or promise to pay any type of endowment or annuity benefits, but shall confine its operation to the issuance of a certificate or policy looking to continuous payment of premiums or assessments during the lifetime of the policyholder.

(19) Burial policies. In addition to the foregoing requirements, policies to be issued by local mutual burial associations shall provide:

(A) for payment of the benefit in certain stipulated merchandise and burial service, which shall be scheduled in the policy or certificate and approved by the State Board of Insurance as being of the reasonable value as stated in the face of the policy, unless the insured shall at the time said policy is issued elect to have same paid in cash. The policy shall show in writing the election made. If the association issuing said policy shall fail or refuse to furnish the merchandise and services provided for in the policy, the same shall be paid in cash; and

(B) that if a burial association is not given the opportunity to provide the merchandise and services stipulated in the policy, it shall be required to pay not less than the total amount paid into its mortuary fund for account of said policy in lieu of the stipulated merchandise and services unless a greater percent of the face value is specified in the policy.

(20) Each policy and application therefor shall contain language in type no smaller than that used for the benefit provisions of the policy to the effect that the company reserves the right to adjust premium rates by classes in accordance with the company's experience under the type of policy involved.

(d) Health, accident and hospitalization policy forms.

(1) Each form must be designated by a suitable form number which may be composed of numbers or letters or both. The form number shall be sufficient to distinguish the form from all others used by the company. When any word, provision, format, or arrangement of a previously approved form is changed, a new form number must be assigned and the form submitted for approval. A mere reprinting need not be resubmitted.

(2) The following shall appear at the top of each form:

(A) the name of the company or association;

(B) the location of the principal office of the company or association; and

(C) the type of company or association, such as: "A Local Mutual Aid Association," "A Local Mutual Burial Association," or "A Statewide Mutual Assessment Corporation."

(3) The provisions of all health, accident, and hospitalization policies shall be in compliance with the Insurance Code, Articles 3.70-1-3.70.10, and in compliance with the provisions of the Insurance Code, Chapter 14. In the event of a conflict, the provisions of Articles 3.70-1-3.70-10 control.

(4) No policy nor the application therefor may contain any statement to the effect that the policy is either "noncancellable" or "guaranteed renewable" unless it also states in the same part, section, or provision and in the same size and kind of type that the company reserves the right to adjust premium rates by classes in accordance with its experience under the type of policy involved and in conformity with the Insurance Code.

(5) Each policy shall contain language in type no smaller than that used for the standard provisions of the policy to the effect that the company reserves the right to adjust premium rates by classes in accordance with the company's experience under the type of policy involved and in accordance with the Insurance Code, Article 14.23, and each application shall state that the insurer is a mutual assessment company.

History

Source Note: The provisions of this §13.3 adopted to be effective February 23, 1983, 8 TexReg 450.

28 Tex. Admin. Code § 13.4 Requirement of Certain Descriptive Words as a Part of the Corporate Name

No company or association shall operate under a name that is misleading or confusing to the public. A burial association shall include the words "burial association" in its name.

History

Source Note: The provisions of this §13.4 adopted to be effective February 23, 1983, 8 TexReg 453.

28 Tex. Admin. Code § 13.5 Organization of a Local Mutual Aid Association or Local Mutual Burial Association

There is no present rule on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.5 adopted to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.6 Movement of Home Office

There is no present rule on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.6 adopted to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.7 Membership Fees

(a) The following are membership fee plans.

(1) Plan 1. The first three monthly assessments may be stipulated as a membership fee and may be placed in the expense fund. All other premiums or assessments shall be known as regular premium assessments and shall be divided as follows.

(A) The regular premium assessments on all life policies, including life coverages in accident and health policies, shall be divided so as to place an amount at least equal to the renewal net premium in the mortuary fund in accordance with approved statutory reserve standards adopted by the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund.

(B) The regular premium assessments on all health, accident, accidental death, sickness, and hospitalization policies shall be divided so that at least 60% of such premiums shall be placed in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All policy claims may be paid out of the mortuary fund.

(2) Plan 2. The first six monthly assessments may be stipulated as a membership fee and may be placed in the expense fund. All other premiums or assessments shall be known as regular premium assessments and shall be divided as follows.

(3) Plan 3. One hundred percent of the premiums of assessments for the first policy year on health, accident, accidental death, sickness, and hospitalization policies, excluding life coverages in such policies, may be stipulated as a membership fee and may be placed in the expense fund. All first-year claims shall be paid from the expense fund. All other premiums or assessments shall be known as regular premium assessments and divided so that at least 60% of such premiums are to be placed in the mortuary fund of the company or association. All other portions of the premiums or assessments may be placed in the expense fund. All second and subsequent year claims may be paid out of the mortuary fund. Plan 3 is not applicable to life policies or life coverages. Any company adopting Plan 3 for collection of membership fees must make the statutory deposit from the expense fund and replenish it from that fund when necessary. In lieu of a deposit from the expense fund, but in addition to the mortuary fund statutory deposit, a company may file a bond in the form and in an amount equal to the statutory deposit, executed by a licensed surety acceptable to the State Board of Insurance. The expense of such bond shall be borne by the expense fund.

(4) Plan 4. All premiums or assessments, including the first, shall be known as regular premium assessments and shall be divided as follows.

(b) Each company or association, other than those operating on the assessment as needed basis under the provisions of the Insurance Code, Article 14.31, shall adopt and follow one of the membership fee plans established by this section if it has not already done so, and shall have appropriate provisions therefor in its constitution and bylaws. It is not required that the same membership fee plan be adopted for both life and accident and health policies.

(c) Bylaws may provide that upon advance approval of the State Board of Insurance the board of directors may change the plan of operation to another plan or plans provided any plan adopted is in accordance with a plan then prescribed by the State Board of Insurance.

(d) At the time of receiving an application for a policy, the agent or other person acting for the company or association shall collect from the applicant all the funds required and shall give to the applicant a written receipt for such funds.

History

Source Note: The provisions of this §13.7 adopted to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.8 Operation and Management of Companies and Associations

(a) The board finds and declares that mutual assessment companies, local mutual aid associations and burial associations shall operate in the following manner and under the following conditions.

(1) The operation of such companies shall be mutual in character.

(2) The operation of such companies shall be on a nonprofit basis.

(3) The board of directors of the company shall maintain its control over the operations of such company and shall not divest itself of its duties and responsibilities to manage the affairs of such company for the benefit of the policyholders or members thereof.

(4) The board of directors of the company shall determine the amount of compensation to be paid to officers, directors, employees, agents, and managers, which compensation shall be reasonable and shall be only for personal services rendered and reimbursement for actual and necessary expenses incurred, and the board of directors shall also fix and determine the length of time such officers, directors, employees, agents and managers shall be so engaged and compensated.

(5) Any employment, general agency or general manager contract with the company shall have a reasonable cancellation provision whereby either the company or the employee, general agent, or general manager may cancel such contract for good cause.

(6) All persons who hold a general management or general agency contract and perform any services or functions thereunder, shall be bonded in an amount not less than that required of an officer responsible for the handling of funds.

(7) No officer, director, agent, manager or employee of a company shall pay or receive, directly or indirectly, for his personal use or benefit, anything of value as consideration or partial consideration for the resignation or election of an officer or director of any such company, or for transferring or assigning proxies or appointing a substitute in connection with any proxies, or for the sale of any asset of whatever kind or character belonging to such company or association.

(b) A copy of every management contract, amendment thereto, or assignment thereof shall be filed with the commissioner of insurance within 10 days from the date of its execution; or in the case of an assignment, within 10 days from the date on which notice of assignment was received by the association or company.

(1) The term "management contract" refers to any agreement for the rendition of services to the company or association, except such contracts as are to be performed within one year from the making thereof.

(2) The commissioner shall neither approve nor disapprove such filed contracts, amendments, or assignments; but if he finds them to be contrary to law, he will take such action as he deems appropriate under the law.

History

Source Note: The provisions of this §13.8 adopted to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.9 Books and Records, Minimum Requirements

(a) Each company or association shall hereafter maintain no less than the following records, which shall be the property of such company or association.

(1) A daily collection sheet (or other acceptable records) on which the following shall be recorded: date, policy number, name of insured, cash collected, amount retained by agents, month and amount of membership fee, and regular premium.

(2) A premium card on the face of which shall be recorded the insurance age, name and address of insured, year, month, and day of issue, name and address of beneficiary, policy number, date of policy, amount of policy, date of birth, amount of premium by mode, mortality table renewal net premium, and space allocated for remarks. On the front or back of the card, space must be provided for recording each premium payment and the date. The companies shall either have a reserve card file or maintain premium history cards in a manner which will permit the calculation of reserves.

(3) A cash book for recording all income for the benefit of the claim and expense funds, and for all payments from each fund.

(4) A policy register on which the following shall be recorded: policy number, name of insured, name and address of beneficiary, date policy issued, insured's date of birth, amount of benefit, and amount of premium by mode. Space should be left for remarks.

(5) A claim register on which shall be recorded the following: every reported claim by claim number, name of insured, name and address of beneficiary, policy number, date of policy, date of death, date proof was filed, date paid, amount of policy, and amount paid. Space must be left for remarks.

(6) A claim file, which is not considered complete unless it contains the following:

(A) an official certified copy of vital statistics records (if applicable);

(B) the cancelled and surrendered policy together with evidence showing payment of benefits provided in the policy, or a signed receipt of benefits in lieu of the surrendered policy (if applicable);

(D) cancelled checks for claim payments and the premium card of a deceased insured must also be available.

(7) A permanent investment file. Each company or association shall hereafter establish and maintain an investment file or a record of each investment which such company or association has or hereafter makes, which record shall be maintained for a period of not less than five years after such investment has been transferred, sold, paid off, or otherwise disposed of. Such file or record shall include:

(A) the date of such investment;

(B) the original amount invested and any additions thereto;

(D) a complete description of the investment and a legal description of any property given in security therefor;

(E) the date of disposal or termination of such investment;

(F) the name and address of the person or organization to whom the investment was transferred or assigned; and

(G) the consideration received for such investment upon transfer or assignment.

(8) A minute book which shall contain a complete record of the proceedings of its members, board of directors, and committees which have any authority from the board of directors.

(9) A record of members which shall contain a record of the names and addresses of its members entitled to vote, which record shall be maintained at its principal office.

(b) In the event the company has more than one group, club, or class, the mortuary fund of each group, club, or class shall be kept and maintained separately.

(c) A company may use computers and automatic equipment in keeping the records and books required by subsection (a)(1)-(5) and (9) of this section, provided the information or record is available and maintained under verifiable, usual, and customary insurance accounting standards. Computers and automatic equipment may be used to supplement the records required to be kept under subsection (a)(6)-(8) of this section, but cannot be used to generate a substitute for the written records required in subsection (a)(6)-(8) of this section without the prior written permission of the commissioner.

(d) All books and records of any company or association shall be maintained at either its principal office or its registered office, which must be located within its authorized territory.

(e) Suggested forms for records of local mutual aid and burial associations.

Attached Graphic

History

Source Note: The provisions of this §13.9 adopted to be effective January 1, 1976; amended to be effective October 31, 1984, 9 TexReg 5425.

28 Tex. Admin. Code § 13.10 Merger under the Insurance Code, Article 14.13

(a) No association or company shall merge with another association or company nor transfer any part or group of its membership to another association or company nor merge nor transfer members from one group to another within an association or company without first obtaining the consent of the commissioner of insurance. The commissioner of insurance may not consent to any such merger or transfer except after a complete investigation into the facts and a determination by him that such transfer or merger is to the advantage of the association or company or groups to be affected.

(b) In effecting such merger or transfer, the provisions of the Texas Nonprofit Corporation Act shall be followed to the extent that such provisions are applicable and such duties as are required of the secretary of state under such Act shall be performed by the commissioner of insurance.

(1) whether such merger or transfer was duly authorized in accordance with the articles of association or articles of incorporation of the respective associations or companies and in accordance with the bylaws of the respective associations or companies;

(2) whether such merger or transfer was duly authorized in accordance with the provisions of the Texas Nonprofit Corporation Act and other applicable statutes and in conformity with the applicable rules of the State Board of Insurance;

(3) the minutes of the respective membership and boards of directors' meetings concerning such merger and whether such minutes contain the text of the resolutions and motions adopted and a tabulation of votes upon each motion and resolution;

(4) the terms of the plan of merger;

(5) the terms of the articles of merger;

(6) the terms of the certificate of assumption or other certificate which is proposed to be issued to the members being transferred;

(7) the financial condition of each association or company and of each group, club, or class affected by such merger, including a statement setting forth the number of members and amount of assets and liabilities of each fund being transferred;

(8) such statements as are required under the provisions of the Texas Nonprofit Corporation Act, Article 5.04;

(9) if, under the terms of the merger, all of the members of an association or company are being transferred, whether such association has surrendered for cancellation its articles of association or articles of incorporation, its constitution and bylaws and its current certificate of authority.

(d) After a public hearing, if it be found that such merger is to the advantage of the associations or companies or groups to be affected, the commissioner of insurance shall enter an order consenting to such merger and the associations or companies or groups affected shall thereupon be authorized to proceed to consummate such merger and to issue and deliver the applicable certificate of assumption or other certificate to the members being transferred. Such order of the commissioner of insurance shall constitute a certificate of merger within the meaning of the Texas Nonprofit Corporation Act, Article 5.05. If, after a public hearing, the commissioner of insurance is unable to find that such merger is to the advantage of the associations or companies or groups to be affected, the commissioner of insurance shall enter an order to that effect and such merger shall not be consummated.

History

Source Note: The provisions of this §13.10 adopted to be effective January 1, 1976; amended to be effective May 3, 1983, 9 TexReg 5425.

28 Tex. Admin. Code § 13.11 Status of Exempt Associations

There is no present rule on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.11 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 13.12 Assessments and Rate Schedules

(a) All rate schedules to be used by a company or association shall be first adopted in accordance with the bylaws or articles of association of such company or association and shall be submitted in duplicate to the State Board of Insurance prior to the use of such rates.

(b) All rate schedules to be used by a company or association shall be file-marked by the State Board of Insurance and a duplicate copy forwarded to the company or association. Each company or association shall maintain the file-marked copy in its permanent files.

History

Source Note: The provisions of this §13.12 adopted to be effective January 1, 1976; amended to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.13 The Use of Mortuary Funds for the Purpose of Defending Contested Claims

There is no present rule on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.13 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 13.14 Ownership and Investment of Assets

(a) Ownership of assets.

(1) No company or association funds may be disbursed for the purpose of purchasing or investing in any asset unless such asset thereby becomes the property of the fund from which the disbursement is made, but this requirement shall not prohibit an unequivocal transfer to the mortuary fund from the expense fund.

(2) No company or association may permit any asset belonging to such company or association to be held, registered, or deposited in any name other than that of the fund and company or association owning such asset.

(3) Each company or association shall at all times have direct control and supervision over each asset owned by such company or association.

(b) Investment of assets.

(1) Mortuary funds and expense funds other than surplus funds may be invested only in such securities as are qualified investments for reserve funds of domestic legal reserve life insurance companies.

(2) The expense fund may be invested in such securities as are qualified investments for reserve or surplus funds of domestic legal reserve life insurance companies.

(3) All income derived from the investment of mortuary funds shall be placed in the mortuary fund.

(4) The income derived from the investment of expense funds may be placed either in the expense fund or in the mortuary fund.

History

Source Note: The provisions of this §13.14 adopted to be effective January 1, 1976; amended to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.15 Beneficiaries under Burial Policies

There is no present rule on this subject except §13.3(c)(3)(B) of this title (relating to Policy Approval). Licensees should refer to statutory law.

History

Source Note: The provisions of §13.15 adopted to be effective January 1, 1976; amended to be effective May 3, 1983, 8 TexReg 1294.

28 Tex. Admin. Code § 13.16 Connection Between Two or More Companies Through Common Management

There is no present rule on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.16 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 13.17 Conversion or Reinsurance of Entire Membership into Legal Reserve Companies under the Insurance Code, Article 14.61

(a) Approval of a plan of conversion or reinsurance under Article 14.61 must be obtained from the commissioner of insurance prior to the time any such plan is submitted to the membership of any company or association for their ratification or rejection. When the commissioner of insurance has entered a written order approving such plan of conversion or reinsurance or approving such plan as amended to meet the requirements of the commissioner of insurance as provided by law, the plan of conversion or reinsurance shall be submitted to the members of the company or association affected for their ratification or rejection, and such submission shall be made in the manner provided by law and these sections.

(b) The following procedure shall be followed in submitting a plan of conversion or reinsurance to the commissioner of insurance.

(1) A complete outline of the plan, together with all exhibits necessary to show compliance with the applicable statutes, which outline shall be duly verified and submitted to the commissioner of insurance in writing in quintuplicate (five copies).

(2) The plan submitted shall set out all facts pertinent thereto. Approval of the plan may be given by the commissioner of insurance only after a public hearing held following due notice and only after it has been established that:

(A) the plan is in conformity with the Insurance Code, Article 14.61, and other applicable statutes and in conformity with these sections; and

(B) the written application to the commissioner of insurance has been authorized by proper action of the board of directors of each company or association involved, and that a true and correct copy of the minutes of the meetings of such boards of directors, duly certified, be submitted with the applications.

(3) As exhibits attached to the written application, the following information and documents in blank form must be furnished on behalf of each mutual assessment company or association involved.

(A) A copy of the form of notice of each membership meeting, which notice is to be sent to the policyholders to be affected by the proposed plan of conversion or reinsurance. The form of notice must provide the following:

(i) the date, hour, and place of the meeting of the membership;

(ii) the name of the company or association and the date of the notice, such notice to bear the signature (actual or facsimile) of the secretary or other appropriate officer of such company or association;

(iii) an accurate summary of the plan and the reasons for the conversion or reinsurance; and

(iv) a list of enclosures, which shall include a copy of the proposed reinsurance agreement if reinsurance is involved, a copy of the proposed certificate or assumption, and a copy of the ballot to be used in voting by mail.

(B) The form of the affidavit to be executed by the secretary (verified as required by law) showing that the notice of the membership meeting was mailed to each member at the last known address of said member as reflected by the records of such company or association, and the date of the mailing of the notice.

(C) A statement or outline giving the proposed procedure to be followed at the membership meeting of the mutual assessment companies or associations affected, which statement or outline shall provide:

(i) a tabulation giving the number of members who appear at the membership meeting in person;

(ii) a tabulation giving the number of members represented at the membership meeting by a special proxy;

(iii) a tabulation giving the number of members voting by mail ballot;

(iv) a statement that the procedure, purpose, and probable effect of such reinsurance or conversion will be fully explained to the members at the meeting;

(v) a copy of the proposed resolution or motion to be adopted by the members approving such plan;

(vi) provisions that the minutes of such membership meeting will be duly recorded and signed by the president or vice-president and the secretary or an assistant secretary of such company or association, and that such minutes will reflect the date, time, and place of such membership meeting and the matters considered and action taken at such meeting;

(vii) a statement of any other action proposed to be taken at such membership meeting;

(viii) a copy of the proposed resolution or motion to be submitted to the members dissolving or converting the mutual assessment company or association and authorizing the surrender of its articles of incorporation or articles of association and its certificate of authority to the commissioner of insurance for cancellation;

(ix) if the plan involves a conversion, copies of the proposed articles of incorporation and all other papers required to effect the organization of a company under the Insurance Code, Chapter 11, and under the applicable provisions of the Texas Business Corporation Act.

(4) If the plan involves reinsurance, the following must be furnished by the assuming company as exhibits attached to the written application:

(A) the minutes of the meeting of the board of directors of the assuming company approving the plan of reinsurance and authorizing the officers of such company to enter into the reinsurance agreement involved in the plan;

(B) a copy of the reinsurance agreement involved in such plan, which agreement shall comply with the provisions of the Insurance Code, Article 14.16, shall state the date, hour, and minute when the agreement is to become effective, shall provide that the assuming company will assume all of the liabilities of the mutual assessment companies or associations being reinsured including making provisions for proper credit for advance premiums paid, and that the mutual assessment companies or associations being reinsured shall be dissolved and their certificates of authority and articles of association or articles of incorporation shall be surrendered to the commissioner of insurance for cancellation upon consummation of the plan; and

(C) a financial statement setting forth the current financial condition of the legal reserve life insurance company, including therein information as to all liabilities, contingent or otherwise.

(5) Whether such plan involves reinsurance or conversion, the following, in blank form, must be furnished as exhibits attached to the written application:

(A) the proposed certificate of assumption or policy, which shall be in conformity with the provisions of the Insurance Code, Chapters 3 and 11, as applicable, and shall not contain any provisions prohibited by the Insurance Code, Chapter 3;

(B) the form of the letter of transmittal to be sent with the assumption certificate or policy, in which letter the member shall be furnished a copy of the plan, or, in lieu thereof, an accurate summary of the plan and the reasons for the conversion or reinsurance and advised that the member may refuse to accept the assumption certificate or policy, that he or she may make request for his actuarial portion as of a certain date within 60 days following the date of conversion or reinsurance (if notice is not sent to the policyholder on the effective date of the conversion or reinsurance, the policyholder will have 60 days from the date the notice is mailed to request the actuarial portion) and that, upon request by the member to the association or company, he or she shall be advised as to the actuarial portion of the mortuary fund as of a certain date to which he or she may be entitled; and

(C) a current statement of the condition of the affairs of each mutual assessment company or association affected by such reinsurance or conversion, which statement shall set forth the following minimum facts:

(i) the number of bona fide, premium paying members;

(ii) the amount of the mortuary fund balance;

(iii) the amount of the expense fund balance; and

(iv) a list of all unpaid claims and liabilities, contingent or otherwise.

(c) Following the issuance by the commissioner of insurance of a written order approving such plan of conversion or reinsurance, or approving such plan as amended to meet the requirements of the commissioner of insurance as provided by law, notice of the special membership meeting to be held by each mutual assessment company or association involved shall be mailed to the respective members not less than 15 days nor more than 50 days prior to the date such meeting is to be held, but in no event shall such meeting be held until notice has been given in accordance with the constitution and bylaws of the respective mutual assessment company or association.

(1) The following items shall be enclosed with the notice of meeting sent to each member of all the mutual assessment companies or associations affected by such plan:

(A) an exact copy of the proposed reinsurance agreement;

(B) an exact copy of the proposed certificate of assumption; and

(2) If more than one mutual assessment company or association is involved, the respective membership meetings must be held separately and at the time and place set out in the notice of such meeting. The proposed reinsurance agreement must be read to the members at each such membership meeting, and the members must be given ample opportunity to discuss the reinsurance agreement or conversion. Each eligible member must be given an opportunity to vote upon the reinsurance agreement or conversion. The percentage of the membership needed for approval of such reinsurance agreement or conversion shall be the percentage required by law.

(3) Upon a proper and sufficient vote of the respective memberships of each mutual assessment company or association and upon proper action taken by the boards of directors, the authorized officers shall then proceed to certify to the commissioner of insurance, in duplicate, all action taken. The commissioner of insurance shall review the action taken to determine whether or not the approved plan of reinsurance or conversion and the applicable laws and regulations pertaining thereto were followed. The commissioner of insurance shall enter an appropriate order. No public hearing shall be required unless requested by a party at interest or unless deemed necessary by the commissioner of insurance. The certificate of assumption or policy shall be issued only after the commissioner of insurance has entered his order finding that the plan of reinsurance or conversion has been approved by the mutual assessment companies or associations.

History

Source Note: The provisions of this §13.17 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.18 Reinsurance Agreements under the Insurance Code, Article 14.62

Each contract of reinsurance entered into by companies or associations operating under the Insurance Code, Chapter 14, with legal reserve companies under the provisions of the Insurance Code, Article 14.62, shall become effective only after such contract has been approved by the commissioner of insurance. The commissioner of insurance shall not approve any such contract of reinsurance unless it be shown at a public hearing that the following conditions exist:

(1) that the legal reserve company is authorized to write life, health, and accident insurance in Texas and that such company has capital or surplus of at least $100,000;

(2) that such contract will be to the benefit of the members of the company operating under the provisions of the Insurance Code, Chapter 14;

(3) that upon cancellation of such contract the cancellation thereof shall not apply to risks theretofore assumed by the reinsurer for which premiums have been paid or become due;

(4) that reinsurance premiums may be paid from the mortuary fund or expense fund, or both; however, any premium paid from the mortuary fund shall not exceed the amount of premium currently received in the mortuary fund from the policies being reinsured but calculated separately upon each individual policy, and, additionally, the amount of such premium so paid from the mortuary fund shall not exceed the percentage of the total mortuary fund premium so individually calculated as the percentage of the risk reinsured applies to the total of the risk insured by the mutual assessment company. For example, if the mortuary fund portion of the annual premium of $10 for a $1,000 mutual assessment policy and one-half of the risk ($500) is reinsured, only $5.00 annually may be paid from the mortuary fund for the reinsurance;

(5) that the ceding company or association will set up and maintain current and adequate records which will reflect the true status of all policies or risks reinsured;

(6) that no officer, director, agent, or employee of the ceding company shall receive any commission or remuneration in any manner for procuring a reinsurance agreement between the ceding company and a reinsurer, except that dividends or profit sharing agreements may be effected whereby the mortuary or claim fund shall be the recipient; and

(7) that no credit shall be allowed to any ceding insurer for reinsurance made, ceded or renewed, as an admitted asset or as a reduction of liability, unless by the terms of the written reinsurance agreement the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding insurer under any policy or contract reinsured without diminution because of the insolvency of the ceding insurer, nor unless under the contract or contracts of reinsurance the liability of such reinsurance is assumed by the assuming insurer or insurers as of the same effective date.

History

Source Note: The provisions of this §13.18 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.19 Certain Prohibited Practices

(a) The furnishing of free ambulance service, reduction of rates and understatement of age are inducements to the policyholder which are discriminatory and are a rebate of the premium to that extent; no insurer may engage in these practices.

(b) No insurer may misrepresent policy provisions and benefits or engage in misleading advertising.

(c) The employment of an agent by the association and the acting as an agent by the individual without first obtaining a license from this department is a violation of the Insurance Code, Article 12.07.

(d) Unborn babies are not persons in being upon whom a life insurance policy may be written and the insurer is wholly without the power to make such a contract. The acceptance of risks which may be reasonably expected to die within a short time after the policy is written is a fraud upon the association and the other policyholders who are members of it. No insurer may insure the risks specified in this subsection.

(e) The alteration of policy forms and provisions without advance approval by the State Board of Insurance is a violation of the Insurance Code, Article 14.18.

History

Source Note: The provisions of this §13.19 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.20 Availability of Company Records to the Membership

There is no present section on this subject. Licensees should refer to statutory law.

History

Source Note: The provisions of this §13.20 adopted to be effective January 1, 1976.

28 Tex. Admin. Code § 13.21 Liabilities

(a) General. Every liability, contingent or otherwise, shall be disclosed in accordance with sound accounting practice in each financial statement of the condition of the company or association.

(b) Contingent liabilities. Whenever funds, as authorized by the board of directors, are borrowed from any source for the purpose of association or company business, as for example, to acquire new business by merger, and the repayment of such funds is contingent upon the availability of funds in the expense fund over and above all other obligations of the expense fund, the contingent obligation to repay shall be considered as a nonstatement liability if the agreement for the repayment of the obligation contains a clause substantially as follows: "The obligation herein provided for shall be repayable, both as to principal and interest, from the expense fund of __________ Company, only after ample provision has been made for the payment of all other obligations of the expense fund of __________ Company, and shall not under any circumstances be either due or payable unless sufficient funds of the expense fund are available with which to pay the sum free from any other expense fund obligation as provided by the laws of the State of Texas and the rules and regulations of the State Board of Insurance."

(c) Releases. Any obligations of a company or association which might otherwise be considered as a general liability may be treated as a nonstatement liability provided that the holder of such obligation releases all right of repayment from the mortuary fund and all rights of repayment from the expense fund except upon a contingent basis and accepts in lieu of all other rights, contracted or otherwise, an agreement for repayment containing a clause substantially similar to the clause quoted in subsection (b) of this section.

History

Source Note: The provisions of this §13.21 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.22 Minutes of Directors and Membership Meetings

(a) Minutes shall be kept and preserved of all meetings of the membership, and of all meetings of the board of directors. Whenever action is taken at any such meeting upon any matters hereinafter set out, the complete minutes relating to such action, duly verified as required by law shall be promptly filed, in duplicate, with the commissioner of insurance. One authenticated copy of such minutes shall be returned to the company or association and it shall be maintained in the permanent records thereof. Any action pertaining to any of the following matters affecting the operation of a company or association are subject to this section:

(1) election of officers or directors and the designation of, or a change in the designation of, the officer or other person or persons responsible for the handling of the funds of the company or association;

(2) mergers;

(3) reinsurance agreements;

(4) amendments to the constitution and bylaws;

(5) amendments to the articles of association or articles of incorporation;

(6) any change or modification in the rates to be charged on policies then in force;

(7) dissolution of the company or association; and

(8) the execution, transfer, assignment or change in any contract of management, employment, or general agency.

(b) The commissioner of insurance may require other minutes to be filed when he deems it necessary. The filing of any minutes shall not constitute approval by the commissioner of insurance of the action taken as reflected in such minutes.

History

Source Note: The provisions of this §13.22 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.23 Rate Increases

(a) With the consent of the State Board of Insurance, a local mutual burial association may change its rates by adopting and filing with the State Board of Insurance a new rate schedule, but in each instance each rate must be within the minimum and maximum as promulgated by the State Board of Insurance.

(b) Any changes in rates of local mutual aid associations and statewide mutual assessment corporations shall be filed with the commissioner of insurance along with the minutes pertaining thereto as required under these sections.

(c) Applications for approval of rate increases must be submitted on forms furnished by the State Board of Insurance or forms acceptable to the State Board of Insurance.

History

Source Note: The provisions of this §13.23 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.24 Procedure for Amending Constitution and Bylaws

(If articles of association are changed, the same procedure should be followed as for amending constitution and bylaws.)

(1) The constitution and bylaws must be amended in accordance with the Texas Insurance Code, Article 14.05, which reads substantially as follows: "Bylaws of any association may be amended by a majority of the members of the association present when ratified by the board of directors, but only at meetings called for that purpose, or at regular meetings. Amendments to the bylaws shall not be effective until approved by the commissioner of insurance. Notices of all meetings, whether regular or special, at which amendments to bylaws will be considered, must be mailed to all members. Such notices must contain full copies of the proposed changes in the bylaws and a fair explanation of the intent and effect thereof.''

(2) To avoid the necessity of declining to approve the purported amendments because of deficiency in the notice, it is suggested that such notices be submitted to the commissioner of insurance before they are mailed to the members.

(3) After the meetings, the following must be submitted to the commissioner of insurance:

(A) two copies of the printed notice to members accompanied by an affidavit of the secretary that the notice was mailed by first class mail to every member;

(B) two copies of the minutes of the membership meeting reciting the action taken, duly signed by the appropriate officers;

(C) two copies of the minutes of the meeting of the board of directors ratifying the action taken by the membership, duly signed by the appropriate officers; and

(D) two copies of the amendment as adopted, duly certified by the president and secretary.

(4) A hearing may be required by the commissioner of insurance.

(A) If a hearing is to be held, 10 days notice thereof will be given.

(B) All documents submitted shall be verified as required by law.

History

Source Note: The provisions of this §13.24 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.25 Conversion or Change of Name From a Burial Association to a Local Mutual Aid Association

(a) The name of a new association must be submitted and reserved before making any definite arrangements for conversion. To convert a burial association or change the name of a burial association or local mutual aid association, the constitution and bylaws and articles of association must be amended in accordance with the Insurance Code, Article 14.05, which reads substantially as follows: "Bylaws of any association may be amended by a majority of the members of the association present when ratified by the board of directors, but only at meetings called for that purpose, or at regular meetings. Amendments to the bylaws shall not be effective until approved by the commissioner of insurance. Notices of all meetings, whether regular or special, at which amendments to bylaws will be considered, must be mailed to all members. Such notices must contain full copies of the proposed changes in the bylaws and fair explanation of the intent and effect thereof."

(b) To avoid the necessity of declining to approve the purported amendments because of deficiency in the notice, it is suggested that such notices be submitted to the commissioner of insurance before they are mailed to the members.

(1) two copies of the printed notice to members accompanied by an affidavit of the secretary that the notice was mailed by first class mail to every member;

(2) two duly signed copies of the minutes of the membership meeting reciting the action taken;

(3) two duly signed copies of the minutes of the meeting of the board of directors ratifying the action taken by the membership;

(4) two copies of the amendment to the constitution and bylaws duly certified by the president and secretary;

(5) two copies of the amendment to the articles of association duly certified by the president and secretary:

(A) if the change is a change of name only, two copies of the endorsements or certificates of name change which are to be sent to each member stating the change in the name;

(B) if the change is a conversion from a burial association to a local mutual aid association, two copies of the assumption certificate which is to be issued by the converted company, and the assumption certificate should provide, in the event the burial policy does not have a designated beneficiary, an automatic beneficiary, and further grant to the policyholder the right to thereafter change the automatically designated beneficiary;

(6) $1.00 for the amended certificate of authority in the new name of the association;

(7) an application for amended certificate of authority;

(8) current certificate of authority must be surrendered for cancellation;

(9) two copies each of tentative drafts of policy form, application form, reinstatement application form, and rate schedule;

(10) bond; and

(11) statutory deposit.

(d) A hearing is required, and 10 days' notice of hearing will be given.

(1) All documents submitted shall be verified as required by law.

(2) Approval shall not be given to the amendments and the amended certificate of authority shall not be issued until the final printed copies of the policy, application, application for reinstatement, and rate schedule are in acceptable form.

(3) One copy of each document will be returned to the association for its permanent files.

History

Source Note: The provisions of this §13.25 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.26 Computation of Time

In computing any period of time for the mailing of notices of a meeting of the membership or board of directors of a mutual assessment company or association, the day of mailing and the day of meeting shall not be counted.

History

Source Note: The provisions of this §13.26 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1021.

28 Tex. Admin. Code § 13.27 Reserve Requirements

(a) General. The life insurance reserves required to be maintained by all mutual assessment associations shall be computed in accordance with recognized actuarial principles based upon the liability of the association as set out in its various life insurance contracts. In general, the following rules will apply.

(1) As required by the Insurance Code Article 14.15, §2, the reserve liabilities for all outstanding contracts of life insurance shall be computed as soon as possible after the end of each calendar year and a detailed copy of such valuation submitted to the State Board of Insurance. One copy of the valuation must be retained in the home office of the association and be available for the periodical examination of such association. The valuation submitted to the State Board of Insurance must include a recap and summary and be in such form as to enable the reserve analysts to verify the accuracy of such valuation based on the outstanding business as of date of valuation. Valuation forms will be supplied by the State Board of Insurance for those associations which desire to compute their reserves manually by group valuation methods. Machine valuations of reserves must include data sufficient to verify the accuracy and completeness of the valuation.

(2) If the association has computed its reserve liability based on the 1956 Chamberlain Table which provides for reserves calculated on a calendar year basis, the tabular reserve must be increased by an unearned net premium for policies for which the mode of premium payment is other than monthly. Such unearned net premium reserve will be the aggregate of the net premiums applicable to full months of insurance coverage subsequent to valuation date for which the contract premiums were paid prior to the date of valuation. The State Board of Insurance will accept a reasonable estimate of this unearned net premium in lieu of an amount determined by actual computation.

(b) Advanced premiums. All financial statements of the association must include a liability in both the expense fund and mortuary fund for their respective portions of gross premiums collected prior to premium due date.

(c) Unearned premium on accident and health policies. The computation of the unearned accident and health premium must be calculated in a manner described in the Insurance Code, Article 6.01, except that an unearned premium reserve is not required during the first policy year.

History

Source Note: The provisions of this §13.27 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.28 Uncollected Premiums

The association may take an asset in the mortuary fund for uncollected net premiums on policies for which the reserve has been included in the reserve valuation. No credit will be allowed for deferred premiums if a method adopted by the company or association for computing its reserve liability on outstanding policies is based on the 1956 Chamberlain Reserve Table. The State Board of Insurance will accept a reasonable estimate of the amount of this asset in lieu of an amount determined by actual computation.

History

Source Note: The provisions of this §13.28 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

28 Tex. Admin. Code § 13.29 Establishment and Maintenance of Permissive Deficiency Reserves

(a) At the time of determination (effective December 31, 1965):

(1) determine on a reasonable basis the amount of net assets of the mortuary fund of the mutual assessment company attributable to the various blocks of life and health and accident business. The various blocks of business to which proportionate parts of the net assets are to be allocated includes those blocks for which a separation of accounting for rating or other purposes has been required by the board or by the commissioner of insurance under various reinsurance and/or merger agreements or are otherwise required by law. In the absence of adequate records for determining mortuary fund balances for the various blocks, such allocations may be made on a reasonable basis taking into consideration past and prospective claim experience of such blocks;

(2) determine and allocate the amount of permissive deficiency reserve which will be applied against the reserves for the various blocks of life and health and accident business.

(b) After the initial determination of amounts of permissive deficiency reserves the company or association will maintain sufficient data recorded in its premium history and/or reserve valuation cards so as to make possible calculations of reserves when required and for determining rate increases as may be approved by the State Board of Insurance on the following blocks of business:

(1) life policies issued by the mutual assessment company;

(2) life policies assumed by reinsurance of other mutual assessment companies;

(3) life policies assumed by partial reinsurance of business from other mutual assessment companies if the block of business reinsured has a deficiency reserve;

(4) accident and health policies issued by the mutual assessment company;

(5) accident and health policies assumed by reinsurance of other mutual assessment companies;

(6) accident and health policies assumed by partial reinsurance of business from other mutual assessment companies if the block of business reinsured has a deficiency reserve.

(c) The permissive deficiency reserves for the separate blocks of business shall be reduced annually. The required annual reduction in the amount of the permissive deficiency reserve may be accomplished by any legal plan or method approved by the State Board of Insurance upon the association's application to be submitted prior to July 1, 1966. Such plan for the annual reduction of reserve deficiencies must be such as to produce reductions not less than the reductions determined in accordance with the following procedure which shall be applicable for each separate block of business.

(1) Upon the determination of the amount of the initial permissive deficiency in accordance with the applicable statutes and these sections, a deficiency ratio will be determined by dividing the amount of the initial deficiency by the amount of the initial reserve.

(2) The initial deficiency ratio will be decreased in 18 equal annual reductions to 0 with the first reduction to be made as of December 31, 1966.

(3) Upon the valuation each year of the permissive deficiency, the required reserve will be calculated and the appropriate deficiency ratio for that year as prescribed in paragraphs (1) and (2) of this subsection will be applied to the calculated reserve to determine the dollar amount of the reserve deficiency provided, however, that the reductions required under this subsection shall not be less in the aggregate than the cumulative amount of one-eighteenth per annum of the initial permissive deficiency.

(d) The permissive deficiency reserve for a block of business shall only be allowed against the aggregate reserves for that block of business. If the company reinsures a block of business upon which a permissive deficiency reserve exists, the remaining unpaid balance of the permissive deficiency reserve shall be transferred to the assuming company or association provided that the assuming company reduces the permissive deficiency reserve as would be required of the original mutual assessment company subject to applicable provisions of these sections.

(e) The board may, in lieu of approving a rate increase, accept an application for the restoration of a company or an association's permissive deficiency reserve which has been reduced under the provisions of subsection (c) of this section, if such company or association can demonstrate that its rate or mortality has been in excess of either assumed mortality or the rates of withdrawal have been less than the assumed rates or both.

History

Source Note: The provisions of this §13.29 adopted to be effective January 1, 1976; amended to be effective April 11, 1983, 8 TexReg 1025.

Subchapter B STIPULATED PREMIUM INSURANCE COMPANIES

28 Tex. Admin. Code § 13.101 Establishment and Maintenance of Permissive Deficiency Reserve

(a) At the time of reinsurance of a Chapter 14 association or company:

(1) Determine on a reasonable basis the amount of net assets of the mutual assessment company attributable to the various blocks of life and health and accident business. The various blocks of business to which proportionate parts of the net assets are to be allocated includes those blocks for which a separation of accounting for rating or other purposes has been required by the board or by the commissioner of insurance under various reinsurance and/or merger agreements or are otherwise required by law. In the absence of adequate records for determining the net assets applicable to the various blocks, such allocations may be made on a reasonable basis taking into consideration past and prospective claim experience of such blocks.

(2) Allocate the amount of permissive deficiency reserve in the stipulated premium company which will be applied against the reserves for the various blocks of life and health and accident business.

(b) After the reinsurance has been consummated, the company will maintain sufficient data recorded in its premium history and/or reserve valuation cards so as to make possible calculations of reserves when required and for determining rate increases or for reinsurance purposes, for board or commissioner approval based on the following separate blocks of business:

(1) life policies assumed from the first mutual assessment company reinsured;

(2) life policies issued by the stipulated premium company;

(3) life policies assumed by reinsurance of other mutual assessment companies;

(4) life policies assumed by partial reinsurance of business from other stipulated premium companies if the block of business reinsured has a deficiency reserve;

(5) accident and health policies assumed from the first mutual assessment company reinsured;

(6) accident and health policies issued by the stipulated premium company;

(7) accident and health policies assumed by reinsurance of other mutual assessment companies; and

(8) accident and health policies assumed by partial reinsurance of business from other stipulated premium companies if the block of business reinsured has a deficiency reserve.

(c) The permissive deficiency reserves for the separate blocks of business shall be reduced annually. The required annual reduction in the amount of permissive deficiency reserve may be accomplished by any legal plan or method acceptable to the State Board of Insurance which produces reductions in such deficiency not less than the reductions determined in accordance with paragraph (1) of this subsection or the company may, at its option, elect permissive deficiency reduction procedures in accordance with either paragraph (1) or (2) of this subsection.

(1) Procedure 1--applicable to each separate block of business.

(A) Upon the determination of the amount of the initial permissive deficiency in accordance with the applicable statutes and these sections, a deficiency ratio will be determined by dividing the amount of the initial deficiency by the amount of the initial reserve.

(B) The initial deficiency ratio will be decreased in 10 equal annual reductions to 0 with the first reduction to be made at the end of the calendar year following the year in which the initial deficiency was established.

(C) Upon the valuation each year of the permissive deficiency, the required reserve will be calculated and the appropriate deficiency ratio for that year as prescribed in subparagraphs (A) and (B) of this paragraph will be applied to the calculated reserve to determine the dollar amount of the permissive deficiency; provided, however, that the reductions required by this paragraph shall not be less in the aggregate than the cumulative amount of 10% per annum of the initial permissive deficiency.

(2) Procedure 2--applicable to each separate block of business. Following determination of the total of the initial permissive deficiency on all policies in accordance with the applicable statutes and these sections, the amount of the permissive deficiency at each subsequent accounting date shall be determined as follows:

(A) determine the sum of the amounts of the initial permissive deficiency on each policy remaining in force on such accounting dates;

(B) deduct therefrom at least 10% per annum of the total of the initial permissive deficiency, as originally determined on all policies, at each of such subsequent accounting dates.

(d) The permissive deficiency reserve for a block of business shall only be allowed against the aggregate reserves for that block of business. If the company reinsures a block of business from another stipulated premium company upon which a permissive deficiency reserve exists, the remaining unpaid balance of the permissive deficiency reserve shall be transferred to the assuming stipulated premium company provided that the assuming company reduces the permissive deficiency reserve as would be required of the original stipulated premium company subject to applicable provisions of these sections.

(e) The board may, in lieu of approving a rate increase, accept an application for the restoration of a company or association's permissive deficiency reserve which has been reduced under the provisions of subsection (c) of this section, if such company or association can demonstrate that its rate of mortality has been in excess of either assumed mortality or the rates of withdrawal have been less than the assumed rates or both.

History

Source Note: The provisions of this §13.101 adopted to be effective January 1, 1976; amended to be effective November 8, 1984, 9 TexReg 5544.

28 Tex. Admin. Code § 13.102 Life Policy Forms

(a) The reserve basis adopted by the company shall be shown on the rate schedule and may be shown in the policy.

(b) Family group policies, upon which the rate is calculated on an individual insured basis, shall contain a provision with reference to a reduction of premium in the event of the death of any insured by the amount of premium being paid on behalf of the deceased insured.

(c) Policies shall provide a grace period of at least 31 days for the payment of every premium after the first, which may be subject to an interest charge, during which month the insurance shall continue in force, which may stipulate that if the insured shall die during the period of grace the overdue premium will be deducted in any settlement under the policy.

(d) Policies shall provide that claims are to be paid within 60 days after receipt of due proof of claim.

History

Source Note: The provisions of this §13.102 adopted to be effective January 1, 1976; amended to be effective November 8, 1984, 9 TexReg 5544.

Subchapter C LLOYD'S PLAN INSURERS

28 Tex. Admin. Code § 13.201 Approval of Attorney in Fact

No original, additional, or substitute attorney in fact may act for a Lloyd's plan company until he or she is appointed by the underwriters of the Lloyd's plan company and is approved, after a hearing before the commissioner, as an attorney in fact for the Lloyd's plan company.

History

Source Note: The provisions of this §13.201 adopted to be effective March 1, 1985, 10 TexReg 578.

28 Tex. Admin. Code § 13.202 Distinction between Attorney in Fact and Deputy Attorney in Fact

(a) Attorney in fact.

(1) Wherein the terms "attorney in fact" and "actual attorney in fact" are used in the statutes or State Board of Insurance rules, they are synonymous.

(2) An attorney in fact has total authority to operate the Lloyd's plan company acting pursuant to authorization from the underwriters of the Lloyd's plan company under power of attorney.

(3) An attorney in fact need not be licensed by the State Board of Insurance as an agent pursuant to the Insurance Code, Article 21.14.

(b) Deputy attorney in fact.

(1) A deputy attorney in fact possesses some, but not all, of the powers of the attorney in fact as delegated by the attorney in fact. A deputy attorney in fact may be compensated for services rendered to the Lloyd's plan company.

(2) A deputy attorney in fact who, directly or indirectly, solicits, writes, signs, executes, or delivers any policy or certificate of insurance, or accepts premiums or binds the Lloyd's plan company on any policy or certificate of insurance must have an agent's license pursuant to the Insurance Code, Article 21.14.

History

Source Note: The provisions of this §13.202 adopted to be effective March 1, 1985, 10 TexReg 578.

Subchapter D RISK RETENTION GROUPS AND PURCHASING GROUPS

28 Tex. Admin. Code § 13.301 Purpose

The purpose of this subchapter is to regulate, to the extent permitted by law and dictated by sound public policy, groups doing business in Texas as risk retention groups or purchasing groups.

History

Source Note: The provisions of this §13.301 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.302 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Doing business in Texas as a risk retention group or purchasing group--

(A) operating in, soliciting members in, having members in, or having an office in, Texas; and

(B) claiming to be, representing itself to be, or operating as, a risk retention group or purchasing group.

(2) Purchasing group--The meaning given by the Insurance Code, Article 21.54.

(3) Risk retention group--The meaning given by the Insurance Code, Article 21.54.

History

Source Note: The provisions of this §13.302 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.303 Scope

The following two kinds of groups are subject to this subchapter:

(1) a group doing business in Texas as a risk retention group or purchasing group, which actually has the status of a risk retention group or purchasing group; and

(2) a group doing business in Texas as a risk retention group or purchasing group, but not actually having the status of a risk retention group or purchasing group because the group has not completed the registration process or does not conform to other statutory criteria.

History

Source Note: The provisions of this §13.303 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.304 General Prohibition

No organization or group may do business in Texas as a risk retention group or purchasing group without having the status of a risk retention group or purchasing group under the Insurance Code, Article 21.54.

History

Source Note: The provisions of this §13.304 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.305 Registration

A group violating the requirements described in this section shall not have the status of a purchasing group or risk retention group under the Insurance Code, Article 21.54.

(1) A group doing business in Texas as a purchasing group must first furnish notice to, and register with, the commissioner of insurance, pursuant to the Insurance Code, Article 21.54, §7.

(2) A group doing business in Texas as a risk retention group must first complete the process of being chartered or registered under the Insurance Code, Article 21.54, §3 or §4.

History

Source Note: The provisions of this §13.305 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.306 Operation by Members Only

(a) Every group doing business in Texas as a risk retention group shall be operated only by its members collectively.

(b) In this section, a group is operated only by its members collectively if the members collectively retain the power to direct the affairs of the group and to enter at arm's length into transactions with suppliers of goods and services.

(c) Any group or organization that fails to conform to this section shall not have the status of a risk retention group under the Insurance Code, Article 21.54.

History

Source Note: The provisions of this §13.306 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.307 Providing Other Than Liability Insurance

(a) A group doing business in Texas as a risk retention group shall not provide physical damage coverage, property coverage, surety bonds, or any insurance except:

(1) liability insurance; or

(2) reinsurance with respect to the liability of any other risk retention group, or any members of such other group, which is engaged in businesses or activities so that the group or member meets the requirement of the Insurance Code, Article 21.54, §2(6), for membership in the risk retention group which provides the reinsurance.

(b) A group doing business in Texas as a purchasing group shall not procure physical damage coverage, property coverage, surety bonds, or any insurance except liability insurance on a group basis.

(c) A group violating this section shall not have the status of a risk retention group or purchasing group under the Insurance Code, Article 21.54.

History

Source Note: The provisions of this §13.307 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.308 Requirement of Similar or Related Liability Exposure

This section states rules for a group doing business in Texas as a purchasing group or risk retention group, defining the requirement of similar or related liability exposure, pursuant to the Insurance Code, Article 21.54, §2(9) and (10). If a group violates any of the provisions in this section, the group does not meet the requirement. Any group or organization that fails to meet the requirement shall not have the status of a risk retention group or a purchasing group under the Insurance Code, Article 21.54.

(1) A group's membership shall not be based on various theories of potential legal liability. By way of example only, a professional liability exposure is not similar or related to a product liability exposure.

(2) A group's members must reasonably be able to engage in a joint loss prevention program.

(3) If a group's membership consists of businesses, all those businesses must be tied to the same kind of product or service. By way of example only, if a group's membership includes manufacturers and repairers, they all must manufacture or repair the same kind of product.

(4) If a group's membership consists of professionals who provide a service, all the members must provide the same kind of service.

History

Source Note: The provisions of this §13.308 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.309 Sanctions

(a) If an entity holding a certificate of authority in Texas is doing business in Texas as a risk retention group, but violates any one of §§13.305, 13.306, 13.307, or 13.308 of this title (relating to Registration, Operation by Members Only, Providing Other Than Liability Insurance; or Requirement of Similar or Related Liability Exposure), the State Board of Insurance may revoke the certificate of authority or impose other sanctions under the Insurance Code, Article 1.10, §7.

(b) If a group, other than a group described in subsection (a) of this section, is doing business in Texas as a purchasing group or risk retention group, without the status of a purchasing group or risk retention group, the group is subject to the same actions that the State Board of Insurance may take against an unauthorized insurer, in addition to any other actions.

History

Source Note: The provisions of this §13.309 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.310 Cease and Desist Orders

The following may be authorized persons or unauthorized persons, subject to emergency cease and desist orders under the Insurance Code, Article 1.10A and Article 21.21:

(1) a group doing business in Texas as a purchasing group or a risk retention group; or

(2) an individual acting for any such group.

History

Source Note: The provisions of this §13.310 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.311 Deceptive Acts or Practices

The following are deceptive acts or practices under the Insurance Code, Article 21.21:

(1) representing a group to be a purchasing group located in another state, when the group is actually located in Texas, according to the Insurance Code, Article 21.54, §2(14);

(2) soliciting members in Texas for a purchasing group, or for a group representing itself to be a purchasing group, when:

(A) the group's insurer is insolvent;

(B) the group's insurer is prohibited from engaging in the business of insurance by a court order or administrative order issued in any state; or

(C) the group is prohibited from operating by a court order or administrative order issued in the state in which the group is domiciled;

(3) soliciting members in Texas for a risk retention group, or for a group representing itself to be a risk retention group, when:

(A) the group is insolvent; or

(B) the group is prohibited from doing business by a court order or administrative order issued in the state where the group is chartered.

History

Source Note: The provisions of this §13.311 adopted to be effective March 8, 1991, 16 TexReg 1290.

28 Tex. Admin. Code § 13.312 Regulatory Fees

The regulated entities subject to the fees imposed by this section shall include all risk retention groups and purchasing groups defined in the Insurance Code, Article 21.54, §2(9) and (10), and doing business in this state. For filings and other actions on and after May 19, 1987, the State Board of Insurance shall charge these entities fees in accordance with the provisions of this section.

(1) Initial filing fee for risk retention groups chartered and licensed pursuant to the Insurance Code, Chapters 2, 8, 15, or 19. As provided in the Insurance Code, Article 21.54, §3(f), risk retention groups shall be required to pay a filing fee of $500.

(2) Initial filing fee for risk retention groups not chartered in this state. As provided in the Insurance Code, Article 21.54, §4(c), a filing fee of $250 shall be paid for the filing of an identifying statement pursuant to the Insurance Code, Article 21.54, §4(b)(1). This filing fee shall also include the cost of filing a plan of operation if required by the provisions of the Insurance Code, Article 21.54, §4(b)(2).

(3) Annual filing fee for risk retention groups not chartered in this state. As provided in the Insurance Code, Article 21.54, §4(e), risk retention groups shall pay a filing fee of $250 for the filing of the financial statement under the Insurance Code, Article 21.54, §4(d)(1).

(4) Initial filing fee for purchasing groups. As provided in the Insurance Code, Article 21.54, §7(a), purchasing groups who file with the commissioner of insurance the requisite notice that they intend to do business in this state shall pay a filing fee of $50 upon the submission of the notice.

(5) Filing fee for document served on commissioner as agent. As provided in the Insurance Code, Article 1.36 and Article 21.54, §§3(b), 4(b)(3), and 7(b)(4), a filing fee of $25 shall be paid for each document served on the commissioner of insurance of this state as agent for service of process under the Insurance Code, Article 21.54.

History

Source Note: The provisions of this §13.312 adopted to be effective March 8, 1991, 16 TexReg 1290; transferred effective September 1, 1993, as published in the Texas Register, October 19, 1993, 18 TexReg 7295; transferred effective September 1, 1993, as published in the Texas Register, November 5, 1996, 21 TexReg 10880.

28 Tex. Admin. Code § 13.313 Forms Required for Risk Retention Groups and Purchasing Groups

(a) Requirement for use of specific forms. Risk retention group or purchasing group filings and registrations under the Insurance Code, Chapter 2201, must be effected by using forms promulgated by the commissioner of insurance.

(b) Adoption by reference of forms. The commissioner of insurance adopts by reference standard forms as specified in paragraphs (1) - (6) of this subsection and subsection (c) of this section for use by risk retention groups and purchasing groups which are subject to the provisions of this subchapter and the Insurance Code, Chapter 2201. The forms are published by the Texas Department of Insurance, and copies of the forms are available from the Company Licensing and Registration Division, Texas Department of Insurance, Mail Code 305-2C, P.O. Box 149104, Austin, Texas 78714-9104. The following forms must be utilized, as applicable, under the provisions of this subchapter and the Insurance Code, Chapter 2201.

(1) Risk retention groups seeking to be chartered in this state pursuant to the Insurance Code Chapters 822, 861, and 883, must utilize Form RRG-A-120.

(2) Risk retention groups seeking to be chartered in this state pursuant to the Insurance Code, Chapter 942 must utilize Form RRG-A-121.

(3) Foreign or alien risk retention groups seeking to do business as a risk retention group in this state must utilize Form RRG-A-122.

(4) All risk retention groups and purchasing groups seeking to do business in this state must utilize Form RRG/PG PC1, for appointing the commissioner as agent for service of process.

(5) Purchasing groups filing a notice of intent and registering to do business in this state under the Insurance Code, §§2201.255 and 2201.256, must utilize Form PG1.

(6) Agents filing annual reports as required by the Insurance Code, §2201.007 must use Form PG3.

(c) Annual filing by purchasing groups. On or before July 1 each year, beginning in 2008, every purchasing group doing business in this state shall provide the commissioner of insurance with current information on Form PG1R; however, there shall be no filing fee for annual filings of Form PG1R after payment of the initial filing fee described in §13.312 of this title (relating to Regulatory Fees).

History

Source Note: The provisions of this §13.313 adopted to be effective March 8, 1991, 16 TexReg 1290; transferred effective September 1, 1993, as published in the Texas Register, October 19, 1993, 18 TexReg 7295; transferred effective September 1, 1993, as published in the Texas Register, November 5, 1996, 21 TexReg 10880; amended to be effective May 12, 2008, 33 TexReg 3773.

Chapter 15 SURPLUS LINES INSURANCE

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 15.1 Applicability

(a) This chapter applies to all surplus lines insurance transactions if Texas is the home state of the insured.

(b) Texas Department of Insurance rules applicable to licensing, regulation, and supervision of surplus lines agents and surplus lines insurers and transactions in effect before the effective date of an applicable section in this chapter apply in the adjudication of acts and transactions occurring before the effective date of the section.

History

Source Note: The provisions of this §15.1 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.2 Definitions

(a) The definitions in Insurance Code §981.002 and §981.071 apply to this chapter.

(b) The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

(1) Client--Any person to whom a surplus lines agent sells or attempts to sell a surplus lines insurance policy, or from whom an application for surplus lines insurance is accepted, or to whom advice and counsel on a surplus lines insurance policy is given for the purpose of selling a surplus lines insurance policy.

(2) Commissioner--The Texas Commissioner of Insurance.

(3) Comptroller--The office of the Texas Comptroller of Public Accounts.

(4) Person--An individual or entity as defined by Insurance Code §541.002(2).

(5) Stamping Office--The Surplus Lines Stamping Office of Texas created under Insurance Code Subchapter D, Chapter 981, and operating under a plan of operation as specified by §15.201 of this title. The organization is also commonly referred to as a service office by peer offices throughout the country.

(6) State--Any state, district, commonwealth, territory, and insular possession of the United States and any area subject to the legislative authority of the United States of America.

(7) Surplus lines agent--A person, whether an individual or entity, holding a surplus lines license issued by TDI under Insurance Code Chapter 981.

(8) TDI--Texas Department of Insurance.

(9) Timely filed--A transaction filed with the stamping office that meets the requirements of Insurance Code §981.105(a).

(10) Untimely filed--A transaction filed with the stamping office that does not meet the requirements of Insurance Code §981.105(a).

History

Source Note: The provisions of this §15.2 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.3 Regulation of Policies

A surplus lines insurance policy is subject to Texas regulation if the insured's home state is Texas. Under Insurance Code §981.002(5), an insured's home state is the insured's:

(1) principal place of business, which is the location from which the officers of an insured that is not an individual direct, control, and coordinate the insured's activities; generally, the insured's main headquarters; or

(2) principal residence, which is the state where the insured who is an individual resides for the greatest number of days during a calendar year.

History

Source Note: The provisions of this §15.3 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.4 Sanctions

(a) The Commissioner may impose any sanction or remedy in Insurance Code Chapter 82 or any other applicable laws or statutes if the Commissioner determines, after notice and an opportunity for hearing, that the applicant or license holder individually or through any officer, director, or shareholder:

(1) committed any action that would form the basis for sanctioning a general property and casualty agent or a managing general agent, as applicable to the surplus lines agent's other licenses, under the Insurance Code;

(2) failed to allow TDI or the comptroller to examine the surplus lines agent's accounts and records or failed to maintain surplus lines insurance business accounts and records as required by the Insurance Code and this chapter;

(3) failed to make and file all reports when due, as required by the Insurance Code and this chapter;

(4) failed to properly collect and pay required taxes and stamping fees on surplus lines gross premium or failed to submit tax reports as required by law or regulation;

(5) failed to otherwise maintain the qualifications for a surplus lines agent license; or

(6) is in violation of, or has failed to comply with the Insurance Code, this chapter, or any other applicable laws or regulations of this state.

(b) Except when Insurance Code §981.203(a-1) applies to a nonresident surplus lines agent, an agent's surplus lines license will not be renewed and the surplus lines agent may not act under the surplus lines agent license if the surplus lines agent fails to maintain or renew the surplus lines agent's license as a general property and casualty agent or managing general agent, as appropriate to the license status of the agent.

(c) A surplus lines agent whose license has been revoked or suspended will not have a license issued, renewed, or a suspension lifted until all fines, penalties, delinquent taxes, and delinquent stamping office fees the agent owes have been paid.

History

Source Note: The provisions of this §15.4 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.5 Minimum Content of Contracts

(a) Each new or renewal insurance contract, policy, certificate, cover note, or other confirmation of insurance purchased and delivered as surplus lines coverage under the Insurance Code must contain, at a minimum:

(1) the information required by Insurance Code §981.101;

(2) a statement designating the name and address of the individual to whom the Commissioner will mail service of process in accordance with the Insurance Code; and

(3) a stamping fee.

(b) As provided by Insurance Code §981.073(b), Insurance Code §981.101(b) does not apply to a new or renewal insurance contract, policy, certificate, cover note, or other confirmation of insurance purchased and delivered as surplus lines coverage under Insurance Code Chapter 981 if issued by a domestic surplus lines insurer.

(c) Under Insurance Code §981.076, a domestic surplus lines insurer must include with each new or renewal insurance contract, policy, certificate, cover note, or other confirmation of insurance purchased and delivered as surplus lines coverage under the Insurance Code the following statement: "This insurance contract is issued and delivered as surplus lines coverage under the Texas Insurance Code. The insurer is not a member of the property and casualty insurance guaranty association created under Insurance Code Chapter 462. Insurance Code Chapter 225 requires payment of a __________ (insert appropriate tax rate) percent tax on gross premium."

History

Source Note: The provisions of this §15.5 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.6 Forms

Applications, reports, and memorandums, required under the Insurance Code and by this chapter relating to surplus lines insurance must include all required information.

History

Source Note: The provisions of this §15.6 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.7 Submission of Applications, Notices, and Correspondence

(a) All submissions to the Commissioner or TDI required in this chapter must be sent to the appropriate physical, mailing, or electronic address:

(1) specified on the applicable TDI form being used; or

(2) listed on the TDI website for a particular submission.

(b) All submissions to the stamping office required in this chapter must be sent by a method acceptable to the stamping office.

History

Source Note: The provisions of this §15.7 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.8 Filing Requirements

(a) No report required to be filed under the Insurance Code or this chapter relating to surplus lines insurance will be deemed filed with TDI or the stamping office unless the documents submitted are correctly completed and signed on forms complying with §15.6 of this title.

(b) A correct surplus lines policy filing submitted to the stamping office will be deemed correctly executed and filed the day the transaction is posted by the stamping office.

(c) The surplus lines agent responsible for a filing must maintain the subject contract file, as specified in §15.110 of this title, at the agent's place of business in accordance with §15.108 of this title and must promptly submit the contract file to the stamping office on request. On mutual agreement, a representative of the stamping office may view the requested contract file at the agent's place of business.

(d) Nothing in this section limits TDI's ability to require the agent to submit information or reports as required by the Insurance Code or this chapter.

History

Source Note: The provisions of this §15.8 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.9 Becoming an Eligible Insurer

(a) The stamping office must evaluate surplus lines insurance policies, contracts, or other evidences of coverage for eligibility and compliance with filing requirements. The stamping office may request additional information from the surplus lines agent responsible for the filing if the information filed is not sufficient to make an evaluation in accordance with this section.

(b) Following its evaluation of filings under this section, the stamping office must provide the following written reports to TDI:

(1) Within 60 days of discovery, a report documenting any surplus lines insurance policy issued by an insurer that is not an eligible surplus lines insurer, any surplus lines insurance policy and contract that is of a type that is not compliant with the Insurance Code, and any act that requires a license that is performed by an unlicensed person.

(2) Promptly upon discovery, a report documenting any surplus lines insurance policy or contract that has uncorrected administrative or technical errors that the stamping office has asked the surplus lines agent to correct.

History

Source Note: The provisions of this §15.9 adopted to be effective December 30, 2018, 43 TexReg 8455.

Subchapter B SURPLUS LINES AGENTS

28 Tex. Admin. Code § 15.101 Licensing of Surplus Lines Agents

(a) Persons performing any of the following surplus lines insurance activities are required to have a surplus lines agent license:

(1) supervising unlicensed staff engaged in activities described in subsection (b) of this section, although unlicensed intermediary supervisors may supervise unlicensed staff engaging in these activities if the ultimate supervisor is licensed;

(2) negotiating, soliciting, effecting, procuring, or binding surplus lines insurance contracts for clients or offering advice, counsel, opinions, or explanations of surplus lines insurance products to agents or clients beyond the scope of underwriting policies or contracts, except for a general lines property and casualty agent making a referral of surplus lines business to a surplus lines agent that then completes the surplus lines transaction; or

(3) receiving any direct commission or variance in compensation based on the volume of surplus lines premiums taken and received from, or as a result of, another person selling, soliciting, binding, effecting, or procuring surplus lines insurance policies, contracts, or coverages, except for a general lines property and casualty agent making a referral of surplus lines business to a surplus lines agent that then completes the surplus lines transaction.

(b) The following activities, if supervised by a surplus lines agent, do not require a surplus lines agent license if the employee does not receive any direct commission from selling, soliciting, binding, effecting, or procuring insurance policies, contracts, or coverages, and the employee's compensation is not varied by the volume of premiums taken and received:

(1) full-time clerical and administrative services, including, but not limited to, the incidental taking of information from clients; receipt of premiums in the office of a licensed agent; or transmitting to clients, as directed by a licensed surplus lines agent, prepared marketing materials or other prepared information and materials including, without limitation, invoices and evidences of coverage;

(2) contacting clients to obtain or confirm information necessary to process an application for surplus lines insurance so long as the contact does not involve any activities for which a license would be required under subsection (a)(2) of this section;

(3) performing the task of underwriting any insurance policy, contract, or coverage, including and without limitation, pricing of the policy or contract; or

(4) contacting clients, insureds, agents, other persons, and insurers to gather and transmit information regarding claims and losses under the policy to the extent the contact does not require a licensed adjuster as set forth under Insurance Code Chapter 4101, concerning Insurance Adjusters.

(c) This section must not be construed to prohibit distribution of agency profits to unlicensed persons, including shareholders, partners, and employees.

(d) Before TDI issues a surplus lines agent license, the applicant must submit the following:

(1) an appropriate, fully completed written application; and

(2) the fee specified by §19.801 and §19.802 of this title (relating to General Provisions and Amount of Fees, respectively).

(e) Texas-resident applicants, and nonresident applicants who do not hold a surplus lines license in their state of residence or whose state of residence does not license Texas residents on a reciprocal basis as determined by TDI, must meet all licensing requirements set forth in Insurance Code Chapter 981, concerning Surplus Lines Insurance. Nonresident applicants under this section must also comply with Insurance Code §4056.051, concerning Application for Nonresident Agent License; Criminal History.

(f) Nonresident applicants who hold a surplus lines agent license in good standing in the agent's state of residence and meet the requirements of Insurance Code §4056.052, concerning Issuance of License to Nonresident Agent Licensed in Other State, must meet all the licensing requirements of Insurance Code Chapter 981 to the extent that the requirements are not waived by the commissioner under Insurance Code §4056.055, concerning Waiver of Requirements for Nonresident Agent Licensed in Other State or Jurisdiction.

(g) Notwithstanding any other subsection of this section, nonresident applicants are not required to obtain a general property and casualty agent license if they meet the requirements of Insurance Code §981.203(a-1), concerning Qualifications for Surplus Lines License.

(h) Each surplus lines agent license issued to an agent will be valid for a term as established under Insurance Code §4003.001, concerning License Expiration, and Chapter 19, Subchapter I of this title (relating to General Provisions Regarding Fees, Applications, and Renewals). The license may be renewed by submitting a renewal application and a nonrefundable license fee as specified by §19.801 and §19.802 of this title.

History

Source Note: The provisions of this §15.101 adopted to be effective December 30, 2018, 43 TexReg 8455; amended to be effective February 6, 2020, 45 TexReg 912; amended to be effective February 29, 2024, 49 TexReg 1094.

28 Tex. Admin. Code § 15.102 Conduct of Agent's Business

(a) A surplus lines agent engaging in surplus lines business as an individual surplus lines agent may be licensed only in his or her name. No individual may hold more than one surplus lines agent license. A surplus lines agent engaging in surplus lines business under an assumed name must comply with §19.902 of this title.

(b) An insurance agent doing business as a partnership, corporation, or limited liability company may apply for and obtain a surplus lines license, provided that the agent meets the qualifications and has been issued a license under the Insurance Code as either a general property and casualty agent or a managing general agent, except when Insurance Code §981.203(a-1) is applicable. The surplus lines agent license will be issued to a partnership, corporation, or limited liability company in the name of the agency as indicated on the underlying license issued under the Insurance Code. No partnership, corporation, or limited liability company may receive more than one surplus lines agent license. A partnership, corporation, or limited liability company doing business under an assumed name must comply with §19.902 of this title.

(c) Every act in placing or servicing a surplus lines insurance contract under an assumed name must also clearly disclose the true name of the surplus lines agent acting under the assumed name, or the true name of the individual licensed surplus lines agent representing the surplus lines agency, partnership, corporation, or limited liability company acting under the assumed name.

(d) A surplus lines agent may not shift, transfer, delegate, or assign his or her responsibility to a person or persons not licensed as a surplus lines agent. A surplus lines agent may not file with the stamping office a policy for a transaction in which the surplus lines agent did not place the policy.

(e) Notwithstanding subsection (d) of this section, a surplus lines agent may contract with a third-party to meet the requirements of Insurance Code §981.105(a) and (b) to file policies with the stamping office, but the agent remains responsible for the timeliness and accuracy of the filings including payment of any fees owed and any penalties assessed for policies that were not timely filed.

(f) A surplus lines agent may exercise underwriting authority on behalf of an eligible surplus lines insurer if the surplus lines agent possesses a current written agreement from each eligible surplus lines insurer granting that authority. The written agreement must set forth the identity of the insurer and the scope of the underwriting authority granted, and must reserve the duty of final underwriting review by the insurer. The underwriting agreement must be available for review by TDI. The underwriting authority granted to a surplus lines agent by the insurer may include the rating and acceptance of risks, binding of coverage, issuance of formal evidence of coverage, and cancellation of coverage.

(g) A surplus lines agent may exercise claims authority on behalf of an eligible surplus lines insurer if the surplus lines agent possesses a current written agreement from the eligible surplus lines insurer granting authority. A Texas-licensed adjuster must perform all claims adjustments unless the policy covers risks in multiple states and the claim is for a loss on a non-Texas risk. The written agreement must be available for review by TDI.

(1) Claims authority delegated to the surplus lines agent by the insurer may include, but is not limited to, the investigation, adjustment, supervision, and payment of claims, including payment from the surplus lines agents' funds, provided the agent is promptly reimbursed by the insurer for the payments.

(2) Partial payments to claimants by the surplus lines agent made under the written agreement do not relieve the surplus lines insurer of any continuing obligations to the insured. Payment of claims may also be made by the surplus lines agent directly from funds of the eligible surplus lines insurer, provided the surplus lines agent possesses a current written agreement that the insurer authorizes the direct payments. This written agreement must be available for review by TDI.

History

Source Note: The provisions of this §15.102 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.103 Surplus Lines Stamping Fee

For each surplus lines policy, contract, or other detailed evidence of coverage issued on Texas risks, including additions or deletions to, or cancellations of, the surplus lines agent must submit a stamping fee as approved by TDI. The fees are due and payable as provided in §15.106 of this title.

History

Source Note: The provisions of this §15.103 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.104 Reasonable Duty in Placing Coverage

(a) Before placing insurance with an eligible surplus lines insurer, a surplus lines agent must make a reasonable inquiry into the financial condition and operating history of the insurer.

(b) During the course of placing coverage with an eligible surplus lines insurer, each surplus lines agent will be under a continuous duty to stay informed of the insurer's solvency and the soundness of its financial strength, and of the insurer's ability to process claims and pay losses expeditiously.

(c) A surplus lines agent must immediately inform TDI and the stamping office if the agent has grounds to reasonably doubt the capacity, competence, stability, claim practices, or business practices of an eligible surplus lines insurer.

(d) A surplus lines agent must immediately inform TDI and the stamping office if the agent has reasonable grounds to believe that an insurer that is not an admitted insurer, an alien insurer listed with the NAIC's International Insurer Department, or an eligible surplus lines insurer, is transacting the business of insurance in this state.

(e) A surplus lines agent may place surplus lines insurance on Texas risks with only an eligible insurer that meets the requirements of the Insurance Code and TDI's rules.

History

Source Note: The provisions of this §15.104 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.105 Evidence of Insurance

(a) A surplus lines agent must promptly provide the insured or the client's agent with written evidence of insurance containing complete terms, conditions, and exclusions pertaining to the coverage to protect all parties against misunderstanding. If temporary confirmation of insurance coverage is required by the insured or is given by the surplus lines agent, that temporary confirmation must be replaced as promptly as possible with a policy or certificate stating the complete terms, conditions, and exclusions of the insurance.

(b) If, after delivery to the insured or the insured's agent of any document evidencing insurance coverage, there is any change as to the identity of the insurers or the portion of the direct risk assumed by the insurer as stated in the previously mentioned original documents, or any other material change as to the insurance coverage, the surplus lines agent must promptly send to the insured or the insured's agent a substitute certificate, cover note, confirmation, or endorsement for the original. All substitute documents must accurately show the current status of the coverage and the responsible insurers.

History

Source Note: The provisions of this §15.105 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.106 Stamping Office Filing and Fees

(a) The surplus lines agent must file a true and correct copy of each executed surplus lines policy, contract, or other detailed evidence of coverage, including additions, deletions, or cancellations with the stamping office within 60 days of issuance or the effective date, whichever is later. If evidence of coverage other than the policy is initially filed, a copy of the policy must be filed with the stamping office within 60 days after it becomes available.

(b) For purposes of reporting to the stamping office, the term "true and correct copy of a surplus lines insurance policy" as used in this section, includes:

(1) a declarations page;

(2) a listing of all participating insurers on the policy;

(3) all coverage parts and schedules, including limits;

(4) extended coverage exclusions;

(5) all premium-bearing documents;

(6) risk ZIP code location; and

(7) any other parts as may be required by the stamping office to review and record the policy.

(c) The stamping office must compile information from the filings submitted under subsection (b) of this section on a surplus lines agent basis within 10 days after the end of each month. The reports will be provided to the surplus lines agent with a notice of the total stamping fees due. The surplus lines agent must pay the fees to the stamping office by the end of the month in which the surplus lines agent receives the notice.

History

Source Note: The provisions of this §15.106 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.107 Requests for Information

(a) In addition to those documents required to be filed under §15.106 and §15.301 of this title, the stamping office may request a surplus lines agent to submit additional information necessary to evaluate the eligibility of surplus lines policies, contracts, or other detailed evidence of coverage.

(b) The stamping office must issue a written report to TDI if the requested additional information is not timely submitted by the surplus lines agent.

(c) The stamping office and the surplus lines agent may mutually agree for a representative of the stamping office to review the requested information at the surplus lines agent's place of business.

(d) Nothing in this section limits TDI's ability to require the surplus lines agent to submit information or reports as required by the Insurance Code and this chapter.

History

Source Note: The provisions of this §15.107 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.108 Recordkeeping

(a) In order to provide for basic uniformity in recordkeeping requirements, and to make it possible for TDI to make a complete and accurate examination of the surplus lines agent's records, the following insurance and accounting records must be established and maintained by each surplus lines agent:

(1) a policy register;

(2) a contract file;

(3) general books of account;

(4) a list of all agreements entered into with a managing underwriter under Insurance Code §225.006(c) and copies of the agreements; and

(5) any other insurance and accounting records as are necessary to properly and promptly service Texas policyholders and provide required information to TDI.

(b) The surplus lines agent's records and accounts relating to surplus lines insurance that are required to be kept by the Insurance Code and this chapter are subject to examination by TDI and the comptroller at all times and without notice. These records and accounts must be available for inspection and review by TDI for five years following the expiration or termination of the insurance contract, unless specified otherwise in the Insurance Code.

History

Source Note: The provisions of this §15.108 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.109 Policy Number

(a) All surplus lines agents must, immediately on procuring insurance from an eligible surplus lines insurer, record the policy number and the name of the insured. The surplus lines agent must inscribe with the same policy number all records and files maintained by the surplus lines agent that are pertinent to a specific risk.

(b) For agents having authority to issue policies on behalf of an eligible surplus lines insurer, and in the instance of voided or unused policy numbers, the agent must record an explanation in the policy number register.

History

Source Note: The provisions of this §15.109 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.110 Contract File

Each surplus lines agent must maintain a contract file containing a complete and true record for each individual surplus lines contract including the items described under Insurance Code §981.215(a) and the following, as applicable:

(1) a copy of the daily report or other evidence of insurance;

(2) amount of insurance and perils insured against;

(3) brief general description of the property insured and its location, including ZIP code;

(4) gross premium;

(5) name and mailing address of the insured;

(6) name and home office address of the insurer, underwriting syndicate or other risk-bearing entity;

(7) record of losses or claims filed and payments made;

(8) a true and correct copy of the insurance policy, contract, and other detailed evidences of coverage, as issued to the insured;

(9) all correspondence relating to the specific insurance coverage of that contract file;

(10) support for exempt commercial purchaser status complying with Insurance Code §981.215(a)(12)(A) and §15.111 of this title; and

(11) support for the industrial insured status complying with Insurance Code §981.215(a)(12)(B) and §15.112 of this title.

History

Source Note: The provisions of this §15.110 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.111 Exempt Commercial Purchaser Documentation

Support for exempt commercial purchaser status must include documentation of the following:

(1) a copy of the document described in Insurance Code §981.004(c)(2); and

(2) a signed statement from the insured identifying which provisions of Insurance Code §981.0031(a)(3) and §981.0032(3) are applicable to the insured.

History

Source Note: The provisions of this §15.111 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.112 Industrial Insured Documentation

Support for industrial insured status must include documentation of the following:

(1) compliance with Insurance Code §981.004(d)(2) and (3); and

(2) a signed statement from the insured identifying which provisions of Insurance Code and §981.0032(3) and §981.0033(2) are applicable to the insured.

History

Source Note: The provisions of this §15.112 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.113 Agent Accounting Records

(a) Each surplus lines agent must maintain general accounting records, which must include a general ledger, a general journal, cash records, and other items necessary to reflect the financial solvency of the agent.

(b) The surplus lines agent's general accounting records must show a month-end summary of operations and fiscal or calendar-year-to-date summary of operations, and must be maintained in accordance with generally accepted accounting principles.

History

Source Note: The provisions of this §15.113 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.114 Untimely Filed Policies

(a) On or before the 15th day of each month, the stamping office must either directly provide or make easily obtainable to surplus lines agents a report listing any surplus lines policies the agent filed in the previous month that were untimely filed. The surplus lines agent is responsible for confirming the accuracy of the report.

(b) For any policy listed in the report described in subsection (a) of this section that the surplus lines agent believes was timely filed, the agent must, on or before the earlier of 90 days from the date of the report or February 15 of each year following the year in which the policies were filed, either:

(1) correct any errors in the record using electronic procedures established by the stamping office, or

(2) if the error in the record cannot be corrected using electronic procedures established by the stamping office, the agent must notify the stamping office that the agent believes the policy was timely filed. The notification must identify the filing at issue, describe any special factors or unique circumstances that apply, and provide all necessary documentation to support the agent's position that it was timely filed.

(3) Following receipt of notification described in paragraph (2) of this subsection, on or before the earlier of either 30 days after receipt or March 1, the stamping office must review and research the notification and then provide TDI with a summary as well as the stamping office's opinion as to whether the policy should be considered timely filed. On receiving the summary from the stamping office, TDI will decide by the earlier of either 45 days after receiving the stamping office's analysis or March 15 whether the policy should be considered timely filed and notify the agent and stamping office. If TDI determines that the policy should be considered timely filed, the stamping office must make any necessary changes to its records so that the policy is considered timely filed.

(c) An agent waives the right to later dispute the timeliness for any filing if the agent fails to comply with the requirements of subsection (b) of this section.

(d) Not later than the first business day of April of each year, the stamping office must submit a report to TDI listing all surplus lines policies that were not timely filed in the previous calendar year. If TDI decides a policy should be considered timely filed under subsection (b)(3) of this section, the filing will not be included in the annual report. The annual report must be in a format acceptable to the Commissioner, and it must reflect any corrections made by the agent under subsection (b)(1) of this section or determinations made by TDI under subsection (b)(3) of this section.

History

Source Note: The provisions of this §15.114 adopted to be effective December 30, 2018, 43 TexReg 8455.

28 Tex. Admin. Code § 15.115 Surplus Lines Policies for Purchasing Groups

(a) A purchasing group is any group that:

(1) has as one of its purposes the purchase of liability insurance on a group basis;

(2) purchases liability insurance only for its group members and only to cover their similar or related liability exposure;

(3) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by any related, similar, or common business, trade, product, service, premise, or operation; and

(4) is domiciled in any state.

(b) When a registered purchasing group purchases insurance through a surplus lines agent, the surplus lines agent must submit the filings required under Insurance Code §981.105 and stamping fees directly to the stamping office.

(c) A surplus lines agent must stamp or write the words "Purchasing Group" conspicuously on every policy, contract, or other detailed evidence of coverage issued to a purchasing group or its members through the surplus lines agent.

(d) A surplus lines agent may not sell insurance to a purchasing group that is not registered with TDI. Registration may be verified on TDI's website.

History

Source Note: The provisions of this §15.115 adopted to be effective December 30, 2018, 43 TexReg 8455.

Subchapter C SURPLUS LINES STAMPING OFFICE PLAN OF OPERATION

28 Tex. Admin. Code § 15.201 Commissioner Approval

(a) The stamping office's plan of operation (plan of operation) and any amendment to it become effective on written approval by Commissioner order, and constitute the manner in which the stamping office must operate and discharge its responsibilities in accordance with the Insurance Code and TDI's rules.

(b) The stamping office must submit proposed amendments to the plan of operation to the Commissioner for consideration and approval.

(1) The Commissioner may accept or reject some or all of the proposed amendments.

(2) TDI will provide public notice and an opportunity to comment on some or all of the proposed amendments.

(3) The Commissioner will approve amendments to the plan of operation by Commissioner order.

(c) If the stamping office fails to submit an acceptable amendment to the plan of operation, the Commissioner may amend the plan of operation as set forth in Insurance Code §981.153(c).

(d) The stamping office must post the most current approved plan of operation on its website.

(e) If the stamping office's board of directors recommends changing the stamping fee, the Commissioner will post notice in the Texas Register that a stamping fee change is being considered and allow for a 20-day comment period. The notice will specify the current stamping fee and the proposed stamping fee. After the close of the comment period and review of the comments, the Commissioner will either approve or deny changing the stamping fee by order.

History

Source Note: The provisions of this §15.201 adopted to be effective December 30, 2018, 43 TexReg 8455.

Subchapter D SURPLUS LINES INSURERS

28 Tex. Admin. Code § 15.301 Evaluation Requirements of Surplus Lines Insurance Coverage

(a) Surplus lines insurers not designated as a domestic surplus lines insurer by TDI must provide to TDI and to the stamping office information relating to the insurer's eligibility to write surplus lines insurance.

(1) For insurers domiciled in another state, this information must include documents evidencing authorization from the insurer's domiciliary jurisdiction to write the same kind and class of business that it proposes to write in Texas and documentation that the insurer has capital and surplus required by Insurance Code §981.057. Documentation must include:

(A) insurer information, including the insurer's:

(i) full name;

(ii) physical address for its principal place of business;

(iii) mailing address;

(iv) NAIC number; and

(v) contact individual's name, phone number, and email;

(B) the state in which they are domiciled;

(2) Alien insurers listed with the NAIC's International Insurer Department are not required to submit anything under this section, but are encouraged to provide TDI with a contact person located in the United States, including the person's address and phone number, as well as information regarding the types of insurance the company anticipates writing in Texas. This information may be sent electronically to TDI.

(b) Surplus lines insurers designated as a domestic surplus lines insurer by TDI must provide to the stamping office a copy of the domestic surplus lines insurer certificate issued by TDI and documentation that the insurer has capital and surplus required by Insurance Code §981.057.

History

Source Note: The provisions of this §15.301 adopted to be effective December 30, 2018, 43 TexReg 8455.

Chapter 19 LICENSING AND REGULATION OF INSURANCE PROFESSIONALS

Subchapter A DISCIPLINARY HEARINGS IN RESPECT OF INSURANCE AGENTS

28 Tex. Admin. Code § 19.1 Purpose

It is the purpose of these sections, in the event a public hearing is set by the commissioner of insurance to consider disciplinary action in respect of an insurance agent and notice of such hearing is deposited in the United States mail, to cause such hearing to be held, evidence to be presented, and an order to be entered by the commissioner of insurance. It is also a purpose of these sections to prevent the defeat of any provision of the Insurance Code relating to disciplinary action including proceedings contemplated pursuant thereto. As used in these sections, the term "disciplinary action" includes actions by which a license is denied, revoked, suspended, or any other sanction imposed.

History

Source Note: The provisions of this §19.1 adopted to be effective January 1, 1976; amended to be effective February 22, 1983, 8 TexReg 454.

28 Tex. Admin. Code § 19.2 Effect of Surrendering or Attempting To Surrender Agent's License

(a) The surrender of any agent's license to the State Board of Insurance will not operate to negate any offense committed prior to the effective date of the surrender.

(b) Transmitting to the State Board of Insurance any or all insurance agent licenses held by an insurance agent for the purpose of surrender and cancellation will in no way affect pending disciplinary proceedings by the commissioner of insurance in respect of such agent.

(c) No communication will issue from the State Board of Insurance designed to effect the surrender of an insurance agent's license to avoid disciplinary proceedings.

History

Source Note: The provisions of this §19.2 adopted to be effective January 1, 1976; amended to be effective February 22, 1983, 8 TexReg 454; amended to be effective March 19, 1984, 9 TexReg 1357.

Subchapter B MEDICARE ADVANTAGE PLANS, MEDICARE ADVANTAGE PRESCRIPTION DRUG PLANS, AND MEDICARE PART D PLANS

28 Tex. Admin. Code § 19.101 Definitions

The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise.

(1) CMS--Centers for Medicare and Medicaid Services.

(2) CMS marketing guidelines--CMS' published marketing guidelines for use by Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, Prescription Drug Plans and 1876 Cost Plans, as revised July 25, 2006, and inclusive of all subsequent revisions.

(3) Department--Texas Department of Insurance.

(4) Marketing--Soliciting and/or selling.

(5) Medicare Plans--Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Prescription Drug Plans as described in the CMS marketing guidelines.

(6) Permanent license--A license issued to a person satisfying all the requirements of the Insurance Code §§4001.105, 4001.106, 4056.052, 4056.053, or 4056.054. The term does not include a temporary license issued under the Insurance Code §§4001.151 - 4001.154.

(7) Person--An individual, partnership, corporation, or depository institution as defined in the Insurance Code §4001.003(8).

History

Source Note: The provisions of this §19.101 adopted to be effective November 23, 2008, 33 TexReg 9260.

28 Tex. Admin. Code § 19.102 Agent Authority to Market Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Medicare Prescription Drug Plans

(a) Persons holding a current permanent general life, accident, and health insurance license under the Insurance Code §4054.051 are authorized to act as marketing representatives to market Medicare plans pursuant to federal law, regulations and CMS marketing guidelines.

(b) In accord with the Insurance Code §4051.053, persons holding a current permanent general property and casualty insurance agent license under the Insurance Code §4051.051 are qualified to act as marketing representatives to market Medicare plans pursuant to federal law, regulations and CMS marketing guidelines, only to the extent that the Medicare plans are offered by a property and casualty insurer authorized to sell those products in this state.

(c) Unless qualifying under subsection (a) or (b) of this section, department licensees, including individuals holding a temporary general life, accident and health insurance agent license or a temporary general property and casualty insurance agent license, are not qualified to act and are prohibited from acting as marketing representatives to market Medicare plans.

(d) Except for activities that are specifically authorized under federal law and CMS marketing guidelines to be performed by unlicensed persons, an insurer, health maintenance organization, or insurance agent is prohibited from assisting or participating in enrolling any individual in a Medicare plan contract marketed by an:

(1) agent that does not hold either:

(A) a current permanent general life, accident, and health insurance agent license; or

(B) a current permanent general property and casualty insurance agent's license, if the agent is acting for a property and casualty insurer engaged in selling Medicare plans; or

(2) unlicensed person.

History

Source Note: The provisions of this §19.102 adopted to be effective November 23, 2008, 33 TexReg 9260.

28 Tex. Admin. Code § 19.103 Reporting Requirements

An insurer, health maintenance organization, or insurance agent is required to report in writing any violation of §19.102 of this title (relating to Agent Authority to Market Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Medicare Prescription Drug Plans) within four calendar days of discovering the violation to the Fraud and Enforcement Division at the contact information provided on the department's website.

History

Source Note: The provisions of this §19.103 adopted to be effective November 23, 2008, 33 TexReg 9260; amended to be effective June 19, 2023, 48 TexReg 3285.

Subchapter G LICENSING OF INSURANCE ADJUSTERS

28 Tex. Admin. Code § 19.601 Fees for Examination

Any person wishing to take the examination for an insurance adjuster's license must submit the examination fee specified by §19.802 of this title (relating to Amounts of Fees) with the application in advance of taking the examination. The fee shall not be refunded to any applicant who may for any reason fail to take such examination or to any applicant who may fail to pass the examination.

History

Source Note: The provisions of this §19.601 adopted to be effective January 1, 1976; amended to be effective December 24, 1982, 7 TexReg 4318; amended to be effective March 23, 1992, 17 TexReg 1733.

28 Tex. Admin. Code § 19.602 Types of Adjuster's Licenses

(a) Any references to the Act in this subchapter are references to Insurance Code Chapter 4101, concerning Insurance Adjusters. The following types of adjuster's licenses are approved for insurance:

(1) all lines (issuance of "all lines" adjuster's license for those adjusters who qualify in paragraphs (2) and (3) of this subsection);

(2) property, casualty, and surety; and

(3) workers' compensation, employer's liability, USL&H (U.S. Longshoremen's and Harbor Workers' Compensation Insurance).

(b) Under Insurance Code Chapter 4101, the following are exempted from the requirement of an adjuster's license examination or reexamination administered by the department or the department's authorized testing service:

(1) those persons holding CPCU designation;

(2) those persons who have received the Associate in Claims (AIC) designation;

(3) those persons who have a certificate of completion showing that within the past 12 months the applicant has completed a certified adjuster prelicensing education program and passed an examination in compliance with Insurance Code §4101.054, concerning Examination Required, and §19.1006(b) of this title (relating to Course Criteria); and

(4) those persons who have an adjuster's license that has been expired for a period of more than 90 days but less than one year.

(c) Adjusters must renew their licenses in the manner set forth in §19.801 of this title (relating to General Provisions).

(d) Adjusters may only renew a license that has not expired or has not been expired for more than 90 days; otherwise, the adjuster must apply to the department for a new license.

(e) If an adjuster's license has been expired for one year or more, the adjuster applicant must submit to reexamination. The reexamination must be completed within the 12 months preceding the application unless the adjuster applicant can show that the applicant is exempt from the reexamination as set forth in subsection (b) of this section.

History

Source Note: The provisions of this §19.602 adopted to be effective January 1, 1976; amended to be effective December 24, 1982, 7 TexReg 4318; amended to be effective December 12, 2000, 25 TexReg 12186; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.603 Interpretations of the Act

(a) For the purpose of administration of the Act:

(1) the phrase "undisputed and/or uncontested losses" as used in the Act, §1(b)(4), means "losses that do not involve negotiations between the parties on issues involving coverage, damage, or liability";

(2) the word "principally" as used in the Act, §10(a)(1), is interpreted to mean "regularly" as used elsewhere in the Act;

(3) the word "regularly" means "acting in the capacity of an adjuster as a routine part of established employment duties."

(b) Marine surveyors, as usually and customarily defined, are not subject to licensing under the Act, unless they regularly investigate, adjust, or supervise losses on behalf of an insurer or self-insured.

(c) The department recognizes that certain risks are commonly referred to as "self-insured" or "self-handlers" in reference to insurance claims and losses. For the purposes of administration of the Act and in reference to those entities operating as such, the department interprets that any individual specifically employed for the purpose of supervision, investigation, or adjusting of losses is subject to the provisions of the Act, and the individual or individuals who have the primary responsibility for the supervision, investigation, or adjustment of losses is subject to the provisions of the Act.

History

Source Note: The provisions of this §19.603 adopted to be effective January 1, 1976; amended to be effective December 24, 1982, 7 TexReg 4318; amended to be effective November 2, 2003, 28 TexReg 9274.

Subchapter H LICENSING OF PUBLIC INSURANCE ADJUSTERS

28 Tex. Admin. Code § 19.701 Definitions

(a) Words and terms defined in Insurance Code Chapter 4001 shall have the same meaning when used in this subchapter.

(b) The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Commission--Any amount received by a public insurance adjuster for service provided under Insurance Code Chapter 4102, consisting of an hourly fee, a flat rate, a percentage of the total amount paid by the insurer to resolve a claim, or another method of compensation, including expenses, direct costs, or any other costs accrued by the public insurance adjuster, not to exceed 10 percent of the amount of the insurance settlement on the claim.

(2) Corporation--A legal entity that is organized under the business corporations laws or limited liability company laws of this state, another state, or a territory of the United States. The licensing and regulation of a limited liability company is subject to all provisions of this subchapter that apply to a corporation licensed under this subchapter.

(3) Partnership--An association of two or more persons organized under the partnership laws or limited liability partnership laws of this state, another state, or a territory of the United States. The term includes a general partnership, limited partnership, limited liability partnership, and limited liability limited partnership.

(4) Public Insurance Adjuster--A person licensed under Insurance Code Chapter 4102 or §19.704 of this subchapter (relating to Public Insurance Adjuster Licensing). A licensed public insurance adjuster may be otherwise referred to as a "license holder" or "licensee" in this subchapter.

History

Source Note: The provisions of this §19.701 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective January 1, 2014, 38 TexReg 7448.

28 Tex. Admin. Code § 19.702 Type of Public Insurance Adjuster Licenses

The department will issue a single public insurance license under Insurance Code Chapter 4102, concerning Public Insurance Adjustors and the provisions of this subchapter.

History

Source Note: The provisions of this §19.702 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.704 Public Insurance Adjuster Licensing

(a) Any individual that desires a public adjuster license must file with the department a fully completed license application, on a form as required by the commissioner, and otherwise meet the licensing qualification requirements of Insurance Code Chapter 4102, Subchapter B, concerning License Requirements, and this subchapter.

(b) Any corporation or partnership that desires a public insurance adjuster license must file with the department a fully completed license application on a form as required by the commissioner.

(c) The department will issue a license to a resident or nonresident corporation or partnership if the department finds that:

(1) the corporation or partnership is:

(A) organized under the laws of this state or any other state or territory of the United States;

(B) admitted to conduct business in this state by the secretary of state, if required; and

(2) the corporation or partnership meets the definition of that entity adopted under Insurance Code §4001.003, concerning Definitions;

(3) at least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of a public insurance adjuster on behalf of the corporation or partnership in this state are individually licensed by the department separately from the corporation or partnership;

(4) the corporation or partnership intends to be actively engaged in the business of public insurance adjusting;

(5) the corporation or partnership has submitted the application, appropriate fees, proof of financial responsibility, and any other information required by the department; and

(6) no officer, director, member, manager, partner, or any other person who has the right or ability to control the license holder has:

(A) had a license suspended or revoked or been the subject of any other disciplinary action by a financial or insurance regulator of this state, another state, or the United States; or

(B) committed an act for which a license may be denied under Insurance Code §4005.101, concerning Grounds for License Denial or Disciplinary Action, or §4102.201, concerning Denial, Suspension, or Revocation of License.

(d) Nothing contained in this section may be construed to permit any unlicensed employee or representative of any corporation or partnership to perform any act of a public insurance adjuster without obtaining a public insurance adjuster license.

(e) Each corporation or partnership applying for a public insurance adjuster license must file, under oath, on a form developed by the department, biographical information for each of its executive officers and directors or unlicensed partners who administer the entity's operations in this state, and shareholders who are in control of the corporation, or any other partners who have the right or ability to control the partnership. If any corporation or partnership is owned, in whole or in part, by another entity, a biographical form is required for each individual who is in control of the parent entity.

(f) Each corporation or partnership must notify the department not later than the 30th day after the date of:

(1) a felony conviction of a licensed public insurance adjuster of the entity or any individual associated with the corporation or partnership who is required to file biographical information with the department;

(2) an event that would require notification under Insurance Code §81.003, concerning Notification of Certain Disciplinary Actions Occurring in Other States; Civil Penalty; and

(3) the addition or removal of an officer, director, partner, member, or manager.

(g) A person may not acquire in any manner any ownership interest in an entity licensed as a public insurance adjuster under this subchapter if the person is, or after the acquisition would be directly or indirectly in control of the license holder, or otherwise acquire control of or exercise any control over the license holder, unless the person has filed the following information with the department under oath:

(1) a biographical form for each person by whom or on whose behalf the acquisition of control is to be effected;

(2) a statement certifying that no person who is acquiring an ownership interest in or control of the license holder has been the subject of a disciplinary action taken by a financial or insurance regulator of this state, another state, or the United States;

(3) a statement certifying that, immediately on the change of control, the license holder will be able to satisfy the requirements for the issuance of the public insurance adjuster license; and

(4) any additional information that the commissioner may prescribe as necessary or appropriate to the protection of the insurance consumers of this state or as in the public interest.

(h) If a person required to file a statement under subsection (g) of this section is a partnership, limited partnership, syndicate, or other group, the commissioner may require that the information required by paragraphs (1) - (4) of that subsection for an individual be provided regarding each partner of the partnership or limited partnership, each member of the syndicate or group, and each person who controls the partner or member. If the partner, member, or person is a corporation or the person required to file the statement under subsection (g) of this section is a corporation, the commissioner may require that the information required by paragraphs (1) - (4) of that subsection be provided regarding:

(1) the corporation;

(2) each individual who is an executive officer or director of the corporation; and

(3) each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.

(i) The department may disapprove an acquisition of control if, after notice and opportunity for hearing, the commissioner determines that:

(1) immediately on the change of control the license holder would not be able to satisfy the requirements for the public insurance adjuster license;

(2) the competence, trustworthiness, experience, and integrity of the persons who would control the operation of the license holder are such that it would not be in the interest of the insurance consumers of this state to permit the acquisition of control; or

(3) the acquisition of control would violate the Insurance Code or another law of this state, another state, or the United States.

(j) Notwithstanding subsection (h) of this section, a change in control is considered approved if the department has not proposed to deny the requested change before the 61st day after the date the department receives all information required by this section.

(k) The commissioner is the corporation's or partnership's agent for service of process in the manner provided by Insurance Code Chapter 804, concerning Service of Process, in a legal proceeding against the corporation or partnership if:

(1) the corporation or partnership licensed to transact business in this state fails to appoint or maintain an agent for service in this state;

(2) an agent for service cannot with reasonable diligence be found; or

(3) the license of a corporation or partnership is revoked.

(l) If a license holder does not maintain the qualifications necessary to obtain the license, the department will revoke or suspend the license or deny the renewal of the license under Insurance Code §4005.101, concerning Grounds for License Denial or Disciplinary Action, or Insurance Code §4102.201, concerning Denial, Suspension, or Revocation of License.

(m) Each public insurance adjuster must maintain all insurance records, including all records relating to customer complaints received from customers and the department, separate from the records of any other business in which the person may be engaged and in the manner specified in Insurance Code Chapter 4102, concerning Public Insurance Adjusters.

(n) The department may license a depository institution or entity chartered by the federal Farm Credit Administration under the farm credit system established under 12 U.S.C. Section 2001 et seq., as amended, to act as a public insurance adjuster in the manner provided for the licensing of a corporation under this section.

History

Source Note: The provisions of this §19.704 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.705 Financial Responsibility Requirement

Each public insurance adjuster, as a condition for being licensed, must maintain proof of financial responsibility by obtaining a surety bond in the principal sum of not less than $10,000 that covers all the required perils and losses set forth under Insurance Code §4102.105, concerning Financial Responsibility.

History

Source Note: The provisions of this §19.705 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.706 Demonstrating Financial Responsibility

The public insurance adjuster applicant or licensee must demonstrate proof of financial responsibility by providing to the department the original surety bond upon application, renewal, or replacement of the bond.

History

Source Note: The provisions of this §19.706 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.707 Type of Financial Responsibility

A surety bond used to maintain and demonstrate proof of financial responsibility under §§19.705 and 19.706 of this subchapter (relating to Financial Responsibility Requirement and Demonstrating Financial Responsibility) must:

(1) be in the form specified by the department;

(2) be executed by the public insurance adjuster as principal and a surety company authorized to do business in this state as surety;

(3) be payable to the Texas Department of Insurance for the use and benefit of an insured, conditioned that the public insurance adjuster shall pay any final judgment recovered against it by an insured;

(4) provide that the surety will give no less than 30 days written notice of bond termination to the licensee and the department;

(5) be separate from any other financial responsibility obligation; and

(6) not be used to demonstrate professional responsibility for any other license, certification, or person.

History

Source Note: The provisions of this §19.707 adopted to be effective November 2, 2003, 28 TexReg 9274.

28 Tex. Admin. Code § 19.708 Public Insurance Adjuster Contracts

(a) A public insurance adjuster may not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a written contract executed in duplicate by the licensee and the insured or the insured's duly authorized representative.

(b) A public insurance adjuster's written contract with an insured must contain:

(1) the name, address, and license number of the public insurance adjuster negotiating the contract and, if applicable, the name, address, and license number of the public insurance adjuster's employing public insurance adjuster, with each page of the contract prominently displaying the license number(s);

(2) the public insurance adjuster's telephone and fax number, including area code;

(3) the mailing and physical addresses to which notice of cancellation and all communications to the public insurance adjuster may be delivered;

(4) if any part of the contract or solicitation is made via the Internet, the email and website address to which notice of contract cancellation and all communications to the public insurance adjuster may be delivered;

(5) the date and time the contract was signed;

(6) for each nonresident public insurance adjuster named in the contract, the name and address of the nonresident public insurance adjuster's agent for service of process;

(7) the following separate statements in 12-point bold type on the signature page of the contract:

(A) "NOTICE: The insured may cancel this contract by written notice to the public insurance adjuster within 72 hours of signature for any reason.";

(B) "We represent the insured only."; and

(C) "You are entering into a service contract. You are being charged a fee for this service. You do not have to enter into this contract to make a claim for loss or damage on a policy of insurance."

(8) the statement: "If the insurance carrier pays or commits in writing to pay to the insured the policy limits of the insurance policy under Insurance Code §862.053, concerning Fire and Marine Insurance Companies, within 72 hours of the loss being reported to the insurer, the public insurance adjuster is not entitled to compensation based on a percentage of the insurance settlement, but is entitled to reasonable compensation for the public insurance adjuster's time and expenses provided to the insured before the claim was paid or the written commitment to pay was received.";

(9) the statement: "NOTICE: A public insurance adjuster may not participate directly or indirectly in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the public insurance adjuster or engage in any other activities that may reasonably be construed as presenting a conflict of interest, including soliciting or accepting any remuneration from, or having a financial interest in, any salvage firm, repair firm, or other firm that obtains business in connection with any claim the public insurance adjuster has a contract or agreement to adjust.";

(10) on the first or second page of the contract, the following English and Spanish notices in 10-point bold type:

(A) "IMPORTANT NOTICE: You may contact the Texas Department of Insurance to get information about public insurance adjusters, your rights as a consumer, or information about how to file a complaint by calling 1-800-252-3439; or you may write the Texas Department of Insurance, at MC: CO-CP, P.O. Box 12030, Austin, Texas 78711-2030.";

(B) "ADVISO IMPORTANTE: Puede communicarse con el Departamento de Seguros de Texas para obtener informacion acera ajustadores publicos de seguros, sus derechos como consumidor, o informacion sobre como presenter una queja llamando 1-800-252-3439; o puede escribir al Departamento de Seguros de Texas, en MC: CO-CP, P.O. Box 12030, Austin, Texas 78711-2030.";

(11) a statement that under any method of compensation, the total commission payable to the public insurance adjuster, including expenses, direct costs, or any other costs accrued by the public insurance adjuster, must not exceed 10% of the amount of the insurance settlement;

(12) if applicable, a statement disclosing how payments issued before the effective date of the contract will be used in determining compensation to the public insurance adjuster; and

(13) a clear and prominent statement of the public insurance adjuster's commission including:

(A) the method of calculating the commission for the public insurance adjuster, whether an hourly rate, flat fee, percentage of settlement, or another method of compensation, specifically:

(i) if an hourly rate, the contract must state the hourly rate and how it will be applied to hours of service provided by the public insurance adjuster to calculate the amount payable;

(ii) if a flat fee, the contract must state the amount that will be payable to the public insurance adjuster;

(iii) if a percentage, the contract must state the exact percentage that will be applied to the settlement on the claim to calculate the amount payable to the public insurance adjuster; or

(iv) if another method of calculation is chosen, the contract must include a detailed explanation of how the amount payable will be determined based on services provided by the public insurance adjuster;

(B) a general description of services the public insurance adjuster will provide under the contract;

(D) if based on an hourly rate, a provision that the public insurance adjuster will provide an invoice for services that includes a detailed listing of services provided and separate costs payable to the public insurance adjuster as part of the commission based on the claim settlement, including expenses, direct costs, and any other accrued costs.

(c) The contract must not contain any terms or conditions that have the effect of limiting or nullifying any requirements of the Insurance Code, this subchapter, or other rules of the department.

(d) All public insurance adjusters in Texas must use a written contract that is in the form prescribed by the department and that complies with all relevant Insurance Code requirements and department rules. Public insurance adjusters must select from the following contract form options:

(1) a standard language contract developed by the department, identified by FIN 535; or

(2) a contract filed and approved by the department before use.

(e) All contracts must be submitted with an original adjuster license application or an application for renewal to the department's Agent and Adjuster Licensing Office. Contracts also must be submitted to the office upon any modification or amendment of terms or conditions between license renewals.

(f) The failure by a public insurance adjuster or other individual to use a properly authorized and approved contract may result in suspension, nonrenewal, revocation of the adjuster's license, or other administrative penalty.

History

Source Note: The provisions of this §19.708 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective January 1, 2014, 38 TexReg 7448; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.709 Nonresident Applicants and License Holders

An applicant for a nonresident public insurance adjuster license or temporary certificate must, through the law enforcement agency of the applicant's state of residence, submit a copy of the applicant's criminal history records to the department. The department will use the criminal history records to determine eligibility for issuance of a license in accordance with this subchapter and other laws of this state.

History

Source Note: The provisions of this §19.709 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.710 Nonresidents Required to File Biographical Information

A nonresident who is required to file biographical information under §19.704 of this subchapter (relating to Public Insurance Adjuster Licensing) shall, through the law enforcement agency of the person's state of residence, submit a copy of the applicant's criminal history records to the department. The department shall use the criminal history records to determine eligibility for issuance of a license in accordance with this subchapter and other laws of this state.

History

Source Note: The provisions of this §19.710 adopted to be effective November 2, 2003, 28 TexReg 9274.

28 Tex. Admin. Code § 19.711 Fingerprint Requirement

Any individual who submits to the Department a new application to be licensed or registered under Insurance Code Chapter 4102 and any individual from whom biographical information is required under §19.704 of this subchapter (relating to Public Insurance Adjuster Licensing) shall comply with the requirements of Chapter 1, Subchapter D of this title (relating to Effect of Criminal Conduct).

History

Source Note: The provisions of this §19.711 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective October 23, 2006, 31 TexReg 8682.

28 Tex. Admin. Code § 19.712 Advertisement

(a) As used in Insurance Code Chapter 4102, concerning Public Insurance Adjusters, "advertisement" includes:

(1) printed and published material, audiovisual material and descriptive literature of a public insurance adjuster used in direct mail, newspapers, magazines, radio, telephone and television scripts, websites, billboards, and similar displays;

(2) descriptive literature and promotional aids of all kinds issued by a public insurance adjuster for presentation to members of the public, including circulars, leaflets, booklets, depictions, illustrations, and form letters;

(3) prepared promotional talks, presentations and materials for use by a public insurance adjuster, and those representations made on a recurring basis by a public insurance adjuster to members of the public;

(4) material used to:

(A) solicit contracts from insureds; or

(B) modify existing contracts;

(5) material included with a contract when the contract is delivered and materials used in the solicitation of contract renewals, extensions or reinstatements, except those extensions or reinstatements provided for in the contract;

(6) lead card solicitations, defined as communications distributed to the public which, regardless of form, content, or stated purpose, are intended to result in the compilation or qualification of a list containing names or other personal information regarding insureds who have expressed a specific interest in obtaining assistance with having their claims settled, and which are intended to be used to solicit residents of this state for the execution of a contract for a public insurance adjuster's services; and

(7) any other communication directly or indirectly related to a public insurance adjuster contract, and intended to result in the eventual execution of such a contract.

(b) "Advertisement" does not include:

(1) communications or materials used within a public insurance adjuster's own organization, not used as promotional aids and not disseminated to the public;

(2) communications with insureds other than materials soliciting insureds to enter, renew, extend or reinstate a contract for a public insurance adjuster's services; and

(3) material used solely for the recruitment, training, and education of a public insurance adjuster's personnel and subcontractors, provided it is not also used to induce the public to enter, renew, extend or reinstate a contract for a public insurance adjuster's services.

History

Source Note: The provisions of this §19.712 adopted to be effective November 2, 2003, 28 TexReg 9274; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.713 Public Insurance Adjuster Code of Ethics

(a) This section states legal and ethical requirements that are of prime importance for public insurance adjusters' professional conduct. This section does not exhaust the legal or ethical requirements that govern public insurance adjusters. This section details requirements similar to the codes of ethics adopted by local and national public insurance adjusters' professional organizations.

(b) All public insurance adjuster licensees must comply with the following requirements:

(1) Licensees must conduct business fairly with their clients, insurance companies, and the public.

(2) Licensees must not employ any improper solicitation that would violate Insurance Code Chapter 4102 and applicable rules.

(3) Licensees must not make a misrepresentation, in violation of Insurance Code Chapter 4102, to an insured or to an insurance company in the conduct of their actions as public insurance adjusters.

(4) Licensees must charge only commissions that comply with the requirements set forth in Insurance Code Chapter 4102 and applicable rules.

(5) Licensees must complete continuing education as required by Insurance Code Chapter 4102 and this subchapter.

(6) Licensees must have appropriate knowledge and experience for the work they undertake and should obtain competent technical assistance, when necessary, to help handle claims and losses outside their area of expertise.

(7) Licensees must not engage in the unauthorized practice of law.

(8) Licensees must avoid conflicts of interest, including acquiring any interest in salvaged property or participating in any way, directly or indirectly, in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the licensee, except as allowed in Insurance Code Chapter 4102 and this subchapter.

(9) Licensees must not disseminate or use any form of agreement, advertising, or other communication, regardless of format or medium, in this state that is harmful to the profession of public insurance adjusting and that does not comply with Insurance Code Chapter 4102, this subchapter, or other provisions of the Insurance Code.

(10) Licensees must use only contracts that comply with Insurance Code Chapter 4102 and this subchapter.

History

Source Note: The provisions of this §19.713 adopted to be effective September 9, 2004, 29 TexReg 8559; amended to be effective January 1, 2014, 38 TexReg 7448.

Subchapter I GENERAL PROVISIONS REGARDING FEES, APPLICATIONS, AND RENEWALS

28 Tex. Admin. Code § 19.801 General Provisions

(a) Completed application. An applicant must provide all information required of the applicant by statute and TDI rule.

(b) Original application. In this subchapter, an original application is an application for any license type not currently held by the applicant.

(1) Individual application. An original application for an individual license must include the following information:

(A) the individual's:

(i) name;

(ii) date of birth;

(iii) social security number;

(iv) mailing address, physical address, and email address;

(v) phone number; and

(vi) professional background and criminal history information; and

(B) other applicable information required by statute or rule, including:

(i) a complete set of the applicant's fingerprints, using the procedures and requirements under Chapter 1, Subchapter D, of this title (relating to Effect of Criminal Conduct);

(ii) for adjuster applicants, documentation of the successful completion of the applicable adjuster examination or prelicensing course as required under Insurance Code §4101.054, concerning Examination Required, and §4101.056, concerning Exemption from Examination Requirement; and

(iii) for public insurance adjuster applicants, evidence of financial responsibility and a sample contract as required under §19.705 of this title (relating to Financial Responsibility Requirement), §19.706 of this title (relating to Demonstrating Financial Responsibility), §19.707 of this title (relating to Type of Financial Responsibility), §19.708 of this title (relating to Public Insurance Adjuster Contracts), §19.709 of this title (relating to Nonresident Applicants and License Holders), §19.710 of this title (relating to Nonresidents Required to File Biographical Information), and §19.711 of this title (relating to Fingerprint Requirement).

(2) Entity application. An original application for an entity license must include the following information:

(A) the name of the entity;

(B) the entity's federal employer identification number;

(D) disclosures regarding regulatory actions, criminal actions, and litigation history;

(E) the amount and type of financial responsibility applicable to the license type;

(F) the name, license information, and a complete set of fingerprints, using the procedures under Chapter 1, Subchapter D, of this title, of at least one individual who is an officer or active partner of the entity and holds, or is applying for, the same license type sought by the entity;

(G) the biographical information of all individuals in control of the entity, including the individual's:

(i) name;

(ii) date of birth;

(iii) social security number;

(iv) mailing address, physical address, and email address;

(v) phone number;

(vi) professional background and criminal history information;

(vii) a complete set of each individual's fingerprints, using the procedures under Chapter 1, Subchapter D, of this title; and

(H) other applicable information required by statute or rule, including information required for public insurance adjusters under §§19.705 - 19.711, including the sample contract.

(1) An appointment authorizes an agent to represent and act as an agent for an insurer, as defined in Insurance Code §4001.003(6), concerning Definitions. An agent must be appointed directly by an insurer.

(2) An appointment fee of $10 must accompany each notice of appointment.

(d) Submission of fees. All fees must be submitted as directed by:

(1) the original or renewal application;

(2) the appointment form;

(3) TDI's designated testing service;

(4) using the instructions provided on the department's website; or

(5) other TDI designated service provider.

(e) Fees fully earned and not refundable or transferable. All fees are fully earned at the time the application, registration, or appointment is submitted, and they are not refundable or transferable to another application, registration, or appointment. These fees may not be reduced for any reason, except as authorized by statute or rule.

(f) Examination and examination fees.

(1) TDI administers examinations through its designated testing service. If TDI should cease to use a designated testing service, TDI will directly administer the examinations and all references in this subchapter to TDI's designated testing service will apply to TDI.

(2) All examination fees for any license type, whether administered by TDI or TDI's designated testing service, are fully earned when the examination is scheduled and are not refundable or transferable to any other applicant or examination, except when approved by TDI as provided under Insurance Code §4002.005(c), concerning Examination Fee. A separate fee is required for each examination and reexamination. Examination fees may not be reduced for any reason, except as authorized by statute or rule.

History

Source Note: The provisions of this §19.801 adopted to be effective March 11, 1992, 17 TexReg 1542; amended to be effective September 26, 2002, 27 TexReg 8948; amended to be effective November 25, 2007, 32 TexReg 8314; amended to be effective May 31, 2018, 43 TexReg 3367; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.802 Amount of Fees

(a) With each application for original license or renewal, notice of appointment, request for examination, or registration or renewal of registration, the applicant, licensee, or registrant must submit the amount shown in this section. The fees for examinations and reexaminations only apply if TDI does not contract with a testing service for the provisions of these examinations.

(b) The amounts of fees are as follows:

(1) General life, accident, and health insurance agent:

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--$50.

(2) County mutual agent:

(A) original application--$50;

(B) renewal--$50;

(3) Insurance adjuster:

(A) original application--$50;

(B) renewal--$50;

(4) Insurance adjuster (emergency license): original application--$20.

(5) General property and casualty agent:

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--50;

(E) emergency application for license issued under Insurance Code §4051.054, concerning Deceased, Disabled, or Insolvent Agents; Emergency License--$50 (for original application with no additional charge for renewal).

(6) Managing general agent:

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--$50;

(E) emergency application for license issued under Insurance Code §4053.052--$50.

(7) Limited lines agent (includes agents licensed under Insurance Code Chapter 4051, Subchapter C, concerning Limited Property and Casualty License, and Chapter 4054, Subchapter C, concerning Limited Life, Accident, and Health License):

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--$50.

(8) Surplus lines agent:

(A) original application--$50;

(B) renewal--$50;

(9) Specialty insurance agent:

(A) original application--$50 (per license authority);

(B) renewal--$50 (per license authority);

(10) Title attorney:

(A) original application--$50;

(B) renewal--$48.

(11) Life insurance not exceeding $15,000:

(A) original application--$50;

(B) renewal--$50;

(12) Risk manager:

(A) original application--$50;

(B) renewal--$50;

(13) Funeral prearrangement life insurance agent:

(A) original application--$50;

(B) renewal--$50;

(14) Reinsurance intermediary:

(A) original application--$500;

(B) renewal--$500.

(15) Temporary license application--For license types authorized by Insurance Code Chapter 4001, Subchapter D, concerning Temporary License, to be issued on a temporary basis, $100 in addition to the original license application fee for each license type.

(16) Utilization review agent:

(A) original application--$2,150;

(B) renewal--$545.

(17) Public insurance adjuster:

(A) original application--$50;

(B) renewal--$50;

(18) Provisional permit application fee is $50 in addition to the original license application fee for each license type.

(19) Life agent:

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--$50.

(20) Personal lines property and casualty agent:

(A) original application--$50;

(B) renewal--$50;

(D) qualifying examination--$50;

(21) Discount health care program operator:

(A) initial registration fee--$1,000; or

(B) renewal registration fee--$500.

(c) The limited lines agent license is a single license type that is authorized under Insurance Code Chapter 4051, concerning Property and Casualty Agents, and 4054, concerning Life, Accident, and Health Agents. Persons licensed as limited lines agents may be appointed to sell or solicit any line authorized by Insurance Code Chapter 4051, Subchapter C and Chapter 4054, Subchapter C without payment of additional license fees or examinations other than the necessary additional company appointment fees.

(d) All fees are the same for both residents and nonresidents. Insurance Code Chapter 4056 does not create an additional license type for nonresidents, but designates a procedure for licensing nonresidents under appropriate Texas license types.

History

Source Note: The provisions of this §19.802 adopted to be effective March 11, 1992, 17 TexReg 1542; amended to be effective August 13, 1992, 17 TexReg 5362; amended to be effective April 26, 1998, 23 TexReg 3836; amended to be effective September 1, 1999, 24 TexReg 6754; amended to be effective September 26, 2002, 27 TexReg 8948; amended to be effective November 2, 2003, 28 TexReg 9274; amended to be effective November 25, 2007, 32 TexReg 8314; amended to be effective September 8, 2010, 35 TexReg 8111; amended to be effective November 22, 2015, 40 TexReg 8031; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.804 Application for a New Entity License

(a) An entity applicant for new license must submit a completed original application to TDI.

(b) A licensed individual officer or active partner, required for an entity license, must hold the same or greater license authority as the entity, based on lines the agent and entity are authorized to write. For example:

(1) a county mutual agent may only be the agent for a county mutual insurance entity license holder; and

(2) a general lines property and casualty agent may be the agent for a county mutual insurance entity license holder, or any other type of property and casualty insurance entity license holder.

(1) may act for the entity only within the authority of the entity's license;

(2) must be appointed directly by an insurer or as a subagent as provided in §19.801(c) of this title; and

(3) must hold a license authority qualifying that person to act that is separate from the entity's licensed authority. The agent may not exceed the agent's licensed authority even if the entity license holder has a greater license authority.

History

Source Note: The provisions of this §19.804 adopted to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.805 Application for a New Individual License

(a) This section does not apply to:

(1) a provisional permit issued under Insurance Code Chapter 4001, Subchapter H, and §19.806 of this title;

(2) a temporary license issued under Insurance Code Chapter 4001, Subchapter D, concerning Temporary License, and §19.807 of this title (relating to Application for a Temporary License); or

(3) specialty agent licenses issued under Insurance Code Chapter 4054, concerning Life, Accident, and Health Agents and Chapter 19, Subchapter T of this title (relating to Specialty Insurance License).

(b) Examination required. Unless exempt by applicable statute or rule, all license applicants must successfully complete the applicable license examination to be eligible for licensure.

(1) Except as provided in paragraph (2) of this subsection:

(A) an applicant must submit:

(i) the required examination fee to TDI's designated testing service when the examination is requested; and

(ii) a complete original application, the original application fee, and all required fees, to TDI, or TDI's designated testing service, when the application is submitted; and

(B) TDI must receive the score report from TDI's designated testing service showing successful completion of the applicable examination within the 12-month period before the completed application is received by TDI.

(2) An applicant qualifying for a license through an insurance carrier administered examination under Insurance Code Chapter 4051, Subchapter E, concerning County Mutual Agent License; Chapter 4054, Subchapter D, concerning Funeral Prearrangement Life Insurance; or Chapter 4054, Subchapter E, concerning Life Insurance Not Exceeding $25,000, must submit to TDI:

(A) all required fees at the time of filing an original application for license; and

(B) a completed original application with an appointment from the insurance carrier administering the examination indicating successful completion of the applicable examination within the 12-month period preceding the completed application being received by TDI.

(c) Examination not required. An applicant who is not required to qualify for a license by examination must submit to TDI the original application fee and all required fees with a completed original application.

History

Source Note: The provisions of this §19.805 adopted to be effective May 31, 2018, 43 TexReg 3367; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.806 Application for a Provisional Permit

An applicant for a provisional permit must be an individual Texas resident and must apply for a license type listed in Insurance Code §4001.353(a).

(1) An applicant must submit the required examination fee to TDI's designated testing service when the examination is requested, unless:

(A) the applicant is exempt from the examination; or

(B) the application is for a license listed under Insurance Code §4001.353(a) that is administered by the insurance carrier; and

(2) Except as provided in paragraph (3) of this section, if the applicant is exempt from the examination, or after successfully completing the required licensing examination within the preceding 12 month period, the applicant must submit to TDI a completed original application, including a request for a provisional permit, and all required fees, including the original application fee and provisional permit fee.

(3) Applicants for a license listed under Insurance Code §4001.353(a) that is administered by the insurance carrier must also submit with the application an appointment from the insurance carrier administering the licensing examination indicating successful completion of the applicable examination within the preceding 12 month period.

History

Source Note: The provisions of this §19.806 adopted to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.807 Application for a Temporary License

(a) An applicant for a temporary license must be an individual Texas resident and must submit to TDI's designated testing service:

(1) the fully completed temporary license application and original application for license; and

(2) all required fees, including the original application fee, and the temporary license fee, when the completed temporary license application is submitted to TDI's designated testing service.

(b) To obtain the license beyond the temporary license period, the applicant must:

(1) submit the required examination fee when the examination is scheduled with TDI's designated testing service; and

(2) successfully complete the license examination within the temporary license period.

(c) As required under Insurance Code §4001.162(b), an agent, insurer, or health maintenance organization must comply with the following request and reporting standards to appoint more than 500 temporary license holders during a calendar year.

(1) The agent, insurer, or health maintenance organization must annually submit a written request to TDI:

(A) stating the number of additional temporary license appointments requested;

(B) stating the reason for the additional number of temporary license appointments;

(D) documenting the procedures and ability to train and monitor the additional temporary license appointments.

(2) TDI will approve all or part of the number of additional temporary license appointments if TDI determines that the agent, insurer, or health maintenance organization has provided evidence demonstrating the need for the additional temporary license appointments, evidence of its past compliance with Insurance Code §4001.161, and procedures and ability to train and monitor the additional temporary license appointments.

(3) If approved, an agent, insurer, or health maintenance organization must submit reports to TDI within 30 days of the end of each calendar quarter, documenting:

(A) the total number of temporary agents appointed during the calendar quarter and for the calendar year; and

(B) compliance with Insurance Code §§4001.151 - 4001.161 for all appointed temporary agents.

History

Source Note: The provisions of this §19.807 adopted to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.808 The Initial Term of a New License and Renewal License Expiration

(a) License expiration dates will be determined as provided in Insurance Code §4003.001. Individual licenses will expire at the end of the individual's birth month.

(b) If the applicant has an existing license and obtains another new license, the initial license period of the new license will be aligned:

(1) to the existing license's expiration date; or

(2) if the initial license period of the new license is less than six months based on the alignment of the license expiration date to the existing license expiration date, TDI will use the next expected renewal date of the existing license as the expiration date for the initial period of the new license.

(c) The original application fee for the new license under this section will not be reduced or increased based on the length of the initial license period.

History

Source Note: The provisions of this §19.808 adopted to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.809 Nonresident Licensees Relocating to Texas

To continue to be licensed, including as an agent, adjuster, or public insurance adjuster, a nonresident individual licensee who relocates to Texas during the existing license term must, within 30 days of relocating to Texas, submit to TDI a completed application that meets the requirements of Insurance Code §4056.059. TDI will make available on its website a form that the individual may use to comply with this requirement.

History

Source Note: The provisions of this §19.809 adopted to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.810 License Renewal and Application for an Expired License

(a) Applicability. This section applies to the renewal of a license and application for an expired license under Insurance Code Title 13, concerning Regulation of Professionals, that was issued or renewed on or after November 1, 2015.

(b) Conflicts with other sections. To the extent that this section conflicts with §1.814 of this title (relating to Military Service Member, Military Veteran, and Military Spouse) in the application of this section and §1.814 to military service members, military veterans, and military spouses, §1.814 controls.

(c) Unexpired license. A licensee may apply for renewal of a license that has neither expired nor been suspended or revoked by:

(1) submitting to TDI the required renewal application fee and renewal application; and

(2) completing the applicable continuing education requirement within the reporting period and prior to the expiration of the license, as required under Insurance Code §4004.055, concerning Conduct, Disciplinary Actions, and Sanctions.

(d) Noncompliance with subsection (c) of this section. If the licensee does not comply with subsection (c) of this section, the license will not be renewed and will expire on the expiration date.

(e) Renewal of a license that has been expired for 90 days or less. A licensee may renew a license that has been expired for 90 days or less. The licensee must submit to TDI within 90 days after the license expiration date:

(1) the required renewal application fee;

(2) an additional fee equal to one-half of the required renewal application fee;

(3) a completed renewal application; and

(4) evidence demonstrating that the licensee has:

(A) completed the applicable continuing education requirement before the license expired; or

(B) completed continuing education after the license expired and paid all applicable fines as required under Insurance Code §4004.055.

(f) Effect of renewal or nonrenewal of expired license. If the licensee completes each item listed in subsection (c) of this section for an unexpired license as described, or completes each item listed in subsection (e) of this section within 90 days after the license expiration date, and the license is renewed, the license will be renewed effective as of the license expiration date. If the licensee fails to complete each item listed in subsection (c) of this section prior to the expiration date, or subsection (e) of this section within 90 days after the license expiration date, as applicable, the license cannot be renewed, and the individual cannot engage in the business of insurance in the capacity granted by that license effective as of the license's expiration date and continuing until the individual obtains a new license as provided in subsection (g) or (h) of this section.

(g) License expired for more than 90 days. If an individual's license has been expired for more than 90 days, but less than one year, the individual may apply for the expired license without an examination. The individual must submit to TDI within one year after the date the license expired:

(1) a new original application;

(2) the required application fee;

(3) an additional fee equal to one-half of the required application fee; and

(4) evidence demonstrating that the licensee has:

(A) completed the applicable continuing education requirement before the license expired; or

(B) completed continuing education after the license expired and paid all applicable fines as required under Insurance Code §4004.055.

(h) License expired for one year or more. If an individual's license has been expired for one year or more, to obtain the expired license the individual must:

(1) complete the requirements for a new license described in §§19.805 - 19.807 of this title (relating to Application for a New Individual License, Application for a Provisional Permit, and Application for a Temporary License), including reexamination, if applicable; and

(2) for a license that expired, was canceled, revoked, or not renewed on or after November 1, 2015, evidence demonstrating that the licensee:

(A) completed the applicable continuing education requirement before the license expired; or

(B) completed continuing education after the license expired and paid all applicable fines as required under Insurance Code §4004.055.

History

Source Note: The provisions of this §19.810 adopted to be effective May 31, 2018, 43 TexReg 3367; amended to be effective February 29, 2024, 49 TexReg 1095.

Subchapter J STANDARDS OF CONDUCT FOR LICENSED AGENTS

28 Tex. Admin. Code § 19.901 Definitions Concerning Conduct of Licensed Agents

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Agent--Any individual, partnership, or corporation which obtains from the Texas Department of Insurance a license or a certificate of authority to act as an agent under any of the provisions of Insurance Code Chapter 4001; as a health maintenance organization agent under Insurance Code Chapter 843, the Texas Health Maintenance Organization Act; or as an agent for a single health care service plan under Insurance Code §843.075.

(2) Applicant--An individual, partnership, or corporation applying to do business as an agent.

(3) Assumed name--Any name other than a true name.

(4) Office--Any location regularly maintained as a place of business and operating as an insurance agency under the provisions of the Insurance Code applicable to this subchapter.

(5) True name--Present legal name.

History

Source Note: The provisions of this §19.901 adopted to be effective October 6, 1987, 12 TexReg 3331; amended to be effective April 3, 1990, 15 TexReg 1589; amended to be effective April 26, 2021, 46 TexReg 2824.

28 Tex. Admin. Code § 19.902 One Agent, One License

(a) Only one license of the same type permitted. No agent may hold more than one license of the same type currently in effect. An agent doing an insurance business subject to the provisions of this subchapter must have the agent's license certificate issued in the agent's true name. If an individual is authorized to act as a particular type of agent, that individual need not obtain an additional license in order to participate in a licensed partnership or corporate agency of the same type, but the partnership or corporation must obtain a separate license. Any licensed agent may have additional offices or do an insurance business under assumed names without obtaining an additional license; provided, however, each agent must furnish the Texas Department of Insurance with a certification showing any and all assumed names that the agent will use. Where such a filing is required under the Assumed Business or Professional Name Act (Texas Business and Commerce Code Chapter 71, concerning Assumed Business or Professional Name), or any similar statute, the agent must provide the Texas Department of Insurance with a copy of the valid assumed name certificate reflecting proper registration of each assumed name used by the agent.

(b) Standards for approval and disapproval of names to be used by licensed agents.

(1) Name states or implies insurance capabilities not permitted under licenses applied for or held. No name proposed by an applicant or license will be approved if such name states or implies, or would lead reasonable persons to infer, that the applicant or licensed agent is an insurer, motor club, hospital service plan, health maintenance organization, continuing care retirement community, or other entity entitled to engage in insurance activities which in fact are not permitted under licenses applied for or held.

(2) Name states or implies ability to act as an insurer or guarantor. No name proposed by an applicant or licensee will be approved if such name states or implies, or would lead reasonable persons to infer, that the applicant or licensee is an insurer or guarantor. Nothing in this subsection prohibits the following:

(A) any agent from indicating that such agent is an authorized representative of an admitted insurer if such agent is also clearly designated as an agent representing such insurer; or

(B) any agent from using a name which includes "underwriter," "underwriters," or "underwriting."

(3) When name is misleading. No name proposed by an applicant or licensee (other than the true name of an individual) will be approved if it appears that use of the proposed name may mislead the public in any respect. A disapproval under this paragraph may be based on one or more of the criteria listed in subparagraphs (A) - (C) of this paragraph.

(A) The name is the same as, closely resembles, borrows on the name of, or implies affiliation with or sponsorship by, a federal, state, or local governmental authority or program.

(B) The name fails to state or clearly indicate that the applicant or licensee is or will be an insurance agent and the name states or implies, or would lead reasonable persons to infer:

(i) that the applicant or licensee is primarily engaged in some line of business other than the insurance business;

(ii) that the applicant or licensee has expertise in the area of investment, tax shelter, financial or estate planning, or computer programming; or

(iii) that the applicant or licensee is a public interest organization seeking to educate consumers or perform research for the public's benefit.

(C) The name makes use of one or more of the following words or phrases or a derivation of one or more of such words or phrases in a misleading manner:

(i) "administrator";

(ii) "advisor";

(iii) "agency";

(iv) "America" or "American";

(v) "analyst";

(vi) "assigned risk";

(vii) "associate";

(viii) "association";

(ix) "assurance company" or "assurance corporation" or "assurance, incorporated";

(x) "benefit";

(xi) "broker";

(xii) "bureau";

(xiii) "care";

(xiv) "city";

(xv) "company";

(xvi) "compensation";

(xvii) "consultant";

(xviii) "consumer";

(xix) "coop" or "cooperative";

(xx) "corporation" or "Corp.";

(xxi) "counselor";

(xxii) "county";

(xxiii) "credit union";

(xxiv) "department";

(xxv) "deposit insurance";

(xxvi) "federal";

(xxvii) "financial advisor" or "financial consultant" or "financial planner";

(xxviii) "government";

(xxix) "group";

(xxx) "HMO" or "health maintenance organization";

(xxxi) "incorporated" or "Inc.";

(xxxii) "Indemnity Company" or "Indemnity Corporation" or "Indemnity Inc.";

(xxxiii) "insurer" or "insuror";

(xxxiv) "investment";

(xxxv) "investor";

(xxxvi) "Medi" when used as the first part of prefix of a word leg;

(xxxvii) "mortgage guarantee" or "mortgage guaranty";

(xxxviii) "national";

(xxxix) "nationwide";

(xl) "no fault";

(xli) "plan";

(xlii) "referral";

(xliii) "research";

(xliv) "reserve";

(xlv) "savings";

(xlvi) "senior";

(xlvii) "service";

(xlviii) "social security";

(xlix) "state";

(l) "statewide";

(li) "Texas";

(lii) "trust";

(liii) "United States," "US," or "USA"; or

(liv) "veteran."

(D) The list of words and phrases appearing in subparagraph (C) of this paragraph is representative only. Such list is intended to serve as a standard or guideline and will not be considered as enumerating the only words or phrases which might be used in a manner that would be misleading or would have the capacity or tendency to mislead the public in any respect. Subparagraph (C) of this paragraph may be amended from time to time as conditions warrant revision.

(4) Review of disapproval of proposed name by Commissioner. Any applicant or licensee whose proposed name has been disapproved pursuant to these standards may request a hearing before the Commissioner. Such request for hearing must be in writing and must be submitted to the Commissioner no later than 30 days from written notice to the applicant or licensee of disapproval.

(5) Enforcement of standards. The standards established by these regulations are applicable to names filed with the Texas Department of Insurance upon the effective date of these rules. Agents may continue to use the name(s) under which they are licensed. The adoption of these regulations does not affect the authority of the department to order an agent to discontinue the use of a name that is shown to mislead the public and violate Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices, or rules adopted under it; provided, however, that any such action by the department must be conducted in accordance with the Insurance Code.

History

Source Note: The provisions of this §19.902 adopted to be effective October 6, 1987, 12 TexReg 3331; amended to be effective April 3, 1990, 15 TexReg 1589; amended to be effective April 26, 2021, 46 TexReg 2824; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.903 Concurrent Eligibility for Managing General Agent's License and Other Licenses

Nothing contained in this subchapter shall be taken to prohibit an individual, partnership, or corporation from concurrently holding both a managing general agent license under the Insurance Code, Article 21.07-3, and any other agent license or licenses not licenses of the same type, if the individual, partnership, or corporation can satisfy the eligibility requirements for each type of license under the Insurance Code and this title. The foregoing shall not be taken to permit a managing general agent, acting under the authority of that particular license, to engage in the life insurance business, health and accident insurance business, or annuity business.

History

Source Note: The provisions of this §19.903 adopted to be effective October 6, 1987, 12 TexReg 3331.

28 Tex. Admin. Code § 19.904 Joint Advertising by Similarly Licensed Agents

Subject to the provisions of this subchapter, two or more agents holding active licenses of the same type may jointly advertise or otherwise jointly present their agency names to the public. In such instances, any solicitation put forth by an individual agent or any policy, binder, certificate of insurance, endorsement, invoice, or billing must clearly and exactly identify the specific agency making the solicitation or servicing the insurance account in question. No agent shall make any representation, whether written or oral, that such agent is an authorized representative of any insurer unless the agent has been properly appointed to act as an agent for such insurer.

History

Source Note: The provisions of this §19.904 adopted to be effective October 6, 1987, 12 TexReg 3331.

28 Tex. Admin. Code § 19.905 Referral Business and Insurance Company Appointments

When a licensed local recording agent who does not have an appointment from a particular insurance company has referred an application for insurance to a local recording agent or managing general agent who does have an appointment with that company and the referral has resulted in the issuance of a policy of insurance written by that company, the agent who has the appointment may share the commission with the agent who does not have an appointment. The local recording agent, without an appointment from the company which takes the risk or issues a policy, may prepare an application for insurance, may collect and remit premium due to the agent issuing any such policy, and may deliver the policy and any endorsements to the insured and shall as to such activities be regarded as the agent of the insured and shall not be considered to be the agent of the company for any purpose. Upon making such referral, the local recording agent without an appointment from the company which takes the risk shall make written disclosure to the insured that such agent is not authorized to bind coverage or to execute or issue a policy for the subject risk. An agent without an appointment from a particular insurer may not sign or execute policies or issue binders, endorsements, or any other indication of coverage on behalf of that insurer.

History

Source Note: The provisions of this §19.905 adopted to be effective October 6, 1987, 12 TexReg 3331.

28 Tex. Admin. Code § 19.906 Last Known Address

Each agent must at all times keep the Texas Department of Insurance informed of the agent's current address. Such address must be included in each license application and each license renewal form. In the absence of the submission of a specific written request to change that address, which must be separate from any other submission, the agent's current address is presumed to be the most recent address on file with the department. Such address will be considered the agent's last known address for the purposes of notice to the agent by mail. Any request for a change of address must be made using the instructions provided on the department's website.

History

Source Note: The provisions of this §19.906 adopted to be effective October 6, 1987, 12 TexReg 3331; amended to be effective June 19, 2023, 48 TexReg 3285.

Subchapter K CONTINUING EDUCATION, ADJUSTER PRELICENSING EDUCATION PROGRAMS, AND CERTIFICATION COURSES

28 Tex. Admin. Code § 19.1001 General Provisions

(a) Purpose. The purpose of this subchapter is to specify:

(1) procedures and requirements for certification of continuing education courses and licensee continuing education requirements as authorized under the Insurance Code;

(2) procedures and requirements for certification and approval of adjuster prelicensing education courses and adjuster examinations as authorized under the Insurance Code §4101.054 and §4101.056;

(3) procedures and requirements for certification and approval of long-term care partnership certification courses and licensee long-term care partnership training requirements as authorized under the Insurance Code Chapter 1651, Subchapter C, and the Human Resources Code Chapter 32, Subchapter C;

(4) procedures and requirements for certification and approval of Medicare-related product certification courses and licensee Medicare-related product training requirements as authorized under the Insurance Code Chapter 4004, Subchapter D;

(5) procedures and requirements for certification and approval of small employer health benefit plan specialty certification courses and licensee small employer health benefit plan specialty training requirements as authorized under the Insurance Code Chapter 4054, Subchapter H; and

(6) procedures and requirements for certification and approval of annuity certification courses and licensee annuity training requirements as authorized under the Insurance Code Chapter 4004, Subchapter E and §1115.056.

(b) Severability. Where any terms or provisions of this subchapter are determined by a court of competent jurisdiction to be inconsistent with any statutes of this state or to be unconstitutional, the remaining terms and provisions of this subchapter shall remain in effect.

(c) Licensee continuing education compliance date. Licensees renewing a license prior to January 1, 2003 shall comply with the continuing education requirements set forth in §19.1003 of this title (relating to Licensee Requirements) that were in effect as of August 31, 2001.

History

Source Note: The provisions of this §19.1001 adopted to be effective May 27, 1994, 19 TexReg 3697; amended to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1002 Definitions

(a) Words and terms defined in Insurance Code §4001.003, concerning Definitions; §4004.151, concerning Agent Education Programs; or §4004.201, concerning Definition have the same meaning when used in this subchapter.

(b) The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Adjuster--An individual licensed under Insurance Code Chapter 4101, concerning Insurance Adjusters.

(2) Application level--Demonstration of the ability to use learned materials in a new situation, usually involving the application of rules, policies, methods, computations, laws, theories, or any other relevant and available information.

(3) Assignee--Any provider that is authorized under §19.1008(f) of this title (relating to Certified Course Advertising, Modification, and Assignment).

(4) Authorized provider representative--The individual a provider designates as the contact individual responsible for all of the provider's communications and filings with the department.

(5) Business of insurance--Has the same meaning as set forth in Insurance Code §101.051, concerning Conduct that Constitutes the Business of Insurance.

(6) Classroom course--A course complying with §19.1009(g) of this title (relating to Types of Courses).

(7) Classroom equivalent course--A course complying with §19.1009(h) of this title.

(8) Certificate of completion--A document complying with §19.1007(a)(7) of this title (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions).

(9) Certification course--A course designed to enhance the student's knowledge, understanding, and professional competence regarding specified subjects for an insurance product. The term includes courses that satisfy the requirements for the Long-Term Care Certification required by Insurance Code Chapter 1651, Subchapter C, concerning Partnership for Long-Term Care Program and Human Resources Code Chapter 32, Subchapter F, concerning Partnership for Long-Term Care Program; the Medicare-Related Product Certification required by Insurance Code Chapter 4004, Subchapter D, concerning Agent Education Programs; the Small Employer Health Benefit Plan Specialty Certification required by Insurance Code Chapter 4054, Subchapter H, concerning Specialty Certification for Agents Serving Certain Employer Groups; and the Annuity Certification required by Insurance Code §1115.056, concerning Agent Training Requirements.

(10) Certified course--A classroom, classroom equivalent, or self-study course offered by a registered provider that the department or its designee has determined meets the requirements of this subchapter.

(11) Department--Texas Department of Insurance.

(12) Disinterested third party--An individual who is:

(A) not related to a student by blood, adoption, or marriage as a parent, child, grandparent, sibling, niece, nephew, aunt, uncle, or first cousin; or

(B) not an employee or subordinate of the student.

(13) Ethics course--A course that deals with usage and customs among members of the insurance profession, involving their moral and professional duties toward one another, toward clients, toward insureds, and toward insurers.

(14) Insurance course--A course primarily focused on teaching subjects related to the business of insurance.

(15) Interactive inquiries--An interactive electronic component that complies with §19.1009(g)(2) of this title.

(16) Knowledge level--Recall of specific facts, patterns, methods, rules, dates, or other information that must be committed to memory.

(17) Licensee--An individual licensed under one or more of the following Insurance Code provisions:

(A) Chapter 4051, Subchapter B, concerning General Property and Casualty License; Subchapter C, concerning Limited Property and Casualty License; Subchapter E, concerning County Mutual Agent License; or Subchapter I, concerning Personal Lines Property and Casualty Agent;

(B) Chapter 4053, concerning Managing General Agents;

(C) Chapter 4054, Subchapter B, concerning General Life, Accident, and Health License; Subchapter C, concerning Limited Life, Accident, and Health License; Subchapter E, concerning Life Insurance Not Exceeding $25,000; or Subchapter G, concerning Life Agent;

(D) Chapter 4101, concerning Insurance Adjusters; or

(E) Chapter 4102, concerning Public Insurance Adjusters.

(18) Long-term care partnership insurance policy--For purposes of §19.1022 of this title (relating to Long-Term Care Partnership Certification Course) and §19.1023 of this title (relating to Long-Term Care Partnership Continuing Education) only, a policy established under Human Resources Code Chapter 32, Subchapter F, and Insurance Code Chapter 1651, Subchapter C.

(19) National designation certification--A professional designation that is:

(A) nationally recognized in the insurance industry; and

(B) issued by an entity that maintains a not-for-profit status and has been in existence for at least five years.

(20) One-time-event--A type of classroom course complying with §19.1009(j) of this title.

(21) Provider--An individual or organization including a corporation, partnership, depository institution, insurance company, or entity chartered by the Farm Credit Administration as defined in Insurance Code §4001.108, concerning Issuance of License to Entity Chartered by Federal Farm Credit Administration, registered with the department to offer continuing education courses for licensees, prelicensing instruction for adjusters, or long-term care partnership certification courses for licensees.

(22) Provider registration--The process of a provider seeking permission to offer continuing education courses for licensees, prelicensing education for adjusters, or long-term care partnership certification courses for licensees.

(23) Qualifying course--Insurance courses for which a licensee may receive continuing education credit and are:

(A) offered for credit by accredited colleges, universities, or law schools;

(B) part of a national designation certification program;

(C) approved for classroom, classroom equivalent, or participatory credit by the continuing education approval authority of a state bar association or state board of public accountancy; or

(D) certified or approved for continuing education credit under the guidelines of the Federal Crop Insurance Corporation.

(24) Reporting period--The period from the issue date or last renewal date of the license to the expiration date of the license, generally a two-year period.

(25) Self-study--A course complying with §19.1009(i) of this title.

(26) Speaker--An individual who is speaking from special knowledge regarding the business of insurance obtained through experience and position in professional or social organizations, industry, or government.

(27) Student--A licensee or adjuster applicant enrolled in and attending a certified course for credit.

(28) TDI license number--An identification number the department assigns to the licensee and found on the license certificate.

(29) Visually monitored environment--An environment permitting visual identification of students and visual confirmation of attendance, including observation by camera.

History

Source Note: The provisions of this §19.1002 adopted to be effective May 27, 1994, 19 TexReg 3697; amended to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective November 2, 2003, 28 TexReg 9274; amended to be effective November 25, 2007, 32 TexReg 8314; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1003 Licensee Hour and Completion Requirements

(a) Continuing education hour requirement. Except as provided in subsections (c) - (e) of this section, for each license and reporting period that the individual is licensed, each licensee must complete 24 hours of continuing education, except that licensees holding only a license issued under Insurance Code Chapter 4051, Subchapter C, concerning Limited Property and Casualty License; Chapter 4051, Subchapter E, concerning County Mutual Agent License; Chapter 4054, Subchapter C, concerning Limited Life, Accident, and Health License; or Chapter 4054, Subchapter E, concerning Life Insurance not Exceeding $25,000 must complete 10 hours of continuing education. The following requirements apply:

(1) licensees must:

(A) complete all required continuing education hours during the reporting period to avoid fines and be eligible to renew the license. A licensee who obtains a new license during the reporting period for an existing license held by the licensee may count all prior continuing education credits earned in the reporting period for the active license towards the new license if the licenses have the same expiration date;

(B) complete at least two hours of the licensee's continuing education requirement in certified ethics or consumer protection courses;

(C) complete at least 50% of the licensee's required continuing education hours in certified classroom or classroom equivalent courses; and

(D) complete the remainder of the continuing education requirement by completing certified courses applicable to any license type.

(2) Continuing education credit will not be granted for:

(A) any continuing education course credit received before the date the license is issued by TDI, including course credit earned while acting under a temporary license or a provisional permit, towards complying with the licensee's applicable continuing education requirement, except as provided in §19.1021 of this title (relating to Flood Insurance Education Course) and subsection (e) of this section;

(B) carry forward excess hours completed in one reporting period to a subsequent reporting period; or

(C) the current reporting period for any credit hours completed under Insurance Code §4004.055, concerning Consequences of Failure to Complete Continuing Education Requirement, to correct a shortage of hours in a previous reporting period.

(b) Maximum hour requirement. Licensees holding more than one license issued under the Insurance Code are not required to complete more than the number of continuing education hours required under their greatest single license requirement for a license held by the licensee during the reporting period, three hours of which must be in certified ethics or consumer protection courses, within each reporting period. This requirement applies even if the licensee chooses to cancel or nonrenew the license with the requirement. If the licensee is required to complete certain continuing education courses or course hours to maintain a voluntary certification, including certifications under §19.1022 of this title (relating to Long-Term Care Partnership Certification Course), §19.1023 of this title (relating to Long-Term Care Partnership Continuing Education), §19.1024 of this title (relating to Medicare-Related Product Certification Course), §19.1025 of this title (relating to Medicare-Related Product Continuing Education), §19.1026 of this title (relating to Small Employer Health Benefit Plan Specialty Certification Course), §19.1027 of this title (relating to Small Employer Health Benefit Plan Specialty Continuing Education), §19.1028 of this title (relating to Annuity Certification Course), and §19.1029 of this title (relating to Annuity Continuing Education), the licensee must complete the requirement to maintain the certification even if the total number of hours would exceed the limit specified in this subsection.

(c) Adjuster prelicensing education. Adjuster applicants seeking an examination exemption under Insurance Code §4101.056(a)(4), concerning Exemption from Examination Requirement, must complete both a certified adjuster prelicensing education course of not less than 40 hours, and pass the course examination testing the applicant's knowledge and qualifications set forth in this subchapter. Adjuster applicants must complete at least 30 hours of the course requirement through classroom or classroom equivalent course work.

(d) Prorated requirement. Licensees holding a license that was issued with a term of less than two years and those licensees who convert from nonresident to resident licenses during a reporting period, excluding adjusters with a license under which Texas is the designated home state, must complete continuing education hours based on a prorated schedule, as follows:

(1) for license types with a 24-hour requirement, one hour for each whole month between the issue or last renewal date of the license, or the date of Texas residency, to the end of the license period up to the maximum number of hours required for the license type during the reporting period; and

(2) for license types with a 10-hour requirement, the number of hours required in Figure: 28 TAC §19.1003(d)(2) for the license period between the issue date or last renewal date of the license, or the date of Texas residency, to the end of the license period up to the maximum number of hours required for the license type during the reporting period.

Attached Graphic

(3) Notwithstanding paragraphs (1) and (2) of this subsection, a licensee is not required to complete continuing education for the reporting period if the prorated reporting period is less than six months; and

(4) a licensee may not apply hours completed before becoming a Texas resident licensee towards compliance with the continuing education requirement.

(e) Texas designated home state adjuster requirement. A designated home state adjuster licensee under which Texas is the designated home state must complete continuing educations under the same requirements as a Texas resident adjuster. A licensee that converts from the Texas designated home state adjuster license to a Texas resident adjuster license during the reporting period:

(1) must complete continuing education in the same manner as a Texas resident adjuster for the combined period the individual held the Texas designated home state adjuster license and the Texas resident adjuster license; and

(2) does not qualify for completing continuing education on a prorated basis if the licensee becomes a Texas resident between renewals of the Texas designated home state adjuster license.

History

Source Note: The provisions of this §19.1003 adopted to be effective May 27, 1994, 19 TexReg 3697; amended to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective May 31, 2018, 43 TexReg 3367; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1004 Licensee Exemption from and Extension of Time for Continuing Education

(a) Any exemption or extension granted to a licensee under subsections (b) - (f) of this section applies to all license types held by the licensee. Nothing within this subchapter may be construed as preventing TDI from auditing a licensee to confirm the continued existence of circumstances supporting the exemption or extension.

(b) An agent who held a Texas resident license issued under Insurance Code Article 21.07-1, as Group I, legal reserve life insurance agent or general lines life, accident, and health insurance agent; Article 21.07-3, as managing general agent; or Article 21.14, as local recording agent, solicitor, general lines property and casualty agent, or insurance service representative, for at least 20 years or more as of December 31, 2002, is exempt from completing the required number of continuing education hours in §19.1003 of this title (relating to Licensee Hour and Completion Requirements). Agents must confirm that they qualify for this exemption by submitting a written request to TDI indicating that they have met the longevity requirement. TDI or TDI's designee will provide written notice that an agent qualifies for this exemption. Agents that qualified for the longevity exemption authorized under the Insurance Code prior to September 1, 2001, remain qualified and do not have to reapply for this exemption.

(c) A licensee who on or after January 1, 2003, has been continuously licensed by TDI for at least 20 years is exempt from completing the required number of continuing education hours in §19.1003 of this title. For purposes of this subsection "continuously licensed" means that the licensee has held a TDI issued license for the entire period of time without any lapse in excess of 90 days in which the licensee was not licensed or failed to renew a license. The exemption will apply beginning with the reporting period in which the licensee reaches the 20th year of licensure. TDI or TDI's designee will provide written notice to the licensee that a licensee qualifies for this exemption. Licensees may not claim the exemption prior to receiving written notice that they qualify for the exemption. Licensees may submit a written request to TDI to evaluate their longevity status.

(d) Nonresident licensees, are subject to the following requirements:

(1) A nonresident licensee, including an adjuster with a designated home state adjuster license issued by a state other than Texas, who is in compliance with the licensee's resident state's or adjuster's designated home state's continuing education requirements are not required to complete the continuing education requirement under this subchapter. A licensee may qualify for this exemption based on the following:

(A) the licensee's state of residence, or adjuster's designated home state, claimed in the licensee's original application;

(B) by sending written notification to TDI or its designee stating that the licensee is a resident of another state, or the adjuster has a designated home state other than Texas, with a certificate of good standing; or

(C) by sending any other document acceptable to TDI, showing that the licensee has a resident license or an adjuster's designated home state adjuster license in good standing in that state.

(2) A designated home state adjuster licensee who designates Texas as the licensee's home state is not exempt under this subsection and must complete continuing education under the same requirements as a Texas resident adjuster as required under §19.1003(e) of this title.

(e) Licensees who meet the criteria of illness, medical disability, or circumstances beyond the control of the licensee may apply for an exemption or extension of time to complete their continuing education requirement without incurring a fine or a waiver, in whole or in part, of the continuing education requirement. Business reasons do not constitute circumstances beyond the control of the licensee. TDI will establish the duration of the extension when it is granted. If the circumstances supporting the extension continue beyond the granted extension period, the licensee may reapply for an exemption or extension. The licensee's application must include the information set forth in paragraphs (1) - (6) of this subsection:

(1) a written statement of the exact nature of the illness, medical disability or other extenuating circumstances beyond the control of the licensee that have prevented or will prevent the licensee from completing the required hours within the reporting period;

(2) evidence regarding the illness or medical disability of the licensee and circumstances beyond the control of the licensee;

(3) a written assessment of whether the condition is temporary, permanent, or unknown;

(4) a written statement as to whether the licensee will be able to perform activities including any acts of an agent or adjuster during the exemption or extension period being requested;

(5) the estimated date when the licensee will be able to perform any activities including any acts of an agent or adjuster in accordance with the medical reports or other documents pertaining to circumstances beyond the control of the licensee; and

(6) any other information that may be of assistance in evaluating the request.

(f) An individual holding a risk manager license is exempt from the continuing education requirements under this subchapter for any license held by the individual, if the individual demonstrates in writing to TDI that the individual has held one of the following designations listed in Insurance Code §4153.055, concerning Exemptions from Examination and Continuing Education Requirement, for a period of not less than 30 years:

(1) certified insurance counselor,

(2) associate in risk management, or

(3) certified risk manager.

(g) A licensee holding only a funeral prearrangement life insurance agent license or a life insurance not exceeding $25,000 agent license and meeting the requirements specified in Insurance Code §4054.159, concerning Continuing Education Exemption, or Insurance Code §4054.207, concerning Continuing Education Exemption, is exempt from completing the continuing education requirements in this subchapter. A licensee claiming this exemption must attest to meeting this requirement during each reporting period with the licensee's license renewal.

History

Source Note: The provisions of this §19.1004 adopted to be effective May 27, 1994, 19 TexReg 3697; amended to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective May 31, 2018, 43 TexReg 3367; amended to be effective February 29, 2024, 49 TexReg 1095.

28 Tex. Admin. Code § 19.1005 Provider Registration, Instructor, and Speaker Criteria

(a) A provider applicant seeking initial registration or renewal registration from the department as a continuing education provider, adjuster prelicensing education provider, or certification course provider shall submit to the department or its designee, an application on forms provided by the department and all applicable fees as set forth in §19.1012 of this title (relating to Forms and Fees). The department may require the following items in order to approve or disapprove a provider's registration request:

(1) The name, physical address, and mailing address of the provider applicant;

(2) The name of the provider applicant's designated authorized provider representative;

(3) A description of the provider's student record system including a description of the methods for documenting attendance;

(4) The method used by the provider for evaluating instructors;

(5) If the provider applicant is a corporation, partnership, limited liability company, or other legal entity not otherwise licensed or regulated by the department, the provider applicant must furnish:

(A) the name of its state of incorporation, domicile, or residence; and

(B) if required to pay franchise taxes, a certificate of good standing from the Texas Comptroller of Public Accounts;

(6) All names used by the provider applicant to provide insurance related education courses in this state;

(7) A statement as to whether or not the provider applicant has had any certification or approval for a professional continuing education course, prelicensing education course, or a certification course revoked, suspended, or placed on probation, whether by agreement or as ordered in an administrative or judicial proceeding, by a court, financial or insurance regulator, or other agency of this state, another state, or the United States;

(8) A statement certifying that the provider shall comply with all provider and course requirements set forth in this subchapter; and

(9) Other information as specified by the department.

(b) Providers shall have a single registration and may, but are not required to, certify and offer continuing education courses, adjuster prelicensing education courses, and certification courses.

(c) Providers shall certify that course instructors are experienced and qualified in the subject to be taught, and certify that the instructors meet at least one of the following instructor criteria:

(1) has been in the practice of teaching insurance courses for at least the last three years and has the knowledge and experience in the subject the instructor will teach;

(2) has been properly licensed as a licensee subject to continuing education under the Insurance Code or similar statutes of another state or jurisdiction for at least five years;

(3) is the holder of a national designation certification recognized by the department which relates directly to the subject the instructor shall teach; or

(4) has been engaged in a recognized profession that is pertinent to the subject areas to be taught, including, but not limited to: licensed or certified medical professionals, Certified Public Accountants, and members of a state bar.

(d) Providers shall maintain as a part of the providers' records a written statement from each instructor certifying that the instructor is qualified as an instructor, the basis of qualification, and that the instructor shall comply with all course requirements as outlined in these sections.

(e) All provider registrations are valid for two years at which time the registration shall expire. Providers shall timely renew their registrations whether or not a notice of expiration is sent by the department. The provider may submit a registration renewal application up to 90 days in advance of the expiration date. Providers that are already registered upon the effective date of these sections shall provide the required registration information at the request of the department.

(f) Providers may use speakers only in conjunction with one-time-event continuing education courses. Providers may not use speakers in conjunction with other continuing education courses, adjuster prelicensing courses, or certification courses unless the speaker qualifies as an instructor.

(g) Providers shall maintain all information described or required under this section for a period of not less than four years.

History

Source Note: The provisions of this §19.1005 adopted to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1006 Course Criteria

(a) To be certified as a continuing education course, the course content must include topics that contribute substantive knowledge relating to the business of insurance and expand the competence of the licensee. Ethics and consumer protection course credit, described in paragraph (8) of this subsection, applies equally to all license types. TDI will not approve a course if it does not relate specifically to the business of insurance. Given that restriction, approved topics include, but are not limited to, the following:

(1) actuarial mathematics, statistics, and probability;

(2) assigned risk;

(3) claims adjusting;

(4) courses leading to and maintaining insurance designations;

(5) employee benefit plans;

(6) errors and omissions;

(7) estate planning/taxation;

(8) ethics and consumer protection, only if the course also provides instruction consistent with one or more of the following topics:

(A) Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices;

(B) Insurance Code Chapter 547, concerning False Advertising by Unauthorized Insurers;

(D) Business and Commerce Code Chapter 17, Subchapter E, concerning Deceptive Trade Practices and Consumer Protection Act;

(E) analogous laws as specified by TDI, including:

(i) Insurance Code Chapter 1952, Subchapter G, concerning Repair of Motor Vehicles;

(ii) Insurance Code Chapter 542, Subchapter B, concerning Prompt Payment of Claims;

(iii) Insurance Code Chapter 542, Subchapter D, concerning Notice of Settlement of Claim Under Casualty Insurance Policy;

(iv) Insurance Code Chapter 542, Subchapter E, concerning Recovery of Deductible From Third Parties Under Certain Automobile Insurance Policies;

(v) §5.501 of this title (relating to Notice Requirements to Claimants Regarding Motor Vehicle Repairs); and

(vi) Penal Code Chapter 35, concerning Insurance Fraud;

(F) corporate ethics;

(G) ethical challenges of licensees;

(H) ethical behavior of an insurance company;

(I) ethical behavior of an agent or adjuster;

(J) duties of the licensee to company, client, and customer;

(K) duties of insurer/HMO to agents/clients;

(L) fiduciary responsibility;

(M) unfair marketing practices;

(N) difference between ethics and laws;

(O) confidentiality, privacy, and ethics;

(P) ethical analysis of the licensee's job;

(Q) philosophical approaches to ethics; or

(R) business ethics;

(9) fundamentals/principles of insurance;

(10) insurance accounting/actuarial considerations;

(11) insurance contract/policy comparison and analysis;

(12) insurance fraud;

(13) insurance laws, rules, regulations, and regulatory updates;

(14) insurance policy provisions;

(15) insurance product-specific knowledge;

(16) insurance rating/underwriting/claims;

(17) insurance tax laws;

(18) legal principles;

(19) long-term care/partnership;

(20) loss prevention, control, and mitigation;

(21) managed care;

(22) principles of risk management;

(23) proper uses of insurance products;

(24) Real Estate Settlement Procedures Act;

(25) restoration -- addresses claims, loss control issues, and mitigation;

(26) retirement planning;

(27) securities;

(28) suitability in insurance products;

(29) surety bail bond;

(30) underwriting principles; and

(31) viaticals/life settlements.

(b) To be certified as an adjuster prelicensing education course or program, the course content must enhance the student's knowledge, understanding, and/or professional competence regarding the subjects set forth in §19.1017 and §19.1018 of this title (relating to Adjuster Prelicensing Education Course Content and Examination Requirements and Adjuster Prelicensing Examination Topics). Unless specifically stated otherwise, this subchapter applies equally to courses certified for continuing education and adjuster prelicensing purposes.

(c) To be certified as a long-term care partnership certification course, the course content must enhance the student's knowledge, understanding, and professional competence regarding the subjects specified in §19.1022 of this title (relating to Long-Term Care Partnership Certification Course). Unless specifically stated otherwise, this subchapter applies equally to courses certified for continuing education and long-term care partnership certification and long-term care partnership continuing education purposes.

(d) To be certified as a Medicare-related product certification course, the course content must enhance the student's knowledge, understanding, and professional competence regarding the subjects specified in §19.1024 of this title (relating to Medicare-Related Product Certification Course). Unless specifically stated otherwise, this subchapter applies equally to courses certified for continuing education, Medicare-related product certification, and Medicare-related product continuing education purposes.

(e) To be certified as a small employer health benefit plan specialty certification course, the course content must enhance the student's knowledge, understanding, and professional competence regarding the subjects specified in §19.1026 of this title (relating to Small Employer Health Benefit Plan Specialty Certification Course). Unless specifically stated otherwise, this subchapter applies equally to courses certified for continuing education and small employer health benefit plan specialty certification.

(f) To be certified as an annuity certification or continuing education course, the course content must enhance the student's knowledge, understanding, and professional competence regarding the subjects specified in §19.1028(g)(1) - (4) of this title (relating to Annuity Certification Course). Unless specifically stated otherwise, this section applies equally to courses certified for continuing education and annuity certification.

(g) The following course content is not applicable to a licensee's continuing education requirements:

(1) meetings held in conjunction with the regular business of the licensee or courses or training relating to the marketing and business practices of a specific company;

(2) course content teaching general accounting, speed reading, other general business skills, computer use, or computer software application use;

(3) course content teaching motivation, goal-setting, time management, communication, sales, or marketing skills;

(4) course content providing for prelicensing training qualifying examination preparation;

(5) course content that does not meet the requirement of subsection (a) of this section; and

(6) course content that is substantially:

(A) a glossary, dictionary, or index of insurance terms without independent distinction as to the application of these terms to the business of insurance through case studies or analysis based on actual or hypothetical factual situations that apply to the business of insurance; or

(B) a recitation of statutes, rules, legal principles, or theories without independent distinction as to the application of these issues to the business of insurance through case studies or analysis based on actual or hypothetical factual situations that apply to the business of insurance.

(h) A single continuing education course may include both ethics and consumer protection credit topics with other topics meeting the requirements of subsection (a) of this section.

History

Source Note: The provisions of this §19.1006 adopted to be effective January 10, 1997, 22 TexReg 49; amended to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective June 16, 2021, 46 TexReg 3610.

28 Tex. Admin. Code § 19.1007 Course Certification Submission Applications, Course Expirations, and Resubmissions

(a) The provider shall submit the course certification application to the department or its designee and include the following information:

(1) A certification by the provider that the course meets the minimum requirements as defined in this subchapter;

(2) A statement identifying the knowledge, skills, or abilities the licensee is expected to obtain through completion of the course;

(3) A detailed course content outline showing the approximate times for major topics;

(4) For one-time-event continuing education courses, the provider's certification that all speakers, if any, are qualified under this subchapter;

(5) The method of evaluation by which the provider measures how effectively the course meets its objectives and provides for student input;

(6) The total number of course hours requested for approval, including:

(A) the method the applicant is using to determine the number of course hours;

(B) the number of hours included in the total number of course hours requested for approval that are:

(i) sales and marketing topics; and

(ii) ethics and consumer protection topics; and

(C) for applicants determining classroom equivalent or self study course hours by using the average of approval times in other states, a list of all course approval times and states in which the course is approved.

(7) A sample of the certificate of completion which shall be used when licensees or adjuster applicants successfully complete the certified course for approval by the department or its designee. The certificate of completion must contain, at a minimum, the following information:

(A) a statement that the course is for continuing education credit, adjuster prelicensing training, long-term care partnership certification, Medicare-related product certification, small employer health benefit plan specialty certification, or annuity certification;

(B) provider name and number;

(D) course name, and if applicable, TDI course number(s);

(E) total number of credit hours and the number of included ethics and consumer protection topics;

(F) date of course completion;

(G) for continuing education courses, TDI license number and name of student completing the course;

(H) for adjuster prelicensing training, the name of the student completing the course; and

(I) for certification courses, TDI license number, the name of the student completing the course, and the type of certification (long-term care partnership certification, Medicare-related product certification, small employer health benefit plan specialty certification, or annuity certification);

(8) A statement that the course is intended for:

(A) continuing education classroom, classroom equivalent, or self study credit and whether the course is primarily intended to be open to all licensees or shall have a restricted enrollment;

(B) adjuster prelicensing education and whether the course is primarily intended to be open to all adjuster applicants or shall have a restricted enrollment; or

(C) certification and whether the course is primarily intended to be open to all licensees or will have a restricted enrollment;

(9) A copy of the provider's refund policy; and

(10) Any other information requested by the department.

(b) Failure to submit a completed application and all of the requested items shall result in rejection of the application.

(1) maintained by the provider for four years;

(2) subject to review and audit by the department or its designee; and

(3) provided to the department or its designee upon request.

(d) All course certifications are valid for two years at which time the course certification shall expire. The provider shall review and update each course every two years to remain in compliance with this subchapter prior to resubmission for certification. If more than 25% of the course is changed, or if any change shall affect the course content breakdown as previously certified by the department, the department shall consider the course revised and the provider must submit the course to the department for certification as a new course.

(e) If a course is not certified by the department, the provider may request re-evaluation, supplying specifics on how each portion of the course meets the minimum requirements for certification.

History

Source Note: The provisions of this §19.1007 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1008 Certified Course Advertising, Modification, and Assignment

(a) The provider may provide courses open to all licensees or restrict enrollment to licensees of its choice. Restricted enrollment courses shall not be included on lists of courses available to the public. In addition to public offerings, a provider may offer the open registration courses to restricted audiences.

(b) Providers may advertise their courses subject to the following guidelines:

(1) Providers may not advertise that their course has been certified by the department until they have received written confirmation from the department or its designee of the certification of their course, except that providers may advertise submitted courses as "Pending certification by the Texas Department of Insurance."

(2) Advertisements that include references to course certification by the department must also include the provider's name and TDI provider number.

(3) Advertisements may not be misleading as to the course content or requirements for successful completion, and must clearly state:

(A) whether the provider is offering the course for classroom, classroom equivalent, or self study credit;

(B) any equipment or software that is required to take the course; and

(C) the requirements for successful completion of the course, including whether the course shall require a monitored final examination.

(c) Providers shall not allow the presentation of advertising of any type in any manner during course instruction or examination periods. Use of company logos and references to specific company products during a course shall not be considered advertising if they are the subject of the course or are actually affixed to items being used, are incidental to the presentation, and do not interfere with or distract from the instruction.

(d) A provider may make a written request for classroom credit certification of a recording of the provider's certified classroom or one-time-event course. The certification shall be for the same number of credit hours. The recorded version must present the program in its entirety and may be edited only to remove gaps between presentations. This shall not be considered as a new course application for the purpose of fees. A provider making a presentation of a recorded certified classroom or one-time-event course must maintain a record of the name, qualifications, and certification of all instructors that present the recorded course.

(e) Providers modifying certified courses or one-time-events as to the number of credit hours or changing the course to qualify as a classroom equivalent or self study course, must submit the modified course for certification.

(f) The department shall not grant credit for any assigned courses except as provided under this subsection.

(1) Both the assignee and assignor must be authorized providers.

(2) The course may not be modified:

(A) by changing more than 25% of the certified course content;

(B) to change the number of certified course credit hours;

(D) by using an examination other than that prepared by the originating assignor.

(3) The assignee must submit to the department or its designee an assignment form provided by the department designating the assignment of the course, bearing an original signature of the assignor's authorized provider representative, and detailing:

(A) the original course certification number;

(B) the actual calendar date the assignment is effective;

(D) any other information which may be requested by the department or its designee.

(4) The assignor shall deliver all information required for certification of a course as set forth in §19.1007(a) of this title (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions) to the assignee. The assignee shall maintain all information required under §19.1007(a) of this title and shall submit to the department or its designee such information on request.

(5) Assignment of any course shall not affect the certification period of the course or work to extend the course certification termination date.

(6) Assigned courses shall be considered as courses of the assignee for purposes of this subchapter and the assignee shall comply with all parts of this subchapter in relation to the assigned course, except that assignees may not assign an assigned course.

(7) The department shall not act on behalf of, or at the request of, any party in any dispute over an assignment.

(8) The department shall consider an assignment terminated only upon the following events:

(A) the date the assignment terminates as specified in the assignment application;

(B) the written and signed request of both the assignor and assignee, which may be granted or given to an assignor by the assignee in advance or as a condition of assignment;

(D) expiration of the course certification; or

(E) the order of a court of competent jurisdiction finding that the assignee is not authorized to present the course or that the assignment agreement is terminated.

(9) Assignees may not offer an assigned course after the course's certification termination date unless the originating assignor re-certifies the course.

History

Source Note: The provisions of this §19.1008 adopted to be effective January 6, 2003, 28 TexReg 75.

28 Tex. Admin. Code § 19.1009 Types of Courses

(a) Continuing education courses may be qualifying courses and certified classroom, classroom equivalent, and self study courses offered by registered providers.

(b) Providers shall offer adjuster prelicensing courses only as a complete course of study for the particular adjuster's license type designation that meets the requirements of §19.1003(c) of this title (relating to Licensee Requirements) and §19.1017 of this title (relating to Adjuster Prelicensing Education Course Content and Examination Requirements). The course of study may consist of classroom, classroom equivalent, and self study instruction. Providers may offer a variety of courses for each adjuster's license designation.

(c) Providers must offer long-term care partnership certification courses only as a complete course of study that meets the requirements of §19.1022 of this subchapter (relating to Long-Term Care Partnership Certification Course). The course of study for long-term care partnership certification courses may consist of classroom, classroom equivalent, and self-study instruction.

(d) Providers must offer Medicare-related product certification courses only as a complete course of study that meets the requirements of §19.1024 of this subchapter (relating to Medicare-Related Product Certification Course). The course of study for Medicare-related product certification courses may consist of classroom, classroom equivalent, and self-study instruction.

(e) Providers must offer small employer health benefit plan specialty certification courses only as a complete course of study that meets the requirements of §19.1026 of this subchapter (relating to Small Employer Health Benefit Plan Specialty Certification Course). The course of study for small employer health benefit plan specialty certification courses may consist of classroom, classroom equivalent, and self-study instruction.

(f) Providers must offer annuity certification courses only as a complete course of study that meets the requirements of paragraphs §19.1028(g)(1) - (4) of this subchapter (relating to Annuity Certification Course). The course of study for annuity certification courses may consist of classroom, classroom equivalent, and self-study instruction.

(g) Classroom courses may include lectures, seminars, audio, video, computer-based instruction, and teleconferences that meet the following requirements:

(1) A disinterested third party attendant, an instructor, or a disinterested third party using visual observation technology must visually monitor attendance either inside or at all exits to the course presentation area at all times during the course presentation.

(2) At least three students and an instructor must be involved in each presentation of the course; however, in circumstances involving remote presentations, all students and the instructor do not need to be in the same location. In the case of presenting recorded or text materials, the instructor making the live course presentation does not have to be the same instructor included on the recorded presentation or who prepared the text materials.

(3) Question and answer and discussion periods must be provided by:

(A) an instructor making a live presentation of the course to licensees in the same room or via real-time live audio or audio-visual connection which shall allow for immediate student inquiries and responses with the presenting instructor; or

(B) an instructor who is present for the entire remote, recorded, or computer-based course presentation to students in the same room which shall allow for immediate inquiries and responses of students to the instructor.

(4) The course pace is set by the instructor and does not allow for independent completion of the course by students.

(h) Classroom equivalent courses may be internet, CD-ROM, DVD, or other computer-based presentations that:

(1) May not have more than one student at any one presentation of the course.

(2) Must have an interactive electronic component that:

(A) provides for at least four interactive multiple choice inquiry periods during each hour of the course, one of which shall be at the end of the course. Inquiry periods shall occur at regular and relatively evenly-spaced intervals between each period. Inquiry periods shall cover material presented in that section of the course;

(B) requires answering 70% of the inquiries for each period correctly to demonstrate mastery of the current section, including the final section, before the student is allowed by the program to proceed to the next section or complete the course;

(C) identifies all incorrect responses and informs the student of the correct response with an explanation of the correct answer;

(D) generates a different set of inquiries for the section, which may be repeated as necessary on a random or rotating basis if the student does not achieve the 70% correct response rate necessary to advance to the next section;

(E) is capable of generating at least two separate sets of inquiries for each inquiry period;

(F) provides for a method to directly transmit the final course completion results to the provider or a printed course completion receipt to be sent to the provider for issuance of a completion certificate; and

(G) has a means to reasonably authenticate the student's identity on a periodic hourly basis, including upon entering, during, and exiting the course.

(3) A comprehensive final examination is not required for classroom equivalent courses.

(i) Self-study courses may include textbook, audio, video, computer-based instruction, or any combination of these in an independent study setting designed in such a manner as to insure that the course cannot be completed by the typical enrollee in less time than the period for which the course is certified to the department.

(j) One-time-event courses shall:

(1) meet the requirements of a classroom course, except that the course may be offered only in a lecture or seminar format at particular events such as conventions and organizational meetings; and

(2) be designed to be offered as a single live presentation, except that providers may offer the course as a live presentation an additional three times per year within this state.

(k) One-time-event courses may be presented by speakers or instructors.

(l) Qualifying courses shall be categorized as classroom, classroom equivalent, or self-study based upon the teaching format in which the course is offered.

History

Source Note: The provisions of this §19.1009 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1010 Hours of Credit

(a) Credit hours for courses are determined by the methods set forth in paragraphs (1) - (7) of this subsection.

(1) TDI will award credit for certified classroom courses at the rate of one hour for every 50 minutes of actual instruction contact time. All classroom courses must be at least one hour of credit in length. Instruction contact time is considered the amount of time devoted to the actual course instruction and does not include breaks, lunch, dinner, introductions of speakers, explanatory or preparatory instructions, or evaluation of the course. TDI will not certify more than 24 credit hours for any one classroom course.

(2) TDI will award credit for certified classroom equivalent and self-study courses as set forth in subparagraphs (A) - (D) of this paragraph.

(A) The provider must determine the number of course hours by using one of the methods described in the following clauses.

(i) Average completion time. The provider may determine the number of course hours by calculating the average completion time of the individual course completion times of at least five licensees. If the provider uses this method to determine the number of credit hours, the provider must retain the names, current insurance license numbers, and completion times of all licensees that were used by the provider. A provider using this method may, at its discretion, issue certificates of completion in the number of hours certified by TDI to the licensees involved in the process and who completed the entire course.

(ii) Average number of credit hours assigned by other states. The provider may determine the number of course hours by calculating the average number of hours of the credit hours assigned by all other states in which the course is certified or approved. A provider may not use this method to determine the number of credit hours unless the course is approved in at least three other states. Providers may not include any hours allowed by other states for sales and marketing topics in calculating the average.

(iii) Word count/difficulty level. Providers using this method must designate the course as one of three difficulty levels: basic, intermediate, or advanced. A basic level course is designed for entry-level practitioners or practitioners new to the subject matter, an intermediate level course is designed for practitioners who have existing competence in the subject area and who seek to further develop and apply their skills, and an advanced course is designed for practitioners who have a strong foundation and high level of competence in the subject matter. Using these course difficulty definitions, the provider may then determine the number of course hours in the following manner. First, divide the total number of words by 180 to equal the documented average reading time. Second, divide the documented average reading time by 50 to equal the credit hours for a basic level course. Third, for intermediate and advanced courses, multiply the number of credit hours by 1.25 and 1.50, respectively, to reach the total number of credit hours for those respective courses. Fractional hours must be rounded up to the nearest whole number if .50 or above, and fractional hours must be rounded down to the nearest whole number if .49 or less.

(iv) Interactive course content. To use this method, the course must be interactive. An interactive course includes regularly occurring opportunities for student participation, engagement, and interaction with or in course activities and information. Examples include, but are not limited to, question and answer sessions, polling, games, sequencing, and matching exercises. The provider may determine the number of course hours of an interactive course by calculating the run time of the mandatory interactive elements, which include only those elements required to complete the course.

(B) All classroom equivalent and self-study courses must be at least one hour of credit, 50 minutes, in length.

(D) TDI will not certify more than 24 credit hours for any one classroom equivalent course or 12 credit hours for any one self-study course.

(3) TDI will grant continuing education classroom credit to licensees successfully completing qualifying college, law school, and university insurance classroom courses, as determined by the college, law school, or university. The number of classroom hours of continuing education credit for college, law school, and university insurance courses is the number of classroom instruction contact hours not including examinations, which may be no more than 24 credit hours per course.

(4) TDI will grant 12 self-study credit hours to licensees successfully passing qualifying national designation certification program examinations. Should the licensee also participate in and successfully complete a certified or qualifying classroom or classroom equivalent course in preparation for the national designation certification program examination, the licensee must choose either the classroom presentation or the national designation certification program examination to count as credit towards the licensee's continuing education requirement.

(5) Licensees who teach any portion of a certified continuing education classroom course may receive hour for hour classroom credit up to the maximum number of credit hours for the course. Licensees who teach courses may also be awarded an equal number of self-study hours as credit for course preparation.

(6) TDI will grant continuing education classroom credit to licensees successfully completing qualifying courses certified or approved for classroom, classroom equivalent, or participatory credit by the continuing education authority of a state bar association or state board of public accountancy on an hour for hour basis equal to the credit hours assigned to the course by the certifying state bar association or state board of public accountancy. The state bar association or state board of public accountancy must determine what constitutes successful completion of the course. TDI will not grant licensees self-study credit for any course accepted by a state bar association or state board of public accountancy unless the self-study course is offered through a registered provider in accordance with this subchapter.

(7) TDI will grant licensees continuing education credit for successfully completing courses certified or approved by the Federal Farm Credit Insurance Corporation on an hour for hour basis as assigned by the Farm Credit Insurance Corporation. The Farm Credit Insurance Corporation must determine what constitutes successful completion of the course.

(b) A provider must not issue certificates of completion to a licensee for partial credit of any course, except to an instructor teaching a portion of the course and who does not attend the full course.

(c) A licensee may not receive credit for teaching or completing the same continuing education course more than once within the same reporting period for compliance with the continuing education requirement.

(d) Providers may advertise and link courses as parts of a whole curriculum, but providers may not require a licensee to purchase more than one continuing education course to receive the credit hours approved for a single course.

History

Source Note: The provisions of this §19.1010 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective May 31, 2018, 43 TexReg 3367; amended to be effective June 16, 2021, 46 TexReg 3610.

28 Tex. Admin. Code § 19.1011 Requirements for Successful Completion of Continuing Education Courses

(a) Providers must use, at a minimum, actual attendance rosters to certify completion of a certified classroom or one-time-event continuing education course or a certified classroom certification course. TDI requires each student to attend at least 90% of the course. Providers must establish a means to ensure that each student attended at least 90% of the course. Attendance records must include, at a minimum, sign-in and sign-out sheets, and the legible names, addresses, and TDI license number of each student in attendance. Providers must use a written, online, or computer-based final examination to determine completion of all certified classroom certification courses that statutorily require an examination for successful completion of the certified classroom certification course. Providers may establish additional assessment measurements or any other completion requirements for successful completion of a classroom continuing education or classroom certification course, but those requirements must be fully disclosed in the registration materials before the student purchases the course. Providers must determine successful completion of these additional requirements.

(b) Providers must use the periodic interactive inquiries to determine completion of certified classroom equivalent continuing education or certification courses. A student must complete all inquiry sections with a minimum score of at least 70% for each section.

(c) Providers must use a written, online, or computer-based final examination as the means of completion for all certified self-study continuing education or certification courses. TDI does not require providers to monitor continuing education or certification self-study examinations. Course records for each examination attempt must include, at a minimum, the date the exam was taken, the final examination score, the examination version used, the legible name, address, and the TDI license number of each student.

(d) Self-study examinations and classroom equivalent interactive inquiries must meet the criteria set forth in paragraphs (1) - (12) of this subsection:

(1) the final examination or interactive inquiries must reasonably evaluate the student's understanding of the course content;

(2) the specific final examination questions and interactive inquiries may not be made available to the student until the test is administered, and providers must effect security measures to maintain the integrity of the examination;

(3) providers must maintain a record of each student's final examination in the student's record for four years;

(4) an authorized staff member or computer program must grade self-study final examinations, and the interactive inquiry computer program must grade interactive inquiries;

(5) providers must allow students to retake an examination at least one time if a score of 70% or higher is not achieved;

(6) providers must revise and update self-study final examinations and interactive inquiries consistent with the course update/revision;

(7) providers requiring a monitored final examination must establish the rules under which the examination will be given;

(8) the examination or interactive inquiry periods must consist of questions that do not give or indicate an answer or correct response and are of the following types:

(A) for self-study courses:

(i) short essay questions requiring a response of five or more words;

(ii) fill in the blank questions requiring a response from memory and not from an indicated list of potential alternatives; or

(iii) multiple choice questions stemming from an inquiry with at least four appropriate potential responses and for which "all of the above" or "none of the above" is not an appropriate option;

(B) for interactive inquiry periods, multiple choice questions stemming from an inquiry with at least four appropriate potential responses and for which "all of the above" or "none of the above" is not an appropriate option;

(9) each interactive inquiry period must consist of at least five questions;

(10) each self-study final examination must consist of at least 10 questions for each hour of credit up to a maximum requirement of 50 questions per course. Providers may, at their discretion, have a greater number of final examination questions;

(11) during examinations and interactive inquiry periods, licensees may use course materials or personal notes, but may not use another person's notes, answers, or otherwise receive assistance in answering the questions from another person; and

(12) licensees must mail or deliver the completed self-study examination directly to the provider.

(e) Providers must issue certificates of completion to students who successfully complete a certified course. The provider must prepare the certificate and issue it in a manner that ensures that the student receiving the certificate is the student who took the course, issue the certificate within 30 days of completing the course, and complete the certificate to reflect the date the student took the course/examination.

(f) Notwithstanding subsections (a) - (e) of this section, licensees must claim continuing education under §19.1020 of this title (relating to State and National Association Credit) by sending to TDI, or its designee, upon request, an affirmation acceptable to TDI containing:

(1) the licensee's name, address, telephone number, and licensee's TDI license number;

(2) the name of the national designation or state or national insurance association providing educational materials or sponsoring educational presentations;

(3) the cumulative number of hours of credit claimed for reviewing the educational materials;

(4) the cumulative number of hours of credit claimed for attending the educational presentations;

(5) a statement that the licensee currently holds the national designation or is a member in good standing of the state or national insurance association; and

(6) a statement that the licensee completed at least the number of hours in these activities the licensee is claiming for continuing education credit.

(g) In addition to the affirmation provided under subsection (f) of this section, TDI may request a licensee claiming hours under §19.1020 of this title to submit a sworn written affirmation to TDI confirming under oath the information in subsection (f) of this section. Failure to submit a sworn affirmation will result in denial of the claimed hours and may result in disciplinary action under §19.1015 of this title (relating to Failure to Comply) or the Insurance Code.

History

Source Note: The provisions of this §19.1011 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective January 19, 2006, 31 TexReg 292; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective June 16, 2021, 46 TexReg 3610.

28 Tex. Admin. Code § 19.1012 Forms and Fees

(a) Information on provider registration, course registration, sample certificates of completion, and the list of courses can be obtained from the department's website.

(b) The department establishes the following nonrefundable fees, which are necessary to administer the continuing education and certification programs and will apply unless the department contracts with a third party to provide continuing education or certification services:

(1) Provider registration:

(A) Original Registration - $50; and

(B) Renewal - $50.

(2) Continuing education and certification course certification:

(A) Initial submission - $10 for each hour of course credit requested on the application; and

(B) Resubmission - $10 for each hour of course credit requested on the application.

(3) Course assignment - $50 per assignment.

History

Source Note: The provisions of this §19.1012 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1013 Licensee Record Maintenance

(a) Licensees and adjuster applicants must provide evidence of completion of courses to TDI or its designee upon request. Each licensee must maintain evidence of each course completed for a period of at least four years from the date of completion of the course for the purpose of investigation or audit. Licensees must continue to maintain evidence of compliance during any period in which the licensee has been notified by TDI or its designee that the records or the licensee's compliance is the subject of an investigation or audit.

(b) Types of course completion evidence of compliance may include:

(1) a certificate of completion from a provider;

(2) a college transcript;

(3) a passing grade report from a national designation program;

(4) a certificate or report of completed continuing education hours issued by a professional licensing authority or a provider of a course certified by a professional licensing authority; or

(5) a letter from the program sponsor's representative stating the number of hours the licensee taught.

(c) Absent written notification from TDI that the applicant is exempt from the continuing education requirement or a timely written request or notice for extension or exemption as required under Insurance Code §4004.052(a) and §19.1004(b) - (h) of this title, a renewal applicant or individual applying for an expired license must complete and document all continuing education as required under this section, Insurance Code §4004.055 and §19.810 of this title. TDI's renewal of any license does not relieve a licensee from compliance with the continuing education requirements for any reporting period and failure to obtain required continuing education hours without obtaining a prior exemption or extension shall subject the licensee to administrative action.

(d) It is the licensee's responsibility to comply with this subchapter and submit and maintain evidence that the licensee has completed the required continuing education hours. A licensee should immediately report to TDI or its designee any discrepancy the licensee discovers between a course taken by a licensee and the credit hours certified to the licensee by the provider.

History

Source Note: The provisions of this §19.1013 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.1014 Provider Compliance Records

(a) Providers shall maintain all continuing education records, adjuster prelicensing education records, certification course records, attendance records, and course materials, including final examinations for at least four years, and the department or its designee may review these materials at any time.

(b) Providers shall notify the department or its designee when a course is discontinued or no longer active, and when there is a change to the provider's information of record.

(c) At the request of the department or its designee, providers shall furnish course completion information in an acceptable electronic format.

(d) The department or its designee may conduct audits of any certified course or provider without prior notice to the provider. Department staff or its representative or designee may attend courses without identifying themselves as employees or representatives of the department.

(e) If continuing education records, adjuster prelicensing records, or certification course records are audited or reviewed and the validity or completeness of the records are questioned, the provider shall have 30 days from the date of notice to correct discrepancies or submit new documentation.

(f) Registration of providers is conditioned upon the provider's compliance with this subchapter.

History

Source Note: The provisions of this §19.1014 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective August 5, 2008, 33 TexReg 6138; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1015 Failure to Comply

(a) The department or its designee may at any time investigate or audit a licensee's continuing education records and/or compliance with this subchapter. The commissioner may, after notice and opportunity for hearing, discipline a licensee under the Insurance Code, Chapter 82, Chapter 4005, Subchapter C, §§4005.101 - 4005.108, and Chapter 4101, Subchapter E, §4101.201, and this subchapter, if the commissioner determines that the license holder:

(1) is in violation of, or has failed to comply with, the Insurance Code or this subchapter;

(2) has provided, submitted, or filed any document which in whole or in part is false or deceptive for the purpose of providing evidence of complying with the continuing education statutes and this subchapter, or in responding to any inquiry from the department concerning compliance;

(3) has falsified records or participated in any activity which allows circumvention of the requirements of the Insurance Code or this subchapter;

(4) has received or used unauthorized materials or assistance or provided to another student unauthorized materials or assistance before or during an examination or interactive inquiry period; or

(5) has failed to pay within 90 days an automatic fine assessed pursuant to the Insurance Code §4005.109 and §19.1016 of this title (relating to Automatic Fines) without properly requesting a hearing.

(b) The department or its designee may at any time investigate or audit a provider's continuing education records and/or compliance with this subchapter. The commissioner may, after notice and an opportunity for hearing, discipline a provider and/or the provider's authorized representative, officers, directors, managers or partners, under the Insurance Code Chapter 82 and Chapter 4005, Subchapter C, §§4005.101 - 4005.108, and this subchapter, if the commissioner determines that the provider and/or its authorized representative, officer, director, manager, or partner:

(1) is in violation of, or has failed to comply with the Insurance Code or this subchapter;

(2) has represented to the public that the provider is authorized to offer certified courses prior to the approval of the provider's registration;

(3) has advertised any course in a manner not in compliance with this subchapter;

(4) has used unqualified instructors or speakers to present certified courses;

(5) has provided, submitted, or filed with the department any document which in whole or in part is false or deceptive relating to the provider's registration application, course assignment, course approval, instructor/speaker criteria, course content, or course credit, which allows circumvention of the requirements of the Insurance Code or this subchapter;

(6) has provided, submitted, or filed falsified records relating to a student's completion of continuing education, attendance, or final examination;

(7) has issued a certificate of completion for a course which does not comply with the registration requirements of this subchapter;

(8) has issued a certificate of completion or certificate of attendance when the student has not met the minimum completion requirements;

(9) has failed to pay within 90 days an automatic fine assessed pursuant to the Insurance Code §4005.109 and §19.1016 of this title without properly requesting a hearing;

(10) has failed to notify the department of changes to any course which are required to be reported;

(11) has failed to conduct the certified course, as specified in the course application;

(12) has failed to monitor course attendance where monitoring is required;

(13) has failed to insure an appropriately monitored examination where monitoring is required;

(14) has provided or allowed the use of unauthorized materials or assistance during an examination;

(15) has failed to provide timely refunds to students when required;

(16) has failed to timely file any form or other required information; or

(17) has failed to maintain course records for the required time period.

(c) If the commissioner proposes action against a licensee or provider, the affected licensee or provider is entitled to a hearing in accordance with Insurance Code, Chapter 40.

History

Source Note: The provisions of this §19.1015 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1016 Automatic Fines

(a) Pursuant to Insurance Code §4005.109, TDI establishes the following procedure for automatic fines:

(1) All automatic fines must be paid as directed in the notice of fine within 30 calendar days after the date of issuance of the automatic fine under this section unless the fined party disputes the assessment of the automatic fine and files a written request for contested case hearing under Chapter 2001 of the Government Code within the 30-day period.

(2) If the assessment of the fine is disputed, TDI may, in its discretion, assert other matters and claims against the fined party at such hearing and also seek any disciplinary action available under Insurance Code Chapter 82; Insurance Code §§4005.101 - 4005.108, 4101.201, and 4102.201 - 4102.204; and this subchapter, including additional fine amounts in excess of the automatic fine amount.

(b) TDI adopts the following automatic fines for a licensee who fails:

(1) to obtain the required number of continuing education hours and prior to June 1, 2018, attempts to renew a license, applies for an expired license, or applies for a new license - $50 per credit hour not completed; or

(2) to obtain the required number of continuing education hours and on or after June 1, 2018, attempts to renew a license, applies for an expired license, or applies for a new license - $50 per credit hour not completed, not to exceed $500 per license, per reporting period.

(1) failing to issue a properly completed certificate of completion within 30 days following completion of course - $100 per certificate;

(2) providing a course to students prior to course certification - $200 per student, per instance;

(3) providing a course to students after course certification has expired - $200 per student, per instance;

(4) providing an assigned course to students prior to approval of the assignment - $200 per student, per instance; and

(5) providing an assigned course to students after the assignment has expired - $200 per student, per instance.

History

Source Note: The provisions of this §19.1016 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271; amended to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.1017 Adjuster Prelicensing Education Course Content and Examination Requirements

(a) Certified adjuster prelicensing education courses shall provide students with instruction sufficient to take and pass the course's final examination for the adjuster's license designation as specified in this section. The course must meet the minimum 40-hour prelicensing education requirement to qualify for certification.

(b) All adjuster prelicensing examinations for compliance with the Insurance Code §4101.056(a)(4) may be written or computer-based and shall be designed to test applicants on the materials as specified in this section for the appropriate license designation and shall meet the criteria set forth in paragraphs (1) - (7) of this subsection:

(1) All lines adjuster. The student shall complete a 150-question examination in less than 180 minutes over the subjects and in the question percentages as set forth in §19.1018(a) of this title (relating to Adjuster Prelicensing Examination Topics).

(2) Property, casualty, and surety adjuster. The student shall complete a 150-question examination in less than 180 minutes over the subjects and in the question percentages as set forth in §19.1018(b) of this title.

(3) Workers' compensation adjuster. The student shall complete a 60-question examination in less than 90 minutes over the subjects and in the question percentages as set forth in §19.1018(c) of this title.

(4) At least 70% of the examination questions must be based on the application level or higher. The remainder of questions may be based at the knowledge level. Examination questions shall not be the same or substantially the same questions the student previously encountered in the course materials or review examinations and cannot be designed such that the correct answer is obvious by its content. The examination questions shall be multiple choice questions stemming from an inquiry with at least four appropriate potential responses and for which "all of the above" or "none of the above" is not an appropriate option.

(5) The specific examination questions may not be made available to the student until the test is administered. Security measures shall be in place to maintain the integrity of the examination and ensure that the enrolled student is the individual who took the examination.

(6) Providers must include and maintain the examination results in the student's record for four years. Providers and instructors shall not give any person answers to the examination questions at any time before, during, or after the course.

(7) An authorized staff member or a computer program shall grade the examinations.

(c) Students shall be allowed to retake a certified prelicensing examination course at least one time if a score of 70% or higher is not achieved without being required to retake the course. The retest shall consist of an alternate examination consisting of different questions from the original examination.

(d) Final examinations shall consist of at least three complete exams which are distributed alternatively to students and are revised or updated consistent with the course update/revision. The provider may distribute only one examination to any student at any one examination.

(e) A disinterested third party shall monitor the final examination in a visual environment. During the examination, students may not use course materials, personal notes, or any other written or electronic material or media that is not part of the examination, nor engage in communication of any kind with any other person except to receive instructions from the examination monitor. Upon completion of the examination, the person monitoring the examination must mail or deliver the completed examination directly to the provider.

(f) Providers shall issue certificates of completion to students who successfully pass the examination by correctly answering at least 70% of the examination questions. The provider must issue the certificate in a manner which shall ensure that the student receiving the certificate is the student who took the course, issue the certificate within 30 days of passing the examination, and complete the certificate to reflect the dates the student took the course and examination. Providers shall not allow a student, or any person or organization other than the provider giving the course, to prepare, print, or complete a certificate of completion.

History

Source Note: The provisions of this §19.1017 adopted to be effective January 6, 2003, 28 TexReg 75; amended to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1018 Adjuster Prelicensing Examination Topics

(a) All lines adjuster's license designation examination topics:

(1) General property insurance product knowledge pertinent to adjusters:

(A) Standard fire policy - 3%;

(B) Auto liability (includes Texas PAP) - 3%;

(D) Commercial lines coverage - 10%;

(E) Inland marine - 2%;

(F) Ocean marine - 2%;

(G) Additional coverages, exclusions, and extensions - 7%; and

(H) Bonds - 3%.

(2) Insurance terms and related concepts - 40%.

(3) Texas statutes and rules pertinent to property and casualty adjusting:

(A) Licensing requirements - 7%;

(B) Marketing practices - 7%;

(D) Workers' compensation - 3%.

(b) Property, casualty, and surety adjuster's content outline:

(1) General property insurance product knowledge pertinent to adjusters:

(A) Standard fire policy - 3%;

(B) Auto liability (include Texas PAP) - 3%;

(D) Commercial lines coverage - 10%;

(E) Inland marine - 2%;

(F) Ocean marine - 2%;

(G) Additional coverages, exclusions, and extensions - 7%; and

(H) Bonds - 3%.

(2) Insurance terms and related concepts - 40%.

(3) Texas statutes and rules pertinent to property and casualty adjusting:

(A) Licensing requirements - 6%;

(B) Marketing practices - 7%;

(1) Insurance terms and related concepts - 16%.

(2) Policy provisions - 8%.

(3) Texas statutes and rules pertinent to workers' compensation adjusting:

(A) Commissioner of Insurance - 7%;

(B) Licensing requirements - 7%;

(D) Workers' compensation - 55%.

History

Source Note: The provisions of this §19.1018 adopted to be effective January 6, 2003, 28 TexReg 75.

28 Tex. Admin. Code § 19.1020 State and National Insurance Association Credit

(a) For the purposes of this section the following definitions apply:

(1) Educational material--Printed or electronic materials with content intended to enhance the recipient's knowledge of insurance-related topics.

(2) Educational presentation--A live presentation allowing for questions or discussion given to a group of three or more licensees and that provides information intended to enhance the recipient's knowledge of insurance-related topics.

(3) State or national insurance association--A membership organization:

(A) organized as an association or corporation under state law;

(B) based on paid memberships renewable annually or biennially for an additional membership fee; and

(C) organized for the express purpose of promoting the interests of insurance licensees or a class of insurance licensees, including those classes based on license type or regional, gender, religious, or minority interests.

(b) Licensees who currently hold a national designation certification or are members in good standing of a state or national insurance association may receive up to four hours of self study continuing education credit per reporting period as follows:

(1) by accumulating up to two hours for reviewing educational materials provided by the national designation sponsor or state or national insurance association in which they hold a designation or are members; and

(2) by accumulating up to four hours for attending educational presentations sponsored by the national designation sponsor or state or national association in which they hold a designation or are members.

(c) A licensee may accumulate hours from different national designations or state or national insurance associations in which they hold a designation or membership to reach the four-hour limit, but regardless of the number of designations or association memberships or hours accumulated, the licensee may not claim more than four hours of credit under this section towards completing the licensee's continuing education requirement for any reporting period.

(d) Continuing education hours under this section shall apply only as self study credit and shall not count towards the licensee's ethics, classroom, or classroom equivalent continuing education requirements.

(e) A licensee claiming hours under this section may claim the actual time, up to an accumulated total of four hours, that the licensee needed to review the educational material or the duration of the educational presentation.

History

Source Note: The provisions of this §19.1020 adopted to be January 19, 2006, 31 TexReg 292.

28 Tex. Admin. Code § 19.1021 Flood Insurance Education Course

(a) Pursuant to §207 of the Flood Insurance Reform Act of 2004, the Federal Emergency Management Agency on September 1, 2005 published minimum training and education standards for persons that intend to write or currently write flood insurance (Federal Register, Vol. 70, No. 169, pp. 52117-52119). This section establishes these standards for a department-certified continuing education course.

(b) The course shall:

(1) be submitted for approval in compliance with §19.1007 of this subchapter (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions);

(2) be at least three hours in length;

(3) and cover the topics listed in subsection (g) of this section.

(d) The course may be taken after the department has issued a license or within 12 months preceding the license issue date.

(e) Licensees may count up to three hours towards completion of their initial continuing education requirement for successful completion of a certified flood insurance training course prior to issuance of their license. The licensee shall maintain proof of completion of the flood insurance training course prior to licensure for four years or through the second renewal of the license, whichever is longer. Upon request, the licensee shall provide the proof of course completion to the department or the department's designee.

(f) A provider-issued completion certificate in compliance with §19.1011(e) of this subchapter (relating to Requirements for Successful Completion of Continuing Education Courses) shall demonstrate proof of successful course completion.

(g) Course topics for the basic flood insurance course outline shall include:

(1) Section I - Introduction:

(A) National Flood Insurance Program (NFIP) Background;

(B) Community Participation;

(D) Regular Program Defined;

(E) Community Rating System;

(F) Eligible/Ineligible Buildings;

(G) Coastal Barrier Resources System and Other Protected Areas;

(H) Who Needs Flood Insurance?

(i) Mandatory Purchase of Flood Insurance in High Flood Risk Zones; and

(ii) Recommended in Moderate and Low Flood Risk Zones; and

(I) Why Flood Insurance is Better than Disaster Assistance.

(2) Section II - Flood Maps and Zone Determinations:

(A) Flood Hazard Boundary Map (FHBM);

(B) Flood Insurance Rate Map (FIRM):

(i) Pre-FIRM/Post-FIRM Defined; and

(ii) Special Flood Hazard Area Defined;

(D) Zone Determination.

(3) Section III - Policies and Products Available:

(A) Dwelling Policy - Types of Buildings Covered;

(B) General Property Policy - Types of Buildings Covered;

(D) Preferred Risk Policy - Types of Buildings Covered;

(E) Definitions:

(i) Flood;

(ii) Basement/Enclosure; and

(iii) Elevated Buildings;

(F) Damages Not Covered:

(i) Single Peril Policy; and

(ii) Mudslides vs. Mudflow;

(G) Property Covered:

(i) Basements;

(ii) Appurtenant Structure;

(iii) Loss Avoidance Measures;

(iv) Debris Removal; and

(v) Improvements and Betterments;

(H) Property and Expenses Not Covered:

(i) Decks;

(ii) Finished Items in Basements;

(iii) Property in Enclosures; and

(iv) Additional Living Expenses;

(I) Increased Cost of Compliance Coverage.

(4) Section IV - General Rules:

(A) Statutory Coverage Limits;

(B) Deductibles:

(i) Standard Deductibles; and

(ii) Apply Separately for Building and Contents;

(D) Loss Settlement:

(i) Actual Cash Value (ACV);

(ii) Replacement Cost Value (RCV); and

(iii) Co-insurance Penalty in RCBAP;

(E) Reduction and Reformation of Coverage;

(F) No Binders;

(G) One Building per Policy - No Blanket Coverage;

(H) Building and Contents Coverage Purchased Separately;

(I) Waiting Period/Effective Date of Policy;

(J) Policy Term; and

(K) Cancellations.

(5) Section V - Rating:

(A) Types of Buildings:

(i) Elevated Buildings; and

(ii) Buildings with Basements;

(B) When to Use an Elevation Certificate; and

(6) Section VI - Claims Handling Process:

(A) Helping Your Client to File a Claim;

(B) Appeals Process; and

(7) Section VII - Requirements of the Flood Insurance Reform Act of 2004; Point of Sale and Renewal Responsibilities:

(A) Notification of Coverages Being Purchased;

(B) Policy Exclusions that Apply;

(D) Number and Dollar Amount of Claims for Property; and

(E) Acknowledgement Forms.

(8) Section VIII - Agent Resources:

(A) Write Your Own Company;

(B) FEMA Websites:

(i) http://www.fema.gov/nfip;

(ii) http://www.floodsmart.gov; and

(iii) http://training.nfipstat.com/; and

History

Source Note: The provisions of this §19.1021 adopted to be January 19, 2006, 31 TexReg 292.

28 Tex. Admin. Code § 19.1022 Long-Term Care Partnership Certification Course

(a) Except as provided in subsection (b) of this section, an individual may not perform any action constituting the act of an agent under the Insurance Code §4001.051 with regard to a long-term care partnership insurance policy unless the individual:

(1) holds a current Life, Accident, and Health license issued by the department; and

(2) has completed a long-term care partnership certification course meeting the requirements of this subchapter.

(b) An individual who holds a current Life, Accident, and Health license issued by the department and is performing an action constituting the act of an agent under the Insurance Code §4001.051 with regard to a long-term care insurance policy at the time of the effective date of this section may perform an action constituting the act of an agent under the Insurance Code §4001.051 with regard to a long-term care partnership insurance policy at the time of the effective date of this section, provided the individual completes a long-term care partnership certification course meeting the requirements of this subchapter no later than January 1, 2009.

(1) be submitted to the department for approval in compliance with §19.1007 of this subchapter (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions);

(2) be at least eight hours in length; and

(3) cover the subjects described in subsection (g) of this section.

(d) Licensees may count a long-term care partnership certification course toward completion of the continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements). If a licensee chooses to use a long-term care partnership certification course to satisfy a portion of the continuing education requirements prescribed in §19.1003, the licensee shall comply with §19.1013 of this subchapter (relating to Licensee Record Maintenance).

(e) A licensee shall maintain proof of completion of a long-term care partnership certification course for a period of four years from the date of completion of the course. Upon request, the licensee shall provide proof of completion of the long-term care partnership certification course to the department.

(f) A provider issued completion certificate for a long-term care partnership certification course must comply with the requirements of §19.1011 of this subchapter (relating to Requirements for Successful Completion of Continuing Education Courses).

(g) Course subjects for a long-term care partnership certification course outline must include topics that address:

(1) long-term care insurance;

(2) long-term care services and providers;

(3) qualified state long-term care insurance partnership programs, which must include:

(A) state and federal requirements;

(B) the relationship between qualified state long-term care insurance partnership programs and other public and private coverage of long-term care services, including Medicaid;

(D) changes or improvements in long-term care services or providers;

(4) alternatives to the purchase of private long-term care insurance;

(5) the effect of inflation on benefits and the importance of inflation protection;

(6) consumer suitability standards and guidelines;

(7) Medicaid eligibility criteria and requirements, including financial eligibility criteria and requirements; and

(8) asset disregard under qualified state long-term care insurance partnership programs, including the interaction between asset disregard and Medicaid rules.

(h) Providers must meet all of the requirements of this subchapter before offering a long-term care partnership certification course to licensees.

(i) A non-resident licensee is not required to complete a long-term care partnership certification course required by this subchapter if:

(1) the non-resident licensee holds a comparable, current license issued in his or her home state;

(2) the home state of the non-resident licensee qualifies as a long-term care partnership state;

(3) upon department request, an insurer who has appointed the non-resident licensee is able to provide proof of the non-resident licensee's completion of a long-term care partnership certification course in the non-resident licensee's home state with requirements substantially similar to those in this subchapter; and

(4) upon department request, the non-resident licensee is able to provide proof of his or her completion of a long-term care partnership certification course in his or her home state with requirements substantially similar to those in this section.

(j) A non-resident licensee whose home state does not qualify as a long-term care partnership state may comply with the requirements of this subchapter by:

(1) completing a department certified long-term care partnership certification course in this state that meets the requirements of this subchapter; or

(2) designating a home state that qualifies as a long-term care partnership state and meeting the requirements of subsection (i) of this section.

(k) Licensees that may qualify for the exemptions provided under §19.1004 of this subchapter (relating to Licensee Exemption from and Extension of Time for Continuing Education) are not exempt from the provisions of this section.

(l) Information and resource material relating to the course subjects required in subsection (g) of this section, including a section entitled, "Resource Document for Agent Training: Texas Medicaid Eligibility and the Long-Term Care Partnership", may be found at the following website sponsored by the Texas Long-Term Care Partnership, located at www.ownyourfuturetexas.com.

History

Source Note: The provisions of this §19.1022 adopted to be effective August 5, 2008, 33 TexReg 6138.

28 Tex. Admin. Code § 19.1023 Long-Term Care Partnership Continuing Education

(a) In addition to completing the long-term care partnership certification course required by §19.1022 of this subchapter (relating to Long-Term Care Partnership Program Certification Course), in each reporting period following the reporting period in which a licensee completed a certification course, a licensee intending to perform any action constituting the act of an agent under the Insurance Code §4001.051 with regard to a long-term care partnership insurance policy must also complete at least four hours of department certified continuing education during each reporting period as part of the licensee's continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements).

(b) The department certified continuing education required under subsection (a) of this section must:

(1) comply with the requirements of §19.1006 of this subchapter (relating to Course Criteria); and

(2) enhance the knowledge, understanding, and professional competence of the student with regard to subjects described in §19.1022 of this subchapter.

(c) Providers must meet all the requirements of this subchapter before offering a long-term care partnership continuing education course to licensees.

(d) A non-resident licensee is not required to complete four hours of long-term care partnership continuing education required by this subchapter if:

(1) the non-resident licensee is in compliance with the long-term care partnership continuing education requirements of his or her home state; and

(2) the home state of the non-resident licensee qualifies as a long-term care partnership state.

(e) A non-resident licensee whose home state does not qualify as a long-term care partnership state may comply with the requirements of this subchapter by:

(1) completing four hours of department certified long-term care continuing education in this state that meets the requirements of this subchapter; or

(2) designating a home state that qualifies as a long-term care partnership state and meeting the requirements of subsection (d) of this section.

(f) Licensees that may qualify for the exemptions provided under §19.1004 of this subchapter (relating to Licensee Exemption from and Extension of Time for Continuing Education) are not exempt from the provisions of this section.

History

Source Note: The provisions of this §19.1023 adopted to be effective August 5, 2008, 33 TexReg 6138.

28 Tex. Admin. Code § 19.1024 Medicare-Related Product Certification Course

(a) An individual whose life, accident, and health license is issued or renewed by the department on or after April 1, 2010, may not perform an action constituting the act of an agent under the Insurance Code §4001.051 with regard to a Medicare-related product, unless the individual:

(1) satisfies the requirements of §19.102 of this title (relating to Agent Authority to Market Medicare Advantage Plans, Medicare Advantage Prescription Drug Plans, and Medicare Prescription Drug Plans); and

(2) has completed a Medicare-related product certification course meeting the requirements of this subchapter.

(b) This section establishes the standards for a Medicare-related product certification course. The course shall:

(1) be submitted to the department for approval in compliance with §19.1007 of this subchapter (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions);

(2) be at least eight hours in length; and

(3) cover each of the subjects described in subsection (f) of this section.

(c) Licensees may count a Medicare-related product certification course toward completion of the continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements). If a licensee chooses to use a Medicare-related product certification course to satisfy a portion of the continuing education requirements prescribed in §19.1003 of this subchapter, the licensee shall comply with §19.1013 of this subchapter (relating to Licensee Record Maintenance).

(d) A licensee shall maintain proof of completion of a Medicare-related product certification course for a period of four years from the date of completion of the course. Upon request, the licensee shall provide proof of completion of the Medicare-related product certification course to the department.

(e) A provider issued completion certificate for a Medicare-related product certification course must comply with the requirements of §19.1011 of this subchapter (relating to Requirements for Successful Completion of Continuing Education Courses).

(f) Course subjects for a Medicare-related product certification course outline must include topics that address:

(1) topics related specifically to Medicare-related products;

(2) state and federal laws and rules related to Medicare-related products;

(3) prohibited sales practices regarding Medicare-related products;

(4) topics related to the suitability of sales of Medicare-related products; and

(5) fraudulent and unfair trade practices regarding the sale of Medicare-related products.

(g) Licensees that may qualify for the exemptions provided under §19.1004(b) or (c) of this subchapter (relating to Licensee Exemption from and Extension of Time for Continuing Education) are not exempt from the provisions of this section.

History

Source Note: The provisions of this §19.1024 adopted to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1025 Medicare-Related Product Continuing Education

(a) In addition to completing the Medicare-related product certification course required by §19.1024 of this subchapter (relating to Medicare-Related Product Certification Course), in each reporting period following the reporting period in which a licensee completed a certification course, a licensee who performs or intends to perform any action constituting the act of an agent under the Insurance Code §4001.051 with regard to a Medicare-related product must also complete at least four hours of department certified continuing education during each reporting period as part of the licensee's continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements).

(b) The department certified continuing education required under subsection (a) of this section must:

(1) comply with the requirements of §19.1006 of this subchapter (relating to Course Criteria); and

(2) enhance the knowledge, understanding, and professional competence of the student with regard to one or more subjects described in §19.1024(f) of this subchapter.

(c) Licensees that may qualify for the exemptions provided under §19.1004(b) or (c) of this subchapter (relating to Licensee Exemption from and Extension of Time for Continuing Education) are not exempt from the provisions of this section.

History

Source Note: The provisions of this §19.1025 adopted to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1026 Small Employer Health Benefit Plan Specialty Certification Course

(a) An individual may advertise, in compliance with Chapter 21, Subchapter B of this title (relating to Insurance Advertising, Certain Trade Practices, and Solicitation), that the individual is specially trained to serve small employers in the health benefit plan market if the individual:

(1) holds a current life, accident, and health license issued by the department;

(2) agrees to market small employer health benefit plans to small employers that satisfy the requirements of the Insurance Code Chapter 1501 without regard to the number of employees to be covered under the plan;

(3) maintains on file with the department a current business address, phone number, and general description of the individual's service area;

(4) has completed a small employer health benefit plan specialty certification course meeting the requirements of this subchapter or qualifies for an exception from completion of the small employer health benefit plan specialty certification course in accordance with the Insurance Code §4054.353(c); and

(5) has passed an examination testing the individual's knowledge and qualifications in compliance with the requirements of §19.1011 of this subchapter (relating to Requirements for Successful Completion of Continuing Education Courses) or qualifies for an exception from completion of the small employer health benefit plan specialty certification course in accordance with the Insurance Code §4054.353(c).

(b) This section establishes the standards for a small employer health benefit plan specialty certification course. The course shall:

(1) be submitted to the department for approval in compliance with §19.1007 of this subchapter (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions);

(2) be at least eight hours in length;

(3) cover each of the subjects described in subsection (e) of this section; and

(4) comply with the requirements of §19.1011 of this subchapter.

(c) Licensees may count a small employer health benefit plan specialty certification course toward completion of the continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements). If a licensee chooses to use a small employer health benefit plan specialty certification course to satisfy a portion of the continuing education requirements prescribed in §19.1003 of this subchapter, the licensee shall comply with §19.1013 of this subchapter (relating to Licensee Record Maintenance).

(d) A licensee shall maintain proof of completion of a small employer health benefit plan specialty certification course for a period of four years from the date of completion of the course. Upon request, the licensee shall provide to the department the following:

(1) proof of completion of the small employer health benefit plan specialty certification course; or

(2) proof of exception from completion of the small employer health benefit plan specialty certification course in accordance with the Insurance Code §4054.353(c).

(e) Course subjects for a small employer health benefit plan specialty certification course outline must include topics that address:

(1) topics related specifically to small employer health benefit plans;

(2) state and federal laws and rules related to employer health benefit plans;

(3) anti-rebating and prohibited sales practices regarding employer health benefit plans;

(4) federal programs and other alternatives related to small employer health benefit plans; and

(5) fraudulent and unfair trade practices regarding small employer health benefit plans.

History

Source Note: The provisions of this §19.1026 adopted to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1027 Small Employer Health Benefit Plan Specialty Continuing Education

(a) In addition to completing the small employer health benefit plan specialty certification course required by §19.1026 of this subchapter (relating to Small Employer Health Benefit Plan Specialty Certification Course), in each reporting period following the reporting period in which a licensee completed a certification course, a licensee seeking to renew a small employer health benefit plan specialty certification must also complete at least five hours of department certified continuing education during each reporting period as part of the licensee's continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements).

(b) The department certified continuing education required under subsection (a) of this section must:

(1) comply with the requirements of §19.1006 of this subchapter (relating to Course Criteria); and

(2) enhance the knowledge, understanding, and professional competence of the student with regard to one or more subjects described in §19.1026(e) of this subchapter.

History

Source Note: The provisions of this §19.1027 adopted to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1028 Annuity Certification Course

(a) An individual who obtains a current resident agent license issued by the department on or after April 1, 2010, or renews a resident agent license on or after April 1, 2010, may not sell, solicit, or negotiate a contract for an annuity or represent an insurer in relation to an annuity in this state until they have completed the annuity certification course as specified in this section.

(b) Licensees that may qualify for the exemption provided under §19.1004(b) or (c) of this subchapter (relating to Licensee Exemption from and Extension of Time for Continuing Education) are not exempt from the provisions of this section.

(1) be submitted to the department for approval in compliance with §19.1007 of this subchapter (relating to Course Certification Submission Applications, Course Expirations, and Resubmissions);

(2) be at least four hours in length; and

(3) cover each of the subjects described in subsection (g) of this section.

(d) Licensees may count an annuity certification course toward completion of the continuing education requirements prescribed in §19.1003 of this subchapter (relating to Licensee Requirements). If a licensee chooses to use an annuity certification course to satisfy a portion of the continuing education requirements prescribed in §19.1003 of this subchapter, the licensee shall comply with §19.1013 of this subchapter (relating to Licensee Record Maintenance).

(e) A licensee shall maintain proof of completion of an annuity certification course for a period of four years from the date of completion of the course. Upon request, the licensee shall provide proof of completion of the annuity certification course to the department.

(f) A provider issued completion certificate for an annuity certification course must comply with the requirements of §19.1011 of this subchapter (relating to Requirements for Successful Completion of Continuing Education Courses).

(g) Course subjects for an annuity certification course outline must include each of the following topics:

(1) the requirements of the Insurance Code Chapters 1114 and 1115, and the requirements of Chapter 3, Subchapter NN of this title (relating to Consumer Notices for Life Insurance Policy and Annuity Contract Replacements);

(2) the prohibitions specified in the Insurance Code §§541.051 - 541.061;

(3) recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an annuity; and

(4) practices relating to annuities that are prohibited by the Penal Code Chapter 35.

(h) Course subjects for an annuity certification course outline may include additional topics addressing statutes enacted and rules adopted subsequent to the effective date of this section, provided that the statutes or rules relate specifically to annuities.

History

Source Note: The provisions of this §19.1028 adopted to be effective February 21, 2010, 35 TexReg 1271.

28 Tex. Admin. Code § 19.1029 Annuity Continuing Education

(a) Licensees who qualify for the exemption provided in §19.1004(b) or (c) of this title (relating to Licensee Exemption from and Extension of Time for Continuing Education) are exempt from the provisions of this section.

(b) During a licensee's two-year licensing period, a licensee who sells, solicits, or negotiates a contract for an annuity or represents an insurer in relation to an annuity in this state, or intends to sell, solicit, or negotiate a contract for an annuity or represent an insurer in relation to an annuity in this state, must complete at least eight hours of TDI-certified annuity continuing education in compliance with this section.

(c) Completion of the annuity certification course required by §19.1028 of this title (relating to Annuity Certification Course) constitutes four hours of TDI‑certified annuity continuing education in the license period during which the certification course is taken.

(d) The TDI-certified continuing education required under subsection (b) of this section must:

(1) comply with the requirements of §19.1006 of this title (relating to Course Criteria); and

(2) enhance the student's knowledge, understanding, and professional competence of one or more of the subjects described in §19.1028(g)(1) - (4) of this title.

History

Source Note: The provisions of this §19.1029 adopted to be effective February 21, 2010, 35 TexReg 1271; amended to be effective June 16, 2021, 46 TexReg 3610.

28 Tex. Admin. Code § 19.1030 Effect of License Expiration, Revocation, or Refusal to Renew on Certification Requirements

A licensee whose license has been expired for one year or more or has been revoked or refused renewal by the Department shall, upon the issuance of a new original license, comply with the certification requirements of this subchapter and may not use any certification course or continuing education course completed under the licensee's inactive license to satisfy the requirements.

History

Source Note: The provisions of this §19.1030 adopted to be effective February 21, 2010, 35 TexReg 1271.

Subchapter L SELECTION OF A TESTING SERVICES VENDOR FOR ADMINISTRATION OF LICENSING EXAMINATIONS

28 Tex. Admin. Code § 19.1101 Vendor Selection Process

(a) The department shall select a testing services vendor in accordance with Insurance Code Article 21.01-1, state procurement statutes and regulations, the provisions of this subchapter, and the requirements specified in any bid document issued by the department for selecting a licensing examination testing services vendor.

(b) The department shall issue a bid document setting forth its requirements for a testing services vendor contract. Any testing service vendor that would like to be considered for selection by the department for administration of license examinations must submit a qualifying proposal to the department in response to the bid document the department has issued in the manner and by the deadline required in the bid document.

(c) The department shall review each proposal for compliance with this subchapter and other necessary requirements as contained in related statutes, rules, and the bid document.

History

Source Note: The provisions of this §19.1101 adopted to be effective February 7, 2005, 30 TexReg 563.

28 Tex. Admin. Code § 19.1102 Evaluation

(a) The department shall evaluate each qualifying proposal based on the evaluation criteria set forth in the bid document.

(b) The department may establish an evaluation committee to conduct or assist in the evaluation process. Such committee may consist entirely of department staff with responsibility in areas affected by the various license types or knowledge of the technical areas covered in the bid document. The department may also include technical testing experts in the evaluation committee. Committee members may not have a direct or indirect financial relationship to potential vendors or be related to an employee of a vendor within the second degree of affinity or consanguinity.

(c) An evaluation committee established under this section shall not be considered to be an advisory committee as that term is defined in Government Code, Chapter 2110.

History

Source Note: The provisions of this §19.1102 adopted to be effective February 7, 2005, 30 TexReg 563.

28 Tex. Admin. Code § 19.1103 Selection of Vendor

(a) The commissioner shall conduct a public hearing for the purpose of selecting a licensing examination testing vendor in accordance with the bid document and state procurement statutes and regulations.

(b) After selection of the vendor, the department may engage in contract negotiations and execute a final written contract with the successful vendor.

History

Source Note: The provisions of this §19.1103 adopted to be effective February 7, 2005, 30 TexReg 563.

28 Tex. Admin. Code § 19.1104 Objection to Selection Process

Any objection to the examination testing vendor selection or bid process under this subchapter, must comply with §§1.1101 - 1.1107 of this title (relating to Procedures for Vendor Protests of Procurements).

History

Source Note: The provisions of this §19.1104 adopted to be effective February 7, 2005, 30 TexReg 563.

Subchapter M LICENSING AND REGULATION OF MANAGING GENERAL AGENTS

28 Tex. Admin. Code § 19.1201 General Provisions

(a) Statutory basis and purpose. This subchapter implements the Managing General Agents' Licensing Act (the Insurance Code, Article 21.07-3). The Managing General Agents' Licensing Act (Act) was first enacted in 1967 as Chapter 757 at page 2048 of the Acts of the 60th Legislature and first became effective on August 28, 1967.

(b) Severability. Where any terms or sections of this subchapter are determined by a court of competent jurisdiction to be inconsistent with the Act, as identified by this subchapter, the Act will apply and the remaining terms and provisions of this subchapter shall continue in effect.

(c) Effect of rules. The sections set out in this subchapter are prescribed to govern the performance of appropriate statutory and regulatory functions and are not to be construed as limitations upon the exercise of statutory authority by the State Board of Insurance (board) or the commissioner of insurance (commissioner).

(d) Violation. A violation of any lawful rule, regulation, or order of the commissioner or board made pursuant to this subchapter constitutes a violation of the Act.

History

Source Note: The provisions of this §19.1201 adopted to be effective October 24, 1991, 16 TexReg 5776.

28 Tex. Admin. Code § 19.1202 Definitions Concerning Licensing and Regulation of Managing General Agents

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Managing General Agents' Licensing Act (the Insurance Code, Article 21.07-3).

(2) Affiliate--An affiliate of, or person affiliated with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(3) Board--The State Board of Insurance.

(4) Carrier--A company, as defined in this section.

(5) Commissioner--The commissioner of insurance.

(6) Company--Any insurance company, corporation, inter-insurance exchange, mutual, reciprocal, association, county mutual insurance company, Lloyds, or other insurance carrier licensed to transact business in the State of Texas, excepting, however, those which write only life, health, and accident insurance and variable life insurance and variable annuity contracts.

(7) Control--The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. The term "control" shall include the terms "controlling," "controlled by," and "under common control with." Control shall be presumed to exist if any person, directly or indirectly, or with members of the person's immediate family, owns, controls, or holds with the power to vote, or if any person other than a corporate officer or director of a person holds proxies representing, 10% or more of the voting securities or authority of any other person, or if any person by contract or agreement is designated as an attorney-in-fact for a Lloyd's plan insurer under the Insurance Code, Article 18.02, or for a reciprocal or interinsurance exchange under the Insurance Code, Articles 19.02 and 19.10. This presumption may be rebutted by a showing that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of presumption to that effect, where a person exercises directly or indirectly either alone or pursuant to an agreement with one or more other persons such a controlling influence over the management or policies of an authorized insurer or an MGA as to make it necessary or appropriate in the public interest or for the protection of the policyholders of the insurer that the person be deemed to control the insurer or MGA.

(8) Insurer--A company, as defined in this section.

(9) Loss reserves--Has the meaning given to that phrase in the Insurance Code, Article 21.39.

(10) MGA--A managing general agent, as defined in this section.

(11) Managing general agent--Any person, firm, or corporation who has supervisory responsibility for the local agency and field operations of an insurance company or carrier within this state, or any part thereof, or who is authorized by a company or carrier to accept or process in its behalf insurance policies produced and sold by other agents. The term does not include an agent licensed under the Insurance Code, Article 1.14-2, 21.11, or 21.14, unless that agent accepts 50% or more of that agent's total annual business or does more than $500,000 of total annual business, whichever amount is less, as measured by premium volume from insurance policies produced and sold by other agents. An agent licensed under the Insurance Code, Article 21.11, who does business in conformance with the Insurance Code, Article 21.11, is not considered to derive any income from policies produced by other agents, as that term is used in the Act, §2(a); however, the agent is considered to derive its income from policies sold by such other agents. A managing general agent may perform any of the following acts for a company or carrier: receive and pass upon daily reports and monthly accounts; receive and be responsible for agency balances; handle the adjustment of losses; or appoint or direct local recording agents, state agents, or special agents within this state, or any part thereof.

(12) Person--An individual, a corporation, a partnership, an association, a joint stock company, a trust, an incorporated organization, any similar entity or any combination of the foregoing acting in concert, but not any securities broker performing no more than the usual and customary broker's function.

History

Source Note: The provisions of this §19.1202 adopted to be effective October 24, 1991, 16 TexReg 5776.

28 Tex. Admin. Code § 19.1203 Adoption by Reference of Forms Relating to Licensing and Regulation of Managing General Agents

The State Board of Insurance adopts and incorporates herein by reference forms for use in administrative licensing and regulation of managing general agents. These forms are published by the State Board of Insurance and may be obtained from the Agents' Licensing Division, Mail Code 014-3, State Board of Insurance, 333 Guadalupe Street, Austin, Texas 78701-1998. The forms adopted by reference are specifically identified in paragraphs (1)-(3) of this section as follows:

(1) Appointment Application for Licensing of Managing General Agents;

(2) Notice to State Board of Insurance by Managing General Agents or Surplus Lines Agents; and

(3) Notice to State Board of Insurance by Insurance Companies Licensed under Authority of the Insurance Code, Chapters 5, 6, 7, 8, 15, 16, 17, 18, or 19.

History

Source Note: The provisions of this §19.1203 adopted to be effective October 24, 1991, 16 TexReg 5776.

28 Tex. Admin. Code § 19.1204 Contract Provisions

(a) This subsection imposes the requirements set out in paragraph (1) and paragraph (2) of this subsection upon contracts between a managing general agent (MGA) and insurers in effect prior to the effective date of this subchapter.

(1) Oral contract. Every oral contract between an MGA and an insurer in effect prior to the effective date of this subchapter must be reduced to writing and must comply with the Managing General Agents' Licensing Act (Act) and with the provisions of this subchapter within 90 days following the effective date of this subchapter, regardless of the intended renewal date of the contract.

(2) Written contract. For any written contract between an MGA and an insurer entered into prior to September 1, 1989, the following actions must be taken.

(A) If the written contract does not address any area which the Act or this subchapter requires the contract to address, the MGA and the insurer must enter into a separate written contract or adopt amendments to the existing contract which address such area and which are in compliance with the Act and this subchapter. The written contract must be entered into or amendments adopted within 90 days from the effective date of this subchapter.

(B) If the written contract addresses an area which is covered by the Act and this subchapter, and if the contract does not comply with the Act or this subchapter, the written contract must be filed by the MGA with the Agents' Licensing Division of the State Board of Insurance, for information.

(C) If any written contract entered into prior to September 1, 1989, is amended or changed subsequent to the effective date of the Act, any amendment or change must be in writing and must comply with the Act and this subchapter.

(b) The provisions required by paragraphs (1)-(24) of this subsection are mandatory and must be included in each contract between a managing general agent and an insurer. These provisions are mandated not in order to limit the negotiation process between an MGA and an insurer, but in order to assure that minimum standards are utilized in each contract. Each MGA contract may contain provisions in addition to those listed in this section.

(1) The contract must state that all amendments and changes to the contract must be in writing and specify the effective date.

(2) The contract shall specify the party that is responsible for carrying out each particular function. If both parties share responsibility for a particular function, the contract shall specify the extent of each party's responsibility.

(3) The contract shall include a provision for termination of the contract; may define events of default; may specify cures for events of default; and may define the rights and obligations of parties during a period of default. The contract must state that the insurer may suspend the authority of the MGA during the pendency of any dispute regarding any event of default.

(4) The contract must specify the frequency with which the MGA must remit funds due to the insurer. In no event may the period of time for the MGA to remit funds to the insurer exceed 90 days from the end of the month in which the coverage is issued.

(5) The contract must state that, on not less than a monthly basis, the MGA shall submit an account report to the insurer. The report shall detail all transactions as set out in the Insurance Code, Article 21.07-3, §3C(a), and shall include both insurance and reinsurance transactions. The MGA may satisfy this requirement by confirming the insurer's rendering of such account. The account must be received by or confirmed to the insurer not later than 60 days from the close of the month for which business is reported. The insurer must maintain the account on file for at least three years and must make the account available to the commissioner for review.

(6) The contract must specify whether or not the MGA may appoint or terminate the appointment of agents.

(7) The contract must state that an MGA may not bind reinsurance or retrocessions on behalf of the insurer, may not commit the insurer to participation in insurance or reinsurance syndicates, and may not collect a payment from a reinsurer or commit the insurer to a claim settlement with a reinsurer without the prior written approval of the insurer. The contract must state that, if prior approval is given, the MGA must promptly forward a report to the insurer.

(8) The contract must state that the MGA may not assign the contract directly or indirectly in whole or in part without prior written approval of the insurer.

(9) Where electronic claims files are in existence, the contract must address the timely transmission of the data.

(10) The contract must include, if such authority is granted, appropriate authority and limitations under which the MGA is to operate, including the maximum annual premium volume, the basis of the rates to be charged, the lines of insurance which may be written, maximum limits of liability, applicable exclusions, territorial limitations, policy cancellation provisions, the maximum policy period, and control of policy issuance. In accordance with the authority and limitations, appropriate underwriting guidelines will be developed by the insurer and MGA and incorporated into the contract by reference.

(11) The contract shall prohibit the MGA from ceding reinsurance on behalf of the insurer to a company that would not qualify for reinsurance credit under the Insurance Code, Article 3.10 or Article 5.75-1, and the rules of the State Board of Insurance promulgated thereunder. The contract must specify the conditions under which the MGA may place reinsurance and the contract must comply with all provisions of the Insurance Code, including Article 21.07-3, §3B, and the rules of the State Board of Insurance adopted thereunder.

(12) The contract must provide that the MGA shall not be required to return, as commission or return commission, monies greater than the total commission paid or otherwise payable to the MGA.

(13) The contract must provide that, if a provision or separate written contract allows for payment of profit sharing between an insurer and an affiliated MGA before all reported claims are closed, including payment of all losses and loss adjustment expenses, then no payment shall be made before:

(A) one year from the expiration, anniversary, or closing date on which premiums for the period on which profits are to be paid are based for property, inland marine, or auto physical damage; or

(B) three years from such date for automobile liability; or

(D) two years from such date for any other non-liability lines.

(14) The contract must provide that, if the MGA has claim settlement authority including the setting of loss reserves, the insurer must review and verify every open reserve for the period on which profits are to be paid prior to calculation and payment of such profit sharing under paragraph (13) of this section.

(15) The contract must provide that, if the MGA has claim settlement authority including the setting of loss reserves, the insurer may elect to:

(A) make no payment of the profit sharing under paragraph (13) of this subsection until all reported claims for the period on which profits are to be paid are closed; or

(B) pay a portion of the profit sharing on the dates shown in paragraph (13) of this subsection and the remaining portion(s) on future anniversaries of such dates until all reported claims for the period on which profits are to be paid are closed.

(16) The contract must specify that the records to be maintained separately for each insurer as specified in the Insurance Code, Article 21.07-3, §3C(b), include underwriting files and that the separate records of business for each insurer must be maintained for at least five years or until the completion of a financial examination by the insurance department of the state in which the insurer is domiciled, whichever is longer.

(17) The contract must state whether or not the MGA has claims settlement authority and, if so, must state the maximum dollar amount of such authority, per claim, which in no event shall exceed 1.0% of the insurer's policyholder surplus as of December 31 of the last completed calendar year, or $30,000, whichever is greater.

(18) If a contract permits the managing general agent to settle claims on behalf of the insurer, the contract shall state that the managing general agent must send a copy of a form reporting to the insurer, within 30 days of determination, that:

(A) the claim involves a coverage dispute;

(B) the claim involves a demand in excess of policy limits; or includes allegations of bad faith, violations of the Deceptive Trade Practices Act, or violations of the Insurance Code, Article 21.21.

(19) The contract must specify the frequency with which the insurer shall cause to be conducted examinations of MGAs with which it is doing business in accordance with the following schedule.

(A) If the contract is with an MGA that is not an affiliate of the insurer, the contract must specify that the insurer shall cause to be conducted a semiannual examination of such nonaffiliated MGA if such nonaffiliated MGA has done business with the insurer during the previous six months.

(B) If the contract is with an MGA that is an affiliate of the insurer, the contract must specify that the insurer shall cause to be conducted an annual examination of such affiliated MGA with which the insurer had done business during the previous year.

(C) If the insurer's aggregate premium volume increases by 30% in any 30-day period, the insurer shall cause to be conducted an examination within 90 days of any Texas MGA that writes more than 20% of the insurer's volume and that has experienced an increase of 20% in premium volume during the same 30-day period.

(20) The contract must specify that the examinations required in paragraph (19) of this subsection must adequately provide the commissioner with the information required under subparagraphs (A)-(E) of this paragraph; must be made available to the commissioner for review; must remain on file with the insurer for at least three years; and must, at a minimum, contain the following information required by subparagraphs (A)-(E) of this paragraph:

(A) claims procedures;

(B) timeliness of claims payments; i.e., lag time between date claim is reported and date claim is paid;

(D) compliance with underwriting guidelines as developed in accordance with paragraph (10) of this subsection; and

(E) reconciliation of policy inventory.

(21) The contract must state that the MGA must notify the insurer in writing within 30 days if there is a change in:

(A) ownership of 10% or more of the outstanding stock of the MGA;

(B) any principal officer of the MGA; or

(22) The contract shall not allow an MGA to offset balances due under any contract with any offset due under any other contract.

(23) The contract must state that the MGA holds all funds of the insurer in a fiduciary capacity.

(24) The contract must state that the insurer retains final authority over disputes concerning claims settlement and setting of loss reserves.

(c) The provisions of paragraph (1) and paragraph (2) of this subsection are permissive and may be included in a contract between a managing general agent and an insurer. These two permissive contract terms are included in order to clarify that these terms are acceptable as written in this subsection. This subsection is not intended to preclude the inclusion of other provisions in the contract in addition to those listed in this subsection.

(1) The contract may authorize the MGA to accept premiums net of commissions due to agents and to retain from the premiums, as received, commissions due the MGA as specified in the contract.

(2) The contract may authorize an MGA to pay reinsurance premiums if the MGA is not an affiliate, as defined in this subchapter, of the insurer or of the reinsurer.

(d) A written contract between an MGA and an insurer which provides that the MGA may not place business with the insurer need not comply with the requirements of this section.

History

Source Note: The provisions of this §19.1204 adopted to be effective October 24, 1991, 16 TexReg 5776.

28 Tex. Admin. Code § 19.1205 Escrow Accounts

(a) Separate and identifiable escrow accounts are allowed if such accounts meet all requirements of the Insurance Code, Article 21.07-3, and this subchapter.

(b) The managing general agent shall maintain all escrow accounts in a bank that is a member of the Federal Reserve System and whose accounts are insured by the Federal Deposit Insurance Corporation. Such accounts may consist of any one or all of the following vehicles listed in paragraphs (1)-(7) of this subsection:

(1) checking accounts;

(2) pass book savings accounts;

(3) money market accounts;

(4) certificates of deposit;

(5) United States treasury bills, notes, or bonds;

(6) real estate repurchase agreements for which the underlying collateral is United States government securities;

(7) non-assessable money market mutual funds which are primarily invested in United States government securities.

(c) Other than as specified in subsection (b) of this section, the MGA may not place fiduciary monies from or in any escrow account into accounts or investments:

(1) that consist of common or preferred stock or so-called junk bonds, to include at a minimum, but not be limited to, all those securities rated Category Number 3 and below by the Securities Valuation Office of the National Association of Insurance Commissioners; or

(2) that are primarily invested in common or preferred stock or so-called junk bonds as described in paragraph (1) of this subsection.

(d) All monies received by an MGA on behalf of an insurer, including without limitation, all premiums, policy fees, salvage and subrogation recoveries, and reinsurance recoveries, shall be deposited in the escrow account required by the Insurance Code, Article 21.07-3, §3C(c).

(e) All withdrawals from the escrow account required by the Insurance Code, Article 21.07-3, §3C(c), must be evidenced by detailed accounting which clearly reflects each withdrawal. Funds may be withdrawn from the escrow account only for the following purposes listed in paragraphs (1)-(8) of this subsection:

(1) accounts due to insurers;

(2) commissions to agents and managing general agents and expenses, such as fees for inspections, premium audits, and motor vehicle reports, specified within the terms of the MGA contract;

(3) return premiums;

(4) loss and loss adjustment expenses;

(5) money deposited in error;

(6) withdrawals of any interest belonging to the MGA;

(7) withdrawals from escrow accounts for the purposes of making investments authorized under this subchapter;

(8) payment of reinsurance premiums authorized by §19.1204 of this title (relating to Contract Provisions); provided, however, that the MGA must report the payment of such premiums to the insurer on a monthly basis.

(f) Ownership of the interest on the escrow account required by the Insurance Code, Article 21.07-3, §3C(c), belongs to the MGA unless otherwise specified in the contract.

History

Source Note: The provisions of this §19.1205 adopted to be effective October 24, 1991, 16 TexReg 5776.

28 Tex. Admin. Code § 19.1206 Errors and Omissions Policies

For any errors and omissions policy used to satisfy the financial responsibility requirement under the Insurance Code, Article 21.07-3, §4C(a)(1), the State Board of Insurance shall be a certificate holder and shall receive a copy of any cancellation or nonrenewal notice.

History

Source Note: The provisions of this §19.1206 adopted to be effective October 24, 1991, 16 TexReg 5776.

Subchapter N LICENSING AND REGULATION OF RISK MANAGERS

28 Tex. Admin. Code § 19.1301 Purpose, Scope, and Interpretation of This Subchapter

(a) Purpose. The purpose of this subchapter is to implement licensing of risk managers as prescribed by the Insurance Code, Article 21.14-1. The purpose of a license issued under this subchapter is to authorize and enable the licensee actively and in good faith to engage in the business of risk management (and property and casualty insurance consulting) with respect to the general public, and to facilitate the public supervision of such activities in the public interest, and not for the purpose of enabling the licensee to receive a rebate of premium in the form of commission or other compensation upon the licensee's own interest or upon the interests of other persons with whom the licensee is closely associated. A license as risk manager does not authorize adjusting of losses and does not authorize receipt of compensation from insurers or agents for the sale or placement of insurance.

(b) Severability. If any provision of this subchapter is determined by a court of competent jurisdiction to be inconsistent with the Insurance Code, Article 21.14-1, that article will apply, but the remaining provisions of this subchapter will continue in effect.

(c) Effect of rules. The rules set forth in this subchapter are prescribed to govern the performance of appropriate statutory and regulatory functions and are not to be construed as limitations upon the exercise of statutory authority by the State Board of Insurance and the commissioner of insurance.

(d) Violation of rules. A violation of the lawful rules, regulations, or orders issued by the commissioner or board pursuant to the provisions of this subchapter constitutes a violation of the Insurance Code, Article 21.14-1.

(e) Gender and number. Whenever the context of the Insurance Code, Article 21.14-1, or of the provisions of this subchapter so requires, the masculine gender includes the feminine and/or neuter, and the singular includes the plural.

History

Source Note: The provisions of this §19.1301 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1302 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Board--The State Board of Insurance.

(2) Code--The Texas Insurance Code, 1951, as amended.

(3) Commissioner--The commissioner of insurance.

(4) Risk management--The process of identifying the areas of potential risk, using measurement techniques to determine the severity and frequency with which the risk may occur, evaluating and analyzing all costs involved with each type of risk, and establishing procedures for managing, controlling, retaining, and financing each risk.

(5) Risk manager--A person who holds himself out to the public and who for compensation examines, assesses, or evaluates risks for, and provides advice for reduction of risks to, a person who seeks to obtain or renew property and casualty insurance coverage in this state.

(6) Rules--All rules under this subchapter relating to risk managers.

History

Source Note: The provisions of this §19.1302 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1304 Last Known Address

Each risk manager must at all times keep the Texas Department of Insurance informed of the risk manager's address. Such address must be included in each license application and each license renewal form. In the absence of the submission of a specific written request to change that address, which must be separate from any other submission, the risk manager's current address is presumed to be the address on file with the department. Such address will be considered the risk manager's last known address for the purpose of notice to the agent by the department. Any request for a change of address must be made using the instructions provided on the department's website.

History

Source Note: The provisions of this §19.1304 adopted to be effective May 4, 1989, 14 TexReg 1934; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1305 License Requirement

(a) A person may not act as, or hold himself out to be, a risk manager in this state unless the person meets the requirements of the Insurance Code, Article 21.14-1, and the rules of the board and is licensed by the board.

(b) In applying for a license, each applicant must submit the following:

(1) a completed application for risk manager's license with all documentation attached;

(2) two recent clear and close-up photographs of the applicant, at least 2 inches by 1.5 inches in size; and

(3) the license fee.

History

Source Note: The provisions of this §19.1305 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1306 Qualifications for Risk Manager's License

To qualify for a license under the Insurance Code, Article 21.14-1, a person must:

(1) be at least 18 years of age;

(2) maintain a place of business in this state;

(3) be a trustworthy and competent person;

(4) meet the application requirements required by the Insurance Code, Article 21.14-1, and the rules of the board;

(5) take and pass the licensing examination; and

(6) pay the licensing and examination fees.

History

Source Note: The provisions of this §19.1306 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1307 Exemption

The Insurance Code, Article 21.14-1, and the provisions of this subchapter do not apply to a person who is employed as a risk manager by a liability insurance company authorized to do business in this state or by a single employer or by a public self-insured pool.

History

Source Note: The provisions of this §19.1307 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1308 Application for License

Using the forms prescribed and furnished by the Texas Department of Insurance, a person who desires to be licensed as risk manager in Texas must submit an application for risk manager's license using the instructions provided on the department's website. The license fee is payable at the time of application. As part of the application, the applicant must furnish to the department any information relating to the applicant's identity, personal history, experience, business record, or other items as the department may require. All documentation and records submitted or maintained for the purpose of licensure or renewal are subject to audit or review by the department.

History

Source Note: The provisions of this §19.1308 adopted to be effective May 4, 1989, 14 TexReg 1934; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1309 Place of Business

A licensed risk manager must maintain a place of business in this state that is accessible to the public. This place of business must be located at the place at which the risk manager principally conducts or transacts business.

History

Source Note: The provisions of this §19.1309 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1310 Examination

(a) Except as provided in subsection (b) of this section, qualified applicants must pass the risk manager license examination administered by TDI's designated testing service before TDI will issue a license to the applicant. Applicants must contact TDI's designated testing service to schedule the examination.

(b) Applicants not required to take the examination as a prerequisite to obtaining a license are those who hold the designations of chartered property and casualty underwriter, certified insurance counselor, associate in risk management, or certified risk manager.

History

Source Note: The provisions of this §19.1310 adopted to be effective May 4, 1989, 14 TexReg 1934; amended to be effective May 31, 2018, 43 TexReg 3367.

28 Tex. Admin. Code § 19.1311 Examination and License Fees and Charges

(a) The commissioner shall collect in advance the following nonrefundable fees and charges specified by §19.802 of this title (relating to Amounts of Fees):

(1) risk manager's license fee;

(2) examination fee;

(3) renewal fee; and

(4) late renewal charge.

(b) The license fee shall accompany the application for risk manager's license for the initial license.

(c) The examination fee shall accompany the examination request form and shall not be returned for any reason other than failure to appear and take the examination after the applicant has given at least 24 hours notice of an emergency situation to the commissioner of insurance and received the commissioner's approval.

(d) An applicant who fails an examination may retake the examination as often as necessary to obtain a passing score. A new examination request form and examination fee shall be submitted for each and every examination.

History

Source Note: The provisions of this §19.1311 adopted to be effective May 4, 1989, 14 TexReg 1934; amended to be effective March 23, 1992, 17 TexReg 1733.

28 Tex. Admin. Code § 19.1312 License Renewal; Renewal Fee

(a) A license issued under the Insurance Code, Article 21.14-1, expires two years after the date of issuance. A licensee may renew an unexpired license by filing an application for renewal with the board and paying the renewal fee on or before the expiration date of the license. The commissioner shall issue a renewal certificate to the licensee at the time of the renewal if the commissioner determines the licensee continues to be eligible for the license.

(b) If a person's license has been expired for less than two years, the person may renew the license by paying the unpaid renewal fee plus a late renewal charge.

(c) If the person's license has been expired for two years or more, the person may not renew the license. The person may obtain a new license by:

(1) filing an application for risk manager's license form;

(2) submitting to reexamination (if the person is not exempt from the examination at the time of reapplication);

(3) submitting payment of the license fee; and

(4) complying with the requirements and procedures for obtaining an original license.

(d) The commissioner will notify each licensee in writing, by certified mail, return receipt requested, of the pending license expiration not later than the 30th day before the date on which the license expires.

History

Source Note: The provisions of this §19.1312 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1313 Denial, Suspension, or Revocation of a License

(a) The State Board of Insurance may deny an application or suspend, revoke, or refuse to renew a risk manager's license for any of the reasons designated in the Insurance Code, Article 21.14-1, and the rules and regulations of the State Board of Insurance.

(b) A person who fails the examination is considered to have application pending and is not legally licensed to ask a risk manager until successful completion of the examination and issuance of the license.

History

Source Note: The provisions of this §19.1313 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1314 Duration of Suspension

(a) Every order suspending a license must specify the period during which the suspension is effective. A license may not be suspended for a period to exceed 12 months.

(b) The holder of a license that has been revoked or suspended shall surrender the license to the commissioner.

History

Source Note: The provisions of this §19.1314 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1315 Reinstatement or Relicensing

The commissioner may not reinstate the license of, or reissue a license to, a licensee for one year from the date of suspension, revocation, or refusal to renew a license.

History

Source Note: The provisions of this §19.1315 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1316 Nonresident License

A nonresident of the state of Texas who seeks to do business as a risk manager within the State of Texas must apply for licensing in accordance with the Insurance Code, Article 21.14-1, and the provisions of this subchapter.

History

Source Note: The provisions of this §19.1316 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1317 License by Endorsement

If a nonresident applicant is licensed as a risk manager by another state, the District of Columbia, or a commonwealth or territory of the United States, and if the licensing requirements of the licensing jurisdiction were, on the date of the licensing, substantially equal to those prescribed by the Insurance Code, Article 21.14-1, the applicant may receive a license without examination upon submission of an application for risk manager's license, a certificate of good standing from the nonresident's home state, and payment of the license fee.

History

Source Note: The provisions of this §19.1317 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1318 Dual Compensation

A person licensed under the provisions of the Insurance Code, Article 21.14-1, who is also licensed under the Insurance Code, Article 21.14, and who receives a commission or compensation for his services as an agent licensed under the Insurance Code, Article 21.14, shall not be entitled to receive a fee for his services relative to the same policy placement as a risk manager within a 24-month period without full disclosure in writing of the fee to the insured.

History

Source Note: The provisions of this §19.1318 adopted to be effective May 4, 1989, 14 TexReg 1934.

28 Tex. Admin. Code § 19.1319 Penalty

A person may not act as or hold himself out to be a risk manager in the State of Texas unless the person meets the requirements of the Insurance Code, Article 21.14-1, and the rules of the board and is licensed by the board. An offense is committed if a person violates or does not comply with the Insurance Code, Article 21.14-1, §2. An offense under that section is a Class C misdemeanor.

History

Source Note: The provisions of this §19.1319 adopted to be effective May 4, 1989, 14 TexReg 1934.

Subchapter O PROCEDURES AND REQUIREMENTS FOR REINSURANCE INTERMEDIARIES (BROKERS AND MANAGERS)

28 Tex. Admin. Code § 19.1401 Purpose and Scope

These rules govern the licensure and activities of brokers and managers who are licensed under the Reinsurance Intermediary Act, Texas Insurance Code, Article 21.07-7. These sections are supplementary to and cumulative of existing statutes. In the case of an ambiguity or contradiction between any of the sections in these rules and any statute, the provisions of the statute prevail.

History

Source Note: The provisions of this §19.1401 adopted to be effective April 13, 1992, 17 TexReg 2276.

28 Tex. Admin. Code § 19.1402 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Board--The State Board of Insurance.

(2) Broker--A person other than an officer or employee of an insurer, who solicits, negotiates, or places reinsurance business on behalf of an insurer and who may not exercise the authority to bind reinsurance on behalf of that insurer.

(3) Commercially domiciled insurer--A foreign or alien insurer authorized to do business in this state that during its three preceding fiscal years taken together, or any lesser period of time if it has been licensed to transact business in this state only for that lesser period of time, has written an average of more gross premiums in this state than it has written in its state of domicile during the same period with those gross premiums constituting 20% or more of its total gross premiums everywhere in the United States for that three-year or lesser period, as reported in its three most recent annual statements.

(4) Commissioner--The commissioner of insurance.

(5) Insurer--A commercially domiciled insurer or other person legally organized in this state to do business as an insurance company, including:

(A) a capital stock company;

(B) a mutual company;

(D) a fraternal benefit society;

(E) a local mutual aid association;

(F) a statewide mutual assessment company;

(G) a county mutual insurance company;

(H) a Lloyds' plan company;

(I) a reciprocal or interinsurance exchange;

(J) a stipulated premium insurance company;

(K) a group hospital service company;

(L) a farm mutual insurance company; and

(M) a risk retention group.

(6) Manager--A person who has authority to bind reinsurance or who manages all or part of the reinsurance business of an insurer, including the management of a separate division, department, or underwriting office, and who acts as an agent for that insurer. The term does not include:

(A) an employee of the insurer;

(B) a manager of the United States branch of an alien insurer;

(C) an underwriting manager who, under a contract, manages all of the reinsurance operations of an insurer, who is under common control with the insurer under the Code, Article 21.49-1, and whose compensation is not based on the volume of premiums written; or

(D) the manager of a group, association, pool, or other organization of insurers who engages in joint underwriting or joint reinsurance and who is subject to examination by the insurance commissioner or other appropriate officer of the state in which the manager's principal business office is located.

(7) Person--An individual, corporation, partnership, association, or other private legal entity.

(8) Reinsurance intermediary--A broker or manager.

(9) Underwriting period--The period for which the policy is issued.

History

Source Note: The provisions of this §19.1402 adopted to be effective April 13, 1992, 17 TexReg 2276.

28 Tex. Admin. Code § 19.1403 Requirements for Bond or Errors and Omissions Policy

Any reinsurance intermediary must file and maintain a bond with the commissioner for the protection of all insurers represented or file and maintain an errors and omissions policy, meeting the following criteria.

(1) The bond must be executed by the reinsurance intermediary as principal and by a surety company authorized to do business in this state, as surety, or surplus lines insurer eligible in this state, in the principal sum of $100,000 for a broker and in the principal sum of $250,000 for a manager, payable to the Texas Department of Insurance for the use and benefit of all insurers represented. The bond must provide that a copy of any cancellation or nonrenewal notice must be mailed to Agent and Adjuster Licensing Office, Texas Department of Insurance, MC: CO-AAL, P.O. Box 12030, Austin, Texas 78711-2030. The executed bond must be furnished to the Texas Department of Insurance.

(2) The errors and omissions policy must be in a form acceptable to the Texas Department of Insurance, and must be filed with Agent and Adjuster Licensing Office at the address listed in paragraph (1) of this section. The policy must provide that the Texas Department of Insurance will be a certificate holder and will receive a copy of any cancellation or nonrenewal notice, which must be mailed to the deputy commissioner for licensing at the address listed in paragraph (1) of this section. The errors and omissions policy must cover all negligent acts or omissions of the reinsurance intermediary and any person acting on its behalf and must provide coverage of at least $100,000 for each occurrence for brokers and must provide coverage of at least $250,000 for each occurrence for managers.

(3) The commissioner may determine that special circumstances require an additional amount of coverage for the bond or policy.

History

Source Note: The provisions of this §19.1403 adopted to be effective April 13, 1992, 17 TexReg 2276; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1404 Requirements for Interim Profit-Sharing by a Manager

If the contract between an insurer and its manager provides for a sharing of interim profits by the manager, interim profits may not be paid until five years after the end of each underwriting period for casualty business, one year after the end of each underwriting period for property business, and one year after the end of each underwriting period for accident and health insurance and all other lines of insurance.

History

Source Note: The provisions of this §19.1404 adopted to be effective April 13, 1992, 17 TexReg 2276.

28 Tex. Admin. Code § 19.1405 Requirements for Form of Audited Statements

The statements prepared by an independent certified public accountant of the financial condition of each manager of an insurer, required by the Reinsurance Intermediary Act, §8(b), shall comply with all generally accepted accounting procedures.

History

Source Note: The provisions of this §19.1405 adopted to be effective April 13, 1992, 17 TexReg 2276.

28 Tex. Admin. Code § 19.1406 Fees for Examinations

The expenses for the examinations required by the Reinsurance Intermediary Act (the Act), §9, shall be determined to be just and reasonable if they are sufficient to meet all the expenses and disbursements necessary to comply with the provisions of the Act.

History

Source Note: The provisions of this §19.1406 adopted to be effective April 13, 1992, 17 TexReg 2276.

28 Tex. Admin. Code § 19.1407 Approval of Reinsurance Intermediary Manager's Contracts

(a) A written contract, which specifies the responsibilities of each party, must be approved by the insurer's board of directors or attorney in fact and executed by a responsible officer of an insurer and a manager prior to entering into any transaction between the manager and the insurer.

(b) A copy of the executed contract and the approval of the insurer's board of directors or attorney in fact must be filed by the manager with the commissioner for approval at least 30 days before the insurer assumes or cedes any business through the manager.

(c) The contract must include the minimum requirements specified in Insurance Code §4152.201, concerning Contract Between Manager and Insurer. A contract that does not comply with the minimum requirements of the Insurance Code or this section will not be considered to have been filed with the commissioner for approval. The contract will be approved or disapproved within 30 days of its filing.

(d) A failure to file complete and accurate information in all material respects is grounds for disapproval of the contract by the commissioner under Insurance Code §4152.201.

(e) Any disapproval by the commissioner of any contract filed under this section will set forth the specific reasons for such disapproval.

(f) If any material changes are made to the contract filed with the commissioner, an amended contract setting forth such changes must be filed with the commissioner for approval as if it were a new contract.

(g) Contracts subject to this section and Insurance Code §4152.201, must be filed using the method described on the department's website for the purpose of determining compliance with this section. Telephonic or fax transmissions will not constitute proper filing under this section.

(h) This section will be cumulative of and in addition to the requirements of Insurance Code Chapter 4053, concerning Managing General Agents; Chapter 4152, concerning Reinsurance Intermediaries; and Chapter 823, concerning Insurance Holding Company Systems, and related regulations. Nothing contained in this section is intended to exempt an insurer or its reinsurance intermediary manager from other provisions of the Insurance Code.

History

Source Note: The provisions of this §19.1407 adopted to be effective April 13, 1992, 17 TexReg 2276; amended to be effective June 19, 2023, 48 TexReg 3285.

Subchapter P FEES CHARGED BY LOCAL RECORDING AGENTS

28 Tex. Admin. Code § 19.1501 General Provisions

(a) Purpose and Scope. The purpose of this subchapter is to insure full disclosure of fees local recording agents charge purchasers of insurance policies. This subchapter applies to all fees authorized to be charged by local recording agents.

(b) Severability. Where any terms or sections of this subchapter are determined by a court of competent jurisdiction to be inconsistent with any statutes of this state or to be unconstitutional, the remaining terms and provisions of this subchapter shall remain in effect.

History

Source Note: The provisions of this §19.1501 adopted to be effective October 12, 1992, 17 TexReg 6600; amended to be effective February 21, 1997, 22 TexReg 1643.

28 Tex. Admin. Code § 19.1502 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Agent fee--A charge by a local recording agent, in lieu of or in addition to the commission, for services the agent agrees to perform in connection with the sale or service of a particular policy.

(2) Client--The client of the local recording agent.

(3) Commissioner--The commissioner of insurance.

(4) Fees--Fees authorized by Texas Insurance Code, Article 21.14, §4(e), which may include the services rendered to a client but not anticipated in any commission paid to the agent by an insurance company. These services may include special delivery postal charges, printing and reproduction costs, electronic mail costs, telephone transmission costs, or similar costs that the local recording agent may incur on behalf of the client.

(5) Inspection fee--A charge by a local recording agent for examination of a risk to be insured to determine acceptance, rejection or rate.

(6) Local recording agent--A person subject to licensing under Insurance Code, Article 21.14.

(7) Membership dues--A payment or obligation required by an organization or group for an individual to be considered a member or part of the organization or group.

(8) Policy fee--A charge by a local recording agent on behalf of an insurer, managing general agent or surplus lines agent in connection with issuance of the policy. This charge is in addition to the premium.

(9) Service fee--A charge by a local recording agent for actual costs incurred in obtaining a motor vehicle record of a person, or a photograph of property, insured under, or to be insured under, an insurance policy; or the reasonable costs of special delivery or postal charges, printing and reproduction costs, electronic mail costs, telephone transmission costs, and similar costs incurred by the agent on behalf of the client.

History

Source Note: The provisions of this §19.1502 adopted to be effective October 12, 1992, 17 TexReg 6600; amended to be effective February 21, 1997, 22 TexReg 1643.

28 Tex. Admin. Code § 19.1503 Procedures for Charging Fees

(a) A local recording agent may charge a client a service fee to reimburse the agent for actual costs as specifically enumerated in and in accordance with the Insurance Code, Article 21.35A(b). A local recording agent may also charge a client a reasonable service fee for those items listed in Insurance Code, Article 21.35A(c). A local recording agent may not charge a service fee unless the agent notifies the client of the service fee (including for reimbursement of actual costs) and obtains the client's written consent for each item charged under the service fee prior to the local recording agent incurring an expense on behalf of the client.

(b) Local recording agents may, aside from service fees, charge a client policy fees, agent fees, inspection fees and membership dues in accordance with Insurance Code, Article 21.35B.

(c) The local recording agent must follow the procedures for disclosure set out in this subsection when charging a client for these fees. The local recording agent must obtain the client's signature on a disclosure form. The local recording agent must disclose, to a client, the following information in the written disclosure form signed by the client:

(1) that the agent has notified the client of the agent's reimbursement or fee requirement prior to incurring the expense or providing the service;

(2) the agent fee, service fee or inspection fee, if any, charged by the agent on the transaction. If a policy fee is charged which is not separately disclosed on the declarations page of the policy or endorsed onto the policy, the agent must disclose the policy fee;

(3) the toll-free telephone number (1-800-252-3439) of the Texas Department of Insurance and a statement in boldface type advising the client that the client may call that number to obtain information on how to file a complaint if the client has a complaint regarding such fees; and

(4) a complete, itemized listing of the fees being charged and, if a service fee is charged, a complete itemized listing of the services provided and the corresponding charge for each item under the service fee.

(d) All files relating to fees, including written records of disclosure of fees, must be maintained for a period of five years and must be made available to the Texas Department of Insurance for inspection or copying upon request to insure compliance with this subchapter and Texas Insurance Code, Articles 21.35A and 21.35B.

History

Source Note: The provisions of this §19.1503 adopted to be effective February 21, 1997, 22 TexReg 1643.

Subchapter Q DISCOUNT HEALTH CARE PROGRAM REGISTRATION AND RENEWAL REQUIREMENTS

28 Tex. Admin. Code § 19.1601 Definitions

The following words and terms when used in this subchapter shall have the following meanings unless the context clearly indicates otherwise:

(1) Individuals responsible for conducting the program operator's affairs--Individuals with the power to direct or cause the direction of the management and policies of a discount health care program, whether directly or indirectly.

(2) Person--An individual, corporation, association, partnership, or other legal entity as provided by the Insurance Code §562.002(7).

History

Source Note: The provisions of this §19.1601 adopted to be effective September 8, 2010, 35 TexReg 8111.

28 Tex. Admin. Code § 19.1602 Registration Requirement

(a) Registration Requirement. An applicant for registration to offer a discount health care program in this state is required to submit all of the following to the department:

(1) the initial registration fee of $1,000 as provided in Insurance Code §7001.006, concerning Fees, and §19.802 of this title (relating to Amount of Fees) that is nonrefundable and nontransferable;

(2) a complete application for registration that contains all the information required by Insurance Code §7001.005, concerning Application for Registration and Renewal of Registration, and this section, including:

(A) the applicant's full legal name and federal employer identification number or social security number; daytime telephone number with extension; toll free telephone number; website address; physical address, including city, state, and ZIP code; mailing address, including the city, state, and ZIP code; a contact person's name, including the title, telephone number, and email address; the applicant's agent for service of process, including the physical address, city, state, and ZIP code;

(B) identification of whether the applicant is a corporation, association, limited partnership, limited liability company, limited liability partnership, sole proprietorship, or other legal entity;

(C) any and all assumed names to be used by the applicant in operating a discount health care program. If a filing is required under the Assumed Business or Professional Name Act under the Texas Business and Commerce Code, or any similar statute, the discount health care program operator applicant for registration must provide the department with a copy of the assumed name certificate reflecting the registration of each assumed name used by the discount health care program operator applicant;

(D) a statement generally describing the applicant, its facilities, personnel, and the health care services or products for which a discount will be made available under its discount health care programs;

(E) a copy of the form of all contracts made or to be made between the applicant and any providers or provider networks regarding the provision of health care services or products to members;

(F) a copy of the applicant's charter, certificate of authority, or registration obtained from the Texas Secretary of State's office;

(G) if the applicant is an entity subject to the bank or farm credit administration, a copy of the documentation issued by a federal or Texas state agency authorizing the entity to do business in Texas;

(H) an original surety bond payable to the department for the use and benefit of members in the principal amount of $50,000, as required by Insurance Code §562.103(f)(1), concerning Program Operator Duties, and §19.1603 of this title (relating to Financial Responsibility Requirement), except that an insurer that holds a certificate of authority under Texas Insurance Code Title 6, concerning Organization of Insurers and Related Entities, is not required to maintain the surety bond;

(I) lists of marketers, both entities and individuals, separated as follows:

(i) a list of the marketers, both entities and individuals, authorized to sell or distribute the program operator's programs under the program operator's name; and

(ii) a list of the marketers, both entities and individuals, authorized to private label the program operator's programs;

(J) a certification in writing to the department that its programs comply with the requirements of Insurance Code Chapter 7001, concerning Registration of Discount Health Care Program Operators, and Chapter 562, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Regarding Discount Health Care Programs;

(K) a list of names, addresses, official positions, and biographical information of:

(i) the individuals responsible for conducting the applicant's affairs;

(ii) each member of the board of directors, board of trustees, executive committee, or other governing board or committee;

(iii) the officers;

(iv) any contracted management company personnel; and

(v) any person owning or having the right to acquire 10% or more of the voting securities of the applicant;

(L) a complete biographical certificate concerning each individual whose biographical information is required under Insurance Code §7001.005(a)(2) and this section, including:

(i) the identification of the individual's relationship to the applicant;

(ii) the name of the applicant;

(iii) the full name; title; social security number; date of birth; mailing address, including the city, state, and ZIP code; telephone number; fax number; and email address of the individual;

(iv) excluding traffic violations and a first DWI offense, a response to the following questions:

(I) whether the individual has any pending misdemeanor or felony charges by indictment, information, or any other instrument filed in Texas or in any other state or by the federal government;

(II) whether the individual has ever been convicted of any misdemeanor or felony offense in Texas, in any other state, or by the federal government;

(III) whether the individual has ever had deferred adjudication on any misdemeanor or felony charge or offense in Texas, in any other state, or by the federal government; and

(IV) whether the person has ever served any period of probation for any misdemeanor or felony offense in Texas, in any other state, or by the federal government;

(v) if the response is positive to any question under clause (iv)(I) - (IV) of this subparagraph, the applicant for registration as a discount health care program operator is required to provide to the department original certified copies of the charging document, indictment, information, or any other charging document, any judgment of conviction, deferred adjudication order, or probation order, and any order terminating probation, community supervision certificate, or parole certificate for each offense. If the court does not maintain the record, the submission of a letter on the court's letterhead will be required. If the arrest did not result in a prosecution, the submission of a records search from the appropriate jurisdiction indicating a final disposition will be required. A statement describing the circumstances leading to the offense and the individual's age at the time of the offense will be required. Letters of recommendation from any person aware of a particular criminal history may be provided;

(vi) a response to the question whether the individual whose biographical information is required under Insurance Code §7001.005(a)(2) and this section, or any entity in which the individual served as a director, officer, shareholder, manager, member, or partner, has ever been the subject of an administrative or legal action filed by the department, or any other insurance department, financial regulatory agency, or of an action filed on behalf of the State of Texas or any other state or by the federal government based on alleged violations of state or federal insurance, securities, or financial regulatory laws that the individual has not previously reported to the department. If the response is positive, the applicant for registration as a discount health care program operator is required to provide to the department a description of the circumstances regarding the administrative or legal action and a copy of any document sent to the individual to commence the administrative or legal action that described the nature of the action;

(vii) a response to the question whether the individual, whose biographical information is required under Insurance Code §7001.005(a)(2) and this section, is indebted to any discount health care program operator, policyholder, insurance or reinsurance company, insurance agency, general agent, managing general agency, premium finance company or court-appointed liquidator for membership refunds, premiums collected, or commissions retained, or have any claims or judgments filed against the individual for membership refunds, retaining premiums, or commissions. If the response is positive, the applicant for registration as a discount health care program operator is required to provide to the department a description of the circumstances regarding the indebtedness, including the name and contact information of the person or entity to whom the individual is indebted;

(viii) a response to the question whether the individual whose biographical information is required under Insurance Code §7001.005(a)(2) and this section has ever had a discount health care program contract cancelled for cause, such as for misrepresentation or misappropriation. If the response is positive, the applicant for registration as a discount health care program operator is required to provide to the department a description of the circumstances regarding the cancellation including the name and contact information of the individual or entity that cancelled the contract;

(ix) a copy of a fingerprint receipt from the state authorized fingerprint collection vendor for each individual that uses the electronic fingerprint process;

(x) an acknowledgment from each individual whose biographical information is required under Insurance Code §7001.005(a)(2) and this section that the fingerprints provided will be used to check criminal history records of the Texas Department of Public Safety and the Federal Bureau of Investigation; and

(xi) compliance with the requirements of Chapter 1, Subchapter D, of this title (relating to Effect of Criminal Conduct) relating to fingerprint requirements for a criminal background check under Insurance Code §7001.008, concerning Criminal Background Check.

(b) Registration Application Forms. The discount health care program operator registration application forms are available at www.tdi.texas.gov/forms/form11dhcpo.html and at the Agent and Adjuster Licensing Office of the Texas Department of Insurance's mailing address.

(c) Submission of Registration Application Forms. The following paragraphs apply to the submission of discount health care program operator registration application forms.

(1) Except for the list of marketers required under Insurance Code §7001.005(a)(4) and this section, a discount health care program operator must submit the registration application forms by:

(A) mail, to the Texas Department of Insurance, Agent and Adjuster Licensing Office's mailing address;

(B) email to TDI-DiscountHealth@tdi.texas.gov;

(D) more current mailing addresses, email addresses, and telephone numbers for the Agent and Adjuster Licensing Office of the Texas Department of Insurance as made available on the department's website.

(2) A discount health care program operator must submit the list of the marketers in the format found on the department's website via email to TDI-DiscountHealth@tdi.texas.gov.

(3) Assistance with applying for registration as a discount health care program operator is available at the department's Agent and Adjuster Licensing Office Customer Service phone line at 512-676-6500, email address at license@tdi.texas.gov, and the department's website.

(d) The registration is valid for one year from the date issued by the department and is required to be renewed annually.

History

Source Note: The provisions of this §19.1602 adopted to be effective September 8, 2010, 35 TexReg 8111; amended to be effective April 16, 2023, 48 TexReg 1837.

28 Tex. Admin. Code § 19.1603 Financial Responsibility Requirement

(a) As required by the Insurance Code §562.103(f)(1), a discount health care program operator, as a condition of being registered and continuing such registration, shall maintain a surety bond payable to the department, for the use and benefit of members, in the principal amount of $50,000, except that a discount health care program operator that is an insurer that holds a certificate of authority under Title 6 is not required to maintain the surety bond.

(b) Each discount health care program operator is required to obtain separate proof of financial responsibility and may not rely on the bond of any other discount health care program operator to demonstrate proof of financial responsibility.

(c) The discount health care program operator applicant or registrant is required to demonstrate proof of financial responsibility by providing to the department the original surety bond upon application, renewal, or replacement of the bond.

(d) A surety bond used to maintain and demonstrate proof of financial responsibility under this section is required to:

(1) be issued by a company authorized, or eligible, to do business as a surety in the State of Texas;

(2) be in compliance with all applicable provisions of the Insurance Code and applicable department rules;

(3) be on a form filed with and approved by the department;

(4) be consistent with the Insurance Code §562.103(f), to be payable to the Texas Department of Insurance for the use and benefit of members:

(A) on the determination by the department that funds are necessary for the payment of such claims following compliance with all applicable provisions of the Insurance Code and applicable rules of the department; or

(B) upon final judgment against the Principal arising from such a claim.

(5) provide that the issuing company will provide the department and the registrant at least 30 days prior written notice of its intent to cancel the bond;

(6) be effective for the entire time period of the registration;

(7) be separate from any other financial obligation; and

(8) not be used to demonstrate professional responsibility for any other registration or individual or entity.

(e) The department may make claims against the bond for one year after the program operator ceases to be registered in the state, or for one year after the bond is terminated, based on actions within the registration and bond period. The aggregate liability of the surety shall be limited to the penal sum of the bond.

(f) Failure to maintain the bond for the entire period required by this section and the Insurance Code §562.103(f)(1) will be cause for the department to institute action pursuant to Chapters 82, 83, and 84 of the Insurance Code.

History

Source Note: The provisions of this §19.1603 adopted to be effective September 8, 2010, 35 TexReg 8111.

28 Tex. Admin. Code § 19.1604 Renewal

(a) Not later than 60 days before the date a person's registration as a discount health care program operator expires, the department will send a written registration renewal notice to the email address designated for such communications by the regulated person.

(b) In the absence of the submission of a written request to change the address of a registered discount health care program operator as required by Insurance Code §7001.005(a)(1), concerning Application for Registration and Renewal of Registration, and §19.1605 of this title (relating to Requirements Related to Discount Health Care Program Information), the discount health care program operator's current address is presumed to be the address on file with the department. Such address will be considered the discount health care program operator's last known address for the purpose of the department sending a registration renewal notice to the discount health care program operator.

(c) A discount health care program operator may renew a registration to offer a discount health care program in this state by:

(1) submitting $500 renewal fee and renewal application as required by Insurance Code §7001.006, concerning Fees, and §19.802 of this title (relating to Amount of Fees). A renewal fee paid under this section is nonrefundable and nontransferable. The discount health care program operator may submit the renewal notice and payment to the Texas Department of Insurance using the method described on the department's website; and

(2) certifying in writing to the department that its programs comply with the requirements of the Insurance Code Chapters 7001 and 562.

(d) A discount health care program operator renewing a registration must submit a written communication to the department of any information provided to the department that has changed since the initial registration or subsequent renewals as provided in Insurance Code §7001.005(a) and §19.1605 of this title.

(e) The renewal of the registration is valid for one year from the date issued by the department and is required to be renewed annually.

(f) Except as provided by Occupations Code §55.003, concerning Extension of Certain Deadlines for Military Service Members, a discount health care program operator whose registration has been expired may not renew the registration. The discount health care program operator may obtain a new registration by complying with the registration requirements as provided by Insurance Code §7001.005(a) and §19.1602 of this title (relating to Registration Requirement).

History

Source Note: The provisions of this §19.1604 adopted to be effective September 8, 2010, 35 TexReg 8111; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1605 Requirements Related to Discount Health Care Program Information

(a) Except for changes in the form of contracts as provided in Insurance Code §7001.005(b), concerning Application for Registration and Renewal of Registration, and subsection (b) of this section, a registered discount health care program operator whose registration or renewal information has changed since the initial registration or renewal pursuant to Insurance Code §7001.005(a) and this section must notify the department in writing of a change not later than the 30th day after the effective date of the change using instructions provided on the department's website.

(b) After the initial registration, if the form of a contract described by Insurance Code §7001.005(a)(5) and §19.1602(a)(2)(C) of this title (relating to Registration Requirement) changes, the program operator is required to file the modified contract with the department before it may be used.

(c) After the initial registration, a discount health care program operator must comply with the requirements of Insurance Code §7001.005(a)(4) and this section to submit to the department on a quarterly basis, not later than each June 30, September 30, December 31, and March 31, lists of marketers, both entities and individuals, separated as follows:

(1) a list of the marketers, both entities and individuals, authorized to sell or distribute the program operator's programs under the program operator's name; and

(2) a list of the marketers and individuals authorized to private label the program operator's programs.

(d) A discount health care program operator must submit the quarterly list of the marketers using instructions provided on the department's website.

(e) Assistance with notifying the department in writing of a change in information or with submitting the quarterly list of marketers is available at the department's website.

History

Source Note: The provisions of this §19.1605 adopted to be effective September 8, 2010, 35 TexReg 8111; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1606 Severability

If a court of competent jurisdiction holds that any provision of this subchapter is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this subchapter shall remain in effect.

History

Source Note: The provisions of this §19.1606 adopted to be effective September 8, 2010, 35 TexReg 8111.

Subchapter T SPECIALTY INSURANCE LICENSE

28 Tex. Admin. Code § 19.1901 Purpose

The purpose of this subchapter is to implement licensing of specialty agents as prescribed by Insurance Code Article 21.09 and to facilitate the supervision of such activities in the public interest. The purpose of a license issued under Insurance Code Article 21.09 and subject to the provisions of this subchapter is to authorize and enable the specialty licensee and its properly trained employees to actively engage in the solicitation or sale of insurance as specified in Article 21.09 with respect to the general public only in connection with an associated consumer transaction.

History

Source Note: The provisions of this §19.1901 adopted to be effective February 20, 2001, 26 TexReg 1545.

28 Tex. Admin. Code § 19.1902 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Associated consumer transaction--A retail exchange of goods or services other than insurance which is the basis of the relationship between the specialty license holder and its customer.

(2) Control--The power to direct or cause the direction of the management and policies of a specialty license holder, whether directly or indirectly. For the purpose of this subchapter, a person is considered to control:

(A) a corporate specialty license holder if the person is an officer or director of the corporation or if the person, individually or acting with others, directly or indirectly, holds with the power to vote, owns, or controls, or holds proxies representing, at least 10% of the voting stock or voting rights of the corporate specialty license holder; or

(B) a partnership if the person through a right to vote or through any other right or power exercises rights in the management, direction, or conduct of the business of the partnership.

(3) Corporation--A legal entity organized under the business corporations laws or limited liability company laws of this state, another state, or a territory of the United States.

(4) Credit accident and health insurance--A type of insurance as set out in Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance.

(5) Credit involuntary unemployment insurance--A type of insurance as set out in Insurance Code Chapter 3501, concerning Credit Involuntary Unemployment Insurance.

(6) Credit life insurance--A type of insurance as set out in Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance.

(7) Department--The Texas Department of Insurance.

(8) Depository institution--Any bank or savings association as defined under 12 U.S.C. §1813 including a state or federal credit union.

(9) Employee--A person that:

(A) is trained to act individually on behalf of the specialty license holder;

(B) is acting on behalf of and under the supervision of the license holder; and

(10) Franchisee--A person that is granted a franchise by a franchisor.

(11) Location--A place of business.

(12) Franchisor--A person that grants a franchise to a franchisee.

(13) Partnership--An association of two or more persons organized under the partnership laws or limited liability partnership laws of this state, another state, or a territory of the United States.

(14) Person--An individual, partnership, corporation, or depository institution.

(15) Specialty insurance product--Any of the types of insurance set out in Insurance Code Chapter 4055, concerning Specialty Agents.

(16) Specialty license holder or specialty licensee--A person who holds a license under Insurance Code Chapter 4055.

(17) Supervision--Supplying trained employees with forms, specific requirements, and procedures necessary for the sale of insurance under the specialty license.

History

Source Note: The provisions of this §19.1902 adopted to be effective February 20, 2001, 26 TexReg 1545; amended to be effective December 27, 2001, 26 TexReg 10603; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1903 Qualifications

(a) An individual may qualify for a specialty license if the individual:

(1) is at least 18 years of age;

(2) has not committed an act for which a license may be denied under the Insurance Code or insurance regulations of this state or any other state; and

(3) satisfies the requirements of subsection (c) of this section.

(b) A corporation, partnership or depository institution may qualify for a specialty license if the entity:

(1) is organized under federal law or the laws of this or any other state or territory of the United States;

(2) is admitted to conduct business in this state by the secretary of state, if so required;

(3) provides a current franchise tax certificate from the Texas state comptroller's office;

(4) provides the name, address, date of birth and social security number of all officers, directors, members, managers, partners or any other person who has the right or ability to control the specialty license holder; and

(5) satisfies the requirements of subsection (c) of this section.

(1) submit a properly completed license application to the department;

(2) obtain a company appointment and certification from an insurance company authorized by the department to write the specific type of insurance in this state which the person requests authority to solicit under Article 21.09;

(3) remit all required license fees. All such fees are nonrefundable;

(4) be actively engaged in a finance or retail business at each location where insurance sales will be conducted under the specialty license with the primary purpose of providing goods or services other than insurance to customers in this state; and

(5) solicit and deliver the specialty insurance product authorized under Article 21.09 only in connection with an associated consumer transaction.

History

Source Note: The provisions of this §19.1903 adopted to be effective February 20, 2001, 26 TexReg 1545.

28 Tex. Admin. Code § 19.1904 Application

(a) Application for more than one specialty license authority. A first time applicant may seek licensure for more than one specialty license authority on the same specialty license application. A $50 fee per specialty license authority must accompany the application.

(b) Assumed name or trade name. An applicant desiring to use an assumed name in the conduct of an insurance business under a specialty insurance license shall be subject to the requirements of §19.902 of this title (relating to One Agent, One License) except that a separate filing with the department shall not be required for an applicant who conducts business under a single assumed name and registers that name with the department on the applicant's original specialty license application. No applicant for or holder of a specialty license shall be required to file multiple registrations with the department for a previously registered assumed name as a result of seeking more than one specialty license authority.

(1) contacting the department's licensing division customer service center; or

(2) through the department's website at www.tdi.state.tx.us.

History

Source Note: The provisions of this §19.1904 adopted to be effective February 20, 2001, 26 TexReg 1545.

28 Tex. Admin. Code § 19.1906 Expiration and Renewal of Licenses

(a) Except as may be provided under §19.801 of this title (relating to General Provisions Regarding Licensing Fees and License Renewal), each specialty license issued by the department expires on the second anniversary of the date of issuance unless suspended or revoked by the commissioner. A specialty license holder may renew a license that has not expired or has not been suspended or revoked by filing a properly completed renewal application with the department in the form prescribed by the department and paying to the department before the expiration date of the license the required renewal fee as specified in §19.802 of this title (relating to Amounts of Fees). A renewal fee is nonrefundable.

(b) The provisions of Insurance Code Article 21.01-2 §2 concerning the renewal of an insurance agent license shall apply to the specialty license issued under Insurance Code Article 21.09 and this subchapter.

(c) When a complete renewal application is filed not later than the expiration date of the license and accompanied by the renewal fee specified in §19.802 of this title, the original license continues in force until:

(1) the department issues the renewal license; or

(2) the commissioner issues an order suspending or revoking the license.

History

Source Note: The provisions of this §19.1906 adopted to be effective February 20, 2001, 26 TexReg 1545.

28 Tex. Admin. Code § 19.1907 Non-Residents

A specialty license shall be issued to persons not resident in the State of Texas under the same requirements applicable to Texas residents.

History

Source Note: The provisions of this §19.1907 adopted to be effective February 20, 2001, 26 TexReg 1545.

28 Tex. Admin. Code § 19.1908 Notice to Department

Each specialty license holder must notify the department within 30 days of the occurrence of the following:

(1) a change of the specialty license holder's mailing address;

(2) an administrative action taken against the specialty license holder by the insurance regulator of another state;

(3) a felony conviction of the specialty license holder or any individual who exercises control of the specialty license holder; or

(4) the addition or removal of an officer, director, partner, member, manager, or any other person in control of the specialty license holder.

History

Source Note: The provisions of this §19.1908 adopted to be effective February 20, 2001, 26 TexReg 1545; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.1909 Employee Training

(a) Each employee of a specialty license holder who performs any act of an insurance agent shall complete a training program which satisfies the requirements of Article 21.09 §1(d).

(b) An insurance company authorized to write the specialty insurance product shall submit an outline of the training program to the department for approval prior to use by a specialty license holder.

(c) The training outline shall be sufficiently detailed to demonstrate that the specialty license applicant's employees will receive training in the disclosures required under the applicable statutes and regulations as well as training in each specific type of specialty insurance product which the applicant seeks authorization to solicit.

(d) An applicant for or holder of a specialty insurance license shall submit all employee training materials to the department upon request. If the department finds that a training program is deficient, misrepresents any aspect of the insurance transaction or contains inaccuracies misleading to the public, the department may institute a disciplinary action against the insurance company that prepared the training materials. If the department finds that a training program is modified by or is not properly administered by the specialty license holder, the department may take any disciplinary action authorized under §19.1910 of this title (relating to Denial or Refusal of Specialty License Application; Suspension or Revocation of Specialty Licenses; Discipline of Specialty License Holders) against the specialty license holder.

History

Source Note: The provisions of this §19.1909 adopted to be effective February 20, 2001, 26 TexReg 1545; amended to be effective December 27, 2001, 26 TexReg 10603.

28 Tex. Admin. Code § 19.1910 Denial Or Refusal Of Specialty License Application; Suspension Or Revocation Of Specialty Licenses; Discipline Of Specialty License Holders

(a) In addition to any other remedy available under Chapter 82 of the Insurance Code, the department may refuse to issue an original license, revoke, suspend, or refuse to renew a license, place on probation a person whose license has been suspended, assess an administrative penalty, or reprimand a specialty license holder for a violation of the Insurance Code, another insurance law of this state, or a rule of the department. If a license suspension is probated, the commissioner may require the license holder to:

(1) report regularly to the department on matters that are the basis of the probation;

(2) limit the person's practice to the areas prescribed by the department; or

(3) continue or review professional education until the person attains a degree of skill satisfactory to the commissioner in those areas that are the basis of the probation.

(b) If the department proposes to refuse to issue an original specialty license, or to suspend, revoke, or refuse to renew a specialty license, the person affected is entitled to a hearing conducted by the State Office of Administrative Hearings in accordance with Chapter 40 of the Insurance Code. Notice of the hearing shall be provided to the person and to any insurance company appearing on the application as desiring that the license be issued.

(c) The department may discipline a specialty license holder or deny a license application under this subchapter if the department determines that the applicant or specialty license holder, individually or through any officer, director, controlling shareholder or employee:

(1) has willfully violated any provision of the insurance laws of this state or any other state;

(2) has intentionally made a material misstatement in a license application;

(3) has obtained, or attempted to obtain, a license by fraud or misrepresentation;

(4) has misappropriated, converted to the applicant's or specialty license holder's own use, or illegally withheld money belonging to:

(A) an insurance company;

(B) a specialty license holder; or

(5) has engaged in fraudulent or dishonest acts or practices;

(6) has materially misrepresented the terms or conditions of an insurance policy or contract;

(7) is convicted of a felony;

(8) has offered or given a rebate of an insurance premium or commission to an insured or enrollee; or

(9) is not actively engaged in a finance or retail business at a location where insurance sales are conducted.

(d) If a specialty license holder does not maintain the qualifications necessary for issuance of the license, the department shall deny, revoke, or suspend the person's license as provided in this section.

(e) A person whose license application is denied or whose insurance license has been revoked under the laws of this or any other state may not apply for a license as a specialty insurance agent before the first anniversary of:

(1) the effective date of the denial or revocation; or

(2) if the applicant or specialty license holder seeks judicial review of the department's action, the date of the final court order or decree affirming that action.

(f) The department may deny a timely application filed under subsection (e) of this section if the applicant does not show good cause why the denial or revocation of the previous license application or license should not be considered a bar to the issuance of a specialty license. This subsection does not apply to an applicant whose license application was denied for failure to submit a properly completed license application.

History

Source Note: The provisions of this §19.1910 adopted to be effective February 20, 2001, 26 TexReg 1545.

Subchapter U UTILIZATION REVIEWS FOR HEALTH CARE PROVIDED UNDER WORKERS' COMPENSATION INSURANCE COVERAGE

28 Tex. Admin. Code § 19.2001 General Provisions

(a) Statutory basis. This subchapter implements Insurance Code Chapter 4201, concerning Utilization Review Agents; Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks; and Labor Code Title 5, concerning Workers' Compensation.

(1) promote the delivery of quality health care in a cost-effective manner, including protection of injured employee safety;

(2) ensure that URAs adhere to reasonable standards for conducting utilization reviews;

(3) foster greater coordination and cooperation between health care providers and URAs;

(4) improve communications and knowledge of medical benefits among all parties concerned before expenses are incurred; and

(5) ensure that URAs maintain the confidentiality of medical records under applicable law.

History

Source Note: The provisions of this §19.2001 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2002 Applicability

(a) Limitations on applicability. Except as provided in Insurance Code Chapter 4201, this subchapter applies to utilization review performed under workers' compensation insurance coverage. This subchapter does not affect the authority of TDI-DWC to exercise the powers granted to it under Labor Code Title 5 and Insurance Code Chapter 4201. This subchapter applies to utilization review as set forth in Insurance Code Chapters 1305 and 4201 and Labor Code Title 5.

(1) This subchapter does not apply to utilization review performed under a health benefit plan or a health insurance policy.

(2) This subchapter does not apply to a person who provides information to an injured employee or an injured employee's representative, physician, doctor, or other health care provider about scope of coverage or benefits provided for under workers' compensation insurance coverage, and does not determine medical necessity or appropriateness or the experimental or investigational nature of health care services.

(b) Applicability of other law.

(1) Health care providers performing peer reviews regarding the prospective, concurrent, or retrospective review of the medical necessity or appropriateness of health care are performing utilization review, must generate a written report, and must comply with this subchapter, Labor Code Title 5, and rules adopted under the Texas Workers' Compensation Act including, but not limited to, Chapter 180 of this title (relating to Monitoring and Enforcement).

(2) Insurance carriers must process medical bills as required by Labor Code Title 5 and rules adopted under the Texas Workers' Compensation Act including, but not limited to, Chapter 133, Subchapter A, of this title (relating to General Rules for Medical Billing and Processing).

(3) If there is a conflict between this subchapter and rules adopted by the commissioner of workers' compensation, the rules adopted by the commissioner of workers' compensation prevail.

(4) If there is a conflict between this subchapter and the rules in Chapter 10 of this title, regarding Workers' Compensation Health Care Networks, the rules in Chapter 10 of this title prevail.

History

Source Note: The provisions of this §19.2002 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2003 Definitions

(a) The words and terms defined in Insurance Code Chapter 4201, concerning Utilization Review Agents, have the same meaning when used in this subchapter, except as otherwise provided by this subchapter, unless the context clearly indicates otherwise.

(b) The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Adverse determination--A determination by a URA made on behalf of a payor that the health care services provided or proposed to be provided to an injured employee are not medically necessary or appropriate. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review. For the purposes of this subchapter, an adverse determination does not include a determination that health care services are experimental or investigational.

(2) Appeal--The URA's formal process by which an injured employee, an injured employee's representative, or an injured employee's provider of record may request reconsideration of an adverse determination. For the purposes of this subchapter, the term also applies to reconsideration processes prescribed by Labor Code Title 5, concerning Workers' Compensation, and applicable rules for workers' compensation.

(3) Biographical affidavit--National Association of Insurance Commissioners biographical affidavit to be used as an attachment to the URA application.

(4) Certificate--A certificate issued by the commissioner to an entity authorizing the entity to operate as a URA in the State of Texas. A certificate is not issued to an insurance carrier that is registered as a URA under §19.2004 of this title (relating to Certification or Registration of URAs).

(5) Commissioner--As defined in Insurance Code §31.001, concerning Definitions.

(6) Compensable injury--As defined in Labor Code §401.011, concerning General Definitions.

(7) Complaint--An oral or written expression of dissatisfaction with a URA concerning the URA's process in conducting a utilization review. The term "complaint" does not include:

(A) an expression of dissatisfaction constituting an appeal under Insurance Code §4201.351, concerning Complaint as Appeal; or

(B) a misunderstanding or misinformation that is resolved promptly by supplying the appropriate information or by clearing up the misunderstanding to the satisfaction of the complaining party.

(8) Concurrent utilization review--A form of utilization review for ongoing health care or for an extension of treatment beyond previously approved health care.

(9) Disqualifying association--Any association that may reasonably be perceived as having potential to influence the conduct or decision of a reviewing physician, doctor, or other health care provider, which may include:

(A) shared investment or ownership interest;

(B) contracts or agreements that provide incentives, for example, referral fees, payments based on volume or value, or waiver of beneficiary coinsurance and deductible amounts;

(C) contracts or agreements for space or equipment rentals, personnel services, management contracts, referral services, or warranties, or any other services related to the management of a physician's, doctor's, or other health care provider's practice;

(D) personal or family relationships; or

(E) any other financial arrangement that would require disclosure under Labor Code or applicable TDI-DWC rules, Insurance Code or applicable TDI rules, or any other association with the injured employee, employer, or insurance carrier that may give the appearance of preventing the reviewing physician, doctor, or other health care provider from rendering an unbiased opinion.

(10) Doctor--As defined in Labor Code §401.011.

(11) Experimental or investigational--A health care treatment, service, or device for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of the treatment, service, or device but that is not yet broadly accepted as the prevailing standard of care.

(12) Health care--As defined in Labor Code §401.011.

(13) Health care facility--As defined in Labor Code §401.011.

(14) Insurance carrier or insurer--As defined in Labor Code §401.011.

(15) Independent review organization or IRO--As defined in §12.5 of this title (relating to Definitions).

(16) Legal holiday--

(A) a holiday as provided in Government Code §662.003(a), concerning Dates and Descriptions of Holidays;

(B) the Friday after Thanksgiving Day;

(D) December 26.

(17) Medical benefit--As defined in Labor Code §401.011.

(18) Medical emergency--The sudden onset of a medical condition manifested by acute symptoms of sufficient severity, including severe pain that the absence of immediate medical attention could reasonably be expected to result in:

(A) placing the injured employee's health or bodily functions in serious jeopardy; or

(B) serious dysfunction of any body organ or part.

(19) Medical records--The history of diagnosis of and treatment for an injury, including medical, mental health records as allowed by law, dental, and other health care records from all disciplines providing care to an injured employee.

(20) Mental health medical record summary--A summary of process or progress notes relevant to understanding the injured employee's need for treatment of a mental or emotional condition or disorder including:

(A) identifying information; and

(B) a treatment plan that includes a:

(i) diagnosis;

(ii) treatment intervention;

(iii) general characterization of injured employee behaviors or thought processes that affect level of care needs; and

(iv) discharge plan.

(21) Mental health therapist--Any of the following individuals who, in the ordinary course of business or professional practice, as appropriate, diagnose, evaluate, or treat any mental or emotional condition or disorder:

(A) an individual licensed by the Texas Medical Board to practice medicine in this state;

(B) an individual licensed as a psychologist, psychological associate, or a specialist in school psychology by the Texas State Board of Examiners of Psychologists;

(C) an individual licensed as a marriage and family therapist by the Texas State Board of Examiners of Marriage and Family Therapists;

(D) an individual licensed as a professional counselor by the Texas State Board of Examiners of Professional Counselors;

(E) an individual licensed as a social worker by the Texas State Board of Social Worker Examiners;

(F) an individual licensed as a physician assistant by the Texas Medical Board;

(G) an individual licensed as a registered professional nurse by the Texas Board of Nursing; or

(H) any other individual who is licensed or certified by a state licensing board in the State of Texas, as appropriate, to diagnose, evaluate, or treat any mental or emotional condition or disorder.

(22) Mental or emotional condition or disorder--A mental or emotional illness as detailed in the most current Diagnostic and Statistical Manual of Mental Disorders .

(23) Payor--Any person or entity that provides, offers to provide, or administers hospital, outpatient, medical, or other health benefits, including workers' compensation benefits, to an individual treated by a health care provider under a policy, plan, statute, or contract.

(24) Peer review--An administrative review by a health care provider performed at the insurance carrier's request without a physical examination of the injured employee.

(25) Person--Any individual; partnership; association; corporation; organization; trust; hospital district; community mental health center; intellectual disability center; mental health and intellectual disability center; limited liability company; limited liability partnership; a political subdivision of this state; the statewide rural health care system under Insurance Code Chapter 845, concerning Statewide Rural Health Care System; and any similar entity.

(26) Preauthorization--A form of prospective utilization review by a payor or a payor's URA of health care services proposed to be provided to an injured employee.

(27) Provider of record--The physician, doctor, or other health care provider that has primary responsibility for the health care services rendered or requested on behalf of an injured employee, or a physician, doctor, or other health care provider that has rendered or has been requested to provide health care services to an injured employee. This definition includes any health care facility where health care services are rendered on an inpatient or outpatient basis.

(28) Reasonable opportunity--At least one documented good faith attempt to contact the provider of record that provides an opportunity for the provider of record to discuss the services under review with the URA during normal business hours before issuing a prospective, concurrent, or retrospective utilization review adverse determination:

(A) no less than one working day before issuing a prospective utilization review adverse determination;

(B) no less than five working days before issuing a retrospective utilization review adverse determination; or

(29) Registration--The process for an insurance carrier to register with TDI to perform utilization review solely for injured employees covered by workers' compensation insurance coverage issued by the insurance carrier.

(30) Request for a review by an IRO--Form to request a review by an independent review organization that is completed by the requesting party and submitted to the URA or insurance carrier that made the adverse determination.

(31) Retrospective utilization review--A form of utilization review for health care services that have been provided to an injured employee. Retrospective utilization review does not include review of services for which prospective or concurrent utilization reviews were previously conducted or should have been previously conducted.

(32) Screening criteria--The written policies, decision rules, medical protocols, or treatment guidelines used by a URA as part of the utilization review process.

(33) TDI--The Texas Department of Insurance.

(34) TDI-DWC--The Texas Department of Insurance, Division of Workers' Compensation.

(35) Texas Workers' Compensation Act--Labor Code Title 5, Subtitle A.

(36) Treating doctor--As defined in Labor Code §401.011.

(37) URA--Utilization review agent.

(38) URA application--Form for application for, renewal of, and reporting a material change to a certification or registration as a URA in this state.

(39) Workers' compensation health care network--As defined in Insurance Code §1305.004, concerning Definitions.

(40) Workers' compensation health plan--Health care provided by a political subdivision contracting directly with health care providers or through a health benefits pool, under Labor Code §504.053(b)(2), concerning Election.

(41) Workers' compensation insurance coverage--As defined in Labor Code §401.011.

(42) Workers' compensation network coverage--Health care provided under a workers' compensation health care network.

(43) Workers' compensation non-network coverage--Health care delivered under Labor Code Title 5, excluding health care provided under Insurance Code Chapter 1305, concerning Workers' Compensation Health Care Networks.

History

Source Note: The provisions of this §19.2003 adopted to be effective February 20, 2013, 38 TexReg 892; amended to be effective November 18, 2025, 50 TexReg 7419.

28 Tex. Admin. Code § 19.2004 Certificate or Registration of URAs

(a) Applicability of certification or registration requirements. A person acting as or holding itself out as a URA under this subchapter must be certified or registered, as applicable, under Insurance Code §4201.057, concerning Health Maintenance Organizations; Insurance Code §4201.058, concerning Insurers; or Insurance Code §4201.101, concerning Certificate of Registration Required, and this subchapter.

(1) If an insurance carrier performs utilization review for an individual or entity subject to this subchapter for which it is not the payor, the insurance carrier must be certified.

(2) If an insurance carrier performs utilization review only for coverage for which it is the payor, the insurance carrier must be registered.

(b) Application form. The commissioner adopts by reference the:

(1) URA application, for application for, renewal of, and reporting a material change to a certification or registration as a URA in this state; and

(2) Biographical affidavit, to be used as an attachment to the URA application.

(c) Original application fee. The original application fee specified in §19.802 of this title (relating to Amount of Fees) must be sent to TDI with the application for certification. A person applying for registration is not required to pay a fee.

(d) Where to obtain and send the URA application form. Forms may be obtained from www.tdi.texas.gov/forms and must be sent to: Texas Department of Insurance, Managed Care Quality Assurance Office, MC: LH-MCQA, P.O. Box 12030, Austin, Texas 78711-2030.

(e) Original application process. Within 60 calendar days after receipt of a complete application, TDI will process the application and issue or deny a certification or registration. TDI will send a certificate or a letter of registration to an entity that is granted certification or registration. The applicant may waive the time limit described in this subsection.

(f) Omissions or deficiencies. TDI will send the applicant written notice of any omissions or deficiencies in the application. The applicant must correct the omissions or deficiencies in the application, or request additional time in writing, within 15 working days of the date of TDI's latest notice of omissions or deficiencies. If the applicant fails to do so, the application will not be processed and the file will be closed as an incomplete application. The application fee is not refundable. The request for additional time must be approved by TDI in writing to be effective.

(g) Certification and registration expiration. Each URA registration or certification issued by TDI and not suspended or revoked by the commissioner expires on the second anniversary of the date of issuance.

(h) Renewal requirements. A URA must apply for renewal of certification or registration every two years from the date of issuance by submitting the URA application to TDI. A URA must also submit a renewal fee in the amount specified by §19.802 of this title (relating to Amount of Fees) for renewal of a certification. A person applying for renewal of a registration is not required to pay a fee.

(1) Continued operation during review. If a URA submits the required information and fees specified in this subsection on or before the expiration of the certification or registration, the URA may continue to operate under its certification or registration until the renewal certification or registration is denied or issued.

(2) Expiration for 90 calendar days or less. If the certification or registration has been expired for 90 calendar days or less, the URA may renew the certification or registration by sending a completed renewal application and fee as applicable. The URA may not operate from the time the certification or registration has expired until the time TDI has issued a renewal certification or registration.

(3) Expiration for longer than 90 calendar days. If a URA's certification or registration has been expired for longer than 90 calendar days, the URA may not renew the certification or registration. The URA must obtain a new certification or registration by submitting an application for original issuance of the certification or registration and an original application fee as applicable.

(i) Contesting a denial. If an application for an original or renewal certification or registration is denied, the applicant may contest the denial under the provisions of Chapter 1, Subchapter A, of this title (relating to Rules of Practice and Procedure) and Government Code Chapter 2001, concerning Administrative Procedure.

(j) Updating information on effective date. A URA that is certified or registered before the effective date of this rule must submit an updated application to TDI to comply with this subchapter within 90 calendar days after the effective date of this rule. However, the submission of an updated application does not change the URA's existing renewal date, and this section still governs the URA's renewal process.

History

Source Note: The provisions of this §19.2004 adopted to be effective February 20, 2013, 38 TexReg 892; amended to be effective June 19, 2023, 48 TexReg 3285.

28 Tex. Admin. Code § 19.2005 General Standards of Utilization Review

(a) Review of utilization review plan. A utilization review plan must be reviewed and approved by a physician and conducted under standards developed and periodically updated with input from both primary and specialty physicians, doctors, and other health care providers, including practicing health care providers, as appropriate.

(b) Special circumstances. A utilization review determination must be made in a manner that takes special circumstances of the case into account that may require deviation from the norm stated in the screening criteria or relevant guidelines. Special circumstances include, but are not limited to, an individual who has a disability, acute condition, or life-threatening illness. For the purposes of this section, disability must not be construed to mean an injured employee who is off work or receiving income benefits.

(c) Screening criteria. Each URA must utilize written screening criteria that are evidence-based, scientifically valid, outcome-focused, and that comply with the requirements in Insurance Code §4201.153. The screening criteria must also recognize that if evidence-based medicine is not available for a particular health care service provided, the URA must utilize generally accepted standards of medical practice recognized in the medical community. For workers' compensation network coverage, screening criteria must comply with Insurance Code Chapter 1305 and §10.101 of this title (relating to General Standards for Utilization Review and Retrospective Review); for workers' compensation non-network coverage and workers' compensation health plan, screening criteria must comply with Labor Code §§401.011, 413.011, and 413.014, and Chapters 133, 134, and 137 of this title (relating to General Medical Provisions; Benefits-Guidelines for Medical Services, Charges, and Payments; and Disability Management, respectively).

(d) Referral and determination of adverse determinations. Adverse determinations must be referred to and may only be determined by a physician, doctor, or other health care provider with appropriate credentials under Chapter 180 of this title (relating to Monitoring and Enforcement) and §19.2006 of this title (relating to Requirements and Prohibitions Relating to Personnel). Physicians and doctors performing utilization review must also comply with Labor Code §§408.0043, 408.0044, and 408.0045.

(e) Delegation of review. A URA, including a specialty URA, may delegate the utilization review to qualified personnel in a hospital or other health care facility in which the health care services to be reviewed were, or are, to be provided. The delegation does not relieve the URA of full responsibility for compliance with this subchapter, Insurance Code Chapter 4201, the Texas Workers' Compensation Act, and applicable TDI-DWC rules, including responsibility for the conduct of those to whom utilization review has been delegated.

(f) Complaint system. The URA must develop and implement procedures for the resolution of oral or written complaints initiated by injured employees, their representatives, or health care providers concerning the utilization review. The URA must maintain records of complaints for three years from the date the complaints are filed. The complaints procedure must include a requirement for a written response to the complainant by the agent within 30 calendar days. The written response must include TDI's address, toll-free telephone number, and a statement explaining that a complainant is entitled to file a complaint with TDI.

(g) Compliance with Labor Code §504.055. Utilization review plan written policies must evidence compliance with Labor Code §504.055, concerning Expedited Provision of Medical Benefits for Certain Injuries Sustained by First Responder in Course and Scope of Employment.

History

Source Note: The provisions of this §19.2005 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2006 Requirements and Prohibitions Relating to Personnel

(a) Qualification requirements. Physicians, doctors, and other health care providers employed by or under contract with a URA to perform utilization review must be appropriately trained, qualified, and currently licensed. Personnel conducting utilization review must hold an unrestricted license or an administrative license in Texas or be otherwise authorized to provide health care services in Texas. Physicians and doctors conducting utilization review must hold a professional certification in a health care specialty appropriate to the type of health care the injured employee is receiving as required by Labor Code §§408.0043, 408.0044, and 408.0045. Physicians, doctors, and other health care providers conducting utilization review must have the appropriate credentials as required by Chapter 180 of this title (relating to Monitoring and Enforcement).

(1) This subchapter does not supersede requirements in the Medical Practice Act, Texas Medical Board rules, Texas Occupations Code Chapter 201 (relating to Chiropractors), or Texas Board of Chiropractic Examiners rules. Individuals licensed by the Texas Medical Board are subject to 22 TAC Chapter 190, regarding disciplinary guidelines.

(2) Personnel who perform clerical or administrative tasks are not required to have the qualifications prescribed by this subsection.

(b) Disqualifying associations. For purposes of this subsection, being employed by or under contract with the same URA as the physician, doctor, or other health care provider who issued the initial adverse determination does not in itself constitute a disqualifying association. A physician, doctor, or other health care provider who conducts utilization review must not have any disqualifying associations with the:

(1) injured employee or health care provider who is requesting utilization review or an appeal; or

(2) physician, doctor, or other health care provider who issued the initial adverse determination.

(c) Information a URA must send to TDI. A URA must send to TDI the name, type, Texas license number, and qualifications of the personnel either employed or under contract to perform utilization review with an original or renewal application.

(d) Written procedures and maintenance of records. A URA must develop and implement written procedures, and maintain documentation, to demonstrate that all physicians, doctors, and other health care providers used by the URA are licensed, qualified, and appropriately trained or experienced.

(e) Physician direction requirement. Utilization review conducted by a URA must be under the direction of a physician currently licensed without restriction to practice medicine in Texas. The physician must be employed by or under contract with the URA.

History

Source Note: The provisions of this §19.2006 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2007 URA Contact with and Receipt of Information from Health Care Providers

(a) If a URA must reimburse health care providers for providing medical information under Insurance Code §4201.207, reimbursement is limited to the reasonable costs for providing medical records relevant to the utilization review that were requested by the URA in writing. A health care provider's charge for providing medical information to a URA must comply with §134.120 of this title (relating to Reimbursement for Medical Documentation) and may not include any costs that are recouped as a part of the charge for health care. Nothing in this subsection removes the health care provider's requirement to provide information to substantiate the medical necessity of health care requested under Chapter 134 of this title (relating to Benefits--Guidelines for Medical Services, Charges, and Payments) or to submit required documentation when submitting a medical bill under Chapter 133 of this title (relating to General Medical Provisions).

(b) When conducting utilization review, a URA must request all relevant and updated information and medical records to complete the review.

(1) This information may include identifying information about the injured employee; the claim; the treating physician, doctor, or other health care provider; and the facilities rendering care. It may also include clinical and diagnostic testing information regarding the diagnoses of the injured employee and the medical history of the injured employee relevant to the diagnoses and the compensable injury, the injured employee's prognosis, and the plan of treatment prescribed by the provider of record, along with the provider of record's justification for the plan of treatment. The required information should be requested from the appropriate sources.

(2) A URA must not routinely request copies of all medical records on injured employees reviewed. During utilization review, copies of the necessary or pertinent sections of medical records should only be required when a difficulty develops in determining whether the health care is medically necessary or appropriate or experimental or investigational in nature.

(c) The URA must share among its various divisions all clinical and demographic information on individual injured employees to avoid duplicate requests for information from injured employees, physicians, doctors, and other health care providers.

(d) A URA may not require as a condition of approval of a health care service, or for any other reason, the observation of a psychotherapy session or the submission or review of a mental health therapist's process or progress notes that relate to the mental health therapist's treatment of an injured employee's mental or emotional condition or disorder. This prohibition extends to requiring an oral, electronic, facsimile, or written submission or rendition of a mental health therapist's process or progress notes. This prohibition does not preclude the URA from requiring submission of:

(1) an injured employee's mental health medical record summary; or

(2) medical records or process or progress notes that relate to treatment of conditions or disorders other than a mental or emotional condition or disorder.

History

Source Note: The provisions of this §19.2007 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2008 On-Site Review by a URA

(a) Identification of URAs. If a URA's staff member is conducting an on-site or off-site review, each staff member must provide his or her name, the name of his or her organization, photo identification, and a URA identification card with the certification or registration number assigned by TDI when requested by an individual, including an injured employee or health care provider.

(b) On-site review. For on-site review conducted at a health care facility, a URA:

(1) must ensure that on-site review staff:

(A) register with the appropriate contact individual, if available, prior to requesting any clinical information or assistance from health care facility staff; and

(B) wear appropriate health care facility supplied identification tags while on the health care facility premises;

(2) must agree, if so requested, that the medical records remain available in the designated areas during the on-site review and that reasonable health care facility administrative procedures will be followed by on-site review staff to avoid disrupting health care facility operations or injured employee care. The procedures, however, should not obstruct or limit the ability of the URA to efficiently conduct the necessary review.

History

Source Note: The provisions of this §19.2008 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2009 Notice of Determinations Made in Utilization Review

(a) Notice requirements of favorable or adverse determinations.

(1) A URA must send written notification of a determination made in utilization review to the individuals specified in and within the timeframes required for utilization review.

(2) For prospective and concurrent review, the timeframes are specified by:

(A) Section 134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care) for workers' compensation non-network coverage; and

(B) Insurance Code §1305.353, concerning Notice of Certain Utilization Review Determinations; Preauthorization Requirements; and §10.102 of this title (relating to Notice of Certain Utilization Review Determinations; Preauthorization and Retrospective Review Requirements) for workers' compensation network coverage.

(3) For retrospective review, the timeframes are specified by:

(A) Sections 133.240 and 133.250 of this title (relating to Medical Payment and Denials, and Reconsideration for Payment of Medical Bills, respectively) for workers' compensation non-network coverage;

(B) Sections 133.240, 133.250, and 10.102 of this title, for workers' compensation network coverage.

(4) For workers' compensation non-network coverage and network coverage, a URA must ensure that preauthorization numbers assigned by the URA comply with the data and format requirements contained in the standards adopted by the U.S. Department of Health and Human Services in 45 Code of Federal Regulations §162.1102 (relating to Standards for Health Care Claims or Equivalent Encounter Information Transaction) based on the type of service in the preauthorization request.

(b) Required notice elements. In all instances of a prospective, concurrent, or retrospective utilization review adverse determination, written notification of the adverse determination by the URA must include:

(1) the principal reasons for the adverse determination;

(2) the clinical basis for the adverse determination;

(3) a description of the procedure for filing a complaint with TDI;

(4) the professional specialty and Texas license number of the physician, doctor, or other health care provider that made the adverse determination;

(5) a description of the procedure for the URA's complaint system as required by §19.2005 of this title (relating to General Standards of Utilization Review);

(6) a description of the URA's appeal process, as required by §19.2011 of this title (relating to Written Procedures for Appeal of Adverse Determination) and a statement that in a circumstance involving an injured employee's life-threatening condition, the injured employee is entitled to an immediate review of the adverse determination by an IRO and is not required to comply with procedures for an internal review of the adverse determination by the URA for prospective and concurrent utilization review;

(7) for workers' compensation network coverage, a description or the source of the screening criteria used in making the determination, including a description of treatment guidelines used, as applicable;

(8) for workers' compensation non-network coverage, a description of treatment guidelines used under Chapter 137 of this title (relating to Disability Management) or Labor Code §504.054(b) in making a determination; and

(9) notice of the independent review process. The notice of the independent review process required under this paragraph must include:

(A) a statement that:

(i) the request for a review by an IRO form must be completed by the injured employee, the injured employee's representative, or the injured employee's provider of record and be returned to the insurance carrier or URA that made the adverse determination to begin the independent review process;

(ii) a request for independent review of an adverse determination made under workers' compensation non-network coverage must be timely filed by the requestor consistent with §133.308 of this title (relating to MDR of Medical Necessity Disputes); and

(iii) a request for independent review of an adverse determination made under workers' compensation network coverage must be timely filed by the requestor consistent with §10.104 of this title (relating to Independent Review of Adverse Determination); and

(B) either of the following:

(i) a copy of the request for a review by an IRO form, available at www.tdi.texas.gov/forms; or

(ii) notice in at least 12 point font that the injured employee can obtain a copy of the request for a review by an IRO form by:

(I) accessing TDI's website at www.tdi.texas.gov/forms; or

(II) calling {insert URA's telephone number} to request a copy of the form, at which time the URA will send a copy of the request for a review by an IRO form to the injured employee.

(c) Peer review reports. The notice of determination made in utilization review required under this section and the peer review report required by §180.28 of this title (relating to Peer Review Requirements, Reporting, and Sanctions) may be combined into one document if all the requirements of both sections are met.

History

Source Note: The provisions of this §19.2009 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2010 Requirements Prior to Issuing Adverse Determination

In any instance in which a URA is questioning the medical necessity or appropriateness of the health care services prior to issuance of an adverse determination, the URA must afford the provider of record a reasonable opportunity to discuss the plan of treatment for the injured employee with a physician, dentist, or chiropractor. If the health care services in question are dental services, then a dentist may conduct the discussion if the services in question are within the scope of the dentist's license to practice dentistry. If the health care services in question are chiropractic services, then a chiropractor may conduct the discussion if the services in question are within the scope of the chiropractor's license to practice chiropractic. The discussion must include, at a minimum, the clinical basis for the URA's decision and a description of documentation or evidence, if any, that can be submitted by the provider of record that, on appeal, might lead to a different utilization review decision.

(1) The URA must provide the URA's telephone number so the provider of record may contact the URA to discuss the pending adverse determination.

(2) The URA must maintain, and submit to TDI or TDI-DWC on request, documentation that details the discussion opportunity provided to the provider of record, including the date and time the URA offered the opportunity to discuss the adverse determination, the date and time that the discussion, if any, took place, and the discussion outcome.

History

Source Note: The provisions of this §19.2010 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2011 Written Procedures for Appeal of Adverse Determinations

(a) Appeal of prospective or concurrent review adverse determinations. Each URA must comply with its written procedures for appeals. The written procedures for appeals must comply with Insurance Code Chapter 4201, Subchapter H, concerning Appeal of Adverse Determination, and must include the following provisions:

(1) For workers' compensation network coverage, a URA must include in its written procedures a statement specifying the timeframes for requesting the appeal under Insurance Code §1305.354, which may not be less than 30 calendar days after the date of issuance of written notification of an adverse determination.

(2) For workers' compensation non-network coverage and workers' compensation health plans, a URA must include in its written procedures a statement specifying that the timeframes for requesting the appeal of the adverse determination must be consistent with §134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care) and Chapter 133, Subchapter D, of this title (relating to Dispute of Medical Bills).

(3) An injured employee, the injured employee's representative, or the provider of record may appeal the adverse determination orally or in writing.

(4) Appeal decisions must be made by a physician, dentist, or chiropractor who has not previously reviewed the case, as required by Chapter 180 of this title (relating to Monitoring and Enforcement); Insurance Code §1305.354; and §10.103 of this title (relating to Reconsideration of Adverse Determination). If the health care services in question are dental services, then a dentist may make the appeal decision if the services in question are within the scope of the dentist's license to practice dentistry. If the health care services in question are chiropractic services, then a chiropractor may make the appeal decision if the services in question are within the scope of the chiropractor's license to practice chiropractic.

(5) Subject to the notice requirements of §19.2009 of this title (relating to Notice of Determinations Made in Utilization Review), in any instance in which the URA is questioning the medical necessity or appropriateness of the health care services, prior to issuance of an adverse determination, the URA must afford the provider of record a reasonable opportunity to discuss the plan of treatment for the injured employee with a physician. If the health care services in question are dental services, then a dentist may conduct the discussion if the services in question are within the scope of the dentist's license to practice dentistry. If the health care services in question are chiropractic services, then a chiropractor may conduct the discussion if the services in question are within the scope of the chiropractor's license to practice chiropractic. The provision must state that the discussion must include, at a minimum, the clinical basis for the URA's decision.

(6) After the URA has sought review of the appeal of the adverse determination, the URA must issue a response letter explaining the resolution of the appeal to individuals specified in §19.2009(a) of this title (relating to Notice of Determinations Made in Utilization Review).

(7) The response letter required in paragraph (6) of this subsection, for both workers' compensation network coverage and for workers' compensation non-network coverage, must include:

(A) a statement of the specific medical or dental reasons for the resolution;

(B) the clinical basis for the decision;

(C) the professional specialty and Texas license number of the physician, dentist, or chiropractor who made the determination;

(D) notice of the appealing party's right to seek review of the adverse determination by an IRO under §19.2017 of this title (relating to Independent Review of Adverse Determinations), the notice of the independent review process, and either of the following:

(i) a copy of the request for a review by an IRO form, available at www.tdi.texas.gov/forms; or

(ii) notice in at least 12 point font that the injured employee can obtain a copy of the request for a review by an IRO form by:

(I) accessing TDI's website, at www.tdi.texas.gov/forms; or

(II) calling {insert URA's telephone number} to request a copy of the form, at which time the URA will send a copy of the request for a review by an IRO form to the injured employee or health care provider;

(E) procedures for filing a complaint as described in §19.2005(f) of this title (relating to General Standards of Utilization Review);

(F) for workers' compensation network coverage only, a description or the source of the screening criteria that were utilized in making the determination, including a description of the network adopted treatment guidelines, if any; and

(G) for workers' compensation non-network coverage only, a description of treatment guidelines utilized under Chapter 137 of this title (relating to Disability Management) or Labor Code §504.054(b) in making a determination;

(8) Timeframes required for written notifications to the appealing party of the determination of the appeal:

(A) must be resolved as specified in §10.103 of this title for workers' compensation network coverage; and

(B) must be resolved as specified in §134.600 of this title for workers' compensation non-network coverage.

(9) In a circumstance involving an injured employee's life-threatening condition, or involving a request for a medical interlocutory order under §134.550 of this title (Medical Interlocutory Order), the injured employee is entitled to an immediate review by an IRO of the adverse determination and is not required to comply with procedures for an appeal of the adverse determination by the URA.

(b) Appeal of retrospective review adverse determinations. A URA must maintain and make available a written description of appeal procedures involving an adverse determination in a retrospective review. The appeal procedures must comply with §19.2009 of this title for retrospective utilization review adverse determination appeals and Insurance Code §4201.359. The written procedures for appeals must specify that an injured employee, the injured employee's representative, or the provider of record may appeal the adverse determination orally or in writing.

(1) Workers' compensation network coverage. For workers' compensation network coverage, appeal procedures must comply with the requirements in Insurance Code Chapter 1305, §10.102 of this title (relating to Notice of Certain Utilization Review Determinations; Preauthorization and Retrospective Review Requirements), and §133.250 of this title (relating to Reconsideration for Payment of Medical Bills).

(2) Workers' compensation non-network coverage. For workers' compensation non-network coverage, the appeal procedures must comply with the requirements of §133.250 of this title.

History

Source Note: The provisions of this §19.2011 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2012 URA's Telephone Access and Procedures for Certain Drug Requests and Post-Stabilization Care

(a) A URA must have appropriate personnel reasonably available by toll-free telephone at least 40 hours per week during normal business hours in both Central Time and Mountain Time, to discuss an injured employee's care and to respond to telephone review requests.

(b) A URA must have procedures that the URA will implement when responding to requests for:

(1) drugs that require preauthorization, in situations in which the injured employee has received or is currently receiving the requested drugs and an adverse determination could lead to a medical emergency; and

(2) post-stabilization care and pain management medication immediately subsequent to surgery or emergency treatment, as requested by the treating physician or provider of record.

History

Source Note: The provisions of this §19.2012 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2013 Confidentiality

(a) Confidentiality requirements. To ensure confidentiality, a URA must, when contacting a physician's, doctor's, or other health care provider's office, provide its certification number, name, and professional qualifications.

(1) If requested by the physician, doctor, or other health care provider, the URA must present written documentation that it is acting as an agent of the insurance carrier for the relevant injured employee.

(2) Medical records and injured employee specific information must be maintained by a URA in a secure area with access limited to essential personnel only.

(3) A URA must retain information generated and obtained by the URA in the course of utilization review for at least four years.

(4) A URA's charges for providing a copy of recorded personal information to individuals may not exceed 10 cents per page and may not include any costs that are otherwise recouped as part of the charge for utilization review.

(b) Written procedures on confidentiality.

(1) A URA must specify in writing the procedures the URA will implement pertaining to confidentiality of information received from the injured employee, the injured employee's representative, and the physician, doctor, or other health care provider and the information exchanged between the URA and third parties for conducting utilization review. These procedures must specify that:

(A) specific information received from the injured employee, the injured employee's representative, and the physician, doctor, or other health care provider and the information exchanged between the URA and third parties for the purpose of conducting reviews will be considered confidential, be used by the review agent solely for utilization review, and be shared by the URA with only those third parties who have authority to receive the information, for example, the claim administrator; and

(B) the URA has procedures in place to address confidentiality, and that the URA agrees to abide by any federal and state laws governing the issue of confidentiality.

(2) Summary data which does not provide sufficient information to allow identification of individual injured employees, physicians, doctors, or other health care providers is not considered confidential.

History

Source Note: The provisions of this §19.2013 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2014 Regulatory Requirements Subsequent to Certification or Registration

(a) Complaints to TDI. Complaints received by TDI against a URA must be processed under TDI's established procedures for investigation and resolution of complaints.

(b) TDI inquiries. TDI may address inquiries to a URA related to any matter connected with URA transactions TDI considers necessary for the public good or for the proper discharge of TDI's duties. Under Insurance Code §38.001, a URA that receives an inquiry from TDI must respond to the inquiry in writing not later than the 15th day after the date the inquiry is received.

(c) TDI-DWC inquiries. This section does not limit the ability of the commissioner of workers' compensation or TDI-DWC to make inquiries, conduct audits, or receive and investigate complaints against URAs or personnel employed by or under contract with URAs to perform utilization review to determine compliance with or violations of Labor Code Title 5, the Insurance Code, or applicable TDI-DWC rules.

(d) On-site review by TDI. For scheduled and unscheduled on-site reviews, TDI may make a complete on-site review of the operations of each URA at the principal place of business for each agent as often as is deemed necessary. An on-site review will only be conducted during weekdays and normal business hours. A URA must make available all records relating to its operation during any scheduled or unscheduled on-site reviews.

(1) Scheduled on-site reviews. A URA will be notified of any scheduled on-site review by letter, which will specify, at a minimum, the identity of TDI's designated representative and the expected arrival date and time.

(2) Unscheduled on-site reviews. At a minimum, notice of an on-site review of a URA will be in writing and be presented by TDI's designated representative on arrival.

History

Source Note: The provisions of this §19.2014 adopted to be effective February 20, 2013, 38 TexReg 892; amended to be effective March 20, 2016, 41 TexReg 2172.

28 Tex. Admin. Code § 19.2015 Administrative Violations

(a) A fraudulent or deceptive act or omission in obtaining, attempting to obtain, or use of certification or registration as a URA is a violation of Insurance Code Chapter 4201.

(b) The commissioner's authority under this subchapter is in addition to any other authority to enforce a sanction, penalty, fine, forfeiture, denial, suspension, or revocation otherwise authorized by law, including remedies under Insurance Code Chapter 4201, Subchapter M, concerning Enforcement.

(c) This section does not limit the ability of the commissioner of workers' compensation or TDI-DWC to make inquiries, conduct audits, or receive and investigate complaints against URAs or personnel employed by or under contract with URAs to perform utilization review to determine compliance with or violations of Labor Code Title 5 or TDI-DWC rules. Nothing in this section prohibits joint enforcement actions by TDI and TDI-DWC or delegations of authority between TDI and TDI-DWC to enforce relevant statutes or rules.

History

Source Note: The provisions of this §19.2015 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2016 Specialty URA

(a) Application. To be certified or registered as a specialty URA, an applicant must submit to TDI the application, information, and fee required in §19.2004 of this title (Certification or Registration of URAs).

(b) Same specialty required. A specialty URA must conduct utilization review under the direction of a health care provider who is of the same specialty as the agent and who is licensed or otherwise authorized to provide the specialty health care service by a state licensing agency in the United States. To conduct utilization review, a specialty URA must be of the same specialty as the health care provider who ordered the service. For example, when conducting utilization review of prescription drugs prescribed by a physician with a specialty in neurological surgery, the specialty URA must be a physician with a specialty in neurological surgery.

(c) Rule requirements. A specialty URA is subject to the requirements of this subchapter, except for the following provisions:

(1) §19.2005(a) of this title (relating to General Standards of Utilization Review);

(2) §19.2006(a), (c), (d), and (e) of this title (relating to Requirements and Prohibitions Relating to Personnel);

(3) §19.2010 of this title (relating to Requirements Prior to Issuing Adverse Determination); and

(4) §19.2011(a)(4) and (5) of this title (relating to Written Procedures for Appeal of Adverse Determination).

(d) Utilization review plan. A specialty URA must have its utilization review plan, including appeal requirements, reviewed by a physician, doctor, or other health care provider of the appropriate specialty, and the plan must be implemented under standards developed with input from a physician, doctor, or other health care provider of the appropriate specialty. The specialty URA must have written procedures to ensure that these requirements are implemented.

(e) Requirements of employed or contracted physicians, doctors, other health care providers, and personnel.

(1) Physicians, doctors, other health care providers, and personnel employed by or under contract with a specialty URA to perform workers' compensation utilization review must be appropriately trained, qualified, and currently licensed as specified in Chapter 180 of this title (relating to Monitoring and Enforcement).

(2) Personnel conducting utilization review must hold an unrestricted license, an administrative license issued by a state licensing board in Texas, or be otherwise authorized to provide health care services in Texas.

(f) Utilization review by a specialty URA. Utilization review conducted by a specialty URA must be under the direction of a physician, doctor, or other health care provider of the same specialty and the physician, doctor, or other health care provider must be currently licensed to provide the specialty health care service in Texas. The physician, doctor, or other health care provider may be employed by or under contract to the URA.

(g) Reasonable opportunity for discussion. In any instance in which a specialty URA questions whether the health care is medically necessary or appropriate, the health care provider that ordered the services must, prior to the issuance of an adverse determination, be afforded a reasonable opportunity to discuss the plan of treatment for the patient and the clinical basis for the decision of the URA with a health care provider of the same specialty as the URA. The discussion must include, at a minimum, the clinical basis for the specialty URA's decision and a description of documentation or evidence, if any, that can be submitted by the provider of record that, on appeal, might lead to a different utilization review decision.

(1) A specialty URA's telephone number must be provided to the provider of record so that the provider of record may contact the specialty URA to discuss the pending adverse determination.

(2) A specialty URA must maintain, and submit to TDI or TDI-DWC on request, documentation that details the discussion opportunity provided to the provider of record, including the date and time the specialty URA offered the opportunity to discuss the adverse determination, the date and time that the discussion, if any, took place, and the discussion outcome. The specialty URA must allow the provider of record five working days to respond orally or in writing.

(h) Appeal. The decision in an appeal of any adverse determination by a specialty URA must be made by a physician or other health care provider who has not previously reviewed the case and who is of the same specialty as the specialty URA that made the adverse determination.

History

Source Note: The provisions of this §19.2016 adopted to be effective February 20, 2013, 38 TexReg 892.

28 Tex. Admin. Code § 19.2017 Independent Review of Adverse Determinations

(a) Life-threatening conditions.

(1) Notification for life-threatening conditions. For life-threatening conditions, notification of an adverse determination by a URA must comply with:

(A) Section 134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care) for workers' compensation non-network coverage;

(B) Insurance Code §1305.353 and §10.102 of this title (relating to Notice of Certain Utilization Review Determinations; Preauthorization and Retrospective Review Requirements) for workers' compensation network coverage; and

(C) Section 19.2009(a)(2) of this title (relating to Notice of Determinations Made in Utilization Review), including notice of the independent review process and the procedure for obtaining a copy of the request for a review by an IRO form. The notice must describe how to obtain independent review of the adverse determination and how TDI assigns a request for independent review to an IRO.

(2) Existence of life-threatening condition. An injured employee, the injured employee's representative, or the injured employee's provider of record must determine the existence of a life-threatening condition on the basis that a prudent layperson possessing an average knowledge of medicine and health would believe that the injured employee's disease or condition is a life-threatening condition.

(3) Appeal of adverse determination involving life-threatening condition. Any party who receives an adverse determination involving a life-threatening condition or whose appeal of an adverse determination involving a life-threatening condition is denied by the URA may seek review of the adverse determination by an IRO assigned under Insurance Code Chapter 4202 and Chapter 12 of this title (relating to Independent Review Organizations).

(b) Independent review involving life-threatening and non life-threatening conditions. A URA, or insurance carrier that made the adverse determination, must notify TDI within one working day from the date a request for an independent review is received. The URA, or insurance carrier that made the adverse determination, must submit the completed request for a review by an IRO form to TDI through TDI's Internet website.

(1) Assignment of IRO. Within one working day of receipt of a complete request for independent review, TDI will randomly assign an IRO to conduct the independent review and notify the URA, the payor, the IRO, the injured employee or the injured employee's representative, injured employee's provider of record and any other providers listed by the URA as having records relevant to the review of the assignment.

(2) Workers' compensation non-network coverage. Additional requirements for independent review of an adverse determination for a workers' compensation non-network coverage review are governed by the Texas Workers' Compensation Act and TDI-DWC rules, including but not limited to Chapter 133, Subchapter D, of this title (relating to Dispute of Medical Bills).

(3) Workers' compensation network coverage. Additional requirements for independent review of an adverse determination for a workers' compensation network coverage review are governed by Insurance Code Chapter 1305, TDI rules, and TDI-DWC rules, including but not limited to Chapter 10, Subchapter F, of this title (relating to Utilization Review and Retrospective Review) and Chapter 133, Subchapter D, of this title.

History

Source Note: The provisions of this §19.2017 adopted to be effective February 20, 2013, 38 TexReg 892.

Chapter 21 TRADE PRACTICES

Subchapter A UNFAIR COMPETITION AND UNFAIR PRACTICES OF INSURERS, AND MISREPRESENTATION OF POLICIES

28 Tex. Admin. Code § 21.1 Deceptive Acts or Practices of Insurers, Agents, and Connected Persons

Purpose of regulation. It is the purpose of these sections to further define and state the standards that are necessary to prohibit deceptive acts or deceptive practices by insurers and insurance agents and other persons in their conduct of the business of insurance or in connection therewith, whether done directly or indirectly, and irrespective of whether the person is acting as insurer, principal, agent, employer, or employee, or in other capacity or connection with such insurer.

History

Source Note: The provisions of this §21.1 adopted to be effective January 1, 1976; amended to be effective July 22, 1982, 7 TexReg 2589.

28 Tex. Admin. Code § 21.2 Interpretations

The meanings given to the provisions, terms, and words of this regulation are not to be limited to the common law meaning, which may have been given thereto, but are to be interpreted to accomplish the purpose of these sections in accordance with the provisions of Insurance Code Chapter 541 and Insurance Code §543.001.

History

Source Note: The provisions of this §21.2 adopted to be effective January 1, 1976; amended to be effective July 22, 1982, 7 TexReg 2589; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.3 Unfair Trade Practices Prohibited

(a) Misrepresentation of insurance policies, unfair competition, and unfair practices by insurers, agents, and other connected persons are prohibited by Insurance Code Chapter 541 and Insurance Code §543.001 or by other provisions of the Insurance Code and this chapter. No person may engage in this state in any trade practice that is a misrepresentation of an insurance policy, that is an unfair method of competition, or that is an unfair or deceptive act or practice as defined by the provisions of the Insurance Code or as defined by these sections and other rules and regulations authorized by the Insurance Code.

(b) Irrespective of the fact that the improper trade practice is not defined in any other section of these rules and regulations, no person may engage in this state in any trade practice which is determined pursuant by law to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

History

Source Note: The provisions of this §21.3 adopted to be effective January 1, 1976; amended to be effective July 22, 1982, 7 TexReg 2589; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.4 Misrepresentation Defined; Standards for Determining Misrepresentation

The term misrepresentation, or the prohibited conduct, act, or practice that constitutes misrepresentation by a person subject to the provisions of these sections, is defined as any one of the following acts or omissions:

(1) any untrue statement of a material fact;

(2) any omission to state a material fact necessary to make the statements made (considered in the light of the circumstances under which they are made) not misleading;

(3) the making of any statement in such manner or order as to mislead a reasonably prudent person to a false conclusion of a material fact;

(4) any material misstatement of law; or

(5) any failure to disclose any matter required by law to be disclosed, including failure to make disclosures in accordance with the provisions of these sections and other applicable rules.

History

Source Note: The provisions of this §21.4 adopted to be effective January 1, 1976; amended to be effective July 22, 1982, 7 TexReg 2589; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.5 Enforcement

The commissioner shall cause to be brought such legal action as is authorized by the Code in the enforcement of these sections and cause to be enjoined misrepresentation and other unfair trade practices.

History

Source Note: The provisions of this §21.5 adopted to be effective January 1, 1976; amended to be effective July 22, 1982, 7 TexReg 2589.

28 Tex. Admin. Code § 21.6 Prohibition against the Use of Guaranty Fund Protection in the Sale of Insurance

The use in any manner of the protection afforded by the Life and Health Insurance Guaranty Association Act (the Act) by any person in the sale of any product included within the scope of the Act (Insurance Code Chapter 463) will constitute unfair competition and unfair practices under Insurance Code Chapter 541 and will be subject to the provisions thereof.

History

Source Note: The provisions of this §21.6 adopted to be effective May 2, 1989, 14 TexReg 1871; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter C UNFAIR CLAIMS SETTLEMENT PRACTICES

28 Tex. Admin. Code § 21.201 Short Title

These regulations shall be known as the "Unfair Claims Settlement Practices Rules."

History

Source Note: The provisions of this §21.201 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148.

28 Tex. Admin. Code § 21.202 Definitions

The following words or phrases, as used in these regulations, shall have the meanings placed opposite them unless the explicit wording of a regulation shall otherwise direct.

(1) Business day--A day other than a Saturday, Sunday, or holiday recognized by this state.

(2) Claim--A request or demand reduced to writing and filed by a Texas resident with an insurer for payment of funds or the providing of services under the terms of a policy, certificate, or binder of insurance.

(3) Claimant--A person making or having made a claim.

(4) Complaint--Any written communication to an insurer, not solicited by such insurer, primarily expressing a grievance relating to an unfair claims settlement practice as defined in §21.203 of this title (relating to Unfair Claims Settlement Practices). For purposes of this subchapter, any written communication to an insurer by the same person which relates to the same claim, issue or question and requests or demands the same kind of relief and which arises out of the same transaction or transactions is considered to be part of the same complaint. A complaint is not a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding and/or supplying the appropriate information to the satisfaction of the person submitting the written communication, as applicable.

(5) First-party coverage--Benefits and other rights provided by an insurance contract to an insured.

(6) Insurer--Stock and mutual life, health, accident, fire, casualty, fire and casualty, hail, storm, title, and mortgage guarantee companies; mutual assessment companies; local mutual aid associations; local mutual burial associations; statewide mutual assessment companies; stipulated premium companies; fraternal benefit societies; group hospital service organizations; county mutual insurance companies; Lloyds; reciprocal or interinsurance exchanges; and farm mutual insurance companies.

(7) Policyholder--The owner of a policy, certificate, or binder of insurance, and any insured, named insured, or obligee under a bond.

(8) Third-party coverage--Benefits and other rights provided by an insurance contract to any person other than the insured.

(9) Written communication--Any communication that is documented by publication or otherwise being written onto a medium which is capable at the point of receipt of being viewed, stored, retrieved and reproduced by the recipient without any transcription. Such communication expressly includes, but is not limited to, facsimile transmissions and electronic mail transmissions.

History

Source Note: The provisions of this §21.202 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148; amended to be effective August 19, 1992, 17 TexReg 5458; amended to be effective December 7, 1998, 23 TexReg 12397.

28 Tex. Admin. Code § 21.203 Unfair Claim Settlement Practices

No insurer may engage in unfair claim settlement practices. Unfair claim settlement practices means committing or performing any of the following:

(1) misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue;

(2) failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies, provided that "pertinent communications" will exclude written communications that are direct responses to specific inquiries made by the insurer after initial report of a claim. An acknowledgment within 15 business days is presumed to be reasonably prompt;

(3) failing to adopt and implement reasonable standards for prompt investigation of claims arising under its policies;

(4) not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims submitted in which liability has become reasonably clear;

(5) compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

(6) failure of any insurer to maintain, in substantial compliance with §21.2504 of this title (relating to Complaint Record; Required Elements; Explanation and Instructions), a complete record of all complaints, as that term is defined in §21.202(4) of this title (relating to Definitions), which it has received during the preceding three years or since the date of its most recent financial examination by the Commissioner of Insurance, whichever time is shorter. For purposes of this section, "substantial compliance" has the meaning set out in §21.2503 of this title (relating to Compliance Standard);

(7) failing to provide promptly, when provided for in the policy, claim forms when the insurer requires such forms as a prerequisite for a claim settlement;

(8) not attempting in good faith to promptly settle claims where liability has become reasonably clear under one portion of the policy in order to influence settlement under other portions of the policy coverage. (This provision does not apply to those situations where payment under one portion of coverage constitutes evidence of liability under another portion of coverage.);

(9) failing to promptly provide to a policyholder a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;

(10) failing to affirm or deny coverage of a claim to a policyholder within a reasonable time. The reasonable submission of a reservation of rights letter by an insurer to a policyholder within a reasonable time is deemed compliance with the provisions of this paragraph;

(11) except as may be specifically provided in the policy, to refuse, fail, or unreasonably delay offer of settlement under applicable first-party coverage on the basis that other coverage may be available or third parties are responsible in law for damages suffered;

(12) attempting to settle a claim for less than the amount to which a reasonable person would have believed she/he was entitled by reference to an advertisement, as described in §21.102 of this title (relating to Scope), made by an insurer or person acting on behalf of an insurer;

(13) undertaking to enforce a full and final release from a policyholder when, in fact, only a partial payment has been made. (This provision will not prevent or have application to the compromise settlement of doubtful or disputed claims.);

(14) failing to establish a policy and proper controls to make certain that agents calculate and deliver to policyholders or their assignees funds due under policy provisions relative to cancellation of coverage within a reasonable time after such coverages are terminated;

(15) refusing to pay claims without conducting a reasonable investigation based upon all available information;

(16) failing to respond promptly to a request by a claimant for personal contact about or review of the claim;

(17) with respect to the Texas personal auto policy, delaying or refusing settlement of a claim solely because there is other insurance of a different type available to satisfy partially or entirely the loss forming the basis of that claim. The claimant who has a right to recover from either or both insurers is entitled to choose under which coverage and in what order payment is to be made;

(18) a violation of Insurance Code Chapter 542, Subchapter B, by an insurer subject to its provisions; or

(19) requiring a claimant, as a condition of settling a claim, to produce the claimant's federal income tax returns for examination or investigation by the insurer unless the claimant is ordered to produce those tax returns by a court of competent jurisdiction, the claim involves a fire loss, or the claim involves a loss of profits or income.

History

Source Note: The provisions of this §21.203 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148; amended to be effective January 16, 1985, 10 TexReg 82; amended to be effective August 19, 1992, 17 TexReg 5458; amended to be effective December 7, 1998, 23 TexReg 12397; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.204 Special Claim Reports and Statistical Plan

If the department finds based on complaint or complaints of unfair claim settlement practices as described in §21.203 of this title (relating to Unfair Claim Settlement Practices), that an insurer should be subjected to closer supervision with respect to such practices, it may require the insurer to file a report at such periodic intervals as the department deems necessary. The periodical reports must contain the following information:

(1) the total number of written claims filed, including the original amount filed for by the insured and the classification by line of insurance of each individual written claim, for the past 12-month period or from the date of the insurer's last periodic report, whichever time is shorter;

(2) the total number of written claims denied for the past 12-month period or from the date of the insurer's last periodic report, whichever is shorter;

(3) the total number of written claims settled, including the original amount filed for by the insured, the settled amount, and the classification by line of insurance of each individual settled claim, for the past 12-month period or from the date of the insurer's last periodic report, whichever time is shorter;

(4) the total number of written claims for which lawsuits were instituted against the insurer, including the original amount filed for by the insured, the amount of final adjudication, the reason for the lawsuit, and the classification by line of insurance of each individual written claim, for the past 12-month period or from the date of the insurer's last periodic report, whichever time is shorter; and

(5) the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. Such periodic reports must be filed with the department.

History

Source Note: The provisions of this §21.204 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148; amended to be effective August 19, 1992, 17 TexReg 5458; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.205 Minimum Standard of Performance

All insurers must maintain their affairs so that no unfair claims settlement practices are committed and the minimum standard of performance for all insurers (as that term is used in Insurance Code Chapter 542, Subchapter A) is to comply with the provisions of §21.203 of this title (relating to Unfair Claims Settlement Practices).

History

Source Note: The provisions of this §21.205 adopted to be effective January 1, 1976; amended to be effective September 9, 1982, 7 TexReg 3148; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter D STATISTICAL AGENTS

28 Tex. Admin. Code § 21.301 Performance Standards for Designated Statistical Agent

(a) Definitions. The following words and terms when used in this section have the following meanings unless the context clearly indicates otherwise.

(1) Agreed upon standards of performance--A set of standards of performance for each statistical agent which is negotiated and agreed upon by the statistical agent affected and the department. For statistical agents already designated as of the effective date of this section, the standards of performance must be agreed upon within eight months of the effective date of this section. For statistical agents designated after the effective date of this section, the standards of performance must be agreed upon prior to the effective date of the statistical agent's designation.

(2) Commissioner--Commissioner of Insurance of the State of Texas.

(3) Department--Texas Department of Insurance.

(4) Designated statistical agent--An organization duly designated by or contracted with the Commissioner to gather insurance data from insurers according to a statistical plan.

(5) Statistical plan--A document promulgated by the Commissioner that specifies the information to be reported, the insurers who must report the information, and the procedures and format for the information to be reported to the designated statistical agent.

(b) Each designated statistical agent must comply with the agreed upon standards of performance.

(c) If, after notice and the opportunity for a hearing, the Commissioner determines that a designated statistical agent has failed to comply with the agreed upon standards of performance, the Commissioner may impose sanctions against the designated statistical agent under Insurance Code Chapter 82, including but not limited to an administrative monetary penalty under Insurance Code Chapter 84.

(d) In determining the amount of the administrative monetary penalty, the Commissioner will consider the following factors described in this subsection.

(1) The seriousness of the noncompliance, including the nature, circumstances, extent, and gravity of the noncompliance.

(2) The hazard or potential hazard to the health safety, or economic welfare of the public created by the noncompliance.

(3) The economic harm to the public's interests or confidences caused by the noncompliance.

(4) The history of previous noncompliance with performance standards by the designated statistical agent.

(5) The amount necessary to deter future noncompliance.

(6) The designated statistical agent's efforts to correct the noncompliance.

(7) Whether the designated statistical agent intentionally or unintentionally failed to comply with the agreed upon standards of performance.

(8) Any other consideration that the Commissioner may deem appropriate.

(e) The amount of the administrative monetary penalty may not exceed $25,000 for each act of noncompliance.

(f) The department reserves the right to assert any and all other rights it may have against the statistical agents or other related parties, including its right to terminate the designation of a statistical agent, if appropriate.

History

Source Note: The provisions of this §21.301 adopted to be effective March 9, 1998, 23 TexReg 2295; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter E UNFAIR DISCRIMINATION BASED ON SEX OR MARITAL STATUS

28 Tex. Admin. Code § 21.401 Purpose

The purpose of these sections is to eliminate unfair discrimination based upon sex or marital status in the terms and conditions of insurance policies, in the underwriting criteria of insurers, and in the rates, rating plans, and rating classifications of insurers.

History

Source Note: The provisions of this §21.401 adopted to be effective January 1, 1978, 2 TexReg 2843.

28 Tex. Admin. Code § 21.402 Applicability and Scope

These sections apply to all individual, group, and blanket policies and contracts, and individual certificates of insurance delivered or issued for delivery in this state on or after January 1, 1978. They apply to all group certificates issued pursuant to group policies when the group policy is delivered or issued for delivery in this state on or after January 1, 1978. Provided, however, that to the extent these sections apply to group and individual accident and health policies, contracts, and certificates, the effective date is May 1, 1978.

History

Source Note: The provisions of this §21.402 adopted to be effective January 1, 1978, 2 TexReg 2843; amended to be effective June 28, 1978, 3 TexReg 2042.

28 Tex. Admin. Code § 21.403 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Insurer--Includes, but is not be limited to, all life, health, and accident companies; capital stock companies; mutual assessment life insurance companies; statewide mutual assessment corporations; county mutual insurance companies; local mutual aid associations; farm mutual insurance companies; mutual or natural premium life or casualty insurance companies; general casualty companies; Mexican casualty companies; Lloyds, reciprocal, or inter-insurance exchanges; nonprofit hospital, medical, or dental service corporations including, but not limited to, companies subject to the Insurance Code Chapter 842, as amended; stipulated premium insurance companies; fidelity, guaranty, and surety companies; title insurance companies; health maintenance organizations; and all other organizations, corporations, or persons engaged in the business of insurance, whether or not named previously; provided, however, these sections do not apply to any society, company, or other insurer whose activities are by statute exempt from the regulation of the department and which are entitled by statute to an exemption certificate from the department in evidence of their exempt status; nor to fraternal benefit societies.

(2) Policy--Includes any insurance policy, plan, certificate or subscriber agreement, statement of coverage, binder, rider, endorsement, or application, if attached, offered by any person or entity engaged in the business of insurance or board-regulated prepaid services in this state.

History

Source Note: The provisions of this §21.403 adopted to be effective January 1, 1978, 2 TexReg 2843; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.404 Underwriting

Availability of any policy may not be denied to an insured or prospective insured on the basis of sex or marital status of the insured or prospective insured. However, nothing contained in this section shall be construed to prohibit any insurance underwriter or insurance agent requiring the joinder of both spouses as a condition of issuance of any policy of insurance where such joinder is required by any provision of the constitution or laws of the State of Texas. Specific practices prohibited by this section shall include, but not be limited to, the following.

(1) No insurer may deny coverage to females gainfully employed at home, employed part time, or employed by relatives when that coverage is offered to males similarly employed.

(2) No insurer may deny policy riders to females when the riders are available to males.

(3) No insurer may exclude from prescription drug benefits oral contraceptives when all other prescription drugs are covered.

(4) No insurer may deny, under group policies, coverage to eligible husbands of female employees, when dependent coverage is available to eligible wives of male employees.

(5) No insurer may deny disability income policies to women employed in high risk classifications when coverage is offered to men similarly employed.

(6) No insurer may deny maternity benefits to insureds or prospective insureds purchasing an individual policy when comparable family coverage policies offer maternity benefits.

History

Source Note: The provisions of this §21.404 adopted to be effective January 1, 1978, 2 TexReg 2843.

28 Tex. Admin. Code § 21.405 Policy Terms and Conditions

The amount of benefits payable, or any term, condition, or type of coverage may not be restricted, modified, excluded, or reduced on the basis of the sex or marital status of the insured or prospective insured. However, nothing in these sections shall prohibit an insurer from taking marital status into account for the purpose of defining persons eligible for dependents' benefits. Specific practices prohibited by this section shall include, but not be limited to, the following.

(1) No policy may treat complications of pregnancy differently than any other illness or sickness under the policy. For the purpose of this section, complications of pregnancy means:

(A) conditions, requiring hospital confinement (when the pregnancy is not terminated), whose diagnoses are distinct from pregnancy but are adversely affected by pregnancy or are caused by pregnancy, such as acute nephritis, nephrosis, cardiac decompensation, missed abortion, and similar medical and surgical conditions of comparable severity, but shall not include false labor, occasional spotting, physician prescribed rest during the period of pregnancy, morning sickness, hyperemesis gravidarum, pre-eclampsis, and similar conditions associated with the management of a difficult pregnancy not constituting a nosologically distinct complication of pregnancy; and

(B) non-elective cesarean section, termination of ectopic pregnancy, and spontaneous termination of pregnancy, occurring during a period of gestation in which a viable birth is not possible.

(2) No policy may restrict, reduce, modify, or exclude benefits based solely upon the genital organs of one sex.

(3) No policy may apply arbitrary waiting periods to maternity benefits in such a way as to exclude coverage for premature births when normal maternity benefits are included in the policy. Medical evidence of the prematurity of the baby may reasonably be required.

(4) No disability policy may offer lower maximum monthly benefits to women than to men who are in the same risk classifications.

(5) No disability policy may offer more restrictive basic benefit periods or more restrictive definitions of disability to women than to men. Normal pregnancy is not considered to be a disability.

(6) No policy may establish different conditions by sex as a prerequisite to the exercise of benefit options contained in the policy.

(7) No insurer may limit the scope and/or amount of coverage an insured or prospective insured may purchase based on the insured's or prospective insured's marital status unless such limitation is for the purpose of defining persons eligible for dependents' benefits.

History

Source Note: The provisions of this §21.405 adopted to be effective January 1, 1978, 2 TexReg 2843.

28 Tex. Admin. Code § 21.406 Rates

When rates differ by sex or marital status, the insurer may be required to justify that the differential equitably reflects the difference in the risk assumed. Rates shall be based on a reasonable classification system according to actual or expected loss and expense data where available. In the absence of actual loss and expense data, rates must be based upon reasonable actuarial assumptions. Rates may differ by sex or marital status when approved or promulgated by the board.

History

Source Note: The provisions of this §21.406 adopted to be effective January 1, 1978, 2 TexReg 2843.

28 Tex. Admin. Code § 21.407 Continuance of Coverage

In individual policies, if a person loses coverage due to a change in marital status, that person shall be issued a policy which the insurer is then issuing which most nearly approximates the coverage of the policy which was in effect prior to the change in marital status. The new policy will be issued without evidence of insurability and will have the same effective date as the policy under which coverage was afforded prior to the change in marital status. Provided, however, as respects insurance other than life, accident, and health, the inception date of the policy issued to provide continuity of coverage need not precede the earliest date required to maintain such continuity, and such policy shall have the same expiration date as the policy under which coverage was issued prior to the change in marital status except that the insurer and insured may agree on a later expiration date.

History

Source Note: The provisions of this §21.407 adopted to be effective January 1, 1978, 2 TexReg 2843; amended to be effective March 1, 1985, 10 TexReg 579; amended to be effective September 24, 1985, 10 TexReg 3437.

28 Tex. Admin. Code § 21.408 Amendments

The subject matters covered by this subchapter treat only a portion of the subject matters contemplated by Insurance Code Chapter 541 and are not exhaustive on this subject; therefore, these sections remain open for corrections and future additions as the needs may arise or procedures require.

History

Source Note: The provisions of this §21.408 adopted to be effective January 1, 1978, 2 TexReg 2843; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.409 Severability Clause

If any provision of a section of these sections or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the sections which can be given effect without the invalid provision or application, and to this end the provisions of each section are declared to be severable.

History

Source Note: The provisions of this §21.409 adopted to be effective January 1, 1978, 2 TexReg 2843.

Subchapter F ELECTRONIC TRANSACTIONS

28 Tex. Admin. Code § 21.501 Notices of Termination

"Termination" includes nonrenewal, a refusal to renew, or discontinuation by a regulated entity for the purposes of Insurance Code §35.004, concerning Minimum Standards for Regulated Entities Electronically Conducting Business with Consumers.

History

Source Note: The provisions of this §21.501 adopted to be effective October 13, 2024, 49 TexReg 8173.

Subchapter H UNFAIR DISCRIMINATION

28 Tex. Admin. Code § 21.701 Purpose

The purpose of these sections is to identify specific acts or practices which are prohibited by Insurance Code §541.057 and §544.002.

History

Source Note: The provisions of this §21.701 adopted to be effective June 17, 1983, 8 TexReg 1914; amended to be effective December 24, 1985, 10 TexReg 4744; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.702 Unfairly Discriminatory Acts or Practices

(a) The following are hereby identified as acts or practices in life and health insurance which constitute unfair discrimination between individuals of the same class:

(1) refusing to insure, or refusing to continue to insure, or limiting the amount, extent, or kind of coverage available to an individual, or charging a different rate for the same coverage solely because of a physical or mental impairment, except where the refusal, limitation, or rate differential is based on sound actuarial principles, including actual or reasonably anticipated experience; or

(2) without exception, refusing to insure, or refusing to continue to insure, or limiting the amount, extent, or kind of coverage available to an individual, or charging an individual a different rate for the same coverage solely because of blindness or partial blindness.

(b) This section does not specify a complete list of acts or practices in life and health insurance which constitute unfair discrimination between individuals of the same class.

History

Source Note: The provisions of this §21.702 adopted to be effective June 17, 1983, 8 TexReg 1914; amended to be effective June 28, 1985, 10 TexReg 1978; amended to be effective October 23, 1992, 17 TexReg 7082.

28 Tex. Admin. Code § 21.703 Definitions Concerning Discrimination

For the purpose of §21.702 of this title (relating to Unfairly Discriminatory Acts or Practices) and to effectuate the objectives of Insurance Code §544.002, the definitions specified in this section are applicable. The words "physical or mental impairment" include, but are not limited to, any psychological disorder or condition, cosmetic disfigurement or anatomical loss affecting one or more of the following bodily systems: neurological, musculoskeletal, special sense organs, respiratory and speech organs, cardiovascular, reproductive, digestive, genito-urinary, hemic and lymphatic, skin, and endocrine system or any mental or physiological disorder such as intellectual disability, organic brain syndrome, emotional or mental illness, and specific learning disabilities. As used in Insurance Code §544.002, the words "disability or partial disability" mean a physical or mental impairment which substantially limits one or more of the person's major life activities.

History

Source Note: The provisions of this §21.703 adopted to be effective December 24, 1985, 10 TexReg 4744; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.704 Unfair Discrimination

(a) General propositions.

(1) No inquiry in an application for health or life insurance coverage, or in an investigation conducted by or on behalf of an insurer in connection with an application for such coverage, may be directed toward determining the proposed insured's sexual orientation.

(2) Sexual orientation may not be used in the underwriting process or in the determination of insurability.

(3) Insurers may not direct, require, or request insurance support organizations to investigate, directly or indirectly, the sexual orientation of a proposed insured or a beneficiary.

(b) Medical/lifestyle applications, questions, and underwriting standards.

(1) No question may be used which is designed to establish the sexual orientation of the proposed insured.

(2) Questions relating to the proposed insured having, or having been diagnosed as having, acquired immune deficiency syndrome (AIDS) or AIDS-related complex are permissible if they are factual and designed to establish the existence of the condition.

(3) Questions relating to medical and other factual matters intending to reveal the possible existence of a medical condition are permissible if they are not used as a proxy to establish the sexual orientation of the proposed insured, and if the proposed insured has been given an opportunity to provide an explanation for any affirmative answers given in the application.

(4) Questions relating to applicant's having, or having been diagnosed as having, sexually transmitted disease are permissible.

(5) Neither the marital status, the living arrangements, the occupation, the gender, the medical history, the beneficiary designation, nor the zip code or other classification of a proposed insured may be used to establish, or aid in establishing, the proposed insured's sexual orientation.

(6) For purposes of rating a proposed insured for health and life insurance, an insurer may impose territorial rates, but only if the rates are based on sound actuarial principles or are related to actual or reasonably anticipated experience.

(7) No adverse underwriting decision may be made because medical records or a report from any other source shows that the proposed insured has demonstrated acquired immune deficiency syndrome-related concerns by seeking counseling from health care professionals. This paragraph does not apply to a proposed insured seeking or having sought treatment.

(8) Whenever a proposed insured is requested to take an HIV-related test in connection with an application for insurance, the use of such a test must be revealed to the proposed insured or to any other person legally authorized to consent to such a test, and his or her written authorization obtained. The form of such authorization must be printed on a separate piece of paper and must contain the specific language in the form, entitled Notice and Consent for HIV-Related Testing, which the Texas Department of Insurance has adopted and incorporated herein by reference, effective January 7, 1997. This form is published by the Texas Department of Insurance and copies of this form are available from and on file at the offices of the Texas Department of Insurance, Life and Health Lines, MC-LH-LHL, P.O. Box 12030 Austin, Texas 78711-2030. Other information may be included so long as it is not misleading or violative of any applicable law or rule. Testing may be required only on a nondiscriminatory basis. No adverse underwriting decision shall be made on the basis of such a positive HIV-related test unless the established test protocol as provided by §21.705 of this title (relating to Nondiscriminatory Testing for Human Immunodeficiency Virus) has been followed.

(9) Insurers are permitted to ask a proposed insured whether the proposed insured has tested positive on an acquired immune deficiency syndrome-related test.

(10) The result of an HIV-related test is confidential.

(A) An insurer may not release or disclose the test results or allow them to become known, except in the following circumstances:

(i) as may be required by law; or

(ii) pursuant to the written request or authorization of the proposed insured or other person legally authorized to consent to the test on behalf of the proposed insured, with such release pursuant to written request limited to:

(I) the proposed insured;

(II) the person legally authorized to consent to the test;

(III) a licensed physician, medical practitioner, or other person designated by the proposed insured;

(IV) an insurance medical information exchange under procedures that are designed to assure confidentiality, including the use of general codes that also cover results of tests for other diseases or conditions not related to AIDS, or for the preparation of statistical reports that do not disclose the identity of any particular proposed insured;

(V) a reinsurer, if the reinsurer is involved in the underwriting process, under procedures that are designed to assure confidentiality;

(VI) persons within the insurer's organization who have the responsibility to make underwriting decisions on behalf of the insurer; or

(VII) outside legal counsel who needs such information to effectively represent the insurer in regard to matters concerning the proposed insured.

(B) Should a proposed insured or the person legally authorized to consent to the test request that the test result be sent to him or her directly, in addition to being provided notice as otherwise required by law, the insurer shall mail the test result to the proposed insured or the person legally authorized to consent to the test by registered mail with delivery restricted to the addressee.

(i) a physician designated by the proposed insured or other person legally authorized to consent to the test; or

(ii) in the absence of such designation, to the Texas Department of Health, in order that the proposed insured be provided notice of such result as required by law.

(c) Severability. If any provision of this section or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of the provisions of this section which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §21.704 adopted to be effective February 1, 1988, 13 TexReg 344; amended to be effective March 1, 1990, 15 TexReg 878; amended to be effective January 8, 1997, 22 TexReg 53; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.705 Nondiscriminatory Testing for Human Immunodeficiency Virus

A proposed insured for life or health and accident insurance, or for coverage by a company licensed under Insurance Code Chapter 842, or with a licensed health maintenance organization may be required to be tested for the presence of the human immunodeficiency virus (HIV). Requiring such testing is not unfair discrimination provided:

(1) the testing is required on a nondiscriminatory basis for all individuals in the same class; and

(2) no proposed insured is denied coverage or rated a substandard risk on the basis of such testing unless:

(A) an initial enzyme linked immunosorbent assay (ELISA) test is administered to the proposed insured, and it indicates the presence of HIV antibodies;

(B) a second ELISA test is conducted and it indicates the presence of HIV antibodies; and

(3) the tests and testing procedures used have been approved by the United States Food and Drug Administration (FDA) and otherwise comply with applicable Texas and federal laws.

History

Source Note: The provisions of this §21.705 adopted to be effective February 1, 1988, 13 TexReg 346; amended to be effective January 8, 1997, 22 TexReg 53; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter I PROHIBITED AGENT PRACTICES

28 Tex. Admin. Code § 21.901 Prohibition Against Solicitation or Acceptance of Power of Attorney

(a) Scope and application. This section applies to any person required to be licensed as an agent pursuant to the provisions of the Insurance Code or other insurance law of this state. For purposes of this section, "person" means both natural persons and business association entities.

(b) Prohibition. No person subject to the provisions of this section is permitted, directly or indirectly, to require, solicit or accept any power of attorney to act as attorney-in-fact for any applicant for any insurance coverage in this state for purposes of placing, procuring, instituting, maintaining, canceling or nonrenewing any insurance coverage, or for any other act in connection with the placement or institution of such insurance coverage.

(c) Exceptions. This section does not apply to the situations described in paragraphs (1) and (2) of this subsection, as follow:

(1) insurance activities for which the Insurance Code or other insurance law of this state expressly authorizes a person to conduct such insurance activities as an attorney-in-fact pursuant to a power of attorney; or

(2) instances in which a person required to be licensed as an agent under the Insurance Code is appointed attorney-in-fact by a relative or household member of such person for purposes which include placing personal lines insurance coverages for such relative or household member.

(d) Premium finance company provisions. The provisions of this section do not prohibit any person subject to the provisions of this section from accepting applications for premium financing on premium financing agreement forms that include a power of attorney in favor of the premium financing company for purposes of canceling a financed insurance contract, so long as the power-of-attorney provisions comply with statutory provisions of Insurance Code Chapter 651, concerning the financing of insurance premiums.

(e) Declaration of unfair practice. The failure to comply with the provisions of this section constitutes unfair competition and unfair practices according to Insurance Code Chapter 541 and is subject to the provisions of that chapter.

History

Source Note: The provisions of this §21.901 adopted to be effective August 29, 1996, 21 TexReg 7851; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter J PROHIBITED TRADE PRACTICES

28 Tex. Admin. Code § 21.1001 Prohibition against Insurer's Non-renewing Personal Auto Policy Solely Because of Age of Young Driver

No insurer may refuse to renew a personal auto policy or require a named driver exclusion for any family member as a condition of renewal solely on the basis that a family member of the insured reaches driving age.

History

Source Note: The provisions of this §21.1001 adopted to be effective September 30, 1993, 18 TexReg 6332.

28 Tex. Admin. Code § 21.1004 Restrictions on Certain Claims in Residential Property Insurance and Transition Plan Requirement

(a) Purpose and Applicability. The purpose of this section is to protect homeowners in Texas from increases in residential property insurance rates and premiums that vary greatly between renewal periods and to provide homeowners in Texas with just, fair, and reasonable residential property insurance rates and premiums. This section places restrictions on the use of residential property insurance claims in rates and premiums due to the introduction of, or changes to, a claims-free program or premium surcharge program in accordance with the Insurance Code and also establishes the requirements and procedures for insurers to file a transition plan. This section applies to the rates and premiums applicable to residential property insurance policies that are delivered, issued for delivery, or renewed on or after January 1, 2006.

(b) Definitions for the purposes of this section.

(1) Residential property insurance--Property or property and casualty insurance covering a dwelling, including homeowner's insurance, residential fire and allied lines insurance, farm and ranch insurance, or farm and ranch owners insurance.

(2) Premium surcharge--An additional amount due to a policyholder's claims experience that is added to the base rate. The term does not include a reduction or elimination of a discount previously received by an insured, reassignment of an insured from one rating tier to another, re-rating an insured, or re-underwriting an insured by using multiple affiliates.

(3) Claims-free program--Any program that considers a policyholder's claim experience, in whole or in part, whether through the use of discounts, a tier classification, or other program that does not qualify as a premium surcharge if the policyholder has been a residential property insurance policyholder with that insurer or an affiliate of that insurer.

(4) Transition plan--A plan that promotes rates and premiums that are fair, just, and reasonable by moderating rate and premium increases caused by the introduction of, or change to, a claims-free or premium surcharge program, including a tier classification system.

(5) Natural cause--A weather related cause.

(6) Claim that is filed but is not paid or payable--A claim that is filed, including a customer inquiry, that does not result in an indemnity payment under the provisions of the policy.

(c) Premium consequence prohibited. An insurer may not assign any premium consequence through a premium surcharge or claims-free program based on filed claims occurring on or after September 1, 2005, in whole or in part, due to:

(1) claims resulting from a loss caused by natural causes;

(2) a claim that is filed but not paid or payable under a residential property policy; or

(3) a claim that an insurer is prohibited from using under Insurance Code §544.353.

(d) Claims-free programs. Claims-free programs must be based on sound actuarial principles. Actuarial support as specified in §5.9332 of this title (relating to Categories of Supporting Information) must be filed with the department in the event such program is introduced or changed.

(e) Premium surcharge programs. Premium surcharge programs must be based on sound actuarial principles. Actuarial support as specified in §5.9332 of this title must be filed with the department in the event such program is introduced or changed.

History

Source Note: The provisions of this §21.1004 adopted to be effective April 23, 2006, 31 TexReg 3258; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.1005 Prohibition of Underwriting Guidelines Based on the Purchase of Types or Amounts of Coverage in Excess of Minimum Limits Liability Coverage

(a) Prohibition. Effective September 1, 1995, an insurer or agent may not use an underwriting guideline for private passenger automobile insurance based, in whole or in part, on whether an insured or applicant purchases types or amounts of coverage in excess of the minimum automobile liability coverage required to show proof of financial responsibility under the Motor Vehicle Safety Responsibility Act, Transportation Code, Chapter 601. The failure to comply with this section constitutes an unfair trade practice in the business of insurance in violation of Insurance Code Chapter 541, and is subject to the provisions thereof.

(b) Definition of "Underwriting Guideline." For the purposes of this rule, an "underwriting guideline" is a rule, standard, marketing decision, guideline, or practice, whether written, oral or electronic, used by an insurer or its agent to examine, bind, accept, reject, renew, non-renew, cancel or limit coverages made available to classes of consumers.

(c) Definition of "Private Passenger Automobile Insurance." For the purposes of this rule, "private passenger automobile insurance" is the insurance for which a personal auto policy is issued.

History

Source Note: The provisions of this §21.1005 adopted to be effective February 9, 1995, 20 TexReg 478; amended to be effective September 1, 1995, 20 TexReg 3719; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.1006 Prohibition Against Declining to Write Residential Property Insurance Based on the Age or Value of the Property

(a) "Residential property insurance" means insurance against loss to real or tangible personal property at a fixed location provided in a homeowners policy or residential fire and allied lines policy.

(b) An insurer may not decline to write residential property insurance based on the age of the property sought to be insured. This provision does not prohibit an insurer from declining to write coverage based on physical conditions of the property, including wiring, heating, air conditioning, plumbing, and roofing. This provision does not prohibit the Texas Windstorm Insurance Association from requiring, in accordance with the provisions of Chapter 2210 of the Insurance Code, different building code standards to qualify for coverage based on the date that the structure was constructed, repaired, or additions were made.

(c) An insurer may not decline to write residential property insurance based on a minimum value of the property sought to be insured.

History

Source Note: The provisions of this §21.1006 adopted to be effective September 1, 1997, 22 TexReg 6645; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.1007 Restrictions on Using Guidelines Based on a Water Damage Claim, Previous Mold Damage, or a Mold Damage Claim

(a) Purpose. The purpose of this section is to protect persons and property from being unfairly stigmatized in obtaining residential property insurance due to previous mold damage, or by filing a mold damage claim, a water damage claim, or certain appliance-related claims under a residential property insurance policy.

(b) Definitions. The following words and terms, when used in this section, have the following meanings:

(1) Appliance--A household device operated by gas or electric current, including hoses directly attached to the device. The term includes air conditioning units, heating units, refrigerators, dishwashers, icemakers, clothes washers, water heaters, and disposals.

(2) Appliance-related claim--A claim for a loss arising from the discharge or leakage of water or steam from an appliance that is the direct result of the failure of the appliance.

(3) Consumer--The person making the application to insure a property and includes both existing insureds and applicants for insurance.

(4) Insurer--An insurance company, reciprocal or interinsurance exchange, mutual, capital stock company, county mutual insurance company, farm mutual insurance company, association, Lloyd's plan company, or other entity writing residential property insurance in this state. The term includes an affiliate as described by Insurance Code §823.003 if that affiliate is authorized to write and is writing residential property insurance in Texas. The term does not include the Texas Windstorm Insurance Association, the FAIR Plan, or an eligible surplus lines insurer regulated under Insurance Code Chapter 981.

(5) Residential property insurance--Insurance against loss to residential real property at a fixed location or tangible personal property provided in a homeowners policy, including a tenant policy, a condominium owners policy, or a residential fire and allied lines policy.

(6) Underwriting guideline--A rule, standard, guideline, or practice, whether written, oral, or electronic, that is used by an insurer or an agent of an insurer to decide to accept or reject an application for a residential property insurance policy or to determine how to classify risks that are accepted for the purpose of determining a rate.

(7) Water damage claim--A claim for a loss arising from the discharge or leakage of water or steam that is the direct result of the failure of a plumbing system or other system that contains water or steam.

(c) Water damage claims - underwriting. An insurer may not use an underwriting guideline based solely on a single previous water damage claim either filed by the applicant or on the covered property. This subsection does not affect the surcharge and renewal provisions in Insurance Code §551.107 (concerning Renewal of Certain Policies; Premium Surcharge Authorized; Notice).

(d) This subsection contains provisions related to underwriting and rating based on a previous appliance-related claim.

(1) Except as provided in Insurance Code §544.353(e) (concerning Restrictions on Use of Claims History for Water Damage) an insurer must not use a previous appliance-related claim as a basis for determining a rate to be paid or for determining whether to issue, renew, or cancel a residential property insurance policy if the consumer complies with the requirements in Insurance Code §544.353(c) and §544.353(d). It is the consumer's option whether to have the appliance-related claim inspected and certified. The consumer is responsible for the cost of the inspection and certification. An appliance-related claim that is not inspected and certified is subject to subsection (c) of this section.

(2) Nothing in this subsection exempts an insurer from the notice provisions in Insurance Code §551.107(e). However, appliance-related losses are a special class of non-weather-related losses. The notice must be specific to the insured's appliance-related loss history.

(3) The following individuals are inspectors that may have the knowledge and experience in water damage remediation to inspect and certify the proper remediation of an appliance-related claim:

(A) inspectors licensed or certified through the Voluntary Inspection Program under Insurance Code Chapter 2003, Subchapter C;

(B) persons licensed to perform real estate property inspections under the Real Estate Licensing Act;

(C) persons licensed as mold assessment consultants or mold remediation contractors by the Department of Licensing and Regulation under Occupations Code Chapter 1958;

(D) engineers licensed by the Texas Board of Professional Engineers; and

(E) persons authorized by an insurer to perform appliance-related water damage remediation inspections.

(4) An insurer that maintains a list of authorized inspectors must give verbal and written notice that a claimant has the right to choose an inspector. The inspector does not have to be on the insurer's list. The insurer must give verbal notice when the claimant calls to report the claim. The insurer must send written notice within 15 days after the insurer receives notice of the claim.

(5) If a consumer uses an inspector from an insurer's list, the insurer may not reject or challenge the certification. If the consumer uses an inspector who is not on the insurer's list, the insurer may reject or challenge the certification by reinspecting the property. The insurer must give the consumer a list of all reasons it will not accept the certification. The insurer must keep all documentation of the reinspection.

(6) If an inspector physically inspects the property and determines that the appliance-related water damage was properly remediated, the inspector must issue a water damage repair certificate (PC327 WDR-1) within 10 days of completing the inspection.

(7) Water damage repair certificate form (PC327 WDR-1). An inspector must use the water damage repair certificate form (PC327 WDR-1) found on TDI's website at www.tdi.texas.gov. TDI adopts by reference the water damage repair certificate form (PC327 WDR-1) that an inspector must use, subject to the provisions of this subchapter and Insurance Code Chapter 544. Persons using the form should confirm that they are using the most recent online version before giving a copy to the property owner.

(8) TDI has information about inspectors who may have the knowledge and experience in water damage remediation to inspect and certify the proper remediation of an appliance-related claim. A list of inspectors can be obtained from TDI's website or by requesting it from the TDI Property and Casualty Lines Office.

(e) This subsection contains provisions related to underwriting based on previous mold damage or a previous mold damage claim.

(1) An insurer may not use an underwriting guideline based on previous mold damage or a previous mold damage claim filed by the applicant or on the covered property if:

(A) the property is eligible for residential property insurance coverage;

(B) the property had mold damage;

(D) the property was:

(i) remediated in accordance with the requirements in Occupations Code Chapter 1958, Subchapter D and any applicable rules adopted by the Department of Licensing and Regulation, and inspected by a licensed mold assessment consultant; and a mold damage remediation certificate (PC326 MDR-1) was issued to the property owner under Occupations Code §1958.154, certifying with reasonable certainty that the underlying cause or causes of the mold at the property were remediated; or

(ii) inspected by a licensed, independent mold assessment consultant or a licensed adjuster; and a mold damage remediation certificate (PC326 MDR-1) was issued to the property owner under Occupations Code §1958.154, certifying that, based on the mold assessment inspection, the property does not contain evidence of mold damage.

(2) Mold damage remediation certificate form (PC326 MDR-1). Mold remediation contractors, mold assessment consultants, and adjusters must use the mold damage remediation certificate form (PC326 MDR-1) found on TDI's website at www.tdi.texas.gov or by requesting the form from the TDI Property and Casualty Lines Office, or from the Department of Licensing and Regulation. TDI adopts by reference the mold damage remediation certificate form (PC326 MDR1) that must be used, subject to the provisions of this subchapter, Occupations Code Chapter 1958, and Insurance Code Chapter 544. Persons using the form should confirm that they are using the most recent online version before giving a copy to the property owner.

(3) This subsection does not affect the surcharge and renewal provisions in Insurance Code §551.107 (concerning Renewal of Certain Policies; Premium Surcharge Authorized; Notice).

(f) This subsection contains provisions for filing underwriting guidelines related to water damage claims, previous mold damage, or mold damage claims.

(1) All underwriting guidelines relating to water damage claims, previous mold damage, or mold damage claims must be filed with TDI. They must comply with the requirements in this section and with any rules adopted by the Commissioner.

(2) Underwriting guidelines relating to water damage claims, previous mold damage, or mold damage claims must be submitted to TDI as described in §5.9310(f) of this title (relating to Property and Casualty Transmittal Information and General Filing Requirements).

History

Source Note: The provisions of this §21.1007 adopted to be effective December 26, 2002, 27 TexReg 11986; amended to be effective January 1, 2004, 28 TexReg 11603; amended to be effective August 13, 2006, 31 TexReg 6228; amended to be effective May 7, 2019, 44 TexReg 2266; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter K CERTIFICATION OF CREDITABLE COVERAGE

28 Tex. Admin. Code § 21.1101 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Affiliation period--A period of time that under the terms of the coverage offered by an HMO, must expire before the coverage becomes effective. During an affiliation period an HMO is not required to provide health care services or benefits to the participant or beneficiary and a premium may not be charged to the participant or beneficiary.

(2) COBRA--Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (29 USC Section 1161, et seq.).

(3) COBRA continuation coverage--Coverage that satisfies an applicable COBRA continuation provision.

(4) Commissioner--The Commissioner of Insurance.

(5) Creditable coverage--

(A) An individual's coverage is creditable if the coverage is provided under:

(i) a self-funded or self-insured employee welfare benefit plan that provides health benefits and that is established in accordance with the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);

(ii) a group health benefit plan provided by a health insurance carrier or an HMO;

(iii) an individual health insurance policy or evidence of coverage;

(iv) Part A or Part B of Title XVIII of the Social Security Act (42 U.S.C. Section 1395c et seq.);

(v) Title XIX of the Social Security Act (42 U.S.C. Section 1396 et seq.), other than coverage consisting solely of benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);

(vi) Chapter 55 of Title 10, United States Code (10 U.S.C. Section 1071 et seq.);

(vii) a medical care program of the Indian Health Service or of a tribal organization;

(viii) a state or political subdivision health benefits risk pool;

(ix) a health plan offered under Chapter 89 of Title 5, United States Code (5 U.S.C. Section 8901 et seq.);

(x) a public health plan as defined in this section;

(xi) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. Section 2504(e)); and

(xii) short-term limited duration insurance as defined in this section.

(B) Creditable coverage does not include:

(i) accident-only, disability income insurance, or a combination of accident-only and disability income insurance;

(ii) coverage issued as a supplement to liability insurance;

(iii) liability insurance, including general liability insurance and automobile liability insurance;

(iv) workers' compensation or similar insurance;

(v) automobile medical payment insurance;

(vi) credit-only insurance;

(vii) coverage for onsite medical clinics;

(viii) other coverage that is similar to the coverage described in this subparagraph under which benefits for medical care are secondary or incidental to other insurance benefits and specified in federal regulations;

(ix) if offered separately, coverage that provides limited-scope dental or vision benefits;

(x) if offered separately, long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community-based care coverage or benefits, or any combination of those coverages or benefits;

(xi) if offered separately, coverage for other limited benefits specified by federal regulations;

(xii) if offered as independent, noncoordinated benefits, coverage for specified disease or illness;

(xiii) if offered as independent, noncoordinated benefits, hospital indemnity or other fixed indemnity insurance; or

(xiv) Medicare supplemental health insurance as defined under Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss), coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (10 U.S.C. Section 1071 et seq.), and similar supplemental coverage provided under a group plan, but only if such insurance or coverages are provided under a separate policy, certificate, or contract of insurance.

(6) Health benefit plan--A plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including:

(A) an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an individual or group evidence of coverage that is offered by:

(i) an insurance company;

(ii) a group hospital service corporation operating under Insurance Code Chapter 842;

(iii) a fraternal benefit society operating under Insurance Code Chapter 885;

(iv) a stipulated premium insurance company operating under Insurance Code Chapter 884; or

(v) an HMO; or

(B) to the extent permitted by the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.), a plan that is offered by:

(i) a multiple employer welfare arrangement as defined by Section 3, Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1002), and operating under Insurance Code Chapter 846; or

(ii) another analogous benefit arrangement; or

(C) a plan issued by any other entity not licensed under the Insurance Code or another insurance law of this state that contracts directly for health care services on a risk-sharing basis, including an entity that contracts for health care services on a capitation basis.

(7) Health insurance coverage--Benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract.

(8) HMO--Any person governed by the Texas Health Maintenance Organization Act, Insurance Code Chapter 843, including:

(A) a person defined as a health maintenance organization under Insurance Code §843.002;

(B) an approved nonprofit health corporation that is certified under Occupations Code Chapter 162, and that holds a certificate of authority issued by the Commissioner under Insurance Code Chapter 844;

(D) a nonprofit corporation created and operated by a community center under Chapter 534, Subchapter C, Health and Safety Code.

(9) Issuer of a health benefit plan--An insurance company, a group hospital service corporation operating under Insurance Code Chapter 842, a fraternal benefit society operating under Insurance Code Chapter 885, a stipulated premium insurance company operating under Insurance Code Chapter 884, a Lloyd's plan operating under Insurance Code Chapter 941, a reciprocal or interinsurance exchange operating under Insurance Code Chapter 942, or an HMO that issues a health benefit plan.

(10) Medical care--Amounts paid for:

(A) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

(B) transportation primarily for and essential to the medical care described in subparagraph (A) of this paragraph; or

(11) Preexisting condition provision--A provision that denies, excludes, or limits coverage as to a disease or condition for a specified period after the effective date of coverage.

(12) Public health plan--Any plan established or maintained by a state, county or other political subdivision of a state that provides health insurance coverage to individuals who are enrolled in the plan.

(13) Qualified beneficiary--As defined in Section 4980B(g)(1) of the Internal Revenue Code (26 U.S.C. Section 4980B(g)(1)).

(14) Short-term limited duration insurance--Health insurance coverage provided under a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer's consent) that is within 12 months of the date the contract becomes effective.

(15) Waiting period--A period of time established by an employer that must pass before an individual who is a potential enrollee in a health benefit plan is eligible to be covered for benefits. If an employee or dependent enrolls as a late enrollee, any period before such late enrollment is not a waiting period. If an individual seeks and obtains coverage in the individual market, any period after the date the individual files a substantially complete application for coverage and before the first day of coverage is a waiting period.

History

Source Note: The provisions of this §21.1101 adopted to be effective December 22, 1997, 22 TexReg 12513; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.1102 Certification of Coverage

Each issuer of a health benefit plan shall provide a certification of coverage in accordance with §21.1103 of this title (relating to Timing of Issuance of Written Certificate of Creditable Coverage to an Individual) through §21.1108 of this title (relating to Notification of Creditable Coverage and Preexisting Condition Exclusion), as necessary to determine the period of applicable creditable coverage of health benefit plans. An issuer of a health benefit plan may enter into an agreement with a third party administrator or plan sponsor for the purpose of providing a certification of creditable coverage as provided in this subchapter. The agreement may provide that the requirements of this subchapter may be complied with by either the issuer of the health benefit plan or a third party administrator or plan sponsor on behalf of the issuer. If an issuer of a health benefit plan enters into an agreement with a third party administrator or plan sponsor under this section, it is the issuer of the health benefit plan's responsibility to meet the requirements of this subchapter or to assure that the requirements are met.

History

Source Note: The provisions of this §21.1102 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1103 Timing of Issuance of a Written Certificate of Creditable Coverage to an Individual

(a) Each issuer of a health benefit plan shall comply with the following:

(1) For an individual who is a qualified beneficiary entitled to elect COBRA continuation coverage, a certificate of creditable coverage shall be provided at the time the individual would lose coverage under the plan in the absence of COBRA continuation coverage or alternative coverage elected, instead of COBRA continuation coverage. The certificate of creditable coverage shall be provided within 30 days of the date the individual would lose coverage under the plan, in the absence of COBRA continuation coverage.

(2) For an individual who is not a qualified beneficiary entitled to elect COBRA continuation coverage, a certificate of creditable coverage shall be provided within 30 days after the date the individual ceases to be covered under the health benefit plan.

(3) For an individual who is a qualified beneficiary and has elected COBRA continuation coverage, a certificate of creditable coverage shall be provided within 30 days after coverage under COBRA ceases or within 30 days after the expiration of any grace period for nonpayment of premium. A certificate of creditable coverage is required to be provided regardless of whether the individual has previously received a certificate of creditable coverage under paragraph (1) of this subsection.

(b) Requests for certificates are permitted to be made by, or on behalf of, an individual within 24 months after coverage ceases. For example, the issuer of a health benefit plan in which an individual enrolls may, if authorized by the individual, request a certificate of the individual's creditable coverage from an issuer of a health benefit plan in which the individual was formerly covered. After the request is received, the issuer of the health benefit plan in which the individual was formerly covered shall provide the certificate within 30 days of receipt of the request. A certificate is required to be provided under this subsection even if the individual has previously received a certificate under this subsection or under subsection (a)(1) or (2) of this section. An issuer of a health benefit plan shall establish a procedure for individuals to request and receive certificates under this subsection.

(c) An issuer of a health benefit plan is not required to issue a certificate of creditable coverage for coverage excluded as creditable coverage under the definition of creditable coverage in §21.1101 of this title (relating to Definitions).

(d) A certificate of creditable coverage shall be provided under this section without charge.

History

Source Note: The provisions of this §21.1103 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1104 Form and Content of Written Certificate of Creditable Coverage

(a) Except as otherwise provided in §21.1107 of this title (relating to Creditable Coverage Established Through Means Other Than Written Certificate), a certificate of creditable coverage must be provided in writing.

(b) The written certificate of creditable coverage shall include the following:

(1) The date the certificate is issued;

(2) The name of the issuer of the health benefit plan that provided the coverage described in the certificate;

(3) The individual's or dependent's name for which the certificate of creditable coverage is issued;

(4) Any other information necessary for the health benefit plan providing the coverage specified in the certificate to identify the individual, including but not limited to, the individual's identification number under the health benefit plan;

(5) The name, address and telephone number of the third party administrator, plan sponsor, or issuer of the health benefit plan providing the certificate;

(6) A telephone number to call for further information regarding the certificate of creditable coverage, if different than paragraph (5) of this section;

(7) Either one of the following:

(A) the date any waiting period (or affiliation period, if applicable) began and the date creditable coverage began; or

(B) a statement indicating the individual has:

(i) 18 months of creditable coverage for individual coverage; or

(ii) 12 months of creditable coverage for group coverage; and

(8) The date creditable coverage ended, or a statement that creditable coverage is continuing.

(1) Form CCC provided at Figure 1 of §21.1110(b) of this title (relating to Form CCC) to comply with subsection (a) of this section; or

(2) a form that is substantially similar to Form CCC and complies with subsection (a) of this section; or

(3) the model contained in federal rules with modifications to reflect the applicable 12 or 18 month time period.

(d) If a certificate is provided under §21.1103(a) of this title (relating to Timing and Issuance of a Written Certificate of Creditable Coverage to an Individual), the period that must be included on the certificate is the last period of continuous coverage, ending on the date coverage ceased.

(e) If an individual requests a certificate under §21.1103(b) of this title (relating to Timing and Issuance of a Written Certificate of Creditable Coverage to an Individual), a certificate shall be provided for each period of continuous creditable coverage ending within the 24-month period, ending on the date of the request (or continuing on the date of the request). A separate certificate shall be provided for each such period of continuous creditable coverage.

(f) A certificate of creditable coverage may provide information on both an individual and the individual's dependents if the information is identical for each individual. If the information is not identical, the certificates of creditable coverage may be provided on one form if the form provides all the required information for each individual and separately states the information that is not identical.

(g) Delivery of a certificate of creditable coverage prior to the adoption of this subchapter shall be deemed to comply with this subchapter, provided the certificate complied with the federal regulations and properly reflected the creditable time period applicable to Texas residents.

History

Source Note: The provisions of this §21.1104 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1105 Delivery of Certificate of Creditable Coverage

(a) A certificate shall be provided to an individual as provided in §21.1103(a) of this title (relating to Timing of Issuance of a Written Certificate of Creditable Coverage to an Individual) or an entity requesting the certificate on behalf of the individual by first-class mail. A certificate may also be made available to the intended recipient by fax, or e-mail, if available.

(b) If a certificate or certificates of creditable coverage are provided to the individual at the individual's last known address, then the requirements of this section are satisfied with respect to all individuals residing at that address.

(c) If a spouse or a dependent's last known address is different than other individuals covered under the health benefit plan, a separate certificate is required to be provided to the spouse or the dependent at the spouse's or dependent's last known address.

(d) If separate certificates of creditable coverage are provided by mail to individuals who reside at the same address, separate mailings of each certificate are not required.

(e) An individual entitled to receive the certificate of creditable coverage under §21.1103(a) of this title (relating to Timing of Issuance of a Written Certificate of Creditable Coverage to an Individual) may designate another individual or entity to receive the certificate.

History

Source Note: The provisions of this §21.1105 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1106 Dependent Coverage

(a) An issuer of a health benefit plan is required to use reasonable efforts to determine the information needed for a certificate of creditable coverage relating to dependent coverage.

(b) An issuer of a health benefit plan that cannot provide the names or addresses of dependents for providing a dependent's certificate of creditable coverage may satisfy the requirements of §21.1104(b)(3) of this title (relating to Form and Content of Certificate of Creditable Coverage) until June 30, 1998, by providing the name of the individual covered by the issuer of the health benefit plan and specifying that the type of coverage described in the certificate is for dependent coverage (for example: family coverage or employee/spouse coverage).

(c) An issuer of a health benefit plan that issues a written certificate of creditable coverage that does not contain the name of a dependent must furnish a certificate within 21 days after the individual ceases to be covered under the policy.

(d) An issuer of a health benefit plan shall treat an individual as having furnished a certificate of creditable coverage showing the dependent status if the individual attests to the dependent status and the period of such dependency and the individual cooperates with the issuer's efforts to verify the dependent status.

History

Source Note: The provisions of this §21.1106 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1107 Creditable Coverage Established Through Means Other Than Written Certificate

(a) An individual may establish creditable coverage through means other than a written certificate of creditable coverage as provided in §21.1103 of this title (relating to Timing of Issuance of a Written Certificate of Creditable Coverage) if the accuracy of a written certificate is contested or if a written certificate is unavailable when needed by the individual. For example, the individual may make such a demonstration, including but not limited to, the following circumstances:

(1) an entity has failed to provide a certificate within the required time period;

(2) the coverage is for a period before July 1, 1996;

(3) the individual has an urgent medical condition that necessitates a determination of whether prior creditable coverage existed before the individual can deliver a certificate to the health benefit plan; or

(4) the individual lost a certificate he or she had previously received and is unable to obtain another certificate.

(b) No written certificate is required to be provided if the following conditions are met:

(1) an individual is entitled to receive a certificate;

(2) the individual requests that the certificate be sent to another issuer of a health benefit plan instead of to the individual;

(3) the issuer of the health benefit plan that would otherwise receive the certificate agrees to accept the information regarding creditable coverage through means other than a written certificate (for example, by telephone); and

(4) the issuer of the health benefit plan receives the information from the sending issuer of the health benefit plan within the time periods required under §21.1103 of this title (relating to Timing of Issuance of a Written Certificate of Creditable Coverage to an Individual).

(c) Documents that may establish creditable coverage (and waiting or affiliation periods) in the absence of a written certificate of coverage, include but are not limited to, the following:

(1) explanations of benefit claims or other correspondence from a health benefit plan or issuer indicating coverage;

(2) pay stubs showing a payroll deduction for health benefit coverage;

(3) health benefit plan identification card;

(4) a certificate of coverage under a health benefit plan;

(5) records from medical care providers indicating health benefit plan coverage;

(6) third party statements verifying periods of coverage; and

(7) other relevant documents that evidence periods of health benefit plan coverage.

(d) An issuer of a health benefit plan shall take into account all information that it obtains or that is present on behalf of an individual to make a determination, based on the relevant facts and circumstances, whether an individual has creditable coverage and is entitled to offset all or a portion of any preexisting condition exclusion period.

(e) An issuer of a health benefit plan shall treat the individual as having furnished a written certificate of creditable coverage if the individual attests to the period of creditable coverage, the individual presents relevant corroborating evidence of some creditable coverage during the period, and the individual cooperates with the issuer of the health benefit plan's efforts to verify the individual's coverage.

(f) For purposes of subsection (e) of this section, cooperation includes providing, upon request, a written authorization for the issuer of the health benefit plan to request a certificate on behalf of the individual, and cooperating in efforts to determine the validity of the corroborating evidence and the dates of creditable coverage.

(g) An issuer of a health benefit plan may refuse to credit coverage if the individual fails to cooperate with the issuer's efforts to verify coverage. However, an issuer of a health benefit plan shall not consider an individual's inability to obtain a certificate to be evidence of the absence of creditable coverage.

(h) Creditable coverage may also be established through means other than documentation, such as by a telephone call from the health benefit plan or provider to a third party verifying creditable coverage.

(i) Nothing contained in this subchapter shall be construed to prohibit an issuer of a health plan from providing coverage on the contractual effective date and receiving premium for such coverage while creditable coverage information is being determined.

History

Source Note: The provisions of this §21.1107 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1108 Notification of Creditable Coverage and Preexisting Condition Exclusion

(a) After receipt of a written certification of creditable coverage as provided under §21.1103 of this title (relating to Timing of Issuance of a Written Certificate of Creditable Coverage to an Individual) or other means as provided under §21.1107 of this title (relating to Creditable Coverage Established Through Means Other Than Written Certificate), an issuer of a health benefit plan shall as soon as reasonably possible, not to exceed 30 days after receipt of the information regarding creditable coverage, make a determination regarding the individual's period of creditable coverage and notify the individual to whom a preexisting condition exclusion period is to apply of its determination in accordance with subsection (b) of this section.

(b) An issuer of a health benefit plan seeking to impose a preexisting condition exclusion shall disclose to the individual, in writing, its determination of any preexisting condition exclusion period that applies to the individual as soon as reasonably possible, not to exceed 30 days after receipt of the information regarding creditable coverage. The issuer of a health benefit plan shall disclose the basis for such determination, including the source and substance of any information on which the issuer relied. The issuer of a health benefit plan shall establish a grievance procedure in accordance with applicable law and shall notify the individual in writing of such grievance procedure. The issuer of a health benefit plan shall provide an individual with a reasonable opportunity to submit additional evidence of creditable coverage.

(c) An issuer of a health benefit plan may modify an initial determination of creditable coverage if the issuer determines the individual did not have the claimed creditable coverage, provided that:

(1) a notice of the reconsideration is provided to the individual; and

(2) until the final determination is made, the issuer of the health benefit plan, for purposes of approving access to medical services, acts in a manner consistent with the initial determination.

History

Source Note: The provisions of this §21.1108 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1109 Severability

If any provision of this subchapter or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of this subchapter and the application of its provisions to any persons under other circumstances shall not be affected thereby.

History

Source Note: The provisions of this §21.1109 adopted to be effective December 22, 1997, 22 TexReg 12513.

28 Tex. Admin. Code § 21.1110 Form CCC

(a) Form CCC relating to Insurance Code §1205.002 and §1357.056 for certification and disclosure of coverage under a health benefit plan is included in subsection (b) of this section in its entirety and has been filed with the Office of the Secretary of State.

(b) Form CCC referenced in this subchapter is as follows.

Attached Graphic

History

Source Note: The provisions of this §21.1110 adopted to be effective December 22, 1997, 22 TexReg 12513; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter L MEDICAL CHILD SUPPORT, UNFAIR PRACTICES

28 Tex. Admin. Code § 21.2001 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Actuarial assumptions--The value of a parameter, or other choice, having an impact on an estimate of a future cost or other actuarial item under evaluation.

(2) Actuarially equivalent--Producing equal actuarial present value, determined as of a given date with each value based on the same set of actuarial assumptions.

(3) Actuarial present value--The value of an amount or series of amounts payable or receivable at various times, determined as of a given date by the application of a particular set of actuarial assumptions.

(4) Child--

(A) a person under 18 years of age who is not and has not been married or who has not had the disabilities of minority removed for general purposes; or

(B) in the context of child support, "child" includes a person over 18 years of age for whom a person may be obligated to pay child support.

(5) Child support agency--As defined in Family Code §101.004.

(6) Custodial parent--

(A) a managing conservator of a child or a possessory conservator of a child who is a parent of the child; or

(B) a guardian of the person of a child, or another custodian of a child if the guardian or custodian is designated by a court or administrative agency of this or another state.

(7) Health insurer--Any insurance company, stipulated premium company, fraternal benefit society, group hospital service corporation, or HMO that delivers or issues for delivery an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or an evidence of coverage that provides benefits for medical or surgical expenses incurred as a result of an accident or sickness.

(8) Insurer--

(A) a health insurer;

(B) a governmental entity subject to:

(i) Insurance Code, Articles 3.51-1, 3.51-4, or 3.51-5; or

(ii) Insurance Code Chapter 1578; Local Government Code, Chapter 177; or Insurance Code §1355.151 or §1364.101;

(C) a multiple employer welfare arrangement, as that term is defined by Insurance Code §§846.001, 846.002, 846.202, and 846.251; or

(D) a health insurer that issues coverage for a group health plan, as defined by the Employee Retirement Income Security Act of 1974, §607(1) (29 U.S.C. §1167).

(9) Medical assistance--Medical assistance under the state Medicaid program.

(10) Medical support order--A court or administrative judgment, decree, or order whether temporary, final, or subject to modification for the benefit of a child that provides for health coverage of the child.

(11) Policy--Includes an individual, blanket, or franchise insurance agreement or contract, a certificate issued under a group policy, a group hospital service contract, or evidence of coverage issued by a health maintenance organization.

(12) Qualified actuary--An actuary who is either:

(A) a Fellow of the Society of Actuaries, or

(B) a Member of the American Academy of Actuaries.

History

Source Note: The provisions of this §21.2001 adopted to be effective May 8, 1997, 22 TexReg 3799; amended to be effective January 31, 1999, 24 TexReg 388; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2002 Prohibition Against Denial of Enrollment

(a) An insurer shall not deny enrollment of a child who is the subject of a medical support order under the health coverage of the child's parent on the ground that the child:

(1) has a preexisting condition;

(2) was born out of wedlock;

(3) is not claimed as a dependent on the parent's federal income tax return;

(4) does not reside with the parent or in the insurer's service area; or

(5) is or has been an applicant for or recipient of medical assistance.

(b) This section does not prohibit an insurer from enforcing otherwise applicable policy provisions, such as waiting period limitations or other applicable limitations on preexisting conditions so long as such provisions are in accordance with federal and state law.

History

Source Note: The provisions of this §21.2002 adopted to be effective May 8, 1997, 22 TexReg 3799.

28 Tex. Admin. Code § 21.2004 Enrollment of Child Who Is the Subject of a Medical Support Order

(a) If the insurer offers coverage of dependent children under the policy, enrollment of a child who is the subject of a medical support order in the health coverage shall be automatic for the first 31 days after receipt of a medical support order or notice of a medical support order by the employer, or the insurer if there is no employer and the insurer provides health coverage to the parent ordered to provide medical support. The insurer shall enroll the child without regard to any enrollment period restriction that might otherwise be applicable to the parent or the child. Receipt of a medical support order or notice of a medical support order requiring that health coverage be provided for a child shall be considered a change in the family circumstances of the employee or member, for health coverage purposes, equivalent to the birth or adoption of a child. For purposes of this section, the change of family circumstances shall not be construed to require coverage of any person other than the child subject to the court order and, if not already covered, the parent ordered to provide medical support.

(b) Within 31 days after receipt of a medical support order or notice of a medical support order by the employer or the insurer as specified in subsection (a) of this section, the insurer shall complete all necessary forms and procedures to enroll the child in health coverage on a permanent basis:

(1) on application of a parent of the child, a custodial parent of the child, a child support agency having a duty to collect or enforce support for the child, or the child over 18 years of age; and

(2) if the required premium is paid within 31 days of the receipt of the medical support order or notice of the medical support order by the employer, or the insurer if there is no employer except that the insurer shall not terminate coverage of a child that is the subject of a medical support order if such insurer's billing cycle does not coincide with this 31 day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of such premium.

(c) As a prerequisite to the child's permanent enrollment in group health coverage, an insurer offering coverage of dependent children may require the parent, who is required by a medical support order to provide coverage, and who is eligible for dependent health coverage, if not already enrolled, to enroll in the health coverage plan within 31 days after receipt of a medical support order or notice of a medical support order by the employer, or the insurer if there is no employer.

(d) If the child is not enrolled on a permanent basis, the insurer shall report in accordance with the Family Code, Chapter 154, Subchapter D, the reasons coverage cannot be made permanent.

(e) With respect to a child residing outside the insurer's service area, the insurer shall not use the child's status as the subject of a medical support order to charge a higher premium for coverage of the child than it charges for coverage of other dependent children under the policy.

(f) The application of subsection (e) of this section is illustrated in the following paragraphs and assumes a monthly premium for Employee Only coverage is $210; a monthly premium for Employee and Child(ren) coverage is $430; and a monthly premium for Family coverage is $650.

(1) An employee who elected Employee Only coverage must subsequently provide coverage to 2 children pursuant to a medical support order. The total premium charged to this employee for adding the 2 children may not exceed $220 ($430 minus $210).

(2) An employee who elected Employee and Child(ren) coverage must subsequently provide coverage to an additional child pursuant to a medical support order. The employee may not be charged an additional premium for adding the additional child.

(3) An employee who elected Family coverage must subsequently provide coverage to an additional child pursuant to a medical support order. The employee may not be charged an additional premium for adding the additional child.

History

Source Note: The provisions of this §21.2004 adopted to be effective May 8, 1997, 22 TexReg 3799; amended to be effective January 31, 1999, 24 TexReg 388.

28 Tex. Admin. Code § 21.2005 Prohibition on Cancellation or Nonrenewal

(a) An insurer shall not cancel or refuse to renew coverage of a child entitled to enrollment or enrolled under this subchapter unless satisfactory written evidence is filed with the insurer by the parent or the employer demonstrating that:

(1) the court order or administrative order that required the coverage is no longer in effect; or

(2) the child is enrolled in comparable health coverage or will be enrolled in comparable coverage that will take effect not later than the effective date of the cancellation or nonrenewal.

(b) For purposes of this section, health coverage will be considered comparable coverage if it is similar coverage and does not result in any significant reduction or limitation in benefits.

(c) As used in this section, "a child entitled to enrollment or enrolled under this subchapter" does not include a child whose eligibility has terminated because the parent eligible for dependent health coverage is no longer eligible for such coverage, due to nonpayment of premium, or other reasons as permitted by law and the terms of the policy.

History

Source Note: The provisions of this §21.2005 adopted to be effective May 8, 1997, 22 TexReg 3799.

28 Tex. Admin. Code § 21.2006 Notice of Availability of Continuation or Conversion Coverage

(a) For the purpose of providing notification to the custodial parent under Insurance Code §1504.054 and §21.2008 of this title (relating to Information Provided by an Insurer), the custodial parent must notify the insurer of any change of address. If no such change of address is submitted by the custodial parent to the insurer, then the insurer must comply with the provisions of Insurance Code §1504.054 and §21.2008 of this title (relating to Information Provided by an Insurer) regarding notification to the custodial parent if such notice is sent to the last known address of the custodial parent.

(b) The insurer must enroll or continue enrollment of the child on application of a parent of the child, a child support agency, or the child over 18 years of age.

History

Source Note: The provisions of this §21.2006 adopted to be effective May 8, 1997, 22 TexReg 3799; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2007 Assignment of Medical Support Rights to State Agency

An insurer shall not impose requirements on a state agency that has been assigned the rights of an individual eligible for medical assistance and covered for health benefits by that insurer which are different from the requirements applicable to an agent or assignee of any other covered individual.

History

Source Note: The provisions of this §21.2007 adopted to be effective May 8, 1997, 22 TexReg 3799.

28 Tex. Admin. Code § 21.2008 Information Provided by an Insurer

(a) Upon request, an insurer shall provide to a state agency providing medical assistance, or to a child support agency enforcing medical support, information necessary to facilitate reimbursement of medical services provided to or paid on behalf of a child.

(b) An insurer providing coverage to a child through a parent of the child shall provide information and documents within 31 days after coverage has been made permanent or upon written request, whichever occurs first, to each custodial parent or a child over 18 years of age as may be necessary for the child to obtain benefits through that coverage, including:

(1) the name of the insurer;

(2) the number of the policy;

(3) a copy of the policy and schedule of benefits;

(4) a health insurance membership card;

(5) claim forms; and

(6) any other information or document necessary to submit a claim in accordance with the insurer's policies and procedures.

History

Source Note: The provisions of this §21.2008 adopted to be effective May 8, 1997, 22 TexReg 3799.

28 Tex. Admin. Code § 21.2009 Submission and Payment of Claims

(a) An insurer shall not require the approval of the insured or enrollee parent for the submission of claims for covered services or for the appeal of a denial of any benefit by a custodial parent, a health care provider, a child over 18 years of age, or a state agency that has been assigned medical support rights.

(b) An insurer shall not refuse or fail to make payments on covered claims directly to the custodial parent, health care provider, child over 18 years of age, or state agency submitting the claim, in accordance with the terms of the policy. Nothing in this section shall require an insurer to make duplicate payments on covered claims.

History

Source Note: The provisions of this §21.2009 adopted to be effective May 8, 1997, 22 TexReg 3799.

28 Tex. Admin. Code § 21.2010 Prohibition on Service Area Restrictions

(a) With respect to a child who lives outside the insurer's service area but inside the United States whose coverage under the policy is required by a medical support order, an insurer must either:

(1) cover the child under coverage for which the parent who has been ordered to provide the coverage is eligible and not enforce otherwise applicable policy provisions that would deny, limit, or reduce payment for claims for such child; or

(2) provide coverage through the use of alternative delivery systems, such as reciprocal agreements with indemnity insurers or HMOs.

(b) If the policy contains preferred provider provisions for the purposes of offering a network of preferred providers as defined in Insurance Code Chapter 1301, and the insurer does not provide coverage under subsection (a)(2) of this section, reimbursement for services for a child who is the subject of a medical support order and lives outside the insurer's service area must be provided at the preferred provider level of benefits.

(c) If the insurer provides coverage under subsection (a)(2) of this section, the coverage must include benefits identical to, greater than, or comparable to those provided to other dependent children covered by the policy under which coverage is required by a medical support order.

(d) If the coverage is provided under subsection (a)(2) of this section, the insurer must submit a certification to the Texas Department of Insurance. The certification must be filed with the Texas Department of Insurance, Life and Health Division by email to MCQA@tdi.texas.gov, signed by an officer of the insurer and include:

(1) the insurer's full name;

(2) a statement that the insurer has elected to utilize an alternative delivery system to provide coverage for children who are the subject of a medical support order;

(3) the name of the HMO or indemnity carrier with which the insurer has contracted to provide coverage to children who are the subject of a medical support order and a statement, if applicable, that the HMO or indemnity carrier has filed the applicable forms providing the coverage as required by Insurance Code Chapter 1701, and Insurance Code §1504.002 and §1504.052 or §11.301 of this title (relating to Filing Requirements);

(4) a statement that the coverage provided by the alternative delivery system is either identical, greater or comparable to the coverage provided other dependent children under the policy under which coverage is required by a medical support order; and

(5) if the coverage is not identical, the certification must also be signed by a qualified actuary or an officer of the insurer who attests that the coverage provided is at least actuarially equivalent to or greater than the coverage provided to other dependent children under the policy under which coverage is required by a medical support order. The determination of actuarial equivalence of the coverages must take into account plan design (e.g., copayments, coinsurance, deductibles, etc.) and scope of benefits. The certification must identify any other variables considered in the analysis relating to the actuarial equivalence of the coverages.

History

Source Note: The provisions of this §21.2010 adopted to be effective May 8, 1997, 22 TexReg 3799; amended to be effective January 31, 1999, 24 TexReg 388; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2011 Unfair or Deceptive Practices

(a) A violation of §21.2002 of this title (relating to Prohibition Against Denial of Enrollment), §21.2003 of this title (relating to Requirements Concerning Adopted Children or Children Placed for Adoption), §21.2004 of this title (relating to Enrollment of Child Who Is the Subject of a Medical Support Order), §21.2005 of this title (relating to Prohibition on Cancellation or Nonrenewal), §21.2009 of this title (relating to Submission and Payment of Claims), and §21.2010 of this title (relating to Prohibition on Service Area Restrictions) is considered an unfair or deceptive practice and will subject the insurer to the penalties provided in Insurance Code Chapter 541 and other applicable provisions of the Insurance Code.

(b) A violation of §21.2006 of this title (relating to Notice of Availability of Continuation of Conversion Coverage), §21.2007 of this title (relating to Assignment of Medical Support Rights to State Agency), and §21.2008 of this title (relating to Information Provided by an Insurer) subjects the insurer to the penalties provided in Insurance Code Chapter 82 and other applicable provisions of the Insurance Code.

History

Source Note: The provisions of this §21.2011 adopted to be effective May 8, 1997, 22 TexReg 3799; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter M MANDATORY BENEFIT NOTICE REQUIREMENTS

28 Tex. Admin. Code § 21.2101 Scope

The purpose of this subchapter is:

(1) to require notice to enrollees in a health benefit plan of coverage or benefits for:

(A) prostate cancer examinations;

(B) minimum inpatient stays for maternity and childbirth;

(D) reconstructive surgery after mastectomy;

(E) certain diagnostic screening tests for early detection of human papillomavirus, ovarian cancer, and cervical cancer; and

(F) certain tests for the detection of colorectal cancer; and

(2) to require notice to individuals who become eligible for certain protections regarding Medicare supplement coverage under §3.3312 of this title (relating to Guaranteed Issue for Eligible Persons).

History

Source Note: The provisions of this §21.2101 adopted to be effective March 29, 1998, 23 TexReg 3009; amended to be effective April 14, 1999, 24 TexReg 3356; amended to be effective January 8, 2001, 26 TexReg 202; amended to be effective April 2, 2002, 27 TexReg 2506; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective November 2, 2016, 41 TexReg 8609.

28 Tex. Admin. Code § 21.2102 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Another limited benefit--A plan that provides coverage, singularly or in combination, for benefits for a specifically named disease, accident, or combination of diseases or accidents, including, but not limited to:

(A) heart attack;

(B) stroke;

(D) travel, farm, or occupational accident.

(2) Carrier--The term includes:

(A) an insurance company, a group hospital service corporation, a fraternal benefit society, a stipulated premium insurance company, a health maintenance organization, a multiple employer welfare arrangement that holds a certificate of authority under Insurance Code Chapter 846, or an approved nonprofit health corporation that holds a certificate of authority issued by the commissioner under Insurance Code Chapter 844;

(B) for the purposes of paragraph (4)(B) and (F) of this section, a reciprocal exchange operating under Insurance Code Chapter 942;

(C) for purposes of paragraph (4)(E) and (F) of this section, a Lloyds plan operating under Insurance Code Chapter 941; and

(D) for purposes of paragraph (4)(E) of this section, a risk pool created under Local Government Code Chapter 172.

(3) Enrollee--A person enrolled in and entitled to coverage under a health benefit plan, including covered dependents.

(4) Health Benefit Plan--Subject to subparagraphs (A), (B), (C), (D), (E), and (F) of this paragraph, a plan that is offered by a carrier and provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including an individual, group, blanket, or franchise insurance policy or insurance agreement; a group hospital service contract; an individual or group evidence of coverage; or any similar coverage document. The term does not include a plan that provides coverage only for accidental death or dismemberment, disability income, supplement to liability insurance, Medicare supplement, workers' compensation, medical payment insurance issued as a part of a motor vehicle insurance policy, or a long-term care policy.

(A) For the inpatient mastectomy coverage notice required by §21.2103(a)(1) of this title (relating to Mandatory Benefit Notices), the definition of health benefit plan includes a plan that provides coverage only for a specific disease or condition for the treatment of breast cancer or for hospitalization. The term does not include a small employer health benefit plan issued under Insurance Code Chapter 1501, Subchapters A - H (concerning Health Insurance Portability and Availability Act).

(B) For the reconstructive surgery after mastectomy notices required by §21.2103(a)(2) of this title, the definition of health benefit plan does not include:

(i) a plan that provides coverage for a specified disease or another limited benefit, except for cancer;

(ii) a plan that provides only credit insurance;

(iii) a plan that provides coverage only for dental or vision care; or

(iv) a plan that provides coverage only for hospital indemnity or other fixed indemnity.

(C) For the prostate cancer examination notice required by §21.2103(a)(3) of this title, the definition of health benefit plan does not include:

(i) a small employer health benefit plan written under Insurance Code Chapter 1501, Subchapters A - H;

(ii) a plan that provides coverage only for a specified disease or another limited benefit; or

(iii) a plan that provides coverage only for hospital indemnity or other fixed indemnity.

(D) For the inpatient maternity and childbirth coverage notice required by §21.2103(a)(4) and (5) of this title, the definition of health benefit plan does not include:

(i) a plan that provides only credit insurance;

(ii) a plan that provides coverage only for a specified disease or another limited benefit;

(iii) a plan that provides coverage only for dental or vision care; or

(iv) a plan that provides coverage only for hospital indemnity or other fixed indemnity.

(E) For the detection of colorectal cancer screening coverage notice required by §21.2103(a)(6) of this title, the definition of health benefit plan does not include:

(i) a small employer health benefit plan written under Insurance Code Chapter 1501, Subchapters A - H;

(ii) a plan that provides coverage only for a specified disease or another limited benefit; or

(iii) a plan that provides coverage only for hospital indemnity or other fixed indemnity.

(F) For the detection of human papillomavirus and cervical cancer screening notice required by §21.2103(a)(7) of this title, the definition of health benefit plan includes a small employer health benefit plan written under Insurance Code Chapter 1501, but does not include:

(i) a plan that provides coverage only for a specified disease or another limited benefit, other than a plan that provides benefits for cancer treatment or similar services;

(ii) a plan that provides coverage only for dental or vision care;

(iii) a plan that provides coverage only for indemnity or for hospital indemnity or other fixed indemnity;

(iv) a credit insurance policy; or

(v) a limited benefit policy that does not provide coverage for physical examinations or wellness exams.

(5) Primary Enrollee--For group coverage, the covered member or employee of the group. For individual coverage, the person first named on the application or enrollment form.

History

Source Note: The provisions of this §21.2102 adopted to be effective March 29, 1998, 23 TexReg 3009; amended to be effective January 8, 2001, 26 TexReg 202; amended to be effective April 2, 2002, 27 TexReg 2506; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective November 2, 2016, 41 TexReg 8609.

28 Tex. Admin. Code § 21.2103 Mandatory Benefit Notices

(a) Prescribed mandatory benefit notices consist of the following:

(1) For a health benefit plan that provides coverage or benefits for the treatment of breast cancer, a carrier must issue a notice that includes the language provided in Figure 1 of §21.2106(b) of this title (relating to Forms).

(2) For a health benefit plan that provides coverage or benefits for a mastectomy, a carrier must issue:

(A) an enrollment notice that includes the language provided in Figure 2 of §21.2106(b) of this title; and

(B) an annual notice that includes either:

(i) the language provided in Figure 3 §21.2106(b) of this title; or

(ii) the language provided in Figure 2 §21.2106(b) of this title.

(3) For a health benefit plan that provides coverage or benefits for diagnostic medical procedures, a carrier must issue a notice that includes the language provided in Figure 4 §21.2106(b) of this title.

(4) For a health benefit plan that provides coverage or benefits for maternity, including benefits for childbirth, a carrier must issue a notice that includes the language provided in Figure 5 §21.2106(b) of this title.

(5) If the health benefit plan described in paragraph (4) of this subsection includes benefits or coverage for in-home postdelivery care, the following language, or substantially similar language, must be inserted immediately before the "Prohibitions" portion of the notice language in Figure 5 §21.2106(b) of this title: "Since we provide in-home postdelivery care, we are not required to provide the minimum number of hours outlined above unless (a) the mother's or child's physician determines the inpatient care is medically necessary, or (b) the mother requests the inpatient stay."

(6) For a health benefit plan that provides coverage or benefits for medical screening procedures, a carrier must issue a notice that includes the language provided in Figure 6 §21.2106(b) of this title.

(7) For a health benefit plan that provides coverage or benefits for medical screening procedures, a carrier must issue a notice that includes the language provided in Figure 7 §21.2106(b) of this title. If a plan is not required to provide a benefit for ovarian cancer screening due to the exception in Insurance Code §1370.002(b) (concerning Exceptions), the notice may be modified to omit the references to ovarian cancer and the CA 125 blood test.

(b) Instead of the prescribed notices outlined in subsection (a) of this section, a carrier may opt to provide notices with substantially similar language rather than the notices contained in §21.2106(b) of this title. A form that includes substantially similar language under this subsection must be filed for review and approval by the commissioner prior to use, in accordance with Insurance Code Chapters 843 (concerning Health Maintenance Organizations), 1271 (concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges), and 1701 (concerning Policy Forms), except that a form already in use may not be used after March 1, 2017, unless approved by the commissioner. The substantially similar language must be in a readable and understandable format, and must include a clear, complete, and accurate description of these items in the following order:

(1) a heading in bold print and all capital letters indicating the information in the notice relates to mandated benefits;

(2) a statement that the notice is being provided to advise the enrollee of the appropriate coverage or benefits, including the carrier's complete licensed name;

(3) a heading in bold print describing the coverage or benefits being provided; for example, Examinations for Detection of Prostate Cancer;

(4) a description of the coverage or benefits for which the notice is being provided;

(5) for a carrier who issues a health benefit plan that provides coverage or benefits for a mastectomy, the following requirements apply:

(A) the enrollment notice required by subsection (a)(2)(A) of this section must disclose that the coverage or benefits must be provided in a manner determined to be appropriate, in consultation with the attending physician and the enrollee, and state the specific deductibles, copayments, and coinsurance, which may not be greater than the deductibles, copayments, and coinsurance applicable to other benefits under the health benefit plan; and

(B) the annual notice required by subsection (a)(2)(B) of this section must, at a minimum, describe that the health benefit plan provides coverage or benefits for reconstructive surgery after mastectomy, surgery and reconstruction of the other breast for symmetry, prostheses, and treatment of complications resulting from a mastectomy (including lymphedema);

(6) for the notice required by subsection (a)(1), (2)(A), and (4) of this section, the heading "Prohibitions" in bold, followed by a summary of the prohibited acts by a carrier in providing the coverage or benefits for which the notice is being provided; and

(7) a statement identifying the carrier, and providing a phone number and address to which an enrollee may direct questions regarding the coverage or benefits for which the notice is being provided.

(c) If a health benefit plan provides coverage or benefits of more than one of the required notices described in subsection (a) of this section, the carrier may combine the language of the required notices into one notice.

(d) The notices must be printed in no less than 10-point type.

History

Source Note: The provisions of this §21.2103 adopted to be effective March 29, 1998, 23 TexReg 3009; amended to be effective April 14, 1999, 24 TexReg 3356; amended to be effective January 8, 2001, 26 TexReg 202; amended to be effective April 2, 2002, 27 TexReg 2506; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective November 2, 2016, 41 TexReg 8609.

28 Tex. Admin. Code § 21.2105 Delivery of Mandatory Benefit Notices

(a) The notices required by §21.2103(a)(1), (3), and (4) of this title (relating to Mandatory Benefit Notices) must be issued to enrollees of a health benefit plan within 60 days of the plan's issuance or renewal.

(1) Except as specified in paragraph (5) of this subsection, a carrier must deliver the notices to enrollees through the U.S. Postal Service or, as permitted by state law, electronically.

(2) The notice may be delivered with other health benefit plan documents within 60 days of the plan's issuance or renewal. For example, the notice may be delivered with the policy, certificate, evidence of coverage, or the enrollment or insurance card.

(3) If the notices are provided to the primary enrollee's last known address, the requirements of this section are satisfied with respect to all enrollees residing at that address.

(4) If a covered spouse or dependent's last known address is different than the primary enrollee, separate notices are required to be provided to the spouse or the dependent at the spouse's or dependent's last known address.

(5) For group health benefit plans, the notice may be provided to the group master contract holder for distribution to enrollees if the carrier has an agreement with the group master contract holder that the notice will be delivered within 60 days of the plan's issuance or renewal; however, TDI will hold the carrier responsible for ensuring that notice is provided to the enrollees.

(b) The notices required by §21.2103(a)(2) of this title must be issued to enrollees of a health benefit plan and be provided according to the following paragraphs:

(1) the enrollment notice required by §21.2103(a)(2)(A) of this title must be issued to each enrollee upon enrollment in the health benefit plan;

(2) the annual notice required by §21.2103(a)(2)(B) of this title must be issued to each enrollee annually; and

(3) notwithstanding §21.2103(a)(2) of this title, a carrier may elect to issue the enrollment notice required by §21.2103(a)(2)(A) of this title to satisfy the annual notice requirements set forth in §21.2103(a)(2)(B) of this title.

History

Source Note: The provisions of this §21.2105 adopted to be effective March 29, 1998, 23 TexReg 3009; amended to be effective April 14, 1999, 24 TexReg 3356; amended to be effective January 8, 2001, 26 TexReg 202; amended to be effective April 2, 2002, 27 TexReg 2506; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective November 2, 2016, 41 TexReg 8609.

28 Tex. Admin. Code § 21.2106 Forms

(a) The forms identified in §21.2103 of this title (relating to Mandatory Benefit Notices) are included in subsection (b) of this section in their entirety. The forms can be obtained from the TDI website, www.tdi.texas.gov.

(b) The forms referenced in this chapter are:

(1) Figure Number 1: Form Number 349 Mastectomy:

Attached Graphic

(2) Figure Number 2: Form Number 1764 Reconstructive Surgery After Mastectomy-Enrollment:

Attached Graphic

(3) Figure Number 3: Form Number 1764 Reconstructive Surgery After Mastectomy-Annual:

Attached Graphic

(4) Figure Number 4: Form Number 258 Prostate:

Attached Graphic

(5) Figure Number 5: Form Number 102 Maternity:

Attached Graphic

(6) Figure Number 6: Form Number 1467 Colorectal Cancer Screening:

Attached Graphic

(7) Figure Number 7: Form Number LHL391 Human Papillomavirus, Ovarian Cancer, and Cervical Cancer Screening:

Attached Graphic

History

Source Note: The provisions of this §21.2106 adopted to be effective March 29, 1998, 23 TexReg 3009; amended to be effective April 14, 1999, 24 TexReg 3356; amended to be effective January 8, 2001, 26 TexReg 202; amended to be effective April 2, 2002, 27 TexReg 2506; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective November 2, 2016, 41 TexReg 8609; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2107 Right To Medicare Supplement Coverage Notice

(a) At the time of an event described in §3.3312(b) of this title (relating to Guaranteed Issue for Eligible Persons) that causes an individual to lose coverage or benefits due to the termination of a contract, agreement, policy, or plan, the entity, as defined in §3.3312 of this title, must:

(1) notify the individual of his or her rights under §3.3312(a), (c), (d), and (e) of this title, and the obligations of issuers of Medicare supplement policies under §3.3312(a) of this title; and

(2) communicate this notice at the same time as the notification of termination.

(b) At the time of an event described in §3.3312(b) of this title that causes an individual to cease enrollment under a contract, agreement, policy, or plan, the entity, as defined in §3.3312 of this title, that offers the contract or agreement, regardless of the basis for the cessation of enrollment or the licensed third-party administrator of the plan, must:

(1) notify the individual of his or her rights under §3.3312(a), (c), (d), and (e) of this title, and of the obligations of issuers of Medicare supplement policies under §3.3312(a) of this title; and

(2) communicate this notice within 10 working days of the entity's receipt of notification of disenrollment.

History

Source Note: The provisions of this §21.2107 adopted to be effective April 14, 1999, 24 TexReg 3356; amended to be effective February 19, 2001, 26 TexReg 1547; amended to be effective April 4, 2002, 27 TexReg 2507; amended to be effective November 2, 2016, 41 TexReg 8609.

Subchapter N LIFE INSURANCE ILLUSTRATIONS

28 Tex. Admin. Code § 21.2201 Purpose

The purpose of this Subchapter is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The Subchapter provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this Subchapter are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

History

Source Note: The provisions of this §21.2201 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2202 Authority

This subchapter is issued based upon the authority granted the Commissioner under Insurance Code §543.001; Chapter 541, Subchapter J; and §36.001.

History

Source Note: The provisions of this §21.2202 adopted to be effective September 29, 1998, 23 TexReg 9753; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2203 Applicability and Scope

This Subchapter applies to all group and individual life insurance policies and certificates except:

(1) variable life insurance;

(2) individual and group annuity contracts;

(3) credit life insurance; or

(4) life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

History

Source Note: The provisions of this §21.2203 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2204 Definitions

For the purposes of this subchapter, the following terms have the following meanings unless the explicit wording of a section or portion of a section directs otherwise.

(1) Actuarial Standards Board--the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

(2) Concept Illustration--the use of non-guaranteed policy values to pay premiums or policy expenses (suspension or reduction of premiums) or to generate distributions to the policyholder or owner (cash flows).

(3) Contract premium--the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(4) Currently payable scale--a scale of non-guaranteed elements in effect for a policy form as of the illustration date or declared to become effective within 95 days of the illustration date.

(5) Disciplined current scale--a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards:

(A) are consistent with all provisions of this regulation;

(B) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(C) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(D) do not permit assumed expenses to be less than minimum assumed expenses.

(6) Generic name--a short title descriptive of the policy being illustrated such as "whole life," "term life" or "flexible premium adjustable life."

(7) Guaranteed elements--the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.

(8) Illustrated scale--a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(A) the disciplined current scale; or

(B) the currently payable scale.

(9) Illustration--a presentation or depiction used in the solicitation or sale of a life insurance policy that includes non-guaranteed elements of a policy of life insurance over a period of years and includes but is not limited to the three types defined in subparagraphs (A) - (C) of this paragraph.

(A) Basic illustration--an illustration that shows both guaranteed and non-guaranteed elements.

(B) Supplemental illustration--an illustration furnished in addition to a basic illustration that meets the applicable requirements of this subchapter, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.

(C) In-force illustration--an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(10) Illustration actuary--an actuary meeting the requirements of §21.2211(c) of this title (relating to Annual Certification) who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.

(11) Illustration date--the date on which the illustration was prepared.

(12) Insurer--a life insurance company as defined by Insurance Code §841.001 and §982.001; a fraternal benefit society as defined by Insurance Code §885.051 and §885.052; a Mutual Life Insurance Company as defined by Insurance Code Chapter 882; or a Stipulated Premium Insurance Company as defined by Insurance Code Chapter 884.

(13) Lapse-supported illustration--an illustration of a policy form failing the test of self-supporting as defined in this subchapter, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100% policy persistency thereafter.

(14) Minimum assumed expenses--the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from:

(A) fully allocated expenses;

(B) marginal expenses; and

(C) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the National Association of Insurance Commissioners or by the Commissioner. Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

(15) Non-guaranteed elements--the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

(16) Non-term group life--a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(A) every plan of coverage was selected by the employer or other group representative;

(B) some portion of the premium is paid by the group or through payroll deduction; and

(17) Participating life insurance policy--a life insurance policy which provides for possible policyholder dividends.

(18) Policy owner--the owner named in the policy or the certificate holder in the case of a group policy.

(19) Premium outlay--the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.

(20) Self-supporting illustration--an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

(21) Universal life insurance policy--a life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other separate accounts) and mortality and expense charges are made to the policy. A universal life policy may provide for other credits and charges, such as charges for the cost of benefits provided by rider.

History

Source Note: The provisions of this §21.2204 adopted to be effective September 29, 1998, 23 TexReg 9753; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2205 Policies To Be Illustrated

(a) Commissioner notification. Each insurer marketing policies to which this Subchapter is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this Subchapter, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this Subchapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner.

(b) Prohibition. If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

(c) When delivery of illustration is required. If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this Subchapter is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

(d) When delivery of quotation is required. Potential enrollees of non-term group life subject to this Subchapter shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this Subchapter, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.

History

Source Note: The provisions of this §21.2205 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2206 General Rules and Prohibitions

An illustration other than an in force illustration shall conform to the requirements set out in paragraphs (1)-(3) of this section.

(1) Disclosure and format. An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this Subchapter, be clearly labeled "life insurance illustration" and contain the basic information set out in subparagraphs (A)-(T) of this paragraph, as follows:

(A) name of insurer;

(B) name and business address of producer or insurer's authorized representative, if any;

(D) underwriting or rating classification upon which the illustration is based;

(E) generic name of policy, the company product name, if different, and form number;

(F) initial death benefit;

(G) dividend option election or application of non-guaranteed elements, if applicable; and

(H) illustration date.

(I) The illustration shall be prominently labeled "Life Insurance Illustration."

(J) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled "page 4 of 7 pages"). If a Supplemental illustration is used, it may be numbered either sequentially with or separately from the basic illustration.

(K) If the age of the proposed insured is shown as a component of a tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force.

(L) If the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed.

(M) An illustration may show a concept in either a basic or supplemental illustration or both, subject to the following:

(i) A concept may be shown in a basic illustration provided an extended numeric summary is used; or

(ii) If a basic illustration does not show a concept, the concept may be shown in an extended numeric summary appended to a basic illustration.

(iii) If a concept is not illustrated in a basic illustration pursuant to clauses (i) or (ii) of this subparagraph, it can only be shown in:

(I) a single supplemental illustration which calculates values based upon both the illustrated and one of the alternative scales set out in clause (iv) of this subparagraph; or

(II) a single supplemental illustration which calculates values based upon the illustrated scale, provided an extended numeric summary is attached which calculates values based upon both the illustrated and one of the alternative scales set out in clause (iv) of this subparagraph; or

(III) two supplemental illustrations, one which calculates values based on the illustrated scale, and the other which calculates values based upon one of the alternative scales set out in clause (iv) of this subparagraph; or

(IV) a disclosure document explaining in narrative form:

(-a-) that the depiction of policy values to pay premiums does not mean that policy premium requirements are canceled, forgiven or waived, that the operation of any plan to use policy values to pay premium is contingent upon non-guaranteed factors remaining unchanged, which may or may not occur; and/or

(-b-) that the use of policy cash flows for other purposes is contingent upon the non-guaranteed factors remaining unchanged, which may or may not occur; and

(-c-) such disclosure documents shall include a brief description of the non-guaranteed factors impacting the use of policy values to pay premiums or to generate cash flows and a hypothetical example for issue age 50 showing the impact of reduction in the current non-guaranteed factors of 25% and 50% on the concept.

(iv) Alternative scales include:

(I) mid-point and guaranteed scales; or

(II) the dividend component of the illustrated scale reduced by 50%; or

(III) the dividend and/or credited interest component of the illustrated scale reduced by 50% of the interest component of the illustrated scale in excess of policy guarantees.

(v) For purposes of this section, an extended numeric summary is the numeric summary set out in §21.2207(3) of this title (relating to Standards for Basic Illustrations) which also, under the assumptions shown, identifies items and events as set out in subclauses (I)-(III) of this clause, as follows:

(I) Suspension of Premium: the first policy year for which out-of-pocket premium is no longer required, and/or the number of policy years for which out-of-pocket premium is no longer required, and/or the number of policy years for which out-of-pocket premium is required.

(II) Cash Flow: the first policy year when cash flow ceases, and/or the number of policy years for which cash flow occurs.

(III) The assumed payments on which the illustrated benefits and values are based may be identified as premium outlay or contract premium, as applicable, or total outlay.

(vi) After January 1, 2001, a concept may not be presented using the option set out in clause (iii)(IV) of this subparagraph, nor may any alternative scale be used other than the mid-point and guaranteed scales unless the option set out in clause (iii)(IV) of this subparagraph and/or the alternative scales set out in clause (iv)(II) and (III) of this subparagraph are extended by Order of the Commissioner.

(vii) An illustration for a proposed policy under which an employer pays all or part of the premium or shares part of the benefits, such as a split dollar plan, or an illustration of executive bonuses or deferred compensation, is exempt from the requirements of this subsection.

(N) The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender.

(O) The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable.

(P) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.

(Q) A disclaimer shall be set out conspicuously and in close conjunction to any depiction of non-guaranteed elements over a period of years and shall:

(i) identify those benefits and values which are not guaranteed;

(ii) identify the assumptions upon which the illustration is based;

(iii) disclose that the assumptions are not likely to continue unchanged for the years shown and that the assumptions are subject to change by the insurer;

(iv) state that actual results may be more or less favorable; and

(v) identify generally the factors which may affect future policy performance, such as death claims, investment earnings and overhead costs or make reference to the narrative which identifies these factors.

(R) If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up.

(S) If the applicant plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

(T) If policy loans are illustrated on a guaranteed basis, interest charged must be calculated in accordance with provisions of clause (i) or (ii) of this subparagraph, as follows:

(i) at the highest numerical rate permitted under the terms of the contract; or

(ii) to the extent that the loan interest rate is guaranteed in the contract as a specific constant addition to the actual interest crediting rate used in the determination of guaranteed cash values, the interest charged may be determined by applying that constant addition to the guaranteed minimum interest rate.

(2) Prohibited conduct. When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives or agents shall not:

(A) represent the policy as anything other than a life insurance policy;

(B) use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(D) use an illustration that does not comply with the requirements of this Subchapter;

(E) use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(F) provide an applicant with an incomplete illustration;

(G) represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

(H) use the term "vanish" or "vanishing premium," or a similar term that implies the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay a portion of future premiums;

(I) except for policies that can never develop nonforfeiture values, use an illustration that is "lapse-supported;"

(J) use an illustration that is not "self-supporting;"

(K) use an illustration or the software supporting it unless the illustration and the supporting software have been approved by the insurer in accordance or consistent with §21.122 of this title (relating to System of Control and Home Office Approval of Advertising Material Naming an Insurer); or

(L) use an illustration on a policy not identified by the insurer as one to be marketed with an illustration.

(3) Interest rate for non-guaranteed elements; persistency bonuses. The interest rate used to determine the illustrated non-guaranteed elements shall not be greater than the lesser of the earned interest rate underlying the disciplined current scale or the interest rate for the currently payable scale. No illustration shall depict a persistency bonus, a specified additional amount or specified reduction in mortality costs or expenses in a specified policy year, after the first policy year, unless such bonus, additional amount or reduction is an express obligation of the insurer in the contract or policy and meets the lapse-support and self-supporting tests as required by this subchapter.

History

Source Note: The provisions of this §21.2206 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2207 Standards for Basic Illustrations

In addition to those matters set out in §21.2206 of this title (relating to General Rules and Prohibitions), the standards set out in paragraphs (1)-(4) of this subsection shall apply to a basic illustration.

(1) Format. A basic illustration shall conform with the following requirements:

(A) the assumed dates of payment receipt and benefit pay out within a policy year shall be clearly identified;

(B) the assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay;

(C) guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed;

(D) the guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements").

(2) Narrative summary. Excluding a cover page, a basic illustration shall begin with a narrative summary which shall include:

(A) a brief description of the policy being illustrated, including a statement that it is a life insurance policy;

(B) a brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code;

(C) a brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;

(D) identification and a brief definition of column headings and key terms used in the illustration; and

(E) A statement which:

(i) identifies those benefits and values which are not guaranteed;

(ii) identifies the assumptions upon which the illustration is based;

(iii) discloses that the assumptions are not likely to continue unchanged for the years shown and that the assumptions are subject to change by the insurer;

(iv) discloses that actual results may be more or less favorable; and

(v) identifies generally the factors which may affect future policy performance, such as death claims, investment earnings and overhead costs.

(3) Numeric summary. Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable.

(A) For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years five, 10 and 20 and at age 70, if applicable. For multiple life policies the summary shall show policy years five, 10, 20 and 30. The summaries required in this subparagraph shall be presented on the three bases set out in clauses (i)-(iii) of this subparagraph, as follows:

(i) policy guarantees;

(ii) insurer's illustrated scale; and

(iii) insurer's illustrated scale used but with the non-guaranteed elements reduced as set out in subclauses (I)-(III) as follows:

(I) dividends at 50% of the dividends contained in the illustrated scale used;

(II) non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(III) all non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

(B) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three bases set out in subparagraph (A) of this paragraph.

(C) A statement substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or other owner in the case of illustration provided at the time of delivery, and the insurance producer or other authorized representative or agent: "A copy of this illustration has been provided to the applicant/policy owner."

(4) Tabular detail. Life insurance policy illustrations shall include, as applicable, the tabular detail set out in subparagraphs (A)-(C) of this paragraph.

(A) A basic illustration shall include the following for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change:

(i) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

(ii) The corresponding guaranteed death benefit, as provided in the policy; and

(iii) The corresponding guaranteed value available upon surrender, as provided in the policy.

(B) For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium.

(C) Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any non-guaranteed elements are shown, they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.

History

Source Note: The provisions of this §21.2207 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2208 Standards for Supplemental Illustrations

A supplemental illustration may be provided so long as it meets all standards set out in paragraphs (1)-(4) of this section, as follows:

(1) it is appended to, accompanied by or preceded by a basic illustration that complies with this Subchapter;

(2) the non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;

(3) it conforms to §21.2206 of this title (relating to General Rules and Prohibitions); and

(4) for a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration.

History

Source Note: The provisions of this §21.2208 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2209 Delivery of Illustration and Record Retention

(a) Illustration delivery provisions. An illustration or revised illustration shall be delivered by the insurer as set out in paragraphs (1)-(5) of this subsection.

(1) Basic illustration delivery. If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy, and the policy is applied for as illustrated, a copy of that illustration signed in accordance with this rule shall be submitted to the insurer at the time of policy application. A copy also shall be provided to the applicant.

(2) Revised illustration delivery. If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this subchapter, shall be labeled "Revised Illustration," and shall be signed and dated by the applicant or policy owner and insurance producer or other authorized representative of the insurer no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

(3) Certification required where no illustration is used. If no illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the insurance producer, other authorized representative of the insurer, or insurer shall certify to that effect in writing on a form provided by the insurer. On the same form the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.

(4) Illustration to be provided with policy. If the policy is issued under facts and circumstances described in paragraph (3) of this subsection, a basic illustration conforming to the policy as issued shall be sent with the policy. A copy shall be provided to the insurer and the policy owner.

(5) Proof of illustration delivery by mail. If a basic illustration or revised illustration is sent to the applicant or policy owner by mail from an insurance producer, other authorized representative of an insurer, or the insurer itself, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued or applied for and return the signed copy to the insurer. The insurer's obligation under this subsection shall be satisfied if the insurer can demonstrate that the insurance producer, other authorized representative of the insurer, or the insurer itself has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurance producer, other authorized representative of the insurer, or insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.

(b) Records retention. As applicable, a copy of the basic illustration, a revised basic illustration, and/or a signed numeric summary page, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three years after the policy is no longer in force. A copy of such records need not be retained if no policy is issued.

History

Source Note: The provisions of this §21.2209 adopted to be effective September 29, 1998, 23 TexReg 9753; amended to be effective December 31, 2000, 25 TexReg 12986.

28 Tex. Admin. Code § 21.2210 Annual Report; Notice to Policy Owners

(a) Annual report provision. If an illustration is used in the sale of a life insurance policy after the effective date of this Subchapter, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain, at a minimum, the applicable information set out in paragraphs (1)-(3) of this subsection.

(1) Universal life policies. For universal life policies, the report shall include:

(A) the beginning and end date of the current report period;

(B) the policy value at the end of the previous report period and at the end of the current report period;

(C) the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders);

(D) the current death benefit at the end of the current report period on each life covered by the policy;

(E) the net cash surrender value of the policy as of the end of the current report period;

(F) the amount of outstanding loans, if any, as of the end of the current report period; and

(G) for fixed premium policies, if, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or

(H) for flexible premium policies, if, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report.

(2) Other life insurance policies. For all other policies, the report shall include, as applicable:

(A) current death benefit;

(B) annual contract premium;

(D) current dividend;

(E) application of current dividend; and

(F) amount of outstanding loan.

(3) Life insurance policies without nonforfeiture values. For life insurance policies that do not build nonforfeiture values, insurers shall only be required to provide an annual report with respect to these policies for those years when a change has been made to non-guaranteed policy elements by the insurer.

(b) Required policy owner notice. If the annual report does not include an in-force illustration, it shall contain the following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling (insurer's phone number), writing to (insurer's name) at (insurer's address) or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in-force illustration.

(c) In-force illustration to be provided at policy owner request. Upon the request of the policy owner, the insurer shall furnish an in-force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of §21.2206(1) and (2)(A)-(L) of this title (relating to General Rules and Prohibitions); and §21.2207(4) of this title (relating to Standards for Basic Illustrations). No signature or other acknowledgment of receipt of this illustration shall be required.

(d) Notice of change to non-guaranteed elements. If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

History

Source Note: The provisions of this §21.2210 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2211 Annual Certification

(a) Insurer to appoint illustration actuary. The board of directors of each insurer shall appoint one or more illustration actuaries.

(b) Actuary certification. The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this Subchapter.

(1) be a member in good standing of the American Academy of Actuaries;

(2) be familiar with the standard of practice regarding life insurance policy illustrations;

(3) not have been found by the commissioner, following appropriate notice and hearing to have:

(A) violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary;

(B) been found guilty of fraudulent or dishonest practices;

(C) demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or

(D) resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;

(4) not fail to notify the commissioner of any action taken by a commissioner of another state similar to that under paragraph (3) of this subsection;

(5) disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If non-guaranteed elements illustrated for new policies are not consistent with those illustrated for similar in-force policies, this must be disclosed in the annual certification. If non-guaranteed elements illustrated for both new and in-force policies are not consistent with the non-guaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and

(6) disclose in the annual certification the method used to allocate overhead expenses for all illustrations:

(A) fully allocated expenses;

(B) marginal expenses; or

(d) Certification filing requirements. The illustration actuary shall file a certification with the commissioner prior to use of any illustration for a new policy form, and annually for all current policy forms for which illustrations are used.

(e) Notice of error. If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner promptly.

(f) Notice of inability to certify. If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify.

(g) Annual certification. A responsible officer of the insurer, other than the illustration actuary, shall certify annually:

(1) that the illustration formats meet the requirements of this Subchapter and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and

(2) that the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in subsection (c)(6) of this section.

(h) Due date of certifications. The annual certifications shall be provided to the commissioner each year by a date determined by the insurer.

(i) Notice of change in illustration actuary. If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change.

History

Source Note: The provisions of this §21.2211 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2212 Penalties

Any violation of this subchapter constitutes a misrepresentation of the terms of an issued and unissued policy in violation of Insurance Code Chapter 541, Subchapter B, and to be a misrepresentation of the terms, benefits, and advantages of a policy within the meaning of Insurance Code §543.001. Violations of this subchapter subject the insurer and agent to the penalties provided in Insurance Code Chapter 541 and other applicable provisions of the Insurance Code.

History

Source Note: The provisions of this §21.2212 adopted to be effective September 29, 1998, 23 TexReg 9753; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2213 Separability, Conflict with and Effect on Other Regulations

(a) Separability. If any provision of this subchapter or its application to any person or circumstance is for any reason held to be invalid by any court of law, the remainder of the subchapter and its application to other persons or circumstances shall not be affected.

(b) Conflict with or effect on other rules. This subchapter is not intended to conflict with or supersede and is to be interpreted when possible as not to conflict with Subchapters A and B of this chapter (relating to Unfair Competition and Unfair Practices of Insurers, and Misrepresentation of Policies and Insurance Advertising, Certain Trade Practices, and Solicitation).

History

Source Note: The provisions of this §21.2213 adopted to be effective September 29, 1998, 23 TexReg 9753.

28 Tex. Admin. Code § 21.2214 Effective Date

This subchapter shall apply to all policies sold on or after July 1, 2000.

History

Source Note: The provisions of this §21.2214 adopted to be effective September 29, 1998, 23 TexReg 9753.

Subchapter Q COMPLAINT RECORDS TO BE MAINTAINED

28 Tex. Admin. Code § 21.2501 Applicability and Purpose

This subchapter applies to all insurers as defined in §21.2502 of this title (relating to Definitions). The purpose of this subchapter is to prescribe the minimum information required to be maintained in the complaint record of an insurer, to provide a recommended format for the maintenance of such a record by insurers, and to require presentation of such information at the time of examination of insurers or upon other request for complaint record information by the department. Complaint record maintenance provisions of this subchapter apply to all complaints of an insurer not specifically excepted by this subchapter, including complaints relating to the claims settlement practices of an insurer.

(1) This subchapter does not apply to complaints received and maintained by Health Maintenance Organizations. Insurance Code Chapter 843, Subchapter G, as amended, as well as §11.205 of this title (relating to Additional Documents to be Available for Review), expressly and specifically provide for complaint record maintenance by HMOs.

(2) This subchapter does not apply to the complaints received by an insurer in its capacity as a utilization review agent. Complaint record maintenance and reporting for such complaints are addressed in §19.1705 of this title (relating to General Standards of Utilization Review).

History

Source Note: The provisions of this §21.2501 adopted to be effective December 7, 1998, 23 TexReg 12398; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2502 Definitions

The following words or phrases, as used in these sections, shall have the meanings placed opposite them unless the explicit wording of a section or part of a section shall otherwise direct.

(1) Complainant--A person making or having made a complaint.

(2) Complaint--Any written communication to an insurer, not solicited by such insurer, concerning coverage offered or issued by such insurer in this state and primarily expressing a grievance. For purposes of this subchapter, any written communication to an insurer by the same person which relates to the same claim, issue or question and requests or demands the same kind of relief and which arises out of the same transaction or transactions is considered to be part of the same complaint. A complaint is not a misunderstanding or a problem of misinformation that is resolved promptly by clearing up the misunderstanding and/or supplying the appropriate information to the satisfaction of the person submitting the written communication, as applicable.

(3) Complaint record--An electronic or hard copy record maintained by an insurer on a calendar-year basis and consisting of all complaints it has received during the preceding three years or since the date of its most recent financial examination, whichever time period is shorter.

(4) Insurer--Stock and mutual life, health, accident, fire, casualty, fire and casualty, hail, storm, title, and mortgage guarantee companies; mutual assessment companies; local mutual aid associations; local mutual burial associations; statewide mutual assessment companies; stipulated premium companies; fraternal benefit societies; group hospital service organizations; county mutual insurance companies; Lloyds; reciprocal or interinsurance exchanges; and farm mutual insurance companies.

(5) Person--Any natural or artificial entity, including but not limited to, an individual, an association, or a partnership, trust or corporation.

(6) Written communication--Any communication that is documented by publication or otherwise being written onto a medium which is capable at the point of receipt of being viewed, stored, retrieved and reproduced by the recipient insurer without any transcription. Such communication expressly includes facsimile transmissions and electronic mail transmissions.

History

Source Note: The provisions of this §21.2502 adopted to be effective December 7, 1998, 23 TexReg 12398.

28 Tex. Admin. Code § 21.2503 Compliance Standard

An insurer must maintain a complete record of all complaints which it has received during the preceding three years or since the date of its most recent financial examination by the commissioner of insurance, whichever time period is shorter, in substantial compliance with the provisions of this subchapter.

(1) For purposes of this subchapter, "substantial compliance" shall mean that the record maintained by the insurer must capture the prescribed minimum complaint information items set out in this subchapter, and must be provided to the department upon examination of the insurer or within prescribed statutory time periods or other reasonable time following a request from the department for such complaint information. Substantial compliance includes presenting such information to the department so that, if requested, a complete record of all complaints as set out in §21.2504 of this title (relating to Complaint Record; Required Elements; Explanation and Instructions) is provided upon examination or pursuant to a request for such complaint information by the department.

(2) Maintenance of a complaint record and provision of such complaint information to the department under this subchapter do not constitute a waiver of any exception to public disclosure provided by law.

History

Source Note: The provisions of this §21.2503 adopted to be effective December 7, 1998, 23 TexReg 12398.

28 Tex. Admin. Code § 21.2504 Complaint Record; Required Elements; Explanation and Instructions

(a) Complaint record: general information. The complaint record provided for in this subchapter shall be maintained by all insurers. The complaint record is based on the Model Regulation for Complaint Records to be Maintained adopted by the National Association of Insurance Commissioners (NAIC), and incorporates the prescribed minimum information required to be maintained in a complaint record complying with all maintenance provisions of the NAIC Model regulation. The complaint record is intended and recommended to be maintained as a single, comprehensive record. The complaint record presented to the department at time of examination or in response to department request must indicate the total number of complaints received for the applicable time interval as set out in this subchapter.

(1) The complaint record may be maintained at the option of the insurer in either an electronic format or a hard-copy format.

(2) The format set out in §21.2505 of this title (relating to Complaint Record Form) is preferred and recommended for both maintenance and presentation. Moreover, utilization of NAIC Complaint Database System Standard Complaint Data Form classification coding conventions for the classifications and categories set out in subsections (b)-(h) of this section, as applicable, is preferred as a maintenance and presentation option.

(3) If the complaint record is maintained in a format other than the recommended form or as a decentralized record, the insurer must nonetheless be capable of providing the department a complete complaint record upon examination or other departmental request. Subsections (b)-(i) of this section set out information items to be included in the complaint record and refer to the recommended documentary format.

(b) Complaint identification information. The complaint record must include, as indicated in Column (1) of the Complaint Record Form, entry of a unique complaint identifier, preferably numeric, assigned by the insurer to the underlying originally-submitted complaint. For any complaint involving an agent, the complaint record must also include a unique identifier, preferably numeric, for the placing or servicing agent.

(c) Function and reason categories for the complaint. The complaint record must include, as indicated in Column (2) of the Complaint Record Form, an entry for both the function code category, and the reason code category applicable to the complaint. Each complaint is to be classified hierarchically so that each is first assigned a function code category, followed by a reason code category. The function code categories set out in this subsection relate to particular kinds of company activities. The reason code categories relate to the more specific transactions entered into or actions taken by the insurer and contributing to the complaint. It is recommended but not required that the four-digit reason codes set out by the NAIC in its Complaint Database System Standard Complaint Data Form be utilized in maintenance of reasons for complaints addressed in this subsection. The function categories are set out with descriptive specificity in paragraphs (1)-(5) of this subsection, with particular reason categories similarly set out as subparagraphs within those paragraphs, as follows:

(1) Underwriting

(A) Company underwriting

(B) Individual application underwriting (applicable to complaints where misrepresentations or declarations in an application results in insurer action that is the subject of the complaint)

(D) Rescission

(E) Nonrenewal

(F) Premiums and rating

(G) Delays

(H) Refusal to insure

(I) Miscellaneous (any reason not specified in subparagraphs (A)-(H) of this paragraph)

(2) Marketing and Sales

(A) General Advertising

(B) Mass marketing advertising (any advertising essentially directed to reach more people than in a one-to-one relationship)

(D) Replacement

(E) Dividend illustration

(F) Delays

(G) Misleading statement or misrepresentation

(H) Miscellaneous (any reason not specified in subparagraphs (A)-(G) of this paragraph)

(3) Claims

(A) Claims procedure

(B) Delays

(D) Natural disaster adjusting (situations producing a large number of claims)

(E) Unsatisfactory settlement offers

(F) Denial of claim

(G) Miscellaneous (any reason not specified in subparagraphs (A)-(F) of this paragraph)

(4) Policyholder service

(A) Failure to respond

(B) Delays

(5) Miscellaneous

(d) Line type. The complaint record must include, as indicated in Column (3) of the Complaint Record Form, an entry which indicates the line of insurance involved, utilizing the classification categories set out in paragraphs (1)-(14) of this subsection. It is recommended but not required that the four-digit reason codes set out by the NAIC in its Complaint Database System Standard Complaint Data Form be utilized in maintenance of line type indication addressed in this subsection. The line type categories are as follows:

(1) Automobile

(2) Fire

(3) Homeowners--Farmowners

(4) Crop

(5) Inland Marine

(6) Individual Life

(7) Group Life

(8) Annuities

(9) Individual Health--Accident and Sickness

(10) Group Health--Accident and Sickness

(11) Workers' Compensation

(12) Liability Insurance other than Automobile

(13) Mobile Homeowners

(14) Miscellaneous (any line not specified in paragraphs (1)-(13) of this subsection)

(e) Company disposition after receipt. The complaint record must include, as indicated in Column (4) of the Complaint Record Form, an entry indicating manner of final disposition of the complaint. The department prefers and recommends, but does not require, that the disposition codes or reasons set out in paragraphs (1)-(15) of this subsection be utilized by insurers in categorizing the manner in which a complaint is disposed of or resolved. The department recommends use of such reason categories because, although the NAIC Model Regulation for Complaint Records to be Maintained does not include specific categories, the NAIC Complaints Database System includes such disposition categories, along with four-digit numeric identifiers, as standard complaint coding conventions. Although not intended to be exhaustive of all disposition descriptions, the recommended disposition reasons in paragraphs (1)-(15) of this subsection are as follows:

(1) Policy issued/restored

(2) Claim settled

(3) Additional claim payment made

(4) Refund of premium

(5) Advertising withdrawn/amended

(6) Underwriting practice resolved

(7) Cancellation notice withdrawn

(8) Nonrenewal notice rescinded

(9) Premium or rate problem resolved

(10) Question of fact

(11) Contract provision/legal issue

(12) Company position upheld

(13) Insufficient information

(14) Claim resolved through arbitration or mediation

(15) Other (Any disposition not addressed in paragraphs (1)-(14) of this subsection.)

(f) Date received. The complaint record must include, as indicated in Column (5) of the Complaint Record Form, entry of the date the complaint was received. The date received is the date the insurer originally received the complaint.

(g) Date closed. The complaint record must include, as indicated in Column (6) of the Complaint Record Form, entry of the date the complaint was closed. The date closed is the date on which the complaint was finally disposed of, either by a single action or by the final in series of actions as might be necessary for some complaints.

(h) Source of complaint. The complaint record must include, as indicated in Column (7) of the Complaint Record Form, an entry classifying origin of the complaint. At a minimum, the entry must clearly indicate any complaint originating from TDI or another insurance department. It is recommended but not required that the NAIC Complaints Database System standard complaint coding conventions for "complainant type" be utilized for classifying the origin of complaints other than those from insurance departments.

(i) State of origin. The complaint record must include, as indicated in Column (8) of the Complaint Record Form, an entry classifying origin of the complaint by state.

History

Source Note: The provisions of this §21.2504 adopted to be effective December 7, 1998, 23 TexReg 12398.

28 Tex. Admin. Code § 21.2505 Complaint Record Form

(a) Recommended maintenance form. The recommended form for complaint record maintenance is available on TDI's website at www.tdi.texas.gov/forms.

(b) Texas Department of Insurance Complaint Record Form.

Attached Graphic

History

Source Note: The provisions of this §21.2505 adopted to be effective December 7, 1998, 23 TexReg 12398; amended to be effective June 27, 2023, 48 TexReg 3409.

28 Tex. Admin. Code § 21.2506 Maintenance Basis and Compilation Frequency of the Complaint Record

The complaint record shall be maintained on a calendar-year basis. All information items required to be maintained, including the number of complaints by line of insurance, function, reasons, disposition, complaint origin, and dates received and closed, shall be compiled not less frequently than once a year.

History

Source Note: The provisions of this §21.2506 adopted to be effective December 7, 1998, 23 TexReg 12398.

28 Tex. Admin. Code § 21.2507 Effective Date

Provisions of this subchapter addressing complaint record maintenance and presentation apply to all complaints of an insurer received on or after January 1, 1999.

History

Source Note: The provisions of this §21.2507 adopted to be effective December 7, 1998, 23 TexReg 12398.

Subchapter R DIABETES

28 Tex. Admin. Code § 21.2601 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Basic benefit--Health care service or coverage, which is included in the evidence of coverage, policy, or certificate, without additional premium.

(2) Caretaker--A family member or significant other responsible for ensuring that an insured not able to manage his or her illness (due to age or infirmity) is properly managed, including overseeing diet, administration of medications, and use of equipment and supplies.

(3) Diabetes--Diabetes mellitus. A chronic disorder of glucose metabolism that can be characterized by an elevated blood glucose level. The terms "diabetes" and "diabetes mellitus" are synonymous.

(4) Diabetes equipment--The term "diabetes equipment" includes items defined in Insurance Code §1358.051 and §1358.056, and §21.2605 of this title (relating to Diabetes Equipment and Supplies).

(5) Diabetes supplies--The term "diabetes supplies" includes items defined in Insurance Code §1358.051 and §1358.056, and §21.2605 of this title.

(6) Diabetes self-management training--Instruction enabling an insured and/or his or her caretaker to understand the care and management of diabetes, including nutritional counseling and proper use of diabetes equipment and supplies.

(7) Health benefit plan--A health benefit plan, for purposes of this subchapter, means:

(A) a plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including:

(i) an individual, group, blanket, or franchise insurance policy or insurance agreement; a group hospital service contract; or an individual or group evidence of coverage that is offered by:

(I) an insurance company;

(II) a group hospital service corporation operating under Insurance Code Chapter 842;

(III) a fraternal benefit society operating under Insurance Code Chapter 885;

(IV) a stipulated premium insurance company operating under Insurance Code Chapter 884;

(V) a reciprocal exchange operating under Texas Insurance Code Chapter 942; or

(VI) a health maintenance organization (HMO) operating under Insurance Code Chapter 843;

(ii) to the extent permitted by the Employee Retirement Income Security Act of 1974 (29 U.S.C. §1002), a health benefit plan that is offered by a multiple employer welfare arrangement as defined by §3, Employee Retirement Income Security Act of 1974 (29 U.S.C. §1002) that holds a certificate of authority under Insurance Code Chapter 846; or

(iii) notwithstanding Local Government Code §172.014, or any other law, health and accident coverage provided by a risk pool created under Local Government Code Chapter 172.

(B) A plan offered by an approved nonprofit health corporation that is certified under Texas Occupation Code §162.001(b), and that holds a certificate of authority issued by the Commissioner under Insurance Code Chapter 844.

(i) a plan that provides coverage:

(I) only for a specified disease or other limited benefit;

(II) only for accidental death or dismemberment;

(III) for wages or payments in lieu of wages for a period during which an employee is absent from work because of sickness or injury;

(IV) as a supplement to liability insurance;

(V) for credit insurance;

(VI) dental or vision care only; or

(VII) hospital confinement indemnity coverage only.

(ii) a small employer plan written under Insurance Code Chapter 1501;

(iii) a Medicare supplemental policy as defined by §1882(g)(1), Social Security Act (42 U.S.C. §1395 ss);

(iv) a plan that is designed to supplement benefits provided under a program established by the Department of Defense pursuant to Chapter 55 of Title 10, United States Code (10 U.S.C. §1071 et seq.);

(v) workers' compensation insurance coverage;

(vi) medical payment insurance issued as part of a motor vehicle insurance policy; or

(vii) a long-term care policy, including a nursing home fixed indemnity policy, unless the Commissioner determines that the policy provides benefit coverage so comprehensive that the policy is a health benefit plan as described by subparagraph (A) of this paragraph.

(8) Insured--A person enrolled in a health benefit plan who has been diagnosed with:

(A) insulin dependent or noninsulin dependent diabetes; or

(B) elevated blood glucose levels induced by pregnancy or another medical condition associated with elevated glucose levels.

(9) Nutrition counseling--As defined in Occupations Code §701.002.

(10) Physician--A Doctor of Medicine or a Doctor of Osteopathy licensed by the Texas State Board of Medical Examiners.

(11) Practitioner--An Advanced Practice Nurse, Doctor of Dentistry, Physician Assistant, Doctor of Podiatry, or other licensed person with prescriptive authority.

History

Source Note: The provisions of this §21.2601 adopted to be effective April 13, 1999, 24 TexReg 2939; amended to be effective July 27, 2003, 28 TexReg 5657; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2602 Required Benefits for Persons with Diabetes

(a) Notwithstanding §172.014, Local Government Code, or any other law, health plans provided by a risk pool created under Chapter 172, Local Government Code, delivered, issued for delivery, or renewed on or after January 1, 1998, that provide benefits for the treatment of diabetes and associated conditions must provide coverage to an insured for diabetes equipment, diabetes supplies, and diabetes self-management training programs, in accordance with §21.2603 of this title (relating to Out of Pocket Expenses), §21.2605 of this title (relating to Diabetes Equipment and Supplies) and §21.2606 of this title (relating to Diabetes Self-Management Training).

(b) Health benefit plans (other than reciprocal exchanges operating under Chapter 942 of the Texas Insurance Code) delivered, issued for delivery, or renewed on or after January 1, 1999, must provide coverage to each insured in accordance with §21.2603 of this title and §21.2604 of this title (relating to Minimum Standards for Benefits for Persons with Diabetes).

(c) Health benefits plans delivered, issued for delivery, or renewed on or after January 1, 1998, by an entity other than an HMO, which provide coverage limited to hospitalization expenses, shall provide coverage to each insured for diabetes equipment, diabetes supplies, and diabetes self-management training programs, in accordance with §§21.2603, 21.2605 and 21.2606 of this title, during hospitalization of the insured.

(d) A determination of medical necessity may be applied to benefits required under this subchapter provided it complies with all applicable laws and regulations.

History

Source Note: The provisions of this §21.2602 adopted to be effective April 13, 1999, 24 TexReg 2939; amended to be effective February 9, 2004, 29 TexReg 1201.

28 Tex. Admin. Code § 21.2603 Out of Pocket Expenses

(a) The basic benefits required under this subchapter shall not be subject to a deductible, coinsurance, or copayment requirement that exceeds the applicable deductible, coinsurance, or copayment applicable to other analogous chronic medical conditions or other similar benefits provided under the plan.

(b) No more than one copayment shall be charged for a thirty-day supply of any item of diabetes supplies listed in §21.2605 of this title (relating to Diabetes Equipment and Supplies). The amount of supplies that constitutes a thirty-day supply for an insured is the amount prescribed as a thirty-day supply by the physician or practitioner of the insured.

History

Source Note: The provisions of this §21.2603 adopted to be effective April 13, 1999, 24 TexReg 2939.

28 Tex. Admin. Code § 21.2604 Minimum Standards for Benefits for Persons with Diabetes, Requirement for Periodic Assessment of Physician and Organizational Compliance

(a) Health benefit plans provided by HMOs must provide coverage for the services in paragraphs (1) through (7) of this subsection and must contract with providers that agree to comply with the minimum practice standards outlined in subsection (b) of this section. Services to be covered include:

(1) office visits and consultations with physicians and practitioners for monitoring and treatment of diabetes, including office visits and consultations with appropriate specialists;

(2) immunizations required by Insurance Code Chapter 1367, Subchapter B, Coverage for Childhood Immunizations;

(3) immunizations for influenza and pneumococcus;

(4) inpatient services, and physician and practitioner services when the insured is confined to:

(A) a hospital;

(B) a rehabilitation facility; or

(5) inpatient and outpatient laboratory and diagnostic imaging services;

(6) diabetes equipment and supplies in accordance with §21.2605 of this title (relating to Diabetes Equipment and Supplies); and

(7) diabetes self-management training, in accordance with subsection (b)(1)(A)(iii) of this section and §21.2606 of this title (relating to Diabetes Self-Management Training);

(b) HMOs must contract with providers who, at a minimum, provide care that complies with subsection (a) of this section that includes:

(1) for all insureds:

(A) at initial visit by the insured:

(i) a complete history and physical including an assessment of immunization status;

(ii) development of a management plan addressing all of the following that are applicable to the insured:

(I) nutrition and weight evaluation;

(II) medications;

(III) an exercise regimen;

(IV) glucose and lipid control;

(V) high risk behaviors;

(VI) frequency of hypoglycemia and hyperglycemia;

(VII) compliance with applicable aspects of self care;

(VIII) assessment of complications;

(IX) follow up on any referrals;

(X) psychological and psychosocial adjustment;

(XI) general knowledge of diabetes; and

(XII) self-management skills;

(iii) diabetes self-management training given or referred by the physician or practitioner as required by §21.2606 of this title and §21.2607 of this title;

(iv) referral for a dilated funduscopic eye exam to be performed by an ophthalmologist or therapeutic optometrist for an insured with Type 2 Diabetes.

(B) at every visit the following:

(i) weight and blood pressure taken,

(ii) foot exam performed without shoes or socks, and

(iii) dental inspection.

(i) review of the management plan, and

(ii) glycosylated hemoglobin test.

(D) annually the following:

(i) lipid profile,

(ii) microalbuminuria;

(iii) influenza immunization;

(iv) referral for a dilated funduscopic eye exam performed by an ophthalmologist or therapeutic optometrist; and

(v) for insureds under 18 years of age, a referral for a retinal camera examination to be performed by an ophthalmologist or therapeutic optometrist.

(2) For treatment of an insured 65 years of age and over or an insured with complications affecting two or more body systems:

(A) minimum practice standards as set forth in paragraph (1) of this subsection; and

(B) specific inquiries into and consideration of treatment goals for comorbidity and polypharmacy.

(3) For pregnant insureds with pre-existing or gestational diabetes:

(A) minimum practice standards as set forth in paragraph (1) of this subsection; and

(B) enhanced fetal monitoring based on the standards promulgated by the American College of Gynecologists and Obstetricians.

(4) For insureds with Type 1 Diabetes:

(A) minimum practice standards as set forth in paragraph (1) of this subsection;

(B) an initial diagnosis, consideration of hospitalization due to the insured's:

(i) age;

(ii) physical condition;

(iii) psychosocial circumstances; or

(iv) lack of access to outpatient diabetes self-management training as required in §21.2606 of this title or §21.2607 of this title; and

(i) weight;

(ii) blood pressure;

(iii) ophthalmologic exam;

(iv) thyroid palpation;

(v) cardiac exam;

(vi) examination of pulses;

(vii) foot exam;

(viii) skin exam;

(ix) neurological exam;

(x) dental inspection;

(xi) results of home glucose self-monitoring;

(xii) frequency and severity of hypoglycemia or hyperglycemia;

(xiii) medical nutrition plan;

(xiv) exercise regimen;

(xv) adherence problems;

(xvi) psychosocial adjustment;

(xvii) reevaluation of short- and long-term self-management goals;

(xviii) anticipatory guidance related to issues of Type 1 Diabetes;

(xix) glycosylated hemoglobin;

(xx) counseling for high-risk behaviors; and

(xxi) for insureds under 18 years of age, growth assessment.

(c) Health plans provided by HMOs must periodically assess physician and organizational compliance with the minimum practice standards contained in subsection (b) of this section.

(d) Health benefit plans provided by entities other than HMOs must provide coverage at a minimum for:

(1) office visits and consultations with physicians and practitioners for monitoring and treatment of diabetes, including office visits and consultations with appropriate specialists;

(2) immunizations required by Insurance Code Chapter 1367, Subchapter B, Coverage for Childhood Immunizations;

(3) immunizations for influenza and pneumococcus;

(4) inpatient services, physician, and practitioner services when an insured is confined to:

(A) a hospital;

(B) a rehabilitation facility; or

(5) inpatient and outpatient laboratory and diagnostic imaging services;

(6) diabetes equipment and supplies in accordance with §21.2605 of this title; and

(7) diabetes self-management training in accordance with §21.2606 of this title.

History

Source Note: The provisions of this §21.2604 adopted to be effective April 13, 1999, 24 TexReg 2939; amended to be effective February 9, 2004, 29 TexReg 1201; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2605 Diabetes Equipment and Supplies

(a) A health benefit plan shall provide coverage for equipment and supplies for the treatment of diabetes for which a physician or practitioner has written an order, including:

(1) blood glucose monitors, including those designed to be used by or adapted for the legally blind;

(2) test strips specified for use with a corresponding glucose monitor;

(3) lancets and lancet devices;

(4) visual reading strips and urine testing strips and tablets which test for glucose, ketones and protein;

(5) insulin and insulin analog preparations;

(6) injection aids, including devices used to assist with insulin injection and needleless systems;

(7) insulin syringes;

(8) biohazard disposal containers;

(9) insulin pumps, both external and implantable, and associated appurtenances, which include:

(A) insulin infusion devices;

(B) batteries;

(D) adhesive supplies;

(E) infusion sets;

(F) insulin cartridges;

(G) durable and disposable devices to assist in the injection of insulin; and

(H) other required disposable supplies;

(10) repairs and necessary maintenance of insulin pumps not otherwise provided for under a manufacturer's warranty or purchase agreement, and rental fees for pumps during the repair and necessary maintenance of insulin pumps, neither of which shall exceed the purchase price of a similar replacement pump;

(11) prescription medications which bear the legend "Caution: Federal Law prohibits dispensing without a prescription" and medications available without a prescription for controlling the blood sugar level;

(12) podiatric appliances, including up to two pairs of therapeutic footwear per year, for the prevention of complications associated with diabetes; and

(13) glucagon emergency kits.

(b) As new or improved treatment and monitoring equipment or supplies become available and are approved by the United States Food and Drug Administration, such equipment or supplies shall be covered if determined to be medically necessary and appropriate by a treating physician or other practitioner through a written order.

(c) All supplies, including medications, and equipment for the control of diabetes shall be dispensed as written, including brand name products, unless substitution is approved by the physician or practitioner who issues the written order for the supplies or equipment.

History

Source Note: The provisions of this §21.2605 adopted to be effective April 13, 1999, 24 TexReg 2939.

28 Tex. Admin. Code § 21.2606 Diabetes Self-Management Training

(a) A health benefit plan must provide diabetes self-management training or coverage for diabetes self-management training for which a physician or practitioner has written an order, including a written order of a practitioner practicing under protocols jointly developed with a physician, to each insured or the caretaker of the insured in accordance with the standards contained in Insurance Code §1358.054.

(b) A person may not provide a component of diabetes self-management training under subsection (a) of this section unless the subject matter of the component is within the scope of the person's practice and the person meets the education requirements as determined by the person's licensing agency in consultation with the Commissioner of Public Health.

(c) Self-management training should include the development of an individualized management plan that is created for and in collaboration with the insured and that meets the requirements of the minimum standards for benefits in accordance with §21.2604 of this title (relating to Minimum Standards for Benefits for Persons with Diabetes).

(d) Nutrition counseling and instructions on the proper use of diabetes equipment and supplies must be provided or covered as part of the training.

(e) Diabetes self-management training must be provided, or coverage for diabetes self-management training must be provided to an insured or a caretaker, upon the following occurrences relating to an insured, provided that any training involving the administration of medications must comply with the applicable delegation rules from the appropriate licensing agency:

(1) the initial diagnosis of diabetes;

(2) the written order of a physician or practitioner indicating that a significant change in the symptoms or condition of the insured requires changes in the insured's self-management regime;

(3) the written order of a physician or practitioner that periodic or episodic continuing education is warranted by the development of new techniques and treatment for diabetes.

(f) An HMO must provide oversight of its diabetes self-management training program on an ongoing basis to ensure compliance with this section.

(g) Health benefit plans provided by entities other than HMOs must disclose in the plan how to access providers or benefits described in subsection (a) of this section.

History

Source Note: The provisions of this §21.2606 adopted to be effective April 13, 1999, 24 TexReg 2939; amended to be effective July 27, 2003, 28 TexReg 5657; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter S ASSOCIATION PLANS

28 Tex. Admin. Code § 21.2701 Scope

Unless otherwise specified, this subchapter applies to all health carriers that issue health benefit plans to associations or bona fide associations. This subchapter does not apply to coverage issued to employer associations.

History

Source Note: The provisions of this §21.2701 adopted to be effective July 5, 1999, 24 TexReg 5014.

28 Tex. Admin. Code § 21.2702 Definitions

The following words and terms when used in this subchapter have the following meanings, unless the context clearly indicates otherwise.

(1) Association--An association (other than an employer association), including but not limited to a labor union or organizations of such unions, membership corporations organized or holding a certificate of authority under the Texas Non-profit Corporation Act, and cooperatives and corporations subject to the supervision and control of the Farm Credit Administration of the United States of America, that:

(A) has a constitution and bylaws;

(B) has been actively in existence for at least 2 years; and

(C) has been formed and maintained in good faith for purposes other than obtaining coverage under a health benefit plan to cover members for the benefit of persons other than the association or its officers or trustees.

(2) Bona Fide Association--An association that, in addition to meeting the requirements of an association in paragraphs (1)(A) and (C) of this subsection:

(A) has been actively in existence for at least 5 years;

(B) does not condition membership in the association on any health-status-related factor relating to an individual (including the individual eligible for membership or a dependent of the individual eligible for membership, if dependent coverage is offered);

(C) makes coverage under a health benefit plan offered through the association available to all members, regardless of any health-status-related factor relating to the members (or dependents eligible for coverage through a member, if dependent coverage is offered); and

(D) does not make a health benefit plan offered through the association available other than in connection with a member of the association.

(3) Creditable Coverage--As defined in §21.1101 of this title (relating to Definitions).

(4) Genetic information--Information derived from the results of a genetic test.

(5) Genetic test--A laboratory test of an individual's deoxyribonucleic acid (DNA), ribonucleic acid (RNA), proteins, or chromosomes to identify by analysis of the DNA, RNA, proteins, or chromosomes the genetic mutations or alterations in the DNA, RNA, proteins, or chromosomes that are associated with a predisposition for a clinically recognized disease or disorder. The term does not include:

(A) a routine physical examination or a routine test performed as a part of a physical examination;

(B) a chemical, blood or urine analysis;

(D) a test for the presence of the human immunodeficiency virus.

(6) HMO--A health maintenance organization as defined in Insurance Code §843.002.

(7) Health benefit plan--A group insurance policy, a certificate issued under a group policy, a group hospital service contract, or a group subscriber contract or evidence of coverage issued by a health carrier that provides benefits for health care benefits or services. The term does not include the following plans of coverage:

(A) Under all circumstances:

(i) coverage only for accident;

(ii) credit-only insurance;

(iii) disability insurance coverage;

(iv) Medicare services under a federal contract;

(v) coverage issued as a supplement to liability insurance;

(vi) insurance coverage arising out of workers' compensation or similar insurance;

(vii) automobile medical payment insurance coverage;

(viii) jointly managed trusts authorized under 29 United States Code §§141 et seq. that contain a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 United States Code §157;

(ix) short-term limited duration insurance as defined in this section;

(x) liability insurance, including general liability insurance and automobile liability insurance; or

(xi) coverage for onsite medical clinics.

(B) Only if the benefits are provided under a separate policy or contract of insurance or evidence of coverage:

(i) coverage for a specified disease or illness;

(ii) Medicare supplement and Medicare select policies regulated in accordance with federal law;

(iii) long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community-based care coverage or benefits, or any combination of those coverages or benefits;

(iv) coverage that provides limited-scope dental or vision benefits;

(v) coverage provided by a single-service HMO;

(vi) hospital indemnity or other fixed indemnity insurance;

(vii) coverage supplemental to the coverage provided under Chapter 55, Title 10 of the United States Code (also known as CHAMPUS supplemental programs);

(viii) coverage that provides other limited benefits specified by federal regulations; or

(ix) other coverage that is:

(I) similar to the coverage described in subparagraphs (A) and (B) of this paragraph under which benefits for medical care are secondary or incidental to other insurance benefits; and

(II) specified in federal regulations.

(8) Health carrier--Any entity authorized under the Texas Insurance Code or another insurance law of this state that provides health benefit plans in this state, including an insurance company; a group hospital service corporation operating under Insurance Code Chapter 842; a stipulated premium insurance company operating under Insurance Code Chapter 884; an approved nonprofit health corporation that is certified under Occupations Code Chapter 162 and that holds a certificate of authority issued by the Commissioner under Insurance Code Chapter 844, or an HMO.

(9) Health-status-related factor--Any of the following in relation to an individual:

(A) health status;

(B) medical condition, including both physical and mental illness;

(D) receipt of health care;

(E) medical history;

(F) genetic information;

(G) evidence of insurability, including conditions arising out of acts of domestic violence, including family violence as defined by Insurance Code Chapter 544, Subchapter D; or

(H) disability.

(10) Short-term limited duration coverage--Health coverage provided under a contract with a health carrier that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the health carrier's consent) that is within 12 months of the date the contract becomes effective.

History

Source Note: The provisions of this §21.2702 adopted to be effective July 5, 1999, 24 TexReg 5014; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2703 Health Care Plans Issued to Associations and Bona Fide Associations

A health benefit plan issued to an association or a bona fide association is considered a group product, and shall comply with the statutes and regulations applicable to coverages and benefits relating to group products. Notwithstanding any other provisions of this subchapter to the contrary, health carriers other than HMOs that offer health benefit plans to associations that are not bona fide associations may decline, restrict, limit, exclude or rate-up coverage based upon a member's health status-related factors.

History

Source Note: The provisions of this §21.2703 adopted to be effective July 5, 1999, 24 TexReg 5014.

28 Tex. Admin. Code § 21.2704 Mandatory Guaranteed Renewability Provisions for Health Benefit Plans Issued to Members of an Association or Bona Fide Association

(a) Except as provided by subsection (d) of this section, a health carrier shall renew a health benefit plan issued to an association, or a bona fide association, at the option of the association or bona fide association, unless:

(1) the association or bona fide association has failed to pay premiums or contributions in accordance with the terms of the health benefit plan, including any timeliness requirements;

(2) the association or bona fide association has performed an act or practice that constitutes fraud, or has made an intentional misrepresentation of material fact, relating in any way to the health benefit plan, including claims for benefits under the health benefit plan;

(3) in regards only to a health benefit plan offered by an HMO or a group hospital service plan issued under the Insurance Code Chapter 20, the association or bona fide association ceases to have any covered members who reside, live, or work in the service area of the HMO or group hospital service plan, but only if coverage is terminated uniformly without regard to any health status-related factor of covered members or dependents of covered members, if dependent coverage is offered; or

(4) the health carrier is ceasing to offer health benefit plan coverage in the association market in accordance with subsection (d) of this section.

(b) A health carrier may refuse to renew the coverage of a covered member or dependent if:

(1) the member fails to pay premiums or contributions in accordance with the terms of the health benefit plan, including any timeliness requirements;

(2) the covered member or dependent has performed an act or practice that constitutes fraud, or has made an intentional misrepresentation of material fact, relating in any way to the health benefit plan, including claims for benefits under the health benefit plan;

(3) in regards only to coverage offered by an HMO or a group hospital service plan issued under the Insurance Code Chapter 20, the covered member no longer resides, lives, or works in the service area of the HMO or group hospital service plan, but only if coverage is terminated uniformly without regard to any health status-related factor of the covered member or dependent;

(4) the health carrier is ceasing to offer health benefit plan coverage in the association market in accordance with subsection (d) of this section; or

(5) the covered member or dependent ceases to be a member of the association or bona fide association to which the coverage is offered, but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of the covered member or dependent.

(c) Medicare eligibility or entitlement is not a basis for non-renewal or termination of a health benefit plan issued to an association or bona fide association or members of an association or bona fide association. However, health benefit plan coverage sold to association and bona fide association members before the members attain Medicare eligibility may contain coordination of benefit provisions that comply with Chapter 3, Subchapter V of this title (relating to Group Coordination of Benefits) and §11.511 of this title (relating to Optional Provisions).

(d) A health carrier may discontinue a particular health benefit plan pursuant to paragraph (1) of this subsection. A health carrier may discontinue all health benefit plans pursuant to paragraph (2) of this subsection.

(1) A health carrier may discontinue offering a particular type of health benefit plan offered to associations or bona fide associations only if, at least 90 days before the date coverage will be discontinued, the health carrier:

(A) provides notice in writing to each association or bona fide association and each member covered under the health benefit plan being discontinued;

(B) offers to the association or bona fide association the option to purchase any other health benefit plan currently being offered by the carrier to associations or bona fide associations; and

(C) acts uniformly without regard to any health status-related factor of covered members or dependents, or new members or dependents who may become eligible for the coverage.

(2) A health carrier may discontinue offering all health benefit plans offered to associations or bona fide associations only if, at least 180 days before the date coverage will expire, the health carrier:

(A) provides notice in writing to the commissioner of insurance, each association or bona fide association, and each covered member;

(B) discontinues and does not renew all health benefit plans issued in this state or an approved geographic service area of an HMO or group hospital service corporation to associations or bona fide associations; and

(C) acts uniformly without regard to any health status-related factor of covered members or dependents of covered members, if dependent coverage is offered, or new members or dependents who may become eligible for coverage.

(e) A health carrier that elects not to renew all health benefit plans to associations or bona fide associations in accordance with subsection (d)(2) of this section may not issue any association or bona fide association coverage in this state, or in an approved geographic service area of an HMO or group hospital service corporation, during the five year period beginning on the date of discontinuation of the last such coverage not renewed.

(f) Nothing in this section prohibits or restricts a health carrier's ability to make changes in premium rates by classes in accordance with applicable laws and regulations.

(g) Nothing in this section shall be interpreted as prohibiting a health carrier from making modifications to a health benefit plan mandated by state or federal law.

History

Source Note: The provisions of this §21.2704 adopted to be effective July 5, 1999, 24 TexReg 5014.

28 Tex. Admin. Code § 21.2705 Certification of Creditable Coverage

Each health carrier that issues a health benefit plan to members of an association or bona fide association shall provide a certification of coverage in accordance with §§21.1103-21.1107 of this title (relating to Notification of Creditable Coverage).

History

Source Note: The provisions of this §21.2705 adopted to be effective July 5, 1999, 24 TexReg 5014.

28 Tex. Admin. Code § 21.2706 Coverage and Issuance Requirements to Bona Fide Associations

(a) A health carrier that issues a health benefit plan to a bona fide association may refuse to provide coverage to all members, and dependents of members if dependent coverage is offered, of a bona fide association in accordance with the health carrier's underwriting standards and criteria. However, on issuance to a bona fide association, each carrier shall provide coverage to each member without regard to the member's health status-related factors.

(b) A health carrier that issues a health benefit plan to members of a bona fide association shall accept or reject all members who apply for coverage and may exclude only those members who have not applied for coverage.

History

Source Note: The provisions of this §21.2706 adopted to be effective July 5, 1999, 24 TexReg 5014.

Subchapter T SUBMISSION OF CLEAN CLAIMS

28 Tex. Admin. Code § 21.2801 Purpose and Scope

The purpose of this subchapter is to specify the definitions and procedures necessary to implement Insurance Code Chapters 843 and 1301 relating to clean claims and prompt payment of physician and provider claims. This subchapter applies to all nonelectronic and electronic claims submitted by contracted physicians or providers for services or benefits provided to insureds of preferred provider carriers, insureds of exclusive provider carriers, and enrollees of health maintenance organizations. The subchapter also has limited applicability to noncontracted physicians and providers. This subchapter does not apply to an exclusive provider benefit plan regulated under Chapter 3, Subchapter KK of this title (relating to Exclusive Provider Benefit Plan) written by an insurer under a contract with the Health and Human Services Commission to provide services under the Texas Children's Health Insurance Program or Medicaid.

History

Source Note: The provisions of this §21.2801 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2802 Definitions

The following words and terms when used in this subchapter have the following meanings unless the context clearly indicates otherwise:

(1) Audit--A procedure authorized by and described in §21.2809 of this title (relating to Audit Procedures) under which a managed care carrier (MCC) may investigate a claim beyond the statutory claims payment period without incurring penalties under §21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period).

(2) Batch submission--A group of electronic claims submitted for processing at the same time within a HIPAA standard ASC X12N 837 Transaction Set and identified by a batch control number.

(3) Billed charges--The charges for medical care or health care services included on a claim submitted by a physician or a provider. For purposes of this subchapter, billed charges must comply with all other applicable requirements of law, including Health and Safety Code §311.0025, Occupations Code §105.002, and Insurance Code Chapter 552.

(4) CMS--The Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.

(5) Catastrophic event--An event, including an act of God, civil or military authority, or public enemy; war, accident, fire, explosion, earthquake, windstorm, flood, or organized labor stoppage, that cannot reasonably be controlled or avoided and that causes an interruption in the claims submission or processing activities of an entity for more than two consecutive business days.

(6) Clean claim--

(A) For nonelectronic claims, a claim submitted by a physician or a provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy that includes:

(i) the required data elements set out in §21.2803(b) or (c) of this title (relating to Elements of a Clean Claim); and

(ii) if applicable, the amount paid by the primary plan or other valid coverage under §21.2803(d) of this title;

(B) For electronic claims, a claim submitted by a physician or a provider for medical care or health care services rendered to an enrollee under a health care plan or to an insured under a health insurance policy using the ASC X12N 837 format and in compliance with all applicable federal laws related to electronic health care claims, including applicable implementation guides, companion guides, and trading partner agreements.

(7) Condition code--The code utilized by CMS to identify conditions that may affect processing of the claim.

(8) Contracted rate--Fee or reimbursement amount for a preferred provider's services, treatments, or supplies as established by agreement between the preferred provider and the MCC.

(9) Corrected claim--A claim containing clarifying or additional information necessary to correct a previously submitted claim.

(10) Deficient claim--A submitted claim that does not comply with the requirements of §21.2803(b), (c), or (e) of this title.

(11) Diagnosis code--Numeric or alphanumeric codes from the International Classification of Diseases (ICD-9-CM), Diagnostic and Statistical Manual (DSM-IV), or their successors, valid at the time of service.

(12) Duplicate claim--Any claim submitted by a physician or a provider for the same health care service provided to a particular individual on a particular date of service that was included in a previously submitted claim. The term does not include:

(A) corrected claims; or

(B) claims submitted by a physician or a provider at the request of the MCC.

(13) Exclusive provider carrier--An insurer that issues an exclusive provider benefit plan as provided by Insurance Code Chapter 1301.

(14) HMO--A health maintenance organization as defined by Insurance Code §843.002(14).

(15) HMO delivery network--As defined by Insurance Code §843.002(15).

(16) Institutional provider--An institution providing health care services, including, but not limited to, hospitals, other licensed inpatient centers, ambulatory surgical centers, skilled nursing centers, and residential treatment centers.

(17) MCC or managed care carrier--An HMO, a preferred provider carrier, or an exclusive provider carrier.

(18) NPI number--The National Provider Identifier standard unique health identifier number for health care providers assigned under 45 Code of Federal Regulations Part 162 Subpart D or a successor rule.

(19) Occurrence span code--The code used by the Centers for Medicare and Medicaid Services (CMS) to define a specific event relating to the billing period.

(20) Patient control number--A unique alphanumeric identifier assigned by the institutional provider to facilitate retrieval of individual financial records and posting of payment.

(21) Patient financial responsibility--Any portion of the contracted rate for which the patient is responsible under the terms of the patient's health benefit plan.

(22) Patient discharge status code --The code used by CMS to indicate the patient's status at the time of discharge or billing.

(23) Physician--Anyone licensed to practice medicine in this state.

(24) Place of service code--The code used by CMS that identifies the place where the service was rendered.

(25) Point of Origin for Admission or Visit code--The code used by CMS to indicate the source of an inpatient admission.

(26) Preferred provider--

(A) with regard to a preferred provider carrier or an exclusive provider carrier, a preferred provider as defined by Insurance Code §1301.001; and

(B) with regard to an HMO:

(i) a physician, as defined by Insurance Code §843.002, who is a member of that HMO's delivery network; or

(ii) a provider, as defined by Insurance Code §843.002, who is a member of that HMO's delivery network.

(27) Preferred provider carrier--An insurer that issues a preferred provider benefit plan as provided by Insurance Code Chapter 1301.

(28) Primary plan--As defined in §3.3506 of this title (relating to Use of the Terms "Plan," "Primary Plan," "Secondary Plan," and "This Plan" in Policies, Certificates, and Contracts), or in a successor rule adopted by the commissioner.

(29) Procedure code--Any alphanumeric code representing a service or treatment that is part of a medical code set that is adopted by CMS as required by federal statute and valid at the time of service. In the absence of an existing federal code, and for nonelectronic claims only, this definition may also include local codes developed specifically by Medicaid, Medicare, or an MCC to describe a specific service or procedure.

(30) Provider--Any practitioner, institutional provider, or other person or organization that furnishes health care services and that is licensed or otherwise authorized to practice in this state, other than a physician.

(31) Revenue code--The code assigned by CMS to each cost center for which a separate charge is billed.

(32) Secondary plan--As defined in §3.3506 of this title, or in a successor rule adopted by the commissioner.

(33) Statutory claims payment period--

(A) the 45 calendar days during which an MCC must pay or deny a claim, in whole or in part, after receipt of a nonelectronic clean claim under Insurance Code Chapters 843 and 1301, and any extended period permitted under §21.2804 of this title (relating to Requests for Additional Information from Treating Provider) or §21.2819 of this title (relating to Catastrophic Event);

(B) the 30 calendar days during which an MCC must pay or deny a claim, in whole or in part, after receipt of an electronically submitted clean claim under Insurance Code Chapters 843 and 1301, and any extended period permitted under §21.2804 or §21.2819 of this title;

(C) the 21 calendar days during which an MCC must pay a claim after affirmative adjudication of a claim for a prescription benefit that is not electronically submitted under Insurance Code Chapters 843 and 1301 and §21.2814 of this title (relating to Adjudication of Prescription Benefits), and any extended period permitted under §21.2804 or §21.2819; or

(D) the 18 calendar days during which an MCC must make a claim payment after affirmative adjudication of an electronically submitted claim for a prescription benefit under Insurance Code Chapters 843 and 1301 and §21.2814 of this title, and any extended period permitted under §21.2804 or §21.2819 of this title.

(34) Subscriber--If individual coverage, the individual who is the contract holder and is responsible for payment of premiums to the MCC; or if group coverage, the individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility for enrollment in a group health benefit plan issued by the MCC.

(35) Type of bill code--The three-digit alphanumeric code used by CMS to identify the type of facility, the type of care, and the sequence of the bill in a particular episode of care.

History

Source Note: The provisions of this §21.2802 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 1, 2004, 29 TexReg 1001; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective July 11, 2007, 32 TexReg 4215; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2803 Elements of a Clean Claim

(a) Filing a clean claim. A physician or a provider submits a clean claim by providing to an MCC or any other entity designated for receipt of claims under §21.2811 of this title (related to Disclosure of Processing Procedures):

(1) for nonelectronic claims other than dental claims, the required data elements specified in subsection (b) of this section;

(2) for nonelectronic dental claims filed with an HMO, the required data elements specified in subsection (c) of this section;

(3) for electronic claims and for electronic dental claims filed with an HMO, the required data elements specified in subsections (e) and (f) of this section; and

(4) if applicable, any coordination of benefits or nonduplication of benefits information under subsection (d) of this section.

(b) Required data elements. CMS has developed claim forms that provide much of the information needed to process claims. Insurance Code Chapter 1204 identifies two of these forms, HCFA 1500 and UB-82/HCFA, and their successor forms, as required for the submission of certain claims. The terms in paragraphs (1) - (3) of this subsection are based on the terms CMS used on successor forms CMS-1500 (02/12), CMS-1500 (08/05), UB-04 CMS-1450, and UB-04. The parenthetical information following each term and data element refers to the applicable CMS claim form and the field number to which that term corresponds on the CMS claim form. Mandatory form usage dates and optional form transition dates for nonelectronic claims filed or refiled by physicians or noninstitutional providers are set out in paragraphs (1) and (2) of this subsection. Mandatory form usage dates and optional form transition dates for nonelectronic claims filed or refiled by institutional providers are set out in paragraph (3) of this subsection.

(1) Required form and data elements for physicians or noninstitutional providers for claims filed or refiled on or after the later of April 1, 2014, or the earliest compliance date required by CMS for mandatory use of the CMS-1500 (02/12) claim form for Medicare claims. The CMS-1500 (02/12) claim form and the data elements described in this paragraph are required for claims filed or refiled by physicians or noninstitutional providers on or after the later of these two dates: April 1, 2014, or the earliest compliance date required by CMS for mandatory use of the CMS-1500 (02/12) claim form for Medicare claims. The CMS-1500 (02/12) claim form must be completed in compliance with the special instructions applicable to the data elements as described by this paragraph for clean claims filed by physicians and noninstitutional providers. Further, on notification that an MCC is prepared to accept claims filed or refiled on form CMS-1500 (02/12), a physician or noninstitutional provider may submit claims on form CMS-1500 (02/12) before the mandatory use date described in this paragraph, subject to the required data elements set out in this paragraph.

(A) subscriber's or patient's plan ID number (CMS-1500 (02/12), field 1a) is required;

(B) patient's name (CMS-1500 (02/12), field 2) is required;

(D) subscriber's name (CMS-1500 (02/12), field 4) is required if shown on the patient's ID card;

(E) patient's address (street or P.O. Box, city, state, ZIP Code) (CMS-1500 (02/12), field 5) is required;

(F) patient's relationship to subscriber (CMS-1500 (02/12), field 6) is required;

(G) subscriber's address (street or P.O. Box, city, state, ZIP Code) (CMS-1500 (02/12), field 7) is required, but the physician or the provider may enter "Same" if the subscriber's address is the same as the patient's address required by subparagraph (E) of this paragraph;

(H) other insured's or enrollee's name (CMS-1500 (02/12), field 9) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (N) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(I) other insured's or enrollee's policy or group number (CMS-1500 (02/12), field 9a) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (N) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(J) other insured's or enrollee's HMO or insurer name (CMS-1500 (02/12), field 9d) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (N) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(K) whether the patient's condition is related to employment, auto accident, or other accident (CMS-1500 (02/12), field 10) is required, but facility-based radiologists, pathologists, or anesthesiologists must enter "N" if the answer is "No" or if the information is not available;

(L) subscriber's policy number (CMS-1500 (02/12), field 11) is required;

(M) HMO or insurance company name (CMS-1500 (02/12), field 11c) is required;

(N) disclosure of any other health benefit plans (CMS-1500 (02/12), field 11d) is required;

(i) if answered "Yes," then:

(I) data elements specified in subparagraphs (H) - (J) of this paragraph are required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete the data elements in subparagraphs (H) - (J) of this paragraph;

(II) when submitting claims to secondary payor MCCs the data element specified in subparagraph (GG) of this paragraph is required;

(ii) if answered "No," the data elements specified in subparagraphs (H) - (J) of this paragraph are not required if the physician or the provider has on file a document signed within the past 12 months by the patient or authorized person stating that there is no other health care coverage. Although the submission of the signed document is not a required data element, the physician or the provider must submit a copy of the signed document to the MCC on request;

(O) patient's or authorized person's signature or a notation that the signature is on file with the physician or the provider (CMS-1500 (02/12), field 12) is required;

(P) subscriber's or authorized person's signature or a notation that the signature is on file with the physician or the provider (CMS-1500 (02/12), field 13) is required;

(Q) date of injury (CMS-1500 (02/12), field 14) is required if due to an accident;

(R) when applicable, the physician or the provider must enter the name of the referring primary care physician, specialty physician, hospital, or other source (CMS-1500 (02/12), field 17). However, if there is no referral, the physician or the provider must enter "Self-referral" or "None";

(S) if there is a referring physician noted in CMS-1500 (02/12), field 17, the physician or the provider must enter the ID Number of the referring primary care physician, specialty physician, or hospital (CMS-1500 (02/12), field 17a);

(T) if there is a referring physician noted in CMS-1500 (02/12), field 17, the physician or the provider must enter the NPI number of the referring primary care physician, specialty physician, or hospital (CMS-1500 (02/12), field 17b) if the referring physician is eligible for an NPI number;

(U) for diagnosis codes or nature of illness or injury (CMS-1500 (02/12), field 21), the physician or the provider:

(i) must identify the ICD code version being used:

(I) for all claims arising before the date on which CMS mandates the use of the ICD-10-CM for claims filed under the Medicare program, by entering either the number "9" to indicate the ICD-9-CM or the number "0" to indicate the ICD-10-CM between the vertical, dotted lines in the upper right-hand portion of the field;

(II) for all claims arising on or after the date on which CMS mandates the use of the ICD-10-CM for claims filed under the Medicare program, by entering the number "0" to indicate the ICD-10-CM between the vertical, dotted lines in the upper right-hand portion of the field;

(III) should CMS no longer require identification of the ICD code version being used, may indicate no ICD code version between the vertical dotted lines in the upper right-hand portion of the field;

(ii) must enter at least one diagnosis code, and

(iii) may enter up to 12 diagnosis codes, but the primary diagnosis must be entered first;

(V) if the claim is a duplicate claim, a "D" is required; if the claim is a corrected claim, a "C" is required (CMS-1500 (02/12), field 22);

(W) verification number is required (CMS-1500 (02/12), field 23) if services have been verified as provided by §19.1719 of this title (relating to Verification for Health Maintenance Organizations and Preferred Provider Benefit Plans). If no verification has been provided, a prior authorization number (CMS-1500 (02/12), field 23) is required when prior authorization is required and granted;

(X) date(s) of service (CMS-1500 (02/12), field 24A) is required;

(Y) place of service code(s) (CMS-1500 (02/12), field 24B) is required;

(Z) procedure/modifier code(s) (CMS-1500 (02/12), field 24D) is required. If a physician or a provider uses an unlisted or not classified procedure code or a National Drug Code (NDC), the physician or provider must enter a narrative description of the procedure or the NDC in the shaded area above the corresponding completed service line;

(AA) diagnosis code by specific service (CMS-1500 (02/12), field 24E) is required with the first code linked to the applicable diagnosis code for that service in field 21;

(BB) charge for each listed service (CMS-1500 (02/12), field 24F) is required;

(CC) number of days or units (CMS-1500 (02/12), field 24G) is required;

(DD) the NPI number of the rendering physician or provider (CMS-1500 (02/12), field 24J, unshaded portion) is required if the rendering provider is not the billing provider listed in CMS-1500 (02/12), field 33, and if the rendering physician or provider is eligible for an NPI number;

(EE) physician's or provider's federal tax ID number (CMS-1500 (02/12), field 25) is required;

(FF) whether assignment was accepted (CMS-1500 (02/12), field 27) is required if assignment under Medicare has been accepted;

(GG) total charge (CMS-1500 (02/12), field 28) is required;

(HH) amount paid (CMS-1500 (02/12), field 29) is required if an amount has been paid to the physician or the provider submitting the claim by the patient or subscriber, or on behalf of the patient or subscriber or by a primary plan in compliance with subparagraph (N) of this paragraph and as required by subsection (d) of this section;

(II) signature of physician or provider or a notation that the signature is on file with the MCC (CMS-1500 (02/12), field 31) is required;

(JJ) name and address of the facility where services were rendered, if other than home, (CMS-1500 (02/12), field 32) is required;

(KK) the NPI number of the facility where services were rendered, if other than home, (CMS-1500 (02/12), field 32a) is required if the facility is eligible for an NPI;

(LL) physician's or provider's billing name, address, and telephone number (CMS-1500 (02/12), field 33) is required;

(MM) (MM) the NPI number of the billing provider (CMS-1500 (02/12), field 33a) is required if the billing provider is eligible for an NPI number; and

(NN) provider number (CMS-1500 (02/12), field 33b) is required if the MCC required provider numbers and gave notice of the requirement to physicians and providers before June 17, 2003.

(2) Required form and data elements for physicians or noninstitutional providers for claims filed or refiled before the later of April 1, 2014, or the earliest compliance date required by CMS for mandatory use of the CMS-1500 (02/12) claim form for Medicare claims. The CMS-1500 (08/05) claim form and the data elements described in this paragraph are required for claims filed or refiled by physicians or noninstitutional providers before the later of these two dates: April 1, 2014, or the earliest compliance date required by CMS for mandatory use of the CMS-1500 (02/12) claim form for Medicare claims. The CMS-1500 (08/05) claim form must be completed in compliance with the special instructions applicable to the data element as described in this paragraph for clean claims filed by physicians and noninstitutional providers. However, on notification that an MCC is prepared to accept claims filed or refiled on form CMS-1500 (02/12), a physician or noninstitutional provider may submit claims on form CMS-1500 (02/12) before the subsection (b)(1) of this section mandatory use date described in this paragraph, subject to the subsection (b)(1) of this section required data elements set out in the paragraph.

(A) subscriber's or patient's plan ID number (CMS-1500 (08/05), field 1a) is required;

(B) patient's name (CMS-1500 (08/05), field 2) is required;

(D) subscriber's name (CMS-1500 (08/05), field 4) is required, if shown on the patient's ID card;

(E) patient's address (street or P.O. Box, city, state, ZIP Code) (CMS-1500 (08/05), field 5) is required;

(F) patient's relationship to subscriber (CMS-1500 (08/05), field 6) is required;

(G) subscriber's address (street or P.O. Box, city, state, ZIP Code) (CMS-1500 (08/05), field 7) is required, but physician or provider may enter "Same" if the subscriber's address is the same as the patient's address required by subparagraph (E) of this paragraph;

(H) other insured's or enrollee's name (CMS-1500 (08/05), field 9) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (Q) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(I) other insured's or enrollee's policy or group number (CMS-1500 (08/05), field 9a) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (Q) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(J) other insured's or enrollee's date of birth (CMS-1500 (08/05), field 9b) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (Q) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(K) other insured's or enrollee's plan name (employer, school, etc.), (CMS-1500 (08/05), field 9c) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (Q) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element. If the field is required and the physician or the provider is a facility-based radiologist, pathologist, or anesthesiologist with no direct patient contact, the physician or the provider must either enter the information or enter "NA" (not available) if the information is unknown;

(L) other insured's or enrollee's HMO or insurer name (CMS-1500 (08/05), field 9d) is required if the patient is covered by more than one health benefit plan, generally in situations described in subsection (d) of this section. If the required data element specified in subparagraph (Q) of this paragraph, "disclosure of any other health benefit plans," is answered "Yes," this element is required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete this data element;

(M) whether the patient's condition is related to employment, auto accident, or other accident (CMS-1500 (08/05), field 10) is required, but facility-based radiologists, pathologists, or anesthesiologists must enter "N" if the answer is "No" or if the information is not available;

(N) if the claim is a duplicate claim, a "D" is required; if the claim is a corrected claim, a "C" is required (CMS-1500 (08/05), field 10d);

(O) subscriber's policy number (CMS-1500 (08/05), field 11) is required;

(P) HMO or insurance company name (CMS-1500 (08/05), field 11c) is required;

(Q) disclosure of any other health benefit plans (CMS-1500 (08/05), field 11d) is required;

(i) if answered "Yes," then:

(I) data elements specified in subparagraphs (H) - (L) of this paragraph are required unless the physician or the provider submits with the claim documented proof that the physician or the provider has made a good faith but unsuccessful attempt to obtain from the enrollee or the insured any of the information needed to complete the data elements in subparagraphs (H) - (L) of this paragraph;

(II) the data element specified in subparagraph (KK) of this paragraph is required when submitting claims to secondary payor MCCs;

(ii) if answered "No," the data elements specified in subparagraphs (H) - (L) of this paragraph are not required if the physician or the provider has on file a document signed within the past 12 months by the patient or authorized person stating that there is no other health care coverage. Although the submission of the signed document is not a required data element, the physician or the provider must submit a copy of the signed document to the MCC on request;

(R) patient's or authorized person's signature or a notation that the signature is on file with the physician or the provider (CMS-1500 (08/05), field 12) is required;

(S) subscriber's or authorized person's signature or a notation that the signature is on file with the physician or the provider (CMS-1500 (08/05), field 13) is required;

(T) date of injury (CMS-1500 (08/05), field 14) is required if due to an accident;

(U) when applicable, the physician or the provider must enter the name of the referring primary care physician, specialty physician, hospital, or other source (CMS-1500 (08/05), field 17). However, if there is no referral, the physician or the provider must enter "Self-referral" or "None";

(V) if there is a referring physician noted in CMS-1500 (08/05), field 17, the physician or the provider must enter the ID Number of the referring primary care physician, specialty physician, or hospital (CMS-1500 (08/05), field 17a);

(W) if there is a referring physician noted in CMS-1500 (08/05), field 17, the physician or the provider must enter the NPI number of the referring primary care physician, specialty physician, or hospital (CMS-1500 (08/05), field 17b) if the referring physician is eligible for an NPI number;

(X) narrative description of procedure (CMS-1500 (08/05), field 19) is required when a physician or a provider uses an unlisted or unclassified procedure code or an NDC code for drugs;

(Y) for diagnosis codes or nature of illness or injury (CMS-1500 (08/05), field 21), up to four diagnosis codes may be entered. At least one is required, but the primary diagnosis must be entered first;

(Z) verification number (CMS-1500 (08/05), field 23) is required if services have been verified under §19.1719 of this title (relating to Verification for Health Maintenance Organizations and Preferred Provider Benefit Plans). If no verification has been provided, a prior authorization number (CMS-1500 (08/05), field 23) is required when prior authorization is required and granted;

(AA) date(s) of service (CMS-1500 (08/05), field 24A) is required;

(BB) place of service code(s) (CMS-1500 (08/05), field 24B) is required;

(CC) procedure/modifier code (CMS-1500 (08/05), field 24D) is required;

(DD) diagnosis code by specific service (CMS-1500 (08/05), field 24E) is required with the first code linked to the applicable diagnosis code for that service in field 21;

(EE) charge for each listed service (CMS-1500 (08/05), field 24F) is required;

(FF) number of days or units (CMS-1500 (08/05), field 24G) is required;

(GG) the NPI number of the rendering physician or provider (CMS-1500 (08/05), field 24J, unshaded portion) is required if the rendering provider is not the billing provider listed in CMS-1500 (08/05), field 33, and if the rendering physician or provider is eligible for an NPI number;

(HH) physician's or provider's federal tax ID number (CMS-1500 (08/05), field 25) is required;

(II) whether assignment was accepted (CMS-1500 (08/05), field 27) is required if assignment under Medicare has been accepted;

(JJ) total charge (CMS-1500 (08/05), field 28) is required;

(KK) amount paid (CMS-1500 (08/05), field 29) is required if an amount has been paid to the physician or the provider submitting the claim by the patient or subscriber, or on behalf of the patient or subscriber or by a primary plan to comply with subparagraph (Q) of this paragraph and as required by subsection (d) of this section;

(LL) signature of physician or provider or a notation that the signature is on file with the MCC (CMS-1500 (08/05), field 31) is required;

(MM) name and address of the facility where services were rendered, if other than home, (CMS-1500 (08/05), field 32) is required;

(NN) the NPI number of the facility where services were rendered, if other than home, (CMS-1500 (08/05), field 32a) is required if the facility is eligible for an NPI;

(OO) physician's or provider's billing name, address, and telephone number (CMS-1500 (08/05), field 33) is required;

(PP) the NPI number of the billing provider (CMS-1500 (08/05), field 33a) is required if the billing provider is eligible for an NPI number; and

(QQ) provider number (CMS-1500 (08/05), field 33b) is required if the MCC required provider numbers and gave notice of the requirement to physicians and providers before June 17, 2003.

(3) Required form and data elements for institutional providers. The UB-04 claim form and the data elements described in this paragraph are required for claims filed or refiled by institutional providers. The UB-04 claim form must be completed under the special instructions applicable to the data elements as described by this paragraph for clean claims filed by institutional providers.

(A) provider's name, address, and telephone number (UB-04, field 1) are required;

(B) patient control number (UB-04, field 3a) is required;

(C) type of bill code (UB-04, field 4) is required and must include a "7" in the fourth position if the claim is a corrected claim;

(D) provider's federal tax ID number (UB-04, field 5) is required;

(E) statement period (beginning and ending date of claim period) (UB-04, field 6) is required;

(F) patient's name (UB-04, field 8a) is required;

(G) patient's address (UB-04, field 9a - 9e) is required;

(H) patient's date of birth (UB-04, field 10) is required;

(I) patient's sex (UB-04, field 11) is required;

(J) date of admission (UB-04, field 12) is required for admissions, observation stays, and emergency room care;

(K) admission hour (UB-04, field 13) is required for admissions, observation stays, and emergency room care;

(L) type of admission (such as emergency, urgent, elective, newborn) (UB-04, field 14) is required for admissions;

(M) point of origin for admission or visit code (UB-04, field 15) is required;

(N) discharge hour (UB-04, field 16) is required for admissions, outpatient surgeries, or observation stays;

(O) patient discharge status code (UB-04, field 17) is required for admissions, observation stays, and emergency room care;

(P) condition codes (UB-04, fields 18 - 28) are required if the CMS UB-04 manual contains a condition code appropriate to the patient's condition;

(Q) occurrence codes and dates (UB-04, fields 31 - 34) are required if the CMS UB-04 manual contains an occurrence code appropriate to the patient's condition;

(R) occurrence span codes and from and through dates (UB-04, fields 35 and 36) are required if the CMS UB-04 manual contains an occurrence span code appropriate to the patient's condition;

(S) value code and amounts (UB-04, fields 39 - 41) are required for inpatient admissions, and may be entered as value code "01" if no value codes are applicable to the inpatient admission;

(T) revenue code (UB-04, field 42) is required;

(U) revenue description (UB-04, field 43) is required;

(V) Healthcare Common Procedure Coding System (HCPCS) codes or rates (UB-04, field 44) are required if Medicare is a primary or secondary payor;

(W) service date (UB-04, field 45) is required if the claim is for outpatient services;

(X) date bill submitted (UB-04, field 45, line 23) is required;

(Y) units of service (UB-04, field 46) are required;

(Z) total charge (UB-04, field 47) is required;

(AA) MCC name (UB-04, field 50) is required;

(BB) prior payments-payor (UB-04, field 54) are required if payments have been made to the provider by a primary plan as required by subsection (d) of this section;

(CC) the NPI number of the billing provider (UB-04, field 56) is required if the billing provider is eligible for an NPI number;

(DD) other provider number (UB-04, field 57) is required if the HMO or preferred provider carrier, before June 17, 2003, required provider numbers and gave notice of that requirement to physicians and providers;

(EE) subscriber's name (UB-04, field 58) is required if shown on the patient's ID card;

(FF) patient's relationship to subscriber (UB-04, field 59) is required;

(GG) patient's or subscriber's certificate number, health claim number, and ID number (UB-04, field 60) are required if shown on the patient's ID card;

(HH) insurance group number (UB-04, field 62) is required if a group number is shown on the patient's ID card;

(II) verification number (UB-04, field 63) is required if services have been verified under §19.1719 of this title. If no verification has been provided, treatment authorization codes (UB-04, field 63) are required when authorization is required and granted;

(JJ) principal diagnosis code (UB-04, field 67) is required;

(KK) diagnosis codes other than principal diagnosis code (UB-04, fields 67A - 67Q) are required if there are diagnoses other than the principal diagnosis;

(LL) admitting diagnosis code (UB-04, field 69) is required;

(MM) principal procedure code (UB-04, field 74) is required if the patient has undergone an inpatient or outpatient surgical procedure;

(NN) other procedure codes (UB-04, fields 74 - 74e) are required as an extension of subparagraph (MM) of this paragraph if additional surgical procedures were performed;

(OO) attending physician NPI number (UB-04, field 76) is required if the attending physician is eligible for an NPI number; and

(PP) attending physician ID (UB-04, field 76, qualifier portion) is required.

(c) Required data elements for dental claims. The data elements described in this subsection are required as indicated and must be completed or provided under the special instructions applicable to the data elements for nonelectronic clean claims filed by dental providers with HMOs.

(1) patient's name is required;

(2) patient's address is required;

(3) patient's date of birth is required;

(4) patient's sex is required;

(5) patient's relationship to subscriber is required;

(6) subscriber's name is required;

(7) subscriber's address is required, but the provider may enter "Same" if the subscriber's address is the same as the patient's address required by paragraph (2) of this subsection;

(8) subscriber's date of birth is required, if shown on the patient's ID card;

(9) subscriber's sex is required;

(10) subscriber's identification number is required, if shown on the patient's ID card;

(11) subscriber's plan or group number is required, if shown on the patient's ID card;

(12) HMO's name is required;

(13) HMO's address is required;

(14) disclosure of any other plan providing dental benefits is required and must include a "No" if the patient is not covered by another plan providing dental benefits. If the patient does have other coverage, the provider must indicate "Yes," and the elements in paragraphs (15) - (20) of this subsection are required unless the provider submits with the claim documented proof that the provider has made a good faith but unsuccessful attempt to obtain from the enrollee any of the information needed to complete the data elements;

(15) other insured's or enrollee's name is required as called for by the response to and requirements of paragraph (14) of this subsection;

(16) other insured's or enrollee's date of birth is required as called for by the response to and requirements of the element in paragraph (14) of this subsection;

(17) other insured's or enrollee's sex is required as called for by the response to and requirements of the element in paragraph (14) of this subsection;

(18) other insured's or enrollee's identification number is required as called for by the response to and requirements of the element in paragraph (14) of this subsection;

(19) patient's relationship to other insured or enrollee is required as called for by the response to and requirements of the element in paragraph (14) of this subsection;

(20) name of other HMO or insurer is required as called for by the response to and requirements of the element in paragraph (14) of this subsection;

(21) verification or preauthorization number is required, if a verification or preauthorization number was issued by an HMO to the provider;

(22) date(s) of service(s) or procedure(s) is required;

(23) area of oral cavity is required, if applicable;

(24) tooth system is required, if applicable;

(25) tooth number(s) or letter(s) are required, if applicable;

(26) tooth surface is required, if applicable;

(27) procedure code for each service is required;

(28) description of procedure for each service is required, if applicable;

(29) charge for each listed service is required;

(30) total charge for the claim is required;

(31) missing teeth information is required, if a prosthesis constitutes part of the claim. A provider that provides information for this element must include the tooth number(s) or letter(s) of the missing teeth;

(32) notification of whether the services were for orthodontic treatment is required. If the services were for orthodontic treatment, the elements in paragraphs (33) and (34) of this subsection are required;

(33) date of orthodontic appliance placement is required, if applicable;

(34) months of orthodontic treatment remaining is required, if applicable;

(35) notification of placement of prosthesis is required, if applicable. If the services included placement of a prosthesis, the element in paragraph (36) of this subsection is required;

(36) date of prior prosthesis placement is required, if applicable;

(37) name of billing provider is required;

(38) address of billing provider is required;

(39) billing provider's provider identification number is required, if applicable;

(40) billing provider's license number is required;

(41) billing provider's social security number or federal tax identification number is required;

(42) billing provider's telephone number is required; and

(43) treating provider's name and license number are required if the treating provider is not the billing provider.

(d) Coordination of benefits or nonduplication of benefits.

(1) If a claim is submitted for covered services or benefits for which coordination of benefits is necessary under §§3.3501 - 3.3511 of this title (relating to Group Coordination of Benefits), a successor rule adopted by the commissioner, or §11.511(1) of this title (relating to Optional Provisions), the amount paid as a covered claim by the primary plan is a required element of a clean claim for purposes of the secondary plan's claim processing and CMS-1500 (02/12), field 29, or CMS-1500 (08/05), field 29, or UB-04, field 54, as applicable, must be completed under subsection (b)(1)(GG), (2)(KK), and (3)(BB) of this section.

(2) If a claim is submitted for covered services or benefits for which nonduplication of benefits under §3.3053 of this title (relating to Non-duplication of Benefits Provision) is an issue, the amounts paid as a covered claim by all other valid coverage is a required element of a clean claim, and CMS-1500 (02/12), field 29, or CMS-1500 (08/05), field 29, or UB-04, field 54, as applicable, must be completed under subsection (b)(1)(GG), (2)(KK), and (3)(BB) of this section.

(3) If a claim is submitted for covered services or benefits and the policy contains a variable deductible provision as set out in §3.3074(a)(4) of this title (relating to Minimum Standards for Major Medical Expense Coverage), the amount paid as a covered claim by all other health insurance coverages, except for amounts paid by individually underwritten and issued hospital confinement indemnity, specified disease, or limited benefit plans of coverage, is a required element of a clean claim, and CMS-1500 (02/12), field 29, or CMS-1500 (08/05), field 29, or UB-04, field 54, as applicable, must be completed under subsection (b)(1)(GG), (2)(KK), and (3)(BB) of this section. Despite these requirements, an MCC may not require a physician or a provider to investigate coordination of other health benefit plan coverage.

(e) Submission of electronic clean claim. A physician or a provider submits an electronic clean claim by using the applicable format that complies with all applicable federal laws related to electronic health care claims, including applicable implementation guides, companion guides, and trading partner agreements.

(f) Coordination of benefits on electronic clean claims. If a physician or a provider submits an electronic clean claim that requires coordination of benefits under §§3.3501 - 3.3511 of this title, a successor rule adopted by the commissioner, or §11.511(1) of this title, the MCC processing the claim as a secondary payor must rely on the primary payor information submitted on the claim by the physician or the provider. The primary payor may submit primary payor information electronically to the secondary payor using the ASC X12N 837 format and in compliance with federal laws related to electronic health care claims, including applicable implementation guides, companion guides, and trading partner agreements.

(g) Format of elements. The elements of a clean claim set out in subsections (b) - (f) of this section, as applicable, must be complete, legible, and accurate.

(h) Additional data elements or information. The submission of data elements or information on or with a claim form by a physician or a provider in addition to those required for a clean claim under this section does not render such claim deficient.

History

Source Note: The provisions of this §21.2803 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective February 14, 2001, 26 TexReg 1341; amended to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 1, 2004, 29 TexReg 1001; amended to be effective July 11, 2007, 32 TexReg 4215; amended to be effective February 16, 2014, 39 TexReg747.

28 Tex. Admin. Code § 21.2804 Requests for Additional Information from Treating Preferred Provider

(a) If necessary to determine whether a claim is payable, an MCC may, within 30 days of receipt of a clean claim, request additional information from the treating preferred provider. The time to request additional information may be extended as allowed by §21.2819(c) of this title (relating to Catastrophic Event). An MCC may make only one request to the submitting treating preferred provider for information under this section.

(b) A request for information under this section must:

(1) be in writing;

(2) be specific to the claim or the claim's related episode of care;

(3) describe with specificity the clinical and other information to be included in the response;

(4) be relevant and necessary for the resolution of the claim; and

(5) be for information that is contained in or in the process of being incorporated into the patient's medical or billing record maintained by the preferred provider.

(c) An MCC that requests information under this section must determine whether the claim is payable and pay or deny the claim, or audit the claim in compliance with §21.2809 of this title (relating to Audit Procedures), on or before the later of:

(1) the 15th day after the date the MCC receives the requested information as required under subsection (e) of this section;

(2) the 15th day after the date the MCC receives a response under subsection (d) of this section; or

(3) the latest date for determining whether the claim is payable under §21.2807 of this title (relating to Effect of Filing a Clean Claim).

(d) If a preferred provider does not possess the requested information, the preferred provider must submit a written response indicating that the preferred provider does not possess the requested information in order to resume the claims payment period as described in subsection (c) of this section.

(e) An MCC must require the preferred provider responding to a request made under this section to either attach a copy of the request to the response or include with the response the name of the patient, the patient identification number, the claim number as provided by the MCC, the date of service, and the name of the treating preferred provider. If the MCC submitted the request for additional information electronically in compliance with federal requirements concerning electronic transactions, the treating preferred provider must submit the response in compliance with those requirements. To resume the claims payment period as described in subsection (c) of this section, the treating preferred provider must deliver the requested information in compliance with this subsection.

(f) Receipt of a request or a response to a request under this section is subject to the provisions of §21.2816 of this title (relating to Date of Receipt).

History

Source Note: The provisions of this §21.2804 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2805 Requests for Additional Information from Other Sources

(a) If an MCC requests additional information from a person other than the preferred provider who submitted the claim, the MCC must provide to the preferred provider who submitted the claim a notice containing the name of the physician, the provider, or the other entity from which the MCC is requesting information. The MCC may not withhold payment beyond the applicable statutory claims payment period pending receipt of information requested under subsection (b) of this section. If, on receiving information requested under this subsection the MCC determines that there was an error in payment of the claim, the MCC may recover any overpayment under §21.2818 of this title (relating to Overpayment of Claims).

(b) An MCC must request that the entity responding to a request made under this section attach a copy of the request to the response. If the request for additional information was submitted electronically in compliance with applicable federal requirements concerning electronic transactions, the responding entity must submit the response in compliance with those requirements, if applicable.

(c) Receipt of a request or a response to a request under this section is subject to the provisions of §21.2816 of this title (relating to Date of Receipt).

History

Source Note: The provisions of this §21.2805 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2806 Claims Filing Deadline

(a) Claim submission deadline. A physician or a provider must submit a claim to an MCC not later than the 95th day after the date the physician or the provider delivers the medical care or health care services for which the claim is made. An MCC and a physician or a provider may agree, by contract, to extend the period for submitting a claim. For a claim submitted by an institutional provider, the 95-day period does not begin until the date of discharge. For a claim for which coordination of benefits applies, the 95-day period does not begin for submission of the claim to the secondary payor until the physician or the provider receives notice of the payment or the denial from the primary payor.

(b) Failure to meet claim submission deadline. If a physician or a provider fails to submit a claim in compliance with this section, the physician or the provider forfeits the right to payment unless the physician or the provider has certified that the failure to timely submit the claim is a result of a catastrophic event in compliance with §21.2819 of this title (relating to Catastrophic Event).

(c) Manner of claim submission. A physician or a provider may submit claims by United States mail, first class; United States mail, return receipt requested; overnight delivery service; electronic transmission; hand delivery; facsimile, if the MCC accepts claims submitted by facsimile; or as otherwise agreed to by the physician or the provider and the MCC. An MCC must accept as proof of timely filing a claim filed in compliance with this subsection or information from another MCC showing that the physician or the provider submitted the claim to the other MCC in compliance with this subsection.

(d) Determining date of submission. Section 21.2816 of this title (relating to Date of Receipt) determines the date an MCC receives a claim.

(e) Duplicate claims.

(1) A physician or a provider may not submit a duplicate claim before the 46th day, or the 31st day if filed electronically, after the date the original claim is received according to the provisions of §21.2816 of this title, except as provided in paragraph (2) of this subsection for prescription benefit claims.

(2) A physician or a provider may not submit a duplicate claim for prescription benefits before the 22nd day, or the 19th day if filed electronically, after the date the original claim is received according to the provisions of §21.2816 of this title.

(3) An MCC that receives a duplicate claim before the applicable date specified in paragraphs (1) and (2) of this subsection is not subject to the provisions of §21.2807 of this title (relating to Effect of Filing a Clean Claim) or §21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period) with respect to the duplicate claim.

History

Source Note: The provisions of this §21.2806 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2807 Effect of Filing a Clean Claim

(a) The statutory claims payment period begins to run on receipt of a clean claim, including a corrected claim that is a clean claim, from a preferred provider, under §21.2816 of this title (relating to Date of Receipt), at the address designated by the MCC, in compliance with §21.2811 of this title (relating to Disclosure of Processing Procedures), whether it be the address of the MCC or any other entity, including a clearinghouse or a repricing company, designated by the MCC to receive claims. The date of claim payment is determined in §21.2810 of this title (relating to Date of Claim Payment).

(b) After receipt of a clean claim and before the expiration of the applicable statutory claims payment period specified in §21.2802 of this title (relating to Definitions), an MCC must:

(1) pay the total amount of the clean claim as specified in the contract between the preferred provider and the MCC;

(2) deny the clean claim in its entirety after a determination that the MCC is not liable for the clean claim and notify the preferred provider in writing why the clean claim will not be paid;

(3) notify the preferred provider in writing that the entire clean claim will be audited and pay 100 percent of the contracted rate on the claim to the preferred provider; or

(4) pay the portion of the clean claim for which the MCC acknowledges liability as specified in the contract between the preferred provider and the MCC, and:

(A) deny the remainder of the clean claim after a determination that the MCC is not liable for the remainder of the clean claim and notify the preferred provider in writing why the remainder of the clean claim will not be paid; or

(B) notify the preferred provider in writing that the remainder of the clean claim will be audited and pay 100 percent of the contracted rate on the unpaid portion of the clean claim to the preferred provider.

(c) An MCC or an MCC's clearinghouse that receives an electronic clean claim is subject to the requirements of this subchapter regardless of whether the claim is submitted together with, or in a batch submission with, a claim that is deficient.

History

Source Note: The provisions of this §21.2807 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2808 Effect of Filing Deficient Claim

If an MCC determines that a submitted claim is deficient, the MCC must notify the preferred provider submitting the claim that the claim is deficient within 45 calendar days of the MCC's receipt of the nonelectronic claim, or within 30 days of receipt of an electronic claim. If an MCC determines that a claim for a prescription benefit is deficient, the MCC must notify the provider that the claim is deficient within 21 calendar days of the MCC's receipt of the nonelectronic claim, or within 18 days of receipt of an electronic claim.

History

Source Note: The provisions of this §21.2808 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2809 Audit Procedures

(a) Notice and payment required. If an MCC is unable to pay or deny a clean claim, in whole or in part, within the applicable statutory claims payment period specified in §21.2802 of this title (relating to Definitions) and intends to audit the claim to determine whether the claim is payable, the MCC must notify the preferred provider that the claim is being audited and pay 100 percent of the contracted rate within the applicable statutory claims payment period.

(b) Failure to provide notice and payment. An MCC that fails to provide notice of the decision to audit the claim and pay 100 percent of the applicable contracted rate subject to copayments and deductibles within the applicable statutory claims payment period, or, if applicable, the extended periods allowed for by §21.2804(c) of this title (relating to Requests for Additional Information from Treating Preferred Provider) or §21.2819(c) of this title (relating to Catastrophic Event), may not make use of the audit procedures set out in this section. A preferred provider that receives less than 100 percent of the contracted rate with a notice of intent to audit has received an underpayment and must notify the MCC within 270 days in compliance with the provisions of §21.2815(f)(2) of this title (relating to Failure to Meet the Statutory Claims Payment Period) to qualify to receive a penalty for the underpaid amount.

(c) Explanation of payment. The MCC must clearly indicate on the explanation of payment that the claim is being audited and that the preferred provider is being paid 100 percent of the contracted rate, subject to completion of the audit. A nonelectronic explanation of payment complies with this requirement if the notice of the audit is clearly and prominently identified.

(d) Audit deadline and requirements. The MCC must complete the audit within 180 calendar days from receipt of the clean claim. The HMO or preferred provider carrier must provide written notice of the results of the audit. The MCC must include in the notice a listing of the specific claims paid and not paid under the audit, as well as a listing of specific claims and amounts for which a refund is due and, for each claim, the basis and specific reasons for requesting a refund. An MCC seeking recovery of any refund under this section must comply with the procedures set out in §21.2818 of this title (relating to Overpayment of Claims).

(e) Requests for information. An MCC may recover the total amount paid on the claim under subsection (a) of this section if a physician or a provider fails to timely provide additional information requested under the requirements of Insurance Code §1301.105 or §843.340(c). Section 21.2816 of this title (relating to Date of Receipt) applies to the submission and receipt of a request for information under this subsection.

(f) Opportunity for appeal. Before seeking a refund for a payment made under this section, an MCC must provide a preferred provider with the opportunity to appeal the request for a refund in compliance with §21.2818 of this title. An MCC may not seek to recover the refund until all of the preferred provider's internal appeal rights under §21.2818 of this title have been exhausted.

(g) No admission of liability. Payments made under this section on a clean claim are not an admission that the MCC acknowledges liability on that claim.

History

Source Note: The provisions of this §21.2809 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective February 14, 2001, 26 TexReg 1341; amended to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2810 Date of Claim Payment

For purposes of determining compliance with the statutory claims payment period, payment is considered to have been paid on the date of:

(1) the postmark, if a claim payment is delivered by the United States Postal Service;

(2) electronic transmission, if a claim payment is made electronically;

(3) delivery of the claim payment to a commercial carrier, such as UPS or Federal Express; or

(4) receipt by the physician or provider, if a claim payment is made other than as provided in paragraph (1), (2), or (3) of this section.

History

Source Note: The provisions of this §21.2810 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective February 14, 2001, 26 TexReg 1341.

28 Tex. Admin. Code § 21.2811 Disclosure of Processing Procedures

(a) In contracts with preferred providers, or in the physician or the provider manual or other document that sets forth the procedure for filing claims, or by any other method mutually agreed on by the contracting parties, an MCC must disclose to its preferred providers:

(1) the address, including a physical address, where claims are to be sent for processing;

(2) the telephone number to which preferred providers' questions and concerns regarding claims may be directed;

(3) any entity, along with its address, including physical address and telephone number, to which the MCC has delegated claim payment functions; and

(4) the mailing address, physical address, and telephone number of any separate claims processing centers for specific types of services.

(b) An MCC must provide no less than 60 calendar days prior written notice of any changes of address for submission of claims, and of any changes of delegation of claims payment functions, to all affected preferred providers.

History

Source Note: The provisions of this §21.2811 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2812 Denial of Clean Claim Prohibited for Change of Address

After a change of claims payment address or a change in delegation of claims payment functions, an MCC may not premise the denial of a clean claim on a preferred provider's failure to file a claim within the claim filing deadline set out in §21.2806 of this title (relating to Claim Filing Deadline), unless the MCC has given timely written notice as required by §21.2811(b) of this title (relating to Disclosure of Processing Procedures).

History

Source Note: The provisions of this §21.2812 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2813 Requirements Applicable to Other Contracting Entities

Any contract or delegation agreement between an MCC and an entity that processes or pays claims, obtains the services of physicians and providers to provide health care services, or issues verifications or preauthorizations may not limit the MCC's authority or responsibility to comply with all applicable statutory and regulatory requirements.

History

Source Note: The provisions of this §21.2813 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2814 Electronic Adjudication of Prescription Benefits

If a prescription benefit does not require authorization by an MCC, the statutory claims payment period must begin on the date of affirmative adjudication of the claim for a prescription benefit.

History

Source Note: The provisions of this §21.2814 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2815 Failure to Meet the Statutory Claims Payment Period

(a) An MCC that determines under §21.2807 of this title (relating to Effect of Filing a Clean Claim) that a claim is payable must pay the contracted rate owed on the claim; and:

(1) if the claim is paid on or before the 45th day after the end of the applicable statutory claims payment period, pay to a noninstitutional preferred provider a penalty in the amount of the lesser of:

(A) 50 percent of the difference between the billed charges and the contracted rate; or

(B) $100,000;

(2) if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay to a noninstitutional preferred provider, a penalty in the amount of the lesser of:

(A) 100 percent of the difference between the billed charges and the contracted rate; or

(B) $200,000;

(3) if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period:

(A) pay to the noninstitutional preferred provider a penalty computed under paragraph (2) of this subsection; and

(B) pay to the Texas Health Insurance Pool until its dissolution, and after its dissolution to Texas Department of Insurance (department) 18 percent annual interest on the penalty amount paid to a noninstitutional preferred provider under paragraph (2) of this subsection. Interest under this paragraph accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the penalty are paid in full to the noninstitutional provider;

(4) if the claim is paid to an institutional preferred provider on or before the 45th day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraph (A) or (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of:

(A) 50 percent of the difference between the billed charges and the contracted rate; or

(B) $100,000;

(5) if the claim is paid to an institutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraph (A) or (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of:

(A) 100 percent of the difference between the billed charges and the contracted rate; or

(B) $200,000; and

(6) if the claim is paid to an institutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period:

(A) pay the penalty amount to the institutional provider and the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department as specified in paragraph (5) of this subsection; and

(B) pay 18 percent annual interest on the penalty amount computed under paragraph (5) of this subsection. Interest under this paragraph accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the institutional provider's portion of the penalty are paid in full. The MCC must pay 50 percent of the interest to the institutional preferred provider and 50 percent of the interest to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department.

(b) The following examples demonstrate how to calculate penalty amounts under subsection (a)(1) - (3) of this section:

(1) if the contracted rate, including any patient financial responsibility, is $10,000 and the billed charges are $15,000, and the MCC pays the claim on or before the 45th day after the end of the applicable statutory claims payment period, the MCC must pay, in addition to the amount owed on the claim, 50 percent of the difference between the billed charges ($15,000) and the contracted rate ($10,000) or $2,500. The basis for the penalty is the difference between the total contracted amount, including any patient financial responsibility, and the noninstitutional provider's billed charges;

(2) if the claim is paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, the MCC must pay, in addition to the contracted rate owed on the claim, 100 percent of the difference between the billed charges and the contracted rate or $5,000; and

(3) if the claim is paid on or after the 91st day after the end of the applicable statutory claims payment period, the MCC must pay to the noninstitutional provider, in addition to the contracted rate owed on the claim, the $5,000 penalty. The MCC must also pay to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department 18 percent annual interest on the $5,000 penalty amount accruing from the statutory claim payment deadline until the date the claim and penalty are paid in full to the noninstitutional provider.

(c) Except as provided by this section, an MCC that determines under §21.2807 of this title that a claim is payable, pays only a portion of the amount of the claim on or before the end of the applicable statutory claims payment period, and pays the balance of the contracted rate owed for the claim after that date must, in addition to paying the contracted amount owed:

(1) if the balance of the claim is paid to a noninstitutional preferred provider on or before the 45th day after the applicable statutory claims payment period, pay to the preferred provider a penalty on the amount not timely paid in the amount of the lesser of:

(A) 50 percent of the underpaid amount; or

(B) $100,000;

(2) if the balance of the claim is paid to a noninstitutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay to the preferred provider a penalty in the amount of the lesser of:

(A) 100 percent of the underpaid amount; or

(B) $200,000;

(3) if the balance of the claim is paid to a noninstitutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period, pay to the preferred provider a penalty computed under paragraph (2) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the penalty are paid in full;

(4) if the balance of the claim is paid to an institutional preferred provider on or before the 45th day after the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraphs (A) and (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph on the amount not timely paid is in the amount of the lesser of:

(A) 50 percent of the underpaid amount; or

(B) $100,000;

(5) if the balance of the claim is paid to an institutional preferred provider on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period, pay a penalty in the amount specified in subparagraphs (A) and (B) of this paragraph. The MCC must pay 50 percent of the penalty to the institutional preferred provider and 50 percent of the penalty to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department. The penalty under this paragraph is in the amount of the lesser of:

(A) 100 percent of the underpaid amount; or

(B) $200,000; and

(6) if the balance of the claim is paid to an institutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period, pay a penalty computed under paragraph (5) of this subsection plus 18 percent annual interest on the penalty amount. Interest under this subsection accrues beginning on the date the MCC was required to pay the claim and ending on the date the claim and the institutional provider's portion of the penalty are paid in full. The MCC must pay 50 percent of the interest to the institutional preferred provider and 50 percent of the interest to the Texas Health Insurance Pool until its dissolution, and after its dissolution to the department.

(d) For the purposes of subsection (c) of this section, the underpaid amount is calculated on the ratio of the balance owed by the MCC to the total contracted rate, including any patient financial responsibility, as applied to an amount equal to the billed charges minus the contracted rate. For example, a claim for a contracted rate to a noninstitutional preferred provider of $1,000 and billed charges of $1,500 is initially underpaid at $600, with the insured owing $200 and the MCC owing a balance of $200. The MCC pays the $200 balance on the 30th day after the end of the applicable statutory claims payment period. The amount the MCC initially underpaid, $200, is 20 percent of the contracted rate. To determine the penalty, the MCC must calculate 20 percent of the billed charges minus the contracted rate, which is $100. This amount represents the underpaid amount for subsection (c)(1) of this section. The MCC must pay, as a penalty, 50 percent of $100, or $50.

(e) For purposes of calculating a penalty when an MCC is a secondary plan MCC for a claim, the contracted rate and billed charges must be reduced in proportion to the percentage of the entire claim that is owed by the secondary plan MCC. The following example illustrates this method: Carrier A pays 80 percent of a claim to a noninstitutional preferred provider for a contracted rate of $1,000 and billed charges of $1,500, leaving $200 unpaid as the patient's financial responsibility. The patient has coverage through Carrier B that is secondary, and Carrier B will owe the $200 balance under the coordination of benefits provision of Carrier B's policy. If Carrier B fails to pay the $200 within the applicable statutory claims payment period, Carrier B will pay a penalty based on the percentage of the claim that it owed. The contracted rate for Carrier B will be $200 (20 percent of Carrier A's $1,000 contracted rate), and the billed charges will be $300 (20 percent of $1,500). Although Carrier B may have a contracted rate with the provider that is different from Carrier A's contracted rate, it is Carrier A's contracted rate that establishes the entire claim amount for the purpose of calculating Carrier B's penalty.

(f) An MCC is not liable for a penalty under this section:

(1) if the failure to pay the claim within the applicable statutory claims payment period is a result of a catastrophic event that the MCC certified according to the provisions of §21.2819 of this title (relating to Catastrophic Event); or

(2) if the claim was paid in compliance with §21.2807 of this title, but for less than the contracted rate, and:

(A) the preferred provider notifies the MCC of the underpayment after the 270th day after the date the underpayment was received; and

(B) the MCC pays the balance of the claim on or before the 30th day after the date the insurer receives the notice of underpayment.

(g) Subsection (f) of this section does not relieve the MCC of the obligation to pay the remaining unpaid contracted rate owed the preferred provider.

(h) An MCC that pays a penalty under this section must clearly indicate on the explanation of payment the amount of the contracted rate paid, the amount of the billed charges as submitted by the physician or the provider, and the amount paid as a penalty. A nonelectronic explanation of payment complies with this requirement if it clearly and prominently identifies the notice of the penalty amount.

History

Source Note: The provisions of this §21.2815 adopted to be effective May 23, 2000, 25 TexReg 4543; amended to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective February 7, 2008, 33 TexReg 928; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2816 Date of Receipt

(a) A written communication, including a claim, referenced under this subchapter is subject to and must comply with this section unless otherwise stated in this subchapter.

(b) An entity subject to these rules may deliver written communications as follows:

(1) submit the communication by United States mail, first class; by United States mail, return receipt requested; or by overnight delivery;

(2) submit the communication electronically and maintain proof of the electronically submitted communication;

(3) if the entity accepts facsimile transmissions for the type of communication being sent, fax the communication and maintain proof of facsimile transmission; or

(4) hand deliver the communication and maintain a copy of the signed receipt acknowledging the hand delivery.

(c) If a communication is submitted by United States mail, first class, the communication is presumed to have been received on the fifth day after the date the communication is submitted, or, if the communication is submitted using overnight delivery service or United States mail return receipt requested, on the date the delivery receipt is signed.

(d) If a communication other than a claim is submitted electronically, the communication is presumed received on the date of submission. Communications electronically submitted after the receiving entity's normal business hours are presumed received the following business day.

(e) If a claim is submitted electronically, the claim is presumed received on the date of the electronic verification of receipt by the MCC or the MCC's clearinghouse. If the MCC's clearinghouse does not provide a confirmation of receipt of the claim or a rejection of the claim within 24 hours of submission by the physician, or the provider, or the physician's or provider's clearinghouse, the physician's or provider's clearinghouse must provide the confirmation. The physician's or provider's clearinghouse must be able to verify that the claim contained the correct payor identification of the entity to receive the claim.

(f) If a communication is faxed, the communication is presumed to have been received on the date of the transmission acknowledgement. Communications faxed after the receiving entity's normal business hours are presumed received the following business day.

(g) If a communication is hand delivered, the communication is presumed to have been delivered on the date the delivery receipt is signed.

(h) Any entity submitting a communication under subsection (b)(1) - (4) of this section may choose to maintain a mail log to provide proof of submission and establish date of receipt. The entity must fax or electronically transmit a copy of the mail log, if used, to the receiving entity at the time of the submission of a communication and include another copy with the relevant communication. The log must identify each separate claim, request for information, or response included in a batch communication. The mail log must include the following information: name of claimant; address of claimant; telephone number of claimant; claimant's federal tax identification number; name of addressee; name of MCC; designated address; date of mailing or hand delivery; subscriber name; subscriber ID number; patient name; date(s) of service or occurrence; delivery method; and claim number, if applicable.

History

Source Note: The provisions of this §21.2816 adopted to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2817 Terms of Contracts

Unless otherwise provided in this subchapter, contracts between MCCs and preferred providers may not include terms that:

(1) extend the statutory or regulatory time frames; or

(2) waive the preferred provider's right to recover reasonable attorney's fees and court costs under Insurance Code §1301.108 and §843.343.

History

Source Note: The provisions of this §21.2817 adopted to be effective October 2, 2001, 26 TexReg 7542; amended to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2818 Overpayment of Claims

(a) An MCC may recover a refund due to overpayment or completion of an audit if:

(1) the MCC notifies the physician or the provider of the overpayment not later than the 180th day after the date of receipt of the overpayment; or

(2) the MCC notifies the physician or the provider of the completion of an audit under §21.2809 of this title (relating to Audit Procedures).

(b) Notification under subsection (a) of this section must:

(1) be in written form and include the specific claims and amounts for which a refund is due, and for each claim, the basis and specific reasons for the request for refund;

(2) include notice of the physician's or provider's right to appeal; and

(3) describe the methods by which the MCC intends to recover the refund.

(c) A physician or a provider may appeal a request for refund by providing written notice of disagreement with the refund request not later than 45 days after receipt of notice described in subsection (a) of this section. On receipt of written notice under this subsection, the MCC must begin the appeal process provided for in the MCC's contract with the physician or the provider.

(d) An MCC may not recover a refund under this section until:

(1) for overpayments, the later of the 45th day after notification under subsection (a)(1) of this section or the exhaustion of any physician or provider appeal rights under subsection (c) of this section, where the physician or the provider has not made arrangements for payment with an MCC; or

(2) for audits, the later of the 30th day after notification under subsection (a)(2) of this section or the exhaustion of any physician or provider appeal rights under subsection (c) of this section, where the physician or the provider has not made arrangements for payment with an MCC.

(e) If an MCC is a secondary payor and pays a portion of a claim that should have been paid by the MCC that is the primary payor, the secondary payor may only recover overpayment from the MCC that is primarily responsible for that amount. If the portion of the claim overpaid by the secondary payor was also paid by the primary payor, the secondary payor may recover the amount of overpayment from the physician or the provider that received the payment under the procedures set out in this section.

(f) Subsections (a) - (e) of this section do not affect an MCC's ability to recover an overpayment in the case of fraud or a material misrepresentation by a physician or a provider.

History

Source Note: The provisions of this §21.2818 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2819 Catastrophic Event

(a) An MCC, a physician, or a provider must notify the Texas Department of Insurance (TDI) if, due to a catastrophic event, it is unable to meet the deadlines in §21.2804 of this title (relating to Requests for Additional Information from Treating Preferred Provider), §21.2806 of this title (relating to Claims Filing Deadline), §21.2807 of this title (relating to Effect of Filing a Clean Claim), §21.2808 of this title (relating to Effect of Filing Deficient Claim), §21.2809 of this title (relating to Audit Procedures), and §21.2815 of this title (relating to Failure to Meet the Statutory Claims Payment Period), as applicable. The entity must send a request required under this section to TDI within five days of the date the catastrophic event began substantially interfering with the normal business operations of the entity, or as specified in a notice published by the commissioner regarding the catastrophic event.

(b) An entity must send the request required under this section to TDI by email to PromptPay@tdi.texas.gov, unless an alternative electronic method is provided by TDI for a specified event. The request must:

(1) be from:

(A) if for a physician or a provider, the physician, provider, office manager, administrator, or their designee; or

(B) if for an MCC, a corporate officer or a corporate officer's designee;

(2) identify the specific nature of the catastrophic event;

(3) identify the first date the catastrophic event caused an interruption in the claims submission or processing activities of the physician, provider, or MCC;

(4) identify the date the physician, provider, or MCC reasonably expects to resume normal business operations;

(5) state how the catastrophic event is substantially interfering with the entity's normal business operations;

(6) include the contact information for the physician, provider, or MCC, including each entity's name, email address, phone number, and:

(A) if for a physician or provider, the national provider identification number; or

(B) if for an MCC, the entity's NAIC number; and

(7) include the physical address of each business or practice location affected by the catastrophic event.

(c) A request under this section tolls the applicable deadlines in §§21.2804, 21.2806, 21.2807, 21.2808, 21.2809, and 21.2815 of this title for the number of days between the date identified in subsection (b)(3) of this section and the earlier of any date specified in a notice published by the commissioner or listed in TDI's approval of a request, or the date the entity is able to resume normal business operations.

(d) If a catastrophic event is expected to continue to substantially interfere with an entity's normal business operations past the date in a notice published by the commissioner or in TDI's approval of an extension request, then the entity must send an additional request meeting the requirements of this section to TDI at least three business days before the expiration of the existing extension. The new request must explain why an additional extension is needed. If an entity resumes normal business operations sooner than the date the extension would otherwise expire, the entity must send a notification to TDI of the date the entity resumed normal business operations, no later than three business days after that date.

(e) TDI will contact the physician, provider, or MCC if more information is needed for any request received. TDI may disapprove a request if the nature of the event does not meet the definition of a catastrophic event that substantially interferes with the entity's normal business operations. TDI may limit a requested extension if the identified duration of interruption to normal business operations is not proportional to the nature of the catastrophic event.

History

Source Note: The provisions of this §21.2819 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747; amended to be effective November 7, 2021, 46 TexReg 7408; amended to be effective March 18, 2024, 49 TexReg 1720.

28 Tex. Admin. Code § 21.2820 Identification Cards

(a) An identification card, or other similar document that includes information necessary to allow enrollees and insureds to access services or coverage under an HMO evidence of coverage, a preferred provider benefit plan, or an exclusive provider benefit plan that is issued by an MCC subject to this subchapter must comply with the requirements of this section.

(b) An identification card or other similar document issued to enrollees or to insureds must include the following information:

(1) the name of the enrollee or the insured;

(2) the first date on which the enrollee or the insured became eligible for benefits under the plan or a toll-free number that a preferred provider may use to obtain such information;

(3) for an exclusive provider benefit plan, the acronym "EPO" or the phrase "Exclusive Provider Organization"; and

(4) the letters "TDI" or "DOI" prominently displayed on the front of the card or the document.

History

Source Note: The provisions of this §21.2820 adopted to be effective February 1, 2004, 29 TexReg 1007; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2821 Reporting Requirements

(a) An MCC must submit to the department quarterly claims payment and related penalty and interest payment information, and information regarding complaints, in compliance with the requirements of this section.

(b) The MCC must submit the report required by subsection (a) of this section to the department on or before:

(1) May 15th for the months of January, February, and March of each year;

(2) August 15th for the months of April, May, and June of each year;

(3) November 15th for the months of July, August, and September of each year; and

(4) February 15th for the months of October, November, and December of each preceding calendar year.

(1) number of claims received from noninstitutional preferred providers;

(2) number of claims received from institutional preferred providers;

(3) number of clean claims received from noninstitutional preferred providers;

(4) number of clean claims received from institutional preferred providers;

(5) number of clean claims from noninstitutional preferred providers paid within the applicable statutory claims payment period;

(6) number of clean claims from noninstitutional preferred providers paid on or before the 45th day after the end of the applicable statutory claims payment period;

(7) number of clean claims from institutional preferred providers paid on or before the 45th day after the end of the applicable statutory claims payment period;

(8) number of clean claims from noninstitutional preferred providers paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period;

(9) number of clean claims from institutional preferred providers paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period;

(10) number of clean claims from noninstitutional preferred providers paid on or after the 91st day after the end of the applicable statutory claims payment period;

(11) number of clean claims from institutional preferred providers paid on or after the 91st day after the end of the applicable statutory claims payment period;

(12) number of clean claims from institutional preferred providers paid within the applicable statutory claims payment period;

(13) number of claims paid under the provisions of §21.2809 of this title (relating to Audit Procedures);

(14) number of requests for verification received under §19.1719 of this title (relating to Verification for Health Maintenance Organizations and Preferred Provider Benefit Plans);

(15) number of verifications issued under §19.1719 of this title;

(16) number of declinations of requests for verifications under §19.1719 of this title;

(17) number of certifications of catastrophic events sent to the department;

(18) number of calendar days business was interrupted for each corresponding catastrophic event;

(19) number of electronically submitted, affirmatively adjudicated pharmacy claims received by the MCC;

(20) number of electronically submitted, affirmatively adjudicated pharmacy claims paid within the 18-day statutory claims payment period;

(21) number of electronically submitted, affirmatively adjudicated pharmacy claims paid on or before the 45th day after the end of the 18-day statutory claims payment period;

(22) number of electronically submitted, affirmatively adjudicated pharmacy claims paid on or after the 46th day and before the 91st day after the end of the 18-day statutory claims payment period; and

(23) number of electronically submitted, affirmatively adjudicated pharmacy claims paid on or after the 91st day after the end of the 18-day statutory claims payment period.

(d) An MCC must annually submit to the department, on or before August 15th, at a minimum, information related to the number of declinations of requests for verifications from July 1st of the prior year to June 30th of the current year, in the following categories:

(1) policy or contract limitations:

(A) premium payment time frames that prevent verifying eligibility for a 30-day period;

(B) policy deductible, specific benefit limitations, or annual benefit maximum;

(D) no coverage or change in membership eligibility, including individuals not eligible, not yet effective, or for whom membership is canceled;

(E) preexisting condition limitations; and

(F) other;

(2) declinations due to an inability to obtain necessary information to verify requested services from the following persons:

(A) the requesting physician or provider;

(B) any other physician or provider; and

(e) In addition to the information reported under subsection (c) of this section, the report required by subsection (a) of this section must also include, at a minimum, the following information:

(1) the total dollar amount of the claims described in each of the following subparagraphs:

(A) clean claims from noninstitutional preferred providers paid on or before the 45th day after the end of the applicable statutory claims payment period;

(B) clean claims from institutional preferred providers paid on or before the 45th day after the end of the applicable statutory claims payment period;

(C) clean claims from noninstitutional preferred providers paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period;

(D) clean claims from institutional preferred providers paid on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period;

(E) clean claims from noninstitutional preferred providers paid on or after the 91st day after the end of the applicable statutory claims payment period; and

(F) clean claims from institutional preferred providers paid on or after the 91st day after the end of the applicable statutory claims payment period;

(2) the dollar amount that the MCC paid late to an institutional preferred provider for each clean claim that the MCC paid to the institutional preferred provider:

(A) on or before the 45th day after the end of the applicable statutory claims payment period;

(B) on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period; and

(3) the dollar amount that the MCC paid late to a noninstitutional preferred provider for each clean claim that the MCC paid to the noninstitutional preferred provider:

(A) on or before the 45th day after the end of the applicable statutory claims payment period;

(B) on or after the 46th day and before the 91st day after the end of the applicable statutory claims payment period; and

(4) the amount of interest, based on the penalty dollar amount, that the MCC paid to the department for each clean claim that the MCC paid to a noninstitutional preferred provider on or after the 91st day after the end of the applicable statutory claims payment period;

(5) for each clean claim, the associated penalty dollar amount as reported under subsection (e), paragraphs (2) and (3) of this section; and

(6) the total number of written complaints received by the MCC for failure to pay a clean claim on time.

(f) The claim-level data required by subsections (e)(2) - (e)(5) must be reported using a unique identifier for each claim, created and maintained solely by the MCC, that is not the claim number. The unique identifier must consist of no more than 15 characters and may not contain any of the identifiers listed in 45 C.F.R. §164.514(b). The MCC must relate the unique identifier back to the claim on request by the department during an examination.

(g) The quarterly report required in subsection (a) of this section must be submitted electronically as specified on the department's website.

(h) Subsections (e), (f), and (g) of this section apply to reports submitted under subsection (a) of this section beginning with the report required to be submitted by May 15, 2022, for the months of January, February, and March of that year.

History

Source Note: The provisions of this §21.2821 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective July 11, 2004, 29 TexReg 6301; amended to be effective January 19, 2006, 31 TexReg 295; amended to be effective February 16, 2014, 39 TexReg 747; amended to be effective June 7, 2021, 46 TexReg 3531.

28 Tex. Admin. Code § 21.2822 Administrative Penalties

(a) An MCC that fails to comply with §21.2807 of this title (relating to Effect of Filing a Clean Claim) for more than 2 percent of clean claims submitted to the MCC is subject to an administrative penalty under Insurance Code §843.342(k) or §1301.137(k), as applicable.

(b) The percentage of the MCC's compliance with §21.2807 of this title must be determined on a quarterly basis and must be separated into a compliance percentage for noninstitutional preferred provider claims and institutional preferred provider claims. Claims paid in compliance with §21.2809 of this title (relating to Audit Procedures) are not included in calculating the compliance percentage under this section.

History

Source Note: The provisions of this §21.2822 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2823 Applicability to Certain Noncontracting Physicians and Providers

The provisions of §19.1719 of this title (relating to Verification for Health Maintenance Organizations and Preferred Provider Benefit Plans) and §21.2807 of this title (relating to Effect of Filing a Clean Claim) apply to a physician or a provider that provides to an enrollee or an insured of an MCC:

(1) care related to an emergency or its attendant episode of care as required by state or federal law; or

(2) specialty or other medical care or health care services at the request of the MCC, the physician, or the provider because the services are not reasonably available from a physician or a provider who is included in the MCC's network.

History

Source Note: The provisions of this §21.2823 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2824 Applicability

The amendments to §§21.2801 - 21.2803, 21.2807 - 21.2809, and 21.2811 - 21.2817 of this title (relating to Scope, Definitions, Elements of a Clean Claim, Effect of Filing a Clean Claim, Effect of Filing Deficient Claim, Audit Procedures, Disclosure of Processing Procedures, Denial of Clean Claim Prohibited for Change of Address, Requirements Applicable to Other Contracting Entities, Electronic Adjudication of Prescription Benefits, Failure to Meet the Statutory Claims Payment Period, Date of Receipt, and Terms of Contracts), and new §§21.2804 - 21.2806, 21.2818, 21.2819, and 21.2821 - 21.2825 of this title (relating to Requests for Additional Information from Treating Preferred Provider, Requests for Additional Information from Other Sources, Claims Filing Deadline, Overpayment of Claims, Catastrophic Event, Reporting Requirements, Administrative Penalties, Applicability to Certain Non-Contracting Physicians and Providers, Applicability, and Severability) apply to services provided, or inpatient services beginning, under contracts entered into or renewed between an MCC and a preferred provider after October 4, 2003, and to services provided or hospital confinements beginning after October 4, 2003, by physicians and providers that do not have a contract with an MCC.

History

Source Note: The provisions of this §21.2824 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2825 Severability

If a court of competent jurisdiction holds that any provision of this subchapter or its application to any person or circumstance is invalid for any reason, the invalidity does not affect other provisions or applications of this subchapter that can be given effect without the invalid provision or application, and to this end the provisions of this subchapter are severable.

History

Source Note: The provisions of this §21.2825 adopted to be effective October 5, 2003, 28 TexReg 8647; amended to be effective February 16, 2014, 39 TexReg 747.

28 Tex. Admin. Code § 21.2826 Waiver

In compliance with Insurance Code §1211.001, the provisions in Insurance Code Chapter 1301, §1301.069, §1301.162, and Subchapters C and C-1; Chapter 1213; Chapter 843, §843.209, §843.319, and Subchapter J; as well as this subchapter and §§3.3703(a)(20), 11.901(a)(11), 19.1718, and 19.1719 of this title (relating to Contracting Requirements, Required Provisions, Preauthorization for Health Maintenance Organizations and Preferred Provider Benefit Plans, and Verification for Health Maintenance Organizations and Preferred Provider Benefit Plans, respectively) are not applicable to Medicaid and Children's Health Insurance Program plans provided by an MCC to persons enrolled in the medical assistance program established under Human Resources Code Chapter 32 or the child health plan established under Health and Safety Code Chapter 62.

History

Source Note: The provisions of this §21.2826 adopted to be effective February 1, 2004, 29 TexReg 1009; amended to be effective February 16, 2014, 39 TexReg 747.

Subchapter U ARRANGEMENTS BETWEEN INDEMNITY CARRIERS AND HMOS FOR POINT-OF-SERVICE COVERAGE

28 Tex. Admin. Code § 21.2901 Definitions

The following words and terms, when used in this subchapter have the following meanings, unless the context clearly indicates otherwise.

(1) Corresponding benefits--Benefits provided under the indemnity portion of a point-of-service (POS) plan, as defined in Insurance Code §1273.001 and §843.108, that conform to the nature and kind of coverage provided to an enrollee under the HMO portion of a point-of-service plan.

(2) Cost containment requirements--Provisions in POS indemnity coverage requiring a specific action, such as the provision of specified information to the plan, that must be taken by an enrollee or by a physician or a provider on behalf of the enrollee in order to avoid the imposition of a specified penalty on the coverage provided under the plan for a proposed service or treatment.

(3) In-plan covered services--Health care services, benefits, and supplies to which an enrollee is entitled under the evidence of coverage issued by an HMO, including emergency services, approved out-of-network services and other authorized referrals.

(4) Non-participating physicians and providers--Physicians and providers that are not part of an HMO delivery network.

(5) Out-of-plan covered benefits--All covered health care services, benefits, and supplies that are not in-plan covered services. Out-of-plan covered benefits include health care services, benefits and supplies obtained from participating physicians and providers under circumstances in which the enrollee fails to comply with the HMO's requirements for obtaining in-plan covered services.

(6) Participating physicians and providers--Physicians and providers that are part of an HMO delivery network.

(7) Point-of-service blended contract plan (POS blended contract plan)--A POS plan evidenced by a single contract, policy, certificate or evidence of coverage that provides a combination of indemnity benefits for which an indemnity carrier is at risk and services are provided by an HMO under a POS plan.

(8) Point-of-service coverage (POS coverage)--Coverage provided under a POS plan.

(9) Point-of-service dual contracts plan (POS dual contracts plan)--A POS plan providing a combination of indemnity benefits and HMO services through separate contracts, one being the contract, policy or certificate offered by an indemnity carrier for which the indemnity carrier is at risk and the other being the evidence of coverage offered by the HMO.

(10) Point-of-service HMO coverage (POS HMO coverage)--Services provided by an HMO in an evidence of coverage under a POS plan.

(11) Point-of-service indemnity coverage (POS indemnity coverage)--Coverage for which an indemnity carrier is at risk under a POS plan for self-referred health care services, benefits and supplies, other than emergency services, selected at the option of the enrollee, from non-participating physicians or providers, as well as services, benefits and supplies from participating physicians or providers under circumstances in which the enrollee fails to comply with the requirements of the HMO providing the POS HMO coverage under a POS plan for obtaining in-plan covered services.

History

Source Note: The provisions of this §21.2901 adopted to be effective July 10, 2001, 26 TexReg 5012; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.2902 Arrangements between Indemnity Carriers and HMOs to Provide Coverage

(a) Written agreement between the HMO and the indemnity carrier. A POS plan offered under this subchapter must be evidenced by a written agreement between the HMO and indemnity carrier that must be filed with the department as a plan document and must provide the following:

(1) the identity of each entity, including the HMO, the indemnity carrier, or any third-party administrator (TPA) that will administer the coverages offered under the POS plan;

(2) all duties of the HMO and indemnity carrier to each other relating to the POS plan issued under this subchapter;

(3) all costs allocable to the HMO or the indemnity carrier relating to the POS plan;

(4) the HMO's network of providers and, if the POS indemnity coverage includes preferred provider benefits, as allowed by Insurance Code Chapter 1301 and applicable rules, the indemnity carrier's list of preferred providers, which may not be identical; and

(5) the respective premium rates for the POS HMO coverage and for the POS indemnity coverage must be derived separately by the HMO and the indemnity carrier and must be separately identified in each POS plan contract; however, the agreement may provide that for a POS plan offered by the entities under this subchapter:

(A) the HMO, the indemnity carrier or a TPA may collect the premiums for both coverages;

(B) the purchaser may issue one payment for both coverages; and

(C) the entity delegated to collect the premium will then disburse the appropriate premium to the other party or parties;

(6) premium rates charged by the HMO must be based on the actuarial value of the POS HMO coverage and may be different from the premium rates charged by the indemnity carrier, which must be based on the actuarial value of the POS indemnity coverage offered by the indemnity carrier;

(7) the HMO and indemnity carrier must maintain separate books and records for the POS plan, including but not limited to information regarding premiums, lists of covered persons, claim payment data, complaint records, maintenance tax records, and all other books and records required to be maintained by law or rule;

(8) neither entity may use the other to perform functions or duties that are its own responsibility by law or rule, including but not limited to making all reports and filings required by law or rule;

(9) the entities may delegate those functions or duties permitted by law or rule to be delegated to another party to perform, including but not limited to contracting with providers, administering claims, and conducting grievance procedures, provided that the delegating entity remains responsible for ensuring that all delegated functions are conducted in compliance with all applicable laws and rules;

(10) the agreement between the indemnity carrier and the HMO may not be canceled or terminated until the coverage for each enrollee in a POS plan issued by both the indemnity carrier and HMO is terminated or canceled according to the provisions of this subchapter; and

(11) the arrangements to be made in the event of insolvency, loss of certification or any other circumstances affecting the ability of the indemnity carrier, the HMO, or both to comply with this subchapter.

(b) Basic requirements. In addition to complying with all of the requirements listed in subsection (a) of this section, a contract creating a POS blended contract plan and contracts that together create a POS dual contracts plan must provide the following:

(1) enrollees may not be required to first use either the POS indemnity coverage or POS HMO coverage;

(2) if the premiums necessary to maintain both the POS HMO coverage and the POS indemnity coverage are not paid, both coverages will be cancelled simultaneously, and any premium the enrollee has remitted to maintain coverage will be returned to the enrollee;

(3) the POS HMO evidence of coverage must include all mandatory HMO coverages and the POS indemnity coverage must contain all mandatory indemnity coverages;

(4) corresponding coverage for a POS plan must include the following:

(A) all mandatory benefit offers required by the Insurance Code that are accepted or rejected by the purchaser must also be accepted or rejected in the same manner with respect to both the POS HMO and the POS indemnity coverage;

(B) benefits under the POS HMO coverage may not be reduced by the benefits received under the POS indemnity coverage; and

(5) if medically necessary covered services, benefits, and supplies are not available through the HMO's participating physicians or providers, the HMO is not relieved of its obligation to provide out-of-network services under Insurance Code Chapter 1271 on the basis that the same services are available to an enrollee through POS indemnity coverage; and

(6) each POS contract must identify the respective premium rates for the POS HMO coverage and for the POS indemnity coverage, as well as the name and address of the entity to whom the premiums must be paid.

(1) list all POS HMO coverage;

(2) specify how services, benefits and supplies under the POS HMO coverage are accessed;

(3) list all POS indemnity coverage;

(4) specify how claims are made for POS indemnity coverage;

(5) disclose all copayments required;

(6) disclose all coinsurance required for POS indemnity coverage, which must never exceed 50% of the total amount to be covered;

(7) disclose all deductibles required;

(8) disclose all precertification requirements for POS indemnity coverage under the plan including any penalties for failing to comply with any precertification or cost containment provisions, provided that any such penalties do not reduce benefits by more than 50% in the aggregate;

(9) disclose how the enrollee may complain about a denial of coverage and appeal an adverse determination rendered concerning the coverage under the POS plan and disclose any rights the enrollee may have to an independent review of an adverse determination under Insurance Code Chapter 4201;

(10) POS indemnity coverage issued to a group must contain provisions that comply with Insurance Code §§1251.111 - 1251.116; and

(11) POS indemnity coverage issued to an individual must contain provisions that comply with Insurance Code §§1201.111 - 1201.217.

(d) POS dual contracts. Contracts comprising a POS dual contract plan must comply with the following:

(1) The contract issued by the indemnity carrier must comply with all applicable requirements for indemnity carriers and must:

(A) list all indemnity coverage;

(B) specify how claims are made;

(D) disclose all applicable deductibles;

(E) disclose all precertification requirements for POS indemnity coverage under the plan, including any penalties for failing to comply with any precertification or cost containment provisions, provided that any such penalties must not reduce benefits more than 50% in the aggregate;

(F) disclose how the enrollee may complain about a denial of coverage and appeal an adverse determination rendered concerning the coverage under the POS indemnity coverage and disclose any rights the enrollee may have to an independent review of an adverse determination under Insurance Code Chapter 4201, if applicable;

(G) POS indemnity coverage issued to a group must contain provisions that comply with Insurance Code §§1251.111 - 1251.116;

(H) POS indemnity coverage issued to an individual must contain provisions that comply with Insurance Code §§1201.111 - 1201.217.

(2) The contract issued by the HMO must comply with all requirements for an HMO evidence of coverage and must:

(A) list all covered services, benefits and supplies;

(B) specify how covered services, benefits and supplies are accessed by the enrollee; and

(e) Filings. All plan documents for a POS plan offered under this subchapter must be submitted to the department in accordance with:

(1) Insurance Code Chapter 1271 and Chapter 11 of this title (relating to Health Maintenance Organizations), including the filing fee requirements; and

(2) Insurance Code Chapter 1701 and Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings), including the filing fee requirements.

History

Source Note: The provisions of this §21.2902 adopted to be effective July 10, 2001, 26 TexReg 5012; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter W COVERAGE FOR ACQUIRED BRAIN INJURY

28 Tex. Admin. Code § 21.3101 General Provisions

(a) Purpose. The purposes of this subchapter are to:

(1) ensure that enrollees in health benefit plans receive coverage for certain services for acquired brain injury and to facilitate the recovery and progressive rehabilitation of survivors of acquired brain injuries to the extent possible to their preinjury condition by making available therapies that are medically necessary, clinically proven, goal-oriented, efficacious, based on individualized treatment plans, and provided by, or ordered and provided under, the direction of a licensed healthcare practitioner with the goal of returning the individual to, or maintaining the individual in, the most integrated living environment appropriate to the individual;

(2) ensure that an issuer provides coverage for services related to an acquired brain injury under the medical and surgical provisions of the health benefit plan; and

(3) require the issuer of a health benefit plan to provide adequate training of individuals responsible for preauthorization of coverage or utilization review under the plan in order to prevent wrongful denial of coverage required under Insurance Code Chapter 1352 and this subchapter, and to avoid confusion of medical and surgical benefits with mental and behavioral health benefits.

(b) Severability. If a court of competent jurisdiction holds that any provision of this subchapter is inconsistent with any statutes of this state, is unconstitutional, or for any other reason is invalid, the remaining provisions remain in full effect. If a court of competent jurisdiction holds that the application of any provision of this subchapter to particular persons, or in particular circumstances, is inconsistent with any statutes of this state, is unconstitutional, or for any other reason is invalid, the provision remains in full effect as to other persons or circumstances.

(c) Applicability. Nothing in this subchapter requires the issuer of a health benefit plan to provide coverage for services that are not: medically necessary; clinically proven; goal-oriented; efficacious; based on an individualized treatment plan; or provided by, or ordered and provided under, the direction of a licensed healthcare practitioner.

History

Source Note: The provisions of this §21.3101 adopted to be effective August 26, 2002, 27 TexReg 7814; amended to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3102 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

(1) Acquired brain injury--A neurological insult to the brain that is not hereditary, congenital, or degenerative. The injury to the brain has occurred after birth and results in a change in neuronal activity, which results in an impairment of physical functioning, sensory processing, cognition, or psychosocial behavior.

(2) Cognitive communication therapy--Services designed to address modalities of comprehension and expression, including understanding, reading, writing, and verbal expression of information.

(3) Cognitive rehabilitation therapy--Services designed to address therapeutic cognitive activities, based on an assessment and understanding of the individual's brain-behavioral deficits.

(4) Community reintegration services--Services that facilitate the continuum of care as an affected individual transitions into the community.

(5) Enrollee--A person covered by a health benefit plan.

(6) Health benefit plan--As described in Insurance Code §1352.001 and §1352.002.

(7) Issuer--Those entities identified in Insurance Code §1352.001.

(8) Neurobehavioral testing--An evaluation of the history of neurological and psychiatric difficulty, current symptoms, current mental status, and premorbid history, including the identification of problematic behavior and the relationship between behavior and the variables that control behavior. This may include interviews of the individual, family, or others.

(9) Neurobehavioral treatment--Interventions that focus on behavior and the variables that control behavior.

(10) Neurocognitive rehabilitation--Services designed to assist cognitively impaired individuals to compensate for deficits in cognitive functioning by rebuilding cognitive skills and/or developing compensatory strategies and techniques.

(11) Neurocognitive therapy--Services designed to address neurological deficits in informational processing and to facilitate the development of higher level cognitive abilities.

(12) Neurofeedback therapy--Services that utilize operant conditioning learning procedures based on electroencephalography (EEG) parameters, and are designed to result in improved mental performance and behavior, and stabilized mood.

(13) Neurophysiological testing--An evaluation of the functions of the nervous system.

(14) Neurophysiological treatment--Interventions that focus on the functions of the nervous system.

(15) Neuropsychological testing--The administering of a comprehensive battery of tests to evaluate neurocognitive, behavioral, and emotional strengths and weaknesses and their relationship to normal and abnormal central nervous system functioning.

(16) Neuropsychological treatment--Interventions designed to improve or minimize deficits in behavioral and cognitive processes.

(17) Outpatient day treatment services--Structured services provided to address deficits in physiological, behavioral, and/or cognitive functions. Such services may be delivered in settings that include transitional residential, community integration, or nonresidential treatment settings.

(18) Post-acute-care treatment services--Services provided after acute-care confinement and/or treatment that are based on an assessment of the individual's physical, behavioral, or cognitive functional deficits, which include a treatment goal of achieving functional changes by reinforcing, strengthening, or reestablishing previously learned patterns of behavior and/or establishing new patterns of cognitive activity or compensatory mechanisms.

(19) Postacute transition services--Services that facilitate the continuum of care beyond the initial neurological insult through rehabilitation and community reintegration.

(20) Psychophysiological testing--An evaluation of the interrelationships between the nervous system and other bodily organs and behavior.

(21) Psychophysiological treatment--Interventions designed to alleviate or decrease abnormal physiological responses of the nervous system due to behavioral or emotional factors.

(22) Remediation--The process or processes of restoring or improving a specific function.

(23) Services--The work of testing, treatment, and providing therapies to an individual with an acquired brain injury.

(24) Therapy--The scheduled remedial treatment provided through direct interaction with the individual to improve a pathological condition resulting from an acquired brain injury.

History

Source Note: The provisions of this §21.3102 adopted to be effective August 26, 2002, 27 TexReg 7814; amended to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3103 Coverage for Services

(a) Required Coverage. Under Insurance Code Chapter 1352, a health benefit plan must include coverage for services specified in §1352.003, including cognitive rehabilitation therapy, cognitive communication therapy, neurocognitive therapy and rehabilitation, neurobehavioral, neurophysiological, neuropsychological, and psychophysiological testing and treatment, neurofeedback therapy, remediation, and postacute transition services, community reintegration services, including outpatient day treatment services, or other post-acute-care treatment services, if such services are necessary as a result of and related to an acquired brain injury.

(b) Medically Necessary and Appropriate.

(1) For purposes of Insurance Code §1352.003 and this subchapter, the word "necessary" means "medically necessary."

(2) Under Insurance Code §1352.007(a), a health benefit plan may not deny benefits for the coverage required under Insurance Code Chapter 1352 based solely on the fact that the treatment or services are provided at a facility other than a hospital. Medically necessary treatment and services for an acquired brain injury must be provided under the coverage required by Chapter 1352 at a facility where appropriate services may be provided, including:

(A) a hospital regulated under the Health and Safety Code Chapter 241, including an acute or postacute rehabilitation hospital; and

(B) an assisted living facility regulated under the Health and Safety Code Chapter 247.

(1) Treatment goals for services required by Insurance Code Chapter 1352 may include the maintenance of functioning or the prevention or slowing of further deterioration.

(2) Under Insurance Code §1352.003(e), a health benefit plan must include coverage for reasonable expenses related to periodic reevaluation of the care of an individual covered under the plan who has incurred an acquired brain injury, been unresponsive to treatment, and becomes responsive to treatment at a later date. As provided in Insurance Code §1352.003(f), factors for determining whether reasonable expenses related to periodic reevaluation of care must be covered may include:

(A) cost;

(B) the time that has expired since the previous evaluation;

(D) changes in technology; and

(E) advances in medicine.

(d) Lifetime Dollar Amount or Number of Visit Limitations, Deductibles, Copayments, and Coinsurance.

(1) A health benefit plan may not subject the coverage required under Insurance Code Chapter 1352 to dollar amount or number of visit limitations, deductibles, copayments, and coinsurance factors that are more restrictive than dollar amount or number of visit limitations, deductibles, copayments, and coinsurance factors applicable to other medical conditions for which the health benefit plan provides coverage.

(2) A health benefit plan that includes annual or lifetime limitations on coverage required under Insurance Code Chapter 1352 is prohibited from including any post-acute-care treatment for the coverage in any annual or lifetime limitation on the number of days of acute-care treatment covered under the plan.

(3) A health benefit plan may not limit the number of days of covered postacute care, including any therapy, treatment, or rehabilitation, testing, remediation, or other service described in Insurance Code §1352.003(a) and (b), or the number of days of covered inpatient care to the extent that the treatment or care is determined to be medically necessary as a result of and related to an acquired brain injury, as provided in Insurance Code §1352.003(c-1) and §1352.006.

(e) Other Coverage Limitations. The coverage for services required under Insurance Code Chapter 1352 may be subject to limitations and exclusions that are generally applicable to other physical illnesses or injuries under the health benefit plan. These types of exclusions or limitations include, but are not limited to, limitations or exclusions for services that may be limited or excluded because they are solely educational in nature, experimental or investigational, not medically necessary, or services for which the enrollee failed to obtain proper preauthorization under the requirements of the health benefit plan.

(f) Permitted Coverage Exclusions. The types of limitations or exclusions permitted under Insurance Code §1352.003(d) do not include limitations or exclusions under a health benefit plan that meet the definition of a therapy or service required under Insurance Code Chapter 1352. For example, if a health benefit plan contains an exclusion for biofeedback therapy, the issuer may deny coverage for biofeedback therapy for any diagnosis except an acquired brain injury diagnosis because biofeedback falls within the definition of "neurofeedback therapy" as defined in §21.3102 of this subchapter, and coverage is required for it under Insurance Code Chapter 1352. However, if the same health benefit plan also contains an exclusion for services that are not authorized prior to service, the issuer may, as allowed by subsection (e) of this subsection, deny coverage based on the prior authorization exclusion.

(g) Permitted Coverage Denials. A health benefit plan may deny coverage or apply a limitation or exclusion in a health benefit plan for a service required under Insurance Code Chapter 1352 if the service is prescribed for a condition that, although a result of, or related to, an acquired brain injury, was sustained in an activity or occurrence for which coverage for other medical conditions under the health benefit plan is limited or excluded (for example, acts of war, participation in a riot, etc.).

(h) Inapplicability of Section to Small Employer Health Benefit Plan. Under Insurance Code §1352.003(h) and §1352.007(b), this section does not apply to a small employer health benefit plan.

History

Source Note: The provisions of this §21.3103 adopted to be effective August 26, 2002, 27 TexReg 7814; amended to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3104 Training

(a) In this section, "preauthorization" has the meaning assigned by Insurance Code §1352.004(a), and includes benefit determinations for proposed medical or health care services.

(b) Each issuer must develop written preauthorization and utilization review policies and procedures for the purpose of identifying services to be covered for acquired brain injury, to be used by any individual responsible for preauthorization of coverage or utilization review. Such policies and procedures must include:

(1) identification of all current Common Procedural Terminology (CPT) codes associated with services for acquired brain injury; and

(2) a means to identify an enrollee initially diagnosed with an acquired brain injury.

(c) Each health benefit plan issuer must ensure that all employees or staff responsible for preauthorization of coverage or utilization review, or any individual performing these processes, receive training to prevent wrongful denial of coverage required under Insurance Code Chapter 1352 and this subchapter, and to avoid confusion of medical and surgical benefits with mental and behavioral health benefits. At a minimum, training must consist of:

(1) identification of services likely to be requested in treating an enrollee with an acquired brain injury;

(2) identification of specific therapies currently used in treating an enrollee with an acquired brain injury;

(3) instruction relating to correctly evaluating requests for services to differentiate between covered medical and surgical benefits versus covered benefits for mental and behavioral health; and

(4) instruction relating to the requirements of Insurance Code Chapter 1352 and this subchapter.

(d) At a minimum, training must be accomplished by attendance at an initial orientation, in-service, or continuing education program relating to acquired brain injuries and their treatments, provided that the training is consistent with the requirements of subsections (a) and (b) of this section.

(1) Documentation and verification of training must be maintained for each employee or staff member responsible for preauthorization of coverage, utilization review, or any individual performing these processes.

(2) On request, any documentation and verification required by paragraph (1) of this subsection must be provided to the issuer with whom the employee, staff member, or individual is employed or contracted.

(3) On request, any documentation and verification required by paragraph (1) of this subsection must be provided to the department for review.

(e) The requirements of this section also apply to any contracted entity of an issuer to the extent the contracted entity is responsible for preauthorization or utilization review.

History

Source Note: The provisions of this §21.3104 adopted to be effective August 26, 2002, 27 TexReg 7814; amended to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3105 Provision of CPT Codes

Each issuer of a health benefit plan subject to Insurance Code Chapter 1352 and this subchapter must, on request from the department, submit to the department the list of CPT codes identified by the issuer under §21.3104(b)(1) of this subchapter.

History

Source Note: The provisions of this §21.3105 adopted to be effective August 26, 2002, 27 TexReg 7814; amended to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3106 Small Employer Health Benefit Plans

(a) Required Coverage. Under Insurance Code §1352.0035(a), a small employer health benefit plan may not exclude coverage for cognitive rehabilitation therapy, cognitive communication therapy, neurocognitive therapy and rehabilitation, neurobehavioral, neurophysiological, neuropsychological, or psychological testing or treatment, neurofeedback therapy, remediation, postacute transition services, or community reintegration services, if the services are medically necessary as a result of and related to an acquired brain injury.

(b) Deductibles, Copayments, Coinsurance, and Lifetime Limitations. Under Insurance Code §1352.0035(b), small employer health benefit plan coverage of acquired brain injury may be subject to deductibles, copayments, coinsurance, or annual or maximum dollar amount or number of visit limits consistent with the deductibles, copayments, coinsurance, or annual or maximum dollar amount or number of visit limits applicable to other medical conditions for which coverage is provided under the small employer health benefit plan.

(c) Maintenance and Prevention; Treatment Goals. Treatment goals for services required by Insurance Code §1352.0035 may include the maintenance of functioning or the prevention or slowing of further deterioration.

(d) Other Coverage Limitations. The coverage for services required by Insurance Code §1352.0035 may be subject to limitations and exclusions that are generally applicable to other physical illnesses or injuries under the health benefit plan. These types of exclusions or limitations include, but are not limited to, limitations or exclusions for services that may be limited or excluded because they are solely educational in nature, experimental or investigational, not medically necessary, or services for which the enrollee failed to obtain proper preauthorization under the requirements of the health benefit plan.

(e) Permitted Coverage Exclusions. The types of limitations or exclusions permitted under subsection (d) of this section do not include limitations or exclusions under a health benefit plan that meet the definition of a therapy or service required under subsection (a) of this section. For example, if a health benefit plan contains an exclusion for biofeedback therapy, the issuer may deny coverage for biofeedback therapy for any diagnosis except an acquired brain injury diagnosis because biofeedback falls within the definition of "neurofeedback therapy" as defined in §21.3102 of this subchapter, and coverage is required for it under subsection (a) of this section. However, if the same health benefit plan also contains an exclusion for services that are not authorized prior to service, the issuer may, as allowed by subsection (d) of this subsection, deny coverage based on the prior authorization exclusion.

(f) Permitted Coverage Denials. A small employer health benefit plan may deny coverage or apply a limitation or exclusion in a health benefit plan for a service required under Insurance Code Chapter 1352 if the service is prescribed for a condition that, although a result of, or related to, an acquired brain injury, was sustained in an activity or occurrence for which coverage for other medical conditions under the health benefit plan is limited or excluded (e.g., acts of war, participation in a riot, etc.).

History

Source Note: The provisions of this §21.3106 adopted to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

28 Tex. Admin. Code § 21.3107 Mandatory Annual Notice to Insureds and Enrollees

(a) Under Insurance Code §1352.005, health benefit plan issuers must provide to insureds and enrollees the notification specified in this subsection. A representation of this notification is as follows:

Attached Graphic

(b) The notice required by Insurance Code §1352.005 and subsection (a) of this section is required by Insurance Code §1352.005 to be issued annually to each insured or enrollee under the plan.

(1) The notice must be provided during the policy term for the plan, and no later than the 60th day after enrollment and renewal.

(2) Except as specified in paragraph (6) of this subsection, a health benefit plan issuer must deliver the notice to insureds or enrollees through the U.S. Postal Service.

(3) The notice may be delivered with other health benefit plan documents that are delivered through the U.S. Postal Service as long as the time frames set forth in paragraph (1) of this subsection are met. For example, the notice may be delivered with the policy, certificate, evidence of coverage, or enrollment or insurance card.

(4) If the notice is provided to the primary insured's or enrollee's last known address, the requirements of this section are satisfied with respect to all insureds or enrollees residing at that address.

(5) If the last known address of a covered spouse or dependent is different than the primary insured's or enrollee's last known address, separate notices are required to be provided to the spouse or the dependent at the spouse's or dependent's last known address.

(6) For group health benefit plans, the notice may be provided to the group master contract holder for distribution to insureds or enrollees if the health benefit plan issuer has an agreement with the group master contract holder that the notice will be delivered in compliance with the timelines specified in paragraph (1) of this subsection; however, the health benefit plan issuer must ensure that the notice is provided to the insureds or enrollees.

(d) As provided in Insurance Code §1352.005(a), this section does not apply to a small employer health benefit plan issuer.

History

Source Note: The provisions of this §21.3107 adopted to be effective February 23, 2009, 34 TexReg 1247; amended to be effective June 7, 2015, 40 TexReg 3179.

Subchapter X EVALUATION OF NETWORK PHYSICIANS AND PROVIDERS

28 Tex. Admin. Code § 21.3201 Texas Standardized Credentialing Application for Physicians, Advanced Practice Nurses, and Physician Assistants

(a) Purpose and applicability. The purpose of this section is to identify the standardized credentialing application form required by Insurance Code §1452.052. Hospitals, health maintenance organizations, preferred provider benefit plans, and preferred provider organizations are required to use this form for credentialing and recredentialing of physicians, advanced practice nurses, and physician assistants.

(b) Definitions. The following words and terms when used in this section have the following meanings.

(1) Advanced practice nurse--An advanced practice nurse as that term is defined by Occupations Code §301.152.

(2) Credentialing--The process of collecting, assessing, and validating qualifications and other relevant information pertaining to a physician or provider to determine eligibility to deliver health care services.

(3) Department--Texas Department of Insurance.

(4) Health maintenance organization--A health maintenance organization as that term is defined by Insurance Code §843.002(14).

(5) Hospital--A licensed public or private institution as defined by Health and Safety Code Chapter 241 and any hospital owned or operated by state government.

(6) Physician--An individual licensed to practice medicine in this state.

(7) Physician assistant--A person who holds a license issued under Occupations Code Chapter 204.

(8) Preferred provider benefit plan--A plan issued by an insurer under Insurance Code Chapter 1301.

(9) Preferred provider organization--An organization contracting with an insurer issuing a preferred provider benefit plan under Insurance Code Chapter 1301 for the purpose of providing a network of preferred providers.

(10) Recredentialing--The periodic process by which:

(A) qualifications of physicians, advanced practice nurses and physician assistants are reassessed;

(B) performance indicators including utilization and quality indicators are evaluated; and

(c) Texas Standardized Credentialing Application. The Texas Standardized Credentialing Application must be used by all hospitals, health maintenance organizations, preferred provider benefit plan insurers, and preferred provider organizations for credentialing and recredentialing of physicians, advanced practice nurses, and physician assistants.

(d) Effective date. The application form is required for initial credentialing or recredentialing that occurs on or after August 1, 2002 for physicians. The application form is required for advanced practice nurses and physician assistants for initial credentialing and recredentialing that occurs on or after May 20, 2003.

(e) Availability. This form may be obtained on the department's website at www.tdi.texas.gov. Reproduction of this form without any changes is allowed.

(f) Electronic submission. The form may be submitted electronically to the credentialing entity in the same format as the hard copy form if the credentialing entity accepts such electronic submissions.

History

Source Note: The provisions of this §21.3201 adopted to be effective July 31, 2002, 27 TexReg 6709; amended to be effective May 15, 2005, 30 TexReg 2678; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.3202 Physician Ranking Requirements

(a) Purpose. In accordance with the Insurance Code §1460.005, this section specifies the standards and guidelines that are necessary to ensure that a health benefit plan issuer, including a subsidiary or affiliate, that utilizes rankings, tiers, ratings or other comparisons of a physician's performance against standards, measures, or other physicians, uses a nationally recognized physician ranking system that emphasizes quality of health care.

(b) Applicability.

(1) This section applies to a health benefit plan issuer as defined in the Insurance Code §1460.001.

(2) This section does not apply to:

(A) a plan specified in the Insurance Code §1460.002; or

(B) a Medicare plan offered pursuant to Title XVIII, Part C and D of the Social Security Act.

(c) General Prohibition. A health benefit plan issuer may not rank, tier or publish physician-specific information unless the standards used by the health benefit plan issuer meet the requirements of this section.

(d) National Quality Forum (NQF) or AQA Alliance. A health benefit plan issuer that uses a physician ranking system is required to follow the endorsed measures, guidelines, and standards of the NQF or the endorsed measures, guidelines, and standards of the AQA Alliance.

(e) National Committee on Quality Assurance (NCQA) and Other Similar National Organizations. If neither the NQF nor the AQA Alliance has an endorsed measure, guideline, and standard regarding an issue, the health benefit plan issuer is required to follow the endorsed measures, guidelines, and standards of the NCQA and other similar national organizations.

(f) Other Guidelines, Quality Standards, and Clinical Evidence. If the NQF, AQA Alliance, or other national organizations have not established standards or guidelines regarding an issue, the health benefit plan issuer is required to follow measures, guidelines, and standards based on other bona fide nationally recognized guidelines, expert-based physician consensus quality standards, or leading objective clinical evidence and scholarship standards adopted by the Commissioner.

(g) Duties of Health Benefit Plan Issuer. In accordance with the Insurance Code §1460.006, a health benefit plan issuer using a comparison program as described in the Insurance Code §1460.003 shall ensure that:

(1) physicians currently in clinical practice are actively involved in the development of the standards used in the health benefit plan issuer's comparison program; and

(2) the measures and methodology used in the health benefit plan issuer's comparison program are transparent and valid.

History

Source Note: The provisions of this §21.3202 adopted to be effective May 17, 2010, 35 TexReg 3839.

Subchapter Y UNFAIR DISCRIMINATION IN COMPENSATION FOR WOMEN'S HEALTH CARE

28 Tex. Admin. Code § 21.3301 Purpose

The purpose of this subchapter is to remedy unequal reimbursements to physicians and providers by requiring issuers to pay physicians and providers of women's health care services the same or similar amounts for covered reproductive health or reproductive oncology services as are paid to physicians and providers who provide covered services exclusively to men or to the general population.

History

Source Note: The provisions of this §21.3301 adopted to be effective May 26, 2002, 27 TexReg 4359.

28 Tex. Admin. Code § 21.3302 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Issuer--Those entities that offer a health benefit plan as identified in Insurance Code §1454.002.

(2) Physician--A person licensed by the Texas State Board of Medical Examiners to practice medicine and surgery in this state.

(3) Provider--A hospital, nurse practitioner, registered nurse, physician assistant, home health aide, nurse midwife, surgery center, or other outpatient care center.

History

Source Note: The provisions of this §21.3302 adopted to be effective May 26, 2002, 27 TexReg 4359; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.3303 Applicability

This subchapter applies to issuers that provide coverage for reproductive health or reproductive oncology services for women and applies to health benefit plans as described in Insurance Code §1454.002 that are delivered, issued for delivery, or renewed on or after January 1, 2002.

History

Source Note: The provisions of this §21.3303 adopted to be effective May 26, 2002, 27 TexReg 4359; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.3304 Reimbursements

(a) An issuer that covers reproductive health or reproductive oncology services provided for women must reimburse physicians or providers for those services at an amount not less than the annual average compensation per hour or unit as would be paid in the service area for the same or similar covered medical, surgical, hospital, pharmaceutical, nursing or other services, as applicable, provided exclusively to men or to the general population.

(b) In determining appropriate reimbursement for reproductive health or reproductive oncology services, the relative value units (RVUs) published by the Centers for Medicare & Medicaid Services (CMS) shall be considered, in addition to any other reimbursement methodologies submitted by the physician or provider included as part of the complaint documentation described in subparagraph (a)(6) of §21.3305 of this subchapter (relating to Complaints), for comparing reimbursements of the same or comparable covered services offered exclusively to men or to the general population.

History

Source Note: The provisions of this §21.3304 adopted to be effective May 26, 2002, 27 TexReg 4359.

28 Tex. Admin. Code § 21.3305 Complaints

(a) A complaint against an issuer filed with the Texas Department of Insurance for alleged violations of Insurance Code §1454.051 must include:

(1) a description of the alleged violation under Insurance Code §1454.051;

(2) the complainant's name, address, telephone number and fax number;

(3) the physician's or provider's name, if different from the complainant;

(4) the name of the issuer;

(5) a statement indicating the complaint applies to a health benefit plan as set forth in §21.3303 of this subchapter (relating to Applicability); and

(6) documentation from the physician or provider that:

(A) identifies the amount reimbursed by the issuer for a covered reproductive health or reproductive oncology service provided to a woman;

(B) identifies the amount of time and resources spent in providing the covered reproductive health or reproductive oncology service;

(C) using objective criteria, identifies the same or comparable covered service provided exclusively to men or to the general population offered by the issuer;

(D) identifies the difference, if any, in the amount of time and resources spent in providing the covered reproductive health or reproductive oncology service and the same or comparable covered service using objective criteria;

(E) identifies the level of expertise needed to provide the covered reproductive health or reproductive oncology service and the same or comparable covered service; and

(F) compares the difference in reimbursements for the covered reproductive health or reproductive oncology service and the same or comparable service from the issuer within the same geographic service area as the physician or the provider performing the service.

(b) Within 10 days of receipt of a complaint, the department will determine whether all the information in subsection (a) of this section has been received.

(1) the complaint will be considered filed on the date of receipt;

(2) the complainant will be notified in writing and the issuer will be contacted for a response; and

(3) the 120-day time period in Insurance Code §1454.107 will commence.

(d) If all the information identified in subsection (a) of this section is not included with the complaint, the complaint will be returned to the complainant with a letter explaining the deficiencies.

(e) If the department believes that the information received by the department under subsection (a) of this section substantiates the alleged unfair discrimination in compensation as contemplated in Insurance Code Chapter 1454 and this subchapter, action will be taken in accordance with Insurance Code Chapter 1454, Subchapter C.

History

Source Note: The provisions of this §21.3305 adopted to be effective May 26, 2002, 27 TexReg 4359; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter Z DATA COLLECTING AND REPORTING RELATING TO MANDATED HEALTH BENEFITS AND MANDATED OFFERS OF COVERAGE

28 Tex. Admin. Code § 21.3401 Purpose and Scope

(a) Purpose of subchapter. The purpose of this subchapter is to require certain health benefit plan issuers to collect and report to the commissioner data on certain mandated health benefits and mandated offers of coverage.

(b) Scope of subchapter. This subchapter applies to a health benefit plan issuer that is subject to Insurance Code §38.251 (concerning Applicability), and that reports on its submission to the National Association of Insurance Commissioners (NAIC), for the year for which it is reporting data, a total of $10 million or more in direct premiums earned in Texas for individual comprehensive health coverage, small group comprehensive health coverage, or large group comprehensive health coverage.

History

Source Note: The provisions of this §21.3401 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3402 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise:

(1) Claims incurred--Paid claims plus amounts held in reserve for claims that have been incurred but have not yet been paid.

(2) Direct premium--The amount of health premiums earned for comprehensive health coverage as reported on an issuer's submission to the NAIC for the year for which it is reporting data.

(3) Health benefit plan--A health benefit plan regulated under Insurance Code Title 8 (concerning Health Insurance and Other Health Coverages), Subtitles A (concerning Health Coverage in General), B (concerning Group Health Coverage), C (concerning Managed Care), D (concerning Provider Plans), and G (concerning Health Coverage Availability).

(4) Mandated benefit--A health benefit listed in §21.3406(b) of this title (relating to Mandates for Which Data Must Be Reported) that must be included in a health benefit plan.

(5) Mandated offer--An offer of coverage listed in §21.3406(c) of this title (relating to Mandates for Which Data Must Be Reported) that must be offered and made available to the holder or sponsor of an individual or group health benefit plan.

(6) Medical billing codes--Standard code sets used to bill for specific medical services, including the Healthcare Common Procedure Coding System (HCPCS) and diagnosis-related group (DRG) system established by the Centers for Medicare and Medicaid Services (CMS), the Current Procedural Terminology (CPT) code set maintained by the American Medical Association, and the International Classification of Diseases (ICD) code sets developed by the World Health Organization. TDI's list of suggested mandated benefit codes is shown on its website, www.tdi.texas.gov.

(7) Member months--The cumulative number of months that all enrollees were covered during the reporting year.

(8) Reporting entity--A health benefit plan issuer or a third-party administrator that performs claims payment services for a health benefit plan issuer to which this subchapter applies.

(9) Reporting year--A one-year period, beginning each January 1 and ending the following December 31, for which health benefit plan issuers must collect the data required by §21.3407 of this title (relating to Reporting of Required Information).

(10) Third-party administrator--An administrator holding a certificate of authority under Insurance Code Chapter 4151 (concerning Third-Party Administrators).

History

Source Note: The provisions of this §21.3402 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective December 11, 2003, 28 TexReg 10946; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3403 Collection of Data Necessary to Provide Report

A reporting entity must collect the data required by this subchapter for each mandated benefit and mandated offer listed in §21.3406 of this title (relating to Mandates for Which Data Must Be Reported) and must prepare and submit a report as required by §21.3407 of this title (relating to Reporting of Required Information).

History

Source Note: The provisions of this §21.3403 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3404 Deadline for Submission of Reports

(a) First reporting date. The first reporting date for the rule will be June 1, 2018, for data collected from January 1, 2017, through December 31, 2017. Subsequent annual reporting will follow this schedule.

(b) Submission of annual reports. A reporting entity must submit the report required by this subchapter no later than June 1 following the reporting year.

History

Source Note: The provisions of this §21.3404 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective December 11, 2003, 28 TexReg 10946; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3405 Exceptions to Required Reporting and Justification for Exceptions

(a) Exceptions for confidential information. A reporting entity is not required to report data that:

(1) could reasonably be used to identify a specific enrollee; or

(2) violates confidentiality requirements of state or federal law or regulations applicable to an enrollee.

(b) Exceptions for certain HMOs. A reporting entity that is an HMO is not required to report data for a particular benefit or coverage if:

(1) the HMO does not directly process the claim because the services are prepaid under a capitated payment arrangement; or

(2) the HMO does not receive complete and accurate encounter data.

(c) Justification for exceptions. A reporting entity that does not report data for a reason listed in subsection (a) of this section must submit, in addition to the report required by this subchapter, an addendum containing:

(1) a general description of the type of data that has been omitted;

(2) the specific provision of each state or federal law or regulation that is the basis for its omission; and

(3) a certification that the data could not be identified in a way that would allow it to be included in the report without violating subsection (a) of this section.

(d) Addendum required. A reporting entity that omits data for a reason listed in subsection (b) of this section must submit, in addition to the report required by this subchapter, an addendum describing the arrangements or circumstances that except the reporting entity from reporting the data as required.

History

Source Note: The provisions of this §21.3405 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3406 Mandates for Which Data Must Be Reported

(a) Data to be reported separately. For all mandated benefits and mandated offers to be reported, a reporting entity must report separately its data for individual, small group, and large group health benefit plans.

(b) Mandated benefits. The following is a list of mandated benefits about which data relating to a health benefit plan must be filed under §21.3403 of this title (relating to Collection of Data Necessary to Provide Report):

(1) Certain Benefits Related to Acquired Brain Injury, Insurance Code §1352.003 and §1352.0035;

(2) Serious Mental Illness, Insurance Code §1355.004;

(3) Autism Spectrum Disorder, Insurance Code §1355.015;

(4) Low-Dose Mammography, Insurance Code §1356.005;

(5) Reconstructive Surgery Following Mastectomy, Insurance Code §1357.004;

(6) Diabetes Equipment, Supplies, and Self-Management Training, Insurance Code §1358.054;

(7) Formulas for Phenylketonuria (PKU) or Other Heritable Diseases, Insurance Code §1359.003;

(8) Temporomandibular Joint (TMJ) Diagnosis and Treatment, Insurance Code §1360.004;

(9) Osteoporosis, Detection and Prevention, Insurance Code §1361.003;

(10) Certain Tests for Detection of Prostate Cancer, Insurance Code §1362.003;

(11) Certain Tests for Detection of Colorectal Cancer, Insurance Code §1363.003;

(12) Childhood Immunizations, Insurance Code §1367.053;

(13) Hearing Screening for Children, Insurance Code §1367.103;

(14) Chemical Dependency Coverage, Insurance Code §§1368.004, 1368.005, and 1368.007;

(15) Prescription Contraceptive Drugs and Devices and Related Services, Insurance Code §1369.104;

(16) Certain Tests for Detection of Human Papillomavirus and Cervical Cancer, Insurance Code §1370.003;

(17) Certain Tests for Detection of Ovarian Cancer, Insurance Code §1370.003;

(18) Certain Tests for Early Detection of Cardiovascular Disease, Insurance Code §1376.003; and

(19) Certain Amino Acid-Based Elemental Formulas, Insurance Code §1377.051.

(c) Mandated offers. The following is a list of mandated offers about which data relating to a health benefit plan must be filed under §21.3403 of this title:

(1) Loss or Impairment of Speech or Hearing, Insurance Code §1365.003;

(2) In Vitro Fertilization Procedures, Insurance Code §1366.003; and

(3) Developmental Delays, Insurance Code §1367.204.

(d) Suggested procedure and diagnosis codes. TDI will provide on its website, www.tdi.texas.gov, suggested procedure and diagnosis codes that may be used in capturing the required data for the report. Regardless of whether a reporting entity uses the suggested codes or some other method of capturing the required information, each reporting entity must maintain information and documentation supporting the accuracy and completeness of its data and the report, including, but not limited to, a list of all procedural and diagnosis codes used in collecting data for the report for five years following the submission of the report on which the information was based. On receiving a request from TDI, a reporting entity must make available the supporting information described in this subsection.

History

Source Note: The provisions of this §21.3406 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3407 Reporting of Required Information

(a) Reporting data. A reporting entity must submit the data required by this section electronically by completing the Mandated Benefits and Mandated Offers Reporting Form found on TDI's website, www.tdi.texas.gov. A reporting entity must use medical billing codes to identify applicable claims for each mandated benefit and mandated offer of coverage.

(b) Issuer's information. For each reporting year, a reporting entity must provide the following information:

(1) the year for which the data is being reported;

(2) the health benefit plan issuer's NAIC Number;

(3) the health benefit plan issuer's name;

(4) the health benefit plan issuer's mailing address;

(5) the issuer type (insurance or HMO);

(6) whether a third-party administrator is submitting the report;

(7) the name, title, direct telephone number, email address, and mailing address of an individual who is responsible for the report;

(8) whether the contact person's email address can be released;

(9) the submission date; and

(10) whether the health benefit plan issuer meets the reporting threshold for each reporting category (individual, small group, and large group).

(c) Reporting for all covered benefits. For each reporting year, a reporting entity must provide, for all covered comprehensive health benefit plans subject to mandated benefits and mandated offers, the following aggregated data:

(1) the total direct premiums earned;

(2) the total dollar amount of the claims incurred; and

(3) the total member months.

(d) Reporting for all mandated benefits and mandated offers. For each reporting year, a reporting entity must provide the following information for each of the mandated benefits and mandated offers listed in §21.3406 of this title (relating to Mandates for Which Data Must Be Reported), aggregated separately by individual, small group, and large group health benefit plans:

(1) the total dollar amount of the claims incurred;

(2) the total number of individual claims incurred; and

(3) the total member months.

(e) Additional reporting data. A reporting entity must provide the following information:

(1) the medical billing codes used to capture the required data for the report;

(2) any additional information the reporting entity believes is pertinent to the data being reported, if applicable; and

(3) the certification on the data collection form.

History

Source Note: The provisions of this §21.3407 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3408 Compliance

A reporting entity that fails to comply with this subchapter will be subject to the sanctions and penalties provided in Insurance Code Chapters 82 (concerning Sanctions), 83 (concerning Emergency Cease and Desist Orders), 84 (concerning Administrative Penalties), 601 (concerning Privacy), and 602 (concerning Privacy of Health Information).

History

Source Note: The provisions of this §21.3408 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

28 Tex. Admin. Code § 21.3409 Severability

If a court holds invalid any section or portion of a section of this subchapter or holds invalid its applicability to any person or circumstance, the remainder of the subchapter or the applicability of the provision to other persons or circumstances will not be affected.

History

Source Note: The provisions of this §21.3409 adopted to be effective December 29, 2002, 27 TexReg 11990; amended to be effective July 6, 2017, 42 TexReg 3384.

Subchapter BB DENTAL CARE BENEFITS

28 Tex. Admin. Code § 21.3601 Scope

This subchapter applies to insurers who issue health insurance policies covering dental care services.

History

Source Note: The provisions of this §21.3601 adopted to be effective June 13, 2004, 29 TexReg 5637.

28 Tex. Admin. Code § 21.3602 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

(1) Contracting dentist--A dentist who, as a contracting provider under a health insurance policy, has entered into a written agreement with an insurer to limit charges for dental care services provided to insureds.

(2) Dental care services--Any services furnished to a person for the purpose of preventing, alleviating, curing, or healing human dental illness or injury.

(3) Dentist--Any person who furnishes dental care services and who is licensed as a dentist by the state of Texas.

(4) Health insurance policy--An individual, group, blanket, or franchise insurance policy or certificate or insurance agreement or rider that is delivered, renewed or issued for delivery in this state and that provides benefits for dental care services.

(5) Insurer--An insurance company that is authorized under the Texas Insurance Code to issue, deliver or issue for delivery in this state health insurance policies or certificates.

(6) Non-contracting dentist--A dentist who is not a contracting dentist as defined in this section.

History

Source Note: The provisions of this §21.3602 adopted to be effective June 13, 2004, 29 TexReg 5637.

28 Tex. Admin. Code § 21.3603 Right to Choose Dentist

A health insurance policy providing benefits for dental care services shall not:

(1) prevent an insured from selecting the dentist of his choice to furnish dental care services offered by the policy or interfere with the selection of any dentist, provided the dental care services are within the scope of the dentist's license; or

(2) authorize any person to regulate, interfere, or intervene in any manner in the diagnosis or treatment rendered by a dentist to a patient for the purpose of providing dental care services, provided the dentist practices within the scope of the dentist's license.

History

Source Note: The provisions of this §21.3603 adopted to be effective June 13, 2004, 29 TexReg 5637.

28 Tex. Admin. Code § 21.3604 Payment of Benefits for Dental Care Services

(a) A health insurance policy shall not provide a different level of payment of benefits or reimbursement, including deductibles, maximums or other cost-sharing provisions, for covered dental care services based on whether the services are provided by a contracting or non-contracting dentist.

(b) A health insurance policy shall define and explain the standard of payment or reimbursement for dental care services. In defining the standard, a policy may express the level of payment or reimbursement as a percentage of charges for dental care services, provided the insurer uses the same percentage for both contracting and non-contracting dentists.

(c) A health insurance policy may, in the same policy, apply the percentage specified in subsection (b) of this section to a contracted rate and a fee expressed as "usual and customary" or words of similar import.

(d) Notwithstanding subsection (a) of this section, an insurer is not required to make payment to a non-contracting dentist that is greater than the actual fee charged for the dental care service.

(e) A health insurance policy must disclose, if applicable, that the benefit offered is limited to the least costly treatment.

(f) A health insurance policy must provide that an insured may assign the right to benefits to a dentist who provides dental care services, in which case, the insurer shall pay benefits directly to the designated dentist, and such payment shall discharge the insurer's obligation to pay those benefits.

History

Source Note: The provisions of this §21.3604 adopted to be effective June 13, 2004, 29 TexReg 5637.

28 Tex. Admin. Code § 21.3605 Applicability

This subchapter is applicable to health insurance policies issued or renewed on or after July 1, 2004.

History

Source Note: The provisions of this §21.3605 adopted to be effective June 13, 2004, 29 TexReg 5637.

28 Tex. Admin. Code § 21.3606 Severability

If any provision of this subchapter or the application thereof to any person or circumstances is for any reason held invalid, the invalidity shall not affect the other provisions or any application of this subchapter that can be given effect without the invalid provisions or application. To this end all provisions of this subchapter are declared severable.

History

Source Note: The provisions of this §21.3606 adopted to be effective June 13, 2004, 29 TexReg 5637.

Subchapter CC ELECTRONIC HEALTH CARE TRANSACTIONS

28 Tex. Admin. Code § 21.3701 Electronic Claims Filing Requirements

(a) The purpose of this section is to implement Insurance Code Chapter 1213. This section applies to a contract between an issuer of a health benefit plan and a health care professional or health care facility (hereinafter referred to as "physicians or providers").

(b) Consistent with Insurance Code Chapter 1213 and this section, the issuer of a health benefit plan may, by contract, require physicians and providers to electronically submit the following:

(1) health care claims or equivalent encounter information;

(2) referral certifications; and/or

(3) any authorization or eligibility transactions.

(c) An issuer of a health benefit plan must give 90 calendar days written notice prior to requiring electronic filing of any information described in subsection (b) of this section.

(d) A contract between the issuer of a health benefit plan and a physician or provider that requires electronic submission of any information described in subsection (b) of this section must include a provision stating that in the event of a systems failure or a catastrophic event as defined in §21.2802 of this title (relating to Definitions) that substantially interferes with the business operations of the physician or provider, the physician or provider may submit non-electronic claims in accordance with the requirements in this subchapter and for the number of calendar days during which substantial interference with business operations occurs as of the date of the catastrophic event or systems failure. A physician or provider must provide written notice of the physician's or provider's intent to submit non-electronic claims to the issuer of the health benefit plan within five calendar days of the catastrophic event or systems failure.

(e) A contract between the issuer of a health benefit plan and a physician or provider that requires electronic submission of the information described in subsection (b) of this section must include a provision allowing for a waiver of the electronic submission requirements in any of the following circumstances:

(1) No method available for the submission of claims in electronic form. This exception applies to situations in which the federal standards for electronic submissions (45 C.F.R., Parts 160 and 162) do not support all of the information necessary to process the claim.

(2) The operation of small physician and provider practices. This exception applies to those physicians and providers with fewer than 10 full-time-equivalent employees, consistent with 42 C.F.R. §424.32(d)(1)(viii).

(3) Demonstrable undue hardship, including fiscal or operational hardship.

(4) Any other special circumstances that would justify a waiver.

(f) The physician's or provider's request for a waiver must be in writing and must include documentation supporting the issuance of a waiver.

(g) Upon receipt of a request for a waiver from a physician or provider, the issuer of a health benefit plan must, within 14 calendar days, issue or deny a waiver.

(h) A waiver or denial of a waiver must be issued in writing to the requesting physician or provider. A written waiver must contain any restrictions, conditions, or limitations related to the waiver. A written denial of a request for a waiver or the issuance of a qualified or conditional waiver must include the reason for the denial or any restrictions, conditions, or limitations, and notice of the physician's or provider's right to appeal the determination to the department.

(i) A physician or provider that is denied a waiver of the electronic submission requirements or granted a waiver with restrictions, conditions, or limitations, may, within 14 calendar days of receipt, appeal the waiver determination. The request for appeal and accompanying documentation must be sent to the Director of MCQA, MC-LH-MCQA, P.O. Box 12030, Austin, Texas 78711-2030 and to the issuer of the health benefit plan. The information must include:

(1) the physician's or provider's initial request for a waiver sent to the issuer of the health benefit plan, including the documentation required by subsection (f) of this section;

(2) the waiver determination received from the issuer of the health benefit plan;

(3) any additional documentation supporting issuance of a waiver or removal of restrictions, conditions or limitations of a granted waiver; and

(4) any additional information necessary for the determination of the appeal.

(j) Upon receipt of notice of a request for appeal under this section, an issuer of a health benefit plan must, within 14 calendar days, submit to the department and to the physician or provider:

(1) documentation supporting the waiver determination issued to the physician or provider; and

(2) any additional information necessary for the determination of the appeal.

(k) The department may request additional information from either party and may request the parties to appear at a hearing. Either party may choose to attend a hearing conducted at the department or participate in a hearing via telephone.

(l) Upon receipt of all information required by subsections (i) and (j) of this section, the Director of Managed Care Quality Assurance will issue a determination within 14 calendar days of the later of the receipt of all necessary information or the conclusion of the hearing.

(m) Either party may request a hearing before the Deputy Commissioner of Life and Health for reconsideration of the Director of the Managed Care Quality Assurance Office's determination. Either party may choose to attend a hearing conducted at the department or participate in a hearing via telephone. A request for reconsideration must be received by the Chief Clerk at MC-GC-CCO, P.O. Box 12030, Austin, Texas 78711-2030 within 14 calendar days of receiving notice of the appeal determination.

(n) The physician or provider requesting or receiving a waiver, appealing a waiver determination, or requesting reconsideration of an appeal determination under this section may elect to file the required electronic transactions in a non-electronic format until a final determination on the request is made.

(o) The issuer of a health benefit plan may not refuse to contract or to renew a contract with a physician or provider based in whole or in part on the physician or provider requesting or receiving a waiver, appealing a waiver determination, or requesting reconsideration of an appeal determination under this section.

(p) This section applies to:

(1) a contract between a physician or provider and an issuer of a health benefit plan that requires electronic submission of the information described in subsection (b) of this section and entered into or renewed on or after September 1, 2004; and

(2) existing contracts to the extent that any contract provisions related to electronic submission of the information described in subsection (b) of this section are made applicable to a physician or provider on or after September 1, 2004.

History

Source Note: The provisions of this §21.3701 adopted to be effective August 29, 2004, 29 TexReg 8357; amended to be effective November 7, 2021, 46 TexReg 7408.

Subchapter DD ELIGIBILITY STATEMENTS

28 Tex. Admin. Code § 21.3801 Scope and Applicability

This subchapter applies to a health benefit plan issuer that enters into or renews a contract with a participating provider on or after January 31, 2006. The provisions of Insurance Code §1274.002 and this subchapter are not applicable to Medicaid and Children's Health Insurance Program (CHIP) plans provided by a health benefit plan issuer to persons enrolled in the medical assistance program established under Chapter 32, Human Resources Code, or the child health plan established under Chapter 62, Health and Safety Code.

History

Source Note: The provisions of this §21.3801 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3802 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Enrollee--An individual who is eligible for coverage under a health benefit plan, including a covered dependent.

(2) Health benefit plan--A group, blanket, or franchise insurance policy, a certificate issued under a group policy, a group hospital service contract, or a group subscriber contract or evidence of coverage issued by a health maintenance organization that provides benefits for health care services. The term does not include:

(A) accident-only or disability income insurance coverage or a combination of accident-only and disability income insurance coverage;

(B) credit-only insurance coverage;

(D) coverage only for a specified disease or illness;

(E) Medicare services under a federal contract;

(F) Medicare supplement, Medicare Select, Medicare Advantage, or any successor policies regulated in accordance with federal law;

(H) coverage that provides only dental or vision benefits;

(I) coverage provided by a single service health maintenance organization;

(J) coverage issued as a supplement to liability insurance;

(K) workers' compensation insurance coverage or similar insurance coverage;

(L) automobile medical payment insurance coverage;

(M) a jointly managed trust authorized under 29 U.S.C. Section 141 et seq. that contains a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 U.S.C. Section 157;

(N) hospital indemnity or other fixed indemnity insurance coverage;

(O) reinsurance contracts issued on a stop-loss, quota-share, or similar basis;

(P) liability insurance coverage, including general liability insurance and automobile liability insurance coverage; or

(Q) coverage that provides other limited benefits specified by federal regulations.

(3) Health benefit plan issuer--Any entity that issues a health benefit plan, including:

(A) a health maintenance organization operating under Insurance Code Chapter 843;

(B) an approved nonprofit health corporation that holds a certificate of authority under Insurance Code Chapter 844;

(C) an insurance company, including an insurance company offering a preferred provider benefit plan under Insurance Code Chapter 1301;

(D) a group hospital service corporation operating under Insurance Code Chapter 842;

(E) a fraternal benefit society operating under Insurance Code Chapter 885; or

(F) a stipulated premium company operating under Insurance Code Chapter 884.

(4) Health care provider--

(A) a person, other than a physician, who is licensed or otherwise authorized to provide a health care service in this state, including:

(i) a pharmacist or dentist; or

(ii) a pharmacy, hospital, or other institution or organization;

(B) a person who is wholly owned or controlled by a provider or by a group of providers who are licensed or otherwise authorized to provide the same health care service; or

(C) a person who is wholly owned or controlled by one or more hospitals and physicians, including a physician-hospital organization.

(5) Participating provider--

(A) a physician or health care provider who contracts with a health benefit plan issuer to provide medical care or health care to enrollees in a health benefit plan; or

(B) a physician or health care provider who accepts and treats a patient on a referral from a physician or provider described by subparagraph (A) of this paragraph.

(6) Physician--

(A) an individual licensed to practice medicine in this state under Subtitle B, Title 3, Occupations Code;

(B) a professional association organized under the Texas Professional Association Law (Business Organizations Code Chapters 301 and 302);

(D) a medical school or medical and dental unit, as defined or described by Education Code §§61.003, 61.501, or 74.601, that employs or contracts with physicians to teach or provide medical services or employs physicians and contracts with physicians in a practice plan; or

(E) another entity wholly owned by physicians.

(7) Primary enrollee--The individual who is the certificate holder and whose employment or other membership status, except for family dependency, is the basis for eligibility under the health benefit plan.

History

Source Note: The provisions of this §21.3802 adopted to be effective January 19, 2006, 31 TexReg 301; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.3803 Method for Requesting Eligibility Statements

(a) Beginning January 31, 2006, a health benefit plan issuer shall, in writing, communicate to each participating provider that enters into or renews a contract with the health benefit plan issuer, the method or methods by which the provider may request an eligibility statement. The health benefit plan issuer may communicate the method or methods a provider may use to request an eligibility statement in existing materials, such as a provider manual, so long as the information is clearly identified and properly captioned with an underlined, bold-faced, or otherwise conspicuous heading.

(b) A health benefit plan issuer may accept a request for an eligibility statement by:

(1) telephone;

(2) Internet website portal; or

(3) other electronic means.

History

Source Note: The provisions of this §21.3803 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3804 Requests for Eligibility Statements

(a) A participating provider may, prior to providing services to an enrollee, request an eligibility statement using a method designated by the health benefit plan issuer.

(b) A request under subsection (a) of this section must include:

(1) the enrollee's full name;

(2) the enrollee's relationship to the primary enrollee; and

(3) the enrollee's birth date.

(c) If the participating provider is seeking information concerning the enrollee's benefits under §21.3805(c)(2)(B) of this subchapter (relating to Requirement to Provide Eligibility Statements), the request must also include a description of the specific type or category of service.

History

Source Note: The provisions of this §21.3804 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3805 Requirement to Provide Eligibility Statements

(a) A health benefit plan issuer shall maintain a system to enable it to provide eligibility statements to participating providers using the information provided under §21.3804(b) and (c) of this subchapter (relating to Requests for Eligibility Statements). On receipt of a request for an eligibility statement that complies with §21.3804 of this subchapter, a health benefit plan issuer must provide an eligibility statement to the participating provider allowing the provider access to the information at the time of the enrollee's visit.

(b) If the health benefit plan issuer is unable to provide an eligibility statement, the health benefit plan issuer shall notify the participating provider such that the provider receives the response at the time of the patient's visit and may contemporaneously request additional information to assist the health benefit plan issuer in providing an eligibility statement. A health benefit plan issuer may not use a request for additional information to satisfy the requirement that the issuer maintain a system to provide eligibility statements using the information described in §21.3804(b) and (c) of this subchapter.

(c) An eligibility statement provided under this section shall include information that will enable the participating provider to determine at the time of the request:

(1) the enrollee's identification and eligibility under the health benefit plan, including:

(A) the enrollee's identification number assigned by the health benefit plan issuer;

(B) the name of the enrollee and, if necessary to obtain payment for services to be provided to the patient, the names of any affected covered dependents;

(C) the birth date of the enrollee and, if necessary to obtain payment for services to be provided to the patient, the birth dates of any affected covered dependents;

(D) the gender of the enrollee and, if necessary to obtain payment for services to be provided to the patient, the gender of any affected covered dependent; and

(E) the current enrollment and eligibility status of the enrollee under the health benefit plan;

(2) the enrollee's benefits, including:

(A) excluded benefits or limitations, both group and individual; and

(B) if the participating provider included the information required by §21.3804(c) of this subchapter, whether the specific type or category of service is a benefit under the policy; and

(3) the enrollee's financial information, including:

(A) copayment requirements, if any; and

(B) the unmet amount of the enrollee's deductible or enrollee financial responsibility.

(d) The information required to be provided under this section is limited to information in the possession of and maintained by the health benefit plan issuer in the ordinary course of business at the time of a request for an eligibility statement.

(e) A health benefit plan issuer may not directly or indirectly charge a participating provider for an eligibility statement.

History

Source Note: The provisions of this §21.3805 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3806 Privacy Issues

A health benefit plan issuer may refuse to provide all or part of an eligibility statement if applicable state or federal law prevents the disclosure of an enrollee's or dependent's personally identifiable information to the requesting participating provider. A health benefit plan issuer that refuses to provide all or part of an eligibility statement shall provide a response to the request for an eligibility statement indicating the reason(s) for refusing to provide the information. Within three days of refusing to provide an eligibility statement under this section, a health benefit plan issuer shall provide a written response indicating the reason(s) for refusing to provide the information and describing the particular state or federal law provision(s) that prevent the disclosure.

History

Source Note: The provisions of this §21.3806 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3807 Effect of Eligibility Statement

An eligibility statement provided under this subchapter is not a verification under §19.1724 of this title (relating to Verification).

History

Source Note: The provisions of this §21.3807 adopted to be effective January 19, 2006, 31 TexReg 301.

28 Tex. Admin. Code § 21.3808 Severability

History

Source Note: The provisions of this §21.3808 adopted to be effective January 19, 2006, 31 TexReg 301.

Subchapter EE HIGH DEDUCTIBLE HEALTH PLANS

28 Tex. Admin. Code § 21.3901 Purpose

The purpose of this subchapter is to implement Texas Insurance Code Chapter 1653 which prohibits construing state statutes to prevent a health carrier from applying deductible or copayment requirements to benefits, including state-mandated health benefits, in order to qualify health benefit plans as high deductible health plans.

History

Source Note: The provisions of this §21.3901 adopted to be effective May 31, 2006, 31 TexReg 4439.

28 Tex. Admin. Code § 21.3902 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Accident and health insurance policy--Any policy or contract that provides insurance against loss resulting from:

(A) accidental bodily injury;

(B) accidental death; or

(2) Evidence of coverage--Any certificate, agreement, or contract, including a blended contract, that:

(A) is issued to an enrollee; and

(B) states the coverage to which the enrollee is entitled.

(3) Health benefit Plan--An accident and health insurance policy or evidence of coverage.

(4) Health carrier--A health insurer or health maintenance organization.

(5) Health insurer--Includes:

(A) a life, health, and accident insurance company;

(B) a mutual insurance company, including:

(i) a mutual life insurance company; and

(ii) a mutual assessment life insurance company;

(D) a mutual or natural premium life or casualty insurance company;

(E) a general casualty company;

(F) a Lloyd's plan;

(G) a reciprocal or interinsurance exchange;

(H) a nonprofit hospital, medical, or dental service corporation, including a corporation operating under Texas Insurance Code Chapter 842; and

(I) another insurer issuing an accident and health insurance policy and required by law to be authorized by the department.

(6) Health maintenance organization--A person who arranges for or provides to enrollees on a prepaid basis a health care plan, a limited health care service plan, or a single health care service plan.

(7) High deductible health benefit plan--Has the meaning assigned by Section 223, Internal Revenue Code of 1986.

(8) Preventive care--Has the meaning assigned by Section 223(c)(2)(C), Internal Revenue Code of 1986.

History

Source Note: The provisions of this §21.3902 adopted to be effective May 31, 2006, 31 TexReg 4439.

28 Tex. Admin. Code § 21.3903 Applicability of State Mandates to High Deductible Health Plans

Subject to §21.3904(a) of this subchapter (relating to Exemption from State Mandates for High Deductible Health Plans), a high deductible health plan is subject to any law mandating a minimum health insurance benefit or reimbursement.

History

Source Note: The provisions of this §21.3903 adopted to be effective May 31, 2006, 31 TexReg 4439.

28 Tex. Admin. Code § 21.3904 Exemption from State Mandates for High Deductible Health Plans

(a) No provision of the Insurance Code may be construed to prevent a health carrier or other entity issuing a health benefit plan from applying deductible or copayment requirements to benefits and services, including state-mandated health benefits and services, in order to qualify the health benefit plan as a high deductible health plan.

(b) Subsection (a) of this section does not apply to a preventive care benefit or service. Example: Insurance Code §§1367.053 and 1367.054 require a health benefit plan to cover certain childhood immunizations without making them subject to a deductible, copayment, or coinsurance requirement. While compliance with this Texas statute would ostensibly prevent a health benefit plan from qualifying as a high deductible health plan, since IRS Bulletin 2004-15 classifies the benefit as preventive care, the safe harbor of 29 U.S.C. §228 allows a high-deductible health plan to cover it on a first-dollar basis. Accordingly, compliance with §§1367.053 and 1367.054 does not prevent a health benefit plan from qualifying as a high deductible health plan, and Insurance Code §1653.002 thus would not except a health carrier issuing a high deductible health plan from compliance with the state mandate.

History

Source Note: The provisions of this §21.3904 adopted to be effective May 31, 2006, 31 TexReg 4439.

28 Tex. Admin. Code § 21.3905 Applicability

This subchapter applies to coverage under a health benefit plan issued, amended to be effective, renewed, or issued for delivery on or after January 1, 2006.

History

Source Note: The provisions of this §21.3905 adopted to be effective May 31, 2006, 31 TexReg 4439.

Subchapter FF OBLIGATION TO CONTINUE PREMIUM PAYMENT AND COVERAGE AFTER NOTICE OF LOST GROUP ELIGIBILITY

28 Tex. Admin. Code § 21.4001 Purpose and Scope

This subchapter applies to group preferred provider benefit plans and evidences of coverage issued pursuant to Insurance Code Chapters 843 and 1301. The subchapter outlines a group policyholder's or group contract holder's liability for premium payment, and a health carrier's obligation to provide coverage, from the time an individual insured or enrollee loses eligibility for coverage as part of a particular group until the end of the month in which the group policyholder or group contract holder notifies the health carrier that the individual is no longer part of the group eligible for coverage. The subchapter does not impose requirements on a group policyholder, a group contract holder, or a health carrier when an entire group ends coverage under a health benefit plan or when an individual terminates coverage while remaining part of the group eligible for coverage.

History

Source Note: The provisions of this §21.4001 adopted to be effective July 17, 2006, 31 TexReg 5628.

28 Tex. Admin. Code § 21.4002 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Evidence of coverage--Any certificate, agreement, or contract, including a blended contract, that:

(A) is issued to an enrollee; and

(B) states the coverage to which the enrollee is entitled.

(2) Health benefit plan--A preferred provider benefit plan or health maintenance organization evidence of coverage or other group health benefit plan issued by a health maintenance organization.

(3) Health carrier--A health insurer issuing a preferred provider benefit plan, as defined in Insurance Code §1301.001(9), or a health maintenance organization, as defined in Insurance Code §843.002(14).

(4) Health insurer--A life, health, and accident insurance company, health and accident insurance company, health insurance company, or other company operating under Insurance Code Chapters 841, 842, 884, 885, 982, or 1501 that is authorized to issue, deliver, or issue for delivery in this state health insurance policies.

(5) Health maintenance organization--A person who arranges for or provides to enrollees on a prepaid basis a health care plan, a limited health care service plan, or a single health care service plan as defined in Insurance Code §843.002(14).

(6) Month--The period from a date in a calendar month to the corresponding date in the succeeding calendar month, as provided in the group policy or contract. If the succeeding calendar month does not have a corresponding date, the period ends on the last day of the succeeding calendar month.

(7) Preferred provider benefit plan--Any policy or contract issued pursuant to Insurance Code Chapter 1301.

History

Source Note: The provisions of this §21.4002 adopted to be effective July 17, 2006, 31 TexReg 5628.

28 Tex. Admin. Code § 21.4003 Group Policyholder, Group Contract Holder, and Carrier Premium Payment and Coverage Obligations

(a) Liability for Premiums for Individuals Who Are No Longer Part of the Covered Group.

(1) A contract between a health carrier and a group policyholder or group contract holder under a health benefit plan contract must provide that:

(A) the group policyholder or group contract holder, as described in the Insurance Code Chapter 1251, is liable for an individual insured's or enrollee's premiums from the time the individual is no longer part of the group eligible for coverage under the plan until the end of the month in which the group policyholder or group contract holder notifies the health carrier that the individual is no longer part of the group eligible for coverage under the plan; and

(B) the individual remains covered under the plan until the end of the period specified in subparagraph (A) of this paragraph.

(2) If a health carrier agrees that a group policyholder or group contract holder may tender the notice referenced in paragraph (1)(A) of this subsection by mail, the date the group policyholder or group contract holder tenders the notice to the postal service is the date the group policyholder or group contract holder notifies the health carrier. Evidence of written notifications may be maintained in a mail log in order to provide proof of submission and establish date of receipt.

(3) If an individual or an enrollee ceases to be a part of the group eligible for coverage within seven calendar days prior to the end of the month, the group policyholder or group contract holder will be deemed to have notified the health carrier in the month in which the individual or enrollee ceases to be part of the group if the health carrier receives notification within the first three days of the subsequent month, not including Saturdays, Sundays, and legal holidays. If the notification is sent during this additional three-day notification period, the policyholder or contract holder must transmit the notification of an individual's loss of eligibility during the previous month by a method:

(A) agreed upon by the group policyholder or group contract holder and the carrier, and

(B) that provides immediate written notification, such as an internet portal, electronic mail, or telefacsimile. Immediate written notification sent via electronic means will be presumed received on the date it is submitted; hand-delivered notification will be presumed received on the date the delivery receipt is signed.

(4) A group policyholder or group contract holder is not liable for an individual insured's or an enrollee's premiums, and a health carrier is not obligated to continue coverage, under subsection (a) of this section if a group policyholder or group contract holder notifies a health carrier that an individual will no longer be part of the group eligible for coverage at least 30 days prior to the date the individual will no longer be part of the group eligible for coverage.

(5) A group policyholder or group contract holder is not liable for an individual insured's or an enrollee's premiums, and a health carrier is not obligated to continue coverage, under subsection (a) of this section if the individual elects to terminate coverage under the plan and obtains coverage under a successor health benefit plan that takes effect at any time after termination of group eligibility and before the end of the coverage and premium payment period required by the Insurance Code §843.210 and §1301.0061 and subsection (a) of this section. A health carrier may require a group policyholder or group contract holder seeking to avoid payment of additional premium for an individual no longer part of the group eligible for coverage to verify the successor coverage and to agree to be responsible for payment of premium if the individual's successor health benefit plan does not cover the individual from the termination of the health carrier's coverage until the end of the month in which the group policyholder or group contract holder notifies the health carrier that the individual is no longer part of the group eligible for coverage. In addition, the group policyholder or group contract holder and the health carrier remain responsible for compliance with the Insurance Code §843.210 and §1301.0061 if the individual's successor health benefit plan does not cover the individual from the termination of the health carrier's coverage until the end of the month in which the group policyholder or group contract holder notifies the health carrier that the individual is no longer part of the group eligible for coverage.

(6) A group policyholder or group contract holder is not liable for an individual insured's or an enrollee's premiums, and a health carrier is not obligated to continue coverage, under subsection (a) of this section under coverage a health carrier extends to an individual in compliance with 29 U.S.C. §1161 et seq. (COBRA), the Insurance Code Chapter 1251 Subchapter F, or any other federal or state continuation of coverage requirement that allows an individual insured or enrollee, upon termination of eligibility from a group, to pay premium and extend the period of group health benefit plan coverage after the individual has left employment or otherwise no longer qualifies as a member of the group.

(7) A group policyholder or group contract holder is not liable for an individual insured's or an enrollee's premiums, and a health carrier is not obligated to continue coverage, under subsection (a) of this section if a group policyholder or group contract holder does not contribute to the payment of any individual insured's or enrollee's premium.

(8) A group policyholder or group contract holder is not liable for an individual insured's or an enrollee's premiums, and a health carrier is not obligated to continue coverage, under subsection (a) of this section in the event of the individual insured's or enrollee's death after the later of the date of the individual insured's or enrollee's:

(A) death; or

(B) receipt of the last covered service under the plan.

(b) Notice of Liability for Premiums for Individuals Who Are No Longer Part of the Covered Group.

(1) A health carrier that enters into or renews a health benefit plan contract with a group policyholder or group contract holder shall provide written notice to the group policyholder or group contract holder that the group policyholder or group contract holder is liable for premiums for an individual who is no longer part of the group until the health carrier receives notification of termination of the individual's eligibility for coverage as follows:

(A) as required by the Insurance Code §843.210(c) and §1301.0061(c), if the health carrier charges the group policyholder or group contract holder on a monthly basis for premiums, the health carrier shall provide the notice in each monthly statement sent to the group policyholder or group contract holder;

(B) if the health carrier charges the group policyholder or group contract holder on other than a monthly basis for premiums, the health carrier shall provide the written notice at inception or renewal of the policy or contract, as applicable, and, thereafter, at the time of each billing, and

(C) as required by the Insurance Code §843.210(d) and §1301.0061(d), the notice required under subparagraphs (A) and (B) of this paragraph must include a description of methods preferred by the health carrier for notification by a group policyholder or group contract holder of an individual's termination from coverage eligibility.

(2) Notwithstanding the requirements of paragraph (1) of this subsection, a health carrier is not required to send notice of group policyholder or contract holder liability for premiums more often than monthly.

History

Source Note: The provisions of this §21.4003 adopted to be effective July 17, 2006, 31 TexReg 5628; amended to be effective June 13, 2010, 35 TexReg 5039.

Subchapter GG HEALTH CARE QUALITY ASSURANCE PRESUMED COMPLIANCE

28 Tex. Admin. Code § 21.4101 Purpose and Scope

(a) General purpose. This subchapter implements provisions of the Health Care Quality Assurance Act (Act), codified as the Insurance Code Chapter 847. The general purpose of the Act and this subchapter is to provide standards for the appropriate recognition of accreditation of health benefit plan issuers by nationally recognized accreditation organizations. These standards will facilitate increased affordability of health benefit plan coverage for consumers and eliminate the duplication of effort by both health benefit plan issuers and state agencies.

(b) Applicability. This subchapter applies to an entity that:

(1) issues a health benefit plan as defined in the Insurance Code §847.003(2);

(2) holds a license or certificate of authority issued by the commissioner; and

(3) provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including those entities listed in the Insurance Code §847.004.

History

Source Note: The provisions of this §21.4101 adopted to be effective May 3, 2007, 32 TexReg 2364.

28 Tex. Admin. Code § 21.4102 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Accreditation report--The final report a national accreditation organization issues that contains a detailed analysis of the accreditation survey results including the scores of the health benefit plan issuer and the extent to which the health benefit plan issuer meets or exceeds, or fails to meet, the required accreditation standards.

(2) Delegated entity--Has the meaning assigned by the Insurance Code §1272.001(a)(1).

(3) Delegated third party--Has the meaning assigned by the Insurance Code §1272.001(a)(3).

(4) Health benefit plan--Has the meaning assigned by the Insurance Code §847.003(2).

(5) National accreditation organization--Has the meaning assigned by the Insurance Code §847.003(3).

(6) Nonconditional accreditation--Final accreditation survey results that a national accreditation organization issues stating an outcome that meets or exceeds the requirements of the national accreditation organization in a particular category and that is not conditional or contingent upon the health benefit plan issuer correcting any deficiencies.

(7) Summary results--A synopsis of the final accreditation survey results, excluding numeric scores and percentages that a national accreditation organization issues that provides the accreditation outcome results of the health benefit plan issuer, such as in report card format, but that is not a complete and detailed report of the accreditation survey results.

(8) Utilization review agent--Has the meaning assigned by the Insurance Code §4201.002(14).

History

Source Note: The provisions of this §21.4102 adopted to be effective May 3, 2007, 32 TexReg 2364.

28 Tex. Admin. Code § 21.4103 Presumed Compliance

(a) Health benefit plan issuer presumed compliance. Pursuant to the Insurance Code §847.005(a), a health benefit plan issuer shall be presumed to be in compliance with state statutory and regulatory requirements if:

(1) a national accreditation organization has issued the health benefit plan issuer nonconditional accreditation applicable to its operations within the state of Texas; and

(2) the national accreditation organization's accreditation requirements are the same, substantially similar to, or more stringent than the department's statutory and regulatory requirements.

(b) Examination. Pursuant to the Insurance Code §847.007(a), in conducting an examination of a health benefit plan issuer, the commissioner:

(1) shall accept the accreditation report submitted by the health benefit plan issuer as evidence of the health benefit plan issuer's compliance with the processes and standards for which the issuer has received nonconditional accreditation; and

(2) may adopt relevant findings from a health benefit plan issuer's accreditation report in the examination report if the accreditation report complies with applicable state and federal requirements regarding the nondisclosure of proprietary and confidential information and personal health information.

(1) apply to any process or standard of a health benefit plan issuer that is not covered as part of the health benefit plan issuer's accreditation; or

(2) set minimum quality standards.

(d) Submission of report. Pursuant to the Insurance Code §847.006(a), at the department's request, the health benefit plan issuer seeking presumed compliance pursuant to subsection (b) of this section must provide to the department a complete copy of the accreditation report issued by the national accreditation organization.

(e) Loss of nonconditional accreditation. If a health benefit plan issuer loses nonconditional accreditation, the health benefit plan issuer shall report this change in accreditation status to the department not later than the 30th day following the date the national accreditation organization notifies the health benefit plan issuer of the loss of nonconditional accreditation status. A health benefit plan issuer will be subject to immediate examination by the department if it loses its nonconditional accreditation status.

History

Source Note: The provisions of this §21.4103 adopted to be effective May 3, 2007, 32 TexReg 2364.

28 Tex. Admin. Code § 21.4104 Health Benefit Plan Issuers Contracting with Delegated Entities, Delegated Third Parties, and Utilization Review Agents

(a) Delegations by health benefit plan issuers with nonconditional accreditation. If a health benefit plan issuer with nonconditional accreditation has delegated one or more functions to a delegated entity, delegated third party, or utilization review agent, those delegated functions shall be presumed in compliance with state statutory and regulatory requirements if:

(1) the delegation was in place at the time of the national accreditation organization's review of the health benefit plan issuer; or

(2) the delegated entity, delegated third party, or utilization review agent has received nonconditional accreditation or certification by a national accreditation organization.

(b) Delegations by health benefit plan issuers without nonconditional accreditation. If a health benefit plan issuer without nonconditional accreditation has delegated one or more functions to a delegated entity, delegated third party, or utilization review agent, those delegated functions shall be presumed in compliance with state statutory and regulatory requirements if the delegated entity, delegated third party, or utilization review agent has received nonconditional accreditation or certification by a national accreditation organization that the department recognizes, as set forth in §21.4103 of this subchapter (relating to Presumed Compliance).

History

Source Note: The provisions of this §21.4104 adopted to be effective May 3, 2007, 32 TexReg 2364.

28 Tex. Admin. Code § 21.4105 Department Monitoring and Analysis of National Accreditation Organization Standards

(a) Analysis of standards. The department will compare statutory and regulatory requirements of the department for health benefit plan issuers with the standards of national accreditation organizations. The standards of national accreditation organizations that are the same as, substantially similar to, or more stringent than the department's statutory and regulatory requirements will be identified and used to determine the presumption of compliance of health benefit plan issuers.

(b) Monitoring schedule. The department will, at least annually, monitor and analyze updates and amendments made to accreditation standards by national accreditation organizations to ensure that those standards remain the same as, substantially similar to, or more stringent than the statutory and regulatory requirements of the department.

(c) Posting of standards. The department will post a table on its website that contains a summary of its comparison of national accreditation organization standards with the statutory and regulatory requirements of the department and indicates which portions of the examination process the department will presume compliance for accredited entities. The presumed compliance table listing the summary of the comparison of national accreditation standards and department statutory and regulatory requirements may be obtained from:

(1) the department's website at www.tdi.texas.gov; or

(2) the Financial Regulation Division, MC-FRD, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.

(d) Updates to standards. The department will update the table of standards posted on its website on at least an annual basis, as necessary, to reflect changes made to national accreditation organization standards.

History

Source Note: The provisions of this §21.4105 adopted to be effective May 3, 2007, 32 TexReg 2364; amended to be effective November 7, 2021, 46 TexReg 7408.

28 Tex. Admin. Code § 21.4106 Confidentiality

(a) Accreditation reports. Pursuant to the Insurance Code §847.006(b), accreditation reports submitted to the department are proprietary and confidential under the Government Code Chapter 552 and are not subject to subpoena.

(b) Summary results. Pursuant to the Insurance Code §847.006(c) the summary results of a national accreditation organization are not proprietary information and are subject to public disclosure under the Government Code Chapter 552.

History

Source Note: The provisions of this §21.4106 adopted to be effective May 3, 2007, 32 TexReg 2364.

Subchapter HH MILITARY SALES PRACTICES

28 Tex. Admin. Code § 21.4201 Purpose

The purpose of this subchapter is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified insurance sales practices to be false, misleading, deceptive or unfair.

History

Source Note: The provisions of this §21.4201 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4202 Scope

(a) This subchapter shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance agent to an active duty service member of the United States Armed Forces.

(b) This subchapter shall apply only to acts or practices committed on or after the effective date of this subchapter.

(c) This subchapter shall apply in addition to all other statutes and Texas Department of Insurance rules concerning the marketing and solicitation of insurance products, as well as statutes and Texas Department of Insurance rules concerning unfair or deceptive trade practices, and shall not be interpreted to limit those statutes and rules in any manner. The commissioner may discipline or enforce an action against an insurer or insurance agent under this subchapter in addition to any other statute or Texas Department of Insurance rule authorizing disciplinary or enforcement action.

History

Source Note: The provisions of this §21.4202 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4203 Exemptions

(a) This subchapter shall not apply to solicitations or sales involving:

(1) credit insurance;

(2) group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance agent or where the contract or certificate does not include a side fund;

(3) an application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

(4) individual stand-alone health policies, including disability income policies;

(5) contracts offered by Servicemembers' Group Life Insurance (SGLI) or Veterans' Group Life Insurance (VGLI), as authorized by 38 U.S.C. Section 1965 et seq.;

(6) life insurance contracts offered through or by a non-profit military association, qualifying under Section 501(c)(23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer; or

(7) contracts used to fund:

(A) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(B) a plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the IRC, as amended, if established or maintained by an employer;

(C) a government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC;

(D) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(E) settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(F) prearranged funeral contracts.

(b) Nothing herein shall be construed to abrogate the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 - PERSONAL COMMERCIAL SOLICITATION ON DOD INSTALLATIONS or successor directive.

(c) For purposes of this subchapter, general advertisements, direct mail and internet marketing shall not constitute "solicitation." Telephone marketing shall not constitute "solicitation" provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Provided however, nothing in this subsection shall be construed to exempt an insurer or insurance agent from this subchapter in any in-person, face-to-face meeting established as a result of the "solicitation" exemptions identified in this subsection.

History

Source Note: The provisions of this §21.4203 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4204 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Active duty--Full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

(2) Department of Defense (DoD) Personnel--All active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the U.S. Department of Defense.

(3) Door to door--A solicitation or sales method whereby an insurance agent proceeds randomly or selectively from household to household without prior specific appointment.

(4) General advertisement--An advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance, or the promotion of the insurer or the insurance agent.

(5) Insurer--An insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

(6) Insurance agent--A person required to be licensed under Chapter 4054, Insurance Code, and includes a person required to be licensed in accordance with §4054.051(7).

(7) Known or knowingly--Depending on its use in this subchapter, the insurance agent or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

(A) is a service member; or

(B) is a service member with a pay grade of E-4 or below.

(8) Life insurance--Insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income and unless otherwise specifically excluded, includes individually issued annuities.

(9) Military installation--Any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

(10) MyPay--A Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

(11) Service member--Any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.

(12) Side fund--A fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include:

(A) accumulated value or cash value or secondary guarantees provided by a universal life policy;

(B) cash values provided by a whole life policy which are subject to the provisions of the Insurance Code Chapter 1105; or

(i) contains only premiums paid in advance which accumulate at interest;

(ii) imposes no penalty for withdrawal;

(iii) does not permit funding beyond future required premiums;

(iv) is not marketed or intended as an investment; and

(v) does not carry a commission, either paid or calculated.

(13) Specific appointment--A prearranged appointment agreed upon by both parties and definite as to place and time.

(14) United States Armed Forces--All components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.

History

Source Note: The provisions of this §21.4204 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4205 Practices Declared False, Misleading, Deceptive or Unfair on a Military Installation

(a) The following acts or practices when committed on a military installation by an insurer or insurance agent with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive or unfair:

(1) knowingly soliciting the purchase of any life insurance product "door to door" or without first establishing a specific appointment for each meeting with the prospective purchaser;

(2) soliciting service members in a group or mass audience or in a captive audience where attendance is not voluntary;

(3) knowingly making appointments with or soliciting service members during their normally scheduled duty hours;

(4) making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation;

(5) soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander's designee;

(6) posting unauthorized bulletins, notices or advertisements;

(7) failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885; or

(8) knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer's files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives or rules of the DoD or any branch of the Armed Forces.

(b) The following acts or practices when committed on a military installation by an insurer or insurance agent constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

(1) using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members; or

(2) using an insurance agent to participate in any United States Armed Forces sponsored education or orientation program.

History

Source Note: The provisions of this §21.4205 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4206 Practices Declared Deceptive or Unfair Regardless of Location

(a) The following acts or practices by an insurer or insurance agent constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

(1) submitting, processing or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member's pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service member's "MyPay" account or other similar internet or electronic medium for such purposes. This subsection does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form;

(2) knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this section, a formal banking relationship is established when the depository institution:

(A) provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. Section 4301 et seq. and the regulations promulgated thereunder; and

(B) permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums;

(3) employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member's Leave and Earnings Statement or equivalent or successor form as "Savings" or "Checking" and where the service member has no formal banking relationship as defined in subsection (a)(2) of this section;

(4) entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship;

(5) using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel;

(6) offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting or facilitating the solicitation or sale of life insurance to another service member;

(7) knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited; or

(8) advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

(b) The following acts or practices by an insurer or insurance agent lead to confusion regarding source, sponsorship, approval or affiliation and are declared to be false, misleading, deceptive or unfair:

(1) Making any representation, or using any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance agent or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance agent titles include, but are not limited to, "Battalion Insurance Counselor," "Unit Insurance Advisor," "Servicemen's Group Life Insurance Conversion Consultant" or "Veteran's Benefits Counselor." Nothing in this subchapter shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include, but are not limited to, Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS).

(2) Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance agent or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, or the United States Armed Forces.

(c) The following acts or practices by an insurer or insurance agent lead to confusion regarding premiums, costs or investment returns and are declared to be false, misleading, deceptive or unfair:

(1) using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid; or

(2) excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product "costs nothing" or is "free."

(d) The following acts or practices by an insurer or insurance agent regarding SGLI or VGLI are declared to be false, misleading, deceptive or unfair:

(1) making any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive;

(2) making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading or deceptive; or

(3) suggesting, recommending or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member's separation from the United States Armed Forces.

(e) The following acts or practices by an insurer and/or insurance agent regarding disclosure are declared to be false, misleading, deceptive or unfair:

(1) deploying, using or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance agent, if that is the case, for the purpose of soliciting the purchase of life insurance;

(2) failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser;

(3) excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance;

(4) failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by Section 10 of the "Military Personnel Financial Services Protection Act," Pub. L. No. 109-290, p.16; or

(5) excluding individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:

(A) an explanation of any free look period with instructions on how to cancel if a policy is issued; and

(B) either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of Chapter 21, Subchapter N of this title (relating to Life Insurance Illustrations), shall be deemed sufficient to meet this requirement for a written disclosure.

(f) The following acts or practices by an insurer or insurance agent with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive or unfair:

(1) excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable;

(2) offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance.

(A) "Insurable needs" are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant's estate and/or survivors or dependents.

(B) "Other military survivor benefits" include, but are not limited to: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents' Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.

(3) excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

(A) unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

(B) unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided for at least each policy year from one to 10 and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and

(4) excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with the requirements of the Insurance Code Chapter 1105; or

(5) selling any life insurance product to an individual known to be a service member that excludes coverage if the insured's death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

History

Source Note: The provisions of this §21.4206 adopted to be effective January 1, 2008, 32 TexReg 5704.

28 Tex. Admin. Code § 21.4207 Severability

History

Source Note: The provisions of this §21.4207 adopted to be effective January 1, 2008, 32 TexReg 5704.

Subchapter II RECOGNITION OF NATIONAL CERTIFYING ORGANIZATIONS FOR NONINVASIVE SCREENING OF CARDIOVASCULAR DISEASE

28 Tex. Admin. Code § 21.4301 Recognition

The Commissioner recognizes the following organizations pursuant to Insurance Code §1376.003(b), which requires the Commissioner to recognize national organizations that certify laboratories to perform the screening tests for atherosclerosis and abnormal artery structure and function that are set forth in the Insurance Code §1376.003(b)(1) and (2):

(1) the American College of Radiology;

(2) the Intersocietal Accreditation Commission; or

(3) a certifying organization recognized by the Centers for Medicare and Medicaid Services.

History

Source Note: The provisions of this §21.4301 adopted to be effective May 11, 2010, 35 TexReg 3646.

Subchapter KK HEALTH CARE REIMBURSEMENT RATE INFORMATION

28 Tex. Admin. Code § 21.4501 Purpose

The purpose of this subchapter is to:

(1) prescribe the data collection and submission requirements for the submission of data related to health care reimbursement rates by health benefit plan issuers;

(2) specify the definitions necessary to implement Insurance Code Chapter 38, Subchapter H; and

(3) facilitate TDI's publication of aggregate health care reimbursement rate information derived from the data collected under this subchapter.

History

Source Note: The provisions of this §21.4501 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4502 Applicability

(a) This subchapter applies to the issuer of an applicable health benefit plan as defined in §21.4503 of this title and as provided by Insurance Code §38.353(a):

(1) an insurance company;

(2) a group hospital service corporation;

(3) a fraternal benefit society;

(4) a stipulated premium company;

(5) a reciprocal or interinsurance exchange; and

(6) a health maintenance organization (HMO).

(b) As provided in Insurance Code §38.353(b), and notwithstanding any provision in Insurance Code Chapters 1551, 1575, 1579, or 1601 or any other law, this subchapter applies to:

(1) a basic coverage plan under Insurance Code Chapter 1551;

(2) a basic plan under Insurance Code Chapter 1575;

(3) a primary care coverage plan under Insurance Code Chapter 1579; and

(4) basic coverage under Insurance Code Chapter 1601.

(1) standard health benefit plans provided under Insurance Code Chapter 1507;

(2) childrens' health benefit plans provided under Insurance Code Chapter 1502;

(3) health care benefits provided under a workers' compensation insurance policy;

(4) Medicaid managed care programs operated under Government Code Chapter 533;

(5) Medicaid programs operated under Human Resources Code Chapter 32; or

(6) the state child health plan operated under Health and Safety Code Chapters 62 or 63.

(d) Notwithstanding subsection (c)(1) of this section, an applicable health benefit plan issuer is not prohibited from electively including data concerning reimbursement rates for standard health benefit plans provided under Insurance Code Chapter 1507 in its submission of the report required in §21.4506 of this title for purposes of administrative convenience. Data from all other plans identified in subsection (c) of this section must be excluded from the report.

(e) An applicable health benefit plan issuer with fewer than 20,000 covered lives in comprehensive health coverage as reported on Part 1 of the National Association of Insurance Commissioners Supplemental Health Care Exhibit as of the end of the applicable reporting period is not required to submit a report under §21.4506.

(f) Under §38.353(e), this subchapter does not apply to:

(1) a Medicare supplemental policy as defined by §1882(g)(1), Social Security Act (42 U.S.C. §1395ss); or

(2) a Medicare Advantage plan offered under a contract with the federal Centers for Medicare and Medicaid Services.

History

Source Note: The provisions of this §21.4502 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4503 Definitions

The following words and terms when used in this subchapter have the following meanings unless the context clearly indicates otherwise:

(1) Allowed amount--The amount that the applicable health benefit plan issuer allows as payment for a health care service or group of services, including amounts for which a patient is responsible due to deductibles, copayments, or coinsurance.

(2) Ambulatory surgical center--A facility licensed under Health and Safety Code Chapter 243.

(3) Applicable health benefit plan--A group health benefit plan as specified in Insurance Code §38.352 and §38.353, which is a preferred provider benefit plan as defined by Insurance Code §1301.001, including an exclusive provider benefit plan consistent with Insurance Code §1301.0042, or an evidence of coverage for a health care plan that provides basic health care services as defined by Insurance Code §843.002, or a state employee health plan under Insurance Code Chapters 1551, 1575, 1579, and 1601. The term does not include an HMO plan providing routine dental or vision services as a single health care service plan or a preferred provider benefit plan providing routine vision services as a single health care service plan.

(4) Billed amount--The amount charged for health care services on a claim submitted by a provider.

(5) Facility claims--Any claim for health care services provided by a facility as defined in §3.3702 of this title.

(6) Freestanding emergency medical care facility--A freestanding emergency medical care facility required to be licensed under Health and Safety Code Chapter 254.

(7) Geographic region--A three-digit ZIP code representing the collection of ZIP codes that share the same first three digits. For purposes of data submitted under this subchapter, a geographic region must be located in Texas, in full or in part.

(8) Imaging claims--Claims for radiological services furnished in a provider office, outpatient hospital, or other outpatient environment.

(9) Inpatient procedure claims--Claims for health care services furnished in a hospital, as defined by Insurance Code §1301.001, to a patient who is formally admitted.

(10) In-network claims--Claims filed with an applicable health benefit plan for health care treatment, services, or supplies furnished by a provider contracted as an in-network or preferred provider under the plan.

(11) Medical billing codes--Standard code sets used to bill for specific medical services, including the Healthcare Common Procedure Coding System (HCPCS) and Diagnosis-Related Group (DRG) system established by the Centers for Medicare and Medicaid Services (CMS), the Current Procedural Terminology (CPT) code set maintained by the American Medical Association, and the International Classification of Diseases (ICD) code sets developed by the World Health Organization.

(12) Out-of-network claims--Claims filed with an applicable health benefit plan for health care treatment, services, or supplies furnished by a provider that is not an in-network provider or preferred provider under the plan. Claims paid on an out-of-network basis are considered out-of-network regardless of whether the provider is reimbursed based on an agreed on rate.

(13) Outpatient facility procedure claims--Claims for health care services furnished in an ambulatory surgical center or a hospital, as defined by Insurance Code §1301.001, to a patient who is not formally admitted.

(14) Place-of-service code--A health care claim code where "place of service" refers to the type of entity where services were rendered, as specified by a two-digit place-of-service code on a professional health care claim consistent with the ASC X12N standard for electronic transactions. Place-of-service codes are maintained by CMS.

(15) Primary plan--As defined in §3.3503(17) of this title.

(16) Professional claims--Any claim for health care services provided by a physician or provider that is not an institutional provider, as defined in Insurance Code §1301.001.

(17) Provider--Any physician, practitioner, institutional provider, or other person or organization that furnishes health care services and is licensed or otherwise authorized to practice in this state.

(18) Reporting period--The 12-month interval of time for which a plan or applicable health benefit plan issuer must submit data each year, beginning each January 1 and ending the following December 31.

(19) TDI--Texas Department of Insurance.

History

Source Note: The provisions of this §21.4503 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4504 Geographic Regions

Issuers must report data collected under this subchapter according to the three-digit ZIP code in which the health care service was provided. Publication of health care reimbursement rate information derived from the data collected under this subchapter may be aggregated by TDI across broader geographic regions if necessary to ensure, consistent with Insurance Code §38.357, that the published information does not reveal the name of any provider or health benefit plan issuer.

History

Source Note: The provisions of this §21.4504 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4505 Requirement to Collect Data

(a) Each applicable health benefit plan issuer and plan specified in §21.4502(a) and (b) of this title must annually collect the data specified under §21.4507 of this title and prepare and file data as provided.

(b) Data elements and health care services specified under §21.4507(b) and (c) of this title must be collected with respect to medical billing codes specified by TDI. The current set of medical billing codes will be available to issuers in a Microsoft Excel template on TDI's website at www.tdi.texas.gov/health/reimbursement.html. If there are changes in standard medical practice or medical billing codes that necessitate changing the identified billing codes for the services specified in §21.4507(c) of this title, the billing codes on TDI's website will be updated and affected carriers notified, but in no event will these updates occur more often than annually or less than six months before the May 1 reporting deadline.

History

Source Note: The provisions of this §21.4505 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4506 Submission of Report

(a) Not later than May 1 of each year, each plan and applicable health benefit plan issuer identified in §21.4502(a) and (b) of this title, or the plan or issuer's authorized agent must submit to TDI the data required under §21.4507 of this title.

(b) The data filed under this section is required to be filed electronically as a Microsoft Excel form and emailed to TDI at ReimbursementRates@tdi.texas.gov, or uploaded by secure File Transfer Protocol (FTP).

(c) Issuers may meet the requirements of this subchapter by submitting data using the Microsoft Excel template available on TDI's website at www.tdi.texas.gov/health/reimbursement.html.

History

Source Note: The provisions of this §21.4506 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

28 Tex. Admin. Code § 21.4507 Data Required

(a) Applicable health benefit plans must include the following information as a cover page to each report:

(1) reporting period;

(2) company or plan name;

(3) NAIC number, issued to the company by the National Association of Insurance Commissioners;

(4) TDI company number;

(5) contact information for the person designated to discuss the report with TDI staff, including name, telephone number, and email address;

(6) an indication of whether the report is for insurance business or HMO business, consistent with subsection (d) of this section, or "NA" for reports limited to self-insured business;

(7) an indication of whether the report includes data on self-insured business, including data for certain governmental plans required to report under Insurance Code Chapter 38, Subchapter H; and

(8) a certification that the information provided is a full and true statement of the data required under this subchapter.

(b) Applicable health benefit plans must submit the following data, for in-network and out-of-network claims, for each geographic region, as defined by §21.4503 of this title, for each service identified in subsection (c) of this section, with data columns reported in the following order:

(1) network status of the claims data, using "IN" to indicate in-network claims and "OON" to indicate out-of-network claims;

(2) geographic region of the claims data, using the three-digit ZIP code to indicate the applicable region;

(3) total number of unique claim identifiers for all claim types;

(4) for inpatient procedure facility claims, the total number of discharges;

(5) total amount billed;

(6) total amount allowed;

(7) mean amount billed;

(8) mean amount allowed;

(9) median amount billed;

(10) median amount allowed;

(11) maximum amount billed;

(12) maximum amount allowed;

(13) minimum amount billed;

(14) minimum amount allowed;

(15) lower quartile amount billed, representing the 25th percentile of all amounts billed;

(16) lower quartile amount allowed, representing the 25th percentile of all amounts allowed;

(17) upper quartile amount billed, representing the 75th percentile of all amounts billed; and

(18) upper quartile amount allowed, representing the 75 percentile of all amounts allowed.

(c) Data elements identified in subsection (b) of this section must be reported in the specified manner for each category of services in this subsection.

(1) Inpatient procedures. Data on inpatient procedure claims must be reported separately for facility claims and professional claims.

(A) Facility claims data must be grouped by discharge and only include claims that occurred in an inpatient hospital.

(B) Professional claims data must be reported separately for surgical claims, radiology claims, pathology claims, and anesthesia claims, as applicable, and only include claims for which the place-of-service code indicates inpatient hospital.

(C) Inpatient procedure claims data must be reported for the full cost of any claim, or the full cost of any discharge for facility claims, for the following services, using the medical billing codes specified by TDI consistent with §21.4505(b) of this title:

(i) cesarean section delivery;

(ii) vaginal delivery;

(iii) hysterectomy;

(iv) hip replacement;

(v) knee replacement;

(vi) coronary artery bypass grafting;

(vii) back surgery - laminectomy;

(viii) inguinal hernia repair, unilateral;

(ix) inguinal hernia repair, bilateral;

(x) laparoscopic cholecystectomy; and

(xi) appendectomy.

(2) Outpatient procedures. Data on outpatient facility procedure claims must be reported separately for facility claims and professional claims.

(A) Facility claims data must be reported separately for outpatient procedures that occurred in an outpatient hospital and those that occurred in an ambulatory surgical center or freestanding clinic.

(B) Professional claims data must only include claims for which the place-of-service code indicates outpatient hospital or ambulatory surgical center, and be reported separately for surgical claims, radiology claims, pathology claims, and anesthesia claims, as applicable.

(C) Data on outpatient procedure facility claims must be reported for the full cost of any claim for the following services, using the medical billing codes specified by TDI, consistent with §21.4505(b) of this title:

(i) back surgery - laminectomy

(ii) inguinal hernia repair, unilateral;

(iii) inguinal hernia repair, bilateral;

(iv) laparoscopic cholecystectomy;

(v) appendectomy;

(vi) tonsillectomy;

(vii) adenoidectomy;

(viii) tonsillectomy and adenoidectomy;

(ix) tympanostomy;

(x) colonoscopy;

(xi) upper GI endoscopy;

(xii) upper and lower GI endoscopy;

(xiii) bunion repair;

(xiv) ACL repair;

(xv) rotator cuff repair;

(xvi) cardiac catheterization, left;

(xvii) cardiac catheterization, right;

(xviii) cardiac catheterization, left and right; and

(xix) percutaneous transluminal coronary angioplasty.

(3) Emergency services. Data on emergency room visits must be reported only for professional claims for which the place of service is an emergency room or outpatient hospital. An emergency room includes both a hospital emergency room and a freestanding emergency medical care facility. Data must be reported at the claim-line level for the following types of emergency room visits, using the medical billing codes specified by TDI, consistent with §21.4505(b) of this title:

(A) emergency department visit, self-limited or minor problem;

(B) emergency department visit, low to moderately severe problem;

(D) emergency department visit, problem of high severity; and

(E) emergency department visit, problem with significant threat to life or function.

(4) Imaging services. Data on imaging services must be reported separately for facility claims and professional claims.

(A) Facility claims must include only claims that occurred in an outpatient hospital, and for which units of service equal one.

(B) Professional claims must be reported only for claims for which units of service equal one. Data must be reported separately for claims billed with CPT code modifiers for the professional component (26), technical component (TC), and a missing or null modifier. Data must be reported separately by place-of-service code:

(i) outpatient hospital;

(ii) office; and

(iii) all other place-of-service codes, excluding office, inpatient hospital, outpatient hospital, and emergency room.

(C) Data must be reported at the claim-line level for the following imaging services, using the medical billing codes specified by TDI, consistent with §21.4505(b) of this title:

(i) CT abdomen and pelvis;

(ii) CT scan abdomen;

(iii) CT scan pelvis;

(iv) CT scan head/brain;

(v) CT scan mouth, jaw, and neck;

(vi) CT scan soft tissue neck;

(vii) CT scan chest;

(viii) CT scan lumbar lower spine;

(ix) CT scan lower extremity;

(x) MRI brain;

(xi) MRI head, orbit/face/neck;

(xii) MRI angiography head;

(xiii) MRI neck spine;

(xiv) MRI spine;

(xv) MRI lumbar spine;

(xvi) MRI lower limb;

(xvii) MRI upper limb, other than joint;

(xviii) MRI lower limb with joint;

(xix) MRI upper limb with joint;

(xx) MRI abdomen;

(xxi) MRI one breast;

(xxii) MRI both breasts;

(xxiii) MRI pelvis;

(xxiv) mammogram, analog;

(xxv) mammogram with CAD; and

(xxvi) mammogram, digital.

(5) Pathology services. Data on pathology services must be reported only for professional claims for which the place of service is an independent lab.

(A) Data must be reported at the claim-line level and averaged to reflect the cost per unit of service.

(B) Data must be reported for the following pathology services, using the medical billing codes consistent with §21.4505(b) of this title:

(i) organ or disease panels;

(ii) evocative suppression testing;

(iii) urinalysis;

(iv) chemistry;

(v) hematology-coagulation;

(vi) immunology;

(vii) microbiology;

(viii) anatomic pathology;

(ix) screening cytopathology; and

(x) complete blood count.

(6) Office visits. Data on office visits must be reported only for professional claims for which the place of service is an office or rural health clinic.

(A) For data elements listed in subparagraph (B) of this paragraph, data must be reported at the claim-line level and averaged to reflect the cost per unit of service.

(B) Data must be reported for the following types of office visits, using the medical billing codes consistent with §21.4505(b) of this title:

(i) office or other outpatient visit with a new patient, by time or complexity;

(ii) office or other outpatient visit with an established patient, by time or complexity;

(iii) office consultation, by time or complexity;

(iv) preventive medicine evaluation and management, new patient, by age group;

(v) preventive medicine evaluation and management, established patient, by age group;

(vi) annual gynecological exam, new patient;

(vii) annual gynecological exam, established patient;

(viii) screening pelvic and breast exam;

(ix) screening pap smear; and

(x) cytopathology for pap smear.

(C) Data must be reported for well-woman exams so that all costs associated with a claim are reported with respect to the medical billing consistent with §21.4505(b) of this title.

(d) In reporting data required under this section, issuers must:

(1) report data elements according to medical billing codes specified by §21.4505(b) of this title;

(2) separately report data for insurance and HMO and exclude any HMO claims paid through a capitation agreement;

(3) separately report data for in-network and out-of-network claims; and

(4) filter claims data to include only:

(A) claims incurred during the 12-month reporting period. For the 2015 reporting period, limit data for inpatient procedure claims and outpatient procedure claims to claims incurred before October 1, 2015, or the date on which the issuer transitioned billing systems to use ICD-10 procedure codes;

(B) claims for which adjudication is final; exclude pending or denied claims;

(C) claims for which the issuer is the primary plan responsible for payment; exclude claims for which issuer is the secondary plan; and

(D) claims with an allowed amount greater than zero.

History

Source Note: The provisions of this §21.4507 adopted to be effective January 9, 2011, 35 TexReg 11868; amended to be effective June 6, 2016, 41 TexReg 4027.

Subchapter MM WELLNESS PROGRAMS

28 Tex. Admin. Code § 21.4701 Applicability and Scope

This subchapter applies to any small employer health benefit plan issuer, any large employer health benefit plan issuer, any insurer issuing an individual or group accident and health insurance policy, or any health maintenance organization evidence of coverage, with respect to a policy or plan that establishes premium discounts, rebates, or reductions in otherwise applicable copayments, coinsurance, or deductibles, or any combination of these incentives, in return for participation in programs designed to promote disease prevention, wellness, and health.

History

Source Note: The provisions of this §21.4701 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4702 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Health status-related factor--Health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; and disability.

(2) Wellness Program--Any program designed to promote disease prevention, wellness, and health.

History

Source Note: The provisions of this §21.4702 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4703 Wellness Programs Exception

(a) Notwithstanding the provisions of Insurance Code Chapter 1501, §541.056(a) and §544.052, and the provisions of Chapter 26, Subchapter A of this title, an individual or group health benefit plan issuer, an accident and health insurance issuer, or a health maintenance organization may vary the amount of premium or contribution it requires similarly situated individuals to pay, or vary benefits, or both, including cost-sharing mechanisms such as a deductible, copayment, or coinsurance, based on whether an individual has met the standards of a wellness program that satisfies the requirements of §§21.4706, 21.4707, or 21.4708 of this title.

(b) Notwithstanding the provisions of Insurance Code §541.056(a) and §544.052, an insurer issuing an accident and health insurance policy may vary the amount of premium or contribution it requires similarly situated individuals or individuals of the same class and of essentially the same hazard to pay, or vary benefits, or both, including cost-sharing mechanisms such as a deductible, copayment, or coinsurance, based on whether an individual has met the standards of a wellness program that satisfies the requirements of §§21.4706, 21.4707, or 21.4708 of this title.

History

Source Note: The provisions of this §21.4703 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4704 Purposes

The purposes of this subchapter are to provide for the circumstances under which, and the constraints within which, a group health benefit plan issuer, an accident and health insurance issuer, or health maintenance organization may:

(1) vary benefits, including cost-sharing mechanisms such as a deductible, copayment, or coinsurance, based on whether an individual has met the standards of a wellness program that satisfies the requirements of §§21.4706, 21.4707, or 21.4708 of this title; or

(2) vary the amount of premium or contribution it requires similarly situated individuals to pay based on whether an individual has met the standards of a wellness program that satisfies the requirements of §§21.4706, 21.4707, or 21.4708 of this title.

History

Source Note: The provisions of this §21.4704 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4705 General Provisions Applicable to Wellness Programs

(a) Wellness programs as set out in this subchapter are excepted from the general prohibitions against discrimination based on a health status-related factor for plan provisions that vary benefits, including cost-sharing mechanisms, or the premium or contribution for individuals eligible for plan coverage, in connection with participation in such a wellness program.

(b) A wellness program must be reasonably designed to promote disease prevention, wellness, and health. A program satisfies this standard if it:

(1) has a reasonable probability of improving the health of, or preventing disease in, participating individuals;

(2) is not overly burdensome;

(3) is not a subterfuge for otherwise prohibited discrimination based on a health status-related factor; and

(4) is not highly suspect in the method chosen to promote disease prevention, wellness, and health.

(c) A wellness program must comply, as applicable, with Insurance Code §1701.061 and provisions of rules codified in this title relating to Insurance Code §1701.061 and the administration of noninsurance benefits.

History

Source Note: The provisions of this §21.4705 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4706 Wellness Programs With Participation as Sole Basis for Reward Eligibility

(a) A wellness program that contains no condition for obtaining a reward premised on an individual satisfying a standard associated with a health factor does not violate this subchapter so long as the status-related program is made available to all individuals eligible for coverage under the plan.

(b) Wellness programs meeting the description of this section would include the following program types:

(1) a program that reimburses all or part of the cost for membership in a fitness center;

(2) a diagnostic testing program that provides a reward for participation and does not base any part of the reward on testing outcomes;

(3) a program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan or individual policy for the costs of a particular preventive care item or items;

(4) a program that reimburses covered individuals for the costs of smoking cessation programs without regard to whether the individual quits smoking; or

(5) a program that provides a reward to covered individuals for attending a monthly health education seminar.

History

Source Note: The provisions of this §21.4706 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4707 Activity-only Wellness Programs

(a) A health-contingent wellness program that requires an individual to perform or complete an activity related to a health factor in order to obtain a reward but does not require the individual to attain or maintain a specific health outcome is an activity-only wellness program.

(b) An activity-only wellness program does not violate this subchapter so long as the requirements of this section are met.

(1) Size of reward. The reward for the activity-only wellness program, coupled with the reward for other health-contingent wellness programs offered under the same plan, must not exceed in total value 30 percent of the cost of employee-only or member-only coverage under the plan; or 50 percent of the cost of employee-only or member-only coverage under the plan if the program includes a program designed to prevent or reduce tobacco use, except that no more than 20 percent of the reward may be attributable to the tobacco use program. However, if, in addition to employees or members, any class of dependents--such as spouses or spouses and dependent children--may participate in the activity-only wellness program, the reward must not exceed 30 percent of the cost of the coverage in which an employee or member, and any dependents, are enrolled; or 50 percent of the cost of the coverage in which an employee or member, and any dependents, are enrolled, to the extent that the additional 20 percent is in connection with a program designed to prevent or reduce tobacco use.

(A) For purposes of this section, the cost of coverage is determined based on the total amount of employer and employee contributions toward the cost of coverage, or member contributions toward the cost of coverage, for the benefit package under which the employee or member is, or the employee or member and any dependents are, receiving coverage.

(B) A reward can be in the form of a discount or rebate of a premium or contribution; a waiver of all or part of a cost-sharing mechanism such as deductibles, copayments, or coinsurance; the absence of a surcharge; or the value of a benefit that would otherwise not be provided under the plan.

(2) Reasonable design. The activity-only wellness program must meet the criteria set out in §21.4705 of this title. This determination is based on all the relevant facts and circumstances.

(3) Frequency of opportunity to qualify. The activity-only wellness program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

(4) Uniform availability and reasonable alternative standards. The full reward under the activity-only wellness program must be available to all similarly situated individuals.

(A) A reward under this section is available to all similarly situated individuals for a period so long as the program allows, at a minimum:

(i) a reasonable alternative standard, or waiver of the otherwise applicable standard, for obtaining the reward for any individual for whom, for that period, it is unreasonably difficult due to a medical condition or other health status-related factor to satisfy the otherwise applicable standard; and

(ii) a reasonable alternative standard, or waiver of the otherwise applicable standard, for obtaining the reward for any individual for whom, for that period, it is medically inadvisable to attempt to satisfy the otherwise applicable standard.

(B) To the extent that a reasonable alternative standard under an activity-only wellness program is an activity-only wellness program, it must comply with the requirements of this subtitle in the same manner as if it were an initial program standard. To the extent that a reasonable alternative standard under an activity-only wellness program is an outcome-based wellness program, it must comply with the requirements of §21.4708 of this title.

(C) If reasonable under the circumstances, a plan or issuer may seek verification, such as a statement from an individual's personal physician, that the medical condition or other health status-related factor makes it unreasonably difficult for the individual to satisfy or attempt to satisfy the otherwise applicable standard of an activity-only wellness program. Plans and issuers may seek verification with respect to requests for a reasonable alternative standard for which it is reasonable to determine that medical judgment is required to evaluate the validity of the request.

(5) Notice of availability of reasonable alternative standard. The health benefit plan or policy, or health benefit plan or policy issuer, must disclose, in all plan materials describing the terms of an activity-only wellness program, the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard required under paragraph (4) of this subsection), including contact information for obtaining a reasonable alternative standard and a statement that recommendations from an individual's personal physician will be accommodated. If plan materials merely mention that an alternative program is available, without describing its terms, this disclosure is not required.

History

Source Note: The provisions of this §21.4707 adopted to be effective March 31, 2009, 34 TexReg 2135; amended to be effective July 22, 2015, 40 TexReg 4693.

28 Tex. Admin. Code § 21.4708 Outcome-Based Wellness Programs

(a) A health-contingent wellness program that requires an individual to attain or maintain a specific health outcome in order to obtain a reward is an outcome-based wellness program.

(b) An outcome-based wellness program does not violate this subchapter so long as the requirements of this section are met.

(1) Size of reward. The reward for the outcome-based wellness program, coupled with the reward for other health-contingent wellness programs with respect to the plan, must not exceed in total value 30 percent of the cost of employee-only or member-only coverage under the plan; or 50 percent of the cost of employee-only or member-only coverage under the plan, to the extent that the additional 20 percent is in connection with a program designed to prevent or reduce tobacco use. However, if, in addition to employees or members, any class of dependents--such as spouses or spouses and dependent children--may participate in the outcome-based wellness program, the reward must not exceed 30 percent of the cost of the coverage in which an employee or member and any dependents are enrolled; or 50 percent of the cost of the coverage in which an employee or member and any dependents are enrolled, to the extent that the additional 20 percent is in connection with a program designed to prevent or reduce tobacco use.

(2) Reasonable design. The outcome-based wellness program must be reasonably designed to promote health or prevent disease. An outcome-based wellness program satisfies this standard if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals and it is not overly burdensome, is not a subterfuge for discriminating based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease. This determination is based on all the relevant facts and circumstances. To ensure that an outcome-based wellness program is reasonably designed to improve health and does not act as a subterfuge for underwriting or reducing benefits based on a health factor, a reasonable alternative standard to qualify for the reward must be provided to any individual who does not meet the initial standard based on a measurement, test, or screening that is related to a health factor, as explained in paragraph (4) of this subsection.

(3) Frequency of opportunity to qualify. The outcome-based wellness program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

(4) Uniform availability and reasonable alternative standards. The full reward under the outcome-based wellness program must be available to all similarly situated individuals.

(A) Under this paragraph, a reward under an outcome-based wellness program is not available to all similarly situated individuals for a period unless the program allows a reasonable alternative standard (or waiver of the otherwise applicable standard) for obtaining the reward for any individual who does not meet the initial standard based on the measurement, test, or screening, as described in this paragraph.

(B) To the extent that a reasonable alternative standard under an outcome-based wellness program is an activity-only wellness program, it must comply with the requirements of §21.4707 of this title in the same manner as if it were an initial program standard. To the extent that a reasonable alternative standard under an outcome-based wellness program is another outcome-based wellness program, it must comply with the requirements of this section, subject to the following requirements:

(i) The reasonable alternative standard cannot be a requirement to meet a different level of the same standard without additional time to comply that takes into account the individual's circumstances.

(ii) An individual must be given the opportunity to comply with the recommendations of the individual's personal physician as a second reasonable alternative standard to meeting the reasonable alternative standard defined by the plan or issuer, but only if the physician joins in the request. The individual can make a request to involve a personal physician's recommendations at any time, and the personal physician can adjust the physician's recommendations at any time, consistent with medical appropriateness.

(C) It is not reasonable to seek verification under an outcome-based wellness program, such as a statement from an individual's personal physician, that a health factor makes it unreasonably difficult for the individual to satisfy, or medically inadvisable for the individual to attempt to satisfy, the otherwise applicable standard as a condition of providing a reasonable alternative to the initial standard. However, if a plan or issuer provides an alternative standard to the otherwise applicable measurement, test, or screening that involves an activity that is related to a health factor, then the requirements of §21.4707 of this title for activity-only wellness programs apply to that component of the wellness program, and the plan or issuer may, if reasonable under the circumstances, seek verification that it is unreasonably difficult due to a medical condition for an individual to perform or complete the activity or it is medically inadvisable to attempt to perform or complete the activity.

(5) Notice of availability of reasonable alternative standard. The plan or issuer must disclose in all plan materials describing the terms of an outcome-based wellness program, and in any disclosure that an individual did not satisfy an initial outcome-based standard, the availability of a reasonable alternative standard to qualify for the reward and, if applicable, the possibility of waiver of the otherwise applicable standard, including contact information for obtaining a reasonable alternative standard and a statement that recommendations of an individual's personal physician will be accommodated. If plan materials merely mention that such a program is available, without describing its terms, this disclosure is not required.

History

Source Note: The provisions of this §21.4708 adopted to be effective July 22, 2015, 40 TexReg 4693.

Subchapter NN NONINSURANCE BENEFITS AND FEATURES

28 Tex. Admin. Code § 21.4801 Applicability and Scope

In accordance with the Insurance Code §1701.061, this subchapter applies to any insurer that provides or discloses a noninsurance benefit as part of a life insurance policy or certificate, annuity contract or certificate, or an accident or health insurance policy, contract or certificate.

History

Source Note: The provisions of this §21.4801 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4802 Definition of Noninsurance Benefit

For purposes of this subchapter, the term "noninsurance benefit" has the same meaning as provided in the Insurance Code §1701.061(a).

History

Source Note: The provisions of this §21.4802 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4803 Purpose

The purpose of this subchapter is to provide the essential standards to be met in satisfaction of requirements applicable to noninsurance benefits intended to be offered as part of a policy, contract or certificate of insurance under the Insurance Code §1701.061.

History

Source Note: The provisions of this §21.4803 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4804 Reasonable Relation to Policy, Contract or Certificate

(a) In accordance with the Insurance Code §1701.061(a), any noninsurance benefit provided or disclosed as part of an insurance policy, contract or certificate of insurance must be reasonably related to the type of insurance policy, contract or certificate being issued.

(b) For purposes of this subchapter, the standard of "reasonable relation" takes into account the nature, character, purpose and scope of the insurance policy, contract or certificate with which the noninsurance benefit or feature is associated and to be offered. An example representing the existence of "reasonable relation" is a noninsurance benefit which, in form and application, is specifically related to the purpose and function of the underlying insurance policy, contract or certificate. Determination of "reasonable relation" will include examination of the degree to which the noninsurance benefit is related in its nature, character and purpose to that of the insurance policy, contract or certificate, including, as appropriate, the type and amount of benefit provided.

History

Source Note: The provisions of this §21.4804 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4805 Disclosure Requirements for Form Filings that Include Noninsurance Benefits

A policy, contract or certificate form filing that includes a noninsurance benefit shall also include the items set out in paragraphs (1) - (3) of this section:

(1) A description of the noninsurance benefit must be provided. The description must be sufficiently specific to provide information about the nature, character, purpose and scope of the benefit.

(2) A notice fully disclosing the noninsurance benefit to the policyholder, contract holder or certificate holder must be provided. Full disclosure includes the following:

(A) an explanation of how the noninsurance benefit may be obtained;

(B) a statement disclosing:

(i) whether acceptance or declination of the noninsurance benefit is optional to the policyholder, contract holder, certificate holder or, as applicable, other individual covered person;

(ii) the identifiable charge and amount, if any, for a noninsurance benefit that an individual covered person has the option to accept or decline;

(iii) the means by which the policyholder, contract holder, certificate holder or other person entitled to the benefit may obtain the benefit in the event the provider of the benefit, if other than the insurer, fails to provide or to continue to provide the benefit as set out in the policy, contract or certificate; and

(C) a statement providing information about the nature, character and purpose of the benefit, as well as any limitations associated with or applicable to the benefit.

(3) A statement explaining any condition on which termination of the noninsurance benefit will occur must be provided. The statement must include a reasonable notice and pre-termination period in circumstances where the condition triggering termination is the insurer's decision to discontinue offering or providing the benefit.

History

Source Note: The provisions of this §21.4805 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4806 Additional Provisions Applicable to Noninsurance Benefits

(a) A noninsurance benefit provided or disclosed as part of a policy, contract or certificate as set out in the Insurance Code §1701.061 may not contain any provision that is unfairly deceptive.

(b) A noninsurance benefit provided or disclosed as part of a policy, contract or certificate as set out in the Insurance Code §1701.061 is subject to the Insurance Code, Chapters 82 - 84.

(c) If a noninsurance benefit is to be available to in-force business, commitment documentation setting out such availability must be submitted with the form filing, specifically identifying all existing in-force business to which the noninsurance benefit is intended to be made available.

History

Source Note: The provisions of this §21.4806 adopted to be effective January 4, 2010, 35 TexReg 99.

28 Tex. Admin. Code § 21.4807 Noninsurance Benefits Composed of Certain Discount Programs

(a) A noninsurance benefit may consist in whole or in part of discount cards for health care programs, vision care programs, dental care programs, prescriptions, physical fitness programs or facilities, or other similar programs.

(b) Noninsurance benefits which include, in whole or in part, discount health care programs and discount health care program operators are subject to the provisions in paragraphs (1) and (2) of this subsection.

(1) Noninsurance benefits offered or provided prior to April 1, 2010, which include, in whole or in part, discount health programs and discount health care program operators as defined in the Health and Safety Code §76.001, are subject to the provisions of the Health and Safety Code Chapter 76, any administrative rules adopted by the Texas Department of Licensing and Regulation implementing that chapter, and any orders entered by the Executive Director or Commission to administer and enforce the chapter.

(2) Noninsurance benefits offered or provided on or after April 1, 2010, which include, in whole or in part, discount health programs and discount health care program operators as defined in the Insurance Code §562.002 and §7001.001, are subject to the provisions of the Insurance Code Chapters 562 and 7001, any administrative rules adopted by the Commissioner of Insurance, and any orders entered by the commissioner to administer and enforce the chapters.

History

Source Note: The provisions of this §21.4807 adopted to be effective January 4, 2010, 35 TexReg 99.

Subchapter OO DISCLOSURES BY OUT-OF-NETWORK PROVIDERS

28 Tex. Admin. Code § 21.4901 Purpose and Applicability

(a) The purpose of this subchapter is to interpret and implement Insurance Code §§1271.157, 1271.158, 1275.052, 1275.053, 1301.164, 1301.165, 1551.229, 1551.230, 1575.172, 1575.173, 1579.110, and 1579.111; and Insurance Code Chapter 1467.

(b) Section 21.4903 of this title is only applicable to a covered nonemergency health care or medical service or supply provided by:

(1) a facility-based provider that is not a participating provider for a health benefit plan, if the service or supply is provided at a health care facility that is a participating provider; or

(2) a diagnostic imaging provider or laboratory service provider that is not a participating provider for a health benefit plan, if the service or supply is provided in connection with a health care or medical service or supply provided by a participating provider.

History

Source Note: The provisions of this §21.4901 adopted to be effective June 25, 2020, 45 TexReg 4204; amended to be effective February 20, 2022, 47 TexReg 792.

28 Tex. Admin. Code § 21.4902 Definitions

Words and terms defined in Insurance Code Chapter 1467, concerning Out-of-Network Claim Dispute Resolution, have the same meaning when used in this subchapter unless the context clearly indicates otherwise, and the following words and terms have the following meanings when used in this subchapter unless the context clearly indicates otherwise.

(1) Administrator--Has the meaning assigned by Insurance Code §1467.001, concerning Definitions. The term also includes an administrator of a nonprofit agricultural organization under Insurance Code Chapter 1682, concerning Health Benefits Provided by Certain Nonprofit Agricultural Organizations; an administrator of a self-insured or self-funded ERISA plan under Insurance Code Chapter 1275, concerning Balance Billing Prohibitions and Out-of-Network Claim Dispute Resolution for Certain Plans; and an administrator of a postsecondary educational institution under Chapter 1683, concerning Health Benefits Provided by Certain Postsecondary Educational Institutions, offering a health benefit plan.

(2) ERISA--The Employee Retirement Income Security Act of 1974 (29 USC §1001 et seq.).

(3) Health benefit plan--A plan that provides coverage under:

(A) a health benefit plan offered by an HMO operating under Insurance Code Chapter 843, concerning Health Maintenance Organizations;

(B) a preferred provider benefit plan, including an exclusive provider benefit plan, offered by an insurer under Insurance Code Chapter 1301, concerning Preferred Provider Benefit Plans;

(C) a plan, other than an HMO plan, under Insurance Code Chapters 1551, concerning Texas Employees Group Benefits Act; 1575, concerning Texas Public School Employees Group Benefits Program; 1579, concerning Texas School Employees Uniform Group Health Coverage; 1682; or 1683; or

(D) a self-insured or self-funded plan established by an employer under ERISA (29 USC §1001 et seq.) for which the plan sponsor has elected to apply Insurance Code Chapter 1275 to the plan for the relevant plan year.

History

Source Note: The provisions of this §21.4902 adopted to be effective June 25, 2020, 45 TexReg 4204; amended to be effective June 27, 2023, 48 TexReg 3409; amended to be effective January 3, 2024, 48 TexReg 8372; amended to be effective February 19, 2026, 51 TexReg 900.

28 Tex. Admin. Code § 21.4903 Out-of-Network Notice and Disclosure Requirements

(a) For purposes of this section a "balance bill" is a bill for an amount greater than an applicable copayment, coinsurance, and deductible under an enrollee's health benefit plan, as specified in Insurance Code §§1271.157(c), 1271.158(c), 1275.052(c), 1275.053(c), 1301.164(c), 1301.165(c), 1551.229(c), 1551.230(c), 1575.172(c), 1575.173(c), 1579.110(c), or 1579.111(c).

(b) An out-of-network provider may not balance bill an enrollee receiving a nonemergency health care or medical service or supply, and the enrollee does not have financial responsibility for a balance bill, unless the enrollee elects to obtain the service or supply from the out-of-network provider knowing that the provider is out-of-network and the enrollee may be financially responsible for a balance bill. An enrollee's legal representative or guardian may elect on behalf of an enrollee. For purposes of this subsection, an enrollee elects to obtain a service or supply only if:

(1) the enrollee has a meaningful choice between a participating provider for a health benefit plan issuer or administrator and an out-of-network provider. No meaningful choice exists if an out-of-network provider was selected for or assigned to an enrollee by another provider or health benefit plan issuer or administrator;

(2) the enrollee is not coerced by a provider or health benefit plan issuer or administrator when making the election. A provider engages in coercion if the provider charges or attempts to charge a nonrefundable fee, deposit, or cancellation fee for the service or supply prior to the enrollee's election; and

(3) the out-of-network provider or the agent or assignee of the provider provides written notice and disclosure to the enrollee and obtains the enrollee's written consent, as specified in subsection (c) of this section.

(c) If an out-of-network provider elects to balance bill an enrollee, rather than participate in claim dispute resolution under Insurance Code Chapter 1467 and Subchapter PP of this title, the out-of-network provider or agent or assignee of the provider must provide the enrollee with the notice and disclosure statement specified in subsection (e) of this section prior to scheduling the nonemergency health care or medical service or supply. To be effective, the notice and disclosure statement must be signed and dated by the enrollee no less than 10 business days before the date the service or supply is performed or provided. The enrollee may rescind acceptance within five business days from the date the notice and disclosure statement was signed, as explained in the notice and disclosure statement form.

(d) Each out-of-network provider, or the provider's agent or assignee, must maintain a copy of the notice and disclosure statement, signed and dated by the enrollee, for four years if the medical service or supply is provided and a balance bill is sent to the enrollee. The provider must provide the enrollee with a copy of the signed notice and disclosure statement on the same date the statement is received by the provider.

(e) The department adopts by reference Form AH025 as the notice and disclosure statement to be used under this section. The notice and disclosure statement may not be modified, including its format or font size, and must be presented to an enrollee as a stand-alone document and not incorporated into any other document. The form is available from the department by accessing its website at www.tdi.texas.gov/forms.

(f) A provider who seeks and obtains an enrollee's signature on a notice and disclosure statement under this section is not eligible to participate in claim dispute resolution under Insurance Code Chapter 1467 and Subchapter PP of this title. This subsection does not apply if the election is defective as described by subsection (b) of this section or rescinded by the enrollee under subsection (c) of this section.

History

Source Note: The provisions of this §21.4903 adopted to be effective June 25, 2020, 45 TexReg 4204; amended to be effective February 20, 2022, 47 TexReg 792.

28 Tex. Admin. Code § 21.4904 Health Benefit Plan Issuer and Administrator Responsibility

Consistent with Insurance Code §1661.002, a health benefit plan issuer or administrator must assist an enrollee with evaluating the enrollee's financial responsibility for a health care or medical service or supply based on the information in the notice and disclosure statement provided to the enrollee under §21.4903 of this title.

History

Source Note: The provisions of this §21.4904 adopted to be effective June 25, 2020, 45 TexReg 4204.

Subchapter RR STANDARD PROOF OF HEALTH INSURANCE FOR MEDICAL BENEFITS FOR INJURIES INCURRED AS A RESULT OF A MOTORCYCLE ACCIDENT

28 Tex. Admin. Code § 21.5201 Identification Cards - Health Coverage for Motorcycle Injuries

(a) Applicability.

(1) This subchapter is applicable to an individual, group, blanket, or franchise insurance policy, insurance agreement, health maintenance organization evidence of coverage, group hospital services contract, or employee benefit plan that provides benefits for health care services or for medical or surgical expenses incurred as a result of an accident while operating or riding on a motorcycle.

(2) This subchapter is not applicable to:

(A) credit-only coverage;

(B) disability coverage;

(D) long-term care coverage;

(E) dental or vision-only coverage;

(F) single-service health maintenance organization coverage;

(G) accidental death and dismemberment coverage;

(H) hospital indemnity coverage;

(I) workers' compensation coverage; or

(J) medical payments or personal injury protection coverage provided under an automobile policy.

(b) Standard Proof of Health Insurance. Upon request, a health insurance plan, as defined by the Transportation Code §661.003(i), shall issue a standard proof of health insurance coverage that satisfies the content requirements under subsection (c) of this section and identifies a person who is at least 21 years of age and covered by the health insurance plan for medical benefits for injuries incurred as a result of an accident while operating or riding on a motorcycle. A request can be made by a person who is an enrollee or an insured of the health insurance plan or who is a dependent of an enrollee or insured of the health insurance plan.

(c) Contents of Standard Proof of Health Insurance. A health insurance plan shall issue the standard proof of health insurance coverage described by subsection (b) of this section through one of the methods set forth in either paragraph (1) or paragraph (2) of this subsection:

(1) The health insurance plan may elect to add to its customary identification card the words "MOTORCYCLE HEALTH." By including the words "MOTORCYCLE HEALTH" on its customary identification card, a health insurance plan affirms that the person named on the card is covered by a health insurance plan that provides medical benefits for injuries incurred as a result of an accident while operating or riding on a motorcycle, as addressed by the Transportation Code §661.003(c). The words "MOTORCYCLE HEALTH" must be:

(A) printed in all capital letters;

(B) printed in at least 8-point boldface font; and

(2) The health insurance plan may elect to issue a paper card, separate from its customary identification card, titled "Motorcycle Health: Standard Proof of Health Insurance."

(A) The separate paper card must contain at least the following:

(i) a heading that includes only the words "Motorcycle Health: Standard Proof of Health Insurance;"

(ii) the carrier logo;

(iii) the carrier name;

(iv) the name of the enrollee, insured, or dependent of the enrollee or insured;

(v) the policy number; and

(vi) the statement: "{name of enrollee, insured, or dependent of the enrollee or insured} is covered by a health insurance plan that provides medical benefits for injuries incurred as a result of an accident while operating or riding on a motorcycle, as addressed by the Transportation Code §661.003(c)."

(B) All text printed on the separate paper card shall appear in upper and lower case as appropriate.

(D) The heading shall appear in at least 12 point boldface type.

History

Source Note: The provisions of this §21.5201 adopted to be effective December 6, 2010, 35 TexReg 10765.

Subchapter TT ALL-PAYOR CLAIMS DATABASE

28 Tex. Admin. Code § 21.5401 Applicability

(a) This subchapter applies to a payor that issues, sponsors, or administers a plan subject to reporting under subsection (b) of this section.

(b) Payors must submit data files as required by this subchapter with respect to health benefit plans or dental benefit plans issued in Texas that are subject to Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database, including:

(1) a health benefit plan as defined by Insurance Code §1501.002, concerning Definitions;

(2) an individual health care plan that is subject to Insurance Code §1271.004, concerning Individual Health Care Plan;

(3) an individual health insurance policy providing major medical expense coverage that is subject to Insurance Code Chapter 1201, concerning Accident and Health Insurance;

(4) a health benefit plan as defined by §21.2702 of this title (relating to Definitions);

(5) a student health plan that provides major medical coverage, consistent with the definition of student health insurance coverage in 45 CFR §147.145, concerning Student Health Insurance Coverage;

(6) short-term limited-duration insurance as defined by Insurance Code §1509.001, concerning Definition;

(7) individual or group dental insurance coverage that is subject to Insurance Code Chapter 1201 or Insurance Code Chapter 1251, concerning Group and Blanket Health Insurance;

(8) dental coverage provided through a single service HMO that is subject to Chapter 11, Subchapter W, of this title (relating to Single Service HMOs);

(9) a Medicare supplement benefit plan under Insurance Code Chapter 1652, concerning Medicare Supplement Benefit Plans, if the payor elects to submit such data;

(10) a health benefit plan as defined by Insurance Code Chapter 846, concerning Multiple Employer Welfare Arrangements;

(11) basic coverage under Insurance Code Chapter 1551, concerning Texas Employees Group Benefits Act;

(12) a basic plan under Insurance Code Chapter 1575, concerning Texas Public School Employees Group Benefits Program;

(13) a health coverage plan under Insurance Code Chapter 1579, concerning Texas School Employees Uniform Group Health Coverage;

(14) basic coverage under Insurance Code Chapter 1601, concerning Uniform Insurance Benefits Act for Employees of the University of Texas System and the Texas A&M University System;

(15) a county employee health benefit plan established under Local Government Code Chapter 157, concerning Assistance, Benefits, and Working Conditions of County Officers and Employees;

(16) group dental, health and accident, or medical expense coverage provided by a risk pool created under Local Government Code Chapter 172, concerning Texas Political Subdivisions Uniform Group Benefits Program;

(17) coverage for medical expenses provided under a self-insurance fund established under Government Code Chapter 2259, concerning Self-Insurance by Governmental Units;

(18) the state Medicaid program operated under Human Resources Code Chapter 32, concerning Medical Assistance Program;

(19) a Medicaid managed care plan operated under Government Code Title 4, Subtitle I, concerning Health and Human Services;

(20) the child health plan program operated under Health and Safety Code Chapter 62, concerning Child Health Plan for Certain Low-Income Children;

(21) the health benefits plan for children operated under Health and Safety Code Chapter 63, concerning Health Benefits Plan for Certain Children;

(22) a Medicare Advantage Plan providing health benefits under Medicare Part C as defined in 42 USC §1395w-21, et seq ., concerning Medicare+Choice Program;

(23) a Medicare Part D voluntary prescription drug benefit plan providing benefits as defined in 42 USC §1395w-101, et seq ., concerning Voluntary Prescription Drug Benefit Program; and

(24) a health benefit plan or dental plan subject to the Employee Retirement Income Security Act of 1974 (29 USC §1001 et seq .) if the plan sponsor or administrator elects to submit this data.

(c) Data files required by this subchapter must include information with respect to all Texas resident members, as defined in §21.5402(16) of this title (relating to Definitions). Information on persons who are not Texas resident members is not required.

History

Source Note: The provisions of this §21.5401 adopted to be effective June 16, 2022, 47 TexReg 3475; amended to be effective November 28, 2024, 49 TexReg 9556.

28 Tex. Admin. Code § 21.5402 Definitions

The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) Allowed amount--Has the meaning assigned by Insurance Code §38.402, concerning Definitions.

(2) Center--The Center for Health Care Data at The University of Texas Health Science Center at Houston.

(3) Data--Has the meaning assigned by Insurance Code §38.402.

(4) Data files--Files submitted under this subchapter, including dental claims data files, enrollment and eligibility data files, medical claims data files, pharmacy claims data files, and provider files.

(5) Database--Has the meaning assigned by Insurance Code §38.402.

(6) Dental claims data file--A file that includes data as specified in the Texas APCD CDL about any dental claim or encounter for which some action has been taken on the claim during the reporting period, including payment, denial, adjustment, or other modification.

(7) Enrollment and eligibility data file--A file that provides identifying data as specified in the Texas APCD CDL about a person who is enrolled and eligible to receive health care coverage from a payor, whether or not the member used services during the reporting period, with one record per member, per month, per plan.

(8) Medical claims data file--A file that includes data as specified in the Texas APCD CDL about medical claims and other encounter information for which some action has been taken on the claim during the reporting period, including payment, denial, adjustment, or other modification.

(9) Payor--Has the meaning assigned by Insurance Code §38.402.

(10) Pharmacy claims data file--A file that includes data as specified in the Texas APCD CDL about all claims filed by pharmacies, including mail order and retail dispensaries, for prescriptions that were dispensed, processed, and paid during the reporting period.

(11) Provider file--A file that includes information as specified in the Texas APCD CDL about all providers (regardless of network status) that submitted claims that are included in the medical claims data file, dental claims data file, or pharmacy claims data file, with a separate record provided for each unique physical location for a provider who practices in multiple locations.

(12) Qualified research entity--Has the meaning assigned by Insurance Code §38.402.

(13) Stakeholder advisory group--Has the meaning assigned by Insurance Code §38.402.

(14) Submission guide--The document entitled "The Texas All-Payor Claims Database Data Submission Guide," created by the Center, that outlines administrative procedures and provides technical guidance for submitting data files.

(15) Texas APCD CDL--The standardized format, or common data layout (CDL), for All-Payor Claims Database (APCD) data files published by the Center and based on the "All-Payer Claims Database Common Data Layout" established by the National Association of Health Data Organizations and used with permission.

(16) Texas resident member--Any policyholder or certificate holder (subscriber) of a plan issued in Texas whose residence is within the state of Texas and all covered dependents, regardless of where the dependent resides.

History

Source Note: The provisions of this §21.5402 adopted to be effective June 16, 2022, 47 TexReg 3475.

28 Tex. Admin. Code § 21.5403 Texas APCD Common Data Layout and Submission Guide

(a) Payors must submit complete and accurate data files for all applicable plans as required by this subchapter and consistent with the data elements and technical requirements found in the Texas APCD CDL v3.0.1. The Texas APCD CDL v3.0.1 is available on the Center's website.

(b) If the Center adopts subsequent versions of the Texas APCD CDL, payors must submit data consistent with the requirements of each subsequent version, but this subchapter does not require the submission by payors of additional data elements unless they are both required in the Texas APCD CDL v3.0.1 and within the scope of Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database. The Center will communicate to payors an implementation deadline for use of an updated version of the Texas APCD CDL that is not less than 90 days after the updated version has been published by the Center in its final form.

(c) The Center will establish, evaluate, and update data collection procedures within a submission guide, consistent with Insurance Code §38.404(f), concerning Establishment and Administration of Database. Notwithstanding subsection (b) of this section, in the event of an inconsistency between this subchapter and the submission guide, this subchapter controls.

History

Source Note: The provisions of this §21.5403 adopted to be effective June 16, 2022, 47 TexReg 3475; amended to be effective November 28, 2024, 49 TexReg 9556.

28 Tex. Admin. Code § 21.5404 Data Submission Requirements

(a) Payors must submit the data files required by subsection (c) of this section to the Center according to the schedule provided in §21.5405 of this title (relating to Timing and Frequency of Data Submissions). Payors are responsible for submitting or arranging to submit all applicable data under this subchapter, including data with respect to benefits that are administered or adjudicated by another contracted or delegated entity, such as carved-out behavioral health benefits or pharmacy benefits administered by a pharmacy benefit manager. Payors may arrange for a third-party administrator or delegated or contracted entity to submit data on behalf of the payor but may not submit data that duplicates data submitted by a third party.

(1) The Texas Health and Human Services Commission may submit data on behalf of all applicable payors participating in a plan or program identified in §21.5401(b)(18) - (b)(21) of this title (relating to Applicability).

(2) A payor that acts as an administrator on behalf of a health benefit plan or dental plan for which reporting is optional per Insurance Code §38.407, concerning Certain Entities Not Required to Submit Data, may ask the plan sponsor whether it elects or declines to participate in or submit data to the Center and may include data for such plans within the payor's data submission. Both the inquiry to and response from the plan sponsor should be in writing.

(3) A payor providing Medicare Supplement benefit plans may elect to submit Medicare Supplement benefit plan data to the Center.

(b) Payors or their designees that are subject to this subchapter must register with the Center each year, consistent with the instructions and procedures contained in the submission guide. Payors must communicate any changes to registration information by contacting the Center within 30 days using the contact information provided in the submission guide. Upon registration, the Center will assign a unique payor code and submitter code to be used in naming the data files and provide the credentials and information required to submit data files.

(1) enrollment and eligibility data files;

(2) medical claims data files;

(3) pharmacy claims data files;

(4) dental claims data files; and

(5) provider files.

(d) Payors must package all files being submitted into zip files that are encrypted according to the standard provided in the submission guide. Payors must submit the encrypted zip files to the Center using one of the following file submission methods:

(1) transmit the files to the Center's Managed File Transfer servers using the Secure File Transport Protocol (SFTP) and the credentials and transmittal information provided upon registration;

(2) upload files from an internet browser using the Hypertext Transfer Protocol Secure (HTTPS) protocol and the credentials and transmittal information provided upon registration; or

(3) transmit the files using a subsequent electronic method as provided in the data submission guide.

(e) Payors must name data files and zip files consistent with the file naming conventions specified by the Center in the submission guide.

(f) Payors must format all data files as standard 8-bit UCS Transformation Format (UTF-8) encoded text files with a ".txt" file extension and adhere to the following standards:

(1) use a single line per record and do not include carriage returns or line feed characters within the record;

(2) records must be delimited by the carriage return and line feed character combination;

(3) all data fields are variable field length, subject to the constraints identified in the Texas APCD CDL, and must be delimited using the pipe (|) character (ASCII=124), which must not appear in the data itself;

(4) text fields must not be demarcated or enclosed in single or double quotes;

(5) the first row of each data file must contain the names of data columns as specified by the Texas APCD CDL;

(6) numerical fields (e.g., ID numbers, account numbers, etc.) must not contain spaces, hyphens, or other punctuation marks, or be padded with leading or trailing zeroes;

(7) currency and unit fields must contain decimal points when appropriate;

(8) if a data field is not to be populated, a null value must be used, consisting of an empty set of consecutive pipe delimiters (||) with no content between them.

(g) Data files must include information consistent with the Texas APCD CDL that enables the data to be analyzed based on the market category, product category, coverage type, and other factors relevant for distinguishing types of plans.

(h) Payors must include data in medical, pharmacy, and dental claims data files for a given reporting period based on the date the claim is adjudicated, not the date of service associated with the claim. For example, a service provided in March but adjudicated in April would be included in the April data report. Likewise, any claim adjustments must be included in the appropriate data file based on the date the adjustment was made and include a reference that links the original claim to all subsequent actions associated with that claim. Payors must report medical, pharmacy, and dental claims data at the visit, service, or prescription level. Payors must also include claims for capitated services with all medical, pharmacy, and dental claims data file submissions.

(i) Payors must include all payment fields specified as required in the Texas APCD CDL. With respect to medical, pharmacy, and dental claims data file submissions, payors must also:

(1) include coinsurance and copayment data in two separate fields;

(2) clearly identify claims where multiple parties have financial responsibility by including a Coordination of Benefits, or COB, notation; and

(3) include specified types of denied claims and identify a denied claim either by a denied notation or assigning eligible, allowed, and payment amounts of zero. The data submission guide will specify the types of denied claims that must be included on the basis of the claim adjustment reason code associated with the denial. In general, denied claims are not required when the reason for the denial was incomplete claim coding or duplicative claims. Denied claims are required when they accurately reflect care that was delivered to an eligible member but not covered by a plan due to contractual terms, such as benefit maximums, place of service, provider type, or care deemed not medically necessary or experimental or investigational. Payors are not required to include data for rejected claims or claims that are denied because the patient was not an eligible member.

(j) Every data file submission must include a control report that specifies the count of records and, as applicable, the total allowed amount and total paid amount.

(k) Unless otherwise specified, payors must use the code sources listed and described in the Texas APCD CDL within the member eligibility and enrollment data file and medical, pharmacy, and dental claims data file and provider file submissions.

(l) Payors must use the member's social security number as a unique member identifier (ID) or assign an alternative unique member ID as provided in this subsection.

(1) If a payor collects the social security number for the subscriber only, the payor must assign a discrete two-digit suffix for each member under the subscriber's contract.

(2) If a payor does not collect the subscriber's social security number, the payor must assign a unique member ID to the subscriber and the member in its place. The payor must also use a discrete two-digit suffix with the unique member ID to associate members under the same contract with the subscriber.

(3) A payor must use the same unique member ID for the member's entire period of coverage under a particular plan. If a change in the unique member ID or the use of two different unique member IDs for the same individual is unavoidable, the payor must provide documentation, if available, linking the member IDs in the form and method provided by the Center.

(m) When standardized values for data variables are available and stated within the Texas APCD CDL, no specific or unique coding systems will be permitted as part of the health care claims data set submission.

(n) Within the enrollment and eligibility data files, payors must report member enrollment and eligibility information at the individual member level. If a member is covered as both a subscriber and a dependent on two different policies during the same month, the payor must submit two member enrollment and eligibility records. If a member has two different policies for two different coverage types, the payor must submit two member enrollment and eligibility records.

(o) Payors must include a header and trailer record in each data file submission according to the formats described in the Texas APCD CDL. The header record is the first record of each separate file submission, and the trailer record is the last.

History

Source Note: The provisions of this §21.5404 adopted to be effective June 16, 2022, 47 TexReg 3475; amended to be effective November 28, 2024, 49 TexReg 9556.

28 Tex. Admin. Code § 21.5405 Timing and Frequency of Data Submissions

(a) Payors must submit monthly data files according to the following schedule:

(1) January data must be submitted no later than March 7 of that year;

(2) February data must be submitted no later than April 7 of that year;

(3) March data must be submitted no later than May 7 of that year;

(4) April data must be submitted no later than June 7 of that year;

(5) May data must be submitted no later than July 7 of that year;

(6) June data must be submitted no later than August 7 of that year;

(7) July data must be submitted no later than September 7 of that year;

(8) August data must be submitted no later than October 7 of that year;

(9) September data must be submitted no later than November 7 of that year;

(10) October data must be submitted no later than December 7 of that year;

(11) November data must be submitted no later than January 7 of the following year; and

(12) December data must be submitted no later than February 7 of the following year.

(b) Payors must submit test data files as provided in the submission guide:

(1) after registering for the first time with the Center as a payor that is subject to reporting under this subchapter;

(2) after a merger, acquisition, divestiture, or other change of ownership that requires an update to a payor's registration; and

(3) before the effective date of a new version of the Texas APCD CDL, consistent with §21.5403 of this title (relating to Texas APCD Common Data Layout and Submission Guide) that contains additional data elements.

(c) A payor may request a temporary exception or extension of time from complying with one or more requirements of this subchapter or the Texas APCD CDL by submitting a request to the Center, as provided in the submission guide posted on https://go.uth.edu/DSG, no less than 15 calendar days before the date the payor is otherwise required to comply with the requirement.

(1) The Center may grant an exception or extension for good cause for not more than 12 consecutive months, if the payor demonstrates that compliance would impose an unreasonable cost or burden relative to the public value that would be gained from full compliance. An exception may not be granted from any requirement contained in Insurance Code Chapter 38, Subchapter I, concerning Texas All Payor Claims Database.

(2) A payor that registers with the Center and demonstrates that it has fewer than 10,000 covered lives in plans subject to this subchapter qualifies for an extension under this subsection for the payor's first required reporting. The Center may grant an extension for new payors for not more than 12 consecutive months.

(3) The Center may request additional information from a payor in order to make a determination on an exception or extension request. A request for additional information must be in writing and must be submitted to the payor within 14 calendar days from the date the payor's request is received. The deadline for data submission is tolled while the Center makes a determination on an exception or extension request.

(4) A request for an exception or extension that is neither accepted nor rejected by the Center within 14 calendar days from the date the payor's request is received will be deemed accepted. If the Center has requested additional information from a payor under paragraph (3) of this subsection, the 14-day timeline begins the day after the payor submits the information. If a payor does not respond to or fails to provide the Center with additional information as requested, the payor's request for an exception or extension may be deemed withdrawn by the Center at the end of the 14-day period.

(5) In order to assist TDI's oversight and enforcement required by Insurance Code §38.409, the Center will provide TDI on or before July 1st of each year for the prior year:

(A) the names of payors that timely reported data;

(B) information about payors that did not report data and either requested an exception or extension that the Center did not grant or otherwise failed to demonstrate an exemption from reporting under this subchapter;

(C) information about payors that obtained exceptions and extensions, including the nature of the exceptions and amount of extensions granted;

(D) information about payors that failed to report timely without obtaining an exception or extension, including the filing due dates and the dates of actual filing; and

(E) information about payors that otherwise failed to materially comply with the requirements of Insurance Code Chapter 38, Subchapter I, or this subchapter.

(d) The Center will assess each data submission to ensure the data files are complete, accurate, and correctly formatted.

(e) The Center will communicate receipt of data within 14 calendar days, inform the payor of the data quality assessments, and specify any required data corrections and resubmissions.

(f) Payors must provide reasonable follow-up information requested by the Center, limited to ensuring that the payor submitted complete and correct information.

(g) Upon receipt of a resubmission request, the payor must respond within 14 calendar days with either a revised and corrected data file or an extension request.

(h) If a payor fails to submit required data or fails to correct submissions rejected due to errors or omissions, the Center will provide written notice to the payor. If the payor fails to provide the required information within 30 calendar days following receipt of the written notice, the Center will notify the department of the failure to report. The department may pursue compliance with this subchapter via any appropriate corrective action, sanction, or penalty that is within the authority of the department.

(i) The reporting schedule under subsection (a) of this section applies to monthly data submissions due on or after March 7, 2025, containing data for months beginning January 1, 2025. Payors must submit data for November and December 2024 at the same time as January 2025 data.

History

Source Note: The provisions of this §21.5405 adopted to be effective June 16, 2022, 47 TexReg 3475; amended to be effective November 28, 2024, 49 TexReg 9556.

28 Tex. Admin. Code § 21.5406 Stakeholder Advisory Group Terms

(a) Except as otherwise provided in this section, the term of office for seats on the stakeholder advisory group, as specified by Insurance Code §38.403, concerning Stakeholder Advisory Group, is three years.

(b) Initial terms of office for the members of the stakeholder advisory group will end December 31, 2024.

(c) Subsequent terms of office for the members of the stakeholder advisory group will begin January 1, 2025, and will be staggered as follows:

(1) the terms of office for the seats of the two members representing the business community and the two members representing consumers will expire December 31, 2026;

(2) the terms of office for the seats of the member designated by the Teacher Retirement System of Texas, the two members representing hospitals, and the two members representing health benefit plan issuers will expire December 31, 2027; and

(3) the terms of office for the seats of the member designated by the Employees Retirement System; the two members representing physicians; and the two members not professionally involved in the purchase, provision, administration, or review of health care services, supplies, or devices, or health benefit plans will expire December 31, 2028.

(d) The term of office for the seat of a member representing an institution of higher education is one year.

(e) Except as provided by subsection (f) of this section, members may not serve for more than six consecutive years.

(f) If a member does not complete the member's three-year term, a replacement member may be designated to complete the remainder of the term.

(g) Members and prospective members of the stakeholder advisory group are subject to the conflicts of interest and standards of conduct provisions in paragraphs (1) - (4) of this subsection.

(1) A prospective member of the stakeholder advisory group must disclose to the designating entity any conflict of interest before being designated to the group.

(2) A member of the stakeholder advisory group must immediately disclose to the Center and the member's designating entity any conflict of interest that arises or is discovered while serving on the group.

(3) A conflict of interest means a personal or financial interest that would lead a reasonable person to question the member's objectivity or impartiality. An example of a conflict of interest is employment by or financial interest in an organization with a financial interest in work before the stakeholder advisory group, such as evaluating data requests from qualified research entities under Insurance Code §38.404(e)(2), concerning Establishment and Administration of Database.

(4) A member of the stakeholder advisory group must comply with Government Code §572.051(a), concerning Standards of Conduct; State Agency Ethics Policy, to the same extent as a state officer or employee.

(h) A member may be removed from the stakeholder advisory group for good cause by the member's designating entity.

History

Source Note: The provisions of this §21.5406 adopted to be effective June 16, 2022, 47 TexReg 3475; amended to be effective November 28, 2024, 49 TexReg 9556.

Subchapter UU MACHINE-READABLE FILES

28 Tex. Admin. Code § 21.5501 Applicability and Effective Date

(a) Except as provided in subsections (b) and (c) of this section, this subchapter applies to issuers of health benefit plans as specified in Insurance Code §1662.003, concerning Applicability of Chapter, that provide major medical coverage for which federal reporting requirements under 26 C.F.R. Part 54, concerning Pension Excise Taxes; 29 C.F.R. Part 2590, concerning Rules and Regulations for Group Health Plans; 45 C.F.R. Part 147, concerning Health Insurance Reform Requirements for the Group and Individual Health Insurance Markets; and 45 C.F.R. Part 158, concerning Issuer Use of Premium Revenue: Reporting and Rebate Requirements, do not apply, including:

(1) issuers providing short-term limited-duration insurance, as defined in Insurance Code Chapter 1509, concerning Short-Term Limited-Duration Insurance;

(2) issuers providing grandfathered health plan coverage, as defined in 45 C.F.R. §147.140, concerning Preservation of Right to Maintain Existing Coverage; and

(3) a regional or local health care program operated under Health and Safety Code §75.104, concerning Health Care Services.

(b) This subchapter does not apply to the following types of plans:

(1) a plan that is not considered creditable coverage as specified under Insurance Code §1205.004(b), concerning Creditable Coverage;

(2) the child health plan program operated under Health and Safety Code Chapter 62, concerning Child Health Plan for Certain Low-Income Children;

(3) the health benefits plan for children operated under Health and Safety Code Chapter 63, concerning Health Benefits Plan for Certain Children; and

(4) the state Medicaid program operated under Human Resources Code Chapter 32, concerning Medical Assistance Program, including the Medicaid managed care program operated under Government Code Chapter 533, concerning Medicaid Managed Care Program.

(c) Except as provided by subsections (d) and (e) of this section, with respect to an applicable health benefit plan, an issuer must begin publishing machine-readable files as required under this subchapter in the month in which the plan year or policy year begins.

(d) A health benefit plan issuer with fewer than 1,000 total enrollees in all health benefit plans subject to reporting as of December 31, 2021, must begin publishing machine-readable files as required under this subchapter no later than January 1, 2024.

(e) Except as provided by subsection (d) of this section, an issuer is required to begin publishing machine-readable files no sooner than 180 days after the effective date of this section and no later than the earliest date specified in paragraphs (1) and (2) of this subsection:

(1) the date that the federal Departments of Labor, Health and Human Services, and Treasury begin enforcing the federal Transparency in Coverage rules specific to the publication of machine-readable files for prescription drug pricing, in-network rates, and out-of-network allowed amounts and billed charges, if the date of enforcement occurs after the 180th day following the effective date of this section; or

(2) January 1, 2024.

History

Source Note: The provisions of this §21.5501 adopted to be effective June 2, 2022, 47 TexReg 3154.

28 Tex. Admin. Code § 21.5502 Form and Method of Publishing Machine-Readable Files

(a) Required machine-readable files. Issuers must publish the following machine-readable files consistent with Insurance Code Chapter 1662, Subchapter C, concerning Required Public Disclosures, and the rules under this subchapter:

(1) an in-network negotiated rates file, containing in-network provider negotiated rates for all covered health care services and supplies, consistent with Insurance Code §1662.103(a)(1), concerning Required Information, and §1662.104, concerning Network Rate Disclosures;

(2) an out-of-network allowed amounts file, containing billed charges and allowed amounts for covered health care services or supplies provided by out-of-network providers, consistent with Insurance Code §1662.103(a)(2) and §1662.105, concerning Out-of-Network Allowed Amounts; and

(3) an in-network prescription drugs file, containing in-network historical net prices and negotiated rates for prescription drugs, consistent with Insurance Code §1662.103(a)(3) and §1662.106, concerning Historical Net Price.

(b) Transport mechanism. An issuer must make all machine-readable files available via HTTPS.

(c) Content type. An issuer must use a nonproprietary and open format for publishing machine-readable files. Examples of acceptable formats include JSON, XML, and YAML. Examples of proprietary formats that are not acceptable include PDF, XLS, and XLSX.

(d) Public discoverability. An issuer must make machine-readable files available to the public consistent with Insurance Code §1662.107, concerning Required Method and Format for Disclosure, and without restrictions that would impede the reuse of that information. The issuer must provide the location of the URLs for the machine-readable files over HTTPS to ensure the integrity of the data.

(e) Indexing. To allow for search engine discoverability, an issuer may not use a mechanism, such as a robots.txt file or a meta tag on the page where the files are hosted, or other mechanism that gives instructions to web crawlers to not index the page.

(f) Special data types. Dates must be strings in ISO 8601 format (e.g., YYYY-MM-DD).

(g) Different flat files. Issuers must publish three machine-readable files using the following file type names:

(1) "in-network-rates" for the file containing in-network provider negotiated rates for all covered health care services and supplies, consistent with Insurance Code §1662.103(a)(1) and §1662.104;

(2) "allowed-amounts" for the file containing billed charges and allowed amounts for covered health care services or supplies provided by out-of-network providers, consistent with Insurance Code §1662.103(a)(2) and §1662.105; and

(3) "prescription-drugs" for the file containing historical net prices and negotiated rates for prescription drugs, consistent with Insurance Code §1662.103(a)(3) and §1662.106.

(h) Multiple plans per file. An issuer that has multiple plans with the same negotiated rates with the same group of providers for the same covered health care services and supplies may group multiple plans together within a single file. An issuer that groups multiple plans into a single file must create a file with the file type name "table-of-contents" that uses the naming convention and standards required under subsection (i)(2) of this section. The filing convention for single plan files under subsection (i)(1) of this section will not apply to files published as permitted under this subsection.

(i) File-naming convention. An issuer must name each file using the naming convention and standards required under this subsection.

(1) The file naming convention for single plan files includes the elements identified in subparagraphs (A) - (D) of this paragraph, each separated by an underscore, followed by a period and the file extension:

(A) the four-digit year, two-digit month, and two-digit day, each separated by dashes (e.g., "2022-12-01" would be used for a file published December 1, 2022);

(B) the issuer name, with any spaces replaced with dashes (e.g., "issuer-abc" would be used for an issuer called "issuer abc");

(C) the plan name, with any spaces replaced with dashes (e.g., "healthplan-100" would be used for a plan called "healthplan 100"); and

(D) the file type name (e.g., "in-network-rates").

(2) The file naming convention for the table-of-contents file published by an issuer that includes multiple plans per file, as permitted by subsection (h) of this section, includes the elements identified in subparagraphs (A) - (C) of this paragraph, each separated by an underscore, followed by a period and the file extension:

(A) the four-digit year, two-digit month, and two-digit day, each separated by dashes (e.g., "2022-12-01" would be used for a file published December 1, 2022);

(B) the issuer name, with any spaces replaced with dashes (e.g., "issuer-abc" would be used for an issuer called "issuer abc"); and

(3) An issuer may include only alphanumeric characters in the file name. An issuer may not include special characters or punctuation other than the dashes, underscores, and periods specified in the naming convention. An issuer must either remove special characters completely or replace the special characters with a dash ("-").

(4) Examples of the file naming conventions are provided in Figure: 28 TAC §21.5502(i)(4).

Attached Graphic

(j) Safe harbor. An issuer that publishes machine-readable files in the form and method specified by the federal guidance published on the following website: github.com/CMSgov/price-transparency-guide, and its associated schemas, will be deemed compliant for the purposes of this subchapter.

History

Source Note: The provisions of this §21.5502 adopted to be effective June 2, 2022, 47 TexReg 3154.

28 Tex. Admin. Code § 21.5503 Data Schemas

(a) In-network negotiated rate file schema. For the "in-network-rates" file published under this subchapter, an issuer must include data elements consistent with the In-Network File Schema contained in Machine-Readable Files: Data Schemas (version 1.1), published on the department's website.

(b) Out-of-network allowed amount file schema. For the "allowed-amounts" file published under this subchapter, an issuer must include data elements consistent with the Out-of-Network Allowed Amount File Schema contained in Machine-Readable Files: Data Schemas (version 1.1), published on the department's website.

(c) In-network prescription drugs file schema. For the "prescription-drugs" file published under this subchapter, an issuer must include data elements consistent with the Rx File Schema contained in Machine-Readable Files: Data Schemas (version 1.1), published on the department's website.

(d) Table of contents file schema. If an issuer chooses to include multiple plans in a single file, as permitted under §21.5502(h) of this title (relating to Form and Method of Publishing Machine-Readable Files), the issuer must publish a "table-of-contents" file, consistent with the Table of Contents File Schema contained in Machine-Readable Files: Data Schemas (version 1.1), published on the department's website.

(e) Provider reference file schema. If an issuer chooses to include an external file of provider references, the issuer must include a "Provider Reference" file, consistent with the Provider Reference File Schema contained in the Machine-Readable Files: Data Schemas (version 1.1), published on the department's website.

History

Source Note: The provisions of this §21.5503 adopted to be effective June 2, 2022, 47 TexReg 3154.

Chapter 22 PRIVACY

Subchapter A INSURANCE CONSUMER FINANCIAL INFORMATION PRIVACY

28 Tex. Admin. Code § 22.1 Purpose and Scope

(a) Purpose. This subchapter governs the treatment of nonpublic personal financial information about individuals by all covered entities. This subchapter:

(1) requires a covered entity to provide notice to individuals about its privacy policies and practices;

(2) describes the conditions under which a covered entity may disclose nonpublic personal financial information about individuals to nonaffiliated third parties; and

(3) provides methods for individuals to prevent a covered entity from disclosing that information to nonaffiliated third parties.

(b) Scope. This subchapter applies to nonpublic personal financial information about individuals who obtain or are claimants or beneficiaries, primarily for personal, family or household purposes, of products or services from covered entities. This subchapter does not apply to information about companies or about individuals who obtain products or services for business, commercial or agricultural purposes.

History

Source Note: The provisions of this §22.1 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.2 Definitions

The following words and terms, when used in this chapter, will have the following meanings, unless the context clearly indicates otherwise.

(1) Affiliate--Any company that controls, is controlled by, or is under common control with another company.

(2) Agent--As set out in Insurance Code §§2651.002 - 2651.011, 2651.051 - 2651.059, 4001.002, 4001.051, and 4001.053.

(3) Authorization--As set out in Insurance Code §82.001.

(4) Clear and conspicuous--A notice reasonably understandable and designed to call attention to the nature and significance of the information in the notice.

(5) Collect--To obtain information that the covered entity organizes or can retrieve by the name of an individual or by identifying number, symbol, or other identifying particular assigned to the individual, irrespective of the source of the underlying information.

(6) Commissioner--The commissioner of insurance.

(7) Company--A corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship, or other similar organization.

(8) Consumer--An individual or that individual's representative who seeks to obtain, obtains, or has obtained an insurance product or service from a covered entity that is to be used primarily for personal, family, or household purposes, and about whom the covered entity has nonpublic personal financial information.

(9) Consumer reporting agency--As defined in §603(f) of the federal Fair Credit Reporting Act (FCRA) (15 U.S.C. §1681a(f)).

(10) Control--Includes the terms "controls," "controlled by," and "under common control," and has the meaning assigned that term by Insurance Code §823.005 and §823.151.

(11) Covered entity--An individual or entity that receives an authorization from the Texas Department of Insurance. The term includes any individual or entity described by Insurance Code, §82.002.

(12) Customer--A consumer who has a customer relationship with a covered entity.

(13) Customer relationship--A continuing relationship, as described in §22.5 of this subchapter (relating to Determination of Continuing Relationship), between a consumer and a covered entity under which the covered entity provides one or more insurance products or services to the consumer to be used primarily for personal, family, or household purposes.

(14) Financial institution--Any institution, the business of which is engaging in activities that are financial in nature or incidental to financial activities as described in §4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. §1843(k)). Financial institution does not include:

(A) any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. §1 et seq.);

(B) the Federal Agricultural Mortgage Corporation or any entity charged and operating under the Farm Credit Act of 1971 (12 U.S.C. §2001 et seq.); or

(C) institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights), or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer nonpublic personal financial information to a nonaffiliated third party.

(15) Financial product or service--Any product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to a financial activity under §4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. §1843(k)). Financial service includes a financial institution's evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or service.

(16) Health care--

(A) preventive, diagnostic, therapeutic, rehabilitative, maintenance or palliative care, services, procedures, tests, or counseling that:

(i) relates to the physical, mental, or behavioral condition of an individual; or

(ii) affects the structure or function of the human body or any part of the human body, including the banking of blood, sperm, organs, or any other tissue; or

(B) prescribing, dispensing, or furnishing drugs or biologicals, medical devices, or health care equipment and supplies to an individual.

(17) Health care provider--A physician or other health care practitioner licensed, accredited, or certified to perform specified health services consistent with state law, or a health care facility.

(18) Health information--Any information or data, except age or gender, whether oral or recorded, in any form or medium, that is created by or derived from a health care provider or the consumer that relates to:

(A) the past, present, or future physical, mental, or behavioral health or condition of an individual;

(B) the provision of health care to an individual; or

(19) Insurance product or service--Any product or service offered by a covered entity under the Insurance Code and other insurance laws of this state. Insurance service includes a covered entity's evaluation, brokerage, or distribution of information that the covered entity collects in connection with a request or an application from a consumer for an insurance product or service.

(20) Nonaffiliated third party--An entity that is not an affiliate of, related to by common ownership, or affiliated by corporate control with the covered entity. The term does not include a joint employee of the entity.

(21) Nonpublic personal financial information--Information that:

(A) includes:

(i) personally identifiable financial information;

(ii) any list, description, or other grouping of consumers (and publicly available information pertaining to them) derived using any personally identifiable financial information not publicly available; and

(iii) any list of individuals' names and street addresses derived in whole or in part using personally identifiable financial information not publicly available, such as account numbers;

(B) does not include:

(i) health information;

(ii) publicly available information unless derived from a nonpublic source as described in subparagraphs (A)(ii) and (A)(iii) of this paragraph;

(iii) any list, description, or other grouping of consumers (and publicly available information pertaining to them) derived without using any personally identifiable financial information not publicly available; and

(iv) any list of individuals' names and addresses that:

(I) contains only publicly available information;

(II) is wholly derived using personally identifiable financial information that is publicly available; and

(III) does not disclose that any of the individuals on the list is a consumer of a financial institution.

(22) Opt out--A direction by the consumer that the covered entity not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by §22.17 of this title, §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions), and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information).

(23) Personally identifiable financial information--

(A) The term includes:

(i) any information a consumer provides to a covered entity to obtain an insurance product or service from the covered entity;

(ii) any information about a consumer resulting from a transaction involving an insurance product or service between a covered entity and a consumer;

(iii) any information the covered entity otherwise obtains about a consumer in connection with providing an insurance product or service to that consumer;

(iv) account balance information and payment history;

(v) the fact that an individual is or has been one of the covered entity's customers or has obtained an insurance product or service from the covered entity;

(vi) any information about the covered entity's consumer disclosed in a manner that indicates that the individual is or has been the covered entity's consumer;

(vii) any information a consumer provides to a covered entity or that the covered entity or its agent otherwise obtains in connection with collecting on a loan or servicing a loan;

(viii) any information the covered entity collects through an information-collecting device from an Internet web server; and

(ix) information from a consumer report.

(B) The term does not include:

(i) health information;

(ii) a list of names and addresses of customers of an entity that is not a financial institution; and

(iii) information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names, or addresses.

(24) Publicly available information--Any information a covered entity has a reasonable basis to believe is lawfully made available to the general public from:

(A) federal, state, or local government records;

(B) widely distributed media; or

History

Source Note: The provisions of this §22.2 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.3 Exceptions to Applicability of Subchapter

(a) A covered entity is not subject to the notice and opt out requirements for nonpublic personal financial information set out in this subchapter if the covered entity is an employee, agent, or other representative of another covered entity (a principal) and:

(1) the principal otherwise complies with, and provides the notices required by, the provisions of this subchapter; and

(2) the covered entity does not disclose any nonpublic personal financial information to any person other than the principal or its affiliates in a manner permitted by this subchapter.

(b) Subject to subsection (c) of this section, covered entity includes an eligible surplus lines insurer for transactions where Texas is the home state of the insured to the extent the insurer accepts business placed through a person subject to Insurance Code Chapter 981.

(c) A person transacting surplus lines business will be deemed to be in compliance with the notice and opt out requirements for nonpublic personal financial information set out in this subchapter provided:

(1) the person does not disclose nonpublic personal financial information of a consumer or customer to nonaffiliated third parties for any purpose, including joint servicing or marketing under §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing), except as permitted by §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions), and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information); and

(2) the person delivers a notice to the consumer at the time a customer relationship is established on which the following is printed in at least 16-point type:

Attached Graphic

History

Source Note: The provisions of this §22.3 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.4 Determination of Consumer Status

(a) The term consumer includes, but is not limited to:

(1) an individual who provides nonpublic personal financial information to a covered entity in connection with obtaining or seeking to obtain financial, investment or economic advisory services relating to an insurance product or service regardless of whether the covered entity establishes an ongoing relationship.

(2) an applicant for insurance prior to the inception of insurance coverage.

(3) an individual, if the covered entity discloses nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing), §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information), and:

(A) the individual is a beneficiary of a life insurance policy underwritten by the covered entity;

(B) the individual is a claimant under an insurance policy issued by the covered entity;

(C) the individual is an insured or an annuitant under an insurance policy or an annuity, respectively, issued by the covered entity; or

(D) the individual is a mortgagor of a mortgage covered under a mortgage insurance policy.

(b) Examples of when individuals will not be considered consumers of a covered entity:

(1) an individual who is a consumer of another financial institution is not a covered entity's consumer solely because the covered entity is acting as agent for, or provides processing or other services to, that financial institution.

(2) an individual is not a covered entity's consumer solely because he or she is a beneficiary of a trust for which the covered entity is a trustee.

(3) an individual is not a covered entity's consumer solely because he or she has designated the covered entity as trustee for a trust.

(c) Special requirements for employee benefit plans, group or blanket insurance policies, group annuity contracts, or workers' compensation policies.

(1) An individual who is a participant or a beneficiary of an employee benefit plan that a covered entity administers or sponsors or for which the covered entity acts as a trustee, insurer or fiduciary is not the consumer of a covered entity that:

(A) provides all initial, annual and revised notices required by this subchapter to the employer or other entity establishing the plan; and

(B) does not disclose nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §§22.17, 22.18, and 22.19 of this title.

(2) An individual who is covered under a group or blanket insurance policy or group annuity contract issued by a covered entity is not the consumer of a covered entity that:

(A) provides all initial, annual and revised notices required by this subchapter to the policyholder or contractholder; and

(B) does not disclose nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §§22.17, 22.18, and 22.19 of this title.

(3) An individual that is a claimant under or beneficiary of a workers' compensation policy issued by a covered entity is not the consumer of a covered entity that:

(A) provides all initial, annual and revised notices required by this subchapter to the plan participant; and

(B) does not disclose nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §§22.17, 22.18, and 22.19 of this title.

(d) An individual described in subsection (c) of this section is the consumer of a covered entity that does not comply with the applicable notice and nondisclosure requirements of that subsection.

(e) In no event shall an individual, solely by virtue of his status described in subsection (c) of this section, be deemed to be the customer of a covered entity for purposes of this subchapter.

History

Source Note: The provisions of this §22.4 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.5 Examples of Continuing Relationship

(a) The following examples illustrate situations where a consumer has a continuing relationship with a covered entity:

(1) the consumer is a current policyholder of an insurance product issued by or through the covered entity; or

(2) the consumer obtains financial, investment or economic advisory services relating to an insurance product or service from the covered entity for a fee.

(b) The following examples illustrate situations where a consumer does not have a continuing relationship with a covered entity:

(1) the consumer applies for insurance but does not purchase the insurance;

(2) the covered entity sells the consumer insurance in an isolated transaction involving single-event types of coverage including, but not limited to, auto rental liability, travel, and short-term non-resident auto liability insurance;

(3) the individual is no longer a current policyholder of an insurance product or no longer obtains insurance services with or through the covered entity;

(4) the consumer is a beneficiary or claimant under a policy even though the consumer has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with the covered entity;

(5) the consumer is a beneficiary or a claimant under a policy and has submitted a claim under that policy choosing a lump sum settlement option;

(6) the customer's policy is lapsed, expired, or otherwise not in force, and the covered entity has not communicated with the customer about the relationship for a period of 12 consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;

(7) the individual is an insured or an annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity; or

(8) the individual's last known address according to the covered entity's records is deemed invalid, which occurs when:

(A) mail sent to that address by the covered entity has been returned by the postal authorities as undeliverable, and

(B) subsequent attempts by the covered entity to obtain a current valid address for the individual have been unsuccessful.

History

Source Note: The provisions of this §22.5 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.6 Notice Requirements

Any notice required by this subchapter must comply with the following standards.

(1) Designed to call attention. A covered entity designs its notice to call attention to the nature and significance of the information in it, if:

(A) with regard to all notices, the covered entity:

(i) uses a plain-language heading to call attention to the notice;

(ii) uses a typeface and type size that are easy to read;

(iii) provides wide margins and ample line spacing;

(iv) uses boldface or italics for key words; and

(v) uses distinctive type size, style, and graphic devices, such as shading or sidebars, when the covered entity combines its notice in a form with other information, in order to emphasize the privacy component of the form.

(B) on a notice on a Web page, the covered entity uses text or visual cues to encourage scrolling down the page if necessary to view the entire notice and to ensure that other elements on the Web site (such as text, graphics, hyperlinks or sound) do not distract attention from the notice, and the covered entity either:

(i) places the notice on a screen that consumers frequently access, such as a page on which transactions are conducted; or

(ii) places a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature and relevance of the notice.

(2) Reasonably understandable. A covered entity makes its notice reasonably understandable if it:

(A) presents the information in the notice in clear, concise sentences, paragraphs, and sections;

(B) uses short explanatory sentences or bullet lists whenever possible;

(D) avoids multiple negatives;

(E) avoids legal and highly technical business terminology whenever possible; and

(F) avoids explanations that are imprecise and readily subject to different interpretations.

History

Source Note: The provisions of this §22.6 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.7 Determination of Reasonable Basis

(a) For purposes of determining if information is publicly available as defined in this subchapter:

(1) a covered entity has a reasonable basis to believe that information is lawfully made available to the general public if the covered entity has taken steps to determine:

(A) that the information is of the type that is available to the general public; and

(B) whether an individual can direct that the information not be made available to the general public, and

(C) if an option as described in subparagraph (1)(B) of this section is available, that the covered entity's consumer has not made such a direction.

(2) The following examples illustrate whether a reasonable basis exists to believe that information is publicly available.

(A) A covered entity has a reasonable basis to believe that information is publicly available if the information comes from nonconfidential government records, such as information in real estate records and security interest filings.

(B) A covered entity has a reasonable basis to believe that information is publicly available if the information comes from widely distributed media, such as information from a telephone book, a television or radio program, a newspaper or a Web site that is available to the general public on an unrestricted basis. A Web site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public.

(C) A covered entity has a reasonable basis to believe that mortgage information is lawfully made available to the general public if the covered entity has determined that the information is of the type included in the public record in the jurisdiction where the mortgage would be recorded.

(D) A covered entity has a reasonable basis to believe that an individual's telephone number is lawfully made available to the general public if the covered entity has located the telephone number in the telephone book or the consumer has informed the covered entity that the telephone number is not unlisted.

History

Source Note: The provisions of this §22.7 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.8 Initial Privacy Notice

(a) Initial notice requirement. A covered entity shall provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to:

(1) an individual who becomes the covered entity's customer, not later than when the covered entity establishes a customer relationship, except as provided in subsection (e) of this section; and

(2) a consumer, before the covered entity discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if the covered entity makes a disclosure other than as authorized by §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information).

(b) Initial notice not required. A covered entity is not required to provide an initial notice to a consumer under subsection (a)(2) of this section if:

(1) the covered entity does not disclose any nonpublic personal financial information about the consumer to any nonaffiliated third party, other than as authorized by §22.18 and §22.19 of this title, and the covered entity does not have a customer relationship with the consumer; or

(2) a notice has been provided by an affiliated covered entity, so long as the notice clearly identifies all covered entities to whom the notice applies and is accurate with respect to the covered entity and the other institutions.

(1) Generally, a covered entity establishes a customer relationship at the time the covered entity and the consumer enter into a continuing relationship.

(2) Some examples of a covered entity establishing a customer relationship occur when the consumer:

(A) becomes a policyholder of a covered entity that is an insurer when the insurer delivers an insurance policy or contract to the consumer, or in the case of a covered entity that is an insurance agent, obtains insurance through that covered entity; or

(B) agrees to obtain financial, economic or investment advisory services relating to insurance products or services for a fee from the covered entity.

(d) Existing customers. When an existing customer obtains a new insurance product or service from a covered entity that is to be used primarily for personal, family or household purposes, if the initial, revised or annual notice that the covered entity most recently provided to that customer was inaccurate with respect to the new insurance product or service, the covered entity shall, in accordance with the initial notice requirements of subsection (a) of this section, provide a revised privacy notice, under §22.12 of this title (relating to Revised Privacy Notices), that covers the customer's new insurance product or service. If the initial, revised or annual notice that the covered entity most recently provided to that customer was accurate with respect to the new insurance product or service, the covered entity does not need to provide a new privacy notice under subsection (a) of this section.

(e) Subsequent delivery of notice.

(1) General rule. A covered entity may provide the initial notice required by subsection (a)(1) of this section within a reasonable time after the covered entity establishes a customer relationship if:

(A) establishing the customer relationship is not at the customer's election; or

(B) providing notice not later than when the covered entity establishes a customer relationship would substantially delay the customer's transaction and the customer agrees to receive the notice at a later time.

(2) Not at customer's election. Establishing a customer relationship is not at the customer's election if a covered entity acquires or is assigned a customer's policy from another financial institution or residual market mechanism and the customer does not have a choice about the covered entity's acquisition or assignment.

(3) Substantial delay of customer's transaction. Providing notice not later than when a covered entity establishes a customer relationship would substantially delay the customer's transaction when the covered entity and the individual agree over the telephone to enter into a customer relationship involving prompt delivery of the insurance product or service.

(4) No substantial delay of customer's transaction. Providing notice not later than when a covered entity establishes a customer relationship would not substantially delay the customer's transaction when the relationship is initiated in person at the covered entity's office or through other means by which the customer may view the notice, such as on a Web site.

(f) Delivery. A covered entity shall deliver any notices required by this section according to §22.13 of this title (relating to Delivery). If the covered entity uses a short-form initial notice for non-customers according to §22.10(d) of this title (relating to Information to be Included in Privacy Notices), the covered entity may deliver its privacy notice according to §22.10(d)(3) of this title.

History

Source Note: The provisions of this §22.8 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.9 Annual Privacy Notice

(a) A covered entity must provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship, except as provided in subsection (d) of this section. "Annually" means at least once in any period of 12 consecutive months during which that relationship exists. A covered entity may define the 12-consecutive-month period, but the covered entity must apply it to the customer on a consistent basis. A covered entity provides a notice annually if it defines the 12-consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the covered entity provided the initial notice. For example, if a customer opens an account on any day of year 1, the covered entity must provide an annual notice to that customer by December 31 of year 2.

(b) A covered entity is not required to provide an annual notice to a former customer. A former customer is an individual with whom a covered entity no longer has a continuing relationship. A covered entity no longer has a continuing relationship with an individual:

(1) if the individual no longer is a current policyholder of an insurance product or no longer obtains insurance services with or through the covered entity;

(2) if the individual's policy is lapsed, expired, or otherwise not in force, and the covered entity has not communicated with the customer about the relationship for a period of 12 consecutive months, other than to provide annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;

(3) for the purposes of this subchapter, if:

(A) the covered entity sends mail to the individual's last known address, according to the covered entity's records, and the postal authorities return that mail as undeliverable, and

(B) subsequent attempts by the covered entity to obtain a current valid address for the individual are unsuccessful; or

(4) in the case of providing real estate settlement services, at the later of the following events:

(A) the customer completes execution of all documents related to the real estate closing;

(B) payment for those services has been received; or

(C) the covered entity has completed all of its responsibilities with respect to the settlement, including filing documents in the public record.

(c) A covered entity must deliver any annual privacy notices required by this section according to §22.13 of this title (relating to Delivery).

(d) A covered entity that is excepted from annual privacy notice requirements under 15 U.S.C. §6803(f), or one that would be excepted if it were a financial institution, is not required to provide an annual privacy notice under this section. At any time the covered entity fails to meet both criteria for the exception under §6803(f), the covered entity is subject to the annual notice requirement in this section.

History

Source Note: The provisions of this §22.9 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective May 10, 2017, 42 TexReg 2413.

28 Tex. Admin. Code § 22.10 Information to be Included in Privacy Notices

(a) Simplified nondisclosure notice requirements. A covered entity that does not disclose, and does not reserve the right to disclose, nonpublic personal financial information about customers or former customers to nonaffiliated third parties except as authorized under §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information), may comply with this subchapter by providing a simplified notice that expresses:

(1) the nondisclosure policy stated in this subsection, and

(2) the information required by subsections (b)(1), (b)(8), (b)(9), and (c) of this section.

(b) Disclosure notice requirements. The initial, annual, and revised privacy notices a covered entity provides under §22.8 of this title (relating to Initial Privacy Notice), §22.9 of this title (relating to Annual Privacy Notice), and §22.12 of this title (relating to Revised Privacy Notices) must include the following items of information, in addition to any other information the covered entity wishes to provide, that applies to the covered entity and to the consumers to whom the covered entity sends its privacy notice.

(1) The categories of nonpublic personal financial information the covered entity collects. A covered entity satisfies the requirement to categorize the nonpublic personal financial information it collects when the covered entity categorizes it according to the source of the information, as applicable, including:

(A) information from the consumer;

(B) information about the consumer's transactions with the covered entity or its affiliates;

(D) information from a consumer reporting agency.

(2) The categories of nonpublic personal financial information the covered entity discloses.

(A) A covered entity satisfies the requirement to categorize nonpublic personal financial information it discloses when the covered entity categorizes the information according to source, as described in paragraph (1) of this subsection, as applicable, and provides examples to illustrate the types of information in each category, such as:

(i) information from the consumer, including application information (such as assets and income) and identifying information (such as name, address, and social security number);

(ii) transaction information (such as information about balances, payment history, and parties to the transaction); and

(iii) information from consumer reports (such as a consumer's creditworthiness and credit history).

(B) A covered entity does not adequately categorize the information it discloses when the covered entity uses only general terms (such as transaction information about the consumer).

(C) A covered entity that reserves the right to disclose all the nonpublic personal financial information about consumers it collects may state that fact without describing the categories or examples of nonpublic personal financial information the covered entity discloses.

(3) The categories of affiliates and nonaffiliated third parties to whom the covered entity discloses nonpublic personal financial information, other than those parties to whom the covered entity discloses information under §22.18 and §22.19 of this title.

(4) The categories of nonpublic personal financial information about the covered entity's former customers that the covered entity discloses and the categories of affiliates and nonaffiliated third parties to whom the covered entity discloses nonpublic personal financial information about the covered entity's former customers, other than those parties to whom the covered entity discloses information under §22.18 and §22.19 of this title.

(5) A separate description of the categories of information the covered entity discloses and the categories of third parties with whom the covered entity has contracted, if the covered entity discloses nonpublic personal financial information to a nonaffiliated third party under §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing) and no other exception in §22.18 and §22.19 of this title applies to that disclosure.

(6) An explanation of the consumer's right under §22.14(a) of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties) to opt out of the disclosure of nonpublic personal financial information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time.

(7) Any disclosures the covered entity makes under §603(d)(2)(A)(iii) of the federal FCRA (15 U.S.C. §1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates).

(8) The covered entity's policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information. A covered entity provides an adequate description of its policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information if it does both of the following:

(A) describes in general terms who is authorized to have access to the information; and

(B) states whether the covered entity has security practices and procedures in place to ensure the confidentiality of the information under the covered entity's policy. The covered entity is not required to describe technical information about the safeguards it uses.

(9) Any disclosure the covered entity makes under subsection (c) of this section.

(c) Description of nonaffiliated third parties subject to exceptions. A covered entity that discloses nonpublic personal financial information to third parties as authorized under §22.18 and §22.19 of this title is not required to list those exceptions in the initial or annual privacy notices required by §22.8 and §22.9 of this title. When describing the categories of parties to whom the covered entity makes disclosures, it is sufficient for the covered entity to state that it makes disclosures to other nonaffiliated companies:

(1) for the covered entity's everyday business purposes, such as (include all that apply) to process account transactions, maintain accounts, respond to court orders and legal investigations, or report to credit bureaus; or

(2) as permitted by law.

(d) Appropriate methods of categorizing affiliates and nonaffiliated third parties.

(1) A covered entity satisfies the requirement to categorize the affiliates and nonaffiliated third parties to which the covered entity discloses nonpublic personal financial information about consumers if the covered entity identifies the types of businesses in which they engage.

(2) Types of businesses may be described by general terms only if the covered entity uses illustrative examples of significant lines of business. For example, a covered entity may use the term "financial products or services" if the notice includes appropriate examples of significant lines of businesses or services, such as life insurer, automobile insurer, consumer banking, or securities brokerage.

(3) A covered entity also may categorize the affiliates and nonaffiliated third parties to which it discloses nonpublic personal financial information about consumers using more detailed categories.

(e) Disclosures under exception for service providers and joint marketers. A covered entity that discloses nonpublic personal financial information under the exception in §22.17 of this title to a nonaffiliated third party to market products or services it offers alone or jointly with another financial institution satisfies the disclosure requirement of subsection (b)(5) of this section if it:

(1) lists the categories of nonpublic personal financial information it discloses, using the same categories and examples the covered entity used to meet the requirements of subsection (a)(2) of this section, as applicable; and

(2) states whether the third party is:

(A) a service provider that performs marketing services on the covered entity's behalf or on behalf of the covered entity and another financial institution; or

(B) a financial institution with whom the covered entity has a joint marketing agreement.

(f) Short-form initial notice with opt out notice for noncustomers.

(1) A covered entity may satisfy the initial notice requirements in §22.8(a)(2) and §22.11(c) of this title (relating to Form of Opt Out Notice to Consumers and Opt Out Methods) for a consumer who is not a customer by providing a short-form initial notice at the same time as the covered entity delivers an opt out notice as required in §22.11 of this title.

(2) A short-form initial notice must:

(A) be clear and conspicuous;

(B) state that the covered entity's privacy notice is available on request; and

(3) The covered entity must deliver its short-form initial notice according to §22.13 of this title (relating to Delivery). The covered entity is not required to deliver its privacy notice with its short-form initial notice. The covered entity may instead provide the consumer with a reasonable means to obtain its privacy notice. If a consumer who receives the covered entity's short-form notice requests the covered entity's privacy notice, the covered entity must deliver its privacy notice according to §22.13 of this title.

(4) The covered entity provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the covered entity:

(A) provides a toll-free telephone number that the consumer may call to request the notice; or

(B) for a consumer who conducts business in person at the covered entity's office, maintains copies of the notice on hand that the covered entity provides to the consumer immediately on request.

(g) Reservation of right to disclose. The covered entity's notice may include:

(1) categories of nonpublic personal financial information the covered entity reserves the right to disclose in the future, but does not currently disclose; and

(2) categories of affiliates or nonaffiliated third parties to whom the covered entity reserves the right in the future to disclose, but to whom the covered entity does not currently disclose, nonpublic personal financial information.

(h) Model privacy form. A model privacy form that meets the notice content requirements of this section appears in 74 Federal Register 62890 (December 1, 2009). A covered entity may use the applicable model privacy form, consistent with the instructions in §22.27 of this title (relating to General Instructions).

History

Source Note: The provisions of this §22.10 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.11 Form of Opt Out Notice to Consumers and Opt Out Methods

(a) Clear and conspicuous notice. If a covered entity is required to provide an opt out notice under §22.14(a) of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties), it must provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out. The notice must state:

(1) that the covered entity discloses or reserves the right to disclose nonpublic personal financial information about its consumer to a nonaffiliated third party;

(2) that the consumer has the right to opt out of that disclosure; and

(3) a reasonable means by which the consumer may opt out.

(b) Adequate opt out notice. A covered entity provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal financial information to a nonaffiliated third party if the covered entity:

(1) identifies all of the categories of nonpublic personal financial information it discloses or reserves the right to disclose, and all of the categories of nonaffiliated third parties to which the covered entity discloses the information, as described in §22.10(a)(2) and (3) of this title (relating to Information to be Included in Privacy Notices), and states that the consumer can opt out of the disclosure of that information; and

(2) identifies the insurance products or services the consumer obtains from the covered entity, either singly or jointly, to which the opt out direction would apply.

(1) designates check-off boxes in a prominent position on the relevant forms with the opt out notice; and

(2) includes the reply form together with the opt out notice; or

(3) provides an electronic means to opt out, such as a form that can be sent by electronic mail or a process on the covered entity's website, if the consumer agrees to the electronic delivery of information; or

(4) provides a toll-free telephone number consumers may call to opt out.

(d) Unreasonable opt out means. A covered entity does not provide a reasonable means of opting out if:

(1) the only means of opting out is for the consumer to write his or her own letter to exercise that opt out right; or

(2) the only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the covered entity provided with the initial notice but did not include with the subsequent notice.

(e) Specific opt out means. A covered entity may require each consumer to opt out through a specific means, so long as that means is reasonable for that consumer.

(f) Opt out notice with or on a written or electronic form. A covered entity may provide the opt out notice together with, or on the same written or electronic form as, the initial notice the covered entity provides in accord with §22.8 of this title (relating to Initial Privacy Notice).

(g) Opt out notice later than initial notice. If a covered entity provides the opt out notice later than required for the initial notice in accord with §22.8 of this title, the covered entity must also include a copy of the initial notice with the opt out notice in writing or, if the consumer agrees, electronically.

(h) Joint relationships. A covered entity must use the procedures set out in paragraphs (1) - (4) of this subsection when joint relationships between consumers are involved.

(1) If two or more consumers jointly obtain or seek to obtain an insurance product or service from a covered entity, the covered entity may provide a single opt out notice. The covered entity's opt out notice must explain how the covered entity will treat an opt out direction by a joint consumer (as explained in subsection (i) of this section).

(2) Any of the joint consumers may exercise the right to opt out. The covered entity may either:

(A) treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or

(B) permit each joint consumer to opt out separately.

(3) If a covered entity permits each joint consumer to opt out separately, the covered entity must permit one of the joint consumers to opt out on behalf of all the joint consumers.

(4) A covered entity may not require all joint consumers to opt out before it implements any opt out direction.

(i) Examples. The following are examples of how a covered entity should treat a joint relationship. If John and Mary are both named policyholders on a homeowner's insurance policy issued by a covered entity and the covered entity sends policy statements to John's address, the covered entity may do any of the following, but it must explain in its opt out notice which opt out policy the covered entity will follow:

(1) Send a single opt out notice to John's address, but the covered entity must accept an opt out direction from either John or Mary.

(2) Treat an opt out direction by either John or Mary as applying to the entire policy. If the covered entity does so and John opts out, the covered entity may not require Mary to opt out as well before implementing John's opt out direction.

(3) Permit John and Mary to make different opt out directions. If the covered entity does so:

(A) it must permit John and Mary to opt out for each other;

(B) if both opt out, the covered entity must permit both of them to notify it in a single response (such as on a form or through a telephone call); and

(C) if John opts out and Mary does not, the covered entity may only disclose nonpublic personal financial information about Mary, but not about John, and not about John and Mary jointly.

(j) Opt out direction. A covered entity must comply with a consumer's opt out direction as soon as reasonably practicable after the covered entity receives it.

(k) Consumer's right to opt out. A consumer may exercise the right to opt out at any time.

(l) A consumer's direction. A consumer's direction to opt out under this section is effective until the consumer revokes it in writing or, if the consumer has agreed to conduct business electronically, electronically.

(m) Customer relationship. When a customer relationship terminates, the customer's opt out direction continues to apply to the nonpublic personal financial information the covered entity collected during or related to that relationship. If the individual subsequently establishes a new customer relationship with the covered entity, the opt out direction that applied to the former relationship does not apply to the new relationship.

(n) Opt out delivery. When a covered entity is required to deliver an opt out notice by this section, the covered entity must deliver it according to §22.13 of this title (relating to Delivery).

(o) Notice content requirements. A model privacy form that meets the notice content requirement of this section appears in 74 Federal Register 62890 (December 1, 2009). A covered entity may use the applicable model privacy form, consistent with the instructions in §22.27 of this title (relating to General Instructions).

History

Source Note: The provisions of this §22.11 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.12 Revised Privacy Notices

(a) Except as otherwise authorized in this subchapter, a covered entity shall not, directly or through an affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party other than as described in the initial notice that the covered entity provided to that consumer under §22.8 of this title (relating to Initial Privacy Notice), unless:

(1) the covered entity has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices;

(2) the covered entity has provided to the consumer a new opt out notice;

(3) the covered entity has given the consumer a reasonable opportunity, before the covered entity discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(4) the consumer does not opt out.

(b) Except as otherwise permitted by §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing), §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information), a covered entity shall provide a revised notice before it:

(1) discloses a new category of nonpublic personal financial information to any nonaffiliated third party;

(2) discloses nonpublic personal financial information to a new category of nonaffiliated third party; or

(3) discloses nonpublic personal financial information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt out right regarding that disclosure.

(c) A revised notice is not required if the covered entity discloses nonpublic personal financial information to a new nonaffiliated third party that the covered entity adequately described in its prior notice.

(d) When a covered entity is required to deliver a revised privacy notice by this section, the covered entity shall deliver it according to §22.13 of this title (relating to Delivery).

History

Source Note: The provisions of this §22.12 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.13 Delivery

(a) How to provide notices. A covered entity shall provide any notices that this subchapter requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.

(b) Examples of reasonable expectation of actual notice. A covered entity satisfies the reasonable expectation that a consumer will receive actual notice if the covered entity:

(1) hand-delivers a printed copy of the notice to the consumer;

(2) mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing or other written communication;

(3) for a consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular insurance product or service; or

(4) for an isolated transaction with a consumer, such as the covered entity providing an insurance quote or selling the consumer single-event types of coverage including, but not limited to, auto rental liability, travel, and short-term non-resident auto liability insurance, presents the notice and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular insurance product or service.

(c) Examples of unreasonable expectation of actual notice. A covered entity has not met the reasonable expectation that a consumer will receive actual notice of its privacy policies and practices if it:

(1) only posts a sign in its office or generally publishes advertisements of its privacy policies and practices; or

(2) sends the notice via electronic mail to a consumer who does not obtain an insurance product or service from the covered entity electronically.

(d) Annual notices only. A covered entity satisfies the reasonable expectation that a customer will receive actual notice of the covered entity's annual privacy notice if:

(1) the customer uses the covered entity's Web site to access insurance products and services electronically and agrees to receive notices at the Web site and the covered entity posts its current privacy notice continuously in a clear and conspicuous manner on the Web site; or

(2) the customer has requested that the covered entity refrain from sending any information regarding the customer relationship, and the covered entity's current privacy notice remains available to the customer upon request.

(e) Oral description of notice insufficient. A covered entity may not provide any notice required by this subchapter solely by orally explaining the notice, either in person or over the telephone.

(f) Retention or accessibility of notices for customers.

(1) For customers only, a covered entity shall provide the initial notice required by §22.8(a)(1) of this title (relating to Initial Privacy Notice), the annual notice required by §22.9(a) of this title (relating to Annual Privacy Notice), and the revised notice required by §22.12 of this title (relating to Revised Privacy Notices) so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically.

(2) A covered entity provides a privacy notice to the customer so that the customer can retain it or obtain it later if the covered entity:

(A) hand-delivers a printed copy of the notice to the customer;

(B) mails a printed copy of the notice to the last known address of the customer; or

(C) makes its current privacy notice available on a Web site (or a link to another Web site) for the customer who obtains an insurance product or service electronically and agrees to receive the notice at the Web site.

(g) Joint notice with other financial institutions. A covered entity may provide a joint notice from the covered entity and one or more of its affiliates or other financial institutions, as identified in the notice, so long as the notice is accurate with respect to the covered entity and the other institutions. A covered entity also may provide a notice on behalf of another financial institution.

(h) Joint relationships. If two or more consumers jointly obtain an insurance product or service from a covered entity, the covered entity may satisfy the initial, annual and revised notice requirements of §§22.8(a), 22.9(a), and 22.12(a) of this title, respectively, by providing one notice to those consumers jointly.

History

Source Note: The provisions of this §22.13 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.14 Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties

(a) Conditions for disclosure. Except as otherwise authorized in this subchapter, a covered entity may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party unless:

(1) the covered entity has provided to the consumer an initial notice as required under §22.8 of this title (relating to Initial Privacy Notice);

(2) the covered entity has provided to the consumer an opt out notice as required in §22.11 of this title (relating to Form of Opt Out Notice to Consumers and Opt Out Methods);

(3) the covered entity has given the consumer a reasonable opportunity, before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(4) the consumer does not opt out.

(b) Examples of reasonable opportunity to opt out. A covered entity provides a consumer with a reasonable opportunity to opt out if:

(1) the covered entity mails the notices required in subsection (a) of this section to the consumer and allows the consumer to opt out by mailing a form, calling a toll-free telephone number or any other reasonable means within 30 days from the date the covered entity mailed the notices.

(2) a customer opens an on-line account with a covered entity and agrees to receive the notices required in subsection (a) of this section electronically, and the covered entity allows the customer to opt out by any reasonable means within 30 days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account.

(3) for an isolated transaction such as providing the consumer with an insurance quote, a covered entity provides the consumer with a reasonable opportunity to opt out if the covered entity provides the notices required in subsection (a) of this section at the time of the transaction and requests that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.

(1) A covered entity shall comply with this section, regardless of whether the covered entity and the consumer have established a customer relationship.

(2) Unless a covered entity complies with this section, the covered entity may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer that the covered entity has collected, regardless of whether the covered entity collected it before or after receiving the direction to opt out from the consumer.

(d) Partial opt out. A covered entity may allow a consumer to select certain nonpublic personal financial information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.

History

Source Note: The provisions of this §22.14 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.15 Limits on Redisclosure and Reuse of Nonpublic Personal Financial Information

(a) If a covered entity receives nonpublic personal financial information from a nonaffiliated financial institution under an exception in §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information), the covered entity's disclosure and use of that information is limited as follows:

(1) the covered entity may disclose the information to the affiliates of the financial institution from which the covered entity received the information;

(2) the covered entity may disclose the information to its affiliates, but the covered entity's affiliates may, in turn, disclose and use the information only to the extent that the covered entity may disclose and use the information; and

(3) the covered entity may disclose and use the information pursuant to an exception in §22.18 and §22.19 of this title in the ordinary course of business to carry out the activity covered by the exception under which the covered entity received the information.

(b) If a covered entity receives information from a nonaffiliated financial institution for claims settlement purposes, the covered entity may disclose the information for fraud prevention, or in response to a properly authorized subpoena. The covered entity may not disclose that information to a third party for marketing purposes or use that information for its own marketing purposes.

(c) If a covered entity receives nonpublic personal financial information from a nonaffiliated financial institution other than under an exception in §22.18 and §22.19 of this title, the covered entity may disclose the information only:

(1) to the affiliates of the financial institution from which the covered entity received the information;

(2) to its affiliates, but its affiliates may, in turn, disclose the information only to the extent that the covered entity may disclose the information; and

(3) to any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which the covered entity received the information.

(d) If a covered entity obtains a customer list from a nonaffiliated financial institution outside of the exceptions in §22.18 and §22.19 of this title:

(1) the covered entity may use that list for its own purposes; and

(2) the covered entity may disclose that list to another nonaffiliated third party only if the financial institution from which the covered entity purchased the list could have lawfully disclosed the list to that third party. That is, the covered entity may disclose the list in accordance with the privacy policy of the financial institution from which the covered entity received the list, as limited by the opt out direction of each consumer whose nonpublic personal financial information the covered entity intends to disclose, and the covered entity may disclose the list in accordance with an exception in §22.18 and §22.19 of this title, such as to the covered entity's attorneys or accountants.

(e) If a covered entity discloses nonpublic personal financial information to a nonaffiliated third party under an exception in §22.18 and §22.19 of this title, the third party may disclose and use that information only as follows:

(1) the third party may disclose the information to the covered entity's affiliates;

(2) the third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and

(3) the third party may disclose and use the information pursuant to an exception in §22.18 or §22.19 of this title in the ordinary course of business to carry out the activity covered by the exception under which it received the information.

(f) If a covered entity discloses nonpublic personal financial information to a nonaffiliated third party other than under an exception in §22.18 and §22.19 of this title, the third party may disclose the information only:

(1) to the covered entity's affiliates;

(2) to the third party's affiliates, but the third party's affiliates, in turn, may disclose the information only to the extent the third party can disclose the information; and

(3) to any other person, if the disclosure would be lawful if the covered entity made it directly to that person.

History

Source Note: The provisions of this §22.15 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.16 Limits on Sharing Account Number Information for Marketing Purposes

(a) A covered entity shall not, directly or through an affiliate, disclose, other than to a consumer reporting agency, a policy number or similar form of access number or access code for a consumer's policy or transaction account to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to the consumer.

(b) Subsection (a) of this section does not apply if a covered entity discloses a policy number or similar form of access number or access code:

(1) to a service provider, including another covered entity, solely for the purpose of marketing the sharing covered entity's own products or services, so long as the receiving covered entity is not authorized to initiate charges directly to the account; or

(2) to a participant in an affinity or similar program as set forth in 12 CFR §40.12(b)(2), 12 CFR §216.12(b)(2), 12 CFR §332.12(b)(2), 12 CFR §573.12(b)(2), and 12 CFR §716.12(b)(2), where the participants in the program are identified to the customer when the customer enters into the program.

(c) A policy number, or similar form of access number or access code, does not include a number or code in an encrypted form, so long as the covered entity does not provide the recipient with a means to decode the number or code.

(d) For the purposes of this section, a policy or transaction account is an account other than a deposit account or a credit card account. A policy or transaction account does not include an account to which third parties cannot initiate charges.

History

Source Note: The provisions of this §22.16 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.17 Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing

(a) The opt out requirements in §22.11 of this title (relating to Form of Opt Out Notice to Consumers and Opt Out Methods) and §22.14 of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties) do not apply when a covered entity provides nonpublic personal financial information to a nonaffiliated third party to perform services for the covered entity or functions on the covered entity's behalf, if the covered entity:

(1) provides the initial notice in accordance with §22.8 of this title (relating to Initial Privacy Notice); and

(2) enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the covered entity disclosed the information, including use under an exception in §22.18 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions) and §22.19 of this title (relating to Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information) in the ordinary course of business to carry out those purposes.

(b) If a covered entity discloses nonpublic personal financial information under this section to a financial institution with which the covered entity performs joint marketing, the covered entity's contractual agreement with that institution meets the requirements of subsection (a)(2) of this section if it prohibits the institution from disclosing or using the nonpublic personal financial information except as necessary to carry out the joint marketing or under an exception set forth in §22.18 and §22.19 of this title in the ordinary course of business to carry out that joint marketing.

(c) The services a nonaffiliated third party performs for a covered entity under subsection (a) of this section may include marketing of the covered entity's own products or services or marketing of financial products or services offered pursuant to joint agreements between the covered entity and one or more financial institutions.

(d) For purposes of this section, "joint agreement" means a written contract pursuant to which a covered entity and one or more financial institutions jointly offer, endorse or sponsor a financial product or service.

History

Source Note: The provisions of this §22.17 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.18 Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions

(a) If the covered entity discloses nonpublic personal financial information as necessary to effect, administer or enforce a transaction that a consumer requests or authorizes, or in connection with a transaction listed in subsection (b) of this section, the following do not apply:

(1) provision of the initial notice in §22.8(a)(2) of this title (relating to Initial Privacy Notice),

(2) the opt out requirements in §22.11 of this title (relating to Form of Opt Out Notice to Consumers and Opt Out Methods) and the limitations on disclosure in §22.14 of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties), and

(3) the requirements pertaining to service providers and joint marketing in §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing).

(b) Applicable transactions include:

(1) servicing or processing an insurance product or service that a consumer requests or authorizes;

(2) maintaining or servicing the consumer's account with a covered entity, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity;

(3) a proposed or actual securitization, secondary market sale (including sales of servicing rights) or similar transaction related to a transaction of the consumer; or

(4) reinsurance or stop loss or excess loss insurance.

(1) required, or is one of the lawful or appropriate methods, to enforce the covered entity's rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or

(2) required, or is a usual, appropriate or acceptable method:

(A) to carry out the transaction or the product or service business of which the transaction is a part, and record, service or maintain the consumer's account in the ordinary course of providing the insurance product or service;

(B) to administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;

(C) to provide a confirmation, statement or other record of the transaction, or information on the status or value of the insurance product or service to the consumer or the consumer's agent or broker;

(D) to accrue or recognize incentives or bonuses associated with the transaction that are provided by a covered entity or any other party;

(E) to underwrite insurance at the consumer's request or for any of the following purposes as they relate to a consumer's insurance: account administration, reporting, investigating or preventing fraud or material misrepresentation, processing premium payments, processing insurance claims, administering insurance benefits (including utilization review activities), participating in research projects or as otherwise required or specifically permitted by federal or state law; or

(F) in connection with:

(i) the authorization, settlement, billing, processing, clearing, transferring, reconciling or collection of amounts charged, debited or otherwise paid using a debit, credit or other payment card, check or account number, or by other payment means;

(ii) the transfer of receivables, accounts or interests therein; or

(iii) the audit of debit, credit or other payment information.

History

Source Note: The provisions of this §22.18 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.19 Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information

(a) The requirements for initial notice to consumers in §22.8(a)(2) of this title (relating to Initial Privacy Notice), the opt out in §22.11 of this title (relating to Form of Opt Out Notice to Consumers and Opt Out Methods) and §22.14 of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties), and service providers and joint marketing in §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing) do not apply when a covered entity discloses nonpublic personal financial information:

(1) with the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction;

(2) to protect the confidentiality or security of a covered entity's records pertaining to the consumer, service, product or transaction;

(3) to protect against or prevent actual or potential fraud or unauthorized transactions;

(4) for required institutional risk control or for resolving consumer disputes or inquiries;

(5) to persons holding a legal or beneficial interest relating to the consumer;

(6) to persons acting in a fiduciary or representative capacity on behalf of the consumer;

(7) to provide information to insurance rate advisory organizations, guaranty funds or agencies, agencies that are rating a covered entity, persons that are assessing the covered entity's compliance with industry standards, and the covered entity's attorneys, accountants and auditors;

(8) to the extent specifically permitted or required under other provisions of law and in accordance with the federal Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.), to law enforcement agencies (including the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, the Securities and Exchange Commission, the Secretary of the Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 (Financial Recordkeeping), a state insurance authority, and the Federal Trade Commission), self-regulatory organizations or for an investigation on a matter related to public safety;

(9) to a consumer reporting agency in accordance with the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.); or from a consumer report reported by a consumer reporting agency;

(10) in connection with a proposed or actual sale, merger, transfer or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal financial information concerns solely consumers of the business or unit;

(11) to comply with federal, state or local laws, rules and other applicable legal requirements;

(12) to comply with a properly authorized civil, criminal or regulatory investigation, or subpoena or summons by federal, state or local authorities;

(13) to respond to judicial process or government regulatory authorities having jurisdiction over a covered entity for examination, compliance or other purposes as authorized by law; or

(14) for purposes related to the replacement of a group benefit plan, a group health plan, a group welfare plan or a workers' compensation policy.

(b) A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal financial information as permitted under §22.11(f) of this title.

History

Source Note: The provisions of this §22.19 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.20 Protection of Fair Credit Reporting Act

Nothing in this subchapter shall be construed to modify, limit or supersede the operation of the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.), and no inference shall be drawn on the basis of the provisions of this subchapter regarding whether information is transaction or experience information under Section 603 of that Act.

History

Source Note: The provisions of this §22.20 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.21 Nondiscrimination

A covered entity shall not unfairly discriminate against any consumer or customer because that consumer or customer has opted out from the disclosure of his or her nonpublic personal financial information pursuant to the provisions of this subchapter.

History

Source Note: The provisions of this §22.21 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.22 Violation

A violation of any section of this subchapter will subject the covered entity to the disciplinary and enforcement sanctions and penalties provided in Insurance Code, Chapters 82, 83, 84, and 601.

History

Source Note: The provisions of this §22.22 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.23 Severability

If any section or portion of a section of this subchapter or its applicability to any person or circumstance is held invalid by a court, the remainder of the subchapter or the applicability of the provision to other persons or circumstances shall not be affected.

History

Source Note: The provisions of this §22.23 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.24 Effective Date

(a) This subchapter is effective July 12, 2001.

(b) By September 10, 2001, a covered entity shall provide an initial notice, as required by §22.8 of this title (relating to Initial Privacy Notice), to consumers who are the covered entity's customers on September 10, 2001. For example, a covered entity provides an initial notice to consumers who are its customers on September 10, 2001, if, by that date, the covered entity has established a system for providing an initial notice to all new customers and has mailed the initial notice to all the covered entity's existing customers.

(c) Until September 10, 2002, a contract that a covered entity has entered into with a nonaffiliated third party to perform services for the covered entity or functions on the covered entity's behalf satisfies the provisions of §22.17(a)(1)(B) of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing), even if the contract does not include a requirement that the third party maintain the confidentiality of nonpublic personal financial information, so long as the covered entity entered into the agreement on or before September 10, 2000.

History

Source Note: The provisions of this §22.24 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.25 Preservation of Existing Privacy Law

Nothing in this subchapter shall preempt or supersede existing state law related to nonpublic personal financial information.

History

Source Note: The provisions of this §22.25 adopted to be effective December 17, 2001, 26 TexReg 10316.

28 Tex. Admin. Code § 22.26 Model Privacy Notice Form and Examples

Use of Version 1, 2, or 3 of the model privacy form in 74 Federal Register 62890 (December 1, 2009), or Version 4 for the optional mail-in opt out form, consistent with the instructions in §22.27 of this title (relating to General Instructions), complies with the notice content requirements of §22.10 and §22.11 of this title (relating to Information to be Included in Privacy Notices and Form of Opt Out Notice to Consumers and Opt Out Methods), although use of the model privacy form is not required. The examples are not exclusive. Compliance with an example, to the extent applicable, constitutes compliance. Covered entities, including a group of financial holding company affiliates that use a common privacy notice, may use the model privacy form, if the information in the model privacy form is accurate for each institution that uses the notice. Note that disclosure of certain information, such as assets, income, and information from a consumer reporting agency, may give rise to obligations under the federal FCRA, such as a requirement to permit a consumer to opt out of disclosures to affiliates or designation as a consumer reporting agency if a covered entity makes disclosures to nonaffiliated third parties.

History

Source Note: The provisions of this §22.26 adopted to be effective December 17, 2001, 26 TexReg 10316; amended to be effective December 7, 2014, 39 TexReg 9566.

28 Tex. Admin. Code § 22.27 General Instructions

(a) A covered entity, including a group of covered entities or financial institutions that use a common privacy notice, may use the model form, at its option, to meet the content requirements of the privacy notice and opt out notice set out in §22.10 and §22.11 of this title (relating to Information to be Included in Privacy Notices and Form of Opt Out Notice to Consumers and Opt Out Methods).

(b) The model form is a standardized form, including page layout, content, format, style, pagination, and shading. Covered entities seeking to obtain legal safe harbor through use of the model form may modify it only as described in these instructions.

(c) Disclosure of certain information, such as assets, income, and information from a consumer reporting agency, may give rise to obligations under the Fair Credit Reporting Act (15 U.S.C. §§1681 - 1681x) (FCRA), for example, a requirement to permit a consumer to opt out of disclosures to affiliates or designation as a consumer reporting agency if disclosures are made to nonaffiliated third parties.

(d) The word "customer" may be replaced by the word "member" whenever it appears in the model form, as appropriate. A covered entity may replace the term "customer" with another appropriate term as provided under 28 TAC §22.4(c) - (e).

(e) The model form consists of two pages, which may appear on both sides of a single sheet of paper, or may appear on two separate pages. Where a covered entity provides a long list of covered entities or financial institutions at the end of the model form in accord with the instructions in subsection (g)(3)(A)(i) of this section, or provides additional information in accord with the instructions in subsection (g)(3)(C) of this section, and the list or additional information exceeds the space available on page two of the model form, the list or additional information may extend to a third page.

(1) Page one contents. The first page consists of the following components:

(A) date last revised in the upper right-hand corner;

(B) title;

(D) disclosure table (Reasons we can share your personal information);

(E) "To limit our sharing" box, as needed, for the covered entity's opt out information;

(F) "Questions" box, for customer service contact information; and

(G) mail-in opt out form, as needed.

(2) Page two contents. The second page consists of the following components:

(A) heading (page 2);

(B) frequently asked questions("Who we are" and "What we do";

(D) "Other important information" box, as needed.

(f) The format of the model privacy form may be modified only as described in paragraphs (1) - (5) of this subsection.

(1) Easily readable type font. Covered entities that use the model form must use an easily readable type font. While a number of factors together produce easily readable type font, covered entities must use a minimum of 10-point font, unless otherwise expressly permitted in these instructions, and sufficient spacing between the lines of type.

(2) Logo. A covered entity may include a corporate logo on any page of the notice, so long as it does not interfere with the readability of the model form or the space constraints of each page.

(3) Page size and orientation. Each page of the model form must appear on paper in portrait orientation, the size of which must meet the layout and minimum font size requirements.

(4) Color. The model form must appear on white or light color paper, for example, cream, with black or other contrasting ink color. Spot color may be used to achieve visual interest, so long as the color contrast is distinctive and the color does not detract from the readability of the model form. Logos may also appear in color.

(5) Languages. The model form may be translated into languages other than English.

(g) The information required in the model form may be modified only as described in this subsection.

(1) Name of the covered entity or group of affiliated covered entities or institutions providing the notice. Insert the name of the covered entity providing the notice or a common identity of affiliated covered entities or institutions jointly providing the notice on the form wherever name of covered entity appears.

(2) Page one instruction.

(A) Last revised date. The covered entity must insert in the upper right-hand corner the date on which it last revised the notice. The information must appear in minimum 8-point font as "rev. (month/year)" using either the name or number of the month, for example "rev. July 2009" or "rev. 7/09."

(B) General instructions for the "What?" box.

(i) The bulleted list identifies the types of personal information the covered entity collects and shares. All covered entities must use the term "Social Security number" in the first bullet.

(ii) Covered entities must use at least five of the following terms to complete the bulleted list: income, account balances, payment history, transaction history, transaction or loss history, credit history, credit scores, assets, investment experience, credit-based insurance scores, insurance claim history, medical information, overdraft history, purchase history, account transactions, risk tolerance, medical-related debts, credit card or other debt, mortgage rates and payments, retirement assets, checking account information, employment information, and wire transfer instructions.

(C) General instructions for the disclosure table. The left column lists reasons for sharing or using personal information. Each reason correlates to a specific legal provision described in the instructions in subparagraph (D) of this paragraph. In the middle column, each covered entity must provide a "Yes" or "No" response that accurately reflects its information-sharing policies and practices with respect to the reason listed on the left. In the right column, each covered entity must provide in each box one of the following three responses, as applicable, that reflects whether a consumer can limit such sharing:

(i) "Yes" if it is required to or voluntarily provides an opt out;

(ii) "No" if it does not provide an opt out; or

(iii) "We don't share" if it answers "No" in the middle column. Only the sixth row, "For our affiliates to market to you," may be omitted at the option of the covered entity as described in the instructions in subparagraph (D)(vi) of this paragraph.

(D) Specific disclosures and corresponding legal provisions.

(i) For our everyday business purposes. This reason incorporates sharing information under §22.18 and §22.19 of this title (relating to Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial information for Processing and Servicing Transactions and Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information) and with service providers under §22.17 of this title (relating to Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing), other than the purposes specified in the instructions in clause (ii) or (iii) of this subparagraph.

(ii) For our marketing purposes. This reason incorporates sharing information with service providers by a covered entity for its own marketing under §22.17 of this title. A covered entity that shares for this reason may choose to provide an opt out.

(iii) For joint marketing with other financial companies. This reason incorporates sharing information under joint marketing agreements between two or more covered entities or financial institutions and with any service provider used in connection with such agreements under §22.17 of this title. A covered entity that shares for this reason may choose to provide an opt out.

(iv) For our affiliates' everyday business purposes - information about transactions and experiences. This reason incorporates sharing information specified in §603(d)(2)(A)(i) and §603(d)(2)(A)(ii) of the FCRA. A covered entity that shares for this reason may choose to provide an opt out.

(v) For our affiliates' everyday business purposes - information about creditworthiness. This reason incorporates sharing information under §603(d)(2)(A)(iii) of the FCRA. A covered entity that shares for this reason must provide an opt out.

(vi) For our affiliates to market to you. This reason incorporates sharing information specified in §624 of the FCRA. This reason may be omitted from the disclosure table when the covered entity does not have affiliates, or does not disclose personal information to its affiliates; the covered entity's affiliates do not use personal information in a manner that requires an opt out; or the covered entity provides the affiliate marketing notice separately. Covered entities that include this reason must provide an opt out of indefinite duration. A covered entity that must provide an affiliate marketing opt out, but does not include that opt out in the model form under this clause, must comply with §624 of the FCRA and Insurance Code Chapter 601 and 28 TAC Subchapter A, including §§22.8 - 22.12 of this title (relating to Initial Privacy Notice, Annual Privacy Notice, Information to be Included in Privacy Notices, Form of Opt Out Notice to Consumers and Opt Out Methods, and Revised Privacy Notices, respectively), with respect to the initial notice and opt out and any subsequent renewal notice and opt out. A covered entity not required to provide an opt out under this subparagraph may elect to include this reason in the model form.

(vii) For nonaffiliates to market to you. This reason incorporates sharing described in §22.11 and §22.12(a)(1) - (4) of this title. A covered entity that shares personal information for this reason must provide an opt out.

(E) To limit our sharing. A covered entity must include this section of the model form only if it provides an opt out. The word "choice" may be written in either the singular or plural, as appropriate. Covered entities must select one or more of the applicable opt out methods described: telephone, for example, by a toll-free number; a website; or use of a mail-in opt out form. Covered entities may include the words "toll-free" before telephone, as appropriate. A covered entity that allows consumers to opt out online must provide either a specific web address that takes consumers directly to the opt out page or a general web address that provides a clear and conspicuous direct link to the opt out page. The opt out choices made available to the consumer who contacts the covered entity through these methods must correspond accurately to the "Yes" responses in the third column of the disclosure table. In the part titled "Please note," covered entities may insert a number that is 30 or greater in the space marked "(30)." Instructions on voluntary or state privacy law opt out information are in the instructions in subparagraph (G)(v) of this paragraph.

(F) Questions box. Customer service contact information must appear, as appropriate, where "phone number" or "website" appears. Covered entities may elect to provide either a phone number, such as a toll-free number, or a web address, or both. Covered entities may include the words "toll-free" before the telephone number, as appropriate.

(G) Mail-in opt out form. Covered entities must include this mail-in form only if they state in the "To limit our sharing" box that consumers can opt out by mail. The mail-in form must provide opt out options that correspond accurately to the "Yes" responses in the third column in the disclosure table. Covered entities that require customers to provide only name and address may omit the section identified as "account #." Covered entities that require additional or different information, for example, a random opt out number or a truncated account number, to implement an opt out election should modify the "account #" reference accordingly. This includes covered entities that require customers with multiple accounts to identify each account to which the opt out should apply. A covered entity must enter its opt out mailing address in the far right of the Version 3: Model Form with Mail-In Opt Out Form. A covered entity must enter its opt out mailing address below the Version 4: Optional Mail-In Form. The reverse side of the mail-in opt out form must not include any content of the model form.

(i) Joint accountholder. Only covered entities that provide their joint accountholders the choice to opt out for only one accountholder, in accord with the instructions in paragraph (3)(A)(v) of this subsection, must include in the far left column of the mail-in form the following statement: "If you have a joint account, your choice(s) will apply to everyone on your account unless you mark below. Apply my choice(s) only to me." The word "choice" may appear in either the singular or plural, as appropriate. Covered entities that provide insurance products or services, provide this option, and elect to use the model form may substitute the word "policy" for "account" in this statement. Covered entities that do not provide this option may eliminate this left column from the mail-in form.

(ii) FCRA §603(d)(2)(A)(iii) opt out. If the covered entity shares personal information under §603(d)(2)(A)(iii) of the FCRA, it must include in the mail-in opt out form the following statement: "Do not share information about my creditworthiness with your affiliates for their everyday business purposes."

(iii) FCRA §624 opt out. If the covered entity incorporates §624 of the FCRA in accord with the instructions in subparagraph (D)(vi) of this paragraph, it must include in the mail-in opt out form the following statement: "Do not allow your affiliates to use my personal information to market to me."

(iv) Nonaffiliate opt out. If the covered entity shares personal information under §22.14(a)(1) - (4) of this title (relating to Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties), it must include in the mail-in opt out form the following statement: "Do not share my personal information with nonaffiliates to market their products and services to me."

(v) Additional opt outs. Covered entities that use the disclosure table to provide opt out options beyond those required by federal law must provide those opt outs in this section of the model form. A covered entity that chooses to offer an opt out for its own marketing in the mail-in opt out form must include one of the two following statements: "Do not share my personal information to market to me." or "Do not use my personal information to market to me." A covered entity that chooses to offer an opt out for joint marketing must include the following statement: "Do not share my personal information with other financial institutions to jointly market to me."

(H) Barcodes. A covered entity may elect to include a barcode, a tagline, or both as an internal identifier in 6-point font at the bottom of page one, as needed for information internal to the institution, so long as these do not interfere with the clarity or text of the form.

(3) Page two instructions.

(A) General instructions for the questions. Certain of the questions may be customized as follows:

(i) "Who is providing this notice?" A covered entity may omit this question where only one covered entity provides the model form and that covered entity's name clearly appears in the title on page one. Two or more covered entities or financial institutions that jointly provide the model form must use this question to identify themselves as required by §22.13(g) of this title (relating to Delivery). Where the list of covered entities or financial institutions exceeds four lines, the covered entity must describe in the response to this question the general types of covered entities or financial institutions jointly providing the notice and must separately identify those covered entities or financial institutions, in minimum 8-point font, directly following the "Other important information" box, or, if that box is not included in the covered entity's form, directly following the "Definitions." The list may appear in a multi-column format.

(ii) "How does (name of covered entity) protect my personal information?" The covered entity may only provide additional information about its safeguarding practices following the designated response to this question. This may include information about the covered entity's use of "cookies" or other measures it uses to safeguard personal information. Covered entities are limited to a maximum of 30 additional words.

(iii) "How does (name of covered entity) collect my personal information?" Covered entities must use at least five of the following terms to complete the bulleted list for this question: open an account, deposit money, pay your bills, apply for a loan, use your credit or debit card, seek financial or tax advice, apply for insurance, pay insurance premiums, file an insurance claim, seek advice about your investments, buy securities from us, sell securities to us, direct us to buy securities, direct us to sell your securities, make deposits or withdrawals from your account, enter into an investment advisory contract, give us your income information, provide employment information, give us your employment history, tell us about your investment or retirement portfolio, tell us about your investment or retirement earnings, apply for financing, apply for a lease, provide account information, give us your contact information, pay us by check, give us your wage statements, provide your mortgage information, make a wire transfer, tell us who receives the money, tell us where to send the money, show your government-issued ID, show us your driver's license, or order a commodity futures or option trade. Covered entities that collect personal information from their affiliates, credit bureaus, or both, must include after the bulleted list the following statement: "We also collect your personal information from others, such as credit bureaus, affiliates, or other companies." Covered entities that do not collect personal information from their affiliates or credit bureaus but do collect information from other companies must include the following statement instead: "We also collect your personal information from other companies." Only covered entities that do not collect any personal information from affiliates, credit bureaus, or other companies can omit both statements.

(iv) "Why can't I limit all sharing?" Covered entities that describe state privacy law provisions in the "Other important information" box must use the bracketed sentence: "See below for more on your rights under state law." Other covered entities must omit this sentence.

(v) "What happens when I limit sharing for an account I hold jointly with someone else?" Only covered entities that provide opt out options must use this question. Other covered entities must omit this question. Covered entities must choose one of the following two statements to respond to this question: "Your choices will apply to everyone on your account," or "Your choices will apply to everyone on your account-unless you tell us otherwise." Covered entities that provide insurance products or services and elect to use the model form may substitute the word "policy" for "account" in these statements.

(B) General instructions for the definitions. The covered entity must customize the space below the responses to the three definitions in this area of the form. This specific information must be in italicized lettering to set off the information from the standardized definitions.

(i) Affiliates. As required by §22.10(b)(3) of this title, where (affiliate information) appears, the covered entity must:

(I) if it has no affiliates, state: "(name of covered entity) has no affiliates";

(II) if it has affiliates but does not share personal information, state: "(name of covered entity) does not share with our affiliates"; or

(III) if it shares with its affiliates, state, as applicable: "Our affiliates include companies with a (common corporate identity of covered entity) name; financial companies such as (insert illustrative list of companies); nonfinancial companies, such as (insert illustrative list of companies); and others, such as insert illustrative list."

(ii) Nonaffiliates. As required by §22.10(d) of this title, where (nonaffiliate information) appears, the covered entity must:

(I) if it does not share with nonaffiliated third parties, state: "(name of covered entity) does not share with nonaffiliates so they can market to you"; or

(II) if it shares with nonaffiliated third parties, state, as applicable: ''Nonaffiliates we share with can include (list categories of companies such as mortgage companies, insurance companies, direct marketing companies, and nonprofit organizations)."

(iii) Joint marketing. As required by §22.17 of this title, where (joint marketing) appears, the covered entity must:

(I) if it does not engage in joint marketing, state: "(name of covered entity) doesn't jointly market"; or

(II) if it shares personal information for joint marketing, state, as applicable: "Our joint marketing partners include (list categories of companies, such as credit card companies)."

(C) General instructions for the "Other important information" box. This box is optional. The space provided for information in this box is not limited. Only the following types of information may appear in this box:

(i) State, international privacy law information, or both; or

(ii) Acknowledgment of receipt form; or

(iii) Both (i) and (ii).

History

Source Note: The provisions of this §22.27 adopted to be effective December 7, 2014, 39 TexReg 9566.

Subchapter B INSURANCE CONSUMER HEALTH INFORMATION PRIVACY

28 Tex. Admin. Code § 22.51 Purpose and Scope

(a) Purpose. This subchapter governs the treatment by all covered entities of a consumer's nonpublic personal health information. This subchapter:

(1) requires a covered entity to obtain an authorization prior to disclosing nonpublic personal health information about a consumer to any other person for any purpose other than as enumerated in §22.57 of this subchapter (relating to Exceptions); and

(2) describes exceptions to the authorization requirement for certain insurance related transactions and other purposes enumerated in this subchapter.

(b) Scope. This subchapter applies to all nonpublic personal health information held by a covered entity as defined in this subchapter.

History

Source Note: The provisions of this §22.51 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.52 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Unless otherwise defined in this subchapter, each term that is used in this subchapter that is defined in subchapter A of this chapter shall have the meaning assigned by subchapter A of this chapter.

(1) Authorization--Executed document that signifies that the signer of the authorization is providing informed permission that nonpublic personal health information held by a covered entity and described in the document may be released to other parties pursuant to the terms of the document.

(2) Authorization form--A form provided by a covered entity which, if signed and dated by a consumer as set forth in this subchapter, constitutes an authorization under this subchapter.

(3) Consumer--An individual or that individual's representative who seeks to obtain, obtains or has obtained an insurance product or service from a covered entity, and about whom the covered entity has nonpublic personal health information.

(4) Covered entity--A person who holds or is required to hold a license, registration, certificate of authority, or other authority under the Insurance Code or another insurance law of this state. The term includes, but is not limited to, an insurance company, group hospital service corporation, mutual insurance company, local mutual aid association, statewide mutual assessment company, stipulated premium insurance company, health maintenance organization, reciprocal or interinsurance exchange, Lloyd's plan, fraternal benefit society, county mutual insurer, farm mutual insurer, viatical or life settlement provider or broker, or insurance agent. For purposes of this subchapter, "covered entity" has the same meaning as "licensee" as used in Article 28B.01(2), Insurance Code.

(5) Health care operations--As set forth in the Health Insurance Portability and Accountability Act and Privacy Standards. The term does not include marketing as described in 45 C.F.R. §164.514(e) and any subsequent amendments.

(6) Health Insurance Portability and Accountability Act and Privacy Standards--The privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.) and the final rules adopted on December 28, 2000, and published at 65 Fed. Reg. 82798 et seq., and any subsequent amendments.

(7) Marketing--The promotion or advertisement, by a covered entity, of specific products or services if the covered entity receives, directly or indirectly, a financial incentive or remuneration for the use, access, or disclosure of protected health information. Marketing includes, but is not limited to, communications to an individual based on prescription patterns or protected health information intended to encourage or discourage the individual's use of prescription or non-prescription medicine, medical devices or any other product. Marketing does not include a communication, by a covered entity, health care provider, or participants in an organized health care arrangement or their affiliated covered entities or business associates, necessary to provide treatment or perform health care operations.

(8) Nonpublic personal health information--Has the same meaning as "protected health information."

(9) Prescription information--Any information, whether oral or recorded in any form or medium, that:

(A) relates to or concerns a prescription created or received by a covered entity, health care provider, public health authority, employer, school or university, or health care clearinghouse; and

(B) relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to the individual, or the utilization of health care by the individual.

(10) Prescription pattern--A profile or other summary of an individual's prescription information.

(11) Protected health information--Individually identifiable health information collected from an individual, including the individual's name, address, social security number and demographic information, that:

(A) relates to:

(i) the past, present, or future physical or mental health or condition of the individual;

(ii) the provision of health care to the individual; or

(iii) the past, present, or future payment for the provision of health care to the individual; and

(B) either identifies the individual or provides a reasonable basis to believe the information can be used to identify the individual.

(12) Request for authorization--A written or electronic transmission requesting an authorization pursuant to this subchapter.

History

Source Note: The provisions of this §22.52 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.53 Authorization Required for Disclosure of Nonpublic Personal Health Information

Except pursuant to §22.57 of this subchapter (relating to Exceptions) a covered entity must obtain an authorization to disclose any nonpublic personal health information about a consumer to another party before making such a disclosure.

History

Source Note: The provisions of this §22.53 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.54 Authorizations

An authorization required by this subchapter shall:

(1) be in writing or electronic form (if the consumer has agreed to conduct business with the covered entity electronically), and shall:

(A) state the identity of the consumer who is the subject of the nonpublic personal health information;

(B) describe:

(i) the types of nonpublic personal health information to be disclosed;

(ii) the parties to whom the covered entity discloses nonpublic personal health information;

(iii) the purpose of the disclosure;

(iv) how the information disclosed will be used; and

(v) the procedure for revoking the authorization.

(C) include the signature which (if the consumer has agreed to conduct business with the covered entity electronically) may be in electronic form, and date signed, of:

(i) the consumer who is the subject of the nonpublic personal health information; or

(ii) a person who is legally empowered to authorize disclosure of the subject consumer's nonpublic personal health information.

(D) provide notice:

(i) of the length of time for which the authorization is valid; and

(ii) that the consumer may revoke the authorization at any time.

(2) An authorization subject to this subchapter shall specify the period of time for which the authorization shall remain valid, but shall in no event be valid:

(A) in the case of an authorization signed by the consumer that is the subject of the nonpublic personal health information, for a period of more than 24 months from the date it was signed; and

(B) in the case of an authorization signed by another person who is legally empowered to authorize disclosure on behalf of the consumer, for a period that ends at the later of:

(i) the date the covered entity receives notice that the person has lost the legal capacity to authorize disclosure, or

(ii) 24 months from the date it was signed.

(3) A covered entity obtaining an authorization pursuant to this subchapter shall retain the original authorization or a copy thereof in its records of the consumer who is the subject of nonpublic personal health information.

(4) A covered entity may obtain a subsequent authorization to replace an authorization that has by its terms expired, provided that the subsequent authorization:

(A) complies with the requirements of paragraph (1)(C) of this section, and

(B) meets all other applicable requirements of this section.

History

Source Note: The provisions of this §22.54 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.55 Delivery of Requests for Authorization & Authorization Forms

(a) A covered entity may deliver a request for authorization and an authorization form to a consumer as required by this subchapter:

(1) separately; or

(2) along with a policy, billing, an opt-out notice pursuant to Subchapter A of this chapter, or other written communication, provided that the request for authorization and the authorization form:

(A) are clear and conspicuous,

(B) are separate in content from any other accompanying written communication, and

(C) require a separate signature on a signature line that is not a part of any signature line relating to any of the other accompanying written communication.

(b) A covered entity is not required to deliver, or include in any other communications, an authorization form to the consumer unless the covered entity intends to disclose protected health information pursuant to §22.53 of this subchapter (relating to Authorization Required for Disclosure of Nonpublic Personal Health Information).

History

Source Note: The provisions of this §22.55 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.56 Revocation of Authorizations

(a) A consumer or person who has signed an authorization described in this subchapter may at any time revoke that authorization.

(b) Revocation of any authorization made pursuant to this subchapter is subject to the rights of a person who acted in reasonable reliance on the authorization before receiving notice of the revocation.

(c) A revocation must be in writing and signed by the consumer about whom the authorization was made or by a person legally empowered to authorize disclosure on behalf of the consumer.

(d) A covered entity:

(1) may not require a revocation to be on a particular form; and

(2) must honor a revocation that reasonably identifies the authorization that it is intended to revoke.

(e) A covered entity shall effect a revocation as soon as possible after receipt but not later than 15 days after the date of receipt.

History

Source Note: The provisions of this §22.56 adopted to be effective September 1, 2002, 27 TexReg 6504 and 7123.

28 Tex. Admin. Code § 22.57 Exceptions

(a) A covered entity may disclose, without an authorization, nonpublic personal health information to the extent that the disclosure is necessary to perform the following insurance functions or legally required activity on behalf of that covered entity:

(1) the investigation or reporting of actual or potential fraud, misrepresentation, or criminal activity;

(2) underwriting;

(3) the placement or issuance of an insurance product;

(4) loss control services;

(5) ratemaking and guaranty fund functions;

(6) reinsurance and excess loss insurance;

(7) risk management;

(8) case management;

(9) disease management;

(10) quality assurance;

(11) quality improvement;

(12) performance evaluation;

(13) health care provider credentialing verification;

(14) utilization review;

(15) peer review activities;

(16) actuarial, scientific, medical, or public policy research;

(17) grievance procedures;

(18) the internal administration of compliance, managerial, and information systems;

(19) policyholder services;

(20) auditing;

(21) reporting;

(22) database security;

(23) the administration of consumer disputes and inquiries;

(24) external accreditation standards;

(25) the replacement of a group benefit plan or workers' compensation policy or program;

(26) activities in connection with a sale, merger, transfer, or exchange of all or part of a business or operating unit;

(27) any activity that permits disclosure without authorization under the federal Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Section 1320d et seq.), as amended;

(28) disclosure that is required, or is a lawful or appropriate method, to enforce the covered entity's rights or the rights of other persons engaged in carrying out a transaction or providing an insurance product or service that the consumer requests or authorizes;

(29) claims administration, adjustment, and management;

(30) any activity otherwise permitted by law, required pursuant to a governmental reporting authority, or required to comply with legal process; and

(31) any other insurance functions that the commissioner approves that are:

(A) necessary for appropriate performance of insurance functions; and

(B) fair and reasonable to the interests of consumers.

(b) A disclosure for marketing purposes shall not be considered to be an insurance function or any other type of activity that constitutes an exception under this section.

History

Source Note: The provisions of this §22.57 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.60 Responsibility for Disclosure to Third Parties

A covered entity that discloses protected health information to another person to perform any function on behalf of the covered entity shall not make any such disclosure unless the third party agrees not to disclose or use the protected health information other than to carry out the purposes for which the covered entity disclosed the information or in a manner otherwise consistent with this subchapter.

History

Source Note: The provisions of this §22.60 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.61 Relationship to Federal Rules

This subchapter does not apply to a covered entity that is required to comply with the standards governing the privacy of individually identifiable health information adopted by the United States Secretary of Health and Human Services under Section 262(a), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. Sections 1320d-1320d-8).

History

Source Note: The provisions of this §22.61 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.62 Protection of Fair Credit Reporting Act

This subchapter may not be construed to modify, limit, or supersede the operation of the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.) and an inference may not be drawn based on this subchapter regarding whether information is transaction or experience information under Section 603 of that Act (15 U.S.C. Section 1681a).

History

Source Note: The provisions of this §22.62 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.63 Relationship to State Laws

Nothing in this subchapter shall be construed to preempt or supersede existing state law related to medical records, health or insurance information privacy that is in effect on July 1, 2002.

History

Source Note: The provisions of this §22.63 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.64 Violation; Disciplinary Action

(a) A covered entity may not knowingly or willfully violate this subchapter.

(b) A knowing or willful violation of any section of this subchapter shall subject the covered entity to the disciplinary and enforcement sanctions and penalties provided in the Insurance Code, Chapters 28B, 82, 83, and 84.

(c) In addition to the penalties prescribed by this subchapter, an alleged violation of this subchapter by a covered entity is subject to investigation and disciplinary proceedings, including probation or suspension. Evidence of a pattern or practice of violations under this subchapter may subject a covered entity to license revocation.

(d) In addition to the penalties prescribed by this subchapter, a covered entity shall be excluded from participating in any state-funded health care program if there is evidence that the covered entity engaged in a pattern or practice of violating this subchapter.

(e) This subchapter does not affect any right of a person to bring a cause of action under other law or otherwise seek relief with respect to conduct that is a violation of this subchapter.

History

Source Note: The provisions of this §22.64 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.65 Nondiscrimination

A covered entity shall not unfairly discriminate against a consumer because that consumer has not authorized disclosure of his or her nonpublic personal health information pursuant to the provisions of this subchapter.

History

Source Note: The provisions of this §22.65 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.66 Severability

History

Source Note: The provisions of this §22.66 adopted to be effective September 1, 2002, 27 TexReg 6504.

28 Tex. Admin. Code § 22.67 Effective date

This subchapter takes effect on September 1, 2002.

History

Source Note: The provisions of this §22.67 adopted to be effective September 1, 2002, 27 TexReg 6504.

Chapter 24 DISCOUNT HEALTH CARE PROGRAM PRINCIPLES OF REGULATION

Subchapter A DISCOUNT HEALTH CARE PROGRAM PRINCIPLES OF REGULATION

28 Tex. Admin. Code § 24.1 Purpose, Scope, and Construction

(a) The purpose of this chapter is to implement the Insurance Code, Chapters 562, 7001, and 7002 by establishing the principles of conduct applicable to a discount health care program operator in its business activities.

(b) A discount health care program operator, including the operator of a freestanding discount health care program or a discount health care program operated and marketed by an insurer or a health maintenance organization, shall comply with this chapter.

(c) This chapter construes and applies the principles of conduct embodied in the Insurance Code Chapter 562 for the regulation of trade practices in the business of discount health care programs; Chapter 7001 for the registration of discount health care program operators; and Chapter 7002 for the supplemental provisions relating to discount health care program operators.

History

Source Note: The provisions of this §24.1 adopted to be effective September 8, 2010, 35 TexReg 8121.

28 Tex. Admin. Code § 24.2 Definitions

In this chapter, the following terms have the meanings assigned by the Insurance Code, §562.002 and §7001.001:

(1) Discount health care program;

(2) Discount health care program operator;

(3) Member; and

(4) Provider.

History

Source Note: The provisions of this §24.2 adopted to be effective September 8, 2010, 35 TexReg 8121.

28 Tex. Admin. Code § 24.3 Principles

A discount health care program operator shall:

(1) comply with all applicable statutes of the State of Texas and with all applicable department rules, including Chapter 1, Subchapter D of this title (relating to Effect of Criminal Conduct); Chapter 19, Subchapter Q of this title (relating to Discount Health Care Program Registration); §19.802 of this title (relating to Amount of Fees); and Chapter 21, Subchapter B, Division 2 of this title (relating to Discount Health Care Program Advertising);

(2) lawfully conduct its business with integrity and diligence;

(3) organize and control its affairs responsibly and effectively, with adequate risk management systems;

(4) maintain adequate financial resources to enable it to satisfy its obligations as they are incurred or become due;

(5) pay due regard to the interests of its prospective members, members, and providers by treating them fairly;

(6) pay due regard to the information needs of its prospective members, members, and providers by communicating information to them in a way that is clear, fair, and not misleading;

(7) manage conflicts fairly, between, as applicable:

(A) the discount health care program operator and its members;

(B) the discount health care program operator and its providers; and

(8) interact with the commissioner in an open and cooperative way and promptly disclose to the commissioner any significant information relating to its ability to continue as a going concern or as a registered discount health care program operator and to its continued financial stability.

History

Source Note: The provisions of this §24.3 adopted to be effective September 8, 2010, 35 TexReg 8121.

28 Tex. Admin. Code § 24.4 Severability

If a court of competent jurisdiction holds that any provision of this chapter is inconsistent with any statutes of this state, is unconstitutional, or is invalid for any reason, the remaining provisions of this chapter shall remain in effect.

History

Source Note: The provisions of this §24.4 adopted to be effective September 8, 2010, 35 TexReg 8121.

Chapter 25 INSURANCE PREMIUM FINANCE

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 25.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Affiliated--When any person is connected by commonality of interest or ownership with another person.

(2) Agent--An individual licensed by the Texas Department of Insurance pursuant to Insurance Code, Article 21.07 (licensing of agents), Article 21.14 (local recording agents), Article 21.07-3 (managing general agents), and Article 1.14-2 (surplus lines agents).

(3) Annual percentage rate--That rate computed in accordance with the regulations issued by the Federal Reserve Board of the United States pursuant to §1606 of the Consumer Credit Protection Act, 15 United States Code §1601, et seq.

(4) Department--The Texas Department of Insurance.

(5) Insurer--A company or other entity formally liable on an insurance risk.

(6) Licensee--A person holding an insurance premium finance license.

(7) Ownership in a corporation--The possession of 10% or more stock in a corporation.

(8) Person--An individual, partnership, corporation, joint venture, trust, association, or any other legal entity, however organized.

(9) Premium finance company--An insurance premium finance company as defined by the Insurance Code, Article 24.01.

History

Source Note: The provisions of this §25.1 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.2 Place of Business

Each licensed insurance premium finance company shall maintain a place of business accessible to the public. This place of business shall be located where the insurance premium finance company conducts transactions under the license. A licensee may not conduct the business of premium financing provided for by this chapter, or under the Insurance Code, Chapter 24, under any name or at any place of business other than that stated on the license.

History

Source Note: The provisions of this §25.2 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.3 Responsibility for Acts of Employees

A licensee is responsible for the acts of its officers, directors and employees in the conduct of the licensee's business.

History

Source Note: The provisions of this §25.3 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.4 Knowledge of Laws and Regulations Required

Each licensee and employee of a licensee who negotiates, makes, or collects loans under the Insurance Code, Chapter 24, shall have knowledge of the laws and regulations governing such business, including the Insurance Code, Chapter 24, the Credit Code, Chapters 3 and 4 (Texas Civil Statutes, Articles 5069-3.01 et seq and Article 5069-4.01 et seq), and the federal Truth in Lending Regulations (Regulation Z, 12 Code of Federal Regulations §§226.1 et seq), and shall be charged with knowledge of those laws.

History

Source Note: The provisions of this §25.4 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.6 Motor Clubs

Motor clubs are not insurers regulated by the Department. Therefore, membership fees or dues for a motor club may not be financed with insurance policies by a premium finance company.

History

Source Note: The provisions of this §25.6 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.8 Notice by Insurance Companies of Additional or Return Premium Charge

If an insurance company receives notice of a financed insurance premium, the insurer shall notify the insurance premium finance company whenever it notifies the insured or insurance agent of an additional or return premium arising under the financed policy. This section shall not apply to policies written pursuant to the provisions of the Texas Automobile Insurance Plan Association.

History

Source Note: The provisions of this §25.8 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.9 Texas Automobile Insurance Plan Association Financing Disclosure and Premium Finance Comparison Disclosure Form

(a) Before an insurance premium finance company may finance a policy insured through the Texas Automobile Insurance Plan Association (TAIPA), it must require disclosure to the insured or prospective insured the payment plan available through TAIPA. A comparison between the terms of financing the policy with an insurance premium finance company and the use of the payment plan available through TAIPA must be made.

(b) This disclosure shall be made using the Premium Finance Comparison Disclosure Form (Disclosure Form), which the Department adopts and incorporates by reference. The Disclosure Form shall be provided to the consumer in both English and Spanish. The effective date of the Disclosure Form is October 1, 2001. This form is published by the Department and may be obtained from the Premium Finance Licensing Unit, Mail Code 107-5A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104. Reproduction of this form is allowed.

(c) The insurance premium finance company shall maintain copies of the Disclosure Forms as evidence to an examiner that disclosure of the TAIPA payment plan was made to the insured.

History

Source Note: The provisions of this §25.9 adopted to be effective May 17, 1995, 20 TexReg 3337; amended to be effective October 15, 1995, 20 TexReg 7993; amended to be effective October 2, 2001, 26 TexReg 7564.

28 Tex. Admin. Code § 25.10 Premium Refunds

(a) If the insurance premium finance company notified the insurer of the existence of the premium finance agreement pursuant to the Insurance Code, Article 24.22, then the entire unearned premium owed the insurance premium finance company (in trust for the insured) shall be paid within 60 days from the date notice of cancellation was received. If an audit of the insured's records is required to determine the amount of premiums, the time shall be extended to 90 days. If the audit is delayed because of acts of the insured, the 90-day period shall be extended to provide a reasonable time to conduct the audit and determine the amount of premiums earned.

(b) If the insurance premium finance company does not give notice of the premium finance agreement to the insurer (as provided by the Insurance Code, Article 24.22), then the total unearned premium refund shall be paid directly to the insurance premium finance company within 120 days from the effective date of the cancellation, unless the insurer has already refunded the unearned premium to the insured due to cancellation.

(c) The insurance premium finance company shall return any monies due to the insured within 20 days from the date returned unearned premiums are received from the insurer or agent.

(d) This section shall apply to cancelled policies written through or in a statutory plan or pool, except that the agent who applied for the statutory plan or pool policy on behalf of the insured shall be solely responsible for the payment of any unearned commission owed to the insurance premium finance company unless the insuring company tenders the entire unearned premium including unearned commission.

History

Source Note: The provisions of this §25.10 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.11 Surplus Lines Insurance Agents and Agencies

If an insurance premium finance company funds surplus lines insurance policy premiums or notifies a surplus lines agent or agency that its insurance policy premiums are financed, the surplus lines agent or agency shall return all gross unearned premiums to the insurance premium finance company within 60 days of notice of cancellation.

History

Source Note: The provisions of this §25.11 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.12 Savings Clause

Any cause of action, hearing, or procedure already pending or arising out of an event occurring before the effective date of this chapter shall be determined under the statutes, rules, orders, or interpretations of the Department in effect when the event occurred. This section saves the application of past procedure and law to any such event from amendment, change, or repeal despite any conflicting provisions of this chapter.

History

Source Note: The provisions of this §25.12 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.13 Severability

Where any terms or provisions of this chapter are determined by a court of competent jurisdiction to be inconsistent with any statutes of this state or to be unconstitutional, the remaining terms and provisions of this chapter shall remain in effect.

History

Source Note: The provisions of this §25.13 adopted to be effective May 17, 1995, 20 TexReg 3337.

Subchapter B LICENSING AND REGULATION

28 Tex. Admin. Code § 25.21 When a Premium Finance License Is Required

(a) A premium finance license is required if a person:

(1) makes loans by entering into premium finance agreements with insureds and prospective insureds;

(2) acquires premium finance agreements from insurance agents, brokers, or other premium finance companies; or

(3) holds premium finance agreements made and delivered by insureds payable to the person or his order.

(b) A premium finance license is not required if a person is a properly licensed local recording agent and finances premiums in accordance with the Insurance Code, Article 24.20.

History

Source Note: The provisions of this §25.21 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.22 Forms Relating to Regulation of Premium Finance Companies under the Insurance Code, Chapter 24

The Department adopts and incorporates by reference standard administration forms for use in the administrative regulation of premium finance companies. Applicants and licensed premium finance companies shall utilize the forms in preparing applications, statements, notices of required information, and other submissions required under the Insurance Code, Chapter 24, and this chapter. These forms are published by the Department and may be obtained from the Premium Finance Licensing Unit, Mail Code 107-5A, Texas Department of Insurance, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104. These forms are identified as follows.

(1) FORM PF1--Premium Finance Company License Application (for NEW license).

(2) FORM PF1A--Premium Finance Supplemental Application (for additional location, relocation, name change and ownership change).

(A) SCHEDULE A--Additional Location Filing Requirements.

(B) SCHEDULE B--Relocation Filing Requirements.

(D) SCHEDULE D--Ownership Change Filing Requirements.

(3) FORM PF1B--Application for an Insurance Premium Finance Company License by a Bank or Savings and Loan Association.

(4) FORM PF1C--Premium Finance License Renewal Application.

(5) FORM PF2--List of Principals.

(6) FORM PF3--Questionnaire.

(7) FORM PF4--Biographical Affidavit.

(8) FORM PF5--List of Other States of Licensure.

(9) FORM PF6--Appointment of Statutory Agent and Consent to Service.

History

Source Note: The provisions of this §25.22 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.23 Bank and Savings and Loan Association Premium Finance Application

A bank or savings and loan association applying for an insurance premium finance license shall file Form PF1B with the Department. The application shall include the following as applicable.

(1) Copy of Charter issued by the State Banking Department or by the Comptroller of Currency.

(2) Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts.

(3) $200 License Fee.

History

Source Note: The provisions of this §25.23 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.24 License Application

(a) An applicant for an insurance premium finance company license must file an application Form PF1 with TDI. The application must include the following as applicable:

(1) List of Principals (Form PF2);

(2) Premium Finance Application Questionnaire (Form PF3);

(3) Biographical Affidavit (Form PF4) for each individual named on Form PF2;

(4) General statement of experience giving applicant's qualifications;

(5) List of Other States of Licensure (Form PF5);

(6) Appointment of Statutory Agent and Consent to Service (Form PF6);

(7) Sworn financial statement;

(8) Sample Business Operation forms;

(9) $400 Investigation Fee;

(10) Partnership agreement;

(11) Certified copy of Assumed Name Certificate as on file with the County Clerk or Secretary of State;

(12) Originally certified copy of Articles of Incorporation from the Office of the Secretary of State or equivalent office in another state;

(13) Certified copy of Bylaws;

(14) Certified copy of Minutes;

(15) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts; and

(16) Certified copy of Certificate of Authority issued by the Texas Secretary of State (foreign corporations only).

(b) On notification by TDI of approval of the application, the applicant must submit a license fee as follows:

(1) Licenses issued January 1 through June 30--$200;

(2) Licenses issued July 1 through December 31--$100.

History

Source Note: The provisions of this §25.24 adopted to be effective May 17, 1995, 20 TexReg 3337; amended to be effective February 6, 2020, 45 TexReg 914; amended to be effective February 29, 2024, 49 TexReg 1096.

28 Tex. Admin. Code § 25.25 Additional Location License Application

An applicant for an additional location insurance premium finance company license shall file a supplemental application Form PF1A with the Department. The application shall include the following as applicable:

(1) List of Principals (Form PF2);

(2) Premium Finance Application Questionnaire (Form PF3);

(3) Biographical Affidavit (Form PF4) for manager;

(4) Appointment of Statutory Agent and Consent to Service (Form PF6);

(5) Sworn financial statement;

(6) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts;

(7) $200 License Fee.

History

Source Note: The provisions of this §25.25 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.26 Relocation of Licensed Offices

(a) A licensee may move its office from the licensed location to any other location by filing a supplemental application Form PF1A with the Department not less than 30 days prior to moving date. The application shall include the following as applicable:

(1) List of Principals (Form PF2);

(2) Current premium finance company license;

(3) $20 processing fee;

(4) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts;

(5) Copy of printed letter to be sent to the insureds; the notice letter shall include the following:

(A) Name of the insurance premium finance company;

(B) Both the old and new addresses;

(D) Date the relocation is effective; and

(E) Mailing address.

(b) An amended license shall be issued reflecting the new address upon approval of the required documentation.

(c) The relocation notice shall be approved by the Department prior to printing. The notice shall be mailed to all insureds of record at least 15 days prior to the date of relocation.

(d) After relocation is complete, the insurance premium finance company shall submit, within 30 days, copies of all new business forms used, with the new location listed on each form.

History

Source Note: The provisions of this §25.26 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.27 Change of Mailing Address

(a) Written notice of a change in business mailing address only shall be mailed to the Department and to all insureds of record at least 15 days prior to the change of mailing address.

(b) The notice shall include the exact name of the licensee, the old and new mailing addresses, the licensee's current physical address, the licensee's telephone number and the date the new mailing address is effective.

History

Source Note: The provisions of this §25.27 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.28 Ownership Change

(a) When there is an anticipated change in ownership of an insurance premium finance company, the new owner shall submit the following as applicable:

(1) Supplemental Application for an insurance premium finance company license (Form PF1A);

(2) List of Principals (Form PF2);

(3) Premium Finance Application Questionnaire (Form PF3);

(4) Biographical Affidavit (Form PF4) on all NEW individuals named on Form PF2;

(5) List of Other States of Licensure (Form PF5);

(6) Appointment of Statutory Agent and Consent to Service (Form PF6);

(7) Sworn financial statement;

(8) $200 investigation fee;

(9) A copy of the contract of sale establishing refund and fee liability;

(10) Certified copy of Assumed Name Certificate as on file with the County Clerk(s) and/or Secretary of State;

(11) A copy of the resolution minutes authorizing the change of ownership;

(12) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts;

(13) Partnership agreement.

(b) When there is a change in ownership of an insurance premium finance company resulting in no new owners, the following requirements may be omitted:

(1) Biographical Affidavit (Form PF4) on all NEW individuals named on Form PF2;

(2) $200 investigation fee.

History

Source Note: The provisions of this §25.28 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.29 Name Change

(a) A licensee may change the name of the licensed insurance premium finance company by filing a supplemental application, Form PF1A, with the Department not less than 30 days prior to name change. The application shall include the following as applicable:

(1) List of Principals (Form PF2);

(2) Current insurance premium finance company license;

(3) $20 processing fee;

(4) Amended Appointment of Statutory Agent and Consent to Service (Form PF6);

(5) A copy of the notice to be mailed to all insureds notifying of the change of name. This notice must be approved by the Texas Department of Insurance prior to mailing and must include the old name, proposed new name, effective date, physical address, mail address and phone number;

(6) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts;

(7) A copy of the amendment to the Articles of Incorporation or Organization complete with original certification from the office of the Secretary of State or the equivalent office in other states;

(8) A certified copy of amendment to the Bylaws;

(9) A certified copy of the resolution minutes authorizing the name change;

(10) Certified copy of Assumed Name Certificate as on file with the County Clerk(s) and/or Secretary of State;

(11) A certified copy of the amendment to the partnership agreement authorizing the name change.

(b) The name of the insurance premium finance company shall not be so similar to that of any other insurance premium finance company as to be likely to mislead the public.

(c) All business forms used in accordance with §25.31 of this title (relating to Insurance Premium Business Operation Forms) shall be submitted to the Department within 30 days to show the effective name change.

History

Source Note: The provisions of this §25.29 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.30 Renewal

Each licensee shall file a renewal application, FORM PF1C, with the Department. The renewal form must be postmarked on or before December 31st and shall be accompanied by the following as applicable:

(1) $200 renewal fee;

(2) Current Franchise Tax Certificate of Good Standing or letter of exemption issued by the Texas Comptroller of Public Accounts.

History

Source Note: The provisions of this §25.30 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.31 Insurance Premium Finance Business Operation Forms

(a) The Department shall review and approve, prior to use, all insurance premium finance business forms submitted as part of the initial application for license. Thereafter, each licensee shall insure that any business form used complies with the requirements of the Insurance Code, Chapter 24, and this chapter.

(b) An Insurance Premium Finance Agreement form, a Memorandum of Agreement form, a notice of Premium Finance Agreement form, a Notice of Intent to Cancel form, a Notice of Cancellation form, and a Reinstatement Request form shall accompany each license application. The forms shall reflect the applicant's preprinted information including the insurance premium finance company's name, physical address, mailing address and telephone number.

(d) The format of the Memorandum of Agreement form shall be in accordance with the Insurance Code, Article 24.11(h).

(e) The format of the Notice of Premium Finance Agreement form shall be in accordance with the Insurance Code, Article 24.22. The form must include:

(1) Insured's name and mailing address;

(2) Agent's name and mailing address;

(3) Insurance company's name and mailing address;

(4) Policy number, term and inception date;

(5) Amount financed; and

(6) Person to whom the funds were paid.

(f) The format of the Notice of Intent-to-Cancel form shall be in accordance with the Insurance Code, Article 24.17(c). The form must include:

(1) Insured's name and mailing address;

(2) Agent's name and mailing address;

(3) Date of mailing;

(4) Date of cancellation;

(5) Policy number;

(6) Amount of payment due; and

(7) Amount of late payment due if after ten days past due.

(g) The format of the Notice of Cancellation form shall be in accordance with the Insurance Code, Article 24.17(d). The form must include:

(1) Insured's name and mailing address;

(2) Agent's name and mailing address;

(3) Insurance company's name and mailing address;

(4) Date of mailing;

(5) Date of cancellation; and

(6) Policy number.

(h) The format of the Reinstatement Request form must include:

(1) Insured's name and mailing address;

(2) Agent's name and mailing address; and

(3) Insurance company's name and mailing address;

(4) Disclaimer, in boldface type, notifying that only a reinstatement has been requested and that the licensed insurance premium finance company cannot reinstate the policy.

History

Source Note: The provisions of this §25.31 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.32 Financial Responsibility

(a) Each license application shall be accompanied by a sworn financial statement for each individual, partner or corporation, as applicable, disclosing the applicant's financial condition and reflecting net assets for use in the insurance premium finance business of not less than $25,000. As used here, "net assets" means the total value of assets available for use in the business, less liabilities other than those liabilities secured by assets which are not acceptable for meeting the financial requirements under this section. The financial statement shall also disclose any existing or anticipated lines of credit for the applicant's use in the business or indicate that there are none.

(b) Unacceptable assets include, but are not limited to, goodwill, unpaid stock subscription, lines of credit, property subject to the claim of homestead, and encumbered real or personal property to the extent of the encumbrance. Valuations of accounts receivable shall be adjusted by adequate reserves for unearned charges and bad debts.

(c) Each licensee shall at all times be required to maintain net assets for use in the insurance premium finance business of not less than $25,000 for each location that is licensed.

History

Source Note: The provisions of this §25.32 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.33 Summary of Fees

The Department shall collect, and the person affected shall pay to the Department, the following fees:

(1) $400--Initial license investigation fee;

(2) $200--Initial license fee for licenses issued January 1 through June 30;

(3) $100--Initial license fee for licenses issued July 1 through December 31;

(4) $200--Investigation fee for change of ownership;

(5) $200--Additional location license fee;

(6) $20--Relocation fee;

(7) $20--Name change fee;

(8) $20--Duplicate license fee;

(9) $200--License Renewal fee.

History

Source Note: The provisions of this §25.33 adopted to be effective May 17, 1995, 20 TexReg 3337.

Subchapter C OPERATIONS

28 Tex. Admin. Code § 25.41 Unacceptable Loans

Notice of adverse action shall be sent to the insured, giving reasons for denial of any insurance premium finance agreement, as required by Regulation B of the Equal Credit Opportunity Act, 15 United States Code §§1691 et seq. Notice that the loan was denied shall be sent to the agent, but shall not include the reasons for denial.

History

Source Note: The provisions of this §25.41 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.42 Rate and Refund Chart

Each insurance premium finance company shall establish and maintain a rate and refund chart which complies with the authorized rates required by the Credit Code, Chapters 3 and 4, and the Insurance Code, Chapter 24. A copy of the rate and refund chart prepared by the insurance premium finance company shall be made available for review and inspection upon request by an examiner of the Department. The rate and refund chart shall also be made available to the insured upon request.

History

Source Note: The provisions of this §25.42 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.43 Acceptance or Rejection

An insurance premium finance company may not alter any insurance premium finance agreement unless agreed to by the insured. The insurance premium finance company shall return any unacceptable agreement to the agent from whom it was received within three working days of the date of receipt.

History

Source Note: The provisions of this §25.43 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.44 Prompt Processing Required

An insurance premium finance company shall exercise reasonable care in the processing of insurance premium finance agreements and shall promptly pay amounts due under such agreements. Reasonable time for processing of insurance premium finance agreements shall be within five working days after acceptance. If this time limitation cannot be met, the insurance premium finance company shall give notice of the delay to both insured and agent before the expiration of the five day period.

History

Source Note: The provisions of this §25.44 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.45 Duplication of Loans

A licensee may make more than one insurance premium finance loan agreement with the same insured. However, no licensee shall induce or permit any person to be obligated directly or indirectly under more than one insurance premium finance agreement concurrently, for the purpose of obtaining a higher authorized charge than would otherwise be permitted.

History

Source Note: The provisions of this §25.45 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.46 Quotation of Net Payoffs

When an insured or co-obligor asks the licensee for the net amount necessary to pay the insured's indebtedness in full, the licensee shall quote the requested information to the person making such inquiry.

History

Source Note: The provisions of this §25.46 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.47 Policies Issued through the Texas Medical Liability Insurance Underwriting Association

Insurance coverage provided by authority of the Insurance Code, Article 21.49-3 (Texas Medical Liability Insurance Underwriting Association Act) may not be financed in conjunction with other types of insurance under a single insurance premium finance agreement, but must be financed by a separate agreement.

History

Source Note: The provisions of this §25.47 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.48 Notification of Account Adjustment to Insured

The insured shall be promptly advised by the insurance premium finance company of any adjustments made to the account balance and of any changes in the repayment schedule.

History

Source Note: The provisions of this §25.48 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.49 Increase in Financed Premiums

The insurance premium finance agreement may contain a provision for amendment if increased or additional premiums are financed through use of a memorandum of agreement. Otherwise, any amendment financing increased or additional premiums shall be authorized by the signature of the insured at the time the insurance premium finance agreement is amended.

History

Source Note: The provisions of this §25.49 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.50 Premium Decrease Due to Improper Rating

Decrease in the premium due to an improperly rated policy, improperly calculated premium, or any other premium reduction shall be effective on the date the insurance premium finance company received the return premium from the insurance company and shall be handled as follows:

(1) credit the amount of return premium to the insured's account balance as a current payment and reduce in like amount the insured's next payment(s) due. No reduction of the original finance charge is necessary when the credit of return premium is given in this manner; or

(2) credit the return premium on the insured's account balance plus finance charge credit on the returned premium equal to the difference between the amount of finance charge initially charged and the amount that should have been charged at the same finance charge rate on the reduced amount financed. The insured's repayment schedule shall be revised to reflect smaller monthly payments due to the reduction of the account balance or the finance charge and premium credits shall be applied to the final maturing installments;

(3) the insurance premium finance company shall notify the insured of the decrease in premium, the effective date of the decrease and the method chosen to reflect the insured's reduced repayment obligation.

History

Source Note: The provisions of this §25.50 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.51 Changes in Finance Rate

When amending an insurance premium finance agreement, the agent or insurance premium finance company may not charge the insured a rate which exceeds that permitted under the Credit Code. When an increase in the principal amount financed creates a total amount financed greater than that permitted on the original loan made under either Article 5069-3.15 or 5069-3.16 of the Credit Code, the finance charge rate on the insurance premium finance agreement shall be reduced so as not to exceed the maximum amount permitted under the Texas Credit Code. This shall apply regardless of whether an additional finance charge is charged on the additional premium.

History

Source Note: The provisions of this §25.51 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.52 Effective Date of Adjusted Premium Finance Changes

Any increases or decreases in premiums of a policy financed under an insurance premium finance agreement due to changes in the policy subsequent to the inception date of the policy shall be considered effective, for finance charge adjustment purposes, on the date the insurance premium finance company receives the return premium from the insurance company or advances additional premium to the insurance company.

History

Source Note: The provisions of this §25.52 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.53 Computation of Finance Charge upon Cancellation

If an insurance premium finance agreement is to be prepaid by return premium due to cancellation of the financed policy, the finance charge stops accruing on the date the return premium is received by the insurance premium finance company on that part of the outstanding indebtedness equal to the return premium.

History

Source Note: The provisions of this §25.53 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.54 Finance Charge Earnings upon Acceleration

If an insurance premium finance agreement contains a provision whereby the insurance premium finance company may accelerate the maturity of the contract for reasonable cause, other than default of the insured in making payment, and the insurance premium finance company exercises this right, the insurance premium finance company shall credit the insured's account with the amount of unearned finance charge as of the date of acceleration. The insurance premium finance company shall be entitled to collect additional interest under the premium finance agreement, from the date of acceleration at the lawful rate of charge provided in the premium finance agreement for interest after maturity. Likewise, an insurance premium finance company is only entitled to earn and collect interest at the lawful rate stipulated in the premium finance agreement as interest after maturity (or 6.0% per annum as authorized by law) when the insurance premium finance company accelerates the maturity of a premium finance agreement because of the default in payment(s) by the insured.

History

Source Note: The provisions of this §25.54 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.55 Notification to Insured of Offset

An insurance premium finance company may not offset monies paid to an insured by mistake unless it notifies the insured that it is offsetting against an insured's account. The insurance premium finance company shall preserve a copy of such notice in the individual file of the insured.

History

Source Note: The provisions of this §25.55 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.56 Alternative Methods of Adjusting Accounts

(a) Any amount found to be due an insured may be credited to the next payment(s) on the account of the insured when the insured has an existing obligation to the licensee. The licensee must notify the insured in writing of the date and amount of the next payment due after this credit has been given.

(b) Alternatively, if the error correction or adjustment to an account is related to an improper charge or proceeds improperly held by licensee on which interest has been precomputed, the licensee may credit the final maturing installment(s) of the contract provided credit is also given the insured for the proportionate interest originally charged on the amount being credited. The licensee must notify the insured in writing of any amount being credited and the resulting change in the final maturing installments.

History

Source Note: The provisions of this §25.56 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.57 Cancellation of Policy Through Power of Attorney

When a premium finance agreement utilizes a power of attorney to effect the cancellation of a financed policy, the insurance premium finance company may require the insured to pay to it any unpaid amount on the account not covered by the gross unearned premium returned by the insurer. This is allowed only if the insurance premium finance company has not delayed in closing out the loan for the purpose of creating additional indebtedness.

History

Source Note: The provisions of this §25.57 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.58 Notice of Intent To Cancel Insurance Because of Default

(a) A notice of intent-to-cancel insurance because of default, as provided by the power of attorney agreement, shall be titled "Notice of Intent to Cancel" and shall be sent to the insured with a cancellation date not earlier than ten days after the mailing date of the notice of intent to cancel. The insurance premium finance company shall establish and maintain either a computer printout or a copy of the intent-to-cancel notice if the policy is subsequently cancelled. Such records shall provide evidence to an examiner that the notice was mailed. A copy of the notice of intent-to-cancel insurance because of default shall be sent to the insurance agent.

(b) If the insurance policy financed by an insurance premium finance company is written under the authority of the Texas Medical Liability Insurance Underwriting Association (Insurance Code, Article 21.49-3), a copy of the notice of intent-to-cancel and the request for cancellation shall be sent to the Texas Medical Liability Insurance Underwriting Association.

History

Source Note: The provisions of this §25.58 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.59 Notice of Cancellation Because of Default

(a) A notice of cancellation because of default shall be titled "Notice of Cancellation" and may not be sent to the insurer before the ten-day waiting period of the notice of intent-to-cancel has expired. Copies of the Notice of Cancellation shall be sent to the insured, insurance agent, and insured's permanent account file. The insurance company policy cancellation date shall be the day following receipt of the notice of cancellation issued by the insurance premium finance company or the date specified on the notice of cancellation, whichever is later, unless otherwise stated in the insurance policy or by applicable law.

History

Source Note: The provisions of this §25.59 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.60 Collection Practices

In attempting to collect money due on an insurance premium finance loan from the insured, and prior to implementing the power of attorney, a licensee shall not use unfair debt collection practices, but only lawful remedies authorized under the laws of this state.

History

Source Note: The provisions of this §25.60 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.61 Record of Contacts

An insurance premium finance company or its designee shall preserve written record of each oral or written contact made by the company with the insured or any other person for the purpose of collecting late insurance premium finance payments. The record shall also include contacts made by the insured with the insurance premium finance company. The record shall include the date, method of contact, contacted party, person initiating the contact and essence of the contact. Each record shall be maintained in a manner that is readily understood.

History

Source Note: The provisions of this §25.61 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.62 Compliance with Statutory, Regulatory, or Contractual Requirements

If statutory, regulatory, or contractual restrictions provide that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, certificate of insurance holder or other third party, the insurer shall give the required notice and calculate the cancellation date in conformity with the Insurance Code, Article 24.17(e).

History

Source Note: The provisions of this §25.62 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.63 Filing of Power of Attorney on Assignment with Insurer

(a) An insurance premium finance company may cancel an insurance policy pursuant to a power of attorney. However, it must notify the insurer in advance or at the time of financing that an insurance premium is being financed and that the insurance premium finance company has a power of attorney in accordance with the Insurance Code, Article 24.22. The cancellation notice shall advise the insurer that it has 60 days from the policy cancellation date to return the gross unearned premium.

(b) Each premium financing check delivered to an insurance company shall contain with it a statement officially notifying the insurance company that the insurance policy has been financed and that the financier holds a power of attorney enabling it to recover monies in case of default by the insured. This document shall accompany the insurance application and premium finance company check as part of the total insurance application. These requirements shall also apply to the financing of insurance policies written through the Texas Workers' Compensation Insurance Fund and the Texas Medical Liability Insurance Underwriting Association.

History

Source Note: The provisions of this §25.63 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.64 Notification to Insurers

(a) An insurance premium finance company which enters into an insurance premium finance agreement with an insured to finance an insurance policy or policies shall notify the insurer whose premiums are being financed of the existence of such agreement within a reasonable period of time not to exceed 30 days after the date such agreement is received by the insurance premium finance company.

(b) The word "insurer," as used in the Insurance Code, Articles 24.17 and 24.22, means the company or other entity formally liable on the insurance risk. It does not mean an insurance agent. Accordingly, notice to an insurance agent or to a managing general agency of the insurer is not notice under the Insurance Code, Article 24.22, unless the premium finance company has received written authorization from a county mutual insurance company to notify an agent or managing general agent. If the insurance premium finance company gave notice to the insurer in accordance with the Insurance Code, Article 24.22, the insurer shall, as provided in the Insurance Code, Article 24.17, return whatever unearned premiums are due under the insurance contract directly to the insurance premium finance company within 60 days. Return of unearned premium through an accounts current with an agent or agency does not satisfy the insurer's obligation under the Insurance Code, Article 24.17.

History

Source Note: The provisions of this §25.64 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.65 Relocation of Accounts

When current accounts are relocated to an affiliated office, both licensed offices shall maintain current records of the accounts relocated. A copy of the Notification of Relocation letter to the insured shall be filed with the Department at the time it is mailed to the insured. This notice shall include the following:

(1) Exact name of the company as licensed;

(2) Present physical address;

(3) New physical address;

(4) Present mailing address;

(5) New mailing address;

(6) Present phone number;

(7) New phone number; and

(8) Date of relocation of account.

History

Source Note: The provisions of this §25.65 adopted to be effective May 17, 1995, 20 TexReg 3337.

Subchapter D ADVERTISING

28 Tex. Admin. Code § 25.71 Advertisements in General

An insurance premium finance company may not engage in deceptive advertising as set forth in the Insurance Code, Article 24.13, and further defined in these sections.

(1) Advertisements by an insurance premium finance company shall be truthful, not misleading in fact or in implication, or fail to disclose material facts.

(2) No advertisement shall be used by an insurance premium finance company which, because of words, phrases, statements, or illustrations therein or information omitted therefrom, have the tendency to mislead or deceive borrowers. Words or phrases which are misleading or deceptive because the meaning is unclear, or clear only to persons familiar with insurance premium finance terminology, may not be used. This paragraph does not prohibit use of trade or technical terms in advertisements directed exclusively at commercial insureds.

(3) All information required to be disclosed by these guidelines shall be set out conspicuously and in close conjunction with the statements to which such information relates or under appropriate captions of such prominence that it is not minimized, rendered obscure, presented in an ambiguous fashion, or intermingled with the context of the advertisement so as to be confusing or misleading.

History

Source Note: The provisions of this §25.71 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.72 Place of Loan

No licensee shall advertise that loans will be made at any place other than that named in its license. Each such advertisement shall state or clearly indicate the identity of the licensee in such a manner as to prevent confusion with the name of any unrelated licensee. A licensee shall not use any loan advertisement which gives only telephone numbers or addresses.

History

Source Note: The provisions of this §25.72 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.73 Advertisement File

Between examinations by the Department, each licensee shall maintain a file or other complete record of all written communications soliciting the financing of insurance premiums, and of all other advertising material used (including scripts of radio and television broadcasts and reproductions of billboards and signs not at the licensed place of business). The file shall be maintained at the licensed office or at a principal Texas office, as designated to the Department. The date or period of use of each solicitation or advertisement shall be indicated. If any language other than English is used in any such advertising material, a true and correct translation of it shall appear in the file along with such material.

History

Source Note: The provisions of this §25.73 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.74 Full Disclosure Requirements in Advertising

(a) If rates or charges are stated in advertising, they shall be expressed in terms of an "annual percentage rate" (simple annual interest rate). Any advertisement that states the amount of any installment payment, the dollar amount of any finance charge or the number of installments or the period of repayment shall also state:

(1) the amount of the loan expressed as "amount financed";

(2) the number, amount, and due dates or periods of payments scheduled to repay the indebtedness if credit is extended;

(3) the rate of the finance charge; and

(4) the sum of the payments expressed as "total of payments."

(b) The foregoing information shall be clearly shown in such a manner as not to be deceiving or misleading.

(c) If any licensee advertises that the first installment on a loan may be extended beyond one month from the loan date, he shall also clearly state whether a charge is to be made for such extension.

(d) The advertisement shall state that a licensed insurance agent can take application from the insured for insurance premium financing.

(e) The advertisement shall specifically state that the advertisement pertains to insurance premium finance only.

History

Source Note: The provisions of this §25.74 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.75 Misleading Advertising

In determining whether any particular advertising matter violates the Insurance Code, Article 24.13, the relevant factors include general arrangement of copy and whether, from statements or representations made, there may be a reasonable inference or impression that such statements or representations are inaccurate, deceptive, or misleading.

(1) No advertisement may use phrases such as "lowest costs" or "quickest service" unless such phrases are in fact accurate with respect to the licensee's business.

(2) No advertisement may state "new reduced rate" or "a new type of service" or any such similar comparative expression unless such statement is in fact accurate with respect to the business of the licensee so advertised and unless such advertisement clearly indicates that such new plan refers specifically to a change in the particular licensee's plan of operation. The change referred to must be of more than minor importance with respect to the business of the licensee. Any such advertisement may not be used for a period longer than 60 days after such plan has been put into effect.

(3) An advertisement may not contain any statement or representation with reference to the ease of procuring insurance premium financing, the speed with which it may be effected, the freedom from credit inquiries addressed to particular sources of information, or to any other implied differentiation in policy or loan service, unless the licensee shall comply with the representation so made.

(4) An advertisement may not contain offers to insureds for insurance premium financing in general unless, in general practice, the licensee actually makes a reasonable number of such loans within such limited time and upon the basis of such offer.

(5) A licensee other than a lawfully chartered banking institution may not use the word "bank" or any derivative in any advertisement where its use might mislead the public to believe that the licensee is an authorized banking institution or is conducting a banking business.

(6) Any advertisement which omits material facts shall be deemed deceptive or misleading.

History

Source Note: The provisions of this §25.75 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.76 Multiple Page Advertisements

For the purposes of this subchapter, a catalog or other multiple page advertisement shall be considered a single advertisement if it clearly and conspicuously displays a credit terms table or chart on which the information required to be stated under these regulations is clearly set forth.

History

Source Note: The provisions of this §25.76 adopted to be effective May 17, 1995, 20 TexReg 3337.

Subchapter E EXAMINATIONS AND ANNUAL REPORTS

28 Tex. Admin. Code § 25.81 Examinations

Examiners appointed by the Department may conduct periodic examinations to determine if a licensee is in compliance with the Insurance Code, Chapter 24, and the provisions of this chapter. Examinations of banks and savings and loan associations doing business under the laws of this state or the United States will not be conducted by the Department, unless the annual report indicates irregularities or complaints received by the Department indicate concerns.

History

Source Note: The provisions of this §25.81 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.82 Examination Charges

A licensee shall reimburse the Department for the expense of an examination. The charges to be invoiced to the insurance premium finance company shall include the actual salaries and expenses of the examiners allocable to each examination. The expenses assessed shall be those actually incurred by the examiner to the extent permitted by law.

History

Source Note: The provisions of this §25.82 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.83 Access to Books and Records

Examiners shall have free access, including the right to make copies, to all the books and records of the insurance premium finance company for the purpose of determining the financial condition, as well as compliance with the Insurance Code, Chapter 24, affecting the conduct of its business.

History

Source Note: The provisions of this §25.83 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.84 Individual Account Records

Individual account records on each insured shall be maintained to reflect the complete account history as to funding, charges, payments, and adjustments, if any, and shall include the accurate dates of all entries to the account. The records shall also reflect the date the finance charge began to accrue. Individual account records shall disclose the date that the insurance premium finance company requested cancellation of the financed insurance policies. The individual's file shall contain copies of premium finance agreements, memoranda, notices of intent to cancel or computer printouts of such notices, and cancellation notices. A complete account history shall be maintained by the licensee in all closed account files. All records of proof-of-funding must be available for examination by the Department.

History

Source Note: The provisions of this §25.84 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.85 Retention of Records

All documents required by the Insurance Code to be retained by the insurance premium finance company, and copies of documents signed by the borrower, shall be available for inspection at any time by the Department or its authorized representatives. These documents shall be retained for a period of four years from the date a final entry is made thereon. Records of paid out loans shall be retained in original form for a period of at least one year following the date of the last examination by the Department after which such records may be microfilmed for the remainder of the statutory period under the Insurance Code.

History

Source Note: The provisions of this §25.85 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.86 Filing of Account Records

All filing of account records shall be systematic, maintained on a current basis, and appropriately cross-referenced for access to other files.

History

Source Note: The provisions of this §25.86 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.87 Annual Reports

(a) Each licensee shall file an annual report as prescribed by the Department. The annual report shall include information on the ownership, operation, and statistical data sufficient to aid in determining compliance with the Insurance Code, Chapter 24.

(b) The annual report shall also include a sworn financial statement.

(c) Each insurance premium finance company licensed at any time during the preceding calendar year shall complete the annual report form and return it to the Department on or before April 1 of each year. The affidavit certifying the annual report shall be executed by an officer or director of the insurance premium finance company.

History

Source Note: The provisions of this §25.87 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.88 General Administrative Expense Assessment

No later than April 1 of each year, every insurance premium finance company holding a license issued by the department under Insurance Code Chapter 651 must pay an assessment to cover the general administrative expenses attributable to the regulation of insurance premium finance companies. An insurance premium finance company must send payment to the Texas Department of Insurance at the address provided on the invoice. The assessment to cover general administrative expenses is $250.

History

Source Note: The provisions of this §25.88 adopted to be effective May 17, 1995, 20 TexReg 3337; amended to be effective January 1, 1996, 20 TexReg 10786; amended to be effective January 13, 1997, 22 TexReg 115; amended to be effective February 9, 1998, 23 TexReg 1098; amended to be effective January 27, 1999, 24 TexReg 399; amended to be effective January 3, 2000, 24 TexReg 12069; amended to be effective January 10, 2001, 26 TexReg 204; amended to be effective January 7, 2002, 27 TexReg 185; amended to be effective January 8, 2003, 28 TexReg 81; amended to be effective January 20, 2004, 29 TexReg 459; amended to be effective January 11, 2005, 30TexReg 22; amended to be effective February 2, 2006, 31 TexReg 704; amended to be effective February 1, 2012, 37 TexReg 332; amended to be effective January 30, 2013, 38 TexReg 381; amended to be effective January 6, 2014, 39 TexReg 87; amended to be effective January 6, 2015, 40 TexReg 72.

28 Tex. Admin. Code § 25.89 File for Official Correspondence and Reports

All communications between the licensee and the Department shall be maintained by the licensee in a separate file. The file shall include, but not be limited to, complaints, annual reports, examination reports, and any other correspondence with the Department.

History

Source Note: The provisions of this §25.89 adopted to be effective May 17, 1995, 20 TexReg 3337.

28 Tex. Admin. Code § 25.90 Escheat Account

An escheat or unclaimed property account shall be established as required by the Property Code, Chapters 72 and 74, for monies due an insured who cannot be located. These monies must remain in an account for three years and then be reported to the Texas Department of Treasury. Copies of the escheat account reports shall be placed in an examination file to be available at the time of the insurance premium finance company's examination by the Department.

History

Source Note: The provisions of this §25.90 adopted to be effective May 17, 1995, 20 TexReg 3337.

Subchapter A DEFINITIONS, SEVERABILITY, AND SMALL EMPLOYER HEALTH REGULATIONS

28 Tex. Admin. Code § 26.3 Severability

If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid, the invalidity does not affect the remainder of the chapter and the application of its provisions to any persons under other circumstances.

History

Source Note: The provisions of this §26.3 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.4 Definitions

The following terms, when used in Subchapters A, C, and D of this chapter, have the following meanings unless the context clearly indicates otherwise.

(1) Affiliation period--As defined in Insurance Code §1501.104 (concerning Affiliation Period).

(2) Agent--A person who may act as an agent for the sale of a health benefit plan under a license issued by TDI.

(3) Base premium rate--As defined in Insurance Code §1501.201 (concerning Definitions).

(4) Case characteristics--As defined in Insurance Code §1501.201.

(5) Child--

(A) An unmarried natural child of the employee, including a newborn child;

(B) An unmarried adopted child, including a child about whom the insured employee is a party in a suit seeking the adoption of the child;

(C) An unmarried natural child or adopted child of the employee's spouse including a child about whom the spouse is a party in a suit seeking the adoption of the child; and

(D) Any other child included as an eligible dependent under an employer's benefit plan.

(6) Class of business--As defined in Insurance Code §1501.201.

(7) Commissioner--The commissioner of insurance.

(8) Consumer choice health benefit plan--A health benefit plan authorized by Insurance Code Chapter 1507 (concerning Consumer Choice of Benefits Plans).

(9) Creditable coverage--As defined in Insurance Code §1205.004 (concerning Creditable Coverage).

(10) Dependent--As defined in Insurance Code §1501.002 (concerning Definitions).

(11) Effective date--The first day of coverage under a health benefit plan or, if there is a waiting period, the first day of the waiting period.

(12) Eligible dependent--A dependent who meets the requirements for coverage under a small or large employer health benefit plan.

(13) Eligible employee--As defined in Insurance Code §1501.002.

(14) Employee--As defined in Insurance Code §1501.002.

(15) Franchise insurance policy--An individual health benefit plan under which a number of individual policies are offered to a selected group of a small or large employer. The rates for the policy may differ from the rate applicable to individually solicited policies of the same type and may differ from the rate applicable to individuals of essentially the same class.

(16) Genetic information--As defined in Insurance Code §546.001 (concerning Definitions).

(17) Genetic test--As defined in Insurance Code §546.001.

(18) Gross premiums--The total amount of money collected by the health carrier for health benefit plans during the applicable calendar year or the applicable calendar quarter, including premiums collected:

(A) for individual and group health benefit plans issued to employers or their employees; and

(B) under certificates issued or delivered to Texas employees of employers, regardless of where the policy is issued or delivered.

(19) HMO--Any person governed by the Texas Health Maintenance Organization Act, Insurance Code Chapter 843 (concerning Health Maintenance Organizations), including:

(A) a person defined as a health maintenance organization under the Texas Health Maintenance Organization Act;

(B) an approved nonprofit health corporation that is certified under Occupations Code §162.001 (concerning Certification by Board), and that holds a certificate of authority issued by the commissioner under Insurance Code Chapter 844 (concerning Certification of Certain Nonprofit Health Corporations);

(C) a statewide rural health care system under Insurance Code Chapter 845 (concerning Statewide Rural Health Care System) that holds a certificate of authority issued by the commissioner; or

(D) a nonprofit corporation created and operated by a community center under Health and Safety Code Chapter 534, Subchapter C (concerning Health Maintenance Organizations).

(20) Health benefit plan--As defined in Insurance Code §1501.002.

(21) Health carrier--Any entity authorized under the Insurance Code or another insurance law of this state that provides health insurance or health benefits in this state including an insurance company, a group hospital service corporation under Insurance Code Chapter 842 (concerning Group Hospital Service Corporations), an HMO under Insurance Code Chapter 843, or a stipulated premium company under Insurance Code Chapter 884 (concerning Stipulated Premium Insurance Companies).

(22) Health insurance coverage--Benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract.

(23) Health-status-related factor--Health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; disability; and evidence of insurability, including conditions arising out of acts of domestic violence and tobacco use.

(24) Index rate--As defined in Insurance Code §1501.201.

(25) Large employer--As defined in Insurance Code §1501.002.

(26) Large employer carrier--A health carrier, to the extent that carrier is offering, delivering, issuing for delivery, or renewing health benefit plans subject to Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act).

(27) Large employer health benefit plan--As defined in Insurance Code §1501.002.

(28) Late enrollee--

(A) Any employee or dependent eligible for enrollment who:

(i) requests enrollment in a small or large employer's health benefit plan after the expiration of the initial enrollment period established under the terms of the first plan for which that employee or dependent was eligible through the small or large employer, or after the expiration of an open enrollment period under Insurance Code §1501.156(a) (concerning Employee Enrollment; Waiting Period) and §1501.606(a) (concerning Employee Enrollment; Waiting Period);

(ii) does not fall within the exceptions listed in subparagraph (B) of this paragraph; and

(iii) is accepted for enrollment and not excluded until the next open enrollment period.

(B) An employee or dependent eligible for and requesting enrollment cannot be excluded until the next open enrollment period and, when enrolled, is not a late enrollee, in the following special circumstances:

(i) the individual:

(I) was covered under another health benefit plan or self-funded employer health benefit plan at the time the individual was eligible to enroll;

(II) declines in writing, at the time of initial eligibility, stating that coverage under another health benefit plan or self-funded employer health benefit plan was the reason for declining enrollment;

(III) has lost coverage under another health benefit plan or self-funded employer health benefit plan as a result of termination of employment, reduction in the number of hours of employment, termination of the other plan's coverage, termination of contributions toward the premium made by the employer, death of a spouse, or divorce; and

(IV) requests enrollment not later than the 31st day after the date on which coverage under the other health benefit plan or self-funded employer health benefit plan terminates;

(ii) the individual is employed by an employer who offers multiple health benefit plans and the individual elects a different health benefit plan during an open enrollment period;

(iii) a court has ordered coverage to be provided for a spouse under a covered employee's plan and the request for enrollment is made not later than the 31st day after the date on which the court order is issued;

(iv) a court has ordered coverage to be provided for a child under an insured's plan and the request for enrollment is made not later than the 31st day after the date on which the employer receives the court order or notification of the court order;

(v) the individual is a child of an insured and has lost coverage under Health and Safety Code Chapter 62 (concerning Child Health Plan for Certain Low-Income Children) or Title XIX of the Social Security Act (42 U.S.C. §§1396, et seq., concerning Medicaid and CHIP Payment and Access Commission), other than coverage consisting solely of benefits under Section 1928 of that Act (42 U.S.C. §1396s, concerning Program for Distribution of Pediatric Vaccines);

(vi) the individual has a change in family composition due to marriage, birth of a child, adoption of a child, or because an insured becomes a party in a suit for the adoption of a child;

(vii) an individual becomes a dependent due to marriage, birth of a child, adoption of a child, or because an insured becomes a party in a suit for the adoption of a child; and

(viii) the individual described in clauses (v) - (vii) of this subparagraph requests enrollment no later than the 31st day after the date of the marriage, birth, adoption of the child, loss of the child's coverage, or within 31 days of the date an insured becomes a party in a suit for the adoption of a child.

(29) Limited scope dental or vision benefits--Dental or vision benefits that are sold under a separate policy or rider and that are limited in scope to a narrow range or type of benefits that are generally excluded from hospital, medical, or surgical benefits contracts.

(30) Medical care--Amounts paid for:

(A) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

(B) transportation primarily for and essential to the medical care described in subparagraph (A) of this paragraph; or

(31) Medical condition--Any physical or mental condition including, but not limited to, any condition resulting from illness, injury (whether or not the injury is accidental), pregnancy, or congenital malformation. Genetic information does not constitute a medical condition in the absence of a diagnosis of a condition related to the information.

(32) New business premium rate--As defined in Insurance Code §1501.201.

(33) New entrant--An eligible employee, or the dependent of an eligible employee, who becomes eligible for coverage in an employer group after the initial period for enrollment in a health benefit plan. After the initial enrollment period, this includes any employee or dependent who becomes eligible for coverage and who is not a late enrollee.

(34) Participation criteria--As defined in Insurance Code §1501.601 (concerning Participation Criteria).

(35) Person--As defined in Insurance Code §1501.002.

(36) Plan year--For purposes of Insurance Code Chapter 1501 and this chapter, a 365-day period that begins on the plan or policy's effective date or a period of one full calendar year, under a health benefit plan providing coverage to small or large employers and their employees, as defined in the plan or policy. Health carriers must use the same definition of plan year in all small or large employer health benefit plans.

(37) Point-of-service coverage--Coverage provided under a point-of-service plan as described in §21.2901 of this title (relating to Definitions) and as permitted by Insurance Code §1501.255 (concerning Health Maintenance Organization Plans).

(38) Point-of-service option--Coverage that complies with the out-of-plan coverage set forth in either Chapter 11, Subchapter Z of this title (relating to Point-of-Service Riders), or Chapter 21, Subchapter U of this title (relating to Arrangements Between Indemnity Carriers and HMOs for Point-of-Service Coverage), and that allows the enrollee to access out-of-plan coverage at the option of the enrollee.

(39) Point-of-service plan--As defined in Insurance Code §1273.051 (concerning Definitions).

(40) Postmark--A date stamp by the U.S. Postal Service or other delivery entity, including any electronic delivery available.

(41) Preexisting condition provision--As defined in Insurance Code §1501.002.

(42) Premium--As defined in Insurance Code §1501.002.

(43) Premium rate quote--A statement of the premium a health carrier offers and will accept to make coverage effective for a small or large employer.

(44) Public health plan--Any plan established or maintained by a state, county, or other political subdivision of a state that provides health insurance coverage to individuals.

(45) Qualified actuary--An actuary who is a member:

(A) of the Society of Actuaries; and

(B) in good standing of the American Academy of Actuaries.

(46) Rating period--As defined in Insurance Code §1501.201.

(47) Reinsured carrier--A small employer carrier participating in the Texas Health Reinsurance System.

(48) Renewal date--For each small or large employer's health benefit plan, the earlier of the date, if any, specified in the plan for renewal; the policy anniversary date; or the date the small or large employer's plan is changed. To determine the renewal date for employer association or multiple employer trust group health benefit plans, health carriers may use the date specified for renewal, or the policy anniversary date, of either the master contract or the contract or certificate of coverage of each small or large employer in the association or trust. Health carriers must use the same method of determining renewal dates for all small or large employer health benefit plans. A change in the premium rate is not considered a renewal if the change is due solely:

(A) to the addition or deletion of an employee or dependent if the deletion is due to a request by the employee, death or retirement of the employee or dependent, termination of employment of the employee, or because a dependent is no longer eligible; or

(B) to fraud or intentional misrepresentation of a material fact by a small or large employer or an eligible employee or dependent.

(49) Risk-assuming carrier--A risk-assuming health benefit plan issuer as defined in Insurance Code §1501.301 (concerning Definitions).

(50) Risk characteristic--The health-status-related factors, duration of coverage, or any similar characteristic, except genetic information, related to the health status or experience of a small employer group or of any member of that group.

(51) Risk load--The percentage above the applicable base premium rate that is charged by a small employer carrier to a small employer to reflect the risk characteristics of that group. A small employer carrier may not use genetic information to alter or otherwise affect risk load.

(52) Short-term limited duration insurance--Health insurance coverage provided under a contract with an issuer that:

(A) has an expiration date specified in the contract, taking into account any extensions that may be elected by the policyholder without the issuer's consent; and

(B) is within 12 months of the date the contract becomes effective.

(53) Significant break in coverage--A period of 63 consecutive days during which the individual does not have creditable coverage. Neither a waiting period nor an affiliation period is counted in determining a significant break in coverage.

(54) Small employer--As defined in Insurance Code §1501.002. A small employer includes an independent school district that elects to participate in the small employer market under Insurance Code §1501.009 (concerning School District Election).

(55) Small employer carrier--A health carrier, to the extent that health carrier is offering, delivering, issuing for delivery, or renewing, under Insurance Code §1501.003 (concerning Applicability: Small Employer Health Benefit Plans), health benefit plans subject to Insurance Code Chapter 1501.

(56) Small employer health benefit plan--As defined in Insurance Code §1501.002.

(57) State-mandated health benefits--As defined in §21.3502 of this title (relating to Definitions).

(58) TDI--The Texas Department of Insurance.

(59) Waiting period--As defined in Insurance Code §1501.002. If an employee or dependent enrolls as a late enrollee, under special circumstances that except the employee or dependent from the definition of late enrollee, or during an open enrollment period, any period of eligibility before the effective date of enrollment is not a waiting period.

History

Source Note: The provisions of this §26.4 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective July 10, 2001, 26 TexReg 5016; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.5 Applicability and Scope

(a) Insurance Code Chapter 1501, concerning Health Insurance Portability and Availability Act, and this subchapter regulate all health benefit plans sold to small employers, whether sold directly or through associations or other groupings of small employers.

(b) Except as otherwise provided, this subchapter applies to any health benefit plan providing health care benefits covering two or more employees of a small employer, whether provided on a group or individual franchise insurance policy basis, regardless of whether the policy was issued in this state, if the plan meets one of the following conditions:

(1) a portion of the premium or benefits is paid by a small employer;

(2) the health benefit plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of the United States Internal Revenue Code of 1986, 26 U.S.C. §106 (concerning Contributions by Employer to Accident and Health Plans) or §162 (concerning Trade or Business Expenses);

(3) the health benefit plan is a group policy issued to a small employer; or

(4) the health benefit plan is an employee welfare benefit plan under 29 C.F.R. §2510.3-1(j) (concerning Employee Welfare Benefit Plan).

(c) For an employer that was not in existence the previous calendar year, the determination of whether the employer is a small employer is based on the average number of employees the employer reasonably expects to employ on business days in the calendar year in which the determination is made.

(d) The provisions of Insurance Code Chapter 1501 and this subchapter apply to a health benefit plan provided to a small employer or to the employees of a small employer without regard to whether the health benefit plan is offered under or provided through a group policy or trust arrangement of any size sponsored by an association or discretionary group.

(e) If a small employer or the employees of a small employer are issued a health benefit plan under the provisions of Insurance Code Chapter 1501 and this subchapter, and the small employer, due to an increase or decrease in the number of employees, ceases to meet the definition of a small employer, the provisions of Insurance Code Chapter 1501 and this subchapter continue to apply to that particular health plan, subject to the provisions of §26.15 of this title (relating to Renewability of Coverage and Cancellation). A health carrier providing coverage to an employer must, within 60 days of becoming aware that the employer no longer meets the definition of small employer, but not later than the first renewal date occurring after the small employer has ceased to be a small employer, notify the employer of its change in status. The carrier must also notify the employer that the protections provided to small employers under Insurance Code Chapter 1501, and this subchapter will cease to apply to the employer if the employer fails to renew its current health benefit plan; fails to comply with the contribution, minimum group size, or minimum participation requirements of this subchapter; or elects to enroll in a different health benefit plan. The notice requirement of this subsection does not apply to a health carrier electing to issue coverage to a group consisting of one employee.

(f) If a small employer has employees in more than one state, the provisions of Insurance Code Chapter 1501 and this subchapter applicable to small employer plans, including provisions regarding marketing and rates, apply to a health benefit plan issued to the small employer if:

(1) the majority of employees are employed in this state on the issue date or renewal date; or

(2) the primary business location is in this state on the issue date or renewal date and no state contains a majority of the employees.

(g) A carrier licensed in this state that issues a certificate of insurance covering a Texas resident is responsible for ensuring that the certificate complies with applicable Texas insurance laws and rules, including Senate Bill 1264, 86th Legislature, 2019, and other mandated benefits, regardless of whether the group policy underlying the certificate was issued outside the state.

(h) A small employer nonfederal governmental employee health benefit plan that is not self-funded is subject to the Insurance Code and this title, as applicable, including Chapter 1501 and this chapter.

(i) This chapter is applicable to an insurance policy, evidence of coverage, contract, or other document that is delivered, issued for delivery, or renewed on or after September 1, 2017. An insurance policy, evidence of coverage, contract, or other document that is delivered, issued for delivery, or renewed prior to September 1, 2017, is subject to the rules in effect at the time the insurance policy, evidence of coverage, contract, or other document was delivered, issued for delivery, or renewed.

History

Source Note: The provisions of this §26.5 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539; amended to be effective July 12, 2023, 48 TexReg 3666.

28 Tex. Admin. Code § 26.6 Status of Health Carriers as Small Employer Carriers

(a) With the original filing to enter the small employer market or when notifying TDI of a change in status, each health carrier providing health benefit plans in this state must file with the commissioner a statement indicating whether the health carrier will or will not offer, renew, issue, or issue for delivery health benefit plans to small employers in this state. The filing must include a certification, signed by an officer of the company, that the carrier intends to operate in accordance with the status certification unless or until it is changed in accordance with this section, and provide a statement to the effect of one of the following statements:

(1) the health carrier intends to offer, renew, issue, and issue for delivery health benefit plans to small employers in Texas and will operate in accordance with Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) and this subchapter;

(2) the health carrier does not intend to offer, issue, or issue for delivery health benefit plans to small employers in Texas, but the health carrier intends to renew existing health benefit plans;

(3) the health carrier does not intend to offer, issue, or issue for delivery health benefit plans to small employers in Texas; intends to nonrenew all health benefit plans issued to small employers in Texas; and will provide notice to the commissioner and employers in accordance with §26.16 of this title (relating to Refusal to Renew and Application to Reenter Small Employer Market) and Insurance Code §1501.110 (concerning Notice to Covered Persons); or

(4) the health carrier has no health benefit plans issued to small employers or to employees of a small employer and does not intend to offer, issue, or issue for delivery health benefit plans to small employers.

(b) If a health carrier chooses to change its election or the date of implementing its election under subsection (a)(1), (2), or (4) of this section, the health carrier must notify the commissioner of its new election at least 30 days before the date the health carrier intends to begin operations under the new election as required in subsection (a) of this section.

(c) A form fulfilling the requirements of subsections (a) and (b) of this section is available online at www.tdi.texas.gov/forms/form10smgroup.html through the link for Small Employer Carrier Status Certification.

(d) Health carriers providing coverage under any health benefit plans issued to small employers and their employees, whether on a group or franchise insurance policy basis, will be considered small employer carriers for purposes of those plans, and must comply with all provisions of Insurance Code Chapter 1501 and this subchapter, as applicable.

(e) The small employer carrier must also comply with any other applicable legal requirements, including those for withdrawal from the market under Chapter 7, Subchapter R of this title (relating to Withdrawal Plan Requirements and Procedures).

History

Source Note: The provisions of this §26.6 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.7 Requirement to Insure Entire Groups

(a) A small employer carrier that offers coverage to a small employer and its employees must offer coverage to each eligible employee and to each dependent of an eligible employee. Except as provided in subsection (b) of this section, the small employer carrier must provide the same health benefit plan to each employee or dependent eligible for coverage.

(b) If elected by the small employer, a small employer carrier may offer one or more health benefit plans, provided that each eligible employee may choose any of the plans offered. Except as provided in Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) with respect to an affiliation period or exclusions for preexisting conditions, the choice among benefit plans may not be limited, restricted, or conditioned based on the risk characteristics of each employee or dependent eligible for coverage.

(c) A small employer carrier may require each small employer that applies for coverage, as part of the application process, to provide a complete list of employees, eligible employees, and dependents of eligible employees. The small employer carrier may also require the small employer to provide reasonable and appropriate supporting documentation to verify the information required under this subsection, and to confirm the applicant's status as a small employer. The small employer carrier must make a determination of eligibility within five business days of receipt of any requested documentation. A small employer carrier may not condition the issuance of coverage on an employer's production of a particular document, where the employer can otherwise provide the information required by this section. Similarly, if a particular document an employer produces does not reasonably evidence the employer's compliance with this subsection, the employer must produce other documentation to satisfy the requirements. Examples of the types of reasonable and appropriate supporting documentation that a small employer carrier may request from an employer as needed to fulfill the purposes of this subsection are:

(1) a W-2 Summary Wage and Tax Form or other federal or state tax records;

(2) a loan agreement;

(3) an invoice;

(4) a business check;

(5) a sales tax license;

(6) articles of incorporation or other business entity filings with the secretary of state;

(7) assumed name filings;

(8) professional licenses; and

(9) reports required by the Texas Workforce Commission.

(d) A small employer carrier may not deny two individuals who are married the status of eligible employee solely on the basis that the two individuals are married. The small employer carrier must provide a reasonable opportunity for the individuals to submit evidence as provided in subsection (c) of this section to establish each individual's status as an eligible employee.

(1) A small employer carrier must provide married eligible employees of the same employer the option to have one spouse be treated under a small employer health benefit plan as an employee, and the other spouse treated as an employee or alternatively as the dependent of the other employee.

(2) A child of either of the two individuals may only be covered under the same small employer health benefit plan as a dependent by one of the two individuals.

(3) An election by a spouse to be treated as a dependent under this subsection does not impact the individual's status as an eligible employee for any other purpose under Insurance Code Chapter 1501, except that the individual may be treated as a dependent for purposes of employer premium contributions.

(e) A small employer carrier must secure a waiver with respect to each eligible employee and each dependent of the eligible employee who declines an offer of coverage under a health benefit plan provided to a small employer. If a small employer elects to offer coverage through more than one small employer carrier, waivers are only required to be signed if the individual is declining all offered plans. The small employer carriers may enter into an agreement designating which small employer carrier will receive and retain the waiver. Waivers must be maintained by the small employer carrier for a period of six years. The waiver must be signed by the employee (on behalf of the employee or dependent) and must certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan. Receipt by the small employer carrier of a facsimile transmission of the waiver is permissible, provided that the transmission includes a representation from the small employer that the employer will maintain the original waiver on file for a period of six years from the date of the facsimile transmission. The waiver form must:

(1) require that the reason for declining coverage be stated on the form;

(2) include a written warning of the penalties imposed on late enrollees; and

(3) include a statement that the employee and dependents were not induced or pressured by the small employer, agent, or health carrier into declining coverage, but elected of their own accord to decline the coverage.

(f) An agent must notify a small employer carrier, before submitting an application for coverage with the health carrier on behalf of a small employer or employee of a small employer, of any circumstances that would indicate that the small employer has induced or pressured the employee or dependent to decline coverage due to the individual's risk characteristics.

(g) New entrants in a health benefit plan issued to a small employer group must be offered an opportunity to enroll in the health benefit plan currently held by the employer group or be offered an opportunity to enroll in the health benefit plan if the plan is provided through an individual franchise insurance policy, or if more than one plan is available. If a small employer carrier has offered more than one health benefit plan to eligible employees of a small employer group under subsection (b) of this section, the new entrant must be offered the same choice of health benefit plans as the other employees (members) in the group. A new entrant who does not exercise the opportunity to enroll in the health benefit plan within the period provided by the small employer carrier may be treated as a late enrollee by the health carrier, provided that the period provided to enroll in the health benefit plan complies with subsection (h) of this section.

(h) Periods provided for enrollment in and application for any health benefit plan provided to a small employer group must comply with the following:

(1) the initial enrollment period must extend at least 31 consecutive days after the date the new entrant begins employment or, if the waiting period exceeds 31 days, at least 31 consecutive days after the date the new entrant completes the waiting period for coverage;

(2) the new entrant must be notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted;

(3) the new entrant's application for coverage will be considered timely if the application is submitted within the initial enrollment period:

(A) in person;

(B) by mail, postmarked by the end of the specified period; or

(C) in an alternative method normally accepted by the small employer carrier, including facsimile transmission (fax), email, or web-based application; and

(4) the small employer carrier must provide an open enrollment period of at least 31 consecutive days on an annual basis.

(i) A small employer may establish a waiting period in accordance with Insurance Code §1501.156 (concerning Employee Enrollment; Waiting Period) that must not exceed 90 days. A small employer carrier may not apply a waiting period, elimination period, or other similar limitation of coverage, other than an exclusion for preexisting medical conditions or affiliation period consistent with Insurance Code §1501.102 (concerning Preexisting Condition Provision) and §1501.104 (concerning Affiliation Period), with respect to a new entrant, that is longer than the waiting period established by the small employer.

(j) New entrants in a health plan issued to a small employer group must be accepted for coverage by the small employer carrier without any restrictions or limitations on coverage related to the risk characteristics of the employees or their dependents, except that a health carrier may exclude coverage for preexisting medical conditions or impose an affiliation period, to the extent allowed under Insurance Code Chapter 1501.

(k) A small employer carrier may assess a risk load to the premium rate associated with a new entrant, consistent with the requirements of Insurance Code Chapter 1501, Subchapter E (concerning Underwriting and Rating of Small Employer Health Benefit Plans) and this chapter. The risk load must be the same risk load charged to the small employer group immediately before acceptance of the new entrant into the group.

History

Source Note: The provisions of this §26.7 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective December 6, 2010, 35 TexReg 10768; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.8 Guaranteed Issue, Contribution, and Participation Requirements

(a) A small employer carrier must issue a health benefit plan to any small employer that elects to be covered under the plan and agrees to satisfy other requirements of the plan factors.

(b) Health carriers may require small employers to answer questions designed to determine the level of contribution by the small employer, the number of employees and eligible employees of the small employer, and the percentage of participation of eligible employees of the small employer. In this section, an "eligible employee" does not include employees within their waiting or affiliation period for percentage of participation requirement purposes.

(c) Availability of coverage under a small employer health benefit plan is subject to the minimum participation requirements of Insurance Code §1501.154 (concerning Minimum Participation Requirement) and §1501.155 (concerning Exception to Minimum Participation Requirement). A small employer that has only two eligible employees will be subject to a 100 percent participation requirement.

(d) A health carrier must treat all similarly situated small employer groups in a consistent and uniform manner when terminating health benefit plans due to a participation level of less than the qualifying participation level or group size.

(e) If a small employer fails to meet the qualifying minimum participation requirement for a small employer health benefit plan for six consecutive months, the health carrier may terminate coverage under the plan on the first renewal date following that period. The termination must conform to the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum participation requirement and in accordance with Insurance Code §§1501.108 - 1501.111 (concerning Renewability of Coverage; Cancellation; Refusal to Renew; Discontinuation of Coverage; Notice to Covered Persons; and Written Statement of Denial, Cancellation, or Refusal to Renew Required) and §26.15 of this title (relating to Renewability of Coverage and Cancellation).

(f) In determining whether an employer has the required percentage of participation of eligible employees, if the percentage of eligible employees is not a whole number, the result of applying the percentage to the number of eligible employees must be rounded down to the nearest whole number. For example, 75 percent of five employees is 3.75, so 3.75 would be rounded down to three, and 75 percent participation by a five employee group will be achieved if three of the eligible employees participate.

(g) If a small employer fails to meet, for six consecutive months, the qualifying minimum group size requirement set forth in Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) for a small employer health benefit plan, the health carrier may terminate coverage under the plan no earlier than the first day of the next month following the end of that period. The termination must conform to the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum group size requirement and in accordance with Insurance Code §§1501.108 - 1501.111 and §26.15 of this title.

History

Source Note: The provisions of this §26.8 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 13, 2012, 37 TexReg 3415; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.9 Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders

(a) All health benefit plans that provide coverage for small employers and their employees must comply with the following requirements.

(1) A small employer carrier may not exclude any eligible employee or dependent (including a late enrollee who would otherwise be covered under a small employer health benefit plan), except to the extent permitted under Insurance Code §1501.156 (concerning Employee Enrollment; Waiting Period).

(2) A small employer carrier may not limit or exclude (by use of rider, amendment, or other provision of the plan, applicable to a specific individual) coverage by type of illness, treatment, medical condition, or accident, except for preexisting conditions or diseases or an affiliation period, as permitted under Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act).

(3) A preexisting condition provision in a small employer health benefit plan may not apply to expenses incurred on or after the expiration of the 12 months following the effective date of coverage of the enrollee or late enrollee, except as authorized by paragraph (9)(B) of this subsection.

(4) A small employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee. Any coverage of a newborn child of an employee under this subsection terminates on the 32nd day after the date of the birth of the child unless notification of the birth and any required additional premium are received by the small employer carrier not later than the 31st day after the date of birth. A small employer carrier must not terminate coverage of a newborn child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of the premium.

(5) A small employer health benefit plan may not limit or exclude initial coverage of an adopted child of an insured. An adopted child of an insured may be enrolled, at the option of the insured, within either:

(A) 31 days after the insured is a party in a suit for adoption; or

(B) 31 days of the date the adoption is final.

(6) Coverage of an adopted child of an insured under paragraph (5) of this subsection terminates unless notification of the adoption and any required additional premium are received by the small employer carrier not later than either:

(A) the 31st day after the insured becomes a party in a suit in which the adoption of the child by the insured is sought; or

(B) the 31st day after the date of the adoption. A small employer carrier may not terminate coverage of an adopted child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of the premium.

(7) For purposes of paragraphs (4) and (6) of this subsection, "received by the small employer within a specified period" means that the item(s) must be either received or postmarked by the specified period.

(8) If a newborn or adopted child is enrolled in a health benefit plan or other creditable coverage within the periods specified in paragraph (4) or (5) of this subsection, and subsequently enrolls in another health benefit plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion or affiliation period with regard to the child. If a newborn or adopted child is not enrolled within the periods specified in paragraph (4) or (5) of this subsection, then in accordance with paragraph (9) of this subsection, the newborn or adopted child may be considered a late enrollee or excluded from coverage until the next open enrollment period.

(9) A small employer carrier must choose one of the methods set forth in subparagraph (A) or (B) of this paragraph for handling requests for enrollment as a late enrollee in any health benefit plan subject to this subchapter. The small employer carrier must use the same method for all small employer health benefit plans.

(A) The eligible employee or dependent may be excluded from coverage and any application for coverage rejected until the next annual open enrollment period and, once enrolled, may be subject to a 12-month preexisting condition provision or, in the case of an HMO, may be subject to a 60-day affiliation provision, as described by Insurance Code §§1501.102 - 1501.104 (concerning Preexisting Condition Provision; Treatment of Certain Conditions as Preexisting Prohibited; and Affiliation Period).

(B) The eligible employee or dependent's application may be accepted immediately and the employee or dependent enrolled as a late enrollee during the plan year. If so enrolled, the preexisting condition provision imposed for a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation period may not exceed 90 days from the date of the late enrollee's application for coverage.

(C) The provisions of subparagraphs (A) and (B) of this paragraph do not apply to eligible employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in §26.4 of this title (relating to Definitions).

(D) Examples for applying subparagraphs (A) and (B) of this paragraph, in the case of both insurers and HMOs: Individual A requests coverage on October 1, 2014, after the enrollment period of July 1, 2014, through July 31, 2014, has ended. The next annual open enrollment period is July 1, 2015, through July 31, 2015. The effective date of coverage for persons enrolling during an open enrollment period is the beginning of the plan year, which is September 1 of each year.

(i) If the carrier is an insurer and has elected to exclude all applicants requesting late enrollment until the next open enrollment period, Individual A must reapply for coverage in July 2015 and the carrier may apply up to a 12-month preexisting condition period from the effective date of coverage, and as with any other enrollee, the preexisting condition period would begin on September 1, 2015, and expire on September 1, 2016.

(ii) If the carrier is an insurer and has elected to accept applications for late enrollment immediately and enroll the applicant during the plan year, the carrier may apply up to an 18-month preexisting condition period from the date of application. If Individual A applied for coverage on October 1, 2014, the preexisting condition period would begin on that date and expire on April 1, 2016.

(iii) If the carrier is an HMO and has elected to exclude all applicants requesting late enrollment until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 60-day affiliation period, as with any other enrollee.

(iv) If the carrier is an HMO and has elected to accept applications for late enrollment immediately and enroll the applicant during the plan year, the carrier may apply up to a 90-day affiliation period from the day Individual A applied for coverage.

(10) A preexisting condition provision in a small employer health benefit plan may not apply to coverage for a disease or condition other than a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received from an individual licensed to provide the services under state law and operating within the scope of practice authorized by state law during the six months before the effective date of coverage.

(11) A small employer carrier may not treat genetic information as a preexisting condition described by Insurance Code §1501.002 (concerning Definitions) in the absence of a diagnosis of the condition related to the information.

(12) A small employer carrier may not treat a pregnancy as a preexisting condition described in Insurance Code §1501.002.

(13) A preexisting condition provision in a small employer health benefit plan does not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the small employer health benefit plan, excluding any waiting period under the previous coverage. For example, Individual A has coverage under an individual policy for six months beginning on May 1, 2014, through October 31, 2014, followed by a gap in coverage of 61 days until December 31, 2014. Individual A is covered under an individual health plan beginning on January 1, 2015, for six months through June 30, 2015, followed by a gap in coverage of 62 days until August 31, 2015. Individual A's effective date of coverage under a small employer health benefit plan is September 1, 2015. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the small employer health benefit plan.

(14) In determining whether a preexisting condition provision applies to an individual covered by a small employer health benefit plan, the small employer carrier must credit the time the individual was covered under creditable coverage if the previous coverage was in effect at any time during the 12 months preceding the effective date of coverage under a small employer health benefit plan. Any waiting period that applied before that coverage became effective also must be credited against the preexisting condition provision period. For instance, Individual B is covered under an individual health insurance policy for 18 months beginning May 1, 2014, through November 30, 2015, followed by a four-month gap in coverage from December 1, 2015, to March 31, 2016. On April 1, 2016, Individual B is covered under a group health plan for three months through June 30, 2016, followed by a two-month gap in coverage until August 31, 2016. Individual B's coverage became effective on September 1, 2016. Under this example, since there was a significant break in coverage, to determine the length of creditable coverage, the small employer carrier counts the creditable coverage the individual had for the 12-month period preceding the effective date of the individual's coverage under the small employer health benefit plan. Individual B has creditable coverage of six months and the issuer of the small employer health benefit plan may impose a preexisting condition limitation for six months on Individual B.

(15) A small employer may establish a waiting period in accordance with Insurance Code §1501.156. On completion of the waiting period and enrollment within the time frame allowed by §26.7(h) of this title (relating to Requirement to Insure Entire Groups), coverage must be effective no later than the next premium due date. Coverage may be effective at an earlier date as agreed between the small employer and the small employer carrier.

(16) An HMO may impose an affiliation period in accordance with Insurance Code §1501.104, if the period is applied uniformly without regard to any health-status-related factor. The affiliation period may not exceed two months for an enrollee, other than a late enrollee, and may not exceed 90 days for a late enrollee. An affiliation period under a plan must run concurrently with any applicable waiting period under the plan. An HMO may not impose any preexisting condition limitation, except for an affiliation period.

(17) The imposition of an affiliation period by an HMO does not preclude application of any applicable waiting period as determined by the employer for all new entrants under a health benefit plan.

(18) An affiliation period provision in a small employer health benefit plan does not apply to an individual who would not be subject to a preexisting condition limitation in accordance with paragraphs (12) and (13) of this subsection.

(b) To determine if preexisting conditions exist, a small employer carrier must ascertain the source of previous or existing coverage of each eligible employee or dependent at the time the employee or dependent initially enrolls into the health benefit plan provided by the small employer carrier. The small employer carrier has the responsibility to contact the source of the previous or existing coverage to resolve any questions about the benefits or limitations related to that coverage in the absence of a creditable coverage certification form.

History

Source Note: The provisions of this §26.9 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.10 Establishment of Classes of Business

(a) A small employer carrier that establishes more than one class of business in accordance with the provisions of Insurance Code §1501.202 (concerning Establishment of Classes of Business) and §1501.203 (concerning Establishment of Classes of Business on Certain Bases Prohibited) must maintain on file for inspection by the commissioner the following information with respect to each class of business so established:

(1) a description of each criterion employed by the health carrier (or any of its agents) for determining membership in the class of business;

(2) a statement describing the justification for establishing the class as a separate class of business and documentation that the establishment of the class of business is intended to reflect substantial differences in expected claims experience or administrative costs related to the reasons set forth in Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act); and

(3) a statement disclosing which, if any, health benefit plans are currently available for purchase in the class and any significant limitations related to the purchase of the plans.

(b) A health carrier may not directly or indirectly use the number of employees and dependents of a small employer, the trade or occupation of the employees of a small employer, or the industry or type of business of the small employer as criteria for establishing eligibility for a health benefit plan or for a class of business, except as provided in Insurance Code §1501.202 and §1501.203.

(c) A health carrier may not establish a separate class of business based on minimum participation requirements or whether the coverage provided to a small employer group is provided on a guaranteed issue basis or is subject to underwriting or proof of insurability.

History

Source Note: The provisions of this §26.10 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.11 Restrictions Relating to Premium Rates

(a) A small employer carrier must develop a separate rate manual for each class of business. Base premium rates and new business premium rates charged to small employers by the small employer carrier must be computed solely from the applicable rate manual developed under this subsection. To the extent that a portion of the premium rates charged by a small employer carrier are based on objective criteria established by the small employer carrier consistent with the criteria set out in Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act), the manual must specify the criteria and factors considered by the health carrier in exercising this discretion.

(b) A small employer carrier must file with TDI, at least 60 days before the proposed date of the change, any proposed change to the rating method used in the rate manual for a class of business. The small employer carrier must ensure that the rating method used is actuarially sound and appropriate to ensure compliance with Insurance Code Chapter 1501 and this chapter, and that differences in rates charged for each small employer health benefit plan are reasonable and reflect objective differences in plan design. The commissioner may disapprove a change to the rating method that does not meet the requirements of this chapter. At the expiration of 60 days from the filing of the form with TDI, the proposed change will be deemed compliant unless the commissioner has disapproved it by written order.

(1) The filing must contain at least the following information:

(A) the reasons the change in rating method is being requested;

(B) a complete description of each of the proposed modifications to the rating method;

(C) a description of how the change in rating method would affect the premium rates currently charged to small employers in the class of business, including an estimate from a qualified actuary of the number of groups or individuals and a description of the types of groups or individuals whose premium rates may change by more than 10 percent due to the proposed change in rating method (not including general increases in premium rates applicable to all small employers in a health benefit plan);

(D) a certification from a qualified actuary that the new rating method would be based on objective and credible data and would be actuarially sound and appropriate; and

(E) a certification from a qualified actuary that the proposed change in rating method would not produce premium rates for small employers that would be in violation of Insurance Code Chapter 1501.

(2) For the purpose of this section, a change in rating method means:

(A) a change in the number of case characteristics used by a small employer carrier to determine premium rates for health benefit plans in a class of business;

(B) a change in the manner or procedures by which insureds are assigned into categories for the purpose of applying a case characteristic to determine premium rates for health benefit plans in a class of business;

(D) a change in a rating factor with respect to any case characteristic if the change would produce a change in premium for any small employer that exceeds 10 percent. For the purpose of this paragraph, a change in a rating factor means the cumulative change with respect to the factor considered over a 12-month period. If a small employer carrier changes rating factors with respect to more than one case characteristic in a 12-month period, the health carrier must consider the cumulative effect of all the changes in applying the 10 percent test under this paragraph.

(c) Each rate manual developed under subsection (a) of this section must specify the case characteristics and rate factors to be applied by the small employer carrier in establishing premium rates for the class of business.

(1) A small employer may not use case characteristics other than those specified in Insurance Code §1501.210 (concerning Premium Rates: Nondiscrimination), without the prior approval of the commissioner. A small employer carrier seeking approval must file for a change in rating method under subsection (b) of this section with the commissioner.

(2) A small employer carrier must use the same case characteristics in establishing premium rates for each health benefit plan in a class of business and must apply them in the same manner in establishing premium rates for each health benefit plan. Case characteristics may include the employer's industry classification consistent with Insurance Code §1501.208 (concerning Premium Rates: Industry Classification). Case characteristics must be applied without regard to the risk characteristics of a small employer.

(3) The rate manual developed under subsection (a) of this section must clearly illustrate the relationship among the base premium rates charged for each health benefit plan in the class of business. If the new business premium rate is different from the base premium rate for a health benefit plan, the rate manual must illustrate the difference.

(4) Differences among base premium rates for health benefit plans must be based solely on the reasonable and objective differences in the design and benefits of the health benefit plans and may not be based in any way on the actual or expected health-status-related factors of the small employer groups that choose or are expected to choose a particular health benefit plan. A small employer carrier must apply case characteristics and rate factors within a class of business in a manner that ensures that premium differences among health benefit plans for identical small employer groups vary only due to reasonable and objective differences in the design and benefits of the health benefit plans and are not due to the actual or expected health-status-related factors of the small employer groups that choose or are expected to choose a particular health benefit plan.

(5) Each rate manual developed under subsection (a) of this section must provide for premium rates to be developed in a two-step process. In the first step, the small employer carrier must develop a base premium rate for the small employer group without regard to any risk characteristics of the group. In the second step, the small employer carrier may adjust the resulting base premium rate by the risk load of the group, subject to the provisions of Insurance Code Chapter 1501, to reflect the risk characteristics of the group.

(6) Except as provided in this subsection, a premium charged to a small employer for a health benefit plan may not include a separate application fee, underwriting fee, or any other separate fee or charge. A small employer carrier may charge a separate fee with respect to a health benefit plan (but only one fee with respect to each plan) provided the fee is no more than $5 per month per covered employee and that the fee is applied in a uniform manner to each health benefit plan in a class of business.

(7) A small employer carrier must allocate administrative expenses to the small employer health benefit plans on no less favorable a basis than expenses are allocated to other health benefit plans in the class of business. The rate manual developed under subsection (a) of this section must describe the method of allocating administrative expenses to the health benefit plans in the class of business for which the manual was developed.

(8) The health carrier must retain each rate manual developed under subsection (a) of this section for a period of six years, including all updates and changes.

(9) Each rate manual and the rating practices of a small employer carrier must comply with any applicable rules.

(d) If a small employer carrier uses the number of employees and dependents of a small employer as a case characteristic, the highest rate factor associated with a classification based on the number of employees and dependents of a small employer may not exceed the lowest rate factor associated with the classification by more than 20 percent.

(e) The restrictions related to changes in premium rates in Insurance Code Chapter 1501 must be applied as follows.

(1) A small employer carrier must revise its rate manuals each rating period to reflect changes in base premium rates and changes in new business premium rates.

(2) If, for any health benefit plan with respect to any rating period, the percentage change in the new business premium rate is less than or the same as the percentage change in the base premium rate, the change in the new business premium rate will be deemed to be the change in the base premium rate for the purposes of Insurance Code Chapter 1501.

(3) If, for any health benefit plan with respect to any rating period, the percentage change in the new business premium rate exceeds the percentage change in the base premium rate, the health benefit plan will be considered a health benefit plan into which the small employer carrier is no longer enrolling new small employers for the purposes of Insurance Code Chapter 1501.

(4) If, for any rating period, the change in the new business premium rate for a health benefit plan differs from the change in the new business premium rate for any other health benefit plan in the same class of business by more than 20 percent, the health carrier must make a filing with the commissioner containing a complete explanation of how the respective changes in new business premium rates were established and the reason for the difference. The filing must be made at least 60 days before the beginning of the rating period during which the change is applicable. The filing allows the commissioner to determine whether the methodology is actuarially sound and appropriate to ensure compliance with Insurance Code Chapter 1501.

(5) A small employer carrier must keep the calculations used to determine the change in base premium rates and new business premium rates for each health benefit plan for each rating period for six years.

(f) Changes in premium rates and revised premium rates must comply with the following.

(1) Except as provided in subsection (e) of this section, a change in premium rate for a small employer must produce a revised premium rate that is no more than the base premium rate for the small employer (as shown in the rate manual as revised for the rating period), multiplied by one plus the sum of:

(A) the risk load applicable to the small employer during the previous rating period; and

(B) 15 percent (prorated for periods of less than one year).

(2) In the case of a health benefit plan into which a small employer carrier is no longer enrolling new small employers, a change in premium rate for a small employer must produce a revised premium rate that is no more than the base premium rate for the small employer (given its present composition and as shown in the rate manual in effect for the small employer at the beginning of the previous rating period), multiplied by one plus the lesser of:

(A) the change in the base rate; or

(B) the percentage change in the new business premium for the most similar health benefit plan into which the small employer carrier is enrolling new small employers, multiplied by one plus the sum of:

(i) the risk load applicable to the small employer during the previous rating period; and

(ii) 15 percent (prorated for periods of less than one year).

(3) In the case of a health benefit plan described in Insurance Code §1501.208, if the current premium rate for the health benefit plan exceeds the ranges set forth in Insurance Code §1501.204 (concerning Index Rates), the formulae set forth in paragraphs (1) and (2) of this subsection will be applied as if the 15 percent adjustment provided in paragraphs (1)(B) and (2)(B)(ii) of this subsection were a 0 percent adjustment.

(4) Notwithstanding the provisions of paragraphs (1) and (2) of this subsection, a change in premium rate for a small employer may not produce a revised premium rate that would exceed the limitations on rates provided in Insurance Code §1501.204.

(g) An HMO offering any state-approved, federally qualified plan described in Insurance Code §1501.255 (concerning Health Maintenance Organization Plans) and §26.14 of this title (relating to Coverage) must establish premium rates for those plans in accordance with formulae or schedules of charges filed with TDI under the procedures set forth in Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges) and Chapter 11, Subchapter H of this title (relating to Schedule of Charges). An HMO must follow the rating requirements set out in this section for any plan it offers that is not federally qualified.

(h) An HMO participating in a purchasing cooperative that provides employees of small employers a choice of benefit plans, which has established a separate class of business as provided by Insurance Code §1501.202 (concerning Establishment of Classes of Business) and §1501.203 (concerning Establishment of Classes of Business on Certain Bases Prohibited), and a separate line of business as provided under Insurance Code §1501.255 and 42 U.S.C. §§300e et seq. (concerning Health Maintenance Organizations), may use rating methods in accordance with this subchapter that are used by other small employer carriers participating in the same purchasing cooperative, including rating by age and gender.

(i) When seeking to obtain information relating to a small employer group, including the risk characteristics of the small employer group, a small employer carrier must comply with §26.13(l) of this title (relating to Fair Marketing).

History

Source Note: The provisions of this §26.11 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.12 Disclosure

In connection with the offering for sale of any small employer health benefit plan, each small employer carrier and each agent must make a reasonable disclosure, as part of its solicitation and sales material, of:

(1) the extent to which premium rates for a specific small employer are established or adjusted based on the actual or expected variation in claim costs or the actual or expected variation in health status of the employees of the small employer and their dependents;

(2) provisions concerning the small employer carrier's right to change premium rates and the factors other than claim experience that affect changes in premium rates;

(3) provisions relating to renewability of policies and contracts; and

(4) any preexisting condition provision or affiliation period.

History

Source Note: The provisions of this §26.12 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective March 5, 1998, 23 TexReg 2297 ; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.13 Fair Marketing

(a) A small employer carrier must market each of its small employer health benefit plans to small employers in this state. A small employer carrier may not suspend the marketing or issuance of the small employer benefit plans unless the health carrier has good cause and has received prior approval from the commissioner or the commissioner's designee. Any agent authorized by a small employer carrier to market consumer choice health benefit plans to small employers in this state must also be authorized to market small employer health benefit plans that contain state-mandated health benefits.

(b) Before issuing coverage to a small employer, a small employer carrier must offer the employer a choice of all health benefit plans that the small employer carrier offers and for which the small employer qualifies. The small employer carrier may provide the offer directly to the small employer or deliver it through an agent, but in either case must offer each required plan contemporaneously with the offer of any other small employer health benefit plan. The offer must be in writing and include at least the following:

(1) information describing how the small employer may enroll in the plan or plans;

(2) information set out in Insurance Code §1501.354 (concerning Required Disclosures) and §26.12 of this title (relating to Disclosure); and

(3) a written disclosure, as required by Chapter 21, Subchapter AA of this title (relating to Consumer Choice Health Benefit Plans).

(c) On request, a small employer carrier must explain to a small employer each of the small employer health benefit plans it offers.

(d) A small employer carrier must comply with this subsection when providing a premium rate quote to a small employer.

(1) A small employer carrier must provide a premium rate quote to a small employer, directly or through an authorized agent, within 15 business days of receiving the small employer's completed application for coverage and individual enrollment forms.

(2) A small employer carrier may request, directly or through an authorized agent, any additional information, using the applicable rate manual and associated underwriting guidelines developed under §26.11 of this title (relating to Restrictions Relating to Premium Rates), necessary to provide the premium rate quote. If the carrier requests this additional information before the end of the 15-day period described in paragraph (1) of this subsection, the request for additional information tolls the running of the 15-day period until the small employer carrier receives the requested additional information.

(3) A small employer carrier may give a small employer an estimated cost of coverage before the end of the 15-day period described in paragraph (1) of this subsection, so long as the carrier makes clear that the estimate is not a premium rate quote.

(4) A small employer carrier may not impose any additional conditions to its provision of a premium rate quote.

(e) A small employer carrier may not apply more stringent or detailed requirements related to the application process for, or otherwise discriminate in the offer of, any small employer health benefit plan than are applied for other health benefit plans offered by the health carrier to small employers.

(f) If a small employer carrier denies coverage under a health benefit plan to a small employer on any basis, the denial must be in writing and specifically state the reasons for the denial (subject to any restrictions related to confidentiality of medical information).

(g) A small employer carrier must establish and maintain a means to provide information to small employers who request information on the availability of small employer health benefit plans in this state. The information provided to small employers must include information about how to apply for coverage from the health carrier and may include the names and phone numbers of agents located geographically proximate to the caller or other information that is reasonably designed to assist the caller in locating an authorized agent or applying for coverage.

(h) The small employer carrier may not require a small employer to join or contribute to any association or group as a condition of being accepted for coverage by the small employer carrier, except that, if membership in an association or other group is a requirement for accepting a small employer into a particular health benefit plan, a small employer carrier may apply that requirement, subject to the requirements of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act).

(i) A small employer carrier may not require, as a condition to the offer or sale of a health benefit plan to a small employer, that the small employer purchase or qualify for any other insurance product or service.

(j) Health carriers offering individual and group health benefit plans in this state must determine whether the plans are subject to the requirements of Insurance Code Chapter 1501 and this subchapter. Health carriers must obtain the following information from applicants for those plans at the time of application:

(1) whether any portion of the premium will be paid by a small employer;

(2) whether the prospective policyholder, certificate holder, or any prospective covered individual intends to treat the health benefit plan as part of a plan or program under the United States Internal Revenue Code of 1986, 26 U.S.C. §106 (concerning Contributions by Employer to Accident and Health Plans), or §162 (concerning Trade or Business Expenses);

(3) whether the health benefit plan is an employee welfare benefit plan under 29 C.F.R. §2510.3-1 (concerning Employee Welfare Benefit Plan); or

(4) whether the applicant is a small employer.

(k) If a health carrier fails to comply with subsection (j) of this section, the health carrier will be deemed to be on notice of any information that could reasonably have been attained if the health carrier had complied with subsection (j) of this section.

(l) A small employer carrier may not discriminate between small employer groups when obtaining information relating to a small employer, including information related to the risk characteristics of the small employer group or other aspects of the application or application process.

(m) A small employer carrier may not terminate, fail to renew, limit its contract or agreement of representation with, or take any other negative action against an agent for the agent's request that the carrier issue or renew a health benefit plan to a small employer.

History

Source Note: The provisions of this §26.13 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.14 Coverage

(a) Continuation and conversion. All small employer health benefit plans must provide for continuation and may provide an option for conversion that complies with Insurance Code Chapters 1251 (concerning Group and Blanket Health Insurance) and 1271 (concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges) and rules adopted under those statutes. A state-approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 U.S.C. §§300e, et seq., concerning Health Maintenance Organizations) must provide coverage for continuation that complies with the requirements of Insurance Code Chapter 1271 and must offer conversion in compliance with 42 C.F.R. §417.124(e) (concerning Administration and Management) and applicable federal law.

(b) Plain language. Each health benefit plan, certificate, policy, rider, or application used by health carriers to provide coverage to small employers and their employees must comply with Insurance Code §1501.258 (concerning Forms) and §1501.260 (concerning Plain Language Required), be written in plain language, and meet the requirements of Chapter 3, Subchapter G of this title (relating to Plain Language Requirements for Health Benefit Policies). Requirements for use of plain language are not applicable to a health benefit plan group master policy or a policy application or enrollment form for a health benefit plan group master policy.

(c) Dependent coverage. Every small employer carrier providing health benefit plans to small employers is required to offer dependent coverage to each eligible employee. Dependent coverage may be paid for by the employer, the employee, or both.

(d) Point-of-service coverage. An HMO issuing small employer HMO coverage may also offer point-of-service coverage that complies, as applicable, with the requirements set forth in Insurance Code Chapter 843 (concerning Health Maintenance Organizations); Chapter 11, Subchapter Z of this title (relating to Point-of-Service Riders); and Chapter 21, Subchapter U of this title (relating to Arrangements Between Indemnity Carriers and HMOs for Point-of-Service Coverage) that allow the enrollee to access out-of-plan coverage at the option of the enrollee.

History

Source Note: The provisions of this §26.14 adopted to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.15 Renewability of Coverage and Cancellation

(a) Except as provided by Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage), a small employer carrier must renew any small employer health benefit plan at the option of the small employer, unless:

(1) the premium has not been paid as required by the terms of the plan;

(2) the small employer has committed fraud or intentional misrepresentation of a material fact. An intentional misrepresentation of a material fact does not include any misrepresentation related to health status;

(3) the small employer has not complied with a material provision of the health benefit plan relating to premium contribution, group size, or minimum participation requirements;

(4) the small employer has no enrollee, in connection with the plan, who resides or works in the service area of the small employer carrier or in the area where the small employer carrier is authorized to do business; or

(5) membership of an employer in an association terminates, but only if coverage is terminated uniformly without regard to a health-status-related factor of a covered individual.

(b) A small employer carrier may refuse to renew the coverage of an eligible employee or dependent for fraud or intentional misrepresentation of a material fact by that individual and with respect to an eligible employee or dependent who is a subscriber or enrollee in an HMO, for the reasons specified in §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate). The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses. An intentional misrepresentation of a material fact does not include any misrepresentation related to health status.

(c) A small employer carrier may not cancel a small employer health benefit plan except for the reasons specified for refusal to renew under Insurance Code §1501.108 (concerning Renewability of Coverage; Cancellation), and subsections (a) and (b) of this section. A small employer carrier may not cancel the coverage of an eligible employee or dependent except for the reasons specified for refusal to renew under Insurance Code §1501.108 and subsections (a) and (b) of this section.

(d) A carrier is not prevented from seeking any legal remedies against a person who fraudulently misrepresents health status during the initial application for coverage. Legal remedies available to a carrier do not include cancellation or nonrenewal.

(e) Other small employer health benefit plans, provided through individual policies, must be guaranteed renewable for life or until maximum benefits have been paid, or may be guaranteed renewable with the only reasons for termination being those set out in Insurance Code §1501.108 and §1501.109 and this subchapter. All other health benefit plans issued to small employers must be renewed at the option of the small employer, but may provide for termination in accordance with Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act), and this subchapter.

History

Source Note: The provisions of this §26.15 adopted to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.16 Refusal to Renew and Application to Reenter Small Employer Market

(a) A small employer carrier may elect to refuse to renew all small employer health benefit plans delivered or issued for delivery by the small employer carrier in this state or in a geographic service area. The small employer carrier must notify the commissioner and each affected covered small employer of the election as provided in Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage).

(b) The small employer carrier may not write a new small employer health benefit plan in this state or in the geographic service area, as applicable, for five years after notice to the commissioner of the election to refuse to renew. A small employer carrier that elects not to renew may not resume offering health benefit plans to small employers in this state or in the geographic area for which the election was made until it has filed a petition with the commissioner to be reinstated as a small employer carrier and the petition has been approved. In reviewing the petition, the commissioner may ask for information and assurances as the commissioner finds reasonable and appropriate.

(c) A small employer carrier may elect to discontinue a particular type of small employer coverage only if the small employer carrier:

(1) before the 90th day preceding the date of the discontinuation of the coverage:

(A) provides notice of the discontinuation to each employer and TDI; and

(B) offers to each employer the option to purchase other small employer coverage offered by the small employer carrier at the time of the discontinuation; and

(2) acts uniformly without regard to the claims experience of the employer or any health-status-related factors of employees or dependents or new employees or dependents who may become eligible for the coverage.

History

Source Note: The provisions of this §26.16 adopted to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.18 Election and Application to be Risk-Assuming or Reinsured Carrier

(a) Each small employer carrier must file with the commissioner, no later than with the first filing of a small employer health benefit plan, notification of whether the carrier elects to operate as a risk-assuming or reinsured carrier.

(1) A small employer carrier's operation as a risk-assuming carrier is subject to approval by the commissioner, and each small employer carrier electing to operate as a risk-assuming carrier must file an application with the commissioner contemporaneously with its election to operate as a risk-assuming carrier. A risk-assuming carrier's application, in addition to the financial information already on file with TDI, must include a:

(A) history of rating and underwriting small employer groups, including a description of underwriting experience to identify high risks and the percentage of aggregate rate increases for the past three years for small employer groups for Texas and nationwide;

(B) description of the carrier's commitment to fairly market to all small employers in Texas or in the small employer carrier's established geographic service areas, including sample material used, or planned to be used, to market to small employers;

(i) the number of years, volume of business, results, etc.;

(ii) a list of other states with guaranteed issue requirements where the carrier provides small employer group coverage;

(iii) the total number of lives currently covered under those guaranteed issue plans; and

(iv) a list of other states where the carrier voluntarily participates in reinsurance programs;

(D) description of plans to manage the risk of guaranteed issue as a risk-assuming carrier;

(E) list of affiliated small employer carriers and whether they have been approved as either a risk-assuming or reinsured carrier;

(F) list of any other affiliated small employer carrier applicants, indicating their requested designation as either a risk-assuming or reinsured carrier; and

(G) the name, title, and signature of the chief executive officer, attorney, or actuary for the named health carrier.

(2) A reinsured carrier's notification must include:

(A) a statement of the carrier's election to operate as a reinsured carrier; and

(B) the name, title, and signature of the chief executive officer, attorney, or actuary of the named health carrier.

(b) A small employer carrier seeking to change its status as a risk-assuming or reinsured carrier must file an application with the commissioner. If the carrier is requesting a change to be a:

(1) risk-assuming carrier, the filing must include:

(A) the information requested in subsection (a) of this section;

(B) information demonstrating good cause for the request to change status; and

(2) reinsured carrier, the filing must include:

(A) information demonstrating good cause for the request to change status; and

(B) the name, title, and signature of the chief executive officer, attorney, or actuary for the named health carrier.

(c) A small employer carrier's election is effective until the fifth anniversary of the election. A small employer carrier seeking to maintain its status after that date must file with the commissioner, at least 90 days before the fifth anniversary of its election, the same information required by subsection (a)(1) and (2) of this section.

(d) A form fulfilling the requirements of this section is available at www.tdi.texas.gov/forms/form10smgroup.html through the link for Election and Application to be a Risk-Assuming or Reinsured Carrier.

History

Source Note: The provisions of this §26.18 adopted to be effective April 9, 1996, 21 TexReg 2648; amended March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.19 Filing Requirements

(a) Each small employer carrier must file each form, including, but not limited to, each policy, contract, certificate, agreement, evidence of coverage, endorsement, amendment, enrollment form, and application that will be used to provide a health benefit plan in the small employer market, in accordance with Insurance Code Chapter 1701 (concerning Policy Forms), and Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings), or Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges), and §11.301 of this title (relating to Filing Requirements) or §11.302 of this title (relating to Service Area Expansion or Reduction Applications), as applicable.

(b) Each small employer carrier, other than an HMO, must use a policy shell format for any group or individual health benefit plan form used to provide a health benefit plan in the small employer market. To expedite the review and approval process, all group and individual health benefit plan form filings (excluding HMO filings that are covered in subsection (c) of this section) must be submitted in the following order:

(1) a group policy face page or individual policy face page, as applicable;

(2) the group certificate page or individual data page, as applicable;

(3) as applicable under Chapter 3, Subchapter A of this title, the toll-free number and complaint notice page, as required by Chapter 1, Subchapter E of this title (relating to Notice of Toll-Free Telephone Numbers and Procedures for Obtaining Information and Filing Complaints);

(4) the table of contents;

(5) insert pages for the general provisions;

(6) insert pages for the required provisions and any optional provisions, if elected and as applicable;

(7) for small employer health benefit plans, an insert page for the benefits section of the health benefit plan, including but not limited to schedule of benefits; definitions; benefits provided; exclusions and limitations; continuation provisions; and, if applicable, alternative cost containment, preferred provider, conversion and coordination of benefits provisions, and riders;

(8) insert pages for any amendments, applications, enrollment forms, or other form filings that comprise part of the contract;

(9) insert pages for any required outline of coverage for individual products;

(10) any additional form filings and documentation as outlined in Chapter 3, Subchapter A of this title and Chapter 3, Subchapter G of this title (relating to Plain Language Requirements for Health Benefit Policies);

(11) the certifications required under this section and any other rating information required under §26.10 of this title (relating to Establishment of Classes of Business) and §26.11 of this title (relating to Restrictions Relating to Premium Rates); and

(12) the rate schedule applicable to any individual health benefit plan, as required by Chapter 3, Subchapter A of this title.

(c) In addition to subsection (a) of this section, the following provisions apply to each HMO. The HMO must submit health benefit plan forms for use in the small employer market that include the following.

(1) Any HMO group or individual agreement must address and include all required provisions of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act). The agreement must be in compliance with any other applicable provisions of the Insurance Code. In addition, the agreement must comply with the provisions of Chapter 11, Subchapter F of this title (relating to Evidence of Coverage) where those provisions are not in conflict with Insurance Code Chapter 1501.

(2) The filing must include any alternative pages to the agreement or the schedule of benefits and any alternative schedules of benefit.

(3) The filing must include any additional riders, amendments, applications, enrollment forms, or other forms and any other required documentation outlined in Chapter 11, Subchapter F of this title.

(4) The filing must include any applicable requirements of Chapter 11, Subchapter D, of this title (relating to Regulatory Requirements for an HMO Subsequent to Issuance of a Certificate of Authority), and Chapter 11, Subchapter F of this title, except for:

(A) continuation and conversion of coverage, in accordance with Insurance Code Chapter 1271 and this title; and

(B) cancellation, in accordance with §26.15 of this title (relating to Renewability of Coverage and Cancellation).

(5) The filing must include any rider forms that will be used with health benefit plans offered to small employers. The rider forms, if developed subsequent to approval of the agreement, must be submitted with an explanation of the market in which the forms will be used. All rider forms must comply with Insurance Code Chapter 1271, and applicable provisions of Chapter 11, Subchapters D and F of this title.

History

Source Note: The provisions of this §26.19 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.20 Reporting Requirements

(a) Small employer health carriers offering a small employer health benefit plan must file annually, not later than March 1 of each year, an actuarial certification Form Number 1212 CERT ACTUARIAL, Annual Small Employer Health Benefit Plan Actuarial Certification, Rev. 09/16, signed by a qualified actuary stating that the underwriting and rating methods of the small employer carrier:

(1) comply with accepted actuarial practices;

(2) are uniformly applied to each small employer health benefit plan covering a small employer; and

(3) comply with the provisions of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) and this chapter.

(b) Form Number 1212 CERT ACTUARIAL is available at www.tdi.texas.gov/forms/forms10smgroup.html through the link for Form Number 1212 CERT ACTUARIAL Annual Small Employer Health Benefit Plan Actuarial Certification.

(c) Not later than March 1 of each calendar year, a small employer carrier must complete and file with the commissioner Form Number 1212 CERT DATA Annual Small Employer Health Benefit Plan Report, Rev. 09/16, available at www.tdi.texas.gov/forms/forms10smgroup.html. This annual filing must include the following information related to the previous calendar year for health benefit plans issued by the small employer carrier to small employers in this state:

(1) the number of small employers that were issued and the number of lives that were covered under health benefit plans in the previous calendar year (separated, if applicable, as to newly issued plans and renewals);

(2) the number of small employers that were issued and the number of lives that were covered under consumer choice health benefit plans; plans offering all state-mandated health benefits; HMO consumer choice health benefit plans and HMO plans, including all state-mandated health benefits in the previous calendar year (as applicable, separated as to newly issued plans and renewals and by groups based on the following covered-employee size ranges: 2 - 9, 10 - 20, 21 - 35, 36 - 50, and more than 50);

(3) the number of small employer health benefit plans in force and the number of lives covered under those plans, broken down by the ZIP code of the small employers' principal place of business in Texas;

(4) the number of small employer health benefit plans voluntarily not renewed by small employers in the previous calendar year;

(5) the number of small employer health benefit plans terminated or nonrenewed (for reasons other than nonpayment of premium) by the health carrier in the previous calendar year;

(6) the number of small employer health benefit plans issued to small employers that were uninsured for at least the two months before issue;

(7) the health carrier's gross premiums derived from health benefit plans delivered, issued for delivery, or renewed to small employers in the previous calendar year;

(8) the name and license information regarding any other small employer carrier whose health benefit plans the health carrier assumed; and

(9) the number of small employers and the number of lives that were covered under plans issued to small employer health coalitions and cooperatives in the previous calendar year (as applicable, separated as to newly issued plans and renewals).

History

Source Note: The provisions of this §26.20 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.25 Unfair Competition and Unfair Practices

A misrepresentation about the effects of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) or this subchapter in marketing small employer health plans or in the marketing, renewing, or canceling of other health insurance products will be considered a violation of Insurance Code Chapter 541 (concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices) and §543.001 (concerning Misrepresentation Prohibited).

History

Source Note: The provisions of this §26.25 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.28 Territorial Exclusions

Subject to the provisions of Chapter 3 of this title (relating to Life, Accident, and Health Insurance and Annuities) and Chapter 11 of this title (relating to Health Maintenance Organizations), a small employer health benefit plan may not exclude health care services, supplies, or drugs provided for medical emergencies outside the plan service area, including outside the United States.

History

Source Note: The provisions of this §26.28 adopted to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.30 Composite Premiums

(a) Definitions. For purposes of this section:

(1) "Composite premiums" are premiums offered to enrollees of a small group health plan that are determined using the average premium per enrollee and corresponding average premiums for different coverage tiers, as described in this section.

(2) "Per-member premiums" are premiums offered to enrollees that are determined on an individual basis.

(3) "Tier" refers to each premium category in subsection (d).

(4) "Tier factor" is a multiplier used to determine premium for each tier.

(b) A small employer carrier may offer composite premiums in addition to per-member premiums. Composite premiums cannot be offered instead of per-member premiums.

(c) A small employer carrier that offers composite premiums in the small group market in Texas must determine composite premiums using the tiers and tier factors described in this section, as provided in 45 CFR §147.102(c)(3) and other applicable law.

(d) The tiers and tier factors used to determine composite premiums are:

(1) employee only, with a tier factor of 1.0;

(2) employee and spouse, with a tier factor of 2.0;

(3) employee and child or children, with a tier factor of 2.0; and

(4) employee and family, with a tier factor of 3.0.

(e) This section applies to health benefit plans issued or renewed on or after November 1, 2015.

History

Source Note: The provisions of this §26.30 adopted to be effective October 18, 2015, 40 TexReg 7093.

Subchapter B TEXAS HEALTH REINSURANCE SYSTEM PLAN OF OPERATION

28 Tex. Admin. Code § 26.201 The Texas Health Reinsurance System Plan of Operation

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commissioner--The Commissioner of Insurance.

(2) Department--The Texas Department of Insurance.

(3) THR System--The Texas Health Reinsurance System.

(4) Plan of Operation--The guidelines or bylaws necessary or suitable to assure the fair, reasonable, and equitable administration of the THR System, as established in Texas Insurance Code, Articles 26.51 et seq.

(5) Procedures Manual--The manuals, handbooks, or guidelines, if any, created and/or adopted by the THR System in addition to its Plan of Operation.

(b) The THR System shall keep and make available for inspection by interested persons its current Plan of Operation and procedures manual at the THR System's regular business place and hours. The Department shall also keep and make available for inspection by interested persons the current Plan of Operation and procedures manual for the THR System at the Department's regular business place and hours.

(c) The THR System shall send notice of any regular meeting and agenda of its Board of Directors to the Texas Register for publication so that the notice appears at least seven days before an impending meeting. Such publication shall be made as miscellaneous information provided as a public service.

(d) The THR System shall send notice of proposed and/or adopted amendments to its Plan of Operation and procedures manual to the Texas Register for publication. Notice of proposed amendments shall be sent to the Texas Register within ten calendar days after any action is taken by the THR System Board of Directors. Additionally, the text of any proposed "access to small employers health insurance" and "assessments" amendments to its Plan of Operation and procedures manual shall be submitted in full to the Texas Register for publication. Such publication shall be made as miscellaneous information provided as a public service.

History

Source Note: The provisions of this §26.201 adopted to be effective September 29, 1995, 20 TexReg 7284.

Subchapter C LARGE EMPLOYER HEALTH INSURANCE REGULATIONS

28 Tex. Admin. Code § 26.301 Applicability, Definitions, and Scope

(a) The applicable terms defined in §26.4 of this title (relating to Definitions) are incorporated into this subchapter.

(b) Insurance Code Chapter 1501, concerning the Health Insurance Portability and Availability Act, and this subchapter regulate all health benefit plans sold to large employers, whether the plans are sold directly or through associations or other groupings of large employers.

(c) Except as otherwise provided, this subchapter applies to any health benefit plan providing health care benefits covering 51 or more employees of a large employer, whether provided on a group or individual franchise insurance policy basis, regardless of whether the policy was issued in this state, if it provides coverage to any citizen or inhabitant of this state and if the plan meets one of the following conditions:

(1) A portion of the premium or benefits is paid by a large employer.

(2) The health benefit plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of the United States Internal Revenue Code of 1986 (26 U.S.C. §106, concerning Contributions by Employer to Accident and Health Plans, or §162, concerning Trade or Business Expenses).

(3) The health benefit plan is a group policy issued to a large employer.

(4) The health benefit plan is an employee welfare benefit plan under 29 C.F.R. §2510.3-1 (concerning Employee Welfare Benefit Plan).

(d) For an employer that was not in existence the previous calendar year, the determination is based on the average number of employees the employer reasonably expects to employ on business days in the calendar year in which the determination is made.

(e) If a large employer or the employees of a large employer are issued a health benefit plan under the provisions of Insurance Code Chapter 1501 and this subchapter, and the large employer subsequently employs fewer than 51 employees, the provisions of Insurance Code Chapter 1501 and this subchapter continue to apply to that particular health plan if the employer elects to renew the large employer health benefit plan subject to the provisions of §26.308 of this title (relating to Renewability of Coverage and Cancellation). A health carrier providing coverage to an employer must, within 60 days of becoming aware that the employer has fewer than 51 employees, but not later than the first renewal date occurring after the employer ceases to be a large employer, notify the employer of the following:

(1) The employer may renew the large employer policy.

(2) If the employer does not renew the large employer health benefit plan, the employer will be subject to the requirements of Insurance Code Chapter 1501 that apply to small employers, and Chapter 26, Subchapter A, of this title (relating to Definitions, Severability, and Small Employer Health Regulations), including:

(A) guaranteed issue;

(B) rating protections; and

(3) The employer has the option to purchase a small employer health benefit plan from the employer's current health carrier if the carrier is offering small employer coverage or from any small employer carrier currently offering small employer coverage in this state.

(4) If the employer fails to comply with the qualifying minimum participation, contribution, or group size requirements of §26.303 of this title (relating to Coverage Requirements) and Insurance Code §1501.605 (concerning Minimum Contribution or Participation Requirements), the health carrier may terminate coverage under the plan, provided that the termination complies with the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum participation, contribution, or minimum group size requirement and in accordance with Insurance Code §§1501.108 - 1501.111 (concerning Renewability of Coverage: Cancellation; Refusal to Renew: Discontinuation of Coverage; Notice to Covered Persons; and Written Statement of Denial, Cancellation, or Refusal to Renew Required, respectively) and §26.308 of this title.

(f) If a health benefit plan is issued to an employer that is not a large employer, but subsequently the employer becomes a large employer, the provisions of Insurance Code Chapter 1501 and this subchapter apply to the health benefit plan on the first renewal date, unless the employer was a small employer and renews its current health benefit plan as provided under §26.5(e) of this title (relating to Applicability and Scope).

(g) An employer group or association that is a bona fide employer association under this subsection is a single large employer for purposes of this subchapter and Insurance Code Chapter 1501.

(1) An employer group or association is a bona fide employer association if:

(A) the employer group or association has a formal organizational structure with a governing body and has bylaws or other similar indications of formality;

(B) the functions and activities of the employer group or association are controlled by its member employers;

(C) the employer group or association has at least one substantial business purpose unrelated to offering and providing health coverage or other employee benefits to its member employers and their employees;

(D) the member employers of the group or association are in the same trade, industry, line of business, or profession;

(E) the member employers that participate in the group health plan control the plan in form and in substance;

(F) each member employer participating in the group health plan is a person acting directly as an employer of at least one eligible employee who is a participant covered under the plan;

(G) the employer group or association does not make health coverage through the group health plan available to individuals other than:

(i) an eligible employee of a current member employer;

(ii) a former employee of a current member employer who became eligible for coverage under the group health plan when the former employee was an employee of the employer;

(iii) a current member employer; or

(iv) a dependent of an individual described in clause (i), (ii), or (iii) of this subparagraph (for example, spouses and dependent children); and

(H) the employer group or association is not a health insurance issuer, or owned or controlled by a health insurance issuer or by a subsidiary or affiliate of a health insurance issuer, other than if and to the extent such entities participate in an employer group or association in their capacity as member employers of the employer group or association. For purposes of this subparagraph, control is the power to direct, or cause the direction of, the management and policies of a person, other than power that results from an official position with or corporate office held by the person. The power may be possessed directly or indirectly by any means, including through the ownership of voting securities or by contract, other than a commercial contract for goods or nonmanagement services.

(2) An issuer wanting to issue coverage to an employer group or association seeking designation as a bona fide employer association under this subsection must submit to TDI an association filing and any supporting documents establishing that the group or association meets the requirements of this subsection. The filing must be made as provided in Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions). The department will review the filing and all supporting documents and will determine whether to approve or disapprove the employer group's or association's eligibility as a bona fide employer association. The filing must include either:

(A) an advisory opinion from the U.S. Department of Labor recognizing the employer group or association as a bona fide employer association that is no more than three years old; or

(B) an opinion from an attorney attesting to the fact that the employer group or association qualifies as a bona fide employer association under paragraph (1) of this subsection. An attorney attestation must adequately explain how and why the employer group or association meets all of the criteria, based on the facts and circumstances of the employer group's or association's governance and operations during the 12 months immediately preceding submission of the application, with explicit references to relevant language drawn from the employer group's or association's bylaws, trust agreement, or other organizational documents, which must be submitted to the department with the attorney's attestation.

(3) For purposes of paragraph (1)(C) of this subsection, the employer group or association will be treated as having a substantial business interest unrelated to the provision of benefits under the plan if:

(A) the employer group or association would be a viable entity in the absence of sponsoring an employee benefit plan;

(B) the member employers have a shared or common purpose that is not generally applicable to the population at large; and

(4) When determining whether an entity is a bona fide employer association, the department may consider whether the employer group or association ever existed without offering a health benefit plan.

(5) An employer group or association must not condition employer membership in the group or association on any health-status-related factor, as defined in §26.4 of this title (relating to Definitions), of any individual who is or may become eligible to participate in the group health plan sponsored by the bona fide group or association.

(6) If TDI approves an association as a bona fide employer association, an issuer must treat the employer group or association as a single large employer, including for purposes of compliance with this chapter and Texas Insurance Code Chapter 1501.

(h) A large employer nonfederal governmental employee health benefit plan that is not self-funded is subject to the Insurance Code and this title, as applicable, including Chapter 1501 and this chapter.

(i) If a large employer has employees in more than one state, the provisions of Insurance Code Chapter 1501 and this subchapter apply to a health benefit plan issued to the large employer if the:

(1) majority of employees are employed in this state on the issue date or renewal date; or

(2) primary business location is in this state on the issue date or renewal date and no state contains a majority of the employees.

(j) A carrier licensed in this state that issues a certificate of insurance covering a Texas resident is responsible for ensuring that the certificate complies with applicable Texas insurance laws and rules, including Senate Bill 1264, 86th Legislature, 2019, and other mandated benefits, regardless of whether the group policy underlying the certificate was issued outside the state.

History

Source Note: The provisions of this §26.301 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539; amended to be effective December 24, 2020, 45 TexReg 9226; amended to be effective July 12, 2023, 48 TexReg 3666.

28 Tex. Admin. Code § 26.302 Status of Health Carriers as Large Employer Carrier

(a) With the original filing to enter the large employer market or when notifying TDI of a change in status, each health carrier providing health benefit plans in this state must file with the commissioner a statement indicating whether the health carrier will or will not offer, renew, issue, or issue for delivery health benefit plans to large employers in this state. The filing must include a certification, signed by an officer of the company, that the carrier intends to operate in accordance with the status certification unless or until changed in accordance with this section, and provide a statement that:

(1) the health carrier intends to offer, renew, issue, and issue for delivery health benefit plans to large employers in Texas, and will operate in accordance with Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) and this subchapter;

(2) the health carrier does not intend to offer, issue, or issue for delivery health benefit plans to large employers in Texas, but the health carrier intends to renew existing health benefit plans;

(3) the health carrier does not intend to offer, issue, or issue for delivery health benefit plans to large employers in Texas; intends to nonrenew all health benefit plans issued to large employers in Texas; and will provide notice to the commissioner and employers in accordance with §26.309 of this title (relating to Refusal to Renew and Application to Reenter Large Employer Market) and Insurance Code §1501.110 (concerning Notice to Covered Persons); or

(4) the health carrier has no health benefit plans issued to large employers or to employees of a large employer and does not intend to offer, issue, or issue for delivery health benefit plans to large employers.

(c) A form fulfilling the requirements of subsections (a) and (b) of this section is available online at www.tdi.texas.gov/forms/form10smgroup.html through the link for Large Employer Carrier Status Certification.

(d) The large employer carrier must also comply with any other applicable legal requirements, including those for withdrawal from the market under Chapter 7, Subchapter R of this title (relating to Withdrawal Plan Requirements and Procedures).

History

Source Note: The provisions of this §26.302 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.303 Coverage Requirements

(a) The large employer carrier must accept or reject the entire group of individuals who meet the participation criteria established by the employer and who choose coverage, and may exclude only those eligible employees or dependents who have declined coverage. The carrier may charge premiums in accordance with Insurance Code §1501.107 (concerning Discounts, Rebates, and Reductions) and §1501.610 (concerning Premium Rates; Adjustments) to the group of employees or dependents who meet the participation criteria established by the employer and who do not decline coverage.

(b) A large employer carrier must secure a written waiver for each eligible employee who meets the participation criteria and each dependent, if dependent coverage is offered to enrollees under a large employer health benefit plan, who declines an offer of coverage under a health benefit plan provided to a large employer. If a large employer elects to offer coverage through more than one large employer carrier, waivers are only required to be signed if the individual is declining all offered plans. The large employer carriers may enter into an agreement designating which large employer carrier will receive and retain the waiver. Waivers must be maintained by the large employer carrier for a period of six years. The waiver must ensure that the employee was not induced or pressured into declining coverage because of the employee's health-status-related factors. The waiver must be signed by the employee (on behalf of the employee or the dependent, if applicable) and must certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan. Receipt by the large employer carrier of a facsimile transmission of the waiver is permissible, provided the transmission includes a representation from the large employer that the employer will maintain the original waiver on file for a period of six years from the date of the facsimile transmission. The waiver form must:

(1) require that the reason for declining coverage be stated on the form;

(2) include a written warning of the penalties imposed on late enrollees; and

(3) include a statement that the following individuals were not induced or pressured by the large employer, agent, or health carrier into declining coverage, but elected to decline coverage:

(A) an eligible employee who meets the large employer's participation criteria; and

(B) the employee's dependents, if dependent coverage is offered to enrollees under a large employer health benefit plan.

(c) An agent must notify a large employer carrier, before submitting an application for coverage with the health carrier on behalf of a large employer or its employees, of any circumstances that would indicate that the large employer has induced or pressured an eligible employee who meets the large employer's participation criteria or a dependent to decline coverage due to the individual's health-status-related factors.

(d) Health carriers may require large employers to answer questions designed to determine the level of premium contribution by the large employer and the percentage of participation of eligible employees.

(e) In this section, an "eligible employee" does not include employees who are within their waiting or affiliation period for percentage of participation requirement purposes. In determining whether an employer has the required percentage of participation of eligible employees who meet the large employer's participation criteria, if the percentage of eligible employees is not a whole number, the result of applying the percentage to the number of eligible employees must be rounded down to the nearest whole number. For example, if a large employer health carrier uses a minimum participation requirement of 75 percent of the eligible employees meeting the large employer's participation criteria, 75 percent of 55 employees is 41.25. Round 41.25 down to 41; so, 75 percent participation by a 55-employee group would be achieved if 41 of the eligible employees who meet the large employer's participation criteria participate.

(f) If a large employer fails to meet the qualifying minimum participation requirement for six consecutive months, the large employer health carrier may terminate coverage under the plan on the first renewal date following that period. The termination must comply with the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum participation percentage and in accordance with Insurance Code §§1501.108 - 1501.111 (concerning Renewability of Coverage; Cancellation; Refusal to Renew; Discontinuation of Coverage; Notice to Covered Persons; and Written Statement of Denial, Cancellation, or Refusal to Renew Required, respectively) and §26.308 of this title (relating to Renewability of Coverage and Cancellation). A large employer health carrier must treat all similarly situated large employer groups in a consistent and uniform manner when terminating health benefit plans due to a participation level of less than the qualifying participation level.

(g) A large employer must continue to meet the qualifying minimum group size requirement of §26.301(c) of this title (relating to Applicability, Definitions, and Scope) to be entitled to elect to renew coverage under §26.301(e) of this title. If a large employer fails to meet, for six consecutive months, the minimum group size requirement of §26.301(c) of this title, the health carrier may terminate coverage under the plan on the first renewal date following that period. The termination must comply with the terms and conditions of the plan concerning termination for failure to meet the minimum group size requirements in §26.301(c) of this title, and in accordance with Insurance Code §§1501.108 - 1501.111 and §26.308 of this title.

History

Source Note: The provisions of this §26.303 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.304 Requirement to Insure Entire Groups

(a) A large employer carrier that offers coverage to a large employer and its employees must offer coverage to each eligible employee who meets the large employer's participation criteria. If dependent coverage is offered to enrollees under a large employer health benefit plan, a large employer carrier must offer coverage to each eligible dependent. Except as provided in subsection (b) of this section, the large employer carrier must provide the same health benefit plan to each employee and dependent.

(b) If elected by the large employer, a large employer carrier may offer one or more health benefit plans, provided that each eligible employee who meets the participation criteria may choose any of the plans offered. Except as provided in Insurance Code §1501.104 (concerning Affiliation Period) and §1501.106 (concerning Certain Limitations or Exclusions of Coverage Prohibited), with respect to an affiliation period or exclusions for preexisting conditions, the choice among benefit plans may not be limited, restricted, or conditioned based on the health-status-related factors of the employees or dependents, if applicable.

(c) A large employer carrier may require each large employer that applies for coverage, as part of the application process, to provide a complete list of employees, eligible employees, and if dependent coverage is offered to enrollees under a large employer health benefit plan, a complete list of dependents of eligible employees. The large employer carrier may also require the large employer to provide reasonable and appropriate supporting documentation to verify the information required under this subsection, and to confirm the applicant's status as a large employer. The large employer carrier must make a determination of eligibility within five business days of receipt of any requested documentation. A large employer carrier may not condition the issuance of coverage on an employer's production of a particular document, where the employer can otherwise provide the information required by this section. Similarly, if a particular document an employer produces does not reasonably evidence the employer's compliance with this subsection, the employer must produce other documentation to satisfy the requirements. Examples of the types of reasonable and appropriate supporting documentation that a large employer carrier may request from an employer as needed to fulfill the purposes of this subsection are:

(1) a W-2 Summary Wage and Tax Form or other federal or state tax records;

(2) a loan agreement;

(3) an invoice;

(4) a business check;

(5) a sales tax license;

(6) articles of incorporation or other business entity filings with the secretary of state;

(7) assumed name filings;

(8) professional licenses; and

(9) reports required by the Texas Workforce Commission.

(d) A large employer carrier may not deny two individuals who are married the status of eligible employee solely on the basis that the two individuals are married. The large employer carrier must provide a reasonable opportunity for the individuals to submit evidence as provided in subsection (c) of this section to establish each individual's status as an eligible employee.

(1) A large employer carrier must provide married eligible employees of the same employer the option to have one spouse be treated under a large employer health benefit plan as an employee, and the other spouse treated as an employee or alternatively as the dependent of the other employee.

(2) A child of either of the two individuals may only be covered under the large employer health benefit plan as a dependent by one of the two individuals.

(3) An election by a spouse to be treated as a dependent under this subsection does not impact the individual's status as an eligible employee for any other purpose under Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act), except that the individual may be treated as a dependent for purposes of employer premium contributions.

(e) New entrants who meet the large employer's participation criteria in a health benefit plan issued to a large employer group must be offered an opportunity to enroll in the health benefit plan currently held by the employer group or be offered an opportunity to enroll in the health benefit plan if the plan is provided through an individual franchise insurance policy or more than one plan is available. If a large employer carrier has offered more than one health benefit plan to eligible employees of a large employer group under subsection (b) of this section, the new entrant must be offered the same choice of health benefit plans as the other employees (members) in the group. A new entrant who does not exercise the opportunity to enroll in the health benefit plan within the period provided by the large employer carrier may be treated as a late enrollee by the health carrier, provided that the period provided to enroll in the health benefit plan complies with §26.305(a) of this title (relating to Enrollment).

(f) New entrants meeting the participation criteria in a health benefit plan issued to a large employer group must be accepted for coverage by the large employer carrier without any restrictions or limitations on coverage related to the health-status-related factors of the employee or dependent, except that a health carrier may exclude coverage for preexisting medical conditions or impose an affiliation period, to the extent allowed under Insurance Code Chapter 1501.

History

Source Note: The provisions of this §26.304 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective December 6, 2010, 35 TexReg 10768 ; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.305 Enrollment

(a) Periods provided for enrollment in and application for any health benefit plan provided to a large employer group must comply with the following:

(1) the initial enrollment period for the employees meeting the large employer's participation criteria must extend at least 31 consecutive days after the employee's initial date of employment, or if the waiting period exceeds 31 days, at least 31 consecutive days after the date the new entrant completes the waiting period for coverage;

(2) the new entrant who meets the large employer's participation criteria must be notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted;

(3) a new entrant's application for coverage is timely if he or she submits the application within 31 consecutive days following the initial date of employment, or following the date the new entrant is eligible for coverage:

(A) in person;

(B) by mail, postmarked by the end of the specified period; or

(C) in an alternative method normally accepted by the large employer carrier, including facsimile transmission (fax), email, or web-based application; and

(4) the large employer carrier must provide an annual open enrollment period of at least 31 consecutive days.

(b) If dependent coverage is offered to enrollees under a large employer health benefit plan, the initial enrollment period for the dependents must be at least 31 consecutive days, with a 31-consecutive-day annual open enrollment period.

(c) A new employee who meets the participation criteria of a covered large employer may not be denied coverage if the application for coverage is received by the large employer carrier not later than the 31st day after the later of:

(1) the date on which the employment begins; or

(2) the date on which the waiting period established under Insurance Code §1501.606 (concerning Employee Enrollment; Waiting Period) expires.

(d) If dependent coverage is offered to the enrollees under a large employer health benefit plan, a dependent of a new employee who meets the participation criteria established by the large employer may not be denied coverage if the application for coverage is received by the large employer carrier not later than the 31st day after the later of:

(1) the date on which the employment begins;

(2) the date on which the waiting period established under Insurance Code §1501.606 expires; or

(3) the date on which the dependent becomes eligible for enrollment.

(e) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, including a late enrollee, who would otherwise be covered under a large employer group.

(f) A large employer health benefit plan may not limit or exclude initial coverage of a newborn child of a covered employee. Any coverage of a newborn child of an insured under this subsection terminates on the 32nd day after the date of the birth of the child unless:

(1) dependent children are eligible for coverage under the large employer health benefit plan; and

(2) notification of the birth and any required additional premium are received by the large employer not later than the 31st day after the date of birth. A large employer carrier may not terminate coverage of a newborn child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium, within 30 days of the due date of the premium.

(g) If dependent children are eligible for coverage under the large employer health benefit plan, a large employer health benefit plan may not limit or exclude initial coverage of an adopted child of an insured.

(h) If dependent children are eligible for coverage under the large employer health benefit plan, an adopted child of an insured may be enrolled, at the option of the insured, within either:

(1) 31 days after the an insured is a party in a suit for adoption; or

(2) 31 days of the date the adoption is final.

(i) Coverage of an adopted child of an employee terminates unless notification of the adoption and any required additional premiums are received by the large employer not later than either:

(1) the 31st day after the insured becomes a party in a suit in which the adoption of the child by the insured is sought; or

(2) the 31st day after the date of the adoption. A large employer carrier may not terminate coverage of an adopted child if the carrier's billing cycle does not coincide with this 31-day premium payment requirement, until the next billing cycle has occurred and there has been nonpayment of the additional required premium within 30 days of the date of the premium.

(j) For purposes of this section, "received by the large employer" within a specified period means that the item(s) must be postmarked by the specified period.

(k) If a newborn or adopted child is enrolled in a health benefit plan or other creditable coverage within the periods specified in this section, and subsequently enrolls in another health benefit plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion with regard to the child. If a newborn or adopted child is not enrolled within the periods specified in this section, then in accordance with §26.306(h) of this title (relating to Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders), the newborn or adopted child may be considered a late enrollee or excluded from coverage until the next open enrollment period.

History

Source Note: The provisions of this §26.305 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective February 2, 1999, 24 TexReg 575; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.306 Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders

(a) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, if dependent coverage is offered to enrollees under a large employer health benefit plan (including a late enrollee, who would otherwise be covered under a large employer's health benefit plan), except to the extent permitted under Insurance Code §§1501.102 - 1501.106 (concerning Preexisting Condition Provision; Treatment of Certain Conditions as Preexisting Prohibited; Affiliation Period; Waiting Period Permitted; and Certain Limitations or Exclusions of Coverage Prohibited) and 1501.601 - 1501.609 (concerning Participation Criteria; Coverage Requirements; Exclusion of Eligible Employee or Dependent Prohibited; Declining Coverage; Minimum Contribution or Participation Requirements; Employee Enrollment; Waiting Period; Coverage for Newborn Children; Coverage for Adopted Children; and Coverage for Unmarried Children).

(b) A preexisting condition provision in a large employer health benefit plan may not apply to expenses incurred on or after the expiration of the 12 months following the effective date of coverage of the enrollee or late enrollee, except as authorized by subsection (h)(2) of this section.

(c) A preexisting condition provision in a large employer health benefit plan may not apply to coverage for a disease or condition other than a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received from an individual licensed to provide those services under state law and operating within the scope of practice authorized by state law during the six months before the effective date of coverage.

(d) A large employer carrier may not treat genetic information as a preexisting condition described by Insurance Code §1501.102 in the absence of a diagnosis of the condition related to the information.

(e) A large employer carrier may not treat a pregnancy as a preexisting condition described by Insurance Code §1501.102.

(f) A preexisting condition provision in a large employer health benefit plan may not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the large employer health benefit plan, excluding any waiting or affiliation period. For example, Individual A has coverage under an individual policy for six months beginning on May 1, 2014, through October 31, 2014, followed by a gap in coverage of 61 days until December 31, 2014. Individual A is covered under an individual health plan beginning on January 1, 2015, for six months through June 30, 2015, followed by a gap in coverage of 62 days until August 31, 2015. The effective date of Individual A's coverage under a large employer health benefit plan is September 1, 2015. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the large employer health benefit plan.

(g) In determining whether a preexisting condition provision applies to an individual covered by a large employer benefit plan, the large employer carrier must credit the time the individual was covered under previous creditable coverage if the previous coverage was in effect at any time during the 12 months preceding the effective date of coverage under a large employer health benefit plan. If the previous coverage was issued under a health benefit plan, any waiting or affiliation period that applied before that coverage became effective also must be credited against the preexisting condition provision period. For instance, Individual B is covered under an individual health insurance policy for 18 months beginning May 1, 2014, through November 30, 2015, followed by a four-month gap in coverage from December 1, 2015, to March 31, 2016. On April 1, 2016, Individual B is covered under a group health plan for three months through June 30, 2016, followed by a two-month gap in coverage until August 31, 2016. The effective date of Individual B's coverage under a large employer health insurance policy is September 1, 2016. Under this example, since there was a significant break in coverage, to determine the length of creditable coverage, the large employer carrier counts the creditable coverage the individual had for the 12-month period preceding the effective date of the individual's coverage under the large employer plan. Individual B has creditable coverage of six months and the issuer of the large employer health benefit plan may impose a preexisting condition limitation for six months on Individual B.

(h) A large employer carrier must choose one of the methods set forth in paragraph (1) or (2) of this subsection for handling requests for enrollment from a late applicant in any health benefit plan subject to this subchapter. The large employer carrier must use the same method in regard to all health benefit plans.

(1) The employee or dependent may be excluded from coverage and any application for coverage rejected until the next annual open enrollment period and, on enrollment, may be subject to a 12-month preexisting condition provision or, in the case of an HMO, may be subject to a 60-day affiliation provision, as described by Insurance Code §§1501.102 - 1501.104.

(2) The employee or dependent's application may be accepted immediately and the employee or dependent enrolled as a late enrollee during the plan year, in which case the preexisting condition provision imposed for a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation period may not exceed 90 days, from the date of the late enrollee's application for coverage.

(3) The provisions of paragraphs (1) and (2) of this subsection do not apply to employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in §26.4 of this title (relating to Definitions).

(4) Examples for applying subparagraphs (A) and (B) of this paragraph, in the case of both insurers and HMOs: Individual A requests coverage on October 1, 2014, after the enrollment period of July 1, 2014, through July 31, 2014, has ended. The next annual open enrollment period is July 1, 2015, through July 31, 2015. The effective date of coverage for persons enrolling during an open enrollment period is the beginning of the plan year, which is September 1 of each year.

(A) If the carrier is an insurer and has elected to exclude all applicants requesting late enrollment under health benefit plans subject to this subchapter until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 12-month preexisting condition period from the effective date of coverage and, as with any other enrollee, the preexisting condition period would begin on September 1, 2015, and expire on September 1, 2016.

(B) If the carrier is an insurer and has elected to immediately accept applications for late enrollment under health benefit plans subject to this subchapter and enroll the applicant during the plan year, the carrier may apply up to an 18-month preexisting condition period from the date of application. If Individual A applied for coverage on October 1, 2014, the preexisting condition period would begin on that date and would expire on April 1, 2016.

(C) If the carrier is an HMO and has elected to exclude all applicants requesting late enrollment under health benefit plans subject to this subchapter until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 60-day affiliation period, as with any other enrollee.

(D) If the carrier is an HMO and has elected to immediately accept applications for late enrollment under health benefit plans subject to this subchapter and enroll the applicant during the plan year, the carrier may apply up to a 90-day affiliation period from the day Individual A applied for coverage.

(i) An HMO may impose an affiliation period if the period is applied uniformly to each enrollee without regard to any health-status-related factor. The affiliation period may not exceed two months for an enrollee, other than a late enrollee, and may not exceed 90 days for a late enrollee. An affiliation period under a plan must run concurrently with any applicable waiting period under the plan. An HMO may not impose any preexisting condition limitation, except for an affiliation period.

(j) A large employer may establish a waiting period under Insurance Code §1501.606(b) applicable to all new entrants under the health benefit plan during which a new employee is not eligible for coverage. The large employer must determine the duration of the waiting period. A large employer carrier may not apply a waiting period or other similar limitation of coverage (other than an exclusion for preexisting medical conditions or an affiliation period consistent with Insurance Code §§1501.102 - 1501.106 and 1501.601 - 1501.609, with respect to a new entrant, that is longer than the waiting period established by the large employer for all other employees. On completion of the waiting period and enrollment within the time frame allowed by §26.305(a) of this title (relating to Enrollment), coverage must be effective no later than the next premium due date. Coverage may be effective at an earlier date, as agreed on by the large employer and the large employer carrier.

(k) A large employer health benefit plan may not, by use of a rider or amendment applicable to a specific individual, limit or exclude coverage by type of illness, treatment, medical condition, or accident, except for a preexisting condition or affiliation period permitted under Insurance Code §§1501.102 - 1501.106 and 1501.601 - 1501.609.

(l) To determine if preexisting conditions exist, a carrier must determine the source of previous or existing coverage of each eligible employee meeting the participation criteria at the time the employee or dependent initially enrolls into the health benefit plan provided by the large employer carrier. The large employer carrier has the responsibility to contact the source of previous or existing coverage to resolve any questions about the benefits or limitations related to any previous or existing coverage in the absence of a creditable coverage certification form.

History

Source Note: The provisions of this §26.306 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.307 Fair Marketing

(a) On request, a large employer carrier must provide to the large employer a summary of all health benefit plans offered by the large employer carrier for which the large employer qualifies.

(b) Denial by a large employer carrier of an application for coverage or cancellation, or refusal to renew, must be in writing and must state with specificity the reasons for the denial, cancellation, or refusal to renew (subject to any restrictions related to confidentiality of medical information). The large employer carrier must notify the large employer in accordance with Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage) and §1501.110 (concerning Notice to Covered Persons).

(c) A large employer carrier may not require, as a condition to the offer or sale of a health benefit plan to a large employer, that the large employer purchase or qualify for any other insurance product or service.

(d) The large employer carrier may not require a large employer to join or contribute to any association or group as a condition of being accepted for coverage by the large employer carrier, except that, if membership in an association or other group is a requirement for accepting a large employer into a particular health benefit plan, a large employer carrier may apply that requirement, subject to the requirements of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act).

(e) Health carriers offering individual and group health benefit plans in this state are responsible for determining whether the plans are subject to the requirements of Insurance Code Chapter 1501 and this subchapter. At the time of application, health carriers must obtain the following information from applicants for those plans:

(1) whether any portion of the premium will be paid by a large employer;

(2) whether the prospective policyholder, certificate holder, or any prospective insured intends to treat the health benefit plan as part of a plan or program under the United States Internal Revenue Code of 1986 (26 U.S.C. §106, concerning Contributions by Employer to Accident and Health Plans, or §162, concerning Trade or Business Expenses);

(3) whether the health plan is an employee welfare benefit plan under 29 C.F.R. §2510.3-1 (concerning Employee Welfare Benefit Plan); or

(4) whether the applicant is a large employer.

(f) If a health carrier fails to comply with subsection (e) of this section, the health carrier is deemed to be on notice of any information that could reasonably have been attained if the health carrier had complied with subsection (e) of this section.

(g) A large employer carrier may not terminate, fail to renew, limit its contract or agreement of representation with, or take any other negative action against an agent for any reason related to the agent's request that the carrier issue or renew a health benefit plan to a large employer.

(h) If a large employer carrier issues coverage under Insurance Code Chapter 1507 (concerning Consumer Choice of Benefits Plans) to a large employer, it must comply with Chapter 21, Subchapter AA of this title (relating to Consumer Choice Health Benefit Plans).

History

Source Note: The provisions of this §26.307 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.308 Renewability of Coverage and Cancellation

(a) Except as provided by Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage), a large employer carrier must renew any large employer health benefit plan at the option of the large employer, unless:

(1) the premium has not been paid as required by the terms of the plan;

(2) the large employer has committed fraud or intentional misrepresentation of a material fact;

(3) the large employer has not complied with a material provision of the health benefit plan relating to premium contribution, group size, or minimum participation requirements;

(4) the large employer has no enrollee, in connection with the plan, who resides or works in the service area of the large employer carrier or in the area where the large employer carrier is authorized to do business; or

(5) membership of an employer in an association terminates, but only if coverage is terminated uniformly without regard to a health-status-related factor of a covered individual.

(b) A large employer carrier may refuse to renew the coverage of an eligible employee or dependent for fraud or intentional misrepresentation of a material fact by that individual and, with respect to an eligible employee or dependent who is a subscriber or enrollee in an HMO, for the reasons specified in §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate). The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses.

History

Source Note: The provisions of this §26.308 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.309 Refusal to Renew and Application to Reenter Large Employer Market

(a) A large employer carrier may elect to refuse to renew all large employer health benefit plans delivered or issued for delivery by the large employer carrier in this state or in a geographic service area. The large employer carrier must notify the commissioner and each affected covered large employer of the election as provided in Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage).

(b) The large employer carrier may not write a new large employer health benefit plan in this state or in the geographic service area, as applicable, for five years after notice to the commissioner of the election to refuse to renew. A large employer carrier that elects not to renew all large employer health benefit plans under Insurance Code §1501.109 and this section may not resume offering health benefit plans to large employers in this state or in the geographic area for which the election was made until it has filed a petition with the commissioner to be reinstated as a large employer carrier and the petition has been approved. In reviewing the petition, the commissioner may ask for information and assurances as the commissioner finds reasonable and appropriate.

(c) A large employer carrier may elect to discontinue a particular type of large employer coverage, only if the large employer carrier:

(1) before the 90th day preceding the date of the discontinuation of the coverage:

(A) provides notice of the discontinuation to each employer and TDI; and

(B) offers to each employer the option to purchase other large employer coverage offered by the large employer carrier at the time of the discontinuation; and

(2) acts uniformly without regard to the claims experience of the employer or any health-status-related factors of employees or dependents who are or may become eligible for the coverage.

History

Source Note: The provisions of this §26.309 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.310 Unfair Competition and Unfair Practices

A misrepresentation about the effects of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act) or this subchapter in marketing large employer health plans or in the marketing, renewing, or canceling of other health insurance products will be considered a violation of Insurance Code Chapter 541 (concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices) and §543.001 (concerning Misrepresentation Prohibited).

History

Source Note: The provisions of this §26.310 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.312 Point-of-service Coverage

(a) A large employer carrier that offers point-of-service coverage must comply, as applicable, with the requirements set forth in either Chapter 11, Subchapter Z of this title (relating to Point-of-Service Riders) or Chapter 21, Subchapter U of this title (relating to Arrangements Between Indemnity Carriers and HMOs for Point-of-Service Coverage).

(b) If an HMO issues coverage to a large employer and eligible employees have access only to in-plan coverage through one or more HMOs, each of the HMOs issuing coverage must offer the eligible employees the option of obtaining coverage that complies with the out-of-plan coverage set forth in either Chapter 11, Subchapter Z of this title or Chapter 21, Subchapter U of this title, and that allows the enrollee to access out-of-plan coverage at the option of the enrollee in compliance with Insurance Code §1273.052 (concerning Offer of Coverage Through Non-Network Plan Required).

(c) All HMOs offering coverage to eligible employees of a large employer may enter into a written agreement designating one or more of the HMOs to offer the point-of-service option required under this section.

(1) A copy of the agreement must be retained on file by each of the HMOs participating in the agreement and be made available to TDI on request.

(2) If an HMO participating in the agreement ceases to offer coverage to the large employer, a new agreement that complies with all of the requirements of this section must be entered into by all remaining HMOs offering coverage to employees of the large employer.

(3) If for any reason, an agreement is not in existence that ensures that all eligible employees have the option of selecting out-of-plan coverage under this section from at least one of the HMOs offering coverage to the eligible employees, each HMO must offer the eligible employees the option of selecting out-of-plan coverage as required by this section.

(d) Except as otherwise agreed to by the employer, an eligible employee who selects a point-of-service option is responsible for paying all costs, including premiums, coinsurance, copayments, deductibles, and any other cost-sharing provisions imposed by the point-of-service option, including any administrative costs imposed by a large employer as permitted by Insurance Code §1273.055 (concerning Cost-Sharing Provisions).

(e) The premium for coverage required to be offered under this section must be based on the actuarial value of that coverage and may be different from the premium for the in-plan coverage provided by the HMO through the enrollee's evidence of coverage.

History

Source Note: The provisions of this §26.312 adopted to be effective July 10, 2001, 26 TexReg 5017; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.313 Filing Requirements

(a) Each large employer carrier, other than an HMO, must use a policy shell format for any group or individual health-benefit-plan form used to provide a health benefit plan in the large employer market. To expedite the review and approval process, all group and individual health-benefit-plan form filings (excluding HMO filings covered in subsection (b) of this section) must be submitted in the following order:

(1) a group policy face page or individual policy face page, as applicable;

(2) the group certificate page or individual data page, as applicable;

(3) as applicable under Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings), the toll-free number and complaint notice page, as required by Chapter 1, Subchapter E of this title (relating to Notice of Toll-Free Telephone Numbers and Procedures for Obtaining Information and Filing Complaints);

(4) the table of contents;

(5) insert pages for the general provisions;

(6) insert pages for the required provisions and any optional provisions, if elected and as applicable;

(7) for large employer health benefit plans, an insert page for the benefits section of the health benefit plan including, but not limited to, schedule of benefits, definitions, benefits provided, exclusions and limitations, continuation provisions, and if applicable, alternative cost containment, preferred provider, conversion and coordination-of-benefits provisions, and riders;

(8) insert pages for any amendments, applications, enrollment forms, or other form filings that comprise part of the contract;

(9) insert pages for any required outline of coverage for individual products;

(10) any additional form filings and documentation as outlined in Chapter 3, Subchapter A of this title and Subchapter G of this title (relating to Plain Language Requirements for Health Benefit Policies);

(11) the information required under this section; and

(12) the rate schedule applicable to any individual health benefit plan, as required by Chapter 3, Subchapter A of this title.

(b) In addition to subsection (a) of this section, the following provisions apply to each HMO. The HMO must submit health-benefit-plan forms for use in the large employer market that include the following:

(1) Any HMO group or individual agreement must address and include all required provisions of Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act). The agreement must comply with any other applicable provisions of the Insurance Code. In addition, the agreement must comply with the provisions of Chapter 11, Subchapter F of this title (relating to Evidence of Coverage) where those provisions are not in conflict with Insurance Code Chapter 1501.

(2) The filing must include any alternative pages to the agreement or the schedule of benefits and any alternative schedules of benefit.

(3) The filing must include any additional riders, amendments, applications, enrollment forms, or other forms and any other required documentation outlined in Chapter 11, Subchapter F of this title.

(4) The filing must include any applicable requirements of Chapter 11, Subchapter D (relating to Regulatory Requirements for an HMO Subsequent to Issuance of Certificate of Authority) and Chapter 11, Subchapter F of this title, except for:

(A) continuation and conversion of coverage, in accordance with Insurance Code Chapter 1271 (concerning Benefits Provided by Health Maintenance Organizations; Evidence of Coverage; Charges), and this title; and

(B) cancellation, in accordance with §26.308 of this title (relating to Renewability of Coverage and Cancellation).

(5) The filing must include any rider forms that will be used with health benefit plans offered to large employers. The rider forms, if developed subsequent to approval of the agreement, must be submitted with an explanation of the market in which the forms will be used. All rider forms must comply with Insurance Code Chapter 1271, and applicable provisions of Chapter 11, Subchapter D of this title.

History

Source Note: The provisions of this §26.313 adopted to be effective May 17, 2017, 42 TexReg 2539.

28 Tex. Admin. Code § 26.314 Territorial Exclusions

Subject to the provisions of Chapter 3 of this title (relating to Life, Accident and Health Insurance and Annuities) and Chapter 11 of this title (relating to Health Maintenance Organizations), a large employer health benefit plan may not exclude health care services, supplies, or drugs provided for medical emergencies outside the plan service area, including outside the United States.

History

Source Note: The provisions of this §26.314 adopted to be effective May 17, 2017, 42 TexReg 2539.

Chapter 28 SUPERVISION AND CONSERVATION

Subchapter A GENERAL PROVISIONS REGARDING SUPERVISION AND CONSERVATION

28 Tex. Admin. Code § 28.1 Stay of Time Periods

(a) In the event that the commissioner, supervisor, or conservator is prevented from completing his statutory duties due to judicial or administrative order or due to operation of law, the statutory time period fixed for the completion of the commissioner's, supervisor's, or conservator's duties is tolled for an amount of time equivalent to the amount of time that the judicial or administrative order or other existing controlling law is in effect. The status of the affected company remains unchanged during the pendency of the judicial or administrative order or other existing controlling law. The statutory time period begins to run upon actual or constructive notice of the final determination of the judicial or administrative order or other existing controlling law.

(b) The commissioner shall report to the board at the board's next regular meeting each instance a statutory time limit is tolled as described in subsection (a) of this section.

History

Source Note: The provisions of this §28.1 adopted to be effective June 5, 1990, 15 TexReg 2851.

28 Tex. Admin. Code § 28.2 Decisions and Orders

In the event that a compliance hearing is held pursuant to the provisions of the Insurance Code, Article 21.28-A, §3 or §5, the status of the affected company remains unchanged pending the issuance of a decision or order by the commissioner pursuant to the statutory time periods as provided in Texas Civil Statutes, Article 6252-13a, §16. The statutory time period as provided in the provisions of the Administrative Procedure and Texas Register Act governs where an ambiguity or difference exists between this section and the Texas Insurance Code.

History

Source Note: The provisions of this §28.2 adopted to be effective June 5, 1990, 15 TexReg 2851.

28 Tex. Admin. Code § 28.3 The Encouragement of the Merger of Insurers in Weak Financial Condition with Insurers in a Stronger Financial Condition

(a) Purpose and applicability. The purpose of this section is to provide the basis for encouragement of the merger of financially weak insurers with financially stronger insurers, as provided in the Insurance Code, Article 21.28-A, §1, in circumstances where rehabilitation or conservation of an insurer would be inefficient or impracticable. The provisions of this section shall be utilized in conjunction with authority granted and duties required in the Insurance Code, Articles 1.15-1.19, 1.32, 9.48, 21.28, 21.28-A, 21.28-C, 21.28-D, and 21.49-1. If a financially weak insurer, as provided in this section, indicates it does not wish to be merged with a potential merger partner, the provisions of this section shall not apply.

(b) Threshold criteria for merger. The commissioner of insurance, in determining whether to pursue a merger alternative under this section, shall consider the following threshold criteria:

(1) whether the corporate form of the financially weak insurance carrier is one which legally accommodates a merger alternative; and

(2) whether conservation or rehabilitation of the financially weak insurer is inefficient or impracticable.

(c) Scope of consideration. So long as the criteria of subsection (b)(1) of this section is present, the commissioner may consider and pursue merger of a financially weak insurer upon determination that merger is a feasible alternative to supervision, conservatorship, or receivership which otherwise would be required of such insurer. The commissioner is not required, however, to further pursue the alternative of merger with respect to a financially weak insurer if either of the conditions described in subsection (b)(1) and (2) of this section is not present.

(d) Identification of potential merger partners and financially weak insurers. To facilitate the merger of financially weak insurers with financially stronger insurers, the Texas Department of Insurance shall utilize the procedures outlined in paragraphs (1) and (2) of this subsection for identification of potential merger partners and financially weak insurers, respectively.

(1) Potential merger partners are those which exhibit one or more of the following characteristics as of the close of the most recent calendar year:

(A) a review of internal management and accounting controls as required by generally accepted auditing standards which are documented by a certified public accountant's audit;

(B) an operations history of at least five years with respect to all lines of insurance to be merged; and/or

(2) Financially weak insurers are those which exhibit any or a combination of the following factors which would result in a finding of hazardous financial condition by the commissioner of insurance:

(A) the required surplus, capital, or capital stock is impaired to an extent prohibited by law;

(B) the surplus, capital, or capital stock of the company is insufficient to permit it by law to continue to write new business;

(D) the insurer has attempted to dissolve or liquidate without first having made provisions satisfactory to the commissioner of insurance for the payment of liabilities arising from policies of insurance issued by such company; and/or

(E) a review of the financial condition of the insurer indicates that the continued operation of the insurer might be hazardous to its policyholders, creditors, or the general public when such review is made in conjunction with the following:

(i) the kinds and nature of risks insured;

(ii) the loss experience and ownership of the insurer;

(iii) the ratio of total annual premium and net investment income to commission expenses, general insurance expenses, policy benefits paid, and required policy reserve increases;

(iv) the capabilities of management to sufficiently direct and operate the insurer;

(v) the method of operation of the insurer;

(vi) affiliations;

(vii) investments;

(viii) any contracts which lead or may lead to contingent liability; and/or

(ix) agreements with respect to which the insurer is a guarantor or surety.

(e) Compilation and maintenance of list of potential merger partners. The Texas Department of Insurance shall, on or before August 1 of each year, solicit insurers potentially meeting the criteria of subsection (d)(1) of this section to be included on a list of potential merger partners interested in pursuing merger with weak insurers. All interested potential merger partners shall be added to the list of potential merger partners compiled and maintained by the department.

(f) Procedural provisions. Any insurer identified as a weak insurer and meeting the criteria set out in subsection (b) of this section shall be provided with the list of potential merger partners in connection with a communication encouraging the weak insurer to contact potential merger partners for a possible merger. The weak insurer shall provide the department with either of the following within 30 days from the date on which the list of insurers is mailed to the weak insurer:

(1) a letter of intent to merge, from one or more potential merger partners; provided that the commissioner of insurance may extend the time period for response, based upon written application of the weak insurer, and establish such conditions and limitations as are appropriate under the circumstances; or

(2) a letter or other communication indicating that the insurer has elected not to pursue the alternative of merging with any potential merger partner.

(g) Failure to respond. In the event a financially weak insurer fails to respond in accordance with subsection (f) of this section, the insurer shall be deemed to have elected not to pursue the alternative of merger.

(h) Docketing pending mergers. Any merger initiated pursuant to the provisions of this section shall have preference over other matters of a similar nature pending before the Texas Department of Insurance and shall receive official action at the earliest practicable date.

(i) In relation to other law. The provisions of this section are not intended in any manner to limit the authority conferred upon the commissioner of insurance in the Insurance Code or other applicable law.

History

Source Note: The provisions of this §28.3 adopted to be effective August 27, 1992, 17 TexReg 5688.

Chapter 29 GUARANTY ACTS

Subchapter A GUARANTY ASSOCIATIONS' PUBLIC INTEREST INFORMATION

28 Tex. Admin. Code § 29.1 Guaranty Associations' Public Interest Information

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings unless the context clearly indicates otherwise:

(1) Commissioner--The Commissioner of Insurance.

(2) Department--The Texas Department of Insurance.

(3) Guaranty Association(s)--The Texas Title Insurance Guaranty Association; Texas Property and Casualty Insurance Guaranty Association; and the Life, Accident, Health, and Hospital Service Insurance Guaranty Association.

(4) Plan of Operation--The guidelines and regulations necessary or suitable to assure the fair, reasonable, and equitable administration of the Guaranty Association, pursuant to Texas Insurance Code Annotated, Articles 9.48, §14(d); 21.28-C, §9; and 21.28-D, §10.

(5) Public interest information--The Plan of Operation and any procedures and/or policies adopted and used by any office(s) of the Guaranty Associations that pertain to claim filing (including the procedure for appealing denial of claims), investments, and assessments.

(b) Each Guaranty Association shall keep and make available for inspection by interested persons its public interest information at the Guaranty Association's regular office(s) place and hours. Each Guaranty Association shall also provide to the Commissioner its public interest information, and the Department shall keep and make available for inspection by interested persons the public interest information provided by each Guaranty Association at the Department's regular office place and hours.

(c) Each Guaranty Association shall provide notice of meetings and agendas pursuant to the Open Meetings Act, Government Code, Chapter 551.

(d) This rule does not preclude public access to any information and records of the Guaranty Associations which may be available to the public pursuant to the Public Information Act, Government Code Chapter 552.

History

Source Note: The provisions of this §29.1 adopted to be effective June 12, 1996, 21 TexReg 4890.

Chapter 31 LIQUIDATION

Subchapter C AUDIT COVERAGES REQUIRED FOR GUARANTY ASSOCIATIONS

28 Tex. Admin. Code § 31.201 Purpose

The purpose of this subchapter is to prescribe the audit requirements for, and audit coverages applicable to, the Title Insurance Guaranty Association established under the Insurance Code Article 9.48; the Property and Casualty Insurance Guaranty Association established under the Insurance Code Article 21.28-C; and the Life, Accident, Health and Hospital Service Insurance Guaranty Association established under the Insurance Code Article 21.28-D.

History

Source Note: The provisions of this §31.201 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.202 Applicability

The provisions of this subchapter apply to any guaranty association established under the Insurance Code, Articles 9.48, 21.28-C and 21.28-D.

History

Source Note: The provisions of this §31.202 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.203 Qualification of Accountant

The independent certified public accountant for the financial audit required by §31.204(1) of this title (relating to the Nature of Audits) must be selected by a competitive process. An independent certified public accountant may not perform the financial audit required by §31.204(1) for more than seven consecutive years. An independent certified public accountant responsible for performing the financial audit for seven consecutive years may not perform the financial audit during the two years following the seventh year.

History

Source Note: The provisions of this §31.203 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.204 Nature of Audits

Audits applicable to the guaranty associations subject to the provisions of this subchapter shall take the form of financial, performance or operational audits, and may include, but not be limited to, the types of audits which are described in paragraphs (1)-(4) of this section.

(1) Financial audits. The financial audit shall be undertaken annually by an independent certified public accountant to determine whether the financial statements of the audited entity present fairly the financial position and the results of financial operations in accordance with generally accepted accounting principles. The financial audits shall be conducted in accordance with generally accepted auditing standards.

(2) Compliance audit. A compliance audit may be undertaken to determine whether the following objectives are being met:

(A) the audited entity has obligated, expended, received, and used funds in accordance with the purpose for which those funds have been authorized by law;

(B) the audited entity has obligated, expended, received, and used funds in accordance with any limitations, restrictions, conditions, or mandatory directions imposed by law on those obligations, expenditures, receipts, or uses;

(C) the audited entity has maintained its books, records, and accounts in a manner which accurately reflects its financial and fiscal operations relating to the obligation, receipt, expenditure, and use of funds including, but not limited to, funds collected for a public purpose;

(D) the audited entity has collected all revenues and receipts in accordance with the applicable laws and regulations of this state; and

(E) the audited entity has properly and legally handled or administered any money, negotiable securities, or similar assets received in accordance with the entity's governing statute.

(3) Economy and efficiency audit. An economy and efficiency audit may be undertaken to determine whether the objectives set out in subparagraphs (A) and (B) of this paragraph are being met and such audit shall make the identifications set out in subparagraph (C) of this paragraph, as follows:

(A) the audited entity is managing or utilizing its resources, including funds, personnel, contractors and subcontractors, consultants, procurement of professional services, property, equipment, and space, in an economical and efficient manner;

(B) the audited entity has presented financial, program, and statistical reports in a fair manner, and such reports contain useful data; and

(C) the causes of inefficiencies or uneconomical practices, including inadequacies in management information systems, internal and administrative policies and procedures, purchasing, procurement and contracting practices, organizational structure, use of personnel, contractors, equipment and other resources, have been identified.

(4) Effectiveness audit. An effectiveness audit may be undertaken to determine whether the following objectives are being met:

(A) the audited entity is attaining program objectives established pursuant to statutes and regulations, or by program criteria or program evaluation standards applicable to it, in an efficient and effective manner;

(B) the audited entity is contributing to achievement of those benefits intended by program design in an efficient and effective manner;

(C) the audited entity is discharging its duties and responsibilities under statutes and regulations or according to program performance criteria or program evaluation standards applicable to it in an efficient and effective manner; and

(D) the audited entity is performing its duties and responsibilities in connection with a program which does not duplicate, overlap, or conflict with the duties, functions, and responsibilities of another entity with respect to the same program, or with another program designed and intended to be applied to the same persons served by the audited entity.

History

Source Note: The provisions of this §31.204 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.205 Scope and Frequency of Audits

(a) Annual audit required. Each guaranty association subject to the provisions of this subchapter shall undergo an annual financial audit at the end of each calendar year as required by §31.204(1) of this title (relating to Nature of Audits).

(b) Audit plan. The boards of directors of each guaranty association subject to the provisions of this subchapter shall annually adopt an audit plan. In developing the plan, the boards shall consider utilizing the audits described in §31.204(2) - (4). The plan may be modified at the discretion of the boards. The plan and any modifications of the plan shall be filed with the commissioner.

(c) Commissioner may order audit. No provision of this subchapter prohibits or precludes the commissioner from ordering any entity subject to the provisions of this subchapter to submit to one or more audits at a frequency determined by the commissioner, based upon facts and circumstances.

History

Source Note: The provisions of this §31.205 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.206 Audit Reporting Requirements

(a) Report required. A written report shall be prepared in connection with any audit authorized or required pursuant to this subchapter.

(b) Contents of report. The written report must include a management letter containing the following items, as applicable:

(1) the criteria selected to measure effectiveness and efficiency;

(2) internal controls;

(3) compliance with state or federal laws;

(4) conditions found by auditors and the effects of such conditions; and

(5) any recommendations for improving operations or program effectiveness.

(c) Required opinion. The report also must include an opinion on fair presentation of financial statements when included as part of the scope of the audit.

(d) Supplemental items to be reported. The auditing entity's report should also include, to the extent necessary, each of the following items:

(1) an analysis of the overall performance of the entity being audited;

(2) an analysis of the audited entity's financial operations and condition; and

(3) an analysis of receipts and expenditures made by each audited entity.

(e) Filing requirements for audits. Copies of the auditing entity's report shall be filed with the Commissioner of Insurance no later than 30 days after the audits are presented to the board of directors of the audited guaranty association. Any response to the report by the board of directors must be submitted to the commissioner no later than the next meeting of the board of directors.

(f) Audits excluded. This subchapter shall not apply to audits made by the Office of the State Auditor.

History

Source Note: The provisions of this §31.206 adopted to be effective April 3, 2002, 27 TexReg 2508.

28 Tex. Admin. Code § 31.207 Cost of Audits

The cost of audits required by this subchapter shall be paid by the audited entity.

History

Source Note: The provisions of this §31.207 adopted to be effective April 3, 2002, 27 TexReg 2508.

Chapter 33 CONTINUING CARE PROVIDERS

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 33.1 Purpose

The provisions of this chapter implement the Texas Continuing Care Facility Disclosure and Rehabilitation Act, Health and Safety Code, Chapter 246.

History

Source Note: The provisions of this §33.1 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765.

28 Tex. Admin. Code § 33.2 Definitions

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Texas Continuing Care Facility Disclosure and Rehabilitation Act, Health and Safety Code, Chapter 246.

(2) Actuarial funded status--The ratio of actuarial assets plus net accounting assets to actuarial liabilities plus actuarial refund liabilities.

(3) Actuarial review--An analysis performed by a qualified actuary in accordance with actuarial standards of practice of the current actuarial balance of the financial condition of a facility and of the provider's continuing care in residence operations, if any. An actuarial review includes, but is not limited to, the following:

(A) an actuarial report;

(B) a statement of actuarial opinion;

(D) a cash flow projection; and

(E) disclosure of the actuarial methodology, formulas, and assumptions, including justification for continuing care in residence entrance fee escrow account amortization schedules.

(4) Affiliate--A person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

(5) Audited financial statements--Statements prepared by an independent Certified Public Accountant (CPA), which includes an audit opinion from the CPA concerning the financial statements.

(6) Commissioner--The Commissioner of Insurance of the Texas Department of Insurance.

(7) Continuing care--The furnishing of a living unit, together with personal care services, nursing services, medical services, or other health-related services, to an individual who is not related by consanguinity or affinity to the provider of the care under a continuing care contract, regardless of whether the services and the living unit are provided at the same location. The term "continuing care" includes continuing care in residence.

(8) Continuing care contract--An agreement that requires the payment of an entrance fee by or on behalf of an individual in exchange for the furnishing of continuing care by a provider and that is effective for:

(A) the life of the individual; or

(B) more than one year.

(9) Continuing care in residence--Continuing care services provided to an individual in the individual's residence or otherwise enabling the individual to remain in the individual's residence, as authorized under Health and Safety Code §246.0025.

(10) Control--The possession, direct or indirect, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. This definition also includes the terms "controlling," "controlled by," and "under common control with." Control is presumed to exist if any person, directly or indirectly, owns, controls, or holds with the power to vote, or holds irrevocable proxies representing, 10 percent or more of the voting securities or authority of any other person. This presumption may be rebutted to show that control does not in fact exist.

(11) Debt service coverage ratio--Total excess (deficit) of revenues and gains in excess of expenses and losses plus interest expense plus depreciation expense plus amortization expense minus amortization of deferred revenues from entry fees plus net proceeds from entry fees, divided by annual debt service (annual principal and interest payment or maximum annual debt service).

(12) Department--The Texas Department of Insurance.

(13) Entrance fee--An initial or deferred transfer of money, or other property valued at an amount in excess of three months' payments for rent or services, made, or promised to be made, as full or partial consideration for acceptance by a provider of a specified individual entitled to receive continuing care under a continuing care contract. The term does not include a deposit made under a reservation agreement.

(14) Facility--A place in which a person undertakes to provide continuing care. A place is an establishment, complex, campus, or group of living units at which a provider engages in the business of providing continuing care. If two or more establishments, complexes, campuses, or groups of living units are located on one premises, they must be treated as one facility if their operations are controlled by the same provider. If two or more establishments, complexes, campuses, or group of living units are located on one premises but controlled by separate providers, they must be treated as separate facilities. A facility that is constructed on an as-needed basis and for which a certificate of authority is obtained from the department prior to facility construction will be considered a phase-in facility. The term does not include an individual's residence if the residence is not a living unit provided by a provider.

(15) Financial Statements--Financial statements completed in accordance with generally accepted accounting principles. Financial statements for providers with continuing care in residence operations must:

(A) include segmented financial statement reporting, separating the facility services and in residence services, including an actuarial review;

(B) include a balance sheet that reports liabilities for obligations for facility-based services and obligations for in residence services separately;

(C) disclose entrance fee activity for the fiscal year including the amount held in escrow at the beginning of the year, any amounts collected during the year, any amounts released during the year, and the total amount held in escrow at the end of the year; and

(D) disclose the ratios addressed in §33.505(b)(2) - (7) of this title.

(16) Fund balance--Assets as shown on the balance sheet minus liabilities shown on the balance sheet.

(17) Living unit--A room, apartment, cottage, or other area within a facility that is set aside for the exclusive use or control of one or more specified individuals.

(18) Long-term nursing care--Nursing care provided for a period longer than 365 consecutive days.

(19) Person--An individual, corporation, association, or partnership, including a fraternal or benevolent order or society.

(20) Provider--A person who undertakes to provide continuing care under a continuing care contract, whether in a facility or in an individual's residence.

(21) Qualified actuary--A member of the American Academy of Actuaries or the Society of Actuaries or a person recognized by the Commissioner as having comparable training or experience.

(22) Reservation agreement--An agreement that requires the payment of a deposit to reserve a living unit for a prospective resident. A deposit made under a reservation agreement is not considered an entrance fee.

(23) Reservation agreement deposit--A deposit paid under a reservation agreement.

(24) Resident--An individual entitled to receive continuing care from a provider under a continuing care contract.

History

Source Note: The provisions of this §33.2 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective March 9, 2009, 34 TexReg 1608; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.3 Scope

This chapter applies to a provider if the provider:

(1) provides continuing care under a continuing care contract agreement;

(2) enters into, offers, or solicits a continuing care contract; or

(3) enters into, offers, or solicits a reservation agreement on or after September 1, 1993.

History

Source Note: The provisions of this §33.3 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.4 Severability

Where any terms or sections of this chapter are determined by a court of competent jurisdiction to be invalid, the remaining terms and sections of this chapter will continue in effect.

History

Source Note: The provisions of this §33.4 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765.

28 Tex. Admin. Code § 33.5 Violation of Rules

A violation of any provision of this chapter or of any order of the Commissioner or the department entered under this chapter may subject the violator to penalties, including those stated in Insurance Code Chapter 82.

History

Source Note: The provisions of this §33.5 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.6 Fees for Filing Application for Certificate of Authority

An applicant filing for a certificate of authority under Health and Safety Code §246.022 must pay the department a nonrefundable filing fee of $10,000. No fee is required for a §33.102 application for authority for continuing care in residence.

History

Source Note: The provisions of this §33.6 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.7 Fiscal Year

A fiscal year is a period of 12 months ending on the last day of any month. The department will recognize a fiscal year only if it is established as the certificate-of-authority-holder's annual accounting period, and the books and records are kept corresponding to that period. The Commissioner must be notified of any change of fiscal year under §33.508 of this title (Relating to Occasional Required Filings).

History

Source Note: The provisions of this §33.7 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765.

28 Tex. Admin. Code § 33.8 Forms

The forms listed in this section are available on the department's website. The department adopts and incorporates by reference the forms listed in paragraphs (1) - (19) of this subsection, and their use is required, where applicable, for compliance with the provisions of this chapter. Forms that are on the department's letterhead will use the most current version of that letterhead, as it may change from time to time. Bracketed information in the forms is subject to change, including the department's physical, mailing, and electronic addresses; submission locations; submission formats and methods; and contact information. Persons submitting the forms should verify that they are using the most recent online version before submitting.

(1) CCRC Form 1 (FIN382)--Application for certificate of authority to do business in the State of Texas under Health and Safety Code Section 246.022;

(2) CCRC Form 1a (FIN604)--Application for authority to offer continuing care in residence in Texas under Health and Safety Code Section 246.0025(b);

(3) CCRC Form 2 (FIN383)--Application for Commissioner approval to release excess loan reserve escrow fund amounts under Health and Safety Code Section 278.078;

(4) CCRC Form 3 (FIN384)--Officers and directors page;

(5) CCRC Form 4 (FIN385)--Biographical data form;

(6) CCRC Form 4a (FIN386)--Biographical data form for not-for-profit CCRC board members;

(7) CCRC Form 5 (FIN387)--Delivery of disclosure statement;

(8) CCRC Form 6 (FIN388)--Format for disclosure statement for continuing care facility;

(9) CCRC Form 6a (FIN389)--Instructions for preparing a continuing care retirement community disclosure statement for filing with the Texas Department of Insurance;

(10) CCRC Form 6b (FIN605)--Format for disclosure statement for continuing care in residence;

(11) CCRC Form 7 (FIN390)--Change of control statement for CCRC;

(12) CCRC Form 8 (FIN391)--Certification of changes to disclosure statement;

(13) CCRC Form 9 (FIN392)--Notice of request to release entrance fee escrow funds;

(14) CCRC Form 10 (FIN393)--Notice of request to release funds from the reserve fund escrow account;

(15) CCRC Form 11 (FIN394)--Notice by provider of re-payment of previously released funds to the reserve fund escrow account;

(16) CCRC Form 12 (FIN395)--Affidavit of re-payment of previously released funds to the reserve fund escrow account;

(17) CCRC Form 13 (FIN396)--Notice of lien;

(18) CCRC Form 14 (FIN397)--Calculations concerning conditions; and

(19) CCRC Form 14a (FIN607)--Provider request for release of continuing care in residence entrance fee escrow funds.

History

Source Note: The provisions of this §33.8 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.9 Address for Filings

(a) All inquiries, correspondence, applications, and other filings under this chapter must be sent to the appropriate physical, mailing, or electronic address:

(1) specified on the applicable department form being used; or

(2) listed on the department website.

(b) Notwithstanding a requirement in this chapter to make a submission in a paper form, any inquiry, correspondence, application, or other filing under this chapter may be submitted electronically to the department, unless specifically requested in a specified format by the department.

History

Source Note: The provisions of this §33.9 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.10 Unauthorized Providers Required to Respond to Inquiries

If the Commissioner becomes aware of an unauthorized provider and makes inquiries to determine the applicability of this chapter and the Act to the provider, the recipient of an inquiry must respond within 30 days. The Commissioner may conduct any necessary investigation or examination regarding the inquiry and, if warranted, take action against the provider.

History

Source Note: The provisions of this §33.10 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective April 17, 2019, 44 TexReg 1867.

Subchapter B CONTINUING CARE IN RESIDENCE

28 Tex. Admin. Code § 33.101 Scope

This subchapter establishes the requirements and procedures for certificates of authority, disclosure statements, and entrance fee escrow accounts applicable to continuing care in residence under Health and Safety Code §246.022. With respect to continuing care in residence, this subchapter governs in case of conflict with other provisions of this chapter.

History

Source Note: The provisions of this §33.101 adopted to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.102 Adding Authority for Continuing Care in Residence

(a) Sections 33.202, 33.203, 33.205, and 33.206 of this title apply to continuing care in residence.

(b) A person must also hold a certificate of authority to provide continuing care at a facility before the person is eligible to receive authority to provide continuing care in residence. A provider must have authority to provide continuing care in residence before accepting any consideration or entering into any contracts for continuing care in residence.

(c) To apply for authority to provide continuing care in residence, an applicant must submit a CCRC Form 1a (FIN 604), including the following:

(1) the provider's CCRC certificate of authority license number;

(2) format for disclosure statement for continuing care in residence (CCRC Form 6b (FIN605));

(3) a business plan which includes:

(A) a three-year financial projection with associated assumptions;

(B) the geographic region proposed for continuing care in residence services;

(D) information regarding resident qualification;

(E) information regarding marketing and advertising activities; and

(F) information regarding refund procedures applicable before a resident receives continuing care in residence services; and

(4) a certified copy of assumed name certificate, if applicable.

(d) Information and filings under this subchapter must be submitted, as applicable, on paper or in an electronic format that is acceptable to the department. The department's submission locations, formats, and contact information are subject to change; persons submitting forms or information must confirm that they are using the most recent version before submitting to the department. CCRC forms are available on the department's website.

(e) The time period specified in Health and Safety Code §246.022 begins when the department has received all required material and information and deems the application complete.

(f) Incomplete applications will expire without refund one year from the date of receipt of the applicant's initial CCRC Form 1a (FIN604) Application for Authority to Offer Continuing Care in Residence Services in the State of Texas under Health and Safety Code §246.0025(b).

History

Source Note: The provisions of this §33.102 adopted to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.103 Disclosure Statement Requirements

(a) Sections 33.302, 33.303, 33.305, 33.307, and 33.308 of this title apply to continuing care in residence.

(b) The organization and elements of the disclosure statement, including any revisions, must follow the format in CCRC Form 6b (FIN605). The disclosure statement or revision must be submitted in compliance with CCRC Form 6a (FIN389).

(1) the provider contracts to provide continuing care in residence in Texas;

(2) the provider extends the term of an existing contract to provide continuing care in residence in Texas; or

(3) the provider or provider's agent solicits a continuing care contract in Texas for an individual who resides in Texas at the time of the solicitation. A continuing care contract is considered solicited if, during the 12-month period preceding the date on which the continuing care contract is signed or accepted by either party, information concerning the availability of the continuing care in residence contract is given:

(A) by personal, telephone, mail, or other communication directed to and received by a person at a location in Texas; or

(B) in paid advertisements published or broadcast from within Texas, other than in a publication in which more than two-thirds of the circulation is outside Texas.

(d) The provider must submit the initial and annual revisions of the disclosure statement not later than 120 days after the end of the provider's fiscal year. If the 120th day falls on a weekend or on a recognized state or federal holiday, the due date is the next business day.

(e) The disclosure statement must also include the following:

(1) annual audited financial statements as defined in §33.2 of this title;

(2) annual actuarial review; and

(3) information about how the amortization schedules in care in residence contracts are calculated and applied to releases described under §33.104(b) of this title.

(f) No less than 30 days before entering into a contract with a third-party to manage the provider's continuing care in residence operations, a provider must submit one copy of the management contract to the department as set out in §33.9 of this title.

History

Source Note: The provisions of this §33.103 adopted to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.104 Entrance Fee Escrow Account Requirements

(a) Sections 33.401(b) - (e) and 33.402(a) of this title apply to continuing care in residence.

(b) Entrance fees must be held in escrow as set forth in Health and Safety Code §246.071. An escrow agent cannot release, and the provider cannot request or accept, entrance fee funds from the escrow agent without department approval. A provider must file CCRC Form 14a (FIN607) to request release of entrance fee escrow funds for identified residents. An escrow agent must file a CCRC Form 9 (FIN392) when a provider requests the agent release entrance fee escrow account funds.

(1) a provider must verify in Form 14a (FIN607) that:

(A) the identified residents are receiving continuing care in residence;

(B) the requested amount complies with amortization schedules contained in the continuing care in residence contracts; and

(C) the provider's assets exceed the actuarial present value of the expected costs of performing all remaining obligations to all residents under continuing care contracts; and

(2) the provider must disclose its operating ratio and current ratio. A provider is not eligible for a release of continuing care in residence entrance fee escrow funds if the provider's:

(A) operating ratio is greater than 100 percent, unless there is a cash flow analysis acceptable to the department; or

(B) current ratio is no greater than 150 percent.

(d) The department will issue a determination on the request for release of continuing care in residence entrance fee escrow funds to both the provider and escrow agent.

History

Source Note: The provisions of this §33.104 adopted to be effective April 17, 2019, 44 TexReg 1867.

28 Tex. Admin. Code § 33.105 Contract Requirements for Continuing Care in Residence

(a) Providers must use a standard form to contract with residents for continuing care in residence.

(b) The standard contract form must:

(1) contain an amortization schedule showing when the provider will be entitled to release of a resident's entrance fee from escrow;

(2) include or reference all the provider's statutory duties and obligations, including the refund provisions of Health and Safety Code §246.057; and

(3) include the following information about the resident's cancellation rights, in bold, capitalized, or underlined type so as to be conspicuous: "You may cancel this contract at any time before midnight of the seventh day, or a later day if specified in the contract, after the date on which you sign this contract, or you receive the provider's disclosure statement, whichever occurs later. If you elect to cancel the contract, you must do so by written notice and you will be entitled to receive a refund of all assets transferred other than periodic charges applicable to your receiving continuing care in residence services."

History

Source Note: The provisions of this §33.105 adopted to be effective April 17, 2019, 44 TexReg 1867.

Subchapter C APPLICATION BY CONTINUING CARE PROVIDER FOR CERTIFICATE OF AUTHORITY

28 Tex. Admin. Code § 33.201 Scope

This subchapter establishes the procedure for application for certificate of authority under the Health and Safety Code, §246.022. Providers owning or controlling more than one facility shall treat each facility as separate and distinct in form and substance and shall apply for a separate certificate of authority for each.

History

Source Note: The provisions of this §33.201 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767.

28 Tex. Admin. Code § 33.202 Incorporated Entities Only

Except for persons qualifying for a certificate of authority under the Health and Safety Code, §246.023, the Commissioner shall limit issuance of certificates of authority to incorporated entities.

History

Source Note: The provisions of this §33.202 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767.

28 Tex. Admin. Code § 33.203 Filing Requirements for Application for Certificate of Authority

(a) The applicant shall submit the applicable filing fee, as referenced in §33.6 of this title (relating to Fees for Filing Application for Certificate of Authority).

(b) The applicant shall provide the department with an original and two copies of the entire application in three-ring binders with all pages clearly legible and numbered.

(c) Each application binder must contain a table of contents and must be divided with tabs identified to correspond to the items listed in §33.204 of this title (relating to Contents of Application). If any item listed in that section is inapplicable to the applicant, the applicant shall include a page behind the tab for that item with a statement explaining the inapplicability.

(d) The applicant must submit all narrative material typed, double-spaced, and clearly legible.

(e) The original of the application becomes the charter file; therefore, all signatures on the required forms in the original application must be original signatures.

(f) If the application is revised or supplemented during the review process prior to hearing, the applicant must submit an original and two copies of a transmittal letter describing the revision or supplement plus an original and two copies of the specified revision or supplement.

(g) If a page is to be revised, two copies of the complete new page must be submitted with the changed item or information clearly marked on the two copies. The original page which is placed in the charter copy of the application must not have any marks on it.

History

Source Note: The provisions of this 33.203 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767.

28 Tex. Admin. Code § 33.204 Contents of Application for Certificate of Authority

(a) The applicant shall submit an original and two copies of the items listed in paragraphs (1) - (19), as applicable.

(1) CCRC Form #1 (Application for Certificate of Authority To Do Business in the State of Texas under the Act, §246.022);

(2) CCRC Form #3 (Officers and Directors page);

(3) CCRC Form #4 (Biographical Data Form) or CCRC Form #4a (Biographical Data Form for Not-for-Profit CCRC Board Members);

(4) basic organizational documents and all amendments thereto, with an original certification or seal from the state of domicile. These documents shall include, but not be limited to, the articles of incorporation, the bylaws, and the resolution by the board of directors certifying corporate approval of the project;

(5) certified copy of assumed name certificate;

(6) letter from Internal Revenue Service recognizing tax-exempt status under Internal Revenue Code with a certification by an officer that it is a true and correct copy of the original;

(7) chart or listing clearly presenting the identities and interrelationship among affiliates showing the percentage of each class of voting securities of each affiliate which is owned or controlled, directly or indirectly, by another affiliate, or indicating the basis of control if other than by ownership or control of voting securities;

(8) agreements establishing the entrance fee and reserve fund accounts or a verified statement explaining why an escrow is not required. The agreements shall be accompanied by the items described in subparagraphs (A) - (C) of this paragraph:

(A) name and address of escrow agent;

(B) certification of the number of persons and the percentage of the number of living units in the facility under reservation agreements with funds on deposit in the entrance fee escrow accounts; and

(C) statement or set of instructions that the provider will send to the escrow agent to request a release of funds to the provider from the entrance fee and reservation fund escrow accounts;

(9) complete disclosure statement on CCRC Form #6 (Form For Disclosure Statement);

(10) service contracts or agreements with affiliates;

(11) management contract if the facility will be managed on a day-to-day basis by a person other than individuals directly employed by the provider;

(12) independent feasibility study;

(13) actuarial review as defined in §33.2 of this title (relating to Definitions);

(14) all priority agreements, reservation agreements, or any types of contracts or agreements which the provider is using in soliciting continuing care contracts, contracting, or collection of funds, if not included in the disclosure statement;

(15) financial statements dated no more than 90 days prior to the application submission date, if not included in the disclosure statement;

(16) documentation evidencing a commitment to the provider for any permanent mortgage loan or other long-term financing arrangement;

(17) list or description of liens which attach to any part of the facility before, during, or after construction;

(18) legal description of real property on which the facility is or will be located; and

(19) any additional information relating to items required under paragraphs (1) - (18) of this subsection, as the department may request.

(b) The 180-day period during which the commissioner is required to issue an order approving or disapproving an application for a certificate of authority shall commence on the date, as determined by the department, that all required material is submitted to the department.

History

Source Note: The provisions of this §33.204 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767; amended to be effective March 9, 2009, 34 TexReg 1608.

28 Tex. Admin. Code § 33.205 Deficient Application

If any of the items required under §33.204 of this title (relating to Contents of Application) is determined to be insufficient by the department, the department shall notify the applicant and give 30 days from the date of notice to correct the deficiencies. If the deficiencies have not been corrected after the 30 days have expired, the department may take either of the actions listed in paragraphs (1)-(2) of this section:

(1) return the application, and require the applicant to completely refile, except for the fee, in order to be considered for a certificate of authority; or

(2) proceed to hearing on the application.

History

Source Note: The provisions of this §33.205 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767.

28 Tex. Admin. Code § 33.206 Hearing on Application

Following review of the application by the commissioner or the commissioner's designee, a hearing shall be held in accordance with the Government Code, Chapter 2001, Administrative Procedure Act, for the commissioner to make the determinations required under Health and Safety Code, §246.022.

History

Source Note: The provisions of this §33.206 adopted to be effective March 9, 1989, 14 TexReg 988; amended to be effective March 14, 1996, 21 TexReg 1767.

Subchapter D DISCLOSURE STATEMENT

28 Tex. Admin. Code § 33.301 Filing and Preparation of Disclosure Statement

(a) Each provider subject to Health and Safety Code, §246.041, shall file an original and two copies of the disclosure statement with the department, one in a three-ring binder and two copies in the same form as it is distributed to a prospective resident, before one or more of the following occurs:

(1) the provider contracts to provide continuing care in a facility located or to be located in Texas;

(2) the provider extends the term of an existing contract to provide continuing care in a facility located or to be located in Texas;

(3) a provider or provider's agent accepts a reservation agreement deposit;

(4) the provider or provider's agent solicits a continuing care contract in this state for an individual who resides in this state at the time of the solicitation. A continuing care contract is considered solicited in this state if, during the 12-month period preceding the date on which the continuing care contract is signed or accepted by either party, information concerning the facility or the availability of the continuing care contract is given:

(A) by personal, telephone, mail, or other communication directed to and received by a person at a location in this state; or

(B) in paid advertisements published or broadcast from within this state, other than in a publication in which more than two-thirds of the circulation is outside this state.

(b) The provider shall submit a nonrefundable fee with the disclosure statement. The fee is composed of a filing fee of $500 plus a fee of $2.00 for each living unit, excluding the units devoted to licensed nursing home care.

History

Source Note: The provisions of this §33.301 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.302 Annual Disclosure Statement Revision

(a) Each provider shall file a current disclosure statement annually beginning with a statement that covers the provider's most recent fiscal year.

(b) Pursuant to Health and Safety Code, §246.054, each provider shall file an original and two copies of the current annual disclosure statement with the department, one in a three-ring binder and two copies in the same form as it is distributed to a prospective resident with the department, not later than 120 days after the end of the provider's fiscal year. If the 120th day falls on a weekend or on a recognized state or federal holiday, then the due date shall be the first business day thereafter.

(c) The provider shall submit a nonrefundable fee with the current annual disclosure statement. The fee is composed of a filing fee of $500 plus a fee of $2.00 for each living unit, excluding the units devoted to licensed nursing home care.

(d) The current annual disclosure statement must include a statement describing any material differences between:

(1) the estimated income statements filed as a part of the previous year's disclosure statement; and

(2) the actual result of operations during the most recent year together with the current annual estimated income statements filed as a part of the current disclosure statement.

History

Source Note: The provisions of this §33.302 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.303 Other Revisions of Disclosure Statement

(a) A provider may revise its disclosure statement at any time other than the annual disclosure statement filing time if, in the opinion of the provider, revision is necessary to prevent a disclosure statement from containing a material misstatement of fact or omitting a material fact required to be included in the disclosure statement. A provider that revises its disclosure statement for this purpose must submit the original and two copies of the revised disclosure statement to the department, before delivery of the statement to any prospective resident.

(b) No filing fee is required with the submission of revisions of the disclosure statements under this section.

(c) For purposes of filing revisions under this section, a replacement page is acceptable. The provider shall submit one copy of each page to be replaced in the disclosure statement and two complete copies of the disclosure statement containing the revisions as it will be distributed to a prospective resident. The revised page must have the same page number and must show a revision date. If two or more pages replace one page, sub-numbers of the original page number shall be used; e.g., former page 4 is replaced with new pages 4.1, 4.2, 4.3, etc. In every instance, a new page must bear a revision date.

History

Source Note: The provisions of this §33.303 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.304 Disclosure Statement Preparation and Filing

The organization and physical makeup of the disclosure statement or any revisions thereof shall follow the format and instructions contained in CCRC Form #6 (Format for Disclosure Statement) and CCRC Form #6a (Instructions for Preparation of CCRC Disclosure Statement for Filing with the Texas Department of Insurance).

History

Source Note: The provisions of this §33.304 adopted to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.305 Date of Disclosure Statement

(a) The date on the cover page of a disclosure statement, filed pursuant to Health and Safety Code, §246.041, or a current annual disclosure statement, filed pursuant to Health and Safety Code, §246.054, shall coincide with the last day of the provider's fiscal year covered by the information contained in the disclosure statement.

(b) If the disclosure statement filed pursuant to Health and Safety Code, §§246.41, 246.054, is revised during the provider's fiscal year after being filed with the department, the cover page must additionally reflect the date that coincides with the revised information. Each time a disclosure statement is revised, the revision date must be added to the cover page of the disclosure statement and submitted with the revision.

History

Source Note: The provisions of this §33.305 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.306 Financial Statement, Studies, and Forecasts

(a) Financial statements of the provider shall be based on generally accepted accounting principles (GAAP), and shall specifically address escrow accounts, trusts and reserve funds.

(b) If the provider operates more than one facility or has other business interests, then financial statements shall disclose, separately in supporting schedules: assets, including escrow accounts, trusts, and reserve funds; liabilities; revenues; expenses; profits or loses; and cash flows applicable to each individual facility, on a basis comparable to filing separate statements.

(c) Any opinion regarding the financial statements shall specifically address the supporting schedules for each individual facility in addition to the financial statements of the provider.

(d) Generally accepted accounting principles (GAAP) shall be subordinate to any conflicting provision or procedure adopted in this chapter that relates to the financial statement presentation or accounting procedure.

(e) Studies and/or forecasts must disclose the basic assumptions used.

(f) The financial statements shall comply with §33.505 of this title (relating to Financial Condition).

History

Source Note: The provisions of this §33.306 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.307 Delivery of Disclosure Statement

(a) The provider shall deliver a current disclosure statement to the person with whom the contract is to be made before the provider executes a continuing care contract, before a prospective resident transfers any entrance fee or reservation deposit to a provider, or before the provider accepts any reservation deposit, whichever occurs first.

(b) Only the disclosure statement most recently filed with the department shall be considered current for the purpose of the Act and may be delivered to a resident or prospective resident.

(c) The provider shall obtain the signature of each individual or the legal representative of each individual who contracts with the provider acknowledging that the provider delivered the disclosure statement on CCRC Form #5 (Acknowledgment of Delivery of Disclosure Statement). The provider must maintain completed forms for three years. These files are subject to inspection by the department.

History

Source Note: The provisions of this §33.307 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

28 Tex. Admin. Code § 33.308 Violation of Requirements Concerning Disclosure Statements

(a) The Commissioner may order a provider to supplement or correct a disclosure statement that has been determined to be incomplete, inaccurate or misleading.

(b) Failure or refusal by the provider to abide by such an order constitutes a willful and intentional violation of this chapter and the Act, and subjects the provider to sanctions and penalties.

History

Source Note: The provisions of this §33.308 adopted to be effective March 9, 1989, 14 TexReg 989; amended to be effective March 14, 1996, 21 TexReg 1768.

Subchapter E ESCROW ACCOUNTS

28 Tex. Admin. Code § 33.401 Entrance Fee Escrow Accounts

(a) The provider of a facility which was unoccupied on September 1, 1987, and for which continuing care contracts have been or will be entered into on or after September 1, 1987, shall establish an entrance fee escrow account with a bank or trust company located in this state, as escrow agent. The provider subject to this section shall establish the entrance fee escrow account before entering into a reservation agreement or a continuing care contract, and accepting an entrance fee or a reservation agreement deposit. The entrance fee escrow account shall be maintained in an account separate from the provider's business account and must be fully covered by federal deposit insurance or secured by the United States Government.

(b) When the provider receives a refundable reservation agreement deposit, an entrance fee, or a portion of an entrance fee from a resident or prospective resident, the funds shall be deposited in the entrance fee escrow account. The provider shall give the resident or prospective resident a written receipt for the funds. The provider shall then deliver a copy of the receipt together with the funds to the escrow agent for deposit within 72 hours of the provider's receipt. The written receipt given to the resident or prospective resident for the funds shall include the information that the provider must deposit the funds in the escrow account within 72 hours of receipt, in addition to the name and address of the escrow agent.

(c) At any time upon the request of the resident or prospective resident, the provider, or the commissioner, the escrow agent shall issue a statement indicating the status of a resident or prospective resident's balance in the entrance fee escrow account. The written receipt given to the resident shall also include the following statement: "At your request, the escrow agent must provide a statement indicating the status of your balance in the entrance fee escrow account."

(d) Accrued interest on the entrance fee escrow account shall be the property of the provider unless otherwise provided in the continuing care contract.

(e) This section does not apply to any nonrefundable portion of an entrance fee or reservation agreement deposit that does not exceed 2.0% of the amount required as the entrance fee and that is clearly designated as nonrefundable in the relevant continuing care contract or reservation agreement.

History

Source Note: The provisions of this §33.401 adopted to be effective March 9, 1989, 14 TexReg 990; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1769.

28 Tex. Admin. Code § 33.402 Refund of Entrance Fees or Reservation Agreement Deposit to Resident or Prospective Resident from the Entrance Fee Escrow Account

(a) If a person who has contracted with a provider elects to rescind his or her continuing care contract or if a person who has made a refundable reservation agreement deposit requests the return of the reservation agreement deposit, the funds or property held in the entrance fee escrow account, or released to the provider under §33.403 of this title (relating to Release of Entrance Fees Escrow Account to Provider) must be refunded in full within 30 days of request. This subsection does not apply to periodic charges specified in the relevant continuing care contract and which are applicable to the period in which the resident actually occupied the living unit under the continuing care contract.

(b) If an entrance fee escrow account is not released to the provider under §33.403 of this title (relating to Release of Entrance Fees Escrow Account to Provider), or deposited in the loan reserve fund escrow account under §33.405 of this title (relating to Loan Reserve Fund Escrow Accounts) within 36 months from the date on which the provider received any portion of the funds, the escrow agent shall return the funds to the resident or prospective resident. This subsection does not apply if a longer time is specified in the provider's disclosure statement delivered to the resident or prospective resident with the continuing care contract or reservation agreement under which the funds were paid.

(c) The reservation agreement must contain the provisions in paragraphs (1) and (2) of this subsection relative to the refund of the reservation agreement deposit.

(1) At the option of the prospective resident, the reservation agreement deposit may be either refunded to the prospective resident or applied to the entrance fee required under the continuing care contract, when the continuing care contract is executed. If the reservation agreement deposit is applied to the entrance fee, it shall be maintained in the entrance fee escrow account.

(2) A reservation agreement entered into prior to the issuance of a provider's certificate of authority shall require the provider to fully refund the reservation agreement deposit if requested for any reason.

History

Source Note: The provisions of this §33.402 adopted to be effective March 14, 1996, 21 TexReg 1770.

28 Tex. Admin. Code § 33.403 Release of Funds from the Entrance Fee Escrow Account to Provider

(a) The escrow agent shall notify the department of a request for release of funds from the entrance fee escrow account for a facility to the provider in writing within three banking days of receipt of the request. The notice shall be sent to the department on CCRC Form #9 (Notice of Request to Release Entrance Fee Escrow Funds).

(b) The conditions listed in paragraphs (1) - (5) of this subsection must be met before funds in the entrance fee escrow account may be released to the provider.

(1) At least 50% of the living units in the facility must be reserved for residents or prospective residents. In support of this, the provider must have sufficient binding continuing care contracts and at least 10% of the entrance fees designated in the binding continuing care contracts on deposit in the entrance fee escrow account. For phase-in facilities, in lieu of the 10% deposit, the provider shall deposit in the entrance fee escrow account an amount equal to 10% of the amount of entrance fees required for the facility and provide evidence that the resident has full occupancy of the living unit.

(2) The sum of the entrance fees received or receivable by the provider under binding continuing care contracts; the anticipated proceeds of any first mortgage loan or other long-term financing commitment described under paragraph (3) of this subsection; and funds from other sources in the provider's actual possession must be equal to or more than the sum of at least 90% of the aggregate cost of constructing, purchasing, or leasing, equipping, and furnishing the facility; at least 90% of the funds estimated as necessary to cover initial losses of the facility as stated in the current disclosure statement on file with the department; and at least 90% of the amount of the loan reserve fund escrow account required under §33.405 of this title (relating to Loan Reserve Fund Escrow Accounts).

(3) The provider must have commitments for all permanent mortgage loans, other long-term financing, and lease payments described in the statement of anticipated source and application of funds included in the current disclosure statement on file with the department.

(4) Except for the conditions regarding the completion of construction or closing on the purchase of the facility, the commitment for disbursement of funds must be unconditional.

(5) Either subparagraph (A) or (B) of this paragraph must be satisfied.

(A) If construction of the facility is not substantially completed:

(i) the appropriate party must have obtained all necessary governmental permits or approvals; and

(ii) the provider and the general contractor responsible for construction of the facility must have entered into a maximum price contract; and

(iii) a recognized surety authorized to do business in Texas must have executed a construction bond in favor of the provider covering the general contractor's faithful performance and payment of all obligations arising under the construction contract; and

(iv) the provider must have entered into a loan agreement for an interim construction loan in an amount which, when combined with the amount in the entrance fee escrow account plus the amount of funds from other sources in the provider's actual possession equals or exceeds the estimated cost of constructing, equipping, and furnishing the facility; and

(v) the lender must have disbursed at least 10% of the amount of the construction loan for physical construction or site preparation work; and

(vi) the provider must have placed orders at firm prices for at least 50% of the items necessary to equip and furnish the facility in accordance with the current disclosure statement on file with the department, including installation charges if applicable.

(B) If construction or purchase of the facility is substantially completed, both clauses (i) and (ii) must be satisfied, if appropriate:

(i) the appropriate local government must have issued an occupancy permit covering the living unit; and

(ii) if the entrance fee applies to a living unit which has been previously occupied, the living unit must be available for occupancy by the new resident.

(c) The provider shall deliver a completed CCRC #14 (Calculations Concerning Conditions for Release of Entrance Fees to Provider) to the department for release of entrance fees for a facility.

(d) The funds in the entrance fees escrow account that may be released before the facility is complete and before the loan reserve fund escrow is established under §33.405 of this title (relating to Loan Reserve Fund Escrow Accounts), may not exceed the total of entrance fees and reservation agreement deposits received or receivable by the provider under binding continuing care contracts less the amount of funds required to be deposited in the loan reserve fund escrow account.

(e) If the initial release of an entrance fee by an escrow agent for a particular facility has met the criteria under subsection (b) of this section, the department may authorize an escrow agent to continue to release escrowed entrance fees for that facility to the provider without further proof of satisfying the requirements specified in subsection (b) of this section if the provider meets the following conditions:

(1) the provider provides a quarterly report to the department reflecting an accounting of the activities of the entrance fee escrow account for that particular facility;

(2) the accounting reflects a beginning balance, dates of each withdrawal from escrow during the reporting period, and an ending balance. This accounting must be verified, attested to in regards to its accuracy, and signed by both the bank escrow agent and the facility's Chief Financial Officer or person of likewise authority; and

(3) the provider immediately informs the department of any problems, issues, and/or irregularities encountered in the release of entrance fee escrow funds as set forth under this subsection.

History

Source Note: The provisions of this §33.403 adopted to be effective March 14, 1996, 21 TexReg 1770; amended to be effective March 9, 2009, 34 TexReg 1608.

28 Tex. Admin. Code § 33.404 Loan Reserve Fund Escrow Account

(a) Each provider shall establish and maintain a loan reserve fund escrow account with a bank or trust company located in Texas, as escrow agent. The provider must maintain the funds deposited in an account separate from the provider's business account. The account must be fully covered by federal deposit insurance or fully secured by the United States Government.

(b) The amount required to be maintained in the loan reserve fund escrow account is equal to the total of all principal and interest payments due during the next 12 months on all first mortgage loans, other long-term financing arrangements for the facility, or 12 months of lease payments if the provider and facility are operating under a lease agreement. If no principal payments or lease payments are due during the next 12 months, the provider shall maintain in the loan reserve fund escrow account an amount equal to interest payments due during the next 12 months.

(c) Until the loan reserve fund escrow account is fully funded, the provider shall deposit the funds listed in paragraphs (1) and (2) of this subsection into the loan reserve fund escrow account:

(1) Funds released under §33.403 of this title (relating to Release of Funds from the Entrance Fee Escrow Account to the Provider); and

(2) Funds remitted under binding continuing care contracts, when an entrance fee escrow account is not required.

(d) The provider may meet the loan reserve fund escrow account requirements in whole or in part by establishing other reserve funds held to meet long-term financing obligations, if the total amount equals or exceeds the amount required by subsection (b) of this section. The provider shall submit to the department sufficient evidence that the requirement has been met.

History

Source Note: The provisions of this §33.404 adopted to be effective March 14, 1996, 21 TexReg 1770; amended to be effective March 9, 2009, 34 TexReg 1608.

28 Tex. Admin. Code § 33.405 Release of Funds from Loan Reserve Fund Escrow Account

(a) For release of an amount equal to not more than one-twelfth of the loan reserve fund escrow account, the provider shall submit a request in writing to the escrow agent.

(b) For the release of an amount in excess of one-twelfth of the loan reserve fund escrow account, the procedures in paragraphs (1)-(3) of this subsection shall apply.

(1) The provider shall submit a completed CCRC Form #2 (Application for Approval of the Commissioner for Release of Loan Reserve Amounts in Excess of that Allowed by Health and Safety Code, §246.078(a)) with the department for approval. The provider may not withdraw funds under this paragraph more than once during a calendar year.

(2) The department shall notify the provider by letter whether the application is approved within 30 days after the completed application is received by the department. If the department disapproves the application, the provider may request a hearing seeking Commissioner review of the matter by filing a motion for reconsideration addressed to the Commissioner and filed with the department's docket clerk. After a hearing, the Commissioner shall dispose of the matter by entering an order approving or disapproving the application. The department will send a copy of the order to the provider.

(3) If the department approves the application, the provider may present the letter of approval or the Commissioner's order approving the release to the escrow agent. The escrow agent shall then release the funds from the loan reserve fund escrow account in the amount requested.

(c) The escrow agent shall give the department notice of the release not later than the 11th day before the date of release. The notice shall be submitted to the department on CCRC Form #10 (Notice of Request to Release Funds from the Reserve Fund Escrow Account).

History

Source Note: The provisions of this §33.405 adopted to be effective March 14, 1996, 21 TexReg 1770.

28 Tex. Admin. Code § 33.406 Repayment of Funds Released from Reserve Fund Escrow Account

(a) The provider must repay the reserve fund escrow account the amount released or withdrawn not later than 18 months after it is released or withdrawn. The provider shall notify the department of the repayment by completing and returning CCRC Form #11 (Notice by Provider of Repayment of Previously Released Funds to the Reserve Fund Escrow Account).

(b) When the funds have been repaid, the escrow agent shall submit to the department a completed CCRC Form #12 (Affidavit of Repayment of Previously Released Funds to the Reserve Escrow Account).

(c) The escrow agent shall notify the department if the provider fails to repay the amount released within the time required within 30 days of the date the repayment was due.

(d) If the provider fails to timely repay the amount released to the loan reserve escrow account, the department may take action against the provider including but not limited to disciplinary action under the Insurance Code, Article 1.10, §7.

History

Source Note: The provisions of this §33.406 adopted to be effective March 14, 1996, 21 TexReg 1770.

Subchapter F ONGOING REGULATORY REQUIREMENTS

28 Tex. Admin. Code § 33.501 Books and Records

(a) The provider shall keep all books and records in a form and manner to accurately reflect the condition of the provider. The books and records shall contain all of the facts essential to its effective operation.

(b) The provider shall provide the department free access to all books and records relating to the business operation of the facility.

(c) The provider must keep the department advised at all times of the physical location of the books and records relating to the business operation of the facility.

History

Source Note: The provisions of this §33.501 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.502 Inquiries

The Commissioner may make inquiries of any person to determine compliance with the Act, to aid in enforcing the Act, to determine the financial solvency of a facility, or to verify a statement contained in a disclosure or actuarial statement.

History

Source Note: The provisions of this §33.502 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.503 Investigations and Examinations by the Department

The Commissioner may conduct an examination or investigation of any person to determine compliance with the Act, to aid in enforcing the Act, to determine the financial solvency of a facility, or to verify a statement contained in a disclosure or actuarial statement. The Commissioner and the Commissioner's examiners shall have free access to all the books and papers relating to the business and affairs of the provider and facility.

History

Source Note: The provisions of this §33.503 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.504 Advertising

(a) The provider may not use advertising material in the solicitation of continuing care contracts or reservation agreements that conflicts with the information in the disclosure statement on file with the department.

(b) The provider must maintain a file or record of all advertising and disclosure material used during the period covered by the most recently filed disclosure statement or annual revised disclosure statement. This file shall be available to the department upon request.

History

Source Note: The provisions of this §33.504 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.505 Financial Condition

(a) The purpose of this rule is to enumerate conditions which the commissioner may consider to determine whether a provider or facility is financially unsound and which may be a basis for the commissioner to initiate an action against a facility or provider under the Health and Safety Code, §246.091. In evaluating any of these factors, all circumstances concerning the provider's or facility's operations must be evaluated in making an ultimate conclusion that a facility or provider is financially unsound.

(b) In order to determine whether a facility or provider is financially unsound, the commissioner may consider the following factors.

(1) Adequate fund balance.

(A) An adequate fund balance is maintained if resources that are available for the facility's current residents (including the actuarial present value of periodic fees expected to be paid in the future by current residents) are reasonably equivalent to or greater than the actuarial present value of the expected costs of performing all remaining obligations to such residents under their contracts, as evidenced by a fund balance on the actuarial balance sheet which is acceptable to the commissioner or by an actuarial funded status ratio acceptable to the commissioner.

(B) Facilities which are not required to obtain actuarial balance sheets under §33.506 of this title (relating to Actuarial Review Requirements) may show an adequate fund balance by:

(i) maintaining a fund balance on audited financial statements prepared under generally accepted accounting principles which is acceptable to the commissioner; or

(ii) voluntarily obtaining an actuarial report to show a satisfactory actuarial balance as described in §33.506(c); or

(iii) providing evidence of adequate funding by showing guarantees of liabilities and obligations to residents by a parent or other supporting organization, and providing audited financial statements of such parent or supporting organization showing its capacity to provide such guarantees.

(2) Ability to meet current financial obligations. The facility's or provider's ability to meet its current financial obligations, as shown on its most recently audited financial statements can be measured by comparing current assets, including current portions of restricted funds, to current liabilities.

(3) Ability to meet projections. The facility's or provider's ability to meet its projected occupancy goals or cash projections can be measured by comparing the projections filed with the department as part of the annual disclosure statement, CCRC Form Number 6 to actual results. The comparison of projections to actual results, including occupancy figures, shall be included with the disclosure statement and the financial statements, together with an explanation of variances greater than plus or minus 10% in a line item, and an explanation of variances which are greater in dollar amount than the net cash flow, positive or negative.

(4) Cash Flow. The facility's or provider's ability to maintain a level of cash flow acceptable to the commissioner can be measured by analyzing the cash flow statement included in the audited financial statements.

(5) Operating ratio. The facility's or provider's ability to maintain an operating ratio acceptable to the commissioner and within industry guidelines can be measured by taking cash operating revenues and dividing it by cash operating expenses. In determining if an operating ratio is acceptable, the commissioner may consider guarantees of operating support by a parent or other supporting organization, and audited financial statements of such parent or organization showing its capacity to provide such guarantees.

(6) Debt service ratio. The facility's or provider's ability to maintain a debt service ratio acceptable to the commissioner and within industry guidelines can be measured by using the following calculation: Total Excess (Deficit) of Revenues and Gains in excess of Expenses and Losses plus Interest Expense plus Depreciation Expense plus Amortization Expense minus Amortization of Deferred Revenues from Entry Fees plus Net Proceeds from Entry Fees, divided by Annual Debt Service (annual principal and interest payment or maximum annual debt service).

(7) Occupancy ratio. The facility's or provider's ability to maintain an occupancy ratio acceptable to the commissioner and within industry guidelines can be measured by taking the total number of occupied units in a facility and dividing it by the total number of units in that facility. Occupancy may be tracked by each level of care, including independent living units, nursing beds, or other levels of care available.

(1) The commissioner may require information or reports in addition to those contained in the disclosure statement to monitor the financial condition of the facility and administer and enforce the Act. The reports may include, but are not limited to, quarterly financial statements, statements prepared for reporting to bond issuers or underwriters, and audited financial statements of the facility's parent or other supporting organization.

(2) The commissioner may consider the trends in a facility's operation and on its financial statements, and may consider the effect that any unusual, extraordinary, or non-recurring occurrence may have on the outcomes of any calculations made to determine trends or to financial condition of the facility as contemplated in subsection (b) of this section.

(3) If a facility is a start-up facility, the commissioner may consider that such a facility may meet standards which differ from those required of an established facility for at least the first 36 months of operation, beginning with occupancy by the first resident.

(4) Before making a final determination that a facility is financially unsound, the commissioner will provide the facility with the opportunity to submit additional financial information to demonstrate its ability to meet its financial obligations and obligations to its residents.

(d) Balance sheet with net fund deficit. If any audited generally accepted accounting principles (GAAP) balance sheet filed with the disclosure statement shows a net fund deficit and reflects an unfunded future service obligation, the commissioner may require the provider or management of the facility to submit an actuarial balance sheet demonstrating that the facility is in satisfactory actuarial balance, or to submit a plan delineating action to be taken to remove such deficit. The plan shall include, but not be limited to, the items listed in paragraphs (1)-(3) of this subsection:

(1) The reasons or causes of the deficit balance;

(2) Conditions or circumstances that exist which may require unusual accounting treatment, but are not regularly recurring conditions that will cause increasing deficits in subsequent periods;

(3) Projections of the following:

(A) cash flow from operations of the facility for the next 18 months or for whatever other period of time the department deems appropriate;

(B) overall financial conditions, as projected in pro forma calendar quarterly balance sheets and income statements, for the next 18 months or for whatever period of time the department deems appropriate;

(D) specific actions to be taken by management during the next 18 months to minimize any operating factors that are contributing to the deficit balance, or to reduce the deficit balance.

(e) Requirements for basic financial statements. A provider or facility shall file the basic financial statements with the disclosure statement which satisfy the requirements in paragraphs (1)-(3) of this subsection.

(1) The balance sheet on a comparative basis shall reflect at least the liabilities listed in subparagraphs (A)-(D) of this paragraph.

(A) A continuing care provider which is financed through a financing authority by the issuance of bonds or other long-term obligations shall establish those obligations which are issued for its benefit as liabilities. The provider is responsible for repayment of the obligations. The notes accompanying the financial statements shall disclose the debt service ratio, and shall disclose any guarantees of bond obligations made by parent or other supporting organizations.

(B) Liability to provide future services is the excess of the present value of the facility's obligations to provide future services to current residents over and above the present value of related future revenue. No accounting entry is required if the present value of future related revenues exceeds the present value of the obligations for future services. If the present value of related future revenue is less than the present value of the obligation, no accounting entry is required unless the liability is greater than the unamortized entrance fees, in which case a liability is recognized and an expense recorded. If the facility does not maintain a satisfactory actuarial balance as described in §33.506(c) of this title, the commissioner may require the facility to disclose these items in notes accompanying the financial statements, even if an accounting entry is not required to be made.

(C) The nonrefundable entrance fees paid by a resident upon entering into a continuing care contract shall be treated as deferred revenue to be amortized over each group of residents' estimated remaining lives using a method that properly matches revenues with expenses.

(D) The refundable portion of the entrance fee shall be recorded as a liability.

(2) The basic audited financial statements filed with the disclosure statement shall include at least the items listed in subparagraphs (A)-(D) of this subsection:

(A) a statement of activity (a statement of support, revenue, expense);

(B) a statement of changes in fund balances;

(D) notes to accompany the financial statements considered necessary to full disclosure or adequate understanding of the financial statements, financial condition, and operation.

(3) Accompanying the basic financial statements described in paragraphs (1) and (2) of this subsection shall be a reconciliation of the cash flow statement to the statement of revenue and expenses, and a comparison of pro-forma projections for the period to actual results, including an explanation of variances greater than plus or minus 10% in a line item, and an explanation of variances which are greater in dollar amount than total net income or loss. The comparison shall also include actual beginning and ending occupancy rates for living units, and actual number of occupied bed-days for nursing care units. The reconciliation and comparisons required by this paragraph are not required to be included within the audit of the financial statements, and may be prepared by the management of the facility or by the preparers of the audited financial statements.

(f) Continuing Care Contract Liens. To secure the obligations of the provider under any continuing care contract, a lien attaches on the date a resident first occupies a facility. The lien covers the real and personal property of the provider located at the facility. The provider shall submit to the department a written notice sworn to by an officer of the provider for each county where the provider has a facility on CCRC Form Number 13 (Notice of Lien). The provider shall file the notice of the lien with the department before the date of the execution of the first continuing care contract related to the facility.

History

Source Note: The provisions of this §33.505 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 1, 1990, 15 TexReg 880; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.506 Actuarial Review Requirements

(a) Applicability. This section applies to providers of a facility whose continuing care contracts offer future guarantees of long-term nursing care in excess of 365 consecutive days which develop actuarial liabilities.

(b) Initial filing requirements.

(1) Except as provided in paragraph (2) of this subsection, the provider of a facility subject to this section shall file with the Commissioner its most current actuarial review, as defined in §33.2 of this title (relating to Definitions) before September 1, 1989.

(2) A facility that is not eligible for the mandatory issuance of a certificate of authority under the Health and Safety Code, §246.023, shall submit an actuarial review, if applicable, along with its application, as one of the filing requirements for a certificate of authority as provided in §33.204 of this title (relating to Contents of Application).

(3) Any actuarial review filed under paragraphs (1) or (2) of this subsection shall be performed within five years of the date of filing.

(c) Satisfactory actuarial balance. The financial condition of a provider or facility is considered to be in satisfactory actuarial balance at a given date if:

(1) its resources that are available for the facility's current residents (including the actuarial present value of periodic fees expected to be paid in the future by current residents) are greater than or equal to the actuarial present value of the expected costs of performing all remaining obligations to such residents under their contracts, with appropriate provision for surplus;

(2) for a typical cohort of new residents calculated under the most likely scenario of assumptions regarding move-in rates, the sum of the advance fees paid at or before occupancy plus the actuarial present value at occupancy of the new residents' expected future periodic fees is greater than or equal to the actuarial present value at occupancy of performing all obligations assumed by the provider for such residents, with appropriate provision for surplus; the calculation of these amounts is to be done under at least two scenarios, at least one of which assumes the move-in rate of the most recent year in its projection; and

(3) cash balances are projected to remain positive with respect to current and future residents for a period of at least 20 years.

(d) Subsequent actuarial reviews. The provider shall file subsequent actuarial reviews with the department at least (or at a minimum) at five-year intervals from the date of filing of the initial actuarial review filed under subsection (b)(1) or (2) of this section. In addition, the provider shall file an actuarial review as requested by the Commissioner when the Commissioner believes that the facility is financially unsound, or the Commissioner determines that other circumstances exist which warrant such reviews. The Commissioner's request for such actuarial review shall set forth the specific reasons for such a request.

History

Source Note: The provisions of this §33.506 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 1, 1990, 15 TexReg 880; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.507 Supervision, Rehabilitation, Liquidation

The Commissioner may proceed under applicable provisions of Health and Safety Code, §§246.091-246.097, if, upon examination or at any other time, it appears that the facility or provider is insolvent or its condition be, in the opinion of the Commissioner, such that the provider is unable to meet its projected occupancy goals or cash projections as filed in such a manner as endangers the ability of the provider to perform fully its obligations under continuing care contracts.

History

Source Note: The provisions of this §33.507 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.508 Transfer of Certificate of Authority

(a) Whenever a person seeks to acquire control, as defined in §33.2 of this title (relating to Definitions), of a facility with a current certificate of authority, he or she must apply to transfer the certificate of authority.

(b) A person seeking to acquire control of a facility shall first file an application using CCRC Form #7 (CCRC Change of Control Application) with the department for approval.

(c) The department shall notify the applicant by letter whether the application is approved within 30 days after receipt of the completed application. If the department disapproves the application, the applicant may request a hearing seeking Commissioner review of the matter by filing a motion for reconsideration addressed to the Commissioner and filed with the department's docket clerk. After a hearing, the Commissioner shall dispose of the matter by entering an order approving or disapproving the application. The department shall send a copy of the order to the applicant.

History

Source Note: The provisions of this §33.508 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.509 Management Contract

Within 30 days before entering into contract with a third party for management of the facility, the provider shall submit two copies of the management agreement to the department.

History

Source Note: The provisions of this §33.509 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.510 Change of Fiscal Year

The provider holding a certificate of authority shall notify the department at least 30 days in advance of a change in fiscal year of a facility.

History

Source Note: The provisions of this §33.510 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

28 Tex. Admin. Code § 33.511 Changes in Responsible Person

The provider must submit a completed CCRC Form #3 (Officers and Directors page) and CCRC Form #4 (Biographical Data Form) or CCRC Form #4 a (Biographical Data Form for Not-for-Profit CCRC Board Members) to the department within 60 days of any additions, deletions, or modifications to the provider's officers, directors, trustees, managing partner, general partner, any person who has at least 10% interest in the provider, or any person engaged in the day to day management of the facility, other than an individual directly employed by the provider.

History

Source Note: The provisions of this §33.511 adopted to be effective March 9, 1989, 14 TexReg 991; amended to be effective March 14, 1996, 21 TexReg 1771.

Chapter 34 STATE FIRE MARSHAL

Subchapter A FLAMMABLE LIQUIDS

28 Tex. Admin. Code § 34.1 Purpose

The purpose of this subchapter is to administer the law set forth in the Health and Safety Code, Chapter 753, regarding the safe storage, handling, and use of flammable liquids at retail service stations.

History

Source Note: The provisions of this §34.1 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.2 Title

The sections of this subchapter shall be known as and may be cited as the rules for the safe storage, handling, and use of flammable liquids at retail service stations.

History

Source Note: The provisions of this §34.2 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.3 Applicability of Sections

The sections of this subchapter shall apply to any person engaged in the business of the storage, handling, dispensing, and use of flammable liquids at retail service stations, and bulk plants operated in conjunction with retail service stations.

History

Source Note: The provisions of this §34.3 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.4 Definitions

The following words, and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise: NFPA--The National Fire Protection Association, a nationally recognized standards-making organization.

History

Source Note: The provisions of this §34.4 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.5 Adopted Standards

(a) The commissioner adopts by reference the following copyrighted standards and recommendations in this subsection, except to the extent they are in conflict with sections of this subchapter or any Texas statutes or federal law for use through August 31, 2014. Copies of the standards are available for public inspection in the State Fire Marshal's Office. The standards are published by and are available from the National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts:

(1) NFPA 30-1990, Flammable and Combustible Liquids Code;

(2) NFPA 30A-1990, Automotive and Marine Service Station Code, including the Tentative Interim Amendment (TIA Log Number 312R) adopted by the NFPA in 1991, except for §2-4.2 of the Tentative Interim Amendment concerning tank location and capacity.

(b) The commissioner adopts by reference the following copyrighted standards and recommendations in this subsection, except to the extent they are in conflict with sections of this subchapter or any Texas statutes or federal law, for use on and after September 1, 2014. Copies of the standards are available for public inspection in the State Fire Marshal's Office. The standards are published by and are available from the National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts:

(1) NFPA 30-2012, Flammable and Combustible Liquids Code;

(2) NFPA 30A-2012, Code for Motor Fuel Dispensing Facilities and Repair Garages.

History

Source Note: The provisions of this §34.5 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2014, 39 TexReg 2293.

28 Tex. Admin. Code § 34.6 Retroactivity

This subchapter applies to underground and aboveground storage tanks in service after the effective date of the subchapter except for underground tanks used by retail service stations in service prior to September 1, 1969, to the extent that such stations in service prior to September 1, 1969, do not create a distinct hazard to life and property.

History

Source Note: The provisions of this §34.6 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.7 Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these rules which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §34.7 adopted to be effective September 19, 1990, 15 TexReg 5137; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 26, 1992, 17 TexReg 4265; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

Subchapter B FIRE SUPPRESSION RATINGS OVERSIGHT

28 Tex. Admin. Code § 34.201 Applicability

This subchapter applies to an advisory organization or other filer that determines a fire rating for a community, fire district, or other jurisdiction based on a fire suppression and mitigation grading schedule.

History

Source Note: The provisions of this §34.201 adopted to be effective June 6, 2016, 41 TexReg 4036.

28 Tex. Admin. Code § 34.202 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Advisory organization--An advisory organization licensed under Insurance Code Chapter 1805.

(2) Fire rating--A rating, or evaluation of fire suppression and mitigation capabilities, for a community based on the criteria in a fire suppression and mitigation grading schedule.

(3) Filer--An advisory organization or insurer that files fire ratings.

(4) Fire suppression and mitigation grading schedule--A schedule with criteria for determining the fire rating for a community, fire district, or other jurisdiction. A fire suppression and mitigation grading schedule is supplementary rating information, as defined by Insurance Code §2251.002.

(5) Community--A community, fire district, jurisdiction, or other definite geographic area.

(6) Survey--The results of an inspection to evaluate a community's fire suppression and mitigation capabilities.

History

Source Note: The provisions of this §34.202 adopted to be effective June 6, 2016, 41 TexReg 4036.

28 Tex. Admin. Code § 34.203 Review of Community Fire Ratings

(a) Submission. A filer must submit a proposed fire rating for a community to the State Fire Marshal's Office. A submission must contain:

(1) a recommended fire rating based on the filer's survey;

(2) justification for the recommended fire rating, consistent with the applicable fire suppression and mitigation grading schedule;

(3) identification of the fire suppression and mitigation grading schedule used to determine the fire rating;

(4) the primary contact information, including telephone and email, for the person completing the survey; and

(5) an explanation indicating why a community did not achieve a better rating, if applicable.

(b) Verification. After receiving a completed proposed fire rating, the State Fire Marshal's Office may review the proposed fire rating for compliance with the applicable fire suppression and mitigation grading schedule and with state laws and regulations.

(c) Requests for additional information. If the state fire marshal determines that the filer's submission is incomplete or otherwise deficient, the State Fire Marshal's Office may request additional information from the filer.

(d) Approval.

(1) The State Fire Marshal's Office will approve proposed fire ratings that are:

(A) consistent with the applicable fire suppression and mitigation grading schedule; and

(B) consistent with all applicable state laws and regulations.

(2) A proposed fire rating will be deemed approved 30 days after the date it is filed only if it meets the criteria in paragraph (1) of this subsection, and is not disapproved within that 30-day period, unless:

(A) the State Fire Marshal's Office provides notice of proposed disapproval of the fire rating during the 30-day period, or

(B) the filer agrees to extend the period.

(3) The time between the date the state fire marshal requests additional information from the filer and the date the state fire marshal receives the information requested is not included in the computation of the 30-day period in paragraph (2) of this subsection.

(e) Disapproval. If a proposed fire rating is not consistent with the applicable fire suppression and mitigation grading schedule and not compliant with applicable state laws and regulations, the State Fire Marshal's Office will:

(1) notify the filer of a proposed negative action no later than the fifth day before the date the State Fire Marshal's Office proposes to take the action; and

(2) disapprove the proposed fire rating and provide a written explanation of the reasons for the disapproval.

(f) Community notification. The State Fire Marshal's Office may notify an affected community of the proposed fire rating.

(g) Notification. The State Fire Marshal's Office will notify the filer of the final approval or disapproval of a fire rating. Notification will be in the form of a letter or electronic notification and will contain the effective date of the approval or disapproval.

History

Source Note: The provisions of this §34.203 adopted to be effective June 6, 2016, 41 TexReg 4036.

28 Tex. Admin. Code § 34.204 Appeal of Community Fire Rating Determination

(a) Appeal. A filer or person who does not agree with an approval or disapproval of a proposed fire rating may petition for appeal and a hearing to review the matter.

(b) Timeliness. A person must appeal an approval or disapproval not later than the 60th day after the date of the state fire marshal's approval or disapproval.

(c) Petition. A petition filed under this section must be in writing. The petition must identify the fire rating and specify why the approval or disapproval was inconsistent with the applicable fire suppression and mitigation grading schedule and state law and regulations. The petition must be filed with the Texas Department of Insurance, Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

(d) Review. A person affected by the approval or disapproval of a fire rating is entitled to a review of the action under Government Code Chapter 2001.

(e) Proceeding. A hearing under this section will be conducted in accordance with the Insurance Code, the Administrative Procedure and Texas Register Act, and Chapter 1 of this title.

History

Source Note: The provisions of this §34.204 adopted to be effective June 6, 2016, 41 TexReg 4036.

Subchapter D TESTING LABORATORY RULES

28 Tex. Admin. Code § 34.401 Purpose

The purpose of this subchapter is to administer through the state fire marshal the law set forth in the Insurance Code, Chapters 6001, 6002, and 6003, and Health and Safety Code Chapter 753 regarding approval of testing laboratories that perform standardized tests on fire protection equipment or flammable liquids equipment in the interest of safeguarding lives and property.

History

Source Note: The provisions of this §34.401 adopted to be effective June 20, 1989, 14 TexReg 2681; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2014, 39 TexReg 2293.

28 Tex. Admin. Code § 34.402 Title

The sections set forth in this subchapter shall be known and may be cited as the Testing Laboratory Rules.

History

Source Note: The provisions of this §34.402 adopted to be effective June 20, 1989, 14 TexReg 2681; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.403 Applicability and Scope

This subchapter applies to persons and laboratories engaged in testing fire protection equipment or flammable liquids equipment and not to the general public.

History

Source Note: The provisions of this §34.403 adopted to be effective June 20, 1989, 14 TexReg 2681; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2014, 39 TexReg 2293.

28 Tex. Admin. Code § 34.407 Approved Testing Laboratories

An organization will be considered an approved testing laboratory if it is currently accredited as a Nationally Recognized Testing Laboratory (NRTL) by the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) in accord with the requirements of 29 CFR 1910.7 for that specific product or category of products.

History

Source Note: The provisions of this §34.407 adopted to be effective June 20, 1989, 14 TexReg 2681; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7076; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2014, 39 TexReg 2293.

28 Tex. Admin. Code § 34.408 Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of this subchapter which can be given effect without the invalid provisions or application. To this end all provisions of these rules are declared to be severable.

History

Source Note: The provisions of this §34.408 adopted to be effective June 20, 1989, 14 TexReg 2681; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

Subchapter E FIRE EXTINGUISHER RULES

28 Tex. Admin. Code § 34.501 Purpose

The purpose of this subchapter is to regulate the business of leasing, renting, selling, installing, and servicing of portable fire extinguishers and the planning, certifying, installing, or servicing of fixed fire extinguisher systems and to prohibit portable fire extinguishers, fixed fire extinguisher systems, and extinguisher equipment not listed by a testing laboratory approved by the commissioner in the interests of protecting and preserving lives and property under Insurance Code Chapter 6001.

History

Source Note: The provisions of this §34.501 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.502 Title

These sections of this subchapter shall be known and may be cited as the extinguisher rules and shall be administered by and through the state fire marshal.

History

Source Note: The provisions of this §34.502 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.503 Applicability of Subchapter

This subchapter shall apply to all firms and persons engaged in the business of leasing, renting, selling, installing, and servicing of portable fire extinguishers and the planning, certifying, installing, or servicing of fixed fire extinguisher systems and not to the general public.

History

Source Note: The provisions of this §34.503 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.504 Exceptions

The exceptions of Insurance Code §6001.156 are applicable to the sections of this subchapter.

History

Source Note: The provisions of this §34.504 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.505 Notices

Notice by the state fire marshal and required by any provisions of the statutes or of this subchapter must be given by personal service or mailed, postage prepaid, to the person's residence or business address as it appears on the records in the Office of the State Fire Marshal.

History

Source Note: The provisions of this §34.505 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.506 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Apprentice--A person to whom a permit has been issued by the state fire marshal to perform various acts of service or installation while under the direct supervision of a person working for the same firm and holding a valid fire extinguisher service license to perform such acts.

(2) Business--The planning, certifying, installing, leasing, renting, selling, or servicing of portable fire extinguishers or fixed fire extinguisher systems.

(3) Certificate--The certificate of registration issued by the state fire marshal.

(4) Certify--To attest to the proper planning, installing, or servicing of portables and systems by attaching a completed service tag or other form required by a governmental authority.

(5) Commissioner--The commissioner of insurance.

(6) Department--The Texas Department of Insurance.

(7) DOT Specification Fire Extinguisher Cylinder--All fire extinguisher cylinders manufactured, tested and stamped with the specification number as required by the United States Department of Transportation.

(8) DOT Nonspecification Fire Extinguisher Cylinder--All fire extinguisher cylinders manufactured and tested but not stamped with a specification number as required by the United States Department of Transportation. These cylinders may be marked by a label with the words "Meets DOT Requirements."

(9) Installation--The initial placement of a portable or fixed fire extinguisher system or an extension or alteration after initial placement.

(10) License--The license issued by the state fire marshal to an employee of a registered firm.

(11) NFPA--The National Fire Protection Association, Inc., a nationally recognized standards-making organization.

(12) NICET--National Institute for the Certification in Engineering Technologies.

(13) Outsource testing service--The testing service selected by the state fire marshal to administer certain designated qualifying tests for licenses under this subchapter.

(14) Person--A natural person.

(15) Plan--To lay out, detail, draw, calculate, devise, or arrange an assembly of detection or suppression devices and appurtenances in accordance with either fire protection standards adopted in this subchapter or specifications specially designed by a Texas registered professional engineer acting solely in his professional capacity.

(16) Registered firm--A person, partnership, corporation, or association holding a current certificate of registration.

(17) Shop--A facility, whether at a specific location or in a mobile unit, of a registered firm where servicing, repairing, or hydrostatic testing is performed and where parts and equipment, which are required by this subchapter or in the adopted standards, are maintained.

(18) Test--The act of subjecting a portable or fixed system to any procedure necessary to determine whether it is properly installed or operates correctly.

(19) Direct supervision--The oversight by a licensee of the services performed by another licensee or permittee. The licensee, performing the direct supervision at the shop, must be present at all times on the premises where the supervised licensee or permittee is performing the service. When not at the shop, the individual being supervised must be within sight of the licensee performing the direct supervision when installing or servicing portable fire extinguishers or pre-engineered fixed fire extinguisher systems. The licensee performing the direct supervision of an engineered fixed fire extinguisher system is not required to be on-site at all times when the installation is performed.

History

Source Note: The provisions of this §34.506 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective March 23, 1994, 19 TexReg 1682; amended to be effective December 14, 1994, 19 TexReg 9526; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effectiveSeptember 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.507 Adopted Standards

The Commissioner adopts by reference in their entirety, except as noted, the following copyrighted standards and recommendations in this subchapter. If a standard refers to a provision in a specific edition of another standard, the provision is applicable only if it does not conflict with the adopted standard shown in this section. The standards are published by and available from the National Fire Protection Association Inc. (NFPA) on the NFPA website at www.nfpa.org.

(1) NFPA 10-2018, Standard for Portable Fire Extinguishers.

(2) NFPA 11-2016, Standard for Low, Medium, and High-Expansion Foam and Combined Agent Systems.

(3) NFPA 12-2018, Standard on Carbon Dioxide Extinguishing Systems.

(4) NFPA 12A-2018, Standard on Halon 1301 Fire Extinguishing Systems.

(5) NFPA 15-2017, Standard for Water Spray Fixed Systems for Fire Protection.

(6) NFPA 16-2019, Standard for the Installation of Foam-Water Sprinkler and Foam-Water Spray Systems.

(7) NFPA 17-2021, Standard for Dry Chemical Extinguishing Systems.

(8) NFPA 17A-2021, Standard for Wet Chemical Extinguishing Systems.

(9) NFPA 18-2021, Standard on Wetting Agents.

(10) NFPA 25-2020, Standard for the Inspection, Testing, and Maintenance of Water-Based Fire Protection Systems.

(11) NFPA 33-2018, Standard for Spray Application Using Flammable or Combustible Materials.

(12) NFPA 96-2021, Standard for Ventilation Control and Fire Protection of Commercial Cooking Operations.

(13) NFPA 2001-2018, Standard on Clean Agent Fire Extinguishing Systems.

(14) NFPA 2010-2020, Standard for Fixed Aerosol Fire-Extinguishing Systems.

History

Source Note: The provisions of this §34.507 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective December 14, 1994, 19 TexReg 9526; amended to be effective September 20, 1995, 20 TexReg 7077; amended to be effective May 10, 1996, 21 TexReg 3714; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effectiveApril 1, 2006, 31 TexReg 1706; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective September 1, 2023, 48 TexReg 124.

28 Tex. Admin. Code § 34.508 Approved Testing Laboratories

The commissioner approves an organization as an approved testing laboratory which lists equipment and appurtenances for use in compliance with standards adopted in §34.507 of this title (relating to Adopted Standards) if the organization meets the requirements of an approved testing laboratory in accordance with Subchapter D of this title (relating to Testing Laboratory Rules).

History

Source Note: The provisions of this §34.508 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105.

28 Tex. Admin. Code § 34.509 Approved Certification Organization

The commissioner approves the National Institute for Certification in Engineering Technologies (NICET) as a testing standards organization for testing license applicants.

History

Source Note: The provisions of this §34.509 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105.

28 Tex. Admin. Code § 34.510 Certificates of Registration

(a) Required. Each firm and each branch office engaged in the business must obtain a certificate of registration from the state fire marshal.

(b) Properly equipped licensed person. Before engaging in the business, each registered firm must have at least one licensed person who must be properly equipped to perform the act or acts authorized by its certificate.

(c) Types of certificates. The business activities authorized by the certificate are limited to the business activities authorized under the license of its employees. A separate Type C registration is required to engage in the business of hydrostatic testing of U.S. Department of Transportation (U.S. DOT) specification fire extinguisher cylinders.

(d) Business location. Each registered firm must maintain a specific business location, and the business location must be indicated on the certificate. The business location must be a physical address, not a mailing address or P.O. Box.

(e) Shop. A registered firm must establish and maintain a shop, whether at a specific business location or in a mobile unit designed so that servicing, repairing, or hydrostatic testing can be performed. The shop must be adequately equipped to service or test all fire extinguishers or systems the registered firm installs and services. At a minimum, a firm must maintain the following:

(1) a copy of the most recently adopted edition of NFPA 10;

(2) a copy of the most recently adopted Insurance Code Chapter 6001 and this chapter;

(3) a list of manufacturers or types of portable extinguishers serviced with their respective manuals or part lists;

(4) portable scale to accurately measure extinguisher gross weights;

(5) seals or tamper indicators;

(6) temporary fire extinguishers replacements;

(7) if performing annual maintenance on carbon dioxide extinguishers, at a minimum, the following additional items are required:

(A) conductivity tester; and

(B) conductivity test label;

(8) if performing internal maintenance for portable extinguishers, a written notice must be kept on file indicating the registered firm performing the maintenance or, at a minimum, the following additional items are required:

(A) appropriate tools to remove and reinstall a valve head;

(B) charging adapters;

(D) supply of spare parts for respective manufacturers and type of fire extinguishers serviced;

(E) appropriate recharge agents;

(F) agent fill funnels;

(G) light designed to be used for internal inspections;

(H) dry chemical closed recovery system or sufficient new dry chemical;

(I) leak test equipment;

(J) dry nitrogen cylinders, regulator and calibrated gauges for pressurizing cylinders;

(K) verification collar rings; and

(L) six-year maintenance labels.

(9) if performing hydrostatic testing for portable extinguishers, a written notice must be kept on file indicating the registered firm performing the test or, at a minimum, the following additional items are required:

(A) working hydrostatic test pump with flexible connection, check valves, and fittings;

(B) protective cage or barrier;

(D) drying equipment;

(E) hydrostatic test log; and

(F) hydrostatic test labels;

(10) if performing maintenance for U.S. DOT specification portable fire extinguishers, a written notice must be kept on file indicating the registered firm that would perform the hydrostatic test when required or, at a minimum, the following additional items are required:

(A) a current Type C registration issued by the State Fire Marshal's Office; and

(B) verification of registration through the U.S. DOT;

(11) if installing or servicing a fixed fire extinguisher system, at a minimum, the following additional items are required:

(A) a copy of the latest adopted edition of applicable NFPA standards with respect to the type of system installed or serviced;

(B) applicable manufacturer's service manuals for the type of system; and

(f) Business vehicles. All vehicles used regularly in installation, service, maintenance, testing, or certification activities must prominently display the company name, telephone number, and certificate of registration number. The numbers and letters must be at least one inch in height and permanently affixed or magnetically attached to each side of the vehicle in a color contrasting with the background color of the vehicle. The certificate-of-registration number must be designated in the following format: TX ECR-number. A business vehicle must be adequately equipped for the type of service that is being provided.

(g) Branch office initial certificate of registration fees and expiration dates. The initial fee for a branch office certificate of registration is $100 and is not prorated. Branch office certificates of registration expire and renew on the same date as the certificate of registration for the registered firm's main office.

(h) Change of ownership.

(1) The total change of a firm's ownership invalidates the current certificate. To ensure continuance of the business, the new owners must submit an application for a new certificate to the state fire marshal 14 days before the change.

(2) A partial change in a firm's ownership will require a revised certificate if it affects the firm's name, location, or mailing address.

(i) Change of corporate officers. Any change of corporate officers must be reported in writing to the state fire marshal within 14 days. This change does not require an application for a new or revised certificate.

(j) Duplicate certificates. A certificate holder must obtain a duplicate certificate from the state fire marshal to replace a lost or destroyed certificate. The certificate holder must submit written notification of the loss or destruction without delay, accompanied by the required fee.

(k) Revised certificates. The change of a firm's name, location, or mailing address requires a revised certificate. Within 14 days after the change requiring the revision, the registered firm must submit written notification of the necessary change accompanied by the required fee to the State Fire Marshal's Office.

(l) Nontransferable. A certificate is neither temporarily nor permanently transferable from one firm to another.

(m) Initial alignment of the expiration and renewal dates of existing branches. For branch offices in existence as of the effective date of this rule, branch office certificates of registration will expire and renew on the same date as the certificate of registration issued to the main office for that firm. All fees associated with the initial alignment of expiration and renewal dates for the branch office certificate of registration will prorate accordingly.

History

Source Note: The provisions of this §34.510 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective March 23, 1994, 19 TexReg 1682; amended to be effective December 14, 1994, 19 TexReg 9526; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481.

28 Tex. Admin. Code § 34.511 Fire Extinguisher Licenses

(a) Types of licenses. Each license must be identified by type, which indicates the business activity authorized under the license.

(1) Type PL--For planning, supervising, certifying, installing, or servicing of all fixed systems other than pre-engineered systems. A system planning licensee may also perform, supervise, or certify the installation or servicing of all pre-engineered fixed systems and portable fire extinguishers.

(2) Type A--For certifying or servicing the installation of all fixed fire extinguisher systems, other than pre-engineered systems; or for installing, certifying, or servicing all pre-engineered fixed fire extinguisher systems, and certifying and servicing of portable extinguishers.

(3) Type B--For servicing, certifying, and low-pressure hydrostatic testing of portables.

(4) Type K--For installing, certifying, or servicing pre-engineered fixed fire extinguisher systems for the protection of cooking areas, and certifying and servicing portable extinguishers.

(b) Proof of licensure. A licensee must be able to show proof of licensure while engaged in the activities of the business.

(c) Duplicate license. A duplicate license must be obtained from the state fire marshal to replace a lost or destroyed license. The license holder or registered firm must submit written notification of the loss or destruction, accompanied by the required fee.

(d) Revised license. The change of a licensee's registered firm or mailing address requires a revised license. Within 14 days after the change requiring the revision, the license holder or registered firm must submit written notification of the necessary change accompanied by the required fee.

(e) Restrictions.

(1) A licensee must not engage in any act of the business unless employed by a registered firm and holding an unexpired license.

(2) A license is neither temporarily nor permanently transferable from one person to another.

(3) A registered firm must notify the state fire marshal within 14 days after termination of employment of a licensee.

(4) A Type A or Type K license will not be issued to an individual unless the individual has held an apprentice permit or a Type B license for at least six months or has held a license to service fixed extinguisher systems for at least six months from another state.

History

Source Note: The provisions of this §34.511 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective January 1, 1997, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effectiveJune 22, 2021, 46 TexReg 3734.

28 Tex. Admin. Code § 34.512 Apprentice Permit

(a) Proof of licensure. A permit holder must be able to show proof of licensure while engaging in the business.

(b) Duplicate permit. A duplicate permit must be obtained from the state fire marshal to replace a lost or destroyed permit. The permit holder and his employer must submit written notification of the loss or destruction without delay, accompanied by the required fee.

(c) Revised permits. The change of a permittee's employer, home address, or mailing address requires a revised permit. Within 14 days after the change requiring the revision, the permit holder or registered firm must submit written notification to the State Fire Marshal's Office of the necessary change accompanied by the required fee.

(d) Nontransferable. A permit is neither temporarily nor permanently transferable from one person to another.

(e) Apprentice. An individual holding a current apprentice permit may, under the direct supervision of the licensee, assist in all respective services of the licensee; however, the licensee must sign all documents requiring the licensee's signature.

History

Source Note: The provisions of this §34.512 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective June 22, 2021, 46 TexReg 3734.

28 Tex. Admin. Code § 34.513 Alteration of Certificates, Licenses, or Permits

Alteration of such documents renders them invalid and is the basis for administrative action pursuant to Insurance Code §6001.252.

History

Source Note: The provisions of this §34.513 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.514 Applications

(a) Certificates of registration.

(1) Applications for certificates and branch office certificates must be submitted on forms provided by the state fire marshal and accompanied by all other information required by Insurance Code Chapter 6001, concerning Fire Extinguisher Service and Installation, and this subchapter. An application will not be deemed complete until all required forms and documents have been received in the State Fire Marshal's Office.

(2) Applications must be signed by the sole proprietor, or by each partner of a partnership, or by an officer of a corporation. For corporations, the application must be accompanied by the corporate charter of a Texas corporation, or, in the case of a foreign corporation, a copy of the Texas certificate of authority to do business. For applicants using an assumed name, the application must be accompanied by evidence of compliance with the Assumed Business or Professional Name Act, Texas Business and Commerce Code Chapter 71. The application must also include written authorization by the applicant permitting the state fire marshal or the state fire marshal's representative to enter, examine, and inspect any premises, building, room, or establishment used by the applicant while engaged in the business to determine compliance with the provisions of Insurance Code Chapter 6001 and this subchapter.

(3) For corporations, the application must also include the corporate taxpayer identification number, the charter number, and a copy of the corporation's current franchise tax certificate from the State Comptroller's Office showing it is in active status.

(4) Applications for Type C certificates must be accompanied by a copy of the U.S. DOT letter registering the applicant's facility and that issues a registration number to the facility.

(5) The applicant must comply with the following requirements concerning liability insurance.

(A) The state fire marshal will not issue a certificate of registration under this subchapter unless the applicant files a proof of liability insurance with the State Fire Marshal's Office. The insurance must include products and completed operations coverage.

(B) Each registered firm must maintain in force and on file in the State Fire Marshal's Office the certificate of insurance as required.

(C) Evidence of public liability insurance, as required by Insurance Code §6001.154, concerning Required Insurance Coverage for Registration Certificate, must be in the form of a certificate of insurance executed by an insurer authorized to do business in this state.

(D) If a certificate of registration is to be issued in the name of a corporation, the corporate name must be used on the applicable insurance forms. If the corporation is obtaining a certificate of registration in an assumed name, the insurance must be issued to the corporation doing business as (dba) the assumed name. Example: XYZ Corporation, dba XXX Extinguisher Service.

(E) Insurance issued for a partnership must be issued to the name of the partnership or to the names of all the individual partners.

(F) Insurance for a proprietorship must be issued to the individual owner. If an assumed name is used, the insurance must be issued to the individual doing business as "dba" followed by the assumed name. Example: William Jones, dba XXX Extinguisher Service.

(b) Fire extinguisher licenses.

(1) Original applications for a license from an employee of a firm engaged in the business must be submitted on forms provided by the state fire marshal and accompanied by a criminal history report from the Texas Department of Public Safety and all other information required by Insurance Code Chapter 6001 and this subchapter.

(2) For a natural person to be eligible for a Type A, K, or PL license, the natural person must start the application or registration process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/fire/fingerprinting-process.html. The requesting natural person must submit information necessary to complete the fingerprint service code request, including: the natural person's name, natural person's state of residence, natural person's email address, and license type the natural person is applying for.

(3) Applications for Type A and Type K licenses must be accompanied by a written statement from the certificate holder (employer) certifying that the applicant meets the minimum requirements of §34.511(e)(4) of this title (relating to Fire Extinguisher Licenses) and is competent to install or service fixed systems.

(4) Applications for Type PL licenses must be accompanied by one of the following documents to evidence technical qualifications for a license:

(A) proof of registration in Texas as a professional engineer; or

(B) a copy of the National Institute for Certification in Engineering Technologies (NICET) notification letter regarding the applicant's successful completion of examination requirements for certification at Level III for Special Hazard Systems Layout or Special Hazard Suppression Systems.

(5) All applications must indicate if the individual is an employee or agent of the registered firm.

(A) If the individual is an employee of the registered firm, the State Fire Marshal's Office may request from the registered firm verification of employment of the individual.

(B) If the individual is an agent of the fire extinguisher firm, the State Fire Marshal's Office may request that the firm provide a letter or other document acceptable to the State Fire Marshal's Office, issued by the firm's insurance company, verifying the policy number and that the acts of the individual are covered by the same insurance policy required by this subchapter to obtain the firm's registration. If required, the verifying document must be submitted to the State Fire Marshal's Office before a license will be issued or when there is a change in the licensee's registered firm. Unless otherwise required by the State Fire Marshal's Office, renewal of a license does not require insurance verification unless there has been a change in the insurance carrier.

(c) Complete application required for renewal. Renewal applications for certificates of registration and licenses must be submitted on forms provided by the state fire marshal and accompanied by a criminal history report obtained through the Texas Department of Public Safety and by all other information required by Insurance Code Chapter 6001 and this subchapter. An application will not be deemed complete until all required forms and documents have been received in the State Fire Marshal's Office.

(d) Timely filed. A license or registration expires at 12:00 midnight on the date printed on the license or registration. A renewal application and fee for license or registration must be postmarked on or before the date of expiration to be accepted as timely. If a renewal application is not complete but there has been no lapse in the required insurance, the applicant will have 30 days from the time the applicant is notified by the State Fire Marshal's Office of the deficiencies in the renewal application to submit any additional requirement. If an applicant fails to respond and correct all deficiencies in a renewal application within the 30-day period, a late fee may be charged.

(e) Requirements for applicants holding licenses from other states. An applicant holding a valid license in another state who desires to obtain a Texas license through reciprocity must submit the following documentation with the application in addition to all other information required by Insurance Code Chapter 6001 and this subchapter:

(1) a letter of certification from the licensing entity of another state certifying the applicant holds a valid license in that state; and

(2) additional information from the state detailing material content of any required examination used to qualify for license, including NFPA or other standards, if applicable.

(f) Apprentice permits. Each person employed as an apprentice by a firm engaged in the business must make application for a permit on a form provided by the state fire marshal, accompanied by a criminal history report from the Texas Department of Public Safety, and accompanied by the required application fee.

(1) For a natural person to be eligible for an apprentice permit, the natural person must start the application or registration process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/fire/fingerprinting-process.html, as specified in paragraph (2) of this subsection.

(2) The requesting natural person must submit information necessary to complete the fingerprint service code request, including: the natural person's name, natural person's state of residence, natural person's email address, and license type the natural person is applying for.

(g) Complete applications. The application form for a license or registration must be accompanied by the required application fee and must, within 180 days of receipt by the State Fire Marshal's Office of the initial application, be complete and accompanied by all other information required by Insurance Code Chapter 6001 and this subchapter, or a new application must be submitted, including all applicable fees.

History

Source Note: The provisions of this §34.514 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective May 10, 1996, 21 TexReg 3714; amended to be effective January 1, 1997, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14,2013, 38 TexReg 662; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 16, 2023, 48 TexReg 1839.

28 Tex. Admin. Code § 34.515 Fees

(a) Except for fees specified in subsection (d) of this section, all fees payable must be submitted by cashier's check or money order made payable to the Texas Department of Insurance or by online payment. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable.

(b) Fees are as follows.

(1) Certificates of registration:

(A) initial fee--$450;

(B) renewal fee (for two years)--$600;

(D) renewal late fee (expired 91 days to two years)--$450 plus $100 for each branch office operated by the registered firm;

(E) branch office initial fee--$100;

(F) branch office renewal fee (for two years)--$200.

(2) Certificate of registration (Type C):

(A) initial fee--$250;

(B) renewal fee (for two years)--$300;

(D) renewal late fee (expired 91 days to two years)--$250.

(3) Fire extinguisher license (Type A, B, and K):

(A) initial fee--$70;

(B) renewal fee (for two years)--$100;

(D) renewal late fee (expired 91 days to two years)--$70.

(4) Fire extinguisher license (Type PL):

(A) initial fee--$70;

(B) renewal fee (for two years)--$100;

(D) renewal late fee (expired 91 days to two years)--$70.

(5) Apprentice permit fee--$30.

(6) Change of address request--$0.

(7) Duplicate or revised certificates, licenses, permits, or other requested changes to certificates, licenses, or permits--$20.

(8) Initial test fee (if administered by the SFMO)--$20.

(9) Retest fee (if administered by the SFMO)--$20.

(c) Fees for tests administered by an outsource testing service are payable to the testing service in the amount and manner required by the testing service.

(d) Late fees are required of all certificate or license holders who fail to submit complete renewal applications before the expiration of the certificate or license.

History

Source Note: The provisions of this §34.515 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; amended to be effective February 1, 1991, 16 TexReg 311; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective March 23, 1994, 19 TexReg 1682; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 9, 2025, 50 TexReg 2299.

28 Tex. Admin. Code § 34.516 Tests

(a) Applicants for licenses are required to take a test and obtain a grade of at least 70 percent on the test. Tests may be supplemented by practical tests or demonstrations deemed necessary to determine the applicant's knowledge and ability. The test content, frequency, location, and outsource testing service must be designated by the state fire marshal.

(1) The Type B license test will include questions on the following:

(A) this subchapter and Insurance Code Chapter 6001; and

(B) installing and servicing of portables.

(2) The Type A license test will include questions on the following:

(A) this subchapter and Insurance Code Chapter 6001;

(B) installing and servicing of portables;

(D) installing and servicing pre-engineered fixed fire extinguisher systems for the protection of cooking areas.

(3) The Type K license test will include questions on the following:

(A) this subchapter and Insurance Code Chapter 6001;

(B) installing and servicing of portables; and

(4) The Type PL license test will include questions on the following:

(A) this subchapter and Insurance Code Chapter 6001; and

(B) a technically qualifying test to be conducted through NICET.

(b) The standards used in the tests will be adopted by the State Fire Marshal's Office.

(d) A person whose license has been expired for two years or longer who makes application for a new license must take and pass another test. No test is required for a licensee whose license is renewed within two years of expiration.

(e) An examinee who is scheduled for a test to be conducted on a religious holy day by the State Fire Marshal's Office and who wishes to observe the religious holy day may request the rescheduling of the test to an alternate date.

(f) An applicant may only schedule each type of test three times within a twelve-month period.

(g) An applicant for a license must complete and submit all application requirements within one year of the successful completion of any test required for a license, except for testing conducted through NICET; otherwise, the test is voided and the individual will have to pass the test again.

History

Source Note: The provisions of this §34.516 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective June 22, 2021, 46TexReg 3734.

28 Tex. Admin. Code § 34.517 Installation and Service

(a) The following requirements are applicable to all portable extinguishers.

(1) Portable extinguishers must be installed, serviced, and maintained in compliance with the manufacturer's instructions and with the applicable standards adopted in this subchapter except when the installation or servicing complies with a standard that has been adopted by the political subdivision in which the system is installed.

(2) A service tag certifying the work the licensee performed must be securely attached to the portable extinguisher on completion of the work.

(3) When requested in writing by the owner, a portable fire extinguisher of the type described in subparagraphs (A), (B), or (C) of this paragraph may be serviced according to the requirement of this subchapter, regardless of whether it carries the label of approval or listing of a testing laboratory approved according to this subchapter.

(A) All portable fire extinguishers serviced according to the requirements of the United States Coast Guard and installed for use in foreign shipping vessels;

(B) all portable carbon dioxide fire extinguishers serviced according to the requirements of the United States Department of Transportation; or

(4) A licensee who services portable fire extinguishers according to paragraph (3) of this subsection, must comply with the following:

(A) The back of the service tag must be plainly marked with the words "No Listing Mark."

(B) All missing markings, code symbols, instructions, and information required by the applicable performance standard and fire test standard specified in §34.507(1) of this title (relating to Adopted Standards), except for the approving or listing mark of the testing laboratory, must be affixed to each extinguisher in the form of a label designated in the standard.

(b) The following requirements are applicable to all fixed fire extinguisher systems.

(1) Fixed systems must be planned, installed, and serviced in compliance with the manufacturer's installation manuals and specifications or the applicable standards adopted in this subchapter, except when the installation or servicing complies with a standard that has been adopted by the political subdivision in which the system is installed.

(2) On completion of the installation of a pre-engineered fixed fire extinguisher system, a licensee authorized to certify pre-engineered fixed fire extinguishing systems under the provisions of this subchapter must place an installation label on the system to certify that the system was installed in compliance with the manufacturer's installation manuals and specifications or standards adopted by the commissioner in this subchapter. The licensee whose signature appears on the installation label must be present for the final test of the system prior to certification.

(3) On completion of the installation of a fixed fire extinguisher system other than a pre-engineered system, a Type A or Type PL licensee must place an installation label on the system to certify that the system was installed in compliance with the manufacturer's installation manuals and specifications, plans developed by a Type PL licensee or professional engineer, or standards adopted by the commissioner in this subchapter. The licensee whose signature appears on the installation label must be present for the final test of the system prior to certification.

(4) A service tag certifying the work the licensee performed must be securely attached to the system on completion of the work.

(c) Pre-engineered fixed fire extinguisher systems must be installed and serviced by a licensee authorized to install or service pre-engineered fixed fire extinguishing systems under the provisions of this subchapter.

(d) A pre-engineered fixed fire extinguisher system, except those covered by subsection (f) of this section, which has been previously installed in one location may be reinstalled in another location if:

(1) the system is of the size and type necessary to protect all hazards;

(2) all parts and equipment, when installed, will function as designed by the manufacturer; and

(3) the system complies with all applicable adopted standards.

(e) Fixed fire extinguisher systems other than pre-engineered systems must be planned, installed, or serviced by a Type PL licensee or professional engineer. Installation and servicing of these systems may also be performed by or supervised by a Type A licensee. An employee of the registered firm may install these systems, under the direct supervision of a Type A or PL licensee, without obtaining a license or permit.

(f) All pre-engineered fixed fire extinguishing systems, installed or modified after July 1, 1996, according to NFPA 17 or NFPA 17A or NFPA 96 of the adopted standards for the protection of commercial cooking areas, must meet the minimum requirements of Underwriters Laboratories, Inc., Standard 300, "Fire Testing of Fire Extinguishing Systems for Protection of Restaurant Cooking Area" (UL 300). After January 1, 2008, all existing pre-engineered fixed fire extinguishing systems, installed in accordance with NFPA 17 or NFPA 17A or NFPA 96 of the adopted standards, for the protection of commercial cooking areas, must meet the minimum requirements of UL Standard 300, "Fire Testing of Fire Extinguishing Systems for Protection of Restaurant Cooking Area" (UL 300) or a red tag must be attached following the procedures in §34.521 of this title (relating to Red Tags).

(g) If the installation or servicing of a fixed fire extinguishing system includes the installation or servicing of any part of a fire alarm or detection system or a fire sprinkler system other than the installation and servicing of mechanical or pneumatic detection or actuation devices in connection with the fire extinguishing system, the licensing requirements of the appropriate Insurance Code Chapters 6002 or 6003 must be satisfied.

(h) The fixed-temperature sensing elements of the fusible metal alloy type, replaced while servicing a kitchen hood fire extinguishing system, must bear the manufacturer's date stamp, which must be within one year of the date of the replacement. The year of manufacture, temperature, and quantity for new fusible links must be listed on the service tag under service performed.

(i) The disposable actuation cartridge, replaced while servicing a kitchen hood fire extinguisher system, must bear the date of replacement.

(j) After operating the pull pin or locking device during maintenance of a portable fire extinguisher, the flag of the new tamper seal must bear the year it was attached. The date must be imprinted or embossed on the flag of the new tamper seal. Dates applied with a marker are not allowed.

(k) All pre-engineered dry chemical fixed fire extinguishing systems, installed in new, remodeled, or relocated protected areas after January 1, 2006, must meet the minimum requirements of the second edition (1996) or more recent edition of Underwriters Laboratories, Inc., Standard 1254, Pre-engineered Dry Chemical Extinguishing System Units.

History

Source Note: The provisions of this §34.517 adopted to be effective December 5, 1984, 9 TexReg 6006; amended to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; amended to be effective May 10, 1996, 21 TexReg 3714; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105; amended to be effective March 7, 2002, 27 TexReg 1496; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effectiveApril 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.518 Fire Extinguisher Fixed System Plans for Other Than Pre-engineered Systems

(a) A set of shop drawings and hydraulic calculations showing details of system piping, calculations, and alarm configurations must be provided to the building owner or his representative when installation of a fixed extinguisher system protecting special hazards is complete. The firm must also maintain a set of shop drawings for the life of the system.

(b) Subsequent alterations or additions must be legibly noted on updated plans and provided to the owner. Additions to systems protecting previously unprotected hazards also require updated plans. Updated plans must be maintained by the firm for the life of the system.

(c) All shop drawings must bear the signature of a Type PL licensee, his license number, the date of installation, and the certificate-of-registration number of the registered firm.

(d) A rubber stamp may be used to supply the required information; however, a stamped signature is prohibited. If a rubber stamp is used, it shall produce an imprint 2 1/2 inches wide by one inch high, all in boldface type and capital letters and in the following sample format.

Attached Graphic

History

Source Note: The provisions of this §34.518 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.519 Installation Labels for Fixed Extinguisher Systems

(a) After an installation has been completed, an installation label must be affixed to the control head or panel of the fixed fire extinguisher system. The signature of the licensee on the label certifies that the system has been installed according to law. Labels must be five inches in height and four inches in width and must be of the gum label type. They must not be red in color. Installation labels must contain only the following information in the format of the label shown in subsection (b) of this section:

(1) the inscription "DO NOT REMOVE BY ORDER OF THE STATE FIRE MARSHAL--SYSTEM INSTALLATION RECORD" (all in capital letters, at least 10-point boldface type);

(2) the firm's name, address, and telephone number;

(3) the firm's certificate-of-registration number;

(4) the signature and license number of the licensee authorized to certify a fixed fire extinguishing system (a stamped signature is prohibited);

(5) the date of installation; and

(6) identification of the manufacturer's manual(s) used for installation.

(b) Installation label:

Attached Graphic

(d) After completion of the installation, modification, or addition of a fixed fire extinguisher system, the licensee must complete an installation certificate in the format provided by the state fire marshal (see Certificate of Installation). When an installation certificate has been completed, legible copies must be distributed as follows:

(1) original to owner or posted on site at control head or panel;

(2) a copy to main authority having jurisdiction, if required; and

(3) a copy to certifying firm to retain in their office for access by SFMO.

History

Source Note: The provisions of this §34.519 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective March 23, 1994, 19 TexReg 1682; amended to be effective December 14, 1994, 19 TexReg 9526; amended to be effective May 10, 1996, 21 TexReg 3714; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.520 Service Tags

(a) After any service, the licensee must complete a service tag in detail, indicating all work that done, and then attach the tag to the portable or fixed system in such a position as to permit convenient inspection and not hamper its actuation or operation. The signature of the licensee on the service tag certifies that the service performed complies with requirements of law.

(b) A new service tag, yellow tag or red tag, as applicable, must be attached each time service is performed.

(1) "DO NOT REMOVE BY ORDER OF THE STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) firm's name, address, and telephone number;

(3) firm's certificate-of-registration number;

(4) licensee's name and license number;

(5) licensee's signature (a stamped signature is prohibited);

(6) month and year (to be punched);

(7) type of work (to be punched);

(8) service performed;

(9) name and address of owner or occupant; and

(10) extinguisher type, size, and location.

(d) Tags must be 5-1/4 inches in height and 2-5/8 inches in width. Service tags must not be red in color.

(e) Tags may be printed and established for any five-year period.

(f) A service tag may be removed only by an authorized employee of a registered firm, an employee of the state fire marshal's office, or an authorized representative of a governmental agency with regulatory authority.

(g) Service tag:

Attached Graphic

(h) Adhesive label type tags are permitted. The label must bear all information required by subsection (c) of this section.

History

Source Note: The provisions of this §34.520 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective May 10, 1996, 21 TexReg 3714; amended to be effective January 1, 1997, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.521 Red Tags

(a) If impairments exist that make a portable extinguisher or fixed system unsafe or inoperable, the owner or the owner's representative must be notified in writing of all impairments. The registered firm must notify the owner or the owner's representative immediately and must also notify the local authority having jurisdiction (AHJ) when available within 24 hours by phone, fax, or email describing the impairments or deficiencies. A copy of the written notice to the owner must be submitted to the AHJ within three business days. A completed red tag must be attached to indicate that corrective action or replacement is necessary. The signature of the licensee on the tag certifies that the impairments listed indicate that the equipment is unsafe or inoperable. A service tag must not be attached until the impairments have been corrected or the portable extinguisher or fixed system is replaced and the extinguisher or fire extinguisher system re-inspected and found to be in good operating condition. The local AHJ must be notified when corrections are made and a red tag is removed or revised. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the removal of the red tag.

(b) Red tags must be the same size as service tags.

(1) "DO NOT REMOVE--EQUIPMENT IMPAIRED" (all capital letters, at least 10-point boldface type);

(2) firm's name and address;

(3) firm's certificate-of-registration number;

(4) licensee's name and license number;

(5) licensee's signature (a stamped signature is prohibited);

(6) date;

(7) list of impairments; and

(8) name and address of owner or occupant.

(d) A red tag may be removed only by an authorized employee of a registered firm who has corrected the impairments and certified the service, an employee of the State Fire Marshal's Office, or an employee of another governmental agency with regulatory authority.

(e) Red tag:

Attached Graphic

History

Source Note: The provisions of this §34.521 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective May 10, 1996, 21 TexReg 3714; amended to be effective January 1, 1997, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 20, 2004, 29 TexReg 9006; amended to be effective April 1, 2006, 31 TexReg 1706; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.522 Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of this subchapter which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §34.522 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.523 Savings Clause

Each cause of action, pending litigation, matter in process before the commissioner or the state fire marshal, or matter hereafter arising from an event occurring prior to the time this subchapter becomes effective shall be determined in accordance with and governed by the provisions of statutes, sections, orders, or official interpretations in effect at the time of the occurrence of the subject event.

History

Source Note: The provisions of this §34.523 adopted to be effective April 14, 1989, 14 TexReg 1632; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective August 26, 2001, 26 TexReg 6105.

Subchapter F FIRE ALARM RULES

28 Tex. Admin. Code § 34.601 Purpose

The purpose of this subchapter is to administer through the state fire marshal the law set forth in the Insurance Code Chapter 6002 regarding inspecting, planning, certifying, leasing, selling, servicing, testing, installing, monitoring, and maintaining fire alarm or fire detection devices and systems in the interest of safeguarding lives and property.

History

Source Note: The provisions of this §34.601 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.602 Title

The sections of this subchapter shall be known as and may be cited as the Fire Alarm Rules.

History

Source Note: The provisions of this §34.602 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.603 Applicability of Sections

The sections of this subchapter shall apply to persons and organizations engaged in the business of inspecting, planning, certifying, leasing, selling, servicing, testing, installing, monitoring, and maintaining fire alarm or fire detection devices and systems, and not to the general public.

History

Source Note: The provisions of this §34.603 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.604 Exceptions

The exceptions of Insurance Code §6002.155 are applicable to the sections of this subchapter. Professionally exempt individuals or organizations are exempt from license requirements only and will be responsible for ensuring that planning and installation of fire detection or fire alarm devices are performed according to standards adopted in §34.607 of this chapter except when the planning and installation complies with a more recent edition of an adopted standard.

History

Source Note: The provisions of this §34.604 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.605 Notices

Notice by the state fire marshal, as required by the Insurance Code Chapter 6002 or of this subchapter, may be given by personal service or mail, postage prepaid, addressed to the person to be notified at the last known address of the person's residence or business as it appears on the records in the State Fire Marshal's Office.

History

Source Note: The provisions of this §34.605 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.606 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Approval--The document issued by the State Fire Marshal's Office to an individual or entity acknowledging that the individual or entity meets the requirements to perform the functions of an approved instructor or approved training school under this subchapter and the Insurance Code Chapter 6002.

(2) Business--Inspecting, planning, certifying, leasing, selling, servicing, testing, installing, monitoring, or maintaining of fire alarm or fire detection devices and systems.

(3) Certificate--The certificate of registration issued by the state fire marshal.

(4) Certify--To attest to the proper planning or servicing, installing, or maintaining of fire detection and fire alarm devices and systems, including monitoring equipment, by attaching a completed installation/service record label and completing an installation certificate form or other additional form required by a governmental authority.

(5) Commissioner--The commissioner of insurance.

(6) Department--The Texas Department of Insurance.

(7) Designated employee--An individual specified by a registered firm as a full-time employee and a licensee under this subchapter.

(8) Direct supervision--The control of work, excluding the installation of conduit, raceways, junction boxes, back boxes, or similar electrical enclosures, as it is being performed on fire detection or fire alarm devices and systems by a licensed fire alarm technician or a licensed fire alarm planning superintendent..

(9) Firm--An individual or an organization, as defined in the Insurance Code §6002.002.

(10) Full-time--The number of hours that represents the regular, normal, or standard amount of time per week each employee of the firm devotes to work-related activities.

(11) Full-time employment--An employee is considered to work on a full-time basis if the employee works per week at least the average number of hours worked per week by all other employees of the firm.

(12) Instructor--An individual approved under the Insurance Code Chapter 6002 and this subchapter to provide training in installing, servicing, inspecting, and certifying fire alarm or detection systems in single-family or two-family residences.

(13) Local authority having jurisdiction--A fire chief, fire marshal, or other designated official having statutory authority.

(14) Monitoring equipment--Equipment used to transmit and receive fire alarm, trouble, and supervisory signals from protected premises to a firm registered to monitor or one exempt from licensing by the Insurance Code Chapter 6002.

(15) NFPA--National Fire Protection Association, a nationally recognized standards-making organization.

(16) NICET--National Institute for Certification in Engineering Technologies.

(17) Outsource testing service--The testing service selected by the state fire marshal to administer certain designated qualifying tests for licenses under this subchapter.

(18) Plan--To lay out, detail, draw, calculate, devise, or arrange an assembly of fire alarm or detection devices, equipment, and appurtenances, including monitoring equipment, in accordance with standards adopted in this subchapter.

(19) Primary registered firm--The registered fire alarm company with the responsibility for the fire alarm system certification.

(20) Repair--To restore to proper operating condition.

(21) Test--The act of subjecting a fire detection or alarm device or system, including monitoring equipment, to any procedure required by applicable standards or manufacturers' recommendations to determine whether it is properly installed or operates correctly.

(22) Training school--An entity that is approved under the Insurance Code Chapter 6002 and this subchapter to provide approved training in installing, certifying, inspecting, and servicing fire alarm or detection systems in single-family or two-family residences by approved instructors for the purpose of meeting the training requirements of an applicant for a residential fire alarm technician license issued under the applicable statutes and this subchapter.

History

Source Note: The provisions of this §34.606 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; amended to be effective November 27, 1995, 20 TexReg 9449; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.607 Adopted Standards

(a) The Commissioner adopts by reference those sections of the following copyrighted minimum standards, recommendations, and appendices concerning fire alarm, fire detection, or supervisory services or systems, except to the extent they are at variance with sections of this subchapter, Insurance Code Chapter 6002, or other state statutes. The standards are published by and are available from the National Fire Protection Association Inc. (NFPA) on the NFPA website at www.nfpa.org.

(1) NFPA 11-2016, Standard for Low-, Medium-, and High-Expansion Foam.

(2) NFPA 12-2018, Standard on Carbon Dioxide Extinguishing Systems.

(3) NFPA 12A-2018, Standard on Halon 1301 Fire Extinguishing Systems.

(4) NFPA 13-2019, Standard for the Installation of Sprinkler Systems.

(5) NFPA 13D-2019, Standard for the Installation of Sprinkler Systems in One- and Two-Family Dwellings and Manufactured Homes.

(6) NFPA 13R-2019, Standard for the Installation of Sprinkler Systems in Low-Rise Residential Occupancies.

(7) NFPA 15-2017, Standard for Water Spray Fixed Systems for Fire Protection.

(8) NFPA 16-2019, Standard for the Installation of Foam-Water Sprinkler and Foam-Water Spray Systems.

(9) NFPA 17-2021, Standard for Dry Chemical Extinguishing Systems.

(10) NFPA 17A-2021, Standard for Wet Chemical Extinguishing Systems.

(11) NFPA 25-2020, Standard for the Inspection, Testing, and Maintenance of Water-Based Fire Protection Systems.

(12) NFPA 70-2020, National Electrical Code.

(13) NFPA 72-2019, National Fire Alarm Code.

(14) NFPA 90A-2021, Standard for the Installation of Air Conditioning and Ventilating Systems.

(15) NFPA 101-2021, Life Safety Code, or a local jurisdiction may adopt one set of the model codes listed in subsection (b) of this section instead of NFPA 101.

(16) UL 827 December 3, 2021, Standard for Central Station Alarm Services.

(17) NFPA 2001-2018, Standard on Clean Agent Fire Extinguisher Systems.

(b) The acceptable alternative model code sets are:

(1) the International Building Code®-2003 or later editions, and the International Fire Code-2003 or later editions; or

(2) the International Residential Code® for One- and Two-Family Dwellings-2003 or later editions.

History

Source Note: The provisions of this §34.607 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective September 29, 2003, 28 TexReg 8345; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effectiveSeptember 1, 2023, 48 TexReg 1724.

28 Tex. Admin. Code § 34.608 Approved Testing Laboratories

The commissioner approves an organization as an approved testing laboratory which lists equipment and appurtenances for use in compliance with standards adopted in §34.607 of this title (relating to Adopted Standards) if the organization meets the requirements of an approved testing laboratory in accordance with Subchapter D of this chapter (relating to Testing Laboratory Rules).

History

Source Note: The provisions of this §34.608 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212.

28 Tex. Admin. Code § 34.609 Approved Testing Organization

The commissioner approves the following testing organizations as a testing standards organization for testing license applicants:

(1) National Institute for Certification in Engineering Technologies (NICET); and

(2) Electronic Security Association (ESA).

History

Source Note: The provisions of this §34.609 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.610 Certificate of Registration

(a) Business location. A specific business location must be maintained by each registered firm. The location must be indicated on the certificate. The business location must be a physical address, not a mailing address or P.O. Box.

(b) Designated Employee. Each registered firm must specify one full-time employee holding a license under this subchapter as the firm's designated employee on its Fire Alarm Certificate of Registration Application, Form No. SF031, and on its Renewal Application for Fire Alarm Certificate of Registration, Form No. SF084. Any change in the designated employee under this section must be submitted in writing to the State Fire Marshal's Office within 14 days of the change occurrence. An individual may not serve as a designated employee for more than one registered firm.

(c) Business vehicles. All vehicles regularly used in installation, service, maintenance, testing, or certification activities must prominently display the company name, telephone number, and certificate number. The numbers and letters must be at least one inch high and permanently affixed or magnetically attached to each side of the vehicle in a color contrasting with the background color of the vehicle. The certificate of registration number must be designated in the following format: TX ACR-number.

(d) Change of ownership.

(1) The total change of a firm's ownership invalidates the current certificate. To ensure continuance of the business, a complete application for a new certificate must be submitted to the state fire marshal at least 14 days before the change.

(2) A partial change in a firm's ownership requires a revised certificate if it affects the firm's name, location, or mailing address.

(e) Change of corporate officers. Any change of corporate officers must be reported in writing to the state fire marshal within 14 days. This change does not require a revised certificate.

(f) Branch Office Initial Certificate of Registration Fees and Expiration Dates. The initial fee for a branch office certificate of registration is $150 and is not prorated. Branch office certificates of registration expire and renew on the same date as the certificate of registration for the registered firm's main office.

(g) Duplicate certificates. A duplicate certificate must be obtained from the state fire marshal to replace a lost or destroyed certificate. The certificate holder must submit written notification of the loss or destruction without delay, accompanied by the required fee.

(h) Revised certificates. The change of a firm's name, location, or mailing address requires a revised certificate. Within 14 days after the change requiring the revision, the certificate holder must submit written notification of the necessary change accompanied by the required fee.

(i) Initial Alignment of the Expiration and Renewal Dates of Existing Branches. For branch offices in existence as of the effective date of this rule, branch office certificates of registration must expire and renew on the same date as the certificate of registration issued to the main office for that firm. All fees associated with the initial alignment of expiration and renewal dates for the branch office certificate of registration must prorate accordingly.

History

Source Note: The provisions of this §34.610 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective August 29, 2019, 44 TexReg 4481.

28 Tex. Admin. Code § 34.611 Licenses and Approvals

(a) Types of licenses and approvals. The following licenses and approvals are issued by the State Fire Marshal's Office according to Insurance Code Chapter 6002 and this subchapter. As required by Insurance Code Chapter 6002, an individual or entity must be licensed or approved to lawfully perform the functions for which the license or approval is issued.

(1) Fire alarm technician license--For installing, inspecting, servicing, testing, maintaining, monitoring, and certifying fire alarm or fire detection devices and systems.

(2) Fire alarm monitoring technician license--For the monitoring of fire alarm or fire detection devices and systems.

(3) Instructor approval--For providing training at an approved training school in installing, certifying, inspecting, and servicing fire alarm or detection systems in single-family or two-family residences.

(4) Residential fire alarm superintendent single station license--For planning, installing, certifying, inspecting, testing, servicing, and maintaining single station smoke or heat detectors which are not a part of or connected to any other detection device or system in single-family or two-family residences.

(5) Residential fire alarm superintendent license--For planning, installing, certifying, inspecting, testing, servicing, monitoring, and maintaining fire alarm or fire detection devices and systems in single-family or two-family residences. A residential fire alarm superintendent may act as a fire alarm technician.

(6) Fire alarm planning superintendent license--For planning, installing, certifying, inspecting, testing, servicing, monitoring, and maintaining fire alarm or fire detection devices.

(7) Residential fire alarm technician license--For installing, certifying, inspecting, and servicing, but not planning, fire alarm or fire detection devices and systems in single-family or two-family residences.

(8) Training school approval--For conducting required training necessary for obtaining a residential fire alarm technician license.

(b) Proof of license and approval.

(1) A licensee must be able to show proof of licensure while engaged in the activities of the business.

(2) An instructor must carry the instructor's approval while providing training in an approved training school on the installing, certifying, inspecting, and servicing of fire alarm or detection systems in single-family or two-family residences.

(d) Licensee responsibilities relating to revised licenses. A change in the licensee's name, the licensee's mailing address, or a new or additional registered firm employing the licensee requires a revised license. Within 14 days after the change requiring the revision, the license holder must submit written notification of the necessary change accompanied by the required fee.

(e) Registered firms' responsibilities relating to licensees. A registered firm must submit notification of any licensee employment, termination, or resignation within 14 days of its occurrence.

(f) Restrictions on licensees and registered firms.

(1) A licensee must not engage in any act of the business unless employed by or as an agent of a registered firm and holding an unexpired license.

(2) Each person who engages in the activities of the business must have the appropriate license issued by the state fire marshal unless excepted from the licensing provisions by Insurance Code §6002.155.

(g) Restrictions on approval holders. Approvals are not transferable.

(h) Responsibilities relating to revised approvals. A change in an instructor's name or mailing address requires a revised approval. The change in the mailing address of a fire alarm training school requires a revised approval. Within 14 days after the change requiring the revision, the approval holder must submit written notification of the necessary change, accompanied by the required fee.

History

Source Note: The provisions of this §34.611 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective December 4, 1996, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective June 22, 2021, 46 TexReg 3734.

28 Tex. Admin. Code § 34.612 Alteration of Certificates, Licenses, or Approvals

The alteration of certificates, licenses, or approvals renders them invalid and is the basis for administrative action pursuant to the Insurance Code §6002.302.

History

Source Note: The provisions of this §34.612 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.613 Applications

(a) Approvals and certificates of registration.

(1) Applications for approvals, certificates, and branch office certificates must be submitted on the forms adopted by reference in §34.630 of this title (relating to Application and Renewal Forms) and be accompanied by all fees, documents, and information required by Insurance Code Chapter 6002, concerning Fire Detection and Alarm Device Installation, and this subchapter. An application will not be deemed complete until all required forms, fees, and documents have been received in the State Fire Marshal's Office.

(2) Applications must be signed by the sole proprietor, or by each partner of a partnership, or by an officer of a corporation. For applicants using an assumed name, the application must also be accompanied by evidence of compliance with the Assumed Business or Professional Name Act, Texas Business and Commerce Code Chapter 71. The application must also include written authorization by the applicant permitting the state fire marshal or the state fire marshal's representative to enter, examine, and inspect any premises, building, room, or establishment used by the applicant while engaged in the business to determine compliance with the provisions of Insurance Code Chapter 6002 and this subchapter.

(3) For corporations, the application must also include the name of each shareholder owning more than 25% of the shares issued by the corporation; the corporate taxpayer identification number; the charter number; a copy of the corporate charter of a Texas corporation or, in the case of a foreign corporation, a copy of the Texas certificate of authority to do business; and a copy of the corporation's current franchise tax certificate from the State Comptroller's Office showing it is in active status.

(4) A registered firm must employ at least one full-time licensed individual at each location of a main or branch office.

(5) Insurance is required as follows:

(A) The state fire marshal will not issue a certificate of registration under this subchapter unless the applicant files with the State Fire Marshal's Office evidence of an acceptable general liability insurance policy.

(B) Each registered firm must maintain in force and on file in the State Fire Marshal's Office a certificate of insurance identifying the insured and the exact nature of the business insured. In identifying the named insured, the certificate of insurance must include either an assumed name or the name of the corporation; partners, if any; or sole proprietor, if applicable.

(6) A firm billing a customer for monitoring is engaged in the business of monitoring and must comply with the insurance requirements of this subchapter for a monitoring firm.

(7) Applicants for a certificate of registration who engage in monitoring must provide the specific business locations where monitoring will take place and the name and license number of the fire alarm licensees at each business location. A fire alarm licensee may not serve in this capacity for a registered firm other than the firm applying for a certificate of registration. In addition, the applicants must provide evidence of listing or certification as a central station by a testing laboratory approved by the commissioner and a statement that the monitoring service complies with NFPA 72, as adopted in §34.607 of this title (relating to Adopted Standards).

(8) Applicants for a certificate of registration--single station must provide a statement, signed by the sole proprietor, a partner of a partnership, or by an officer of the corporation, indicating that the firm exclusively engages in the business of planning, certifying, leasing, selling, servicing, installing, monitoring, or maintaining single station devices.

(b) Fire alarm licenses.

(1) To be complete, applications for a license from an employee or agent of a registered firm must be submitted on forms provided by the state fire marshal and be accompanied by all fees, documents, a criminal history report from the Texas Department of Public Safety, and information required by Insurance Code Chapter 6002 and this subchapter. Applications must be signed by the applicant and by a person authorized to sign on behalf of the registered firm. All applicants for any type of license must successfully complete a qualifying test as required in Insurance Code Chapter 6002 and this subchapter as designated by the State Fire Marshal's Office. The qualifying test, given as part of the training for residential fire alarm technician license, must include questions regarding Insurance Code Chapter 6002 and this subchapter. For a natural person to be eligible for any fire alarm license, the natural person must start the application or registration process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/fire/fingerprinting-process.html. The requesting natural person must submit information necessary to complete the fingerprint service code request, including the natural person's name, natural person's state of residence, natural person's email address, and license type the natural person is applying for.

(2) Applicants for fire alarm technician licenses must:

(A) furnish notification from the National Institute for Certification in Engineering Technologies (NICET) or the Electronic Security Association (ESA), confirming the applicant's successful completion of the test requirements in work elements pertaining to fire alarm systems, as determined by the state fire marshal; or

(B) successfully complete a technical qualifying test as designated by the State Fire Marshal's Office.

(3) Applicants for a fire alarm monitoring technician license must successfully complete a technical qualifying test as designated by the State Fire Marshal's Office, or provide evidence of current registration in Texas as a registered engineer.

(4) Applicants for a residential fire alarm superintendent (single station) license must successfully complete a technical qualifying test as designated by the State Fire Marshal's Office.

(5) Applicants for a residential fire alarm superintendent license must:

(A) furnish notification from NICET or ESA confirming the applicant's successful completion of the test requirements in work elements pertaining to fire alarm systems, as determined by the state fire marshal; or

(B) successfully complete a technical qualifying test as designated by the State Fire Marshal's Office.

(6) Applications for a fire alarm planning superintendent license must be accompanied by one of the following documents as evidence of technical qualifications for a license:

(A) proof of registration in Texas as a professional engineer; or

(B) a copy of NICET's or ESA's notification letter confirming the applicant's successful completion of the test requirements for NICET or ESA certification at Level III for fire alarm systems.

(7) An applicant for a residential fire alarm technician license must provide evidence of the applicant's successful completion of the required residential fire alarm technician training course from a training school approved by the State Fire Marshal's Office.

(1) Instructor approvals. An applicant for approval as an instructor must:

(A) hold a current fire alarm planning superintendent license, residential fire alarm superintendent license, or fire alarm technician license issued by the State Fire Marshal's Office;

(B) submit a completed Instructor Approval Application, Form No. SF247, signed by the applicant, that is accompanied by all fees; and

(C) furnish written documentation of a minimum of three years of experience in fire alarm installation, service, or monitoring of fire alarm systems unless the applicant has held a fire alarm planning superintendent license, residential fire alarm superintendent license, or fire alarm technician license for three or more years.

(2) Training school approvals.

(A) An applicant for approval of a training school must submit a completed Training School Approval Application, Form No. SF 246, to the State Fire Marshal's Office. To be complete, the application must be:

(i) signed by the applicant, the sole proprietor, by each partner of a partnership, or by an officer of a corporation or organization as applicable;

(ii) accompanied by a detailed outline of the proposed subjects to be taught at the training school and the number and location of all training courses to be held within one year following approval of the application; and

(iii) accompanied by all required fees.

(B) After review of the application for approval for a training school, the state fire marshal will approve or deny the application within 60 days following receipt of the materials. A letter of denial will state the specific reasons for the denial. An applicant that is denied approval may reapply at any time by submitting a completed application that includes the changes necessary to address the specific reasons for denial.

(d) Renewal applications.

(1) In order to be complete, renewal applications for certificates, licenses, instructor approvals, and training school approvals must be submitted on the forms adopted by reference in §34.630 of this title and be accompanied by all fees, documents, a criminal history report from the Texas Department of Public Safety, and information required by Insurance Code Chapter 6002 and this subchapter. A complete renewal application deposited with the United States Postal Service is deemed to be timely filed, regardless of actual date of delivery, when its envelope bears a postmark date that is before the expiration of the certificate or license being renewed.

(2) A licensee with an unexpired license who is not employed by a registered firm at the time of the licensee's renewal may renew that license, but the licensee may not engage in any activity for which the license was granted until the licensee is employed and qualified by a registered firm.

(e) Complete applications. The application form for a license, registration, instructor approval, and training school approval must be accompanied by the required fee and must, within 180 days of receipt by the State Fire Marshal's Office of the initial application, be complete and accompanied by all other information required by Insurance Code Chapter 6002 and this subchapter, or a new application must be submitted including all applicable fees.

History

Source Note: The provisions of this §34.613 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; amended to be effective August 26, 1996, 21 TexReg 7663; amended to be effective December 4, 1996, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014,39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 16, 2023, 48 TexReg 1839.

28 Tex. Admin. Code § 34.614 Fees

(a) Except for fees specified in subsection (c) of this section, all fees payable must be submitted by cashier's check or money order made payable to the Texas Department of Insurance or by online payment. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable.

(b) Fees for tests administered by an outsource testing service are payable to the testing service in the amount and manner required by the testing service.

(1) Certificates of registration:

(A) initial fee--$500;

(B) renewal fee (for two years, subject to the exceptions specified in §34.610(i) of this subchapter (relating to Certificate of Registration) for the initial alignment of the expiration and renewal dates of existing branches)--$1,000;

(C) renewal late fee (expired 1 day to 90 days)--$125 plus $37.50 for each branch office operated by the registered firm;

(D) renewal late fee (expired 91 days to two years)--$500 plus $150 for each branch office operated by the registered firm;

(E) branch office initial fee--$150;

(F) branch office renewal fee (for two years)--$300;

(2) Certificates of registration--Single Station:

(A) initial fee--$250;

(B) renewal fee (for two years)--$500;

(D) renewal late fee (expired 91 days to two years)--$250;

(E) branch office initial fee--None;

(F) branch office renewal fee (for two years)--None;

(3) Fire alarm licenses (fire alarm technician license, fire alarm monitoring technician license, residential fire alarm superintendent (single station) license; residential fire alarm superintendent license, fire alarm planning superintendent license):

(A) initial fee--$120;

(B) renewal fee (for two years)--$200;

(D) renewal late fee (expired 91 days to two years)--$120;

(4) Residential fire alarm technician licenses:

(A) initial fee (for one year)--$50;

(B) renewal fee (for two years)--$100;

(D) renewal late fee (expired 91 days to two years)--$50;

(5) Training school approval:

(A) initial fee (for one year)--$500;

(B) renewal fee (for one year)--$500;

(6) Instructor approval:

(A) initial fee (for one year)--$50;

(B) renewal fee (for one year)--$50;

(7) Change of address request--$0;

(8) Duplicate or revised certificates, approvals, or licenses, or other requested changes to certificates, approvals, or licenses--$20;

(9) Initial test fee (if administered by the State Fire Marshal's Office)--$20;

(10) Retest fee (if administered by the State Fire Marshal's Office)--$20.

(d) All fees are forfeited if the applicant does not appear for the scheduled test.

(e) Late fees are required of all certificate or license holders who fail to submit complete renewal applications before the expiration of the certificate or license except as provided in the Insurance Code §6002.203(g).

(f) Fees for certificates and licenses that have expired for less than two years include both renewal and late fees.

History

Source Note: The provisions of this §34.614 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; amended to be effective December 4, 1996, 21 TexReg 11521; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 9, 2025, 50 TexReg 2299.

28 Tex. Admin. Code § 34.615 Test

(a) Each applicant for a license must pass the appropriate tests. Tests may be supplemented by practical tests or demonstrations necessary to determine the applicant's knowledge and ability.

(1) The license test will include a section on this subchapter, Insurance Code Chapter 6002, and a technical qualifying test to be conducted by:

(A) the State Fire Marshal's Office;

(B) NICET (National Institute for Certification in Engineering Technologies);

(D) an outsource testing service.

(2) The standards used in tests will be those adopted in §34.607 of this title (relating to Adopted Standards).

(b) Examinees who fail the test must file a retest application accompanied by the required fee in order to be retested on the next scheduled test date.

(c) A person whose license has been expired for two years or longer who makes application for a new license must take and pass another test. No test is required for a licensee whose license is renewed within two years of expiration.

(d) An applicant may only schedule each type of test three times within a 12-month period.

(e) An applicant for a license must complete and submit all application requirements within one year of the successful completion of any test required for a license; otherwise the test is voided and the individual will have to pass the test again.

History

Source Note: The provisions of this §34.615 adopted to be effective June 4, 1993, 18 TexReg 3297; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 14, 1999, 24 TexReg 5212; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.616 Sales, Installation, and Service

(a) Residential alarm (single station).

(1) Registered firms may employ persons exempt from the licensing provisions of Insurance Code §6002.155(10) to sell, install, and service residential, single station alarms. Exempted persons must be under the supervision of a residential fire alarm superintendent (single station), residential fire alarm superintendent, or fire alarm planning superintendent.

(2) Each registered firm that employs persons exempt from licensing provisions of Insurance Code §6002.155(10) is required to maintain documentation to include lesson plans and annual test results demonstrating competency of those employees regarding the provisions of Insurance Code Chapter 6002, adopted standards, and this subchapter applicable to single station devices.

(b) Fire detection and fire alarm devices or systems other than residential single station.

(1) The installation of all fire detection and fire alarm devices or systems, including monitoring equipment subject to Insurance Code Chapter 6002, must be performed by or under the direct on-site supervision of a licensed fire alarm technician, residential fire alarm technician, residential fire alarm superintendent, or a fire alarm planning superintendent for the work permitted by the license. The licensee responsible for the planning of all fire detection and fire alarm devices or systems, including monitoring equipment subject to Insurance Code Chapter 6002, must be licensed under the Alarm Certificate of Registration (ACR) number of the registered firm responsible for the planning. The certifying licensee, who is licensed under the ACR number of the registered firm responsible for the installation, must be present for the final acceptance test prior to certification. The registered firm responsible for the planning of the fire devices or system can be different from the firm responsible for the installation.

(2) The maintenance or servicing of all fire detection and fire alarm devices or systems must be performed by or under the direct on-site supervision of a licensed fire alarm technician, residential fire alarm technician, residential fire alarm superintendent, or a fire alarm planning superintendent for the work permitted by the license. The licensee attaching a label must be licensed under the ACR number of the primary registered firm.

(3) If the installation or servicing of a fire alarm system also includes installation or servicing of any part of a fire protection sprinkler system or a fire extinguisher system, the licensing requirements of Insurance Code Chapters 6001 and 6003 must be satisfied, as appropriate.

(4) The planning, installation, and servicing of fire detection or fire alarm devices or systems, including monitoring equipment, must be performed according to standards adopted in §34.607 of this title (relating to Adopted Standards) except when the planning and installation complies with an edition of the standard that has been previously adopted by the political subdivision in which the system is installed.

(5) Fire alarm system equipment replaced in the same location with the same or similar electrical and functional characteristics and listed to be compatible with the existing equipment, as determined by a fire alarm planning superintendent, may be considered a repair. The equipment replaced must comply with the currently adopted standards, but the entire system is not automatically required to be modified to meet the applicable adopted code. The local authority having jurisdiction (AHJ) must be consulted to determine whether to update the entire system to comply with the current code and if plans or a permit is required prior to making the repair.

(6) On request of the owner of the fire alarm system, a registered firm must provide all passwords, including those for the site-specific software, but the registered firm may refrain from providing that information until the system owner signs a liability waiver provided by the registered firm.

(1) A registered firm may not monitor a fire alarm system located in the State of Texas for an unregistered firm.

(2) A registered firm may not connect a fire alarm system to a monitoring service unless:

(A) the monitoring service is registered under Insurance Code Chapter 6002 or is exempt from the licensing requirements of that chapter; and

(B) the monitoring equipment being used is in compliance with Insurance Code §6002.251.

(3) A registered firm must employ at least one technician licensee at each central station location. Each dispatcher at the central station is not required to be a fire alarm technician licensee.

(4) A registered firm subcontracting monitoring services to another registered firm must advise the monitoring services subscriber of the identity and location of the registered firm actually providing the services unless the registered firm's contract with the subscriber contains a clause giving the registered firm the right, at the registered firm's sole discretion, to subcontract any or all of the work or service.

(5) A registered monitoring firm reporting an alarm or supervisory signal to a municipal or county emergency services center must provide, at a minimum, the type of alarm, address of alarm, name of subscriber, dispatcher's identification, and call-back phone number. If requested, the firm must also provide the name, registration number, and call-back phone number of the firm contracted with the subscriber to provide monitoring service if other than the monitoring station.

(6) If the monitoring service provided under this subchapter is discontinued before the end of the contract with the subscriber, the monitoring firm, central station, or service provider must notify the owner or owner's representative of the monitored property and the local AHJ a minimum of seven days before terminating the monitoring service. If the monitored property is a one- or two-family dwelling, notification of the local AHJ is not required.

(d) Record keeping. The firm must keep complete records of all service, maintenance, and testing on the system for a minimum of two years. The records must be available for examination by the state fire marshal or the state fire marshal's representative.

History

Source Note: The provisions of this §34.616 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 28, 2021, 46 TexReg 2826.

28 Tex. Admin. Code § 34.617 Certification

After completion of the installation, modification, or addition of a system or single station detector unit, except for a one-or-two-family residence, the licensee shall complete an installation certificate in the format provided by the state fire marshal in lieu of the installation form required by the adopted standard unless required otherwise by the local authority having jurisdiction. The format for the installation certificate shall be provided by the SFMO on request. The certificate shall be presented to the owner or the owner's representative or posted near the main control panel. The installation certificate shall identify the standards applicable to the installation and certify compliance with such standards, unless variance is permitted in §34.616(b)(4) of this title (relating to Sales, Installation, and Service), in which event the specific variance and authority for such variance shall be identified. The information and format of the installation certificate shall be determined by the state fire marshal. When an installation certificate form has been completed, legible copies shall be distributed as follows:

(1) original at the site of installation after completion of the installation;

(2) one copy retained for the life of the system or ten years, whichever occurs first, by the certifying company for access by the State Fire Marshal's Office; and

(3) one copy to be sent within 10 days after completion of installation to the local authority having jurisdiction.

History

Source Note: The provisions of this §34.617 adopted to be effective April 14, 1989, 14 TexReg 1639; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3297; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1711.

28 Tex. Admin. Code § 34.618 Installation Inspections

The following inspections shall be performed by the licensed firm in order to assure proper installation techniques are followed:

(1) At the completion of the device back-box installation but prior to the start of cable installation;

(2) At the completion of cable installation but prior to the start of device installation; and

(3) At the completion of device installation but prior to activating the fire alarm system. The above-referenced inspections shall be performed by a licensed fire alarm technician or planner and be documented on the inspection form. The registered firm shall notify the authority having jurisdiction if initiation of corrective action does not take place within ten calendar days. The completed form shall be kept on file at the licensed firm's office for a period of five years from the date of system certification. (See the following Fire Alarm System Installation Inspection Form.)

Attached Graphic

History

Source Note: The provisions of this §34.618 adopted to be effective February 27, 1995, 20 TexReg 1021; amended to be effective November 27, 1995, 20 TexReg 9449; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.619 Fire Alarm and Detection System Plans and Record Drawings

(a) Each fire alarm system or modification to an existing system must be planned by a person holding a fire alarm planning superintendent license or a residential fire alarm superintendent license, as applicable, or a Texas registered professional engineer.

(b) Except for plans sealed by a Texas registered engineer or where specifically waived by the local authority having jurisdiction, at least one set of plans submitted for review, rating, permit, or record purposes must be dated and signed with an original signature, unless waived by the local authority having jurisdiction, by the applicable licensed planner, certifying that the plans meet the applicable codes and standards or were copied from sealed engineering plans with any violations of the applicable codes and standards noted. In addition, the plans must contain the license number of the licensee, the name, address, phone number, and the certificate of registration number of the registered firm. This information may be in the form of a stamp as shown in subsection (d) of this section.

(c) Record drawings showing details, in accordance with applicable codes and standards, including the sequence of operation, must be provided to the building owner or his representative and shall comply with the requirements of subsection (b) of this section. Subsequent modifications, additions, or alterations must be legibly noted on the record drawings and provided to the owner or his representative.

(d) Plan review and record drawings stamp:

Attached Graphic

(e) Fire alarm plans, manuals, and documents shall not be stored inside fire alarm panels.

(f) Scale or non-scale drawings for one-or-two-family residences, showing locations of fire detection devices, fire alarm notification devices and the fire alarm system control panel shall be maintained by the installing registered firm for a period of not less than one year after completion of the installation, and shall contain the registered firm's name, phone number, date the installation was completed, certificate of registration number, name and signature of the licensed fire alarm planning superintendent, residential fire alarm superintendent or Texas registered professional engineer. Electronically archived drawings that are reproducible are acceptable. Drawings shall be made available to the residential property owner and local authority having jurisdiction upon request.

History

Source Note: The provisions of this §34.619 adopted to be effective February 27, 1995, 20 TexReg 1021; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1711; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.620 Installation Labels

(a) After the completion of an installation of new fire alarm equipment or a new system, or the extension, alteration, or modification to a fire alarm system already in place, an installation label must be affixed to the inside of the control panel cover or, if the system has no panel, in a permanent location. Yellow or red labels must not be attached for the installation of a new system or new equipment used in the extension, alteration, or modification to an existing fire alarm system.

(b) Installation labels must be white with black lettering.

(c) Installation labels must be approximately three inches in height and approximately three inches in width and must have an adhesive on the back.

(d) Installation labels must contain the following information in the format of the label as indicated in subsection (e) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters in at least 10-point bold face type);

(2) "INSTALLATION RECORD" (all capital letters in at least 10-point bold face type);

(3) the registered firm's name, address, and telephone number and the certificate of registration number (either main office or branch office) of the firm performing the installation;

(4) the installation date, the licensee's signature (a stamped signature is prohibited), and license number; and

(5) the name and license number of the fire alarm planning superintendent or residential fire alarm planning superintendent (as applicable) or professional engineer's name and license number who planned the system.

(e) Installation label:

Attached Graphic

History

Source Note: The provisions of this §34.620 adopted to be effective April 1, 2006, 31 TexReg 1711; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.621 Service Labels

(a) After any service, a fire alarm service label must be completed in detail and affixed to the inside or outside of the control panel cover or, if the system has no panel, in a permanent location. The signature of the licensee on the service label certifies that the service performed complies with requirements of law.

(b) If the service performed corrects all conditions noted on a yellow label or red label, the color and date of the label shall be marked on the service label and the respective yellow or red label removed.

(c) If during any service it is observed that the system does not comply with applicable standards adopted at the time the system was installed, has a fault condition, or is impaired from normal operation, the owner or the owner's representative and the local authority having jurisdiction must be notified of the condition and the licensee must attach, in addition to the service label, the appropriate yellow or red label, following the procedures in this section.

(d) Service labels shall remain in place for at least two years, after which time they may be removed by a licensed employee or agent of a registered firm. An employee of the State Fire Marshal's Office or an authorized representative of a governmental agency with appropriate regulatory authority may remove excess labels at any time.

(e) The service label must be white in color with printed black lettering.

(f) The service label must be approximately three inches in height and three inches in width and must have an adhesive on the back that allows for label removal.

(g) Approximately 1/2 inch of the adhesive on the top back of the label should be used to attach the label over the previous service label to permit viewing of the previous label and the maintaining of a brief history.

(h) Service labels must contain the following information in the format of the service label as set forth in subsection (i) of this section:

(1) DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL (all capital letters in at least 10-point bold face type);

(2) SERVICE RECORD (all capital letters in at least 10-point bold face type);

(3) the registered firm's name, address, telephone number (either main office or branch office) and certificate of registration number of the firm performing the service;

(4) the date of service performed, the licensee's signature (a stamped signature is prohibited) and license number;

(5) a list of services performed; and

(6) the type of service performed, either general service or the correction of conditions that resulted in a red label or yellow label.

(i) Service label:

Attached Graphic

History

Source Note: The provisions of this §34.621 adopted to be effective April 1, 2006, 31 TexReg 1711.

28 Tex. Admin. Code § 34.622 Inspection/Test Labels

(a) After the inspection and testing of a fire alarm system, a fire alarm inspection/test label must be completed in detail and affixed to either the inside or outside of the control panel cover or, if the system has no panel, in a permanent location. The signature of the licensee on the inspection/test label certifies that the inspection and tests performed comply with requirements of the adopted standards.

(b) If any service or maintenance is performed under the inspection or test, a service label, in addition to the inspection/test label, must be completed and attached according to the procedures in this section.

(c) For new installation, an inspection/test label may only be applied after the system has been accepted by the local AHJ.

(d) If, during any inspection or test, the system does not comply with applicable standards adopted at the time the system was installed, has a fault condition, or is impaired from normal operation, the owner or the owner's representative and the local AHJ must be notified of the condition and the licensee must attach, in addition to the inspection/test label, the appropriate yellow or red label, in accordance with the procedures in this section.

(e) The local AHJ must be notified when the fault or impairment has been corrected.

(f) Inspection/test labels must remain in place for at least five years, after which they may be removed by a licensed employee or agent of a registered firm. An employee of the State Fire Marshal's Office or an authorized representative of a governmental agency with appropriate regulatory authority may remove excess labels at any time.

(g) The inspection/test label must be blue with printed black lettering.

(h) The inspection/test label must be approximately three inches high and three inches wide, and must have an adhesive on the back that allows for label removal.

(i) Approximately a half-inch of the adhesive on the top back of the label should be used to attach the label over the previous inspection/test label to permit viewing of the previous label and the maintaining of a brief history.

(j) Inspection/test labels must contain the following information in the format of the inspection/test label, as set forth in subsection (k) of this section:

(1) DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL (all capital letters in at least 10-point bold face type);

(2) INSPECTION/TEST RECORD (all capital letters in at least 10-point bold face type);

(3) the registered firm's name, address, telephone number (either main office or branch office) and certificate of registration number of the firm performing the inspection/test;

(4) the date of the inspection performed, the licensee's signature (a stamped signature is prohibited) and license number;

(5) the type of inspection/test performed to be marked, new installation, semi-annual, quarterly or annual;

(6) the last date of sensitivity test, if known; and

(7) the status after the inspection/test if acceptable or if yellow label attached, or if red label attached.

(k) Inspection/test label:

Attached Graphic

History

Source Note: The provisions of this §34.622 adopted to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.623 Yellow Labels

(a) If, after any service, inspection, or test, a system does not comply with applicable codes and adopted standards or is not being tested or maintained according to those standards, a completed yellow label must be attached to the outside of the control panel cover or, if the system has no panel, in a permanent location to indicate that corrective action is necessary.

(b) The signature of the licensee on a yellow label certifies that the conditions listed on the label cause the system to be out of compliance with applicable codes and standards.

(c) After attaching a yellow label, the licensee or the registered firm must notify the property owner, occupant or their representative, and the local AHJ in writing indicating the conditions with which the system does not comply with the applicable codes and standards. The notification must be postmarked, emailed, faxed or hand delivered within five business days of the attachment of the yellow label.

(d) Yellow labels must remain in place until the conditions are corrected and a service label is attached certifying that the corrections were made. The yellow label may be removed by a licensed employee or agent of a registered firm, an employee of the State Fire Marshal's Office, or an authorized representative of a governmental agency with appropriate regulatory authority. The local AHJ must be notified when corrections are made and a yellow label is removed or revised. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the removal of the yellow label.

(e) Yellow labels must be approximately three inches high and three inches wide and must have an adhesive on the back that allows for label removal.

(f) Labels must be yellow with printed black lettering.

(g) Yellow labels must bear the following information in the format of the label, as set forth in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters in at least 10-point bold face type);

(2) "SYSTEM DOES NOT COMPLY WITH APPLICABLE CODES & STANDARDS" (all capital letters in at least 10-point bold face type);

(3) the registered firm's name, address, telephone number (either main office or branch office) and certificate of registration number of the firm attaching the yellow label;

(4) the date the label was attached, the licensee's signature (a stamped signature is prohibited) and license number; and

(5) a list of conditions resulting in the yellow label;

(h) Yellow label:

Attached Graphic

History

Source Note: The provisions of this §34.623 adopted to be effective April 1, 2006, 31 TexReg 1711; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.624 Red Labels

(a) If, after any service, inspection or test, a system or any part thereof is inoperable, has a fault condition, or is impaired from normal operation, excluding the area(s) of a building under construction, a completed red label must be attached to the outside of the control panel cover or, if the system has no panel, in a permanent location, to indicate that corrective action is necessary.

(b) The signature of the licensee on a red label certifies that the conditions listed on the label have caused the system to be inoperable, have a fault condition, or be impaired from normal operation.

(c) If the system is inoperable, immediately after attaching a red label the licensee or the registered firm must orally notify the property owner, occupant or their representative, and the local AHJ, where available, of all impairments and provide a written notification, emailed, faxed or hand delivered within the next business day of the attachment of the red label. If the system has a fault condition or is impaired from normal operation, after attaching a red label, the licensee or the registered firm must notify the property owner, occupant or their representative, and the local AHJ in writing indicating the condition(s). The written notification must be postmarked, emailed, faxed or hand delivered within three business days of the attachment of the red label.

(d) Red labels must remain in place until the conditions are corrected and a service label is attached certifying that the corrections were made. The red label may be removed by a licensed employee or agent of a registered firm, an employee of the State Fire Marshal's Office, or an authorized representative of a governmental agency with appropriate regulatory authority. The local AHJ must be notified when corrections are made and a red label is removed or revised. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the removal of the red label.

(e) Red labels must be approximately three inches high and three inches wide and must have an adhesive on the back that allows for label removal.

(f) Labels must be red with printed black lettering.

(g) Red labels must bear the following information in the format of the label as shown in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all in capital letters, at least 10-point bold face type);

(2) status of the system to be marked, inoperable or impaired or fault;

(3) the registered firm's name, address, telephone number (either main office or branch office) and certificate of registration number of the firm attaching the red label;

(4) the date the label was attached, the licensee's signature (a stamped signature is prohibited) and license number; and

(5) a list of conditions resulting in the red label;

(h) Red label:

Attached Graphic

History

Source Note: The provisions of this §34.624 adopted to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.625 Enforcement

(a) The state fire marshal, or the state fire marshal's representative, may conduct investigations of registered firms to determine compliance with the Insurance Code Chapter 6002 and this subchapter. An investigation may be initiated on the written complaint of any party or by the department on its own motion.

(b) When an investigation reveals noncompliance, the firm and any licensee responsible for the work shall be notified in writing of the noncompliance upon completion of the investigation report.

(c) The failure to comply with the provisions of this subchapter and the provisions of Insurance Code Chapter 6002 by certificate holders or licensees may subject them, as provided in the Government Code §417.010, to administrative action including, but not limited to, suspension, revocation, or refusal to issue or renew a license or a certificate of registration or issuance of a cease and desist order and/or administrative penalty and/or order for restitution to persons harmed.

History

Source Note: The provisions of this §34.625 adopted to be effective April 1, 2006, 31 TexReg 1711; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.626 Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of this subchapter which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §34.626 adopted to be effective April 1, 2006, 31 TexReg 1711.

28 Tex. Admin. Code § 34.627 Requirements for Instructors and Training Schools

(a) An instructor must comply with the following requirements:

(1) All training provided by an instructor must be conducted through an approved training school.

(2) The instructor must teach the subjects in the outline of the training course submitted by the training school and approved by the State Fire Marshal's Office.

(b) A training school must comply with the following requirements:

(1) The training school must only use instructors who hold an approval issued by the State Fire Marshal's Office to provide the training in installing, certifying, inspecting, and servicing fire alarm or detection systems in single-family or two-family residences.

(2) The entity responsible for the training school must obtain approval of the outline of each residential fire alarm technician training course from the State Fire Marshal's Office before conducting a class.

(3) The entity responsible for the training school may not be a firm registered through the State Fire Marshal's Office or an affiliate of a registered firm.

(4) A training school may not provide training for a residential fire alarm technician license without being approved by the State Fire Marshal. Training school approvals are not transferable and apply only to the entity specified as the responsible entity on the completed Training School Approval Application, Form No. SF246. The training school may not change the entity responsible for the training school without first applying for and receiving a new approval.

(5) The training school must conduct two or more classes, open to the public, within 125 miles of each county in the state that has a population in excess of 500,000 people according to the last decennial census, within each calendar year from the date the approval is issued.

(c) Any individual or entity that provides general training or instruction relating to fire alarm or detection systems not specific to fulfill a requirement to obtain a license is not required to have an approval.

History

Source Note: The provisions of this §34.627 adopted to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.628 Requirements for Residential Fire Alarm Technician Training Course

The training curriculum for a residential fire alarm technician training course must consist of at least seven hours of instruction on installing, servicing, and maintaining single-family and two-family residential fire alarm systems as defined by National Fire Protection Association Standard No. 72. The training curriculum for a residential fire alarm technician training course must include the following minimum instruction time for the following subjects:

(1) one hour of instruction on Insurance Code Chapter 6002 and the Fire Alarm Rules;

(2) one hour of instruction on the National Electric Code, NFPA 70;

(3) four and one-half hours of total combined instruction on:

(A) NFPA 72;

(B) NFPA 101, the Life Safety Code; and

(4) one-half hour of instruction on the monitoring of household fire alarm systems.

History

Source Note: The provisions of this §34.628 adopted to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.630 Application and Renewal Forms

(a) The commissioner adopts by reference the License Application for Individuals For All Types of Fire Alarm Licenses, Form Number SF032, which contains instructions for completion of the form and requires information to be provided regarding the applicant and the applicant's employer.

(b) The commissioner adopts by reference the Renewal Application For Fire Alarm Individual License, Form Number SF094, which contains instructions for completion of the form; information regarding late fees; and requires information to be provided regarding the renewing applicant.

(c) The commissioner adopts by reference the Instructor Approval Application, Form Number SF247, which contains instructions for completion of the form and requires information to be provided regarding the applicant.

(d) The commissioner adopts by reference the Renewal Application For Instructor Approval, Form Number SF255, which contains instructions for completion of the form and requires information to be provided regarding the applicant.

(e) The commissioner adopts by reference the Training School Approval Application, Form Number SF246, which contains instructions for completion of the form, provides information regarding necessary filing documents pursuant to business entity type, and requires information to be provided regarding the applicant and course location and schedule.

(f) The commissioner adopts by reference the Renewal Application for Training School Approval form, which contains instructions for completion of the form, provides information regarding necessary filing documents by business entity type, and requires the training entity applicant to provide information regarding the applicant, course location, and schedule.

(g) The commissioner adopts by reference the Fire Alarm Certificate of Registration Application, Form Number SF031, which contains instructions for completion of the form, provides information regarding necessary filing documents by business entity type, and requires information to be provided regarding the applicant.

(h) The commissioner adopts by reference the Renewal Application For Fire Alarm Certificate of Registration, Form Number SF084, which contains instructions for completion of the form and requires information to be provided regarding the applicant.

(i) The forms adopted by reference in this section are available at the department's website at www.tdi.texas.gov.

History

Source Note: The provisions of this §34.630 adopted to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761.

Subchapter G FIRE SPRINKLER RULES

28 Tex. Admin. Code § 34.701 Purpose

The purpose of this subchapter is to regulate persons engaged in the business of planning, selling, installing, maintaining, or servicing fire protection sprinkler systems in the interest of safeguarding lives and property pursuant to Insurance Code Chapter 6003.

History

Source Note: The provisions of this §34.701 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.702 Title

The sections of this subchapter shall be known and may be cited as the sprinkler rules and shall be administered by and through the state fire marshal.

History

Source Note: The provisions of this §34.702 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.703 Applicability of Subchapter

This subchapter shall apply to all firms and persons engaged in the business of planning, selling, installing, maintaining, or servicing fire protection sprinkler systems, and not to the general public.

History

Source Note: The provisions of this §34.703 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.704 Exceptions

The exceptions of Insurance Code §6003.002 are applicable to the sections of this subchapter.

History

Source Note: The provisions of this §34.704 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.705 Notices

Notice by the state fire marshal as required by any provision of statute or of this subchapter may be given by personal service or mail, postage prepaid, addressed to the person to be notified at his last known address of residence or business as it appears on the records in the Office of the State Fire Marshal.

History

Source Note: The provisions of this §34.705 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.706 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Business--Planning, selling, installing, maintaining, or servicing fire protection sprinkler systems.

(2) Certificate--The certificate of registration issued by the state fire marshal.

(3) Certify--To attest to the proper planning, installing, maintaining, or servicing of fire protection sprinkler systems by executing a contractor's material and test certificate or other form required by a governmental authority or by attaching a completed service tag.

(4) Department--The Texas Department of Insurance.

(5) Emergency impairment--A condition where a water-based fire protection system or portion thereof is out of order due to an unexpected occurrence, such as ruptured pipe, an operated sprinkler, or an interruption of the water supply to the system.

(6) Employee--An individual that who performs tasks assigned by the employer. The employee's pay is subject to the deduction of social security and federal income tax. The employee may be full time, part time, or seasonal. For the purposes of this section, employees of a registered firm who are paid through a staff leasing company are considered to be employees of the registered firm.

(7) Firm--A person or organization as defined in this section.

(8) Full-time--The number of hours that represents the regular, normal, or standard amount of time per week each employee of the firm devotes to work-related activities.

(9) Full-time employment basis--An employee is considered to work on a full-time basis if the employee works per week at least the average number of hours worked per week by all other employees of the firm.

(10) Inspection--A visual examination of a system or portion thereof to verify that it appears to be in operating condition and is free of physical damage.

(11) Inspection, testing, and maintenance service--A service program provided by a qualified contractor in which all components unique to the property's systems are inspected and tested at the required times and necessary maintenance is provided and/or recommended. This program includes logging and retention of relevant records.

(12) NFPA--National Fire Protection Association, a nationally recognized standards-making organization.

(13) NICET--National Institute for the Certification in Engineering Technologies.

(14) Organization--A corporation, partnership or other business association, or governmental entity.

(15) Outsource testing service--The testing service selected by the state fire marshal to administer certain designated qualifying tests for licenses under this subchapter.

(16) Person--A natural person.

(17) Plan--To lay out, detail, draw, calculate, devise, or arrange an assembly of underground and overhead piping and appurtenances in accordance with either adopted fire protection standards or specifications especially designed by an engineer.

(18) Registered firm--A person or organization holding a current certificate of registration.

(19) Repair--Any work performed after initial installation on fire protection sprinkler systems, not including inspecting or testing.

(20) Responsible managing employee--A responsible managing employee, as defined in Insurance Code §6003.001(10), and also referenced within this subchapter as an RME.

(21) Sprinkler system--A sprinkler system, for fire protection purposes which:

(A) is an integrated system of underground and overhead piping designed in accordance with fire protection engineering standards;

(B) is an installation including a water supply such as a gravity tank, fire pump, reservoir, or pressure tank, or connection by underground piping to a city main from the point of connection or valve where the primary purpose of the water is for a fire protection sprinkler system;

(C) includes, as the portion of the sprinkler system aboveground, a network of specially sized or hydraulically designed piping installed in a building, structure, or area, generally overhead, and to which sprinklers are connected in a systematic pattern;

(D) includes a controlling valve and a device for actuating an alarm when the system is in operation; and

(E) is usually activated by heat from a fire and discharges water over the fire area.

(22) Testing--A procedure used to determine the status of a system as intended by conducting periodic physical checks on water-based fire protection systems such as water-flow tests, fire pump tests, alarm tests, and trip tests of dry pipe, deluge, or preaction valves. These tests follow up on the original acceptance test at intervals specified in the applicable adopted standard.

History

Source Note: The provisions of this §34.706 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective October 17, 1986, 11 TexReg 4161; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective February 14, 2013, 38TexReg 662.

28 Tex. Admin. Code § 34.707 Adopted Standards

The Commissioner adopts by reference in their entirety the following copyrighted standards and recommended practices published by and available from the National Fire Protection Association Inc. (NFPA) on the NFPA website at www.nfpa.org.

(1) NFPA 13-2019, Standard for the Installation of Sprinkler Systems;

(2) NFPA 25-2020, Standard for the Inspection, Testing, and Maintenance of Water-Based Fire Protection Systems;

(3) NFPA 13D-2019, Standard for the Installation of Sprinkler Systems in One- and Two-Family Dwellings and Manufactured Homes;

(4) NFPA 13R-2019, Standard for the Installation of Sprinkler Systems in Low-Rise Residential Occupancies;

(5) NFPA 14-2019, Standard for the Installation of Standpipe and Hose Systems;

(6) NFPA 15-2017, Standard for Water Spray Fixed Systems for Fire Protection;

(7) NFPA 16-2019, Standard for the Installation of Foam-Water Sprinkler and Foam-Water Spray Systems;

(8) NFPA 20-2019, Standard for the Installation of Stationary Pumps for Fire Protection;

(9) NFPA 22-2018, Standard for Water Tanks for Private Fire Protection;

(10) NFPA 24-2019, Standard for the Installation of Private Fire Service Mains and Their Appurtenances;

(11) NFPA 30-2021, Flammable and Combustible Liquids Code;

(12) NFPA 30B-2019, Code for the Manufacture and Storage of Aerosol Products;

(13) NFPA 307-2021, Standard for the Construction and Fire Protection of Marine Terminals, Piers, and Wharves;

(14) NFPA 214-2021, Standard on Water-Cooling Towers;

(15) NFPA 409-2016, Standard on Aircraft Hangars; and

(16) NFPA 750-2019, Standard on Water Mist Fire Protection Systems.

History

Source Note: The provisions of this §34.707 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective December 14, 1994, 19 TexReg 9526; amended to be effective September 20, 1995, 20 TexReg 7077; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14,2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective September 1, 2023, 48 TexReg 1724.

28 Tex. Admin. Code § 34.708 Approved Testing Laboratories

The commission approves an organization as an approved testing laboratory which lists equipment and appurtenances for use in compliance with standards adopted in §34.707 of this title (relating to Adopted Standards) if the organization meets the requirements of an approved testing laboratory in accordance with Subchapter D of this chapter (relating to Testing Laboratory Rules).

History

Source Note: The provisions of this §34.708 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.709 Approved Certification Organization

The commission approves the National Institute for Certification in Engineering Technologies (NICET) as a nationally recognized testing standards organization for testing license applicants.

History

Source Note: The provisions of this §34.709 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective September 20, 1995, 20 TexReg 7077; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.710 Certificates of Registration

(a) Required. Each person or organization, before engaging in business in this state as an independent fire protection sprinkler contractor on or for any fire protection sprinkler system, must obtain a certificate of registration from the state fire marshal. A registered firm may not subcontract with an unregistered firm to allow the unregistered firm as an independent contractor to perform any act of a fire protection sprinkler contractor.

(b) Business location. A specific business location must be maintained by each registered firm at a location that must be indicated on the certificate. The business location must be a physical address, not a mailing address or P.O. Box.

(d) Change of ownership.

(1) The total change of a firm's ownership invalidates the current certificate. To ensure continuance of the business, a new application for a new certificate should be submitted to the state fire marshal 14 days before the change.

(2) A partial change in a firm's ownership will require a revised certificate if it affects the firm's name, location, or mailing address.

(e) Change of corporate officers. Any change of corporate officers must be reported in writing to the state fire marshal within 14 days. This change does not require a revised certificate.

(f) Duplicate certificates. A duplicate certificate must be obtained from the state fire marshal to replace a lost or destroyed certificate. The certificate holder must submit written notification of the loss or destruction without delay, accompanied by the required fee.

(g) Revised certificates. The change of a firm's name, location, or mailing address requires a revised certificate. Within 14 days after the change requiring the revision the certificate holder must submit written notification of the necessary change, accompanied by the required fee.

(h) Nontransferable. A certificate is neither temporarily nor permanently transferable from one firm to another.

(i) Types.

(1) General--This certificate permits a fire protection sprinkler system contractor to conduct the planning, sales, installation, maintenance, or servicing of any fire protection sprinkler system or any part of such a system.

(2) Dwelling--This certificate permits the fire protection sprinkler system contractor to conduct the planning, sales, installation, maintenance, or servicing of a one- or two-family dwelling fire protection sprinkler system or any part of such a system.

(3) Underground Fire Main--This certificate permits a fire protection sprinkler system contractor to conduct the sales, installation, maintenance, or servicing, but not the planning, of an assembly of underground piping or conduits that conveys water with or without other agents, used as an integral part of any type of fire protection sprinkler system.

History

Source Note: The provisions of this §34.710 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective August 29, 2019, 44 TexReg 4481.

28 Tex. Admin. Code § 34.711 Responsible Managing Employee (RME) License

(a) Required. Each person designated as a responsible managing employee by a registered firm must have a license issued by the state fire marshal.

(b) Proof of licensure. An RME must be able to show proof of licensure while engaged in the activities of an RME.

(c) Duplicate License. An RME must obtain a duplicate license from the state fire marshal to replace a lost or destroyed license. The license holder must submit written notification of the loss or destruction without delay, accompanied by the required fee.

(d) Revised Licenses. The change of licensee's employer, home address, or mailing address requires a revised license. The license holder must submit written notification of the necessary change within 14 days of the change accompanied by the required fee.

(e) Restrictions.

(1) A licensee must not engage in any act of the business unless employed by a registered firm and holding an unexpired license.

(2) A registered firm must notify the state fire marshal within 14 days after termination of employment of an RME.

(3) A license is neither temporarily nor permanently transferable from one person to another.

(f) Types.

(1) RME-General--A license issued to an individual who is designated by a registered firm to ensure that any fire protection sprinkler system, as planned, installed, maintained, or serviced, meets the standards provided by law.

(2) RME-Dwelling--A license issued to an individual who is designated by a registered firm to ensure that the fire protection sprinkler system for a one- and two-family dwelling, as planned, installed, maintained, or serviced, meets the standards provided by law.

(3) RME-Underground Fire Main--A license issued to an individual who is designated by a registered firm to ensure that the underground fire main for a fire protection sprinkler system, as installed, maintained, or serviced, meets the standards provided by law.

(4) RME-General Inspector--A license issued to an individual who is designated by a registered firm to perform the inspection, test, and maintenance service for a fire protection sprinkler system according to the standards adopted in this subchapter.

History

Source Note: The provisions of this §34.711 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective October 17, 1986, 11 TexReg 4161; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective June 22, 2021, 46 TexReg 3734.

28 Tex. Admin. Code § 34.712 Alteration of Certificates or Licenses

Alteration of certificates or licenses renders them invalid and is the basis for administrative action pursuant to Insurance Code §6003.251.

History

Source Note: The provisions of this §34.712 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.713 Applications

(a) Certificates of registration.

(1) Applications for certificates must be submitted on forms provided by the state fire marshal and must be accompanied by all other information required by Insurance Code Chapter 6003, concerning Fire Protection Sprinkler System Service and Installation, and this subchapter. An application will not be deemed complete until all required forms and documents have been received in the State Fire Marshal's Office.

(2) Applications must be signed by the sole proprietor, by each partner of a partnership, or by an officer of a corporation. For corporations, the application must be accompanied by the corporate charter of a Texas corporation or, in the case of a foreign corporation, a copy of the Texas certificate of authority to do business. For applicants using an assumed name, the application must also be accompanied by evidence of compliance with Business and Commerce Code Chapter 71, concerning Assumed Business or Professional Name. The application must also include written authorization by the applicant that permits the state fire marshal or the state fire marshal's representative to enter, examine, and inspect any premises, building, room, or establishment used by the applicant while engaged in the business so the state fire marshal can determine whether the applicant is in compliance with the provisions of Insurance Code Chapter 6003 and this subchapter.

(4) An applicant must not designate as its full-time responsible managing employee (RME) a person who is the designated full-time RME of another registered firm.

(5) A registered firm must not conduct any business as a fire protection sprinkler contractor until a full-time RME, as applicable to the business conducted, is employed. An individual with an RME-General Inspector's license does not constitute compliance with the requirements of this subsection.

(6) A certificate of registration may not be renewed unless the firm has at least one licensed RME as a full-time employee before the expiration of the certificate of registration to be renewed. If an applicant for renewal does not have an RME as a full-time employee as a result of death or disassociation of an RME within 30 days preceding the expiration of the certificate of registration, the renewal applicant must inform the license section of the State Fire Marshal's Office of the employment of a full-time RME before the certificate of registration will be renewed.

(7) Insurance required.

(A) The state fire marshal must not issue a certificate of registration under this subchapter unless the applicant files with the State Fire Marshal's Office a proof of liability insurance. The insurance must include products and completed operations coverage.

(B) Each registered firm must maintain in force and on file in the State Fire Marshal's Office the certificate of insurance identifying the insured and the exact nature of the business insured. In identifying the named insured, the certificate of insurance must include either an assumed name or the name of the corporation; partners, if any; or sole proprietor, as applicable. Failure to do so will be cause for administrative action.

(C) Evidence of public liability insurance, as required by Insurance Code §6003.152, concerning Required Insurance Coverage for Registration Certificate, must be in the form of a certificate of insurance executed by an insurer authorized to do business in this state, or a certificate of insurance for surplus lines coverage, secured in compliance with Insurance Code Chapter 981, concerning Surplus Lines Insurance, as contemplated by Insurance Code §6003.152(c).

(b) Responsible managing employee licenses.

(1) Original and renewal applications for a license from an employee of a firm engaged in the business must be submitted on forms provided by the state fire marshal, along with a criminal history report from the Texas Department of Public Safety and accompanied by all other information required by Insurance Code Chapter 6003 and this subchapter. For a natural person to be eligible for a responsible managing employee license, the natural person must start the application or registration process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/fire/fingerprinting-process.html. The requesting natural person must submit information necessary to complete the fingerprint service code request, including the natural person's name, natural person's state of residence, natural person's email address, and license type the natural person is applying for.

(2) The following documents must accompany the application as evidence of technical qualifications for a license:

(A) RME-General:

(i) proof of current registration in Texas as a professional engineer; or

(ii) a copy of the NICET notification letter confirming the applicant's successful completion of the test requirements for certification at Level III for water-based fire protection systems layout.

(B) RME-Dwelling:

(i) proof of current registration in Texas as a professional engineer; or

(ii) a copy of the NICET notification letter confirming the applicant's successful completion of the test requirements for certification at Level II for fire protection automatic sprinkler system layout and evidence of current employment by a registered fire sprinkler contractor.

(i) proof of current registration in Texas as a professional engineer; or

(ii) a copy of the notification letter confirming at least a 70% grade on the test covering underground fire mains for fire protection sprinkler systems, administered by the State Fire Marshal's Office or an outsource testing service.

(D) RME-General Inspector:

(i) a copy of the NICET notification letter confirming the applicant's successful completion of the examination requirements for certification at Level II for Inspection and Testing of Water-Based Systems; and

(ii) evidence of current employment by a registered fire protection sprinkler system contractor.

(c) Complete applications. The application form for a license or registration must be accompanied by the required fee and must, within 180 days of receipt by the department of the initial application, be complete and accompanied by all other information required by Insurance Code Chapter 6003 and this subchapter, or a new application must be submitted including all applicable fees.

History

Source Note: The provisions of this §34.713 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective October 17, 1986, 11 TexReg 4161; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective December 14, 1994, 19 TexReg 9526; amended to be effective September 20, 1995, 20 TexReg 7077; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006,31TexReg 1716; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 16, 2023, 48 TexReg 1839.

28 Tex. Admin. Code § 34.714 Fees

(a) Except for fees specified in subsection (b) of this section, all fees payable must be submitted by cashier's check or money order made payable to the Texas Department of Insurance or by online payment. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable and nontransferable.

(b) Fees for tests administered by an outsource testing service are payable to the testing service in the amount and manner required by the testing service.

(1) Certificates of registration:

(A) all initial applications must include an application fee of--$50;

(B) initial fee--$900;

(D) renewal late fee (expired 1 day to 90 days)--$450;

(E) renewal late fee (expired 91 days to two years)--$900;

(2) Certificates of registration--(Dwelling or Underground fire main):

(A) all initial applications must include an application fee of--$50;

(B) initial fee--$300;

(D) renewal late fee (expired 1 day to 90 days)--$150;

(E) renewal late fee (expired 91 days to two years)--$300;

(3) Responsible managing employee license (General):

(A) initial fee--$200;

(B) renewal fee (for two years)--$350;

(D) renewal late fee (expired 91 days to two years)--$200;

(4) Responsible managing employee licenses (Dwelling, or Underground fire main):

(A) initial fee--$150;

(B) renewal fee (for two years)--$200;

(D) renewal late fee (expired 91 days to two years)--$150;

(5) Responsible managing employee license (General Inspector):

(A) initial fee--$50;

(B) renewal fee (for two years)--$100;

(D) renewal late fee (expired 91 days to two years)--$50;

(6) Change of address request--$0;

(7) Duplicate or revised certificates or licenses, or other requested changes to certificates or licenses--$35;

(8) Test fee (if administered by the State Fire Marshal's Office)--$50.

(d) Late fees are required of all certificate or license holders who fail to submit renewal applications before their expiration dates.

(e) A license or registration expires at 12:00 midnight on the date printed on the license or registration. A renewal application and fee for license or registration must be postmarked on or before the date of expiration to be accepted as timely. If a renewal application is not complete but there has been no lapse in the required insurance, the applicant will have 30 days from the time the applicant is notified by the State Fire Marshal's Office of the deficiencies in the renewal application to submit any additional requirement. If an applicant fails to respond and correct all deficiencies in a renewal application within the 30-day period, a late fee may be charged.

(f) Holders of certificates and licenses that have been expired for less than two years cannot be issued new certificates or licenses.

(g) Fees for certificates and licenses that have been expired for less than two years include both renewal and late fees.

History

Source Note: The provisions of this §34.714 adopted to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective April 9, 2025, 50 TexReg 2299.

28 Tex. Admin. Code § 34.715 Tests

(a) Each applicant for a license must take and pass with at least a 70 percent grade, a test covering this subchapter and Insurance Code Chapter 6003 and if applicable, a technical qualifying test as specified in §34.713(b) of this title (relating to Applications). The content, frequency, and location of the test must be designated by the State Fire Marshal's Office.

(b) Examinees who fail must file a retest application accompanied by the required fee.

(d) An examinee who is scheduled for a test to be conducted on a religious holy day by the State Fire Marshal's Office and who wishes to observe the religious holy day may request the rescheduling of the test to an alternate date.

(e) An applicant may only schedule each type of test three times within a twelve-month period.

(f) An applicant for a license must complete and submit all application requirements within one year of the successful completion of any test required for a license, except for testing conducted by NICET; otherwise, the test is voided and the individual will have to pass the test again.

History

Source Note: The provisions of this §34.715 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.716 Installation, Maintenance, and Service

(a) All fire protection sprinkler systems installed under Insurance Code Chapter 6003 must be installed under the supervision of the appropriate licensed responsible managing employee.

(1) An RME-General may supervise the installation of any fire protection sprinkler system including one- and two-family dwellings.

(2) An RME-Dwelling may only supervise the installation of a fire protection sprinkler system in one- and two-family dwellings.

(3) An RME-Underground Fire Main may only supervise the installation of an assembly of underground piping or conduits that conveys water with or without other agents and used as an integral part of any type of fire protection sprinkler system.

(b) On completion of the installation, the licensed RME type G, D, or U (as applicable) must have affixed a contractor's material and test certificate for aboveground or underground piping on or near the system riser. If the adopted installation standard does not require testing, all other sections except the testing portion of the contractor's material and test certificate must still be completed. The contractor's material and test certificate must be obtained from the State Fire Marshal's Office. The certificate must be distributed as follows:

(1) original copy kept at the site after completion of the installation;

(2) second copy retained by the installing company at its place of business in a separate file used exclusively by that firm to retain all Contractor's Material and Test Certificates. The certificates must be available for examination by the state fire marshal or the state fire marshal's representative on request. The certificates must be retained for the life of the system; and

(3) third copy to be sent to the local AHJ within 10 days after completion of the installation.

(c) Service, maintenance, or testing, when conducted by someone other than an owner, must be conducted by a registered firm and in compliance with the appropriate adopted standards. The inspection, test, and maintenance service of a fire protection sprinkler system, except in a one- and two-family dwelling, must be performed by an individual holding a current RME-General Inspector or RME-General license. A visual inspection not accompanied by service, maintenance, testing, or certification does not require a certificate of registration.

(d) The firm must keep complete records of all service, maintenance, testing, and certification operations. The records must be available for examination by the state fire marshal or the state fire marshal's representative.

(e) All vehicles regularly used in service, maintenance, testing, or certification activities must prominently display the company name, telephone number, and certificate of registration number. The numbers and letters must be at least one-inch high and must be permanently affixed or magnetically attached to each side of the vehicle in a color contrasting with the background color of the vehicle. The certificate of registration number must be designated in the following format TX: SCR-number.

(f) Each registered firm must employ at least one full-time RME-General or RME-Dwelling licensee at each business office where fire protection sprinkler system planning is performed, who is appropriately licensed to conduct the business performed by the firm.

(g) The planning of an automatic fire protection sprinkler system must be performed under the direct supervision of the appropriately licensed RME.

(h) The planning, installation, or service of a fire protection sprinkler system must be performed in accordance with the minimum requirements of the applicable adopted standards in §34.707 of this title (relating to Adopted Standards), except when the plan, installation, or service complies with a standard that has been adopted by the political subdivision in which the system is installed.

History

Source Note: The provisions of this §34.716 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective October 17, 1986, 11 TexReg 4161; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective August 26, 1996, 21 TexReg 7663; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1716; amended to be effective March 23, 2008, 33 TexReg 2312; amended to be effective February 14, 2013, 38 TexReg 662; amended tobe effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.717 Sprinkler System Plans

(a) A set of as-built plans and hydraulic calculations, showing details of system piping, calculations, and alarm configurations, must be provided to the building owner or his representative when installation is complete. The firm must also maintain a set of as-built plans for the life of the sprinkler system.

(b) Subsequent alterations or additions must be legibly noted on updated plans and provided to the owner. When an alteration consists of 20 sprinklers or less and all floor areas were protected prior to the alteration, updated plans are not required. Updated plans are required for all alterations consisting of more than 20 sprinklers. Updated plans must be maintained by the firm for the life of the sprinkler system.

(c) All plans must contain the name and license number of the licensed responsible managing employee, the name, address, phone number, and the certificate of registration number of the registered firm.

(1) At least one set of the as-built plans specified in subsection (a) of this section must be signed with an original signature, dated by the RME, and certified that they are in compliance with the adopted NFPA standards. In addition, the plans must contain the license number of the RME; the date of installation, alteration, or addition; the name, address, phone number, and the certificate of registration number of the registered firm. This information shall be in a form of the stamp as set forth in subsection (d) of this section.

(2) At least one set of plans submitted to an authority having jurisdiction, for review, rating, permit, or record purposes must be signed with an original signature, unless waived by the local authority having jurisdiction, dated by the RME, and certified that the plans comply with the adopted NFPA standards. In addition, the plans must contain the license number of the RME, the name, address, phone number, and the certificate of registration number of the registered firm. This information shall be in the form of the stamp as set forth in subsection (d) of this section.

(d) Sample RME plan stamp:

Attached Graphic

History

Source Note: The provisions of this §34.717 adopted to be effective May 10, 1984, 9 TexReg 2380; amended to be effective October 17, 1986, 11 TexReg 4161; amended to be effective April 14, 1989, 14 TexReg 1644; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective April 1, 2006, 31 TexReg 1716.

28 Tex. Admin. Code § 34.718 Installation Tags

(a) On completion of the installation of a fire protection sprinkler system, all information for an installation tag must be completed in detail to indicate the water supply test data obtained during the time of installation. The tag must be securely attached by a durable method to the riser of each system. The fire protection system must not be tagged until the system complies with the applicable NFPA installation standard, including freeze protection methods.

(b) On completion of the installation of a fire protection sprinkler system and after performing the required initial tests and inspections, an ITM tag, in addition to the installation tag, must be attached to each riser in accordance with the procedures in this subchapter for completing and attaching ITM tags.

(c) A new installation tag must be attached, in addition to the existing installation tag, each time more than twenty sprinkler heads are added to a system.

(d) Installation tags must remain on the system for the life of the system.

(e) Installation tags may be printed for multiple years.

(f) Installation tags must be white in color, 5-1/4 inches in height, and 2-5/8 inches in width. The tag and attaching mechanism must be sufficiently durable to remain attached to the system for the life of the system.

(g) Installation tags must contain the following information in the format of the sample tag in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) firm's name, address, phone number, and certificate of registration number;

(3) day, month, and year (to be punched);

(4) "THIS TAG CONTAINS IMPORTANT INFORMATION ABOUT THIS SPRINKLER SYSTEM AND MUST REMAIN ATTACHED TO THE SYSTEM FOR THE LIFE OF THE SYSTEM." (All capital letters, at least 10-point boldface type.);

(5) name and address of owner or occupant;

(6) building number, location, or system number;

(7) static and flowing pressure of the main drain test taken at the riser or lead-in;

(8) static and residual pressure with the measured in gallons per minute flowing of the water supply flow test used to hydraulically design the system;

(9) signature of RME-G or D; and

(10) license number of RME-G or D.

(h) Sample installation tag:

Attached Graphic

History

Source Note: The provisions of this §34.718 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.719 Service Tags

(a) After any service, all sections of a service tag must be completed in detail, indicating all the services that have been performed, and then the tag must be attached to the respective riser of each system.

(b) After any service, if noncompliant conditions or impairments exist, the service person must attach, in addition to attaching a service tag, the appropriate yellow tag or red tag according to the procedures in this subchapter for completing and attaching yellow and red tags.

(d) Service tags must remain on the system for five years, after which they may only be removed by an authorized employee of a registered firm. An employee of the state fire marshal's office or an authorized representative of a governmental agency with appropriate regulatory authority may remove excess tags at any time.

(e) Tags may be printed for multiple years.

(f) Tags must be white, 5-1/4 inches in height, and 2-5/8 inches in width.

(g) Service tags must contain the following information in the format of the sample tag as set forth in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) firm's name, address and phone number;

(3) firm's certificate of registration number;

(4) applicable RME's name and license number;

(5) signature of service person;

(6) day, month, and year (to be punched);

(7) type of work (to be punched);

(8) name and address of owner or occupant;

(9) building, location or system number;

(10) a list of services performed;

(11) date any yellow tag conditions were corrected (punch if applicable); and

(12) date any red tag conditions were corrected (punch if applicable).

(h) Sample service tag:

Attached Graphic

History

Source Note: The provisions of this §34.719 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 29, 2014, 39 TexReg 5761.

28 Tex. Admin. Code § 34.720 Inspection, Test and Maintenance Service (ITM) Tag

(a) After a new installation or a scheduled inspection, testing and maintenance (ITM) service, all portions of an ITM tag must be completed in detail, indicating the ITM service was performed according to the adopted standards, and the tag must be attached to the respective riser of each system.

(b) After any ITM service, the inspector must complete and attach an ITM tag, and if impairments are found, the inspector must attach the appropriate yellow or red tag in accordance with the procedures in this subchapter.

(d) ITM tags shall remain on the system for five years after which time they may only be removed by an authorized employee of a registered firm. An employee of the state fire marshal's office or an authorized representative of a governmental agency with appropriate regulatory authority may remove excess tags at any time.

(e) ITM tags may be printed for a multiple period of years.

(f) ITM tags must be light blue in color, 5 1/4 inches in height, and 2 5/8 inches in width.

(g) ITM tags shall contain the following information in the format of the sample tag in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) type of ITM: initial installation, monthly, quarterly, annual, third year, or fifth year (to be punched);

(3) system status after ITM: acceptable, yellow tag attached, or red tag attached (to be punched);

(4) license number;

(5) name of inspector;

(6) signature of inspector;

(7) day, month, and year (to be punched);

(8) firm's name, address, phone number and registration number;

(9) name and address of owner or occupant;

(10) building, location or system number; and

(11) the static and flowing pressure of the main drain test, taken at the time the inspection, testing and maintenance service was performed.

(h) Sample ITM tag:

Attached Graphic

History

Source Note: The provisions of this §34.720 adopted to be effective April 1, 2006, 31 TexReg 1716.

28 Tex. Admin. Code § 34.721 Yellow Tags

(a) If a fire protection sprinkler system is found to be noncompliant with applicable NFPA standards, is not being tested or maintained according to adopted standards, or found to contain equipment that has been recalled by the manufacturer, but the noncompliance or recalled equipment does not constitute an emergency impairment, a completed yellow tag must be attached to the respective riser of each system to permit convenient inspection, to not hamper the system's actuation or operation, and to indicate that corrective action is necessary.

(b) The signature of the service person or inspector on a yellow tag certifies the conditions that caused the system to be out of compliance with NFPA standards.

(c) After attaching a yellow tag, the service person or inspector must notify the building owner or the building owner's representative and the local AHJ in writing of all noncompliant conditions. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the attachment of the yellow tag.

(d) A yellow tag may only be removed by an authorized employee of a registered firm or an authorized representative of a governmental agency with appropriate regulatory authority after the employee or representative completes and attaches a service tag that indicates the noncompliant conditions were corrected. The local AHJ must be notified when corrections are made and a yellow tag is removed or revised. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the date on which the yellow tag is removed.

(e) Yellow tags may be printed for multiple years.

(f) Yellow tags must be the same size as service tags, and must contain the following information in the format of the tag as set forth in subsection (g) of this section:

(1) "DO NOT REMOVE BY ORDER OF TEXAS STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) firm's name, address, and phone number;

(3) firm's certificate of registration number;

(4) license number of RME;

(5) printed name of service person or inspector;

(6) signature of service person or inspector;

(7) day, month, and year (to be punched);

(8) name and address of owner or occupant;

(9) building number, location, or system number; and

(10) list of items not compliant with NFPA standards.

(g) Sample yellow tag:

Attached Graphic

History

Source Note: The provisions of this §34.721 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective July 29, 2014, 39 TexReg 5761; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.722 Red Tags

(a) If a fire protection sprinkler system has an impairment which constitutes an emergency impairment, as defined in the adopted edition of NFPA 25, the service person or inspector must complete and attach a red tag to the respective riser of each system to indicate corrective action is necessary.

(b) Immediately after attaching a red tag, the inspector or service person must orally notify the building owner or the building owner's representative and, where available, the local AHJ all impairments. The inspector or service person must also provide written notice to the building owner or the building owner's representative and, where available, the local AHJ of all impairments, and the written notice must be postmarked, emailed, faxed, or hand delivered within 24 hours of the attachment of the red tag.

(c) The signature of the service person or inspector on the red tag certifies the impairments listed constitute an emergency impairment.

(d) A red tag may only be removed by an authorized employee of a registered firm or an authorized representative of a governmental agency with appropriate regulatory authority after the employee or representative completes and attaches a service tag that indicates the impaired conditions were corrected. The local AHJ must be notified when corrections are made and a red tag is removed or revised. The notification must be postmarked, emailed, faxed, or hand delivered within five business days of the removal of the red tag.

(e) Red tags may be printed for a multiple period of years.

(f) Red tags must be the same size as service tags.

(g) Red tags must contain the following information in the format of the sample tag as set forth in subsection (h) of this section:

(1) "DO NOT REMOVE BY ORDER OF THE TEXAS STATE FIRE MARSHAL" (all capital letters, at least 10-point boldface type);

(2) firm's name, address, and phone number;

(3) firm's certificate of registration number;

(4) license number of RME;

(5) printed name of service person or inspector;

(6) signature of service person or inspector;

(7) day, month, and year (to be punched);

(8) name and address of owner or occupant;

(9) building number, location, or system number; and

(10) list of emergency impairments.

(h) Sample red tag:

Attached Graphic

History

Source Note: The provisions of this §34.722 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.723 Enforcement

(a) The state fire marshal is authorized and directed to enforce the provisions of Insurance Code Chapter 6003 and this subchapter. The state fire marshal must make, or cause to be made, inspections from time to time and as circumstances dictate to determine that licensed firms and persons engaged in the business act in conformity with the requirements of the law and this subchapter.

(b) Such inspections shall be made by the state fire marshal or the state fire marshal's representative. When an inspection discloses violations of the law or this subchapter, the firm or person responsible for correcting the violation shall be notified within 30 days after completion of the inspection report. In all cases in which a violation is not corrected within a reasonable time, the state fire marshal shall take such steps as may be necessary to enforce correction of the violation and may initiate appropriate administrative action.

History

Source Note: The provisions of this §34.723 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.724 Administrative Actions

The failure to comply with the provisions of this subchapter and the provisions of Insurance Code Chapter 6003 by certificate holders or licensees may subject them, as provided in Government Code §417.010, to administrative action including, but not limited to, suspension, revocation, or refusal to issue or renew a license or a certificate of registration or issuance of a cease and desist order, administrative penalty, order for restitution to persons harmed, or combination of them.

History

Source Note: The provisions of this §34.724 adopted to be effective April 1, 2006, 31 TexReg 1716; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.725 Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of this subchapter which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §34.725 adopted to be effective April 1, 2006, 31 TexReg 1716.

Subchapter H STORAGE AND SALE OF FIREWORKS

28 Tex. Admin. Code § 34.801 Purpose

The purpose of the rules set forth in this subchapter is to regulate the sale, distribution, and use of certain fireworks in the interest of protecting and preserving lives and property pursuant to the Occupations Code Chapter 2154. These rules should be read in conjunction with Occupations Code Chapter 2154 for a complete understanding of the regulation of this subject matter.

History

Source Note: The provisions of this §34.801 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.802 Title

The rules set forth in this chapter shall be known and may be cited as the Fireworks Rules.

History

Source Note: The provisions of this §34.802 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.803 Applicability of Rules

These sections shall apply to all firms and persons engaged in the business.

History

Source Note: The provisions of this §34.803 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.804 Exceptions

The exemptions of the Occupations Code §2154.002 are applicable to this subchapter.

History

Source Note: The provisions of this §34.804 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.805 Notices

All notices by the state fire marshal required by any statutory provision or by these sections must be given by personal service or mailed, postage prepaid, to the person's residence or business address as it appears on the records in the Office of the State Fire Marshal.

History

Source Note: The provisions of this §34.805 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.806 Restrictive Use

No license or permit holder is authorized to enforce or attempt to enforce any section of the Occupations Code Chapter 2154 or this subchapter.

History

Source Note: The provisions of this §34.806 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.807 Administration

(a) The State Fire Marshal is charged with the duty to administer this subchapter, the orders of the commissioner and the enforcement of the Occupations Code Chapter 2154.

(b) Violations of these sections alone do not subject legally possessed fireworks to seizure or confiscation.

History

Source Note: The provisions of this §34.807 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.808 Definitions

The following words and terms, when used in this subchapter, must have the following meanings, unless the context clearly indicates otherwise.

(1) Acceptor building--A building that is exposed to embers and debris emitted from a donor building.

(2) Agricultural, industrial, or wildlife control permits--Permits authorizing the holder to use Fireworks 1.3G for specified purposes in these business activities.

(3) Authorized retail location--A retail location that complies with the requirements of statute and rules and with a permit, and that is not prohibited by a local ordinance.

(4) Bare wiring--Any electrical cable or cord any part of which has the insulating cover broken or removed, exposing bare wire.

(5) Barricade--A natural or artificial barrier that will effectively screen a magazine, building, railway, or highway from the effects of an explosion in a magazine or building containing explosives. It must be of a height that a straight line from the top of any side wall of a building, or magazine containing explosives to the eave line of any magazine, or building, or to a point 12 feet above the center of a railway or highway, will pass through such natural or artificial barrier.

(6) Barricade, artificial--An artificial mound or revetted wall of earth of a minimum thickness of one foot.

(7) Barricade, natural--Natural features of ground, such as hills, or timber of sufficient density that the surrounding exposures that require protection cannot be seen from the magazine or building containing explosives when the trees are bare of leaves.

(8) Barricade, screen type--Any of several barriers for containing embers and debris from fires and deflagrations in process buildings that could cause fires and explosions in other buildings. Screen type barricades must be constructed of metal roofing, one-inch or half-inch mesh screen or equivalent material. A screen-type barricade extends from the floor level of the donor building to a height that a straight line from the top of any side wall of the donor building to the eave line of the acceptor building will go through the screen at a point not less than five feet from the top of the screen. The top five feet of the screen are inclined at an angle of between 30 and 45 degrees, toward the donor building.

(9) Breakaway construction--A general term that applies to the principle of purposely providing a weak wall so that the explosive effects can be directed and minimized. The term "weak wall" as used in these sections refers to a weak wall and roof, or weak roof. The term "weak wall" is used in a relative sense as compared to the construction of the entire building. The design strength of the weak wall will vary as to the building construction, as well as to the type and quantity of explosive or pyrotechnic materials in the building. The materials used for weak wall construction are usually light gauge metal, plywood, hardboard, or equivalent lightweight material, and the material is purposely selected to minimize the danger from flying missiles. The method of attachment of the weak wall must be constructed to aid the relief of blast pressure and fireball.

(10) Bulk storage, Fireworks 1.4G--The storage of 500 or more cases of Fireworks 1.4G.

(11) Business--The manufacturing, importing, distributing, jobbing, or retailing of permissible fireworks; acting as a pyrotechnic operator; conducting multiple public fireworks displays; or using fireworks for agricultural, wildlife, or industrial purposes.

(12) Buyer--Any person or group of persons offering an agreed-upon sum of money or other considerations to a seller of fireworks.

(13) CFR--The Code of Federal Regulations, a codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the federal government. The Code is divided into 50 titles. The titles are divided into chapters, which are further subdivided into parts.

(14) Commissioner--The Commissioner of Insurance.

(15) Department--The Texas Department of Insurance.

(16) Donor building--A process building from which embers and burning debris are emitted during a fire.

(17) DOT--The United States Department of Transportation (U.S. DOT).

(18) Fireworks plant--All land, and buildings used for or in connection with the manufacture processing of fireworks. It includes storage facilities used in connection with plant operation.

(19) Firm--A person, partnership, corporation, or association.

(20) Flame effects operator--An individual who, by experience, training, or examination has demonstrated the skill and ability to safely assemble, conduct, or supervise flame effects in accordance with §2154.253, Occupations Code.

(21) Generator--Any device driven by an engine and powered by gasoline or other fuels to generate electricity for use in a retail fireworks stand.

(22) Highway--The paved surface or, where unpaved, the edge of a graded or maintained public street, public alley, or public road.

(23) Indoor retail fireworks site--A retail fireworks site other than a retail stand that sells Fireworks 1.4G from a building or structure.

(24) Immediate family member--The spouse, child, sibling, parent, grandparent, or grandchild of an individual. The term includes a stepparent, stepchild, and stepsibling and a relationship established by adoption.

(25) License--The license issued by the state fire marshal to a person or a fireworks firm authorizing same to engage in business.

(26) Licensed firm--A person, partnership, corporation, or association holding a current license.

(27) Magazine--Any building or structure, other than a manufacturing building, used for storage of Fireworks 1.3G.

(28) Manufacturing--The preparation of fireworks mixes and the charging and construction of all unfinished fireworks, except pyrotechnic display items made on site by qualified personnel for immediate use when the operation is otherwise lawful.

(29) Master electric switch--Manually operated device designed to interrupt the flow of electricity.

(30) Mixing building--A manufacturer's building used for mixing and blending pyrotechnic composition, excluding wet sparkler mixes.

(31) Multiple public display permit--A permit issued for the purpose of conducting multiple public displays at a single approved location.

(32) Nonprocess building--Office buildings, warehouses, and other fireworks plant buildings where no explosive compositions are processed or stored. A finished firework is not considered an explosive composition.

(33) Open flame--Any flame that is exposed to direct contact.

(34) Outsource testing service--The testing service selected by the state fire marshal to administer certain designated qualifying tests for licenses under this subchapter.

(35) Process building--A manufacturer's mixing building or any building in which pyrotechnic or explosive composition is pressed or otherwise prepared for finishing and assembling.

(36) Public display permit--A permit authorizing the holder to conduct a public fireworks display using Fireworks 1.3G, on a single occasion, at a designated location, and during a designated period.

(37) Retail fireworks site--The structure from which Fireworks 1.4G are sold and in which Fireworks 1.4G are held pending retail sale, and other structures, vehicles, or surrounding areas subject to the care and control of the retailer, owner, supervisor, or operator of the retail location.

(38) Retail stand--A retail site that sells Fireworks 1.4G over the counter to the general public who always remain outside the structure.

(39) Safety container--A container especially designed, tested, and approved for the storage of flammable liquids.

(40) School--Any inhabited building used as a classroom or dormitory for a public or private primary or secondary school or institution of higher education.

(41) Selling opening--An open area, including the counter, through which fireworks are viewed and sold at retail.

(42) Storage facility--Any building, structure, or facility in which finished Fireworks 1.4G are stored, but in which no manufacturing is performed.

(43) Supervisor--A person who is 18 years or older and who is responsible for the retail fireworks site during operating hours.

(44) Walk door--An opening through which retail stand attendants can freely move but which can be secured to keep the public from the interior of the stand.

History

Source Note: The provisions of this §34.808 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective January 27, 2004, 29 TexReg 637; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective July 19,2016,41 TexReg 5180; amended to be effective August 29, 2019, 44 TexReg 4481.

28 Tex. Admin. Code § 34.809 General Requirements, Licenses and Permits

(a) Each firm or person engaged in the manufacture, transportation, storage, wholesale or retail sales of fireworks, public displays utilizing Fireworks 1.3G, pyrotechnic special effects operators, flame effects operators, and pyrotechnic operators shall have an applicable license or permit issued by the state fire marshal.

(1) Licenses by type:

(A) distributor;

(B) jobber;

(D) pyrotechnic operator;

(E) pyrotechnic special effects operator, and

(F) flame effects operator.

(2) Permits by type:

(A) retailer;

(B) single public display;

(D) industrial;

(E) wildlife control; and

(F) multiple public display.

(b) Each license or permit shall indicate the act or acts authorized.

(c) All required licenses and permits shall be made available for inspection at the facility for which it was issued. The original permit shall be posted at all retail locations for which such permit was issued.

(d) License and permit holders shall take every reasonable precaution to protect their license or permit documents from loss, theft, defacement, destruction, or unauthorized duplication or use. Unauthorized use or duplication shall be reported immediately to the state fire marshal.

(e) All holders of licenses or permits who bulk store fireworks shall have storage and other facilities which conform to these sections.

(f) Each licensee or permittee shall notify the state fire marshal of every location where storage or manufacturing facilities are maintained in Texas.

(g) A specific business location shall be maintained by each licensee or permittee which shall be indicated on the license or permit document.

(h) A person engaging in the business using or storing Fireworks 1.3G must obtain a federal license or permit if required by Title XI, Regulation of Explosives of the Crime Control Act (18 United States Code, Chapter 40).

(i) Licensees and permittees shall have adequate storage facilities which comply with appropriate provisions of §34.822 and §34.823 of this title (relating to Storage of Black Powder and Fireworks 1.3G at Other Than Display Sites; Bulk Storage of Fireworks 1.4G).

(j) Licensees and permittees shall comply with the applicable transportation requirements of §34.825 of this title (relating to Distribution and Transportation).

History

Source Note: The provisions of this §34.809 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective January 27, 2004, 29 TexReg 637.

28 Tex. Admin. Code § 34.810 Requirements, Licensees

(a) Licensees shall keep a record of all fireworks sales.

(b) The change of a nonincorporated firm's ownership invalidates the current license. A change of ownership must be reported to the state fire marshal within 14 days of such change.

(c) Any change of corporate officers must be reported in writing to the state fire marshal at the time of license renewal. This change does not require a revised license document.

(d) A duplicate license document must be obtained from the state fire marshal to replace a lost or destroyed document. The licensee must submit written notification of the loss or destruction without delay.

(e) The change of a licensee's name, business location, residence, or mailing address requires a revised license document. Licensees must submit written notification within 14 days of the change.

History

Source Note: The provisions of this §34.810 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective July 5, 2011, 36 TexReg 4111.

28 Tex. Admin. Code § 34.811 Requirements, Pyrotechnic Operator License, Pyrotechnic Special Effects Operator License, and Flame Effects Operator License

(a) Applicants for a pyrotechnic operator license, pyrotechnic special effects operator license, or flame effects operator license must take a written test and obtain at least a passing grade of 70%. Written tests may be supplemented by practical tests or demonstrations deemed necessary to determine the applicant's knowledge and ability. The content, frequency, and location of the tests must be designated by the state fire marshal.

(b) Applicants who fail a test may file a retest application, accompanied by the required fee.

(d) An applicant for a license must complete and submit all application requirements within one year of the successful completion of any test required for a license; otherwise, the test is voided and the individual will have to pass the test again.

(e) The state fire marshal may waive a test requirement for an applicant with a valid license from another state having license requirements substantially equivalent to those of this state.

(f) A licensee whose license has been expired for two years or longer and applies for a new license must pass another test.

(g) A pyrotechnic operator license will not be issued to any person who fails to meet the requirements of subsection (a) of this section and who:

(1) has not assisted in conducting at least five permitted or licensed public displays in Texas under the direct supervision of and verified in writing by a pyrotechnic operator licensed in Texas; and

(2) is not at least 18 years of age.

(h) The application must be accompanied by a criminal history report from the Texas Department of Public Safety. For a natural person to be eligible for a pyrotechnic operator license, pyrotechnic special effects operator license, or flame effects operator license, the natural person must start the application process by submitting a formal request for a fingerprint service code by completing the fingerprinting process information required on the department's website at www.tdi.texas.gov/fire/fingerprinting-process.html. The requesting natural person must submit information necessary to complete the fingerprint service code request, including the natural person's full name, natural person's state of residence, natural person's email address, and intended license type the natural person is applying for.

(i) A licensee must be able to show proof of licensure while engaged in the activities of the business.

History

Source Note: The provisions of this §34.811 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective January 27, 2004, 29 TexReg 637; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective February 14,2013, 38 TexReg 662; amended to be effective August 29, 2019, 44 TexReg 4481; amended to be effective June 22, 2021, 46 TexReg 3734; amended to be effective April 16, 2023, 48 TexReg 1839; amended to be effective December 11, 2025, 50 TexReg 7923.

28 Tex. Admin. Code § 34.812 Expiration, License, and Permit

(a) A license shall be valid for a period of one year from the date of issuance.

(b) Permits expire depending on permit type.

(1) Retail permits expire on January 31 each year.

(2) Public display permits expire at midnight on the date stated on the permit.

(3) Agricultural, industrial, and wildlife control permits expire one year from the date of issuance.

History

Source Note: The provisions of this §34.812 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571.

28 Tex. Admin. Code § 34.813 Applications for Licenses and Permits

(a) Applications for a license or permit to engage in the business, other than retail permits, shall be on forms provided by the state fire marshal, and shall be accompanied by the appropriate fee and documentation as may be required.

(b) Applications must be signed by the sole proprietor, by each partner of a partnership, or by an officer of a corporation or association. Applications from foreign and out of state corporations shall be accompanied by evidence of authority to conduct business in this state granted by the Texas secretary of state and where applicable, the applicant shall evidence compliance with the Assumed Business or Professional Name Act, Texas Business and Commerce Code, Chapter 36.

(1) the name, address, and telephone number of the applicant;

(2) a copy of the site inspection report from the fire prevention officer;

(3) the location or alternate location for the display;

(4) the name and license number of the pyrotechnic operator who is to supervise the display;

(5) the size and estimated number of fireworks to be discharged, the number of set pieces, and other items;

(6) the manner and place of storage of such fireworks prior to and during the display;

(7) a diagram of the grounds on which the display is to be held indicating the:

(A) area meeting appropriate distance regulations which outlines the parameters within which the particular site may be adjusted on the day of the proposed display to address safety concerns or wind changes from which fireworks will be discharged;

(B) distance from exposure to discharge point;

(D) method of spectator restraint;

(8) evidence of public liability insurance, as required by the Occupations Code §2154.205;

(9) the name and license number of the manufacturer or distributor licensed in Texas who is to supply the fireworks; and

(10) applications for a display permit shall include the date, time, and the alternate date and time of the display.

(d) A completed application for a public display permit shall be received by the state fire marshal before the display is to be conducted. A facsimile or other photocopy of the application received by the state fire marshal during normal working hours prior to the date of the display and determined to be in compliance with the provisions of this section, along with the appropriate fee, shall be acceptable for purposes of this section. An applicant issued a permit under the facsimile provisions of this section shall maintain original documentation of the application for a period of one year and shall provide such original materials to the state fire marshal on request.

(e) An additional public display permit shall be required for each site separated from the permitted site by over 1,000 feet measured horizontally.

(f) When an application for a permit is required by the Occupations Code §2154.253 for the use of flame effects or pyrotechnics before an assembly of fifty people or more and is submitted to the state fire marshal, as the authority having jurisdiction because the political subdivision has no fire marshal, local fire protection district, or emergency services district, the application shall be on the form provided by the state fire marshal and include the following information:

(1) the name, address, and telephone number of the applicant;

(2) the date, time, and the alternate date and time of the event;

(3) the location or alternate location for the event;

(4) the names and license numbers of the pyrotechnic operator and the flame effects operator who will be on-site at all times and who will supervise the event;

(5) the plan and information required by NFPA 1126 and NFPA 160;

(6) evidence of general liability insurance, as required by the Occupations Code §2154.207;

(7) name and employer of person who will give verbal instruction regarding the location and use of available exits and information on the building fire protection system as required by §2154.253, Occupations Code; and

(8) whether the building contains a complete operational sprinkler system or personnel that will implement a stand-by fire watch.

(g) Complete applications. The application form for a license or permit must be accompanied by the required fee and must, within 180 days of receipt by the department of the initial application, be complete and accompanied by all other information required by the Texas Occupations Code 2154 and this subchapter, or a new application must be submitted including all applicable fees.

History

Source Note: The provisions of this §34.813 adopted to be effective June 30, 1986, 11 TexReg 2510; amended to be effective December 27, 1988, 13 TexReg 6159; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective January 27, 2004, 29 TexReg 637; amended to be effective June 3, 2004, 29 TexReg 5402.

28 Tex. Admin. Code § 34.814 Fees

(a) All fees payable must be submitted by cashier's check or money order made payable to the Texas Department of Insurance or by online payment. Except for overpayments resulting from mistakes of law or fact, all fees are nonrefundable.

(b) Retail permits may be obtained through participating licensed firms. See §34.815 of this title (relating to Retail Permits).

(c) Fees for tests administered by an outsourced testing service are payable to the testing service in the amount and manner the service requires.

(d) Fees are as follows:

(1) manufacturer license:

(A) initial fee--$1,000;

(B) renewal fee (before expiration)--$1,000;

(D) renewal late fee (expired 91 days to two years)--$1,000;

(2) distributor license:

(A) initial fee--$1,500;

(B) renewal fee (before expiration)--$1,500;

(D) renewal late fee (expired 91 days to two years)--$1,500;

(3) jobber license:

(A) initial fee--$1,000;

(B) renewal fee (before expiration)--$1,000;

(D) renewal late fee (expired 91 days to two years)--$1,000;

(4) pyrotechnic special effects operator license:

(A) initial fee--$45;

(B) renewal fee (before expiration)--$25;

(D) renewal late fee (expired 91 days to two years)--$45;

(5) pyrotechnic operator license:

(A) initial fee--$45;

(B) renewal fee (before expiration)--$25;

(D) renewal late fee (expired 91 days to two years)--$45;

(6) multiple public display permit:

(A) initial fee--$400;

(B) renewal fee (before expiration)--$400;

(7) retail permit--$20;

(8) single public display permit--$50;

(9) agricultural, industrial, and wildlife control permits--$10;

(10) flame effects operator:

(A) initial fee--$45;

(B) renewal fee (before expiration)--$25;

(D) renewal late fee (expired 91 days to two years)--$45;

(11) test administered by the State Fire Marshal's Office:

(A) initial test fee--$20;

(B) retest fee--$20;

(12) change of address request--$0;

(13) duplicate or revised permits or licenses, or other requested changes to permits or licenses--$20.

(e) A renewal application for a license must be accompanied by the renewal fee and may be paid either online or by mail. The renewal application and fee must be submitted before the license's expiration date. A renewal application or payment by mail must be postmarked before the date the license expires. Renewal applications postmarked after the license expiration date must be accompanied by both the renewal fee and the appropriate late fee.

(f) Holders of licenses that have been expired for less than two years cannot be issued new licenses.

History

Source Note: The provisions of this §34.814 adopted to be effective June 30, 1986, 11 TexReg 2510; amended to be effective July 4, 1991, 16 TexReg 3352; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective January 27, 2004, 29 TexReg 637; amended to be effective June 3, 2004, 29 TexReg 5402; amended to be effective August 29, 2019, 44TexReg 4481; amended to be effective April 9, 2025, 50 TexReg 2299.

28 Tex. Admin. Code § 34.815 Retail Permits

(a) A retail permit is required for each retail stand or other retail sales location.

(b) Prior to the issuance of a retail permit, an applicant must present evidence of a valid current sales tax permit issued by the state comptroller.

(d) The retail permit, once issued, must be printed, signed, and posted in a place visible to the public within the retail space to be effective.

(e) Retail permits will only be issued to individuals or groups engaged in the retail sale of fireworks.

(f) Bulk storage of Fireworks 1.4G by a retail permittee must be in compliance with §34.823 of this title (relating to Bulk Storage of Fireworks 1.4G).

(g) Fireworks 1.4G must be sold to the general public only at legally permitted retail fireworks sites and during the legal selling periods defined in the Occupations Code §2154.202.

History

Source Note: The provisions of this §34.815 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective May 8, 2024, 49 TexReg 3011.

28 Tex. Admin. Code § 34.816 Agricultural, Industrial, and Wildlife Control Permits

(a) Applicants shall:

(1) describe the type of fireworks to be used;

(2) indicate the specific purpose for which fireworks are to be used; and

(3) state the exact location where fireworks are to be used.

(b) Duplicate permits shall not be issued.

(d) Fireworks 1.3G for agricultural, industrial, or wildlife control purposes shall be purchased only from distributors licensed in this state.

History

Source Note: The provisions of this §34.816 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.817 Retail Sales General Requirements

(a) A supervisor, 18 years of age or older, must be on duty during all phases of operation. It is the responsibility of the permit holder as well as the supervisor to comply with or require compliance with the fireworks rules.

(b) A building with more than 350 linear feet of fireworks counter display or containing a total of 500 or more cases of Fireworks 1.4G for sales or storage by a retailer must comply with §34.823 of this title (relating to Bulk Storage of Fireworks 1.4G), except as provided by §34.832, of this subchapter (related to Specific Requirements for Retail Fireworks Sites Other Than Stands).

(d) Each retail fireworks site determined to have fire danger external of the sales area must be provided with equipment or facilities that are capable of extinguishing small exterior fires that would threaten the retail stand. Retail sales in other than a stand must have a fire extinguisher rated not less than 2-A. An extinguisher must be located within 75 feet walking distance from any point in the building, and each extinguisher must cover a floor area not greater than 1000 square feet per unit of "A" rating.

(e) An unobstructed pathway to walk doors must be maintained within the retail fireworks site during selling operation.

(f) The display, offer for sale, or sales of fireworks from tents and motor vehicles is prohibited. Fireworks may not be sold or stored for future sale at any inhabited dwelling, house, apartment, or other structure used in whole or in part as a home or place of abode by any person or persons.

(g) Smoking is not permitted in the retail fireworks site. The presence of lighted cigars, cigarettes, or pipes within 10 feet of any site where fireworks are sold or stored is prohibited. "Fireworks" and "No Smoking" signs in letters not less than four inches high must be conspicuously posted on the inside and outside of each entrance door and at several locations inside the building.

(h) The consumption or possession of alcoholic beverages in any retail fireworks site is prohibited. No retail sales personnel inside the facility or any supervisor may be under the influence of or consume alcoholic beverages while on duty.

(i) A retail fireworks site may only sell fireworks, fireworks promotional items and accessories and those items listed in the Occupations Code §2154.002(4). The display and offer for sale, or sales of fireworks within any structure or building where any other business or any other merchandise is sold is prohibited.

(j) A retail permit is required for each retail fireworks site offering fireworks for sale during selling season and must be posted in the sales area.

(k) The display or offer for sale or sales of fireworks from single or multifamily residential structures is prohibited.

(l) All retail fireworks sites must furnish parking off the highway.

(m) An area of at least 10 feet in width on all sides of a retail fireworks site must be kept free of high grass, empty cardboard boxes and trash.

(n) Fireworks must not be displayed or stored behind glass through which direct sunlight will shine on the fireworks.

(o) Fireworks offered for sale to the general public in this state must conform to the labeling requirements of the United States Consumer Product Safety Commission and the United States Department of Transportation. Only labeling specifications or requirements mandated by either of these agencies is required for the labeling of items offered for sale in Texas.

(p) Internal combustion engines must not be operated inside a retail fireworks sales site.

(q) Shipping information, invoices, and bills of lading related to the inventory at each retail stand must be available for inspection on request.

History

Source Note: The provisions of this §34.817 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective July 5, 2011, 36 TexReg 4111; amended to be effective February 14, 2013, 38 TexReg 662; amended to be effective August 29, 2019, 44 TexReg 8841.

28 Tex. Admin. Code § 34.818 Specific Requirements for Retail Fireworks Stands

A retail fireworks stand must comply with the following requirements:

(1) The fireworks stand in which Fireworks 1.4G are held for retail sale must be constructed of wood, metal, masonry, or concrete, or combinations thereof.

(2) Each stand of less than 16 feet in length must have at least one walk door that opens outward. Stands measuring 16 feet or longer must have at least two walk doors, one in each end, that open outward.

(3) A minimum of combustible material such as posters, signs, and decorations may be used on interior walls.

(4) A minimum distance of six feet must be maintained from the front of the customer counter to the back side of the stand. Fireworks must not be displayed on the customer counter or in any manner that allows the customer to handle fireworks without an attendant directly assisting the customer.

(5) Electrical service to the stand must be installed at least eight feet above ground or buried underground according to standards acceptable to the local AHJ.

(6) Each stand that uses electricity must have a point of power interruption, either inside or outside the stand, (switch or switches) located near a walk door, that interrupts all electric supply to devices and equipment located inside and on the stand.

(7) All electrical wiring, equipment, and devices, both inside and outside the stand, must be UL approved, be securely mounted to the structure, and be installed and maintained to prevent electrical hazards. Splices in electrical wiring servicing equipment and devices inside the stand must be enclosed in junction boxes. Light fixtures and wiring used for illumination inside and outside of the stand must be installed and maintained to prevent accidental contact by the general public and employees.

(8) Drop cords with lights, extension cords, or bare wiring must not be used in any manner inside a retail stand.

(9) In stands where generator-created power is used, the generator must be located in an area free from grass, trash, and other flammable materials and at least 10 feet from the stand. Reserve fuel for the generator must be stored in an approved safety container and a portable fire extinguisher rated to at least 6 BC must be provided.

(10) Fireworks stands must not be illuminated or heated by any device that requires open flame or exposed heating elements. Electric heaters must be equipped with a switching device to stop the flow of current should the heater be tipped over.

(11) If the fireworks stand is used for the overnight storage of Fireworks 1.4G, it must be equipped with suitable locking devices to prevent unauthorized entry.

History

Source Note: The provisions of this §34.818 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective April 13, 1999, 24 TexReg 2949; amended to be effective December 8, 2002, 27 TexReg 11562; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.819 Records and Reports

(a) A licensee shall keep a record of all transactions or operations involving fireworks manufacturing, explosive materials, and devices for one year. Such records shall be made available to the authorities having jurisdiction upon request.

(b) Invoices, sales slips, delivery tickets or receipts, bills of lading, or similar papers representing individual transactions will satisfy the recordkeeping requirement, provided they include the signature and license number of both the seller and buyer.

(c) The loss, theft, or unlawful removal of black powder and Fireworks 1.3G shall be reported immediately to the state fire marshal.

(d) Licensees and permittees shall report in writing any unauthorized incident of explosion or fire involving fireworks to the state fire marshal within 10 days after the occurrence. Incidents resulting in injury or death shall be reported immediately. Reports shall include:

(1) a brief account of the cause of injury to any person and such person's name and address; and

(2) a brief account of the fire or explosion.

History

Source Note: The provisions of this §34.819 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.820 Requirements for Manufacturing, Bulk Storage, and Magazine Facilities

All manufacturing and bulk storage facilities shall comply with the applicable provisions of the Occupations Code Chapter 2154 and this subchapter.

History

Source Note: The provisions of this §34.820 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.821 Manufacturing Operations

(a) Building site security.

(1) All fireworks manufacturing plants shall be completely surrounded by a substantial fence having a minimum height of six feet. All openings in the fence shall be equipped with suitable gates which shall be kept securely locked at all times when not in actual use. The main gate may be left open during the regular hours of operation while in plain view of authorized responsible employees or guards. Conspicuous signs indicating "Warning," "No Smoking," and "No Trespassing" shall be posted.

(2) No person other than authorized employees or representatives of departments of federal, state, or political subdivisions of the state governments having jurisdiction shall be allowed in any fireworks manufacturing plants, except by special permission from the plant office.

(3) All manufacturing process buildings shall be separated from inhabited buildings, public highways, and passenger railways in accordance with Table 1 in §34.824 of this title (relating to Distance Tables).

(4) The distance between process buildings shall be in accordance with provisions of Table 2 in §34.824 of this title (relating to Distance Tables).

(5) Distance between nonprocess buildings, process buildings, and magazines shall be in accordance with Table 2 in §34.824 of this title (relating to Distance Tables).

(6) Magazines storing Fireworks 1.3G, black powder, and salutes shall be separated from inhabited buildings, highways, or other magazines containing black powder or salutes in accordance with Table 3 in §34.824 of this title (relating to Distance Tables).

(7) Permissible bulk storage of Class I flammable liquids (such as gasoline) and flammable compressed gases at fireworks manufacturing and/or storage facilities shall:

(A) be located at least 100 feet from processing, storage buildings, or magazines; or flammable liquid tanks may be located below ground; and

(B) provide that dispensing units and ventilation pipes be located at least 100 feet from processing or storage buildings or magazines.

(b) Building construction.

(1) Process buildings, except buildings in which customers' orders are prepared for shipment, shall embody breakaway construction. The exterior of process buildings shall be constructed of materials no more combustible than painted wood.

(2) No building shall have a basement or be more than one story high. Interior surfaces shall be finished to discourage the accumulation of dust.

(3) Mixing and pressing buildings shall have conductive flooring, properly grounded.

(1) No stoves, exposed flames, or electrical heaters shall be used in any part of a process or mixing building. Heating shall be by means of steam, indirect hot air radiation, hot water, or any other means approved by the state fire marshal. Unit heaters located inside buildings shall be equipped with motors and switches suitable for use in Class II, Division 1 locations found in National Electrical Code, 1984, Article 502.

(2) Where artificial lighting is required in fireworks processing buildings, it shall be by electricity. Temporary or loose electrical wiring shall not be used.

(3) All wiring in mixing and pressing buildings shall be in rigid metal conduit or by Type MI cable. The wiring, lighting fixtures, and switches shall comply with the requirements for Class II, Division 1 locations in the National Electrical Code, 1984, Article 502.

(4) Wiring, switches, and fixtures in storage buildings shall comply with the requirements for Class II, Division 2 locations in the National Electrical Code, 1984, Article 502.

(5) All presses and other mechanical devices shall be properly grounded.

(6) A master switch shall be provided at the point where electric current enters the plant, which will, upon being opened, immediately cut off all electric current to the plant, except that to emergency circuits.

(d) Maximum building occupancy and quantities of explosive or pyrotechnic composition.

(1) Occupants in each process building and magazine shall be limited to those conducting the operations.

(2) No more than 500 pounds of pyrotechnic and explosive composition shall be permitted at one time in any mixing building or any building in which pyrotechnic and explosive compositions are pressed or otherwise prepared for finishing and assembling.

(e) Fire, explosion prevention.

(1) All buildings shall be kept clean, orderly, and free from accumulation of dust or rubbish. Powder, or other explosive or pyrotechnic materials, when spilled, shall be immediately cleaned up and removed from the building.

(2) Rags, combustible pyrotechnic or explosive scrap, and paper shall be kept separate from each other and placed in approved marked containers. All waste and reject hazardous material shall be removed from all buildings daily and removed from the plant at regular intervals and destroyed in an appropriate manner.

(3) No smoking or carrying of lighted pipes, cigarettes, cigars, matches, lighters, or open flame is permitted within the plant fence; except that smoking may be permitted in office buildings, or buildings used exclusively as lunchrooms or restrooms and in which the presence of fireworks or any explosive composition is prohibited. Authorized smoking locations shall be established, so marked, and contain suitable receptacles for cigarette and cigar butts and pipe residue. At least one Class A fire extinguisher shall be located in this area. Persons whose clothing is contaminated with explosives, pyrotechnic, or other dangerous materials shall not be permitted in smoking locations.

(4) Matches, cigarette lighters, or other flame-producing devices shall not be brought into any process building or magazine.

(5) No person shall enter any fireworks plant in possession of liquor or narcotics, or be under the influence of liquor or narcotics, while in a fireworks plant.

(6) Each fireworks plant shall have an employee designated as safety officer. All employees of a fireworks plant, upon commencing employment and at least annually thereafter, shall be given formal instruction by the safety officer, regarding proper methods, procedures, and safety requirements for handling explosives, pyrotechnics, and fireworks.

(7) In areas where there is a danger of ignition of materials by sparks, properly maintained and nonferrous safety hand tools shall be used.

(8) In no case shall oxidizers such as nitrates, chlorates, or perchlorates be stored in the same building with combustible powdered materials such as charcoal, gums, metals, sulfur, or antimony sulfide.

(f) Testing. Testing of fireworks and components of fireworks shall be performed in an area set aside for that purpose and located a safe distance from any plant building or other structure.

(g) Fire extinguishers; emergency procedures.

(1) Fire extinguishers shall be provided in all buildings except those in which pyrotechnic mixtures are exposed.

(2) Emergency procedures shall be established for each plant which will include personnel instruction in any emergency that may be anticipated.

(3) Emergency procedures shall include instruction in the use of portable fire extinguishers and instructions on the type of fires on which they may and may not be used.

(A) The employees shall be told that if a fire is involved with or is in danger of spreading to pyrotechnic mixtures, they are to leave the building at once and follow prescribed procedures for alerting other employees.

(B) Extinguishers shall be used on fires involving ordinary combustible materials.

History

Source Note: The provisions of this §34.821 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.822 Storage of Black Powder and Fireworks 1.3G at Other Than Display Sites

(a) General provisions.

(1) Fireworks 1.3G and black powder shall be stored in magazines unless they are in process of manufacture, being physically handled in the operating process, being packaged, or being transported.

(2) Black powder and Fireworks 1.3G shall be stored in a magazine meeting or exceeding the requirements for a Type 4 magazine.

(3) Magazines containing Fireworks 1.3G or black powder shall be separated from inhabited buildings, other magazines, fireworks manufacturing plant buildings, passenger railways, and public highways in accordance with Table 3 in §34.824 of this title (relating to Distance Tables).

(4) Bulk storage of Class I flammable liquids and flammable compressed gases shall comply with provisions of §34.821(a)(7) of this title (relating to Manufacturing Operations).

(b) Construction of magazines--general.

(1) Magazines shall be constructed in conformity with the provisions of this subsection, or may be of substantially equivalent construction.

(2) The ground around the magazines shall be graded for drainage of water.

(3) Magazine heating systems, if installed, shall meet the following requirements.

(A) Radiant heating coils within the building, if used, shall be installed in such a manner that the fireworks containers cannot contact the coils and air is free to circulate between the coils and the fireworks.

(B) Air heating ducts shall be installed in such a manner that the hot air discharge from the duct is not directed against the fireworks or fireworks containers.

(C) The heating device shall have controls that prevent the ambient building temperature from exceeding 130 degrees Fahrenheit.

(D) The electric fan or pump used in the heating system shall be mounted outside and separate from the wall of the magazine and shall be grounded.

(E) The electric fan motor and the controls for an electrical heating device used in heating water or steam shall have overloads and disconnects. All electrical switch gear shall be located a minimum distance of 25 feet from the magazine.

(F) The heating source for a water or steam system, if used, shall be separated from the magazine by a distance of not less than 25 feet when electric and 50 feet when fuel-fired. The area between the heating unit and the magazine shall be cleared of all combustible materials.

(G) The storage of fireworks and fireworks containers in the magazine shall allow uniform air circulation so temperature uniformity can be maintained throughout the stored materials.

(4) When lights are necessary inside the magazine, electrical safety flashlights or electric safety lanterns should be used. The authority having jurisdiction may authorize interior lighting of special design for magazines provided that adequate safety is maintained.

(5) When ventilation is required in a compartmented magazine, sufficient ventilation shall be provided to protect the stored materials as necessary in each compartment. Stored materials shall be so placed in the magazine as not to interfere with ventilation and shall be stored so as to prevent contact with masonry walls or with any steel or other ferrous metal by means of a nonsparking lattice or equivalent lining.

(c) Construction of magazines. Magazines for storage of Fireworks 1.3G and black powder shall meet or exceed the following specifications for Type 4 magazines.

(1) A Type 4 magazine shall be a permanent, portable, or mobile structure, such as a building igloo, semi-trailer, or other mobile container that is fire resistant, theft resistant, and weather resistant.

(2) A Type 4 magazine shall be constructed of masonry, wood covered with metal, fabricated metal, or a combination of these materials. The door shall be metal or solid wood covered with metal.

(3) Permanent Type 4 magazines shall be constructed in accordance with those provisions for Type 4 magazines relating to foundations, ventilation, locks, hinges, hasps, and locking hardware as required by Title 27 C.F.R. Part 55, April 1, 1997 or subsequently adopted edition.

(d) Magazine operations.

(1) Storage shall be supervised by a competent person who shall be at least 21 years of age, and who shall be held responsible for the enforcement of all safety precautions.

(2) When containing Fireworks 1.3G or black powder, the magazine shall be opened and inspected at intervals of not greater than three days to determine whether there has been an unauthorized entry or attempted entry into the magazines; or to determine whether there has been unauthorized material removal from the magazines.

(3) All doors shall be locked, except during hours of operation.

(4) Containers shall be stacked in a stable manner.

(5) Black powder in shipping containers, when stored in magazines with other explosives, shall be segregated. Black powder stored in kegs shall be stored on ends, bungs down, or on side, seams down.

(6) Open black powder containers shall be securely closed before being returned to a magazine. No black powder container without a closed lid may be stored in the magazine.

(7) Tools for opening containers of Fireworks 1.3G or black powder shall be constructed of nonsparking materials, except that metal slitters shall be used for opening fiberboard containers. A wood wedge, a fiber, rubber, or wood mallet shall be used for opening or closing wood containers of explosives.

(8) Magazine floors shall be regularly kept clean, dry, free of grit, paper, empty used packages, and rubbish. Brooms and other cleaning utensils shall not have any spark-producing metal parts. Sweepings from floors of magazines shall be properly disposed.

(9) When magazines need interior repairs, all fireworks and black powder shall be removed and the floors cleaned.

(10) When making exterior magazine repairs, the fireworks and black powder shall be removed from the magazine.

(11) When fireworks and black powder are removed from a magazine under repair they shall be placed in another magazine until repairs have been completed.

(e) Additional safety precautions.

(1) Smoking, matches, open flames, spark-producing devices, and firearms (except firearms carried by authorized guards) shall not be permitted inside of or within 50 feet of magazines.

(2) The land surrounding magazines shall be kept clear of brush, dried grass, leaves, and similar combustibles for a distance of at least 25 feet.

History

Source Note: The provisions of this §34.822 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571.

28 Tex. Admin. Code § 34.823 Bulk Storage of Fireworks 1.4G

(a) General provisions.

(1) These provisions apply to licensees and retail storage of more than 500 cases of Fireworks 1.4G.

(2) Storage facilities containing Fireworks 1.4G must be of solid construction using sound engineering principles.

(3) Electrical installation, if used, must be in compliance with the National Electric Code, 1984. An outside electrical master switch must be provided at each storage facility location when electrical power is installed.

(4) Storage facilities containing Fireworks 1.4G must comply with the following.

(A) Storage facilities must be separated from inhabited buildings, passenger railways, and from the pavement or main travelled surface of any highway by a minimum distance of 50 feet and be in compliance with Table 1 in §34.824 of this title (relating to Distance Tables). Storage facilities in existence prior to January 1, 1986, and then conforming to existing warehouse distance separation rules for jobbers and distributors are exempt from compliance with Table 1, provided such facilities are not enlarged or expanded beyond their January 1, 1986, capacities. An office used for the operation of a storage facility or a retail/wholesale site established in conjunction with a storage facility is exempt from the distance requirements after notifying the state fire marshal. Subsequent construction by adjacent property owners or public authorities must not subject licensee to a distance regulation violation under this section, provided existing storage facilities are not enlarged or expanded after the subsequent construction.

(B) Storage facilities must not contain windows, and any other openings must be situated so that the rays of the sun do not come in contact with or shine through glass directly on fireworks stored in the facility. Skylights that diffuse sun rays are permitted.

(C) No stoves, exposed flames, or electric heaters may be used in any part of storage facility except in a boiler room, machine shop, office building, pump house, or lavatory. Heating of storage facilities must be by means of steam, indirect hot air radiation, or hot water.

(D) Exit doors other than overhead or sliding doors must open outward, must be unlocked during operating hours, and must be clearly marked. Aisles and exit doors must be kept free of any obstruction.

(E) At least one approved Class A fire extinguisher must be provided for each 1,000 square feet of floor space in a storage facility.

(F) The land surrounding storage facilities must be kept clear of brush, dried grass, leaves, and similar combustibles for a distance of at least 10 feet.

(G) Smoking must not be permitted in storage facilities. There must be signs conspicuously posted with the words "Fireworks--No Smoking" in letters not less than four inches high.

(5) Storage buildings must have fencing in compliance with §34.821(a)(1) of this title (relating to Manufacturing Operations) or one of the following:

(A) personnel on the premises 24 hours per day, and the premises remains lighted at night; or

(B) a security alarm system.

(6) Bulk storage of Class I flammable liquids (such as gasoline) and flammable compressed gases must comply with provisions of §34.821(a)(7) of this title (relating to Manufacturing Operations).

(b) Operation of storage facilities.

(1) Storage facilities must at all time during operating hours be in the charge of a competent person who is be at least 18 years of age and who is responsible for the enforcement of all safety precautions.

(2) Doors must be kept locked, except during hours of operation.

History

Source Note: The provisions of this §34.823 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective July 19, 2016, 41 TexReg 5180.

28 Tex. Admin. Code § 34.824 Distance Tables

The following distance tables shall be applicable to this subchapter except to the extent that the distances are different from less restrictive federal regulations.

Attached Graphic

History

Source Note: The provisions of this §34.824 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571.

28 Tex. Admin. Code § 34.825 Distribution and Transportation

(a) With regard to Fireworks, Title 49 C.F.R., governing the transportation of hazardous materials, is adopted by reference as rules governing the safe distribution and transportation of fireworks as hazardous materials in Texas. These rules are subject to the following explanations and exceptions.

(1) When the term "interstate" or "foreign commerce" is used in the federal regulations, it will, for the purpose of such adoption, include all modes of transportation in Texas.

(2) When the term "department" is used in the text of the federal regulations as being the Department of Transportation, it shall, for the purpose of such adoption, mean the Texas Department of Insurance.

(b) A copy of Title 49 CFR shall be kept available for inspection in the Office of the State Fire Marshal.

History

Source Note: The provisions of this §34.825 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571.

28 Tex. Admin. Code § 34.826 Preparing and Conducting Public Pyrotechnic Displays and Flame Effects

(a) Storage. Public display fireworks may be stored temporarily for a period not to exceed 30 days prior to display date in a locked area, in regular 1.3G shipping cartons, not accessible by the general public, and in a location approved by the local fire prevention officer.

(b) Sobriety. Licensed operators or assistants shall not be under the influence of or consume alcoholic beverages or controlled substances during the public display.

(c) Public display criteria. Public displays shall be conducted in accordance with the provisions of the National Fire Protection Association (NFPA) 1123, Code for Fireworks Display, 1995 Edition, except as modified by paragraphs (1) through (3) of this subsection. The Appendix to NFPA 1123 is not considered a part of the requirements of NFPA 1123 and should be used for informational purposes only.

(1) Equivalent material. High density polyethylene (HDPE) pipe shall be a permissible equivalent material for mortars if of sufficient strength and durability to fire aerial shells safely.

(2) Equivalent distance. The separation distance of NFPA 1123 paragraph 2-3.3.3 between mortars, buried in the ground or in a trough, shall not apply to a mortar where the mortar is 6 inches (150 mm) in diameter or less, constructed of high density polyethylene (HDPE), and shells are fired using electrical ignition.

(3) Equivalent distance. The separation distance of NFPA 1123, paragraph 2-3.3.3.2 between a mortar and the wall of a trough shall not apply to a mortar where the mortar is 6 inches (150 mm) in diameter or less and constructed of high density polyethylene (HDPE), shells are fired using electrical ignition and the adjacent trough wall is braced with sufficient strength and durability to safely fire the shells. The trough wall bracing and support shall meet or exceed the following:

(A) two exterior horizontal braces, one along the bottom of the trough, and a top brace at a distance above the bottom brace that is at least one half the length of the shortest mortar in the trough, but not exceeding its top, where bracing consists of angle iron, with a minimum dimension of one and one half inch by one and one half inch by three sixteenths of an inch, or other shaped steel of equivalent strength;

(B) a vertical brace attached between the bottom and top brace spaced no greater than four feet on center along the length of the trough, where the bracing consists of angle iron, with a minimum dimension of one and one half inch by one and one half inch by three sixteenths of an inch, or other shaped steel of equivalent strength; and

(C) a traverse support between the two walls of the trough, consisting of not less than three eighths of an inch threaded rod or equivalent material, located approximately half way up the side walls and located at least every four feet on center along the length of the trough.

(d) Firing mortars. All firing shall be done upon order or signal of the licensed pyrotechnic operator directing the public display.

(e) Public display safety precautions.

(1) A display must be conducted in accordance with all local regulations and conditions prescribed by the fire prevention officer at the time of the site inspection.

(2) During the display, at least one approved Class A type 2 1/2 gallon fire extinguisher or charged garden hose connected to a water line or equivalent means of fire protection shall be provided.

(f) Proximate audience display criteria. Public displays before a proximate audience shall be conducted in accordance with the provisions of the National Fire Protection Association (NFPA) 1126, Standards for the Use of Pyrotechnics Before a Proximate Audience, 1996 Edition. Public displays conducted in accordance with this section shall include pyrotechnic devices, including 1.3G, 1.4G, and 1.4S, as defined in NFPA 1126, and individuals conducting such displays shall be regulated by the provisions of this subchapter as pyrotechnic operators.

(g) Testing. Testing of fireworks and components of fireworks intended for public displays shall be performed in an area set aside for that purpose and located a safe distance from any plant building or other structure. Such testing shall be permitted by a licensed manufacturer, or licensed distributor, conducted under the direct on-site supervision of a licensed pyrotechnic operator, and no public display permit is required.

(h) Flame effects criteria. The use of flame effects before an assembly of 50 people or more shall be conducted in accordance with the provisions of the National Fire Protection Association (NFPA) 160, Standards for Flame Effects Before an Audience, 2001 Edition.

History

Source Note: The provisions of this §34.826 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective April 13, 1999, 24 TexReg 2949 and 24 TexReg 4243; amended to be effective January 27, 2004, 29 TexReg 637.

28 Tex. Admin. Code § 34.827 Qualifications for Persons Assisting at Public Displays

Persons assisting at public displays must be:

(1) at least 18 years old; and

(2) under the direct supervision of a licensed pyrotechnic operator.

History

Source Note: The provisions of this §34.827 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.828 Existing Facilities and Conditions

Existing facilities and conditions outlined in this section which do not comply with the Occupations Code Chapter 2154 and this subchapter shall come into compliance within the following time periods after the effective date of this subchapter:

(1) manufacturing facilities--five years;

(2) bulk storage facilities--three years; and

(3) individuals applying for a pyrotechnic operator license before September 1, 1986, may be issued a license if they otherwise qualify and have passed the required examination, but do not comply with the supervisory requirement of §34.811(e)(1) of this title (relating to Requirements, Pyrotechnic Operator License).

History

Source Note: The provisions of this §34.828 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.829 Severability

If a provision of these sections or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these sections which can be given effect without the invalid provisions or application. To this end, all provisions of these sections are declared to be severable.

History

Source Note: The provisions of this §34.829 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091.

28 Tex. Admin. Code § 34.830 Savings Clause

Each disciplinary action by the Texas Department of Insurance taken against a person or organization licensed or permitted under Occupations Code Chapter 2154 shall be taken in accordance with the statutory law, regulations and orders of the commissioner of insurance or state fire marshal in effect at the time of the regulated action for which the disciplinary action is taken.

History

Source Note: The provisions of this §34.830 adopted to be effective June 30, 1986, 11 TexReg 2510; transferred effective September 1, 1991, as published in the Texas Register March 6, 1992, 17 TexReg 1745; amended to be effective June 4, 1993, 18 TexReg 3300; transferred effective September 1, 1997, as published in the Texas Register November 14, 1997, 22 TexReg 11091; amended to be effective September 14, 1998, 23 TexReg 9571; amended to be effective December 8, 2002, 27 TexReg 11562.

28 Tex. Admin. Code § 34.832 Specific Requirements for Retail Fireworks Sites Other Than Stands

Indoor retail fireworks sites must comply with the following requirements:

(1) The retail fireworks sales building must be a free-standing durable structure with only one story of space accessible to the public. It must not be a tent, boat, or mobile vehicle. The fireworks sales area must not be part of a multi-use or multi-tenant building.

(2) The following distance requirements apply to an indoor retail fireworks site owned or leased by a fireworks licensee, which had a fireworks retail permit or a building permit in effect or was under construction on or before November 18, 2002, and stores or displays over 500 cases of Fireworks 1.4G in the building.

(A) The fireworks sales building must be a minimum distance of 60 feet from any inhabited building;

(B) The fireworks sales building must be a minimum distance of 30 feet from the property line.

(C) The fireworks sales building must meet the distance requirements of §34.824 Table 1 of this title (relating to Distance Tables), or have a minimum one-hour fire rated exterior wall with minimum three-fourths-hour fire rated protected openings.

(D) An office area used for the operation of the site, separated by a one-hour fire-rated wall from the fireworks sales or storage area, may be exempt from the distance requirements after it is reported to and reviewed by the state fire marshal.

(3) The following distance requirements must apply to an indoor retail fireworks site owned or leased by a fireworks licensee that did not have a fireworks retail permit or a building permit in effect or was not under construction on or before November 18, 2002, and that stores or displays over 500 cases of Fireworks 1.4G in the building.

(A) The fireworks sales building must be a minimum distance of 60 feet from any inhabited building.

(B) The fireworks sales building must be a minimum distance of 30 feet from the property line.

(C) The fireworks sales building must meet the distance requirements of §34.824 Table 1 of this title, or have a complete automatic fire sprinkler system installed in accordance with NFPA 13 Standard for the Installation of Sprinkler Systems.

(4) Subsequent construction by adjacent property owners or public authorities will not subject licensee or permittee to a distance regulation violation under this section, provided existing facilities are not enlarged or expanded after the subsequent construction.

(5) Fireworks sales display areas must be sufficiently designed to prevent customers from handling fireworks, unless an attendant is directly assisting the customer.

(6) Fireworks in the sales area must be limited to the displayed merchandise unless stored in closed cardboard boxes not accessible to the public.

(7) Access to fireworks when stored in a separate and distinct area away from general fireworks sales must be restricted to employees only and "No Smoking" signs must be posted inside.

(8) The local fire department and the county fire marshal, if one is appointed or elected in that county, must be notified in writing annually, before beginning sales operations, of the business location, placement of fireworks in building or structure, maximum amount of fireworks in the building, and time period that fireworks will be stored or sold.

(9) Trash, rubbish, and unused boxes, except for small quantities stored in an orderly manner for reuse, must be removed from the sales, storage, and adjacent areas daily, or as often as necessary to prevent unsafe accumulation.

(10) Fireworks may not be displayed or stored behind glass through which direct sunlight can shine on the fireworks.

(11) Extension cords may not be located where the general public could walk over them. An extension cord may be used to extend power to a single appliance or single power strip. An extension cord providing power to a power strip must be of the same or greater wire gauge. Power strips used for multiple appliances must contain an internal circuit breaker. Extension cords and power strips must be protected from accidental damage. Flexible cords and cables must not be used as a substitute for the fixed wiring of a structure. An extension cord must not be plugged into a power strip.

(12) A supervisor, 18 years of age or older, must be on duty during all phases of operation. All fireworks sales personnel must be 16 years of age or older. The permit holder and the supervisor must ensure that all sales personnel comply with this subchapter.

(13) All trash containers used by the general public must be metal or heavy plastic and be located 10 feet from any displayed or stored fireworks.

(14) An outside electrical master switch must be provided at each retail location.

(15) Portable space heaters must not be permitted in retail or storage areas.

(16) A retail sales permit, for other than a retail stand, is not valid until a plan is on file at the State Fire Marshal's Office showing the following:

(A) the address or location of the site;

(B) the name of the person to whom the permit is issued;

(D) the floor area, location, and dimensions used for fireworks sales;

(E) the floor area, location, and dimensions used for fireworks storage outside the sales area;

(F) the floor area, location, and dimensions used for other than fireworks sales and storage;

(G) the general location, description, and distances from the exterior walls to all buildings, fireworks storage magazines, highways, and equipment for storage or dispensing of flammable liquids or compressed gas;

(H) the location of the master electrical cut-off switch;

(I) the location and width of all building doors and paths of egress; and

(J) the maximum estimated number of cases of fireworks to be stored or displayed for sale in the site.

(17) Cooking equipment must not be used within rooms used for fireworks sales or storage.

(18) All fireworks retail sites with a sales area more than 2500 square feet must have a minimum average ceiling height of 12 feet. The sales area is the total square feet of floor area used to sell or store fireworks in an indoor retail fireworks site. Each sales area may be separated from another sales area by a fire barrier having a resistance rating of not less than one hour, with all openings protected by three-fourths-hour fire protection-rated self-closing fire door.

(19) An indoor retail fireworks site must comply with the mercantile occupancy requirements of the standards adopted in §34.303 of this title (relating to Applicability of Rules). This standard, NFPA 101 Life Safety Code, is published by and is available from the National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts, 02269, or 1-800-344-3555.

(20) An indoor fireworks retail site must have a minimum distance of 20 feet around the perimeter of the building that is kept free of high grass, empty cardboard boxes, and trash.

History

Source Note: The provisions of this §34.832 adopted to be effective December 8, 2002, 27 TexReg 11562; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective February 1, 2017, 42 TexReg 318.

Subchapter I SECURITY BARS

28 Tex. Admin. Code § 34.901 Purpose and Application

(a) The purpose of this subchapter is to administer the law set forth in the Health and Safety Code, Chapter 756, regarding security bars on residential dwellings.

(b) The sections of this subchapter shall be known as and may be cited as the rules for the labeling, notice, and release requirements of security bars on residential dwellings.

(d) If any provision of this subchapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity shall not affect the other provisions or any other application of these rules which can be given effect without the invalid provisions or application. To this end, all provisions of this subchapter are declared to be severable.

History

Source Note: The provisions of this §34.901 adopted to be effective November 30, 1999, 24 TexReg 10554.

28 Tex. Admin. Code § 34.902 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bedroom--An area of a dwelling intended as sleeping quarters.

(2) Residential dwelling--Includes a single-family home, a duplex, a triplex, an apartment, a motel or hotel, and a mobile home.

(3) Security bars--Burglar bars or other bars located on the inside or outside of a door or window of a residential dwelling.

History

Source Note: The provisions of this §34.902 adopted to be effective November 30, 1999, 24 TexReg 10554.

28 Tex. Admin. Code § 34.903 Labeling and Notice Requirements

(a) The following label in 14-point, all capital letters, bold-faced type must be attached to security bars or the packaging of security bars sold or offered for sale in this state. The label must be printed in both English and Spanish. Attached Graphic

(b) A person who is not regularly and actively engaged in business as a wholesale or retail dealer may sell or offer to sell security bars in this state provided that a written notice containing the requirements of subsection (a) of this section is provided wholesale or retail dealer may sell or offer to sell security bars in this state provided that to the buyer of the security bars.

History

Source Note: The provisions of this §34.903 adopted to be effective November 30, 1999, 24 TexReg 10554.

28 Tex. Admin. Code § 34.904 Recommended Release Mechanism

(a) The state fire marshal recommends an interior release mechanism for security bars that consists of a lever, knob, handle, panic bar, or other simple type of releasing device having an obvious method of operation under all lighting conditions. The release mechanism for any security bar shall be located not more than 36 inches (91 centimeters) above the finished floor and shall require no more than two movements in order to accomplish the release. The interior release mechanism shall not require the use of a key, a tool, or special knowledge or effort for operation from the inside of the room.

(b) The state fire marshal recommends that the interior release mechanism be inspected or maintained on a periodic basis to make sure that it operates when needed.

History

Source Note: The provisions of this §34.904 adopted to be effective November 30, 1999, 24 TexReg 10554.

Subchapter K GIFTS, GRANTS AND DONATIONS

28 Tex. Admin. Code § 34.1101 Purpose

The purpose of this subchapter is to establish procedures for the acceptance of gifts, grants, and donations made to the State Fire Marshal's Office and to create standards of conduct to govern the relationships between employees of the department and donors or grantors.

History

Source Note: The provisions of this §34.1101 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1102 General Authority to Accept Gifts, Grants, and Donations

The commissioner, through the state fire marshal, is statutorily authorized to accept gifts grants, and donations from any source to develop educational programs and disseminate materials necessary to educate the public effectively regarding methods of fire prevention and safety. It is the policy of the department to accept only those donations and grants that advance the purposes of Government Code §417.0051, Fire Prevention and Safety Education.

History

Source Note: The provisions of this §34.1102 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1103 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commissioner--The Commissioner of Insurance.

(2) Department--The Texas Department of Insurance.

(3) Donation--Money or other assistance from any source other than a grant.

(4) Donation agreement--A written document executed by the commissioner or his designee and the donor that identifies the name of the donor, a description of the donation, the purpose of the donation, and outlines any special conditions of the donation.

(5) Donor--Individuals or organizations that offer to give or give a donation to the department.

(6) Employee--An individual employed by the department in a full or part time capacity.

(7) Gift--Money or other assistance from any source other than a grant.

(8) Grantor--Public or private entity or agency that awards grants to the department.

(9) Grant--Money or other assistance from a grantor, given for a specific purpose.

History

Source Note: The provisions of this §34.1103 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1104 Acceptance of Gifts, Grants, and Donations

(a) All gifts, grants and donations made to the state fire marshal must be accepted by the commissioner on behalf of the state fire marshal. No employee of the department can accept gifts, grants, or donations in their individual capacity.

(b) Donated goods received by the state fire marshal become state property and will be treated as such.

History

Source Note: The provisions of this §34.1104 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1105 Prohibition against Solicitation

No gifts, grants, or donations shall be solicited by the commissioner or any officer or employee of the department. This provision shall not be interpreted to prevent submission by the fire marshal of an application for a grant which would enhance the public welfare. Such submission shall be approved by the fire marshal and the commissioner.

History

Source Note: The provisions of this §34.1105 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1106 Standards of Conduct between Commissioner and Donors or Grantors

Any person or entity seeking to contract with the department on a competitive basis or otherwise shall disclose all previous donations and grants made to the state fire marshal or other state agency within the preceding two years. The disclosure shall include the nature and value of the donation or the grant and the date the donation or grant was made. If the donation or grant is ongoing, the last date that the donation or grant was available to the department shall be used to determine the date of the donation or grant.

History

Source Note: The provisions of this §34.1106 adopted to be effective September 11, 2005, 30 TexReg 5371.

28 Tex. Admin. Code § 34.1107 Procedures for Acceptance of Gifts, Grants, and Donations

(a) Donation agreement. The donor and the commissioner shall execute a donation agreement that includes the following information:

(1) a description of the donation, including a determination of the value;

(2) a statement by the donor attesting to its ownership rights in the property, including intellectual property ownership rights;

(3) the signature of the donor if the donor is an individual or its official representative if the donor is a business organization;

(4) the signature of the commissioner;

(5) any conditions restricting the use of the donation;

(6) the mailing address of the donor and principal place of business if the donor is a business entity;

(7) a statement identifying any official relationship between the donor and the department; and

(8) a statement advising the donor to seek legal and/or tax advice from its own legal counsel.

(b) Grants. All grant money and other assistance shall be received after a written grant acceptance has been executed by the grantor, the fire marshal, and the commissioner.

(c) Deposited funds. The department shall deposit monetary contributions from gifts, grants or donations given pursuant to Government Code §417.0051, Fire Prevention and Safety Education, in accordance with state law. The money contributed shall be used for purposes consistent with Government Code §417.0051.

History

Source Note: The provisions of this §34.1107 adopted to be effective September 11, 2005, 30 TexReg 5371.

Subchapter L FIRE STANDARD COMPLIANT CIGARETTES

28 Tex. Admin. Code § 34.1201 Purpose, Applicability, and Title

(a) The purpose of this subchapter is to implement the Health and Safety Code Chapter 796, regulating the testing, certification, marking, and sale of fire standard compliant cigarettes in the State of Texas.

(b) This subchapter applies to all persons subject to the Health and Safety Code Chapter 796. Pursuant to the Health and Safety Code §796.001, entities located outside of Texas, including those located in other countries, are subject to Chapter 796 if they sell or offer to sell a cigarette in Texas.

(c) This subchapter does not prohibit the sale of a cigarette solely for the purpose of the cigarette's assessment conducted by a manufacturer, or under the control and direction of a manufacturer, to evaluate consumer acceptance of the cigarette. Only the quantity of cigarettes that is reasonably necessary for the assessment may be used.

(d) This subchapter shall be known and may be cited as "The Texas Fire Standard Compliant Cigarette Rules."

History

Source Note: The provisions of this §34.1201 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1202 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Agent--A person licensed by the Texas Comptroller of Public Accounts' Office to purchase and affix adhesive or meter stamps on packages of cigarettes.

(2) Certification--Completion and submission by a cigarette manufacturer of Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), Form Number SF250, adopted by reference in §34.1212(a) of this subchapter (relating to Promulgated and Alternate Certification Forms and Marking Applications), or completion of an alternate certification form as specified in §34.1212(c) of this subchapter.

(3) Cigarette--A roll for smoking:

(A) that is made of tobacco or tobacco mixed with another ingredient and wrapped or covered with a material other than tobacco; or

(B) that is wrapped in any substance containing tobacco that, because of the roll's appearance, the type of tobacco used in the filler or the roll's packaging and labeling, is likely to be offered to or purchased by a consumer as a cigarette.

(4) Department--Texas Department of Insurance.

(5) Fire Standard Compliant Cigarette--A cigarette variety that meets the requirements of the Health and Safety Code Chapter 796 regulating the testing, certification, marking, and sale of fire standard compliant cigarettes.

(6) Manufacturer--A person that manufactures or otherwise produces cigarettes for sale in this state, including cigarettes intended to be sold through an importer; or the first purchaser that intends to resell in this state cigarettes manufactured anywhere that the original manufacturer does not intend to be sold in this state.

(7) Marking--A manufacturer's designation on the package that is permanently stamped, engraved, embossed, or printed and that identifies the package as containing fire standard compliant cigarettes that meet the requirements of the Health and Safety Code §796.006 and §34.1210 of this subchapter (relating to Marking of Package).

(8) Packaging--Cigarette soft packs, hard packs, boxes, cartons, and cases.

(9) Person--An individual or entity, including a cigarette manufacturer, wholesale dealer, or retailer.

(10) Retailer--A person, other than a wholesale dealer, engaged in selling cigarettes or tobacco products.

(11) Sale--Any transfer of title or possession or both, exchange or barter, conditional or otherwise, in any manner or by any means or any agreement. The term includes, in addition to sales using cash or credit, the giving of a cigarette as a sample, prize, or gift and the exchange of a cigarette for any consideration other than money.

(12) Sell--To sell or to offer or agree to sell.

(13) SFMO--State Fire Marshal's Office.

(14) Testing laboratory--Laboratory meeting the accreditation standards specified in the Health and Safety Code §796.003 that performs the fire standard cigarette compliance test. The testing laboratory may be owned or controlled by the cigarette manufacturer.

(15) Variety--A type of cigarette marketed by the manufacturer as being distinct from other types of cigarettes on the basis of the characteristics listed in the Health and Safety Code §796.005(b)(1) - (8).

(16) Wholesale dealer--A person who sells cigarettes or tobacco products to retail dealers or other persons for purposes of resale, including a person who owns, operates, or maintains one or more cigarette or tobacco product vending machines in premises owned or occupied by another person.

History

Source Note: The provisions of this §34.1202 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1203 General Provisions Regarding Required and Voluntary Submissions

(a) Applicability. Except as otherwise provided in this subchapter, this section applies to each:

(1) certification form and marking application, including those submitted in an alternate form in accordance with §34.1212(c) of this subchapter (relating to Promulgated and Alternate Certification Forms and Marking Applications);

(2) request for an alternate certification or marking application form;

(3) request for an alternative test method and performance standard; and

(4) applicable fee required to be submitted to the SFMO under the Health and Safety Code §796.005(e) and §34.1211 of this subchapter (relating to Certification Filing Fees).

(b) Submissions.

(1) Promulgated certification forms and marking applications. The certification form and marking application form specified in §34.1212 of this title (relating to Promulgated and Alternate Certification Forms and Marking Applications) may be obtained from the State Fire Marshal's Office, Mail Code 112-FM, Texas Department of Insurance, P.O. Box 149221, Austin, Texas 78714-9221 or the department's website at www.tdi.texas.gov/forms/forms18.html.

(2) Alternate certification form or marking application. A manufacturer may submit a request to the SFMO to use an alternate form as specified in §34.1212(c) of this subchapter in lieu of the promulgated certification form or marking application specified in §34.1212(a) and (b) of this subchapter. A manufacturer may request to use an alternate certification form or an alternate marking application, or both an alternate certification form and an alternate marking application. The request to use an alternate form should be submitted to the address specified in paragraph (1) of this subsection.

(3) Manner of submission.

(A) All certification forms, marking applications, including those submitted in an alternate form, requests for an alternative test method and performance standard, and applicable fees required to be submitted pursuant to the Health and Safety Code Chapter 796 and this subchapter must be submitted to the Fire Standard Compliant Cigarette Program Coordinator, State Fire Marshal's Office, Mail Code 112-FM, Texas Department of Insurance, P.O. Box 149221, Austin, Texas 78714-9221, or to the extent that the SFMO and department determine an acceptable means of electronic submission, a certification form, marking application, request for an alternate certification or marking application form, request for an alternative test method and performance standard, or applicable fee may be submitted electronically.

(B) Each certification form and marking application or approved-for-use alternate certification or marking application form submitted to the SFMO must be fully completed before it will be accepted and the filing will be considered for the purpose it was submitted. A completed certification form or marking application or completed alternate certification or marking application form is one that provides all required information and is accompanied by all required fees.

(4) SFMO initial actions on initial submissions.

(A) If the SFMO determines the submitted marking application is incomplete, the SFMO shall provide the manufacturer with written notice stating the reasons why the submitted marking application is incomplete. If this notification is not postmarked within 10 business days following the receipt of the marking application, the marking application is deemed approved as provided in §34.1210(c)(2) (relating to Marking of Package).

(B) A certification that includes payment of all required fees is considered valid until the SFMO disapproves the certification submission in writing.

(i) the certification form or marking application has been accepted as complete or that the request for an alternative testing method or request for an alternate certification or marking application form has been approved; or

(ii) the submission has been disapproved. Disapprovals shall state in writing the reason the submission was not approved and that the person may take action as provided under paragraph (5) of this subsection.

(5) Resubmissions. If the submission is disapproved, the person making the submission may complete or correct the submission and resubmit it.

(A) If the corrected or completed submission is resubmitted to the SFMO within 180 days of receipt by the SFMO of the initial submission, the corrected or completed submission may be submitted without payment of additional fees.

(B) If the corrected or completed submission is not submitted within the 180-day time period, the corrected or completed submission constitutes a new submission and must be submitted with an additional payment to the SFMO of all required fees as specified in §34.1211 of this subchapter (relating to Certification Filing Fees).

(C) If the person chooses not to correct and resubmit the submission, the person shall have 30 days from the date of the last disapproval notice to make a written request for hearing to the SFMO. If a hearing is requested, the hearing will be granted, and the procedures for a contested case under the Administrative Procedure Act, Government Code Chapter 2001, shall apply.

(c) Written Notice from the SFMO. Notice by the SFMO, as required by provisions of this subchapter, shall be given by personal service or mailed, postage prepaid, to the mailing address of record for the submitting entity.

History

Source Note: The provisions of this §34.1203 adopted to be effective December 31, 2008, 33 TexReg 10443; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.1204 Existing Inventory

(a) Pursuant to Section 2(a) of HB 2935 enacted by the 80th Legislature and subject to subsection (b) of this section, this subchapter does not prohibit a wholesale dealer or retailer from selling existing inventory of cigarettes on or after January 1, 2009, provided that the state tax stamps were affixed to the cigarettes before January 1, 2009, and the quantity is comparable to the quantity of cigarettes purchased during the previous year.

(b) Pursuant to Section 2(b) of HB 2935, a person may not sell or offer for sale a cigarette in this state that does not comply with this subchapter after January 1, 2010.

History

Source Note: The provisions of this §34.1204 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1205 Testing

(a) Except as provided in §34.1206 of this subchapter (relating to Alternative Testing Methods), each cigarette variety must be tested in compliance with the Health and Safety Code §796.003.

(b) The manufacturer is solely responsible for ensuring that all cigarette varieties not otherwise approved for alternative testing under §34.1206 of this subchapter are tested in compliance with the Health and Safety Code §796.003.

(c) This section does not apply to cigarette varieties that have been previously tested and certified in compliance with the Health and Safety Code Chapter 796 and this subchapter and have been subsequently altered only by changes which are not likely to alter the cigarette's compliance with the reduced cigarette ignition propensity standards required by the Health and Safety Code Chapter 796.

History

Source Note: The provisions of this §34.1205 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1206 Alternative Testing Methods

(a) General Requirements.

(1) Pursuant to §796.004 of the Health and Safety Code, a cigarette manufacturer may not certify a cigarette variety under the Health and Safety Code Chapter 796 and this subchapter using a cigarette testing method and performance standard other than the method specified in the Health and Safety Code §796.003 without the prior written authorization of the SFMO.

(2) The manufacturer is solely responsible for ensuring that all cigarettes accepted for alternative testing under this section are tested in compliance with the alternative testing method and performance standard accepted by the SFMO for that cigarette variety.

(3) SFMO authorization to use an alternative testing method and performance standard must be granted for each specific cigarette variety that will be subject to the alternative testing method and performance standard.

(4) Accepted requests for an alternative testing method and performance standard are not transferable to other cigarette varieties and may not be used to test other cigarette varieties without the prior written authorization of the SFMO.

(b) Initiation of Review of Alternative Test Method. The SFMO may initiate a review of an alternative test method to make a determination under this subsection based on the application of the cigarette manufacturer or the SFMO's own action.

(1) If the SFMO determines that a variety of cigarette cannot be tested in accordance with the Health and Safety Code §796.003, a cigarette manufacturer may request an alternative test method and performance standard.

(2) A cigarette manufacturer may also seek authorization to use an alternative test method and performance standard approved in another state.

(3) Requests for authorization to use an alternative test method and performance standard must be submitted in accordance with §34.1203 of this subchapter (relating to General Provisions Regarding Required and Voluntary Submissions).

(d) SFMO Authorization.

(1) If a request is submitted under subsection (c)(1) of this section, the SFMO shall authorize the cigarette manufacturer to use the alternative test on the variety of cigarette if the cigarette manufacturer demonstrates to the satisfaction of the SFMO that the performance standard proposed by the manufacturer is equivalent to the performance standard under the Health and Safety Code §796.003.

(2) If a request is submitted under subsection (c)(2) of this section, unless the SFMO can demonstrate a reasonable basis why the alternative test method should not be accepted under Health and Safety Code Chapter 796, the SFMO shall authorize the cigarette manufacturer to use the alternative test on the variety of cigarette if the cigarette manufacturer demonstrates to the satisfaction of the SFMO that:

(A) another state has enacted reduced cigarette ignition propensity standards that include a test method and performance standard that are the same as those contained in the Health and Safety Code Chapter 796; and

(B) the officials responsible for implementing those requirements have approved the proposed alternative test method and performance standard for the particular cigarette variety proposed by a manufacturer as meeting the fire safety standards of that state's law or regulation under a legal provision comparable to the Health and Safety Code §796.004, including a provision that the performance standard proposed by the manufacturer is equivalent to, or greater than, the performance standard established under the Health and Safety Code §796.003.

(e) SFMO Rejection. If the requested alternative method is rejected by the SFMO, the cigarette manufacturer may proceed under §34.1203(b)(4) of this subchapter.

(f) SFMO Notice of Determination. Notice regarding the SFMO's determination concerning an alternative test method and performance standard requested pursuant to this section shall be made as described in §34.1203 of this subchapter.

History

Source Note: The provisions of this §34.1206 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1207 Certification

(a) Submission of Form and Payment of Fees. Before a cigarette variety may be sold or offered for sale in this state, the manufacturer of the cigarette variety must:

(1) complete and submit to the SFMO:

(A) the Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), Form Number SF250, that is adopted by reference in §34.1212 of this subchapter (relating to Promulgated and Alternate Certification Forms and Marking Applications); or

(B) an approved-for-use alternate certification form as specified in §34.1212(c) of this subchapter; and

(2) pay the required certification fee for each variety of cigarette being certified as specified in the Health and Safety Code §796.005(e) and §34.1211 of this subchapter (relating to Certification Filing Fees).

(b) Scope of Certification. A manufacturer may certify any number of cigarette varieties in a single filing to the extent that the cigarette varieties:

(1) were all tested at the same testing laboratory;

(2) were tested using the same testing method and performance standard; and

(3) have the same manufacturer contact information.

(c) Validity Period for Certification. A certification that includes payment of all required fees is considered valid until the SFMO disapproves the certification submission in writing. Notice of disapproval shall be made in accordance with §34.1203 of this subchapter (relating to General Provisions Regarding Required and Voluntary Submissions).

(d) Expiration of Certification.

(1) To continue to sell a cigarette variety that has been certified under this section the manufacturer of that cigarette variety must, within three years of the certification date, submit a new complete Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), Form Number SF250, or an approved-for-use alternate certification form as specified in §34.1212(c) of this subchapter to the SFMO that is accompanied by all required certification renewal fees specified in §32.1211(d) of this subchapter.

(2) Each certification period shall expire at 11:59 p.m. on the third anniversary of the date the certification is filed with the SFMO.

(3) A wholesale dealer or retailer may continue to sell a cigarette variety after the certification period for the variety has expired if the cigarettes sold by the wholesale dealer or retailer were purchased from a manufacturer before the expiration of the certification period.

History

Source Note: The provisions of this §34.1207 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1208 Changes to Cigarette Variety

If a certified cigarette variety is changed with respect to any one or more of the items listed in the Health and Safety Code §796.005(b)(1) - (8), it is considered a different cigarette variety and must be certified as a new variety in conformance with §34.1207 of this subchapter (relating to Certification) before the cigarette variety may be sold in this state. Certification must meet all requirements specified in §34.1207 of this subchapter.

History

Source Note: The provisions of this §34.1208 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1209 Records Maintenance

(a) For each cigarette variety offered for sale, the manufacturer shall document and maintain for a period of not less than three years after the cigarette variety was offered for sale the following information:

(1) a copy of the submitted Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), Form Number SF250, for the cigarette variety, or the submitted alternate certification form as specified in §34.1212(c) of this subchapter (relating to Promulgated and Alternate Certification Forms and Marking Applications); and

(2) copies of the reports of all tests conducted on that cigarette variety.

(b) The manufacturer shall, not later than 60 calendar days after the date the manufacturer receives a written request from the SFMO, make available to the SFMO copies of the records and documentation specified in the Health and Safety Code §796.007 and subsections (a) and (b) of this section. Except as agreed by the SFMO and the cigarette manufacturer, all copies requested to be made available under this section shall be delivered to the Fire Standard Compliant Cigarette Program Coordinator, State Fire Marshal's Office, Mail Code 112-FM, Texas Department of Insurance, P.O. Box 149221, Austin, Texas 78714-9221.

History

Source Note: The provisions of this §34.1209 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1210 Marking of Package

(a) General Requirements.

(1) The packaging of all cigarettes varieties certified by the manufacturer to comply with the Health and Safety Code Chapter 796 shall be marked in accordance with the provisions of the Health and Safety Code §796.006.

(2) A manufacturer shall use only one marking method applied uniformly to all cigarette packaging of all varieties marketed by the manufacturer for compliance with the Health and Safety Code Chapter 796.

(b) Submission of Proposed Marking.

(1) Manufacturers must submit their proposed marking to the SFMO along with a completed Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251, that is adopted by reference in §34.1212 of this subchapter (relating to Promulgated and Alternate Certification Forms and Marking Applications), or with a completed approved-for-use alternate marking application form as specified in §34.1212(c) of this subchapter.

(2) The SFMO shall not be deemed to receive an Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251 or an approved-for-use alternate marking application on a Saturday, Sunday, or legal holiday. The day the Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251 or the approved-for-use alternate marking application is received by the SFMO shall not be included in computing the 10-day period.

(1) The SFMO shall approve or disapprove the proposed marking within 10 business days after the date the completed Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251 or the completed approved-for-use alternate marking application is received by the SFMO.

(2) The SFMO shall approve a marking that:

(A) is in use and approved for sale in another state; or

(B) has the letters "FSC" for Fire Standards Compliant appearing in eight-point or larger type and permanently printed, stamped, engraved, or embossed on the package at or near the Universal Product Code.

(3) Pursuant to the Health and Safety Code §796.006(b) if the marking is not disapproved within the 10 business days after the completed Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251 or the completed approved-for-use alternate marking application form is received, the proposed marking method shall be deemed approved.

(4) If the SFMO approves the proposed marking method under the requirements specified in the Health and Safety Code §796.006, the SFMO shall provide the manufacturer with written acknowledgement that the proposed marking method has been approved. Notice of approval shall be made in accordance with §34.1203 of this subchapter (relating to General Provisions Regarding Required and Voluntary Submissions).

(5) If the SFMO disapproves the proposed marking method under the requirements specified in the Health and Safety Code §796.006, the SFMO shall provide the manufacturer with written notice that the marking method may not be used by the manufacturer. Notice of disapproval shall be made in accordance with §34.1203 of this subchapter. The manufacturer may correct the application or appeal the disapproval as described in §34.1203 of this subchapter.

(d) Modification of Approved Marking. A manufacturer shall not modify an approved marking without first submitting a completed Application for Fire Standard Compliant Cigarette Marking Approval, Form Number SF251, or a completed alternate marking application as specified in §34.1203(b)(2) of this subchapter as set forth in this section and obtaining prior approval of the proposed marking method by the SFMO.

History

Source Note: The provisions of this §34.1210 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1211 Certification Filing Fees

(a) Payment of the certification filing fee must accompany completed submissions of the Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), Form Number SF250, or the approved-for-use alternate certification form. Fees must be paid by money order, check or other method accepted by the SFMO. Money orders and checks must be made payable to the Texas Department of Insurance.

(b) Fees must be paid on a cumulative total basis for each certification filing.

(d) Fees for the Fire Standard Compliant Cigarette Certification filing are as follows:

(1) initial fee--$250 per cigarette variety; and

(2) renewal fee (every three years)--$250 per cigarette variety.

History

Source Note: The provisions of this §34.1211 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1212 Promulgated and Alternate Certification Forms and Marking Applications

(a) Promulgated Certification by Manufacturer for Fire Standard Compliant Cigarette. The commissioner adopts by reference the Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC), which contains instructions for completion of the form; information regarding certification fees; requires information to be provided regarding the certification type, cigarette manufacturer, testing entity, test method, testing and quality assurance program, and cigarette variety information required by Health and Safety Code §796.005. The form is available at the department's website at www.tdi.texas.gov/forms/forms18.html.

(b) Promulgated Application for Fire Standard Compliant Cigarette Marking Approval. The commissioner adopts by reference the Application for Fire Standard Compliant Cigarette Marking Approval, which contains instructions for completion of the form and requires information to be provided regarding the cigarette manufacturer, marking approval, and a certification that the manufacturer will or has provided required information to cigarette wholesale dealers and agents. The form is available at the department's website at www.tdi.texas.gov/forms/forms18.html.

(c) Alternate Certification Form or Marking Application. The information required by the promulgated certification form or marking application may be submitted in an alternate form in lieu of the promulgated certification form or marking application.

(1) Manufacturers may submit either an alternate form in lieu of the promulgated certification form or an alternate form in lieu of the promulgated marking application or both an alternate certification form and alternate marking application. Manufacturers may submit an alternate certification form in conjunction with the promulgated Application for Fire Standard Compliant Cigarette Marking Approval. Manufacturers may submit an alternate marking application in conjunction with the promulgated Certification by Manufacturer for Fire Standard Compliant Cigarette (FSCC).

(2) The alternate form must be approved by the SFMO before the form may be used to file the information required in the promulgated certification form or marking application.

(3) A manufacturer may submit a request to the SFMO to use an alternate form in accordance with §34.1203 of this title (relating to General Provisions Regarding Required and Voluntary Submissions).

(4) Submission of an alternate form in lieu of the promulgated certification or marking application is not required and is at the option of the manufacturer.

History

Source Note: The provisions of this §34.1212 adopted to be effective December 31, 2008, 33 TexReg 10443; amended to be effective February 14, 2013, 38 TexReg 662.

28 Tex. Admin. Code § 34.1213 Penalties

Violation of the Health and Safety Code Chapter 796 or this subchapter may subject a person to civil penalties as set forth in the Health and Safety Code §796.010.

History

Source Note: The provisions of this §34.1213 adopted to be effective December 31, 2008, 33 TexReg 10443.

28 Tex. Admin. Code § 34.1214 Forfeiture Authority

Pursuant to the Health and Safety Code §796.010(c), a cigarette sold or offered for sale in violation of the Health and Safety Code Chapter 796 is subject to forfeiture under Chapter 154, Tax Code, except that before a forfeited cigarette may be destroyed, the true holder of the trademark rights in the cigarette brand must be permitted to inspect the cigarette.

History

Source Note: The provisions of this §34.1214 adopted to be effective December 31, 2008, 33 TexReg 10443.

Subchapter M SCHEDULED ADMINISTRATIVE PENALTIES

28 Tex. Admin. Code § 34.1301 Imposition of Penalty

(a) The commissioner delegates to the state fire marshal the authority to take disciplinary and enforcement action described in this subchapter.

(b) The state fire marshal may impose an administrative penalty as described in §34.1302 of this title (relating to Schedule of Administrative Penalties) against a person who violates:

(1) a provision of Title 20, Insurance Code, including Chapter 6001, 6002, or 6003;

(2) Occupations Code Chapter 2154; or

(3) a rule appearing in Subchapter E, F, G, or H of this chapter (relating to Fire Extinguisher and Installation, Fire Alarm Rules, Fire Sprinkler Rules, and Storage and Sale of Fireworks, respectively).

(c) As used in this subchapter, the term "licensee" includes all persons licensed, registered, or otherwise regulated by Title 20, Insurance Code, or Occupations Code Chapter 2154.

(d) The state fire marshal may refer a violation of subsection (b)(1), (2), or (3) of this section to the Texas Department of Insurance, Enforcement Section instead of imposing an administrative penalty under this subchapter. Sanctions under Insurance Code Chapters 82, 83, and 84, and Occupations Code Chapter 2154 are not restricted to the administrative penalty amounts under §34.1302 of this title.

History

Source Note: The provisions of this §34.1301 adopted to be effective April 24, 2013, 38 TexReg 2507; amended to be effective July 2, 2014, 39 TexReg 4962.

28 Tex. Admin. Code § 34.1302 Schedule of Administrative Penalties

(a) The Fire Extinguisher Penalty Schedule is specified as follows.

Attached Graphic

(b) The Fire Alarm Penalty Schedule is specified as follows.

Attached Graphic

(d) The Fireworks Indoor Retail Stand Penalty Schedule is specified as follows.

Attached Graphic

(e) The Fireworks Retail Site Penalty Schedule is specified as follows.

Attached Graphic

(f) The Fireworks Distributor Licensing Retailer Permit Penalty is specified as follows.

Attached Graphic

History

Source Note: The provisions of this §34.1302 adopted to be effective April 24, 2013, 38 TexReg 2507; amended to be effective July 19, 2016, 41 TexReg 5180; amended to be effective April 9, 2025, 50 TexReg 2299.

28 Tex. Admin. Code § 34.1303 Combined Sanctions

An administrative penalty imposed under this subchapter may be combined with a proceeding to impose other administrative sanctions. The requirements of this subchapter apply to administrative penalties imposed under this subchapter.

History

Source Note: The provisions of this §34.1303 adopted to be effective April 24, 2013, 38 TexReg 2507.

28 Tex. Admin. Code § 34.1304 Notice of Violation and Penalty

After investigation of a possible violation and the facts surrounding the possible violation the state fire marshal's office may issue to the licensee a notice of alleged violation stating:

(1) a brief summary of the alleged violation;

(2) the amount of the recommended administrative penalty; and

(3) that the licensee has the right to accept the department's determination and recommended administrative penalty by submitting payment, show compliance with all requirements of all applicable law and rules, or request a hearing.

History

Source Note: The provisions of this §34.1304 adopted to be effective April 24, 2013, 38 TexReg 2507; amended to be effective July 2, 2014, 39 TexReg 4962.

28 Tex. Admin. Code § 34.1305 Penalty to be Paid or Hearing Requested

(a) No later than the 30th day after the date the licensee receives the notice of alleged violation and recommended administrative penalty, the licensee may:

(1) accept the department's determination and recommended administrative penalty by submitting payment;

(2) show compliance with all requirements of all applicable law and rules; or

(3) request a hearing.

(b) If the licensee fails to show compliance with all applicable law and rules within the time specified in subsection (a) of this section, the state fire marshal may refer the alleged violation to the Texas Department of Insurance, Enforcement Section as described in §34.1301(d) of this title (relating to Imposition of Penalty).

History

Source Note: The provisions of this §34.1305 adopted to be effective April 24, 2013, 38 TexReg 2507; amended to be effective July 2, 2014, 39 TexReg 4962.

28 Tex. Admin. Code § 34.1306 Request for Hearing

If the licensee requests a hearing, the state fire marshal will refer the matter to the Texas Department of Insurance, Enforcement Section. The state fire marshal may assert other matters and claims against the licensee at the hearing and seek any disciplinary action available under Insurance Code Chapters 82, 83, and 84, Occupations Code Chapter 2154, and this chapter, including additional penalty amounts in excess of the penalty schedule amount.

History

Source Note: The provisions of this §34.1306 adopted to be effective April 24, 2013, 38 TexReg 2507.

28 Tex. Admin. Code § 34.1307 Failure to Pay Penalty

If a licensee fails to pay the administrative penalty, the state fire marshal may refer the alleged violation to the Texas Department of Insurance, Enforcement Section as described in §34.1301(d) of this title (relating to Imposition of Penalty) and seek additional sanctions.

History

Source Note: The provisions of this §34.1307 adopted to be effective April 24, 2013, 38 TexReg 2507; amended to be effective July 2, 2014, 39 TexReg 4962.

28 Tex. Admin. Code § 34.1308 Dispute of Penalty

A licensee may dispute the imposition of the penalty or the amount of the penalty imposed in the manner prescribed by Insurance Code Chapter 84, Subchapter C.

History

Source Note: The provisions of this §34.1308 adopted to be effective April 24, 2013, 38 TexReg 2507.

Part 2 TEXAS DEPARTMENT OF INSURANCE, DIVISION OF WORKERS' COMPENSATION

Chapter 41 PRACTICE AND PROCEDURE

Subchapter A COMMUNICATIONS

28 Tex. Admin. Code § 41.1 Name Change

Pursuant to Senate Bill 1 (71st Legislature, 2nd Called Session, 1989), the following revisions are effective April 1, 1990.

(1) The state agency known since 1913 as the Industrial Accident Board is renamed the Texas Workers' Compensation Commission. Wherever the term "Industrial Accident Board," "Board," or "board," meaning the agency, appears in these rules, it shall mean "Texas Workers' Compensation Commission."

(2) The executive director of the Texas Workers' Compensation Commission exercises all authority necessary to administer Texas Civil Statutes, Articles 8306-8309-1. Wherever the terms "Industrial Accident Board" or "Board," meaning one or more members of Industrial Accident Board, appears in these rules, the terms shall mean the executive director or delegatee.

History

Source Note: The provisions of this §41.1 adopted to be effective August 29, 1990, 15 TexReg 4701.

28 Tex. Admin. Code § 41.5 Compliance and Suspension of Rules

All parties seeking any action of the board shall comply with these rules, unless in its judgment the board determines that compliance with any of the rules under particular circumstances will result in injustice to either or both parties. Accordingly, rules may be suspended at the discretion of the board and additional hearings held or cases scheduled for hearing out of their regular order (1968).

History

Source Note: The provisions of this §41.5 adopted to be effective November 20, 1977, 2 TexReg 4315.

28 Tex. Admin. Code § 41.8 Contents of Rule-making Petitions

(a) Changes to these rules may be petitioned by any party. Rule-making petitions shall contain the following:

(1) a brief statement summarizing the proposed section;

(2) the text of the proposed section:

(A) if an existing section, state the title and code number, and prepare the text to indicate the words and punctuation to be added, changed, or deleted;

(B) if a new section, prepare the text in the exact form proposed for adoption;

(3) a statement of the statutory source of the section;

(4) a suggested effective date;

(5) a cost-benefit analysis, estimating the public benefits to be expected as a result of adoption of the proposed section, and the probable economic cost to persons who are required to comply with the section. This provision is optional;

(6) any other matter required by law;

(7) the petitioner's name, complete mailing address, and telephone number; and

(8) the petitioner's signature.

(b) Five copies of the petition shall be filed with the board by certified mail.

(c) Within 60 days after the petition is submitted, the board shall either initiate rule-making procedures, or notify the petitioner in writing, stating the reasons for denial.

History

Source Note: The provisions of this §41.8 adopted to be effective November 6, 1986, 11 TexReg 4429.

28 Tex. Admin. Code § 41.10 Definitions

The following words and terms, when used in these sections, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Health provider--Used in these board rules in a generic sense, having reference to licensed practitioners of medicine, osteopathic, chiropractic, and podiatry.

(2) Insurance carrier or carrier--Shall be synonymous with the term "association," as defined in Texas Civil Statutes, Article 8309, §1, to mean any insurance company authorized to insure payment of workers' compensation including political subdivisions according to Texas Civil Statutes, Article 8309h, §3(b).

(3) Medical expenses--Shall include health provider care by licensed medical doctors, osteopathic physicians, chiropractic physicians, and podiatrists, as well as hospital care, drugs and prescriptions, appliances, nursing care, psychological care, therapy and physical rehabilitation, where the same are prescribed by a health provider named under the Workers' Compensation Law, and rendered or provided by a licensed source.

(4) Medical report or medical treatment--Shall also include, where applicable, osteopathic, chiropractic, podiatric care, and the reports thereof.

(5) Subscriber and employer--Are synonymous.

History

Source Note: The provisions of this §41.10 adopted to be effective November 11, 1983, 8 TexReg 4491; amended to be effective October 1, 1985, 10 TexReg 3506.

28 Tex. Admin. Code § 41.15 Social Security Number

All forms, reports, and other documents filed with the board which pertain to a claim shall include the social security number of the injured employee.

History

Source Note: The provisions of this §41.15 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.20 Adjuster Identification

Each adjuster employed by or on behalf of an insurance company, self-insured, insurance agent, or corporation or by an employer in connection with either the investigation or handling of a workers' compensation claim shall provide the board with his/her license number as issued under the Insurance Code, Article 21.07-4. This shall be accomplished in each file as soon as practical.

History

Source Note: The provisions of this §41.20 adopted to be effective November 11, 1983, 8 TexReg 4491; amended to be effective July 20, 1984, 9 TexReg 3732.

28 Tex. Admin. Code § 41.25 Attorney Identification

Each attorney engaged by either a claimant, insurance carrier, or self-insured in connection with the handling of a workers' compensation claim shall provide the board with his/her permanent state bar identification number promptly upon retention in the claim.

History

Source Note: The provisions of this §41.25 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.27 Employer's Identification

Each carrier and employer shall provide the employer's federal tax identification number on:

(1) the employer's first report of injury;

(2) the employer's supplemental report of injury;

(3) the wage statement;

(4) a Form A-1, A-2, and A-4 (initial filing only);

(5) a statement of controversion;

(6) a notice that employer has become subscriber, Form IAB-20;

(7) a cancellation or nonrenewal notice for workers' compensation insurance, Form IAB-9; and

(8) other forms as the board shall direct (effective 1987).

History

Source Note: The provisions of this §41.27 adopted to be effective December 21, 1987, 12 TexReg 4528.

28 Tex. Admin. Code § 41.30 Self-insureds

Unless otherwise specifically noted therein, whenever a board rule makes reference to an insurance carrier or association, this shall be interpreted to include also all self-insured entities as well.

History

Source Note: The provisions of this §41.30 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.35 Designation of Insurance Carriers' Austin Representative

All insurance carriers writing and issuing workers' compensation insurance policies effective in Texas shall designate in writing to the board their Austin representative to the Industrial Accident Board for purposes of communication with the board. The name, business address, and phone number of such representative shall be supplied and kept current at all times. Written notification or communication by the board with such representative shall be deemed notification to the carrier for all purposes.

History

Source Note: The provisions of this §41.35 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.40 General Policy Concerning Communications

The board hereby promulgates its general policy concerning communications to and from the Industrial Accident Board.

(1) The carrier shall send a copy of all written communications relating to a pending claim before the board to the claimant, or if claimant is represented by counsel, directly to his attorney and to the board. Without limiting the generality of the foregoing, the term "written communications" shall include board approved Form A-1, A-2, A-4, and A-2 Lump Sum Transmittal Letter, Statements of Controversion, and Notices of Intention to Appeal.

(2) The attorney representing the claimant shall send a copy of all written communications relating to a pending claim before the board to the insurance carrier and to the board. Without limiting the generality of the foregoing, the term "written communication" shall include written claim for compensation, affidavit of hardship, power of attorney, notice of appeal.

History

Source Note: The provisions of this §41.40 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.45 Communication to Claimants

All notices and written communications to claimant will be mailed to the last address supplied, either on the employer's first report of injury or by claimant's letter. If the board is notified that claimant is represented by an attorney, copies of forms, notices, and correspondence will thereafter be mailed to his attorney and not to the claimant. However, copies of compromise approval notices, prehearing setting, and awards of the board will be mailed to the claimant and his attorney.

History

Source Note: The provisions of this §41.45 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.55 Communication to Employers

All notices and written communications to employers, including notice of conduct which may result in the imposition of a statutory penalty by the board, will be mailed to the last address supplied either on the employer's first report of injury form or on the notice that the employer has become a subscriber form.

History

Source Note: The provisions of this §41.55 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.60 Communication to Insurance Carriers

Unless otherwise required by statute, or provided by a board rule, all notices and other communications to insurance carriers will be sent either to an address designated by the carrier as its principal Texas mailing address or to its designated Austin representative.

History

Source Note: The provisions of this §41.60 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.65 Communication to Health Care Provider

A health care provider shall send a copy of all written communications relative to a pending claim for compensation and the treatment thereof or concerning a statement for professional services rendered to the insurance carrier and to the claimant or his attorney, if represented.

History

Source Note: The provisions of this §41.65 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.70 Filing of Instruments

(a) The following shall be filed only with the board in Austin:

(1) notice of injury and claim for compensation (Texas Civil Statutes, Article 8307, §4a);

(2) employer's first report of injury (Texas Civil Statutes, Article 8307, §7);

(3) employer's response to board request for information (Texas Civil Statutes, Article 8307, §7);

(4) notice that employer has become subscriber (Texas Civil Statutes, Article 8308, §18a);

(5) response to request for notice that employer has become subscriber (Texas Civil Statutes, Article 8308, §18a);

(6) notice of cancellation or nonrenewal of compensation insurance (Texas Civil Statutes, Article 8308, §20a);

(7) form A-1, Report of Initial Payment of Compensation (Texas Civil Statutes, Article 8306, §3b);

(8) statement of controversion (Texas Civil Statutes, Article 8306, §18a(a));

(9) application to suspend compensation (Texas Civil Statutes, Article 8306, §12a and Article 8307, §4);

(10) formal statements of position (Texas Civil Statutes, Article 8307, §10);

(11) statement of position in death cases (Texas Civil Statutes, Article 8306, §18a(a));

(12) notice of intention to appeal (Texas Civil Statutes, Article 8307, §5);

(13) response to notice of possible violation (Texas Civil Statutes, Article 8306, §18a(a));

(14) carrier's designation of board representative (Texas Civil Statutes, Article 8306, §18a).

(b) All other correspondence and forms relating to claims arising under the Workers' Compensation Law must be filed with the proper regional office or the proper resident reviewer of the board in Austin.

(c) Forms and printed materials used by any person or state agency which incorporate the term "Industrial Accident Board" shall be modified to substitute the term "Texas Workers' Compensation Commission" after the present supply of forms and materials is exhausted. Parties are encouraged to use revised forms by June 1, 1990.

History

Source Note: The provisions of this §41.70 adopted to be effective November 11, 1983, 8 TexReg 4491; amended to be effective August 29, 1990, 15 TexReg 4701.

28 Tex. Admin. Code § 41.75 Timely Filing

Forms, reports, and other documents required to be filed before a specified time will be considered timely only if received by the board at Austin or at an appropriate regional office prior to or during business hours on the last permissible day of filing. When the last day for filing is a legal holiday, or is Sunday, then the time is extended so as to include the next succeeding business day.

History

Source Note: The provisions of this §41.75 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.80 Filing Subsequent to Final Order or Award

In order for it to continue monitoring a claim for future medical and compensation benefits after a final award, carriers must continue filing with the board in Austin, and in accordance with existing board rules, the following documents: A-1, A-2, A-4, notice of suspension of medical benefits, a copy of the instruments reflecting final disposition of the case, whether by compromise, settlement agreement, court judgment, or dismissal without judgment entry, and upon request a copy of all available medical information.

History

Source Note: The provisions of this §41.80 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.85 Translation of Documents

Whenever a party submits or files a medical report, witness statement, or other instrument written in a foreign language, a true and correct English translation shall be filed simultaneously.

History

Source Note: The provisions of this §41.85 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.90 Responsibility of Translators

Whenever a non-English speaking party appears before the board or any member thereof at a prehearing conference or a formal hearing, a translator who is proficient in the English language must accompany the party. The responsibility for providing an interpreter rests with the party producing the non-English speaking witness.

History

Source Note: The provisions of this §41.90 adopted to be effective November 11, 1983, 8 TexReg 4491.

28 Tex. Admin. Code § 41.95 Wage Information

The board will accept in lieu of other wage information a stipulated wage agreement executed by the injured employee and the insurance carrier which establishes by mutual agreement an average weekly wage and a weekly compensation rate on a standard form approved by the board. Such stipulation may be considered by the Industrial Accident Board, along with any other evidence concerning the wage rate, but it will not necessarily be binding upon the board. No action by the board on the claim shall be taken as formal approval of such stipulation, and the same shall be regarded only as an informal waiver of proof for purposes of the hearing before the board.

History

Source Note: The provisions of this §41.95 adopted to be effective November 11, 1983, 8 TexReg 4491.

Chapter 42 MEDICAL BENEFITS

Subchapter A GENERAL MEDICAL PROVISIONS

28 Tex. Admin. Code § 42.5 Applicability and Scope of Rules

(a) General. These sections govern all providers of health care services and supplies covered under the Texas Workers' Compensation Act (the Act).

(b) Out-of-state providers. Out-of-state providers of health care services and supplies covered under the Act are governed by these sections.

(c) Effective date. These sections shall be applicable to all services and supplies provided subsequent to November 1, 1988.

History

Source Note: The provisions of this §42.5 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.10 Acceptance of Rules and Guidelines

The filing by a health care provider of a report, the submitting of a bill for services or supplies, or the rendering of treatment to an injured worker entitled to benefits under the Act constitutes acceptance of and agreement to comply with these sections.

History

Source Note: The provisions of this §42.10 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.15 Definitions

The following words and terms, when used in this part, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Accrual of medical benefits--The right to medical benefits for a compensable injury accrues as of the date of injury and continues for the life of the injured worker, or until terminated by agreement between the injured worker and the carrier, and is limited in amount only according to the reasonableness of the expense and the necessity of the treatment.

(2) Act--Texas Civil Statutes, Articles 8306-8309(i).

(3) Association--See carrier.

(4) Billing by report--The billing procedure to be used by a health care provider when:

(A) no procedural definition and/or dollar value is established in the board's fee guidelines for the treatment or service rendered; or

(B) when the provider determines that the procedural definition and/or dollar value established in the fee guidelines does not adequately describe the treatment or service rendered. (See §42.145 of this title (relating to Billing.))

(5) Board--The Industrial Accident Board of the State of Texas.

(6) Carrier--Shall be synonymous with "association," as defined in Texas Civil Statutes, Article 8309, §1, to mean any insurance company or entity authorized to insure payment of workers' compensation, including political subdivisions, the State of Texas, the University of Texas, Texas A&M University, and the State Department of Highways and Public Transportation.

(7) Carrier review and audit of individual provider's bills--

(A) Carrier review of individual provider's bill--A careful screening of a bill, as submitted, with minimal supporting medical documentation. Attention is given to relation of date of accident to date of treatment; relation of treatment to injury; proper itemization; correct/appropriate coding; duplicate charges; correct addition; and compliance with fee and utilization guidelines. May result in audit. Performed at the office of the carrier or carrier-audit representative.

(B) Carrier audit of individual provider's bill--A detailed, line-by-line examination of billed charges, comparing charges to services rendered, using maximum medical documentation such as daily PT, and progress and/or clinic notes. Performed at the office of the carrier or carrier-audit representative. Also known as a desk audit.

(8) Carrier review and audit of hospital bills--

(A) Carrier review of hospital's bill--A careful, selective screening of a hospital bill, as submitted, with minimal supporting medical documentation. Attention is given to correct/appropriate coding; computer errors; duplicate charges; potential unrelated charges; and compliance with fee and utilization guidelines. May result in audit. Performed at the office of the carrier or carrier-audit representative.

(B) Carrier audit of hospital's bill--A line-by-line examination of billed charges, comparing the doctor's orders with supporting medical documentation in the patient's chart. Performed either at the office of the carrier or carrier-audit representative (desk audit) or at the hospital (on-site audit).

(9) Claimant--The worker or health care provider making a claim. The health care provider may be a derivative or independent claimant.

(10) Compensable injury--Any injury having to do with and originating in the work, business, trade, or profession of the subscriber, received by an employee while engaged in or about the furtherance of the affairs or business of the subscriber, either upon the subscriber's premises or elsewhere.

(11) Consulting doctor--A licensed doctor who examines a worker, or the worker's medical record, at the request of the treating doctor to aid in diagnosis and/or treatment, and who may, at the request of the treating doctor, provide specialized treatment of the compensable injury or illness.

(12) Doctor--A licensed practitioner of medicine, osteopathy, chiropractic, or podiatry.

(13) Health care provider (provider)--A health care provider is:

(A) a doctor or other person duly licensed to practice one or more of the healing arts within the limits of the license of the licentiate;

(B) a health facility; and

(14) Health facility--A health facility is:

(A) a general or specialty hospital providing inpatient and outpatient services, whether licensed by the Texas Department of Health or the Texas Department of Mental Health and Mental Retardation;

(B) an outpatient surgery center not covered by a hospital's license, other than a physician's office, and licensed by the Texas Department of Health; and

(C) an outpatient imaging center not covered by a hospital's license, other than a physician's office, which provides radiographic, computerized tomography, magnetic resonance imaging, or other diagnostic imaging services.

(15) Independent medical exam--See medical exam order.

(16) Injured worker's representative--Any person designated in writing by the injured worker to assist him or her in pursuing a claim for compensation.

(17) Liability for medical services--This is the sole responsibility of the carrier prior to final disposition of a claim to pay fair and reasonable charges for necessary medical services rendered to an injured worker. This is the responsibility of the injured worker:

(A) after final disposition of a claim for services that are not related to the compensable injury;

(B) for services not related to the compensable injury; and

(18) Maximum medical recovery--Exists when no further improvement in the injured worker's health is reasonably expected from additional medical treatment or the passage of time.

(19) Medical exam order (also known as independent medical exam)--An order of the board requiring a claimant to present him or herself to be examined by a physician or chiropractor. The board may enter a medical exam order either on its own motion, or at the carrier's request. The claimant has the right to have his or her doctor present during a carrier-requested examination, the cost of which shall be borne by the carrier.

(20) Medical report--A board-approved form or narrative letter that transmits medical information. Reports must include all relevant information.

(21) Small rural hospital--A general hospital licensed for less than 100 beds which is located in a county classified as rural by the Health Care Financing Administration for purposes of Medicare reimbursement.

(22) Subscriber--Any employer who has obtained workers' compensation insurance coverage. This includes all political subdivisions, the State of Texas, the University of Texas, Texas A&M University, and the State Department of Highways and Public Transportation.

(23) Treating doctor--A doctor who is primarily responsible for the treatment of a worker's compensable injury or illness.

History

Source Note: The provisions of this §42.15 adopted to be effective October 20, 1988, 13 TexReg 4990; amended to be effective May 11, 1989, 14 TexReg 2082.

28 Tex. Admin. Code § 42.20 Who May Treat

(a) Licensed doctors of medicine, osteopathy, chiropractic, and podiatry may act as treating doctors for injured workers entitled to benefits under the Act.

(b) Treating doctors may prescribe treatment to be rendered by other persons licensed to provide health care, or by persons not licensed to provide health care who work under the direct supervision and control of the treating doctor.

(c) Treating doctors may prescribe nursing care to be rendered by unlicensed persons, including, but not limited to, members of the injured worker's family.

History

Source Note: The provisions of this §42.20 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.25 Prohibited Practices

(a) The following, when committed knowingly or willfully, shall be deemed prohibited practices by health care providers, and may result in action by the board, including referral to professional grievance committees, licensing agencies, or the attorney general's office:

(1) failing, neglecting, or refusing to observe and comply with the board's rules;

(2) failing, neglecting, or refusing to submit complete, adequate, and detailed reports, when required, or to respond to requests by the carrier, the claimant or claimant's representative, or the board for additional reports or other claim-related information. (See §42.33(c) of this title (relating to Health Care Providers' Reporting Requirements));

(3) submitting false or misleading reports, or colluding with other persons in the submission of false or misleading reports;

(4) submitting inaccurate or misleading bills;

(5) repeated overcharging;

(6) knowingly submitting a bill to an injured worker for treatment of a compensable injury or illness;

(7) charging or attempting to charge fees for required reports, handling fees, interest, or any surcharge whatsoever to an injured worker for treatment of a compensable injury or illness;

(8) persistently using contraindicated or hazardous treatment measures;

(9) repeated overutilization;

(10) using or prescribing narcotic, addictive, or dependency-inducing drugs for other than therapeutic purposes; or

(11) practicing after suspension or revocation of a provider's practice privilege by the appropriate licensing agency, after conviction in any court of any offense involving moral turpitude, or after a declaration of mental incompetency by a court of competent jurisdiction.

(b) Written allegations of repeated overcharging (see subsection (a)(5) of this section), or repeated overutilization (see subsection (a)(9) of this section) shall be referred to appropriate regulatory agencies, pursuant to Texas Civil Statutes, Article 8306, §7b(m). Allegations should be accompanied by appropriate documentation.

History

Source Note: The provisions of this §42.25 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.28 Confirmation of Coverage

The carrier shall confirm medical benefits coverage upon the request of a health care provider when no bona fide dispute exists as to liability.

History

Source Note: The provisions of this §42.28 adopted to be effective December 6, 1988, 13 TexReg 5826.

28 Tex. Admin. Code § 42.30 Written Communications

(a) A health care provider shall send copies of all written communications related to a claim, including reports, to the carrier and, except for bills, to the injured worker or his or her representative. The provider may require written evidence of representative capacity from the claimant's representative.

(b) A provider shall submit bills for services or supplies to the carrier only. A provider shall send copies of bills to the injured worker, or his or her representative, only upon request.

(c) A provider shall send copies of all written communications, including reports and bills, to the board upon the board's request.

(d) All written communications from providers shall contain the following identifying information, if known:

(1) the patient's full name, address, and social security number;

(2) the patient's IAB claim number;

(3) the date and nature of the injury or illness;

(4) the employer's name and address;

(5) the carrier's name;

(6) the provider's name, address, and federal tax identification number.

(e) A separate report or bill shall be filed for each injury.

(f) All written communications must be legible and reproducible.

History

Source Note: The provisions of this §42.30 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.33 Health Care Providers' Reporting Requirements

(a) Providers shall prepare written reports according to the specifications set out in the sections of this subchapter relating to required reports, and shall submit them to the carrier and the injured worker, or his or her representative, as provided in §42.30 of this title (relating to Written Communications).

(b) All required reports shall contain the identifying information required by §42.30(d) of this title (relating to Written Communications).

(c) A provider who fails to comply with the reporting requirements, when applicable, as determined by the board, shall lose his or her right to payment for treatment or services rendered under the Act, pursuant to Texas Civil Statutes, Article 8306, §7.

(d) The board may prescribe forms for reporting purposes.

History

Source Note: The provisions of this §42.33 adopted to be effective December 6, 1988, 13 TexReg 5826.

28 Tex. Admin. Code § 42.35 Required Reports: First Report

(a) The treating doctor shall make an initial report, and submit it to the carrier and the injured worker, or his or her representative, as provided in §42.30 of this title (relating to Written Communications) no later than seven working days after the injured worker's first visit.

(b) The first report shall contain the following information:

(1) all identifying information required by §42.30(d) of this title (relating to Written Communications);

(2) complete history, as related by the claimant, of the occupational accident or illness;

(3) complete listing of positive physical findings;

(4) specific diagnosis with appropriate procedural and diagnostic code(s) and narrative definition(s) relating to the injury;

(5) type of treatment rendered;

(6) anticipated date the worker may achieve maximum medical recovery, if possible; and

(7) anticipated date of release to return to work, if possible.

History

Source Note: The provisions of this §42.35 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.40 Required Reports: Subsequent Reports

(a) Subsequent reports shall be submitted to the carrier and the injured worker, or his or her representative, as provided in §42.30 of this title (relating to Written Communications), and shall contain the following information:

(1) all identifying information required by §42.30(d) of this title (relating to Written Communications);

(2) type of treatment rendered;

(3) anticipated date the worker will achieve maximum medical recovery, if possible; and

(4) anticipated date of release to return to work, if possible.

(b) If treatment continues, the provider shall submit a report:

(1) sixty days from the date treatment began; and

(2) one hundred and twenty days from the date treatment began.

History

Source Note: The provisions of this §42.40 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.55 Required Reports: Change of Status Reports

(a) The treating doctor shall submit a change of status report to the carrier and the injured worker, or his or her representative, as provided in §42.30 of this title (relating to Written Communications) within seven days of:

(1) determining that the patient has achieved maximum medical recovery;

(2) releasing the patient to return to work; or

(3) receiving notice that the patient has changed treating doctors.

(b) If there is no permanent medical impairment, this shall be noted. If there is permanent impairment, the treating doctor may elect to perform an examination prior to writing the change of status report.

(1) all identifying information required by §42.30(d) of this title (relating to Written Communications); and

(2) all pertinent objective findings such as loss of member, description of scars or deformities, visual acuity, measured ranges of motion, strength, measurable atrophy, muscle spasm, reflex changes, sensory changes, and physical and occupational restrictions.

History

Source Note: The provisions of this §42.55 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.60 Required Reports: Special Reports

(a) All special reports shall contain all identifying information required by §42.30(d) of this title (relating to Written Communications).

(b) The provider shall submit special reports to the carrier and the injured worker, or his or her representative, as provided in §42.30 of this title (relating to Written Communications) under the following circumstances.

(1) Hospitalization. A report shall be submitted when the patient is discharged from a hospital.

(2) Amputation. When all or part of any limb or digit is amputated, the treating doctor shall submit a report and a chart showing the exact point of amputation.

(3) Vision loss.

(A) Loss of vision shall be calculated on the actual loss of vision as a result of an injury, and not on loss of vision after restoration of vision by proper fitting glasses.

(B) The board considers loss of an eye to have occurred when loss of vision reaches 90%.

(C) A change of status report for a patient who has suffered vision loss shall be based on the board's Table of Visual Losses of One Eye, published in the appendix to this chapter. (See §55.25 of this title (relating to Loss of an Eye.))

(4) Hearing impairment.

(A) Hearing tests for use in compensation ratings shall be derived from the pure-tone audiogram calculated to ANSI-S3.6-1969 standards. Examination should be performed by a medical specialist who does hearing evaluations or by an audiologist having the Certificate of Clinical Competence from the American Speech-Language-Hearing Association upon referral. Hearing handicap will be based on the functional state of both ears.

(B) A change of status report for a patient who has suffered hearing impairment shall be based on the board's Table of Monaural Hearing Impairment, published in the appendix to this chapter. (See §55.30 of this title (relating to Hearing Impairment.))

(5) Medical examination orders.

(A) The examining doctor shall submit a report within seven days of examining a claimant under board order.

(B) If the examination was ordered on the board's own motion, the original report and the bill shall be sent to the board. Copies shall be sent to the claimant, or claimant's representative, and the carrier.

(C) If the examination was ordered at the carrier's request, the original report and the bill shall be sent to the carrier. Copies shall be sent to the claimant, or claimant's representative, and the board. (See Chapter 69 of this title (relating to Medical Examination Orders.))

(6) Demand for surgery. The report accompanying a demand for surgery shall establish that, in all reasonable medical probability:

(A) the requested surgical procedure will either effect a cure, or materially and beneficially improve and relieve the patient's condition; and

(B) the surgery is medically advisable.

History

Source Note: The provisions of this §42.60 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.65 Changing Treating Doctors

(a) When an injured worker elects to change treating doctors, the subsequent doctor shall make a diligent effort to secure from the prior doctor or from the carrier all available medical information. The prior doctor shall immediately forward, upon proper request, all requested information, including x-rays, to the new treating doctor.

(b) The carrier shall identify all prior treating doctors and provide all relevant medical records in its claim file to the subsequent doctor upon request.

(d) The subsequent doctor is responsible for submitting all required reports.

History

Source Note: The provisions of this §42.65 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.75 Excess Recovery from Third Party Actions

(a) When an injured worker has received an excess recovery in a third party action, pursuant to Texas Civil Statutes, Article 8307, §6a(c), the carrier shall immediately:

(1) notify all providers of the date of the judgment or agreed judgment, and the amount of the excess; and

(2) file a copy of the judgment or agreed judgment with the board.

(b) The provider shall continue to submit reports as required by these sections.

(c) Bills for services and supplies provided after the judgment date shall be sent to the injured worker, or his or her representative. Copies of such bills shall be filed with the carrier.

(d) The claimant shall notify the board, the carrier, and current health care providers when the amount of the excess has been reduced to zero. Upon receipt of such notice, the provider(s) shall resume billing only the carrier, pursuant to §42.30 of this title (relating to Written Communications).

History

Source Note: The provisions of this §42.75 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.78 Reports To Be Filed by the Carrier

The carrier shall file current medical reports with the board under the following conditions:

(1) after the expiration of four weeks of disability;

(2) when filing a notice of controversion based on medical grounds;

(3) upon receipt of narrative reports submitted by the treating doctor pursuant to §42.40 of this subchapter (relating to Required Reports: Subsequent Reports);

(4) when filing an A-2 giving return to work date or release to return to work date;

(5) when filing an A-4 showing additional lost time;

(6) when requesting a prehearing conference;

(7) when filing a CSA;

(8) when filing an A-2 lump sum showing payment for permanent partial disability resulting from a specific injury; and

(9) when requested by the board.

History

Source Note: The provisions of this §42.78 adopted to be effective December 6, 1988, 13 TexReg 5826.

28 Tex. Admin. Code § 42.80 Assignment of Medical Benefits

A health or accident insurance company which has been assigned an injured worker's right to medical benefits under the Act shall file a true copy of the assignment with the carrier and the board within five days of said assignment.

History

Source Note: The provisions of this §42.80 adopted to be effective October 20, 1988, 13 TexReg 4990.

28 Tex. Admin. Code § 42.85 Voluntary Arbitration

The board shall establish procedures for selection of voluntary arbitration panels to assist the board in regulating fees and charges submitted by health care providers to the full extent authorized by Texas Civil Statutes, Article 8306, §7.

(1) The executive director of the board shall prepare bylaws subject to the final approval of the board governing the operation and functions of the various voluntary arbitration panels.

(2) The executive director of the board shall implement the procedures so adopted by the board. The executive director or designee shall supervise the arbitration panels established by the board, and shall serve as chairman of each panel. However, the executive director may from time to time designate the assistant executive director of the board or other person to act as chairman in his or her place.

(3) The procedures for selection of panels and the bylaws shall be available to all parties.

History

Source Note: The provisions of this §42.85 adopted to be effective December 6, 1988, 13 TexReg 5826.

28 Tex. Admin. Code § 42.90 Demand for Surgical Operation

Any written demand for a surgical operation under Texas Civil Statutes, Article 8306, §12e, or any application for reduction or suspension of compensation pursuant to Article 8307, §4, must be filed with the board at least seven calendar days prior to the date of hearing. However, where good cause for waiving strict compliance is approved by the board, parties may file demand for or tender of surgery on or before the scheduled date of hearing.

History

Source Note: The provisions of this §42.90 adopted to be effective December 6, 1988, 13 TexReg 5826.

28 Tex. Admin. Code § 42.95 Scars and Deformities

In all cases involving severe and disfiguring burns or lacerations, a descriptive medical report of the scars or deformity shall be submitted by either the carrier or the claimant. In all such cases involving scars to the face, arms, or hands, a color photograph taken after maximum healing has occurred must be submitted at or prior to any final board action on the claim.

History

Source Note: The provisions of this §42.95 adopted to be effective December 6, 1988, 13 TexReg 5826.

Subchapter B MEDICAL COST EVALUATION

28 Tex. Admin. Code § 42.101 Purpose

The fee guidelines promulgated in this subchapter are intended to establish presumptively fair and reasonable charges for health care services and supplies which may be covered under the Act.

History

Source Note: The provisions of this §42.101 adopted to be effective December 6, 1988, 13 TexReg 5827.

28 Tex. Admin. Code § 42.105 Medical Fee Guideline

(a) The maximum allowable charge under the Medical Fee Guideline for Services Rendered under the Texas Workers' Compensation Act is the lesser of:

(1) the provider's usual fees and charges; or

(2) the fees and charges established by use of a relative value scale adopted under subsection (b) of this section.

(b) The commission will publish and adopt by reference herein a relative value scale used in conjunction with the 1990 CPT (Physician's Current Procedural Terminology) as part of the Medical Fee Guideline for Services Rendered under the Texas Workers' Compensation Act. This guideline is published as the 1991 Texas Workers' Compensation Commission Medical Fee Guideline which is incorporated herein by reference. This shall be the same guideline adopted by the Texas Workers' Compensation Commission and incorporated into §134.201 of this title (relating to Medical Fee Guideline for Medical Services and Equipment Provided under the Texas Workers' Compensation Act) as it exists on the effective date of this section and as it may be amended thereafter by the commissioners. The guideline may be obtained from the Reprographics Department, Texas Workers' Compensation Commission, The Southfield Building, 4000 South I-H 35, Austin, Texas 78704.

(1) the provider's usual fees and charges; or

(2) the fees and charges established in the durable medical equipment section of the Medical Fee Guideline, which is incorporated herein by reference.

(d) The guidelines established herein shall be used for services rendered, and durable medical equipment prescribed, on and after the effective date of this section.

History

Source Note: The provisions of this §42.105 adopted to be effective September 1, 1988, 13 TexReg 4131; amended to be effective February 5, 1991, 16 TexReg 368; amended to be effective December 11, 1991, 16 TexReg 6922.

28 Tex. Admin. Code § 42.115 Pharmaceutical Fee Guideline

(a) The maximum allowable charge for pharmaceuticals under the Pharmaceutical Fee Guideline for Services Rendered Under the Workers' Compensation Law is the lesser of:

(1) the provider's usual charge; or

(2) the fees established by the formulas for brand-name and generic pharmaceuticals as described in subsection (c) of this section.

(b) This section applies to the dispensing of all pharmaceuticals on and after February 1, 1991, excluding the inpatient health care facility setting.

(1) brand-name pharmaceutical formula: average wholesale price (AWP) times 1.09 plus $4.00;

(2) generic pharmaceutical formula: AWP times 1.38 plus $7.50.

(d) The AWP shall be determined with the monthly publication of Medispan. The publication that shall be used for the calculation shall be the same month that includes the date of service. When an AWP is changed during the month, the provider shall still use the AWP from the monthly publication. The two Medispan publications to be used are:

(1) Prescription Pricing Guide; or

(2) Generic Buying and Reimbursement Guide.

(e) When a generic pharmaceutical costs more than a brand-name pharmaceutical, according to the formulas described in subsection (c) of this section, the commission will consider the fair and reasonable price to be the brand-name equivalent, as calculated under subsection (c)(1) of this section.

(f) When there is no national drug code (NDC) number listed in the Medispan Generic Buying and Reimbursement Guide for a manufacturer, or when the provider fails to list the NDC number for each generic pharmaceutical on the bill submitted to the insurance carrier, the commission will determine the fair and reasonable reimbursement for generic pharmaceuticals by the following formula: generic equivalent average price (GEAP) times 1.38 plus $7.50.

History

Source Note: The provisions of this §42.115 adopted to be effective September 1, 1988, 13 TexReg 4131; amended to be effective February 5, 1991, 16 TexReg 372.

28 Tex. Admin. Code § 42.135 Liability for Covered Health Care

(a) The carrier is solely liable to pay a provider for health care which is covered under the Act.

(b) The injured worker shall not be billed for covered health care, nor for any amounts in excess of the amount adjudicated as fair and reasonable. The injured worker shall not be billed for reports, handling fees, interest, or any other surcharge related to the covered health care. The provider shall not refer the injured worker to a collection agency or a retail credit organization.

(c) This section does not apply if the injured worker has received an excess recovery from a third party, pursuant to Texas Civil Statutes, Article 8307, §6a, and §42.60 of this title (relating to Excess Recovery from Third Party Actions.)

History

Source Note: The provisions of this §42.135 adopted to be effective October 20, 1988, 13 TexReg 4994.

28 Tex. Admin. Code § 42.137 Utilization Review

(a) The claimant and the carrier may jointly request the board for an informal review and determination of the necessity or proposed medical treatment.

(b) The application shall be accompanied by supporting documentation from one or more health care providers.

(c) The determination of necessity shall be informal, for the purpose of resolving disputes, and shall not be binding on either party.

(d) The carrier shall bear the cost of a review provided under this section.

History

Source Note: The provisions of this §42.137 adopted to be effective January 1, 1990, 14 TexReg 6671.

28 Tex. Admin. Code § 42.140 Amount of Payment

(a) General. A provider will be paid an amount that is fair and reasonable. It shall be presumed that fair and reasonable amounts are those established in the fee guidelines. Any adjudication by the board as to fair and reasonable amount will be consistent with fee guidelines unless evidence has been properly filed with the board indicating that a different amount is fair and reasonable. The board will consider any request for payment in excess of the fee guidelines when filed by report.

(b) Payment for services billed by report. The carrier shall base payment for services billed by report upon review of the submitted documentation and recommendations from the carrier's medical consultant.

History

Source Note: The provisions of this §42.140 adopted to be effective October 20, 1988, 13 TexReg 4994.

28 Tex. Admin. Code § 42.145 Billing

(a) General. All bills submitted to carriers shall:

(1) contain the identifying information required by §42.30(d) of this title (relating to Written Communications), if available;

(2) itemize services and goods provided; and

(3) after January 1, 1989, identify services and goods provided by appropriate procedural and diagnostic codes, with descriptions, as established in the fee guidelines.

(b) Billing by report.

(1) A provider shall bill by report when no procedural definition and/or dollar value is established for a procedure, or when a provider seeks payment in excess of that established in the fee guidelines.

(2) The report shall:

(A) describe the procedure in sufficient detail to permit evaluation;

(B) contain substantiating documentation to establish the fairness and reasonableness of the charge(s); and

(3) The report shall be attached to the bill.

(c) Billing requirements. Failure to comply with billing requirements shall suspend the carrier's obligation to review the bill. The carrier shall return a noncompliant bill to the provider within three working days of receipt.

(d) Billing forms. The board may prescribe forms for billing purposes.

History

Source Note: The provisions of this §42.145 adopted to be effective October 20, 1988, 13 TexReg 4994.

28 Tex. Admin. Code § 42.155 Carrier Review of Bills

(a) General. The carrier shall promptly date stamp each health care provider bill with the date the same was received by the carrier. Failure on the carrier's part to comply with this rule shall create a rebuttable presumption that such health care provider bill was received by the carrier within five business days of the date of such bill.

(b) Time for review.

(1) General. The carrier shall complete its review of a bill within 30 days of receipt. The review may include an audit, as described by §42.160 of this title (relating to Carrier Desk Audit of Bills). A bill may not be reduced unless the carrier conducts an audit.

(2) Pharmaceutical bills. The carrier shall complete its review of a pharmaceutical bill within 10 days of receipt.

(3) Hospital bills; on-site audit. If the carrier decides to conduct an on-site audit of a hospital bill, the carrier shall proceed according to the provisions of §42.165 of this title (relating to Carrier On-Site Audit of Hospital Bills). The time for review shall be extended until completion of the on-site audit.

(c) Completion of review. Within 10 days of completion of the review, or, if a pharmaceutical bill, within five days of completion of the review, the carrier shall:

(1) remit to the provider full payment of the bill as submitted; or

(2) remit to the provider the amount of payment the carrier has determined to be appropriate. If the carrier remits to the provider an amount less than the amount billed, or remits no payment, the carrier shall immediately send the provider and the claimant or claimant's representative copies of the appropriate medical audit summary sheet, as described in §42.160 and §42.165 of this title (relating to Carrier Desk Audit of Bills and Carrier On-Site Audit of Hospital Bills). The copies sent to the provider and the claimant or claimant's representative shall contain the following statement. "The insurance carrier and not the claimant/patient or employer, is solely liable for all reasonable and necessary medical treatment rendered in connection with the injury, and no billing for any unpaid amounts should be directed to the claimant/patient or employer, nor should any attempt be made to collect any unpaid amount from the claimant/patient or employer, unless the claim has been denied by the board or the court."

(d) Suspension of medical benefits. The carrier's failure to comply with the requirements of subsection (c) of this section within the time indicated constitutes suspension of medical benefits, pursuant to Texas Civil Statutes, Article 8306, §18a(b).

(e) Bill reduction. Forty days after posting, the health care provider may request assistance from the board in compelling the carrier to file reasons for reducing a bill.

History

Source Note: The provisions of this §42.155 adopted to be effective October 20, 1988, 13 TexReg 4994; amended to be effective May 31, 1990, 15 TexReg 2803.

28 Tex. Admin. Code § 42.160 Carrier Desk Audit of Bills

(a) During the audit, the carrier and the provider shall make reasonable attempts to resolve any questions or problems regarding the bill under audit. The provider shall submit to the carrier any additional information requested that is relevant to the audit. If a hospital bill is under review, the hospital shall submit the medical record at the carrier's request.

(b) Every audit shall be documented on the medical audit summary sheet, which shall include the following information:

(1) claimant's name;

(2) IAB claim number;

(3) provider's name, address, and federal tax identification number;

(4) health care provider-reviewer's report; and

(5) for each audited item, the following: applicable code; code description; amount billed; amount paid; and, if appropriate, amount reduced or denied, accompanied by a sufficient explanation for each reduction or denial.

History

Source Note: The provisions of this §42.160 adopted to be effective October 20, 1988, 13 TexReg 4994.

28 Tex. Admin. Code § 42.165 Carrier On-Site Audit of Hospital Bills

(a) The carrier may request an on-site audit of a hospital bill.

(b) The request shall:

(1) be made in writing;

(2) be made no later than 40 days after receipt of the bill; and

(3) be accompanied by payment of either 75% of the bill as submitted, or a $50 audit fee.

(c) The audit shall be conducted according to the Instructions for On-Site Audit of Hospital Charges by Workers' Compensation Carrier, hereby adopted by reference. Copies of this document will be made available upon written request to the Administrator, Medical Cost Evaluation Division, Industrial Accident Board, 200 East Riverside, First Floor, Austin, Texas 78704-1287.

(d) Every audit shall be documented on the medical audit summary sheet, which shall include the following information:

(1) claimant's name;

(2) IAB claim number;

(3) provider's name, address, and federal tax identification number;

(4) health care provider-reviewer's report; and

History

Source Note: The provisions of this §42.165 adopted to be effective October 20, 1988, 13 TexReg 4994.

28 Tex. Admin. Code § 42.175 Miscellaneous Covered Services

(a) Medical reports.

(1) The carrier shall pay the fair and reasonable charges of the provider for the preparation and submission of all required medical reports, records, and information. There shall be no additional charge made to the patient or the patient's representative for copies of these documents except clinical reports (hospital) when a separate request is made. There shall be no additional charge made to the board for copies of any of these documents.

(2) The following shall serve as guidelines for fair and reasonable charges for required reports and records under this chapter:

Attached Graphic

(b) Travel expenses. Whenever it becomes reasonably necessary for an injured worker to travel outside the city or county of residence in order to obtain medical care covered under the Act, the reasonable costs thereof shall be reimbursed by the carrier. This would include, where appropriate, the reasonable costs of meals and lodging. All travel by private conveyance shall be based upon the mileage expense allowance then current for travel by state employees.

History

Source Note: The provisions of this §42.175 adopted to be effective October 20, 1988, 13 TexReg 4994.

Subchapter D DISPUTE RESOLUTION

28 Tex. Admin. Code § 42.305 Requesting Dispute Review and Resolution

(a) Either the carrier or the provider may request board review and resolution of a dispute arising over a medical bill under the following conditions:

(1) the charge has been incurred; and

(2) the carrier has admitted liability for compensation.

(b) For the purposes of this chapter, as required by Texas Civil Statutes, Article 8306, §7b(q), the carrier will be deemed to have admitted liability for compensation until the carrier files with the board proper notice of a bona fide liability dispute.

History

Source Note: The provisions of this §42.305 adopted to be effective October 20, 1988, 13 TexReg 4998.

28 Tex. Admin. Code § 42.307 Procedure for Requesting Dispute Review

(a) A request for dispute review shall be made in writing, and filed with the administrator of the Medical Cost Evaluation Division.

(b) The request shall be made no later than 365 days after the date the disputed bill was submitted to the carrier.

(1) all identifying information required by §42.30(d) of this title (relating to Written Communications);

(2) the bill as originally submitted to the carrier;

(3) copies of all written communications relating to the dispute; and

(4) written documentation that all reasonable efforts to resolve the dispute have been exhausted.

(d) The board may request additional information, and may compel production of documents, if necessary.

(e) A carrier requesting review shall:

(1) file the original request in person with the Medical Cost Evaluation Division;

(2) tender the review fee to the board at the time of filing, unless the provider is responsible for the fee, as provided in §42.309 of this title (relating to Payment for the Review); and

(3) send simultaneously, by certified mail, a copy of the request to the provider.

(f) A health care provider requesting review shall:

(1) file the original and one copy of the request by mail or in person with the Medical Cost Evaluation Division; and

(2) tender the review fee to the board, if responsible, as provided in §42. 309 of this title (relating to Payment for the Review).

(g) When a health care provider requests review, the board will notify the carrier's Austin board representative to appear in person to accept the carrier's copy of the request and tender the review fee, unless the provider is responsible for the fee, as provided in §42.309 of this title (relating to Payment for the Review).

History

Source Note: The provisions of this §42.307 adopted to be effective February 17, 1989, 14 TexReg 694.

28 Tex. Admin. Code § 42.308 Procedure for Responding to a Request for Dispute Review

(a) The respondent may file a response with the administrator of the Medical Cost Evaluation Division no later than 30 days after receiving the request. A copy of the response shall be sent simultaneously to the requestor.

(b) The response shall include, but shall not be limited to, the items set out in subsection (c) of §42.307 of this title (relating to Procedure for Requesting Dispute Review).

(d) If the respondent is a health care provider who is responsible for the review fee, as provided in §42.309 of this title (relating to Payment for the Review), he or she shall tender the fee to the board when filing the response. If such provider fails or refuses to tender the fee, the board will notify the carrier to tender the fee or withdraw the request.

History

Source Note: The provisions of this §42.308 adopted to be effective February 17, 1989, 14 TexReg 694.

28 Tex. Admin. Code § 42.309 Payment for the Review

(a) The board shall set reasonable fees for reviewing fee and utilization disputes. The board may adjust these fees periodically, as necessary.

(b) The review fee shall be paid by check or money order, payable to Industrial Accident Board.

(c) The carrier, whether requester or respondent, shall be responsible to pay for the review, unless the board has found that the provider has overutilized the board's review system.

(d) A provider shall be found to have overutilized the board's review system after three separate disputes involving the provider have been presented to the board for review, and have been resolved by the board against the provider within a 12-month period. The board will notify a provider when such finding is made, and shall maintain a record of such findings. In all subsequent reviews of that provider's bills, the provider, whether requester or respondent, shall be responsible to pay for the review.

History

Source Note: The provisions of this §42.309 adopted to be effective February 17, 1989, 14 TexReg 694.

28 Tex. Admin. Code § 42.310 Board Review and Resolution

(a) After all required information has been filed, the board will commence to review the dispute.

(b) No later than 31 days after commencing the review, the executive director or designee shall issue findings and conclusions in writing to the disputing parties.

(c) If the merits of the injured worker's claim have not been previously resolved by final award, judgment, or settlement, the findings and conclusions of the executive director or designee will be issued as a recommendation, to be filed pending final resolution of the merits of the injured worker's claim.

(d) If the merits of the injured worker's claim have been previously resolved by final award, judgment, or settlement, or if the injured worker is entitled to lifetime benefits under Texas Civil Statutes, Article 8306, §10(b), the board may, upon request of a disputing party, issue an award of medical benefits, based on the findings and conclusions of the executive director or designee.

(e) If the award is entered against the carrier on the issue of fees and charges only, it shall include an assessment of the statutory interest due.

History

Source Note: The provisions of this §42.310 adopted to be effective October 20, 1988, 13 TexReg 4998.

28 Tex. Admin. Code § 42.315 Appeal

An award entered under this chapter may be appealed pursuant to the provisions of Texas Civil Statutes, Article 8307, §5.

History

Source Note: The provisions of this §42.315 adopted to be effective October 20, 1988, 13 TexReg 4998.

Chapter 43 INSURANCE COVERAGE

28 Tex. Admin. Code § 43.5 Notice That Employer Has Become Subscriber

The notice that employer has become subscriber shall be filed with the board's Austin office by certified mail or in person within 30 days of the effective date of the policy and the notice must be completed in detail and shall include:

(1) name, address, and occupation of insured;

(2) effective date of the policy;

(3) signature of the insurance company representative;

(4) complete name of the insurance company;

(5) policy number, and if notice is a rewrite of an existing policy, this information must be included on the notice;

(6) area or location of the business;

(7) Form 154, which shall be filed for divided risk coverage; and

(8) the employer's federal tax identification number (effective 1987).

History

Source Note: The provisions of this §43.5 adopted to be effective November 20, 1977, 2 TexReg 4316; amended to be effective September 25, 1979, 4 TexReg 3230; amended to be effective November 11, 1983, 8 TexReg 4492; amended to be effective October 1, 1985, 10 TexReg 3506; amended to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 43.10 Termination of Coverage

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Termination of coverage--Occurs when either party withdraws from a policy of workers' compensation insurance, either by canceling the policy in the middle of its term, or by declining to renew the policy on its anniversary date.

(2) Rejection of the workers' compensation system--Occurs when a subscriber terminates coverage and fails or refuses to purchase a policy of workers' compensation insurance.

(b) Carrier's notice to the Industrial Accident Board. The carrier shall notify the board when coverage is terminated by filing Board Form IAB-9, "Cancellation or Non-Renewal Notice." The notice shall be:

(1) filed in person or by certified mail; and

(2) filed on or before the effective date of termination.

(c) Carrier's notice to subscriber. The carrier shall notify the subscriber when the carrier terminates coverage. No notice is required when the subscriber terminates coverage. Notice to the subscriber shall be:

(1) in writing;

(2) sent by certified mail; and

(3) mailed no later than the 30th day before the effective date of termination; or

(4) mailed no later than the 10th day before the effective date of termination if termination is due to:

(A) fraud in obtaining coverage;

(B) failure to pay a premium when payment is due;

(C) an increase in the hazard for which the subscriber seeks coverage that results from an action or omission of the subscriber and that would produce an increase in the rate; or

(D) a determination by the commissioner of insurance that coverage would be illegal or hazardous to the interests of subscribers, creditors, or the general public.

(d) Effective date of termination of coverage.

(1) Termination by the carrier shall be effective on the latest of the following dates:

(A) on the 31st day after the carrier notifies the subscriber as provided in subsection (c) of this section, or, if the termination is due to one of the conditions set out in subsection (c)(4) of this section, on the 11th day after the carrier notifies the subscriber as provided in subsection (c) of this section;

(B) the day the carrier files notice of termination with the board, as provided in subsection (b) of this section; or

(2) Termination by the subscriber shall be effective on the actual termination date recited on the notice.

(3) Termination shall be deemed effective on the date a subsequent carrier files notice of inception of coverage for the subscriber.

(e) Duties of a subscriber who terminates coverage and rejects the workers' compensation system.

(1) A subscriber who terminates coverage and rejects the workers' compensation system shall, on or before the effective date of termination:

(A) post copies of notice of noncoverage, on a board-prescribed form, in three places around each work site affected; and

(B) file a copy of the notice of noncoverage with the board.

(2) Failure to comply renders the subscriber liable for statutory benefits to injured employees.

History

Source Note: The provisions of this §43.10 adopted to be effective December 21, 1989, 14 TexReg 6419.

Chapter 45 EMPLOYER'S REPORT OF INJURY OR DISEASE

28 Tex. Admin. Code § 45.5 Forms

The employer's first report of injury and supplemental report of injury shall be completed on standardized forms approved by the board for that purpose. Every insurance carrier writing workers' compensation coverage effective in Texas shall provide an adequate number of the current forms in use to each insured employer.

History

Source Note: The provisions of this §45.5 adopted to be effective November 11, 1983, 8 TexReg 4493.

28 Tex. Admin. Code § 45.10 Employer's Report of Injury and Disease

(a) Since the efficient operation of workers' compensation depends so greatly upon the insurance carrier and Industrial Accident Board receiving prompt notice of possible claims, the employer shall report injuries and occupational diseases by completing board Form E-1, Employer's First Report of Injury, and sending the original to the Industrial Accident Board and a copy to the employer's insurance carrier no later than eight days after:

(1) the employer has notice or knowledge of an injury to an employee resulting in absence from work for more than one day; or

(2) the employer receives notice from an employee of the manifestation of an occupational disease.

(b) The E-1 must be completed and filed regardless of the employer's position on the occurrence of the injury or occupational disease; it shall not be deemed an admission of liability for the claim. If the employer denies the injury or occupational disease, this position may be stated on the report.

History

Source Note: The provisions of this §45.10 adopted to be effective November 11, 1983, 8 TexReg 4493; amended to be effective October 17, 1989, 14 TexReg 5260.

28 Tex. Admin. Code § 45.13 Wage Statement

(a) When requested by the board or carrier, the employer shall immediately complete Board Form IAB-150, Employer's Wage Statement, and file the original with the board and a copy with the carrier.

(b) Noncompliance with this requirement may result in imposition of a civil penalty not to exceed $500.

History

Source Note: The provisions of this §45.13 adopted to be effective October 17, 1989, 14 TexReg 5260.

28 Tex. Admin. Code § 45.20 Board Request for Additional Information

When requested in writing by the board, the employer shall promptly furnish to the board the information requested if such information is either known to the employer or reasonably available to said employer and which is pertinent to the compensation claim in question.

History

Source Note: The provisions of this §45.20 adopted to be effective November 11, 1983, 8 TexReg 4493.

28 Tex. Admin. Code § 45.25 Employer's Supplemental Report of Injury

When the employee returns to work or is no longer incapacitated as a result of the injury or occupational disease, the employer shall file an employer's supplemental report of injury promptly with the board and shall simultaneously deliver a copy thereof to the insurance carrier.

History

Source Note: The provisions of this §45.25 adopted to be effective November 11, 1983, 8 TexReg 4493.

28 Tex. Admin. Code § 45.30 Sanctions

If the employer fails to timely submit any information to the board which the board is entitled to request under the authority of the Workers' Compensation Act, the board shall notify the employer by certified mail with a copy sent to the employer's insurance carrier to either file the requested information or request a hearing by the board within 10 days of notice. If the employer timely requests a hearing, the matter will be heard by the board in Austin within 10 days of the request. If the employer does not timely request a hearing and does not timely provide the requested information, the board may impose a penalty authorized by Texas Civil Statutes, Article 8307, §7. The employer will be promptly notified of any imposition of penalty by the board. The board may consider a request for extension of time to provide the requested information if the employer makes the request in writing and shows good cause therefore within 10 days of the receipt of notice from the board.

History

Source Note: The provisions of this §45.30 adopted to be effective November 11, 1983, 8 TexReg 4493.

Chapter 47 EMPLOYEE NOTICE OF INJURY OR DEATH AND CLAIM FOR BENEFITS

28 Tex. Admin. Code § 47.5 Information Constituting Claim

The prescribed claim form, or any written communications from an injured employee, claiming either medical care or compensation payments, giving his name, the date and the general nature of injury, and the name of his employer shall constitute a claim (1970).

History

Source Note: The provisions of this §47.5 adopted to be effective November 20, 1977, 2 TexReg 4317.

28 Tex. Admin. Code § 47.10 Signature of Claimant

All claim forms must be personally signed by the injured employee and give his home address. If the employee is unable to write, he must make an "X" for his signature, and his mark must be witnessed by at least one credible witness (1978) (Rev. 1973).

History

Source Note: The provisions of this §47.10 adopted to be effective November 20, 1977, 2 TexReg 4317.

28 Tex. Admin. Code § 47.15 Employer Advances Compensation

Where an employer advances compensation in accordance with Texas Civil Statutes, Article 8309, §4b, it is necessary that IAB Form EAC-70 be completed and forwarded by the employer within 10 days to the board in Austin, and such form shall also be furnished within 10 days to the employee and the insurance carrier advising the date first payment was made (Rev. 1979).

History

Source Note: The provisions of this §47.15 adopted to be effective November 20, 1977, 2 TexReg 4317; amended to be effective September 23, 1979, 4 TexReg 3231.

28 Tex. Admin. Code § 47.20 Beneficiaries Filing Claim

In cases of injury resulting in death, the claim form or any written communication claiming compensation payments giving the employee's name, the employer's name, the date of the employee's death, and the name of the claimant shall constitute a claim. One of several beneficiaries may file claim for all beneficiaries. The names of all beneficiaries should be listed on the claim (1953).

History

Source Note: The provisions of this §47.20 adopted to be effective November 20, 1977, 2 TexReg 4317.

Chapter 49 PROCEDURES FOR FORMAL HEARINGS BY THE BOARD

Subchapter A FORMAL HEARINGS

28 Tex. Admin. Code § 49.5 Schedule of Hearings

Formal hearing before the board will be scheduled the first Friday following the expiration of 14 days from the date of prehearing conference. If the Friday upon which a hearing would otherwise be scheduled is a legal holiday or follows a legal holiday, the hearing will be scheduled for the following Monday. A claimant or his attorney must give the board and all parties seven days written notice if they intend to be present for such formal hearing. Hearings will begin at 9:30 a.m. in the board's Austin office and cases normally will be heard by the board in the order registered with the receptionist (1970) (Rev. 1977).

History

Source Note: The provisions of this §49.5 adopted to be effective November 20, 1977, 2 TexReg 4317.

28 Tex. Admin. Code § 49.10 Timely Acceptance of Evidence

All interested parties required to file evidence with the board for consideration in a claim scheduled for a hearing must file this evidence not later than 5 p.m. on date of hearing. The board will consider requests for delayed evidence filing from any interested party. The request must be filed with the board in writing no later than 5 p.m. on the date of hearing and it must include a statement of the facts showing good cause and necessity for the delay. If delayed evidence is filed by any party after permission has been granted by the board, copies of such evidence must be simultaneously furnished to the opposing party (1970) (Rev. 1975).

History

Source Note: The provisions of this §49.10 adopted to be effective November 20, 1977, 2 TexReg 4317.

28 Tex. Admin. Code § 49.15 Formal Statement of Position

The insurance carrier and attorney representing the claimant shall file their formal statement of position in the board's Austin office on or before the date of formal hearing.

History

Source Note: The provisions of this §49.15 adopted to be effective September 22, 1979, 4 TexReg 3231.

28 Tex. Admin. Code § 49.20 Request for Cancellation

Upon written request by claimant or all claimant beneficiaries, the board, at its discretion, may at any time prior to the entry of an award, cancel a scheduled hearing when good cause is shown. Request for cancellation of a scheduled hearing shall be by written notice and filed with the board's Austin office (Rev. 1979).

History

Source Note: The provisions of this §49.20 adopted to be effective November 20, 1977, 2 TexReg 4317; amended to be effective September 22, 1979, 4 TexReg 3231.

28 Tex. Admin. Code § 49.25 Delay or Postponement of Hearing

On the date of hearing, the board will review the case in accordance with the provisions of Article 8309a of the Act, the Industrial Accident Board may delay or postpone the hearing of the claim provided that within its discretion the board deems it to be the best interest of the injured employee that the case not be heard at that time; and such hearing may be delayed or postponed until the carrier discontinues payment of compensation or the furnishing of hospitalization, chiropractic service or medical treatment or until the board deems it to the best interest of such employee for an award to be rendered (1968) (Rev. 1977).

History

Source Note: The provisions of this §49.25 adopted to be effective November 20, 1977, 2 TexReg 4317.

28 Tex. Admin. Code § 49.30 Filing of Medical Bills

All bills unpaid by the insurance carrier or copies of receipts for medical services for claim for reimbursement must be filed with the board at the prehearing conference or attached to the formal statement of position. There must be clear itemization of all prescriptions or incidentals, date of purchase, treatment rendered and physician prescribing same on items furnished (Rev. 1979).

History

Source Note: The provisions of this §49.30 adopted to be effective November 20, 1977, 2 TexReg 4317; amended to be effective September 22, 1979, 4 TexReg 3231.

28 Tex. Admin. Code § 49.35 Filing of Medical Reports and Records

If not previously filed pursuant to other board rules, all medical reports and records shall be filed at the time of formal hearing.

History

Source Note: The provisions of this §49.35 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 49.40 Carrier Attendance

The carrier's designated Austin representative must be available to the board on the day a claim is scheduled for formal hearing. In the event the Industrial Accident Board needs a copy of the carrier's file, or a portion thereof, the carrier's designated Austin representative shall obtain the file, or portion thereof, as requested by the board, from the carrier by suitable overnight mail or delivery service.

History

Source Note: The provisions of this §49.40 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 49.45 Contents of Formal Statement of Position

The formal statement of position shall be responsive to the prehearing officer's recommendations and shall be sufficiently detailed to apprise the board of all controverted issues. Legal contentions should be supported by citations to applicable authorities.

History

Source Note: The provisions of this §49.45 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 49.50 Sanctions

Failure to file a formal statement of position or filing a formal statement of position that does not comply with the requirements of §49.45 of this title (relating to Contents of Formal Statement of Position) may be punishable by appropriate sanctions of the board.

History

Source Note: The provisions of this §49.50 adopted to be effective November 11, 1983, 8 TexReg 4495.

Subchapter B SPECIAL FORMAL AND OTHER INVESTIGATIVE HEARINGS

28 Tex. Admin. Code § 49.105 Procedures

These hearings will only generally follow the Texas Rules of Civil Procedure. Evidence will be received in accordance with the Texas Rules of Evidence as generally applied in Texas judicial proceedings, although not with the same degree of strictness. The procedures used in these hearings shall generally follow that used in judicial proceedings in the courts of this state.

History

Source Note: The provisions of this §49.105 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.110 Commencement of Hearings

Upon its own motion, or upon the written request or complaint of either a party or employer, the board may schedule a special formal hearing, fraud hearing, or investigative hearing to be conducted by the board or any member therefore under the authority of applicable provisions of the Workers' Compensation Law of Texas.

History

Source Note: The provisions of this §49.110 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.115 Notice

All hearings shall be commenced by written notice, in accordance with the provisions of Chapter 41 of this title (relating to Communications and General Medical Provisions) to the individuals and businesses or agencies directly concerned with the subject of the hearing. Sufficiency of the notice shall be presumed unless the issue is raised by an interested party on or before the hearing date.

History

Source Note: The provisions of this §49.115 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.120 Special Statutory Notice

In the event of hearings conducted by the board pursuant to the provisions of Texas Civil Statutes, Article 8306, §18, or Texas Civil Statutes, Article 8307, §7 and §9a, or Texas Civil Statutes, Article 8308, §18a, the notice requirements of those statutes will prevail whether same or inconsistent with any other provisions of these board rules pertaining to notice.

History

Source Note: The provisions of this §49.120 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.125 Notice of Special Formal Hearing

In all other hearings except for those described in §49.120 of this title (relating to Special Statutory Notice), and unless waived by the board upon its own motion, or for good cause shown, no less than 14 days written notice of the date, time, and place of such hearing will be given to the parties concerned.

History

Source Note: The provisions of this §49.125 adopted to be effective November 11, 1983, 8 TexReg 4494; amended to be effective June 16, 1988, 13 TexReg 2752.

28 Tex. Admin. Code § 49.130 Personal Appearance Hearings in Austin

A party desiring to make a personal appearance hearing before the board on a claim which is scheduled for formal hearing by the board in Austin shall give the board and all other interested parties not less than seven days written notice thereof. The claimant's attendance at such hearing is required unless waived by the board for good cause shown. Hearings will begin at 9:30 a.m. in the board's Austin office, and cases normally will be heard by the board in the order they are registered with the receptionist. Strict compliance with the notice provisions of this rule may be waived for good cause.

History

Source Note: The provisions of this §49.130 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.131 Withdrawal of Attorney

After a compensation claim has been scheduled for a special formal hearing, or other hearing as provided in §53.65 of this title (relating to Certification Procedures), et seq., an attorney may not voluntarily withdraw as counsel for a claimant, except upon written request therefore as approved by the Industrial Accident Board.

History

Source Note: The provisions of this §49.131 adopted to be effective October 1, 1985, 10 TexReg 3506.

28 Tex. Admin. Code § 49.135 Use of Court Reporters

Testimony will be recorded under the direction and control of the board member conducting the hearing. It will be permissible for any party to have a court reporter record the proceedings, conditioned upon:

(1) notification thereof shall be made to the presiding board member not less than three days before the scheduled hearing; and

(2) the original of the transcript shall be promptly furnished by the court reporter to the board, without cost to the board; and

(3) a true copy of the transcript shall be made available to the opposing party or parties at the usual and customary charge therefore.

History

Source Note: The provisions of this §49.135 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.140 Continuance

After a hearing is scheduled and notice is given to the party or parties as herein provided, a postponement or cancellation may be had by any party only for good cause. A request for postponement or cancellation shall be first and promptly made by telephone or in person to the presiding board member. If the request is granted, the party shall confirm the request and the grounds therefore by letter to the board member, with a copy thereof being delivered to the opposing party/parties or counsel.

History

Source Note: The provisions of this §49.140 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.145 Recess

After a hearing has commenced, circumstances may develop which, in the best interest of equity and justice, require the presiding board member to recess the hearing until a later time or date. If this occurs, the parties and all subpoenaed witnesses shall be entitled to notice of the date, time, and place of the resumption of hearing, in accordance with the same provisions as herein before provided for in these rules for the initial notice, except not less than 10 days written notice thereof shall be given to the party or parties.

History

Source Note: The provisions of this §49.145 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.150 Complaint Specifications

For all hearings for which complaint and allegation of violation of any provision of the Workers' Compensation Law or of Industrial Accident Board rules, the written notice herein provided for shall describe in detail the areas of investigation or complaint so as to fairly inform the party under investigation.

History

Source Note: The provisions of this §49.150 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.155 Documentary Evidence

If documentary evidence is to be tendered at the hearing, true copies thereof shall be prepared in advance by the parties offering such evidence, sufficient in number for all interested parties to the hearing.

History

Source Note: The provisions of this §49.155 adopted to be effective November 11, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.160 Filing of Formal Statement of Position

Although no formal statement of position is required to be filed in these types of hearings, any party may file a written brief concerning the facts, law, or argument which a party may desire to present in written form to the board.

History

Source Note: The provisions of this §49.160 adopted to be effective November 8, 1983, 8 TexReg 4494.

28 Tex. Admin. Code § 49.165 Subpoenas and Subpoenas Duces Tecum

(a) Upon its own motion, or upon the written request of any party to a hearing, the board member presiding over the scheduled hearing may issue a subpoena for attendance of a witness or issue a subpoena duces tecum in order to examine any part of the books, files, and records of the parties or other witnesses as relate to the matters in dispute.

(b) It is urged that all requests for subpoenas be promptly made and correctly identify the name and address of the person to be subpoenaed, and a description of the books, record, etc., to be produced by subpoena duces tecum.

(c) Although the board will issue a subpoena upon request and in accordance with this rule, the requesting party should be aware the board is unable to enforce its subpoena authority unless the request is accompanied by $1.00 cash for each subpoena to be served, and, in addition, the party requesting the subpoena may be called upon to pay witness travel expense pursuant to Texas Civil Statutes, Article 3708.

(d) No subpoena will be directed to a witness residing more than 100 miles from the county courthouse in the county where the hearing is held.

(e) A true copy of the request for subpoena/subpoena duces tecum shall be promptly mailed by the requesting party to all other parties to the hearings.

(f) Any objection to a subpoena or to a subpoena duces tecum, or any portion thereof, shall be made in writing to the board member conducting the hearing and shall state with certainty the grounds of objection. If the written objection is presented to the board not less than seven days prior to the hearing, then a majority of the board shall rule upon the same. If presented less than seven days in advance of the hearing, or at the time of the hearing, the objection may be determined by the board member scheduled to conduct the hearing.

(g) Any subpoena duces tecum issued by the board, or any member thereof, shall be restricted in the documents, instruments, and other writings discoverable thereby, to the provisions of the Texas Rules of Civil Procedure, Rule 186a, as now written, or hereafter amended. In the event of an unresolved dispute concerning the applicability of a subpoena duces tecum to a particular document, instrument, or other writing, the board or board member conducting the hearing shall examine the instrument in camera to determine whether or not the same is discoverable in whole or in part.

(h) Insofar as practicable, and also in conformity with the board rules herein provided, Rules 176, 177, 177a, 178, and 179 of the Texas Rules of Civil Procedure, as now written, or hereafter amended, shall be applicable to subpoena practice before the board.

History

Source Note: The provisions of this §49.165 adopted to be effective November 8, 1983, 8 TexReg 4494.

Chapter 51 AWARD OF THE BOARD

28 Tex. Admin. Code § 51.10 Joint Payment of Award

Any payment by an insurance carrier of an award of the board to a claimant represented by counsel shall be made payable jointly to the claimant and to his attorney (1970).

History

Source Note: The provisions of this §51.10 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.15 Periodic Installments

When an award is made for payment of compensation in periodic installments, the carrier will notify the board of payment of the award by filing Form A-1 (report of initial payment of compensation), or A-4 (report of resumption of compensation), whichever is appropriate. An A-2 (report of suspension of compensation) will be filed with the board when the carrier discharges its obligation (1974).

History

Source Note: The provisions of this §51.15 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.20 Lump Sum Payment

When an award is made for payment of compensation in a lump sum the carrier will notify the board of payment of the award by filing Form A-2 (report of suspension of compensation) (1974).

History

Source Note: The provisions of this §51.20 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.25 Request for Review

Requests for review shall be filed in writing with the board stating the reason for which the award is sought to be modified or set aside. The board in its discretion may set a date on which the request may be considered and will give notice of the hearing to all parties. As soon as possible after the hearing is held, the board will affirm, set aside, or modify the award on the basis of the information available to it at the time from any source. The board may on its own motion correct typographical errors at any time (1974).

History

Source Note: The provisions of this §51.25 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.30 Review of Award

Review may be granted if any erroneous award was made because of fraud or mistake, or if a change has occurred in the physical condition of the injured employee requiring modification of the award as to amount or duration of payments (1974).

History

Source Note: The provisions of this §51.30 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.50 Payments of Attorney's Fees

The parties may agree after the board's award, and with the approval of the board, to a different method of payment of attorney's fees as provided by law. Any such agreement shall be submitted to the board in writing, and when approved, shall be binding on all parties (1968).

History

Source Note: The provisions of this §51.50 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 51.65 Attorney Fees

(a) As used in this section, executive director means the executive director of the Texas Workers' Compensation Commission, or designee.

(b) Attorneys representing claimants will be authorized to receive fees and expenses only when a power of attorney, contract of employment, or other document signed by the claimant is filed with the executive director. The attorneys' fees for representing the claimant shall be specified in the power of attorney, contract of employment, or other signed document, and the fees shall not exceed 25% of the total recovery. All attorneys' fees for representing claimants shall be subject to the approval of the executive director as provided in Texas Civil Statutes, Article 8306, §7(c). When a dispute arises as to the representation of the claimant by two or more attorneys, the executive director will require a signed and dated power of attorney or employment contract from each attorney, and the attorney first retained will be deemed to be the attorney of record, unless the executive director determines that the claimant has effected a change of attorneys.

History

Source Note: The provisions of this §51.65 adopted to be effective June 1, 1993, 18 TexReg 3194.

Chapter 53 CARRIER'S REPORT OF INITIATION AND SUSPENSION OF COMPENSATION PAYMENTS

28 Tex. Admin. Code § 53.5 Payment of Benefits Without Prejudice

It being the policy of the Industrial Accident Board to encourage the prompt delivery of compensation and medical benefits to an injured worker, neither the payment of periodic benefits nor of the health provider care shall be considered an admission of liability by the insurance carrier.

History

Source Note: The provisions of this §53.5 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.10 Written Notice of Injury Defined

(a) Written notice of injury as used in Texas Civil Statutes, Article 8306, §18a, shall consist of either:

(1) an employer's first report of injury (IAB Form E-1); or

(2) any other instrument in writing, regardless of its source, which fairly informs the carrier of the name of the injured worker, the identity of the employer, the approximate date of injury, and facts showing compensable lost time or the probability of compensable lost time.

(b) Every carrier shall promptly and legibly date stamp every written notice of injury received by it, showing the date such notice was received.

History

Source Note: The provisions of this §53.10 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.15 Board Notice to Carrier of Injury

The board shall furnish a dated written notification of any injury which may produce compensable lost time to the carrier's designated Austin representative. This notice shall begin the 20-day period for commencement of the payment of compensation, or the filing of the statement of controversion, as required in Texas Civil Statutes, Article 8306, §18a, unless the carrier has already received earlier written notice thereof from another source (effective January 1, 1984).

History

Source Note: The provisions of this §53.15 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.20 Notice of Initiation of Compensation; Mode of Payment of Compensation

(a) Every insurance carrier shall report to the Industrial Accident Board and to the claimant or the claimant's attorney on Form A-1 the initial payment of compensation to the claimant within 10 days from the date of:

(1) issuance of a draft, check, or other evidence of payment; or

(2) transfer of funds electronically to the claimant's account.

(b) If such payment represents both initial and final payment, that fact shall be stated on the face of the Form A-1.

(c) Except as otherwise provided, all payments of compensation, whether periodic payments, advances, A-2 lump sum payments, or settlement payments, shall be by United States legal tender, checks, or negotiable drafts drawn on a Texas financial institution.

(d) The claimant and the carrier may agree to payment of income benefits by electronic transfer of funds from any financial institution in the United States directly into an account designated by the claimant.

(e) A carrier which routinely pays benefits by instruments drawn on out-of-state financial institutions shall:

(1) arrange for negotiation of said instruments with a Texas financial institution having offices in the major Texas cities; and

(2) file the name and locations of this financial institution with the board.

(f) Whenever a payment of compensation is made through the use of a negotiable draft of a check drawn on an out-of-state bank, the carrier shall accompany the instrument with written advice to the claimant of the carrier's office location and phone number where the claimant may call, at carrier's expense, to obtain help if necessary in cashing the instrument.

History

Source Note: The provisions of this §53.20 adopted to be effective November 11, 1983, 8 TexReg 4495; amended to be effective January 1, 1990, 14 TexReg 6671.

28 Tex. Admin. Code § 53.22 Application To Change the Benefits Payment Period

(a) While a claim is pending before the board, the claimant and the carrier, with board authorization, may agree to change the weekly payment of benefits to one of the following payment periods: every two weeks, every four weeks, monthly, or quarterly.

(b) Application for board authorization shall be made in writing on a form approved by the board.

History

Source Note: The provisions of this §53.22 adopted to be effective April 18, 1988, 13 TexReg 1539.

28 Tex. Admin. Code § 53.25 Contents of Statement of Controversion or Statement of Position

A statement of position or a statement of controversion as provided for in Texas Civil Statutes, Article 8306, §18a(a), shall state fully and in writing the grounds for refusal to commence paying compensation. These grounds must be based on actual investigation of the claim and stated in sufficient detail so as to be compared with the position taken by the carrier at the prehearing conference. It is insufficient to simply state a conclusion, for example, "liability in question," "compensability in dispute," or "under investigation." When a carrier files an insufficient statement of controversion or statement of position, the board will issue a complaint report to the carrier through its designated Austin Industrial Accident Board representative. The carrier will have 30 days from the date of receipt of the complaint report to respond in writing to the charge. The board will evaluate the carrier's response. If a majority of the board members determine that a violation has occurred, the violation may be used to establish a record of general business practice, in accordance with Texas Civil Statutes, Article 8306, §18a(d). A failure to respond to the complaint report within 30 days will constitute an automatic violation.

History

Source Note: The provisions of this §53.25 adopted to be effective July 20, 1984, 9 TexReg 3733; amended to be effective October 1, 1985, 10 TexReg 3507.

28 Tex. Admin. Code § 53.30 Filing of Wage Statement

(a) In cases in which the reported weekly compensation rate is less than the maximum prescribed by law, the insurance carrier shall file with the board and the claimant or his attorney a wage statement reporting the wages upon which the compensation rate is based. The wage statement shall accompany the Form A-1, report of initial payment of compensation, or in the event a wage statement is not available at the time of filing Form A-1, the carrier shall indicate on Form A-1 that a wage statement has been requested and shall file said form within a reasonable time, not to exceed 30 days from the date of initial payment of compensation.

(b) When an employer fails or refuses to promptly complete and return the wage statement to the carrier, the carrier shall notify the board of that fact and additionally shall supply the employer's current address to the board. The board will thereafter contact the employer pursuant to the provisions of Texas Civil Statutes, Article 8307, §7, and of these rules, and may impose appropriate sanctions against the employer for a continuing unexcused failure to respond to the request.

(c) If the carrier does not notify the board of the employer's failure to comply within 30 days of the carrier's first request for a wage statement, the board shall set the compensation rate based upon evidence in the file, and the carrier shall be required to pay the rate determined by the board beginning with the date that the initial payment of compensation was due and continuing until the wage statement is filed with the board or until the carrier is authorized to stop or suspend compensation.

History

Source Note: The provisions of this §53.30 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.35 Notice of Suspension of Compensation

(a) In every instance in which an insurance carrier has paid compensation to a claimant, the carrier shall report to the board and to the claimant or his attorney on Form A-2 (notice of suspension of compensation payments) within 10 calendar days from the date of last payment. The reasons for suspension of payment shall be stated fully on the notice. When Form A-2 is filed stating compensation suspended because case settled with third party, the carrier shall accompany the notice with a copy of the judgment(s) or settlement papers.

(b) If a carrier suspends or stops the payments of indemnity compensation or medical benefits, and notifies the board in writing thereof pursuant to Texas Civil Statutes, Article 8306, §18a(b), and Article 8307, §11, such notice shall state fully the reason(s) for suspending or stopping such payments. This statement must contain sufficient substantive information to enable the board to evaluate the carrier's position on the claim. It is insufficient to simply state the carrier's position with such phrases as abandoned medical treatment, disability in dispute, etc. When a carrier files an insufficient statement of reasons for suspension of payment of benefits, the board will issue a complaint report to the carrier through its designated Austin Industrial Accident Board representative. The carrier will have 30 days from the date of receipt of the complaint report to respond in writing to the charge. The board will evaluate the carrier's response. If a majority of the board members determine that a violation has occurred, the violation may be used to establish a record of general business practice, in accordance with Texas Civil Statutes, Article 8306, §18a(d). A failure to respond to the complaint report within 30 days will constitute an automatic violation.

History

Source Note: The provisions of this §53.35 adopted to be effective November 11, 1983, 8 TexReg 4495; amended to be effective July 20, 1983, 9 TexReg 3733; amended to be effective October 1, 1985, 10 TexReg 3507.

28 Tex. Admin. Code § 53.40 Transmittal Letters

In cases where the carrier tenders a lump sum payment to claimant based upon medical disability, the carrier shall accompany the payment with the A-2 and a transmittal letter which shall read as follows:

(1) Enclosed is our payment of compensation $_____ for injuries received on __________. This payment is based on the medical reports contained in our file. Your case remains open before the Industrial Accident Board. This payment does not represent a settlement of your compensation claim. However, there are certain requirements of the law and of the Industrial Accident Board rules with which you must comply in order to protect your claim in the future. Please call our office or the board if you require additional medical treatment or become further disabled as a result of your injury.

(2) The insurance carrier shall file an amended A-2 not later than 10 days after the carrier has received a rejected lump sum payment from the claimant or has itself cancelled for any reason the lump sum payment.

History

Source Note: The provisions of this §53.40 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.45 Maximum Payment to Minor

In cases of specific injury or injuries resulting in death, permanent total incapacity, or a high degree of permanent partial disability, where the injured employee is a minor, the compensation rate per week shall be fixed at the maximum allowed by the law unless the evidence clearly dictates the contrary.

History

Source Note: The provisions of this §53.45 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.48 Payment of Partial Benefits for General Injuries

(a) When a carrier believes that a claimant is no longer entitled to temporary total benefits because the claimant has returned to work, or has been released to return to without restrictions, the carrier shall:

(1) initiate payment of partial benefits based on a determination of the claimant's lost wage earning capacity, either periodically or in a lump sum; and

(2) file the appropriate notice with the board.

(b) If the carrier fails or refuses to comply with this section, the claim shall be set for a hearing on the board's next available formal hearing docket.

History

Source Note: The provisions of this §53.48 adopted to be effective January 1, 1990, 14 TexReg 6673.

28 Tex. Admin. Code § 53.50 Resumption of Compensation

In the event the carrier shall, after reporting suspension of payment on Form A-2, subsequently resume the payment of compensation, it shall report such resumption on Form A-4 within 10 days from date of first payment after resumption, and a copy of such Form A-4 shall be furnished to the claimant or his attorney.

History

Source Note: The provisions of this §53.50 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.55 Payment for Amputation

When an industrial injury occurring prior to September 1, 1973, results in the amputation or partial amputation of a finger, thumb, or toe, the insurance carrier shall file with the board, with copy to the claimant or his attorney, a signed medical report and a chart showing the exact point of amputation at the time a Form A-2, compromise or lump sum payment, is submitted.

History

Source Note: The provisions of this §53.55 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.60 Application for Suspension of Compensation

Where application is made by the carrier for suspension of compensation pursuant to either Texas Civil Statutes, Article 8306, §12a, or Texas Civil Statutes, Article 8307, §4, the question of suspension will be set by the board for hearing within two weeks of said application. No suspension of compensation benefits will be approved by the board, under Texas Civil Statutes, Article 8307, §4a, unless statutory grounds exist for such suspension. No suspension of compensation benefits will be approved by the board, under Texas Civil Statutes, Article 8306, §12a, unless:

(1) the injured employee has returned to work; or

(2) the injured employee refuses light duty work procured for him in the locality where he was injured or at a place agreeable to him; or

(3) the treating physician has released the employee to return to work without physical restrictions relating to the compensable injuries involved.

History

Source Note: The provisions of this §53.60 adopted to be effective November 11, 1983, 8 TexReg 4495.

28 Tex. Admin. Code § 53.63 Suspension of Weekly Compensation

(a) A carrier may not suspend payment of weekly or other periodic benefits pending final adjudication until there exists evidence justifying suspension. However, in no event, unless directed otherwise by the board, shall a carrier suspend benefits until:

(1) the injured employee returns to work;

(2) the injured employee is released by a physician to return to work without restrictions;

(3) the employee refused employment offered him or her consistent with any restrictions;

(4) the statutory maximum benefit has been paid;

(5) the claim is resolved by settlement, A-2 lump sum payment, or matured award;

(6) evidence exists showing that the carrier has no liability for the employee's injury; or

(7) there is a third-party settlement which relieves the carrier of its liability.

(b) Medical evidence indicating that a worker can perform work with restrictions or evidence existing showing that the injured employee has engaged in activities inconsistent with his or her impairment shall constitute good cause under §61.25 of this title (relating to Setting at Carrier's Request).

History

Source Note: The provisions of this §53.63 adopted to be effective July 28, 1988, 13 TexReg 3512.

28 Tex. Admin. Code § 53.64 Nonpayment of Compensation Based on Another Carrier's Liability

(a) When the carrier fails or refuses to initiate, or suspends, payment of income or medical benefits based on evidence that another carrier is liable for the claimant's disability, the carrier or the claimant's attorney, if any, shall immediately request a formal hearing before the board.

(b) The claim will be set for a hearing on the board's next available formal hearing docket.

History

Source Note: The provisions of this §53.64 adopted to be effective December 13, 1989, 14 TexReg 6279.

28 Tex. Admin. Code § 53.65 Certification Procedure

In cases where it appears that the carrier willfully fails, or refuses without justification to pay compensation, the following procedure will apply.

(1) If, on suspension or stoppage of workers' compensation payments, it appears to the board that the carrier has not fully discharged its obligation to the claimant, the board will notify the carrier through its Austin Industrial Accident Board representative of the deficiency, and copies of such notice shall be sent to the claimant or his attorney.

(2) The board will specify a reasonable period of time in which a carrier may either pay the deficiency and submit a correct report or submit information to the board justifying the amount of its payment.

(3) If the carrier fails to pay the deficiency or fails to submit information justifying the amount of its payment, the board shall set the case for formal hearing to be held by a majority of the board within 100 miles of the claimant's residence. The provision of §49.105 of this title (relating to Special Formal Hearing and Other Investigative Hearings), et seq., shall apply.

(4) At such hearing, if it determined that compensation benefits are due, the board shall so order. If the carrier fails to obey such order within 10 days the board may certify such fact to the commissioner of insurance for proceedings, according to Texas Civil Statutes, Article 8306, §18.

History

Source Note: The provisions of this §53.65 adopted to be effective October 1, 1985, 10 TexReg 3507.

Chapter 55 LUMP SUM PAYMENTS

28 Tex. Admin. Code § 55.3 Request for Advance Payment of Compensation

(a) A claimant who suffers financial hardship because of loss of wages due to an uncontested injury may request of the carrier an advance payment of compensation ("advance") to be credited against future compensation benefits.

(b) A request for an advance shall be:

(1) prepared on a board-approved form;

(2) signed by the claimant unless waived for good cause; and

(3) submitted in the original to the carrier, with a copy filed with the board.

(c) If, within 10 days of receipt of the request, the carrier fails to tender an advance, the board may set a hearing and notify the parties in writing.

(d) If an advance is sought at a prehearing conference, in the absence of a formal request for an advance under this section, and the advance is either denied by the adjuster at that time or deemed inadequate by the claimant, the board may set a hearing on the first available formal hearing docket.

(e) After the hearing the board may direct the carrier to make an advance if the board determines that:

(1) an emergency or impending necessity exists; and

(2) the future compensation benefits due the claimant exceed the amount of the advance directed.

History

Source Note: The provisions of this §55.3 adopted to be effective January 1, 1990, 14 TexReg 6674.

28 Tex. Admin. Code § 55.5 Lump Sum Payments

No lump sum payment of fatal benefits may be made without prior board approval. No lump sum payment of fatal benefits may be made to beneficiaries, unless there exists a bona fide dispute as to the liability of the insurance carrier, and no lump sum payment of benefits for injuries enumerated in Texas Civil Statutes, Article 8306, §11a, shall be made unless there is also a bona fide dispute as to the liability of the insurance carrier (Texas Civil Statutes, Article 8306, §8(d) and §10(d)).

(1) When authorized by statute, a lump sum payment for a minor's compensation in fatal cases will be considered by the board upon receipt of a certified copy of letters of guardianship. If the carrier requests an order of a probate court directing a lump sum payment, the cost thereof shall be borne by the carrier.

(2) All lump sum payment agreements submitted to the board must be submitted in four parts--the original must be white, the second copy pink, third copy yellow, and fourth copy white. The forms must either be on NCR paper or be submitted with carbon left intact. The board will mail a copy of the lump sum payment agreement to the claimant, claimant's attorney if one has been employed, and the carrier's Austin representative in lieu of a separate approval notice.

History

Source Note: The provisions of this §55.5 adopted to be effective November 20, 1977, 2 TexReg 4320; amended to be effective November 11, 1983, 8 TexReg 4496; amended to be effective June 1, 1993, 18 TexReg 3194.

28 Tex. Admin. Code § 55.10 Settlements Final When Approved

Compromise settlement agreements between insurance carriers and persons claiming benefits under the Texas Workers' Compensation Law are not final until approval by the board (1953).

History

Source Note: The provisions of this §55.10 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.15 Compromise Settlement Agreements

(a) A compromise settlement agreement must contain the following information:

(1) that the agreement is executed on a form approved by the division;

(2) that the agreement is accompanied by physician's signed report of the findings of a recent examination of the employee;

(3) that the employee has achieved maximum recovery, or that good reason exists for settlement prior to maximum recovery;

(4) that in the event of serious injury to the claimant's eye, healing has occurred and the division was given a medical report on whether the other eye is or may be affected; and

(5) that in all instances of severe and disfiguring burns or lacerations, a descriptive medical report of the scars will be submitted by either the association or claimant. In all such cases involving injury to the face, arms, or hands, either the claimant or insurance carrier must submit to the division a color photograph taken after maximum healing.

(b) Compromise settlement agreements submitted to the division must be submitted in the form and manner prescribed by the division. The division will provide a copy of the compromise settlement agreement to the claimant, claimant's attorney if one has been employed, and the insurance carrier's Austin representative instead of a separate approval notice.

History

Source Note: The provisions of this §55.15 adopted to be effective November 20, 1977, 2 TexReg 4320; amended to be effective September 1, 1981, 6 TexReg 3274; amended to be effective June 1, 1993, 18 TexReg 3194; amended to be effective July 3, 2023, 48 TexReg 3505.

28 Tex. Admin. Code § 55.20 Execution of Compromise Settlement Agreement

A compromise settlement agreement must be signed by the claimant personally, unless sufficient good cause is found by the board to excuse strict compliance to this section. Only in extraordinary circumstances will the board approve a compromise settlement agreement in which the attorney signs the claimant's name under a power of attorney.

History

Source Note: The provisions of this §55.20 adopted to be effective September 18, 1981, 6 TexReg 3274; amended to be effective November 11, 1983, 8 TexReg 4496.

28 Tex. Admin. Code § 55.25 Loss of an Eye

The board considers "loss of an eye" when loss of vision reached 90%. Permanent partial loss of vision in an eye will be calculated on the actual loss of vision as a result of an injury, and not on loss of vision after restoration of vision by proper fitting glasses. The following table for the estimate of compensation to be paid workers who have suffered partial or complete loss of vision in one eye, through accident or occupation, is adopted by the board (1961) (Rev. 1973).

Attached Graphic

History

Source Note: The provisions of this §55.25 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.30 Hearing Impairment

(a) Hearing tests for use in compensation ratings shall be derived from the pure-tone audiogram calculated to ANSI-S3.6-1969 standards. Examination should be performed by a medical specialist who does hearing evaluations or by an audiologist having the certificate of clinical competence from the American Speech-Language-Hearing Association upon referral. Hearing handicap will be based on the functional state of both ears.

(b) The average of the hearing threshold levels at 500 Hz, 1,000 Hz, 2,000 Hz, and 3,000 Hz should be calculated for each ear. The percent of impairment for each ear should be calculated by multiplying by 1.5 the amount by which the above average hearing threshold level exceeds 25 dB up to a maximum of 100% which is reached at 92dB. The hearing handicap, a bilateral assessment, should then be calculated by multiplying the smaller percentage (better ear), by five, adding this figure to the larger percentage (poorer ear), and dividing the total by six.

(c) Since there is no exact scientific test by which non-industrial hearing losses can be distinguished from induced impairment, the opinion as to the amount of loss due to such other causes shall be made by the examining medical specialist.

(d) No consideration shall be given to possible improvements through use of prosthesis. Where artificial appliances would materially and beneficially improve the future usefulness and occupational opportunities of the employee, the insurer shall provide same, and shall continue to furnish the needed artificial appliance or appliances until a satisfactory fit is obtained in the judgment of the attending physician or physicians. The association shall be liable for replacing or repairing any artificial appliances so furnished.

(e) Such prosthesis shall be prescribed upon proper evaluation by a medical specialist who does hearing aid evaluations or by an audiologist having the certificate of clinical competence from the American Speech-Language-Hearing Association upon referral. Such hearing and speech centers shall have no commercial properties.

(f) The above formula should be used in calculating the percentage of loss of hearing, but the doctor giving the report shall state specifically the exact loss of hearing in percentage, and not decibels.

(g) See examples and chart.

Attached Graphic

History

Source Note: The provisions of this §55.30 adopted to be effective November 20, 1977, 2 TexReg 4320; amended to be effective September 18, 1981, 6 TexReg 3340; amended to be effective November 11, 1983, 8 TexReg 4496.

28 Tex. Admin. Code § 55.35 Stipulation of Medical Payments

Where an insurance company agrees to pay accrued medical and hospital expenses in a compromise settlement agreement, any exceptions or special stipulations agreed upon by the parties must be clearly stated on the face of the compromise settlement or an attached affidavit (1970).

History

Source Note: The provisions of this §55.35 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.40 Attorney's Signature

Settlement agreements entered into by claimants who are represented by an attorney must be signed by the attorney. The attorney's name and address shall be on the face of the agreement (1953) (Rev. 1973).

History

Source Note: The provisions of this §55.40 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.45 Percent of Medical Impairment

Where the amount of compensation due is covered by Texas Civil Statutes, Article 8306, §12, the board may consider percentage of medical impairment as only one element in arriving at percentage of legal disability as distinguished from medical disability (1973).

History

Source Note: The provisions of this §55.45 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.50 Attorneys Fees and Expenses

Sections 51.5, 51.7, 51.10, 51.35, 51.45, 51.50, 51.55, and 51.60 of this title (relating to Power of Attorney; Representation in Fatal Cases; Joint Payment of Award; Unauthorized Attorney's Fees; Attorney Fees and Expenses on Fatal Cases; Payments of Attorney's Fees; Attorney's Expenses; and Deductible Expenses) shall be applied by the board to claims disposed of by settlement agreement.

History

Source Note: The provisions of this §55.50 adopted to be effective November 20, 1977, 2 TexReg 4320; amended to be effective April 18, 1988, 13 TexReg 1539.

28 Tex. Admin. Code § 55.55 Compromise Settlement Agreement To Set Aside Award

A compromise settlement agreement, properly executed between or among all parties to the claim, when filed in any board office in the period after an award has been entered but before it becomes final, or suit is filed, will serve to set aside the award as of the date the compromise settlement agreement is filed. If the board subsequently fails to approve the compromise settlement agreement, then the original award will be immediately re-entered.

History

Source Note: The provisions of this §55.55 adopted to be effective November 6, 1986, 11 TexReg 4430.

28 Tex. Admin. Code § 55.60 Consent Withdrawn

The board's approval of a compromise settlement agreement shall be final at the time the approval is signed by the board unless the board has received a request in writing prior to entry of the approval order that one or more parties to the agreement wishes to withdraw their consent to the agreement, and the board permits the withdrawal of such consent. Any such written request to the board for permission to withdraw consent to an agreement must fully set out the reason or reasons for such request (1981).

History

Source Note: The provisions of this §55.60 adopted to be effective November 20, 1977, 2 TexReg 4320; amended to be effective September 18, 1981, 6 TexReg 3274; amended to be effective October 1, 1985, 10 TexReg 3506.

28 Tex. Admin. Code § 55.65 Withdrawal of Consent by Death

If the claimant has died after signing the compromise settlement agreement, but before the board approved the same, the claimant's death will be considered as effectively terminating claimant's continuing consent to the compromise settlement agreement (1981)

History

Source Note: The provisions of this §55.65 adopted to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 55.75 Tender Payment Time Period

An insurance carrier shall have 20 days from and after the date of approval of a compromise settlement agreement in which to pay or tender payment to the injured employee of the amount approved by the board, and shall have 20 days from the receipt of bills in which to tender all accrued medical expenses resulting from the injury. Failure to tender payment within such time shall cause the board to immediately set such cause for formal hearing for the purpose of invoking proper sanctions (Rev. 1971).

History

Source Note: The provisions of this §55.75 adopted to be effective November 20, 1977, 2 TexReg 4320.

28 Tex. Admin. Code § 55.80 Waiving of Approval Appearance

Personal appearance of the claimant shall be required prior to recommendation by the board representative for approval of compromise settlement agreements, unless upon the showing of good cause said personal appearance is waived by the board representative (1970) (Rev. 1977).

History

Source Note: The provisions of this §55.80 adopted to be effective November 20, 1977, 2 TexReg 4320.

Chapter 56 STRUCTURED COMPROMISE SETTLEMENT AGREEMENTS

28 Tex. Admin. Code § 56.5 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Annuity company--The company from which the carrier is purchasing an annuity for the claimant. The annuity company may be the carrier if the carrier meets the tests provided following for annuity companies (effective 1987).

(2) Structured settlement--Structured compromise settlement agreement.

History

Source Note: The provisions of this §56.5 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.10 Form

A structured settlement must:

(1) be submitted on a form approved by the board;

(2) be accompanied by a physician's signed report of the findings of a recent examination of the employee;

(3) be accompanied, in the event of serious injury to claimant's eye, by a medical report indicating that healing has occurred and whether the other eye is or may be affected;

(4) be accompanied, in the event of severe and disfiguring burns or lacerations, by a descriptive medical report of the scars. In all cases involving injury to the face, arms, or hands, a color photograph taken after maximum healing must be submitted to the board;

(5) be submitted in five parts. The original must be white, the second part pink, the third yellow, the fourth white, and the fifth white. The forms must be submitted with carbon left intact. The board will furnish the following parties with approved copies of the forms.

(A) The claimant will receive the pink copy.

(B) The attorney, if any, will receive the yellow copy.

History

Source Note: The provisions of this §56.10 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.15 Execution

A structured settlement must be signed by the claimant personally, unless the board finds good cause to excuse strict compliance to this section. Only in extraordinary circumstances will the board approve a structured settlement in which the attorney signs the claimant's name under a power of attorney (effective 1987).

History

Source Note: The provisions of this §56.15 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.20 Personal Appearance by Claimant

A personal appearance of the claimant may be required by the board prior to approval. The personal meeting is to be set up by the board, not by the carrier. A carrier representative is required to be present (effective 1987).

History

Source Note: The provisions of this §56.20 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.25 Medical Benefits

Where a carrier agrees to pay accrued medical and hospital expenses in a structured settlement, any exceptions or special stipulations must be clearly stated on the face of the structured settlement or on an attached affidavit (effective 1987).

History

Source Note: The provisions of this §56.25 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.30 Consent of Parties--Withdrawal

The board's approval of a structured settlement shall be final at the time the approval is signed by the board unless the board has received a request in writing prior to entry of the approval order that one or more parties to the agreement wishes to withdraw their consent to the settlement, and the board permits the withdrawal of such consent. Any such written request to the board for permission to withdraw consent to a settlement must fully set out the reason or reasons for such request (effective 1987).

History

Source Note: The provisions of this §56.30 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.35 Attorney's Signature

A structured settlement entered into by a claimant who is represented by an attorney must be signed by the attorney. The attorney's name and address must be on the face of the settlement (effective 1987).

History

Source Note: The provisions of this §56.35 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.40 Attorney's Fees and Expenses

Sections 51.5, 51.7, 51.10, 51.35, 51.40, 51.45, 51.50, 51.55, and 51.60 of this title (relating to Power of Attorney; Representation in Fatal Cases; Joint Payment of Award; Unauthorized Attorney's Fees; Attorneys Not Licensed in Texas; Attorney's Fees and Expenses in Fatal Cases; Payments of Attorney's Fees; Attorney's Expenses; and Deductible Expenses) shall be applied by the board to claims disposed of by structured settlement (effective 1987).

History

Source Note: The provisions of this §56.40 adopted to be effective December 21, 1987, 12 TexReg 4529; amended to be effective April 18, 1988, 13 TexReg 1539.

28 Tex. Admin. Code § 56.45 Tender Payment Time Period

The carrier shall have 20 days after the date of approval of a structured settlement to pay or tender any approved lump sum payment to the injured employee or approved fees and expenses to any attorney(s), and shall have 20 days from the receipt of bills in which to tender all reasonable accrued medical expenses necessarily resulting from the injury. Failure to tender payment within such time shall cause the board to immediately set such case for formal hearing for the purpose of invoking proper sanctions (effective 1987).

History

Source Note: The provisions of this §56.45 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.50 Final When Approved

A structured settlement is not final until the settlement is approved by the board. Board approval is deemed to have occurred at 5 p.m. of the day the approval is signed (effective 1987).

History

Source Note: The provisions of this §56.50 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.55 Annuity Company

An annuity company providing an annuity under the terms of a structured settlement must be licensed to do business in Texas and must have a Best's rating of A+, with a financial size category of VII or above, according to the most recent information available (effective 1987).

History

Source Note: The provisions of this §56.55 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.60 Payments Guaranteed

The workers' compensation carrier shall guarantee the payments provided by the annuity company in the event of default (effective 1987).

History

Source Note: The provisions of this §56.60 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.65 Cost of the Annuity

(a) The carrier shall submit to the board with the structured settlement, in camera, the cost of the annuity.

(b) The cost of the annuity to a carrier that does not purchase an annuity from a third party is the discounted value of the periodic payments to be provided (effective 1987).

History

Source Note: The provisions of this §56.65 adopted to be effective December 21, 1987, 12 TexReg 4529.

28 Tex. Admin. Code § 56.70 Structured Settlement Agreement To Set Aside Award

A structured settlement, properly executed between or among all parties to the claim, when filed in the board's office in the period after an award has been entered but before it becomes final, or suit is filed, will serve to set aside the award as of the date the structured settlement is filed. If the board subsequently fails to approve the settlement, then the original award will be re-entered immediately (effective 1987).

History

Source Note: The provisions of this §56.70 adopted to be effective December 21, 1987, 12 TexReg 4529.

Chapter 59 NOTICES OF INTENTION TO APPEAL

28 Tex. Admin. Code § 59.5 Filing of Notice

Notices of intention to appeal from a final order or award of the board shall be filed with the board in Austin and must be in writing, clearly and accurately identify the compensation claim to which it pertains, including the board file number, and delivered to the board's office in Austin, either:

(1) in person; or

(2) by mail; or

(3) by wire or telegram; or

(4) by comparable means.

History

Source Note: The provisions of this §59.5 adopted to be effective November 20, 1977, 2 TexReg 4323; amended to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 59.10 Receipt of Notice

Receipt of the Notice of Intention to Appeal shall be acknowledged by a board member, the executive director of the board or by persons duly designated by the board for such purpose, who shall immediately stamp and sign each such notice. Acknowledgment will subsequently be made by mail to all interested parties. (1970).

History

Source Note: The provisions of this §59.10 adopted to be effective November 20, 1977, 2 TexReg 4323.

Chapter 61 PREHEARING CONFERENCES

28 Tex. Admin. Code § 61.5 Request for Prehearing Conference

(a) Except as otherwise provided, a request for a prehearing conference must be submitted on a board-approved form.

(b) Failure to provide the information requested may constitute grounds for rejecting the request.

History

Source Note: The provisions of this §61.5 adopted to be effective December 13, 1989, 14 TexReg 6279.

28 Tex. Admin. Code § 61.7 Request of Prehearing Conference

(a) Except as otherwise provided, the board will give at least 30 days written notice of the prehearing conference date to all interested parties.

(b) If income or medical benefits are not being paid, the board may set a prehearing conference with less than 30 days notice.

History

Source Note: The provisions of this §61.7 adopted to be effective December 13, 1989, 14 TexReg 6279.

28 Tex. Admin. Code § 61.15 Setting under Texas Civil Statutes, Article 8306, §18a

(a) If the carrier, having received written notice of a compensable lost time injury as provided in Texas Civil Statutes, Article 8306, §18a, is not timely paying compensation, or ceases the payment of such benefits, the board shall set the claim for a prehearing conference on the first available docket.

(b) If a Texas Civil Statutes, Article 8306, §18a penalty (18a penalty) appears due, initiation or reinstatement of compensation shall not be grounds for cancellation of a prehearing conference set under this section. However, the board may waive the claimant's appearance at the prehearing conference upon request.

(c) In the event a dispute arises over the suspension of medical benefits as defined in these board rules, a health care provider may file with the board a written request to attend a prehearing conference, as a party and participant therein, and in such event the health care provider shall attend the prehearing conference, either in person or by a representative. In the request, the health care provider shall certify the charges have been itemized and that timely reports have been made in accordance with Texas Civil Statutes, Article 8306, §7, and these board rules.

History

Source Note: The provisions of this §61.15 adopted to be effective November 11, 1983, 8 TexReg 4497; amended to be effective December 13, 1989, 14 TexReg 6280.

28 Tex. Admin. Code § 61.20 Setting on Hardship

(a) If the board determines that financial hardship may exist and the carrier has failed to tender an adequate advance or acceleration of benefits within 10 days from the filing of a hardship affidavit with the board, the board shall schedule such case for prehearing conference on the next docket following 30 days from the date of the filing of the hardship affidavit.

(b) Hardship affidavits must contain sufficient factual information to support the allegations of hardship, and shall be signed and sworn by the claimant personally, unless otherwise waived by the board for good cause shown.

(c) A copy of the hardship affidavit shall be forwarded to the insurance carrier by the claimant, at the same time the original is filed with the board.

History

Source Note: The provisions of this §61.20 adopted to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.25 Setting at Carrier's Request

Upon a showing of good cause, prehearing will be set by the board on the insurance carrier's request. It shall be presumed the payment of compensation benefits for a period of consecutive 52 weeks or longer constitutes a case of "extended disability," and in such cases the carrier, upon written request therefore, approved by the board, shall be entitled to a prehearing conference in order to review the claimant's physical and medical condition and the treatment thereof.

History

Source Note: The provisions of this §61.25 adopted to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.30 Filing of Medical Information

All available medical information that has a bearing on the claim at hand must be filed with the board at or before the prehearing in accordance with Texas Civil Statutes, Article 8309a(b) (1970).

History

Source Note: The provisions of this §61.30 adopted to be effective January 1, 1976; amended to be effective November 20, 1977, 2 TexReg 4323.

28 Tex. Admin. Code § 61.35 Exchange of Medical Information

Claimant and carrier shall exchange all available medical information promptly after expiration of six weeks disability or earlier upon written request of either party. Thereafter, all medical information will be exchanged promptly upon receipt. If received less than seven days prior to a prehearing conference, it shall be brought to the prehearing conference for exchange. Both parties shall bring to the prehearing conference all available medical information (1981).

History

Source Note: The provisions of this §61.35 adopted to be effective January 1, 1976; amended to be effective November 20, 1977, 2 TexReg 4323; amended to be effective September 18, 1981, 6 TexReg 3274.

28 Tex. Admin. Code § 61.40 Additional Medical

Where the hearing officer determines that additional medical examination will probably assist in settlement, he may order such additional medical examination at the expense of the board, provided no undue delay shall occur thereby, and the prehearing officer shall reset the prehearing conference (1970) (Rev. 1973).

History

Source Note: The provisions of this §61.40 adopted to be effective January 1, 1976; amended to be effective November 20, 1977, 2 TexReg 4323.

28 Tex. Admin. Code § 61.45 Charges for Reports

Reasonable charges shall be allowed by the board for narrative reports required under Texas Civil Statutes, Article 8306, §7, and such charges shall be considered necessary expenses to be paid by the carrier (1970) (Rev. 1977).

History

Source Note: The provisions of this §61.45 adopted to be effective January 1, 1976; amended to be effective November 20, 1977, 2 TexReg 4323.

28 Tex. Admin. Code § 61.50 Representatives Must Be Qualified

The success of the prehearing conference system depends upon a high level of expertise in workers' compensation matters by representatives of carriers and claimants. Carriers should be represented either by an attorney licensed to practice in this state, or by individuals who can demonstrate a continuing proficiency in compensation law and procedure. Negotiation of a settlement in a workers' compensation case constitutes the practice of law, and no attorney's fees or expenses will be authorized by the board to any representative of the claimant other than an attorney licensed to practice in this state.

History

Source Note: The provisions of this §61.50 adopted to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.55 Supply of Forms

The carrier's representative shall have a sufficient supply of proper forms to enable him to complete settlements at the prehearing conference.

History

Source Note: The provisions of this §61.55 adopted to be effective January 1, 1976; amended to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.60 Attendance at Conference

(a) The claimant and the claimant's attorney or authorized agent, if any, and the carrier's representative must attend all prehearing conferences pertaining to the claim under consideration.

(b) A request for a prehearing conference shall constitute an agreement by the requesting party to appear personally or arrange for substitute representation in the event of a scheduling conflict.

History

Source Note: The provisions of this §61.60 adopted to be effective January 1, 1976; amended to be effective November 20, 1977, 2 TexReg 4323; amended to be effective December 13, 1989, 14 TexReg 6280.

28 Tex. Admin. Code § 61.65 Request for Cancellation of Prehearing Conference

(a) The board may cancel a prehearing conference:

(1) at the request of the party who initially requested the prehearing conference;

(2) at the request of any party required to attend the prehearing conference, with the agreement of the party who initially requested the prehearing conference; or

(3) on the board's own motion.

(b) Cancellation shall be requested by notifying the resident reviewer or the prehearing office in writing within 10 days from the date notice of the setting is received. The date notice of the setting is received is deemed to be the third day after the date of the notice. Cancellation requests during this 10-day period are unrestricted unless a pattern of abuse is detected.

(c) Cancellation requests after the unrestricted cancellation period defined in subsection (b) of this section will be considered only for good cause. As used in this subsection, good cause for cancellation means the following:

(1) compensation has been initiated or reinstated, unless a §18a penalty may be due, as provided in §61.15 of this title (relating to Setting under Texas Civil Statutes, Article 8306, §18a);

(2) liability previously in dispute is accepted by the carrier, unless a §18a penalty may be due, as provided in §61.15 of this title (relating to Setting under Texas Civil Statutes, Article 8306, §18a);

(3) medical previously in dispute is provided, unless a §18a penalty may be due, as provided in §61.15 of this title (relating to Setting under Texas Civil Statutes, Article 8306, §18a);

(4) an adequate advance is tendered and accepted;

(5) the claim is set against the wrong carrier;

(6) the injured worker dies and no additional benefits appear due;

(7) the injured worker no longer desires to pursue the claim; or

(8) an A-2 lump sum payment or compromise settlement agreement is tendered and accepted by the parties.

(d) Failure to comply with the cancellation provisions of this section may result in sanctions as provided by §61.75 of this title (relating to Failure To Appear).

History

Source Note: The provisions of this §61.65 adopted to be effective December 13, 1989, 14 TexReg 6279.

28 Tex. Admin. Code § 61.70 Maintain Setting

Where the request for continuance or postponement is based upon the payment of compensation and furnishing of medical aid, the resident reviewer or the prehearing officer may still maintain the setting where there is a showing of hardship on the part of the claimant.

History

Source Note: The provisions of this §61.70 adopted to be effective January 1, 1976; amended to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.75 Failure To Appear

(a) Where the claimant fails to make a personal appearance at the prehearing conference without good cause, such failure to appear shall result in postponement until the board is assured in writing of appearance.

(b) Where the attorney or carrier representative fails to comply with the cancellation requirements of §61.65 of this title (relating to Request for Cancellation of Prehearing Conference) or fails to attend a scheduled prehearing conference, the prehearing officer shall prepare a rule violation complaint report as provided by §65.10 of this title (relating to Actions by Carrier, Claimant's Attorney, and/or Agent). Violation of this rule may be grounds for sanctions, including reduction of fees, written reprimand, or suspension from practice before the board.

History

Source Note: The provisions of this §61.75 adopted to be effective January 1, 1976; amended to be effective November 11, 1983, 8 TexReg 4497; amended to be effective December 13, 1989, 14 TexReg 6280.

28 Tex. Admin. Code § 61.80 Participation at Conference

Although no testimony will be taken at a prehearing conference, nevertheless, the claimant, carrier's representative, and any other witnesses in attendance must, if called upon by the prehearing examiner or the adverse party, fully participate by responding to requests for information reasonably necessary in the evaluation or defense of the claim presented. A violation of this rule by claimant may result in a continuance of the prehearing conference until a subsequent date, and a violation of the rule by any other party or witness may result in appropriate sanctions by the board.

History

Source Note: The provisions of this §61.80 adopted to be effective January 1, 1976; amended to be effective November 11, 1983, 8 TexReg 4487.

28 Tex. Admin. Code § 61.85 Carrier Self-Audit of Prehearing Conference

A viable prehearing conference system is important to the efficient functioning of the workers' compensation program in this state. This necessarily includes a good faith effort on the part of both claimant or his/her attorney and of the carrier to negotiate in good faith. In order that the board might monitor the designed function of the prehearing conference in all claims which are the subject of a prehearing conference, except fatals, statutory total and permanent claims, and second injury fund claims, and where no A-2 payment is made or compromise settlement agreement is entered into at the prehearing conference:

(1) The carrier shall make and keep a written record of each compensation file which has been the subject of a prehearing conference, and an award recommendation has been made by the prehearing examiner, the following information: the name of the claimant; the name and permanent state bar number of the claimant's attorney, if known to the carrier; the board file number, the carrier file number; the date of the prehearing conference held on the claim; the amount of the final demand of the claimant or his/her attorney at the prehearing conference; the amount of the final offer made by the carrier; and the net award by the board.

(2) Such record shall also include the date of final disposition, the net amount thereof, and whether by way of compromise settlement agreement, judgment, or dismissal without judgment entry.

(3) The record described in this rule shall be retained by the carrier for not less than five years following its completion, and shall be made available to the board, upon its request therefore.

(4) Neither the carrier nor claimant's attorney shall ever be required to file such information as directed herein by the board, and such information shall never become a part of the records of the board. A carrier or an attorney shall, at the request of the board, make these records available to the carrier for the purpose of the board and carrier or attorney evaluating the negotiation record of the board or the attorney at prehearing conferences. No board member or officer or employee of the board shall ever disclose such information, or any part thereof, to any other person, corporation, or agency.

History

Source Note: The provisions of this §61.85 adopted to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.90 Conduct at Prehearing Conference

Abusive, threatening, and vulgar language or gestures will not be tolerated at a prehearing conference. Violation of this board rule by any party or witness may result in a continuation of the hearing until a later date, sanctions, or, in appropriate instances, charges of unethical conduct under §65.5 of this title (relating to Practicing before the Board).

History

Source Note: The provisions of this §61.90 adopted to be effective November 11, 1983, 8 TexReg 4497.

28 Tex. Admin. Code § 61.95 Consular Officers

Consular officers and their attorneys shall comply with all board rules and shall attend any prehearing conference or board hearing set on any compensation claim where such consular officers or their attorneys shall purport to represent the interests of any resident or nonresident alien beneficiary in a workers' compensation claim under the workers' compensation laws of Texas. No attorney's fees or other expenses shall be deducted or withheld from any compensation paid without prior authorization of the board pursuant to the provisions of Texas Civil Statutes, Article 8306, §7c. The board shall be provided with proper documentation, as it may request, from time to time, of the remission of compensation benefits paid through any consular office pursuant to the provision of Texas Civil Statutes, Article 8306, §17.

History

Source Note: The provisions of this §61.95 adopted to be effective January 1, 1976; amended to be effective November 11, 1983, 8 TexReg 4497.

Chapter 63 PROMPTNESS OF FIRST PAYMENT

28 Tex. Admin. Code § 63.10 Sanctions for Late Payment

Any insurance carrier writing workers' compensation insurance under the provisions of the Texas Workers' Compensation Act who, on the average, shall fail to make compensation payments due claimants within a reasonable length of time after the same become due and payable, but in no event later than 30 days on the average from the date of incapacity, shall be subject to appropriate sanctions to be invoked by the Texas Industrial Accident Board (1970) (Rev. 1973).

History

Source Note: The provisions of this §63.10 adopted to be effective November 20, 1977, 2 TexReg 4324.

Chapter 64 REPRESENTING CLAIMANTS BEFORE THE BOARD

28 Tex. Admin. Code § 64.25 Discharged Attorney

(a) A claimant may discharge an attorney at any time. The claimant shall notify the board in writing, and explain the reasons for the discharge.

(b) When a dispute arises between or among two or more attorneys employed by a claimant, the attorney presenting the earliest executed attorney contract will be deemed the attorney of record unless the claimant or a subsequently retained attorney establishes good cause for discharge.

History

Source Note: The provisions of this §64.25 adopted to be effective April 5, 1990, 15 TexReg 1629.

28 Tex. Admin. Code § 64.30 Adverse Representation in Claims for Death Benefits

(a) An attorney may not represent two or more beneficiaries with adverse claims for death benefits, since such representation constitutes a conflict of interest.

(b) An attorney who violates this section will be ordered to withdraw entirely, and may be subjected to disciplinary action.

History

Source Note: The provisions of this §64.30 adopted to be effective January 1, 1990, 14 TexReg 6280.

Chapter 65 UNETHICAL OR FRAUDULENT CLAIMS PRACTICES

28 Tex. Admin. Code § 65.5 Practicing before the Board

Whenever the board receives evidence that a person practicing before the board is guilty of unethical or fraudulent conduct, such person shall be cited by certified mail to appear before the board in person to show cause why he or she should not be barred from practicing before the board because of such conduct. In all such cases, the board's citation shall contain a detailed description of charges to be considered at such hearing and a reasonable time to secure and prepare evidence shall be given any such person as cited (November 14, 1955) (Rev. 1973).

History

Source Note: The provisions of §65.5 adopted to be effective November 20, 1977, 2 TexReg 4324.

28 Tex. Admin. Code § 65.10 Actions by Carrier, Claimant's Attorney, and/or Agent

The following willful acts shall be deemed unethical or fraudulent conduct by the board.

(1) Carrier representatives:

(A) misrepresenting to claimants, employers, or health providers the provisions of the Workers' Compensation Law of Texas;

(B) failing to submit to the board any settlement agreement executed by the parties;

(C) failing to immediately notify the board of the suspension or stopping of compensation and the reason for such suspension or stopping of compensation;

(D) stopping or suspending compensation without substantiating evidence that such action is authorized by law;

(E) misrepresenting that one is employed by the State of Texas or any agency thereof;

(F) instructing employers not to file Employer's First Reports of Injury with the board when such filing is required by statute;

(G) instructing employers to violate the claimant's rights guaranteed by Texas Civil Statutes, Article 8306, §7;

(H) failing to promptly tender full death benefits where no bona fide dispute exists as to the liability of the carrier;

(I) allowing an employer to dictate the methods by which and the terms on which a claim is handled and settled. Nothing in the foregoing shall prohibit the free discussion of a claim prior to prehearing conference, prohibit the employer's assistance in the investigation and evaluation of a claim prior to pre-hearing conference, or prohibit the employer's attendance at a pre-hearing conference and participation therein as a witness/observer;

(J) failing to confirm medical benefits coverage to any persons or facility providing medical treatment to a claimant where no bona fide dispute exists as to the liability of the carrier;

(K) failing, without good cause, to attend a pre-hearing conference;

(L) attending a pre-hearing conference without complete authority or failing to exercise authority to effectuate settlement;

(M) adjusting workers' compensation claims in any manner contrary to the provisions of the Adjusters Licensing Act or the rules and regulations of the State Board of Insurance;

(N) failing to promptly process claims in a reasonable and prudent manner;

(O) failing to initiate or reinstate compensation when due where no bona fide dispute exists as to the liability of the carrier;

(P) misrepresenting the reason for not paying compensation or for the suspension of compensation;

(Q) misdating the Form A-1 so as to distort the true date of the initial payment of compensation;

(R) making notations on drafts or other instruments so as to indicate that the draft or instrument represents a final settlement of a claim when in fact the claim is still open and pending before the board;

(S) failing and refusing to pay compensation from week to week as and when the same matures and accrues directly to the person entitled thereto;

(T) failing to pay an award of the board as directed by the board when no appeal is perfected;

(U) violating any rule of the board;

(V) controverting claims when evidence clearly indicates compensability;

(W) failing to file with the board, immediately upon receipt, originals of the E-1, Employer's First Report of Injury or Illness; E-2, Employer's Supplemental Report of Injury; and IAB-150, Employer's Wage Statement.

(2) Claimant's attorney and/or agents:

(A) failing, without good cause, to attend a pre-hearing conference;

(B) committing an act of barratry as defined by the laws of this state;

(D) entering into a compromise settlement agreement without the knowledge, consent, and signature of the claimant or beneficiary;

(E) taking a fee or withholding expenses in excess of such sums authorized by the board;

(F) refusing or failing to make prompt delivery to claimant (client) of the funds belonging to claimant as a result of a compromise settlement agreement, A-2 payment or award;

(G) violating the Code of Professional Responsibility of the State Bar of Texas;

(H) violating any rule of the board. (Rev. 1979).

History

Source Note: The provisions of §65.10 adopted to be effective November 20, 1977, 2 TexReg 4324; amended to be effective September 25, 1979, 4 TexReg 3232; amended to be effective September 18, 1981, 6 TexReg 3274; amended to be effective October 26, 1981, 6 TexReg 3819; amended to be effective November 11, 1983, 8 TexReg 4499; amended to be effective October 1, 1985, 10 TexReg 3506; amended to be effective October 17, 1989, 14 TexReg 5260.

28 Tex. Admin. Code § 65.15 Filing of Violation Report

Whenever an authorized representative of the board believes any party to a compensation claim has been or is in violation of either the Workers' Compensation Act, or any part thereof, or of these board rules, a written violation report shall be sent to the executive director with a copy to the party concerned. Said party shall promptly report in writing and shall direct his reply to the executive director. This board may impose sanctions for failure of said party to respond to the violation report within 30 days from receipt thereof.

History

Source Note: The provisions of §65.15 adopted to be effective November 11, 1983, 8 TexReg 4499.

Chapter 67 ALLEGATIONS OF FRAUD

28 Tex. Admin. Code § 67.5 Referral to Attorney General

The board, upon its findings of probable cause, shall promptly refer any written allegation of fraud regarding an employer, employee, attorney, person or facility furnishing medical services, insurance company or its representative to the attorney general (Rev. 1979)

History

Source Note: The provisions of §67.5 adopted to be effective November 20, 1977, 2 TexReg 4325; amended to be effective September 25, 1979, 4 TexReg 3232.

Chapter 69 MEDICAL EXAMINATION ORDERS

28 Tex. Admin. Code § 69.5 Application of Chapter

(a) This chapter shall not apply to medical examinations ordered pursuant to Texas Civil Statutes, Article 8309b, §10, and Article 8309d, §10.

(b) Nothing in this chapter shall be construed to limit the rights of the parties to agree on treatment or an examination by a mutually agreed health care provider. The agreement must be in writing if either party intends to take advantage of the protections offered by this chapter.

History

Source Note: The provisions of this §69.5 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.10 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Carrier's prior choice of health care provider--A health care provider who has examined the claimant in regard to the injury in question as provided in Texas Civil Statutes, Article 8307, §4, because:

(A) the board ordered the claimant to be examined by a health care provider of the carrier's choice; or

(B) the claimant granted permission for an examination by a carrier's tendered choice of a health care provider.

(2) Health care provider--A physician, chiropractor, or podiatrist.

(3) 180-day period--The elapse of 180 days after an examination conducted by the carrier's choice of health care provider.

History

Source Note: The provisions of this §69.10 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.15 Carrier May Apply for Order from Board

It shall be the policy of the board to issue an order for an examination by a health care provider of the carrier's choice within 30 days after initial date of filing with the board a combination form entitled carrier's request for permission or requested medical examination order.

(1) The carrier shall send the properly completed combination form to the claimant or his attorney by certified mail, with a copy to the board.

(2) The claimant or attorney is required to respond to the request for permission within 10 days from receipt of the request in the space provided at the bottom of the combination form. The response by claimant's attorney shall be returned to the carrier by certified mail with a copy forwarded to the board. An unrepresented claimant may use a return envelope provided by the carrier, and the carrier shall immediately file the claimant's response with the board.

(3) An order will not be necessary if the claimant or his attorney agrees to the examination. An examination by agreement will have the same force and effect as a formal board order. If permission is neither granted nor refused within 10 days from receipt by the claimant or his attorney, the board shall enter a formal order directing the examination as requested by the carrier.

(4) All examinations available under this section must be scheduled as soon as possible, with at least 10 days notice to the claimant or his attorney.

(5) If the examiner of the carrier's choice finds that the claimant is able to return to work and compensation is being paid, the case will be set on the next available prehearing docket, but in no event will the scheduled prehearing conference be more than 30 days from receipt of the carrier's request for prehearing conference if the request is accompanied by the carrier's examiner's report.

History

Source Note: The provisions of this §69.15 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.20 Application

The application for permission or order shall be made on a combination form approved by the board and shall contain all information required by the board as detailed on the form.

History

Source Note: The provisions of this §69.20 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.25 Bases for Denial

(a) Time limit after injury. No examination shall be ordered if the combination form is signed or submitted 60 or fewer days after the date of an injury.

(b) Health care providers limited. No examination shall be ordered if the license of the health care provider is under suspension by the appropriate licensing agency on the date of application.

(c) Ability to travel. No examination will be ordered unless a statement is attached to the request setting out whether the claimant's condition will allow travel to and attendance at the examination. The statement shall affirm that travel expenses will be tendered to the claimant in advance of any travel.

(d) One hundred eighty-day period. No examination shall be ordered if the claimant has been examined by the carrier's prior choice of health care provider in a 180-day period.

(e) Same health care provider. No examination shall be ordered if the claimant has been examined for the injury by the carrier's choice of health care provider and the prior health care provider is not the same as the requested health care provider.

(f) Good cause. The board may waive any of the bases for denial in subsections (a)-(e) of this section or deny an application for a medical examination order if the board determines that good cause exists.

History

Source Note: The provisions of this §69.25 adopted to be effective February 19, 1988, 13 TexReg 617; amended to be effective June 4, 1990, 15 TexReg 2852.

28 Tex. Admin. Code § 69.30 Appeal

The carrier or the claimant may appeal a decision by the board staff in writing to the executive director or the full board. The appeal must be received no later than 10 days after the order or denial is mailed or delivered to the parties.

History

Source Note: The provisions of this §69.30 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.33 Claimant's Medical Records

A claimant's health care provider shall timely release any and all medical records relating to the injury or disease in question, including x-rays and results of other diagnostic tests, when requested by the carrier pursuant to this chapter. A carrier shall report to the board the provider's name and the circumstances surrounding a refusal to release records.

History

Source Note: The provisions of this §69.33 adopted to be effective June 8, 1988, 13 TexReg 2555.

28 Tex. Admin. Code § 69.35 Claimant's Expenses

Prior to the date the claimant attends an examination ordered by the board or permitted by the claimant, the carrier shall tender to the claimant travel expenses in accordance with §41.155 of this title (relating to Transportation Costs as Medical Expenses).

History

Source Note: The provisions of this §69.35 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.40 Attendance of Claimant's Health Care Provider

In accordance with Texas Civil Statutes, Article 8307, §4, the claimant shall have the right to have a health care provider of his or her choice present at the examination at the carrier's expense.

History

Source Note: The provisions of this §69.40 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.45 Unreasonable Delay

The claimant shall be entitled to a prompt examination. Any examination that fails to commence within two hours after the claimant timely reports for the examination should be reported to the executive director.

History

Source Note: The provisions of this §69.45 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.50 Reports of Examinations

The carrier's choice of health care provider shall immediately submit a written report of the results of the examination to all parties.

History

Source Note: The provisions of this §69.50 adopted to be effective February 19, 1988, 13 TexReg 617.

28 Tex. Admin. Code § 69.55 Failure To Attend Examination

(a) A claimant who agrees or is ordered to submit to an examination as requested by the carrier under this chapter is required to attend the examination.

(b) When a claimant fails to attend an examination permitted or ordered under this chapter, the carrier may notify the board in writing on a board approved form and request a formal hearing. The board shall set the hearing on the first Friday following 10 days from receipt of the carrier's written request, and shall provide written notice to all parties.

(1) making a personal appearance in Austin;

(2) appearing by telephone conference call; or

(3) filing a written brief.

(d) If a majority of the board determines there was no good cause for the claimant's failure to attend the medical examination, the board shall order the carrier to suspend compensation during the continuance of the claimant's refusal.

(e) The carrier may not terminate compensation because of the claimant's failure to attend a medical examination permitted or ordered under this chapter until ordered by the board.

History

Source Note: The provisions of this §69.55 adopted to be effective February 19, 1988, 13 TexReg 617; amended to be effective June 16, 1988, 13 TexReg 2752.

Chapter 102 PRACTICES AND PROCEDURES--GENERAL PROVISIONS

28 Tex. Admin. Code § 102.2 Gifts, Grants, and Donations

(a) The division may accept and use gifts, grants, and donations in accordance with applicable law, including the Labor Code and the Government Code.

(b) On receiving a gift, grant, or donation of $500 or more, the division will post on the public website for at least five years from the date it was received:

(1) The date the division received the gift, grant, or donation.

(2) The identity of the donor.

(3) The amount of the gift, grant, or donation.

(4) If applicable, the stated purpose of the gift, grant, or donation.

(c) A donor may direct the use of the gift, grant, or donation in writing. The division will follow this direction as nearly as practicable, and in accordance with state and federal law.

(d) The division may not accept a gift or donation of $500 or more from a person who is a party to a contested case before the agency until the 30th day after the decision in the case becomes final under §2001.144 of the Texas Government Code. For purposes of this rule, "contested case" has the meaning assigned by §2001.003 of the Texas Government Code.

History

Source Note: The provisions of this §102.2 adopted to be effective January 1, 1991, 15 TexReg 6746; amended to be effective December 2, 1997, 22 TexReg 11691; amended to be effective March 13, 2000, 25 TexReg 2078; amended to be effective July 11, 2024, 49 TexReg 4920.

28 Tex. Admin. Code § 102.3 Computation of Time

(a) Due dates and time periods under this Act shall be computed as follows:

(1) computing a period of days. In counting a period of time measured by days, the first day is excluded and the last day is included.

(2) computing a period of months. If a number of months is to be computed by counting the months from a particular day, the period ends on the same numerical day in the concluding month as the day of the month from which the computation is begun, unless there are not that many days in the concluding month, in which case the period ends on the last day of that month.

(3) unless otherwise specified, if the last day of any period is not a working day, the period is extended to include the next day that is a working day.

(b) A working day is any day, Monday-Friday, other than a national holiday as defined by Texas Government Code, §662.003(a) and the Friday after Thanksgiving Day, December 24th and December 26th. Use in this title of the term "day," rather than "working day" shall mean a calendar day.

(c) Normal business hours in the Texas workers' compensation system are 8:00 a.m. to 5:00 p.m. Central Standard Time with the exception of the Commission's El Paso field office whose normal business hours are 8:00 a.m. to 5:00 p.m. Mountain Standard Time.

(d) Any written or telephonic communications received other than during normal business hours on working days are considered received at the beginning of normal business hours on the next working day.

(e) Unless otherwise specified by rule, any written or telephonic communications required to be filed by a specified time will be considered timely only if received prior to the end of normal business hours on the last permissible day of filing.

(f) If there is a conflict between this rule and a specific provision of another rule that is applicable to a specific type of benefit, the other rule prevails.

History

Source Note: The provisions of this §102.3 adopted to be effective January 1, 1991, 15 TexReg 6747; amended to be effective August 29, 1999, 24 TexReg 6488; amended to be effective April 28, 2005, 30 TexReg 2396.

28 Tex. Admin. Code § 102.4 General Rules for Non-Division Communications

(a) All written communications to a claimant (who is either an employee, an employee's legal beneficiary, or a subclaimant) must be sent to the most recent address or fax number supplied by the claimant. If an address has not been supplied by the claimant, the most recent address provided by the employer must be used.

(b) After an insurance carrier, employer, or health care provider is notified in writing that a claimant is represented by an attorney or other representative, copies of all written communications related to the claim or to the claimant must be mailed or delivered to the representative as well as the claimant, unless the claimant requests delivery to the representative only.

(c) Insurance carriers must provide a toll-free telephone number for receipt of communication from claimants or their representatives with a sufficient quantity of lines to service their volume of business.

(d) Insurance carriers and health care providers must provide telephone numbers, fax numbers, and email addresses sufficient to service the volume of business for receiving required verbal and written communications on workers' compensation claims.

(e) Insurance carriers must ensure effective and timely communication with claimants and other parties in the system. If a claimant is unable to communicate with an insurance carrier due to a language barrier, and the claimant is unable to provide a person that he or she trusts to serve as a translator, the insurance carrier must provide a means to translate except as needed for a division proceeding. The claimant must not be required to contract with or otherwise employ a translator.

(f) When a claimant contacts an insurance carrier and requests a response on their claim, the response must be verbally provided or sent in writing by the insurance carrier within five working days of receiving the request, unless the request is redundant or the response duplicates information previously provided.

(g) Insurance carriers must employ or provide a sufficient number of personnel, including adjusters appropriately licensed by the Texas Department of Insurance, to meet their obligations under the Act and this title.

(h) Unless the great weight of evidence indicates otherwise, written communications will be deemed to have been sent on:

(1) the date received if sent by fax, personal delivery, or electronic transmission; or

(2) the date postmarked if sent by mail through United States Postal Service regular mail, or, if the postmark date is unavailable, the later of the signature date on the written communication or the date it was received minus five days. If the date received minus five days is a Sunday or legal holiday, the date deemed sent must be the next previous day that is not a Sunday or legal holiday.

(i) An insurance carrier must maintain adjuster's notes on activities and verbal communications involved with the administration of a claim, with the exception of privileged attorney-client communications. The adjuster's notes must, at a minimum, include the date of the activity or communication, the identity of the insurance carrier staff involved in the contact, the person contacted by or contacting the insurance carrier, and a summary of the activity or communication.

(j) An insurance carrier, employer, or health care provider that receives a written communication related to a workers' compensation claim must date stamp or otherwise note on the document the date the written communication was received.

(k) Written communications include all records, reports, notices, filings, submissions, and other information contained either on paper or in an electronic format.

(l) For purposes of this title, if a written communication is required to be filed with both the division and another person by the Act or division rules, the other person will be presumed to have received the written communication on the date the division received its copy, unless the other person noted the date of receipt as provided in subsection (j) of this section, or the means of delivery of the communication was different. In this situation, the other person has the burden of proving that they did not receive or timely receive the written communication.

(m) Electronic transmission is defined as transmission of information by fax, electronic mail, electronic data interchange (EDI), or any other similar method and does not include telephonic communication.

(n) If the division receives an allegation that an insurance carrier or health care provider has failed to provide sufficient toll-free telephone numbers, telephone numbers, fax numbers, or email addresses, or that an insurance carrier has not provided a sufficient number of adjusters as required by this section, unless the violation appears to be willful or intentional, the division will not issue a monetary penalty or other sanctions before:

(1) notifying the alleged violator of the allegation;

(2) affording the alleged violator the opportunity to either disprove the allegation or provide mitigating information; and

(3) if the violator is unable to disprove the allegation, issuing a written warning to the violator allowing a reasonable grace period of not less than 30 days to correct the noncompliance. The grace period may be less than 30 days if the noncompliance prevents the violator from fulfilling other obligations under this title.

(o) A violation as described in subsection (n) will be considered willful or intentional if the violator has been advised of complaints such that the violator knew or should have known that the toll-free telephone numbers, telephone numbers, fax numbers, email addresses, or number of adjusters was insufficient, and the violator cannot establish that it made good faith efforts to correct the deficiency or if the violator otherwise exhibited willful or intentional conduct.

(p) For purposes of determining the date of receipt for non-division written communications, unless the great weight of evidence indicates otherwise, the division will deem the received date to be five days after the date mailed through United States Postal Service regular mail, or the date faxed or electronically transmitted.

(q) This section is effective on adoption.

History

Source Note: The provisions of this §102.4 adopted to be effective January 11, 1991, 16 TexReg 114; amended to be effective August 29, 1999, 24 TexReg 6488; amended to be effective April 28, 2005, 30 TexReg 2396; amended to be effective March 9, 2022, 47 TexReg 1093.

28 Tex. Admin. Code § 102.5 General Rules for Written Communications to and from the Division

(a) After the division is notified in writing that a claimant is represented by an attorney or other representative, all copies of written communications to the claimant will be sent to the representative as well as the claimant. Copies of settlements, notices setting benefit review conferences and hearings, and orders of the division will always be sent to the claimant regardless of representation status. All written communications to the claimant or claimant's representative will be sent to the most recent address or fax number supplied on either the employer's first report of injury, any verbal or written communication from the claimant, or any claim form filed by the insurance carrier through written notice or electronic transmission.

(b) All written communications to people other than insurance carriers and claimants will be sent to the most recent address or fax number reported to the division by the intended recipient or, in the absence of an address or fax number supplied by the intended recipient, to an address or fax number identified by the division.

(c) Unless otherwise specified by rule, written communications required to be filed with the division may be sent to the division headquarters or any division field office.

(d) For purposes of determining the date of receipt for written communications sent by the division, which require the recipient to perform an action by a specific date after receipt unless the great weight of evidence indicates otherwise, the division will deem the received date to be the earliest of: five days after the date mailed through United States Postal Service regular mail, the first working day after the date the written communication was placed in an insurance carrier's Austin representative's electronic box, or the date faxed or electronically transmitted as defined in subsection (h) of this section.

(e) EDI and other required notices must be filed or submitted in the format, form, and manner prescribed by the division under §124.2 of this title (concerning Insurance Carrier Notification Requirements), and Chapter 134, Subchapter I of this title (concerning Medical Bill Reporting).

(f) Unless the great weight of evidence indicates otherwise, written communications received by the division will be deemed to have been sent on:

(1) the date received if sent by fax, personal delivery, or electronic transmission; or

(2) the date postmarked if sent by United States Postal Service regular mail, or, if the postmark date is unavailable, the later of the signature date on the written communication or the date it was received minus five days. If the date received minus five days is a Sunday or legal holiday, the date deemed sent will be the next previous day that is not a Sunday or legal holiday.

(g) Written communications include all records, reports, notices, filings, submissions, and other information contained either on paper or in an electronic format.

(h) Electronic transmission is defined as transmission of information by fax, electronic mail, EDI, or any other similar method and does not include telephonic communication.

(i) Subsection (e) is effective July 26, 2023. All other subsections are effective on adoption.

History

Source Note: The provisions of this §102.5 adopted to be effective July 29, 1991, 16 TexReg 3939; amended to be effective March 15, 1995, 20 TexReg 1418; amended to be effective August 29, 1999, 24 TexReg 6488; amended to be effective April 28, 2005, 30 TexReg 2396; amended to be effective March 9, 2022, 47 TexReg 1093.

28 Tex. Admin. Code § 102.7 Abbreviations

When used in this title, the following terms may be abbreviated as follows:

(1) Additional Lost Time - ALT;

(2) Average Weekly Wage - AWW;

(3) Benefit Review Conference - BRC;

(4) Contested Case Hearing (also Benefit Contested Case Hearing) - CCH.

(5) Death Benefits - DBs;

(6) Texas Department of Insurance, Division of Workers' Compensation - division or DWC;

(7) Electronic Data Interchange - EDI

(8) Health Care Provider - provider or HCP;

(9) Impairment Income Benefits - IIBs;

(10) Impairment Rating - IR;

(11) Injured Employee - employee;

(12) Insurance Carrier - carrier;

(13) Lifetime Income Benefits - LIBs;

(14) Maximum Medical Improvement - MMI;

(15) Office of Injured Employee Counsel - OIEC;

(16) Post Injury Earnings (also Weekly Earnings After the Injury) - PIE;

(17) Required Medical Exam - RME;

(18) Return to Work - RTW;

(19) Supplemental Income Benefits - SIBs;

(20) Temporary Income Benefits - TIBs;

(21) Texas Workers' Compensation Act - the Act or the Statute; and

(22) Texas Workers' Compensation Commission - TWCC or the Commission.

History

Source Note: The provisions of this §102.7 adopted to be effective August 29, 1999, 24 TexReg 6488; amended to be effective January 7, 2019, 44 TexReg 98.

28 Tex. Admin. Code § 102.8 Information Requested on Written Communications to the Division

(a) Unless the division-prescribed form, format, or manner of a written communication specifies otherwise, all written communications to the division about an injured employee or claim for benefits must include the following information, if known:

(1) the injured employee's full name, date of injury, address, and Social Security number. If no Social Security number has been assigned, insert the numerical digits "999" followed by the claimant's birth date or if unknown, the claimant's date of injury listed by the month, day, and year (MMDDYY). Do not use "999" in place of a valid Social Security number to meet timeliness of reporting requirements;

(2) the name and address of the claimant, if other than the injured employee;

(3) the workers' compensation number assigned to the claim by the division;

(4) the employer's name and address;

(5) the employer's Federal Employer's Identification Number;

(6) the insurance carrier's name;

(7) the insurance carrier's policy number; and

(8) the insurance carrier's claim number.

(b) Written communications filed by claim EDI under §124.2 of this title (concerning Insurance Carrier Notification Requirements) must comply with the requirements of Chapter 124, Subchapter B of this title (concerning Insurance Carrier Claim Electronic Data Interchange Reporting to the Division).

History

Source Note: The provisions of this §102.8 adopted to be effective October 1, 1992, 17 TexReg 6361; amended to be effective March 15, 1995, 20 TexReg 1418; amended to be effective August 29, 1999, 24 TexReg 6488; amended to be effective December 12, 2013, 38 TexReg 8910; amended to be effective March 9, 2022, 47 TexReg 1093.

28 Tex. Admin. Code § 102.9 Submission of Information Requested by the Commission

(a) In addition to information required by the Act or Commission rules, the Commission shall require those subject to the Act to provide information at such times and in such manner and format as necessary to effectively and efficiently administer the Act or Commission rules. This request for information shall:

(1) be communicated by telephone, electronically, or in writing;

(2) inform the participant of:

(A) where the information is to be sent;

(B) when the information must be submitted; and

(b) If the request for information is communicated by telephone, the request must be followed up in writing before any order is issued pursuant to subsection (e) of this section.

(c) Upon receipt of the request for information from the Commission, those subject to the Act will have a reasonable period of time to provide the requested information to the Commission considering factors that include:

(1) accessibility of the information;

(2) amount of information requested;

(3) any other circumstances affecting the person's ability to supply the requested information, such as the format in which the information is required to be provided.

(d) In the absence of an emergency, the reasonable period for responding to the request for information shall not be less than one day if the requested information is needed to administer a benefit issue on a claim. For other requested information, the reasonable period for response shall not be less than three working days.

(e) Failure to provide the information may result in a written order requested and issued by staff designated by the Executive Director to issue an order to produce the information. The written order shall be mailed through certified mail, return receipt requested, sent by personal delivery with receipt acknowledged, or for a carrier, placed in an Austin Representative Box with receipt acknowledged. A person receiving a written communication from the Commission which requests receipt acknowledgment shall accept and acknowledge receipt including the date of receipt in the manner prescribed by the Commission.

(f) Nothing in this section limits the authority of the Executive Director to enter orders pursuant to the Act.

History

Source Note: The provisions of this §102.9 adopted to be effective April 1, 1993, 18 TexReg 1357; amended to be effective March 15, 1995, 20 TexReg 1418; amended to be effective August 29, 1999, 24 TexReg 6488.

28 Tex. Admin. Code § 102.10 Interest, General

Unless otherwise specified by law, the term "interest" when applied to workers' compensation benefits shall mean simple interest (interest computed on the same amount of principal for each interest period).

History

Source Note: The provisions of this §102.10 adopted to be effective March 14, 2001, 26 TexReg 2031.

28 Tex. Admin. Code § 102.11 Electronic Formats for Electronic Claim Data Request and Report

(a) The Division prescribes standard electronic formats by utilizing implementation guides for data requests and data reports for the purpose of exchanging data between the Division and insurance carriers, as defined in Labor Code §402.084.

(b) In this section, the following definitions apply:

(1) Claim Data Request and Report Implementation Guide (Guide)--The division specification document for the Claim Data Request and the Claim Data Report that defines specific data requirements, data set transactions, data mapping, data edits, and fees per record available at www.tdi.texas.gov/wc.

(2) Claim Data Report--The electronic report generated by the Division in the format specified by the Guide. The report contains data for claims meeting confidence match criteria defined in the Guide.

(3) Claim Data Request--The electronic request submitted by a requester in the format specified by the Division in the Guide.

(4) Record--An electronic representation of one insured person containing a set of unique identifiers including the full name, date of birth, gender, and social security number, if available. Each set of individual identifiers included in a Claim Data Request represents a separate record.

(5) Requester--An insurance carrier that has adopted an antifraud plan under Labor Code §402.084(b)(8) and qualifies as an insurance carrier under Labor Code §402.084(c-1) or its authorized representative.

(1) all fields required in the applicable Guide as defined in subsection (b) of this section;

(2) complete, current, and correct values as described in the applicable Guide; and

(3) records of persons who are or were valid members of the requesters' benefit programs and whose claims may be related to a workers' compensation claim.

(d) A Claim Data Report must contain:

(1) all fields required in the applicable Guide; and

(2) complete, current, and correct values as described in the applicable Guide.

(e) A Claim Data Request may be submitted by a requester.

(f) The Division will match the records submitted by a requester against the Division's claim data using a matching methodology published in the Guide. The search will include all claims on record with the Division relating to injuries sustained on or after September 1, 2002. For each record submitted, the Division will report:

(1) the existence of a positive match with one or more workers' compensation claims; or

(2) the failure to match the record to any recorded workers' compensation claim.

(g) File transfers between requesters and the Division shall be sent using secured file transfer protocol (SFTP) with access controlled by a unique username and password.

(h) The data shall not be shared or disclosed to any other person or entity, except as necessary to document and pursue reimbursement with the appropriate workers' compensation carrier or claims administrator or through Division dispute resolution procedures. Requesters shall destroy all electronic or paper records related to Claim Data Requests that are not needed to pursue subclaimant status or recovery of reimbursement by an insurance carrier as defined by Labor Code §402.084(c-1).

(i) A requester may submit a Claim Data Request once every 30 days for each covered individual.

(j) Unless waived by the Division, the requester shall pay to the Division a fee for each record included in a request. The fee will be established in the Guide, but shall be no more than $.05 for each record included in the Claim Data Request. Claim Data Requests that include previously submitted requests for records would also be charged a fee of up to $.05 for each record.

(k) Prior to submitting a Claim Data Request, the requester shall execute a trading partner agreement with the Division in the form and manner prescribed by the Division. The trading partner agreement shall contain:

(1) a statement that the requester agrees to abide by all applicable federal and state laws and regulations;

(2) an agreement to submit only names and identifying information related to bona fide beneficiaries of the requester's benefit plans;

(3) an agreement to comply with Division standards for secure transfer and storage of workers' compensation claim information;

(4) an agreement to comply with Division standards regarding the confidentiality of workers' compensation claim information and the approved uses of that information; and

(5) an agreement to pay applicable fees.

(l) After a match of a record has been determined, the information may be used by the requester as the basis for identification and filing of a subclaim under Labor Code §409.009. When a match has been determined and a subclaim filed, the requester shall contact the injured employee who received the health care and is the subject of the subclaim. The requester shall provide the injured employee written notice, which includes the following:

(1) the name of the subclaimant;

(2) the dates of service;

(3) the name of the injured employee;

(4) a statement declaring, "As the injured employee in this matter, you will receive notice of all proceedings related to this matter and may participate in those proceedings. To determine whether to take any action in this matter, you may wish to consult with an attorney. You can also contact the Office of Injured Employee Counsel (OIEC) for ombudsman assistance."; and

(5) the phone number and website address of OIEC.

History

Source Note: The provisions of this §102.11 adopted to be effective December 31, 2006, 31 TexReg 10310; amended to be effective March 14, 2023, 48 TexReg 1450.

Chapter 104 GENERAL PROVISIONS--RULE-MAKING

28 Tex. Admin. Code § 104.1 Contents of Rulemaking Petitions

(a) Changes or additions to the Texas Administrative Code, Title 28, Part 2 may be petitioned by an interested person under Government Code, §2001.021(d). Rulemaking petitions shall be in the form of a letter that contains the following:

(1) a brief statement summarizing the proposed section;

(2) the text of the proposed section, in the exact form proposed for adoption;

(3) a statement setting forth the statutory reference that authorizes the proposed rule;

(4) a suggested effective date;

(5) any other matter which may be required by law;

(6) the petitioner's name, mailing address, and telephone number; and

(7) a statement that the petitioner is an interested person under Government Code, §2001.021(d).

(b) The petitioner may also include a cost-benefit analysis, estimating the public benefit expected as a result of adoption of the proposed section, and the probable economic cost to persons required to comply with the proposed section. This provision is optional.

(c) The petition shall be filed with the commissioner by personal delivery, certified mail, or by email to rulecomments@tdi.texas.gov.

(d) Within 60 days after the petition is submitted, the division shall either initiate rulemaking procedures, or shall deny the petition and provide the petitioner with reasons for denial in writing.

History

Source Note: The provisions of this §104.1 adopted to be effective March 18, 1991, 16 TexReg 1366; amended to be effective March 10, 2016, 41 TexReg 1711.

Chapter 109 WORKERS' COMPENSATION COVERAGE FOR STATE EMPLOYEES

28 Tex. Admin. Code § 109.1 State Agencies: General Provisions

(a) In administering and enforcing the applicable provisions of the Texas Labor Code as set out in §501.002, a state agency shall act in the capacity of employer.

(b) In administering and enforcing the applicable provisions of the Texas Labor Code as set out in §501.002, the State Office of Risk Management shall act in the capacity of insurance carrier.

(c) As an employer, each state agency shall file, in the form and manner prescribed by the Texas Workers' Compensation Commission (commission), a single administrative address with the commission for the purpose of administering workers' compensation claims. All workers' compensation claim notices or written communications to the agency as an employer will be sent to the agency's single administrative address, unless otherwise specified by rule. When the state agency's single administrative address changes, the sate agency shall submit the new address at least 30 days prior to the change, in the form and manner prescribed by the commission.

History

Source Note: The provisions of this §109.1 adopted to be effective February 2, 1996, 21 TexReg 511; amended to be effective October 9, 2002, 27 TexReg 9348.

Chapter 110 REQUIRED NOTICES OF COVERAGE

Subchapter A CARRIER NOTICES

28 Tex. Admin. Code § 110.1 Insurance Carrier Requirements for Notifying the Division of Insurance Coverage

(a) An approved workers' compensation insurance policy, as referenced in Labor Code §401.011(44)(A), includes a binder, which serves as evidence of a temporary agreement that legally provides workers' compensation insurance coverage until the approved insurance policy is issued or the binder is canceled.

(b) As used in this section, "workers' compensation insurance coverage information" includes information regarding whether or not an employer has workers' compensation insurance coverage and, if so, information about the method of workers' compensation insurance coverage used.

(c) This rule applies to an insurance company, certified self-insurer, workers' compensation self-insurance group under Labor Code Chapter 407A, and a political subdivision. Certified Self-Insurers are also subject to requirements specified in Chapter 114 of this title (relating to Self-Insurance). Self-Insurance Groups are also subject to requirements specified in Chapter 5, Subchapter G, Division 2 of this title (relating to Group Self-Insurance Coverage). Self-insured political subdivisions are also subject to requirements specified in §110.7 of this title (relating to Self-Insured Political Subdivision Requirements for Notifying the Division of Election to Provide Medical Benefits).

(d) An insurance company, certified self-insurer, workers' compensation self-insurance group under Labor Code Chapter 407A, and a political subdivision shall submit to the division, or its designee, workers' compensation insurance coverage information in the form and manner prescribed by the division. The division may designate and contract with a data collection agency to collect and maintain insurance coverage information.

(e) Workers' compensation insurance coverage information for insured Texas employers shall be provided to the division in accordance with subsection (d) of this rule as follows:

(1) by the insurance company, certified self-insurer, workers' compensation self-insurance group under Labor Code Chapter 407A, and political subdivision, within 10 days after the effective date of coverage or endorsement and annually thereafter no later than 10 days after the anniversary date of coverage;

(2) by the insurance company, 30 days prior to the date on which cancellation or non-renewal becomes effective if the insurance company cancels the workers' compensation insurance coverage, does not renew the workers' compensation insurance coverage on the anniversary date, or cancels a binder before it issues a workers' compensation insurance policy;

(3) by the insurance company, 10 days prior to the date on which the cancellation becomes effective if the insurance company cancels an employer's workers' compensation insurance coverage in accordance with Labor Code, §406.008(a)(2); or

(4) by the insurance company, within 10 days after receiving notice of the effective date of termination from the covered employer because the employer switched workers' compensation insurance carriers.

(f) Cancellation or non-renewal of a workers' compensation insurance policy by an insurance company takes effect on the later of:

(1) the end of the workers' compensation insurance policy period; or

(2) the date the division and the employer receive the notification from the insurance company of coverage cancellation or non-renewal and the later of:

(A) the date 30 days after receipt of the notice required by Labor Code, §406.008(a)(1);

(B) the date 10 days after receipt of the notice required by Labor Code, §406.008(a)(2); or

(g) "Claim administration contact" as it applies to this chapter is the person responsible for identifying or confirming an employer's coverage information with the division. An insurance company, a certified self-insurer, a workers' compensation self-insurance group under Labor Code Chapter 407A, and a political subdivision shall file a notice with the division of their designated claim administration contact not later than the 10th day after the date on which the coverage or claim administration agreement takes effect. A single administration address for the purpose of identifying or confirming an employer's coverage status shall be provided. If the single claims administration contact address changes, the new address shall be provided to the division at least 30 days in advance of the change taking effect. This information shall be filed in the form and manner prescribed by the division.

(h) An insurance company, certified self-insurer, workers' compensation self-insurance group under Labor Code Chapter 407A, and a political subdivision may elect to have a servicing agent process and file all coverage information, but the insurance company, certified self-insurer, workers' compensation self-insurance group under Labor Code Chapter 407A, or political subdivision remains responsible for meeting all filing requirements of this rule.

(i) Notwithstanding the other provisions of this section, if an employer switches workers' compensation insurance carriers, the original policy is considered canceled as of the date the new coverage takes effect. Employers shall notify the prior insurance carrier of the cancellation date of the original policy, in writing, within 10 days of the effective date.

(j) This section is effective January 1, 2013.

History

Source Note: The provisions of this §110.1 adopted to be effective September 15, 1993, 18 TexReg 5884; amended to be effective March 13, 2000, 25 TexReg 2080; amended to be effective June 5, 2003, 28 TexReg 4284; amended to be effective January 1, 2013, 37 TexReg 5577.

28 Tex. Admin. Code § 110.7 Self-Insured Political Subdivision Requirements for Notifying the Division of Election to Provide Medical Benefits

(a) A health plan, for purposes of this section, is defined as a political subdivision contracting with health care providers under Labor Code §504.053(b)(2).

(b) A political subdivision as defined by Labor Code §504.001(3) that self-insures either individually or collectively and that pursuant to Labor Code §504.053(b)(2) elects to provide medical benefits to its injured employees by directly contracting with health care providers or by contracting through a health benefits pool established under Local Government Code Chapter 172 shall provide to the division notice of the method by which its employees will receive medical benefits. Political subdivisions are also subject to requirements specified in §110.1 of this title (relating to Insurance Carrier Requirements for Notifying the Division of Insurance Coverage).

(c) The notice of the method by which its employees will receive medical benefits required by subsection (b) of this section shall be filed with the division in writing or electronically and in the form and manner prescribed by the division. The notice shall include:

(1) the name, address, and the federal employer identification number (FEIN) of the political subdivision;

(2) the political subdivision's contact information;

(3) the name of the health plan elected under Labor Code §504.053(b)(2) for the political subdivision;

(4) the contact information for the health plan elected under Labor Code §504.053(b)(2); and

(5) the beginning and ending date(s) of the election under subsection (b) of this section, as applicable.

(d) A self-insured political subdivision that provides medical benefits to its injured employees in the manner described by Labor Code §504.053(b)(2) as of the effective date of this section shall provide the notice required by this section not later than December 31, 2012.

(e) A self-insured political subdivision that begins to provide medical benefits to its injured employees in the manner described by Labor Code §504.053(b)(2) after the effective date of this section shall provide the notice required by this section not later than the 30th day after the date the political subdivision begins to provide the medical benefits in that manner.

(f) A self-insured political subdivision shall notify the division of any change in any information required by this section not later than the 30th day after the date of the change.

History

Source Note: The provisions of this §110.7 adopted to be effective August 2, 2012, 37 TexReg 5577.

Subchapter B EMPLOYER NOTICES

28 Tex. Admin. Code § 110.101 Covered and Non-Covered Employer Notices to Employees

(a) In addition to the posted notice required by subsection (e) of this section, employers, as defined by Labor Code §406.001, shall notify their employees of workers' compensation insurance coverage status, in writing. This additional notice:

(1) shall be provided at the time an employee is hired, meaning when the employee is required by federal law to complete both a W-4 form and an I-9 form or when a break in service has occurred and the employee is required by federal law to complete a W-4 form on the first day the employee reports back to duty;

(2) shall be provided to each employee, by an employer whose workers' compensation insurance coverage is terminated or cancelled, not later than the 15th day after the date on which the termination or cancellation of coverage takes effect;

(3) shall be provided to each employee, by an employer who obtains workers' compensation insurance coverage, not later than the 15th day after the date on which coverage takes effect, as necessary to allow the employee to elect to retain common law rights under Labor Code Chapter 406;

(4) shall include the text required in the posted notice; and

(5) if the employer is covered by workers' compensation insurance (subscriber) or becomes covered, whether by commercial insurance or through self-insurance as provided by the Texas Workers' Compensation Act (Act), shall include the following statement: "You may elect to retain your common law right of action if, no later than five days after you begin employment or within five days after receiving written notice from the employer that the employer has obtained workers' compensation insurance coverage, you notify your employer in writing that you wish to retain your common law right to recover damages for personal injury. If you elect to retain your common law right of action, you cannot obtain workers' compensation income or medical benefits if you are injured."

(b) Notices required to be posted by this rule shall be posted:

(1) by the non-subscribing employer as provided in subsection (c) of this section;

(2) by the employer who is terminating workers' compensation insurance coverage, at the time the employer's termination of coverage takes effect, unless a new policy will maintain continuous coverage in which case the employees will be notified at the time the new workers' compensation insurance policy takes effect;

(3) by the self-insurer as provided by the Act, who is withdrawing from self-insurance, at the time the withdrawal takes effect;

(4) by the employer who becomes covered either by a workers' compensation insurance policy or through self-insurance as provided by the Act, at the time coverage or certification takes effect; and

(5) by the employer whose workers' compensation insurance policy is canceled by the insurance carrier, at the time the cancellation becomes effective if no new workers' compensation insurance policy is obtained.

(c) On or after the effective date of this rule, notices shall contain the specific text required by this rule. Any time the information regarding workers' compensation insurance coverage status, insurance carrier, or third party administrator changes, the notice shall be updated to reflect current information.

(d) An employer who recruits an employee in Texas to perform services outside of Texas, actually hires outside of Texas, and has notices of workers' compensation insurance coverage posted conspicuously at the place of hire and at the business location where the employee will perform services, is not required to provide the additional notice required in subsection (a) of this section to the employee.

(e) Employers shall post notices in the workplace to inform employees about workers' compensation issues as required by this rule. These notices shall be posted in the personnel office, if the employer has a personnel office, and in the workplace where each employee is likely to see the notice on a regular basis. The notices shall be printed with a title in at least 26 point bold type, subject in at least 18 point bold type, and text in at least 16 point normal type, and shall include ENGLISH, SPANISH, and any other LANGUAGE common to the employer's employee population. The text for the notices shall be the text provided by the division on the sample notice without any additional words or changes.

(1) Employers insured through a commercial insurance company shall post the following notice:

Attached Graphic

(2) Employers who become certified self-insurers under Labor Code Chapter 407 shall post the following notice:

Attached Graphic

(3) Employers who are a member of a self-insurance group under Labor Code Chapter 407A shall post the following notice:

Attached Graphic

(4) Employers who are not covered by workers' compensation (non-subscriber) shall post the following notice:

Attached Graphic

(f) Failure to post or to provide notice as required in this rule is an administrative violation.

(g) This section is effective January 1, 2013.

History

Source Note: The provisions of this §110.101 adopted to be effective January 1, 1994, 18 TexReg 9195; amended to be effective August 1, 2000, 25 TexReg 3986; amended to be effective January 1, 2013, 37 TexReg 5577.

28 Tex. Admin. Code § 110.103 Employer Requirements for Notifying the Division of Non-Coverage

(a) Applicability. This subsection applies to notices required to be submitted by non-subscribing employers to the division before January 1, 2013. An employer, as defined by Labor Code §406.001, that does not have workers' compensation insurance coverage (non-subscriber) and whose employees are not exempt from coverage under the Workers' Compensation Act (Act) shall provide the division a notice of non-coverage, in the form and manner prescribed by the division. The notice required by this subsection shall be provided, the earlier of the following:

(1) 30 days after receiving a division request for the filing of a notice of non-coverage and annually thereafter on the anniversary date of the original filing; or

(2) 30 days after hiring an employee who is subject to coverage under the Act, and annually thereafter on the anniversary date of the original filing.

(b) Applicability. This subsection applies to notices required to be submitted by non-subscribing employers to the division on or after January 1, 2013.

(1) A non-subscriber whose employees are not exempt from workers' compensation insurance coverage under the Act shall submit a notice of non-coverage to the division annually between February 1st and not later than April 30th of each calendar year. The period of the notice shall cover from May 1st of the same year the notice is submitted through the end of April of the subsequent year.

(2) In addition to the notice required by paragraph (1) of this subsection, a non-subscriber shall submit to the division a notice of non-coverage not later than the 30th day after the date the employer hired its first employee who is subject to coverage under the Act, unless this due date falls within the same time period described by paragraph (1) of this subsection and the employer submits the notice within that time period. A non-subscriber shall also provide the division with a notice of non-coverage not later than the 10th day after receipt of a division request for the information.

(3) The notices required by paragraphs (1) and (2) of this subsection shall be filed with the division in writing or electronically in the form and manner prescribed by the division and shall contain:

(A) a statement that the employer does not have workers' compensation insurance coverage;

(B) a statement of whether the employer had a death, injuries that resulted in the injured employee's absence from work for more than one day, or knowledge of an occupational disease since the last report of no coverage;

(D) the federal employer identification number (FEIN);

(E) the employer's business mailing address;

(F) the employer's business type;

(G) the employer's North American Industry Classification System (NAICS) code(s);

(H) additional business locations (including name, FEIN, and address concerning each additional location); and

(I) the date the form was completed and the name, title, telephone number, email address, and signature of the person providing the information required by this subsection.

(c) Employers are responsible for timely and accurate notice under this section. A notice required by this section is considered filed with the division only when it accurately contains all of the data elements specified under subsection (b) of this section and is received by the division.

History

Source Note: The provisions of this §110.103 adopted to be effective August 2, 2012, 37 TexReg 5577.

28 Tex. Admin. Code § 110.105 Employer Requirements for Notifying the Division of Termination of Coverage

(a) An employer, as defined by Labor Code §406.001, who terminates workers' compensation insurance coverage shall file written notice of the termination of coverage with the division not later than the 10th day after the date on which the employer notified the insurance carrier under Labor Code §406.007 to terminate the coverage.

(b) The employer shall file the notice of termination required by subsection (a) of this section in the form and manner prescribed by the division. The notice shall contain:

(1) a statement of no workers' compensation insurance coverage, including policy termination effective date, policy number, insurance company name, date the termination notice was sent to the insurance company, and date employees were or will be notified;

(2) a statement of whether the employer had a death, injuries that resulted in the injured employee's absence from work for more than one day, or knowledge of an occupational disease since the last report of no coverage;

(3) the employer business name;

(4) the federal employer identification number (FEIN);

(5) the employer's business mailing address;

(6) the employer's business type;

(7) the employer's North American Industry Classification System (NAICS) code;

(8) additional business locations (including name, FEIN, and address concerning each additional location); and

(9) the signature date and the name, title, telephone number, email address, and signature of the person providing the information required by this subsection.

(1) the 30th day after the date of filing the notice with the division under this section; or

(2) the cancellation date of the policy.

(d) Coverage shall be extended until the date on which the termination of coverage takes effect and the employer is obligated for premiums due for that period.

(e) Notwithstanding the other provisions of this section, if an employer switches workers' compensation insurance carriers, the original policy is considered canceled as of the date the new coverage takes effect. Employers shall notify the prior insurance carrier of the cancellation date of the original policy, in writing, within 10 days of the effective date.

(f) This section is effective January 1, 2013.

History

Source Note: The provisions of this §110.105 adopted to be effective January 1, 2013, 37 TexReg 5577; amended to be effective April 15, 2018, 43 TexReg 2150.

28 Tex. Admin. Code § 110.108 Employer Notice Regarding Work-Related Exposure to Communicable Disease/HIV: Posting Requirements; Payment for Tests

(a) Each employer covered by workers' compensation insurance, including state and political subdivision employers, which employ emergency medical service employees, paramedics, fire fighters, law enforcement officers or correctional officers must post the notice contained in subsection (d) of this section, in its workplace to inform employees about Health and Safety Code requirements which may affect qualifying for workers' compensation benefits following a work-related exposure to a reportable communicable disease. The notice shall be posted in the personnel office, if the employer has a personnel office, and in the workplace where employees are likely to read the notice on a regular basis. Specific guidance for employers and employees covered by this subsection is found in §122.3 of this title (relating to Exposure to Communicable Diseases: Reporting and Testing Requirements for Emergency Responders).

(b) Each state agency must post the notice contained in subsection (d) of this section, in its workplace to inform employees about requirements which may affect qualifying for workers' compensation benefits following a work-related exposure to human immunodeficiency virus (HIV). The notice shall be posted in the personnel office and in the workplace where employees are likely to read the notice on a regular basis. Specific guidance for state employers and employees covered by this subsection is found in §122.4 of this title (relating to State Employees: Exposed to Human Immunodeficiency Virus (HIV): Reporting and Testing Requirements).

(c) The cost of testing for exposure to a reportable communicable disease for emergency medical service employees, paramedics, fire fighters, law enforcement officers and correctional officers shall be paid by the employer's workers' compensation insurance carrier, including state and political subdivision employers.

(d) The following notice shall be printed with a title in at least 15 point bold type and the text in at least 14 point normal type, in English and Spanish or in English and any other language common to the employer's affected employee population. The text of the notice shall be as follows without any additional words or changes:

Attached Graphic

History

Source Note: The provisions of this §110.108 adopted to be effective October 15, 1997, 22 TexReg 9678; amended to be effective December 14, 2015, 40 TexReg 8899.

28 Tex. Admin. Code § 110.110 Reporting Requirements for Building or Construction Projects for Governmental Entities

(a) The following words and terms, when used in this rule, shall have the following meanings, unless the context clearly indicates otherwise. Terms not defined in this rule shall have the meaning defined in the Texas Labor Code, if so defined.

(1) Certificate of coverage (certificate)--A copy of a certificate of insurance, a certificate of authority to self-insure issued by the division, or a workers' compensation coverage agreement (DWC Form-81, DWC Form-82, DWC Form-83, or DWC Form-84), showing statutory workers' compensation insurance coverage for the person's or entity's employees (including those subject to a coverage agreement) providing services on a project, for the duration of the project.

(2) Building or construction--Has the meaning defined in the Texas Labor Code, §406.096(e)(1).

(3) Contractor--A person bidding for or awarded a building or construction project by a governmental entity.

(4) Coverage--Workers' compensation insurance meeting the statutory requirements of the Texas Labor Code, §401.011(44).

(5) Coverage agreement--A written agreement on DWC Form-81, DWC Form-82, DWC Form-83, or DWC Form-84, filed with the Division of Workers' Compensation which establishes a relationship between the parties for purposes of the Texas Workers' Compensation Act, pursuant to the Texas Labor Code, Chapter 406, Subchapters F and G, as one of employer/employee and establishes who will be responsible for providing workers' compensation coverage for persons providing services on the project.

(6) Duration of the project--Includes the time from the beginning of work on the project until the work on the project has been completed and accepted by the governmental entity.

(7) Persons providing services on the project ("subcontractor" in §406.096 of the Act)--With the exception of persons excluded under subsections (h) and (i) of this section, includes all persons or entities performing all or part of the services the contractor has undertaken to perform on the project, regardless of whether that person contracted directly with the contractor and regardless of whether that person has employees. This includes but is not limited to independent contractors, subcontractors, leasing companies, motor carriers, owner-operators, employees of any such entity, or employees of any entity furnishing persons to perform services on the project. "Services" includes but is not limited to providing, hauling, or delivering equipment or materials, or providing labor, transportation, or other service related to a project. "Services" does not include activities unrelated to the project, such as food/beverage vendors, office supply deliveries, and delivery of portable toilets.

(8) Project--Includes the provision of all services related to a building or construction contract for a governmental entity.

(b) Providing or causing to be provided a certificate of coverage pursuant to this rule is a representation by the insured that all employees of the insured who are providing services on the project are covered by workers' compensation coverage, that the coverage is based on proper reporting of classification codes and payroll amounts, and that all coverage agreements have been filed with the appropriate insurance carrier or, in the case of a self-insured, with the division. Providing false or misleading certificates of coverage, or failing to provide or maintain required coverage, or failing to report any change that materially affects the provision of coverage may subject the contractor or other person providing services on the project to administrative penalties, criminal penalties, civil penalties, or other civil actions.

(1) include in the bid specifications, all the provisions of paragraph (7) of this subsection, using the language required by paragraph (7) of this subsection;

(2) as part of the contract, using the language required by paragraph (7) of this subsection, require the contractor to perform as required in subsection (d) of this section;

(3) obtain from the contractor a certificate of coverage for each person providing services on the project, prior to that person beginning work on the project;

(4) obtain from the contractor a new certificate of coverage showing extension of coverage:

(A) before the end of the current coverage period, if the contractor's current certificate of coverage shows that the coverage period ends during the duration of the project; and

(B) no later than seven days after the expiration of the coverage for each other person providing services on the project whose current certificate shows that the coverage period ends during the duration of the project;

(5) retain certificates of coverage on file for the duration of the project and for three years thereafter;

(6) provide a copy of the certificates of coverage to the division upon request and to any person entitled to them by law; and

(7) use the language contained in the following figure for bid specifications and contracts, without any additional words or changes, except those required to accommodate the specific document in which they are contained or to impose stricter standards of documentation:

Attached Graphic

(d) A contractor shall:

(1) provide coverage for its employees providing services on a project, for the duration of the project based on proper reporting of classification codes and payroll amounts and filing of any coverage agreements;

(2) provide a certificate of coverage showing workers' compensation coverage to the governmental entity prior to beginning work on the project;

(3) provide the governmental entity, prior to the end of the coverage period, a new certificate of coverage showing extension of coverage, if the coverage period shown on the contractor's current certificate of coverage ends during the duration of the project;

(4) obtain from each person providing services on a project, and provide to the governmental entity:

(A) a certificate of coverage, prior to that person beginning work on the project, so the governmental entity will have on file certificates of coverage showing coverage for all persons providing services on the project; and

(B) no later than seven days after receipt by the contractor, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project;

(5) retain all required certificates of coverage on file for the duration of the project and for one year thereafter;

(6) notify the governmental entity in writing by certified mail or personal delivery, within ten days after the contractor knew or should have known, of any change that materially affects the provision of coverage of any person providing services on the project;

(7) post a notice on each project site informing all persons providing services on the project that they are required to be covered, and stating how a person may verify current coverage and report failure to provide coverage. This notice does not satisfy other posting requirements imposed by the Act or other division rules. This notice must be printed with a title in at least 30 point bold type and text in at least 19 point normal type, and shall be in both English and Spanish and any other language common to the worker population. The text for the notices shall be the following text provided by the division on the sample notice, without any additional words or changes:

Attached Graphic

(8) contractually require each person with whom it contracts to provide services on a project to:

(A) provide coverage based on proper reporting of classification codes and payroll amounts and filing of any coverage agreements for all of its employees providing services on the project, for the duration of the project;

(B) provide a certificate of coverage to the contractor prior to that person beginning work on the project;

(D) provide the contractor, prior to the end of the coverage period, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project;

(E) obtain from each other person with whom it contracts, and provide to the contractor:

(i) a certificate of coverage, prior to the other person beginning work on the project; and

(ii) prior to the end of the coverage period, a new certificate of coverage showing extension of the coverage period, if the coverage period shown on the current certificate of coverage ends during the duration of the project;

(F) retain all required certificates of coverage on file for the duration of the project and for one year thereafter;

(G) notify the governmental entity in writing by certified mail or personal delivery, within ten days after the person knew or should have known, of any change that materially affects the provision of coverage of any person providing services on the project; and

(H) contractually require each other person with whom it contracts, to perform as required by subparagraphs (A) - (H) of this paragraph, with the certificate of coverage to be provided to the person for whom they are providing services.

(e) A person providing services on a project, other than a contractor, shall:

(2) provide a certificate of coverage as required by its contract to provide services on the project, prior to beginning work on the project;

(3) have the following language in its contract to provide services on the project: "By signing this contract or providing or causing to be provided a certificate of coverage, the person signing this contract is representing to the governmental entity that all employees of the person signing this contract who will provide services on the project will be covered by workers' compensation coverage for the duration of the project, that the coverage will be based on proper reporting of classification codes and payroll amounts, and that all coverage agreements will be filed with the appropriate insurance carrier or, in the case of a self-insured, with the division. Providing false or misleading information may subject the contractor to administrative penalties, criminal penalties, civil penalties, or other civil actions."

(4) provide the person for whom it is providing services on the project, prior to the end of the coverage period shown on its current certificate of coverage, a new certificate showing extension of coverage, if the coverage period shown on the certificate of coverage ends during the duration of the project;

(5) obtain from each person providing services on a project under contract to it, and provide as required by its contract:

(A) a certificate of coverage, prior to the other person beginning work on the project; and

(B) prior to the end of the coverage period, a new certificate of coverage showing extension of the coverage period, if the coverage period shown on the current certificate of coverage ends during the duration of the project;

(6) retain all required certificates of coverage on file for the duration of the project and for one year thereafter;

(7) notify the governmental entity in writing by certified mail or personal delivery, of any change that materially affects the provision of coverage of any person providing services on the project and send the notice within ten days after the person knew or should have known of the change; and

(8) contractually require each other person with whom it contracts to:

(B) provide a certificate of coverage to it prior to that other person beginning work on the project;

(D) provide, prior to the end of the coverage period, a new certificate of coverage showing extension of the coverage period, if the coverage period shown on the current certificate of coverage ends during the duration of the project;

(E) obtain from each other person under contract to it to provide services on the project, and provide as required by its contract:

(i) a certificate of coverage, prior to the other person beginning work on the project; and

(F) retain all required certificates of coverage on file for the duration of the project and for one year thereafter;

(H) contractually require each person with whom it contracts, to perform as required by this subparagraph and subparagraphs (A) - (G) of this paragraph, with the certificate of coverage to be provided to the person for whom they are providing services.

(f) If any provision of this rule or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this rule that can be given effect without the invalid provision or application, and to this end the provisions of this rule are declared to be severable.

(g) This rule is applicable for building or construction contracts advertised for bid by a governmental entity on or after September 1, 1994. This rule is also applicable for those building or construction contracts entered into on or after September 1, 1994, which are not required by law to be advertised for bid.

(h) The coverage requirement in this rule does not apply to motor carriers who are required pursuant to Texas Civil Statutes, Article 6675c, to register with the Texas Department of Transportation and who provide accidental insurance coverage pursuant to Texas Civil Statutes, Article 6675c, §4(j).

(i) The coverage requirement in this rule does not apply to sole proprietors, partners, and corporate officers who meet the requirements of the Act, §406.097(c), and who are explicitly excluded from coverage in accordance with the Act, §406.097(a) (as added by House Bill 1089, 74th Legislature, 1995, §1.20). This subsection applies only to sole proprietors, partners, and corporate executive officers who are excluded from coverage in an insurance policy or certificate of authority to self-insure that is delivered, issued for delivery, or renewed on or after January 1, 1996.

History

Source Note: The provisions of this §110.110 adopted to be effective September 1, 1994, 19 TexReg 5715; amended to be effective November 6, 1995, 20 TexReg 8609; amended to be effective December 14, 2015, 40 TexReg 8899.

Chapter 112 SCOPE OF LIABILITY FOR COMPENSATION

28 Tex. Admin. Code § 112.101 Agreement Regarding Workers' Compensation Insurance Coverage Between General Contractors and Subcontractors

(a) An agreement between a general contractor and a subcontractor made in accordance with Texas Labor Code §406.123(a), (d), (e), or (l) must:

(1) be in writing;

(2) state that the subcontractor and the subcontractor's employees are employees of the general contractor for the sole purpose of workers' compensation coverage;

(3) indicate whether the general contractor will make a deduction for the premiums;

(4) specify whether this is a blanket agreement or if it applies to a specific job location and, if so, list the location;

(5) contain the signatures of both parties;

(6) indicate the date the agreement was made, the term the agreement will be effective, and estimated number of workers affected by the agreement.

(b) The workers' compensation insurance coverage provided by the general contractor under the agreement will take effect no sooner than the date the agreement was executed, and deductions for the premiums must not be made for coverage provided before that date.

(c) If a person who is covered by a subcontractor agreement signed under this section is found to be an employee of the general contractor, the person:

(1) is covered under the general contractor's workers' compensation policy; and

(2) must receive a refund from the general contractor for all amounts improperly deducted as premium.

(d) The general contractor must maintain the original and file a legible copy of the agreement with the general contractor's workers' compensation insurance carrier within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete. If a general contractor and subcontractor enter into a written agreement in which the subcontractor assumes the responsibilities of an employer as provided in Texas Labor Code §406.122(b), the general contractor must provide a copy of the agreement to its insurance carrier within 10 days of execution. After January 1, 1993, a general contractor who is a certified self-insurer must file a copy of the agreement with the division within 10 days of the date of execution. The filing must be made in the form and manner prescribed by the division.

(e) The general contractor must give the subcontractor's employees the notice required under Texas Labor Code §406.005 when such an agreement is made.

(f) If a subcontractor makes an agreement in accordance with this rule, an employee of the subcontractor may elect to retain his common law rights as provided by the Texas Labor Code, §406.034.

History

Source Note: The provisions of this §112.101 adopted to be effective February 27, 1991, 16 TexReg 985; amended to be effective March 13, 2000, 25 TexReg 2082; amended to be effective April 15, 2018, 43 TexReg 2151; amended to be effective February 10, 2021, 46 Texreg 922.

28 Tex. Admin. Code § 112.102 Agreements between Motor Carriers and Owner Operators

(a) A motor carrier and an owner operator may enter into an agreement which requires the owner operator to assume the responsibilities of an employer for the performance of work.

(b) An agreement made under subsection (a) of this section must be made at or before the time the contract for the work is made and must:

(1) be in writing;

(2) state that the owner operator assumes the responsibilities of an employer for the performance of work;

(3) contain the signatures of both parties;

(4) indicate the date the agreement was made, the term the agreement will be effective, the estimated number of workers affected by the agreement, the federal tax identification number of the parties; and

(5) be provided to the insurance carrier of the motor carrier within 10 days of execution.

(c) A motor carrier and an owner operator may enter into an agreement under which the motor carrier provides workers' compensation insurance coverage to the owner operator and the owner operator's employees.

(d) An agreement made under subsection (c) of this section must be made at or before the time the contract for the work is made and must:

(1) be in writing;

(2) indicate whether the motor carrier will make a deduction for the premiums;

(3) contain the signatures of both parties;

(5) be filed with the insurance carrier of the motor carrier within 10 days of execution.

(e) The workers' compensation insurance coverage provided by the motor carrier under the agreement must take effect no sooner than the date the agreement was executed, and deductions for the premiums must not be made for coverage provided before that date.

(f) The motor carrier must be required to give the owner operator's employees the notice required under Texas Labor Code §406.005 when such an agreement is made.

History

Source Note: The provisions of this §112.102 adopted to be effective February 27, 1991, 16 TexReg 985; amended to be effective June 9, 2005, 30 TexReg 3230; amended to be effective April 15, 2018, 43 TexReg 2151; amended to be effective February 10, 2021, 46 TexReg 922.

28 Tex. Admin. Code § 112.200 Definition of Residential Structures

For purposes of the Texas Workers' Compensation Act (the Act), §406.142, "residential structures" are buildings used as a family dwelling or multi-family dwelling, limited to a single-family residence, a duplex, a triplex, and a quadraplex. All other types of structures used for living purposes shall be considered commercial structures, and shall only be included within the scope of the Act, §406.142, if they do not exceed three stories or 20,000 square feet.

History

Source Note: The provisions of this §112.200 adopted to be effective June 3, 1991, 16 TexReg 2830; amended to be effective June 9, 2005, 30 TexReg 3230.

28 Tex. Admin. Code § 112.201 Agreement To Establish Employer-Employee Relationship for Certain Building and Construction Workers

(a) This section applies only to building and construction projects as provided by the Texas Labor Code, §406.142.

(b) An independent contractor and a hiring contractor, as defined in the Texas Labor Code, §406.141, may enter into a written agreement:

(1) to allow the hiring contractor to withhold the cost of workers' compensation insurance from the contract price; and

(2) to stipulate that, for the sole purpose of providing workers' compensation insurance, the hiring contractor will be the employer of the independent contractor and the independent contractor's employees.

(c) An agreement made under subsection (b) of this section shall be filed in the form and manner prescribed by the division.

(d) The agreement shall:

(1) be in writing;

(2) indicate whether the hiring contractor will make a deduction for the premiums;

(3) specify that the hiring contractor will be the employer of the independent contractor and the independent contractor's employees for the sole purpose of providing workers' compensation insurance;

(4) specify the location of the job sites subject to the contract and the agreement;

(5) contain the signatures of both parties; and

(6) indicate the date the agreement was made, the term the agreement will be effective, and the estimated number of employees affected by the agreement.

(e) The workers' compensation insurance coverage provided by the hiring contractor under the agreement shall take effect no sooner than the date on which the agreement was executed and deductions for the premiums shall not be made for coverage provided prior to that date.

(f) If a person who is covered by an independent contractor agreement signed under this section is found to be an employee of the hiring contractor, the person:

(1) is covered under the hiring contractor's workers' compensation policy; and

(2) shall receive a refund from the hiring contractor for all amounts improperly deducted as premium.

(g) The hiring contractor must maintain the original and file a legible copy of the agreement with the hiring contractor's workers' compensation insurance carrier within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete.

(h) A hiring contractor electing to provide workers' compensation insurance coverage through an agreement under subsection (b) of this section shall be deemed to have accepted the rights and responsibilities of an employer imposed under the Act as of the effective date of the workers' compensation insurance coverage.

(i) If an independent contractor makes an agreement under this rule, the employee of the independent contractor may elect to retain his common law rights as provided by the Texas Labor Code, §406.034.

(j) For purposes of the Texas Labor Code, §406.142, 20,000 square feet is measured on the outside perimeter of the structure.

History

Source Note: The provisions of this §112.201 adopted to be effective February 26, 1991, 16 TexReg 896; amended to be effective March 13, 2000, 25 TexReg 2082; amended to be effective April 15, 2018, 43 TexReg 2151.

28 Tex. Admin. Code § 112.202 Joint Agreement To Affirm Independent Relationship for Certain Building and Construction Workers

(a) An independent subcontractor and a hiring contractor may enter into an agreement which states that the subcontractor is an independent contractor and is not an employee of the hiring contractor.

(b) The agreement shall be filed in the form and manner prescribed by the division and shall:

(1) be in writing;

(2) state that the subcontractor meets the qualifications of an independent contractor under the Texas Labor Code, §406.141(2);

(3) state that the subcontractor is an independent contractor and is not an employee of the hiring contractor;

(4) contain the signatures of both parties;

(5) indicate the date the agreement was made; and

(6) state that: "Once this agreement is signed, the subcontractor and the subcontractor's employees shall not be entitled to workers' compensation coverage from the hiring contractor unless a subsequent written agreement is executed, and filed according to division rules, expressly stating that this agreement does not apply."

(c) If a person who is covered by an independent contractor agreement signed under this section is found to be an employee of the hiring contractor, the person is covered under the hiring contractor's workers' compensation policy.

(d) The hiring contractor shall maintain the original and file a legible copy of the agreement with the hiring contractor's workers' compensation insurance carrier, if any, within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete.

(e) If the agreement is made in compliance with subsections (a) through (d) of this section and a separate agreement has not been made in accordance with §112.201 of this title (relating to Agreement to Establish Employer-Employee Relationship for Certain Building and Construction Workers):

(1) the subcontractor and the subcontractor's employees shall not be entitled to workers' compensation coverage from the hiring contractor; and

(2) the hiring contractor's workers' compensation insurance carrier shall not require premiums to be paid by the hiring contractor for coverage of the independent contractor or the independent contractor's employees, helpers, or subcontractors.

(f) An agreement signed under subsection (a) applies to each hiring agreement executed by the parties until the first anniversary of the date the agreement was filed with the hiring contractor's workers' compensation insurance carrier, unless a subsequent agreement is executed expressly stating that the agreement does not apply.

History

Source Note: The provisions of this §112.202 adopted to be effective February 26, 1991, 16 TexReg 896; amended to be effective March 13, 2000, 25 TexReg 2082; amended to be effective April 15, 2018, 43 TexReg 2151.

28 Tex. Admin. Code § 112.203 Exception to Application of Agreement to Affirm Independent Relationship for Certain Building and Construction Workers

(a) If a subsequent hiring agreement is made that expressly states that the joint statement made under §112.202 of this title (relating to Joint Agreement To Affirm Independent Relationship for Certain Building and Construction Workers) does not apply to that hiring agreement, the hiring contractor must maintain the original and file a legible copy of the agreement with the hiring contractor's insurance carrier. Nothing in this section otherwise nullifies the joint statement as it applies to other hiring agreements made during the term of the joint statement.

(b) The notification must be filed in the form and manner prescribed by the division and must:

(1) specify the date the agreement to affirm an independent relationship was made;

(2) specify the parties to the agreement and the location of the job site(s);

(3) specify the date this agreement was made;

(4) contain the signatures of both parties.

(c) If a person who is covered by an independent contractor agreement signed under this section is found to be an employee of the hiring contractor, the person:

(1) is covered under the hiring contractor's workers' compensation policy;

(2) must receive a refund from the hiring contractor for all amounts improperly deducted as premium.

(d) The notification must be provided in the form and manner prescribed by the division no later than 10 days from the date the subsequent hiring agreement was executed. An agreement is not considered filed if it is illegible or incomplete.

History

Source Note: The provisions of this §112.203 adopted to be effective February 26, 1991, 16 TexReg 896; amended to be effective March 13, 2000, 25 TexReg 2082; amended to be effective February 10, 2021, 46 TexReg 922.

28 Tex. Admin. Code § 112.301 Labor Agent's Notification of Coverage to Certain Farm or Ranch Employees

(a) A labor agent must notify each person the labor agent contracts with to provide the services of migrant and seasonal workers whether or not the labor agent has workers' compensation insurance coverage.

(b) The notification must be in writing and must be given at the time the contract for the services of the migrant or seasonal workers is made. The notification must be signed and dated by both parties and each party must retain a copy of the notice.

(c) If the labor agent does have workers' compensation insurance coverage, the labor agent must present evidence of the workers' compensation insurance coverage to each person the agent contracts with to provide the services of migrant and seasonal workers. The evidence of coverage must be in writing and must be presented at the time the notification of coverage is made. Each party must retain a copy of the evidence of coverage with the copy of the notice. A certificate of insurance is considered adequate evidence of coverage.

(d) The notice and evidence of coverage, if applicable, must be given each time a labor agent makes a contract with a person to provide migrant or seasonal workers. Any notice and evidence of coverage provided for a prior contract between the parties is considered insufficient to meet the requirements of this section.

(e) If coverage is terminated during the period of the contract for employment, the labor agent must notify:

(1) the person with whom the agent contracted to provide the services of migrant and seasonal workers; and

(2) the migrant and seasonal workers affected that the workers' compensation insurance coverage has been terminated.

History

Source Note: The provisions of this §112.301 adopted to be effective February 26, 1991, 16 TexReg 899; amended to be effective February 10, 2021, 46 TexReg 922.

28 Tex. Admin. Code § 112.401 Election of Coverage by Certain Professional Athletes

(a) A professional athlete employed by a franchise with workers' compensation insurance coverage and subject to Texas Labor Code §406.095 must elect to receive either the benefits available under the Act or the equivalent benefits available under the athlete's contract or collective bargaining agreement. The election must be made not later than the 15th day after the athlete sustains an injury in the course and scope of employment. If the athlete fails to make an election, the athlete will be presumed to have elected the option which provides the highest benefits.

(b) When a contract is signed by a professional athlete, the employer must give the athlete a copy of the following statement: "(Name of employer) has workers' compensation coverage from (name of insurance carrier). If the benefits available to you under your contract and any applicable collective bargaining agreement are equivalent to or greater than those available to you under Texas Labor Code §406.095, you are required to elect whether to receive the benefits available to you under the Act or the benefits available to you under your contract and any applicable collective bargaining agreement. You must make this election no later than 15 days after sustaining an injury. If you elect to receive the benefits available to you under your contract and any applicable collective bargaining agreement, you cannot obtain workers' compensation income or medical benefits if you are injured. You can get more information about your workers' compensation rights and the benefits available to you under the Act from any office of the Texas Department of Insurance, Division of Workers' Compensation, or by calling 1-800-252-7031."

(1) indicate the date of the injury for which the election is being made;

(2) indicate whether the athlete elects to receive the benefits available under the Act or the benefits provided under the contract or agreement; and

(3) be signed by the athlete and the employer.

(d) If the athlete elects to receive the benefits available under the Act, a legible copy of the election must be provided to the division in the form and manner prescribed by the division within 10 days of the date of execution. A copy must also be provided to the franchise's workers' compensation insurance carrier within 10 days of the date of execution. The franchise must maintain the original election and provide a copy to the athlete.

(e) If the athlete elects to receive the benefits available under the contract and any agreement, the election must be filed with the franchise's workers' compensation insurance carrier within 10 days of the date of execution. An agreement is not considered filed if it is illegible or incomplete. Both the athlete and the franchise must keep a copy of the election.

(f) An election made under this section is irrevocable and binding on the athlete and the athlete's legal beneficiaries for a compensable injury incurred on the date specified in the election.

History

Source Note: The provisions of this §112.401 adopted to be effective October 1, 1992, 17 TexReg 6362; amended to be effective March 13, 2000, 25 TexReg 2082; amended to be effective February 10, 2021, 46 TexReg 922.

28 Tex. Admin. Code § 112.402 Determination of Equivalent Benefits for Professional Athletes

(a) Medical care available to a professional athlete subject to the Texas Workers' Compensation Act (the Act), Texas Labor Code, §406.095, is equal to or greater than medical benefits under the Act if:

(1) the athlete is entitled to all health care reasonably required by the nature of the work-related injury as and when needed, including all health care that:

(A) cures or relieves the effects naturally resulting from the work-related injury;

(B) promotes recovery; or

(2) the employer's liability for health care is not limited or terminated in any way by the contract or collective bargaining agreement.

(b) When the athlete is not eligible for lifetime income benefits or when the athlete's legal beneficiaries are not eligible for death benefits under the Act, weekly benefits available to a professional athlete subject to the Act, §406.095, are equal to or greater than the income benefits provided under the Act if the total amount of the payments provided for in the contract or collective bargaining agreement is equal to or greater than the maximum weekly benefit available under the Act multiplied by 104.

(c) When the athlete is entitled to lifetime income benefits under the Act, weekly benefits available to a professional athlete subject to the Act, §406.095, are equal to or greater than the income benefits provided under the Act if equal to or greater than the maximum weekly benefit available under the Act.

(d) When the athlete's legal beneficiaries are entitled to death benefits under the Act, weekly benefits available to the legal beneficiaries of a professional athlete subject to the Act, §406.095, are equal to or greater than the death benefits provided under the Act if equal to or greater than the maximum weekly benefit available under the Act.

History

Source Note: The provisions of this §112.402 adopted to be effective October 1, 1992, 17 TexReg 6362; amended to be effective June 9, 2005, 30 TexReg 3231.

Chapter 114 SELF-INSURANCE

28 Tex. Admin. Code § 114.1 Purpose

(a) The provisions of this chapter are promulgated pursuant to Texas Labor Code, Chapter 407, to explain and enforce provisions related to the self-insuring of liability and to guarantee full and timely payment of compensation benefits by certified self-insurers.

(b) The provisions of this chapter apply to private employers in the State of Texas. They do not apply to the state or to political subdivisions, as made clear by Texas Labor Code §401.011(6).

(c) These rules provide guidance and requirements in addition to those requirements imposed by the Texas Workers' Compensation Act and other division rules.

History

Source Note: The provisions of this §114.1 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.2 Definitions

(a) The following words and terms are defined in the Texas Labor Code §407.001, and are used in this chapter:

(1) Association;

(2) Impaired employer;

(3) Incurred liabilities for compensation; and

(4) Qualified claims servicing contractor.

(b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Applicant--an employer that applies for an initial certificate of authority to self-insure or, once initially certified, any subsequent certificate of authority to self-insure.

(2) Certificate--A certificate of authority to self-insure issued by the commissioner under Texas Labor Code §407.042, which entitles an employer to be a certified self-insurer and is valid only for the persons, firms, or corporations named on the certificate. For a certificate of authority to self-insure delivered, issued for delivery, or renewed on or after January 1, 1996, a sole proprietor, partner, or corporate executive officer of a business may be specifically excluded from coverage under Texas Labor Code §406.097.

(3) Certified self-insurer--A private employer that has been granted a certificate of authority to self-insure for payment of compensation, either currently or for a prior period except if withdrawn with an insuring agreement under Labor Code §407.045(a-1).

(4) Claims Contractor--A qualified claims servicing contractor.

(5) Division--The Texas Department of Insurance, Division of Workers' Compensation.

(6) Excess Insurance--Insurance that an employer purchases to pay claim costs that exceed the employer's retention amount up to a specified limit.

(7) Retention--All payments that must be paid by a certified self-insurer before an excess insurance policy will respond to a loss for claims filed under the Workers' Compensation Act including indemnity benefits, medical payments, death benefits, and all other related claims expenses not otherwise covered by insurance.

(8) Trust Fund--The Texas certified self-insurer guaranty trust fund created by the fee assessed by the Association for emergency payment of the compensation liabilities of an impaired employer.

History

Source Note: The provisions of this §114.2 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective November 6, 1995, 20 TexReg 8612; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.3 Application Form and Financial Information Requirements

(a) Employers shall submit an application by filing a completed and signed application in the form and manner prescribed by the commissioner and must include:

(1) if required to file a Form 10-K by the U.S. Securities and Exchange Commission (SEC), the applicant's Form 10-K for the preceding three fiscal years; and

(2) the applicant's independently audited financial statements according to Generally Accepted Auditing Standards of the American Institute of Certified Public Accountants with the accompanying footnotes and the auditor's opinion for the preceding three fiscal years.

(b) Incomplete applications may be returned to the applicant.

(c) An incomplete application may be treated as voluntarily withdrawn if the applicant fails to respond to any request for information by the division for more than 90 days from the date the request is deemed received by the applicant, as provided by division rule.

(d) The sworn affidavit required on any self-insurance application or other document requiring a sworn affidavit also applies to all attachments, additions, and any subsequent amendments to those documents.

(e) If the financial statements under subsection (a)(2) of this section are dated more than six months prior to the date of the application, interim financial statements may be required.

(f) Applicants will be evaluated for stability and financial strength. Applicants shall provide information relevant to the factors specified in Texas Labor Code §407.061 and §407.062 and shall ensure that a credit or debt rating and an analysis of that rating have been prepared by one of the following:

(1) Dun & Bradstreet or other recognized credit reporting agency's ratings; or

(2) debt ratings from Standard & Poor's or Moody's.

(g) In addition to reviewing the information required in subsection (f) of this section, the commissioner shall consider the applicant's:

(1) liquidity ratio;

(2) ratio of current assets to current liabilities;

(3) ratio of tangible net worth to long-term debt;

(4) ratio of tangible net worth to total liabilities;

(5) cash flow;

(6) working capital;

(7) profitability; and

(8) one of the following:

(A) Dun & Bradstreet or other recognized credit reporting agency's ratings; or

(B) debt ratings from Standard & Poor's or Moody's.

History

Source Note: The provisions of this §114.3 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.4 Security Deposit Requirements

(a) A security deposit shall be one or a combination of any of the following:

(1) surety bond. The surety bond must be issued by a company authorized to conduct such business in Texas and possess either a current A.M. Best rating of B+ or better or a Standard & Poor's rating of claims paying ability of A or better;

(2) cash, bonds, or other evidence of indebtedness issued, assumed or guaranteed by the United States of America or the State of Texas. Any such securities shall be deposited with the Comptroller of Public Accounts pursuant to a trust agreement prescribed by the commissioner; or

(3) irrevocable letter of credit issued by a Texas state chartered bank or a federally chartered bank with a branch office in Texas. The bank shall have a long-term debt rating of at least A or better in the current monthly edition of "Moody's Statistical Handbook" or a long-term investment grade rating of at least A or better in the current edition of "Global Ratings Handbook" prepared by Standard & Poor's Corporation. If the bank's rating subsequent to issuing the letter of credit falls below the acceptable rating, the certified self-insurer shall replace the letter of credit within 60 days with a new letter of credit issued by a bank with an acceptable rating.

(b) Bonds and irrevocable letters of credit must be in a form approved by the commissioner.

(d) The amount of the security deposit shall in no case be less than the retention amount of the excess insurance required by the commissioner.

(e) The commissioner will not issue a certificate before the guarantor of the security has submitted to the division a security deposit that meets the requirements of this section.

(f) The certified self-insurer shall notify the division if the security bond or letter of credit no longer meets the requirements of subsection (a) of this section. This notice shall be provided in writing to the division within 30 days of that change.

(g) The division may require a substitution of the security deposit in the event that the certified self-insurer's surety or guarantor no longer meets the requirements of subsection (a) of this section.

History

Source Note: The provisions of this §114.4 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective December 2, 1997, 22 TexReg 11692; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.5 Excess Insurance Requirements

(a) The upper limit of liability for a contract or policy of excess insurance shall be in the amount required by the commissioner. The minimum amount the commissioner may require is $5 million per occurrence.

(b) A contract or policy of excess insurance must be issued by an insurance company authorized by the State of Texas to transact such business and shall include the following provisions:

(1) cancellation requires notice to the division in the form and manner prescribed by the commissioner at least 60 days before termination;

(2) non-renewal requires notice to the division, in the form and manner prescribed by the commissioner at least 60 days before the end of the policy;

(3) the Association must be named as an additional insured on the excess policy and may assume the rights and responsibilities of the certified self-insurer under the policy when the certified self-insurer is declared to be impaired; and

(4) all of the following benefits to which the injured employee is entitled under the Texas Workers' Compensation Act must be applied toward reaching the retention amount:

(A) payments made by the certified self-insured employer;

(B) payments due and owing by the certified self-insured employer;

(C) payments made on behalf of the certified self-insured employer by any form of security as required by the Act or division rules; and

(D) payments made by the Association pursuant to Texas Labor Code §407.121 and §407.127.

(c) The commissioner will not issue a certificate before the excess insurance carrier has submitted to the division evidence of a qualifying excess insurance policy that meets the requirements of this section.

(d) The certified self-insurer who elects to cancel or chooses not to renew a policy of excess insurance shall notify the division 60 days prior to the cancellation or termination in the form and manner prescribed by the commissioner.

History

Source Note: The provisions of this §114.5 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective March 13, 2000, 25 TexReg 2088; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.6 Safety Program Requirements

To qualify as an effective safety program under Texas Labor Code §407.061(d), an applicant's safety program must include the following components at a minimum:

(1) A management component that includes:

(A) a clearly written safety policy distributed to all employees;

(B) a written assignment of safety responsibilities and delegation of authority which includes oversight of implementation of the safety program and the authority to communicate directly with the employer's top management regarding health and safety issues;

(D) a process to ensure review and revision of the safety program when changes in processes, procedures, operations, or equipment are implemented or anticipated, to ensure continued effectiveness of the safety program.

(2) An analysis component that:

(A) facilitates the recognition of injury and illness trends, and

(B) facilitates the focus of corrective action on identified trends.

(3) A records component that requires documentation of:

(A) analysis results and any consequent improvement effort or corrective action;

(B) safety-related employee training, including the training topic and date trained;

(D) accident investigations;

(E) safety committee meeting minutes, if such a committee is present in the workplace; and

(F) any other safety-related records deemed appropriate by the applicant.

(4) A safety-training component that provides employees with initial and recurring training on all topics required to perform assigned duties safely.

(5) An audit or inspection component that requires:

(A) periodic inspections of facilities, equipment, and safety-related practices and procedures; and

(B) periodic evaluation and monitoring of industrial hygiene exposures.

(6) An accident investigation component that focuses on the identification and mitigation of causal factors.

History

Source Note: The provisions of this §114.6 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.7 Certification Process

(a) The division shall request review and approval of the Association by forwarding a summary of the relevant application information after the division deems the application complete and finds the applicant's financial information required under §114.3 of this title (relating to Application Form and Financial Information Requirements) reflects one of the following qualifying financial ratings:

(1) Dun & Bradstreet rating of 3A1 or better;

(2) Standard & Poor's rating of BBB or better;

(3) Moody's rating of Baa or better; or

(4) minimum tangible net worth of $5 million with a ratio of tangible net worth to long-term debt of 1.5 to one or greater.

(b) The division may audit information supplied by an employer applying for a certificate.

(c) The division shall recommend an applicant for certification only with approval of the application by the Association. Failure of the Association to respond within 120 days after the Association's receipt of the information provided for in subsection (a) of this section will be deemed as the Association's approval of an applicant to be a certified self-insurer.

(d) Within a reasonable time after approval by the Association of a completed application, the division will recommend to the commissioner approval or denial of the application at a public meeting for self-insurance business (generally quarterly) that follows the completion of an application and the approval process described in subsection (c) of this section.

History

Source Note: The provisions of this §114.7 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.8 Refusal To Certify an Employer

(a) When the commissioner determines an application should be denied, the applicant will be notified of the following:

(1) the specific reasons for the denial;

(2) the specific conditions, if any, the applicant must meet to become certified;

(3) that the applicant has a 30-day period from the date the applicant receives the notice to meet the conditions required or provide compelling information to the division to rebut the reasons for denial; and

(4) the form and format required to notify the division of the actions taken by the applicant to overcome the denial.

(b) The notice described in subsection (a) of this section shall be:

(1) in writing; and

(2) sent to the contact person, return receipt requested.

(c) The denial becomes final on the 31st day after the applicant receives the notice of denial if the applicant has not responded.

(d) When the applicant timely responds to the denial, the commissioner may grant or deny the application within 130 days after the applicant received the notice of denial, and such action shall be final immediately. If the commissioner fails to take action within 130 days after the applicant received the notice of denial, the denial becomes final on the 131st day.

History

Source Note: The provisions of this §114.8 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.9 Required Safety Program Inspections

(a) An employer seeking to obtain a certificate shall have its safety program reviewed or inspected by the division before the issuance of its initial certificate and thereafter, as appropriate, to demonstrate the existence of an effective safety program for each location.

(b) To facilitate the review or inspection process, the employer shall provide the division with access to all of the documents related to its safety program and its workers' compensation claims and shall permit the inspection of any of its work sites during working hours. Unreasonable refusal to provide access to the required information or facilities may be considered as:

(1) submission of an incomplete application or grounds for revocation of a certificate; and

(2) an administrative penalty with each day of noncompliance constituting a separate violation.

(c) Unless significant deficiencies are noted in a safety program review or inspection, the division is not required to issue a review or inspection report.

History

Source Note: The provisions of this §114.9 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.10 Claims Contractor Requirements

(a) Claims administration must be performed by an adjuster licensed in Texas to handle workers' compensation claims.

(b) Each proposed contract to provide claims services to a certified self-insurer must be approved by the division prior to recommending approval of an application to self-insure or, if a certified self-insurer is changing from one claims contractor to another, prior to the effective date of the new contract.

(c) An applicant must ensure that a current signed claims administration contract remain on file with the division at all times.

(d) The claims contractor must promptly investigate each reportable injury and either pay benefits or controvert, as required by the Texas Workers' Compensation Act and division rules.

History

Source Note: The provisions of this §114.10 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.11 Audit Program

(a) The division shall audit certified self-insurers as frequently as necessary to assure compliance with the Texas Workers' Compensation Act and division rules, but shall audit each certified self-insurer at least once every three years.

(b) An audit may include, but not be limited to:

(1) any representation made on an application or in an annual report required by §114.15(b) of this title (relating to Revocation of Certificate of Authority to Self-Insure);

(2) payroll and classification;

(3) loss history;

(4) claims administration;

(5) loss reserves;

(6) interviews of the certified self-insurer, its agents, or employees regarding any matter within their knowledge and pertaining to the obligations of the certified self-insurer under the Act or division rules; and

(7) any other issue deemed appropriate by the division.

(d) A certified self-insurer's unreasonable refusal to make the required information available constitutes:

(1) grounds for revocation of the certificate; and

(2) a Class A administrative violation, with each day of noncompliance constituting a separate violation.

History

Source Note: The provisions of this §114.11 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.12 Required Reporting

(a) Each certified self-insurer shall file with the division an annual application or, if required by §114.15(b) of this title (relating to Revocation of Certificate of Authority to Self-Insure), an annual report, according to a schedule established by the division. The division may require an annual application or annual report to include the following:

(1) claims information, such as loss run information, in the form and manner prescribed by the commissioner;

(2) an information report, in the manner prescribed by the commissioner, that includes an analysis of accident trends which:

(A) identifies losses by location, occupation, or job function; and

(B) provides an analysis of those losses based on:

(i) nature, source, and severity of the injury;

(ii) cause of the injury;

(iii) parts of the body affected;

(iv) equipment involved in the injury;

(v) number of injuries and fatalities other than occupational diseases; and

(vi) identification of the number of occupational diseases;

(3) independently audited financial statements according to Generally Accepted Auditing Standards of the American Institute of Certified Public Accountants; and

(4) any substantive policy or procedure changes in the certified self-insurer's safety program.

(b) If any of the information required by this section is more than six months old, it may be considered incomplete and the division may require the certified self-insurer to provide updated information.

(c) An application, annual report required by §114.15(b) of this title (relating to Revocation of Certificate of Authority to Self-Insure), or other designated document will not be complete until all parts of the document, including all required attachments and any required updates, are filed.

History

Source Note: The provisions of this §114.12 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.13 Required Notices to the Division

(a) A certified self-insurer that amends its charter, articles of incorporation, or partnership agreement to change its identity or business structure, or in any other manner materially alters its status as it existed at the time of issuance of its certificate shall, within 30 days after the amendment or other action, notify the division of such action in the form and manner prescribed by the commissioner and provide the division with a copy of such amendment or other action.

(b) A certified self-insurer that ceases doing business entirely, ceases doing business in Texas, or disposes of, by sale or otherwise, the controlling interest of the business for which the certificate was issued, shall immediately notify the division in the form and manner prescribed by the commissioner of such action and the division will act on the notice pursuant to Texas Labor Code, §407.045.

(c) A certified self-insurer shall give notice to the division in the form and manner prescribed by the commissioner of any change in contact person within 10 working days of this change. The notice shall include the name, title, office address, and telephone number, facsimile number and email address of the new contact person.

(d) A certified self-insurer shall give notice to the division in the form and manner prescribed by the commissioner at least 30 days prior to any change in the claims contractor. The notice shall include the name, title, office address, and telephone number, facsimile number and email address of the person or persons appointed to administer both the existing cases and the new cases and the location or locations of records required to be kept and maintained pursuant to Texas Labor Code, §407.082.

(e) A certified self-insurer shall notify the division in the form and manner prescribed by the commissioner of any change or expected change which will significantly alter the liability or solvency of the certified self-insurer within 30 days of the certified self-insurer's knowledge of the change.

(f) For purposes of §406.006 of the Texas Labor Code, coverage takes effect upon approval by the commissioner. Approval by the commissioner fulfills the certified self-insurer's requirement to file notice of coverage and claim administration contact information as required by §406.006.

History

Source Note: The provisions of this §114.13 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective March 13, 2000, 25 TexReg 2088; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.14 Impaired Employer

If a certified self-insurer becomes an impaired employer, the commissioner shall protect the employees of such employer by promptly:

(1) calling the security deposit and placing the funds in an account for the impaired employer;

(2) notifying the Association or other entity designated by the commissioner to assume the liabilities of the impaired employer; to begin paying, pursuant to Texas Labor Code §407.127, benefits out of the impaired employer's account; and, if necessary, to notify the Association to begin paying benefits out of its trust fund; and

(3) estimating the amount of any additional funds needed to supplement the security deposit and available assets of the impaired employer and advise the Association of the amount the Association will need to assess each certified self-insurer to cover the estimated liabilities once the impaired employer's security account has been expended.

History

Source Note: The provisions of this §114.14 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.15 Revocation or Suspension of Certificate of Authority to Self-Insure

(a) The commissioner may revoke the certificate of a certified self-insurer who fails to comply with requirements or conditions established by Chapter 407 of the Texas Labor Code or any rule within Chapter 114 of this title (regarding Self-Insurance), including:

(1) failure to maintain financial strength;

(2) failure to implement and maintain an effective safety program;

(3) failure to maintain acceptable claim services;

(4) failure to obtain and maintain the required security deposit;

(5) failure to obtain and maintain excess insurance as required by the commissioner;

(6) failure to file any required information under §114.12 of this title (relating to Required Reporting);

(7) unreasonable refusal to make information available as required under §114.11 of this title (relating to Audit Program);

(8) failure to provide notice as required in §114.13 of this title (relating to Required Notices to the Division); or

(9) failure to comply with any provision of the Texas Workers' Compensation Act or with any division rule.

(b) The commissioner may suspend or revoke the certificate of a certified self-insurer due to the certified self-insurer's failure to pay an assessment as required by Texas Labor Code §407.124(b) and §407.125.

(c) A certified self-insurer whose certificate has been revoked, suspended, withdrawn, or denied must file an annual report, in the form and manner prescribed by the commissioner.

(d) Pursuant to Texas Labor Code §§407.046, 407.047, and 407.082, the division shall continue to audit the claims of any certified self-insurer whose certificate has been revoked, suspended, withdrawn, or denied.

(e) Prior to revoking a certificate, the commissioner shall refer the matter to the State Office of Administrative Hearings, which shall hold a hearing to determine if the certificate should be revoked.

History

Source Note: The provisions of this §114.15 adopted to be effective January 1, 1993, 17 TexReg 7896; amended to be effective December 4, 1995, 20 TexReg 9698; amended to be effective May 9, 2004, 29 TexReg 4186; amended to be effective January 6, 2019, 44 TexReg 99.

28 Tex. Admin. Code § 114.16 Withdrawal from Self-Insurance

(a) Insuring agreements under Labor Code §407.045(a-1) filed for the commissioner's approval as a part of an adequate program to withdraw from self-insurance must meet the following criteria:

(1) The form of an insuring agreement must be that of a standard workers' compensation policy providing statutory limits with an approved company specific endorsement under Texas Insurance Code §2052.002(b) providing coverage for all open, reopened, and incurred but not reported claims against the self-insured employer for the entire period of time it operated as a certified self-insurer.

(2) The insurance policy must be issued by an insurance company as defined by Texas Labor Code §401.011(28) that has not been determined to be in hazardous financial condition by the commissioner of insurance pursuant to Chapter 8 of this title (relating to Hazardous Condition).

(3) The policy period must be retrospective providing coverage for the entire period of time the employer operated as a certified self-insurer.

(4) The policy as endorsed must be noncancelable by either the insurance company or the certified self-insured employer for any reason.

(5) The insurance company issuing an insuring agreement that covers all the workers' compensation liabilities of a certified self-insurer becomes the workers' compensation insurance carrier for the liabilities covered for all purposes of the Texas Workers' Compensation Act and division rules.

(b) Withdrawals from self-insurance must comply with all applicable statutes and all applicable rules promulgated by the commissioner of insurance and the commissioner of workers' compensation.

(c) Notwithstanding the security deposit requirements in §114.4 of this title (relating to Security Deposit Requirements), the commissioner may review and approve modifications to previously approved withdrawals from self-insurance, including modifications to security deposit requirements.

(d) The commissioner retains discretionary authority to approve, disapprove, or require modification of any proposed program for withdrawal from self-insurance presented by a certified self-insurer.

History

Source Note: The provisions of this §114.16 adopted to be effective January 6, 2019, 44 TexReg 99.

Chapter 116 GENERAL PROVISIONS--SUBSEQUENT INJURY FUND

28 Tex. Admin. Code § 116.11 Request for Reimbursement from the Subsequent Injury Fund

(a) An insurance carrier may request:

(1) reimbursement from the Subsequent Injury Fund (SIF) under Labor Code §403.006(b)(2) for an overpayment of income, death, or medical benefits when the insurance carrier has made an unrecoupable overpayment pursuant to the decision of an administrative law judge, the Appeals Panel, or an interlocutory order, and that decision or order is reversed or modified by final arbitration, order, or decision of the commissioner, State Office of Administrative Hearings, or a court of last resort;

(2) reimbursement from the SIF under Labor Code §403.007(d) for death benefits paid to the SIF before a legal beneficiary was determined to be entitled to receive death benefits;

(3) for a compensable injury that occurs on or after July 1, 2002, reimbursement from the SIF for the amount of income benefits paid to an injured employee based on multiple employment and paid under Labor Code §408.042;

(4) for a compensable injury that occurs on or after September 1, 2007, reimbursement from the SIF for the amount of income, death benefits, or a combination paid to an injured employee or a legal beneficiary based on multiple employment and paid under Labor Code §408.042;

(5) reimbursement from the SIF, under Labor Code §408.0041(f) and (f-1), for an overpayment of benefits made by the insurance carrier based on the opinion of the designated doctor if that opinion is reversed or modified by a final arbitration award or a final order or decision of the commissioner or a court; or

(6) reimbursement from the SIF made in accordance with rules adopted by the commissioner under Labor Code §413.0141. For purposes of this subsection only, an injury is determined not to be compensable following:

(A) The final decision of the commissioner or the judgment of the court of last resort; or

(B) A claimant's failure to respond within one year of a timely dispute of compensability filed by an insurance carrier. In this instance only, the effective date of the determination of noncompensability is one year from the date the insurance carrier filed the dispute with the division.

(i) A determination under this paragraph does not constitute final adjudication. It does not preclude a party from pursuing their claim through the division's dispute resolution process, and it does not permit a health care provider to pursue a private claim against the claimant.

(ii) If the claim is later determined to be compensable, the insurance carrier must reimburse the SIF for any initial pharmaceutical payment that the SIF previously reimbursed to the insurance carrier. The insurance carrier's reimbursement of the SIF must be paid within the timeframe the insurance carrier has to comply with the agreement, decision and order, or other judgment that found the claim to be compensable.

(b) The amount of reimbursement the insurance carrier may be entitled to is equal to the amount of unrecoupable overpayments paid and does not include any amounts the insurance carrier overpaid voluntarily or as a result of its own errors. An unrecoupable overpayment of income or death benefits for the purpose of reimbursement from the SIF only includes those benefits that were overpaid by the insurance carrier pursuant to an interlocutory order, a designated doctor's opinion, or a decision, which were finally determined to be not owed and which, in the case of an overpayment of income or death benefits to the injured employee or legal beneficiary, were not recoverable or convertible from other income or death benefits.

(c) To request reimbursement under subsection (a)(1) of this section for insurance carrier claims of benefit overpayments made under an interlocutory order or decision of the commissioner that is later reversed or modified by final arbitration, order, decision of the commissioner, the State Office of Administrative Hearings, or court of last resort, an insurance carrier must:

(1) submit the request electronically in the form and manner prescribed by the division;

(2) provide a claim-specific summary of the reason the insurance carrier is seeking reimbursement and the total amount of reimbursement requested, including how it was calculated;

(3) provide a detailed payment record showing the dates and amounts of the payments, payees, type of benefits and periods of benefits paid, all plain language notices (PLNs) about the payment of benefits, all certifications of maximum medical improvement and assignments of impairment rating, and documentation that shows the overpayment was unrecoupable as described in subsection (b) of this section, if applicable;

(4) provide the name, address, and federal employer identification number of the payee (insurance carrier) for any reimbursement that may be due;

(5) provide copies of all relevant orders and decisions (benefit review conference reports, interlocutory orders, contested case hearing decisions and orders, Appeals Panel decisions, and court orders) relating to the requested reimbursement and show which document is the final decision on the matter;

(6) provide copies of all relevant reports and DWC forms the employer filed with the insurance carrier; and

(7) provide copies of all medical bills, preauthorization request documents, relevant independent review organization (IRO) decisions, medical fee dispute decisions, contested case hearing decisions and orders, Appeals Panel decisions, and court orders on medical disputes associated with the overpayment, if the request is based on an overpayment of medical benefits.

(d) To request reimbursement under subsection (a)(2) of this section for reimbursement of death benefits paid to the SIF before a legal beneficiary is determined to be entitled to receive death benefits, an insurance carrier must:

(1) submit the request electronically in the form and manner prescribed by the division;

(2) provide a claim-specific summary of the reason the insurance carrier is seeking reimbursement and the total amount of reimbursement requested, including how it was calculated;

(3) provide a detailed payment record showing the dates and amounts of payments, payees, and periods of benefits paid;

(4) provide the name, address, and federal employer identification number of the payee (insurance carrier) for any reimbursement that may be due;

(5) provide the documentation the legal beneficiary submitted with the claim for death benefits under §122.100 of this title (relating to Claim for Death Benefits); and

(6) provide the final award of the commissioner or the final judgment of a court of competent jurisdiction determining that the legal beneficiary is entitled to the death benefits.

(e) To request reimbursement under subsections (a)(3) or (4) of this section regarding multiple employment, the requester must submit the request on an annual basis for the payments made during the same or previous fiscal year. The fiscal year begins each September 1 and ends on August 31 of the next calendar year. For example, insurance carrier payments made during the fiscal year from September 1, 2009, through August 31, 2010, must be submitted by August 31, 2011. Any claims for insurance carrier payments related to multiple employment that are not submitted within the required timeframe will not be reviewed for reimbursement. To request reimbursement under subsections (a)(3) or (4) of this section, an insurance carrier must:

(1) submit the request electronically in the form and manner prescribed by the division;

(2) provide a claim-specific summary of the reason the insurance carrier is seeking reimbursement and the total amount of reimbursement requested, including how it was calculated;

(3) provide a detailed payment record showing the dates and amounts of payments, payees, type of benefits and periods of benefits paid, all PLNs about the payment of benefits, and documentation that shows the overpayment was unrecoupable as described in subsection (b) of this section, if applicable;

(4) provide the name, address, and federal employer identification number of the payee (insurance carrier) for any reimbursement that may be due;

(5) provide information documenting the injured employee's average weekly wage amounts paid from all nonclaim employment held at the time of the work-related injury under §122.5 of this title (relating to Employee's Multiple Employment Wage Statement); and

(6) provide information documenting the injured employee's average weekly wage amounts paid based on employment with the claim employer.

(f) To request reimbursement under subsection (a)(5) of this section, for insurance carrier claims of benefit overpayments made pursuant to a designated doctor's opinion that is later reversed or modified by a final arbitration award or a final order or decision of the commissioner or a court, an insurance carrier must:

(1) submit the request electronically in the form and manner prescribed by the division;

(2) provide a claim-specific summary of the reason the insurance carrier is seeking reimbursement and the total amount of reimbursement requested, including how it was calculated;

(3) provide a detailed payment record showing the dates and amounts of payments, payees, type of benefits and periods of benefits paid, PLNs about the payment of benefits, and all certifications of maximum medical improvement and assignments of impairment rating;

(4) provide the name, address, and federal employer identification number of the payee (insurance carrier) for any reimbursement that may be due;

(5) provide copies of all relevant designated doctors' opinions (including responses to letters of clarification) and orders and decisions (IRO decisions, interlocutory orders, contested case hearing decisions and orders, arbitration awards, Appeals Panel decisions, and court orders) relating to the designated doctor's opinion and the payment made pursuant to the designated doctor's opinion for which reimbursement is being requested, and indicate which document is the final decision on the matter;

(6) provide copies of all relevant reports and DWC forms the employer filed with the insurance carrier; and

(7) provide copies of all medical bills and preauthorization request documents associated with an overpayment of medical benefits.

(g) To request reimbursement under subsection (a)(6) of this section regarding initial pharmaceutical coverage, a requester must submit the request in the same or following fiscal year after a determination that the injury is not compensable. The fiscal year begins each September 1 and ends on August 31 of the next calendar year. For example, if an injury is determined to be not compensable during the fiscal year from September 1, 2009, through August 31, 2010, the request for reimbursement under Labor Code §413.0141 must be submitted by August 31, 2011. Any claims for insurance carrier payments related to initial pharmaceutical coverage that are not submitted within the required timeframe will not be reviewed for reimbursement. An insurance carrier must:

(1) submit the request electronically in the form and manner prescribed by the division;

(2) provide a claim-specific summary of the reason the insurance carrier is seeking reimbursement and the total amount of reimbursement requested;

(3) provide a detailed payment record showing the dates of payments, including documentation on dates of payment of initial pharmaceutical coverage (i.e., during the first seven days following the date of injury), payment amounts, and payees;

(4) provide the name, address, and federal employer identification number of the payee (insurance carrier) for any reimbursement that may be due;

(5) provide documentation that the pharmaceutical services were provided during the first seven days following the date of injury, not counting the actual date the injury occurred, and identify the prescribed pharmaceutical services; and

(6) provide documentation of:

(A) the final resolution of any dispute either from the commissioner or court of last resort that determines the injury is not compensable; or

(B) a claimant's failure to respond in accordance with subsection (a)(6)(B) of this section.

(h) The prescribed forms under this section are on the division's website at www.tdi.texas.gov/wc/index.html. An insurance carrier seeking reimbursement from the SIF must timely provide to the SIF administrator by electronic transmission, as that term is used in §102.5(h) of this title (relating to General Rules for Written Communications to and from the Commission), all forms and documentation reasonably required by the SIF administrator to determine entitlement to reimbursement or payment from the SIF and the amount of reimbursement to which the insurance carrier is entitled. The insurance carrier must also provide notice to the SIF of any relevant pending dispute, litigation, or other information that may affect the request for reimbursement.

History

Source Note: The provisions of this §116.11 adopted to be effective February 11, 1992, 17 TexReg 689; amended to be effective March 13, 2000, 25 TexReg 2090; amended to be effective August 15, 2002, 27 TexReg 7123; amended to be effective January 7, 2010, 35 TexReg 100; amended to be effective January 7, 2019, 44 TexReg 102; amended to be effective February 11, 2021, 46 TexReg 925.

28 Tex. Admin. Code § 116.12 Subsequent Injury Fund Payment/Reimbursement Schedule

(a) Claims against the Subsequent Injury Fund (SIF) shall be paid in the following priority:

(1) claims by insurance carriers for reimbursement made pursuant to Labor Code §403.007 and §132.10(g) of this title (relating to Payment of Death Benefits to the Subsequent Injury Fund);

(2) claims by injured employees for lifetime benefits, as provided by Labor Code §408.162;

(3) claims by insurance carriers for reimbursement, made pursuant to Labor Code §§408.0041, 410.209, and 413.055 and §116.11 of this title (relating to Request for Reimbursement from the Subsequent Injury Fund); and

(4) claims by insurance carriers for reimbursement made pursuant to Labor Code §408.042(g) relating to multiple employment and those in accordance with division rule(s) adopted pursuant to Labor Code §413.0141.

(b) The SIF uses the fiscal year September 1 through August 31.

(c) Claims described in subsection (a) of this section should be reviewed and, if appropriate, paid in the fiscal quarter following the quarter in which the request was submitted and no later than one year following the submission.

(d) In accordance with Labor Code §403.006(d), if the commissioner determines that partial payments of the claims described in subsection (a)(4) of this section are necessary, partial payments shall be calculated in the following manner:

(1) The total amount of completed eligible requests for reimbursement submitted under subsection (a)(4) of this section that are received during the previous fiscal year will be used to establish a baseline amount.

(2) The baseline amount will be divided by the total amount of SIF funding available as determined in accordance with the Labor Code.

(3) The resulting fraction will be equally applied to all claims submitted under subsection (a)(4) of this section to determine the partial reimbursement amount.

(4) If reimbursement requests are paid with partial payments, no further future recovery is available from the SIF for the non-reimbursed portion of that particular request.

(e) If reimbursement requests are paid with partial payments, the SIF administrator shall, no later than October 30 of the following fiscal year, enter appropriate orders for claims described in subsection (a)(4) of this section. The order shall specify the amount the SIF shall pay to the insurance carrier.

(f) The SIF administrator will refrain from acting on an insurance carrier's request for reimbursement from the SIF until final resolution of all disputes affecting the request for reimbursement.

History

Source Note: The provisions of this §116.12 adopted to be effective February 11, 1992, 17 TexReg 689; amended to be effective March 13, 2000, 25 TexReg 2090; amended to be effective August 15, 2002, 27 TexReg 7123; amended to be effective January 7, 2010, 35 TexReg 100.

Chapter 120 COMPENSATION PROCEDURE--EMPLOYERS

28 Tex. Admin. Code § 120.1 Employer's Record of Injuries

(a) An employer shall keep a record of all injuries and fatal injuries to employees as reported to an employer, or otherwise made known to an employer. The record shall include:

(1) the name, address, date of birth, sex, wage, length of service, social security number, and occupation of the employee;

(2) the reported cause and nature of the injury, the part of the body affected, and a description of any equipment involved;

(3) the date, time, and location where the injury occurred;

(4) the name of the employee's immediate supervisor;

(5) the names of any witnesses (if known);

(6) the name and address of the treating health care provider, if known; and

(7) any voluntary benefits paid by the employer under the Texas Workers' Compensation Act (Act), §4.06.

(b) These records shall be open to inspection by the commission, upon at least five working days notice to the employer, at a reasonable time and place.

(c) The employer shall retain a record of an injury until the expiration of five years from the last day of the year in which the injury occurred or the period of time required by Occupational Safety and Health Administration standards and regulations, whichever is greater.

(d) An employer who does not maintain a record, or who refuses to make the record available to the commission, may be assessed an administrative penalty not to exceed $500.

History

Source Note: The provisions of this §120.1 adopted to be effective January 11, 1991, 16 TexReg 115.

28 Tex. Admin. Code § 120.2 Employer's First Report of Injury and Notice of Injured Employee Rights and Responsibilities

(a) The employer shall report to the employer's insurance carrier each death, each occupational disease of which the employer has received notice of injury or has knowledge, and each injury that results in more than one day's absence from work for the injured employee. As used in this section, the term "knowledge" includes receipt of written or oral information regarding diagnosis of an occupational disease, or the diagnosis of an occupational disease through direct examination or testing by a doctor employed by the employer.

(b) The Division shall prescribe the form, format, and manner of the employer's first report of injury (report). The report shall contain:

(1) the information required by §120.1(a) of this title (relating to Employer's Record of Injuries);

(2) any additional information prescribed by the Division in accordance with the Labor Code §402.00128(b)(10); and

(3) the information necessary for an insurance carrier to electronically transmit a first report of injury to the Division.

(c) The report shall be filed with the insurance carrier not later than the eighth day after having received notice of or having knowledge of an occupational disease or death, or not later than the eighth day after the employee's absence from work for more than one day due to a work-related injury. For purposes of this section, a report is filed when personally delivered, mailed, reported via tele-claims, electronically submitted, or sent via facsimile.

(d) The employer shall provide a written copy of the report and a written copy of the Notice of Injured Employee Rights and Responsibilities in the Texas Workers' Compensation System (Notice of Rights and Responsibilities) adopted by the Public Counsel of the Office of Injured Employee Counsel (Public Counsel) to the injured employee by personal delivery, mail, electronic submission or facsimile. The Notice of Rights and Responsibilities shall be in English and Spanish, or in English and any other language common to the employee. The written report may be the report specified in subsection (b) of this section, or at a minimum shall contain the information listed in §120.1(a) of this title.

(e) The Public Counsel must adopt the Notice of Rights and Responsibilities after consultation with the commissioner of workers' compensation. Until the Public Counsel adopts any new notice in accordance with Labor Code §404.109, the notice previously adopted under this section will remain in effect. A copy of the Notice of Rights and Responsibilities adopted by the Public Counsel will be distributed through or provided at:

(1) the department's website at www.tdi.texas.gov;

(2) the Office of Injured Employee Counsel's website at www.oiec.texas.gov;

(3) The Texas Department of Insurance, Division of Workers' Compensation, 1601 Congress Avenue, Austin, Texas, 78701 or any office of the Texas Department of Insurance, Division of Workers' Compensation; or

(4) The Office of Injured Employee Counsel, 1601 Congress Avenue, Austin, Texas, 78701 or any office of the Office of Injured Employee Counsel.

(f) The employer shall maintain a record of the date the copy of the report of injury and the date the Notice of Rights and Responsibilities were provided to the employee. The employer shall also maintain a record of the date the report of injury is filed with the insurance carrier.

(g) If the insurance carrier has not received the report, the employer has the burden of proving that the report was filed within the required time frame. If the carrier receives the report by mail, it will be presumed that the report was mailed four days prior to the date received by the carrier. The employer has the burden of proving that good cause exists if the employer failed to timely file or provide the report.

(h) A party who fails to comply with this section commits an administrative violation.

History

Source Note: The provisions of this §120.2 adopted to be effective January 11, 1991, 16 TexReg 115; amended to be effective January 1, 1993, 17 TexReg 8295; amended to be effective December 4, 1995, 20 TexReg 9698; amended to be effective October 14, 2007, 32 TexReg 7065; amended to be effective March 22, 2010, 35 TexReg 2188; amended to be effective March 26, 2025, 50 TexReg 2076.

28 Tex. Admin. Code § 120.3 Employer's Supplemental Report of Injury

(a) As used in this section, the term "employer" means the employer for whom the injured employee (employee) was working when injured and the filing requirements apply during the time the employee is entitled to temporary income benefits. The employer's duty to file reports required by this section continues until the employee reaches maximum medical improvement (MMI) or is no longer employed by the employer and the employer has made the report required by subsection (b) of this section. The employer may contact the insurance carrier (carrier) for information regarding the employee's MMI status.

(b) As provided in §129.4 of this title (relating to Adjustment of Temporary Income Benefit Amount), the employer shall file the Supplemental Report of Injury, in the form, format and manner prescribed by the Commission. The report shall be filed with the employer's carrier and provided to the employee within ten days after the end of each pay period in which the employee has a change in earnings as a result of the injury or within ten days after the employee resigns or is terminated. The requirement to report a change of earnings under this subsection includes reporting all post-injury earnings as that term is used in Chapter 129 of this title (relating to Temporary Income Benefits).

(c) For injuries requiring an Employer's First Report of Injury, unless the information required in this subsection is provided on the Employer's First Report of Injury, the employer shall file the Supplemental Report of Injury with the employer's carrier and provide a copy to the employee within three days after:

(1) the employee begins to lose time from work as a result of the injury;

(2) the employee returns to work; or

(3) the employee, after returning to work, experiences an additional day(s) of disability as a result of the injury.

(d) The employer shall file the supplemental report of injury with the carrier by personal delivery, telephone, facsimile or electronic transmission. The employer shall provide a copy of the report to the employee by facsimile or electronic transmission if the employee has identified a personal facsimile number or a personal email address to be used and the employer has the means of sending such a transmission. Otherwise the report shall be provided by personal delivery or sent by mail.

(e) The employer shall maintain a record of the date the Supplemental Report of Injury is filed with the carrier and provided to the employee. If a report required by this section has not been received by the required recipient, the employer has the burden of proving that the report was filed within the required time frame. The employer has the burden of proving that good cause exists if the employer failed to file the report.

History

Source Note: The provisions of this §120.3 adopted to be effective January 1, 1993, 17 TexReg 8296; amended to be effective December 4, 1995, 20 TexReg 9698; amended to be effective December 26, 1999, 24 TexReg 11394.

28 Tex. Admin. Code § 120.4 Employer's Wage Statement

(a) The employer is required to timely file a complete wage statement in the form and manner prescribed by the commission. As used in this section, the term "filed" means "received."

(1) The wage statement shall be filed with the carrier, the claimant, and the claimant's representative (if any) within 30 days of the earliest of:

(A) the date the employer is notified that the employee is entitled to income benefits;

(B) the date of the employee's death as a result of a compensable injury.

(2) A subsequent wage statement shall be filed with the carrier, claimant, and the claimant's representative (if any) within seven days of a change in any wage information provided on the previous wage statement (such as because the employer has discontinued providing a nonpecuniary wage that was originally continued after the injury).

(3) The wage statement shall be filed with the commission within seven days of receiving a request from the commission.

(b) The employer shall ensure timely delivery of the written wage statement, however, if agreed upon by the employer and the carrier, the wage statement filed with the carrier may be filed orally. The carrier may also agree to provide the wage statement to the claimant and the claimant's representative, if any. However, the employer remains responsible for ensuring timely delivery of the wage statement and the employer has the burden of proving that the wage statement was timely filed. Therefore, employers should file the wage statement by verifiable means and maintain a record of the:

(1) information provided;

(2) date filed; and

(3) means of filing with each recipient required to receive the report.

(1) the employee's name, address, and social security number;

(2) the date of the employer's hire of the employee;

(3) the date of injury;

(4) the employer's name, address, and federal tax identification number;

(5) an identification of the employment status (e.g. if the employee works full-time, part-time, etc.);

(6) the name of the person submitting the report;

(7) the wage information required by subsection (d) of this section; and

(8) a certification that the wage information provided includes all wage information required by subsection (d) of this section and that the information is complete and accurate.

(d) The employer shall provide wage information in accordance with this subsection.

(1) Employers other than school districts shall report the employee's wage, as defined in §128.1 of this title (relating to Average Weekly Wage: General Provisions), earned by the employee during the 13 weeks immediately preceding the date of injury and the number of hours the employee worked to earn the wages being reported.

(2) School district employers shall report the wages that would be deducted from the employee's salary if the employee were absent from work for one week and did not have personal leave available to compensate for the wages lost that week.

(A) For employees employed through a written contract, the employer shall report the full value of the contract that would be paid (including any stipend the employee was earning or scheduled to receive) if the employee were to fully complete the terms of the contract and:

(i) the number of days that the employee was required to work under that contract; or

(ii) the number of months that the employee was required to work under that contract (whichever is applicable).

(B) For employees who are NOT employed through a written contract, the employer shall report the pecuniary wages earned by the employee during the 13 weeks immediately preceding the date of injury and the number of hours the employee worked to earn the wages being reported.

(C) For all employees, the employer shall report the pecuniary wages earned by the employee in the 12 months immediately preceding the injury.

(3) This subsection applies if the employer is required to report 13 weeks of wage information under subsection (d)(1) or (d)(2)(B) of this section (i.e. it does not apply if the employee was an employee of a school district employed through a written contract).

(A) If the employee is paid on a monthly or a semi-monthly basis, the employer may provide the wages earned in the three months immediately preceding the injury; if the employee is paid on a biweekly basis, the employer may provide the wages earned in the 14 weeks immediately preceding the injury; otherwise the employer shall provide the wages earned in the 13 weeks immediately preceding the injury.

(B) If the employee was not employed for 13 continuous weeks before the date of injury and the employee was not employed by a school district through a written contract:

(i) the employer shall identify a similar employee performing similar services, as those terms are defined in §128.3 of this title (relating to Average Weekly Wage Calculation For Full-Time Employees, and For Temporary Income Benefits For All Employees), and list the wages of that similar employee; however if

(ii) the employer does not have a similar employee who has been employed for 13 continuous weeks prior to the injured employee's date of injury, the employer shall provide the wages earned by the employee during the period the employee was employed.

History

Source Note: The provisions of this §120.4 adopted to be effective May 16, 2002, 27 TexReg 4027.

Chapter 122 COMPENSATION PROCEDURE--CLAIMANTS

Subchapter A CLAIMS PROCEDURE FOR INJURED EMPLOYEES

28 Tex. Admin. Code § 122.1 Notice to Employer of Injury or Occupational Disease

(a) Except as provided in subsection (b) of this section, an injured employee, or a person acting on that employee's behalf, shall notify an employer of an injury not later than the 30th day after the date on which the injury occurs. The notice of injury should include the following information:

(1) the name, address, and telephone number (if any) of the injured employee;

(2) the date, time, and place the injury occurred;

(3) a description of the circumstances and the nature of the injury;

(4) the names of any witnesses (if known);

(5) the name and location of the health provider that has treated the employee for the injury; and

(6) the name of the person (if any) acting on behalf of the injured employee.

(b) An employee whose injury results from an occupational disease, or a person acting on that employee's behalf, must give notice as required in subsection (a) of this section not later than the 30th day after the date on which the employee knew or should have known that the disease may be related to the employment. This notice must be given to the employer for whom the employee worked on the date of the last injurious exposure to the hazards of the disease.

(c) Any notice to the employer may be given to any employee of the employer who holds a supervisory or management position.

(d) Failure to notify the employer shall relieve the employer and the employer's insurance carrier from liability under the Texas Workers' Compensation Act unless:

(1) the employer, or person eligible to receive notice under subsection (c) of this section, or the insurance carrier, had actual knowledge of the injury;

(2) good cause exists for failure to give notice in a timely manner; or

(3) the employer or insurance carrier does not contest the claim.

History

Source Note: The provisions of this §122.1 adopted to be effective January 28, 1991, 16 TexReg 228.

28 Tex. Admin. Code § 122.2 Injured Employee's Claim for Compensation

(a) An injured employee, or a person acting on the injured employee's behalf, shall file with the commission a written claim for compensation within one year after the date of the injury's occurrence, except as provided in subsection (b) of this section.

(b) An employee whose injury results from an occupational disease, or a person acting on that employee's behalf, shall file with the commission a written claim for compensation within one year after the date the employee knew or should have known that the disease was related to the employment.

(c) The claim should be submitted to the commission either on paper or via electronic transmission, in the form, format, and manner prescribed by the commission, and should include the following:

(1) the name, address, telephone number (if any), occupation, wage, and social security number of the injured employee;

(2) the length of time the employee worked for the employer prior to the date of injury;

(3) the date, time, and location the injury occurred (or the date the employee knew or should have known that the occupational disease was related to the employment);

(4) a description of the circumstances and nature of the injury;

(5) the names of witnesses (if any);

(6) the name and location of the employer at the time of the injury (or, if the injury claimed is an occupational disease, the name and location of the employer at the time of the last injurious exposure to the hazards of the occupational disease);

(7) the name of the employee's immediate supervisor;

(8) the name and address of at least one health care provider that has treated the employee for the injury; and

(9) the identity of the person (if any) acting on behalf of the injured employee.

(d) Failure to file a claim for compensation with the commission no later than one year from the incident shall relieve the employer and the employer's insurance carrier from liability under the Act unless:

(1) good cause exists for failure to file a claim in a timely manner; or

(2) the employer or insurance carrier does not contest the claim.

History

Source Note: The provisions of this §122.2 adopted to be effective January 25, 1991, 16 TexReg 173; amended to be effective September 12, 2004, 29 TexReg 8560.

28 Tex. Admin. Code § 122.3 Exposure to Communicable Diseases: Reporting and Testing Requirements for Emergency Responders

(a) This section applies to all law enforcement officers, fire fighters, emergency medical service employees, paramedics, and correctional officers who are either state employees or employees covered under workers' compensation insurance (to include those who are providing services as a volunteer and are covered by workers' compensation insurance).

(b) For purposes of this section "reportable disease" means communicable diseases and health conditions required to be reported to the Texas Department of Health by the Texas Health and Safety Code, §81.041, as amended, including: acquired immune deficiency syndrome (AIDS); amebiasis; anthrax; botulism--adult and infant; brucellosis; campylobacteriosis; chancroid; chickenpox; Chlamydia trachomatis infection; cholera; cryptosporidiosis; dengue; diphtheria; ehrlichiosis; encephalitis; Escherichia coli 0157:H7; gonorrhea; Hansen's disease (leprosy); Heamophilus influenzae type b infection, invasive; hantavirus infection; hemolytic uremic syndrome (HUS); hepatitis, acute viral; human immunodeficiency virus (HIV) infection; legionellosis; listeriosis; Lyme disease; malaria; measles (Rubeola); meningitis; meningococcal infection, invasive; mumps; pertussis; plague; poliomyelitis, acute paralytic; rabies in man; relapsing fever; Rocky Mountain spotted fever; rubella (including congenital); salmonellosis, including typhoid fever; shigellosis; streptococcal disease, invasive Group A; syphilis; tetanus; trichinosis; tuberculosis; tuberculosis infection in persons less than 15 years of age; typhus; Vibrio infection; viral hemorrhagic fevers; and yellow fever. This list of diseases may change from time to time. To determine the most current list of reportable diseases and exposure criteria refer to Texas Department of Health rules, 25 TAC Chapter 97, Communicable Diseases.

(c) An employee listed in subsection (a) of this section will not be entitled to workers' compensation benefits for a reportable disease unless the employee:

(1) had a test performed within 10 days of an exposure to the reportable disease that indicated the absence of the reportable disease (Exposure criteria and testing protocol must conform to Texas Department of Health requirements. This rule does not prohibit a decision-maker's consideration of other factors.); and

(2) provided the employer with a sworn affidavit of the date and circumstances of the exposure and a copy of the results of the test required by paragraph (1) of this subsection.

(d) The employer's insurance carrier, including state and political subdivision employers, shall be liable for the costs of test(s) required by subsection (c) of this section, regardless of the results of the test(s), in addition to any other benefits required to be paid by the Texas Workers' Compensation Act or administrative rules. The cost of a state employee's testing, regardless of the results of the test, shall be paid from funds appropriated for payment of workers' compensation benefits to state employees.

(e) Section 110.108 of this title (relating to Employer Notice Regarding Work-Related Exposure to Communicable Diseases/HIV: Posting Requirements; Payment for Tests) requires each employer with employees covered by this section to post the notice contained in subsection (d) of that section in its workplace to inform employees of the requirements of this section.

(f) Emergency responders and employers of emergency responders should also refer to the Texas Health and Safety Code, Chapter 81 and Texas Department of Health rules, 25 TAC Chapter 97, Communicable Diseases, to ensure compliance with all applicable requirements.

History

Source Note: The provisions of this §122.3 adopted to be effective October 15, 1997, 22 TexReg 9682.

28 Tex. Admin. Code § 122.4 State Employees Exposed to Human Immunodeficiency Virus (HIV): Reporting and Testing Requirements

(a) This section applies to all employees of the state of Texas.

(b) A state employee shall not be entitled to workers' compensation benefits for a work-related exposure to human immunodeficiency virus (HIV) infection unless the employee:

(1) had a test performed within 10 days of an exposure to HIV that indicated the absence of HIV infection (Exposure criteria and testing protocol must conform to Texas Department of Health requirements.); and

(2) provided the employer with a written statement of the date and circumstances of the exposure to HIV and a copy of the results of the test required by paragraph (1) of this subsection.

(c) The cost of a state employee's test(s) required by subsection (b) of this section, regardless of the results of the test(s), shall be paid from funds appropriated for payment of workers' compensation benefits to state employees, in addition to any other benefits required to be paid by the Texas Workers' Compensation Act or administrative rules.

(d) Section 110.108 of this title (relating to Employer Notice Regarding Work Related Exposure to Communicable Disease/HIV: Posting Requirements; Payment for Tests) requires each state agency to post the notice contained in subsection (d) of that section in its workplace to inform employees of the requirements of this section.

(e) State employers and state employees should also refer to the Texas Health and Safety Code, Chapter 85 and Texas Department of Health rules, 25 TAC Chapter 97, Communicable Diseases, to ensure compliance with all applicable requirements.

History

Source Note: The provisions of this §122.4 adopted to be effective October 15, 1997, 22 TexReg 9682.

28 Tex. Admin. Code § 122.5 Employee's Multiple Employment Wage Statement

(a) Definitions. The following words and terms, when used in this subchapter, will have the following meanings, unless the context clearly indicates otherwise.

(1) Claim Employer -- Employer with whom the claimant filed a claim for workers' compensation benefits and for whom the injured employee (employee) was working at the time of the on-the-job injury.

(2) Non-Claim Employers -- Employers other than the claim employer by whom the employee was employed at the time of the on-the-job injury.

(b) For an injury which occurs on or after July 1, 2002, a claimant may file a Multiple Employment Wage Statement for each employer the employee was working for on the date of injury.

(c) If a claimant who is permitted by subsection (b) of this section chooses to file a Multiple Employment Wage Statement, it is the claimant's responsibility to obtain the required wage information from the Non-Claim Employer(s), providing any necessary corrections to the wage information, and filing the information on the Multiple Employment Wage Statement with the insurance carrier and commission. The carrier is not required to make an adjustment to AWW until the employee provides a complete Multiple Employment Wage Statement as described in subsections (d) and (e) of this section.

(d) The Multiple Employment Wage Statement shall include:

(1) the employee's name, address, and social security number;

(2) the date of the Non-Claim Employer's hire of the employee;

(3) the date of injury;

(4) the Non-Claim Employer's name, address, and federal tax identification number;

(5) the name and phone number of a person at the Non-Claim Employer who can be contacted to verify the wage information (unless the wage information was not provided by a person at the Non-Claim Employer - such as if the wage information came from the Texas Workforce Commission or the employee's pay stubs);

(6) the wage information required by subsection (e) of this section with documentation that supports the wage information being reported; and

(7) a certification that the wage information provided includes all wage information required by subsection (e) of this section and that the information is complete and accurate.

(e) The wage information required to be provided in a Multiple Employment Wage Statement includes the employee's Non-Claim Employer wages, as defined in §128.1 of this title (relating to Average Weekly Wage: General Provisions), earned during the 13 weeks immediately preceding the date of injury and the number of hours the employee worked to earn the wages being reported. The wages are limited to those reportable for federal income tax purposes.

(1) If the employee is paid by the Non-Claim Employer:

(A) on a monthly or a semi-monthly basis, the claimant may provide the wages earned in the three months immediately preceding the injury;

(B) on a biweekly basis, the claimant may provide the wages earned in the 14 weeks immediately preceding the injury;

(C) on other than a monthly, semi-monthly, or biweekly basis, the claimant shall provide the wages earned in the 13 weeks immediately preceding the injury.

(2) If the employee was not employed for 13 continuous weeks before the date of injury:

(A) the claimant shall report the wages of a similar employee performing similar services, as those terms are defined in §128.3 of this title (relating to Average Weekly Wage Calculation For Full-Time Employees, and For Temporary Income Benefits For All Employees); or

(B) if the Non-Claim Employer does not have a similar employee who has been employed for 13 continuous weeks prior to the employee's date of injury (or the claimant is unable to obtain the wage information on a similar employee), the claimant shall provide the wages earned by the employee during the period the employee was employed.

(f) Employees who file Multiple Employment Wage Statements are required to report all changes in employment status and/or earnings at the Non-Claim Employer to the carrier until the employee reaches Maximum Medical Improvement.

(1) The employee shall report all changes in employment status at the Non-Claim Employer including termination or resignation within 7 days of the date the change takes place.

(2) The employee shall report within 7 days of the end of the pay period in which a change in earnings at the Non-Claim Employer related to the compensable injury took place. This would include both reductions and increases in wages as compared to the prior week as long as the difference was caused by the compensable injury such as because the employee's ability to work changed or the employer was more or less able to provide work that met the employee's work restrictions.

History

Source Note: The provisions of this §122.5 adopted to be effective May 16, 2002, 27 TexReg 4032.

Subchapter B CLAIMS PROCEDURE FOR BENEFICIARIES OF INJURED EMPLOYEES

28 Tex. Admin. Code § 122.100 Claim for Death Benefits

(a) Filing. For a legal beneficiary, other than the subsequent injury fund, to receive the benefits available because of the death of an employee that results from a compensable injury, a person must file a written claim for death benefits within one year after the date of the employee's death.

(b) An insurance carrier that receives a claim for death benefits under this section must comply with §124.8 of this title (relating to Receipt, Records, and Notice of Death or Claim for Death Benefits).

(c) Form and information requirements. The claim should be submitted to the division or insurance carrier either on paper or via electronic transmission, in the form, format, and manner prescribed by the division, and should include the following:

(1) the potential beneficiary's name, address, telephone number (if any), Social Security number, and relationship to the deceased employee;

(2) the deceased employee's name, last address, Social Security number (if known), and workers' compensation claim number (if any); and

(3) other information, as follows:

(A) a description of the circumstances and nature of the injury (if known);

(B) the name and location of the employer at the time of the injury;

(D) other known legal beneficiaries.

(d) Required documents. A potential beneficiary must file with the division or insurance carrier a copy of the deceased employee's death certificate and any additional documentation or other evidence that establishes that the potential beneficiary is a legal beneficiary of the deceased employee. The required documents or additional evidence may be filed separately either on paper or by electronic transmission, as defined in §102.5(h) of this title.

(e) One claim per person. Each person must file a separate claim for death benefits, unless the claim expressly includes or is made on behalf of another person.

(f) Deadline. Failure to file a claim for death benefits within one year after the date of the employee's death bars the claim of a legal beneficiary, other than the subsequent injury fund, unless:

(1) that legal beneficiary is a minor or otherwise legally incompetent;

(2) except as provided by paragraph (3) of this subsection, good cause exists for failure to file the claim on time; or

(3) for a legal beneficiary who is an eligible parent as defined by §132.6(e) of this title (relating to Eligibility of Other Surviving Dependents and Eligible Parents To Receive Death Benefits), the parent submits proof satisfactory to the commissioner of a compelling reason for the delay in filing the claim for death benefits.

History

Source Note: The provisions of this §122.100 adopted to be effective January 25, 1991, 16 TexReg 174; amended to be effective September 12, 2004, 29 TexReg 8560; amended to be effective October 12, 2008, 33 TexReg 8393; amended to be effective March 21, 2010, 35 TexReg 2190; amended to be effective December 11, 2023, 48 TexReg 7172.

Chapter 124 INSURANCE CARRIERS: NOTICES, PAYMENTS, AND REPORTING

Subchapter A INSURANCE CARRIERS: REQUIRED NOTICES AND MODES OF PAYMENT

28 Tex. Admin. Code § 124.1 Notice of Injury

(a) Except as provided in subsections (b) and (c) of this section, written notice of injury, as used in the Texas Workers' Compensation Act, §409.021, consists of the insurance carrier's earliest receipt of:

(1) the Employer's First Report of Injury as described in §120.2 of this title (relating to Employer's First Report of Injury);

(2) the notification provided by the Commission under subsection (e) of this section; or

(3) if no Employer's First Report of Injury has been filed, any other communication regardless of source, which fairly informs the carrier of the name of the injured employee, the identity of the employer, the approximate date of the injury and information which asserts the injury is work related.

(b) Written notice of injury for a certified self-insurer is received on the date the qualified claims servicing contractor designated by the self-insurer under Texas Labor Code §407.061(c) receives the notice.

(c) Written notice of injury for a political subdivision that self-insures under Texas Labor Code §504.011, either individually or through an interlocal agreement with other political subdivisions, is received on the date the intergovernmental risk pool or other entity responsible for administering the claim receives the notice.

(d) The carrier shall immediately create a written record on paper or in an electronic format of the earliest notice of injury as defined in subsection (a) of this section that is not received in writing. The date of receipt of a written notice of injury shall be deemed to be the earliest date the carrier receives the information identified in subsections (a)(1), (2), or (3) of this section. Upon request of the Commission, a carrier shall provide an affidavit indicating the receipt or non-receipt of a notice of injury received and the receipt date.

(e) The Commission shall furnish written notification to the carrier when a source other than the carrier reports:

(1) an injury that may cause the employee eight days or more of disability or has resulted in an impairment;

(2) a death; or

(3) an occupational disease.

(f) If a carrier is notified of an injury for which it has not received an Employer's First Report of Injury, from the employer, the carrier shall contact the employer regarding the injury within seven days of notification.

(g) Subsections (b) and (c) of this section apply only to compensable injuries with a date of injury on or after September 1, 2003.

History

Source Note: The provisions of this §124.1 adopted to be effective August 29, 1999, 24 TexReg 6503; amended to be effective March 14, 2004, 29 TexReg 2321.

28 Tex. Admin. Code § 124.2 Insurance Carrier Notification Requirements

(a) An insurance carrier must notify the division and the claimant of actions taken on or events occurring in a claim as required by this title.

(b) The insurance carrier must electronically file, as that term is used in §102.5(e) of this title (concerning General Rules for Written Communications to and from the Division) with the division, according to the requirements in Subchapter B of this title (concerning Insurance Carrier Claim Electronic Data Interchange Reporting to the Division):

(1) the information from the original Employer's First Report of Injury; the insurance carrier's Federal Employer Identification Number (FEIN); and the policy number, policy effective date, and policy expiration date reported under §110.1 of this title (concerning Insurance Carrier Requirements for Notifying the Division of Insurance Coverage) for the employer associated with the claim, not later than the seventh day after the later of:

(A) receipt of a required report where there is lost time from work, an occupational disease, or a fatality; or

(B) notification of lost time if the employer made the Employer's First Report of Injury before the employee experienced absence from work as a result of the injury;

(2) information about an acquired claim no later than the 37th day after the acquiring claim administrator has knowledge of claim-specific information from the previous claim administrator;

(3) any correction of an electronic record accepted with errors, as provided in §102.5(e) of this title (concerning General Rules for Written Communications to and from the Division), within 30 days of the notification from the division detailed in §124.104(b) of this title (concerning Reporting Requirements);

(4) information about a compensable death with no beneficiary no later than the 10th day after determining that an employee whose injury resulted in death had no legal beneficiary; and

(5) a change in an electronic record initiated by the insurance carrier, the coverage information required by paragraph (1) of this subsection if not available when the First Report of Injury was submitted to the division, and any change in a claimant or employer mailing address within seven days of receiving the new address.

(c) The insurance carrier must notify the division and the claimant of its denial of a claim based on noncompensability or lack of coverage in accordance with this section and as otherwise provided by this title.

(d) The insurance carrier must notify the division and the claimant of the following:

(1) first payment of indemnity benefits on a claim within 10 days of making the first payment;

(2) first payment of indemnity benefits on an acquired claim within 10 days of making the first payment;

(3) a change in the net benefit payment amount without a change to the benefit type within 10 days of making the first payment reflecting the change;

(4) a change from one income benefit type to another or to death benefits within 10 days of making the first payment reflecting the change;

(5) resumption of payment of income or death benefits within 10 days of making the first payment;

(6) termination or suspension of income or death benefits within 10 days of making the last payment for the benefits;

(7) employer continuation of salary, as defined in §129.1(1) (concerning Definitions for Temporary Income Benefits) of this title, equal to or exceeding the employee's average weekly wage as defined by this title within:

(A) seven days of receiving the information that salary would be continued in lieu of the insurance carrier initiating temporary income benefits;

(B) ten days of making the last payment of temporary income benefits due to the employer's salary continuation; or

(8) lump sum payment of income or death benefits within 10 days of making the payment; or

(9) refusal to pay accrued income benefits due to dispute of disability.

(e) If an insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians), the insurance carrier must take one of the following actions no later than the 15th day after receiving the notice of injury:

(1) initiate benefits as required by the Texas Workers' Compensation Act and the division's rules;

(2) file a notice of denial as described in this section; or

(3) provide the claimant and the division with notice as required under Labor Code §409.021(a-3) (Notice of Continuing Investigation) for a claim for benefits received on or after June 10, 2019.

(f) When applying subsection (e) of this section and Government Code, Chapter 607, Subchapter B, a "claim for benefits" means the first written notice of injury as provided in §124.1 of this title (concerning Notice of Injury).

(g) The insurance carrier must issue a Notice of Continuing Investigation as a plain language notice in the form and manner prescribed by the division. The notification requirements of this section are not considered complete until a copy of the notice provided to the claimant is received by the division.

(1) A Notice of Continuing Investigation must include the following:

(A) a statement describing all steps taken by the insurance carrier to investigate the disease or illness before the notice was given;

(B) a list of any claim-specific evidence, releases, or documentation the insurance carrier reasonably believes is both relevant and necessary to complete its investigation; and

(2) An insurance carrier must provide a reasonable amount of time for a claimant to respond to the notice.

(3) The notice may not include a request for additional diagnostic testing, mental health records, generic requests (such as "the claimant's medical records"), or requests for records that are not directly related to either the disease or illness or eligibility for application of a statutory presumption.

(4) Notwithstanding the issuance of a Notice of Continuing Investigation, an insurance carrier must continue taking reasonable steps to acquire claim-specific information necessary to complete its investigation of the claim.

(h) Notification to the claimant as required by subsections (c) - (e) of this section requires the insurance carrier to use plain language notices in the form and manner prescribed by the division. These notices must provide a full and complete statement describing the insurance carrier's action and rationale. The statement must contain sufficient claim-specific substantive information to enable the claimant to understand the insurance carrier's position or action taken on the claim. A generic statement that simply states the insurance carrier's position with phrases such as "employee returned to work," "adjusted for light duty," "liability is in question," "compensability in dispute," "under investigation," or other similar phrases with no further description of the factual basis for the action taken does not satisfy the requirements of this section.

(i) In addition to the denial notice requirements in subsection (h), if the insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians), the denial must also include the following:

(1) if the insurance carrier asserts that a statutory presumption does not apply, a statement explaining why and describing the claim-specific information that the insurance carrier reviewed;

(2) alternatively, based on its investigation, if the insurance carrier concludes that a statutory presumption applies, but a notice of denial will be issued, a statement explaining why and describing the claim-specific information reviewed before issuing the notice that supports a reasonable belief that risk factors, accidents, hazards, or other causes not associated with their employment were a substantial factor in bringing about the injured employee's disease or illness, without which the disease or illness would not have occurred; and

(3) if the insurance carrier provided a timely Notice of Continuing Investigation as permitted by law, the denial notice must also include a statement describing whether the claimant provided a timely response to the notice.

(j) Notification to the division as required by subsections (b) - (e) of this section requires the insurance carrier to use electronic filing, as that term is used in §102.5(e) of this title (concerning General Rules for Written Communications to and from the Division) with the division, according to the requirements in Subchapter B of this title (concerning Insurance Carrier Claim Electronic Data Interchange Reporting to the Division).

(1) In addition to the electronic filing requirements of this subsection, when an insurance carrier notifies the division of a denial, Notice of Continuing Investigation, or dispute of disability as required by this section, it must provide the division a written copy of the notice provided to the claimant as described under subsections (g) - (i) and (k) of this section, as applicable.

(2) The notification requirements of this section are not considered completed until the copy of the notice provided to the claimant is received by the division.

(k) Notification to the division and the claimant of a dispute of disability, extent of injury, or eligibility of a claimant to receive death benefits must be made as otherwise prescribed by this title and requires the insurance carrier to use plain language notices in the form and manner prescribed by the division. These notices must provide a full and complete statement describing the insurance carrier's action and its reasons for such action. The statement must contain sufficient claim-specific substantive information to enable the claimant to understand the insurance carrier's position or action taken on the claim. A generic statement that simply states the insurance carrier's position with phrases such as "no medical evidence to support disability," "not part of compensable injury," "liability is in question," "under investigation," "eligibility questioned," or other similar phrases with no further description of the factual basis for the action taken does not satisfy the requirements of this section.

(l) Except as otherwise provided by this title, insurance carriers must not provide notices to the division that explain that:

(1) benefits will be paid as they accrue;

(2) a wage statement has been requested;

(3) temporary income benefits are not due because there is no lost time;

(4) the insurance carrier is disputing some or all medical treatment as not reasonable or necessary;

(5) compensability is not denied, but the insurance carrier disputes the existence of disability (if there are no indications of lost time or disability and the employee is not claiming disability); or

(6) future medical benefits are disputed (notices of which must not be provided to anyone in the system).

(m) Notifications to the claimant and the claimant's representative must be filed by fax or electronic transmission unless the recipient does not have the means to receive such a transmission, in which case, the notifications must be personally delivered or sent by mail.

(n) Each insurance carrier must provide to the division, through its Austin representative in the form and manner prescribed by the division, the contact information for all workers' compensation claim service administration functions performed by the insurance carrier either directly or through third parties.

(1) The contact information for each function must include mailing address, telephone number, fax number, and email address, as appropriate. This contact information may be provided either in the form of a single Uniform Resource Locator (URL) for a web page created and maintained by the insurance carrier that contains the required information or through an online submission to the division. The claim service administration functions requiring contact information to be reported are:

(A) coverage verification (policy issuance and effective dates of the policy);

(B) claim adjustment;

(D) pharmacy billing (if different from medical billing);

(E) preauthorization; and

(F) workers' compensation health care network.

(2) If the web page option is used, the page must contain the date it was last updated and an email address or other contact information a user may report problems or inaccuracies to.

(3) The insurance carrier must update the contact information or URL within 10 working days after any such change is made.

(o) All notices to a claimant required under this section must be stated in plain language and in no less than 12-point font. This subsection applies to notices sent on or after April 1, 2020.

(p) The section is effective July 26, 2023.

History

Source Note: The provisions of this §124.2 adopted to be effective August 29, 1999, 24 TexReg 6503; amended to be effective June 5, 2003, 28 TexReg 4285; amended to be effective January 12, 2020, 45 TexReg 348; amended to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.3 Investigation of an Injury and Notice of Denial or Dispute

(a) Except as provided in subsection (b) of this section, upon receipt of written notice of injury as provided in §124.1 of this title (relating to Notice of Injury) the insurance carrier shall conduct an investigation relating to the compensability of the injury, the insurance carrier's liability for the injury, and the accrual of benefits. If the insurance carrier believes that it is not liable for the injury or that the injury was not compensable, the insurance carrier shall file the notice of denial of a claim (Notice of Denial) in the form and manner required by Labor Code §409.022 (relating to Refusal to Pay Benefits; Notice; Administrative Violation) and §124.2 of this title (concerning Insurance Carrier Reporting and Notification Requirements).

(1) If the insurance carrier does not file a Notice of Denial by the 15th day after receipt of the written notice of injury or does not file a Notice of Continuing Investigation as described under Labor Code §409.021(a-3) (relating to Initiation of Benefits; Insurance Carrier's Refusal; Administrative Violation), the insurance carrier is liable for any benefits that accrue and shall initiate benefits in accordance with this section.

(2) If the insurance carrier files a Notice of Denial after the 15th day but on or before the 60th day after receipt of written notice of the injury:

(A) The insurance carrier is liable for and shall pay all income benefits that had accrued and were payable prior to the date the insurance carrier filed the Notice of Denial and only then is it permitted to suspend payment of benefits; and

(B) The insurance carrier is liable for and shall pay for all medical services, in accordance with the Act and rules, provided prior to the filing of the Notice of Denial.

(3) The insurance carrier shall not file notice with the division that benefits will be paid as and when they accrue with the division.

(4) An insurance carrier's failure to file a Notice of Denial or a Notice of Continuing Investigation by the 15th day after it receives written notice of an injury constitutes the insurance carrier's acceptance of the claim as a compensable injury, subject to the insurance carrier's ability to contest compensability on or before the 60th day after receipt of written notice of the injury. In the event of such a failure, the insurance carrier is liable for and shall pay all income and medical benefits that have accrued or become payable, subject to the insurance carrier's right to contest compensability on or before the 60th day.

(5) The insurance carrier commits an administrative violation if, not later than the 15th day after it receives written notice of the injury, it does not begin to pay benefits as required, file a Notice of Denial of the compensability of a claim, or file a Notice of Continuing Investigation in the form and manner required by §124.2 of this title. The division will send periodic notifications to all insurance carriers regarding the amount of penalties owed and the proper way to submit and document the payments.

(b) Except as provided by subsection (c), the insurance carrier waives the right to contest compensability of or liability for the injury, if it does not contest compensability on or before the 60th day after the date on which the insurance carrier receives written notice of the injury.

(c) If the insurance carrier wants to deny compensability of or liability for the injury after the 60th day after it received written notice of the injury:

(1) the insurance carrier must establish that it is basing its denial on evidence that could not have reasonably been discovered earlier; and

(2) the insurance carrier is liable for and shall pay all benefits that were payable prior to and after filing the Notice of Denial until the division has made a finding that the evidence could not have been reasonably discovered earlier.

(d) If the claim involves the death of an injured employee, investigations, denials of compensability or liability, and disputes of the eligibility of a potential beneficiary to receive death benefits are governed by §132.17 of this title (concerning Denial, Dispute, and Payment of Death Benefits). Notwithstanding §132.17(f)(1) and (2) of this title, the insurance carrier may issue a Notice of Continuing Investigation in accordance with the provisions of §124.2(f) and this section.

(e) Notwithstanding §132.13 of this title (concerning Burial Benefits), if an insurance carrier has issued a Notice of Continuing Investigation in accordance with the provisions of §124.2(f) and this section, the insurance carrier shall either pay or deny a claim for burial benefits within seven days from the date the insurance carrier either initiated benefits or filed a notice of denial in accordance with §124.2(f) of this title.

(f) Labor Code §409.021 and subsection (a) of this section do not apply to disputes of extent of injury. If an insurance carrier receives a medical bill that involves treatment(s) or service(s) that the insurance carrier believes is not related to the compensable injury, the insurance carrier shall file a notice of dispute of extent of injury (notice of dispute). The notice of dispute shall be filed in accordance with §124.2 of this title and be filed not later than the earlier of:

(1) the date the insurance carrier denied the medical bill; or

(2) the due date for the insurance carrier to pay or deny the medical bill as provided in Chapter 133 of this title (concerning General Medical Provisions).

(g) If the insurance carrier receives a written notice of injury for a disease or illness identified by Texas Government Code, Chapter 607, Subchapter B (relating to Diseases or Illnesses Suffered by Firefighters, Peace Officers, and Emergency Medical Technicians), it shall investigate the applicability of the statutory presumption as well as compensability of the injury, liability for the injury, and the accrual of benefits.

(1) A claimant is not required to expressly claim the applicability of a statutory presumption in order for the statutory presumption to apply.

(2) A presumption under Government Code, Chapter 607, Subchapter B, is claimed upon an insurance carrier's receipt of a written notice of injury which identifies:

(A) the injured or deceased employee's occupation as a firefighter, peace officer, or emergency medical technician, and

(B) the injured or deceased employee's disease or illness is a medical condition identified by Subchapter B.

(3) A determination that the statutory presumption does not apply does not relieve the insurance carrier of its continuing obligation to conduct a reasonable investigation relating to the compensability of the injury, liability for the injury, and accrual of benefits.

History

Source Note: The provisions of this §124.3 adopted to be effective March 13, 2000, 25 TexReg 2096; amended to be effective March 14, 2004, 29 TexReg 2322; amended to be effective January 12, 2020, 45 TexReg 348.

28 Tex. Admin. Code § 124.5 Mode of Payment Made by Insurance Carriers

(a) The insurance carrier shall make all medical benefit and burial payments by:

(1) check or other readily negotiable instrument; or

(2) electronic transfer by mutual agreement to an account designated in writing by the payee.

(b) Except as provided by §126.2 of this title (relating to Payment of Benefits to Minors), insurance carriers shall make all payments of income or death benefits by:

(1) check or other readily negotiable instrument to the order of the claimant; or

(2) electronic transfer if required to under subsection (f) of this section or by mutual agreement between the insurance carrier and the claimant including an access card under §124.6 of this title (relating to Electronic Transfer Payments Made Through an Access Card).

(c) An insurance carrier that routinely pays benefits by check or other negotiable instrument to the claimant drawn on an out-of-state financial institution shall accompany each instrument with written information about the insurance carrier's office location and telephone number where the claimant may call, at the insurance carrier's expense, to obtain help with cashing the instrument, if necessary.

(d) A claimant may request that the insurance carrier make benefit payments by electronic transfer to a personal bank account by providing the insurance carrier in writing: the name and routing transit number of the financial institution and the account number and type of account that the claimant wants the benefits electronically transferred to. The insurance carrier shall provide the claimant with a form to fill out the information required by this subsection within seven days of receiving a request for such a form from the claimant.

(e) Subsections (f) - (i) of this section apply to income or death benefit payments due on or after September 1, 2000.

(f) Unless relieved by subsection (g) of this section, the insurance carrier shall make income or death benefit payments by electronic transfer if the claimant:

(1) requests in writing that payment be made by electronic transfer;

(2) provides the information required by subsection (d) of this section; and

(3) is reasonably expected to be entitled to receive income or death benefits for a period of eight weeks or more from the point that paragraphs (1) and (2) of this subsection are satisfied.

(4) This subsection does not apply to electronic transfer payments made through an access card under §124.6 of this title.

(g) An insurance carrier is relieved of the responsibility to make payment of temporary income benefits, impairment income benefits, and supplemental income benefits by electronic transfer if the mode of payment has been switched at the request of the claimant three times after initially changing to electronic payments.

(h) The insurance carrier shall initiate payment by electronic transfer starting with the first income or death benefit payment due on or after the 21st day after the requirements of subsection (f) of this section are met but shall continue to timely make payments by check until the insurance carrier initiates benefit delivery by electronic transfer.

(i) If the claimant has previously been receiving income or death benefit payments by electronic transfer and wants to receive benefits by check, the insurance carrier shall initiate income or death benefit delivery by check starting with the first benefit payment due to the claimant on or after the 7th day after receiving a written request.

(j) Effective date. Unless otherwise specified, this section is effective for income or death benefit payments due on or after June 1, 2015.

History

Source Note: The provisions of this §124.5 adopted to be effective January 11, 1991, 16 TexReg 116; amended to be effective November 28, 1999, 24 TexReg 10333; amended to be effective June 1, 2015, 40 TexReg 332.

28 Tex. Admin. Code § 124.6 Electronic Transfer Payments Made Through an Access Card

(a) Access card. In this chapter, access card means any card or other payment method that may be used by a claimant to initiate an electric fund transfer from an insurance carrier's bank account. The term "access card" does not include stored value cards or prepaid cards that store funds directly on the card and that are not linked to an insurance carrier's bank account.

(b) Mutual agreement. An insurance carrier may pay income or death benefits through an access card to a claimant if there is written mutual agreement signed by the insurance carrier and the claimant. The insurance carrier shall maintain accurate records of the mutual agreement for, at a minimum, 401 weeks from the date of injury. The written mutual agreement shall contain an acknowledgement that the claimant received and agreed to the written disclosure in subsection (f) of this section.

(c) Agent of the insurance carrier. Any person with whom an insurance carrier utilizes or contracts for the purpose of providing service or fulfilling duties under this section is an agent of the insurance carrier under §180.1(3) of this title (relating to Definitions).

(d) Requirements and prohibited fees. An insurance carrier shall:

(1) permit the claimant to withdraw the entire amount of the balance of an access card in one transaction;

(2) not reduce income or death benefits paid to a claimant through an access card for the following fees, surcharges, and adjustments:

(A) overdraft services under which a financial institution pays a transaction (including a check or other item) when the claimant has insufficient or unavailable funds in the account;

(B) ATM withdrawal or a point of sale purchase for more than the card holds and the transaction is denied;

(D) withdrawing money from network ATMs;

(E) withdrawing money from a teller;

(F) customer service calls;

(G) activating the card;

(H) fees for card inactivity;

(I) closing account;

(J) access card replacement through standard mail;

(K) withdrawing the entire payment in one transaction;

(L) point of sale purchases; or

(M) any other fees or charges that are not authorized under subsection (e) of this section.

(e) Permitted fees. The claimant may be charged for the following:

(1) access card replacement through an expedited mail service;

(2) international transaction fees; and

(3) out-of-network ATM fees.

(f) Required disclosure. Insurance carriers shall provide a written disclosure to the claimant contemporaneously with the written mutual agreement under subsection (a) of this section. The written disclosure shall include:

(1) a summary of the claimant's liability for unauthorized electronic fund transfers;

(2) the telephone number and address of the person or office to be notified when the claimant believes that an unauthorized electronic fund transfer has been or may be made;

(3) the type of electronic fund transfers that the claimant may make and any limitations on the frequency of transfers;

(4) any fees imposed for electronic fund transfers or for the right to make transfers including a statement that fees may be imposed by ATM operator that is out-of-network;

(5) fees for expedited card replacement or international transaction fees will be removed from the balance maintained in the bank account linked to the access card;

(6) a summary of the claimant's right to receipts and periodic statements;

(7) all bank locations and network ATMs in the United States where the claimant may access his or her funds at no cost;

(8) a statement informing the claimant that they have a right to receive payments directly into their personal bank account through direct deposit.

(g) Plain language requirement. An insurance carrier shall provide a written disclosure and notice of term or condition changes under this section that:

(1) are printed in not less than 12-point font;

(2) include the full text in English, Spanish, and any other language common to the claimant population;

(3) are written in a clear and coherent manner and wherever practical, words with common and everyday meaning shall be used to facilitate readability; and

(4) are appropriately divided and captioned in a meaningful sequence such that each section contains an underlined, boldfaced, or otherwise conspicuous title or caption at the beginning of the section that indicates the nature of the subject matter included in or covered by the section.

(h) Access card information. An access card issued to the claimant under the section:

(1) shall not bear any information that could reasonably identify the claimant as a participant in the workers' compensation system.

(2) shall include on the front or back of the access card a toll-free customer service number and website address. Customer service personnel shall be available by phone Monday through Friday, during normal business hours as outlined in §102.3 of this title (relating to Computation of Time).

(i) Written notice of term or condition changes. The insurance carrier shall provide a written notice to the claimant at least 21 days before the effective date of any change in a term or condition of the mutual agreement or disclosure, including terminating the access card program, increased fees, or liability for unauthorized electronic fund transfers. Any terms or conditions that violate the requirements of this section are null and void and may result in administrative penalties for the insurance carrier. An insurance carrier shall provide a written notice of term or condition changes that:

(1) provides a comparison of the current terms and the changes; and

(2) references the claimant's ability to request a change in payment outlined in §124.5(i) of this title (relating to Mode of Payment Made by Carriers).

(j) Account closure. An insurance carrier may close the account by issuing a check to the claimant with the remaining balance of the access card if the account has been inactive for 12 months or longer.

(k) Recoupment of payment. The insurance carrier shall not remove money from the claimant's account or access card except to remove permitted fees under subsection (e) of this section or to close the account for inactivity of a period of 12 months or more. An insurance carrier seeking to recoup overpayments shall follow the procedures outlined in §126.16 of this title (relating to Procedures for Recouping Overpayments of Income Benefits).

(l) Paid date. An insurance carrier is considered to have made an income or death benefit payment the date the payment is available on the claimant's access card.

(m) No granting of rights. Nothing in the section shall be construed to grant any rights otherwise prohibited under federal law.

(n) Effective date. This section is effective for income or death benefit payments due on or after June 1, 2015.

History

Source Note: The provisions of this §124.6 adopted to be effective June 1, 2015, 40 TexReg 332.

28 Tex. Admin. Code § 124.7 Initial Payment of Temporary Income Benefits

(a) As used in this section, the following terms have the following meanings, unless the context clearly indicates otherwise: "Accrual date" means the day an injured worker's income benefits begin to accrue. "Day of disability" means a day when the worker is unable to obtain and retain employment at wages equivalent to the pre-injury wage because of a compensable injury. Intermittent days of disability shall be cumulated to calculate the accrual date.

(b) An injured worker's accrual date is the worker's eighth day of disability.

(c) A carrier who has received written notice of an injury and has not disputed the claim shall initiate income benefits no later than the seventh day after the accrual date.

(d) Nothing in this section is intended to limit a carrier's discretion to initiate payment of temporary income benefits before the time limit established in subsection (c) of this section.

History

Source Note: The provisions of this §124.7 adopted to be effective September 30, 1991, 16 TexReg 5071; amended to be effective March 1, 1993, 18 TexReg 472; amended to be effective June 5, 2003, 28 TexReg 4290.

28 Tex. Admin. Code § 124.8 Receipt, Records, and Notice of Death or Claim for Death Benefits

(a) Definition. In this section, "claim for death benefits" means a claim that is filed under Chapter 122, Subchapter B, §122.100 of this title.

(b) General requirements. An insurance carrier that receives a notice of death in accordance with §132.17 of this title, or a claim for death benefits must comply with all of the requirements in this chapter.

(1) send the division a copy of the plain-language notice that the insurance carrier must provide to the potential beneficiary under §132.17 of this title.

(2) on receiving a claim for death benefits, create and maintain a record documenting receipt of the claim for death benefits. The record must include all of the information in the claim for death benefits. The insurance carrier must maintain the record in accordance with Chapter 102, §102.4 of this title.

(3) send the division a copy of a claim for death benefits the insurance carrier receives from the potential beneficiary not later than the seventh day after receiving it and include any other documents and information the insurance carrier received.

History

Source Note: The provisions of this §124.8 adopted to be effective December 11, 2023, 48 TexReg 7174.

Subchapter B INSURANCE CARRIER CLAIM ELECTRONIC DATA INTERCHANGE REPORTING TO THE DIVISION

28 Tex. Admin. Code § 124.100 Applicability

(a) This subchapter applies to any claim transactions required to be reported to the division under §124.105 on or after July 26, 2023.

(b) This subchapter applies to all insurance carriers as defined in Labor Code §401.011(27). All insurance carriers are required to report information prescribed by the commissioner under Labor Code §§401.024, 402.082, 411.012, 411.031, 411.032, and 411.033 for each workers' compensation claim. All insurance carriers are required to notify injured employees and the division about claim actions as provided in §124.2 of this title (concerning Insurance Carrier Notification Requirements).

(c) This subchapter is effective July 26, 2023. Insurance carriers and trading partners must continue to submit claim EDI records to the division in the International Association of Industrial Accident Boards and Commissions (IAIABC) Claims Electronic Data Interchange (EDI) Release 1.0 standard before this effective date.

History

Source Note: The provisions of this §124.100 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.101 Purpose

The purpose of this subchapter is to prescribe the reporting requirements for information and data submitted to the division and adopt by reference the implementation guide and specifications necessary for successful EDI transaction processing. The reporting of information and data is necessary to maintain information on every compensable injury; maintain a repository for statistical information on workers' health and safety; and compile, maintain, and use statistical data to detect practices or patterns of misconduct by system participants as required by Labor Code §§402.082, 411.033, and 414.003.

History

Source Note: The provisions of this §124.101 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.102 Definitions

The following words and terms when used in this subchapter will have the following meanings, unless the context clearly indicates otherwise:

(1) Application acknowledgment code--A code used to identify the accepted or rejected status of the transaction being acknowledged.

(2) Claim EDI record--The accurate data associated with a single claim reported in a claim EDI transaction (first report of injury or subsequent report of injury) obtained from all sources, including the report of incident or injury and the insurance carrier's claim file.

(3) Claim EDI transmission--The data that is contained within the interchange envelope.

(4) Division--The Texas Department of Insurance, Division of Workers' Compensation or its data collection agent.

(5) EDI--Electronic data interchange.

(6) Edit Matrix--A table containing the edits applied to Texas' first report of injury and subsequent report of injury records.

(7) Element requirement table--A table containing data elements used in Texas' first report of injury and subsequent report of injury record layouts defining required and conditional data elements and how data edits apply to the elements.

(8) Event table--A table containing the reportable claim events for Texas' first report of injury and subsequent report of injury records and timeframes for reporting the information.

(9) Insurance carrier claim number--An identifier that distinguishes a specific claim within an insurance carrier's claim processing system and is used throughout the life of the claim.

(10) IAIABC--The International Association of Industrial Accident Boards and Commissions.

(11) Person--A person, partnership, corporation, hospital district, insurance carrier, organization, business trust, estate trust, association, limited liability company, limited liability partnership, or other entity. This term does not include an injured employee.

(12) Trading partner--A person entering into an agreement with the insurance carrier to format electronic data for transmission to the division, transmit electronic data to the division, and respond to any technical issues related to the contents or structure of an EDI file.

History

Source Note: The provisions of this §124.102 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.103 Reporting Standards

(a) Except as provided in this subchapter, the commissioner adopts by reference the IAIABC EDI Implementation Guide for Claims, Release 3.1.4, dated January 1, 2021, published by the IAIABC.

(b) The commissioner adopts by reference the:

(1) Texas Claim EDI Release 3.1.4 Implementation Guide, Version 1.0;

(2) Texas Claim EDI Release 3.1.4 Element Requirement Table, Version 1.0;

(3) Texas Claim EDI Release 3.1.4 Edit Matrix, Version 1.0, dated June 30, 2023; and

(4) Texas Claim EDI Release 3.1.4 Event Table, Version 1.0. The Texas Claim EDI Release 3.1.4 Implementation Guide, tables, and the matrix are published by the division.

(d) In the event of a conflict between the IAIABC EDI Implementation Guide for Claims and the Labor Code or division rules, the Labor Code or division rules will prevail.

History

Source Note: The provisions of this §124.103 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.104 Reporting Requirements

(a) Insurance carriers must submit timely and accurate claim EDI records to the division. For the purpose of this section, a claim EDI record is considered accurately submitted when the record:

(1) receives an accepted application acknowledgment code;

(2) contains accurate claim EDI data, which may be obtained from all sources, including the report of incident or injury and the insurance carrier's claim file; and

(3) to the extent supported by the format, contains all data elements necessary to identify activity on a claim.

(b) Insurance carriers are responsible for correcting and resubmitting claim EDI records accepted with errors within 30 days of the acknowledgement or other action that required reporting. The resubmitted claim EDI record must contain the same insurance carrier claim number as the previously accepted claim EDI record.

(c) The insurance carrier's receipt of a rejection does not modify, extend, or otherwise change the date the transaction is required to be reported to the division. The resubmitted rejected claim EDI record must contain the same insurance carrier claim number as the previously rejected claim EDI record.

History

Source Note: The provisions of this §124.104 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.105 Records Required to be Reported

(a) Insurance carriers must submit claim EDI records when the insurance carrier:

(1) takes action on or events occur in a claim as described in §124.2 of this title (concerning Insurance Carrier Notification Requirements);

(2) corrects division-identified errors in a previously accepted electronic record as provided in §124.104(b) of this title (concerning Reporting Requirements);

(3) corrects insurance carrier-identified errors in a previously accepted electronic record as provided in §124.2(b)(4) of this title;

(4) discovers that a claim EDI record should not have been submitted to the division, and the division had previously accepted the claim EDI record; or

(5) receives a request from the division for claim EDI records.

(b) Regardless of the application acknowledgment code returned in an acknowledgment, claim EDI records are not considered received by the division if the claim EDI record:

(1) contains data, which does not accurately reflect the code value or actions taken when the insurance carrier processed information or acted on the claim; or

(2) fails to contain a conditional data element and the mandatory trigger condition existed at the time the insurance carrier acted on the claim.

(c) Claim EDI records submitted in the test environment are not considered received and do not comply with the reporting requirements of this section.

(d) Claims with a date of injury on or after January 1, 1991, must be reported in accordance with the requirements of this chapter (concerning Insurance Carriers: Notices, Payments, and Reporting).

History

Source Note: The provisions of this §124.105 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.106 Records Excluded from Reporting

Insurance carriers must not report claim EDI records for:

(1) claims where the jurisdiction state is not Texas;

(2) claims that do not meet the requirements of §124.2(b);

(3) claims involving benefits payable under federal workers' compensation laws; and

(4) claims with dates of injury before January 1, 1991.

History

Source Note: The provisions of this §124.106 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.107 State Specific Requirements

(a) Insurance carriers must submit claim EDI transactions according to the:

(1) IAIABC EDI Implementation Guide for Claims, Release 3.1.4;

(2) Texas Claim EDI Release 3.1.4 Implementation Guide, Version 1.0;

(3) Texas Claim EDI Release 3.1.4 Element Requirement Table, Version 1.0;

(4) Texas Claim EDI Release 3.1.4 Edit Matrix, Version 1.0, dated June 30, 2023; and

(5) Texas Claim EDI Release 3.1.4 Event Table, Version 1.0.

(b) In addition to the requirements adopted under §124.103 of this title (concerning Reporting Standards), when the injured employee's Social Security number is unknown for reporting claim EDI transactions, it must be reported in accordance with Texas Claim EDI Release 3.1.4 Element Requirement Table, Version 1.0, as adopted in §124.103 of this title.

History

Source Note: The provisions of this §124.107 adopted to be effective July 26, 2023, 47 TexReg 1095.

28 Tex. Admin. Code § 124.108 Insurance Carrier EDI Compliance Coordinator and Trading Partners

(a) Insurance carriers may submit claim EDI records directly to the division or contract with an external trading partner to submit the records on the insurance carrier's behalf.

(b) Each insurance carrier, including those using external trading partners, must designate one person to the division as the EDI compliance coordinator and provide the person's name, working title, mailing address, email address, and telephone number in the form and manner prescribed by the division. The EDI compliance coordinator must:

(1) be an employee of the insurance carrier with knowledge and experience in EDI reporting, who is responsible for EDI reporting;

(2) receive and appropriately disperse data reporting information received from the division; and

(3) serve as the central compliance control for data reporting under this subchapter.

(c) At least five working days before sending its first transaction to the division under this subchapter, the insurance carrier must send a notice to the division. The notice must be in the form and manner prescribed by the division. The notice must include the name of the insurance carrier, the insurance carrier's FEIN, the insurance carrier's TXCOMP customer number, the name of the trading partners authorized to conduct claim EDI transactions on behalf of the insurance carrier, the FEIN of the trading partners, and the EDI compliance coordinator's signature.

(d) The insurance carrier must report changes required under subsections (b) and (c) within five working days of any amendment to data sharing agreements, including adding or removing any trading partners or changing the EDI compliance coordinator. Failure to timely submit updated information may result in the rejection of claim EDI records.

(e) At least five working days before sending its first test transaction to the division under this subchapter, the insurance carrier or trading partner sending the claim EDI transmission must send a notice to the division. The notice must be in the form and manner prescribed by the division. The notice must include the entity's name; FEIN; nine-digit postal code; address; and the technical contact's name, address, phone number, and email address. The insurance carrier or trading partner must report changes within five working days of any amendment to the information required to be reported.

(f) Insurance carriers and trading partners must successfully complete claim EDI Release 3.1.4 testing before transmitting any production claim EDI Release 3.1.4 data to the division. Trading partners must receive approval to submit data for at least one insurance carrier before initiating the testing process. Insurance carriers and trading partners must submit each transaction type during the testing process to ensure that it can be successfully processed by the division. The division will not approve an insurance carrier or trading partner for production submissions until the insurance carrier or trading partner has met the requirements for testing as described in the Texas Claim EDI Release 3.1.4 Implementation Guide.

(g) Once an insurance carrier or trading partner has met the requirements of subsection (f), the insurance carrier or trading partner is approved to report claim EDI data to the division. Only approved insurance carriers or trading partners may report claim EDI data to the division.

(h) The division may suspend the ability for an insurance carrier or trading partner to report claim EDI if it does not meet the requirements for an approved trading partner as described in the Texas Claim EDI Release 3.1.4 Implementation Guide. The division will notify the insurance carrier's claim EDI compliance coordinator in writing in advance of the suspension.

(i) Loss of approval to report claim EDI does not relieve an insurance carrier of the duty to report claim information or notices to the division under §124.2 of this title (concerning Insurance Carrier Notification Requirements).

(j) Insurance carriers are responsible for the acts or omissions of their trading partners. The insurance carrier commits an administrative violation if the insurance carrier or its trading partner fails to timely or accurately submit claim EDI records.

(k) An insurance carrier must provide to the division the EDI compliance coordinator's contact information required by this subsection no later than 90 days after the adoption of this subchapter. Except as otherwise provided by this subsection, an insurance company that obtains a certificate of authority to write workers' compensation insurance in Texas after the adoption of this subchapter, or an employer or group of employers who are authorized to self-insure by DWC or TDI after the adoption date of this subchapter, must provide the EDI compliance coordinator's contact information required by subsection (b) to the division no later than the 30th day after the insurance company's certificate of authority or authorization to self-insure becomes effective.

History

Source Note: The provisions of this §124.108 adopted to be effective July 26, 2023, 47 TexReg 1095.

Chapter 126 GENERAL PROVISIONS APPLICABLE TO ALL BENEFITS

28 Tex. Admin. Code § 126.1 Definitions Applicable to All Benefits

The following terms shall have the following meanings unless the context clearly indicates otherwise:

(1) Employer Initiation of Benefits - Money paid by an employer to the employee to compensate the employee for lost wages or paid by the employer for medical expenses during a period in which the carrier has either:

(A) contested compensability of the injury;

(B) contested liability for the injury; or

(C) has not completed its initial investigation of the injury which is limited to seven days after the carrier receives first written notice of the injury as defined in §124.1 of this title (relating to Notice of Injury).

(2) Nonpecuniary Wages--Wages paid to an employee in a form other than money. Examples of nonpecuniary wages include but are not limited to:

(A) Health insurance premiums;

(B) Laundry/cleaning;

(D) Lodging/housing/rent;

(E) Payment of professional license fees;

(F) Food/Meals; and

(G) Provision of a vehicle/fuel.

(3) Pecuniary Wages--Wages paid to an employee in the form of money. Examples of pecuniary wages include, but are not limited to:

(A) Hourly, weekly, biweekly, monthly (etc.) wages;

(B) Salary;

(D) Any monetary allowance such as for health insurance premiums, vehicle/fuel, food/meals, clothing/uniforms, laundry/cleaning, or lodging/housing/rent;

(E) Monetary bonuses earned or accrued by the employee; and

(F) Commissions.

(4) Unrecoupable overpayment--The amount of benefits paid by the carrier to the claimant which were not owed and which were not recoverable or convertible from other income benefits.

History

Source Note: The provisions of this §126.1 adopted to be effective December 26, 1999, 24 TexReg 11399.

28 Tex. Admin. Code § 126.2 Payment of Benefits to Minors

(a) If an injured employee is a minor, benefits will be paid by the carrier to the custodial parent or guardian, for the use and benefits of the minor, until the minor turns 18 year of age, except as otherwise provided in this section.

(b) If a court-ordered relationship that affects the minor exists and is brought to the attention of the carrier or the commission, the carrier will pay benefits in accordance with that order.

(d) An injured employee who is a minor may petition the commission for direct payment of benefits. The carrier shall pay benefits directly to the minor if so ordered by the executive director, after a hearing, and a reasonable attempt is made to locate the parent or guardian for purpose of the hearing.

(e) When the carrier and commission receive proof that a minor has attained the age of 18 years, or that a guardianship has ended, benefits will be paid directly to the injured employee.

(f) This section will also apply to payment of death benefits to legal beneficiaries who are minors.

History

Source Note: The provisions of this §126.2 adopted to be effective January 1, 1991, 15 TexReg 6747.

28 Tex. Admin. Code § 126.3 Payment of Benefits to Legally Incompetent Persons

(a) Benefits for an injured employee found to be legally incompetent shall be paid by the carrier to the court-appointed guardian for the use and benefit of the injured employee, in accordance with the terms of any court order.

(b) If the carrier and the commission receive a certified copy of the court order declaring the injured employee legally competent, benefits shall once again be paid directly to the injured employee.

(c) The Ombudsman Program may provide information to the parties to a claim about available options if no court has declared an employee to be legally incompetent.

(d) This rule will also apply to payment of death benefits to legally incompetent beneficiaries of deceased employees.

History

Source Note: The provisions of this §126.3 adopted to be effective January 1, 1991, 15 TexReg 6747.

28 Tex. Admin. Code § 126.4 Advance of Benefits Based on Financial Hardship

(a) An injured employee seeking an advance of income benefits based on financial hardship shall submit a written application to the Commission in the form and manner prescribed by the Commission that states the basis for the hardship The application must state the employee understands that if an advance is granted the amount of future weekly benefit payments will be reduced as directed by the Commission.

(b) The Commission shall forward a copy of the employee's application to the insurance carrier and shall consider the employee's application and may order an advance if it determines that both a hardship exists for the employee and the employee is likely to be entitled to income benefits sufficient to cover the amount of the advance.

(c) An advance will not be granted to an employee whose combined post-injury earnings, as defined by §129.2 of this title (relating to Entitlement to Temporary Income Benefits), and income benefits under this Act equals or exceeds 90% of the employee's net pre-injury wage. In the absence of specific evidence to the contrary, the net pre-injury wage of an employee shall be presumed to be 80% of the average weekly wage, for this section.

(d) The Commission shall notify the carrier and the employee in writing when an advance is ordered. The notice shall include the amount of the advance to be paid; this amount shall not exceed four times the maximum weekly benefit for temporary income benefits as computed under the Act, §408.061(a). The carrier shall pay an advance ordered by the Commission within seven days of the receipt of notice from the Commission by the carrier's Austin representative.

(e) After the carrier has paid an advance, it shall reduce the amount of the weekly income benefits in an amount set by the Commission, which takes into account the amount advanced and the number of weeks that benefits are likely to be paid in the future. The weekly benefits may be paid in this reduced amount until the carrier has recouped the amount advanced.

(f) The total amount of benefits paid to the employee through weekly payments and advances based on hardship shall not exceed the amount the employee would have received under a normal payment schedule. No more than three advances shall be granted based on the same injury.

History

Source Note: The provisions of this §126.4 adopted to be effective January 30, 1991, 16 TexReg 313; amended to be effective December 26, 1999, 24 TexReg 11399.

28 Tex. Admin. Code § 126.5 Entitlement and Procedure for Requesting Required Medical Examinations

(a) A doctor who has contracted with or is employed by an authorized workers' compensation health care network established under Insurance Code Chapter 1305, (network doctor) may not perform a required medical examination, as those terms are used under the Texas Workers' Compensation Act (the Act), for an employee receiving medical care through the same network. It is the responsibility of the requesting party to ensure the doctor selected does not have a disqualifying association.

(b) The Division may authorize a required medical examination (RME) for any reason set forth in the Act, Texas Labor Code §408.004, §408.0041, or §408.151 at the request of the insurance carrier (carrier). The request shall be made in the form and manner prescribed by the Division. A carrier is not entitled to take action with respect to benefits based on, and the Division shall not consider, a report of an RME doctor that was not approved or obtained in accordance with this section.

(1) Pursuant to Texas Labor Code §408.004, once every 180 days, to resolve any questions about the appropriateness of the health care received by the injured employee (employee). The carrier's first RME may be requested at any time after the date of injury. A subsequent examination may be requested once every 180 days after the first examination and must be performed by the same doctor unless otherwise approved by the Division. This paragraph only applies to requests for required medical examinations of employees not receiving medical treatment through an authorized workers' compensation health care network.

(2) For the purpose of evaluating a designated doctor's determination on the issues listed under Labor Code §408.0041, a carrier is entitled to an examination under this subsection only after a Designated Doctor exam under §126.7 of this title (relating to Designated Doctor Examinations: Requests and General Procedures).

(3) For the purpose of evaluating a designated doctor's determination pursuant to Texas Labor Code §408.151, to determine if the employee's medical condition resulting from the compensable injury has improved sufficiently to allow the employee to return to work. For the purposes of this paragraph, the carrier may not require an employee to submit to an RME more than once per year if:

(A) an employee is receiving supplemental income benefits on or after the second anniversary of the date of the employee's initial entitlement to supplemental income benefits, and

(B) in the year preceding the request for the RME, the employee's medical condition resulting from the compensable injury had not improved sufficiently to allow the employee to return to work during that year.

(d) The doctor selected to perform an RME must be on the Division's approved doctors list and, if the purpose of the examination is to evaluate maximum medical impairment (MMI) and/or permanent impairment following a designated doctor examination, be authorized to assign impairment ratings under §130.1(a) of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment).

(e) Except for an examination under subsection (c)(2) and (3) of this section, the Division shall not require an employee to submit to a medical examination at the carrier's request until the carrier has made an attempt to obtain the agreement of the employee for the examination as required by this subsection. The carrier shall notify the Division in the form and manner prescribed by the Division of any agreement or non-agreement by the employee regarding the requested examination. An examination of an employee by a doctor selected by the carrier shall be requested as follows:

(1) Prior to requesting an RME from the Division, the carrier shall send a copy of the request to the employee and the employee's representative (if any) in the manner prescribed by subsection (g) of this section in an attempt to obtain the employee's agreement to the examination.

(2) The carrier shall give the employee 15 days to agree to the examination. The 15-day period begins on the date the carrier sends the request to the employee and the employee's representative (if any). Though the employee has 15 days to respond to the request, the carrier is not prohibited from contacting the employee or the employee's representative (if any) by telephone to discuss the request and obtain the employee's or the representative's response.

(3) The carrier shall send the request to the Division after either obtaining the employee's answer to the request or when the employee fails to respond after the 15-day period.

(f) The carrier shall send a copy of the request for a required medical examination required by subsection (e) of this section to the employee and the employee's representative (if any) by facsimile or electronic transmission if the carrier has been provided with a facsimile number or email address for the recipient, otherwise, the carrier shall send the request by other verifiable means.

(g) The carrier shall maintain copies of the request for a required medical examination and shall also maintain verifiable proof of successful transmission of the information. For these purposes, verifiable proof includes, but is not limited to, a facsimile confirmation sheet, certified mail return receipt, delivery confirmation from the postal or delivery service, or a copy of the electronic submission.

(h) This section is effective on January 1, 2007 and a request for an RME under this section may be made on or after January 1, 2007.

History

Source Note: The provisions of this §126.5 adopted to be effective January 30, 1991, 16 TexReg 313; amended to be effective January 1, 1998, 22 TexReg 11693; amended to be effective December 26, 1999, 24 TexReg 11399; amended to be effective January 2, 2002, 26 TexReg 10899; amended to be effective January 1, 2007, 31 TexReg 6351.

28 Tex. Admin. Code § 126.6 Required Medical Examination

(a) When a request is made by the insurance carrier (carrier), or the Division, for a medical examination, the Division shall determine if an examination should occur. The Division shall grant or deny the request within seven days of the date the request is received by the Division. A copy of the action of the Division shall be sent to the injured employee (employee), the employee's representative (if any), and the carrier. The notice shall explain the circumstances under which an employee may experience loss of benefits and penalty exposure for failing to attend the examination as well as the need to reschedule a missed examination. An agreement between the parties for an examination under §126.5 of this title (relating to Entitlement and Procedure for Requesting Required Medical Examinations) that the carrier has a right to has the same effect as the action of the Division.

(b) All examinations required under this section must be scheduled to occur within 30 days after receipt of the notice, with at least 10 days notice to the employee and the employee's representative (if any). If a scheduling conflict exists, the employee and the doctor shall contact each other. The doctor or the employee who has the scheduling conflict must make contact at least 24 hours prior to the appointment. The 24-hour requirement will be waived in an emergency situation (such as a death in the immediate family or a medical emergency). The rescheduled examination shall be set for a date within seven days of the originally scheduled examination, unless an extension is agreed upon by the employee and doctor. The extension may not be to a date later than the 30th day after the originally scheduled examination. In this event, the examining doctor shall notify the carrier and the 10 days notice requirement does not apply to a rescheduled examination.

(c) The employee's treating doctor may be present at an examination scheduled with a doctor selected by the carrier. The employee's treating doctor may observe the conduct of the examination, and may consult with the examining doctor about the course of the employee's treatment. The employee's treating doctor shall not otherwise participate in, impede, or advise the employee not to cooperate with the examination. In initially scheduling the examination, a reasonable attempt shall be made to accommodate the schedule of the treating doctor if the employee wants the treating doctor to attend the examination and the treating doctor is willing to do so. However, once an examination is scheduled based on the treating doctor's availability, the examination shall not be delayed, canceled, or rescheduled due to the treating doctor's scheduling conflicts unless:

(1) the required medical examination (RME) doctor agrees to the rescheduling; or

(2) the examination was canceled by the RME doctor.

(d) If the RME doctor, selected by a carrier, refuses to allow the treating doctor to attend the examination, the carrier shall cancel the appointment and request that another doctor be approved for the RME. If reasonable notice is not provided to the employee and the employee's representative (if any), the carrier shall be liable for any reasonable travel expenses incurred by the employee and for the payment for the treating doctor's attendance at a refused appointment. This subsection shall not apply to situations where the treating doctor is not able to attend the examination due to any form of scheduling conflict.

(e) An RME doctor, selected by the carrier or the Division, who conducts an examination regarding the appropriateness of the health care received by the employee, shall complete a medical report that includes objective findings of the examination and an analysis that explains how the medical condition and objective findings lead to the conclusion reached by the doctor. In addition, the RME doctor shall file the report with the insurance carrier by facsimile or electronic transmission, and shall file the report with the employee and the employee's representative (if any) by facsimile or by electronic transmission if the RME doctor has been provided with a facsimile number or email address for the recipient, otherwise, the RME doctor shall send the report by other verifiable means. Written notice is verifiable when it is provided from any source in a manner that reasonably confirms delivery to the party. This may include an acknowledged receipt by the injured employee or insurance carrier, a statement of personal delivery, confirmed by e-mail, confirmed delivery by facsimile, or some other confirmed delivery to the home or business address. The goal of this requirement is not to regulate how a system participant makes delivery of a report or other information to another system participant, but to ensure that the system participant filing the report or providing the information has verifiable proof that it was delivered.

(f) An RME doctor who, subsequent to a designated doctor's examination, determines the employee has reached maximum medical improvement (MMI) or who assigns an impairment rating, shall complete and file the report as required by §130.1 and §130.3 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment and Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment by Doctor Other than the Treating Doctor). Otherwise, the RME doctor shall not certify MMI or assign an impairment rating. If the RME doctor disagrees with the designated doctor's opinion regarding MMI, the RME doctor's report shall explain why the RME doctor believes the designated doctor was mistaken or why the designated doctor's opinion is no longer valid. Other reports shall be completed in the form and manner prescribed by the Division and shall be sent to the carrier, the employee, the employee's representative, if any, the treating doctor, and Division no later than 10 days after the examination.

(g) An RME doctor who, subsequent to a designated doctor's examination, determines that the employee can return to work immediately with or without restrictions is required to file a Work Status Report, as described in §129.5 of this title (relating to Work Status Reports) within seven days of the date of the examination of the employee. This report shall be filed with the treating doctor and the carrier by facsimile or electronic transmission. In addition, the RME doctor shall file the report with the employee and the employee's representative (if any) by facsimile or by electronic transmission if the RME doctor has been provided with a facsimile number or email address for the recipient, otherwise, the RME doctor shall send the report by other verifiable means.

(h) An RME doctor who, subsequent to a designated doctor's examination, addresses issues other than those listed in subsections (f) and (g) of this section, shall file a narrative report within seven days of the date of the examination of the employee. This report shall be filed with the treating doctor and the carrier by facsimile or electronic transmission. In addition, the RME doctor shall file the report with the employee and the employee's representative (if any) by facsimile or by electronic transmission if the RME doctor has been provided with a facsimile number or email address for the recipient, otherwise, the RME doctor shall send the report by other verifiable means.

(i) A doctor who conducts an examination solely under the authority of this rule shall not be considered a designated doctor under the Labor Code §408.0041, §408.122 or §408.125. Examinations with a designated doctor are not subject to any limitations under the provisions for RMEs.

(j) A carrier may suspend temporary income benefits (TIBs) if an employee, without good cause, fails to attend an RME required pursuant to Labor Code §408.0041(f).

(1) In the absence of a finding by the Division to the contrary, a carrier may presume that the employee did not have good cause to fail to attend the examination if by the day the examination was originally scheduled to occur the employee has both:

(A) failed to submit to the examination; and

(B) failed to contact the RME doctor's office to reschedule the examination in accordance with subsection (b) of this section.

(2) If, after the carrier suspends TIBs pursuant to this section, the employee contacts the RME doctor to reschedule the examination, the RME doctor shall reschedule the examination as soon as possible, but not later than the 30th day after the employee contacted the doctor. The insurance carrier shall re-initiate TIBs effective as of the date the employee submitted to the examination. The re-initiation of TIBs shall occur no later than the seventh day following:

(A) the date the carrier was notified that the employee attended the examination; or

(B) the date that the carrier was notified that the Division found that the employee had good cause for not attending the examination.

(3) An employee is not entitled to TIBs for a period during which the carrier was entitled to suspend benefits pursuant to this section unless the employee later submits to the examination and the Division finds or the carrier determines that the employee had good cause to fail to attend the appointment.

(k) An employee who, without good cause, fails or refuses to appear at the time scheduled for an examination authorized by this section may be assessed an administrative penalty under Labor Code §408.004 and §408.0041. An employee who fails to submit to an examination at the carrier's request when the carrier selected doctor refuses to allow the treating doctor to attend the examination or when the RME doctor cancels the examination does not commit an administrative violation.

(l) The Division shall require examinations requiring travel of up to 75 miles from the employee's residence, unless the treating doctor certifies that such travel may be harmful to the employee's recovery. Travel over 75 miles may be authorized if good cause exists to support such travel. The carrier shall pay reasonable travel expenses incurred by the employee in submitting to any required medical examination, as specified in Chapter 134 of this title (relating to Benefits--Guidelines For Medical Service, Charges, and Payments).

(m) This section is effective on January 1, 2007 and a request for an RME under this section may be made on or after January 1, 2007.

History

Source Note: The provisions of this §126.6 adopted to be effective January 30, 1991, 16 TexReg 313; amended to be effective January 1, 1998, 22 TexReg 11693; amended to be effective December 26, 1999, 24 TexReg 11399; amended to be effective January 2, 2002, 26 TexReg 10899; amended to be effective January 1, 2007, 31 TexReg 6351.

28 Tex. Admin. Code § 126.8 Commission Approved Doctor List

(a) On or after January 1, 1993, except in emergency situations, injured employees must receive medical treatment from a doctor on the commission approved doctor list (the list). This list initially includes all doctors licensed in Texas on or after January 1, 1993, and doctors licensed in other jurisdictions who have been added to the list by the commission.

(b) Doctors licensed in other jurisdictions may ask to be added to the list by submitting a written request containing information prescribed by the commission. Unless the doctor has been deleted from the list by the commission, a carrier shall not withhold reimbursement to doctors licensed in other jurisdictions when the only reason for nonpayment is that the doctor is not presently on the list.

History

Source Note: The provisions of this §126.8 adopted to be effective July 1, 1993, 18 TexReg 3755; amended to be effective June 7, 2001, 26 TexReg 3941; amended to be effective March 14, 2002, 27 TexReg 1810.

28 Tex. Admin. Code § 126.9 Choice of Treating Doctor and Liability for Payment

(a) The injured employee is entitled to the employee's initial choice of treating doctor from the list of doctors approved by the Texas Workers' Compensation Commission. As of January 1, 1993, any change in treating doctor after the initial choice requires approval from the commission. The term "doctor," as used in this section, has the meaning defined in Texas Civil Statutes, Article 8308-1.03(17).

(b) The commission shall include, with the information mailed to the employee as required by the Act, §5.09, the requirements related to the selection of a treating doctor from the commission-approved doctor list and to changing treating doctors as described in this section.

(c) The first doctor who provides health care to an injured employee shall be known as the injured employee's initial choice of treating doctor. The following do not constitute an initial choice of treating doctor:

(1) a doctor salaried by the employer;

(2) a doctor recommended by the carrier or employer, unless the injured employee continues, without good cause as determined by the commission, to receive treatment from the doctor for a period of more than 60 days; or

(3) any doctor providing emergency care unless the injured employee receives treatment from the doctor for other than follow-up care related to the emergency treatment.

(d) If an injured employee wants to change treating doctors, other than exceptions as described in Texas Civil Statutes, Article 8308-4.64, or removal of the doctor from the list, the employee shall submit to the field office handling the claim, reasons why the current treating doctor is unacceptable. Unless medical necessity exists for an immediate change, the submission shall be in writing on a form prescribed by the commission. If the need for an immediate change exists, then the injured employee may notify the field office by telephone. Injured employees who change doctors because the doctor is removed from the list or for one of the exceptions listed in Texas Civil Statutes, Article 8308-4.64, shall immediately notify the commission of the change in the form and format prescribed by the commission.

(e) Reasons for approving a change in treating doctor include, but are not limited to:

(1) the reasons listed in Texas Civil Statutes, Article 8308-4.63(d); and

(2) the selected doctor chooses not to be responsible for coordinating injured employee's health care as described in §133.3 of this title (relating to Responsibilities of Treating Doctor).

(f) The commission shall issue an order approving or denying a change of doctor request. This order shall be issued within 10 days after receiving the request and, if a change is approved, shall include an order for the insurance carrier to pay for treatment provided by the approved doctor unless superseded by a subsequent order.

(g) With good cause, the injured employee or carrier may dispute the order regarding a change to an alternate treating doctor within 10 days after receiving the order. That dispute will be handled through the dispute resolution process described in Chapters 140-143 of this title (relating to Dispute Resolution/General Provisions, Benefit Review Conference, Benefit Contested Case Hearing, and Review by the Appeals Panel).

(h) The commission may, after holding a benefit contested case hearing as provided by Chapter 142 of this title (relating to Benefit Contested Case Hearing), relieve the carrier of liability for health care furnished by a doctor or health care provider at the doctor's direction if:

(1) the doctor chosen by the employee is not on the list at the time the medical treatments or services are rendered; or

(2) the employee failed to comply with commission rules regarding a change in treating doctor.

(i) If the carrier is relieved of liability for the costs of health care, the employee may be billed for medical treatments or services provided the health care provider billing the employee had no knowledge of the violation by the employee at the time the medical treatments or services were rendered.

(j) The commission shall relieve the carrier of liability by an order which identifies the health care provider(s) and expressly states the time period for which the carrier is relieved of liability and whether the health care provider may submit the bill to the employee for those treatments or services. Provided, however, that a doctor removed from the list may not seek reimbursement under workers' compensation for treatments or services rendered.

History

Source Note: The provisions of this §126.9 adopted to be effective July 1, 1993, 18 TexReg 3755.

28 Tex. Admin. Code § 126.11 Extension of the Date of Maximum Medical Improvement for Spinal Surgery

(a) The commission may approve an extension of the date of maximum medical improvement, subject to subsection (f) of this section, if the injured employee has had spinal surgery or has been approved for spinal surgery in accordance with §134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care), 12 weeks or less before the expiration of 104 weeks from the date income benefits began to accrue. Only one extension of the date of maximum medical improvement pursuant to this section may be granted. Approval for spinal surgery is either the notification from the insurance carrier (carrier) that the spinal surgery has been preauthorized or a decision from the appeal process finding the insurance carrier liable for the reasonable costs of spinal surgery. Any extension of the date of maximum medical improvement ordered by the commission must be to a specific and certain date.

(b) Upon application by either the injured employee or the insurance carrier, the commission may by order extend the date of maximum medical improvement past the period of 104 weeks from the date income benefits began to accrue as described in the Texas Labor Code, §401.011(30)(B). The request shall be made in the form and manner prescribed by the commission. The commission shall issue an order approving or denying the request for an extension of the date of maximum medical improvement within ten days of the date the request is received by the commission.

(c) Prior to submission to the commission of a request for an extension of the date of maximum medical improvement, the requestor shall request from the treating doctor or surgeon the information listed in subsection (f) of this section. The request shall also be sent to the injured employee, the injured employee's representative, and the insurance carrier by first class mail on the same day it is submitted to the treating doctor or surgeon. The treating doctor or surgeon shall provide to the injured employee, the injured employee's representative, and the insurance carrier the information requested in subsection (f) of this section within ten days of the date the request is received. If the requesting party has not received the information from the treating doctor or surgeon within 15 days, the request may be submitted to the commission without this information.

(d) After the actions in subsection (c) have been completed, a request for an extension of the date of maximum medical improvement shall be filed at the commission field office managing the claim by personal delivery or first class mail. A request is deemed filed upon receipt at the appropriate field office. In addition, the request shall be sent to the injured employee, the injured employee's representative, and the insurance carrier on the same date it is sent to the commission. If the information from the treating doctor or surgeon is absent when the request is received, commission staff may invoke the provisions of §102.9 of this title (relating to Submission of Information Requested by the Commission) to secure any necessary information.

(e) A request for an extension of the date of maximum medical improvement shall be filed no earlier than 12 weeks before the expiration of 104 weeks after the date income benefits began to accrue. The commission shall deny any request for an extension of the date of maximum medical improvement that is received by the commission prior to 12 weeks before the expiration of 104 weeks after the date income benefits began to accrue or is received on or after the expiration of 110 weeks from the date income benefits began to accrue.

(f) In making the determination to approve or deny a request for an extension of the date of maximum medical improvement, the commission shall consider:

(1) typical recovery times for the specific spinal surgery procedure;

(2) projected date and information regarding when the condition may be medically stable as provided by the treating doctor or the surgeon;

(3) case specific information regarding any extenuating circumstances that may have resulted in variances from conservative treatment protocols and time frames that may impact recovery times as provided by the treating doctor or the surgeon;

(4) information from any source regarding intentional or non-intentional delays in securing the surgery or medical treatment for the compensable injury;

(5) any pending, unresolved disputes regarding the date of maximum medical improvement; and

(6) any pertinent information provided by the insurance carrier, injured employee, and/or the injured employee's representative regarding the extension being requested under this section.

(g) An injured employee or an insurance carrier may dispute the approval, denial, or the length of the extension granted by the commission order by filing a request for a benefit review conference in accordance with §141.1 of this title (relating to Requesting and Setting a Benefit Review Conference) no later than ten days after the date the order is received. Any proceedings and further appeals shall be conducted in accordance with Chapters 140-143 of this title (relating to Dispute Resolution/General Provisions, Benefit Review Conference, Benefit Contested Case Hearing, and Review by the Appeals Panel). Any agreement which resolves a dispute regarding extension of the date of maximum medical improvement in accordance with this section shall be in writing and approved by the commission. Approval shall not be granted if any party rescinds the agreement by notifying the commission within three working days of signing the agreement.

(h) If a request for benefit review conference is not received by the commission within ten days after the date the order granting or denying the extension was received by the disputing party, the parties waive their right to dispute the commission order. In the event that an order is timely disputed, the order shall remain binding pending final resolution of the dispute.

(i) If the injured employee is certified by a doctor to have reached maximum medical improvement between the date the extension order was issued and the extended date of maximum medical improvement specified in the order, any dispute regarding the date of maximum medical improvement shall be resolved through the selection of a designated doctor consistent with the provisions of the Texas Labor Code, §408.122, concerning Eligibility for Impairment Income Benefits; Designated Doctor, and §130.6 of this title (relating to Designated Doctor; General Provisions). If the certification of maximum medical improvement during this time period is not disputed and the date certified is prior to the date of maximum medical improvement specified in the order for the extension, the date of maximum medical improvement from that certification shall apply. If the certification was timely disputed and the resolution of such a dispute determines that the injured employee reached maximum medical improvement at a date which is different than the date of maximum medical improvement specified in the order for the extension, the earlier date shall apply.

(j) In the event that the extension of the date of maximum medical improvement is granted based on a finding of liability for spinal surgery within the 12 week period and a party appeals the preauthorized approval to a benefit contested case hearing, any extension of the date of maximum medical improvement ordered by the commission shall be conditional pending final decision under the commission's jurisdiction of the liability for spinal surgery. If spinal surgery is not performed within six weeks after the date the final decision of the commission is issued, the order for the extension of the date of maximum medical improvement shall be null and void.

(k) This section applies only to compensable claims with a date of injury on or after January 1, 1998. This section does not apply to an employee who has reached maximum medical improvement prior to requesting an extension under this section. An employee has reached maximum medical improvement in accordance with the Texas Labor Code, §401.011(30)(A), when either a finding of the date of maximum medical improvement is not disputed, or the date of maximum medical improvement has been finally resolved.

History

Source Note: The provisions of this §126.11 adopted to be effective January 29, 1998, 23 TexReg 552; amended to be effective June 5, 2003, 28 TexReg 4291.

28 Tex. Admin. Code § 126.12 Payment of Interest on Accrued but Unpaid Income Benefits

(a) Accrued but unpaid income benefits are those benefits which either:

(1) have accrued during a period of dispute over insurance carrier (carrier) liability for the claim or injured employee entitlement to the benefits; or

(2) have not been paid by the date the carrier was required to pay them.

(b) Carriers shall include simple interest in all payments for accrued but unpaid income benefits.

(c) Income benefits accrue in either weekly or monthly pay periods, as otherwise provided by the Texas Workers' Compensation Act and this title, and interest shall be calculated separately for each pay period based on the length of time the benefits for that pay period remained accrued and unpaid.

(1) For pay periods in which benefits accrued while in dispute as provided in subsection (a)(1) of this section, the carrier shall pay interest for number of days between the seventh day after the day the benefits accrued and the day the payment was made.

(2) For pay periods in which benefits accrued and were paid late by the carrier as provided in subsection (a)(2) of this section, the carrier shall pay interest for the number of days between the due date for the payment and the date the payment was made.

(d) The rate of interest to be paid on accrued but unpaid income benefits by carriers will be the rate calculated in accordance with the Texas Labor Code, §401.023 and in effect on the date the payment was made.

(e) The following method shall be used to calculate the simple interest to be paid:

(1) multiply the rate of interest by the amount in question (to create annual amount of interest);

(2) divide the annual amount of interest by 365 (to create daily interest amount); then

(3) multiply daily interest amount by the number of days of interest that are owed.

History

Source Note: The provisions of this §126.12 adopted to be effective December 26, 1999, 24 TexReg 11399.

28 Tex. Admin. Code § 126.13 Employer Initiation of Benefits and Reimbursement

(a) Applicability

(1) This section applies only to the employer initiation of benefits as described in subsection (a)(2) of this section. Employer payments made after the insurance carrier has accepted or been found to be liable for a claim such as salary continuation, as defined in §129.1 (relating to Definitions for Temporary Income Benefits), are covered by Chapter 129 of this title (relating to Temporary Income Benefits).

(2) An employer may initiate benefits including medical benefits to compensate an employee during a period in which the carrier has:

(A) contested compensability of the injury;

(B) contested liability for the injury; or

(C) has not completed its initial investigation of the injury, which is limited to seven days after the carrier receives first written notice of the injury as defined in §124.1 of this title (relating to Notice of Injury).

(b) Employer Entitlement to Reimbursement

(1) An employer who initiates benefits as provided in subsection (a)(2) of this section is entitled to reimbursement from the carrier if the employer timely reported the injury to the carrier in compliance with §120.2 (relating to Employer's First Report of Injury).

(2) An employer who is entitled to reimbursement as provided in subsection (b)(1) of this section is entitled to the amount of those benefits which otherwise would have been paid by the carrier had the carrier immediately accepted compensability for the injury and began payment of income and medical benefits.

(A) For an employer initiation of indemnity benefits, the amount of reimbursement that the employer is entitled to is the amount that would have been paid by the carrier in income benefits. Chapters 128, (relating to Benefits - Calculation of Average Weekly Wage), 129 (relating to Benefits - Temporary Income Benefits), 130 (relating to Benefits - Impairment & Supplemental Income Benefits), and 131 (relating to Calculation of Lifetime Income Benefits) of this title govern carrier payments of income benefits.

(B) For an employer initiation of medical benefits, the amount of reimbursement that the employer is entitled to is the amount that would have been paid by the carrier in medical benefits. An employer is not entitled to and shall not seek reimbursement from either the carrier or the employee for amounts paid to a health care provider which are:

(i) in excess of the Commission's fee guidelines;

(ii) for treatment(s) or service(s) which was not reasonable or medically necessary; or

(iii) for treatment(s) or service(s) which was not related to the compensable injury.

(3) An employer who is entitled to reimbursement under subsection (b)(1) of this section but who paid more benefits to the employee than the carrier was required to pay in income benefits is entitled to be reimbursed for the difference if the employer initiated the benefits with the agreement of the employee and the agreement authorized the reimbursement of this difference. The difference is reimbursable out of impairment income benefits (IIBs) that the employee becomes entitled to, if any.

(4) An employer is not entitled to and shall not seek reimbursement from the employee for any benefits initiated by the employer which are not reimbursed under subsection (c) of this section.

(1) An employer who initiates payment of benefits as provided in subsection (a) of this section shall report the initiation of benefits to the carrier within seven days of this initiation.

(2) A carrier who is notified by an employer that the employer has initiated benefits as provided in subsection (c)(1) of this section shall notify the employer in writing within seven days of the carrier either accepting or being found to be liable for a claim.

(3) Within seven days of being notified by the carrier that the carrier has accepted or been found liable for a claim, the employer shall report to the carrier in the form and manner prescribed by the Commission the amount of any benefits provided to the employee.

(4) A carrier who receives a report of benefits initiated by the employer as described in this section shall, not later than the seventh day after the carrier receives the report, reimburse the employer the compensation that the carrier would have otherwise paid.

(5) The carrier shall pay the employer a reimbursement out of IIBs as provided in subsection (b)(3) of this section in lump sum and shall apportion this amount equally across the employee's remaining weekly IIBs payments. The carrier shall pay this reimbursement in a lump sum not later than the seventh day after the later of:

(A) the date the carrier receives a certification of MMI with an impairment rating of greater than 0%; or

(B) the date an impairment rating dispute is resolved by a designated doctor's opinion, agreement, or final adjudication.

History

Source Note: The provisions of this §126.13 adopted to be effective December 26, 1999, 24 TexReg 11399.

28 Tex. Admin. Code § 126.14 Treating Doctor Examination to Define the Compensable Injury

(a) On request of the insurance carrier, an injured employee is required to submit to a single examination per workers' compensation claim for the purpose of defining the compensable injury. The examination:

(1) shall not be requested prior to the eighth day after the date of injury, and

(2) shall be scheduled to occur no earlier than 15 days and no later than 30 days from the date the notice of examination is sent to the injured employee.

(b) The insurance carrier shall schedule the examination with the injured employee's treating doctor. If a request to change treating doctor has been filed by the injured employee, the insurance carrier shall not schedule this examination until after the treating doctor change has been processed.

(1) An insurance carrier that schedules the examination with a doctor other than the injured employee's treating doctor shall be liable for reimbursement of the examination and testing.

(2) The examination findings may only be used to define the compensable injury when provided by the treating doctor of record at the time the notice of examination was sent to the injured employee. The report by a doctor other than the treating doctor of record at the time the notice of examination was sent shall not be used for the purpose of defining the compensable injury.

(c) The insurance carrier shall send the injured employee a written notice of examination. A copy of a notice of examination shall be sent to the injured employee's representative (if any). The notice of examination, at a minimum, shall include:

(1) general information identifying the claim;

(2) the name of the treating doctor;

(3) the date, time, and the location of the scheduled examination with the treating doctor named; and

(4) the following statements in a bold font equal to the font size in the main body of the notice:

(A) The insurance carrier requests that you, the injured employee, attend a single examination for this workers' compensation claim for the sole purpose of defining the injuries and diagnoses that resulted from the work-related incident or activities. Section 408.0042 of the Labor Code requires you to attend.

(B) If the doctor named in this notice is not your treating doctor, immediately contact the insurance carrier (add name and phone number of contact person) or the Texas Department of Insurance, Division of Workers' Compensation. You are not required to attend this examination with a doctor other than your treating doctor, unless the doctor was your treating doctor on the day the notice of examination was sent to you. Once you receive notice of this examination, you should not request to change treating doctor until after the examination has been conducted.

(C) You are responsible for contacting your doctor to reschedule the examination if you have a conflict with the date and time that has been scheduled for you. The rescheduled examination shall take place within seven days of the originally scheduled date or the doctor's first available appointment date. If you fail to attend the examination at the time scheduled or rescheduled without good cause, an administrative penalty may be assessed.

(d) If a scheduling conflict exists, the injured employee shall immediately contact the treating doctor to reschedule the examination. The examination must be rescheduled to take place within seven working days of the original examination or the doctor's first available appointment date.

(e) An injured employee who fails or refuses to appear at the time scheduled for an examination may be assessed an administrative penalty unless good cause exists for such failure. An injured employee who fails to submit to an examination at the insurance carrier's request does not commit an administrative violation if the doctor named on the notice of examination is not the injured employee's treating doctor.

(f) The treating doctor shall submit a narrative report after the conclusion of the examination. The report shall contain, at a minimum:

(1) general information that identifies the claim;

(2) a description of the mechanism of injury;

(3) a list of all specific, confirmed diagnoses, including ICD-9 codes and the narrative description, that the doctor considers to be related to the compensable injury. The explanation shall describe how the mechanism of injury is a cause of each diagnosis. If the doctor identifies an aggravation of any pre-existing condition, including an ordinary disease of life, the explanation shall describe how the mechanism of injury caused a worsening, acceleration, or exacerbation of that pre-existing condition; and

(4) a list of each diagnostic test performed, if required to establish a diagnosis, including an explanation of why it was appropriate to perform each test to define the compensable injury.

(g) Any diagnostic testing necessary to define the compensable injury shall be performed no later than 10 working days after the examination and is not subject to the preauthorization requirements of either §134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care) or a worker's compensation health care network under Insurance Code Chapter 1305 or Chapter 10 of this title (relating to Workers' Compensation Health Care Networks).

(h) The treating doctor shall submit a copy of the narrative report to the insurance carrier, the injured employee, and the injured employee's representative (if any) no later than 10 days after the conclusion of the examination. If diagnostic testing is required to define the compensable injury, the filing of the report is extended to seven days after the conclusion of the testing.

(i) A treating doctor may bill, and the insurance carrier shall reimburse, for an examination performed under this section.

(1) Treating doctors shall bill for the examination using the Healthcare Common Procedure Coding System (HCPCS) Level I code, Evaluation and Management Section, for work-related or medical disability evaluation services performed by a treating physician. A Division modifier of "TX" shall be added to the Level I code.

(2) Reimbursement for the examination shall be $350. Reimbursement for the report is included in the examination fee. Doctors are not required to submit a copy of the report with the bill if the report was previously provided to the insurance carrier.

(3) Testing necessary to define the compensable injury shall be billed using the appropriate billing codes and reimbursed in addition to the examination fee. Reimbursement for testing shall not be retrospectively reviewed on the basis of compensability if the doctor has documented a rationale for why the testing was necessary for defining the compensable injury.

(j) An insurance carrier shall review the injuries and diagnoses identified in the treating doctor's report. If a specific injury or diagnosis is not accepted as part of the compensable injury, the insurance carrier shall file a denial in accordance with §124.2 of this title (relating to Carrier Reporting and Notification Requirements) within the later of 60 days after the date written notice of the injury is received or within 10 working days of receipt of the treating doctor's report. In addition to the distribution requirements outlined in §124.2 of this title, a copy of the written denial shall be sent to the treating doctor by fax or electronic transmission unless the recipient does not have the means to receive such transmission in which case the notice shall be personally delivered or sent by mail.

(1) A compensable injury established as a result of a waiver determination under Labor Code §409.021, is not affected by a definition of the compensable injury under §408.0042.

(2) The insurance carrier shall not deny reimbursement for treatment of any injury or diagnosis listed in the treating doctor's report on the basis of compensability or relatedness prior to filing a denial as required by §124.2 of this title.

(k) The injured employee may initiate a request for a benefit review conference in accordance with Labor Code §410.023 and §141.1 of this title (relating to Requesting and Setting a Benefit Review Conference) upon receiving a denial regarding specific injuries or diagnoses.

(l) If the insurance carrier denies an injury or diagnosis identified in this examination, all treatment for that injury or diagnosis must be preauthorized prior to treatment occurring. For the treating doctor, the insurance carrier's denial is effective on the date the written notice of denial is received by the doctor. The preauthorization requirement continues until the injury or diagnosis is determined to be part of the compensable injury through dispute resolution or agreement of the parties.

(m) A health care provider may request a benefit review conference, in accordance with §141.1 of this title, to address an extent of injury question if a request for preauthorization has been denied for treatment of an injury or diagnosis that was denied as unrelated to the compensable injury under this section; unless:

(1) the injured employee has already requested a benefit review conference to pursue the extent of injury denial, or

(2) an agreement, filed in accordance with §147.4 of this title (relating to Filing Agreements with the Commission, Effective Dates) has been entered into by the insurance carrier and injured employee establishing the insurance carrier's liability on the disputed issues.

(n) Once the treating doctor has defined the compensable injury and the insurance carrier has accepted injuries or diagnoses as related, the insurance carrier shall not review treatment of the accepted injuries and diagnoses for compensability.

History

Source Note: The provisions of this §126.14 adopted to be effective July 9, 2006, 31 TexReg 5458.

28 Tex. Admin. Code § 126.15 Procedures for Resolution of Underpayments of Income Benefits

(a) This section applies to insurance carrier underpayment of income benefits. It does not apply to:

(1) insurance carrier underpayment of death, burial, or medical benefits; or

(2) redesignation of income benefits.

(b) If the insurance carrier determines on its own that an underpayment of income benefits has occurred, the insurance carrier shall pay the full amount of the underpayment with interest on accrued but unpaid benefits in accordance with Chapter 408, Labor Code, applicable division rules related to payment of benefits, §102.10 of this title (relating to Interest, General), and §126.12 of this title (relating to Payment of Interest on Accrued but Unpaid Income Benefits) within seven days of the determination.

(c) If an injured employee determines that the injured employee has received less than the correct amount owed in income benefits and the injured employee wishes to resolve the underpayment under this section, the injured employee must notify the insurance carrier in writing to request the additional amount. The notice must include an explanation and information that supports the injured employee's determination of the underpayment.

(d) If the insurance carrier agrees with the injured employee that there has been an underpayment of income benefits, the insurance carrier shall pay the full amount of the underpayment with interest on accrued but unpaid benefits in accordance with Chapter 408, Labor Code, applicable division rules related to payment of benefits, §102.10 of this title, and §126.12 of this title within seven days of receipt of the notice from the injured employee.

(e) If the insurance carrier disagrees that there has been an underpayment of income benefits, the insurance carrier must, within seven days of receipt of the notice from the injured employee, provide the injured employee with written notice of its determination. The insurance carrier notice must be in plain language, in English or Spanish, as appropriate, and include the reasons for the insurance carrier's determination, and a statement that the injured employee may request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution), including expedited dispute resolution.

(f) The insurance carrier must provide notice to the injured employee and the division of any change in the payment of an injured employee's income benefits in accordance with the requirements of §124.2 of this title (relating to Carrier Reporting and Notification Requirements).

(g) If an insurance carrier disagrees that there has been an underpayment of income benefits, the injured employee may request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title, including expedited dispute resolution.

(h) This section does not affect the division's authority to identify and take action on underpayments on its own motion.

History

Source Note: The provisions of this §126.15 adopted to be effective January 1, 2012, 36 TexReg 8854.

28 Tex. Admin. Code § 126.16 Procedures for Recouping Overpayments of Income Benefits

(a) This section applies to insurance carrier overpayment of income benefits. It does not apply to:

(1) insurance carrier overpayment of death, burial, or medical benefits;

(2) redesignation of income benefits; or

(3) repayments pursuant to Labor Code §415.008.

(b) If an insurance carrier determines that it has overpaid income benefits to an injured employee, the insurance carrier may recoup the overpayment from future income benefit payments as follows:

(1) The insurance carrier must notify the injured employee in writing that it will begin withholding benefits to recoup an overpayment. The notice must be in plain language and in English or Spanish, as appropriate. The notice must also include the reason for the overpayment; the amount of the overpayment to be recouped from future income benefit payments; the date recoupment will begin; and relevant documentation that supports the insurance carrier's determination of an overpayment, such as a wage statement or a supplemental report of injury. The notice must also advise the injured employee that if the injured employee disagrees that there has been an overpayment, the injured employee may request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution), including expedited dispute resolution. The insurance carrier may not begin recoupment of the overpayment earlier than the second income benefit payment made after the written notice has been sent to the injured employee.

(2) If the injured employee's income benefits are not concurrently being reduced to pay approved attorney's fees or to recoup a division approved advance, the insurance carrier may recoup the overpayment under this subsection in an amount not to exceed 25% of the income benefit payment to which the injured employee is entitled, except as provided by subsection (c) of this section.

(3) If the injured employee's income benefits are concurrently being reduced to pay approved attorney's fees or to recoup a division approved advance, the insurance carrier may recoup the overpayment under this subsection in an amount not to exceed 10% of the income benefit payment to which the injured employee is entitled, except as provided by subsection (c) of this section.

(c) If the insurance carrier wishes to recoup the overpayment in an amount greater than that permitted by subsection (b) of this section, the insurance carrier must attempt to enter into a written agreement with the injured employee and, if unable to do so, request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title. If the injured employee wishes to provide for recoupment of the overpayment in an amount less than the percentage chosen by the insurance carrier, the injured employee must attempt to enter into a written agreement with the insurance carrier and, if unable to do so, request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title.

(d) In determining whether to approve an increase or decrease in the recoupment rate, the division must consider the cause of the overpayment and minimize the financial hardship that may reasonably be created for the injured employee.

(e) The insurance carrier must provide notice to the injured employee and the division of any change in the payment of an injured employee's income benefits in accordance with the requirements of §124.2 of this title (relating to Carrier Reporting and Notification Requirements). The insurance carrier's notice to the injured employee must identify the amount that was overpaid.

(f) This section does not create an entitlement for an insurance carrier to seek reimbursement from the Subsequent Injury Fund except as provided by Labor Code §§403.006, 408.0041, 410.209, and applicable division rules.

(g) If an injured employee does not agree that the injured employee has received an overpayment of income benefits, the injured employee may request dispute resolution through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title, including expedited dispute resolution.

(h) This section does not affect the division's authority to identify and take action on overpayments on its own motion.

History

Source Note: The provisions of this §126.16 adopted to be effective January 1, 2012, 36 TexReg 8854.

28 Tex. Admin. Code § 126.17 Guidelines for Examination by a Treating Doctor or Referral Doctor After a Designated Doctor Examination to Address Issues Other Than Certification of Maximum Medical Improvement and the Evaluation of Permanent Impairment

(a) An examination by the injured employee's treating doctor or another doctor to whom the injured employee is referred by the treating doctor to determine any issue other than certification of maximum medical improvement and the evaluation of permanent impairment may be appropriate after a designated doctor examination if:

(1) the designated doctor issued an opinion on the issue;

(2) the injured employee is not satisfied with the designated doctor's opinion; and

(3) the treating doctor or the referral doctor has not already provided the injured employee with a written report that meets the standard described by subsection (b) of this section on the issue addressed by the designated doctor.

(b) The treating doctor or the referral doctor shall complete a narrative report. The report should include objective findings of the examination and an analysis that explains how the objective findings lead to the conclusion reached by the doctor. This report shall be filed with the insurance carrier, the injured employee and the injured employee's representative. Notwithstanding §129.5 of this title (relating to Work Status Reports), if the treating doctor or the referral doctor examines the injured employee to address an issue relating to return to work, the doctor must also file a Work Status Report.

(c) The insurance carrier shall reimburse the injured employee for all reasonable travel expenses as specified in Chapter 134, Subchapter B of this title (relating to Miscellaneous Reimbursement) for attending an appropriate medical examination.

(d) Nothing in this section is construed to limit or prohibit the injured employee from obtaining reasonable and necessary medical care for the compensable injury or from obtaining a written report from a treating doctor or a referral doctor on any issue under Labor Code §408.0041(a)(3) - (6) prior to a designated doctor examination.

History

Source Note: The provisions of this §126.17 adopted to be effective January 6, 2013, 37 TexReg 10215.

Chapter 127 DESIGNATED DOCTOR PROCEDURES AND REQUIREMENTS

Subchapter A DESIGNATED DOCTOR SCHEDULING AND EXAMINATIONS

28 Tex. Admin. Code § 127.1 Requesting Designated Doctor Examinations

(a) Initiating an examination. At the request of the insurance carrier, an injured employee, the injured employee's representative, or on its own motion, the division may order a medical examination by a designated doctor to resolve questions about:

(1) the impairment caused by the injured employee's compensable injury;

(2) the attainment of maximum medical improvement (MMI);

(3) the extent of the injured employee's compensable injury;

(4) whether the injured employee's disability is a direct result of the work-related injury;

(5) the ability of the injured employee to return to work; or

(6) issues similar to those described by paragraphs (1) - (5) of this subsection.

(b) Requirements for a request. To request a designated doctor examination, a requester must:

(1) provide a specific reason for the examination;

(2) report the injured employee's current diagnosis or diagnoses and body part or body parts affected by the injury;

(3) provide general information about the identity of the requester, injured employee, treating doctor, and insurance carrier;

(4) identify the workers' compensation health care network certified under Insurance Code Chapter 1305 through which the injured employee is receiving treatment, if applicable;

(5) identify whether the claim involves medical benefits provided through a political subdivision under Labor Code §504.053(b)(2) and the name of the health plan, if applicable;

(6) submit the request on the form prescribed by the division under this section. A copy of the prescribed form is:

(A) on the division's website at www.tdi.texas.gov/wc; or

(B) at the division's headquarters in Austin, Texas, or any division field office location;

(7) submit the request to the division and a copy of the request to each party listed in subsection (a) of this section who did not request the designated doctor examination;

(8) provide all information listed in subparagraphs (A) - (G) of this paragraph that applies to the type of examination the requester seeks:

(A) if the requester seeks an examination on the attainment of MMI, include the statutory date of MMI, if any;

(B) if the requester seeks an examination on the impairment rating of the injured employee, include the date of MMI that has been determined to be valid by a final decision of the division or a court or by agreement of the parties, if any;

(C) if the requester seeks an examination on the extent of the compensable injury, include a description of the accident or incident that caused the claimed injury and a list of all injuries in question;

(D) if the requester seeks an examination on whether the injured employee's disability is a direct result of the work-related injury, include the beginning and ending dates for the claimed periods of disability and state if the injured employee is either not working or is earning less than pre-injury wages as defined by Labor Code §401.011(16);

(E) if the requester seeks an examination on the injured employee's ability to return to work in any capacity and the activities the injured employee can perform, include the beginning and ending dates for the periods to be addressed. If no dates are included, the designated doctor must examine the injured employee's work status as of the date of the examination;

(F) if the requester seeks an examination to determine whether an injured employee entitled to supplemental income benefits may return to work in any capacity for the identified period, include the beginning and ending dates for the qualifying periods to be addressed and whether this period involves the ninth quarter or a subsequent quarter of supplemental income benefits;

(G) if the requester seeks an examination on topics under subsection (a)(6) of this section, specify the issue in sufficient detail for the designated doctor to identify and answer the questions; and

(9) provide a signature to attest that every reasonable effort has been made to ensure the accuracy and completeness of the information in the request.

(c) Scheduling an examination within 60 days. The division will not schedule a designated doctor examination within 60 days of the most recent designated doctor examination absent a showing of good cause.

(1) Good cause requires the requester to show that the requested examination is reasonably necessary to resolve the submitted questions and that it will affect entitlement to benefits.

(2) If the requester already asked for an examination on the claim, they must also show that the submitted questions could not reasonably have been included in the previous examination.

(d) Denial of a request. The division will determine whether good cause exists on a case-by-case basis. The division will deny a request for a designated doctor examination and provide a written explanation for the denial to the requester if:

(1) the request does not comply with any of the requirements of subsection (b) or (c) of this section;

(2) the request would require the division to schedule an examination that violates Labor Code §§408.0041, 408.123, 408.151, or 408.1615;

(3) there is an unresolved dispute about compensability reported under §124.2 of this title (relating to Insurance Carrier Notification Requirements); or

(4) the request lacks any legal or factual basis that would reasonably merit approval.

(e) Examination ordered during a dispute. During a dispute on the compensability of a claim as a whole, if a division administrative law judge or benefit review officer determines that an expert medical opinion would be necessary to resolve a dispute about whether the claimed injury resulted from the claimed incident, the administrative law judge or benefit review officer may order the injured employee to attend a designated doctor examination to address that issue.

(f) Disputes about designated doctor requests. The dispute resolution processes in Chapters 140 - 144 and 147 of this title (relating to dispute resolution processes, proceedings, and procedures) govern disputes about designated doctor requests.

(1) The insurance carrier, an injured employee, or the injured employee's representative may dispute the division's approval or denial of a designated doctor examination request.

(2) Until the division has either approved or denied the request, a party may not dispute the designated doctor examination request itself or the accuracy of any information on the request.

(3) To dispute an approved or denied request for a designated doctor examination, a party may seek an expedited contested case hearing under §140.3 of this title (relating to Expedited Proceedings). The party must file the request within three working days of receiving the order under §127.5(b) of this title (relating to Scheduling Designated Doctor Appointments).

(4) If the division receives and approves a timely request for expedited proceedings to dispute a designated doctor examination, the division will stay the disputed examination pending the outcome of the expedited contested case hearing.

History

Source Note: The provisions of this §127.1 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123; amended to be effective November 21, 2024, 49 TexReg 9321.

28 Tex. Admin. Code § 127.5 Scheduling Designated Doctor Appointments

(a) Order assigning a designated doctor. Within 10 days after approving a valid request, the division will issue an order that assigns a designated doctor and will notify the designated doctor, the treating doctor, if any, the injured employee, the injured employee's representative, if any, and the insurance carrier that the designated doctor is directed to examine the injured employee. The order will:

(1) indicate the designated doctor's name, license number, examination address, fax number, telephone number, and the date and time of the examination or the date range for the examination to be conducted;

(2) explain the purpose of the designated doctor examination;

(3) require the injured employee to submit to an examination by the designated doctor;

(4) require the designated doctor to perform the examination at the indicated examination address; and

(5) require the treating doctor, if any, and insurance carrier to forward all medical records to the designated doctor in compliance with §127.10(a)(3) of this title (relating to General Procedures for Designated Doctor Examinations).

(b) Change of examination address. The examination address indicated on the order in subsection (a)(4) of this section may not be changed by any party or by an agreement of any parties without good cause and the division's approval.

(c) Availability of designated doctor. Except as provided in subsection (g) of this section, the division will select the next available doctor on the designated doctor list for a medical examination requested under §127.1 of this title (relating to Requesting Designated Doctor Examinations). A designated doctor is available to perform an examination at any address the doctor has filed with the division if the doctor:

(1) does not have any disqualifying associations as described in §127.140 of this title (relating to Disqualifying Associations);

(2) is appropriately qualified to perform the examination in accordance with §127.130 of this title (relating to Qualification Standards for Designated Doctor Examinations);

(3) is certified on the day the examination is offered and has not failed to timely file for renewal under §127.100 of this title (relating to Designated Doctor Certification), if applicable;

(4) has not treated or examined the injured employee in a different health care provider role:

(A) within the past 12 months; or

(B) for a medical condition being evaluated in the designated doctor examination.

(d) Designated doctor lists. To select the next available doctor, the division will maintain two independent designated doctor lists for each county in Texas.

(1) One list will consist of designated doctors qualified to perform examinations under §127.130(b)(1) - (4) of this title.

(2) The other list will consist of designated doctors qualified to perform examinations under §127.130(b)(5) - (9) of this title.

(3) Nothing in this section prevents a qualified designated doctor from being on both lists.

(4) A designated doctor will be added to the appropriate designated doctor list for the county of each address the doctor has filed with the division.

(5) When a designated doctor adds an address for a county the doctor is not currently listed in, the doctor will be placed at the bottom of the appropriate list for that county.

(6) When a designated doctor removes the only address for a county the doctor is currently listed in, the designated doctor will be removed from the list for that county.

(e) Assignment of designated doctor examinations. Except as provided in subsection (f) of this section, the division will assign designated doctor examinations as follows:

(1) Each working day, all examination requests within a county will be sorted and distributed to the appropriate list based on the designated doctor qualification standards.

(2) Depending on the volume of requested examinations, the division will assign up to five examinations to the next available designated doctor at the top of the appropriate list.

(3) An examination assignment moves the designated doctor receiving the assignment to the bottom of the list from which the designated doctor was selected. Receipt of an assignment on one list does not change a designated doctor's position on the other list.

(4) The division may choose not to offer a designated doctor an examination if it is reasonably probable that the designated doctor will not be certified on the date of the examination.

(f) Exemptions. Nothing in this section prevents the division from exempting a designated doctor from the applicable qualification standard under §127.130(d) of this title. If there is no available designated doctor in the county of the injured employee, the division may assign a designated doctor as necessary.

(g) Subsequent examinations. If the division has previously assigned a designated doctor to the claim at the time a request is made, the division will assign the same doctor to a subsequent examination for that claim unless the division has authorized or required the doctor to stop providing services on the claim in accordance with §127.130 of this title. Examinations under this subsection must be conducted at the same examination address as the designated doctor's previous examination of the injured employee or at another examination address approved by the division.

(h) Mutual agreement required to reschedule. The designated doctor's office and the injured employee must contact each other if there is a scheduling conflict. The designated doctor or the injured employee who has the scheduling conflict must contact the other at least one working day before the appointment. The one working day requirement is waived in an emergency situation. An examination cannot be rescheduled without the mutual agreement of the designated doctor and the injured employee. The designated doctor must maintain and document:

(1) the date and time of the designated doctor examination listed on the division's order;

(2) the date and time of the agreement to reschedule with the injured employee;

(3) how contact was made to reschedule, indicating the telephone number, fax number, or email used to make contact;

(4) the reason for the scheduling conflict; and

(5) the date and time of the rescheduled designated doctor examination.

(i) Documentation required. Failure to document and maintain the information in subsection (h) of this section creates a rebuttable presumption that the examination was rescheduled without mutual agreement of the designated doctor and injured employee.

(j) Rescheduling timeframes. The rescheduled examination must be set to occur no later than 21 days after the originally scheduled examination date. It may not be rescheduled to occur before the originally scheduled examination date.

(1) Within one working day of rescheduling, the designated doctor must provide the time and date of the rescheduled examination to the division, the injured employee or the injured employee's representative, if any, the injured employee's treating doctor, and the insurance carrier.

(2) If the examination cannot be rescheduled to occur within 21 days of the originally scheduled examination date, or if the injured employee fails to attend the rescheduled examination, the designated doctor must notify the division within 21 days of the originally scheduled examination date.

(3) After receiving this notice, the division may select a new designated doctor.

History

Source Note: The provisions of this §127.5 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.10 General Procedures for Designated Doctor Examinations

(a) Authorization to receive documents. The designated doctor is authorized under Labor Code §408.0041(c) to receive the injured employee's confidential medical records and analyses of the injured employee's medical condition, functional abilities, and return-to-work opportunities without a signed release from the injured employee to help resolve a dispute under this subchapter. The following requirements apply to the designated doctor's receipt of medical records and analyses:

(1) The treating doctor and insurance carrier must provide the designated doctor copies of all the injured employee's medical records in their possession relating to the medical condition to be evaluated by the designated doctor.

(A) For subsequent examinations with the same designated doctor, the treating doctor and insurance carrier must provide only those medical records not previously sent.

(B) The cost of copying must be reimbursed in accordance with §134.120 of this title (relating to Reimbursement for Medical Documentation).

(2) The treating doctor and insurance carrier may also send the designated doctor an analysis of the injured employee's medical condition, functional abilities, and return-to-work opportunities.

(A) The analysis sent by any party may only cover the injured employee's medical condition, functional abilities, and return-to-work opportunities as provided in Labor Code §408.0041. The analysis may include supporting information, such as videotaped activities of the injured employee and marked copies of medical records.

(B) If the insurance carrier sends an analysis to the designated doctor, the insurance carrier must send a copy to the treating doctor, the injured employee, and the injured employee's representative, if any.

(C) If the treating doctor sends an analysis to the designated doctor, the treating doctor must send a copy to the insurance carrier, the injured employee, and the injured employee's representative, if any.

(3) The treating doctor and insurance carrier must ensure that the designated doctor receives the required records and analyses (if any) no later than three working days before the date of the designated doctor examination.

(A) If the designated doctor has not received the medical records or any part of them at least three working days before the examination, the designated doctor must report this violation to the division within one working day of not timely receiving the records.

(B) Once notified, the division will take action necessary to ensure that the designated doctor receives the records.

(C) If the designated doctor does not receive the medical records within one working day of the examination or does not have sufficient time to review the late medical records before the examination, the designated doctor must reschedule the examination to occur no later than 21 days after receiving the records.

(b) Requirement to review information. Before examining an injured employee, the designated doctor must review the injured employee's medical records, including any analysis of the injured employee's medical condition, functional abilities, and return to work opportunities that the insurance carrier and treating doctor provide in accordance with subsection (a) of this section, and any materials the division submits to the doctor.

(1) The designated doctor must also review the injured employee's medical condition, history, and any medical records the injured employee provides and must perform a complete physical examination of the injured employee.

(2) The designated doctor must give the medical records reviewed the weight the designated doctor determines to be appropriate.

(c) Additional testing and referrals. The designated doctor must perform additional testing when necessary to resolve the issue in question. The designated doctor must also refer an injured employee to other health care providers when the referral is necessary to resolve the issue in question, and the designated doctor is not qualified to fully resolve it.

(1) Any additional testing or referrals required for the evaluation are not subject to preauthorization requirements.

(2) Payment for additional testing or referrals that the designated doctor has determined are necessary under this subsection must not be denied prospectively or retrospectively, regardless of any potential disagreements about medical necessity, extent of injury, or compensability.

(3) Any additional testing or referrals required for the evaluation are subject to the requirements of §180.24 of this title (relating to Financial Disclosure).

(4) Any additional testing or referrals required for the evaluation of an injured employee under a certified workers' compensation network under Insurance Code Chapter 1305 or a political subdivision under Labor Code §504.053(b):

(A) are not required to use a provider in the same network as the injured employee; and

(B) are not subject to the network or out-of-network restrictions in Insurance Code §1305.101 (relating to Providing or Arranging for Health Care).

(5) Any additional testing or referral examination and the designated doctor's report must be completed within 15 working days of the designated doctor's physical examination of the injured employee unless the designated doctor receives division approval for additional time before the 15 working days expire.

(6) If the injured employee fails or refuses to attend the designated doctor's requested additional testing or referral examination within 15 working days or within the additional time the division approved, the designated doctor must complete the report based on the designated doctor's examination of the injured employee, the medical records received, and other information available to the doctor and indicate the injured employee's failure or refusal to attend the testing or referral examination in the report.

(d) MMI and impairment ratings. Any evaluation relating to either MMI, an impairment rating, or both, must be conducted in accordance with §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment). For examinations conducted under this subsection on or after June 5, 2023, the designated doctor may provide multiple certifications of MMI and impairment ratings only when directed by the division.

(e) Reports on MMI and impairment ratings. A designated doctor who determines the injured employee has reached MMI, assigns an impairment rating, or determines the injured employee has not reached MMI, must complete and file a report as required by §130.1 and §130.3 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment by a Doctor Other than the Treating Doctor).

(1) If the designated doctor provides multiple certifications of MMI and impairment ratings, the designated doctor must file a Report of Medical Evaluation under §130.1(d) of this title for each assigned impairment rating and a designated doctor examination data report under §127.220 of this title (relating to the Designated Doctor Reports) for the doctor's extent of injury determination.

(2) The designated doctor must submit only one narrative report required by §130.1(d)(1)(B) of this title on all assigned impairment ratings and extent of injury findings.

(3) All designated doctor narrative reports submitted under this subsection must comply with the requirements of §127.220(a) of this title (relating to Designated Doctor Reports).

(f) Reports on return to work. A designated doctor who examines an injured employee for any question relating to return to work must complete a Work Status Report that complies with §129.5 of this title (relating to Work Status Reports) and a narrative report that complies with the requirements of §127.220(a) of this title. The designated doctor must file the work status report and the narrative report together within seven working days of the date the designated doctor examines the injured employee.

(1) The designated doctor must file the reports with the treating doctor, the division, and the insurance carrier by fax or electronic transmission.

(2) The designated doctor must file the reports with the injured employee and the injured employee's representative (if any) by fax or electronic transmission if the designated doctor has a fax number or email for the recipient.

(3) If the designated doctor has no fax number or email for a recipient, the designated doctor must send them the reports by other verifiable means.

(g) Report on other issues. A designated doctor who resolves questions on issues other than those listed in subsections (d), (e), and (f) of this section must file a designated doctor examination data report that complies with §127.220(c) of this title and a narrative report that complies with §127.220(a) of this title within seven working days of the date the designated doctor examines the injured employee.

(1) The designated doctor must file these reports with the treating doctor, the division, and the insurance carrier by fax or electronic transmission.

(2) The designated doctor must provide these reports to the injured employee and the injured employee's representative (if any) by fax or electronic transmission if the designated doctor has a fax number or email for the recipient.

(3) If no fax number or email is provided for the recipient, the designated doctor must send the reports by other verifiable means.

(h) Presumptive weight. The designated doctor's report is given presumptive weight on the issue or issues the designated doctor was properly appointed to address, unless the preponderance of the evidence is to the contrary.

(i) Payment of benefits during dispute. The insurance carrier must pay all benefits, including medical benefits, in accordance with the designated doctor's report for the issue or issues in dispute.

(1) If the designated doctor provides multiple certifications of MMI and impairment ratings, the insurance carrier must pay benefits based on the conditions to which the designated doctor determines the compensable injury extends.

(2) For medical benefits, the insurance carrier has 21 days from receipt of the designated doctor's report to reprocess all medical bills previously denied for reasons inconsistent with the designated doctor's findings. By the end of this period, insurance carriers must pay these medical bills in accordance with the Labor Code and Chapters 133 and 134 of this title.

(3) The insurance carrier must pay all other benefits no later than five days after receiving the report.

(j) Record retention. The designated doctor must maintain accurate records for, at a minimum, five years from the anniversary date of the date of the designated doctor's last examination of the injured employee.

(1) This requirement does not reduce or replace any other record retention requirements imposed on a designated doctor by an appropriate licensing board.

(2) These records must include the injured employee's medical records, any analysis the insurance carrier or treating doctor submits (including supporting information), reports the designated doctor generates as a result of the examination, and narratives the insurance carrier and treating doctor provide, to reflect:

(A) the date and time of any designated doctor appointments scheduled with an injured employee;

(B) the circumstances for a cancellation, no-show, or other situation where the examination did not occur as initially scheduled or rescheduled, and if applicable, documentation of the agreement to reschedule the examination and the notice that the doctor provided to the division, the injured employee's treating doctor, and the insurance carrier within 24 hours of rescheduling an appointment;

(D) the date the designated doctor received medical records from the treating doctor or any other person;

(E) the date the designated doctor submitted the reports described in subsections (d), (e), and (f) of this section to all required parties and documentation that these reports were submitted to the division, treating doctor, and insurance carrier by fax or electronic transmission and to other required parties by verifiable means;

(F) if applicable, the names of any referral health care providers the designated doctor used, the dates of referral health care provider appointments, and the reason the designated doctor referred them; and

(G) if applicable, the date the doctor contacted the division for assistance in getting medical records from the insurance carrier or treating doctor.

(k) Dispute resolution. Parties may dispute any entitlement to benefits affected by a designated doctor's report through the dispute resolution processes outlined in Chapters 140-144 and 147 of this title (relating to dispute resolution processes, proceedings, and procedures).

History

Source Note: The provisions of this §127.10 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.15 Undue Influence on a Designated Doctor

(a) Communication about medical condition or history. To avoid undue influence on the designated doctor:

(1) except as provided by §127.10(a) of this title (relating to General Procedures for Designated Doctor Examinations), only the injured employee or appropriate division staff may communicate with the designated doctor about the injured employee's medical condition or history before the designated doctor examines the injured employee;

(2) after the examination is completed, only appropriate division staff may communicate with the designated doctor about the injured employee's medical condition or history; and

(3) the designated doctor may initiate communication with:

(A) any health care provider who previously treated or examined the injured employee for the work-related injury; or

(B) a peer review doctor that the insurance carrier identifies as having reviewed the injured employee's claim or any information about that claim.

(b) Communication about administrative matters. The insurance carrier, treating doctor, injured employee, or injured employee's representative, if any, may contact the designated doctor's office to ask about administrative matters, including, but not limited to, whether the designated doctor received the records, whether the exam took place, or whether the designated doctor has filed the report, or other similar matters.

History

Source Note: The provisions of this §127.15 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.20 Requesting a Letter of Clarification Regarding Designated Doctor Reports

(a) Filing a clarification request. Parties may file a request with the division for clarification of the designated doctor's report.

(1) The requesting party must provide copies of the request to all parties.

(2) The division may contact the designated doctor if it determines that clarification is necessary to resolve an issue regarding the designated doctor's report.

(3) Parties may only request clarification on issues already addressed by the designated doctor's report or on issues that the designated doctor was ordered to address but did not.

(4) A designated doctor must only respond to the questions or requests submitted to the designated doctor in the request for clarification and must not reconsider their previous decision, issue a new or amended decision, or provide clarification on their previous decision.

(b) Requirements. Requests for clarification must:

(1) include the name of the designated doctor, the reason for the examination, the date of the examination, and the requester's name and signature;

(2) explain why clarification of the designated doctor's report is necessary and appropriate to resolve a future or pending dispute;

(3) include questions for the designated doctor to answer that are not inflammatory or leading; and

(4) provide any medical records that were not previously provided to the designated doctor and explain why these records are necessary for the designated doctor to respond to the request for clarification.

(c) Requests by the division. At its discretion, the division may also request clarification from the designated doctor on any issue or issues.

(d) Responses to requests. To respond to a request for clarification, the designated doctor must be on the division's designated doctor list on the date of the request.

(1) The designated doctor must respond in writing to the request for clarification within five working days of receipt and send copies of the response to the parties listed in §127.10(g) of this title (relating to General Procedures for Designated Doctor Examinations).

(2) If the designated doctor must reexamine the injured employee to respond to the request for clarification, the doctor must:

(A) respond to the request for clarification in writing, advising of the need for an additional examination within five working days of receiving the request and provide copies of the response to the parties specified in §127.10(g) of this title;

(B) conduct the reexamination within 21 days from the date the division issues the order for the reexamination at the same address as the original examination; and

(C) respond in writing to the request for clarification based on the additional examination within seven working days of the examination and provide copies of the response to the parties specified in §127.10(g) of this title.

(e) Administrative violation. Any refusal or failure by a designated doctor to conduct a reexamination that is necessary to respond to a request for clarification is an administrative violation.

History

Source Note: The provisions of this §127.20 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective September 1, 2012, 37 TexReg 5422; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.25 Failure to Attend a Designated Doctor Examination

(a) Suspension of benefits. An insurance carrier may suspend temporary income benefits (TIBs), or lifetime income benefits under §408.1615, if an injured employee fails, without good cause, to attend a designated doctor examination or a referral examination under §127.10(c) of this title.

(b) No good cause. If there is no division finding that good cause exists, an insurance carrier may presume that the injured employee did not have good cause to fail to attend the examination if, by the day the examination was originally scheduled to occur, the injured employee has both:

(1) failed to submit to the examination; and

(2) failed to contact the designated doctor's office to reschedule the examination.

(c) Rescheduling timeframe. If the injured employee contacts the designated doctor within 21 days of the scheduled date of the missed examination to reschedule the examination, the designated doctor must schedule the examination to occur as soon as possible, but no later than 21 days after the injured employee contacted the doctor.

(d) New examination request required. If the injured employee fails to contact the designated doctor within 21 days of the missed examination date but wishes to reschedule the examination, the injured employee must request a new examination under §127.1 of this title (relating to Requesting Designated Doctor Examinations).

(e) Reinitiation of TIBs. The insurance carrier must reinitiate TIBs effective on the date the injured employee submitted to the rescheduled examination under subsection (c) of this section or the date the examination was scheduled at the injured employee's request under subsection (d) of this section, unless the designated doctor's report indicates that the injured employee has reached MMI or is otherwise not eligible for income benefits. The reinitiation of TIBs must occur no later than the seventh day following:

(1) the date the insurance carrier was notified that the injured employee submitted to the examination; or

(2) the date the insurance carrier was notified that the division found the injured employee had good cause for not attending the examination.

(f) Reinstatement of lifetime income benefits. The insurance carrier must reinstate lifetime income benefits under §408.1615 effective on the date the injured employee submitted to the rescheduled examination under subsection (c) of this section, or the date the examination was scheduled at the injured employee's request under subsection (d) of this section, unless the designated doctor's report indicates that the injured employee is no longer eligible for lifetime income benefits. The reinstatement of lifetime income benefits must occur no later than the seventh day following:

(1) the date the insurance carrier was notified that the injured employee submitted to the examination; or

(2) the date the insurance carrier was notified that the division found the injured employee had good cause for not attending the examination.

(g) Benefits during suspension. An injured employee is not entitled to TIBs or lifetime income benefits under §408.1615 during the period when the insurance carrier suspended benefits under this section unless the injured employee later submits to the examination, and:

(1) the division finds that the injured employee had good cause for not attending the examination; or

(2) the insurance carrier determines that the injured employee had good cause for not attending the examination.

History

Source Note: The provisions of this §127.25 adopted to be effective February 1, 2011, 35 TexReg 11324; amended to be effective September 1, 2012, 37 TexReg 5422; amended to be effective April 30, 2023, 48 TexReg 2123; amended to be effective November 21, 2024, 49 TexReg 9321.

Subchapter B DESIGNATED DOCTOR CERTIFICATION, RENEWAL, AND QUALIFICATIONS

28 Tex. Admin. Code § 127.100 Designated Doctor Certification

(a) Qualifications to get or renew certification. The division will not assign examinations to a designated doctor who does not meet all requirements for certification or renewal. All designated doctors must:

(1) Have a complete designated doctor certification application as described in subsection (b) of this section on file with the division.

(2) Complete all division-required trainings within 12 months of the date of application and have current documentation confirming their completion on file with the division.

(3) Pass all division-required testing on the specific duties of a designated doctor under the Labor Code and division rules and have current documentation confirming their passage on file with the division. Required testing must have been completed on or after May 13, 2013, and includes demonstrated proficient knowledge of the currently adopted edition of:

(A) the American Medical Association Guides to the Evaluation of Permanent Impairment; and

(B) the division's adopted:

(i) treatment guidelines; and

(ii) return-to-work guidelines.

(4) Have maintained an active practice for at least three years during the doctor's career. For the purposes of this subsection, a doctor has an active practice if the doctor maintains or has maintained routine office hours of at least 20 hours per week for 40 weeks per year to treat patients.

(5) For the duration of the doctor's term as a designated doctor:

(A) be licensed in Texas;

(B) own or subscribe to the current edition of the American Medical Association Guides to the Evaluation of Permanent Impairment adopted by the division to assign impairment ratings and all return-to-work and treatment guidelines adopted by the division; and

(b) Application. To be considered complete, an application for certification must include, and a renewal application must update or confirm:

(1) contact information for the doctor;

(2) information on the doctor's education;

(3) a description of the doctor's license or licenses, certifications, and professional specialty, if any;

(4) a description of the doctor's work history and hospital or other health care provider affiliations;

(5) a description of any affiliations the doctor has with a workers' compensation health care network certified under Insurance Code Chapter 1305 or political subdivision under Labor Code §504.053(b)(2);

(6) information on the doctor's current practice locations;

(7) detailed answers to disclosure questions on the doctor's professional background, education, training, and fitness to perform the duties of a designated doctor, including disclosure and summary of any disciplinary actions taken against the doctor by any state licensing board or other appropriate state or federal agency;

(8) the identity of any person the doctor has contracted with to assist in performing or administering the doctor's designated doctor duties;

(9) an attestation that:

(A) all information provided in the application is accurate and complete to the best of the doctor's knowledge;

(B) the doctor will inform the division of any changes to this information as required by §127.200(a)(8) of this title (relating to Duties of a Designated Doctor); and

(C) the doctor will consent to any on-site visits, as provided by §127.200(a)(15) of this title, by the division at facilities that the designated doctor uses or intends to use to perform designated doctor examinations for the duration of the doctor's certification.

(c) Retesting. If a doctor passes a division-required test, the doctor may not retest within a twelve-month period. If a doctor fails a division-required test, the doctor may not retest more than three times within a six-month period.

(1) After the first or second attempt, the doctor must wait 14 days before retaking the test.

(2) After the third attempt, the doctor must wait six months before retaking the test.

(d) Additional certification testing. On receipt of an application for designated doctor certification renewal, the division may require a designated doctor to complete additional certification testing to demonstrate proficient knowledge on the specific duties of a designated doctor under the Labor Code and division rules. Examples of circumstances that may require additional certification testing include, but are not limited to, individual need for retesting based on substandard performance, changes in the duties of a designated doctor, updates to the guidelines, and legislative changes.

(e) Notice of approval, denial, suspension, or revocation. The division will notify a doctor in writing of the commissioner's approval or denial of the doctor's application to be certified or renewed as a designated doctor; or of the division's suspension or revocation of the doctor's certification.

(f) Term and qualification. Approvals certify a doctor for a term of two years and will include:

(1) the effective date of the certification;

(2) the expiration date of the certification; and

(3) the designated doctor's examination qualifications under §127.130 of this title (relating to Qualification Standards for Designated Doctor Examinations).

(g) Renewal. A designated doctor who seeks to renew their certification immediately after their current term expires, without interruption, must apply for certification no later than 45 days before the end of the term.

(1) If the division does not receive all of the information required under subsection (b)(1) - (9) above no later than 45 days before the end of the designated doctor's term, the division will not assign examinations to the designated doctor during the last 45 days of an expiring term.

(2) The designated doctor may still provide services on claims the division had previously assigned to them during this 45-day period.

(h) Approval of renewal application with restrictions. An application for renewal may be approved with restrictions. The division may restrict a designated doctor's certification until the doctor complies with the requirements in the designated doctor's approval of certification. Designated doctors whose certification is restricted may dispute the restriction through the procedure described in subsection (k) of this section.

(i) Adverse certification actions. The division may deny, suspend, or revoke a designated doctor's certification for any of the following reasons:

(1) if the doctor did not submit a complete application for certification as required under subsection (b) of this section;

(2) for having a relevant restriction on their practice imposed by a state licensing board, certification authority, or other appropriate state or federal agency, including the division;

(3) if the doctor failed to update their application for certification properly; or

(4) for other activities, events, or occurrences that the commissioner determines warrant denial of a doctor's application for certification as a designated doctor, including, but not limited to:

(A) the quality of the designated doctor's past reports;

(B) the designated doctor's history of complaints;

(D) a pattern of overturned reports by the division or a court;

(E) a demonstrated lack of ability to apply or properly consider the American Medical Association Guides to the Evaluation of Permanent Impairment adopted by the division to assign impairment ratings and all return-to-work and treatment guidelines adopted by the division;

(F) a demonstrated lack of ability to consistently perform designated doctor examinations in a timely manner;

(G) a demonstrated failure to identify disqualifying associations;

(H) a demonstrated lack of ability to ensure the confidentiality of injured employee medical records and claim information provided to or generated by a designated doctor;

(I) a history of unnecessary referral examinations or testing;

(J) a failure to comply with the requirements of §180.24 of this title (relating to Financial Disclosure) when they requested referral examinations or additional testing;

(K) applying for certification less than a year from denial of a previous designated doctor certification application; or

(L) any grounds that would allow the division to sanction a health care provider under the Labor Code or division rules.

(j) Response to denial of certification. Within 15 working days after receiving a written denial, a doctor may file a written response with the division addressing the reasons the division gave to the doctor for its denial.

(1) If the division does not receive a written response by the 15th working day after the date the doctor received the notice, the denial will be final effective the next day. The division will not send further notice.

(2) If the division timely receives a written response that disagrees with the denial, the division will review the response and notify the doctor in writing of the commissioner's final decision.

(A) If the final decision is still a denial, the division's final notice will provide the reasons the doctor's response did not change the commissioner's decision to deny the doctor's application for certification as a designated doctor.

(B) The denial will be effective the day after the doctor receives notice of the denial, unless the notice specifies otherwise.

(k) Request for informal conference. A designated doctor whose renewal application is denied, or whose certification is suspended or revoked, may either respond in writing using the procedure in subsection (j) of this section or submit a written request for an informal conference before the division to address those reasons.

(1) If the division does not receive a written request for an informal conference by the 15th working day after the date the doctor received the notice, the denial, suspension, or revocation will be final effective the next day. The division will not send further notice.

(2) If the division timely receives a written request for an informal conference, it will set the informal conference to occur no later than 31 days after it received the request.

(A) At the informal conference, the designated doctor may present evidence that addresses the reasons the doctor was denied certification, or the reasons the doctor's certification was suspended or revoked, to the commissioner's designated representatives.

(B) The designated doctor may have an attorney present.

(C) At the end of the informal conference, the commissioner's designated representatives will provide the designated doctor with their final recommendation on the doctor's certification.

(i) If the final recommendation is still a denial, suspension, or revocation, the commissioner's designated representatives will provide the reasons for not certifying the doctor as a designated doctor.

(ii) After the informal conference, the commissioner's designated representatives will send their final recommendation to the commissioner, who will review it and all evidence presented at the informal conference and make a final decision.

(iii) The division will notify the designated doctor of the commissioner's final decision in writing.

(iv) The decision will be effective the day after the doctor receives notice of the decision, unless the notice specifies otherwise.

History

Source Note: The provisions of this §127.100 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.120 Exception to Certification as a Designated Doctor for Out-of-State Doctors

If the injured employee is temporarily located or resides out of state, the division may waive any of the requirements in this chapter for an out-of-state doctor to serve as a designated doctor to help timely resolve a dispute or perform a particular examination.

History

Source Note: The provisions of this §127.120 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.130 Qualification Standards for Designated Doctor Examinations

(a) Applicability. This section applies to designated doctor assignments made on or after June 5, 2023.

(b) Qualification standards by type of injury or diagnosis. A designated doctor is qualified to perform a designated doctor examination on an injured employee if the designated doctor meets the appropriate qualification standard for the area of the body affected by the injury and the injured employee's diagnosis and has no disqualifying associations under §127.140 of this title (relating to Disqualifying Associations). A designated doctor's qualification standards are as follows:

(1) To examine injuries and diagnoses relating to the hand and upper extremities, a designated doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of chiropractic.

(2) To examine injuries and diagnoses relating to the lower extremities excluding feet, a designated doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of chiropractic.

(3) To examine injuries and diagnoses relating to the spine and musculoskeletal structures of the torso, a designated doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of chiropractic.

(4) To examine injuries and diagnoses relating to feet, including toes and heel, a designated doctor must be a licensed medical doctor, doctor of osteopathy, doctor of chiropractic, or doctor of podiatric medicine.

(5) To examine injuries and diagnoses relating to the teeth and jaw, including a temporomandibular joint, a designated doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of dental surgery.

(6) To examine injuries and diagnoses relating to the eyes, including the eye and adnexal structures of the eye, a designated doctor must be a licensed medical doctor, doctor of osteopathy, or doctor of optometry.

(7) To examine injuries and diagnoses relating to mental and behavioral disorders, a designated doctor must be a licensed medical doctor or doctor of osteopathy.

(8) A designated doctor must be a licensed medical doctor or doctor of osteopathy to examine injuries and diagnoses relating to other body areas or systems, including, but not limited to:

(A) internal systems;

(B) ear, nose, and throat;

(D) skin;

(E) cuts to skin involving underlying structures;

(F) non-musculoskeletal structures of the torso;

(G) hernia;

(H) respiratory;

(I) endocrine;

(J) hematopoietic; and

(K) urologic.

(9) Notwithstanding paragraphs (1) - (8) of this subsection, a designated doctor must be a licensed medical doctor or doctor of osteopathy with the required board certification to examine any of the following diagnoses.

(A) For purposes of this section, a designated doctor is "board-certified" in a required specialty or subspecialty, as applicable, if they hold or previously held:

(i) a general certificate in the required specialty or a subspecialty certificate in the required subspecialty from the American Board of Medical Specialties (ABMS); or

(ii) a primary certificate in the required specialty and a certificate of special qualifications or certificate of added qualifications in the required subspecialty from the American Osteopathic Association Bureau of Osteopathic Specialists (AOABOS).

(B) To examine traumatic brain injuries, including concussion and post-concussion syndrome, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) neurological surgery;

(II) neurology;

(III) physical medicine and rehabilitation;

(IV) psychiatry;

(V) orthopaedic surgery;

(VI) occupational medicine;

(VII) dermatology;

(VIII) plastic surgery;

(IX) surgery;

(X) anesthesiology with a subspecialty in pain medicine;

(XI) emergency medicine;

(XII) internal medicine;

(XIII) thoracic and cardiac surgery; or

(XIV) family medicine.

(ii) Qualifying AOABOS certifications are:

(I) neurological surgery;

(II) neurology;

(III) physical medicine and rehabilitation;

(IV) psychiatry;

(V) orthopedic surgery;

(VI) preventive medicine/occupational-environmental medicine;

(VII) preventive medicine/occupational;

(VIII) dermatology;

(IX) plastic and reconstructive surgery;

(X) surgery (general);

(XI) anesthesiology with certificate of added qualifications in pain management;

(XII) emergency medicine;

(XIII) internal medicine;

(XIV) thoracic and cardiovascular surgery; or

(XV) family practice and osteopathic manipulative treatment.

(C) To examine spinal cord injuries and diagnoses, including a spinal fracture with documented neurological injury, or vascular injury, more than one spinal fracture, or cauda equina syndrome, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) neurological surgery;

(II) neurology;

(III) physical medicine and rehabilitation;

(IV) orthopaedic surgery; or

(V) occupational medicine.

(ii) Qualifying AOABOS certifications are:

(I) neurological surgery;

(II) neurology;

(III) physical medicine and rehabilitation;

(IV) orthopedic surgery;

(V) preventive medicine/occupational-environmental medicine; or

(VI) preventive medicine/occupational.

(D) To examine severe burns, including chemical burns defined as deep partial or full thickness burns, also known as second, third, or fourth-degree burns, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) dermatology;

(II) physical medicine and rehabilitation;

(III) plastic surgery;

(IV) orthopaedic surgery;

(V) surgery; or

(VI) occupational medicine.

(ii) Qualifying AOABOS certifications are:

(I) dermatology;

(II) physical medicine and rehabilitation;

(III) plastic and reconstructive surgery;

(IV) orthopedic surgery;

(V) surgery (general);

(VI) preventive medicine/occupational-environmental medicine; or

(VII) preventive medicine/occupational.

(E) To examine complex regional pain syndrome (reflex sympathetic dystrophy), a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) neurological surgery;

(II) neurology;

(III) orthopaedic surgery;

(IV) plastic surgery;

(V) anesthesiology with a subspecialty in pain medicine;

(VI) occupational medicine; or

(VII) physical medicine and rehabilitation.

(ii) Qualifying AOABOS certifications are:

(I) neurological surgery;

(II) neurology;

(III) orthopedic surgery;

(IV) plastic surgery;

(V) preventive medicine/occupational-environmental medicine;

(VI) preventive medicine/occupational;

(VII) anesthesiology with certificate of added qualifications in pain management; or

(VIII) physical medicine and rehabilitation.

(F) To examine any joint dislocation, one or more fractures with vascular injury, one or more pelvis fractures, or multiple rib fractures, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) emergency medicine;

(II) orthopaedic surgery;

(III) plastic surgery;

(IV) physical medicine and rehabilitation; or

(V) occupational medicine.

(ii) Qualifying AOABOS certifications are:

(I) emergency medicine;

(II) orthopedic surgery;

(III) plastic surgery;

(IV) physical medicine and rehabilitation;

(V) preventive medicine/occupational-environmental medicine; or

(VI) preventive medicine/occupational.

(G) To examine complicated infectious diseases requiring hospitalization or prolonged intravenous antibiotics, including blood borne pathogens, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) internal medicine; or

(II) occupational medicine.

(ii) Qualifying AOABOS certifications are:

(I) internal medicine;

(II) preventive medicine/occupational-environmental medicine; or

(III) preventive medicine/occupational.

(H) To examine chemical exposure, excluding chemical burns, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) internal medicine;

(II) emergency medicine; or

(III) occupational medicine.

(ii) Qualifying AOABOS certifications are:

(I) internal medicine;

(II) emergency medicine;

(III) preventive medicine/occupational-environmental medicine; or

(IV) preventive medicine/occupational.

(I) To examine heart or cardiovascular conditions, a designated doctor must be board-certified by the ABMS or AOABOS.

(i) Qualifying ABMS certifications are:

(I) internal medicine;

(II) emergency medicine;

(III) occupational medicine;

(IV) thoracic and cardiac surgery; or

(V) family medicine.

(ii) Qualifying AOABOS certifications are:

(I) internal medicine;

(II) emergency medicine;

(III) preventive medicine/occupational-environmental medicine;

(IV) preventive medicine/occupational;

(V) thoracic and cardiovascular surgery; or

(VI) family practice and osteopathic manipulative treatment.

(c) Qualification to perform initial examination. To be qualified to perform an initial examination on an injured employee, a designated doctor, other than a chiropractor, must be qualified under Labor Code §408.0043. A designated doctor who is a chiropractor must be qualified to perform an initial designated doctor examination under Labor Code §408.0045.

(d) Exemption from qualification standards. If a designated doctor is not available with the qualifications listed in subsections (b)(9)(A) - (I), the division may exempt a medical doctor or doctor of osteopathy from any of the qualification standards specified in this chapter to serve as a designated doctor to help timely resolve a dispute or perform a particular examination.

(e) Continuity of examinations. A designated doctor who performs an initial designated doctor examination of an injured employee and meets the appropriate qualification standard to perform that examination under subsection (b) of this section will remain assigned to that claim and perform all subsequent examinations of that injured employee unless the division authorizes or requires the designated doctor to discontinue providing services on that claim.

(f) Removal of designated doctor from a claim. The division may authorize a designated doctor to stop providing services on a claim if the doctor does any of the following:

(1) decides to stop practicing in the workers' compensation system.

(2) decides to stop practicing as a designated doctor in the workers' compensation system.

(3) relocates their residence or practice.

(4) asks the division to indefinitely defer the doctor's availability on the designated doctor list.

(5) determines that examining the injured employee would exceed the scope of practice authorized by their license. The division's assignment of a designated doctor exam does not alter the scope of practice authorized by the designated doctor's professional license. Section 127.200(a)(12) of this title requires a designated doctor to notify the division if continuing to participate on a claim would exceed their scope of practice.

(6) can otherwise demonstrate to the division that their continued service on the claim would be impracticable or could impair the quality of examinations performed on the claim.

(g) Prohibition. The division will prohibit a designated doctor from providing services on a claim if:

(1) the doctor has failed to become certified as a designated doctor;

(2) the doctor no longer meets the appropriate qualification standard under subsection (b) of this section to perform examinations on the claim;

(3) the doctor has a disqualifying association specified in §127.140 of this title that is relevant to the claim;

(4) the doctor has repeatedly failed to respond to division appointment, clarification, or document requests or other division inquiries about the claim;

(5) the doctor's continued service on the claim could endanger the health, safety, or welfare of either the injured employee or doctor; or

(6) the division has revoked or suspended the designated doctor's certification.

(h) License revoked or suspended. The division will prohibit a designated doctor from performing examinations on all new or existing claims if the designated doctor's license has been revoked or suspended, and the suspension has not been probated by an appropriate licensing authority.

History

Source Note: The provisions of this §127.130 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.140 Disqualifying Associations

(a) Definition. A disqualifying association is any association that may reasonably be perceived as having potential to influence the conduct or decision of a designated doctor. Disqualifying associations may include:

(1) receipt of income, compensation, or payment of any kind not related to health care the doctor provides;

(2) shared investment or ownership interest;

(3) contracts or agreements that provide incentives, such as referral fees, payments based on volume or value, and waiver of beneficiary coinsurance and deductible amounts;

(4) contracts or agreements for space or equipment rentals, personnel services, management contracts, referral services, billing services agents, documentation management or storage services or warranties, or any other services related to managing or operating the doctor's practice;

(5) personal or family relationships;

(6) a contract with the same workers' compensation health care network certified under Insurance Code Chapter 1305 or a contract with the same political subdivision or political subdivision health plan under Labor Code §504.053(b)(2) that is responsible for providing medical benefits to the injured employee; or

(7) any other financial arrangement that would require disclosure under the Labor Code, the Insurance Code, or applicable rules, or any other association with the injured employee, the employer, or insurance carrier that may give the appearance of preventing the designated doctor from rendering an unbiased opinion.

(b) Disqualification of agent. A designated doctor also has a disqualifying association relevant to an examination or claim if an agent of the designated doctor has an association relevant to the claim that would constitute a disqualifying association under subsection (a) of this section.

(c) Prohibition. A designated doctor must not perform an examination if that doctor has a disqualifying association relevant to that claim.

(1) If a designated doctor learns of a disqualifying association relevant to a claim after accepting the examination, the designated doctor must notify the division of that disqualifying association within two working days of learning of the disqualifying association.

(2) A designated doctor who performs an examination even though the doctor has a disqualifying association relevant to that claim commits an administrative violation.

(d) Notice required. Within five days of receiving the division's order of designated doctor examination under §127.5(b) of this title (relating to Scheduling Designated Doctor Appointments), insurance carriers must notify the division of any disqualifying associations between the designated doctor and injured employee because of the network affiliations described under subsection (a)(6) of this section.

(e) Effect of disqualifying association. If the division determines that a designated doctor with a disqualifying association performed a designated doctor examination, all reports produced by that designated doctor as a result of that examination are stripped of their presumptive weight.

(f) Disputes about disqualifying associations. A party that seeks to dispute the selection of a designated doctor for a particular examination based on a disqualifying association or dispute the presumptive weight of a designated doctor's report based on a disqualifying association must do so through the division's dispute resolution processes in Labor Code Chapter 410 and Chapters 140-144 and 147 of this title (relating to dispute resolution processes, proceedings, and procedures).

History

Source Note: The provisions of this §127.140 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

Subchapter C DESIGNATED DOCTOR DUTIES AND RESPONSIBILITIES

28 Tex. Admin. Code § 127.200 Duties of a Designated Doctor

(a) Duties. All designated doctors must:

(1) Perform designated doctor examinations in a facility:

(A) currently used and properly equipped for medical examinations or other similar health care services; and

(B) that ensures safety, privacy, and accessibility for injured employees, injured employee medical records, and other records containing confidential claim information.

(2) Ensure the confidentiality of medical records, analyses, and forms provided to or generated by the designated doctor in the doctor's capacity as a designated doctor for the duration of the retention period specified in §127.10(i) of this title (relating to General Procedures for Designated Doctor Examinations) and ensure the destruction of these medical records after both this retention period expires and the designated doctor determines the information is no longer needed.

(3) Ensure that all agreements with persons that permit those parties to perform designated doctor administrative duties, including, but not limited to, billing and scheduling duties, on the designated doctor's behalf:

(A) are in writing and signed by the designated doctor and the persons with whom the designated doctor is contracting;

(B) define the administrative duties that the person may perform on behalf of the designated doctor;

(D) comply with all medical billing and payment requirements under Chapter 133 of this title (relating to General Medical Provisions);

(E) do not constitute an improper inducement relating to the delivery of benefits to an injured employee under Labor Code §415.0036 and §180.25 of this title (relating to Improper Inducements, Influence and Threats); and

(F) are made available to the division on request.

(4) Notify the division in writing and in advance if the designated doctor voluntarily defers their availability to receive any offers of examinations for personal or other reasons. The notice must specify the duration and reason for the deferral.

(5) Notify the division in writing and in advance if the designated doctor no longer wishes to practice as a designated doctor before the doctor's current certification as a designated doctor expires. A designated doctor who no longer wishes to practice before their current certification expires must expressly surrender their certification in a signed, written statement to the division.

(6) Be physically present in the same room as the injured employee for the designated doctor examination or any other health care service provided to the injured employee that is not referred to another health care provider under §127.10(c) of this title.

(7) Apply the appropriate edition of the American Medical Association Guides to the Evaluation of Permanent Impairment and division-adopted return-to-work guidelines under §137.10 (relating to Return to Work Guidelines) and consider division-adopted treatment guidelines under §137.100 (relating to Treatment Guidelines) or other evidence-based medicine when appropriate.

(8) Provide the division with updated information within 10 working days of a change in any information they provide to the division on their application for certification.

(9) Maintain a professional and courteous demeanor when performing the duties of a designated doctor, including, but not limited to, explaining the purpose of a designated doctor examination to an injured employee at the beginning of the examination and using non-inflammatory, appropriate language in all reports and documents they produce.

(10) Bill for designated doctor examinations and receive payment for those examinations in accordance with Chapters 133 and 134 of this title (relating to Benefits--Guidelines for Medical Services, Charges, and Payments).

(11) Respond timely to all division appointments, clarifications, document requests, or other division inquiries.

(12) Notify the division if their continued participation on a claim they have already been assigned would exceed the scope of practice authorized by their license.

(13) Not perform required medical examinations, utilization reviews, or peer reviews on a claim they have been assigned as a designated doctor.

(14) Identify themselves at the beginning of every designated doctor examination.

(15) Consent to and cooperate during any on-site visits by the division under §180.4 of this title (relating to On-Site Visits).

(A) Notwithstanding §180.4(e)(2) of this title, the division's purpose for these visits is to ensure the designated doctor's compliance with the Labor Code and applicable division rules.

(B) The notice provided to the designated doctor under §180.4 of this title, either in advance or at the time of the on-site visit, will specify the duties the division will investigate during that visit.

(16) Cooperate with all division compliance audits and quality reviews.

(17) Complete required training or pass required testing detailed in the designated doctor's approval of certification.

(18) Comply with all applicable laws and rules.

(b) Agents. For the purposes of this chapter, Chapter 180 of this title (relating to Monitoring and Enforcement), and all other applicable laws and division rules, any person with whom a designated doctor contracts or otherwise permits to perform designated doctor administrative duties on behalf of the designated doctor qualifies as the doctor's "agent" as defined under §180.1 of this title (relating to Definitions).

History

Source Note: The provisions of this §127.200 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.210 Designated Doctor Administrative Violations

(a) Grounds for sanctions. In addition to the grounds for issuing sanctions against a doctor under §180.26 of this title (relating to Criteria for Imposing, Recommending and Determining Sanctions; Other Remedies), other division rules, or the Labor Code, the commissioner may revoke or suspend a designated doctor's certification as a designated doctor or sanction a designated doctor for noncompliance with requirements of this chapter for:

(1) refusing four times within a 90-day period to accept or perform a division-offered appointment or division-ordered appointment for which the doctor is qualified and that relates to a claim to which the doctor has not been previously assigned;

(2) refusing four consecutive times to perform a division-offered appointment within the required time frames or a division-ordered appointment for which the doctor is qualified and relates to a claim the doctor has not been previously assigned to;

(3) failing to attend a designated doctor examination;

(4) not complying with the rescheduling requirements of this chapter;

(5) refusing at any time to accept or perform a division-offered appointment or division-ordered appointment that relates to a claim on which the doctor has previously performed an examination;

(6) misrepresenting or omitting pertinent facts in medical evaluation and narrative reports;

(7) submitting unnecessary referrals to other health care providers to answer any question that the division submits to the designated doctor;

(8) ordering or performing unnecessary testing of an injured employee as part of a designated doctor's examination;

(9) submitting inaccurate or inappropriate reports due to insufficient medical history or physical examination and analysis of medical records;

(10) submitting designated doctor reports that fail to include all elements required by §127.220 of this title (relating to Designated Doctor Reports), §127.10 of this title (relating to General Procedures for Designated Doctor Examinations), and other division rules;

(11) failing to timely respond to a request for clarification from the division about an examination or any other information the division requests;

(12) failing to successfully complete training and testing requirements as specified in §127.100 of this title (relating to Designated Doctor Certification);

(13) self-referring, including referring to another health care provider with whom the designated doctor has a disqualifying association, for treatment or becoming the employee's treating doctor for the medical condition the designated doctor evaluated;

(14) behaving in an abusive or assaultive manner toward an injured employee, the division, or other system participant;

(15) failing to maintain the confidentiality of patient medical and claim file information;

(16) performing a designated doctor examination that the division did not order the doctor to perform;

(17) failing to complete required training or pass required testing detailed in the designated doctor's approval of certification; or

(18) violating other applicable statutes or rules while serving as a designated doctor.

(b) Responsibility for agents' actions. Designated doctors are liable for all administrative violations committed by their agents on the designated doctor's behalf under this section, other division rules, or any other applicable law.

(c) Notification and appeal. The process for notification and opportunity for appeal of a sanction is governed by §180.27 of this title (relating to Restoration) except that suspension, revocation, or other sanctions relating to a designated doctor's certification will be in effect during the pendency of any appeal.

History

Source Note: The provisions of this §127.210 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective April 30, 2023, 48 TexReg 2123.

28 Tex. Admin. Code § 127.220 Designated Doctor Reports

(a) Format and submission. Designated doctor narrative reports must be filed in the form and manner required by the division. At a minimum, they must do all of the following:

(1) Identify the question or questions the division ordered to be addressed by the designated doctor examination.

(2) Provide a clearly defined answer for each question to be addressed by the designated doctor examination and only for each of those questions.

(3) Sufficiently explain how the designated doctor determined the answer to each question within a reasonable degree of medical probability.

(4) Demonstrate, as appropriate, application or consideration of the American Medical Association Guides to the Evaluation of Permanent Impairment, division-adopted return-to-work and treatment guidelines, and other evidence-based medicine, if available.

(5) Include general information about the identity of the designated doctor, injured employee, employer, treating doctor, and insurance carrier.

(6) State the date of the examination and the address where it took place.

(7) Summarize any additional testing conducted or referrals made as part of the evaluation, including:

(A) the identity of any health care providers to which the designated doctor referred the injured employee under §127.10(c) of this title (relating to General Procedures for Designated Doctor Examinations);

(B) the types of tests conducted or referrals made;

(D) an explanation of why the testing or referral was necessary to resolve a question at issue in the examination; and

(E) the date the testing or referral examination was completed.

(8) Include a narrative description of the medical history, physical examination, and medical decisions the designated doctor made, including the time the designated doctor began taking the medical history of the injured employee, physically examined the employee, and engaged in medical decision making, and the time the designated doctor completed these tasks.

(9) List the specific medical records or other documents the designated doctor reviewed as part of the evaluation, including the dates of those documents and which medical records were provided by the injured employee.

(10) Provide the total amount of time required for the designated doctor to review the medical records.

(11) Be signed by the designated doctor who performed the examination.

(12) Include a statement that there is no known disqualifying association as described in §127.140 of this title (relating to Disqualifying Associations) between the designated doctor and the injured employee, the injured employee's treating doctor, the insurance carrier, the insurance carrier's certified workers' compensation health care network, or a network established under Labor Code Chapter 504.

(13) Certify the date that the report was sent to all recipients as required and in the manner required by §127.10 of this title.

(14) Indicate on the report that the designated doctor reviewed and approved the final version of the report.

(b) Additional forms required. Designated doctors who perform examinations under §127.10(d) or (e) of this title must also complete and file the division forms required by those subsections with their narrative reports. Designated doctors must complete and file these forms in the manner required by applicable division rules.

(c) Designated doctor examination data report. Designated doctors who perform examinations under §127.10(f) of this title must, in addition to filing a narrative report that complies with subsection (a) of this section, also file a designated doctor examination data report in the form and manner required by the division. A designated doctor examination data report must:

(1) include general information regarding the identity of the designated doctor, injured employee, insurance carrier, as well as the identity of the certified workers' compensation health care network under Insurance Code Chapter 1305, if applicable, or whether the injured employee is receiving medical benefits through a political subdivision health care plan under Labor Code §504.053(b)(2) and the identity of that plan, if applicable;

(2) identify the question or questions the division ordered to be addressed by the designated doctor examination;

(3) provide a clearly defined answer for each question to be addressed by the designated doctor examination and only for each of those questions. For extent of injury examinations, the designated doctor should also provide, for informational purposes only, a diagnosis code for each disputed injury;

(4) state the date of the examination, the time the examination began, and the address where the examination took place;

(5) list any additional testing conducted or referrals made as part of the evaluation, including the identity of any healthcare providers to which the designated doctor referred the injured employee under §127.10(c) of this title, the types of tests conducted or referrals made and the dates the testing or referral examinations occurred; and

(6) be signed by the designated doctor who performed the examination.

History

Source Note: The provisions of this §127.220 adopted to be effective September 1, 2012, 37 TexReg 5422; amended to be effective November 4, 2018, 43 TexReg 7149; amended to be effective April 30, 2023, 48 TexReg 2123.

Chapter 128 BENEFITS--CALCULATION OF AVERAGE WEEKLY WAGE

28 Tex. Admin. Code § 128.1 Average Weekly Wage: General Provisions

(a) The average weekly wage (AWW) calculation for an injured employee (employee) shall be calculated depending on whether the employee was employed in one of the following five courses of employment:

(1) full-time (see §128.3 of this title (relating to Average Weekly Wage Calculation for Full-Time Employees, And For Temporary Income Benefits For All Employees));

(2) part-time (see §128.4 of this title (relating to Average Weekly Wage Calculation For Part-Time Employees));

(3) seasonal (see §128.5 of this title (relating to Average Weekly Wage Calculation for Seasonal Employees));

(4) school district employed (see §128.7 of this title (relating to Average Weekly Wage for School District Employees)); and

(5) multiple employment (see Texas Labor Code §408.042 and subsection (h) of this section).

(b) Except as provided by §128.7, an employee's wage, for the purpose of calculating the AWW, shall include:

(1) all pecuniary wages (as defined by §126.1 of this title (relating to Definitions Applicable to All Benefits)) paid by the employer to the employee even if the employer has continued to provide the wages after the date of injury (in which case these wages could be considered post-injury earnings under §129.2 of this title (relating to Entitlement to Temporary Income Benefits)); and

(2) all nonpecuniary wages (as defined by §126.1 of this title) paid by the employer to the employee prior to the compensable injury but not continued by the employer after the injury (though only during a period in which the employer has discontinued providing the wages).

(1) payments made by an employer to reimburse the employee for the use of the employee's equipment, for paying helpers, for reimbursing actual expenses related to employment such as travel related expenses (e.g. meals, lodging, transportation, parking, tolls, and porters), or reimbursing mileage up to the state rate for mileage; or

(2) any nonpecuniary wages continued by the employer after the compensable injury. However, except as provided by §128.7 of this title and Texas Labor Code §408.042(e), if the employer discontinues providing nonpecuniary wages, the AWW shall be recalculated and these discontinued nonpecuniary wages shall be included.

(d) The AWW shall be calculated using gross wages.

(e) If a carrier determines or is notified that the employee's AWW is different than what the carrier had previously determined (either as a result of subsection (c)(2) of this section, receipt of an updated wage statement, or by operation of other adjustments permitted/required under this title), the carrier shall adjust the AWW and begin payment of benefits based upon the adjusted AWW no later than the first payment due at least seven days following the date the carrier receives the new information regarding the AWW.

(f) The carrier shall provide notice to the employee and the division of any adjustments to the AWW and its affect on benefits in accordance with the requirements of §124.2 of this title (relating to Carrier Reporting and Notification Requirements).

(g) Additional adjustments to the AWW may be made in specific circumstances for seasonal employees and school district employees (see §128.5 and §128.7 of this title, respectively), and for employees who are also minors, apprentices, trainees, or students on the date of injury (see §128.6 of this title (relating to Average Weekly Wage Adjustment For Certain Employees Who Are Also Minors, Apprentices, Trainees, or Students)).

(h) For employees injured on or after July 1, 2002, who are employed by more than one employer on the date of injury and the employee submits the wage information from the other employer(s) in the form and manner prescribed by §122.5 of this title (relating to Employee's Multiple Employment Wage Statement), the carrier shall calculate the AWW using the wages from all the employers in accordance with this section. The employee's AWW shall be the sum of the AWWs for each employer.

(1) The portion of the AWW that is based upon employment with the "Claim Employer" (as the term is defined in §122.5 of this title) shall be calculated in accordance with the rule in this chapter which would be used to calculate the employee's AWW if the employee did not have multiple employment.

(A) This portion of the AWW may be different for calculating Temporary Income Benefits (TIBs) than it is for calculating other types of benefits as provided in other sections of this title (such as where the wages may be adjusted for a part-time employee under §128.4 of this title).

(B) This portion of the AWW shall be adjusted if the Claim Employer discontinues providing a nonpecuniary wage that the employer had previously continued after the date of injury.

(2) The portion of the employee's AWW based upon employment with each "Non-Claim Employer" (as the term is defined in §122.5 of this title) shall be calculated in accordance with §128.3 of this title (relating to Average Weekly Wage Calculations for Full-Time Employees, and for Temporary Income Benefits for All Employees) except that the employee's wages from the Non-Claim Employer(s) shall only include those wages that are reportable for federal income tax purposes.

(A) This portion of the AWW of an employee whose employment was limited by the Non-Claim Employer to less than full-time but whose employment was not so limited as a regular course of conduct shall be adjusted to the weekly wage level the employee would have attained by working a full-time workweek at the employee's average rate of pay.

(B) Once calculated correctly, the portion of the AWW based upon employment with the Non-Claim Employer(s) does not vary by benefit type.

History

Source Note: The provisions of this §128.1 adopted to be effective January 11, 1991, 16 TexReg 118; amended to be effective May 16, 2002, 27 TexReg 4036; amended to be effective January 1, 2012, 36 TexReg 8860.

28 Tex. Admin. Code § 128.2 Carrier Presumption of Employee's Average Weekly Wage

(a) An insurance carrier (carrier) shall promptly initiate the payment of income benefits as required by the Workers' Compensation Act (Act). To expedite payment, the carrier shall presume that multiplying the employee's hourly rate times the average number of hours in the employee's standard work week, or, if such information is not available, that the employer's last payment to the employee for personal services based on a full week's work (a partial work week shall be prorated for a full week) accurately reflects the employee's average weekly wage (AWW) until:

(1) the employer files a complete wage statement required by §120.4 of this title (relating to Employer's Wage Statement); or

(2) the correct AWW is determined by other evidence (such as that described in subsections (b) and (c) of this section), if the employer does not file a complete wage statement or if the employee files an Employee's Multiple Employment Wage Statement in accordance with §122.5 of this title (relating to Employee's Multiple Employment Wage Statement).

(b) In the absence of a properly completed wage statement, the carrier shall calculate the correct wage by using available wage information in a manner which is fair, just, and reasonable, and which involves a methodology that allows the closest approximation of a calculation based upon a 13 week average as required by this chapter (for example, pecuniary wages would be included regardless of whether the employer continues them and earnings after the date of injury would not be included). Subsection (c) of this section provides examples of how to do this.

(c) This subsection provides a non-inclusive list of methods that carriers can use to calculate the correct AWW using evidence other than a complete wage statement. There may be other, similar but unlisted methods that are also appropriate in a given situation.

(1) For a salaried employee, paid on monthly or semi-monthly basis, whose salary has not changed in the 13 weeks prior to the compensable injury, the carrier may presume that the AWW is equal to 3 months of wages divided by 13.

(2) For an employee on whom the carrier receives 14 weeks of wage information but is unable to identify the amount of the wages paid in the 14th week (thus leaving 13 usable weeks), the carrier may presume that the AWW is equal to the 14 weeks of wages divided by 14.

(3) For an employee on whom the carrier receives less than 13 weeks of wage information because the employee was not employed with the employer for 13 weeks prior to the injury, the carrier may presume that the AWW is equal to the amount of wages paid divided by the number of weeks for which the wages were earned.

(d) Upon receipt of a properly completed wage statement the carrier shall recalculate the AWW in accordance with the applicable rule(s).

(e) If, at the time that income or death benefits first accrue, the carrier has not received a complete wage statement as required by §120.4 of this title (relating to Employer's Wage Statement), the carrier shall notify the employer that the wage statement is now required under the Statute and Rules.

(f) If a carrier receives a wage statement that indicates that the employee was provided nonpecuniary wages prior to the date of injury but that does not indicate whether the employer is going to continue them or not, the carrier shall assume that the nonpecuniary wages are not being continued by the employer until and unless the carrier is able to verify that the nonpecuniary wages are being continued by the employer.

(g) In the event that the claimant or the carrier believes that the AWW computed by following the calculations in this rule does not reflect the true AWW, the claimant and carrier may enter into a written agreement on the AWW or request a benefit review conference.

History

Source Note: The provisions of this §128.2 adopted to be effective January 11, 1991, 15 TexReg 118; amended to be effective September 1, 1993, 18 TexReg 5213; amended to be effective May 16, 2002, 27 TexReg 4036.

28 Tex. Admin. Code § 128.3 Average Weekly Wage Calculation for Full-Time Employees, and for Temporary Income Benefits for All Employees

(a) All income benefits for full-time employees are based upon an average weekly wage calculated according to this rule. A full-time employee is one who regularly works at least 30 hours per week and that schedule is comparable to other employees of that company and/or other employees in the same business or vicinity who are considered full-time.

(b) Temporary income benefits are based on an average weekly wage which is calculated according to this rule for all employees. However, the average weekly wage for determining temporary income benefits of seasonal employees may be periodically adjusted as set out in §128.5(c) of this title (relating to Average Weekly Wage Calculation for Seasonal Employees).

(c) The average weekly wage for impairment income, supplemental income, lifetime income, and death benefits shall be calculated according to this section concerning full-time employees, §128.4 of this title (relating to Average Weekly Wage Calculation for Part-Time Employees), or §128.5 of this title (relating to Average Weekly Wage Calculation for Seasonal Employees). The average weekly wage for an employee who is also a minor, an apprentice, a trainee, or a student shall be adjusted for determining these income benefits (but not temporary income benefits), according to the procedure described in §128.6 of this title (relating to Average Weekly Wage Adjustment for Certain Employees Who Are Also Minors, Apprentices, Trainees, or Students).

(d) If an employee has worked for 13 weeks or more prior to the date of injury, or if the wage at time of injury has not been fixed or cannot be determined, the wages paid to the employee for 13 weeks immediately preceding the injury are added together and divided by 13. The quotient is the average weekly wage for that employee.

(e) If an employee has worked for less than 13 weeks prior to the date of injury, the wages paid to that employee are not considered. Instead, the wages used for the average weekly wage calculation are those paid by the employer to a similar employee who performs similar services, but who earned wages for at least 13 weeks. If there is no similar employee at the employer's business, the calculation is based on wages paid to a similar employee who performed similar services in the same vicinity, for at least 13 weeks. When a similar employee is identified, the wages paid to that person for the 13 weeks immediately preceding the injury are added together, and divided by 13. The quotient is the average weekly wage for the injured employee.

(f) For purposes of computing average weekly wage under subsection (e) of this section, the following definitions apply:

(1) a similar employee is a person with training, experience, and skills and wages that are comparable to the injured employee. Age, gender, and race shall not be considered;

(2) similar services are tasks performed or services rendered that are comparable in nature to, and in the same class as, those performed by the injured employee, and that are comparable in the number of hours normally worked.

(g) If the methods set forth in this rule cannot be applied reasonably due to the irregularity of the employment or, if the employee has lost time from work, without remuneration, during the said 13-week period due to illness, weather, or other cause beyond the control of the employee, the commission may determine the employee's average weekly wage by any method that it considers fair, just, and reasonable to all parties and consistent with the methods established under this section.

History

Source Note: The provisions of this §128.3 adopted to be effective January 11, 1991, 16 TexReg 118.

28 Tex. Admin. Code § 128.4 Average Weekly Wage Calculation for Part-Time Employees

(a) The average weekly wage used to determine temporary income benefits for all part-time employees shall be calculated according to the basic calculation described in §128.3(d), (e), or (g) of this title (relating to Average Weekly Wage Calculation for Full-Time Employees, and for Temporary Income Benefits for All Employees).

(b) For purposes of calculating average weekly wage for all other income and death benefits, part-time employees are considered in two different categories: those who worked part-time as a regular course of conduct, and those who did not. A "regular course of conduct" for part-time work shall be determined by reviewing the work history of the employee for the 12-month period preceding the injury. If the employee only worked part-time during that period, the employee is presumed to have worked part-time as a regular course of conduct unless such presumption is rebutted by credible evidence.

(c) For an employee who worked part-time as a regular course of conduct, §128.3(d), (e), or (g) of this title (relating to Average Weekly Calculation for Full-Time Employees, and for Temporary Income Benefits for All Employees) shall be used to calculate average weekly wage to determine impairment income, supplemental income, lifetime income, and death benefits.

(d) The average weekly wage for a part-time employee who did not work part-time as a regular course of conduct shall be calculated by using one of the two methods in subsection (e) or (f) of this section, depending upon the length of time the person was employed.

(e) For an employee who worked for the employer for 13 or more consecutive weeks before the date of injury, the person calculating benefits shall derive the average weekly part-time wage, and then adjust upward to a full-time average weekly wage, by this method:

(1) add together the wages for the 13 weeks immediately preceding the date of injury and divide the total by 13;

(2) then add together the number of hours worked by the employee during the same 13 weeks, and divide the total hours by 13 to calculate the average weekly number of hours worked. The adjustment factor is the ratio of the number of full-time hours generally worked by similar employees in the same employment, over the average weekly number of hours worked by the injured employee. (Example: if the usual full-time hours for the employment is 40, and the average number of hours worked by the injured part-time employee is 30, then the adjustment factor derived is 40/30, or 1.334.) For purposes of the adjustment factor, it shall be presumed that a full-time work week is 40 hours, unless and until evidence establishes that use of a different number of hours would be more just;

(3) finally, multiply the result of paragraph (1) of this subsection by the adjustment factor derived in paragraph (2) of this subsection; the product is the average weekly wage for this injured employee.

(f) For an employee who worked for the employer less than 13 weeks or whose wage at the time of injury cannot be fixed or determined, the average weekly wage will be calculated by using the method described in §128.3(e) of this title (relating to Average Weekly Wage Calculation for Full-Time Employees, and for Temporary Income Benefits for All Employees), based upon identification of a similar employee performing similar employment full-time.

History

Source Note: The provisions of this §128.4 adopted to be effective January 11, 1991, 16 TexReg 118.

28 Tex. Admin. Code § 128.5 Average Weekly Wage Calculation for Seasonal Employees

(a) A seasonal employee is an employee who as a regular course of conduct engages in seasonal or cyclical employment which may or may not be agricultural in nature, that does not continue throughout the year.

(b) The average weekly wage used to determine temporary income benefits for seasonal employees shall be determined according to the procedure described in §128.3(d) or (e) of this title (relating to Average Weekly Wage Calculation for Full-Time Employees, and for Temporary Income Benefits for All Employees), subject to the periodic adjustment described in this rule.

(c) The average weekly wage for computing temporary income benefits may be increased or decreased to more accurately reflect the seasonal nature of the employment, if such an adjustment would more accurately reflect the wages the employee could reasonably have expected to earn during the period that temporary income benefits are paid. Evidence of earnings shall be submitted at the time an adjustment is requested. The evidence should include proof of the employee's earnings in corresponding time periods of previous years. In case of a dispute, the commission shall set a benefit review conference to consider whether an adjustment should be made.

(d) The average weekly wage used to determine impairment income benefits, lifetime income benefits, supplemental income benefits, or death benefits for a seasonal employee shall be calculated by:

(1) adding together the total wages received by the employee in the 12 months preceding the date of injury and dividing the result by 50; or

(2) if it is impractical to compute the average weekly wage as provided by paragraph (1) of this subsection, another fair, just, and reasonable method as determined in a benefit review conference if requested by the person claiming income benefits or the insurance carrier.

History

Source Note: The provisions of this §128.5 adopted to be effective January 11, 1991, 16 TexReg 118.

28 Tex. Admin. Code § 128.6 Average Weekly Wage Adjustment for Certain Employees Who Are Also Minors, Apprentices, Trainees, or Students

(a) In order to adjust average weekly wage under this rule, for purposes of computing impairment income, supplemental income, lifetime income, and death benefits, an injured employee must come within one of the following definitions, on the date of injury:

(1) a minor is an employee less than 18 years of age and not emancipated by marriage or judicial action, and is also an apprentice, trainee, or student;

(2) an apprentice is an employee learning a skilled trade or art by practical experience under the direction of a skilled crafts person or artisan;

(3) a trainee is an employee undergoing systematic instruction and practice in some art, trade, or profession with a view towards proficiency in it; and

(4) a student is an employee enrolled in a course of study or instruction in a high school, college, university, or other institute of higher education or technical training.

(b) The average weekly wage used to determine temporary income benefits for a minor, apprentice, trainee, or student shall be computed according to §128.3 of this title (relating to Average Weekly Wage Calculation for Full-Time Employees and for Temporary Income Benefits for All Employees), and may not be adjusted. The basic average weekly wage for other income and death benefits shall be calculated depending upon whether the employee worked full-time, part-time, or as a seasonal employee, and may be adjusted as described in this section.

(c) The average weekly wage of an employee who is less than 18 years of a age, but not a minor as defined in this section, shall not be adjusted.

(d) The average weekly wage used to determine impairment income benefits, supplemental income benefits, lifetime income benefits, or death benefits for an employee defined under subsection (a) of this section shall be adjusted on the basis of this rule if the employee also proves that:

(1) the employee's employment or earnings at the time of the injury were limited primarily because of apprenticeship, continuing formal training, or education that can be reasonably calculated to enhance the employee's future wages; and

(2) the employee's wages would reasonably be expected to change during the period for which the impairment income, supplemental income, lifetime income, and death benefits are payable not to exceed three years after the date of injury.

(e) An insurance carrier and the person claiming income benefits may agree to adjust the average weekly wage used to compute impairment income benefits, lifetime income benefits, supplemental income benefits, or death benefits for an employee who meets the requirements of subsections (a) and (d) of this section. The adjustment shall not reflect the level of the expected wages for a period in excess of three years after the date of injury.

(f) If an insurance carrier and the person claiming income benefits dispute the need for, or the amount of, an adjustment for expected wage levels, the commission shall schedule a benefit review conference. The commission shall then consider the evidence submitted by the insurance carrier and the claimant. Objective, documentary, or expert evidence is favored over testimony of interested parties, in determining an expected wage level which is fair and just.

History

Source Note: The provisions of this §128.6 adopted to be effective January 11, 1991, 16 TexReg 118.

28 Tex. Admin. Code § 128.7 Average Weekly Wage for School District Employees

(a) This rule applies only to school district employees injured on or after December 1, 2001. The calculations in this rule apply to the portion of the employee's average weekly wage (AWW) based upon the employee's employment with the school district where the school district is the "Claim Employer" as that term is used in §122.5 of this title (relating to Employee's Multiple Employment Wage Statement). The AWW of a school district employee injured before December 1, 2001, is computed using the law and commission rules in effect on the date of the injury.

(b) For determining the amount of temporary income benefits of school district employees under Texas Labor Code Chapter 504, the AWW is computed on the basis of wages earned in a week. "Wages earned in a week" are equal to the amount that would be deducted from an employee's salary if the employee were absent from work for one week and the employee did not have personal leave available to compensate the employee for lost wages for that week. For this calculation "wages" includes only pecuniary wages.

(c) For determining the amount of temporary income benefits of a school district employee, the AWW shall be computed as follows.

(1) For a school district employee working under a written contract with the school district, the AWW shall be computed by dividing the amount the employee would have been paid had the employee fully completed the terms of the contract (including any stipend the employee was earning or scheduled to receive under the contract) by:

(A) the number of days that the employee was required to work under that contract and multiplied by five (if the contract has specified the number of work days); or

(B) the number of months that the contract was to cover and then dividing the result by 4.34821.

(2) For a school district employee who is employed on a non-written contract basis (i.e. hourly, daily, salaried, or other basis), the AWW shall be computed by dividing the total gross wages earned in the previous 13-week period immediately preceding the date of injury by 13.

(d) The AWW for computing temporary income benefits may be increased or decreased to more accurately reflect wages the school district employee reasonably could expect to earn during the period for which temporary income benefits are paid.

(1) An insurance carrier (carrier) may adjust the AWW based on evidence of earnings.

(2) A school district employee may request adjustments by submitting evidence of earnings to the carrier.

(3) For a period a school district employee would not have earned wages, the AWW may be adjusted to zero and no minimum benefit payment may be required.

(e) For determining the amount of impairment income benefits, lifetime income benefits, supplemental income benefits, or death benefits, the AWW shall be computed in accordance with this subsection using only pecuniary wages.

(1) The carrier shall add together the total wages earned by the school district employee during the 12 months immediately preceding the injury and dividing the result by 50 weeks.

(2) If the school district employee provides wage information from other employers for whom the employee worked in the 12 months immediately preceding the injury, these wages shall be included in the calculation of the AWW. Note that for injuries on or after July 1, 2002, the effect of wages from a Non-Claim Employer (as the term is defined in §122.5 of this title (relating to Employee's Multiple Employment Wage Statement)) on the employee's AWW is governed by §128.1(h)(2) of this title (relating to Average Weekly Wage: General Provisions).

(f) In the event the school district employee and/or carrier believes that the AWW computed based on the calculations in this rule does not reflect the true AWW, the employee and carrier may enter into a written agreement regarding the AWW or request a benefit review conference.

History

Source Note: The provisions of this §128.7 adopted to be effective May 16, 2002, 27 TexReg 4036.

Chapter 129 INCOME BENEFITS--TEMPORARY INCOME BENEFITS

28 Tex. Admin. Code § 129.1 Definitions for Temporary Income Benefits

The following terms shall have the following meanings unless the context clearly indicates otherwise:

(1) Salary Continuation (also Wage Continuation)--Monies paid by the employer to compensate the injured employee (employee) for wages lost as a result of a compensable injury. Salary continuation does not include monies paid to an employee as compensation for work such as wages paid while an employee is on modified duty.

(2) Salary Supplementation (also Wage Supplementation)--Monies paid by the employer to supplement the amount of income benefits an insurance carrier pays to an employee with a compensable injury. This includes monies paid to the employee based on the employee's voluntary use of sick leave or annual leave in a supplementary manner.

(3) Weekly Earnings After the Injury--Post-Injury Earnings (PIE), further described in §129.2 of this title (relating to Entitlement to Temporary Income Benefits).

History

Source Note: The provisions of this §129.1 adopted to be effective December 26, 1999, 24 TexReg 11420.

28 Tex. Admin. Code § 129.2 Entitlement to Temporary Income Benefits

(a) Once temporary income benefits (TIBs) accrue, an injured employee (employee) is entitled to TIBs to compensate the employee for lost wages due to the compensable injury during a period in which the employee has disability and has not reached maximum medical improvement.

(b) Lost wages are the difference between the employee's gross average weekly wage (AWW) and the employee's gross Post-Injury Earnings (PIE). If the employee's PIE equals or exceeds the employee's AWW, the employee has no lost wages.

(1) all pecuniary wages paid to the employee after the date of injury including wages based on work performed while on modified duty and pecuniary fringe benefits which are paid to the employee whether the employee has returned to work or not;

(2) any employee contribution to benefits such as health insurance that the employee normally pays but that the employer agrees to pay for the employee in order to continue the benefits (which does not include the portion of the benefits that the employer normally pays for);

(3) the weekly amount of any wages offered as part of a bona fide job offer which is not accepted by the employee which the insurance carrier (carrier) is permitted to deem to be PIE under §129.6 of this title (relating to Bona Fide Offers of Employment);

(4) the value of any full days of accrued sick leave or accrued annual leave that the employee has voluntarily elected to use after the date of injury;

(5) the value of any partial days of accrued sick leave or accrued annual leave that the employee has voluntarily elected to use after the date of injury that, when combined with the employee's TIBs, exceeds the AWW; and

(6) any monies paid to the employee by the employer as salary continuation based on :

(A) a contractual obligation between the employer and the employee including through a collective bargaining agreement;

(B) an employer policy; or

(d) PIE shall not include:

(1) any non-pecuniary wages paid to the employee by the employer after the injury;

(2) any accrued sick leave or accrued annual leave that the employee did not voluntarily elect to use;

(3) any wages paid by the employer as salary supplementation as provided by Texas Labor Code, §408.003(a)(2);

(4) any moneys paid by the employer which would otherwise be considered PIE under subsection (c) of this section but which the employer attempts or intends to seek reimbursement from the employee or carrier; or

(5) any money paid to an employee under an indemnity disability program paid for by the employee separate from workers' compensation.

History

Source Note: The provisions of this §129.2 adopted to be effective December 26, 1999, 24 TexReg 11420.

28 Tex. Admin. Code § 129.3 Amount of Temporary Income Benefits

(a) The insurance carrier (carrier) shall pay an injured employee (employee) the temporary income benefits (TIBs) the employee is entitled to in accordance with this chapter.

(b) The carrier shall determine whether the employee earns less than $8.50 per hour for a workers' compensation claim with a date of injury before September 1, 2015, or less than $10 per hour for a workers' compensation claim with a date of injury on or after September 1, 2015, as follows:

(1) Once the carrier has received the Wage Statement required by this title, the carrier shall divide the average weekly wage (AWW) calculated from the Wage Statement by the average number of hours worked. The average hours worked is the total gross hours reported worked on the Wage Statement divided by the period in which the hours were worked;

(2) If the carrier has not received the Wage Statement, but has received the Employer's First Report of Injury, the carrier shall use the wage information provided by the employer through the first report; or

(3) If the carrier has not received the information necessary to perform the calculations required by subsection (b)(1) or (2) of this section, the carrier shall use wage information provided by the employee until the necessary information is obtained from the employer.

(c) The carrier shall calculate the AWW in accordance with Chapter 128 of this title (relating to Calculation of Average Weekly Wage) and shall calculate the Post-Injury Earnings (PIE) in accordance with §129.2 of this title (relating to Entitlement to Temporary Income Benefits). In determining the PIE, the carrier shall base its calculations on specific wage information reported by the employer and/or the employee. A generic statement by the employer indicating the employer is "continuing full salary" or "the employee is earning full salary" is not adequate documentation to be considered PIE.

(d) The carrier shall calculate the employee's lost wages by subtracting the PIE from the AWW (or AWW - PIE).

(e) The amount of TIBs an employee is entitled to is based on the lost wages. If the employee's PIE equals or exceeds the employee's AWW, the employee has no lost wages and the carrier shall not pay TIBs.

(f) Subject to the minimum and maximum TIBs rates as provided in subsection (g) of this section, an employee is entitled to TIBs as follows:

(1) for a workers' compensation claim with a date of injury before September 1, 2015,

(A) an employee who earns $8.50 or more per hour is entitled to TIBs in the amount of 70% of the lost wages; or

(B) an employee who earns less than $8.50 per hour is entitled to TIBs as follows:

(i) 75% of the lost wages for the first 26 weeks of TIBs due; and

(ii) 70% of the lost wages for all TIBs payments thereafter; and

(2) for a workers' compensation claim with a date of injury on or after September 1, 2015,

(A) an employee who earns $10 or more per hour is entitled to TIBs in the amount of 70% of the lost wages; or

(B) an employee who earns less than $10 per hour is entitled to TIBs as follows:

(i) 75% of the lost wages for the first 26 weeks of TIBs due; and

(ii) 70% of the lost wages for all TIBs payments thereafter.

(g) The carrier shall pay the TIBs in the amount calculated in subsection (f) of this section, unless:

(1) this amount is greater than the maximum weekly TIBs rate computed in accordance with Texas Labor Code, §408.061, in which case the carrier shall pay the maximum weekly TIBs rate; or

(2) this amount, when added to the employee's PIE, is less than the minimum weekly TIBs rate computed in accordance with Texas Labor Code, §408.062, in which case the carrier shall pay the minimum weekly TIBs rate.

History

Source Note: The provisions of this §129.3 adopted to be effective December 26, 1999, 24 TexReg 11420; amended to be effective February 28, 2016, 41 TexReg 1249.

28 Tex. Admin. Code § 129.4 Adjustment of Temporary Income Benefit Amount

(a) The insurance carrier shall adjust the weekly amount of temporary income benefits paid to the injured employee as necessary to match the fluctuations in the employee's weekly earnings after the injury.

(b) If a seasonal employee's average weekly wage is adjusted, as described in §128.5 of this title (relating to Average Weekly Wage Calculations for Seasonal Employees), the carrier shall adjust the temporary income benefits paid to the seasonal employee.

(c) If the injured employee is still employed by the employer at the time of injury, the employer is responsible for informing the carrier of changes in the employee's weekly earnings after an injury, on Form TWCC 6, Supplemental Report of Injury, within 10 days after the end of each pay period, as provided by §120.3 of this title (relating to Employer's Supplemental Report of Injury).

(d) If the employee is no longer employed by the employer, the employee is responsible to provide information to the insurance carrier about the existence or amount of any earnings, or any offers of employment. The employee may use Form TWCC 6, Supplemental Report of Injury, for this purpose.

History

Source Note: The provisions of this §129.4 adopted to be effective January 24, 1991, 16 TexReg 175; amended to be effective April 3, 1992, 17 TexReg 2129.

28 Tex. Admin. Code § 129.5 Work Status Reports

(a) As used in this section:

(1) the term "doctor" means either the treating doctor or a referral doctor, as defined by §180.22(c) and (e) of this title (relating to Health Care Provider Roles and Responsibilities);

(2) "substantial change in activity restrictions" means a change in activity restrictions caused by a change in the injured employee's medical condition which either prevents the injured employee from working under the previous restrictions or which allows the injured employee to work in an expanded and more strenuous capacity than the prior restrictions permitted (approaching the injured employee's normal job);

(3) "change in work status" means a change in the injured employee's work status from one of the three choices listed in subsection (a)(4) of this section to another of the choices in that subsection; and

(4) the term "work status" refers to whether the injured employee's medical condition:

(A) allows the injured employee to return to work without restrictions (which is not equivalent to maximum medical improvement);

(B) allows the injured employee to return to work with restrictions; or

(b) If authorized under their licensing act, a treating doctor may delegate authority to complete, sign, and file a work status report to a licensed physician assistant or a licensed advanced practice registered nurse as authorized under Texas Labor Code §408.025(a-1). The delegating treating doctor is responsible for the acts of the physician assistant and the advanced practice registered nurse under this subsection.

(c) The doctor, delegated physician assistant, or delegated advanced practice registered nurse shall file a Work Status Report in the form and manner prescribed by the division.

(d) The doctor, delegated physician assistant, or delegated advanced practice registered nurse shall be considered to have filed a complete Work Status Report if the report is filed in the form and manner prescribed by the division, signed, and contains at minimum:

(1) identification of the injured employee's work status;

(2) effective dates and estimated expiration dates of current work status and restrictions (an expected expiration date is not binding and may be adjusted in future Work Status Reports, as appropriate, based on the condition and progress of the injured employee);

(3) identification of any applicable activity restrictions;

(4) an explanation of how the injured employee's workers' compensation injury prevents the injured employee from returning to work (if the doctor believes that the injured employee is prevented from returning to work); and

(5) general information that identifies key information about the claim (as prescribed on the report).

(e) The doctor, delegated physician assistant, or delegated advanced practice registered nurse shall file the Work Status Report:

(1) after the initial examination of the injured employee, regardless of the injured employee's work status;

(2) when the injured employee experiences a change in work status or a substantial change in activity restrictions; and

(3) on the schedule requested by the insurance carrier, its agent, or the employer requesting the report through its insurance carrier, which shall not exceed one report every two weeks and which shall be based upon the doctor's, delegated physician assistant's, or delegated advanced practice registered nurse's scheduled appointments with the injured employee.

(f) The Work Status Report filed as required by subsection (e) of this section shall be provided to the injured employee at the time of the examination by hand delivery or electronic transmission if the injured employee agrees to receive the report by electronic transmission, and shall be sent, not later than the end of the second working day after the date of examination, to the insurance carrier and the employer.

(g) In addition to the requirements under subsection (e) of this section, the treating doctor, delegated physician assistant, or delegated advanced practice registered nurse shall file the Work Status Report with the insurance carrier, employer, and injured employee within seven days of the day of receipt of:

(1) functional job descriptions from the employer listing available modified duty positions that the employer is able to offer the injured employee as provided by §129.6(a) of this title (relating to Bona Fide Offers of Employment); or

(2) a required medical examination doctor's Work Status Report that indicates that the injured employee can return to work with or without restrictions.

(h) Filing the Work Status Report as required by subsection (g) of this section does not require a new examination of the injured employee.

(i) The doctor, delegated physician assistant, or delegated advanced practice registered nurse shall file the Work Status Report as follows:

(1) A report filed with the insurance carrier or its agent shall be filed by electronic transmission;

(2) A report filed with the employer shall be filed by electronic transmission if the doctor, delegated physician assistant, or delegated advanced practice registered nurse has been provided the employer's facsimile number or email address; otherwise, the report shall be filed by personal delivery or mail; and

(3) A report filed with the injured employee shall be hand delivered to the injured employee or delivered by electronic transmission if the injured employee agrees to receive the report by electronic transmission, unless the report is being filed pursuant to subsection (g) of this section and the doctor, delegated physician assistant, or delegated advanced practice registered nurse is not scheduled to see the injured employee by the due date to send the report. In this case, the doctor, delegated physician assistant, or delegated advanced practice registered nurse shall file the report with the injured employee by electronic transmission if the doctor, delegated physician assistant, or delegated advanced practice registered nurse has been provided the injured employee's facsimile number or email address; otherwise, the report shall be filed by mail.

(j) Notwithstanding any other provision of this title, a doctor, delegated physician assistant, or delegated advanced practice registered nurse may bill for, and an insurance carrier shall reimburse, filing a complete Work Status Report required under this section or for providing a subsequent copy of a Work Status Report which was previously filed because the insurance carrier, its agent, or the employer through its insurance carrier asks for an extra copy. The amount of reimbursement shall be $15. A doctor, delegated physician assistant, or delegated advanced practice registered nurse shall not bill in excess of $15 and shall not bill or be entitled to reimbursement for a Work Status Report which is not reimbursable under this section. Doctors, delegated physician assistants, or delegated advanced practice registered nurses are not required to submit a copy of the report being billed for with the bill if the report was previously provided. Doctors, delegated physician assistants, or delegated advanced practice registered nurses billing for Work Status Reports as permitted by this section shall do so as follows:

(1) CPT code "99080" with modifier "73" shall be used when the doctor, delegated physician assistant, or delegated advanced practice registered nurse is billing for a report required under subsections (e)(1), (e)(2), and (g) of this section;

(2) CPT code "99080" with modifiers "73" and "RR" (for "requested report") shall be used when the doctor, delegated physician assistant, or delegated advanced practice registered nurse is billing for an additional report requested by or through the insurance carrier under subsection (e)(3) of this section; and

(3) CPT code "99080" with modifiers "73" and "EC" (for "extra copy") shall be used when the doctor, delegated physician assistant, or delegated advanced practice registered nurse is billing for an extra copy of a previously filed report requested by or through the insurance carrier.

(k) As provided in §126.6(g) of this title (relating to Order for Required Medical Examinations), a doctor who conducts a required medical examination in which the doctor determines that the injured employee can return to work immediately with or without restrictions shall file the Work Status Report required by this section, but shall do so in accordance with the requirements of §126.6(g).

History

Source Note: The provisions of this §129.5 adopted to be effective December 26, 1999, 24 TexReg 11420; amended to be effective July 16, 2000, 25 TexReg 6520; amended to be effective October 31, 2018, 43 TexReg 7171; amended to be effective March 1, 2020, 45 TexReg 1438.

28 Tex. Admin. Code § 129.6 Bona Fide Offers of Employment

(a) An employer or insurance carrier (carrier) may request the treating doctor provide a Work Status Report by providing the treating doctor a set of functional job descriptions which list modified duty positions which the employer has available for the injured employee (employee) to work. The functional job descriptions must include descriptions of the physical and time requirements of the positions.

(b) An employer may offer an employee a modified duty position which has restricted duties which are within the employee's work abilities as determined by the employee's treating doctor. In the absence of a Work Status Report by the treating doctor an offer of employment may be made based on another doctor's assessment of the employee's work status provided that the doctor made the assessment based on an actual physical examination of the employee performed by that doctor and provided that the treating doctor has not indicated disagreement with the restrictions identified by the other doctor.

(c) An employer's offer of modified duty shall be made to the employee in writing and in the form and manner prescribed by the Commission. A copy of the Work Status Report on which the offer is being based shall be included with the offer as well as the following information:

(1) the location at which the employee will be working;

(2) the schedule the employee will be working;

(3) the wages that the employee will be paid;

(4) a description of the physical and time requirements that the position will entail; and

(5) a statement that the employer will only assign tasks consistent with the employee's physical abilities, knowledge, and skills and will provide training if necessary.

(d) A carrier may deem an offer of modified duty to be a bona fide offer of employment if:

(1) it has written copies of the Work Status Report and the offer; and

(2) the offer:

(A) is for a job at a location which is geographically accessible as provided in subsection (e) of this section;

(B) is consistent with the doctor's certification of the employee's work abilities, as provided in subsection (f) of this section; and

(C) was communicated to the employee in writing, in the form and manner prescribed by the Commission and included all the information required by subsection (c) of this section.

(e) In evaluating whether a work location is geographically accessible the carrier shall at minimum consider:

(1) the affect that the employee's physical limitations have on the employee's ability to travel;

(2) the distance that the employee will have to travel;

(3) the availability of transportation; and

(4) whether the offered work schedule is similar to the employee's work schedule prior to the injury.

(f) The following is the order of preference that shall be used by carriers evaluating an offer of employment:

(1) the opinion of a doctor selected by the Commission to evaluate the employee's work status;

(2) the opinion of the treating doctor;

(3) opinion of a doctor who is providing regular treatment as a referral doctor based on the treating doctor's referral;

(4) opinion of a doctor who evaluated the employee as a consulting doctor based on the treating doctor's request; and

(5) the opinion of any other doctor based on an actual physical examination of the employee performed by that doctor.

(g) A carrier may deem the wages offered by an employer through a bona fide offer of employment to be Post-Injury Earnings (PIE), as outlined in §129.2 of this title (relating to Entitlement to Temporary Income Benefits), on the earlier of the date the employee rejects the offer or the seventh day after the employee receives the offer of modified duty unless the employee's treating doctor notifies the carrier that the offer made by the employer is not consistent with the employee's work restrictions. For the purposes of this section, if the offer of modified duty was made by mail, an employee is deemed to have received the offer from the employer five days after it was mailed. The wages the carrier may deem to be PIE are those that would have been paid on or after the date the carrier is permitted to deem the offered wages as PIE.

(h) Nothing in this section should be interpreted as limiting the right of an employee or a carrier to request a benefit review conference relating to an offer of employment. The Commission will find an offer to be bona fide if it is reasonable, geographically accessible, and meets the requirements of subsections (b) and (c) of this section.

History

Source Note: The provisions of this §129.6 adopted to be effective December 26, 1999, 24 TexReg 11420.

28 Tex. Admin. Code § 129.7 Non-Reimbursable Employer Payments

(a) An employer who pays an injured employee (employee) salary continuation is not entitled to and shall not seek reimbursement from the employee or the insurance carrier (carrier).

(b) An employer who pays an employee salary supplementation to supplement income benefits paid by the carrier is not entitled to and shall not seek reimbursement from the employee or the carrier.

History

Source Note: The provisions of this §129.7 adopted to be effective December 26, 1999, 24 TexReg 11420.

28 Tex. Admin. Code § 129.11 Agreement for Monthly Payment of Temporary Income Benefits

(a) Upon the request of an injured employee, the insurance carrier and an injured employee entitled to temporary income benefits (TIBs) may agree to change the frequency of TIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the division if the division requests a copy. To relieve the insurance carrier of the responsibility to pay TIBs weekly, a valid written agreement must include the following terms and conditions:

(1) the agreement for the monthly payment of TIBs shall be effective the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2) monthly TIBs payment shall be issued on or before the seventh day of the month following the month for which benefits are due;

(3) weekly TIBs payments shall continue through the end of the month in which the agreement was signed;

(4) payment of the last week of TIBs to transition from weekly payment of TIBs to monthly payments shall be prorated to the end of the month to ensure the injured employee receives TIBs through the last day of the month; and

(5) if less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the written agreement.

(b) To calculate the amount of monthly TIBs to pay, the carrier shall determine the average monthly wage by multiplying the average weekly wage by 4.34821 and subtracting any Post-Injury Earnings the employee earned during the month for which the employee was entitled to TIBs to determine the lost wages. The carrier shall then pay the employee in monthly TIBs as follows:

(1) for a workers' compensation claim with a date of injury before September 1, 2015,

(A) if the employee earns $8.50 per hour or more, the carrier shall pay 70% of the lost wages; or

(B) if the employee earns less than $8.50 per hour, the carrier shall pay:

(i) 75% of the lost wages for the first 26 weeks of TIBs due; and

(ii) 70% of the lost wages for all TIBs payments thereafter; and

(2) for a workers' compensation claim with a date of injury on or after September 1, 2015,

(A) if the employee earns $10 per hour or more, the carrier shall pay 70% of the lost wages; or

(B) if the employee earns less than $10 per hour, the carrier shall pay:

(i) 75% of the lost wages for the first 26 weeks of TIBs due; and

(ii) 70% of the lost wages for all TIBs payments thereafter.

(c) Entering into an agreement under this section does not prohibit any party to the claim from raising disputes over periods, amounts of, or entitlement to TIBs. Disputes must be raised as and when they arise.

(d) The agreement for the monthly payment of TIBs shall expire upon the suspension or termination of TIBs in accordance with the Act and division rules. The last monthly payment shall be prorated to ensure the insurance carrier pays the appropriate amount of TIBs.

(e) At any time after signing the agreement for the monthly payment of TIBs, the injured employee or the insurance carrier may notify the other party in writing that it no longer agrees to the monthly payment of TIBs. In this case, the insurance carrier shall pay all accrued but unpaid TIBs at the end of the current monthly cycle and shall continue to pay TIBs weekly as and when they accrue and are due.

History

Source Note: The provisions of this §129.11 adopted to be effective December 26, 1999, 24 TexReg 11439; amended to be effective February 28, 2016, 41 TexReg 1249.

Chapter 130 IMPAIRMENT AND SUPPLEMENTAL INCOME BENEFITS

Subchapter A IMPAIRMENT INCOME BENEFITS

28 Tex. Admin. Code § 130.1 Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment

(a) Authorized Doctor.

(1) Only an authorized doctor may certify maximum medical improvement (MMI), determine whether there is permanent impairment, and assign an impairment rating if there is permanent impairment.

(A) Doctors serving in the following roles may be authorized as provided in subsection (a)(1)(B) of this section.

(i) the treating doctor (or a doctor to whom the treating doctor has referred the injured employee for evaluation of MMI and/or permanent whole body impairment in the place of the treating doctor, in which case the treating doctor is not authorized);

(ii) a designated doctor; or

(iii) a required medical examination (RME) doctor selected by the insurance carrier and approved by the division to evaluate MMI and/or permanent whole body impairment after a designated doctor has performed such an evaluation.

(B) Prior to September 1, 2003 a doctor serving in one of the roles described in subsection (a)(1)(A) of this subsection is authorized to determine whether an injured employee has permanent impairment, assign an impairment rating, and certify MMI. On or after September 1, 2003, a doctor serving in one of the roles described in subsection (a)(1)(A) of this section is authorized as follows:

(i) a doctor whom the division has certified to assign impairment ratings or otherwise given specific permission by exception to, is authorized to determine whether an injured employee has permanent impairment, assign an impairment rating, and certify MMI; and

(ii) a doctor whom the division has not certified to assign impairment ratings or otherwise given specific permission by exception to is only authorized to determine whether an injured employee has permanent impairment and, in the event that the injured employee has no impairment, certify MMI.

(2) Doctors who are not authorized shall not make findings of permanent impairment, certify MMI, or assign impairment ratings and shall not be reimbursed for the examination, certification, or report if one does so. A certification of MMI, finding of permanent impairment, and/or impairment rating assigned by an unauthorized doctor are invalid. If a treating doctor finds that the injured employee has permanent impairment but is not authorized to assign an impairment rating, the doctor is also not authorized to certify MMI and shall refer the injured employee to a doctor who is so authorized.

(3) A doctor who is authorized under this subsection to certify MMI, determine whether permanent impairment exists, and assign an impairment rating and who does, shall be referred to as the "certifying doctor."

(b) Certification of Maximum Medical Improvement.

(1) Maximum medical improvement (MMI) is:

(A) the earliest date after which, based on reasonable medical probability, further material recovery from or lasting improvement to an injury can no longer reasonably be anticipated;

(B) the expiration of 104 weeks from the date on which income benefits begin to accrue; or

(2) MMI must be certified before an impairment rating is assigned and the impairment rating must be assigned for the injured employee's condition on the date of MMI. An impairment rating is invalid if it is based on the injured employee's condition on a date that is not the MMI date. An impairment rating and the corresponding MMI date must be included in the Report of Medical Evaluation to be valid.

(3) Certification of MMI is a finding made by an authorized doctor that an injured employee has reached MMI as defined in subsection (b)(1) of this section.

(4) To certify MMI the certifying doctor shall:

(A) review medical records;

(B) perform a complete medical examination of the injured employee for the explicit purpose of determining MMI (certifying examination);

(i) The date of MMI may not be prospective or conditional.

(ii) The date of MMI may be retrospective to the date of the certifying exam.

(D) Complete and submit required reports and documentation.

(1) An impairment rating is the percentage of permanent impairment of the whole body resulting from the current compensable injury. A zero percent impairment may be a valid rating.

(2) A doctor who certifies that an injured employee has reached MMI shall assign an impairment rating for the current compensable injury using the rating criteria contained in the appropriate edition of the AMA Guides to the Evaluation of Permanent Impairment, published by the American Medical Association (AMA Guides).

(A) The appropriate edition of the AMA Guides to use for all certifying examinations conducted before October 15, 2001 is the third edition, second printing, dated February, 1989.

(B) The appropriate edition of the AMA Guides to use for certifying examinations conducted on or after October 15, 2001 is:

(i) the fourth edition of the AMA Guides (1st, 2nd, 3rd, or 4th printing, including corrections and changes as issued by the AMA prior to May 16, 2000). If a subsequent printing(s) of the fourth edition of the AMA Guides occurs, and it contains no substantive changes from the previous printing, the division by vote at a public meeting may authorize the use of the subsequent printing(s); or

(ii) the third edition, second printing, dated February, 1989 if, at the time of the certifying examination, there is a certification of MMI by a doctor pursuant to subsection (b) of this section made prior to October 15, 2001 which has not been previously withdrawn through agreement of the parties or previously overturned by a final decision.

(C) This subsection shall be implemented to ensure that in the event of an impairment rating dispute, only ratings using the appropriate edition of the AMA Guides shall be considered. Impairment ratings assigned using the wrong edition of the AMA Guides shall not be considered valid.

(3) Assignment of an impairment rating for the current compensable injury shall be based on the injured employee's condition on the MMI date considering the medical record and the certifying examination. An impairment rating is invalid if it is based on the injured employee's condition on a date that is not the MMI date. An impairment rating and the corresponding MMI date must be included in the Report of Medical Evaluation to be valid. The doctor assigning the impairment rating shall:

(A) identify objective clinical or laboratory findings of permanent impairment for the current compensable injury;

(B) document specific laboratory or clinical findings of an impairment;

(D) compare the results of the analysis with the impairment criteria and provide the following:

(i) A description and explanation of specific clinical findings related to each impairment, including zero percent (0%) impairment ratings; and

(ii) A description of how the findings relate to and compare with the criteria described in the applicable chapter of the AMA Guides. The doctor's inability to obtain required measurements must be explained.

(E) assign one whole body impairment rating for the current compensable injury;

(F) be responsible for referring the injured employee to another doctor or health care provider for testing, or evaluation, if additional medical information is required. The certifying doctor is responsible for incorporating all additional information obtained into the report required by this rule:

(i) Additional information must be documented and incorporated into the impairment rating and acknowledged in the required report.

(ii) If the additional information is not consistent with the clinical findings of the certifying doctor, then the documentation must clearly explain why the information is not being used as part of the impairment rating.

(4) After September 1, 2003, if range of motion, sensory, and strength testing required by the AMA Guides is not performed by the certifying doctor, the testing shall be performed by a health care practitioner, who within the two years prior to the date the injured employee is evaluated, has had the impairment rating training module required by §180.23 (relating to Division Required Training for Doctors) for a doctor to be certified to assign impairment ratings. It is the responsibility of the certifying doctor to ensure the requirements of this subsection are complied with.

(5) If an impairment rating is assigned in violation of subsection (c)(4), the rating is invalid and the evaluation and report are not reimbursable. A provider that is paid for an evaluation and/or report that is invalid under this subsection shall refund the payment to the insurance carrier.

(d) Reporting.

(1) Certification of MMI, determination of permanent impairment, and assignment of an impairment rating (if permanent impairment exists) for the current compensable injury requires completion, signing, and submission of the Report of Medical Evaluation and a narrative report.

(A) The Report of Medical Evaluation must be signed by the certifying doctor. The certifying doctor may use a rubber stamp signature or an electronic facsimile signature of the certifying doctor's personal signature.

(B) The Report of Medical Evaluation includes an attached narrative report. The narrative report must include the following:

(i) date of the certifying examination;

(ii) date of MMI;

(iii) findings of the certifying examination, including both normal and abnormal findings related to the compensable injury and an explanation of the analysis performed to find whether MMI was reached;

(iv) narrative history of the medical condition that outlines the course of the injury and correlates the injury to the medical treatment;

(v) current clinical status;

(vi) diagnosis and clinical findings of permanent impairment as stated in subsection (c)(3);

(vii) the edition of the AMA Guides that was used in assigning the impairment rating (if the injured employee has permanent impairment); and

(viii) a copy of the authorization if, after September 1, 2003, the doctor received authorization to assign an impairment rating and certify MMI by exception granted from the division.

(2) A Report of Medical Evaluation under this rule shall be filed with the division, injured employee, injured employee's representative, and the insurance carrier no later than the seventh working day after the later of:

(A) date of the certifying examination; or

(B) the receipt of all of the medical information required by this section.

(3) The report required to be filed under this section shall be filed as follows:

(A) The Report of Medical Evaluation shall be filed with the insurance carrier by facsimile or electronic transmission; and

(B) The Report of Medical Evaluation shall be filed with the division, the injured employee and the injured employee's representative by facsimile or electronic transmission if the doctor has been provided the recipient's facsimile number or email address; otherwise, the report shall be filed by other verifiable means.

(e) Documentation. The certifying doctor shall maintain the original copy of the Report of Medical Evaluation and narrative as well as documentation of:

(1) the date of the examination;

(2) the date any medical records necessary to make the certification of MMI were received, and from whom the medical records were received; and

(3) the date, addressees, and means of delivery that reports required under this section were transmitted or mailed by the certifying doctor.

History

Source Note: The provisions of this §130.1 adopted to be effective June 7, 2000, 25 TexReg 5352; amended to be effective January 2, 2002, 26 TexReg 10910; amended to be effective March 14, 2004, 29 TexReg 2328; amended to be effective August 25, 2013, 38 TexReg 5263.

28 Tex. Admin. Code § 130.2 Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment by the Treating Doctor

(a) A treating doctor shall either examine the injured employee (employee) and determine if the employee has any permanent impairment as a result of the compensable injury as soon as the doctor anticipates that the employee will have no further material recovery from or lasting improvement to the work-related injury or illness, based on reasonable medical probability, or have another authorized doctor do so.

(1) A treating doctor who finds that the employee has permanent impairment but who is not authorized to assign impairment ratings as provided in §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment), shall make a referral to a doctor who is authorized to do so on behalf of the treating doctor. Even if the treating doctor is so authorized, the doctor may choose to have another authorized doctor evaluate the employee for maximum medical improvement (MMI) and impairment in the place of the treating doctor. However, this evaluation shall be considered to be the report of the treating doctor.

(2) Other than subsections (c) and (d) of this section, nothing in this section requires a treating doctor to schedule an examination if the employee has been released from treatment and is not receiving temporary income benefits (TIBs). For example, when the patient is treated and released without further treatment for a minor injury, the treating doctor is not required to schedule and conduct an examination for MMI and permanent impairment.

(3) At the conclusion of an examination in which the treating doctor, or the certifying doctor in the event that the treating doctor is not authorized to certify MMI and assign an impairment rating, determines that the employee has reached maximum medical improvement and assigns an impairment rating, the doctor shall provide the employee with a written notice that the certification may be disputed. The notice shall be provided as a separate document included with the Report of Medical Evaluation provided in accordance with §130.1 of this title. The notice must be provided in English, Spanish, or other language common to the employee, and shall include the following information:

(A) the date of maximum medical improvement;

(B) the assigned impairment rating;

(C) a statement that the impairment rating may become final if not disputed within 90 days, and if the employee, or the employee's representative, disagrees with the certification, they may dispute the certification by contacting the Division of Workers' Compensation and requesting a benefit review conference;

(D) the address and phone number of the local field office of the Division of Workers' Compensation (Division); and

(E) a statement that the employee may contact the Division for more information at 1-800-252-7031.

(b) A certification of MMI and assignment of an impairment rating shall be performed and reported in accordance with the requirements of §130.1 of this title.

(c) The Division shall mail a notice to a treating doctor, the employee, the employee's representative, if any, and the insurance carrier on the expiration of 98 weeks from the date the employee's TIBs began to accrue if the employee is still receiving TIBSs. The Division's notice shall advise the treating doctor of the requirements under Chapter 408, Subchapter G of the Texas Workers' Compensation Act, and this section, and require that an impairment rating report be mailed to the Division no later than 104 weeks from the date TIBs began to accrue.

(d) Upon receipt of the Division's notice required in subsection (c) of this section, the treating doctor shall schedule and conduct an examination of the employee in accordance with §130.1 of this title to certify a MMI date (if earlier than the statutory MMI date as defined in §130.4 of this title (relating to Presumption that Maximum Medical Improvement (MMI) has been Reached and Resolution when MMI has not been Certified) and to assign an impairment rating. A treating doctor who is not authorized to certify MMI and assign impairment ratings, shall make a referral to a doctor who is authorized to do so on behalf of the treating doctor.

(e) If the carrier has not received a report of medical evaluation by the date of statutory MMI:

(1) the carrier may suspend TIBs and is not required to initiate impairment income benefits (IIBs) until such time as it receives a report of an impairment rating assigned in accordance with §130.1 of this title;

(2) the carrier or the employee may request the appointment of a designated doctor under §126.7 of this title (relating to Designated Doctor Examinations: Requests and General Procedures); and/or

(3) a carrier may make a reasonable assessment of what it believes the true impairment rating should be and, if it does so, shall initiate IIBs within five days of making the assessment. The carrier shall continue to pay IIBs until the assessment is paid in full or is superceded by an impairment rating assigned in accordance with §130.1 of this title.

History

Source Note: The provisions of this §130.2 adopted to be effective March 7, 1991, 16 TexReg 1194; amended to be effective January 2, 2002, 26 TexReg 10910; amended to be effective January 1, 2007, 31 TexReg 6366.

28 Tex. Admin. Code § 130.3 Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment by aDoctor other than the Treating Doctor

(a) A doctor, other than a treating doctor, who is authorized to certify that an employee has reached maximum medical improvement (MMI), must do so in accordance with §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment). In addition to complying with the filing requirements of §130.1, the certifying doctor shall file a copy of the Report of Medical Evaluation and the narrative with the treating doctor within the same timeframes for filing with the other persons that §130.1 requires.

(b) Upon receipt of the report identified in subsection (a) of this section, the treating doctor shall:

(1) indicate on the report either agreement or disagreement with the certification of maximum medical improvement and with the impairment rating assigned by the certifying doctor, and, in the case of a disagreement, explain the reasons for this disagreement; and

(2) within seven days of receipt, send a signed copy of the report indicating agreement or disagreement and including any required explanation to the commission, the employee and the employee's representative (if any), and the carrier.

(c) A treating doctor's agreement or disagreement under subsection (b) of this section does not require a separate examination of the employee prior to the issuance of the opinion and shall not be considered a certification as that term is used in §130.1 of this title.

(d) The reports required under this section to be filed with a doctor and carrier shall be filed by facsimile or electronic transmission. In addition, the doctor shall file the report with the employee and the employee's representative by facsimile or electronic transmission if the doctor has been provided the employer's facsimile number or email address; otherwise, the report shall be sent by other verifiable means.

(e) A doctor required to file a report under this section shall maintain the original copy of the Report of Medical Evaluation and narrative and documentation of the date, addressees, facsimile numbers/email addresses and means of delivery that the reports required under this section were transmitted or mailed including proof of successful transmission. In addition:

(1) a certifying doctor shall maintain documentation of:

(A) The date of the examination of the employee; and

(B) The date any medical records necessary to make the certification of MMI were received, and from whom the medical records were received; and

(2) a treating doctor who receives the certifying doctor's report shall maintain documentation of the date the report was received and the means by which the report was delivered to the treating doctor.

History

Source Note: The provisions of this §130.3 adopted to be effective March 7, 1991, 16 TexReg 1194; amended to be effective December 26, 1999, 24 TexReg 11442; amended to be effective January 2, 2002, 26 TexReg 10910.

28 Tex. Admin. Code § 130.4 Presumption that Maximum Medical Improvement (MMI) has been Reached and Resolution when MMI has not been Certified

(a) This section does not apply if statutory maximum medical improvement (MMI) has been reached. Statutory MMI is the later of:

(1) the end of the 104th week after the date that temporary income benefits (TIBs) began to accrue; or

(2) the date to which MMI was extended by the commission through operation of Texas Labor Code §408.104.

(b) If there has not been a certification in accordance with §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment) that an injured employee has reached MMI, an insurance carrier (carrier) may follow the procedure outlined in this section to resolve whether an employee has reached MMI. The carrier shall presume, only for purposes of invoking this procedure, that an employee has reached MMI, if:

(1) it appears that the employee has failed to attend two or more consecutively scheduled health care appointments and the number of days between the two examinations is greater than 60 except for laminectomy, spinal fusion or diskectomy in which case the number of days between the two examinations is greater than 90;

(2) the treating doctor has examined the employee at least twice for the same compensable injury after the date on which TIBs began to accrue, and the doctor's medical reports as filed with the insurance carrier for all examinations and reports conducted after the first of the two examinations, indicate a lack of medical improvement in the employees condition since the date of the first of the two examinations;

(3) the employee was previously found not to be at MMI by a designated doctor but the employee has reached the date the designated doctor estimated that the employee would reach MMI; or

(4) the employee is four weeks past the point that the claim has become a Work Release Outlier Claim as defined by commission rule.

(c) A carrier permitted by subsection (b) of this section to invoke this procedure may request the treating doctor to provide a report on the employee's medical status as it relates to MMI. Note - nothing in this section prohibits the carrier from contacting the treating doctor about whether the employee has reached MMI.

(d) The treating doctor shall evaluate the employee's condition within 14 days of receiving the request from the carrier under subsection (c) of this section. The evaluation shall be conducted in accordance with §130.1 of this title and the report filed within seven working days of the date of the examination. If the treating doctor determines that the employee has permanent impairment but is not authorized to certify MMI or assign an impairment rating, the doctor shall refer the employee to a doctor who is so authorized and this doctor shall comply with the requirements of this section, §130.1 and §130.3 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment and Certification of Maximum Medical Improvement by Doctor Other Than Treating Doctor).

(e) If the treating doctor fails to respond as required by this rule, or if the treating doctor certifies that the employee has not reached MMI, the carrier may request a designated doctor under §130.5 (relating to Entitlement and Procedure for Requesting Designated Doctor Examinations Related to Maximum Medical Improvement and Impairment Rating).

History

Source Note: The provisions of this §130.4 adopted to be effective March 8, 1991, 16 TexReg 1296; amended to be effective January 2, 2002, 26 TexReg 10910.

28 Tex. Admin. Code § 130.7 Acceleration of Impairment Income Benefits

(a) An employee seeking an acceleration of impairment income benefits shall submit a request in writing to commission, on a form prescribed by the commission, and send a copy to the insurance carrier. The form shall explain subsection (d) of this section.

(b) The commission shall approve the request for acceleration of impairment benefits pursuant to the Texas Workers' Compensation Act, §4.321. The commission shall notify the insurance carrier when a request for acceleration is approved, and of the amount and number of accelerated payments which shall be made.

(c) The insurance carrier shall initiate the accelerated payment schedule no later than seven days after receiving notice of the commission's approval.

(d) Acceleration of payment of impairment income benefits does not reduce the impairment period for purposes of the date that entitlement to supplemental income benefits begins.

History

Source Note: The provisions of this §130.7 adopted to be effective March 7, 1991, 16 TexReg 1194.

28 Tex. Admin. Code § 130.8 Initiating Payment of Impairment Income Benefits

(a) Impairment income benefits accrue on the day after the injured employee reaches maximum medical improvement, regardless of whether the employee has suffered seven or more days of disability.

(b) When the date of maximum medical improvement is not disputed, the carrier shall initiate payment of impairment income benefits on or before the fifth day after:

(1) the date of receipt of the employee's treating doctor's medical evaluation report, as described in §130.1 of this title (relating to Reports of Medical Evaluation: Maximum Medical Improvement and Permanent Impairment); or

(2) the last day of the 104th week after the employee's accrual date, as defined in §124.7 of this title (relating to Initial Payment of Temporary Income Benefits).

(c) When the date of maximum medical improvement is disputed, the carrier shall initiate payment of impairment income benefits on or before the fifth day after:

(1) the date of entry of an interlocutory order to begin payment of impairment income benefits;

(2) the date of execution of an agreement on a dispute over date of maximum medical improvement; or

(3) the date of receipt of a commission-approved settlement of a dispute over date of maximum medical improvement.

History

Source Note: The provisions of this §130.8 adopted to be effective February 11, 1992, 17 TexReg 689.

28 Tex. Admin. Code § 130.11 Agreement for Monthly Payment of Impairment Income Benefits

(a) Upon the request of the injured employee, the insurance carrier and an employee entitled to impairment income benefits (IIBs) may agree to change the frequency of IIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the Commission if the Commission requests a copy. To relieve the insurance carrier of the responsibility to pay IIBs weekly, a valid written agreement must include the following terms and conditions:

(1) the agreement for the monthly payment of IIBs payments shall be effective the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2) monthly IIBs payment shall be issued on or before the seventh day of the month for which benefits are due;

(3) weekly IIBs payments shall continue through the end of the month in which the agreement was signed.;

(4) payment of the last week of IIBs to transition from weekly payment of IIBs to monthly payments shall be prorated to the end of the month to ensure the injured employee receives IIBs through the last day of the month;

(6) the monthly benefit amount shall be equal to the weekly compensation rate for IIBs that the injured employee is entitled to multiplied by 4.34821; and

(7) the impairment rating and source of the impairment rating upon which payment of IIBs is being based.

(b) An injured employee and insurance carrier may not agree to the monthly payment of IIBs until the impairment rating has been agreed to or has become final. The entering into an agreement under this section may not be used for the purpose of finalizing an impairment rating

(c) The agreement for the monthly payment of IIBs shall expire upon the suspension or termination of IIBs in accordance with the Act and Commission rules. The last monthly payment shall be prorated to ensure the insurance carrier pays the appropriate amount of IIBs.

(d) At any time after signing the agreement for the monthly payment of IIBs, the injured employee or the insurance carrier may notify the other party in writing that it no longer agrees to the monthly payment of IIBs. In this case, the insurance carrier shall pay all accrued but unpaid IIBs at the end of the current monthly cycle and shall continue paying IIBs weekly as and when they accrue and are due.

(e) Effective Date. This section applies only to agreements entered into on or after January 1, 2000, for payment of IIBs under the provisions of the Act.

History

Source Note: The provisions of this §130.11 adopted to be effective December 26, 1999, 24 TexReg 11447.

28 Tex. Admin. Code § 130.12 Finality of the First Certification of Maximum Medical Improvement and/or First Assignment of Impairment Rating

(a) The certifications and assignments that may become final are:

(1) The first valid certification of MMI and/or IR assigned or determination of no impairment;

(2) The first valid assignment of IR after the expiration of 104 weeks from the date income benefits begin to accrue or the expiration date of any extension under Section 408.104, if the employee has not been certified as having reached MMI; or

(3) The first valid subsequent certification of MMI and/or assignment of an IR or determination of no impairment received after the date a certification of MMI and/or assignment of an IR or determination of no impairment is overturned, modified or withdrawn by agreement of the parties or by a final decision of the commission or a court.

(4) A designated doctor may provide multiple IRs if there is a dispute over extent of injury. Whichever rating from the designated doctor applies to the compensable injury once an extent of injury (EOI) dispute has been resolved may become final if not disputed. An EOI dispute does not constitute a dispute of the MMI/IR for purposes of finality under this subsection.

(b) A first MMI/IR certification must be disputed within 90 days of delivery of written notice through verifiable means, including IRs related to EOI disputes. The notice must contain a copy of a valid Form TWCC 69, Report of Medical Evaluation, as described in subsection (c). The 90-day period begins on the day after the written notice is delivered to the party wishing to dispute a certification of MMI or an IR assignment, or both. The 90-day period may not be extended.

(1) Only an insurance carrier, an injured employee, or an injured employee's attorney or employee representative under 150.3(a) may dispute a first certification of MMI or assigned IR under §141.1 (related to Requesting and Setting a Benefit Review Conference) or by requesting the appointment of a designated doctor, if one has not been appointed.

(2) Use of the TWCC 69's non-concurrence section is not a prescribed form and manner for a dispute.

(3) A dispute may not be revoked or withdrawn to allow the first valid certification of MMI and/or the first valid assignment of IR to become final except by agreement of the parties.

(4) The first certification of maximum medical improvement and/or impairment rating may be disputed after the 90-day period as provided in §408.123(e) of the Texas Labor Code.

(c) A certification of MMI and/or IR assigned as described in subsection (a) must be on a Form TWCC 69, Report of Medical Evaluation. The certification on the Form TWCC 69 is valid if:

(1) There is an MMI date that is not prospective;

(2) There is an impairment determination of either no impairment or a percentage impairment rating assigned; and

(3) There is the signature of the certifying doctor who is authorized by the Commission under §130.1(a) to make the assigned impairment determination.

(d) This section applies only to those claims with initial MMI/IR certifications made on or after June 18, 2003.

History

Source Note: The provisions of this §130.12 adopted to be effective March 14, 2004, 29 TexReg 2328.

Subchapter B SUPPLEMENTAL INCOME BENEFITS

28 Tex. Admin. Code § 130.100 Applicability

(a) Effectiveness. Entitlement or non-entitlement to supplemental income benefits shall be determined in accordance with the rules in effect on the date a qualifying period begins.

(b) Claims Service. Sections 130.101 - 130.109 of this chapter (relating to Impairment and Supplemental Income Benefits) define certain aspects of claims service under the provisions of Texas Labor Code, §406.010.

History

Source Note: The provisions of this §130.100 adopted to be effective January 31, 1999, 24 TexReg 399.

28 Tex. Admin. Code § 130.101 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Application for Supplemental Income Benefits--The Division form required pursuant to Labor Code §408.143(b) containing the following information:

(A) a statement, with supporting payroll documentation, that the employee has earned less than 80% of the employee's average weekly wage as a direct result of the impairment from the compensable injury;

(B) the amount of the employee's wages during the qualifying period;

(C) a statement, with supporting documentation, that the employee has complied with Labor Code §408.1415 and this subchapter; and

(D) for self-employed individuals, copies of all supporting documentation to establish the amount of self-employment income earned during the qualifying period and any other pertinent documentation of efforts to establish or maintain a self-employed enterprise during the qualifying period.

(2) First Quarter--The 13 weeks beginning on the day after the last day of the impairment income benefits period.

(3) Impairment income benefits period--The number of weeks computed under Labor Code §408.121 for which the injured employee is entitled to receive impairment income benefits, starting with the day after the date the employee reached maximum medical improvement.

(4) Qualifying period--A period of time for which the employee's activities and wages are reviewed to determine eligibility for supplemental income benefits. The qualifying period ends on the 14th day before the beginning date of the quarter and consists of the 13 previous consecutive weeks. In accordance with §130.100(a) of this title (relating to Applicability), a qualifying period that begins on or after July 1, 2009, is subject to the provisions of this subchapter, and a qualifying period that begins prior to July 1, 2009, remains subject to the rules in effect on the date the qualifying period begins.

(5) Reviewing authority--The person who reviews the Application for Supplemental Income Benefits and other information to make the determination of entitlement or non-entitlement to supplemental income benefits including Division staff for the first quarter determination and the insurance adjuster for subsequent quarter determinations.

(6) Subsequent Quarter--A 13-week period beginning on the day after the last day of a previous quarter. The term subsequent quarter applies to all quarters after the first quarter.

(7) Vocational Rehabilitation Services--Services which can reasonably be expected to benefit the employee in terms of employability including, but not limited to, identification of the employee's physical and vocational abilities, training, physical or mental restoration, vocational assessment, transferable skills assessment, development of and modifications to an individualized vocational rehabilitation plan, or other services necessary to enable an injured employee to become employed in an occupation that is reasonably consistent with his or her strengths, physical abilities including ability to travel, educational abilities, interest, and pre-injury income level.

(8) Vocational rehabilitation program--Any program, provided by the Texas Workforce Commission (TWC), a comparable federally-funded rehabilitation program in another state under the Rehabilitation Act of 1973, as amended, or a private provider of vocational rehabilitation services, for the provision of vocational rehabilitation services designed to assist the injured employee to return to work that includes a vocational rehabilitation plan. A vocational rehabilitation plan, also known as an Individual Plan for Employment at TWC, includes, at a minimum, an employment goal, any intermediate goals, a description of the services to be provided or arranged, the start and end dates of the described services, and the injured employee's responsibilities for the successful completion of the plan.

(9) Wages--All forms of remuneration payable for personal services rendered during the qualifying period as defined in Labor Code §401.011(43), including the wages of a bona fide offer of employment which was not accepted.

History

Source Note: The provisions of this §130.101 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective November 28, 1999, 24 TexReg 10339; amended to be effective July 1, 2009, 34 TexReg 2138; amended to be effective April 15, 2018, 43 TexReg 2153.

28 Tex. Admin. Code § 130.102 Eligibility for Supplemental Income Benefits; Amount

(a) General. An injured employee is not entitled to supplemental income benefits until the expiration of the impairment income benefit period.

(b) Eligibility Criteria. An injured employee who has an impairment rating of 15% or greater, who has not commuted any impairment income benefits, who has not permanently lost entitlement to supplemental income benefits and who has completed and filed an Application for Supplemental Income Benefits in accordance with this subchapter is eligible to receive supplemental income benefits if, during the qualifying period, the injured employee:

(1) has earned less than 80% of the injured employee's average weekly wage as a direct result of the impairment from the compensable injury; and

(2) has demonstrated an active effort to obtain employment in accordance with Labor Code §408.1415 and this section.

(c) Direct Result. An injured employee has earned less than 80% of the injured employee's average weekly wage as a direct result of the impairment from the compensable injury if the impairment from the compensable injury is a cause of the reduced earnings.

(d) Work Search Requirements.

(1) An injured employee demonstrates an active effort to obtain employment by meeting at least one or any combination of the following work search requirements each week during the entire qualifying period:

(A) has returned to work in a position which is commensurate with the injured employee's ability to work.

(B) has actively participated in a vocational rehabilitation program as defined in §130.101 of this title (Definitions).

(D) has performed active work search efforts documented by job applications the injured employee submitted. For purposes of this section, "job application" means a physical or electronic form or other document that is submitted to an employer or its designated representative to provide information about a candidate to obtain a specific position.

(E) has been unable to perform any type of work in any capacity, has provided a narrative report from a doctor that specifically explains how the injury causes a total inability to work, and no other records show that the injured employee is able to return to work.

(2) An injured employee who has not met at least one of the work search requirements in any week during the qualifying period is not entitled to SIBs unless the injured employee can demonstrate that he or she had reasonable grounds for failing to comply with the work search requirements under this section.

(e) Vocational Rehabilitation. As provided in subsection (d)(1)(B) of this section, regarding active participation in a vocational rehabilitation program, an injured employee must provide documentation sufficient to establish that he or she has actively participated in a vocational rehabilitation program during the qualifying period.

(f) Work Search Efforts. As provided in subsection (d)(1)(C) and (D) of this section regarding active participation in work search efforts and active work search efforts, an injured employee must provide documentation sufficient to establish that he or she has, each week during the qualifying period, made the minimum number of work search efforts, including submitting the minimum number of job applications, consistent with the work search efforts established by TWC that are required for unemployment compensation in the injured employee's county of residence under the TWC Local Workforce Development Board requirements.

(1) If the required number of work search efforts changes during a qualifying period, the lesser number of work search efforts is the required minimum number of work search efforts for that period.

(2) If the injured employee is residing out of state, the minimum number of work search efforts required is the number required by the public employment service under applicable unemployment compensation laws for the injured employee's place of residence.

(g) Calculation of amount. Subject to any approved reduction for the effects of contribution, the monthly supplemental income benefit payment is calculated quarterly as follows:

(1) multiply the injured employee's average weekly wage by 80% (.80);

(2) add the injured employee's wages for all 13 weeks of the qualifying period;

(3) divide the total wages by 13;

(4) subtract this figure from the result of paragraph (1) of this subsection;

(5) multiply the difference by 80% (.80);

(6) if the resulting amount is greater than the maximum rate under the Act, Labor Code, §408.061, use the maximum rate; and

(7) multiply the result by 4.34821.

(h) Maximum Medical Improvement and Impairment Rating Disputes. If there is no pending dispute regarding the date of maximum medical improvement or the impairment rating before the expiration of the first quarter, the date of maximum medical improvement and the impairment rating is final and binding.

(i) Services Provided by a Carrier Through a Private Provider of Vocational Rehabilitation Services. The insurance carrier is responsible for reasonable travel expenses incurred by the injured employee if the employee is required to travel in excess of 20 miles one way from the injured employee's residence to obtain vocational rehabilitation services from a private provider.

History

Source Note: The provisions of this §130.102 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective November 28, 1999, 24 TexReg 10339; amended to be effective July 1, 2009, 34 TexReg 2138; amended to be effective April 15, 2018, 43 TexReg 2153; amended to be effective December 24, 2025, 50 TexReg 8335.

28 Tex. Admin. Code § 130.103 Determination of Entitlement or Non-entitlement for the First Quarter

(a) Division Determination. For each injured employee with an impairment rating of 15% or greater, and who has not commuted any impairment income benefits, the Division will make the determination of entitlement or non-entitlement for the first quarter of supplemental income benefits. This determination shall be made not later than the last day of the impairment income benefit period and the notice of determination shall be sent to the injured employee and the insurance carrier by first class mail, electronic transmission, or personal delivery.

(b) Determination of Entitlement. If the Division determines that the injured employee is entitled to supplemental income benefits for the first quarter, the notice of determination shall include:

(1) the beginning and end dates of the first quarter;

(2) the amount of the monthly payments;

(3) the amount of the wages used to calculate the monthly payment;

(4) instructions for the parties of the procedures for contesting the Division's determination as provided by §130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits; Attorney Fees); and

(5) an Application for Supplemental Income Benefits, filing instructions, a filing schedule, and a description of the consequences of failing to timely file.

(c) Determination of non-entitlement. If the Division determines that the injured employee is not entitled to supplemental income benefits for the first quarter, the notice of determination shall include:

(1) the grounds for this determination;

(2) the beginning and end dates of the first quarter;

(3) instructions for the parties of the procedures for contesting the Division's determination as provided by §130.108 of this title (relating to Contesting Entitlement to Supplemental Income Benefits); and

(4) an Application for Supplemental Income Benefits, filing instructions, a filing schedule, and a description of the consequences of failing to timely file.

History

Source Note: The provisions of this §130.103 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective November 28, 1999, 24 TexReg 10339; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.104 Determination of Entitlement or Non-entitlement for Subsequent Quarters

(a) Subsequent Quarter Determination. After the Division has made a determination of entitlement or non-entitlement for supplemental income benefits for the first quarter, the insurance carrier shall make determinations for subsequent quarters consistent with the provisions contained in §130.102 of this title (relating to Eligibility for Supplemental Income Benefits; Amount). The insurance carrier shall issue a determination of entitlement or non-entitlement within 10 days after receipt of the Application for Supplemental Income Benefits for a subsequent quarter.

(b) Application for Supplemental Income Benefits. An injured employee claiming entitlement to supplemental income benefits for a subsequent quarter must send the insurance carrier an Application for Supplemental Income Benefits as required under this section. With the first monthly payment of supplemental income benefits for any eligible quarter and with any insurance carrier determination of non-entitlement, the insurance carrier shall send the injured employee a copy of the Application for Supplemental Income Benefits and the proper address to file the subsequent application. On the Application for Supplemental Income Benefits sent by the insurance carrier, the insurance carrier shall include:

(1) the number of the applicable quarter;

(2) the dates of the qualifying period;

(3) the dates of the quarter;

(4) the deadline for filing the application with the insurance carrier; and

(5) the minimum number of work search efforts required by §130.102(d)(1) and (f) of this title (relating to Eligibility for Supplemental Income Benefits; Amount) during the next qualifying period.

(c) Filing the Application for Supplemental Income Benefits. The employee shall file the Application for Supplemental Income Benefits and any applicable documentation with the insurance carrier by first class mail, personal delivery or electronic transmission. Except as otherwise provided in this section, the Application for Supplemental Income Benefits shall be filed no later than seven days before, and no earlier than 20 days before, the beginning of the quarter for which the injured employee is applying for supplemental income benefits. If the Application for Supplemental Income Benefits is received by the insurance carrier more than 20 days before the beginning of the quarter, the insurance carrier shall return the form to the injured employee with detailed instructions on when the form is required to be filed. Any form returned to the injured employee because the form was filed early shall not be subject to the provisions of §130.108 of this title (relating to Contesting Entitlement to Supplemental Income Benefits).

(d) Date-Stamp. Upon receipt, the insurance carrier shall date-stamp all Application for Supplemental Income Benefits forms with the date the insurance carrier received the form.

(e) Notice of Determination. Upon making subsequent quarter determinations, the insurance carrier shall issue a notice of determination to the injured employee. The notice shall be sent by first class mail, personal delivery or electronic transmission and shall contain all the information required in the Notice of Entitlement or Non-entitlement portion of the Application for Supplemental Income Benefits. The notice of determination of non-entitlement shall contain sufficient claim specific information to enable the employee to understand the reason for the insurance carrier's determination. A generic statement such as "failure to satisfy the compliance standards of Labor Code §408.1415", "not a direct result", or similar phrases without further explanation does not satisfy the requirements of this section.

(f) Accrual date. If the injured employee is entitled to supplemental income benefits for a subsequent quarter, the benefits begin to accrue on the later of:

(1) the first day of the applicable quarter; or

(2) the date the Application for Supplemental Income Benefits is received by the insurance carrier, subject to the provisions of §130.105 of this title (relating to Failure to Timely File Application for Supplemental Income Benefits; Subsequent Quarters).

(g) Changes in Amount. A change in the monthly amount of supplemental income benefits from one quarter to the next does not constitute a dispute subject to §130.108 of this title (relating to Contesting Entitlement to Supplemental Income Benefits). An insurance carrier that does not contest the entitlement to supplemental income benefits for a subsequent quarter, but determines a different monthly amount is due, shall:

(1) send the notice as required in subsection (e) of this section;

(2) include instructions about the procedures for contesting the insurance carrier's determination as provided by §130.108 of this title (relating to Contesting Entitlement to Supplemental Income Benefits); and

(3) issue payment based on the newly calculated amount.

History

Source Note: The provisions of this §130.104 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.105 Failure to Timely File Application for Supplemental Income Benefits; Subsequent Quarters

(a) Failure to timely file. An injured employee who does not timely file an Application for Supplemental Income Benefits with the insurance carrier shall not receive supplemental income benefits for the period of time between the beginning date of the quarter and the date on which the form was received by the insurance carrier, unless the following apply:

(1) the failure of the insurance carrier to timely mail the form to the injured employee as provided by §130.104 of this title (relating to Determination of Entitlement or Non-entitlement for Subsequent Quarters);

(2) the failure of the Division to issue a determination of entitlement or non-entitlement for the first quarter and the quarter applied for immediately follows the first quarter; or

(3) a finding of an impairment rating of 15% or greater in an administrative or judicial proceeding when the previous impairment rating was less than 15%.

(b) Calculation. If the injured employee has failed to timely file the Application for Supplemental Income Benefits and none of the exceptions listed in subsection (a) of this section apply, the payment of supplemental income benefits for that particular payment period shall be prorated as follows:

(1) divide the weekly amount of supplemental income benefits (as calculated pursuant to §130.102(g)(5) and (6) of this title (relating to Eligibility for Supplemental Income Benefits; Amount) by seven to determine the daily rate;

(2) calculate the number of days between the date the Application for Supplemental Income Benefits was received and the end of that particular payment period; and

(3) multiply the number of days and the daily rate to determine the amount of the payment.

History

Source Note: The provisions of this §130.105 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.106 Loss of Entitlement to Supplemental Income Benefits

(a) 12-Month Provision. Except as provided in §130.109 of this title (relating to Reinstatement of Entitlement if Discharged with Intent to Deprive of Supplemental Income Benefits), an injured employee who is not entitled to supplemental income benefits for a period of four consecutive quarters permanently loses entitlement to such benefits.

(b) 401-Week Provision. An injured employee permanently loses entitlement to supplemental income benefits upon the expiration of the 401-week period calculated pursuant to Labor Code §408.083. Except for situations where the injured employee has previously permanently lost entitlement to supplemental income benefits, the insurance carrier shall send two notices to the injured employee prior to the expiration of the 401-week period if the injured employee has submitted an Application for Supplemental Income Benefits during the 12 months immediately preceding the expiration of the 401-week period. This notification shall be in the form and manner prescribed by the Division and shall be sent:

(1) no later than four months prior to the expiration of the 401-week period; and

(2) one month prior to the expiration of the 401-week period.

(c) Refusal of Vocational Rehabilitation Services. An injured employee, in a vocational rehabilitation program as defined in §130.101(8) of this title (relating to Definitions), who refuses vocational rehabilitation services or refuses to cooperate with services provided at any time during a qualifying period is not entitled to supplemental income benefits for the related quarter.

History

Source Note: The provisions of this §130.106 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.107 Payment of Supplemental Income Benefits

(a) First Quarter. After the Division's initial determination of entitlement, the insurance carrier shall pay supplemental income benefits as follows:

(1) the first payment shall be made on or before the tenth day after the day on which the insurance carrier received the Division determination of entitlement or the seventh day of the quarter, whichever is later;

(2) the second payment shall be made on or before the 37th day of the first quarter; and

(3) the last payment shall be made on or before the 67th day of the first quarter.

(b) Subsequent Quarters. For subsequent quarters, the insurance carrier shall pay supplemental income benefits as follows:

(1) the first payment shall be made on or before the tenth day after the day on which the insurance carrier received the Application for Supplemental Income Benefits, or the seventh day of the quarter, whichever is later;

(2) the second payment shall be made on or before the 37th day of the quarter; and

(3) the last payment shall be made on or before the 67th day of the quarter.

History

Source Note: The provisions of this §130.107 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.108 Contesting Entitlement or Amount of Supplemental Income Benefits; Attorney Fees

(a) Injured Employee Disputes. An injured employee may contest the determination by the Division or the insurance carrier regarding non-entitlement to, or the amount of, supplemental income benefits by requesting a benefit review conference as provided by Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference).

(b) Insurance Carrier Dispute; First Quarter. If an insurance carrier disputes a Division finding of entitlement to, or amount of, supplemental income benefits for the first quarter, the insurance carrier shall request a benefit review conference as provided by Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference) within 10 days after receiving the Division determination of entitlement. An insurance carrier waives the right to contest the Division determination of entitlement to, or amount of, supplemental income benefits for the first quarter if the request is not received by the Division within 10 days after the date the insurance carrier received the determination.

(c) Insurance Carrier Dispute; Subsequent Quarter With Prior Payment. If an insurance carrier disputes entitlement to a subsequent quarter and the insurance carrier has paid supplemental income benefits during the quarter immediately preceding the quarter for which the Application for Supplemental Income Benefits is filed, the insurance carrier shall dispute entitlement to the subsequent quarter by requesting a benefit review conference as provided by Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference) within 10 days after receiving the Application for Supplemental Income Benefits. An insurance carrier waives the right to contest the entitlement to supplemental income benefits for the subsequent quarter if the request is not received by the Division within 10 days after the date the insurance carrier received the Application for Supplemental Income Benefits. The insurance carrier does not waive the right to contest entitlement to supplemental income benefits if the insurance carrier has returned the injured employee's Application for Supplemental Income Benefits pursuant to §130.104(c) of this title (relating to Determination of Entitlement or Non-entitlement for Subsequent Quarters).

(d) Insurance Carrier Disputes; Subsequent Quarter Without Prior Payment. If an insurance carrier disputes entitlement to a subsequent quarter and the insurance carrier did not pay supplemental income benefits during the quarter immediately preceding the quarter for which the Application for Supplemental Income Benefits is filed, the insurance carrier shall send the determination to the injured employee within 10 days of the date the form was filed with the insurance carrier and include the reasons for the insurance carrier's finding of non-entitlement and instructions about the procedures for contesting the insurance carrier's determination as provided by subsection (a) of this section.

(e) Liability. An insurance carrier who unsuccessfully contests a Division determination of entitlement to supplemental income benefits is liable for:

(1) all accrued, unpaid supplemental income benefits, and interest on that amount; and

(2) reasonable and necessary attorney's fees incurred by the injured employee as a result of the insurance carrier's dispute which have been ordered by the Division or court.

History

Source Note: The provisions of this §130.108 adopted to be effective January 31, 1999, 24 TexReg 399; amended to be effective July 1, 2009, 34 TexReg 2138.

28 Tex. Admin. Code § 130.109 Reinstatement of Entitlement if Discharged with Intent to Deprive of Supplemental Income Benefits

(a) An injured employee who has lost entitlement to supplemental income benefits under §130.106(a) of this title (relating to Loss of Entitlement to Supplemental Income Benefits), and is discharged from employment within 12 months of losing entitlement, will become re-entitled if the employer discharged the injured employee with intent to deprive the injured employee of supplemental income benefits.

(b) An injured employee seeking reinstated supplemental income benefits under this section shall request a benefit contested case hearing, as provided by Chapter 142 of this title (relating to Dispute Resolution--Benefit Contested Case Hearing).

(d) Supplemental income benefits reinstated under this section begin to accrue on the day after the injured employee's discharge.

History

Source Note: The provisions of this §130.109 adopted to be effective April 17, 1992, 17 TexReg 2400; amended to be effective July 1, 2009, 34 TexReg 2138.

Chapter 131 BENEFITS--LIFETIME INCOME BENEFITS

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 131.1 Initiation of Lifetime Income Benefits; Notice of Denial

(a) The insurance carrier must initiate the payment of lifetime income benefits without a final decision, order, or other action of the commissioner if an injured employee meets the eligibility criteria for lifetime income benefits listed under Labor Code §408.161 or §408.1615 as a result of the compensable injury.

(b) An injured employee may submit a written request for lifetime income benefits to the insurance carrier. The insurance carrier must either initiate lifetime income benefits or deny the injured employee's eligibility for lifetime income benefits considering all of the eligibility criteria listed under Labor Code §408.161 or §408.1615 within 60 days of receiving the injured employee's written request. An insurance carrier's failure to respond to the request for lifetime income benefits within the timeframes described in this subsection does not constitute a waiver of the insurance carrier's right to dispute the injured employee's eligibility for lifetime income benefits.

(c) The insurance carrier must make the first payment of lifetime income benefits on or before the 15th day after the date the insurance carrier reasonably believes that the injured employee is eligible for lifetime income benefits as a result of the compensable injury. The initiation of lifetime income benefits without a final decision, order, or other action of the commissioner does not waive the insurance carrier's right to contest the compensability of the injury under Labor Code §409.021(c).

(d) If the injured employee submits a written request for lifetime income benefits, and the insurance carrier denies that the injured employee is eligible for lifetime income benefits, the insurance carrier must deny eligibility by sending a plain-language notice of denial of eligibility to the division, the injured employee, and the injured employee's representative, if any, in the form and manner prescribed by the division up to the 60th day after it receives the written request. The notice of denial of eligibility must include:

(1) a full and complete statement describing the insurance carrier's reasons for denial. The statement must contain sufficient claim-specific substantive information to enable the injured employee to understand the insurance carrier's position or action taken under the claim. A generic statement that simply states the insurance carrier's position with phrases such as "not part of compensable injury," "not meeting criteria," "liability is in question," "under investigation," "eligibility questioned," or other similar phrases with no further description of the factual basis for the denial does not satisfy the requirements of paragraph (1) of this subsection;

(2) contact information, including the adjuster's name, toll-free telephone and fax numbers, and email address; and

(3) a statement informing the injured employee of his or her right to request a benefit review conference to resolve the dispute.

(e) An injured employee may contest the insurance carrier's denial of eligibility for lifetime income benefits or failure to respond to the written request for lifetime income benefits by requesting dispute resolution as provided by Chapters 141 - 144 and 147 of this title (relating to Dispute Resolution).

(f) Nothing in this section is intended to limit an insurance carrier's duty to initiate payment of lifetime income benefits before the time limit established in subsection (c) of this section.

History

Source Note: The provisions of this §131.1 adopted to be effective June 1, 2015, 40 TexReg 929; amended to be effective November 21, 2024, 49 TexReg 9322.

28 Tex. Admin. Code § 131.2 Calculation of Lifetime Income Benefits

(a) Lifetime income benefits shall be calculated by multiplying the employee's average weekly wage by .75. The lifetime income benefit payable each week under this formula shall not exceed the weekly maximum benefit under the Workers' Compensation Act, §4.11, for the first year of benefits.

(b) Each year on the anniversary date of the day lifetime income benefits began to accrue, the amount of those benefits being paid shall be increased by 3.0%. The employee is entitled to the annual increase without regard to the limits imposed by the maximum weekly benefit. The increase shall be paid without further action by the commission.

History

Source Note: The provisions of this §131.2 adopted to be effective April 15, 1991, 16 TexReg 1885.

28 Tex. Admin. Code § 131.3 Carrier's Petition for Payment of Benefits by the Subsequent Injury Fund

(a) When an insurance carrier reasonably believes that an injured employee may be eligible for lifetime benefits from the subsequent injury fund, the insurance carrier shall petition the commission for payment of lifetime income benefits from the subsequent injury fund. The petition shall be in writing and contain the following:

(1) the employee's name and social security number;

(2) the date of each injury;

(3) the workers' compensation number assigned to the claim (if any) for each injury;

(4) the name and address of the employer for whom the employee was working at the time of each injury; and

(5) any information upon which the carrier bases its request.

(b) The commission shall order the payment of lifetime income benefits from the subsequent injury fund if it finds that the effects of the two injuries combined entitle the employee to lifetime income benefits.

(d) The subsequent injury fund shall compensate the employee for the remaining lifetime income benefits for which the insurance carrier is not liable.

History

Source Note: The provisions of this §131.3 adopted to be effective April 15, 1991, 16 TexReg 1885.

28 Tex. Admin. Code § 131.4 Change in Payment Period; Purchase of Annuity for Lifetime Income Benefits

(a) Upon the request of an injured employee entitled to lifetime income benefits (LIBs) as defined in the Act, the insurance carrier and an injured employee may agree to change the frequency of LIBs payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing and is only required to be filed with the Commission if the Commission requests a copy. To relieve the insurance carrier of the responsibility to pay LIBs weekly a valid written agreement must include the following terms and conditions:

(1) the agreement for the monthly payment of LIBs shall be effective the first calendar day of the month following the month in which the written agreement was entered into by the insurance carrier and the injured employee;

(2) monthly LIBs shall be issued on or before the seventh day of the month for which benefits are due;

(3) weekly LIBs payments shall continue through the end of the month in which the agreement was signed;

(4) payment of the last week of LIBs to transition from weekly payment of LIBs to monthly payments shall be prorated to the end of the month to ensure the injured employee receives LIBs through the last day of the month;

(5) the monthly compensation rate shall be calculated by multiplying the weekly compensation rate by 4.34821;

(6) if less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a completed Employer's Wage Statement must be included with the injured employee's copy of the written agreement; and

(7) A clear statement regarding the due date of the annual three percent increase in LIBs must be included.

(b) At any time after signing the agreement for the monthly payment of LIBs, the injured employee or the insurance carrier may notify the other party in writing that it no longer agrees to the monthly payment of LIBs. In this case, the insurance carrier shall pay all accrued but unpaid LIBs at the end of the current monthly cycle and shall continue to pay LIBs weekly as and when they accrue and are due. The last monthly payment shall be prorated to ensure the insurance carrier pays the appropriate amount of LIBs.

(c) The insurance carrier and the injured employee entitled to LIBs may agree that the carrier will purchase an annuity for payment of LIBs. An application for payment of LIBs by annuity must be submitted to the Commission for approval in the form, format, and manner required by the Commission. If less than the maximum weekly compensation rate in effect on the date of the compensable injury is being paid, a complete Employer's Wage Statement must be included with the application.

(d) An annuity for the payment of LIBs shall meet the following terms and conditions.

(1) LIBs payments shall be initiated no later than the 45th day after the date the written agreement was approved by the Commission.

(2) The company providing an annuity for the payment of LIBs must be licensed to do business in Texas and must have a current A. M. Best rating of B+ or better or have a Standard & Poor's rating of claims paying ability of A or better.

(3) The workers' compensation insurance carrier must guarantee the payments provided by the annuity company in the event of default.

(4) The annuity contract must include funds for payment of the annual three percent increase in LIBs required by the Act, compounded annually.

(5) The injured employee, or guardian if applicable, shall not be allowed to assign the right to receive LIBs from an annuity. All LIBs must be paid to the order of the injured employee or the legal guardian, if applicable.

(6) An annuity cannot be purchased to fund the payment of medical costs incurred by an injured employee entitled to LIBs.

(7) The annuity company shall pay LIBs either weekly or monthly as indicated in the application for payment of LIBs by annuity.

(8) If monthly payments are agreed to by the insurance carrier and the injured employee, the transition from weekly to monthly benefits paid by annuity shall be the same as that for LIBs paid by the responsible insurance carrier set out in subsection (a) of this section.

(e) This section applies only to agreements entered into on or after January 1, 2000, for payment of LIBs under the provisions of the Act.

History

Source Note: The provisions of this §131.4 adopted to be effective December 26, 1999, 24 TexReg 11449.

28 Tex. Admin. Code § 131.5 Verification by the Subsequent Injury Fund

(a) The Subsequent Injury Fund must confirm the following information before making a payment to the injured employee:

(1) the injured employee is living;

(2) lifetime income benefits are being received; and

(3) the injured employee's contact information is correct.

(b) The injured employee must provide the information required by subsection (a)(1) - (3) to the Subsequent Injury Fund each month over a telephone call, video call, or other online verification system to receive the lifetime income benefit payment from the Subsequent Injury Fund. If the injured employee is unable to provide the information, the Subsequent Injury Fund will hold any pending payments until verification is complete.

History

Source Note: The provisions of this §131.5 adopted to be effective February 18, 2025, 50 TexReg 863

Subchapter B LIFETIME INCOME BENEFITS--CERTAIN FIRST RESPONDERS

28 Tex. Admin. Code § 131.10 Definitions

In Subchapter B of this chapter:

(1) "First responder" means "first responder" as defined in Labor Code §408.1615.

(2) "Serious bodily injury" means "serious bodily injury" as defined in Penal Code §1.07.

History

Source Note: The provisions of this §131.10 adopted to be effective November 21, 2024, 49 TexReg 9322.

28 Tex. Admin. Code § 131.11 Applicability

This subchapter applies to a first responder who sustains a serious bodily injury:

(1) that is an injury described under Labor Code §408.1615;

(2) in the course and scope of the first responder's employment or volunteer service as a first responder; and

(3) that renders the first responder permanently unemployable.

History

Source Note: The provisions of this §131.11 adopted to be effective November 21, 2024, 49 TexReg 9322.

28 Tex. Admin. Code § 131.12 First Responder's Annual Certification to Insurance Carrier

(a) Requirement. A first responder receiving lifetime income benefits under §408.1615 must file a certification with the insurance carrier annually.

(b) Content. The certification must state that the first responder was not employed in any capacity during the preceding year.

(c) Method and Timing. The first responder must submit the certification to the insurance carrier in the form and manner prescribed by the division:

(1) by first class mail, by personal delivery, or by electronic transmission; and

(2) no later than 30 days after the anniversary of the date the first responder's lifetime income benefits began to accrue.

(d) Notice. Every year, 30 days before the first responder's annual certification is due, an insurance carrier must send the annual certification to complete to the first responder. The certification must include the anniversary date the first responder's lifetime income benefits began to accrue and the date by which the first responder must return the certification to the insurance carrier.

History

Source Note: The provisions of this §131.12 adopted to be effective November 21, 2024, 49 TexReg 9322.

28 Tex. Admin. Code § 131.13 Suspension and Reinstatement of Lifetime Income Benefits

(a) An insurance carrier may suspend the payment of lifetime income benefits to a first responder during and for a period in which:

(1) The first responder fails to complete the annual certification as required by §408.1615(e).

(2) The first responder, without good cause, fails to attend a designated doctor examination as required by §408.0041(j).

(3) The first responder is employed in any capacity.

(4) A designated doctor's report indicates that the first responder is no longer entitled to lifetime income benefits as provided in §408.0041(k-1).

(b) Before an insurance carrier may suspend lifetime income benefits under this section, the insurance carrier must send a plain-language notice to the first responder that explains the basis for the suspension.

(1) Within 20 days of receiving this notice, the first responder must respond to the insurance carrier's notice by:

(A) submitting the annual certification to the insurance carrier;

(B) notifying the insurance carrier of an examination under §127.25 of this title (relating to Failure to Attend a Designated Doctor Examination); or

(2) If the first responder does not respond within 20 days of receiving this notice, the insurance carrier may suspend the first responder's benefits.

(c) If an insurance carrier suspends benefits under subsection (a)(1) of this section, the insurance carrier must reinstate benefits effective on the date the insurance carrier receives the first responder's annual certification. The reinstatement of benefits must occur no later than the seventh day following the date the insurance carrier receives the annual certification.

(d) If an insurance carrier suspends benefits under subsection (a)(2) of this section (failure to attend a designated doctor examination), the insurance carrier must follow §127.25 of this title for suspension and reinstatement of the first responder's benefits.

(e) If an insurance carrier suspends benefits under subsection (a)(3) of this section (employment in any capacity), the first responder must submit a new request for lifetime income benefits under §131.1 of this chapter (relating to Initiation of Lifetime Income Benefits; Notice of Denial).

(f) If the insurance carrier suspends or reinstates benefits under this section, the insurance carrier must also comply with the electronic notification requirements to DWC in §124.2 and Chapter 124, Subchapter B (relating to Insurance Carrier Claim Electronic Data Interchange Reporting to the Division).

History

Source Note: The provisions of this §131.13 adopted to be effective November 21, 2024, 49 TexReg 9322.

28 Tex. Admin. Code § 131.14 Dispute of Continuing Entitlement of Lifetime Income Benefits

(a) If the insurance carrier disputes the accuracy of the first responder's annual certification under Labor Code §408.1615(g), the insurance carrier must provide a copy of the annual certification along with supporting evidence to the commissioner and to the first responder.

(b) Upon review of the information in subsection (a) of this section, the commissioner will issue an order stating whether the insurance carrier is entitled to an examination under Labor Code §408.1615(h).

(c) The parties may dispute the determination of the division through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution).

(d) After receiving the designated doctor's report under Labor Code §408.1615(h), a party may dispute the designated doctor's opinion on continuing entitlement to lifetime income benefits through the dispute resolution processes outlined in Chapters 140 - 144 and 147 of this title (relating to Dispute Resolution).

History

Source Note: The provisions of this §131.14 adopted to be effective November 21, 2024, 49 TexReg 9322.

Chapter 132 DEATH BENEFITS--DEATH AND BURIAL BENEFITS

28 Tex. Admin. Code § 132.1 Calculation of Death Benefits

Death benefits shall be computed by multiplying the employee's average weekly wage by .75. The amount paid shall not exceed 100% of the state average weekly wage as determined by the Texas Workers' Compensation Commission and in effect on the date of injury. A claim for death benefits shall be filed as required by §122.100 of this title (relating to Claim for Death Benefits).

History

Source Note: The provisions of this §132.1 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.2 Determination of Facts of Dependent Status

(a) This section applies to a person who claims death benefits as a dependent of the deceased employee.

(b) A benefit which flowed from a deceased employee, at the time of death, on an established basis in at least monthly intervals to the person claiming to be dependent, is presumed to be a regular or recurring economic benefit. This presumption may be overcome by credible evidence. The burden is on the claimant to prove that benefits, which flowed less frequently than once a month, were regular or recurring at the time of the employee's death.

(c) It shall be presumed that an economic benefit, whose value was equal to or greater than 20% of the person's net resources in the period (see subsection (d) of this section) for which the benefit was paid, is an economic benefit which contributed substantially to the person's welfare and livelihood. This presumption may be overcome by credible evidence. The burden is on the claimant to prove that benefits whose value was less than 20% of the person's net resources contributed significantly to the person's welfare and livelihood.

(d) Net resources for the purpose of subsection (b) of this section are 100% of all wage and salary income and all other income including nonpecuniary income and all income of the individual's spouse, less 100% of social security taxes and federal income tax withholding.

(e) The person claiming to be a dependent shall furnish sufficient information to enable the commission to accurately identify the net resources and to establish the existence of the economic benefit claimed. This information may include, but is not limited to, tax returns, a financial statement of the individual, and check stubs.

(f) If an economic benefit was provided in the form of goods and services, the value shall be the market value of the same or similar goods and services in the same vicinity.

History

Source Note: The provisions of this §132.2 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.3 Eligibility of Spouse To Receive Death Benefits

(a) The surviving spouse is entitled to receive death benefits, unless subsection (b) of this section applies. The surviving spouse shall submit a certified copy of the marriage license, or satisfactory evidence of common-law marriage to the deceased employee, to the insurance carrier.

(b) A surviving spouse who abandoned the employee, without good cause for more than one year immediately preceding the death, shall be ineligible to receive death benefits. The surviving spouse shall be deemed to have abandoned the employee if the surviving spouse and the employee had not been living in the same household for more than one year preceding the employee's death unless the spouse is:

(1) hospitalized;

(2) in a nursing home; or

(3) living apart due to career choices, military duty, or other reasons where it is established their separation is not due to the pending breakup of the marriage. The burden is on a person who opposes the claim of a surviving spouse to prove the spouse abandoned the deceased employee.

(c) If more than one person claims to be the surviving spouse of the deceased employee, the commission shall presume the most recent spouse is the surviving spouse. This presumption may be rebutted by an individual who presents proof of a prior valid marriage to the deceased employee.

History

Source Note: The provisions of this §132.3 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.4 Eligibility of a Child To Receive Death Benefits

(a) A child eligible for death benefits is the son or daughter of a deceased employee, including an adoptive child, and including a dependent stepchild, who meets any of the conditions set out in the Texas Workers' Compensation Act (the Act), §4.42(g)(2).

(b) A person claiming benefits as the biological or adoptive son or daughter of a deceased employee shall submit proof of relationship to the deceased employee to the carrier or along with the claim for death benefits. The claimant shall submit a certified copy of the claimant's birth certificate or decree of adoption. If these documents do not exist, the claimant shall submit other proof of relationship, such as baptismal records, court orders establishing paternity, voluntary admissions of paternity, or affidavits of persons who have personal knowledge of the relationship to the deceased employee.

(c) If there are two parents listed on the claimant's birth certificate, but deceased employee is not listed, the claimant is presumed to be the child of the parents actually named and is presumed not eligible to receive death benefits. The presumption may be rebutted by credible evidence.

(d) A person claiming benefits as the dependent stepchild of the deceased employee shall prove that the employee was married to a parent of the claimant, and must also establish dependent status as set out in §132.2 of this title (relating to Determination of Facts of Dependent Status).

(e) A child under 18 years of age, who is married or has been emancipated from the disabilities of minority at the time of the employee's death, shall not be eligible to receive benefits as a minor under the Act, §4.42(g)(2)(A).

(f) A child who is a full-time student at the time of the employee's death and is less than 25 years old shall submit evidence of enrollment at an accredited educational institution. A child shall only be considered a full-time student if the child meets the educational institution's requirements for a full-time student in the child's course of study.

(g) An adult child claiming eligibility to receive benefits under the Act, §4.42(g)(2), shall be required to establish dependent status as set out in §132.2 of this title (relating to Determination of Facts of Dependent Status). A physically or mentally handicapped child also shall submit medical evidence of the handicap.

History

Source Note: The provisions of this §132.4 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.5 Eligibility of a Grandchild To Receive Death Benefits

(a) A grandchild who was dependent on the deceased employee on the day of death shall be entitled to receive death benefits, unless the grandchild's own parent is eligible for benefits.

(b) A person claiming to be an eligible grandchild shall submit proof of the relationship to the deceased employee to the carrier or along with the claim for death benefits. The claimant shall submit a certified copy of the claimant's birth certificate or decree of adoption, and a certified copy of the birth certificate or decree of adoption of the parent who was a child of the deceased employee. If these documents do not exist, the claimant shall submit other proof of relationship, such as baptismal records, court orders establishing paternity, voluntary admissions of paternity, or affidavits of persons who have personal knowledge of the relationship to the deceased employee. In addition, the claimant must present evidence of dependent status on the deceased employee as defined by §132.2 of this title (relating to Determination of Facts of Dependent Status).

History

Source Note: The provisions of this §132.5 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.6 Eligibility of Other Surviving Dependents and Eligible Parents To Receive Death Benefits

(a) A parent, stepparent, sibling, or grandparent of a deceased employee who was dependent on the employee on the day of death is entitled to receive death benefits, only if there is no eligible spouse, child, or grandchild.

(b) A surviving eligible parent is entitled to receive death benefits only if there is no eligible spouse, no eligible child, and no eligible grandchild, and there are no surviving dependents of the deceased employee who are parents, siblings, or grandparents of the deceased.

(c) A person claiming to be a beneficiary under subsection (a) or (b) of this section is required to present proof of the relationship to the deceased employee to the insurance carrier or along with the claim for death benefits. The evidence presented as proof of a relationship shall include certified copies of applicable birth certificates, or decrees of adoption, or proof of marriage. If these documents do not exist, the claimant shall submit other proof of relationship, such as baptismal records, court orders establishing paternity, voluntary admissions of paternity, or affidavits of persons who have personal knowledge of the relationship to the deceased employee. A person claiming to be a beneficiary under subsection (a) of this section shall submit evidence of dependence on the deceased employee as defined in §132.2 of this title (relating to Determination of Facts of Dependent Status). A person claiming to be a beneficiary under subsection (b) of this section shall designate all eligible parents on the claim for death benefits. An insurance carrier is not liable for payment to any eligible parent not designated on the claim for death benefits. A person claiming to be a beneficiary under subsection (b) of this section who is required to receive burial benefits in order to qualify as an eligible parent as provided in subsection (e) of this section shall also submit proof of receipt of burial benefits unless the claim for burial benefits is filed with the insurance carrier pursuant to §132.13 of this title (relating to Burial Benefits) at the same time the claim for death benefits is filed with the division or the claim for burial benefits has been filed with the insurance carrier but is still pending at the time the claim for death benefits is filed with the division.

(d) The term "sibling" means a brother or sister who shares at least one parent, through birth or adoption, with the deceased employee.

(e) For a compensable injury occurring on or after September 1, 2007 but prior to September 1, 2009 that results in the death of the employee, the term "eligible parent" means the mother or the father of a deceased employee, including an adoptive parent or a stepparent, who receives burial benefits under §132.13 of this title, but does not include a parent whose parental rights have been terminated.

(f) For a compensable injury occurring on or after September 1, 2009 that results in the death of the employee, the term "eligible parent" means the mother or the father of a deceased employee, including an adoptive parent or a stepparent, but does not include a parent whose parental rights have been terminated.

History

Source Note: The provisions of this §132.6 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective October 12, 2008, 33 TexReg 8395; amended to be effective March 21, 2010, 35 TexReg 2191.

28 Tex. Admin. Code § 132.7 Duration of Death Benefits for Eligible Spouse

(a) Except as provided in subsection (f) of this section, a spouse who is determined eligible for death benefits is entitled to receive benefits until the date of the spouse's death or until remarriage. The insurance carrier shall notify the eligible spouse of the requirements of this section within 60 days of initiating benefits to that spouse.

(b) An eligible spouse who enters into a ceremonial or informal marriage is entitled to receive a lump-sum payment of 104 weeks of death benefits.

(c) An eligible spouse shall notify the division and the insurance carrier in writing within 30 days of the date of remarriage. The notice shall include the name and social security number of the deceased employee, the date of death, the workers' compensation claim file number, and the date of remarriage.

(d) The amount of the lump-sum payment shall be calculated by multiplying the amount paid to the spouse the week prior to the remarriage by 104. If the insurance carrier paid any weekly benefits to the eligible spouse after the remarriage, the total amount of such payments shall be deducted from the amount of the commuted payment.

(e) An eligible spouse who knowingly accepts death benefits after remarriage in excess of the amount allowed by this section, and who does not notify the division or the insurance carrier of remarriage, may be subject to administrative penalties.

(f) An eligible spouse who remarries is eligible for death benefits for life if the employee was a first responder, as defined by Labor Code §504.055, or an individual described by Government Code §615.003(1) or Labor Code §501.001(5)(F), who died as a result of an injury in the course and scope of employment or while providing services as a volunteer. Subsections (b) - (e) of this section do not apply to an eligible spouse under this subsection. This subsection applies to:

(1) Eligible spouses of first responders, as defined by Labor Code §504.055:

(A) who remarry on or after September 1, 2017; and

(B) who remarried between September 1, 2015, and August 31, 2017, if the claim is based on a compensable injury that occurred on or after September 1, 2015; and

(2) Eligible spouses of individuals, as defined by Government Code §615.003(1) or Labor Code §501.001(5)(F), who remarry on or after September 1, 2019.

History

Source Note: The provisions of this §132.7 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective March 20, 2016, 41 TexReg 1857; amended to be effective December 20, 2018, 43 TexReg 8125; amended to be effective September 8, 2020, 45 TexReg 6237.

28 Tex. Admin. Code § 132.8 Duration of Death Benefits for an Eligible Child

(a) A child, who is eligible to receive death benefits because the child is a minor on the date of the employee's death, is entitled to receive benefits until the date on which the child turns 18. However, if the child is enrolled as a full-time student in an accredited educational institution on that date, benefits continue as described in subsection (b) of this section.

(b) A child, who is eligible to receive death benefits as a full-time student in an accredited educational institution on the date of the employee's death or on the child's 18th birthday, is entitled to receive benefits until the earliest of:

(1) the date on which the child ceases, for the second consecutive semester (excluding summer semesters), to be enrolled as a full-time student;

(2) the date on which the child turns 25; or

(3) the date on which the child dies.

(c) The insurance carrier may request proof that a child eligible for benefits is enrolled as a full-time student in an accredited educational institution; the child shall furnish such proof within 20 days of receiving such request.

(d) A child, who is eligible to receive death benefits because the child had a mental or physical handicap and was dependent on the employee because of the handicap on the date of the employee's death, is entitled to receive benefits until the earlier of:

(1) the date on which the child is no longer handicapped; or

(2) the date on which the child dies.

(e) Once each year, the insurance carrier may request proof that a child eligible under subsection (d) of this section is still mentally or physically handicapped. The carrier shall pay all reasonable medical and travel related expenses incurred in obtaining the requested proof.

(f) A child, who is otherwise eligible to receive benefits because the child was dependent on the employee on the date of the employee's death, is entitled to receive benefits until the earlier of:

(1) the date on which the child dies; or

(2) the expiration of 364 weeks of death benefit payments.

(g) A person who knowingly or intentionally continues to receive benefits as an eligible child or on behalf of an eligible child when the person is no longer entitled to receive them, or who knowingly fails to disclose the facts of ineligibility to the carrier or the commission, may be assessed administrative penalties under the Texas Workers' Compensation Act, §10.04.

History

Source Note: The provisions of this §132.8 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.9 Duration of Death Benefits for an Eligible Grandchild, Eligible Dependent, and Eligible Parent

(a) A grandchild, who is eligible to receive death benefits and is a minor at the time of the employee's death, is entitled to receive benefits until the earlier of:

(1) the date on which the grandchild turns 18; or

(2) the date of death of the grandchild.

(b) A grandchild, who is eligible to receive death benefits and is not a minor at the time of the employee's death, is entitled to receive benefits until the earlier of:

(1) the date of death of the grandchild; or

(2) the expiration of 364 weeks of death benefit payments.

(c) Any other dependent, including a parent, stepparent, sibling, or grandparent of the deceased employee, who is entitled to death benefits shall receive benefits until the earlier of:

(1) the date of death of the beneficiary; or

(2) the expiration of 364 weeks of death benefit payments.

(d) An eligible parent who is entitled to receive death benefits shall receive benefits until the earlier of:

(1) the date the eligible parent dies; or

(2) the date of the expiration of 104 weeks of death benefit payments.

History

Source Note: The provisions of this §132.9 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective October 12, 2008, 33 TexReg 8395.

28 Tex. Admin. Code § 132.10 Payment of Death Benefits to the Subsequent Injury Fund

(a) If a compensable death occurs and the carrier's investigation, as described in §132.17 of this title (relating to Denial, Dispute, and Payment of Death Benefits), has confirmed that the deceased employee has no legal beneficiaries, or if a claim for death benefits is not made in a timely manner, the insurance carrier shall, without order from the Commission, pay to the administrator of the Subsequent Injury Fund (SIF) an amount equal to 364 weeks of death benefits for deposit in the SIF. This payment shall be accompanied by the Employer's First Report of Injury and the Wage Statement.

(b) If, after a carrier has paid death benefits to all legal beneficiaries, all legal beneficiaries cease to be eligible to receive death benefits prior to the carrier paying a full 364 weeks of benefits, the carrier shall, without order from the Commission, pay the remainder of the 364 weeks of death benefits to the administrator of the SIF. The remainder to be paid to the SIF shall be computed by subtracting the total amount paid, including any applicable remarriage payment, from the 364 weeks of death benefits that the carrier is required to pay. This payment shall be accompanied by the Employer's First Report of Injury, the Wage Statement, a detailed payment record showing the dates of payments, the amounts of the payments, the payees, the periods of benefits paid, and any other documentation reasonably required by the SIF administrator.

(1) the day that there has been final adjudication that a death is compensable and/or that the carrier is liable for death benefits (if a denial of compensability or liability had been filed in accordance with §132.17 and §124.2 of this title (relating to Carrier Reporting and Notification Requirements and Denials));

(2) the sixtieth day after the carrier received written notice of the injury;

(3) one year after the date of the employee's death, if no claims of beneficiary entitlement have been made;

(4) the day that beneficiary entitlement disputes are finally adjudicated with the beneficiary being found to not be entitled to death benefits; or

(5) the day that all previously eligible beneficiaries are no longer eligible to receive death benefits.

(d) If a carrier has denied compensability of or liability for a death pursuant to §124.2 of this title and §132.17, and no claim of entitlement has been filed by a potential beneficiary by the 60th day after the date the carrier received written notice of the injury/death, the carrier shall provide to the SIF administrator within 14 days: copies of all reports, notices, witness statements, and investigation notes relating to the compensability of the death or the carrier's liability for payment of death benefits.

(e) If a carrier has disputed compensability of or liability for a death and no claim of entitlement has been filed by a potential beneficiary by the 60th day after the date the carrier received written notice of the injury, the SIF may pursue the issue of compensability or liability through dispute resolution.

(f) The carrier may elect to commute the amount to be paid under subsections (a) and (b) in a lump sum payment. If the carrier does not elect to commute benefits, the Commission may order that the death benefits payable to the SIF be commuted to a lump sum payment. The amount of a commuted payment shall be discounted at the rate established under §401.023 of the Act compounded annually.

(g) If, after the carrier has paid the death benefits to the SIF, a beneficiary makes a claim for death benefits which the carrier accepts or a final award of the Commission or the final judgment of a court of competent jurisdiction determines that the beneficiary is entitled to the death benefits, the carrier shall pay benefits in accordance with the award or order and request a refund for the amount overpaid to the SIF as provided in §116.11 (relating to Request for Reimbursement or Refund from the Subsequent Injury Fund).

(h) If no claim for death benefits is filed with the Commission on or before the first anniversary of the death of the employee and the carrier's investigation has confirmed that the deceased has no legal beneficiaries, it shall be presumed, for the purpose of this section and §403.007 of the Act only, that no legal beneficiary survived the deceased employee.

(i) The presumption created under subsection (h) of this section does not apply against a minor beneficiary, or an incompetent beneficiary for whom no guardian has been appointed.

(j) The SIF as a potential beneficiary in the case of any fatality may bring or enter into any dispute as a party.

History

Source Note: The provisions of this §132.10 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective March 13, 2000, 25 TexReg 2106.

28 Tex. Admin. Code § 132.11 Distribution of Death Benefits

(a) All of the death benefits shall be paid to the eligible spouse if the deceased employee had no eligible children or eligible grandchildren.

(b) Death benefits shall be paid in equal shares to each eligible child per capita and to each eligible grandchild per stirpes if there is no eligible spouse.

(c) If there is an eligible spouse and an eligible child or eligible grandchild, half of the death benefits shall be paid to the eligible spouse. The remaining half shall be paid:

(1) if there are no eligible grandchildren, in equal shares to the eligible children;

(2) if there are no eligible children, per stirpes to the eligible grandchildren; or

(3) if there are eligible children and eligible grandchildren, the eligible children shall be paid equal shares per capita and the eligible grandchildren shall be paid per stirpes.

(d) If there is no eligible spouse, child, or grandchild, the death benefits shall be paid in equal shares to any surviving dependents of the deceased employee who are parents, siblings, or grandparents of the deceased. The amount to be paid to each surviving dependent shall be calculated by dividing the weekly death benefit by the number of surviving dependents.

(e) If there is no eligible spouse, no eligible child, and no eligible grandchild, and there are no surviving dependents of the deceased employee who are parents, siblings, or grandparents of the deceased, the death benefits shall be paid in equal shares to surviving eligible parents. The amount paid may not exceed one payment per household and total payments may not exceed 104 weeks regardless of the number of surviving eligible parents.

(f) If the deceased employee has no legal beneficiaries as defined by the rules and the Texas Workers' Compensation Act, the death benefits shall be paid to the subsequent injury fund, as set out in §132.10 of this title (relating to Payment of Death Benefits to the Subsequent Injury Fund).

(g) The term "per stirpes" means that the grandchildren shall be entitled to share in only the amount of benefits that the parent of those grandchildren would have received had the parent been alive or otherwise eligible to receive death benefits.

History

Source Note: The provisions of this §132.11 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective October 12, 2008, 33 TexReg 8395; amended to be effective March 21, 2010, 35 TexReg 2191.

28 Tex. Admin. Code § 132.12 Redistribution of Death Benefits

(a) Death benefits shall be redistributed if a legal beneficiary dies or becomes ineligible to receive benefits. The benefits shall be redistributed to the remaining legal beneficiaries eligible to receive death benefits at the time of death of the employee.

(b) If an eligible spouse becomes disqualified from continued payment of death benefits because of remarriage, the amount of benefits paid to each remaining legal beneficiary shall remain the same for 104 weeks. At the expiration of 104 weeks, the amount of benefits paid to each remaining legal beneficiary shall be recalculated as provided in §132.11 of this title (relating to Distribution of Death Benefits).

(c) If 364 weeks of death benefit payments have not been paid and the only remaining legal beneficiary is the subsequent injury fund, the insurance carrier shall pay any remaining amounts to the subsequent injury fund in accordance with §132.10 of this title (relating to Payment of Death Benefits to the Subsequent Injury Fund).

(d) In no case shall the insurance carrier pay an amount less than the weekly death benefit multiplied by 364, taking into consideration the discount rate set out in the Texas Workers' Compensation Act, §1.04, for a commuted payment to the subsequent injury fund in subsection (c) of this section.

History

Source Note: The provisions of this §132.12 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.13 Burial Benefits

(a) When an employee has died as the result of a compensable injury, a person claiming burial benefits shall file a request for payment of burial benefits and the bills showing the amount of burial and transportation costs incurred. The request and the documentation shall be filed with the insurance carrier within 12 months of the date of death of the employee.

(b) The person who incurred liability for the costs of burial is entitled to receive the lesser of:

(1) the actual costs incurred for reasonable burial expenses; or

(2) $2,500--if burial benefits are paid based on a compensable injury that occurs before September 1, 1999; or

(3) $6,000--if burial benefits are paid based on a compensable injury that occurs on or after September 1, 1999 and before September 1, 2015; or

(4) $10,000--if burial benefits are paid based on a compensable injury that occurs on or after September 1, 2015.

(c) The person who incurred liability for the costs of transporting the body of the employee is entitled to be reimbursed for the reasonable cost of transportation if the employee died away from the usual place of employment. The insurance carrier's liability for transportation costs under this subsection shall not exceed the cost equivalent to transporting the body from the place the employee died to the employee's usual place of employment.

(d) The insurance carrier shall review each claim for burial benefits. The insurance carrier must either pay or deny the claim within seven days of the date the claim was received by the carrier. If the claim is denied, the insurance carrier must notify the person claiming burial benefits and the division in writing of its denial and the facts supporting the denial.

History

Source Note: The provisions of this §132.13 adopted to be effective January 1, 1991, 15 TexReg 7023; amended to be effective December 26, 1999, 24 TexReg 11452; amended to be effective March 20, 2016, 41 TexReg 1857.

28 Tex. Admin. Code § 132.14 Autopsy

(a) In a claim for death benefits based on an occupational disease, an autopsy may be requested by:

(1) an insurance carrier or the commission; or

(2) any legal beneficiary if the claim for benefits is denied.

(b) The request shall be submitted in writing to the commission with a copy delivered to every other party. Any party that disputes the need for an autopsy shall request, within 10 days after an autopsy is requested, a contested case hearing in accordance with the Texas Workers' Compensation Act, §6.31. A benefit review conference is not required before the hearing is held.

(c) After opportunity for a hearing, the commission may order the legal beneficiaries of the deceased employee to permit an autopsy if an autopsy is deemed necessary to determine the cause of the employee's death.

(d) If an autopsy is ordered, a legal beneficiary is entitled to have a representative present at the autopsy.

(e) The insurance carrier shall pay the costs of an autopsy ordered under this rule.

History

Source Note: The provisions of this §132.14 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.15 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Accredited educational institution--An institution which provides a recognized course or courses of instruction and leads to the conference of a diploma, degree, or other recognized certification of completion at the conclusion of the course of study. The definition may include, but is not limited to, high schools, colleges and universities, and trade schools.

(2) Full-time student--A person enrolled in at least the minimum course load required to qualify as full-time at the particular educational institution and in the particular course of study.

(3) Semester--The periods by which the educational institution divides its academic year.

History

Source Note: The provisions of this §132.15 adopted to be effective January 1, 1991, 15 TexReg 7023.

28 Tex. Admin. Code § 132.16 Change in Payment Periods; Purchase of Annuity for Death Benefits

(a) Upon the request of the eligible beneficiaries, the insurance carrier and eligible beneficiaries entitled to death benefits may agree to change the frequency of death benefits payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing. To relieve the insurance carrier of the responsibility to pay death benefits weekly:

(1) An application to change the frequency of payments must be submitted to the Commission with the written agreement for approval in the form, format and manner required by the Commission

(2) A separate application must be submitted to the Commission for each eligible beneficiary, and the application must state that a payment adjustment shall be made when there is a change in the individual beneficiary's eligibility status in accordance with the provisions of the Act.

(3) If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application to change the payment period.

(4) The written agreement for monthly payment of death benefits must include:

(A) the agreement for the monthly payment of death benefits will be effective the first calendar day of the month following the month in which the written agreement was approved by the Commission;

(B) payment of monthly death benefits shall be issued on or before the seventh day of the month for which benefits are due.

(D) payment of the last week of death benefits to transition from weekly payment of death benefits to monthly payments shall be prorated to the end of the month to ensure the eligible beneficiaries receives death benefits through the last day of the month; and

(E) calculation of the monthly compensation rate by multiplying the weekly compensation rate by 4.34821.

(5) The Commission must approve the application to change the frequency of death benefit payments.

(b) With the exception of payments made by annuity under subsection (d)(7) of this section, at any time after signing the agreement for the monthly payment of death benefits, the eligible beneficiary or insurance carrier may notify the other party in writing that it no longer agrees to the monthly payment of death benefits. The last monthly payment shall be prorated to ensure the insurance carrier pays the appropriate amount of DBs. In this case, the insurance carrier shall pay all accrued but unpaid death benefits at the end of the current monthly cycle and shall continue to pay death benefits weekly as and when they accrue and are due.

(c) The insurance carrier and an eligible beneficiary may enter into a written agreement that the carrier shall purchase an annuity for that beneficiary for weekly or monthly payment of death benefits. An application for payment of death benefits by annuity must be submitted to the Commission for approval in the form, format and manner required by the Commission. If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application for payment by annuity.

(d) An annuity for the payment of death benefits shall meet the following terms and conditions.

(1) Monthly death benefit payments shall be initiated no later than the 45th day after the date on in which the written agreement was approved by the Commission.

(2) The company providing an annuity for the payment of death benefits must be licensed to do business in Texas and must have a current A. M. Best rating of B+ or better or have a Standard & Poor's rating of claims paying ability of A or better.

(3) The workers' compensation insurance carrier must guarantee the payments provided by the annuity company in the event of default.

(4) When benefits are paid to an eligible spouse of the deceased employee and the spouse subsequently remarries, the annuity contract must address the payment of a lump sum payment equal to 104 weeks of benefits to the eligible spouse and the redistribution of benefits at the end of 104 weeks to the remaining eligible beneficiaries, if any.

(5) If all beneficiaries become ineligible to receive death benefits and an amount equal to 364 weeks of death benefits has not been paid, the remaining benefits shall be paid by the annuity company without an order from the Commission to the Subsequent Injury Fund not later than 30 days after all beneficiaries' eligibility ends.

(6) A beneficiary, or the beneficiary's guardian if applicable, shall not be allowed to assign the right to receive death benefits from an annuity. All death benefits must be paid to the order of the eligible beneficiary or the legal guardian, if applicable.

(7) The annuity company shall pay death benefits either weekly or monthly as elected by the beneficiary in the application for payment of death benefits by annuity.

(8) If monthly payments are elected by the beneficiary, the transition from weekly to monthly benefits paid by annuity shall be the same as that for death benefits paid by the responsible insurance carrier set out in subsection (a) of this section.

(e) This section applies only to agreements entered into on or after January 1, 2000, for payment of death benefits under the provisions of the Act.

History

Source Note: The provisions of this §132.16 adopted to be effective December 26, 1999, 24 TexReg 11452.

28 Tex. Admin. Code § 132.17 Denial, Dispute, and Payment of Death Benefits

(a) Upon being notified of a death resulting from an injury, the insurance carrier (carrier) shall: investigate whether the death was a result of the injury and, if the carrier has not already done so in compliance with §124.3 of this title (relating to Investigation of an Injury and Notice of Denial/Dispute) due to the injury being reported separately, conduct an investigation relating to the compensability of the death, the carrier's liability for the death, and the accrual of benefits. The carrier shall have 60 days from notification of the death or from written notice of the injury that resulted in the death (whichever is greater) to conduct its investigation.

(b) If the carrier believes that it is not liable for the death or that the death was not compensable, the carrier shall file the notice of denial of a claim (notice of denial) in the form and manner required by §124.2 of this title (relating to Carrier Reporting and Notification Requirements). If the notice of denial is not filed by the 60th day as required, the carrier may not raise an issue of compensability or liability and is liable for any benefits that accrued and shall initiate benefits in accordance with this section.

(c) A carrier that is made aware of a death under subsection (a) of this section shall attempt to identify all potential beneficiaries, other than the subsequent injury fund (SIF), and the carrier shall maintain documentation relating to its attempt to identify potential beneficiaries.

(d) A carrier that identifies or becomes aware of a potential beneficiary shall notify the potential beneficiary of potential entitlement to benefits, using a plain language notice containing language and content prescribed by the Commission. This notice shall be sent within seven days of the date the carrier identified or was otherwise made aware of the identity and means of contacting the potential beneficiary.

(e) If the carrier receives a claim for death benefits in accordance with §122.100 of this title (relating to Claim for Death Benefits), the carrier shall review the evidence provided by the beneficiary to determine whether the person is entitled to death benefits as provided in §132.2 through §132.6 of this title (relating to Determination of Facts of Dependent Status; Eligibility of Spouse to Receive Death Benefits; Eligibility of a Child to Receive Death Benefits; Eligibility of a Grandchild to Receive Death Benefits; Eligibility of Other Surviving Dependents to Receive Death Benefits).

(f) If the carrier believes the claimant is eligible to receive death benefits, the carrier shall begin payment of death benefits. If the carrier believes that the claimant is not eligible to receive death benefits, the carrier shall file the notice of dispute of eligibility (notice of dispute) in the form and manner required by §124.2 of this title (relating to Carrier Reporting and Notification Requirements).

(1) The carrier shall either begin the payment of death benefits or file the notice of dispute not later than the 15th day after the latest of:

(A) receiving the claim for death benefits;

(B) final adjudication of the carrier's denial of compensability or liability under §124.2 and subsection (b) of this section; or

(2) If the notice of dispute is not filed within 15 days as required, the carrier is liable for and shall pay all benefits that had accrued and were payable prior to the date the carrier files the notice of dispute and only then is the carrier permitted to suspend payment of benefits.

(g) If the carrier has filed a notice of denial prior to receipt of a claim for death benefits, the carrier shall provide a copy of the previously filed notice of denial to the claimant within seven days of receipt of the claim for death benefits.

(h) The 15-day timeframe provided for in subsection (f) of this section applies only to claims for benefits based on compensable injuries that occurred on or after September 1, 2003. For claims based on compensable injuries that occurred prior to September 1, 2003, the applicable timeframe in subsection (f) of this section is seven days.

History

Source Note: The provisions of this §132.17 adopted to be effective March 13, 2000, 25 TexReg 2106; amended to be effective March 14, 2004, 29 TexReg 2345.

Chapter 133 GENERAL MEDICAL PROVISIONS

Subchapter A GENERAL RULES FOR MEDICAL BILLING AND PROCESSING

28 Tex. Admin. Code § 133.1 Applicability of Medical Billing and Processing

(a) This chapter applies to medical billing and processing for health care services provided to injured employees subject to a workers' compensation health care network established under Insurance Code Chapter 1305, and to injured employees not subject to such networks, with the following exceptions pertaining only to health care services provided to an injured employee subject to a workers' compensation health care network established under Chapter 1305:

(1) Subchapter D of this chapter (relating to Dispute of Medical Bills);

(2) §133.210(f) of this chapter (relating to Medical Documentation); and

(3) §133.240(b) and (i) of this chapter (relating to Medical Payments and Denials).

(b) This chapter applies to all health care provided on or after May 2, 2006. For health care provided prior to May 2, 2006, medical billing and processing shall be in accordance with the rules in effect at the time the health care was provided.

History

Source Note: The provisions of this §133.1 adopted to be effective May 2, 2006, 31 TexReg 3544.

28 Tex. Admin. Code § 133.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Adverse determination--A determination by a utilization review agent made on behalf of a payor that the health care services provided or proposed to be provided to an injured employee are not medically necessary or appropriate. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review. An adverse determination does not include a determination that health care services are experimental or investigational.

(2) Agent--A person whom a system participant utilizes or contracts with for the purpose of providing claims service or fulfilling medical bill processing obligations under Labor Code, Title 5 and rules. The system participant who utilizes or contracts with the agent may also be responsible for the administrative violations of that agent. This definition does not apply to "agent" as used in the term "pharmacy processing agent."

(3) Bill review--Review of any aspect of a medical bill, including retrospective review, in accordance with the Labor Code, the Insurance Code, division or department rules, and the appropriate fee and treatment guidelines.

(4) Complete medical bill--A medical bill that contains all required fields as set forth in the billing instructions for the appropriate form specified in §133.10 of this chapter (relating to Required Billing Forms/Formats), or as specified for electronic medical bills in §133.500 of this chapter (relating to Electronic Formats for Electronic Medical Bill Processing).

(5) Emergency--Either a medical or mental health emergency as follows:

(A) a medical emergency is the sudden onset of a medical condition manifested by acute symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected to result in:

(i) placing the patient's health or bodily functions in serious jeopardy, or

(ii) serious dysfunction of any body organ or part;

(B) a mental health emergency is a condition that could reasonably be expected to present danger to the person experiencing the mental health condition or another person.

(6) Final action on a medical bill--

(A) sending a payment that makes the total reimbursement for that bill a fair and reasonable reimbursement in accordance with §134.1 of this title (relating to Medical Reimbursement); and/or

(B) denying a charge on the medical bill.

(7) Pharmacy processing agent--A person or entity that contracts with a pharmacy in accordance with Labor Code §413.0111, establishing an agent or assignee relationship, to process claims and act on behalf of the pharmacy under the terms and conditions of a contract related to services being billed. Such contracts may permit the agent or assignee to submit billings, request reconsideration, receive reimbursement, and seek medical dispute resolution for the pharmacy services billed.

(8) Reasonable opportunity--At least one documented good faith attempt to contact the provider of record that provides an opportunity for the provider of record to discuss the services under review with the utilization review agent during normal business hours prior to issuing a prospective, concurrent, or retrospective utilization review adverse determination:

(A) no less than one working day prior to issuing a prospective utilization review adverse determination;

(B) no less than five working days prior to issuing a retrospective utilization review adverse determination; or

(9) Retrospective utilization review--A form of utilization review for health care services that have been provided to an injured employee. Retrospective utilization review does not include review of services for which prospective or concurrent utilization reviews were previously conducted or should have been previously conducted.

History

Source Note: The provisions of this §133.2 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective July 27, 2008, 33 TexReg 5701; amended to be effective July 1, 2012, 37 TexReg 2408; amended to be effective March 30, 2014, 39 TexReg 2095.

28 Tex. Admin. Code § 133.3 Communication Between Health Care Providers and Insurance Carriers

(a) Any communication between the health care provider and insurance carrier related to medical bill processing shall be of sufficient, specific detail to allow the responder to easily identify the information required to resolve the issue or question related to the medical bill. Generic statements that simply state a conclusion such as "insurance carrier improperly reduced the bill" or "health care provider did not document" or other similar phrases with no further description of the factual basis for the sender's position does not satisfy the requirements of this section.

(b) Communication between the health care provider and insurance carrier related to medical bill processing shall be made by telephone or electronic transmission unless the information cannot be sent by those media, in which case the sender shall send the information by mail or personal delivery.

(c) Health care providers and insurance carriers shall maintain, in a reproducible format, documentation of communications related to medical bill processing.

History

Source Note: The provisions of this §133.3 adopted to be effective May 2, 2006, 31 TexReg 3544.

Subchapter B HEALTH CARE PROVIDER BILLING PROCEDURES

28 Tex. Admin. Code § 133.10 Required Billing Forms/Formats

(a) Health care providers, including those providing services for a certified workers' compensation health care network as defined in Insurance Code Chapter 1305 or to political subdivisions with contractual relationships under Labor Code §504.053(b)(2), must submit medical bills for payment in an electronic format in accordance with §133.500 and §133.501 of this title (relating to Electronic Formats for Electronic Medical Bill Processing and Electronic Medical Bill Processing), unless the health care provider or the billed insurance carrier is exempt from the electronic billing process in accordance with §133.501 of this title.

(b) Except as provided in subsection (a) of this section, health care providers, including those providing services for a certified workers' compensation health care network as defined in Insurance Code Chapter 1305 or to political subdivisions with contractual relationships under Labor Code §504.053(b)(2), must submit paper medical bills for payment on:

(1) the 1500 Health Insurance Claim Form Version 02/12 (CMS-1500);

(2) the Uniform Bill 04 (UB-04); or

(3) applicable forms prescribed for pharmacists, dentists, and surgical implant providers specified in subsections (c), (d), and (e) of this section.

(c) Pharmacists and pharmacy processing agents must submit bills using the division form DWC-066. A pharmacist or pharmacy processing agent may submit bills using an alternate billing form if:

(1) the insurance carrier has approved the alternate billing form prior to submission by the pharmacist or pharmacy processing agent; and

(2) the alternate billing form provides all information required on the division form DWC-066.

(d) Dentists must submit bills for dental services using the 2006 American Dental Association (ADA) Dental Claim form.

(e) Surgical implant providers requesting separate reimbursement for implantable devices must submit bills using:

(1) the form prescribed in subsection (b)(1) of this section when the implantable device reimbursement is sought under §134.402 of this title (relating to Ambulatory Surgical Center Fee Guideline); or

(2) the form prescribed in subsection (b)(2) of this section when the implantable device reimbursement is sought under §134.403 or §134.404 of this title (relating to Hospital Facility Fee Guideline--Outpatient and Hospital Facility Fee Guideline--Inpatient).

(f) All information submitted on required paper billing forms must be legible and completed in accordance with this section. The parenthetical information following each term in this section refers to the applicable paper medical billing form and the field number corresponding to the medical billing form.

(1) The following data content or data elements are required for a complete professional or noninstitutional medical bill related to Texas workers' compensation health care:

(A) patient's Social Security number (CMS-1500/field 1a) is required;

(B) patient's name (CMS-1500/field 2) is required;

(D) employer's name (CMS-1500/field 4) is required;

(E) patient's address (CMS-1500/field 5) is required;

(F) patient's relationship to subscriber (CMS-1500, field 6) is required;

(G) employer's address (CMS-1500, field 7) is required;

(H) workers' compensation claim number assigned by the insurance carrier (CMS-1500/field 11) is required when known; the billing provider must leave the field blank if the workers' compensation claim number is not known by the billing provider;

(I) date of injury and "431" qualifier (CMS-1500, field 14) are required;

(J) name of referring provider or other source is required when another health care provider referred the patient for the services; no qualifier indicating the role of the provider is required (CMS-1500, field 17);

(K) referring provider's state license number (CMS-1500/field 17a) is required when there is a referring doctor listed in CMS-1500/field 17; the billing provider must enter the '0B' qualifier and the license type, license number, and jurisdiction code (for example, 'MDF1234TX');

(L) referring provider's National Provider Identifier (NPI) number (CMS-1500/field 17b) is required when CMS-1500/field 17 contains the name of a health care provider eligible to receive an NPI number;

(M) diagnosis or nature of injury (CMS-1500/field 21) is required; at least one diagnosis code and the applicable ICD indicator must be present;

(N) prior authorization number (CMS-1500/field 23) is required in the following situations:

(i) Preauthorization, concurrent review, or voluntary certification was approved, and the insurance carrier provided an approval number to the requesting health care provider. Include the approval number in the prior authorization field (CMS-1500/field 23).

(ii) The division ordered a designated doctor examination and provided an assignment number. Include the assignment number in the prior authorization field (CMS-1500/field 23).

(iii) The designated doctor referred the injured employee for additional testing or evaluation, and the division provided an assignment number. Include the assignment number in the prior authorization field (CMS-1500/field 23).

(O) date or dates of service (CMS-1500, field 24A) is required;

(i) If the designated doctor referred the injured employee for additional testing or evaluation, the "From" date is the date of the designated doctor examination, and the "To" date is the date of service of the additional testing or evaluation.

(ii) If the designated doctor did not refer the injured employee for additional testing or evaluation, the "From" and "To" dates are the date of the designated doctor examination.

(P) place of service code or codes (CMS-1500, field 24B) is required;

(Q) procedure/modifier code (CMS-1500, field 24D) is required;

(R) diagnosis pointer (CMS-1500, field 24E) is required;

(S) charges for each listed service (CMS-1500, field 24F) is required;

(T) number of days or units (CMS-1500, field 24G) is required;

(U) rendering provider's state license number (CMS-1500/field 24j, shaded portion) is required when the rendering provider is not the billing provider listed in CMS-1500/field 33; the billing provider must enter the '0B' qualifier and the license type, license number, and jurisdiction code (for example, 'MDF1234TX');

(V) rendering provider's NPI number (CMS-1500/field 24j, unshaded portion) is required when the rendering provider is not the billing provider listed in CMS-1500/field 33 and the rendering provider is eligible for an NPI number;

(W) supplemental information (shaded portion of CMS-1500/fields 24d - 24h) is required when the provider is requesting separate reimbursement for surgically implanted devices or when additional information is necessary to adjudicate payment for the related service line;

(X) billing provider's federal tax ID number (CMS-1500/field 25) is required;

(Y) total charge (CMS-1500/field 28) is required;

(Z) signature of physician or supplier, the degrees or credentials, and the date (CMS-1500/field 31) is required, but the signature may be represented with a notation that the signature is on file and the typed name of the physician or supplier;

(AA) service facility location information (CMS-1500/field 32) is required;

(BB) service facility NPI number (CMS-1500/field 32a) is required when the facility is eligible for an NPI number;

(CC) billing provider name, address, and telephone number (CMS-1500/field 33) is required;

(DD) billing provider's NPI number (CMS-1500/Field 33a) is required when the billing provider is eligible for an NPI number; and

(EE) billing provider's state license number (CMS-1500/field 33b) is required when the billing provider has a state license number; the billing provider must enter the '0B' qualifier and the license type, license number, and jurisdiction code (for example, 'MDF1234TX').

(2) The following data content or data elements are required for a complete institutional medical bill related to Texas workers' compensation health care:

(A) billing provider's name, address, and telephone number (UB-04/field 01) is required;

(B) patient control number (UB-04/field 03a) is required;

(D) billing provider's federal tax ID number (UB-04/field 05) is required;

(E) statement covers period (UB-04/field 06) is required;

(F) patient's name (UB-04/field 08) is required;

(G) patient's address (UB-04/field 09) is required;

(H) patient's date of birth (UB-04/field 10) is required;

(I) patient's gender (UB-04/field 11) is required;

(J) date of admission (UB-04/field 12) is required when billing for inpatient services;

(K) admission hour (UB-04/field 13) is required when billing for inpatient services other than skilled nursing inpatient services;

(L) priority (type) of admission or visit (UB-04/field 14) is required;

(M) point of origin for admission or visit (UB-04/field 15) is required;

(N) discharge hour (UB-04/field 16) is required when billing for inpatient services with a frequency code of "1" or "4" other than skilled nursing inpatient services;

(O) patient discharge status (UB-04/field 17) is required;

(P) condition codes (UB-04/fields 18 - 28) are required when there is a condition code that applies to the medical bill;

(Q) occurrence codes and dates (UB-04/fields 31 - 34) are required when there is an occurrence code that applies to the medical bill;

(R) occurrence span codes and dates (UB-04/fields 35 and 36) are required when there is an occurrence span code that applies to the medical bill;

(S) value codes and amounts (UB-04/fields 39 - 41) are required when there is a value code that applies to the medical bill;

(T) revenue codes (UB-04/field 42) are required;

(U) revenue description (UB-04/field 43) is required;

(V) HCPCS/Rates (UB-04/field 44):

(i) HCPCS codes are required when billing for outpatient services and an appropriate HCPCS code exists for the service line item; and

(ii) accommodation rates are required when a room and board revenue code is reported;

(W) service date (UB-04/field 45) is required when billing for outpatient services;

(X) service units (UB-04/field 46) is required;

(Y) total charge (UB-04/field 47) is required;

(Z) date bill submitted, page numbers, and total charges (UB-04/field 45/line 23) is required;

(AA) insurance carrier name (UB-04/field 50) is required;

(BB) billing provider NPI number (UB-04/field 56) is required when the billing provider is eligible to receive an NPI number;

(CC) billing provider's state license number (UB-04/field 57) is required when the billing provider has a state license number; the billing provider must enter the license number and jurisdiction code (for example, '123TX');

(DD) employer's name (UB-04/field 58) is required;

(EE) patient's relationship to subscriber (UB-04/field 59) is required;

(FF) patient's Social Security number (UB-04/field 60) is required;

(GG) workers' compensation claim number assigned by the insurance carrier (UB-04/field 62) is required when known, the billing provider must leave the field blank if the workers' compensation claim number is not known by the billing provider;

(HH) preauthorization number (UB-04/field 63) is required when:

(i) preauthorization, concurrent review, or voluntary certification was approved, and the insurance carrier provided an approval number to the health care provider; or

(ii) a designated doctor referred the injured employee for additional testing or evaluation, and the division provided an assignment number to the designated doctor.

(II) principal diagnosis code and present on admission indicator (UB-04/field 67) are required;

(JJ) other diagnosis codes (UB-04/field 67A - 67Q) are required when these conditions exist or subsequently develop during the patient's treatment;

(KK) admitting diagnosis code (UB-04/field 69) is required when the medical bill involves an inpatient admission;

(LL) patient's reason for visit (UB-04/field 70) is required when submitting an outpatient medical bill for an unscheduled outpatient visit;

(MM) principal procedure code and date (UB-04/field 74) is required when submitting an inpatient medical bill and a procedure was performed;

(NN) other procedure codes and dates (UB-04/fields 74A - 74E) are required when submitting an inpatient medical bill and other procedures were performed;

(OO) attending provider's name and identifiers (UB-04/field 76) are required for any services other than nonscheduled transportation services, the billing provider must report the NPI number for an attending provider eligible for an NPI number and the state license number by entering the '0B' qualifier and the license type, license number, and jurisdiction code (for example, 'MDF1234TX');

(PP) operating physician's name and identifiers (UB-04/field 77) are required when a surgical procedure code is included on the medical bill; the billing provider must report the NPI number for an operating physician eligible for an NPI number and the state license number by entering the '0B' qualifier and the license type, license number, and jurisdiction code (for example, 'MDF1234TX'); and

(QQ) remarks (UB-04/field 80) is required when separate reimbursement for surgically implanted devices is requested.

(3) The following data content or data elements are required for a complete pharmacy medical bill related to Texas workers' compensation health care:

(A) dispensing pharmacy's name and address (DWC-066/field 1) is required;

(B) date of billing (DWC-066/field 2) is required;

(D) billing pharmacy's or pharmacy processing agent's name and address (DWC-066/field 4) is required when different from the dispensing pharmacy (DWC-066/field 1);

(E) invoice number (DWC-066/field 5) is required;

(F) payee's federal employer identification number (DWC-066/field 6) is required;

(G) insurance carrier's name (DWC-066/field 7) is required;

(H) employer's name and address (DWC-066/field 8) is required;

(I) injured employee's name and address (DWC-066/field 9) is required;

(J) injured employee's Social Security number (DWC-066/field 10) is required;

(K) date of injury (DWC-066/field 11) is required;

(L) injured employee's date of birth (DWC-066/field 12) is required;

(M) prescribing doctor's name and address (DWC-066/field 13) is required;

(N) prescribing doctor's NPI number (DWC-066/field 14) is required;

(O) workers' compensation claim number assigned by the insurance carrier (DWC-066/field 15) is required when known; the billing provider must leave the field blank if the workers' compensation claim number is not known by the billing provider;

(P) dispensed as written code (DWC-066/field 19) is required;

(Q) date filled (DWC-066/field 20) is required;

(R) generic National Drug Code (NDC) code (DWC-066/field 21) is required when a generic drug was dispensed or if dispensed as written code '2' is reported in DWC-066/field 19;

(S) name brand NDC code (DWC-066/field 22) is required when a name brand drug is dispensed;

(T) quantity (DWC-066/field 23) is required;

(U) days supply (DWC-066/field 24) is required;

(V) amount paid by the injured employee (DWC-066/field 26) is required if applicable;

(W) drug name and strength (DWC-066/field 27) is required;

(X) prescription number (DWC-066/field 28) is required;

(Y) amount billed (DWC-066/field 29) is required;

(Z) preauthorization number (DWC-066/field 30) is required when:

(i) preauthorization, voluntary certification, or an agreement was approved, and the insurance carrier provided an approval number to the requesting health care provider; or

(ii) a designated doctor referred the injured employee for additional testing or evaluation, and the division provided an assignment number to the designated doctor.

(AA) for billing of compound drugs, refer to the requirements in §134.502 of this title (relating to Pharmaceutical Services).

(4) The following data content or data elements are required for a complete dental medical bill related to Texas workers' compensation health care:

(A) type of transaction (ADA 2006 Dental Claim Form/field 1);

(B) preauthorization number (ADA 2006 Dental Claim Form/field 2) is required when:

(i) preauthorization, concurrent review, or voluntary certification was approved, and the insurance carrier provided an approval number to the health care provider; or

(ii) a designated doctor referred the injured employee for additional testing or evaluation, and the division provided an assignment number to the designated doctor.

(D) employer's name and address (ADA 2006 Dental Claim Form/field 12) is required;

(E) workers' compensation claim number assigned by the insurance carrier (ADA 2006 Dental Claim Form/field 15) is required when known; the billing provider must leave the field blank if the workers' compensation claim number is not known by the billing provider;

(F) patient's name and address (ADA 2006 Dental Claim Form/field 20) is required;

(G) patient's date of birth (ADA 2006 Dental Claim Form/field 21) is required;

(H) patient's gender (ADA 2006 Dental Claim Form/field 22) is required;

(I) patient's Social Security number (ADA 2006 Dental Claim Form/field 23) is required;

(J) procedure date (ADA 2006 Dental Claim Form/field 24) is required;

(K) tooth number or numbers or letter or letters (ADA 2006 Dental Claim Form/field 27) is required;

(L) procedure code (ADA 2006 Dental Claim Form/field 29) is required;

(M) fee (ADA 2006 Dental Claim Form/field 31) is required;

(N) total fee (ADA 2006 Dental Claim Form/field 33) is required;

(O) place of treatment (ADA 2006 Dental Claim Form/field 38) is required;

(P) treatment resulting from (ADA 2006 Dental Claim Form/field 45) is required; the provider must check the box for occupational illness/injury;

(Q) date of injury (ADA 2006 Dental Claim Form/field 46) is required;

(R) billing provider's name and address (ADA 2006 Dental Claim Form/field 48) is required;

(S) billing provider's NPI number (ADA 2006 Dental Claim Form/field 49) is required if the billing provider is eligible for an NPI number;

(T) billing provider's state license number (ADA 2006 Dental Claim Form/field 50) is required when the billing provider is a licensed health care provider; the billing provider must enter the license type, license number, and jurisdiction code (for example, 'DS1234TX');

(U) billing provider's federal tax ID number (ADA 2006 Dental Claim Form/field 51) is required;

(V) rendering dentist's NPI number (ADA 2006 Dental Claim Form/field 54) is required when different than the billing provider's NPI number (ADA 2006 Dental Claim Form/field 49) and the rendering dentist is eligible for an NPI number;

(W) rendering dentist's state license number (ADA 2006 Dental Claim Form/field 55) is required when different than the billing provider's state license number (ADA 2006 Dental Claim Form/field 50); the billing provider must enter the license type, license number, and jurisdiction code (for example, 'MDF1234TX'); and

(X) rendering provider's and treatment location address (ADA 2006 Dental Claim Form/field 56) is required when different from the billing provider's address (ADA Dental Claim Form/field 48).

(g) If the injured employee does not have a Social Security number as required in subsection (f) of this section, the health care provider must leave the field blank.

(h) Except for facility state license numbers, state license numbers submitted under subsection (f) of this section must be in the following format: license type, license number, and jurisdiction state code (for example 'MDF1234TX').

(i) In reporting the state license number under subsection (f) of this section, health care providers should select the license type that most appropriately reflects the type of medical services they provided to the injured employees. When a health care provider does not have a state license number, the field is submitted with only the license type and jurisdiction code (for example, DMTX). The license types used in the state license format must be one of the following:

(1) AC for Acupuncturist;

(2) AM for Ambulance Services;

(3) AS for Ambulatory Surgery Center;

(4) AU for Audiologist;

(5) CN for Clinical Nurse Specialist;

(6) CP for Clinical Psychologist;

(7) CR for Certified Registered Nurse Anesthetist;

(8) CS for Clinical Social Worker;

(9) DC for Doctor of Chiropractic;

(10) DM for Durable Medical Equipment Supplier;

(11) DO for Doctor of Osteopathy;

(12) DP for Doctor of Podiatric Medicine;

(13) DS for Dentist;

(14) IL for Independent Laboratory;

(15) LP for Licensed Professional Counselor;

(16) LS for Licensed Surgical Assistant;

(17) MD for Doctor of Medicine;

(18) MS for Licensed Master Social Worker;

(19) MT for Massage Therapist;

(20) NF for Nurse First Assistant;

(21) OD for Doctor of Optometry;

(22) OP for Orthotist/Prosthetist;

(23) OT for Occupational Therapist;

(24) PA for Physician Assistant;

(25) PM for Pain Management Clinic;

(26) PS for Psychologist;

(27) PT for Physical Therapist;

(28) RA for Radiology Facility; or

(29) RN for Registered Nurse.

(j) When resubmitting a medical bill under subsection (f) of this section, a resubmission condition code may be reported. In reporting a resubmission condition code, the following definitions apply to the resubmission condition codes established by the Uniform National Billing Committee:

(1) W3 - Level 1 Appeal means a request for reconsideration under §133.250 of this title (relating to Reconsideration for Payment of Medical Bills) or an appeal of an adverse determination under Chapter 19, Subchapter U of this title (relating to Utilization Reviews for Health Care Provided Under Workers' Compensation Insurance Coverage);

(2) W4 - Level 2 Appeal means a request for reimbursement as a result of a decision issued by the division, an independent review organization, or a network complaint process; and

(3) W5 - Level 3 Appeal means a request for reimbursement as a result of a decision issued by an administrative law judge or judicial review.

(k) The inclusion of the appropriate resubmission condition code and the original reference number is sufficient to identify a resubmitted medical bill as a request for reconsideration under §133.250 of this title or an appeal of an adverse determination under Chapter 19, Subchapter U of this title provided the resubmitted medical bill complies with the other requirements contained in the appropriate section.

(l) Effective Date.

(1) This section is effective for medical bills submitted on or after June 1, 2024.

(2) For medical bills submitted as a result of an examination that was ordered or referred as the result of an order issued on or after June 1, 2024, the provisions of subsection (f) of this section are effective on and after June 1, 2024.

History

Source Note: The provisions of this §133.10 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective December 24, 2006, 31 TexReg 10097; amended to be effective May 1, 2008, 33 TexReg 3443; amended to be effective August 1, 2011, 36 TexReg 929; amended to be effective April 1, 2014, 38 TexReg 9594; amended to be effective June 1, 2024, 49 TexReg 1478.

28 Tex. Admin. Code § 133.20 Medical Bill Submission by Health Care Provider

(a) The health care provider must submit all medical bills to the insurance carrier except when billing the employer in accordance with subsection (j) of this section.

(b) Except as provided in Labor Code §408.0272(b), (c), or (d), a health care provider must not submit a medical bill later than the 95th day after the date the services are provided.

(1) If a designated doctor refers an injured employee for additional testing or evaluation under §127.10 of this title, the 95-day period for timely submission of the bill begins on the date of service of the additional testing or evaluation.

(2) In accordance with subsection (c) of the statute, the health care provider must submit the medical bill to the correct workers' compensation insurance carrier no later than the 95th day after the date the health care provider is notified of the health care provider's erroneous submission of the medical bill.

(3) A health care provider who submits a medical bill to the correct workers' compensation insurance carrier must include a copy of the original medical bill submitted, a copy of the explanation of benefits (EOB) if available, and sufficient documentation to support why one or more of the exceptions for untimely submission of a medical bill under §408.0272 should be applied. The medical bill submitted by the health care provider to the correct workers' compensation insurance carrier is subject to the billing, review, and dispute processes established by Chapter 133, including §133.307(c)(2)(A) - (H) of this title (relating to MDR of Fee Disputes), which establishes the generally acceptable standards for documentation.

(c) A health care provider must include correct billing codes from the applicable division fee guidelines in effect on the date or dates of service when submitting medical bills.

(d) The health care provider that provided the health care must submit its own bill, unless:

(1) the health care was provided as part of a return-to-work rehabilitation program in accordance with the division fee guidelines in effect for the dates of service;

(2) the health care was provided by an unlicensed individual under the direct supervision of a licensed health care provider, in which case the supervising health care provider must submit the bill;

(3) the health care provider contracts with an agent for purposes of medical bill processing, in which case the health care provider agent may submit the bill; or

(4) the health care provider is a pharmacy that has contracted with a pharmacy processing agent for purposes of medical bill processing, in which case the pharmacy processing agent may submit the bill.

(e) A medical bill must be submitted:

(1) for an amount that does not exceed the health care provider's usual and customary charge for the health care provided in accordance with Labor Code §§413.011 and 415.005; and

(2) in the name of the licensed health care provider that provided the health care or that provided direct supervision of an unlicensed individual who provided the health care.

(f) Health care providers must not resubmit medical bills to insurance carriers after the insurance carrier has taken final action on a complete medical bill and provided an EOB except in accordance with §133.250 of this chapter (relating to Reconsideration for Payment of Medical Bills).

(g) Health care providers may correct and resubmit as a new bill an incomplete bill that has been returned by the insurance carrier.

(h) Not later than the 15th day after receipt of a request for additional medical documentation, a health care provider must submit to the insurance carrier:

(1) any requested additional medical documentation related to the charges for health care rendered; or

(2) a notice the health care provider does not possess requested medical documentation.

(i) The health care provider must indicate on the medical bill if documentation is submitted related to the medical bill.

(j) The health care provider may elect to bill the injured employee's employer if the employer has indicated a willingness to pay the medical bill or bills. Such billing is subject to the following:

(1) A health care provider who elects to submit medical bills to an employer waives, for the duration of the election period, the rights to:

(A) prompt payment, as provided by Labor Code §408.027;

(B) interest for delayed payment as provided by Labor Code §413.019; and

(2) When a health care provider bills the employer, the health care provider must submit an information copy of the bill to the insurance carrier, which clearly indicates that the information copy is not a request for payment from the insurance carrier.

(3) When a health care provider bills the employer, the health care provider must bill in accordance with the division's fee guidelines and §133.10 of this chapter (relating to Required Billing Forms/Formats).

(4) A health care provider must not submit a medical bill to an employer for charges an insurance carrier has reduced, denied, or disputed.

(k) A health care provider must not submit a medical bill to an injured employee for all or part of the charge for any of the health care provided, except as an informational copy clearly indicated on the bill, or in accordance with subsection (l) of this section. The information copy must not request payment.

(l) The health care provider may only submit a bill for payment to the injured employee in accordance with:

(1) Labor Code §413.042;

(2) Insurance Code §1305.451; or

(3) §134.504 of this title (relating to Pharmaceutical Expenses Incurred by the Injured Employee).

(m) A designated doctor must include the assignment number on the medical bill in accordance with §133.10 of this title (relating to Required Billing Forms/Formats).

(n) A designated doctor who refers the injured employee for additional testing or evaluation under §127.10 must provide the assignment number to the health care provider performing the testing or evaluation. The health care provider performing the testing or evaluation must include the assignment number on the medical bill in accordance with §133.10.

(o) This section is effective for medical bills submitted on or after June 1, 2024, including medical bills submitted as a result of an examination that was ordered or referred as the result of an order issued on or after June 1, 2024.

History

Source Note: The provisions of this §133.20 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective January 29, 2009, 34 TexReg 430; amended to be effective June 1, 2024, 49 TexReg 1478.

28 Tex. Admin. Code § 133.30 Telemedicine, Telehealth, and Teledentistry Services

(a) This section applies to medical billing and reimbursement for telemedicine, telehealth, and teledentistry services provided on or after September 1, 2021, to injured employees in the Texas workers' compensation system, including injured employees subject to a workers' compensation health care network established under Insurance Code Chapter 1305.

(b) For the purposes of this section:

(1) "Telemedicine services" means telemedicine medical services as defined in Occupations Code §111.001.

(A) The term includes an examination by a treating doctor to certify maximum medical improvement (MMI), conducted on or after June 1, 2025, under §§130.1 and 130.2 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment) to determine whether an injured employee has reached MMI, that meets the following conditions:

(i) the injured employee has been examined by the treating doctor for the condition in question at least once before the examination to certify MMI;

(ii) the injured employee consents to the examination to certify MMI by telemedicine; and

(iii) the condition in question qualifies as a minor injury, such as §130.2(a)(2) of this title contemplates, requires no additional treatment, and has resulted in no impairment.

(B) The term does not include an examination to assign an impairment rating conducted under §130.1 of this title.

(2) "Telehealth services" means telehealth services as defined in Occupations Code §111.001.

(A) The term includes an examination by a treating doctor to certify MMI, conducted on or after June 1, 2025, under §§130.1 and 130.2 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment) to determine whether an injured employee has reached MMI, that meets the following conditions:

(i) the injured employee has been examined by the treating doctor for the condition in question at least once before the examination to certify MMI;

(ii) the injured employee consents to the examination to certify MMI by telehealth; and

(iii) the condition in question qualifies as a minor injury, such as §130.2(a)(2) of this title contemplates, requires no additional treatment, and has resulted in no impairment.

(B) The term does not include an examination to assign an impairment rating conducted under §130.1 of this title.

(3) "Teledentistry services" means teledentistry dental services as defined in Occupations Code §111.001.

(c) Except as provided in subsection (d) of this section, a health care provider must bill for telemedicine, telehealth, and teledentistry services according to applicable:

(1) Medicare payment policies, as defined in §134.203 of this title (relating to Medical Fee Guideline for Professional Services);

(2) Medicaid payment policies, in accordance with the dental fee guideline in §134.303 of this title (relating to 2005 Dental Fee Guideline);

(3) MMI billing requirements in §134.250 of this title (relating to Maximum Medical Improvement Evaluations and Impairment Rating Examinations by Treating Doctors); and

(4) provisions of Chapter 133 of this title.

(d) A health care provider may bill and be reimbursed for telemedicine, telehealth, or teledentistry services regardless of where the injured employee is located at the time the telemedicine, telehealth, or teledentistry services are provided.

(e) The provisions of this section take precedence over any conflicting provisions adopted or used by:

(1) the Centers for Medicare and Medicaid Services in administering the Medicare program; and

(2) the Texas Health and Human Services Commission in administering the Texas Medicaid Program.

History

Source Note: The provisions of this §133.30 adopted to be effective May 6, 2018, 43 TexReg 2587; amended to be effective August 22, 2023, 48 TexReg 4483; amended to be effective June 1, 2025, 50 TexReg 1030.

Subchapter C MEDICAL BILL PROCESSING/AUDIT BY INSURANCE CARRIER

28 Tex. Admin. Code § 133.200 Insurance Carrier Receipt of Medical Bills from Health Care Providers

(a) On receipt of medical bills submitted in accordance with §133.10 of this chapter (relating to Required Billing Forms/Formats), an insurance carrier must evaluate each medical bill for completeness as defined in §133.2 of this chapter (relating to Definitions).

(1) Insurance carriers must not return medical bills that are complete, unless the bill is a duplicate bill.

(2) Within 30 days after the day it receives a medical bill that is not complete as defined in §133.2 of this chapter, an insurance carrier must:

(A) complete the bill by adding missing information already known to the insurance carrier, except for the following:

(i) dates of service;

(ii) procedure or modifier codes;

(iii) number of units; and

(iv) charges; or

(B) return the bill to the sender, in accordance with subsection (c) of this section.

(3) The insurance carrier may contact the sender to get the information necessary to make the bill complete, including the information specified in paragraph (2)(A)(i) - (iv) of this subsection. If the insurance carrier gets the missing information and completes the bill, the insurance carrier must document the name and telephone number of the person who supplied the information.

(b) An insurance carrier must not return a medical bill except as provided in subsection (a) of this section. When returning a medical bill, the insurance carrier must include a document identifying the reasons for returning the bill. The reasons related to the procedure or modifier codes must identify the reasons by line item.

(c) The proper return of an incomplete medical bill in accordance with this section fulfills the insurance carrier's obligations with regard to the incomplete bill.

(d) An insurance carrier must not combine bills submitted in separate envelopes as a single bill or separate single bills spanning several pages submitted in a single envelope.

History

Source Note: The provisions of this §133.200 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective June 1, 2024, 49 TexReg 1478.

28 Tex. Admin. Code § 133.210 Medical Documentation

(a) Medical documentation includes all medical reports and records, such as evaluation reports, narrative reports, assessment reports, progress report/notes, clinical notes, hospital records and diagnostic test results.

(b) When submitting a medical bill for reimbursement, the health care provider shall provide required documentation in legible form, unless the required documentation was previously provided to the insurance carrier or its agents.

(c) In addition to the documentation requirements of subsection (b) of this section, medical bills for the following services shall include the following supporting documentation:

(1) the two highest Evaluation and Management office visit codes for new and established patients: office visit notes/report satisfying the American Medical Association requirements for use of those CPT codes;

(2) surgical services rendered on the same date for which the total of the fees established in the current Division fee guideline exceeds $500: a copy of the operative report;

(3) return to work rehabilitation programs as defined in §134.202 of this title (relating to Medical Fee Guideline): a copy of progress notes and/or SOAP (subjective/objective assessment plan/procedure) notes, which substantiate the care given, and indicate progress, improvement, the date of the next treatment(s) and/or service(s), complications, and expected release dates;

(4) any supporting documentation for procedures which do not have an established Division maximum allowable reimbursement (MAR), to include an exact description of the health care provided; and

(5) for hospital services: an itemized statement of charges.

(d) Any request by the insurance carrier for additional documentation to process a medical bill shall:

(1) be in writing;

(2) be specific to the bill or the bill's related episode of care;

(3) describe with specificity the clinical and other information to be included in the response;

(4) be relevant and necessary for the resolution of the bill;

(5) be for information that is contained in or in the process of being incorporated into the injured employee's medical or billing record maintained by the health care provider;

(6) indicate the specific reason for which the insurance carrier is requesting the information; and

(7) include a copy of the medical bill for which the insurance carrier is requesting the additional documentation.

(e) It is the insurance carrier's obligation to furnish its agents with any documentation necessary for the resolution of a medical bill. The Division considers any medical billing information or documentation possessed by one entity to be simultaneously possessed by the other.

(f) Workers' compensation health care networks established under Insurance Code Chapter 1305 may decrease the documentation requirements of this section.

History

Source Note: The provisions of this §133.210 adopted to be effective May 2, 2006, 31 TexReg 3544.

28 Tex. Admin. Code § 133.230 Insurance Carrier Audit of a Medical Bill

(a) An insurance carrier may perform an audit of a medical bill that has been submitted by a health care provider to the insurance carrier for reimbursement. The insurance carrier may not audit a medical bill upon which it has taken final action.

(b) If an insurance carrier decides to conduct an audit of a medical bill, the insurance carrier shall:

(1) provide notice to the health care provider no later than the 45th day after the date the insurance carrier received the complete medical bill. For onsite audits, provide notice in accordance with subsection (c) of this section;

(2) pay to the health care provider no later than the 45th day after receipt of the health care provider's medical bill, for the health care being audited:

(A) for a workers' compensation health care network established under Insurance Code Chapter 1305, 85 percent of the applicable contracted amount; or

(B) for services not provided under Insurance Code Chapter 1305, 85 percent of:

(i) the maximum allowable reimbursement amounts established under the applicable Division fee guidelines;

(ii) the contracted amount for services not addressed by Division fee guidelines; or

(iii) the fair and reasonable reimbursement in accordance with §134.1 of this title (relating to Medical Reimbursement) for services not addressed by clause (i) or (ii) of this subparagraph;

(3) make a determination regarding the relationship of the health care services provided for the compensable injury, the extent of the injury, and the medical necessity of the services provided; and

(4) complete the audit and pay, reduce, or deny in accordance with §133.240 of this chapter (relating to Medical Payments and Denials) no later than the 160th day after receipt of the complete medical bill.

(c) If the insurance carrier intends to perform an onsite audit, the notice shall include the following information for each medical bill that is subject to audit:

(1) employee's full name, address, and Social Security number;

(2) date of injury;

(3) date(s) of service for which the audit is being performed;

(4) insurance carrier's name and address;

(5) a proposed date and time for the audit, subject to mutual agreement; and

(6) name and telephone number of the person who will perform the onsite audit, has the authority to act on behalf of the insurance carrier, and shall personally appear for the onsite audit at the scheduled date and time.

(d) During the insurance carrier's onsite audit, the health care provider shall:

(1) make available to the insurance carrier: all notes, reports, test results, narratives, and other documentation the health care provider has relating to the billing(s) subject to audit; and

(2) designate one person with authority to: negotiate a resolution, serve as the liaison between the health care provider and the insurance carrier, and be available to the insurance carrier's representative.

(e) On the last day of the onsite audit, the health care provider's liaison and the insurance carrier's representative shall meet for an exit interview. The insurance carrier's representative shall present to the health care provider's liaison a list of unresolved issues related to the health care provided and the billed charges. The health care provider's liaison and the insurance carrier's representative shall discuss and attempt to resolve the issues.

History

Source Note: The provisions of this §133.230 adopted to be effective May 2, 2006, 31 TexReg 3544.

28 Tex. Admin. Code § 133.240 Medical Payments and Denials

(a) An insurance carrier shall take final action after conducting bill review on a complete medical bill, or determine to audit the medical bill in accordance with §133.230 of this chapter (relating to Insurance Carrier Audit of a Medical Bill), not later than the 45th day after the date the insurance carrier received a complete medical bill. An insurance carrier's deadline to make or deny payment on a bill is not extended as a result of a pending request for additional documentation.

(b) For health care provided to injured employees not subject to a workers' compensation health care network established under Insurance Code Chapter 1305, the insurance carrier shall not deny reimbursement based on medical necessity for health care preauthorized or voluntarily certified under Chapter 134 of this title (relating to Benefits--Guidelines for Medical Services, Charges, and Payments). For pharmaceutical services provided to any injured employee, the insurance carrier shall not deny reimbursement based on medical necessity for pharmaceutical services preauthorized or agreed to under Chapter 134, Subchapter F of this title (relating to Pharmaceutical Benefits).

(c) The insurance carrier shall not change a billing code on a medical bill or reimburse health care at another billing code's value.

(d) The insurance carrier may request additional documentation, in accordance with §133.210 of this title (relating to Medical Documentation), not later than the 45th day after receipt of the medical bill to clarify the health care provider's charges.

(e) The insurance carrier shall send the explanation of benefits in accordance with the elements required by §133.500 and §133.501 of this title (relating to Electronic Formats for Electronic Medical Bill Processing and Electronic Medical Bill Processing, respectively) if the insurance carrier submits the explanation of benefits in the form of an electronic remittance. The insurance carrier shall send an explanation of benefits in accordance with subsection (f) of this section if the insurance carrier submits the explanation of benefits in paper form. The explanation of benefits shall be sent to:

(1) the health care provider when the insurance carrier makes payment or denies payment on a medical bill; and

(2) the injured employee when payment is denied because:

(A) of an adverse determination;

(B) the health care was provided by a health care provider other than:

(i) the treating doctor selected in accordance with Labor Code §408.022;

(ii) a health care provider that the treating doctor has chosen as a consulting or referral health care provider;

(iii) a doctor performing a required medical examination in accordance with §126.5 of this title (relating to Entitlement and Procedure for Requesting Required Medical Examinations) and §126.6 of this title (relating to Required Medical Examination);

(iv) a doctor performing a designated doctor examination in accordance with Labor Code §408.0041; or

(C) the health care was unrelated to the compensable injury, in accordance with §124.2 of this title (relating to Carrier Reporting and Notification Requirements).

(3) the prescribing doctor, if different from the health care provider identified in paragraph (1) of this subsection, when payment is denied for pharmaceutical services because of any reason relating to the compensability of, liability for, extent of, or relatedness to the compensable injury, or for reasons relating to the reasonableness or medical necessity of the pharmaceutical services.

(f) The paper form of an explanation of benefits under subsection (e) of this section, §133.250 of this title (relating to Reconsideration for Payment of Medical Bills), or §133.260 of this title (relating to Refunds) shall include the following elements:

(1) division claim number, if known;

(2) insurance carrier claim number;

(3) injured employee's name;

(4) last four digits of injured employee's social security number;

(5) date of injury;

(6) health care provider's name and address;

(7) health care provider's federal tax ID or national provider identifier if the health care provider's federal tax ID is the same as the health care provider's social security number;

(8) patient control number if included on the submitted medical bill;

(9) insurance carrier's name and address;

(10) insurance carrier control number;

(11) date of bill review/refund request;

(12) diagnosis code(s);

(13) name and address of company performing bill review;

(14) name and telephone number of bill review contact;

(15) workers' compensation health care network name (if applicable);

(16) pharmacy, durable medical equipment, or home health care services informal or voluntary network name (if applicable) pursuant to Labor Code §408.0281 and §408.0284;

(17) health care service information for each billed health care service, to include:

(A) date of service;

(B) the CPT, HCPCS, NDC, or other applicable product or service code;

(D) amount charged;

(E) unit(s) of service;

(F) amount paid;

(G) adjustment reason code that conforms to the standards described in §133.500 and §133.501 of this title if total amount paid does not equal total amount charged;

(H) explanation of the reason for reduction/denial if the adjustment reason code was included under subparagraph (G) of this paragraph and if applicable;

(18) a statement that contains the following text: "Health care providers shall not bill any unpaid amounts to the injured employee or the employer, or make any attempt to collect the unpaid amount from the injured employee or the employer unless the injury is finally adjudicated not to be compensable, or the insurance carrier is relieved of the liability under Labor Code §408.024. However, pursuant to §133.250 of this title, the health care provider may file an appeal with the insurance carrier if the health care provider disagrees with the insurance carrier's determination";

(19) if the insurance carrier is requesting a refund, the refund amount being requested and an explanation of why the refund is being requested; and

(20) if the insurance carrier is paying interest in accordance with §134.130 of this title (relating to Interest for Late Payment on Medical Bills and Refunds), the interest amount paid through use of an unspecified product or service code and the number of days on which interest was calculated by using a unit per day.

(g) When the insurance carrier pays a health care provider for health care for which the division has not established a maximum allowable reimbursement, the insurance carrier shall explain and document the method it used to calculate the payment in accordance with §134.1 of this title (relating to Medical Reimbursement) or §134.503 of this title (relating to Pharmacy Fee Guideline).

(h) An insurance carrier shall have filed, or shall concurrently file, the applicable notice required by Labor Code §409.021, and §124.2 and §124.3 of this title (relating to Investigation of an Injury and Notice of Denial/Dispute) if the insurance carrier reduces or denies payment for health care provided based solely on the insurance carrier's belief that:

(1) the injury is not compensable;

(2) the insurance carrier is not liable for the injury due to lack of insurance coverage; or

(3) the condition for which the health care was provided was not related to the compensable injury.

(i) If dissatisfied with the insurance carrier's final action, the health care provider may request reconsideration of the bill in accordance with §133.250 of this title.

(j) If the health care provider is requesting reconsideration of an adverse determination, the request for reconsideration constitutes an appeal for the purposes of §19.2011 of this title (relating to Written Procedures for Appeal of Adverse Determinations). If dissatisfied with the reconsideration outcome, the health care provider may request medical dispute resolution in accordance with the provisions of Chapter 133, Subchapter D of this title (relating to Dispute of Medical Bills).

(k) Health care providers, injured employees, employers, attorneys, and other participants in the system shall not resubmit medical bills to insurance carriers after the insurance carrier has taken final action on a complete medical bill and provide an explanation of benefits except as provided in §133.250 and Chapter 133, Subchapter D of this title.

(l) All payments of medical bills that an insurance carrier makes on or after the 60th day after the date the insurance carrier originally received the complete medical bill shall include interest calculated in accordance with §134.130 of this title without any action taken by the division. The interest payment shall be paid at the same time as the medical bill payment.

(m) Except as provided by Insurance Code §1305.153, when an insurance carrier remits payment to a health care provider agent, the agent shall remit to the health care provider the full amount that the insurance carrier reimburses. If the insurance carrier remits payment under Insurance Code §1305.153, then the payment must be made in accordance with that section.

(n) When an insurance carrier remits payment to a pharmacy processing agent, the pharmacy processing agent's reimbursement from the insurance carrier shall be made in accordance with §134.503 of this title. The pharmacy's reimbursement shall be made in accordance with the terms of its contract with the pharmacy processing agent.

(o) An insurance carrier commits an administrative violation if the insurance carrier fails to pay, reduce, deny, or notify the health care provider of the intent to audit a medical bill in accordance with Labor Code §408.027 and division rules.

(p) For the purposes of this section, all utilization review must be performed by an insurance carrier that is registered with or a utilization review agent that is certified by the Texas Department of Insurance to perform utilization review in accordance with Insurance Code Chapter 4201 and Chapter 19 of this title.

(1) All utilization review agents or registered insurance carriers who perform utilization review under this section must comply with Labor Code §504.055 and any other provisions of Chapter 19, Subchapter U of this title (relating to Utilization Reviews for Health Care Provided under Workers' Compensation Insurance Coverage) that relate to the expedited provision of medical benefits to first responders employed by political subdivisions who sustain a serious bodily injury in the course and scope of employment.

(2) An insurance carrier must accelerate and give priority to a claim for medical benefits, including all health care required to cure or relieve the effects naturally resulting from a compensable injury, under the following conditions:

(A) In accordance with Labor Code §501.028(b), the claim is by a member of the Texas military forces who, while on state active duty, sustains a serious bodily injury, as defined by Penal Code §1.07.

(B) In accordance with Labor Code §504.057(c), the claim is by a death investigation professional who sustains a serious bodily injury, as defined by Penal Code §1.07, in the course and scope of employment.

(q) When denying payment due to an adverse determination under this section, the insurance carrier shall comply with the requirements of §19.2009 of this title (relating to Notice of Determinations Made in Utilization Review). Additionally, in any instance where the insurance carrier is questioning the medical necessity or appropriateness of the health care services, the insurance carrier shall comply with the requirements of §19.2010 if this title (relating to Requirements Prior to Issuing Adverse Determination), including the requirement that prior to issuance of an adverse determination the insurance carrier shall afford the health care provider a reasonable opportunity to discuss the billed health care with a doctor or, in cases of a dental plan or chiropractic services, with a dentist or chiropractor, respectively.

History

Source Note: The provisions of this §133.240 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective July 1, 2012, 37 TexReg 2408; amended to be effective March 30, 2014, 39 TexReg 2095; amended to be effective December 28, 2023, 48 TexReg 7999; amended to be effective January 29, 2026, 51 TexReg 409.

28 Tex. Admin. Code § 133.250 Reconsideration for Payment of Medical Bills

(a) If the health care provider is dissatisfied with the insurance carrier's final action on a medical bill, the health care provider may request that the insurance carrier reconsider its action. If the health care provider is requesting reconsideration of a bill denied based on an adverse determination, the request for reconsideration constitutes an appeal for the purposes of §19.2011 of this title (relating to Written Procedures for Appeal of Adverse Determinations) and may be submitted orally or in writing.

(b) The health care provider shall submit the request for reconsideration no later than 10 months from the date of service.

(1) the insurance carrier has taken final action on a medical bill; or

(2) the health care provider has not received an explanation of benefits within 50 days from submitting the medical bill to the insurance carrier.

(d) A written request for reconsideration shall:

(1) reference the original bill and include the same billing codes, date(s) of service, and dollar amounts as the original bill;

(2) include a copy of the original explanation of benefits, if received, or documentation that a request for an explanation of benefits was submitted to the insurance carrier;

(3) include any necessary and related documentation not submitted with the original medical bill to support the health care provider's position; and

(4) include a bill-specific, substantive explanation in accordance with §133.3 of this title (relating to Communication Between Health Care Providers and Insurance Carriers) that provides a rational basis to modify the previous denial or payment.

(e) An oral request for reconsideration must clearly identify the health care services(s) denied based on an adverse determination and include a substantive explanation in accordance with §133.3 of this title that provides a rational basis to modify the previous denial or payment. Not later than the fifth working day after the date of receipt of the request for reconsideration, the insurance carrier must send to the requesting party a letter acknowledging the date of the receipt of the oral request that includes a reasonable list of documents the requesting party is required to submit. This subsection applies to reconsideration requests made on or after six months from the effective date of this rule.

(f) An insurance carrier shall review all written reconsideration requests for completeness in accordance with subsection (d) of this section and may return an incomplete written reconsideration request no later than seven days from the date of receipt. A health care provider may complete and resubmit its written request to the insurance carrier.

(g) The insurance carrier shall take final action on a reconsideration request within 30 days of receiving the request for reconsideration. The insurance carrier shall provide an explanation of benefits:

(1) in accordance with §133.240(e) - (f) of this title (relating to Medical Payments and Denial) for all items included in a reconsideration request in the form and format prescribed by the division when there is a change in the original, final action; or

(2) in accordance with §133.240(e)(1) and §133.240(f) of this title when there is no change in the original, final action.

(h) A health care provider shall not resubmit a request for reconsideration earlier than 35 days from the date the insurance carrier received the original request for reconsideration or after the insurance carrier has taken final action on the reconsideration request.

(i) If the health care provider is dissatisfied with the insurance carrier's final action on a medical bill after reconsideration, the health care provider may request medical dispute resolution in accordance with the provisions of Chapter 133, Subchapter D of this title (relating to Dispute of Medical Bills).

(j) For the purposes of this section, all utilization review must be performed by an insurance carrier that is registered with, or a utilization review agent that is certified by, the Texas Department of Insurance to perform utilization review in accordance with Insurance Code Chapter 4201 and Chapter 19 of this title.

(k) In any instance where the insurance carrier is questioning the medical necessity or appropriateness of the health care services, the insurance carrier shall comply with the requirements of §19.2010 of this title (relating to Requirements Prior to Adverse Determination) and §19.2011 of this title, including the requirement that prior to issuance of an adverse determination on the request for reconsideration the insurance carrier shall afford the health care provider a reasonable opportunity to discuss the billed health care with a doctor or, in cases of a dental plan or chiropractic services, with a dentist or chiropractor, respectively.

History

Source Note: The provisions of this §133.250 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective July 1, 2012, 37 TexReg 2408; amended to be effective March 30, 2014, 39 TexReg 2095; amended to be effective December 28, 2023, 48 TexReg 7999; amended to be effective January 29, 2026, 51 TexReg 409.

28 Tex. Admin. Code § 133.260 Refunds

(a) An insurance carrier shall request a refund within 240 days from the date of service or 30 days from completion of an audit performed in accordance with §133.230 (relating to Insurance Carrier Audit of a Medical Bill), whichever is later, when it determines that inappropriate health care was previously reimbursed, or when an overpayment was made for health care provided.

(b) The insurance carrier shall submit the refund request to the health care provider in an explanation of benefits in the form and manner prescribed by the Division.

(c) A health care provider shall respond to a request for a refund from an insurance carrier by the 45th day after receipt of the request by:

(1) paying the requested amount; or

(2) submitting an appeal to the insurance carrier with a specific explanation of the reason the health care provider has failed to remit payment.

(d) The insurance carrier shall act on a health care provider's appeal within 45 days after the date on which the health care provider filed the appeal. The insurance carrier shall provide the health care provider with notice of its determination, either agreeing that no refund is due, or denying the appeal.

(e) If the insurance carrier denies the appeal, the health provider:

(1) shall remit the refund with any applicable interest within 45 days of receipt of notice of denied appeal; and

(2) may request medical dispute resolution in accordance with §133.305 of this chapter (relating to Medical Dispute Resolution - General).

(f) The health care provider shall submit a refund to the insurance carrier when the health care provider identifies an overpayment even though the insurance carrier has not submitted a refund request.

(g) When making a refund payment, the health care provider shall include: a copy of the insurance carrier's original request for refund, if any; a copy of the original explanation of benefits containing the overpayment, if available; and a detailed explanation itemizing the refund. The explanation shall:

(1) identify the billing and rendering health care provider;

(2) identify the injured employee;

(3) identify the insurance carrier;

(4) specify the total dollar amount being refunded;

(5) itemize the refund by dollar amount, line item and date of service; and

(6) specify the amount of interest paid, if any, and the number of days on which interest was calculated.

(h) All refunds requested by the insurance carrier and paid by a health care provider on or after the 60th day after the date the health care provider received the request for the refund shall include interest calculated in accordance with §134.130 of this title (relating to Interest for Late Payment on Medical Bills and Refunds).

History

Source Note: The provisions of this §133.260 adopted to be effective May 2, 2006, 31 TexReg 3544.

28 Tex. Admin. Code § 133.270 Injured Employee Reimbursement for Health Care Paid

(a) An injured employee may request reimbursement from the insurance carrier when the injured employee has paid for health care provided for a compensable injury, unless the injured employee is liable for payment as specified in:

(1) Insurance Code §1305.451, or

(2) Section 134.504 of this title (relating to Pharmaceutical Expenses Incurred by the Injured Employee).

(b) The injured employee's request for reimbursement shall be legible and shall include documentation or evidence (such as itemized receipts) of the amount the injured employee paid the health care provider.

(c) The insurance carrier shall pay or deny the request for reimbursement within 45 days of the request. Reimbursement shall be made in accordance with §134.1 of this title (relating to Medical Reimbursement).

(d) The injured employee may seek reimbursement for any payment made above the division fee guideline or contract amount from the health care provider who received the overpayment.

(e) Within 45 days of a request, the health care provider shall reimburse the injured employee the amount paid above the applicable division fee guideline or contract amount.

(f) The injured employee may request, but is not required to request, reconsideration prior to requesting medical dispute resolution in accordance with the provisions of Chapter 133, Subchapter D of this title (relating to Dispute of Medical Bills).

(g) The insurance carrier shall submit injured employee medical billing and payment data to the division in accordance with Chapter 134, Subchapter I of this title (relating to Medical Bill Reporting).

(h) This section is effective July 1, 2012.

History

Source Note: The provisions of this §133.270 adopted to be effective May 2, 2006, 31 TexReg 3544; amended to be effective July 1, 2012, 37 TexReg 2408.

28 Tex. Admin. Code § 133.280 Employer Reimbursement for Health Care Paid

(a) An employer may request reimbursement from the insurance carrier when the employer has paid for health care provided for a compensable injury, and provided notice of injury in compliance with Labor Code §409.005.

(b) The employer shall be reimbursed in accordance with §134.1.

(c) The employer may seek reimbursement for any payment made above the Division fee guideline or contract amount from the health care provider who received the overpayment.

(d) The employer's request for reimbursement shall be legible and shall include:

(1) a copy of the health care provider's required billing form;

(2) any supporting documentation submitted by the health care provider as required in §133.210 of this chapter (relating to Medical Documentation); and

(3) documentation of the payment to the health care provider.

(e) The insurance carrier shall submit employer medical bill and payment data to the Division in accordance with §134.802 of this title (relating to Insurance Carrier Medical Electronic Data Interchange to the Division).

History

Source Note: The provisions of this §133.280 adopted to be effective May 2, 2006, 31 TexReg 3544.

Subchapter D DISPUTE OF MEDICAL BILLS

28 Tex. Admin. Code § 133.305 MDR--General

(a) Definitions. The following words and terms, when used in this subchapter, have the following meanings unless the context clearly indicates otherwise.

(1) First responder--As defined in Labor Code §504.055(a). (2) Life-threatening--A disease or condition for which the likelihood of death is probable unless the course of the disease or condition is interrupted, as defined in Insurance Code §4201.002.

(2) Life-threatening--A disease or condition for which the likelihood of death is probable unless the course of the disease or condition is interrupted, as defined in Insurance Code §4201.002.

(3) Medical dispute resolution (MDR)--A process for resolution of one or more of the following disputes:

(A) a medical fee dispute; or

(B) a medical necessity dispute, which may be:

(i) a preauthorization or concurrent medical necessity dispute; or

(ii) a retrospective medical necessity dispute.

(4) Medical fee dispute--A dispute that involves an amount of payment for nonnetwork health care rendered to an injured employee that has been determined to be medically necessary and appropriate for treatment of that injured employee's compensable injury. The dispute is resolved by the division pursuant to division rules, including §133.307 of this title (relating to MDR of Fee Disputes). The following types of disputes can be a medical fee dispute:

(A) a health care provider, or a qualified pharmacy processing agent as described in Labor Code §413.0111, dispute of an insurance carrier reduction or denial of a medical bill;

(B) an injured employee dispute of reduction or denial of a refund request for health care charges paid by the injured employee; and

(C) a health care provider dispute regarding the results of a division or insurance carrier audit or review which requires the health care provider to refund an amount for health care services previously paid by the insurance carrier.

(5) Network health care--Health care delivered or arranged by a certified workers' compensation health care network, including authorized out-of-network care, as defined in Insurance Code Chapter 1305 and related rules.

(6) Non-network health care--Health care not delivered or arranged by a certified workers' compensation health care network as defined in Insurance Code Chapter 1305 and related rules. "Non-network health care" includes health care delivered pursuant to Labor Code §408.0281 and §408.0284.

(7) Preauthorization or concurrent medical necessity dispute--A dispute that involves a review of adverse determination of network or non-network health care requiring preauthorization or concurrent utilization review. The dispute is reviewed by an independent review organization (IRO) pursuant to the Insurance Code, the Labor Code and related rules, including §133.308 of this title (relating to MDR of Medical Necessity Disputes).

(8) Requestor--The party that timely files a request for medical dispute resolution with the division; the party seeking relief in medical dispute resolution.

(9) Respondent--The party against whom relief is sought.

(10) Retrospective medical necessity dispute--A dispute that involves a review of the medical necessity of health care already provided. The dispute is reviewed by an IRO pursuant to the Insurance Code, Labor Code and related rules, including §133.308 of this title.

(11) Serious bodily injury--As defined by §1.07, Penal Code.

(12) State active duty--As defined by §437.001, Government Code.

(13) State training and other duty--As defined by §437.001, Government Code.

(14) Texas military forces--As defined by §437.001, Government Code.

(15) Death investigation professional--As defined by §504.057, Labor Code.

(b) Dispute Sequence. If a dispute regarding compensability, extent of injury, liability, or medical necessity exists for the same service for which there is a medical fee dispute, the disputes regarding compensability, extent of injury, liability, or medical necessity shall be resolved prior to the submission of a medical fee dispute for the same services in accordance with Labor Code §413.031 and §408.021.

(c) Division Administrative Fee. The division may assess a fee, as published on the division's website, in accordance with Labor Code §413.020 when resolving disputes pursuant to §133.307 and §133.308 of this title if the decision indicates the following:

(1) the health care provider billed an amount in conflict with division rules, including billing rules, fee guidelines or treatment guidelines;

(2) the insurance carrier denied or reduced payment in conflict with division rules, including reimbursement or audit rules, fee guidelines or treatment guidelines;

(3) the insurance carrier has reduced the payment based on a contracted discount rate with the health care provider but has not made the contract or the health care provider notice required under Labor Code §408.0281 available upon the division's request;

(4) the insurance carrier has reduced or denied payment based on a contract that indicates the direction or management of health care through a health care provider arrangement that has not been certified as a workers' compensation network, in accordance with Insurance Code Chapter 1305 or through a health care provider arrangement authorized under Labor Code §504.053(b)(2); or

(5) the insurance carrier or healthcare provider did not comply with a provision of the Insurance Code, Labor Code or related rules.

(d) Confidentiality. Any documentation exchanged by the parties during MDR that contains information regarding a patient other than the injured employee for that claim must be redacted by the party submitting the documentation to remove any information that identifies that patient.

(e) Severability. If a court of competent jurisdiction holds that any provision of §§133.305, 133.307, or 133.308 of this title is inconsistent with any statutes of this state, unconstitutional, or invalid for any reason, the remaining provisions of these sections remain in full effect.

(f) Texas Military Forces. For a claim under Labor Code §501.028, the travel of a member of the Texas military forces to or from the member's duty location is considered to be in the course and scope of the member's employment if the member is:

(1) serving on state active duty and engaged in authorized duty under written orders; or

(2) on state training and other duty.

History

Source Note: The provisions of this §133.305 adopted to be effective December 31, 2006, 31 TexReg 10314; amended to be effective May 25, 2008, 33 TexReg 3954; amended to be effective July 1, 2012, 37 TexReg 2408; amended to be effective March 30, 2014, 39 TexReg 2095; amended to be effective December 28, 2023, 48 TexReg 7999; amended to be effective January 29, 2026, 51 TexReg 409.

28 Tex. Admin. Code § 133.306 Interlocutory Orders for Medical Benefits

(a) The Commissioner of Workers' Compensation may delegate the authority to issue interlocutory orders for accrued and/or future medical benefits to division staff.

(b) The division may enter an interlocutory order for accrued or future medical benefits when:

(1) the division determines that an insurance carrier has disputed medical benefits as the result of a liability, compensability, or extent of injury dispute that an insurance carrier has raised in accordance with §124.2 of this title (relating to Carrier Reporting and Notification Requirements), and the division determines that those medical benefits are or were medically necessary and constitute health care reasonably required and are not subject to the medical dispute resolution process set forth in Chapter 133, Subchapter D of this title (relating to Dispute of Medical Bills);

(2) at the conclusion of the medical dispute resolution process:

(A) the division determines that an insurance carrier has disputed medical benefits as the result of a liability, compensability, or extent of injury dispute that an insurance carrier has raised in accordance with §124.2 of this title, and the division deems that the disputed medical benefits are or were medically necessary and constitute health care reasonably required; or

(B) the division determines that future medical benefits for which preauthorization is required are medically necessary and constitute health care reasonably required; or

(3) an insurance carrier makes an adverse determination for drugs prescribed on or after September 1, 2011 and excluded from the division's closed formulary as set forth in §§134.510, 134.530, 134.540, and 134.550 of this title (relating to Requirements for the Transition to the Use of the Closed Formulary for Claims with Dates of Injury Prior to September 1, 2011, Requirements for Use of the Closed Formulary for Claims Not Subject to Certified Networks, Requirements for Use of the Closed Formulary for Claims Subject to Certified Networks, and Medical Interlocutory Order respectively) and the division determines that those medical benefits are or were medically necessary and constitute health care reasonably required.

(c) Absent the interlocutory order as set forth in subsections (a) and (b) of this section, the division shall enter an interlocutory order only when the injured employee would not receive medical benefits that are medically necessary and constitute health care reasonably required.

(d) A party shall comply with an interlocutory order entered in accordance with this section on the earlier of the seventh day after receipt of the order or the date the division establishes in the body of the order.

(e) The insurance carrier may dispute an interlocutory order entered under this title by filing a written request for a hearing in accordance with Labor Code §413.055 and §148.3 of this title (relating to Requesting a Hearing).

(f) An insurance carrier that makes an overpayment pursuant to an interlocutory order may be eligible for reimbursement from the Subsequent Injury Fund. An insurance carrier must make a request for reimbursement in accordance with §116.11 of this title (relating to Request for Reimbursement from the Subsequent Injury Fund).

History

Source Note: The provisions of this §133.306 adopted to be effective July 15, 2000, 25 TexReg 2115; amended to be effective September 1, 2011, 35 TexReg 11340.

28 Tex. Admin. Code § 133.307 Medical Fee Dispute Resolution

(a) Applicability. This section applies to a request to the division for medical fee dispute resolution (MFDR) as authorized by the Texas Workers' Compensation Act.

(1) Dispute resolution requests must be resolved in accordance with the statutes and rules in effect at the time the request was filed.

(2) In resolving disputes regarding the amount of payment due for health care determined to be medically necessary and appropriate for treatment of a compensable injury, the role of the division is to adjudicate the payment, given the relevant statutory provisions and division rules.

(3) In accordance with Labor Code §504.055 a request for medical fee dispute resolution that involves a first responder's request for reimbursement of medical expenses paid by the first responder will be accelerated by the division and given priority. The first responder shall provide notice to the division that the request involves a first responder.

(4) The 2020 amendments regarding electronic submission of dispute requests are effective February 22, 2021.

(b) Requestors. The following parties may be requestors in medical fee disputes:

(1) the health care provider, or a qualified pharmacy processing agent, as described in Labor Code §413.0111, in a dispute over the reimbursement of a medical bill(s);

(2) the health care provider in a dispute about the results of a division or insurance carrier audit or review which requires the health care provider to refund an amount for health care services previously paid by the insurance carrier;

(3) the injured employee in a dispute involving an injured employee's request for reimbursement from the insurance carrier of medical expenses paid by the injured employee;

(4) the injured employee when requesting a refund of the amount the injured employee paid to the health care provider in excess of a division fee guideline; or

(5) a subclaimant in accordance with §140.6 of this title (relating to Subclaimant Status: Establishment, Rights, and Procedures), §140.7 of this title (relating to Health Care Insurer Reimbursement under Labor Code §409.0091), or §140.8 of this title (relating to Procedures for Health Care Insurers to Pursue Reimbursement of Medical Benefits under Labor Code §409.0091), as applicable.

(1) Timeliness. A requestor must timely file the request with the division or waive the right to MFDR. The division will deem a request to be filed on the date the division receives the request. A decision by the division that a request was not timely filed is not a dismissal and may be appealed pursuant to subsection (g) of this section.

(A) A request for MFDR that does not involve issues identified in subparagraph (B) of this paragraph shall be filed no later than one year after the date(s) of service in dispute.

(B) A request may be filed later than one year after the date(s) of service if:

(i) a related compensability, extent of injury, or liability dispute under Labor Code Chapter 410 has been filed, the medical fee dispute shall be filed not later than 60 days after the date the requestor receives the final decision, inclusive of all appeals, on compensability, extent of injury, or liability;

(ii) a medical dispute regarding medical necessity has been filed, the medical fee dispute must be filed not later than 60 days after the date the requestor received the final decision on medical necessity, inclusive of all appeals, related to the health care in dispute and for which the insurance carrier previously denied payment based on medical necessity; or

(iii) the dispute relates to a refund notice issued pursuant to a division audit or review, the medical fee dispute must be filed not later than 60 days after the date of the receipt of a refund notice.

(2) Health Care Provider or Pharmacy Processing Agent Request. The requestor must send the request to the division in the form and manner prescribed by the division by any mail service, personal delivery, or electronic transmission as described in §102.5 of this title. The request must include:

(A) the name, address, and contact information of the requestor;

(B) the name of the injured employee;

(D) the date(s) of the service(s) in dispute;

(E) the place of service;

(F) the treatment or service code(s) in dispute;

(G) the amount billed by the health care provider for the treatment(s) or service(s) in dispute;

(H) the amount paid by the workers' compensation insurance carrier for the treatment(s) or service(s) in dispute;

(I) the disputed amount for each treatment or service in dispute;

(J) a copy of all medical bills related to the dispute, as described in §133.10 of this chapter (concerning Required Billing Forms/Formats) or §133.500 (concerning Electronic Formats for Electronic Medical Bill Processing) as originally submitted to the insurance carrier in accordance with this chapter, and a copy of all medical bills submitted to the insurance carrier for an appeal in accordance with §133.250 of this chapter (concerning Reconsideration for Payment of Medical Bills);

(K) each explanation of benefits or e-remittance (collectively "EOB") related to the dispute as originally submitted to the health care provider in accordance with this chapter or, if no EOB was received, convincing documentation providing evidence of insurance carrier receipt of the request for an EOB;

(L) when applicable, a copy of the final decision regarding compensability, extent of injury, liability and/or medical necessity for the health care related to the dispute;

(M) a copy of all applicable medical records related to the dates of service in dispute;

(N) a position statement of the disputed issue(s) that shall include:

(i) the requestor's reasoning for why the disputed fees should be paid or refunded,

(ii) how the Labor Code and division rules, including fee guidelines, impact the disputed fee issues, and

(iii) how the submitted documentation supports the requestor's position for each disputed fee issue;

(O) documentation that discusses, demonstrates, and justifies that the payment amount being sought is a fair and reasonable rate of reimbursement in accordance with §134.1 of this title (relating to Medical Reimbursement) or §134.503 of this title (relating to Pharmacy Fee Guideline) when the dispute involves health care for which the division has not established a maximum allowable reimbursement (MAR) or reimbursement rate, as applicable;

(P) if the requestor is a pharmacy processing agent, a signed and dated copy of an agreement between the processing agent and the pharmacy clearly demonstrating the dates of service covered by the contract and a clear assignment of the pharmacy's right to participate in the MFDR process. The pharmacy processing agent may redact any proprietary information contained within the agreement; and

(Q) any other documentation that the requestor deems applicable to the medical fee dispute.

(3) Subclaimant Dispute Request.

(A) A request made by a subclaimant under Labor Code §409.009 (relating to Subclaims) must comply with §140.6 of this title (concerning Subclaimant Status: Establishment, Rights, and Procedures) and submit the required documents to the division.

(B) A request made by a subclaimant under Labor Code §409.0091 (relating to Reimbursement Procedures for Certain Entities) must comply with the document requirements of §140.8 of this title (concerning Procedures for Health Care Insurers to Pursue Reimbursement of Medical Benefits under Labor Code §409.0091) and submit the required documents to the division.

(4) Injured Employee Dispute Request. An injured employee who has paid for health care may request MFDR of a refund or reimbursement request that has been denied. The injured employee must send the request to the division in the form and manner prescribed by the division by mail service, personal delivery, or electronic transmission as described in §102.5 of this title and must include:

(A) the name, address, and contact information of the injured employee;

(B) the date of the injury;

(D) a description of the services paid;

(E) the amount paid by the injured employee;

(F) the amount of the medical fee in dispute;

(G) an explanation of why the disputed amount should be refunded or reimbursed, and how the submitted documentation supports the explanation for each disputed amount;

(H) proof of employee payment (including copies of receipts, health care provider billing statements, or similar documents); and

(I) a copy of the insurance carrier's or health care provider's denial of reimbursement or refund relevant to the dispute, or if no denial was received, convincing evidence of the injured employee's attempt to obtain reimbursement or refund from the insurance carrier or health care provider.

(5) Division Response to Request. The division will forward a copy of the request and the documentation submitted in accordance with paragraph (2), (3), or (4) of this subsection to the respondent. The respondent shall be deemed to have received the request on the acknowledgment date as defined in §102.5 of this title (relating to General Rules for Written Communications to and from the Commission).

(d) Responses. Responses to a request for MFDR must be legible and submitted to the division and to the requestor in the form and manner prescribed by the division.

(1) Timeliness. The response will be deemed timely if received by the division through mail service, personal delivery, or electronic transmission, as described in §102.5 of this title, within 14 calendar days after the date the respondent received the copy of the requestor's dispute. If the division does not receive the response information within 14 calendar days of the dispute notification, then the division may base its decision on the available information.

(2) Response. On receipt of the request, the respondent must provide any missing information not provided by the requestor and known to the respondent. The respondent must also provide the following information and records:

(A) the name, address, and contact information of the respondent;

(B) all initial and appeal EOBs related to the dispute as originally submitted to the health care provider in accordance with this chapter, related to the health care in dispute not submitted by the requester, or a statement certifying that the respondent did not receive the health care provider's disputed billing before the dispute request;

(C) all medical bill(s) related to the dispute, submitted in accordance with this chapter if different from that originally submitted to the insurance carrier for reimbursement;

(D) any pertinent medical records or other documents relevant to the fee dispute not already provided by the requestor;

(E) a statement of the disputed fee issue(s), which includes:

(i) a description of the health care in dispute;

(ii) a position statement of reasons why the disputed medical fees should not be paid;

(iii) a discussion of how the Labor Code and division rules, including fee guidelines, impact the disputed fee issues;

(iv) a discussion regarding how the submitted documentation supports the respondent's position for each disputed fee issues;

(v) documentation that discusses, demonstrates, and justifies that the amount the respondent paid is a fair and reasonable reimbursement in accordance with Labor Code §413.011 and §134.1 or §134.503 of this title if the dispute involves health care for which the division has not established a MAR or reimbursement rate, as applicable.

(F) The responses shall address only those denial reasons presented to the requestor prior to the date the request for MFDR was filed with the division and the other party. Any new denial reasons or defenses raised shall not be considered in the review. If the response includes unresolved issues of compensability, extent of injury, liability, or medical necessity, the request for MFDR will be dismissed in accordance with subsection (f)(3)(B) or (C) of this section.

(G) If the respondent did not receive the health care provider's disputed billing or the employee's reimbursement request relevant to the dispute prior to the request, the respondent shall include that information in a written statement.

(H) If the medical fee dispute involves compensability, extent of injury, or liability, the insurance carrier must attach any related Plain Language Notice in accordance with §124.2 of this title (concerning Insurance Carrier Reporting and Notification Requirements).

(I) If the medical fee dispute involves medical necessity issues, the insurance carrier must attach documentation that supports an adverse determination in accordance with §19.2005 of this title (concerning General Standards of Utilization Review).

(e) Withdrawal. The requestor may withdraw its request for MFDR by notifying the division prior to a decision.

(f) MFDR Action. The division will review the completed request and response to determine appropriate MFDR action.

(1) Request for Additional Information. The division may request additional information from either party to review the medical fee issues in dispute. The additional information must be received by the division no later than 14 days after receipt of this request. If the division does not receive the requested additional information within 14 days after receipt of the request, then the division may base its decision on the information available. The party providing the additional information shall forward a copy of the additional information to all other parties at the time it is submitted to the division.

(2) Issues Raised by the Division. The division may raise issues in the MFDR process when it determines such an action to be appropriate to administer the dispute process consistent with the provisions of the Labor Code and division rules.

(3) Dismissal. A dismissal is not a final decision by the division. The medical fee dispute may be submitted for review as a new dispute that is subject to the requirements of this section. The division may dismiss a request for MFDR if:

(A) the division determines that the medical bills in the dispute have not been submitted to the insurance carrier for an appeal, when required;

(B) the request contains an unresolved adverse determination of medical necessity;

(D) the division determines that good cause exists to dismiss the request, including a party's failure to comply with the provisions of this section.

(4) Decision. The division shall send a decision to the disputing parties or to representatives of record for the parties, if any, and post the decision on the department's website.

(5) Division Fee. The division may assess a fee in accordance with §133.305 of this subchapter (relating to MDR--General).

(g) Appeal of MFDR Decision. A party to a medical fee dispute may seek review of the decision. Parties are deemed to have received the MFDR decision as provided in §102.5 of this title. The MFDR decision is final if the request for the benefit review conference is not timely made. If a party provides the benefit review officer or administrative law judge with documentation listed in subsection (d)(2)(H) or (I) of this section that shows unresolved issues regarding compensability, extent of injury, liability, or medical necessity for the same service subject to the fee dispute, then the benefit review officer or administrative law judge shall abate the proceedings until those issues have been resolved.

(1) A party seeking review of an MFDR decision must request a benefit review conference no later than 20 days from the date the MFDR decision is received by the party. The party that requests a review of the MFDR decision must mediate the dispute in the manner required by Labor Code, Chapter 410, Subchapter B and request a benefit review conference under Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference). A party may appear at a benefit review conference via telephone. The benefit review conference will be conducted in accordance with Chapter 141 of this title.

(A) Notwithstanding §141.1(b) of this title (relating to Requesting and Setting a Benefit Review Conference), a seeking review of an MFDR decision may request a benefit review conference.

(B) At a benefit review conference, the parties to the dispute may not resolve the dispute by negotiating fees that are inconsistent with any applicable fee guidelines adopted by the commissioner.

(C) A party must file the request for a benefit review conference in accordance with Chapter 141 of this title and must include in the request a copy of the MFDR decision. Providing a copy of the MFDR decision satisfies the documentation requirements in §141.1(d) of this title. A first responder's request for a benefit review conference must be accelerated by the division and given priority in accordance with Labor Code §504.055. The first responder must provide notice to the division that the contested case involves a first responder.

(2) If the medical fee dispute remains unresolved after a benefit review conference, the parties may request arbitration as provided in Labor Code, Chapter 410, Subchapter C and Chapter 144 of this title (relating to Dispute Resolution). If arbitration is not elected, the party may appeal the MFDR decision by requesting a contested case hearing before the State Office of Administrative Hearings. A first responder's request for arbitration by the division or a contested case hearing before the State Office of Administrative Hearings must be accelerated by the division and given priority in accordance with Labor Code §504.055. The first responder must provide notice to the division that the contested case involves a first responder.

(A) To request a contested case hearing before State Office of Administrative Hearings, a party shall file a written request for a State Office of Administrative Hearings hearing with the Division's Chief Clerk of Proceedings not later than 20 days after conclusion of the benefit review conference in accordance with §148.3 of this title (relating to Requesting a Hearing).

(B) The party seeking review of the MFDR decision shall deliver a copy of its written request for a hearing to all other parties involved in the dispute at the same time the request for hearing is filed with the division.

(3) A party to a medical fee dispute who has exhausted all administrative remedies may seek judicial review of the decision of the Administrative Law Judge at the State Office of Administrative Hearings. The division and the department are not considered to be parties to the medical dispute pursuant to Labor Code §413.031(k-2) and §413.0312(f). Judicial review under this paragraph shall be conducted in the manner provided for judicial review of contested cases under Chapter 2001, Subchapter G Government Code, except that in the case of a medical fee dispute the party seeking judicial review must file suit not later than the 45th day after the date on which the State Office of Administrative Hearings mailed the party the notification of the decision. The mailing date is considered to be the fifth day after the date the decision was issued by the State Office of Administrative Hearings. A party seeking judicial review of the decision of the administrative law judge shall at the time the petition for judicial review is filed with the district court file a copy of the petition with the division's chief clerk of proceedings.

(h) Billing of the non-prevailing party. Except as otherwise provided by Labor Code §413.0312, the non-prevailing party shall reimburse the division for the costs for services provided by the State Office of Administrative Hearings and any interest required by law.

(1) The non-prevailing party shall remit payment to the division not later than the 30th day after the date of receiving a bill or statement from the division.

(2) In the event of a dismissal, the party requesting the hearing, other than the injured employee, shall reimburse the division for the costs for services provided by the State Office of Administrative Hearings unless otherwise agreed by the parties.

(3) If the injured employee is the non-prevailing party, the insurance carrier shall reimburse the division for the costs for services provided by the State Office of Administrative Hearings.

History

Source Note: The provisions of this §133.307 adopted to be effective December 31, 2006, 31 TexReg 10314; amended to be effective May 25, 2008, 33 TexReg 3954; amended to be effective May 31, 2012, 37 TexReg 3833; amended to be effective February 22, 2021, 46 TexReg 826.

28 Tex. Admin. Code § 133.308 MDR of Medical Necessity Disputes

(a) Applicability. The applicability of this section is as follows.

(1) This section applies to the independent review of medical necessity disputes that are filed on or after June 1, 2012. Dispute resolution requests filed prior to June 1, 2012 shall be resolved in accordance with the statutes and rules in effect at the time the request was filed.

(2) When applicable, retrospective medical necessity disputes shall be governed by the provisions of Labor Code §413.031(n) and related rules.

(3) All independent review organizations (IROs) performing reviews of health care under the Labor Code and Insurance Code, regardless of where the independent review activities are located, shall comply with this section. The Insurance Code, the Labor Code and related rules govern the independent review process.

(b) IRO Certification. Each IRO performing independent review of health care provided in the workers' compensation system shall be certified pursuant to Insurance Code Chapter 4202 and Chapter 12 of this title (relating to Independent Review Organizations).

(c) Professional licensing requirements. Notwithstanding Insurance Code Chapter 4202, an IRO that uses doctors to perform reviews of health care services provided under this section may only use doctors licensed to practice in Texas that hold the appropriate credentials under Chapter 180 of this title (relating to Monitoring and Enforcement). Personnel employed by or under contract with the IRO to perform independent review shall also comply with the personnel and credentialing requirements under Chapter 12 of this title.

(d) Conflicts. Conflicts of interest will be reviewed by the department consistent with the provisions of the Insurance Code §4202.008, Labor Code §413.032(b), §§12.203, 12.204, and 12.206 of this title (relating to Conflicts of Interest Prohibited, Prohibitions of Certain Activities and Relationships of Independent Review Organizations and Individuals or Entities Associated with Independent Review Organizations, and Notice of Determinations Made by Independent Review Organizations, respectively), and any other related rules. Notification of each IRO decision must include a certification by the IRO that the reviewing health care provider has certified that no known conflicts of interest exist between that health care provider and the injured employee, the injured employee's employer, the insurance carrier, the utilization review agent, any of the treating health care providers, or any of the health care providers utilized by the insurance carrier to review the case for determination prior to referral to the IRO.

(e) Monitoring. The division will monitor IROs under Labor Code §§413.002, 413.0511, and 413.0512. The division shall report the results of the monitoring of IROs to the department on at least a quarterly basis. The division will make inquiries, conduct audits, receive and investigate complaints, and take all actions permitted by the Labor Code and other applicable law against an IRO or personnel employed by or under contract with an IRO to perform independent review to determine compliance with applicable law, this section, and other applicable division rules.

(f) Requestors. The following parties may be requestors in medical necessity disputes:

(1) In network disputes:

(A) health care providers, or qualified pharmacy processing agents acting on behalf of a pharmacy, as described in Labor Code §413.0111, for preauthorization, concurrent, and retrospective medical necessity dispute resolution;

(B) injured employees or a person acting on behalf of an injured employee for preauthorization, concurrent, and retrospective medical necessity dispute resolution; and

(2) In non-network disputes:

(B) injured employees or injured employee's representative for preauthorization and concurrent medical necessity dispute resolution; and, for retrospective medical necessity dispute resolution when reimbursement was denied for health care paid by the injured employee; and

(C) subclaimants in accordance with §140.6 of this title (relating to Subclaimant Status: Establishment, Rights, and Procedures), §140.7 of this title (relating to Health Care Insurer Reimbursement under Labor Code §409.0091), or §140.8 of this title (relating to Procedures for Health Care Insurers to Pursue Reimbursement of Medical Benefits under Labor Code §409.0091), as applicable.

(g) Requests. A request for independent review must be filed in the form and manner prescribed by the department. The department's IRO request form may be obtained from:

(1) the department's website at http://www.tdi.texas.gov/; or

(2) the Managed Care Quality Assurance Office, Mail Code LH-MCQA, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.

(h) Timeliness. A requestor shall file a request for independent review with the insurance carrier that actually issued the adverse determination or the insurance carrier's utilization review agent (URA) that actually issued the adverse determination no later than the 45th calendar day after receipt of the insurance carrier's denial of an appeal. The insurance carrier shall notify the department of a request for an independent review within one working day from the date the request is received by the insurance carrier or its URA. In a preauthorization or concurrent review dispute request, an injured employee with a life-threatening condition, as defined in §133.305 of this subchapter (relating to MDR--General), is entitled to an immediate review by an IRO and is not required to comply with the procedures for an appeal to the insurance carrier.

(i) Dismissal. The department may dismiss a request for medical necessity dispute resolution if:

(1) the requestor informs the department, or the department otherwise determines, that the dispute no longer exists;

(2) the requestor is not a proper party to the dispute pursuant to subsection (f) of this section;

(3) the department determines that the dispute involving a non-life-threatening condition has not been submitted to the insurance carrier for an appeal;

(4) the department has previously resolved the dispute for the date(s) of health care in question;

(5) the request for dispute resolution is untimely pursuant to subsection (h) of this section;

(6) the request for medical necessity dispute resolution was not submitted in compliance with the provisions of this subchapter; or

(7) the department determines that good cause otherwise exists to dismiss the request.

(j) IRO Assignment and Notification. The department shall review the request for IRO review, assign an IRO, and notify the parties about the IRO assignment consistent with the provisions of Insurance Code §4202.002(a)(1), §1305.355(a), Chapter 12, Subchapter F of this title (relating to Random Assignment of Independent Review Organizations), any other related rules, and this subchapter.

(k) Insurance Carrier Document Submission. The insurance carrier or the insurance carrier's URA shall submit the documentation required in paragraphs (1) - (6) of this subsection to the IRO not later than the third working day after the date the insurance carrier or URA receives the notice of IRO assignment. The documentation shall include:

(1) the forms prescribed by the department for requesting IRO review;

(2) all medical records of the injured employee in the possession of the insurance carrier or the URA that are relevant to the review, including any medical records used by the insurance carrier or the URA in making the determinations to be reviewed by the IRO;

(3) all documents, guidelines, policies, protocols and criteria used by the insurance carrier or the URA in making the decision;

(4) all documentation and written information submitted to the insurance carrier in support of the appeal;

(5) the written notification of the initial adverse determination and the written adverse determination of the appeal to the insurance carrier or the insurance carrier's URA; and

(6) any other information required by the department related to a request from an insurance carrier for the assignment of an IRO.

(l) Additional Information. The IRO shall request additional necessary information from either party or from other health care providers whose records are relevant to the review.

(1) The party or health care providers with relevant records shall deliver the requested information to the IRO as directed by the IRO. If the health care provider requested to submit records is not a party to the dispute, the insurance carrier shall reimburse copy expenses for the requested records pursuant to §134.120 of this title (relating to Reimbursement for Medical Documentation). Parties to the dispute may not be reimbursed for copies of records sent to the IRO.

(2) If the required documentation has not been received as requested by the IRO, the IRO shall notify the department and the department shall request the necessary documentation.

(3) Failure to provide the requested documentation as directed by the IRO or department may result in enforcement action as authorized by statutes and rules.

(m) Designated Doctor Exam. In performing a review of medical necessity, an IRO may request that the division require an examination by a designated doctor and direct the injured employee to attend the examination pursuant to Labor Code §413.031(g) and §408.0041. The IRO request to the division must be made no later than 10 days after the IRO receives notification of assignment of the IRO. The treating doctor and insurance carrier shall forward a copy of all medical records, diagnostic reports, films, and other medical documents to the designated doctor appointed by the division, to arrive no later than three working days prior to the scheduled examination. Communication with the designated doctor is prohibited regarding issues not related to the medical necessity dispute. The designated doctor shall complete a report and file it with the IRO, in the form and manner prescribed by the division no later than seven working days after completing the examination. The designated doctor report shall address all issues as directed by the division.

(n) Time Frame for IRO Decision. The IRO will render a decision as follows:

(1) for life-threatening conditions, no later than eight days after the IRO receipt of the dispute;

(2) for preauthorization and concurrent medical necessity disputes, no later than the 20th day after the IRO receipt of the dispute;

(3) for retrospective medical necessity disputes, no later than the 30th day after the IRO receipt of the IRO fee; and

(4) if a designated doctor examination has been requested by the IRO, the above time frames begin on the date of the IRO receipt of the designated doctor report.

(o) IRO Decision. The decision shall be mailed or otherwise transmitted to the parties and to representatives of record for the parties and transmitted in the form and manner prescribed by the department within the time frames specified in this section.

(1) The IRO decision must include:

(A) a list of all medical records and other documents reviewed by the IRO, including the dates of those documents;

(B) a description and the source of the screening criteria or clinical basis used in making the decision;

(C) an analysis of, and explanation for, the decision, including the findings and conclusions used to support the decision;

(D) a description of the qualifications of each physician or other health care provider who reviewed the decision;

(E) a statement that clearly states whether or not medical necessity exists for each of the health care services in dispute;

(F) a certification by the IRO that the reviewing health care provider has no known conflicts of interest pursuant to the Insurance Code Chapter 4202, Labor Code §413.032, and §12.203 of this title; and

(G) if the IRO's decision is contrary to the division's policies or guidelines adopted under Labor Code §413.011, the IRO must indicate in the decision the specific basis for its divergence in the review of medical necessity of nonnetwork health care.

(2) The notification to the department shall also include certification of the date and means by which the decision was sent to the parties.

(p) Insurance Carrier Use of Peer Review Report after an IRO Decision. If an IRO decision determines that medical necessity exists for health care that the insurance carrier denied and the insurance carrier utilized a peer review report on which to base its denial, the peer review report shall not be used for subsequent medical necessity denials of the same health care services subsequently reviewed for that compensable injury.

(q) IRO Fees. IRO fees will be paid in the same amounts as the IRO fees set by department rules. In addition to the specialty classifications established as tier two fees in department rules, independent review by a doctor of chiropractic shall be paid the tier two fee. IRO fees shall be paid as follows:

(1) In network disputes, a preauthorization, concurrent, or retrospective medical necessity dispute for health care provided by a network, the insurance carrier must remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO;

(2) In non-network disputes, IRO fees for disputes regarding non-network health care must be paid as follows:

(A) in a preauthorization or concurrent review medical necessity dispute or retrospective medical necessity dispute resolution when reimbursement was denied for health care paid by the injured employee, the insurance carrier shall remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO.

(B) in a retrospective medical necessity dispute, the requestor must remit payment to the assigned IRO within 15 days after receipt of an invoice from the IRO.

(i) If the IRO fee has not been received within 15 days of the requestor's receipt of the invoice, the IRO shall notify the department and the department shall dismiss the dispute with prejudice.

(ii) After an IRO decision is rendered, the IRO fee must be paid or refunded by the nonprevailing party as determined by the IRO in its decision.

(3) Designated doctor examinations requested by an IRO shall be paid by the insurance carrier in accordance with the medical fee guidelines under the Labor Code and related rules.

(4) Failure to pay or refund the IRO fee may result in enforcement action as authorized by statute and rules.

(5) For health care not provided by a network, the non-prevailing party to a retrospective medical necessity dispute must pay or refund the IRO fee to the prevailing party upon receipt of the IRO decision, but not later than 15 days regardless of whether an appeal of the IRO decision has been or will be filed.

(6) The IRO fees may include an amended notification of decision if the department determines the notification to be incomplete. The amended notification of decision shall be filed with the department no later than five working days from the IRO's receipt of such notice from the department. The amended notification of decision does not alter the deadlines for appeal.

(7) If a requestor withdraws the request for an IRO decision after the IRO has been assigned by the department but before the IRO sends the case to an IRO reviewer, the requestor shall pay the IRO a withdrawal fee of $150 within 30 days of the withdrawal. If a requestor withdraws the request for an IRO decision after the case is sent to a reviewer, the requestor shall pay the IRO the full IRO review fee within 30 days of the withdrawal.

(8) In addition to department enforcement action, the division may assess an administrative fee in accordance with Labor Code §413.020 and §133.305 of this subchapter.

(9) This section shall not be deemed to require an employee to pay for any part of a review. If application of a provision of this section would require an employee to pay for part of the cost of a review, that cost shall instead be paid by the insurance carrier.

(r) Defense. An insurance carrier may claim a defense to a medical necessity dispute if the insurance carrier timely complies with the IRO decision with respect to the medical necessity or appropriateness of health care for an injured employee. Upon receipt of an IRO decision for a retrospective medical necessity dispute that finds that medical necessity exists, the insurance carrier must review, audit, and process the bill. In addition, the insurance carrier shall tender payment consistent with the IRO decision, and issue a new explanation of benefits (EOB) to reflect the payment within 21 days upon receipt of the IRO decision. The decision of an IRO under Labor Code §413.031(m) is binding during the pendency of a dispute.

(s) Appeal of IRO decision. A decision issued by an IRO is not considered an agency decision and neither the department nor the division is considered a party to an appeal. In a division Contested Case Hearing (CCH), the party appealing the IRO decision has the burden of overcoming the decision issued by an IRO by a preponderance of evidence based medical evidence. A party to a medical dispute that remains unresolved after a review under Labor Code §504.053(d)(3) or Insurance Code §1305.355 is entitled to a contested case hearing in the same manner as a hearing conducted under Labor Code §413.0311. A party to a medical necessity dispute may seek review of a dismissal or decision at a division CCS as follows:

(1) A party to a medical necessity dispute may appeal the IRO decision by requesting a division CCH conducted by a division administrative law judge. A benefit review conference is not a prerequisite to a division CCH under this subsection.

(A) The written appeal must be filed with the division's Chief Clerk of Proceedings no later than the later of the 20th day after the effective date of this section or 20 days after the date the IRO decision is sent to the appealing party and must be filed in the form and manner required by the division. Requests that are timely submitted to a division location other than the division's Chief Clerk of Proceedings, such as a local field office of the division, will be considered timely filed and forwarded to the Chief Clerk of Proceedings for processing; however, this may result in a delay in the processing of the request.

(B) The party appealing the IRO decision shall send a copy of its written request for a hearing to all other parties involved in the dispute. The IRO is not required to participate in the division CCH or any appeal.

(C) Except as otherwise provided in this section, a division CCH shall be conducted in accordance with Chapters 140 and 142 of this title (relating to Dispute Resolution--General Provisions and Dispute Resolution--Benefit Contested Case Hearing).

(D) At a division CCH, the administrative law judge shall consider the treatment guidelines:

(i) adopted by the network under Insurance Code §1305.304, for a network dispute;

(ii) adopted by the division under Labor Code §413.011(e) for a non-network dispute; or

(iii) adopted, if any, by the political subdivision or pool that provides medical benefits under Labor Code §504.053(b)(2) if those treatment guidelines meet the standards provided by Labor Code §413.011(e).

(E) Prior to a division CCH, a party may submit a request for a letter of clarification by the IRO to the division's Chief Clerk of Proceedings. A copy of the request for a letter of clarification must be provided to all parties involved in the dispute at the time it is submitted to the division.

(i) A party's request for a letter of clarification must be submitted to the division no later than 10 days before the date set for hearing. The request must include a cover letter that contains the names of the parties and all identification numbers assigned to the hearing or the independent review by the division, the department, or the IRO.

(ii) The department may at its discretion forward the party's request for a letter of clarification to the IRO that conducted the independent review. The department will not forward to the IRO a request for a letter of clarification that asks the IRO to reconsider its decision or issue a new decision.

(iii) The IRO shall send a response to the request for a letter of clarification to the department and to all parties that received a copy of the IRO's decision within 5 days of receipt of the party's request for a letter of clarification. The IRO's response is limited to clarifying statements in its original decision; the IRO shall not reconsider its decision and shall not issue a new decision in response to a request for a letter of clarification.

(iv) A request for a letter of clarification does not alter the deadlines for appeal.

(F) A party to a medical necessity dispute who has exhausted all administrative remedies may seek judicial review of the division's decision. Judicial review under this paragraph shall be conducted in the manner provided for judicial review of contested cases under Chapter 2001, Subchapter G Government Code, and is governed by the substantial evidence rule. The party seeking judicial review under this section must file suit not later than the 45th day after the date on which the division mailed the party the decision of the administrative law judge. The mailing date is considered to be the fifth day after the date the decision of the administrative law judge was filed with the division. A decision becomes final and appealable when issued by a division administrative law judge. If a party to a medical necessity dispute files a petition for judicial review of the division's decision, the party shall, at the time the petition is filed with the district court, send a copy of the petition for judicial review to the division's Chief Clerk of Proceedings. The division and the department are not considered to be parties to the medical necessity dispute pursuant to Labor Code §413.031(k-2) and §413.0311(e).

(G) Upon receipt of a court petition seeking judicial review of a division CCH held under this subparagraph, the division shall prepare and submit to the district court a certified copy of the entire record of the division CCH under review.

(i) The following information must be included in the petition or provided to the division by cover letter:

(I) Any applicable division docket number for the dispute being appealed;

(II) the names of the parties;

(III) the cause number;

(IV) the identity of the court; and

(V) the date the petition was filed with the court.

(ii) The record of the hearing includes:

(I) all pleadings, motions, and intermediate rulings;

(II) evidence received or considered;

(III) a statement of matters officially noticed;

(IV) questions and offers of proof, objections, and rulings on them;

(V) any decision, opinion, report, or proposal for decision by the officer presiding at the hearing and any decision by the division; and

(VI) a transcription of the audio record of the division CCH.

(iii) The division shall assess to the party seeking judicial review expenses incurred by the division in preparing the certified copy of the record, including transcription costs, in accordance with the Government Code §2001.177 (relating to Costs of Preparing Agency Record). Upon request, the division shall consider the financial ability of the party to pay the costs, or any other factor that is relevant to a just and reasonable assessment of costs.

(2) If a party to a medical necessity dispute properly requests review of an IRO decision, the IRO, upon request, shall provide a record of the review and submit it to the requestor within 15 days of the request. The party requesting the record shall pay the IRO copying costs for the records. The record shall include the following documents that are in the possession of the IRO and which were reviewed by the IRO in making the decision including:

(A) medical records;

(B) all documents used by the insurance carrier in making the decision that resulted in the adverse determination under review by the IRO;

(D) the written notification of the adverse determination and the written determination of the appeal to the insurance carrier or the insurance carrier's URA;

(E) a list containing the name, address, and phone number of each health care provider who provided medical records to the IRO relevant to the review;

(F) a list of all medical records of other documents reviewed by the IRO, including the dates of those documents;

(G) a copy of the decision that was sent to all parties;

(H) copies of any pertinent medical literature or other documentation (such as any treatment guideline or screening criteria) utilized to support the decision or, where such documentation is subject to copyright protection or is voluminous, then a listing of such documentation referencing the portion(s) of each document utilized;

(I) a signed and certified custodian of records affidavit; and

(J) other information that was required by the department related to a request from an insurance carrier or the insurance carrier's URA for the assignment of the IRO.

(t) Medical Fee Dispute Request. If the requestor has an unresolved non-network fee dispute related to health care that was found medically necessary, after the final decision of the medical necessity dispute, the requestor may file a medical fee dispute in accordance with §133.305 and §133.307 of this subchapter (relating to MDR--General and MDR of Fee Disputes, respectively).

(u) First Responders. In accordance with Labor Code §504.055(d), an appeal regarding the denial of a claim for medical benefits, including all health care required to cure or relieve the effects naturally resulting from a compensable injury involving a first responder will be accelerated by the division and given priority. The party seeking to expedite the contested case hearing or appeal must provide notice to the division and independent review organization that the contested case hearing or appeal involves a first responder.

(v) Texas Military Forces. In accordance with Labor Code §501.028, the division will accelerate and give priority to an appeal from a denial of a claim for medical benefits.

(1) This subsection applies to a claim for medical benefits made by a member of the Texas military forces who, while on state active duty, sustains a serious bodily injury, as defined by Penal Code §1.07.

(2) The division will accelerate and give priority to actions involving all health care required to cure or relieve the effects naturally resulting from a compensable injury.

(3) The member must notify the division and IRO that the CCH or appeal involves a member of the Texas military forces.

(w) Death investigation professionals. In accordance with Labor Code §504.057, the division will accelerate and give priority to an appeal from a denial of a claim for medical benefits.

(1) This subsection applies to a claim for medical benefits made by a death investigation professional who sustains a serious bodily injury, as defined by Penal Code §1.07, in the course and scope of employment.

(2) The division will accelerate and give priority to actions involving all health care required to cure or relieve the effects naturally resulting from a compensable injury.

(3) The death investigation professional must notify the division and IRO that the CCH or appeal involves a death investigation professional.

(x) Enforcement. The department or the division may initiate appropriate proceedings under Chapter 12 of this title or Labor Code, Title 5 and division rules against an independent review organization or a person conducting independent reviews.

History

Source Note: The provisions of this §133.308 adopted to be effective December 31, 2006, 31 TexReg 10314; amended to be effective May 25, 2008, 33 TexReg 3954; amended to be effective May 31, 2012, 37 TexReg 3833; amended to be effective January 7, 2019, 44 TexReg 103; amended to be effective December 28, 2023, 48 TexReg 7999; amended to be effective January 29, 2026, 51 TexReg 409.

Subchapter G ELECTRONIC MEDICAL BILLING, REIMBURSEMENT, AND DOCUMENTATION

28 Tex. Admin. Code § 133.500 Electronic Formats for Electronic Medical Bill Processing

(a) For electronic transactions conducted before January 1, 2012, the division adopts by reference the following electronic medical bill processing standards as adopted by the United States Department of Health and Human Services in 45 CFR §162.1102(b) and §162.1602(b):

(1) Professional Billing--the ASC X12N 837, Health Care Claim: Professional, Volumes 1 and 2, Version 004010, May 2000, Washington Publishing Company, 004010X098 and Addenda to Health Care Claim: Professional, Volumes 1 and 2, Version 4010, October 2002, Washington Publishing Company, 004010X098A1.

(2) Institutional/Hospital Billing--the ASC X12N 837, Health Care Claim: Institutional, Volumes 1 and 2, Version 004010, May 2000, Washington Publishing Company, 004010X096 and Addenda to Health Care Claim: Institutional, Volumes 1 and 2, Version 4010, October 2002, Washington Publishing Company, 004010X096A1.

(3) Dental Billing--the ASC X12N 837, Health Care Claim: Dental, Version 004010, May 2000, Washington Publishing Company, 004010X097 and Addenda to Health Care Claim: Dental, Version 4010, October 2002, Washington Publishing Company, 004010X097A1.

(4) Retail Pharmacy Billing--the Telecommunication Standard Implementation Guide Version 5, Release 1 (Version 5.1), September 1999, National Council for Prescription Drug Programs and the Batch Standard Batch Implementation Guide, Version 1, Release 1 (Version 1.1), January 2000, supporting Telecommunication Standard Implementation Guide, Version 5, Release 1 (Version 5.1) for the NCPDP Data Record in the Detail Data Record, National Council for Prescription Drug Programs.

(5) Remittance--the ASC X12N 835, Health Care Claim Payment/Advice, Version 004010, May 2000, Washington Publishing Company, 004010X091, and Addenda to Health Care Claim Payment/Advice, Version 4010, October 2002, Washington Publishing Company, 004010X091A1.

(b) For electronic transactions conducted before January 1, 2012, the division adopts by reference the following electronic medical bill processing standards:

(1) Acknowledgment:

(A) Electronic responses to ASC X12N 837 transactions:

(i) the TA1 Interchange Acknowledgment contained in the standards adopted under subsection (a) of this section;

(ii) the 997 Functional Acknowledgment contained in the standards adopted under subsection (a) of this section; and

(iii) the ASC X12N 824--Application Advice, Version 004010, February 2006, Washington Publishing Company, 004010X161.

(B) Electronic responses to National Council for Prescription Drug Programs (NCPDP) transactions, the Response contained in the standards adopted under subsection (a) of this section.

(2) Documentation submitted with an electronic medical bill: ASC X12N 275--Additional Information to Support a Health Claim or Encounter, Version 004050, May 2004, Washington Publishing Company, 004050X151.

(c) For electronic transactions conducted on or after January 1, 2012, the division adopts by reference the following electronic medical bill processing standards as adopted by the United States Department of Health and Human Services in 45 CFR §162.1102(c) and §162.1602(c):

(1) Professional Billing--the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim: Professional (837), May 2006, ASC X12, 005010X222 and Type 3 Errata to Health Care Claim: Professional (837), June 2010, ASC X12, 005010X222A1.

(2) Institutional/Hospital Billing--the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim: Institutional (837), May 2006, ASC X12, 005010X223, Type 1 Errata to Health Care Claim: Institutional (837), ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, October 2007, ASC X12, 005010X223A1, and Type 3 Errata to Health Care Claim: Institutional (837), June 2010, ASC X12, 005010X223A2.

(3) Dental Billing--the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim: Dental (837), May 2006, ASC X12, 005010X224, Type 1 Errata to Health Care Claim: Dental (837), ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, October 2007, ASC X12, 005010X224A1, and Type 3 Errata to Health Care Claim: Dental (837), June 2010, ASC X12, 005010X224A2.

(4) Retail Pharmacy Billing--the Telecommunication Standard Implementation Guide, Version D, Release 0 (Version D.0), August 2007, National Council for Prescription Drug Programs and the Batch Standard Batch Implementation Guide, Version 1, Release 2 (Version 1.2), January 2006, National Council for Prescription Drug Programs.

(5) Remittance--the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim Payment/Advice (835), April 2006, ASC X12, 005010X221, and Type 3 Errata to Health Care Claim Payment/Advice (835), June 2010, ASC X12, 005010X221A1.

(d) For electronic transactions conducted on or after January 1, 2012, the division adopts by reference the following electronic medical bill processing standards:

(1) Acknowledgment:

(A) Electronic responses to ASC X12N 837 transactions:

(i) the ASC X12 Standards for Electronic Data Interchange TA1 Interchange Acknowledgment contained in the standards adopted under subsection (c) of this section;

(ii) the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Implementation Acknowledgment for Health Care Insurance (999), June 2007, ASC X12, 005010X231; and

(iii) the ASC X12 Standards for Electronic Data Interchange Technical Report Type 3, Health Care Claim Acknowledgment (277CA), January 2007, ASC X12, 005010X214.

(B) Electronic responses to NCPDP transactions, the Response contained in the standards adopted under subsection (c) of this section.

(2) Documentation submitted with an electronic medical bill: ASC X12N 275 - Additional Information to Support a Health Claim or Encounter, Version 005010, February 2008, Washington Publishing Company, 005010X210.

(e) Electronic medical billing transactions must:

(1) contain all fields required in the applicable standard as set forth in subsection (a) or (c) of this section and the data requirements contained in §133.502 of this title (relating to Electronic Medical Billing Supplemental Data Requirements); and

(2) be populated with current and valid values defined in the applicable standard as set forth in subsection (a) or (c) of this section, Chapter 134 of this title (relating to Benefits--Guidelines for Medical Services, Charges, and Payments), and the data requirements contained in §133.502 of this title.

(f) Insurance carriers and health care providers may exchange electronic data in a non-prescribed format by mutual agreement. All data elements required in the division prescribed formats must be present in a mutually agreed upon format.

(g) The implementation specifications for the ASC X12N and the ASC X12 Standards for Electronic Data Interchange may be obtained from the ASC X12, 7600 Leesburg Pike, Suite 430, Falls Church, VA 22043; Telephone (703) 970-4480; and FAX (703) 970-4488. They are also available through the internet at http://www.X12.org. A fee is charged for all implementation specifications.

(h) The implementation specifications for the retail pharmacy standards may be obtained from the National Council for Prescription Drug Programs, 9240 East Raintree Drive, Scottsdale, AZ 85260. Telephone (480) 477-1000; FAX (480) 767-1042. They are also available through the Internet at http://www.ncpdp.org. A fee is charged for all implementation specifications.

(i) The electronic medical bill processing standards adopted in this section are available for inspection at the main office of the Texas Department of Insurance, Division of Workers' Compensation, 7551 Metro Center Drive, Suite 100, Austin, TX 78744 or any subsequent address of the division's main office.

(j) This section is effective August 1, 2011.

History

Source Note: The provisions of this §133.500 adopted to be effective August 10, 2006, 31 TexReg 6230; amended to be effective August 1, 2011, 36 TexReg 929.

28 Tex. Admin. Code § 133.501 Electronic Medical Bill Processing

(a) Applicability.

(1) This section applies to the exchange of electronic medical bill data in accordance with §133.500 of this title (relating to Electronic Formats for Electronic Medical Bill Processing) for professional, institutional/hospital, pharmacy, and dental services. This section applies to all electronic medical bill processing, including transactions for medical services rendered under the provisions of Insurance Code Chapter 1305 or rendered to political subdivisions with contractual relationships under Labor Code §504.053(b)(2).

(2) Insurance carriers shall accept electronic medical bills from health care providers transmitted in accordance with §133.500 of this title unless the insurance carrier is exempt from the process in accordance with subsection (b) of this section.

(3) Health care providers shall submit electronic medical bills to insurance carriers in accordance with §133.500 of this title unless the health care provider or the billed insurance carrier is exempt from the process in accordance with subsection (b) of this section.

(b) Exemptions.

(1) A health care provider is exempt from the requirement to submit medical bills electronically to an insurance carrier if:

(A) the health care provider employs fewer than 10 full time employees;

(B) the health care provider provided services to 32 or fewer injured employees during the preceding calendar year; or

(C) the health care provider can sufficiently demonstrate electronic medical bill implementation will create an unreasonable financial hardship and can provide supporting documentation such as financial statements and other documentation which reflect the cost of implementation.

(2) A health care provider who asserts an exemption under this section must provide all supporting documentation to the division within 15 days of a division request for documentation.

(3) An insurance carrier is exempt from the requirement to receive medical bills electronically from health care providers if:

(A) the insurance carrier is placed in receivership;

(B) the insurance carrier was issued an initial license to write workers' compensation insurance by the Texas Department of Insurance during the current or preceding calendar year;

(C) the insurance carrier had less than 32 workers' compensation claims for which income or medical benefits were paid during the preceding calendar year;

(D) the insurance carrier no longer writes workers' compensation insurance in Texas and is only handling runoff claims;

(E) the insurance carrier was a certified self-insured employer under Labor Code, Chapter 407, or a self-insured group under Labor Code, Chapter 407A, which has withdrawn from the certified self-insurance program or group self-insurance; or

(F) the insurance carrier submits a request to the division with supporting documentation such as financial statements and other documents which reflect cost of implementation and sufficiently demonstrates that electronic medical bill implementation will create an unreasonable financial hardship and the Commissioner approves the request.

(4) An insurance carrier who asserts an exemption under this subsection must provide all supporting documentation to the division within 15 days of a division request for documentation.

(5) Insurance carriers shall submit notification to the division prior to the beginning of each calendar year for which they will assert an exemption to the electronic medical bill processing requirements. The required notification must include:

(A) federal tax identification number of the insurance carrier;

(B) contact information, including but not limited to the name, physical address, and telephone number; and

(C) a description regarding facts related to the exemption under paragraph (3) of this subsection asserted by the insurance carrier.

(c) Agents. Health care providers and insurance carriers may contract with other entities for electronic medical bill processing. Insurance carriers and health care providers are responsible for the acts or omissions of their agents executed in the performance of services for the insurance carrier or health care provider.

(d) Electronic medical bill.

(1) An electronic medical bill is a medical bill submitted electronically by a health care provider or its agent.

(2) An insurance carrier shall take final action not later than the 45th day after the date the insurance carrier received a complete electronic medical bill.

(e) Acknowledgment.

(1) An insurance carrier must acknowledge receipt of an electronic medical bill by returning an acknowledgment within two working days of receipt of the electronic submission. The time frame for returning an incomplete medical bill contained in §133.200 of this title (relating to Insurance Carrier Receipt of Medical Bills from Health Care Providers) does not apply to an electronic medical bill.

(A) Notification of a rejection is transmitted in an acknowledgment when an electronic medical bill does not meet the definition of a complete electronic medical bill or does not meet the edits defined in the applicable standard.

(B) A health care provider may not submit a duplicate electronic medical bill earlier than 45 days from the date submitted if an insurance carrier acknowledged receipt of the original complete electronic medical bill. A health care provider may submit a corrected medical bill electronically to the insurance carrier after receiving notification of a rejection. The corrected medical bill is submitted as a new, original bill.

(2) Acknowledgment of a medical bill is not an admission of liability by the insurance carrier. The insurance carrier may subsequently deny a medical bill for liability or other issues within the 45-day medical bill processing timeframe contained in Labor Code §408.027.

(f) Electronic remittance notification.

(1) An electronic remittance notification is an explanation of benefits (EOB), submitted electronically regarding payment or denial of a medical bill, recoupment request, or receipt of a refund.

(2) An insurance carrier must provide an electronic remittance notification no later than 45 days after receipt of a complete electronic medical bill or within 5 days of generating a payment. This requirement applies only to the date the electronic remittance is sent and does not modify the medical bill processing timeframes contained in Labor Code §408.027.

(g) Electronic documentation. Electronic documentation consists of medical documentation submitted electronically that is related to an electronic medical bill.

(h) This section is effective August 1, 2011.

History

Source Note: The provisions of this §133.501 adopted to be effective August 10, 2006, 31 TexReg 6230; amended to be effective August 1, 2011, 36 TexReg 929.

28 Tex. Admin. Code § 133.502 Electronic Medical Billing Supplemental Data Requirements

(a) In addition to the data requirements and standards adopted under §133.500(a) of this title (relating to Electronic Formats for Electronic Medical Bill Processing), all professional, institutional or hospital, and dental electronic medical bills submitted before January 1, 2012, must contain:

(1) the telephone number of the submitter;

(2) the workers' compensation claim number assigned by the insurance carrier or, if that number is not known by the health care provider, a default value of "UNKNOWN";

(3) the injured employee's Social Security number as the subscriber member identification number;

(4) the injured employee's date of injury;

(5) the rendering health care provider's state provider license number;

(6) the referring health care provider's state provider license number;

(7) the billing provider's state provider license number, if the billing provider has a state provider license number;

(8) the attending physician's state medical license number, when applicable;

(9) the operating physician's state medical license number, when applicable;

(10) the claim supplemental information, when electronic documentation is submitted with an electronic medical bill; and

(11) the resubmission condition code, when the electronic medical bill is a duplicate, request for reconsideration, or other resubmission.

(b) In reporting the injured employee Social Security number and the state license numbers under subsection (a) of this section, health care providers must follow the data content and format requirements contained in §133.10 of this title (relating to Required Billing Forms/Formats).

(c) In addition to the data requirements contained in the standards adopted under §133.500(c) of this title, all professional, institutional or hospital, and dental electronic medical bills submitted on or after January 1, 2012, must contain:

(1) the telephone number of the submitter;

(2) the workers' compensation claim number assigned by the insurance carrier or, if that number is not known by the health care provider, a default value of "UNKNOWN";

(3) the injured employee's date of injury;

(4) the claim supplemental information, when electronic documentation is submitted with an electronic medical bill;

(5) the resubmission condition code, when the electronic medical bill is a duplicate, request for reconsideration, or other resubmission; and

(6) for a designated doctor and a health care provider performing a test or evaluation as a result of a designated doctor's referral, the assignment number in the prior authorization field.

(d) In addition to the data requirements contained in the standards adopted under §133.500 of this title, all pharmacy electronic medical bills must contain:

(1) the dispensing pharmacy's National Provider Identification number;

(2) the prescribing doctor's National Provider Identification number; and

(3) for a health care provider performing a test or evaluation as a result of a designated doctor's referral, the assignment number in the prior authorization field.

(e) In reporting the resubmission condition code under this section, the resubmission condition codes must have the definitions specified in §133.10(j) of this title.

(f) This section does not apply to paper medical bills submitted for payment under §133.10(b) of this title.

(g) This section is effective for medical bills submitted on or after June 1, 2024, including medical bills submitted as a result of an examination that was ordered or referred as the result of an order issued on or after June 1, 2024.

History

Source Note: The provisions of this §133.502 adopted to be effective August 1, 2011, 36 TexReg 929; amended to be effective June 1, 2024, 49 TexReg 1478.

Chapter 134 BENEFITS--GUIDELINES FOR MEDICAL SERVICES, CHARGES, AND PAYMENTS

Subchapter A MEDICAL REIMBURSEMENT POLICIES

28 Tex. Admin. Code § 134.1 Medical Reimbursement

(a) "Maximum allowable reimbursement" (MAR), when used in this chapter, is defined as the maximum amount payable to a health care provider in the absence of a contractual fee arrangement that is consistent with §413.011 of the Labor Code, and Division rules.

(b) Medical reimbursement for health care services provided to injured employees subject to a workers' compensation health care network established under Insurance Code Chapter 1305 shall be made in accordance with the provisions of Insurance Code Chapter 1305, except as provided in subsections (c) and (d) of this section.

(c) Examinations conducted pursuant to Labor Code §§408.004, 408.0041, and 408.151 shall be reimbursed in accordance with §134.204 of this chapter (relating to Medical Fee Guideline for Workers' Compensation Specific Services).

(d) Examinations conducted pursuant to Labor Code §408.0042 shall be reimbursed in accordance with §126.14 of this title (relating to Treating Doctor Examination to Define the Compensable Injury).

(e) Medical reimbursement for health care not provided through a workers' compensation health care network shall be made in accordance with:

(1) the Division's fee guidelines;

(2) a negotiated contract; or

(3) in the absence of an applicable fee guideline or a negotiated contract, a fair and reasonable reimbursement amount as specified in subsection (f) of this section.

(f) Fair and reasonable reimbursement shall:

(1) be consistent with the criteria of Labor Code §413.011;

(2) ensure that similar procedures provided in similar circumstances receive similar reimbursement; and

(3) be based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments, if available.

(g) The insurance carrier shall consistently apply fair and reasonable reimbursement amounts and maintain, in reproducible format, documentation of the insurance carrier's methodology(ies) establishing fair and reasonable reimbursement amounts. Upon request of the Division, an insurance carrier shall provide copies of such documentation.

History

Source Note: The provisions of this §134.1 adopted to be effective May 2, 2006, 31 TexReg 3561; amended to be effective March 1, 2008, 33 TexReg 364.

28 Tex. Admin. Code § 134.2 Incentive Payments for Workers' Compensation Underserved Areas

(a) When required by Division rule, an incentive payment shall be added to the maximum allowable reimbursement (MAR) for services performed in a designated workers' compensation underserved area.

(b) The following list of ZIP Codes comprise the Division designated workers' compensation underserved areas: 75134, 75135, 75161, 75181, 75212, 75410, 75558, 75603, 75630, 75650, 75653, 75654, 75658, 75660, 75663, 75666, 75667, 75672, 75687, 75692, 75704, 75750, 75752, 75763, 75789, 75849, 75915, 75933, 75949, 75964, 75969, 75973, 75980, 76023, 76055, 76060, 76066, 76088, 76119, 76226, 76239, 76247, 76271, 76380, 76443, 76534, 76621, 76640, 76657, 76682, 76711, 76932, 76935, 77033, 77050, 77053, 77078, 77336, 77354, 77363, 77389, 77396, 77466, 77496, 77517, 77561, 77632, 77808, 77905, 77968, 78025, 78123, 78132, 78140, 78141, 78210, 78220, 78239, 78242, 78333, 78335, 78343, 78368, 78370, 78383, 78407, 78535, 78574, 78583, 78590, 78605, 78640, 78669, 78802, 78830, 78836, 78877, 78884, 78935, 78960, 79010, 79107, 79108, 79114, 79118, 79311, 79367, 79408, 79411, 79511, 79521, 79536, 79561, 79563, 79778, 79782, 79836, 79838, 79849, 79901, 79922, 79934.

History

Source Note: The provisions of this §134.2 adopted to be effective March 1, 2008, 33 TexReg 364.

Subchapter B MISCELLANEOUS REIMBURSEMENT

28 Tex. Admin. Code § 134.100 Reimbursement of Treating Doctor for Attendance at Required Medical Examination

(a) When an injured employee's treating doctor is present at a required medical examination in accordance with §126.6 of this title (relating to Required Medical Examination), the insurance carrier shall reimburse the treating doctor for time as follows:

(1) at a rate of $100 an hour limited to four hours, unless the insurance carrier pre-approves extended time; and

(2) in quarter hour increments with any amount over 10 minutes considered an additional quarter hour.

(b) Reimbursement is limited to the time required to travel from the treating doctor's usual place of business to the place of the examination. In addition, it includes the duration of the examination and the time required to return from the examination location to the treating doctor's usual place of business. The travel shall be by the most direct route. This time does not include time spent for meals or other elective activities engaged in by the doctor.

(c) The treating doctor shall submit a request for reimbursement in accordance with §133.10 of this title (relating to Required Billing Forms/Formats).

(d) The injured employee's treating doctor shall be the only doctor permitted to attend and charge for the attendance at the examination.

(e) This section shall apply to all dates of travel on or after May 2, 2006.

History

Source Note: The provisions of this §134.100 adopted to be effective May 2, 2006, 31 TexReg 3561.

28 Tex. Admin. Code § 134.110 Reimbursement of Injured Employee for Travel Expenses Incurred

(a) An injured employee may request reimbursement from the insurance carrier if the injured employee has incurred travel expenses when:

(1) medical treatment for the compensable injury is not reasonably available within 30 miles from where the injured employee lives and the distance traveled to secure medical treatment is greater than 30 miles one-way; or

(2) the distance traveled to attend a designated doctor examination, required medical examination, or post designated doctor treating or referral doctor examination is greater than 30 miles one-way.

(b) The injured employee shall submit the request for reimbursement to the insurance carrier within one year of the date the injured employee incurred the expenses.

(c) The injured employee's request for reimbursement shall be in the form and manner required by the division and shall include documentation or evidence (such as itemized receipts) of the amount of the expense the injured employee incurred.

(d) The insurance carrier shall reimburse the injured employee based on the travel rate for state employees on the date travel occurred, using mileage for the shortest reasonable route.

(1) Travel mileage is measured from the actual point of departure to the health care provider's location when the point of departure is:

(A) the employee's home; or

(B) the employee's place of employment.

(2) If the point of departure is not the employee's home or place of employment, then travel mileage shall be measured from the health care provider's location to the nearest of the following locations:

(A) the employee's home;

(B) the place of employment; or

(3) Total reimbursable mileage is based on round trip mileage.

(4) When an injured employee's travel expenses reasonably include food and lodging, the insurance carrier shall reimburse for the actual expenses not to exceed the current rate for state employees on the date the expense is incurred.

(e) The insurance carrier shall pay or deny the injured employee's request for reimbursement submitted in accordance with subsection (c) of this section within 45 days of receipt.

(f) If the insurance carrier does not reimburse the full amount requested, partial payment or denial of payment shall include a plain language explanation of the reason(s) for the reduction or denial. The insurance carrier shall inform the injured employee of the injured employee's right to request a benefit review conference in accordance with §141.1 of this title (relating to Requesting and Setting a Benefit Review Conference).

History

Source Note: The provisions of this §134.110 adopted to be effective May 2, 2006, 31 TexReg 3561; amended to be effective March 30, 2014, 39 TexReg 2102.

28 Tex. Admin. Code § 134.120 Reimbursement for Medical Documentation

(a) An insurance carrier is not required to reimburse initial medical documentation provided to the insurance carrier in accordance with §133.210 of this title (relating to Medical Documentation).

(b) An insurance carrier shall separately reimburse subsequent copies of medical documentation requested by the insurance carrier in accordance with §133.210 of this title.

(c) Upon request, the health care provider shall provide the injured employee, or the injured employee's representative, an initial copy of the medical documentation without charge. The requestor shall reimburse the health care provider for subsequent requests of the same medical documentation.

(d) If the injured employee, or the injured employee's representative, requests creation of medical documentation, such as a medical narrative, the requestor shall reimburse the health care provider for this additional information.

(e) The health care provider shall provide copies of any requested or required documentation to the Division at no charge.

(f) The reimbursements for medical documentation are:

(1) copies of medical documentation--$.50 per page;

(2) copies of hospital records--an initial fee of $5.00 plus $.50 per page for the first 20 pages, then $.30 per page for records over 20 pages;

(3) microfilm--$.50 per page;

(4) copies of X-ray films--$8.00 per film;

(5) narrative reports:

(A) one to two pages--$100;

(B) each page after two pages--$40 per page.

(g) Narrative reports are defined as original documents explaining the assessment, diagnosis, and plan of treatment for an injured employee written or orally transcribed and created at the written request of the insurance carrier or the Division. Narrative reports shall provide information beyond that required by prescribed medical reports and/or records. A narrative report should be single spaced on letter-size paper or equivalent electronic document format. Clinical or progress notes do not constitute a narrative report.

History

Source Note: The provisions of this §134.120 adopted to be effective May 2, 2006, 31 TexReg 3561.

28 Tex. Admin. Code § 134.130 Interest for Late Payment on Medical Bills and Refunds

(a) Insurance carriers shall pay interest on medical bills paid on or after the 60th day after the insurance carrier originally received the complete medical bill, in accordance with §133.340 of this title (relating to Medical Payments and Denials).

(b) Health care providers shall pay interest to insurance carriers on requests for refunds paid later than the 60th day after the date the health care provider received the request for refund, in accordance with §133.260 of this title (relating to Refunds).

(c) The rate of interest to be paid shall be the rate calculated in accordance with Labor Code §401.023 and in effect on the date the payment was made.

(d) Interest shall be calculated as follows:

(1) multiply the rate of interest by the amount on which interest is due (to determine the annual amount of interest);

(2) divide the annual amount of interest by 365 (to determine the daily interest amount); then

(3) multiply the daily interest amount by the number of days of interest to which the recipient is entitled under subsection (a) or (b) of this section.

(e) The percentage of interest for each quarter may be obtained by accessing the Texas Department of Insurance's website, www.tdi.state.tx.us.

(f) This section shall apply to all dates of service on or after May 2, 2006.

History

Source Note: The provisions of this §134.130 adopted to be effective May 2, 2006, 31 TexReg 3561.

28 Tex. Admin. Code § 134.150 Reimbursement of Services Provided by a Federal Military Treatment Facility

(a) This section applies, regardless of the date of injury, to medical services provided on or after January 1, 2020, in a federal military treatment facility (FMTF) as defined in Labor Code §413.0112(a) (relating to Reimbursement of Federal Military Treatment Facility).

(b) Reimbursement for medical services provided to an injured employee shall be the amount of the FMTF's charges as determined under Title 32, Code of Federal Regulations, Part 220 (concerning Collection of Reasonable Charges for Healthcare Services). Additionally, charges may include interest, administrative penalties, or collection fees related to medical benefits.

(c) An FMTF is not required to comply with health care provider billing or preauthorization requirements in Chapters 133 (concerning General Medical Provisions) and 134 (concerning Benefits--Guidelines for Medical Services, Charges, and Payments) of this title. An insurance carrier shall process a medical bill from an FMTF and make payment in accordance with Chapters 133 and 134, except as provided in Labor Code §413.0112. The insurance carrier shall contact the FMTF to obtain any information necessary to process a medical bill and document the name and telephone number of the person who supplied the information.

(d) Notwithstanding the requirements of Chapter 133, an insurance carrier shall process professional and institutional medical services submitted on a single bill by an FMTF. An insurance carrier shall identify reimbursement for professional and institutional services separately on the explanation of benefits form.

(e) The insurance carrier may only deny payment of medical services provided by an FMTF for reasons of medical necessity, compensability, extent of injury, or liability.

(f) An insurance carrier shall forward to the division, within 14 calendar days of receipt, in the form and manner prescribed by the division, the first medical bill for an injured employee that it receives from an FMTF.

(g) An insurance carrier shall report FMTF medical bills in accordance with Chapter 134, Subchapter I, of this title. FMTF medical bills are subject to §102.9 of this title (concerning Submission of Information Requested by the Commission) including medical bills not reported in accordance with §134.806(a)(3) (concerning Records Excluded from Reporting).

History

Source Note: The provisions of this §134.150 adopted to be effective December 11, 2019, 44 TexReg 7549.

28 Tex. Admin. Code § 134.155 Federal Military Treatment Facility Disputes

(a) Disputes over charges billed by a federal military treatment facility (FMTF):

(1) If an insurance carrier denies payment of a medical bill based on medical necessity, the medical necessity dispute shall be initiated under §133.308 of this title (concerning MDR of Medical Necessity Disputes):

(A) Notwithstanding Chapter 133, Subchapter D, of this title (concerning Dispute of Medical Bills), an injured employee is not required to request reconsideration prior to requesting medical dispute resolution;

(B) Notwithstanding §133.308(f)(2)(B), an injured employee may be a requestor in a medical necessity dispute, and

(2) For all other disputes, a party may request a benefit review conference as described under Chapter 141 of this title (concerning Dispute Resolution--Benefit Review Conference).

(b) Except as provided in this section, an FMTF dispute will be conducted in accordance with the division's rules for dispute resolution in §133.308 or Chapters 140 - 147 of this title.

(c) In accordance with Labor Code §504.055 (relating to Expedited Provision of Medical Benefits for Certain Injuries Sustained by First Responders in Course and Scope of Employment) a request for an FMTF dispute that involves a first responder's request for payment of medical expenses will be accelerated by the division and given priority. A first responder shall provide notice to the division that the request involves a first responder.

History

Source Note: The provisions of this §134.155 adopted to be effective December 11, 2019, 44 TexReg 7549.

Subchapter C MEDICAL FEE GUIDELINES

28 Tex. Admin. Code § 134.201 Medical Fee Guideline for Medical Treatments and Services Provided under the Texas Workers' Compensation Act

(a) The commission adopts by reference herein, the Texas Workers' Compensation Commission Medical Fee Guideline 1996. The Guideline shall be effective for all medical treatments, services, durable medical equipment and pharmaceuticals provided on or after April 1, 1996. Medical treatments, services, and durable medical equipment provided prior to April 1, 1996, shall be subject to the 1991 Texas Workers' Compensation Commission Medical Fee Guideline (December 1991 Version). Pharmaceuticals provided prior to April 1, 1996, shall be subject to §134.501 of this title (relating to the Pharmaceutical Fee Guideline). Copies of both guidelines may be obtained from the Publication Department of the Texas Workers' Compensation Commission, 4000 South IH-35, Southfield Building, Austin, Texas 78704.

(b) An insurance carrier or health care provider which willfully or intentionally violates the provisions of this rule commits an administrative violation under Texas Labor Code, §415.002 or §415.003, and may be assessed a penalty. In addition, an insurance carrier or health care provider which repeatedly violates these statutory provisions may be assessed a penalty not to exceed $10,000 under the Texas Labor Code, §415.021, and may be subject to the sanctions specified in the Texas Labor Code, §415.023, including, but not limited to, restriction or revocation of the right to receive reimbursement under the Texas Workers' Compensation Act.

History

Source Note: The provisions of this §134.201 adopted to be effective April 1, 1996, 21 TexReg 2361.

28 Tex. Admin. Code § 134.203 Medical Fee Guideline for Professional Services

(a) Applicability of this rule is as follows:

(1) This section applies to professional medical services provided in the Texas workers' compensation system, other than:

(A) workers' compensation specific codes, services, and programs described in §134.204 of this title (relating to Medical Fee Guideline for Workers' Compensation Specific Services);

(B) prescription drugs or medicine;

(D) the facility services of a hospital or other health care facility; and

(E) medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in Insurance Code Chapter 1305.

(2) This section applies to professional medical services provided on or after March 1, 2008.

(3) For professional services provided between August 1, 2003 and March 1, 2008, §134.202 of this title (relating to Medical Fee Guideline) applies.

(4) For professional services provided prior to August 1, 2003, §134.201 of this title (relating to Medical Fee Guideline for Medical Treatments and Services Provided under the Texas Workers' Compensation Act) and §134.302 of this title (relating to Dental Fee Guideline) apply.

(5) "Medicare payment policies" when used in this section, shall mean reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies as set forth in the Centers for Medicare and Medicaid Services (CMS) payment policies specific to Medicare.

(6) Notwithstanding Medicare payment policies, chiropractors may be reimbursed for services provided within the scope of their practice act.

(7) Specific provisions contained in the Texas Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including this chapter, shall take precedence over any conflicting provision adopted or utilized by CMS in administering the Medicare program. Independent Review Organization (IRO) decisions regarding medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title (relating to MDR by Independent Review Organizations), which are made on a case-by-case basis, take precedence in that case only, over any Division rules and Medicare payment policies.

(8) Whenever a component of the Medicare program is revised, use of the revised component shall be required for compliance with Division rules, decisions, and orders for professional services rendered on or after the effective date, or after the effective date or the adoption date of the revised component, whichever is later.

(b) For coding, billing, reporting, and reimbursement of professional medical services, Texas workers' compensation system participants shall apply the following:

(1) Medicare payment policies, including its coding; billing; correct coding initiatives (CCI) edits; modifiers; bonus payments for health professional shortage areas (HPSAs) and physician scarcity areas (PSAs); and other payment policies in effect on the date a service is provided with any additions or exceptions in the rules.

(2) A 10 percent incentive payment shall be added to the maximum allowable reimbursement (MAR) for services outlined in subsections (c) - (f) and (h) of this section that are performed in designated workers' compensation underserved areas in accordance with §134.2 of this title (relating to Incentive Payments for Workers' Compensation Underserved Areas).

(c) To determine the MAR for professional services, system participants shall apply the Medicare payment policies with minimal modifications.

(1) For service categories of Evaluation & Management, General Medicine, Physical Medicine and Rehabilitation, Radiology, Pathology, Anesthesia, and Surgery when performed in an office setting, the established conversion factor to be applied is $52.83. For Surgery when performed in a facility setting, the established conversion factor to be applied is $66.32.

(2) The conversion factors listed in paragraph (1) of this subsection shall be the conversion factors for calendar year 2008. Subsequent year's conversion factors shall be determined by applying the annual percentage adjustment of the Medicare Economic Index (MEI) to the previous year's conversion factors, and shall be effective January 1st of the new calendar year. The following hypothetical example illustrates this annual adjustment activity if the Division had been using this MEI annual percentage adjustment: The 2006 Division conversion factor of $50.83 (with the exception of surgery) would have been multiplied by the 2007 MEI annual percentage increase of 2.1 percent, resulting in the $51.90 (with the exception of surgery) Division conversion factor in 2007.

(d) The MAR for Healthcare Common Procedure Coding System (HCPCS) Level II codes A, E, J, K, and L shall be determined as follows:

(1) 125 percent of the fee listed for the code in the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) fee schedule;

(2) if the code has no published Medicare rate, 125 percent of the published Texas Medicaid fee schedule, durable medical equipment (DME)/medical supplies, for HCPCS; or

(3) if neither paragraph (1) nor (2) of this subsection apply, then as calculated according to subsection (f) of this section.

(e) The MAR for pathology and laboratory services not addressed in subsection (c)(1) of this section or in other Division rules shall be determined as follows:

(1) 125 percent of the fee listed for the code in the Medicare Clinical Fee Schedule for the technical component of the service; and,

(2) 45 percent of the Division established MAR for the code derived in paragraph (1) of this subsection for the professional component of the service.

(f) For products and services for which no relative value unit or payment has been assigned by Medicare, Texas Medicaid as set forth in §134.203(d) or §134.204(f) of this title, or the Division, reimbursement shall be provided in accordance with §134.1 of this title (relating to Medical Reimbursement).

(g) When there is a negotiated or contracted amount that complies with Labor Code §413.011, reimbursement shall be the negotiated or contracted amount that applies to the billed services.

(h) When there is no negotiated or contracted amount that complies with Labor Code §413.011, reimbursement shall be the least of the:

(1) MAR amount;

(2) health care provider's usual and customary charge, unless directed by Division rule to bill a specific amount; or

(3) fair and reasonable amount consistent with the standards of §134.1 of this title.

(i) Health care providers (HCPs) shall bill their usual and customary charges using the most current Level I (CPT codes) and Level II HCPCS codes. HCPs shall submit medical bills in accordance with the Labor Code and Division rules.

(j) Modifying circumstance shall be identified by use of the appropriate modifier following the appropriate Level I (CPT codes) and Level II HCPCS codes. Division-specific modifiers are identified and shall be applied in accordance with §134.204(n) of this title (relating to Medical Fee Guideline for Workers' Compensation Specific Services). When two or more modifiers are applicable to a single CPT code, indicate each modifier on the bill.

History

Source Note: The provisions of this §134.203 adopted to be effective March 1, 2008, 33 TexReg 364.

28 Tex. Admin. Code § 134.204 Medical Fee Guideline for Workers' Compensation Specific Services

(a) Applicability of this rule is as follows:

(1) This section applies to workers' compensation specific codes, services and programs provided in the Texas workers' compensation system, other than:

(A) professional medical services described in §134.203 of this title (relating to Medical Fee Guideline for Professional Services);

(B) prescription drugs or medicine;

(D) the facility services of a hospital or other health care facility; and

(E) medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in §134.1 of this title and Insurance Code Chapter 1305.

(2) This section applies to workers' compensation specific codes, services and programs provided from March 1, 2008 until September 1, 2016.

(3) For workers' compensation specific codes, services and programs provided between August 1, 2003 and March 1, 2008, §134.202 of this title (relating to Medical Fee Guideline) applies.

(4) For workers' compensation specific codes, services and programs provided prior to August 1, 2003, §134.201 of this title (relating to Medical Fee Guideline for Medical Treatments and Services Provided under the Texas Workers' Compensation Act) and §134.302 of this title (relating to Dental Fee Guideline) apply.

(5) Specific provisions contained in the Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including this chapter, shall take precedence over any conflicting provision adopted or utilized by the Centers for Medicare and Medicaid Services (CMS) in administering the Medicare program. Independent Review Organization (IRO) decisions regarding medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title (relating to MDR by Independent Review Organizations), which are made on a case-by-case basis, take precedence in that case only, over any Division rules and Medicare payment policies.

(b) Payment Policies Relating to coding, billing, and reporting for workers' compensation specific codes, services, and programs are as follows:

(1) Billing. Health care providers (HCPs) shall bill their usual and customary charges using the most current Level I (CPT codes) and Level II Healthcare Common Procedure Coding System (HCPCS) codes. HCPs shall submit medical bills in accordance with the Labor Code and Division rules.

(2) Modifiers. Modifying circumstance shall be identified by use of the appropriate modifier following the appropriate Level I (CPT codes) and Level II HCPCS codes. Where HCPCS modifiers apply, carriers shall treat them in accordance with Medicare and Texas Medicaid rules. Additionally, Division-specific modifiers are identified in subsection (n) of this section. When two or more modifiers are applicable to a single HCPCS code, indicate each modifier on the bill.

(3) Incentive Payments. A 10 percent incentive payment shall be added to the maximum allowable reimbursement (MAR) for services outlined in subsections (d), (e), (g), (i), (j), and (k) of this section that are performed in designated workers' compensation underserved areas in accordance with §134.2 of this title (relating to Incentive Payments for Workers' Compensation Underserved Areas).

(c) When there is a negotiated or contracted amount that complies with Labor Code §413.011, reimbursement shall be the negotiated or contracted amount that applies to the billed services.

(d) When there is no negotiated or contracted amount that complies with §413.011 of the Labor Code, reimbursement shall be the least of the:

(1) MAR amount;

(2) health care provider's usual and customary charge, unless directed by Division rule to bill a specific amount; or

(3) fair and reasonable amount consistent with the standards of §134.1 of this title (relating to Medical Reimbursement).

(e) Case Management Responsibilities by the Treating Doctor is as follows:

(1) Team conferences and telephone calls shall include coordination with an interdisciplinary team.

(A) Team members shall not be employees of the treating doctor.

(B) Team conferences and telephone calls must be outside of an interdisciplinary program. Documentation shall include the purpose and outcome of conferences and telephone calls, and the name and specialty of each individual attending the team conference or engaged in a phone call.

(2) Team conferences and telephone calls should be triggered by a documented change in the condition of the injured employee and performed for the purpose of coordination of medical treatment and/or return to work for the injured employee.

(3) Contact with one or more members of the interdisciplinary team more often than once every 30 days shall be limited to the following:

(A) coordinating with the employer, employee, or an assigned medical or vocational case manager to determine return to work options;

(B) developing or revising a treatment plan, including any treatment plans required by Division rules;

(D) coordinating the care of employees with catastrophic or multiple injuries requiring multiple specialties.

(4) Case management services require the treating doctor to submit documentation that identifies any HCP that contributes to the case management activity. Case management services shall be billed and reimbursed as follows:

(A) CPT Code 99361.

(i) Reimbursement to the treating doctor shall be $113. Modifier "W1" shall be added.

(ii) Reimbursement to the referral HCP shall be $28 when a HCP contributes to the case management activity.

(B) CPT Code 99362.

(i) Reimbursement to the treating doctor shall be $198. Modifier "W1" shall be added.

(ii) Reimbursement to the referral HCP shall be $50 when a HCP contributes to the case management activity.

(i) Reimbursement to the treating doctor shall be $18. Modifier "W1" shall be added.

(ii) Reimbursement to a referral HCP contributing to this case management activity shall be $5.

(D) CPT Code 99372.

(i) Reimbursement to the treating doctor shall be $46. Modifier "W1" shall be added.

(ii) Reimbursement to the referral HCP contributing to this case management activity shall be $12.

(E) CPT Code 99373.

(i) Reimbursement to the treating doctor shall be $90. Modifier "W1" shall be added.

(ii) Reimbursement to the referral HCP contributing to this case management action shall be $23.

(f) To determine the MAR amount for home health services provided through a licensed home health agency, the MAR shall be 125 percent of the published Texas Medicaid fee schedule for home health agencies.

(g) The following applies to Functional Capacity Evaluations (FCEs). A maximum of three FCEs for each compensable injury shall be billed and reimbursed. FCEs ordered by the Division shall not count toward the three FCEs allowed for each compensable injury. FCEs shall be billed using CPT Code 97750 with modifier "FC." FCEs shall be reimbursed in accordance with §134.203(c)(1) of this title. Reimbursement shall be for up to a maximum of four hours for the initial test or for a Division ordered test; a maximum of two hours for an interim test; and, a maximum of three hours for the discharge test, unless it is the initial test. Documentation is required. FCEs shall include the following elements:

(1) A physical examination and neurological evaluation, which include the following:

(A) appearance (observational and palpation);

(B) flexibility of the extremity joint or spinal region (usually observational);

(D) vascular integrity;

(E) neurological tests to detect sensory deficit;

(F) myotomal strength to detect gross motor deficit; and

(G) reflexes to detect neurological reflex symmetry.

(2) A physical capacity evaluation of the injured area, which includes the following:

(A) range of motion (quantitative measurements using appropriate devices) of the injured joint or region; and

(B) strength/endurance (quantitative measures using accurate devices) with comparison to contralateral side or normative database. This testing may include isometric, isokinetic, or isoinertial devices in one or more planes.

(3) Functional abilities tests, which include the following:

(A) activities of daily living (standardized tests of generic functional tasks such as pushing, pulling, kneeling, squatting, carrying, and climbing);

(B) hand function tests that measure fine and gross motor coordination, grip strength, pinch strength, and manipulation tests using measuring devices;

(D) static positional tolerance (observational determination of tolerance for sitting or standing).

(h) The following shall be applied to Return To Work Rehabilitation Programs for billing and reimbursement of Work Conditioning/General Occupational Rehabilitation Programs, Work Hardening/Comprehensive Occupational Rehabilitation Programs, Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs, and Outpatient Medical Rehabilitation Programs. To qualify as a Division Return to Work Rehabilitation Program, a program should meet the specific program standards for the program as listed in the most recent Commission on Accreditation of Rehabilitation Facilities (CARF) Medical Rehabilitation Standards Manual, which includes active participation in recovery and return to work planning by the injured employee, employer and payor or carrier.

(1) Accreditation by the CARF is recommended, but not required.

(A) If the program is CARF accredited, modifier "CA" shall follow the appropriate program modifier as designated for the specific programs listed below. The hourly reimbursement for a CARF accredited program shall be 100 percent of the MAR.

(B) If the program is not CARF accredited, the only modifier required is the appropriate program modifier. The hourly reimbursement for a non-CARF accredited program shall be 80 percent of the MAR.

(2) For Division purposes, General Occupational Rehabilitation Programs, as defined in the CARF manual, are considered Work Conditioning.

(A) The first two hours of each session shall be billed and reimbursed as one unit, using CPT Code 97545 with modifier "WC." Each additional hour shall be billed using CPT Code 97546 with modifier "WC." CARF accredited Programs shall add "CA" as a second modifier.

(B) Reimbursement shall be $36 per hour. Units of less than one hour shall be prorated by 15 minute increments. A single 15 minute increment may be billed and reimbursed if greater than or equal to eight minutes and less than 23 minutes.

(3) For Division purposes, Comprehensive Occupational Rehabilitation Programs, as defined in the CARF manual, are considered Work Hardening.

(A) The first two hours of each session shall be billed and reimbursed as one unit, using CPT Code 97545 with modifier "WH." Each additional hour shall be billed using CPT Code 97546 with modifier "WH." CARF accredited Programs shall add "CA" as a second modifier.

(B) Reimbursement shall be $64 per hour. Units of less than one hour shall be prorated by 15 minute increments. A single 15 minute increment may be billed and reimbursed if greater than or equal to 8 minutes and less than 23 minutes.

(4) The following shall be applied for billing and reimbursement of Outpatient Medical Rehabilitation Programs.

(A) Program shall be billed and reimbursed using CPT Code 97799 with modifier "MR" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited Programs shall add "CA" as a second modifier.

(B) Reimbursement shall be $90 per hour. Units of less than one hour shall be prorated by 15 minute increments. A single 15 minute increment may be billed and reimbursed if greater than or equal to eight minutes and less than 23 minutes.

(5) The following shall be applied for billing and reimbursement of Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs.

(A) Program shall be billed and reimbursed using CPT Code 97799 with modifier "CP" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited Programs shall add "CA" as a second modifier.

(B) Reimbursement shall be $125 per hour. Units of less than one hour shall be prorated in 15 minute increments. A single 15 minute increment may be billed and reimbursed if greater than or equal to eight minutes and less than 23 minutes.

(i) The following shall apply to Designated Doctor Examinations.

(1) Designated Doctors shall perform examinations in accordance with Labor Code §§408.004, 408.0041 and 408.151 and Division rules, and shall be billed and reimbursed as follows:

(A) Impairment caused by the compensable injury shall be billed and reimbursed in accordance with subsection (j) of this section, and the use of the additional modifier "W5" is the first modifier to be applied when performed by a designated doctor;

(B) Attainment of maximum medical improvement shall be billed and reimbursed in accordance with subsection (j) of this section, and the use of the additional modifier "W5" is the first modifier to be applied when performed by a designated doctor;

(C) Extent of the employee's compensable injury shall be billed and reimbursed in accordance with subsection (k) of this section, with the use of the additional modifier "W6";

(D) Whether the injured employee's disability is a direct result of the work-related injury shall be billed and reimbursed in accordance with subsection (k) of this section, with the use of the additional modifier "W7";

(E) Ability of the employee to return to work shall be billed and reimbursed in accordance with subsection (k) of this section, with the use of the additional modifier "W8"; and

(F) Issues similar to those described in subparagraphs (A) - (E) of this paragraph shall be billed and reimbursed in accordance with subsection (k) of this section, with the use of the additional modifier "W9."

(2) When multiple examinations under the same specific Division order are performed concurrently under paragraph (1)(C) - (F) of this subsection:

(A) the first examination shall be reimbursed at 100 percent of the set fee outlined in subsection (k) of this section;

(B) the second examination shall be reimbursed at 50 percent of the set fee outlined in subsection (k) of this section; and

(j) Maximum Medical Improvement and/or Impairment Rating (MMI/IR) examinations shall be billed and reimbursed as follows:

(1) The total MAR for an MMI/IR examination shall be equal to the MMI evaluation reimbursement plus the reimbursement for the body area(s) evaluated for the assignment of an IR. The MMI/IR examination shall include:

(A) the examination;

(B) consultation with the injured employee;

(D) the preparation and submission of reports (including the narrative report, and responding to the need for further clarification, explanation, or reconsideration), calculation tables, figures, and worksheets; and,

(E) tests used to assign the IR, as outlined in the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides), as stated in the Act and Division rules in Chapter 130 of this title (relating to Impairment and Supplemental Income Benefits).

(2) An HCP shall only bill and be reimbursed for an MMI/IR examination if the doctor performing the evaluation (i.e., the examining doctor) is an authorized doctor in accordance with the Act and Division rules in Chapter 130 of this title.

(A) If the examining doctor, other than the treating doctor, determines MMI has not been reached, the MMI evaluation portion of the examination shall be billed and reimbursed in accordance with paragraph (3) of this subsection. Modifier "NM" shall be added.

(B) If the examining doctor determines MMI has been reached and there is no permanent impairment because the injury was sufficiently minor, an IR evaluation is not warranted and only the MMI evaluation portion of the examination shall be billed and reimbursed in accordance with paragraph (3) of this subsection.

(C) If the examining doctor determines MMI has been reached and an IR evaluation is performed, both the MMI evaluation and the IR evaluation portions of the examination shall be billed and reimbursed in accordance with paragraphs (3) and (4) of this subsection.

(3) The following applies for billing and reimbursement of an MMI evaluation.

(A) An examining doctor who is the treating doctor shall bill using CPT Code 99455 with the appropriate modifier.

(i) Reimbursement shall be the applicable established patient office visit level associated with the examination.

(ii) Modifiers "V1", "V2", "V3", "V4", or "V5" shall be added to the CPT code to correspond with the last digit of the applicable office visit.

(B) If the treating doctor refers the injured employee to another doctor for the examination and certification of MMI (and IR); and, the referral examining doctor has:

(i) previously been treating the injured employee, then the referral doctor shall bill the MMI evaluation in accordance with paragraph (3)(A) of this subsection; or,

(ii) not previously treated the injured employee, then the referral doctor shall bill the MMI evaluation in accordance with paragraph (3)(C) of this subsection.

(4) The following applies for billing and reimbursement of an IR evaluation.

(A) The HCP shall include billing components of the IR evaluation with the applicable MMI evaluation CPT code. The number of body areas rated shall be indicated in the units column of the billing form.

(B) When multiple IRs are required as a component of a designated doctor examination under §130.6 of this title (relating to Designated Doctor Examinations for Maximum Medical Improvement and/or Impairment Ratings), the designated doctor shall bill for the number of body areas rated and be reimbursed $50 for each additional IR calculation. Modifier "MI" shall be added to the MMI evaluation CPT code.

(i) Musculoskeletal body areas are defined as follows:

(I) spine and pelvis;

(II) upper extremities and hands; and,

(III) lower extremities (including feet).

(ii) The MAR for musculoskeletal body areas shall be as follows.

(I) $150 for each body area if the Diagnosis Related Estimates (DRE) method found in the AMA Guides 4th edition is used.

(II) If full physical evaluation, with range of motion, is performed:

(-a-) $300 for the first musculoskeletal body area; and

(-b-) $150 for each additional musculoskeletal body area.

(iii) If the examining doctor performs the MMI examination and the IR testing of the musculoskeletal body area(s), the examining doctor shall bill using the appropriate MMI CPT code with modifier "WP." Reimbursement shall be 100 percent of the total MAR.

(iv) If, in accordance with §130.1 of this title (relating to Certification of Maximum Medical Improvement and Evaluation of Permanent Impairment), the examining doctor performs the MMI examination and assigns the IR, but does not perform the range of motion, sensory, or strength testing of the musculoskeletal body area(s), then the examining doctor shall bill using the appropriate MMI CPT code with CPT modifier "26." Reimbursement shall be 80 percent of the total MAR.

(v) If a HCP, other than the examining doctor, performs the range of motion, sensory, or strength testing of the musculoskeletal body area(s), then the HCP shall bill using the appropriate MMI CPT code with modifier "TC." In accordance with §130.1 of this title, the HCP must be certified. Reimbursement shall be 20 percent of the total MAR.

(D) Non-musculoskeletal body areas shall be billed and reimbursed using the appropriate CPT code(s) for the test(s) required for the assignment of IR.

(i) Non-musculoskeletal body areas are defined as follows:

(I) body systems;

(II) body structures (including skin); and,

(III) mental and behavioral disorders.

(ii) For a complete list of body system and body structure non-musculoskeletal body areas, refer to the appropriate AMA Guides.

(iii) When the examining doctor refers testing for non-musculoskeletal body area(s) to a specialist, then the following shall apply:

(I) The examining doctor (e.g., the referring doctor) shall bill using the appropriate MMI CPT code with modifier "SP" and indicate one unit in the units column of the billing form. Reimbursement shall be $50 for incorporating one or more specialists' report(s) information into the final assignment of IR. This reimbursement shall be allowed only once per examination.

(II) The referral specialist shall bill and be reimbursed for the appropriate CPT code(s) for the tests required for the assignment of IR. Documentation is required.

(iv) When there is no test to determine an IR for a non-musculoskeletal condition:

(I) The IR is based on the charts in the AMA Guides. These charts generally show a category of impairment and a range of percentage ratings that fall within that category.

(II) The impairment rating doctor must determine and assign a finite whole percentage number rating from the range of percentage ratings.

(III) Use of these charts to assign an IR is equivalent to assigning an IR by the DRE method as referenced in subparagraph (C)(ii)(I) of this paragraph.

(v) The MAR for the assignment of an IR in a non-musculoskeletal body area shall be $150.

(5) If the examination for the determination of MMI and/or the assignment of IR requires testing that is not outlined in the AMA Guides, the appropriate CPT code(s) shall be billed and reimbursed in addition to the fees outlined in paragraphs (3) and (4) of this subsection.

(6) The treating doctor is required to review the certification of MMI and assignment of IR performed by another doctor, as stated in the Act and Division Rules, Chapter 130 of this title. The treating doctor shall bill using CPT Code 99455 with modifier "VR" to indicate a review of the report only, and shall be reimbursed $50.

(k) The following shall apply to Return to Work (RTW) and/or Evaluation of Medical Care (EMC) Examinations. When conducting a Division or insurance carrier requested RTW/EMC examination, the examining doctor shall bill and be reimbursed using CPT Code 99456 with modifier "RE." In either instance of whether MMI/IR is performed or not, the reimbursement shall be $500 in accordance with subsection (i) of this section and shall include Division-required reports. Testing that is required shall be billed using the appropriate CPT codes and reimbursed in addition to the examination fee.

(l) The following shall apply to Work Status Reports. When billing for a Work Status Report that is not conducted as a part of the examinations outlined in subsections (i) and (j) of this section, refer to §129.5 of this title (relating to Work Status Reports).

(m) The following shall apply to Treating Doctor Examination to Define the Compensable Injury. When billing for this type of examination, refer to §126.14 of this title (relating to Treating Doctor Examination to Define Compensable Injury).

(n) The following Division Modifiers shall be used by HCPs billing professional medical services for correct coding, reporting, billing, and reimbursement of the procedure codes.

(1) CA, Commission on Accreditation of Rehabilitation Facilities (CARF) Accredited programs--This modifier shall be used when a HCP bills for a Return To Work Rehabilitation Program that is CARF accredited.

(2) CP, Chronic Pain Management Program--This modifier shall be added to CPT Code 97799 to indicate Chronic Pain Management Program services were performed.

(3) FC, Functional Capacity--This modifier shall be added to CPT Code 97750 when a functional capacity evaluation is performed.

(4) MR, Outpatient Medical Rehabilitation Program--This modifier shall be added to CPT Code 97799 to indicate Outpatient Medical Rehabilitation Program services were performed.

(5) MI, Multiple Impairment Ratings--This modifier shall be added to CPT Code 99455 when the designated doctor is required to complete multiple impairment ratings calculations.

(6) NM, Not at Maximum Medical Improvement (MMI)--This modifier shall be added to the appropriate MMI CPT code to indicate that the injured employee has not reached MMI when the purpose of the examination was to determine MMI.

(7) RE, Return to Work (RTW) and/or Evaluation of Medical Care (EMC)--This modifier shall be added to CPT Code 99456 when a RTW or EMC examination is performed.

(8) SP, Specialty Area--This modifier shall be added to the appropriate MMI CPT code when a specialty area is incorporated into the MMI report.

(9) TC, Technical Component--This modifier shall be added to the CPT code when the technical component of a procedure is billed separately.

(10) VR, Review report--This modifier shall be added to CPT Code 99455 to indicate that the service was the treating doctor's review of report(s) only.

(11) V1, Level of MMI for Treating Doctor--This modifier shall be added to CPT Code 99455 when the office visit level of service is equal to a "minimal" level.

(12) V2, Level of MMI for Treating Doctor--This modifier shall be added to CPT Code 99455 when the office visit level of service is equal to "self limited or minor" level.

(13) V3, Level of MMI for Treating Doctor--This modifier shall be added to CPT Code 99455 when the office visit level of service is equal to "low to moderate" level.

(14) V4, Level of MMI for Treating Doctor--This modifier shall be added to CPT Code 99455 when the office visit level of service is equal to "moderate to high severity" level and of at least 25 minutes duration.

(15) V5, Level of MMI for Treating Doctor--This modifier shall be added to CPT Code 99455 when the office visit level of service is equal to "moderate to high severity" level and of at least 45 minutes duration.

(16) WC, Work Conditioning--This modifier shall be added to CPT Code 97545 to indicate work conditioning was performed.

(17) WH, Work Hardening--This modifier shall be added to CPT Code 97545 to indicate work hardening was performed.

(18) WP, Whole Procedure--This modifier shall be added to the CPT code when both the professional and technical components of a procedure are performed by a single HCP.

(19) W1, Case Management for Treating Doctor--This modifier shall be added to the appropriate case management billing code activities when performed by the treating doctor.

(20) W5, Designated Doctor Examination for Impairment or Attainment of Maximum Medical Improvement--This modifier shall be added to the appropriate examination code performed by a designated doctor when determining impairment caused by the compensable injury and in attainment of maximum medical improvement.

(21) W6, Designated Doctor Examination for Extent--This modifier shall be added to the appropriate examination code performed by a designated doctor when determining extent of the employee's compensable injury.

(22) W7, Designated Doctor Examination for Disability--This modifier shall be added to the appropriate examination code performed by a designated doctor when determining whether the injured employee's disability is a direct result of the work-related injury.

(23) W8, Designated Doctor Examination for Return to Work--This modifier shall be added to the appropriate examination code performed by a designated doctor when determining the ability of employee to return to work.

(24) W9, Designated Doctor Examination for Other Similar Issues--This modifier shall be added to the appropriate examination code performed by a designated doctor when determining other similar issues.

History

Source Note: The provisions of this §134.204 adopted to be effective March 1, 2008, 33 TexReg 364; amended to be effective July 7, 2016, 41 TexReg 4839.

28 Tex. Admin. Code § 134.209 Applicability

(a) Sections 134.209, 134.210, 134.215, 134.220, 134.225, 134.230, 134.235, 134.239, 134.240, 134.250, and 134.260 of this title apply to workers' compensation specific codes, services, and programs provided in the Texas workers' compensation system, other than:

(1) professional medical services described in §134.203 of this title;

(2) prescription drugs or medicine;

(3) dental services;

(4) the facility services of a hospital or other health care facility; and

(5) medical services provided through a workers' compensation health care network certified under Insurance Code Chapter 1305, except as provided in §134.1 of this title and Insurance Code Chapter 1305.

(b) Sections 134.209, 134.210, 134.215, 134.220, 134.225, 134.230, 134.235, 134.239, 134.240, 134.250, and 134.260 of this title apply to workers' compensation specific codes, services, and programs provided on or after June 1, 2024.

(c) If a court of competent jurisdiction holds that any provision of §§134.209, 134.210, 134.215, 134.220, 134.225, 134.230, 134.235, 134.239, 134.240, 134.250, and 134.260 of this title or its application to any person or circumstance is invalid for any reason, the invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application and the provisions of §§134.209, 134.210, 134.215, 134.220, 134.225, 134.230, 134.235, 134.239, 134.240, 134.250, and 134.260 of this title are severable.

(d) When billing for a treating doctor examination to define the compensable injury, refer to §126.14 of this title.

History

Source Note: The provisions of this §134.209 adopted to be effective July 7, 2016, 41 TexReg 4839; amended to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.210 Medical Fee Guideline for Workers' Compensation Specific Services

(a) Specific provisions contained in the Labor Code or division rules, including this chapter, take precedence over any conflicting provision adopted or used by the Centers for Medicare and Medicaid Services (CMS) in administering the Medicare program. Independent review organization decisions on medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title, which are made on a case-by-case basis, take precedence, in that case only, over any division rules and Medicare payment policies.

(b) Payment policies relating to coding, billing, and reporting for workers' compensation specific codes, services, and programs are as follows:

(1) Health care providers must bill their usual and customary charges using the most current Level I Current Procedural Terminology (CPT) and Level II Healthcare Common Procedure Coding System (HCPCS) codes. Health care providers must submit medical bills in accordance with the Labor Code and division rules.

(2) Modifying circumstance must be identified by use of the appropriate modifier following the appropriate Level I (CPT codes) and Level II HCPCS codes. Where HCPCS modifiers apply, insurance carriers must treat them in accordance with Medicare and Texas Medicaid rules. In addition, division-specific modifiers are identified in subsection (f) of this section. When two or more modifiers apply to a single HCPCS code, indicate each modifier on the bill.

(3) A 10% incentive payment must be added to the maximum allowable reimbursement (MAR) for services outlined in §§134.220, 134.225, 134.235, 134.240, 134.250, and 134.260 of this title and subsection (d) of this section that are performed in designated workers' compensation underserved areas in accordance with §134.2 of this title. However, reimbursement for a missed appointment under §134.240 does not qualify for the 10% incentive payment.

(4) Fees established in §§134.235, 134.240, 134.250, and 134.260 of this title will be:

(A) adjusted once by applying the Medicare Economic Index (MEI) percentage adjustment factor for the period 2009 - 2024.

(B) adjusted annually by applying the MEI percentage adjustment factor identified in §134.203(c)(2).

(C) rounded to whole dollars by dropping amounts under 50 cents and increasing amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

(D) effective on January 1 of each new calendar year.

(c) When there is a negotiated or contracted amount that complies with Labor Code §413.011, reimbursement must be the negotiated or contracted amount that applies to the billed services.

(d) When billing for services in §§134.215, 134.220, 134.225, or 134.230, and there is no negotiated or contracted amount that complies with Labor Code §413.011, reimbursement must be the least of the:

(1) MAR amount;

(2) health care provider's usual and customary charge; or

(3) fair and reasonable amount consistent with the standards of §134.1 of this title.

(e) For services provided under §§134.235, 134.240, 134.250, or 134.260, health care providers must bill and be reimbursed the MAR.

(f) The following division modifiers must be used by health care providers billing professional medical services for correct coding, reporting, billing, and reimbursement of the procedure codes.

(1) 25--This modifier must be added to CPT code 99456 when the division ordered the designated doctor to perform an examination of an injured employee with one or more of the diagnoses listed in §127.130(b)(9)(B) - (I) of this title.

(2) 52--This modifier must be added to CPT code 99456 when the division ordered the designated doctor to perform an examination of an injured employee, and the injured employee failed to attend the examination.

(3) CA, Commission on Accreditation of Rehabilitation Facilities (CARF) accredited programs--This modifier must be used when a health care provider bills for a return-to-work rehabilitation program that is CARF accredited.

(4) CP, chronic pain management program--This modifier must be added to CPT code 97799 to indicate chronic pain management program services were performed.

(5) FC, functional capacity--This modifier must be added to CPT code 97750 when a functional capacity evaluation is performed.

(6) MR, outpatient medical rehabilitation program--This modifier must be added to CPT code 97799 to indicate outpatient medical rehabilitation program services were performed.

(7) MI, multiple impairment ratings--This modifier must be added to CPT code 99456 when the designated doctor is required to complete multiple impairment ratings calculations.

(8) NM, not at maximum medical improvement (MMI)--This modifier must be added to the appropriate MMI CPT code to indicate that the injured employee has not reached MMI when the purpose of the examination was to determine MMI.

(9) VR, review report--This modifier must be added to CPT code 99455 to indicate that the service was the treating doctor's review of reports only.

(10) V3, treating doctor evaluation of MMI--This modifier must be added to CPT code 99455 when the office visit level of service is equal to CPT code 99213.

(11) V4, treating doctor evaluation of MMI--This modifier must be added to CPT code 99455 when the office visit level of service is equal to CPT code 99214.

(12) V5, treating doctor evaluation of MMI--This modifier must be added to CPT code 99455 when the office visit level of service is equal to CPT code 99215.

(13) WC, work conditioning--This modifier must be added to CPT codes 97545 and 97546 to indicate work conditioning was performed.

(14) WH, work hardening--This modifier must be added to CPT codes 97545 and 97546 to indicate work hardening was performed.

(15) W1, case management for treating doctor--This modifier must be added to the appropriate case management billing code activities when performed by the treating doctor.

(16) W5, designated doctor examination for impairment or attainment of MMI--This modifier must be added to the appropriate examination code performed by a designated doctor when determining impairment caused by the compensable injury and in attainment of MMI.

(17) W6, designated doctor examination for extent--This modifier must be added to the appropriate examination code performed by a designated doctor when determining extent of the injured employee's compensable injury.

(18) W7, designated doctor examination for disability--This modifier must be added to the appropriate examination code performed by a designated doctor when determining whether the injured employee's disability is a direct result of the work-related injury.

(19) W8, designated doctor examination for return to work--This modifier must be added to the appropriate examination code performed by a designated doctor when determining the ability of the injured employee to return to work.

(20) W9, designated doctor examination for other similar issues--This modifier must be added to the appropriate examination code performed by a designated doctor when determining other similar issues.

History

Source Note: The provisions of this §134.210 adopted to be effective July 7, 2016, 41 TexReg 4839; amended to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.215 Home Health Services

The maximum allowable reimbursement (MAR) amount for home health services provided through a licensed home health agency shall be 125 percent of the published Texas Medicaid fee schedule for home health agencies.

History

Source Note: The provisions of this §134.215 adopted to be effective July 7, 2016, 41 TexReg 4839.

28 Tex. Admin. Code § 134.220 Case Management Services

Case management responsibilities by the treating doctor are as follows:

(1) Team conferences and telephone calls shall include coordination with an interdisciplinary team.

(A) Team members shall not be employees of the treating doctor.

(3) Contact with one or more members of the interdisciplinary team more often than once every 30 days shall be limited to the following:

(A) coordinating with the employer, employee, or an assigned medical or vocational case manager to determine return to work options;

(B) developing or revising a treatment plan, including any treatment plans required by division rules;

(D) coordinating the care of employees with catastrophic or multiple injuries requiring multiple specialties.

(4) Case management services require the treating doctor to submit documentation that identifies any health care provider that contributes to the case management activity. Case management services shall be billed and reimbursed as follows:

(A) CPT code 99361.

(i) Reimbursement to the treating doctor shall be $113. Modifier "W1" shall be added.

(ii) Reimbursement to the referral health care provider shall be $28 when a health care provider contributes to the case management activity.

(B) CPT code 99362.

(i) Reimbursement to the treating doctor shall be $198. Modifier "W1" shall be added.

(ii) Reimbursement to the referral health care provider shall be $50 when a health care provider contributes to the case management activity.

(i) Reimbursement to the treating doctor shall be $18. Modifier "W1" shall be added.

(ii) Reimbursement to a referral health care provider contributing to this case management activity shall be $5.

(D) CPT code 99372.

(i) Reimbursement to the treating doctor shall be $46. Modifier "W1" shall be added.

(ii) Reimbursement to the referral health care provider contributing to this case management activity shall be $12.

(E) CPT code 99373.

(i) Reimbursement to the treating doctor shall be $90. Modifier "W1" shall be added.

(ii) Reimbursement to the referral health care provider contributing to this case management action shall be $23.

History

Source Note: The provisions of this §134.220 adopted to be effective July 7, 2016, 41 TexReg 4839.

28 Tex. Admin. Code § 134.225 Functional Capacity Evaluations

The following applies to functional capacity evaluations (FCEs). A maximum of three FCEs for each compensable injury shall be billed and reimbursed. FCEs ordered by the division shall not count toward the three FCEs allowed for each compensable injury. FCEs shall be billed using CPT code 97750 with modifier "FC." FCEs shall be reimbursed in accordance with §134.203(c)(1) of this title. Reimbursement shall be for up to a maximum of four hours for the initial test or for a division ordered test; a maximum of two hours for an interim test; and a maximum of three hours for the discharge test, unless it is the initial test. Documentation is required. FCEs shall include the following elements:

(1) A physical examination and neurological evaluation, which include the following:

(A) appearance (observational and palpation);

(B) flexibility of the extremity joint or spinal region (usually observational);

(D) vascular integrity;

(E) neurological tests to detect sensory deficit;

(F) myotomal strength to detect gross motor deficit; and

(G) reflexes to detect neurological reflex symmetry.

(2) A physical capacity evaluation of the injured area, which includes the following:

(A) range of motion (quantitative measurements using appropriate devices) of the injured joint or region; and

(3) Functional abilities tests, which include the following:

(A) activities of daily living (standardized tests of generic functional tasks such as pushing, pulling, kneeling, squatting, carrying, and climbing);

(B) hand function tests that measure fine and gross motor coordination, grip strength, pinch strength, and manipulation tests using measuring devices;

(D) static positional tolerance (observational determination of tolerance for sitting or standing).

History

Source Note: The provisions of this §134.225 adopted to be effective July 7, 2016, 41 TexReg 4839.

28 Tex. Admin. Code § 134.230 Return to Work Rehabilitation Programs

The following shall be applied to Return To Work Rehabilitation Programs for billing and reimbursement of Work Conditioning/General Occupational Rehabilitation Programs, Work Hardening/Comprehensive Occupational Rehabilitation Programs, Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs, and Outpatient Medical Rehabilitation Programs. To qualify as a division Return to Work Rehabilitation Program, a program should meet the specific program standards for the program as listed in the most recent Commission on Accreditation of Rehabilitation Facilities (CARF) Medical Rehabilitation Standards Manual, which includes active participation in recovery and return to work planning by the injured employee, employer and payor or insurance carrier.

(1) Accreditation by the CARF is recommended, but not required.

(B) If the program is not CARF accredited, the only modifier required is the appropriate program modifier. The hourly reimbursement for a non-CARF accredited program shall be 80 percent of the MAR.

(2) For division purposes, General Occupational Rehabilitation Programs, as defined in the CARF manual, are considered Work Conditioning.

(A) The first two hours of each session shall be billed and reimbursed as one unit, using CPT code 97545 with modifier "WC." Each additional hour shall be billed using CPT code 97546 with modifier "WC." CARF accredited programs shall add "CA" as a second modifier.

(3) For division purposes, Comprehensive Occupational Rehabilitation Programs, as defined in the CARF manual, are considered Work Hardening.

(A) The first two hours of each session shall be billed and reimbursed as one unit, using CPT code 97545 with modifier "WH." Each additional hour shall be billed using CPT code 97546 with modifier "WH." CARF accredited programs shall add "CA" as a second modifier.

(4) The following shall be applied for billing and reimbursement of Outpatient Medical Rehabilitation Programs.

(A) Program shall be billed and reimbursed using CPT code 97799 with modifier "MR" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited programs shall add "CA" as a second modifier.

(5) The following shall be applied for billing and reimbursement of Chronic Pain Management/Interdisciplinary Pain Rehabilitation Programs.

(A) Program shall be billed and reimbursed using CPT code 97799 with modifier "CP" for each hour. The number of hours shall be indicated in the units column on the bill. CARF accredited programs shall add "CA" as a second modifier.

History

Source Note: The provisions of this §134.230 adopted to be effective July 7, 2016, 41 TexReg 4839.

28 Tex. Admin. Code § 134.235 Required Medical Examinations

(a) Required medical examination doctors (RME doctors) must perform examinations in accordance with Labor Code §§408.004, 408.0041, 408.0043, and 408.0045 and division rules.

(b) Each examination and its individual billable components will be billed and reimbursed separately.

(c) When conducting an insurance carrier-requested examination to determine impairment or attainment of maximum medical improvement (MMI), the RME doctor must bill, and the insurance carrier must reimburse, using CPT code 99456, with the modifiers and at the rates specified in paragraphs (c)(2) - (3).

(1) The total maximum allowable reimbursement (MAR) for a MMI or impairment rating (IR) examination is equal to the MMI evaluation reimbursement plus the reimbursement for the body area or areas evaluated for the assignment of an IR. The MMI or IR examination must include:

(A) the examination;

(B) consultation with the injured employee;

(D) the preparation and submission of reports (including the narrative report and responding to the need for further clarification, explanation, or reconsideration), calculation tables, figures, and worksheets; and

(E) tests used to assign the IR, as outlined in the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), as stated in the Labor Code and Chapter 130 of this title.

(2) RME doctors must only bill and be reimbursed for an MMI or IR examination if they are an authorized doctor in accordance with the Labor Code and Chapter 130 and §180.23 of this title.

(A) If the RME doctor determines that MMI has not been reached, the RME doctor must bill, and the insurance carrier must reimburse, the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(3) of this section. The RME doctor must add modifier "NM."

(B) If the RME doctor determines that MMI has been reached and there is no permanent impairment because the injury was sufficiently minor, and an IR evaluation was not warranted, the RME doctor must only bill, and the insurance carrier must only reimburse, the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(3) of this section.

(C) If the RME doctor determines MMI has been reached and an IR evaluation is performed, the RME doctor must bill, and the insurance carrier must reimburse, both the MMI evaluation and the IR evaluation portions of the examination in accordance with this subsection.

(3) MMI. MMI evaluations will be reimbursed at $449 adjusted per §134.210(b)(4).

(4) IR. For IR examinations, the RME doctor must bill, and the insurance carrier must reimburse, the components of the IR evaluation. Indicate the number of body areas rated in the units column of the billing form.

(A) For musculoskeletal body areas, the RME doctor may bill for a maximum of three body areas.

(i) Musculoskeletal body areas are:

(I) spine and pelvis;

(II) upper extremities and hands; and

(III) lower extremities (including feet).

(ii) For musculoskeletal body areas:

(I) the reimbursement for the first musculoskeletal body area is $385 adjusted per §134.210(b)(4); and

(II) the reimbursement for each additional musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(B) For non-musculoskeletal body areas, the RME doctor may bill, and the insurance carrier must reimburse, for each non-musculoskeletal body area examined.

(i) Non-musculoskeletal body areas are:

(I) body systems;

(II) body structures (including skin); and

(III) mental and behavioral disorders.

(ii) For a complete list of body system and body structure non-musculoskeletal body areas, refer to the appropriate AMA Guides.

(iii) The reimbursement for the assignment of an IR in a non-musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(C) If the examination for the determination of MMI or the assignment of IR requires testing that is not outlined in the AMA Guides, the RME doctor must bill, and the insurance carrier must reimburse, the appropriate testing CPT code or codes according to the applicable fee guideline in addition to the fees for the examination by the RME doctor outlined in subsection (c) of this section.

(d) When conducting an insurance carrier-requested examination to determine the extent of the employee's compensable injury, whether the injured employee's disability is a direct result of the compensable injury, the ability of the injured employee to return to work, other similar issues, or appropriateness of medical care, the RME doctor must bill, and the insurance carrier must reimburse, using CPT code 99456 and at the rates specified in paragraphs (d)(1) - (5).

(1) Extent of injury. The reimbursement rate for determining the extent of the injured employee's compensable injury is $642 adjusted per §134.210(b)(4).

(2) Disability. The reimbursement rate for determining whether the injured employee's disability is a direct result of the work-related injury is $642 adjusted per §134.210(b)(4).

(3) Return to work. The reimbursement rate for determining the ability of the injured employee to return to work is $642 adjusted per §134.210(b)(4).

(4) Other similar issues. The reimbursement rate for determining other similar issues is $642 adjusted per §134.210(b)(4).

(5) Appropriateness of health care. The reimbursement rate for appropriateness of health care as defined in §126.6 (concerning Required Medical Examination) and Labor Code §408.004 is $642 adjusted per §134.210(b)(4).

(e) When the RME doctor refers testing to a specialist, the referral health care provider must bill, and the insurance carrier must reimburse, the appropriate CPT code or codes for the tests required for the assignment of IR, according to the applicable division fee guideline. Documentation of the referral is required.

History

Source Note: The provisions of this §134.235 adopted to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.239 Billing for Work Status Reports

Work status reports described by §129.5 of this title may not be billed or reimbursed separately when completed as a component of an ordered examination.

History

Source Note: The provisions of this §134.239 adopted to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.240 Designated Doctor Examinations

(a) Designated doctors must perform examinations in accordance with Labor Code §§408.004, 408.0041, and 408.151 and division rules.

(b) The designated doctor must bill, and the insurance carrier must reimburse, for a missed appointment when the injured employee does not attend a properly scheduled or rescheduled examination under 28 TAC §127.5(h) - (j).

(1) The designated doctor may bill for the missed appointment fee when:

(A) the injured employee does not attend a scheduled appointment; and

(B) the designated doctor waits at the examination location for at least 30 minutes after the scheduled appointment time.

(2) When billing for the missed appointment, the designated doctor must bill CPT code 99456 with modifier "52."

(3) Reimbursement for a missed appointment is $100 adjusted per §134.210(b)(4).

(4) Reimbursement for a missed appointment under this section does not qualify for the 10% incentive payment under §134.2 of this chapter.

(d) When conducting a designated doctor examination, the designated doctor must bill, and the insurance carrier must reimburse, using CPT code 99456 and with the modifiers and rates specified in subsections (d)(1) - (7).

(1) The total maximum allowable reimbursement (MAR) for a maximum medical improvement (MMI) or impairment rating (IR) examination is equal to the MMI evaluation reimbursement plus the reimbursement for the body area or areas evaluated for the assignment of an IR. The MMI or IR examination must include:

(A) the examination;

(B) consultation with the injured employee;

(2) A designated doctor must only bill and be reimbursed for an MMI or IR examination if they are an authorized doctor in accordance with the Labor Code and Chapter 130 and §180.23 of this title.

(A) If the designated doctor determines that MMI has not been reached, the MMI evaluation portion of the examination must be billed and reimbursed in accordance with subsection (d) of this section. The designated doctor must add modifier "NM."

(B) If the designated doctor determines that MMI has been reached and there is no permanent impairment because the injury was sufficiently minor, an IR evaluation is not warranted and only the MMI evaluation portion of the examination must be billed and reimbursed in accordance with subsection (d) of this section.

(C) If the designated doctor determines MMI has been reached and an IR evaluation is performed, both the MMI evaluation and the IR evaluation portions of the examination must be billed and reimbursed in accordance with subsection (d) of this section.

(3) MMI. MMI evaluations will be reimbursed at $449 adjusted per §134.210(b)(4), and the designated doctor must apply the additional modifier "W5."

(4) IR. For IR examinations, the designated doctor must bill, and the insurance carrier must reimburse, the components of the IR evaluation. The designated doctor must apply the additional modifier "W5." Indicate the number of body areas rated in the units column of the billing form.

(A) For musculoskeletal body areas, the designated doctor may bill for a maximum of three body areas.

(i) Musculoskeletal body areas are:

(I) spine and pelvis;

(II) upper extremities and hands; and

(III) lower extremities (including feet).

(ii) For musculoskeletal body areas:

(I) the reimbursement for the first musculoskeletal body area is $385 adjusted per §134.210(b)(4); and

(II) the reimbursement for each additional musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(B) For non-musculoskeletal body areas, the designated doctor must bill, and the insurance carrier must reimburse, for each non-musculoskeletal body area examined.

(i) Non-musculoskeletal body areas are defined as follows:

(I) body systems;

(II) body structures (including skin); and

(III) mental and behavioral disorders.

(ii) For a complete list of body system and body structure non-musculoskeletal body areas, refer to the appropriate AMA Guides.

(iii) The reimbursement for the assignment of an IR in a non-musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(iv) The test or tests required by Chapter 127 of this title for the assignment of IR, as outlined in the AMA Guides, must be billed using the appropriate CPT code or codes and reimbursed under the applicable division fee guideline in addition to the fees outlined in subsection (b) and (d)(1) - (3) of this section.

(C) If the examination for the determination of MMI or the assignment of IR requires testing authorized by Chapter 127 of this title that is not outlined in the AMA Guides, the appropriate CPT code or codes must be billed, and the insurance carrier must reimburse, according to the applicable division fee guideline, in addition to the fees outlined in subsections (d)(1) - (3) and (d)(4)(A) - (B) of this section.

(D) When multiple IRs are required as a component of a designated doctor examination under this title, the designated doctor must bill for the number of body areas rated, and the insurance carrier must reimburse, $64 adjusted per §134.210(b)(4) for each additional IR calculation.

(E) When the division requires the designated doctor to complete multiple IR calculations, the designated doctor must apply the additional modifier "MI."

(5) Extent of injury. The reimbursement rate for determining the extent of the employee's compensable injury is $642 adjusted per §134.210(b)(4), and the designated doctor must apply the additional modifier "W6."

(6) Disability. The reimbursement rate for determining whether the injured employee's disability is a direct result of the work-related injury is $642 adjusted per §134.210(b)(4), and the designated doctor must apply the additional modifier "W7."

(7) Return to work. The reimbursement rate for determining the ability of the injured employee to return to work is $642 adjusted per §134.210(b)(4), and the designated doctor must apply the additional modifier "W8."

(8) Other similar issues. The reimbursement rate for determining other similar issues is $642 adjusted per §134.210(b)(4), and the designated doctor must apply the additional modifier "W9" when examining issues similar to those described in subsection (d)(1) - (6).

(e) Required testing or evaluation under §127.10 of this title must be billed using the appropriate CPT codes. Reimbursement will be according to §134.203 or other applicable division fee guideline in addition to the examination fee. If a designated doctor refers an injured employee for additional testing or evaluation under §127.10 of this title:

(1) The 95-day period for timely submission of the designated doctor bill for the examination begins on the date of service of the additional testing or evaluation.

(2) The dates of service (CMS-1500/field 24A) are as follows: the "From" date is the date of the designated doctor examination, and the "To" date is the date of service of the additional testing or evaluation.

(3) The designated doctor and any referral health care providers must include the DWC-provided assignment number in the prior authorization field (CMS-1500/field 23) in accordance with §133.10(f)(1)(N).

(f) When the designated doctor refers an injured employee to a specialist for additional testing or evaluation under §127.10 of this title, the referral health care provider must bill:

(1) using the appropriate CPT codes, and the insurance carrier must reimburse, according to §134.203 or other applicable division fee guideline in addition to the examination fee;

(2) using the assignment number provided by the designated doctor; and

(3) attaching the required documentation.

(g) When the division orders the designated doctor to perform an examination of an injured employee with one or more of the diagnoses listed in §127.130(b)(9)(B) - (I) of this title:

(1) The designated doctor must add modifier "25" to the appropriate examination code.

(2) The designated doctor must add modifier "25" once per bill when addressing issues on the same day, regardless of the number of diagnoses or the number of issues the division ordered the designated doctor to examine.

(3) The designated doctor must bill, and the insurance carrier must reimburse, $300 adjusted per §134.210(b)(4) in addition to the examination fee.

History

Source Note: The provisions of this §134.240 adopted to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.250 Maximum Medical Improvement Evaluations and Impairment Rating Examinations by Treating Doctors

(a) The total maximum allowable reimbursement (MAR) for a maximum medical improvement (MMI) or impairment rating (IR) examination is equal to the MMI evaluation reimbursement plus the reimbursement for the body area or areas evaluated for the assignment of an IR. The MMI or IR examination must include:

(1) the examination;

(2) consultation with the injured employee;

(3) review of the records and films;

(4) the preparation and submission of reports (including the narrative report and responding to the need for further clarification, explanation, or reconsideration), calculation tables, figures, and worksheets; and

(5) tests used to assign the IR, as outlined in the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides), as stated in the Labor Code and Chapter 130 of this title.

(b) Treating doctors must only bill and be reimbursed for an MMI and IR examination if they are an authorized doctor in accordance with the Labor Code and Chapter 130 and §180.23 of this title.

(1) If the treating doctor determines that MMI has not been reached, the treating doctor must bill, and the insurance carrier must reimburse, the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(2) of this section.

(2) If the treating doctor determines MMI has been reached and there is no permanent impairment because the injury was sufficiently minor, an IR evaluation is not warranted and the treating doctor must bill, and the insurance carrier must reimburse, only the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(2) of this section.

(3) If the treating doctor determines MMI has been reached and an IR evaluation is performed, the treating doctor must bill, and the insurance carrier must reimburse, both the MMI evaluation and the IR evaluation portions of the examination in accordance with subsection (c) of this section.

(4) If the treating doctor is not authorized to assign an IR, the treating doctor may refer the injured employee to an authorized doctor for the examination and certification of MMI and IR. The referred doctor must bill under §134.260 of this chapter.

(1) CPT code. The treating doctor must bill using CPT code 99455 with the appropriate modifier. Modifiers "V3," "V4," or "V5" must be added to CPT code 99455 to correspond with the last digit of the applicable office visit.

(2) MMI. MMI evaluations must be reimbursed based on the applicable established patient office visit level associated with the examination under §134.203 of this chapter.

(3) IR. For IR examinations, the treating doctor must bill, and the insurance carrier must reimburse, the components of the IR evaluation. Indicate the number of body areas rated in the units column of the billing form.

(A) For musculoskeletal body areas, the treating doctor may bill for a maximum of three body areas.

(i) Musculoskeletal body areas are:

(I) spine and pelvis;

(II) upper extremities and hands; and

(III) lower extremities (including feet).

(ii) For musculoskeletal body areas:

(I) the reimbursement for the first musculoskeletal body area is $385 adjusted per §134.210(b)(4); and

(II) the reimbursement for each additional musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(B) For non-musculoskeletal body areas, the treating doctor must bill, and the insurance carrier must reimburse, for each non-musculoskeletal body area examined.

(i) Non-musculoskeletal body areas are defined as follows:

(I) body systems;

(II) body structures (including skin); and

(III) mental and behavioral disorders.

(ii) For a complete list of body system and body structure non-musculoskeletal body areas, refer to the appropriate AMA Guides.

(iii) The reimbursement for the assignment of an IR in a non-musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(d) If the examination for the determination of MMI or the assignment of IR requires testing that is not outlined in the AMA Guides, the treating doctor must bill, and the insurance carrier must reimburse, the appropriate testing CPT code or codes according to the applicable fee guideline in addition to the fees for the examination by the treating doctor outlined in subsection (c) of this section.

(e) The treating doctor is required to review the certification of MMI and assignment of IR performed by another doctor, as stated in the Labor Code and Chapter 130 of this title. The treating doctor must bill using CPT code 99455 with modifier "VR" to indicate a review of the report only, and the insurance carrier must reimburse $64 adjusted per §134.210(b)(4).

History

Source Note: The provisions of this §134.250 adopted to be effective July 7, 2016, 41 TexReg 4839; amended to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.260 Maximum Medical Improvement Evaluations and Impairment Rating Examinations by Referred Doctors

(1) the examination;

(2) consultation with the injured employee;

(3) review of the records and films;

(5) tests used to assign the IR, as outlined in the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides), as stated in the Labor Code and Chapter 130 of this title.

(b) Referred doctors must only bill and be reimbursed for an MMI or IR examination if they are an authorized doctor in accordance with the Labor Code and Chapter 130 and §180.23 of this title.

(1) If the referred doctor determines that MMI has not been reached, the referred doctor must bill, and the insurance carrier must reimburse, the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(2) of this section. The referred doctor must add modifier "NM."

(2) If the referred doctor determines that MMI has been reached and there is no permanent impairment because the injury was sufficiently minor and IR evaluation is not warranted, the referred doctor must bill, and the insurance carrier must reimburse, only the MMI evaluation portion of the examination in accordance with subsections (c)(1) and (c)(2) of this section.

(3) If the referred doctor determines MMI has been reached and an IR evaluation is performed, the referred doctor must bill, and the insurance carrier must reimburse, both the MMI evaluation and the IR examination portions of the examination in accordance with subsection (c) of this section.

(1) CPT code. The referred doctor must bill using CPT code 99456 with the appropriate modifier.

(2) MMI. MMI evaluations will be reimbursed at $449 adjusted per §134.210(b)(4).

(3) IR. For IR examinations, the referred doctor must bill, and the insurance carrier must reimburse, the components of the IR evaluation. Indicate the number of body areas rated in the units column of the billing form.

(A) For musculoskeletal body areas, the referred doctor may bill for a maximum of three body areas.

(i) Musculoskeletal body areas are:

(I) spine and pelvis;

(II) upper extremities and hands; and

(III) lower extremities (including feet).

(ii) For musculoskeletal body areas:

(I) the reimbursement for the first musculoskeletal body area is $385 adjusted per §134.210(b)(4); and

(II) the reimbursement for each additional musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(B) For non-musculoskeletal body areas, the referred doctor must bill, and the insurance carrier must reimburse, for each non-musculoskeletal body area examined.

(i) Non-musculoskeletal body areas are:

(I) body systems;

(II) body structures (including skin); and

(III) mental and behavioral disorders.

(ii) For a complete list of body system and body structure non-musculoskeletal body areas, refer to the appropriate AMA Guides.

(iii) The reimbursement for the assignment of an IR in a non-musculoskeletal body area is $192 adjusted per §134.210(b)(4).

(d) If the examination for the determination of MMI or the assignment of IR requires testing that is not outlined in the AMA Guides, the referred doctor must bill, and the insurance carrier must reimburse, the appropriate testing CPT code or codes according to the applicable fee guideline in addition to the fees for the examination by the referred doctor outlined in subsection (c) of this section.

History

Source Note: The provisions of this §134.260 adopted to be effective June 1, 2024, 49 TexReg 1489.

28 Tex. Admin. Code § 134.303 2005 Dental Fee Guideline

(a) Applicability of this rule is as follows:

(1) This section applies to professional dental services provided in the Texas Workers' Compensation system.

(2) This section shall be applicable to professional dental services provided on or after June 15, 2005. For professional dental services provided August 1, 2003 through June 14, 2005, §134.202 of this title (relating to Medical Fee Guideline) shall be applicable. For professional dental services provided December 1, 1996 through July 31, 2003, §134.302 of this title (relating to Dental Fee Guideline) shall be applicable.

(3) Specific provisions contained in the Texas Workers' Compensation Act (the Act), or Texas Workers' Compensation Commission (commission) rules, including this rule, shall take precedence over any provision adopted by or utilized by Texas Medicaid in administering the Texas Medicaid Dental Fee Schedule. Independent Review Organization (IRO) decisions regarding medical necessity are made on a case-by-case basis. The commission will monitor IRO decisions to determine whether commission rulemaking action would be appropriate.

(4) Whenever a component of the Texas Medicaid Dental Fee Schedule is revised and effective, use of the revised component shall be required for compliance with commission rules, decisions and orders for services rendered on or after the effective date of the revised component.

(b) For coding, billing, reporting, and reimbursement of dental treatments and services, Texas Workers' Compensation system participants shall apply the Texas Medicaid Dental Fee Schedule in effect on the date a service is provided with any additions or exceptions in this section.

(1) The fees listed for the procedure codes in the Texas Medicaid Dental Fee Schedule shall be multiplied by 200%.

(2) For products and services for which the Texas Medicaid Dental Fee Schedule does not establish a value, the carrier shall assign a relative value, which may be based on nationally recognized published relative value studies, published commission medical dispute decisions, and values assigned for services involving similar work and resource commitments.

(d) Reimbursement for dental laboratory procedures is bundled with the maximum fees for the associated dental procedures. No additional reimbursement shall be due.

(e) In all cases, reimbursement shall be the lesser of the:

(1) MAR amount;

(2) health care provider's usual and customary charge; or

(3) workers' compensation negotiated and/or contracted amount that applies to the billed service(s).

History

Source Note: The provisions of this §134.303 adopted to be effective June 9, 2005, 30 TexReg 3232.

Subchapter E HEALTH FACILITY FEES

28 Tex. Admin. Code § 134.402 Ambulatory Surgical Center Fee Guideline

(a) Applicability of this rule is as follows:

(1) This section applies to facility services provided on or after September 1, 2008 by an ambulatory surgical center (ASC), other than professional medical services.

(2) This section does not apply to:

(A) professional medical services billed by a health care provider not employed by the ASC, except for a surgical implant provider as described in this section; or

(B) medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in Insurance Code Chapter 1305.

(b) Definitions for words and terms, when used in this section, shall have the following meanings, unless clearly indicated otherwise.

(1) "Ambulatory Surgical Center" means a health care facility appropriately licensed by the Texas Department of State Health Services.

(2) "ASC device portion" means the portion of the ASC payment rate that represents the cost of the implantable device, and is calculated by applying the Centers for Medicare and Medicaid Services (CMS) Outpatient Prospective Payment System (OPPS) device offset percentage to the OPPS payment rate.

(3) "ASC service portion" means the Medicare ASC payment rate less the device portion.

(4) "Device intensive procedure" means an ASC covered surgical procedure that has been designated by CMS as device intensive in TABLE 56 - ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE INTENSIVE FOR CY 2008 or its successor.

(5) "Implantable" means an object or device that is surgically:

(A) implanted,

(B) embedded,

(D) or otherwise applied, and

(E) related equipment necessary to operate, program, and recharge the implantable.

(6) "Medicare payment policy" means reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies as set forth in the Centers for Medicare and Medicaid Services (CMS) payment policies specific to Medicare.

(7) "Surgical implant provider" means a person that arranges for the provision of implantable devices to a health care facility and that then seeks reimbursement for the implantable devices provided directly from an insurance carrier.

(c) A surgical implant provider is subject to Chapter 133 of this title and is considered a health care provider for purposes of this section and the sections in Chapter 133.

(d) For coding, billing, and reporting, of facility services covered in this rule, Texas workers' compensation system participants shall apply the Medicare payment policies in effect on the date a service is provided with any additions or exceptions specified in this section, including the following paragraphs.

(1) Specific provisions contained in the Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including this chapter, shall take precedence over any conflicting provision adopted or utilized by the CMS in administering the Medicare program.

(2) Independent Review Organization decisions regarding medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title (relating to MDR by Independent Review Organizations), which are made on a case-by-case basis, take precedence in that case only, over any Division rules and Medicare payment policies.

(3) Whenever a component of the Medicare program is revised and effective, use of the revised component shall be required for compliance with Division rules, decisions, and orders for services rendered on and after the effective date, or after the effective date or the adoption date of the revised Medicare component, whichever is later.

(e) Regardless of billed amount, reimbursement shall be:

(1) the amount for the service that is included in a specific fee schedule set in a contract that complies with the requirements of Labor Code §413.011; or

(2) if no contracted fee schedule exists that complies with Labor Code §413.011, the maximum allowable reimbursement (MAR) amount under subsection (f) of this section, including any reimbursement for implantables.

(3) If no contracted fee schedule exists that complies with Labor Code §413.011, and an amount cannot be determined by application of the formula to calculate the MAR as outlined in subsection (f) of this section, reimbursement shall be determined in accordance with §134.1 of this title (relating to Medical Reimbursement).

(f) The reimbursement calculation used for establishing the MAR shall be the Medicare ASC reimbursement amount determined by applying the most recently adopted and effective Medicare Payment System Policies for Services Furnished in Ambulatory Surgical Centers and Outpatient Prospective Payment System reimbursement formula and factors as published annually in the Federal Register. Reimbursement shall be based on the fully implemented payment amount as in ADDENDUM AA, ASC COVERED SURGICAL PROCEDURES FOR CY 2008, published in the November 27, 2007 publication of the Federal Register, or its successor. The following minimal modifications apply:

(1) Reimbursement for non-device intensive procedures shall be:

(A) The Medicare ASC facility reimbursement amount multiplied by 235 percent; or

(B) if an ASC facility or surgical implant provider requests separate reimbursement for an implantable, reimbursement for the non-device intensive procedure shall be the sum of:

(i) the lesser of the manufacturer's invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed $2,000 in add-on's per admission; and

(ii) the Medicare ASC facility reimbursement amount multiplied by 153 percent.

(2) Reimbursement for device intensive procedures shall be:

(A) the sum of:

(i) the ASC device portion; and

(ii) the ASC service portion multiplied by 235 percent; or

(B) If an ASC facility or surgical implant provider requests separate reimbursement for an implantable, reimbursement for the device intensive procedure shall be the sum of:

(ii) the ASC service portion multiplied by 235 percent.

(g) A facility, or surgical implant provider with written agreement of the facility, may request separate reimbursement for an implantable.

(1) The facility or surgical implant provider requesting reimbursement for the implantable shall:

(A) bill for the implantable on the Medicare-specific billing form for ASCs;

(B) include with the billing a certification that the amount billed represents the actual cost (net amount, exclusive of rebates and discounts) for the implantable. The certification shall include the following sentence: "I hereby certify under penalty of law that the following is the true and correct actual cost to the best of my knowledge," and shall be signed by an authorized representative of the facility or surgical implant provider who has personal knowledge of the cost of the implantable and any rebates or discounts to which the facility or surgical implant provider may be entitled.

(2) An insurance carrier may use the audit process under §133.230 of this title (relating to Insurance Carrier Audit of a Medical Bill) to seek verification that the amount certified under paragraph (1) of this subsection properly reflects the requirements of this subsection. Such verification may also take place in the Medical Dispute Resolution process under §133.307 of this title (relating to MDR of Fee Dispute), if that process is properly requested, notwithstanding §133.307(d)(2)(B) of this title.

(3) Nothing in this rule precludes an ASC or insurance carrier from utilizing a surgical implant provider to arrange for the provision of implantable devices. Implantables provided by a surgical implant provider shall be reimbursed according to this subsection.

(h) For medical services provided in an ASC, but not addressed in the Medicare payment policies as outlined in subsection (f) of this section, and for which Medicare reimburses using other Medicare fee schedules, reimbursement shall be made using the applicable Division Fee Guideline in effect for that service on the date the service was provided.

(i) If Medicare prohibits a service from being performed in an ASC setting, the insurance carrier, health care provider, and ASC may agree, on a voluntary basis, to an ASC setting as follows:

(1) The agreement may occur before, or during, preauthorization.

(2) A preauthorization request may be submitted for an ASC facility setting only if an agreement has already been reached and a copy of the signed agreement is filed as a part of the preauthorization request.

(3) The agreement between the insurance carrier and the ASC must be in writing, in clearly stated terms, and include:

(A) the reimbursement amount;

(B) any other provisions of the agreement; and

(4) Copies of the agreement are to be kept by both parties. This agreement does not constitute a voluntary network established in accordance with Labor Code §413.011(d-1).

(5) Upon request of the Division, the agreement information shall be submitted in the form and manner prescribed by the Division.

(j) Where any terms or parts of this section or its application to any person or circumstance are determined by a court of competent jurisdiction to be invalid, the invalidity does not affect other provisions or applications of this section that can be given effect without the invalidated provision or application.

History

Source Note: The provisions of this §134.402 adopted to be effective May 9, 2004, 29 TexReg 4191; amended to be effective March 10, 2005, 30 TexReg 1290; amended to be effective December 30, 2007, 32 TexReg 9696; amended to be effective August 31, 2008, 33 TexReg 6830.

28 Tex. Admin. Code § 134.403 Hospital Facility Fee Guideline--Outpatient

(a) Applicability of this section is as follows.

(1) This section applies to medical services provided in an outpatient acute care hospital on or after March 1, 2008.

(2) This section does not apply to:

(A) professional medical services billed by a provider not employed by the hospital, except for a surgical implant provider as described in this section; or

(B) medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in Insurance Code Chapter 1305.

(b) Definitions for words and terms, when used in this section, shall have the following meanings, unless clearly indicated otherwise.

(1) "Acute care hospital" means a health care facility appropriately licensed by the Texas Department of State Health Services that provides inpatient and outpatient medical services to patients experiencing acute illness or trauma.

(2) "Implantable" means an object or device that is surgically:

(A) implanted,

(B) embedded,

(D) or otherwise applied, and

(E) related equipment necessary to operate, program and recharge the implantable.

(3) "Medicare payment policy" means reimbursement methodologies, models, and values or weights including its coding, billing, and reporting payment policies as set forth in the Centers for Medicare and Medicaid Services (CMS) payment policies specific to Medicare.

(4) "Outpatient" means the patient is not admitted for inpatient or residential care. Outpatient medical services includes observation in an outpatient status provided the observation period complies with Medicare policies.

(5) "Surgical implant provider" means a person that arranges for the provision of implantable devices to a health care facility and that then seeks reimbursement for the implantable devices provided directly from an insurance carrier.

(c) A surgical implant provider is subject to Chapter 133 of this title and is considered a health care provider for purposes of this section and the sections in Chapter 133 of this title (relating to Benefits--Medical Benefits).

(d) For coding, billing, reporting, and reimbursement of health care covered in this section, Texas workers' compensation system participants shall apply Medicare payment policies in effect on the date a service is provided with any additions or exceptions specified in this section, including the following paragraphs.

(1) Specific provisions contained in the Texas Labor Code or the Texas Department of Insurance, Division of Workers' Compensation (Division) rules, including this chapter, shall take precedence over any conflicting provision adopted or utilized by the CMS in administering the Medicare program.

(e) Regardless of billed amount, reimbursement shall be:

(1) the amount for the service that is included in a specific fee schedule set in a contract that complies with the requirements of Labor Code §413.011; or

(f) The reimbursement calculation used for establishing the MAR shall be the Medicare facility specific amount, including outlier payment amounts, determined by applying the most recently adopted and effective Medicare Outpatient Prospective Payment System (OPPS) reimbursement formula and factors as published annually in the Federal Register. The following minimal modifications shall be applied.

(1) The sum of the Medicare facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by:

(A) 200 percent; unless

(B) a facility or surgical implant provider requests separate reimbursement in accordance with subsection (g) of this section, in which case the facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by 130 percent.

(2) When calculating outlier payment amounts, the facility's total billed charges shall be reduced by the facility's billed charges for any item reimbursed separately under subsection (g) of this section.

(g) Implantables, when billed separately by the facility or a surgical implant provider in accordance with subsection (f)(1)(B) of this section, shall be reimbursed at the lesser of the manufacturer's invoice amount or the net amount (exclusive of rebates and discounts) plus 10 percent or $1,000 per billed item add-on, whichever is less, but not to exceed $2,000 in add-on's per admission.

(1) A facility or surgical implant provider billing separately for an implantable shall include with the billing a certification that the amount billed represents the actual cost (net amount, exclusive of rebates and discounts) for the implantable. The certification shall include the following sentence: "I hereby certify under penalty of law that the following is the true and correct actual cost to the best of my knowledge."

(2) A carrier may use the audit process under §133.230 of this title (relating to Insurance Carrier Audit of a Medical Bill) to seek verification that the amount certified under paragraph (1) of this subsection properly reflects the requirements of this subsection. Such verification may also take place in the Medical Dispute Resolution process under §133.307 of this title (relating to MDR of Fee Dispute), if that process is properly requested, notwithstanding 133.307(d)(2)(B) of this title.

(3) Nothing in this rule precludes a health care facility or insurance carrier from utilizing a surgical implant provider to arrange for the provision of implantable devices. Implantables provided by a surgical implant provider shall be reimbursed according to this subsection.

(h) For medical services provided in an outpatient acute care hospital, but not addressed in the Medicare payment policies as outlined in subsections (f)(1) or (f)(2) of this section, and for which Medicare reimburses using other Medicare fee schedules, reimbursement shall be made using the applicable Division Fee Guideline in effect for that service on the date the service was provided.

(i) Notwithstanding Medicare payment policies, whenever Medicare requires a specific setting for a service, that restriction shall apply, unless an alternative setting and payment has been approved through the Division's preauthorization, concurrent review, or voluntary certification of health care process.

(j) A preauthorization request may be submitted for an alternative facility setting only if an agreement has already been reached and a copy of the signed agreement is filed as a part of the preauthorization request. Copies of the agreement shall be kept by both parties. This agreement does not constitute a voluntary network established in accordance with Labor Code §413.011(d-1).

(1) The agreement between the insurance carrier and the party that requested the alternative facility setting must be in writing, in clearly stated terms, and include:

(A) the reimbursement amount;

(B) a description of the services to be performed under the agreement;

(D) names of the entities, titles, and signatures of both parties, and names, titles, signatures with dates of the persons signing the agreement.

(2) An agreement for an alternative facility setting may be revised during or after preauthorization by written agreement of the insurance carrier and the party that requested the alternative facility setting.

(3) Upon request of the Division, all agreement information shall be submitted in the form and manner prescribed by the Division.

(k) If a court of competent jurisdiction holds that any provision of this section is inconsistent with any statutes of this state, are unconstitutional, or are invalid for any reason, the remaining provisions of this section shall remain in full effect.

History

Source Note: The provisions of this §134.403 adopted to be effective March 1, 2008, 33 TexReg 400.

28 Tex. Admin. Code § 134.404 Hospital Facility Fee Guideline--Inpatient

(a) Applicability of this section is as follows.

(1) This section applies to medical services provided in an inpatient acute care hospital with an admission date on or after March 1, 2008.

(2) For admission dates prior to March 1, 2008, the law and Division of Workers' Compensation (Division) rules in effect for those dates of service shall apply.

(3) This section does not apply to:

(A) professional medical services billed by a provider not employed by the hospital, except for a surgical implant provider as described in this section; or

(B) medical services provided through a workers' compensation health care network certified pursuant to Insurance Code Chapter 1305, except as provided in Insurance Code Chapter 1305.

(b) Definitions for words and terms, when used in this section, shall have the following meanings, unless clearly indicated otherwise.

(2) "Implantable" means an object or device that is surgically:

(A) implanted,

(B) embedded,

(D) or otherwise applied, and

(E) related equipment necessary to operate, program and recharge the implantable.

(4) "Outlier payment amount" means the amount determined through use of the calculations described in subsection (f) of this section.

(e) Except as provided in subsection (h) of this section, regardless of billed amount, reimbursement shall be:

(1) the amount for the service that is included in a specific fee schedule set in a contract that complies with the requirements of Labor Code §413.011; or

(f) The reimbursement calculation used for establishing the MAR shall be the Medicare facility specific amount, including outlier payment amounts, determined by applying the most recently adopted and effective Medicare Inpatient Prospective Payment System (IPPS) reimbursement formula and factors as published annually in the Federal Register. The following minimal modifications shall be applied.

(1) The sum of the Medicare facility specific reimbursement amount and any applicable outlier payment amount shall be multiplied by:

(A) 143 percent; unless

(1) A facility or surgical implant provider billing separately for an implantable shall include with the billing a certification that the amount billed represents the actual costs (net amount, exclusive of rebates and discounts) for the implantable. The certification shall include the following sentence: "I hereby certify under penalty of law that the following is the true and correct actual cost to the best of my knowledge."

(h) A hospital that is classified by Medicare as a Sole Community Hospital, a Medicare Dependent Hospital, or a Rural Referral Center Hospital, shall initially be paid the amount calculated for such hospital in accordance with subsections (e) through (g) of this section. If the initial payment is less than the cost of the services in question, the hospital may request reconsideration in accordance with §133.250 of this title (relating to Reconsideration for Payment of Medical Bills) and present documentation of any amount it would have been paid under the Medicare regulations in effect when the services were performed. If such a showing is made, the hospital shall be paid the difference between the amount initially paid and the amount Medicare would have paid for the services as adjusted by the appropriate multiplier.

(1) The agreement between the insurance carrier and the party that requested the alternative facility setting must be in writing, in clearly stated terms, and include:

(A) the reimbursement amount;

(B) a description of the services to be performed under the agreement;

(D) names of the entities, titles and signatures of both parties, and names, titles, signatures with dates of the persons signing the agreement.

(3) Upon request of the Division, the agreement information shall be submitted in the form and manner prescribed by the Division.

History

Source Note: The provisions of this §134.404 adopted to be effective March 1, 2008, 33 TexReg 400.

Subchapter F PHARMACEUTICAL BENEFITS

28 Tex. Admin. Code § 134.500 Definitions

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise:

(1) Brand-name drug--A drug marketed under a proprietary, trademark-protected name.

(2) Certified workers' compensation health care network (certified network)--An organization that is certified under Insurance Code Chapter 1305 and department rules.

(3) Closed formulary--All available Food and Drug Administration (FDA) approved prescription and nonprescription drugs prescribed and dispensed for outpatient use, but excludes:

(A) drugs identified with a status of "N" in the current edition of the Official Disability Guidelines Treatment in Workers' Comp (ODG) / Appendix A, ODG Workers' Compensation Drug Formulary, and any updates;

(B) any prescription drug created through compounding prescribed before July 1, 2018, that contains a drug identified with a status of "N" in the current edition of the ODG Treatment in Workers' Comp (ODG) / Appendix A, ODG Workers' Compensation Drug Formulary, and any updates;

(D) any investigational or experimental drug for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of treatment, but which is not yet broadly accepted as the prevailing standard of care as defined in Labor Code §413.014(a).

(4) Compounding--As defined under Occupations Code §551.003(9), the preparation, mixing, assembling, packaging, or labeling of a drug or device:

(A) as the result of a practitioner's prescription drug order based on the practitioner-patient-pharmacist relationship in the course of professional practice;

(B) for administration to a patient by a practitioner as the result of a practitioner's initiative based on the practitioner-patient-pharmacist relationship in the course of professional practice;

(D) for or as an incident to research, teaching, or chemical analysis and not for selling or dispensing, except as allowed under Occupations Code §562.154 or Occupations Code Chapter 563.

(5) Generic--See generically equivalent in definition of paragraph (6) of this section.

(6) Generically equivalent--As defined under Occupations Code §562.001, a drug that, when compared to the prescribed drug, is:

(A) pharmaceutically equivalent--Drug products that have identical amounts of the same active chemical ingredients in the same dosage form and that meet the identical compendia or other applicable standards of strength, quality, and purity according to the United States Pharmacopoeia or another nationally recognized compendium; and

(B) therapeutically equivalent--Pharmaceutically equivalent drug products that, if administered in the same amounts, will provide the same therapeutic effect, identical in duration and intensity.

(7) Medical emergency--The sudden onset of a medical condition manifested by acute symptoms of sufficient severity, including severe pain that, in the absence of immediate medical attention, could reasonably be expected to result in:

(A) placing the patient's health or bodily functions in serious jeopardy; or

(B) serious dysfunction of any body organ or part.

(8) Nonprescription drug or over-the-counter medication--A non-narcotic drug that may be sold without a prescription and that is labeled and packaged in compliance with state or federal law.

(9) Prescribing doctor--A physician or dentist who prescribes prescription drugs or over-the-counter medications in accordance with the physician's or dentist's license and state and federal laws and rules. For purposes of this chapter, prescribing doctor includes an advanced practice nurse or physician assistant to whom a physician has delegated the authority to carry out or sign prescription drug orders, under Occupations Code Chapter 157, who prescribes prescription drugs or over-the-counter medication under the physician's supervision and in accordance with the health care practitioner's license and state and federal laws and rules.

(10) Prescription--An order for a prescription or nonprescription drug to be dispensed.

(11) Prescription drug--

(A) A substance for which federal or state law requires a prescription before the substance may be legally dispensed to the public;

(B) A drug that under federal law is required, before being dispensed or delivered, to be labeled with the statement: "Caution: federal law prohibits dispensing without prescription;" "Rx only;" or another legend that complies with federal law; or

(C) A drug that is required by federal or state statute or regulation to be dispensed on prescription or that is restricted to use by a prescribing doctor only.

(12) Statement of medical necessity--A written statement from the prescribing doctor to establish the need for treatments or services, or prescriptions, including the need for a brand-name drug where applicable. A statement of medical necessity must include:

(A) the injured employee's full name;

(B) the date of injury;

(D) the diagnosis code or codes;

(E) whether the drug has previously been prescribed and dispensed, if known, and whether the inability to obtain the drug poses an unreasonable risk of a medical emergency; and

(F) how the prescription treats the diagnosis, promotes recovery, or enhances the ability of the injured employee to return to or retain employment.

(13) Substitution--As defined under Occupations Code §551.003(41), the dispensing of a drug or a brand of drug other than the drug or brand of drug ordered or prescribed.

History

Source Note: The provisions of this §134.500 adopted to be effective January 3, 2002, 26 TexReg 10970; amended to be effective January 17, 2011, 35 TexReg 11344; amended to be effective April 22, 2018, 43 TexReg 2275; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.501 Initial Pharmaceutical Coverage

(a) For injuries that occur on or after December 1, 2002, the insurance carrier must pay for specified pharmaceutical services sufficient for the first seven days following the date of injury, regardless of issues of liability for or compensability of the injury that the insurance carrier may have, if, before providing the pharmaceutical services, the health care provider obtains both a verification of insurance coverage and an oral or written confirmation that an injury has been reported.

(1) For purposes of this rule, specified pharmaceutical services are prescription drugs and over-the-counter medications prescribed by a doctor that cure or relieve the effects naturally resulting from the compensable injury, promote recovery, or enhance the ability of the injured employee to return to or retain employment.

(2) In determining the first seven days following the injury, the date of the injury is not counted. The first day after the date of injury is "day one." The last day of the seven-day period is "day seven."

(3) If the pharmaceutical services are provided after day one, the insurance carrier's reimbursement under this section is limited to the date the pharmaceutical services were actually provided through day seven. (Example: The pharmaceutical services were provided on day four. The insurance carrier's liability for payment under this section would be for pharmaceutical services in an amount prescribed that would be the quantity sufficient for days four, five, six, and seven.)

(4) Payment for the specified pharmaceutical services for the first seven days following the date of injury must comply with §134.503 of this title (Pharmacy Fee Guideline). The insurance carrier must not deny, prorate, or reduce the dispensing fee for the initial prescription even if the health care provider provided pharmaceutical services beyond the first seven days following the date of injury, and the insurance carrier disputes or denies the pharmaceutical services beyond the first seven days following the date of injury.

(b) The insurance carrier may be eligible for reimbursement from the subsequent injury fund (SIF) for payments made under subsection (a) as provided in Chapter 116 of this title.

(c) The health care provider can verify insurance coverage and confirm the existence of a report of an injury by calling the employer or the insurance carrier. On request, the employer or the insurance carrier must verify coverage and confirm any report of an injury. For verifying insurance coverage, the health care provider can also review the division's internet-based coverage verification system.

(1) The health care provider must document verifications and confirmations not obtained in writing by indicating how the verification or confirmation was obtained (date obtained, from whom, etc.).

(2) The health care provider must affirm on the bill for the pharmaceutical services, in the form and manner prescribed by the division, that the health care provider verified that there is insurance coverage and confirmed that an injury has been reported.

(d) Notwithstanding any other provision of this section, the health care provider may dispense prescription or nonprescription medications in the amount ordered by the prescribing doctor under applicable state and federal law (not to exceed the limits imposed by §134.502 of this title (Pharmaceutical Services)).

(e) The health care provider and insurance carrier may voluntarily discuss approval of pharmaceutical services beyond the seven days following the date of injury as provided in Texas Labor Code §413.014(e) and §134.600 of this title (Preauthorization, Concurrent Utilization Review, and Voluntary Certification of Health Care).

(f) Communication is important to ensure prompt delivery of pharmaceutical services.

(1) Injured employees are encouraged to immediately report their injury to their employer.

(2) Injured employees are encouraged to ask for, and employers to provide, a written statement that confirms an injury was reported to the employer and identifies the date of injury (as reported by the injured employee) and the employer's insurance carrier. Verifying that there is insurance coverage or confirming that an injury was reported does not waive the employer's right to contest compensability under Texas Labor Code §409.011 should the insurance carrier accept liability for the payment of benefits.

(3) The insurance carrier's verification of coverage or confirmation of a reported injury does not waive the insurance carrier's right to further review the claim under Texas Labor Code §409.021 and §124.3 of this title (Investigation of an Injury and Notice of Denial or Dispute).

History

Source Note: The provisions of this §134.501 adopted to be effective November 7, 2002, 27 TexReg 10391; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.502 Pharmaceutical Services

(a) A doctor providing care to an injured employee must prescribe for the employee medically necessary prescription drugs and over-the-counter medication alternatives as clinically appropriate and applicable in accordance with applicable state law and as provided by this section.

(1) The doctor must indicate on the prescription that the prescription is related to a workers' compensation claim.

(2) When prescribing an over-the-counter medication alternative to a prescription drug, the doctor must indicate on the prescription the appropriate strength of the medication and the approximate quantity of the over-the-counter medication that is reasonably required by the nature of the compensable injury.

(3) The doctor must prescribe generic prescription drugs when available and clinically appropriate. If in the medical judgment of the prescribing doctor a brand-name drug is necessary, the doctor must specify on the prescription that brand-name drugs be dispensed in accordance with applicable state and federal law, and must maintain documentation justifying the use of the brand-name drug, in the patient's medical record.

(4) The doctor must prescribe over-the-counter medications instead of a prescription drug when clinically appropriate.

(b) When prescribing, the doctor must prescribe in accordance with §134.530 and §134.540 of this title (Closed Formulary for Claims Not Subject to Certified Networks and Closed Formulary for Claims Subject to Certified Networks, respectively).

(d) Pharmacies and pharmacy processing agents must submit bills for pharmacy services in accordance with Chapter 133 (General Medical Provisions) and Chapter 134 (Benefits--Guidelines for Medical Services, Charges, and Payments).

(1) Health care providers must bill using national drug codes (NDC) when billing for prescription drugs.

(2) Compound drugs must be billed by listing each drug included in the compound and calculating the charge for each drug separately.

(3) A pharmacy may contract with a separate person or entity to process bills and payments for a medical service. However, these entities are subject to the direction of the pharmacy, and the pharmacy is responsible for the acts and omissions of the person or entity.

(4) Except as allowed by Labor Code §413.042, the injured employee must not be billed for pharmacy services.

(e) The insurance carrier, injured employee, or pharmacist may request a statement of medical necessity from the prescribing doctor.

(1) If an insurance carrier requests a statement of medical necessity, the insurance carrier must provide the sender of the bill a copy of the request at the time the request is made.

(2) An insurance carrier must not request a statement of medical necessity unless in the absence of such a statement the insurance carrier could reasonably support a denial based on extent of, or relatedness to, the compensable injury or based on an adverse determination.

(f) The prescribing doctor must provide a statement of medical necessity to the requesting party no later than the 14th day after receiving the request. The prescribing doctor must not bill for, and the insurance carrier must not reimburse for, the statement of medical necessity.

(g) In addition to the requirements of §133.240 of this title (Medical Payments and Denials) regarding explanation of benefits (EOB), at the time an insurance carrier denies payment for medications for any reason related to compensability of, liability for, extent of, or relatedness to the compensable injury, or for reasons related to an adverse determination, the insurance carrier must also send the EOB to the injured employee and the prescribing doctor.

History

Source Note: The provisions of this §134.502 adopted to be effective January 3, 2002, 26 TexReg 10970; amended to be effective January 1, 2003, 27 TexReg 12353; amended to be effective March 30, 2014, 39 TexReg 2102; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.503 Pharmacy Fee Guideline

(a) Applicability of this section is as follows:

(1) This section applies to the reimbursement of prescription drugs and nonprescription drugs or over-the-counter medications as those terms are defined in §134.500 of this title (Definitions) for outpatient use in the Texas workers' compensation system, which includes claims:

(A) subject to a certified workers' compensation health care network as defined in §134.500 of this title;

(B) not subject to a certified workers' compensation health care network; and

(2) This section does not apply to parenteral drugs.

(b) For coding, billing, reporting, and reimbursement of prescription drugs and nonprescription drugs or over-the-counter medications, Texas workers' compensation system participants must comply with Chapters 133 and 134 of this title (General Medical Provisions and Benefits--Guidelines for Medical Services, Charges, and Payments, respectively).

(c) The insurance carrier must reimburse the health care provider or pharmacy processing agent for prescription drugs the lesser of:

(1) the fee established by the following formulas based on the average wholesale price (AWP) as reported by a nationally recognized pharmaceutical price guide or other publication of pharmaceutical pricing data in effect on the day the prescription drug is dispensed:

(A) Generic drugs: ((AWP per unit) x (number of units) x 1.25) + $4.00 dispensing fee per prescription = reimbursement amount;

(B) Brand-name drugs: ((AWP per unit) x (number of units) x 1.09) + $4.00 dispensing fee per prescription = reimbursement amount;

(C) When compounding, a single compounding fee of $15 per prescription must be added to the calculated total for either paragraph (1)(A) or (B) of this subsection; or

(2) notwithstanding §133.20(e)(1) of this title (Medical Bill Submission by Health Care Provider), the amount billed to the insurance carrier by the:

(A) health care provider; or

(B) pharmacy processing agent only if the health care provider has not previously billed the insurance carrier for the prescription drug, and the pharmacy processing agent is billing on behalf of the health care provider.

(d) Reimbursement for nonprescription drugs or over-the-counter medications must be the retail price of the lowest package quantity reasonably available that will fill the prescription.

(e) Except as provided by subsection (f) of this section, if an amount cannot be determined under subsections (c)(1) or (d) of this section, reimbursement must be an amount that is consistent with the criteria listed in Labor Code §408.028(f), including providing for reimbursement rates that are fair and reasonable. The insurance carrier must:

(1) develop one or more reimbursement methodologies for determining reimbursement under this subsection;

(2) maintain in reproducible format documentation of the insurance carrier's methodologies for establishing an amount;

(3) apply the reimbursement methodologies consistently among health care providers in determining reimbursements under this subsection; and

(4) on the division's request, provide to the division copies of such documentation.

(f) Notwithstanding the provisions of this section, the insurance carrier may reimburse prescription medication or services, as defined by Labor Code §401.011(19)(E), at a contract rate that is inconsistent with the fee guideline as long as the contract complies with the provisions of Labor Code §408.0281 and applicable division rules.

(g) When the prescribing doctor has written a prescription for a generic drug or a prescription that does not require the use of a brand-name drug under §134.502(a)(3) of this title (Pharmaceutical Services), reimbursement must be as follows:

(1) the health care provider must dispense the generic drug as prescribed, and the insurance carrier must reimburse the fee established for the generic drug, under subsection (c) or (f) of this section; or

(2) when an injured employee chooses to receive a brand-name drug instead of the prescribed generic drug, the health care provider must dispense the brand-name drug as requested and must be reimbursed:

(A) by the insurance carrier, the fee established for the prescribed generic drug under subsection (c) or (f) of this section; and

(B) by the injured employee, the cost difference between the fee established for the generic drug in subsection (c) or (f) of this section and the fee established for the brand-name drug under subsection (c) or (f) of this section.

(h) When the prescribing doctor has written a prescription for a brand-name drug under §134.502(a)(3) of this title, reimbursement must be under subsection (c) or (f) of this section.

(i) On request by the health care provider or the division, the insurance carrier must disclose the source of the nationally recognized pricing reference used to calculate the reimbursement.

(j) Where any provision of this section is determined by a court of competent jurisdiction to be inconsistent with any statutes of this state, or to be unconstitutional, the remaining provisions of this section remain in effect.

History

Source Note: The provisions of this §134.503 adopted to be effective January 3, 2002, 26 TexReg 10970; amended to be effective March 14, 2004, 29 TexReg 2346; amended to be effective October 23, 2011, 36 TexReg 6949; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.504 Pharmaceutical Expenses Incurred by the Injured Employee

(a) If an injured employee needs to purchase prescription drugs or over-the-counter alternatives to prescription drugs prescribed or ordered by the treating doctor or referral health care provider, the injured employee may request reimbursement from the insurance carrier as follows:

(1) The injured employee must submit to the insurance carrier a letter requesting reimbursement along with a receipt indicating the amount paid and documentation concerning the prescription.

(A) The letter should include information to clearly identify the claimant such as the claimant's name, address, date of injury, and Social Security number.

(B) Documentation for prescription drugs submitted with the letter from the employee must include the prescribing health care provider's name, the date the prescription was filled, the name of the drug, employee's name, and dollar amount paid by the employee. As examples, this information may be on an information sheet provided by the pharmacy, or the employee can ask the pharmacist for a printout of work-related prescriptions for a particular time period. Cash register receipts alone are not acceptable.

(2) The insurance carrier must pay the injured employee under §134.503 of this title (Pharmacy Fee Guideline), or notify the injured employee of a reduction or denial of the payment within 45 days of receiving the request for reimbursement from the injured employee.

(A) If the insurance carrier does not reimburse the full amount requested or denies payment, the insurance carrier must include a full and complete explanation of the reasons the insurance carrier reduced or denied the payment and must inform the injured employee of his or her right to request medical dispute resolution under §133.305 of this title (MDR--General).

(B) The statement must include sufficient claim-specific substantive information to enable the employee to understand the insurance carrier's position or action on the claim. A general statement that simply states the insurance carrier's position with a phrase such as, "not entitled to reimbursement" or a similar phrase with no further description of the factual basis does not satisfy the requirements of this section.

(b) An injured employee may choose to receive a brand-name drug rather than a generic drug or over-the-counter alternative to a prescription medication that is prescribed by a health care provider. In such instances, the injured employee must pay the difference in cost between the generic drug and the brand-name drug. The transaction between the employee and the pharmacist is considered final and is not subject to medical dispute resolution by the division. In addition, the employee is not entitled to reimbursement from the insurance carrier for the difference in cost between generic and brand-name drugs.

(1) The injured employee must notify the pharmacist of their choice to pay the cost difference between the generic and brand-name drugs. An employee's payment of the cost difference is an acceptance of the responsibility for the cost difference and an agreement not to seek reimbursement from the insurance carrier for the cost difference.

(2) The pharmacist must:

(A) determine the costs of both the brand-name and generic drugs under §134.503 of this title, and notify the injured employee of the cost difference amount;

(B) collect the cost difference amount from the injured employee in a form and manner that is acceptable to both parties;

(D) not bill the injured employee for the cost of the generic drug if the insurance carrier reduces or denies the bill.

(3) The insurance carrier must review and process the bill from the pharmacist under Chapters 133 and 134 (General Medical Provisions and Benefits--Guidelines for Medical Services, Charges, and Payments, respectively).

History

Source Note: The provisions of this §134.504 adopted to be effective January 3, 2002, 26 TexReg 10970; amended to be effective March 14, 2004, 29 TexReg 2346; amended to be effective October 23, 2011, 36 TexReg 6949; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.520 Outpatient Closed Formulary

The commissioner of workers' compensation adopts a closed formulary as defined in §134.500(3) of this title (Definitions). The closed formulary applies to all drugs that are prescribed and dispensed for outpatient use.

History

Source Note: The provisions of this §134.520 adopted to be effective January 17, 2011, 35 TexReg 11344; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.530 Closed Formulary for Claims Not Subject to Certified Networks

(a) Applicability. The closed formulary applies to all drugs that are prescribed and dispensed for outpatient use for claims not subject to a certified network.

(b) Preauthorization for claims subject to the division's closed formulary.

(1) Preauthorization is only required for:

(A) drugs identified with a status of "N" in the current edition of the ODG Treatment in Workers' Comp (ODG) / Appendix A, ODG Workers' Compensation Drug Formulary, and any updates;

(B) any prescription drug created through compounding; and

(C) any investigational or experimental drug for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of the treatment, but that is not yet broadly accepted as the prevailing standard of care as defined in Labor Code §413.014(a).

(2) When §134.600(p)(12) of this title (Preauthorization, Concurrent Utilization Review, and Voluntary Certification of Health Care) conflicts with this section, this section prevails.

(1) An intrathecal drug delivery system requires preauthorization under §134.600 of this title, and the preauthorization request must include the prescribing doctor's drug regimen plan of care and the anticipated dosage or range of dosages for the administration of pain medication.

(2) Refills of an intrathecal drug delivery system with drugs excluded from the closed formulary, which are billed using Healthcare Common Procedure Coding System (HCPCS) Level II J codes, and submitted on a CMS-1500 or UB-04 billing form, require preauthorization on an annual basis. Preauthorization for these refills is also required whenever:

(A) the medications, dosage or range of dosages, or the drug regimen proposed by the prescribing doctor differs from the medications, dosage or range of dosages, or drug regimen previously preauthorized by that prescribing doctor; or

(B) there is a change in prescribing doctor.

(d) Treatment guidelines. Except as provided by this subsection, the prescribing of drugs must be in accordance with §137.100 of this title (Treatment Guidelines), the division's adopted treatment guidelines.

(1) Prescription and nonprescription drugs included in the division's closed formulary and recommended by the division's adopted treatment guidelines may be prescribed and dispensed without preauthorization.

(2) Prescription and nonprescription drugs included in the division's closed formulary that exceed or are not addressed by the division's adopted treatment guidelines may be prescribed and dispensed without preauthorization.

(3) Drugs included in the closed formulary that are prescribed and dispensed without preauthorization are subject to retrospective review of medical necessity and reasonableness of health care by the insurance carrier under subsection (g) of this section.

(e) Appeals process for drugs excluded from the closed formulary.

(1) When the prescribing doctor determines and documents that a drug excluded from the closed formulary is necessary to treat an injured employee's compensable injury and has prescribed the drug, the prescribing doctor, other requester, or injured employee must request approval of the drug by requesting preauthorization, including reconsideration, under §134.600 of this title and applicable provisions of Chapter 19 of this title (Licensing and Regulation of Insurance Professionals).

(2) If an injured employee or a requester other than the prescribing doctor requests preauthorization and a statement of medical necessity, the prescribing doctor must provide a statement of medical necessity to facilitate the preauthorization submission under §134.502 of this title (Pharmaceutical Services).

(3) If preauthorization for a drug excluded from the closed formulary is denied, the requester may submit a request for medical dispute resolution under §133.308 of this title (MDR of Medical Necessity Disputes).

(4) In the event of an unreasonable risk of a medical emergency, an interlocutory order may be obtained in accordance with §133.306 of this title (Interlocutory Orders for Medical Benefits) or §134.550 of this title (Medical Interlocutory Order).

(f) Initial pharmaceutical coverage.

(1) Drugs included in the closed formulary that are prescribed for initial pharmaceutical coverage under Labor Code §413.0141 may be dispensed without preauthorization and are not subject to retrospective review of medical necessity.

(2) Drugs excluded from the closed formulary that are prescribed for initial pharmaceutical coverage under Labor Code §413.0141 may be dispensed without preauthorization and are subject to retrospective review of medical necessity.

(g) Retrospective review. Except as provided in subsection (f)(1) of this section, drugs that do not require preauthorization are subject to retrospective review for medical necessity under §133.230 of this title (Insurance Carrier Audit of a Medical Bill) and §133.240 of this title (Medical Payments and Denials), and applicable provisions of Chapter 19 of this title.

(1) Health care, including a prescription for a drug, provided under §137.100 of this title is presumed reasonable as Labor Code §413.017 specifies, and is also presumed to be health care reasonably required as defined by Labor Code §401.011(22-a).

(2) For an insurance carrier to deny payment subject to a retrospective review for pharmaceutical services that are recommended by the division's adopted treatment guidelines in §137.100 of this title, the denial must be supported by documentation of evidence-based medicine that outweighs the presumption of reasonableness established under Labor Code §413.017.

(3) A prescribing doctor who prescribes pharmaceutical services that exceed, are not recommended, or are not addressed by §137.100 of this title must provide documentation on request under §134.500(13) of this title (Definitions) and §134.502(e) and (f) of this title.

History

Source Note: The provisions of this §134.530 adopted to be effective January 17, 2011, 35 TexReg 11344; amended to be effective April 22, 2018, 43 TexReg 2275; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.540 Closed Formulary for Claims Subject to Certified Networks

(a) Applicability. The closed formulary applies to all drugs that are prescribed and dispensed for outpatient use for claims subject to a certified network.

(b) Preauthorization for claims subject to the division's closed formulary. Preauthorization is only required for:

(1) drugs identified with a status of "N" in the current edition of the ODG Treatment in Workers' Comp (ODG) / Appendix A, ODG Workers' Compensation Drug Formulary, and any updates;

(2) any prescription drug created through compounding; and

(3) any investigational or experimental drug for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of the treatment, but that is not yet broadly accepted as the prevailing standard of care as defined in Labor Code §413.014(a).

(1) An intrathecal drug delivery system requires preauthorization under the certified network's treatment guidelines and preauthorization requirements in Insurance Code Chapter 1305 and Chapter 10 of this title (Workers' Compensation Health Care Networks).

(B) there is a change in prescribing doctor.

(d) Treatment guidelines. The prescribing of drugs must be under the certified network's treatment guidelines and preauthorization requirements in Insurance Code Chapter 1305 and Chapter 10 of this title. Drugs included in the closed formulary that are prescribed and dispensed without preauthorization are subject to retrospective review of medical necessity and reasonableness of health care by the insurance carrier under subsection (g) of this section.

(e) Appeals process for drugs excluded from the closed formulary.

(1) When the prescribing doctor determines and documents that a drug excluded from the closed formulary is necessary to treat an injured employee's compensable injury and has prescribed the drug, the prescribing doctor, other requester, or injured employee must request approval of the drug in a specific instance by requesting preauthorization under the certified network's preauthorization process established in Chapter 10, Subchapter F of this title (Utilization Review and Retrospective Review) and applicable provisions of Chapter 19 of this title (Licensing and Regulation of Insurance Professionals).

(f) Initial pharmaceutical coverage.

(g) Retrospective review. Except as provided in subsection (f)(1) of this section, drugs that do not require preauthorization are subject to retrospective review for medical necessity under §133.230 of this title (Insurance Carrier Audit of a Medical Bill), §133.240 of this title (Medical Payments and Denials), Insurance Code Chapter 1305, and applicable provisions of Chapters 10 and 19 of this title.

(1) For an insurance carrier to deny payment subject to a retrospective review for pharmaceutical services that fall within the treatment parameters of the certified network's treatment guidelines, the denial must be supported by documentation of evidence-based medicine that outweighs the evidence-basis of the certified network's treatment guidelines.

(2) A prescribing doctor who prescribes pharmaceutical services that exceed, are not recommended, or are not addressed by the certified network's treatment guidelines is required to provide documentation on request under §134.500(13) of this title (Definitions) and §134.502(e) and (f) of this title.

History

Source Note: The provisions of this §134.540 adopted to be effective January 17, 2011, 35 TexReg 11344; amended to be effective April 22, 2018, 43 TexReg 2275; amended to be effective November 28, 2024, 49 TexReg 9758.

28 Tex. Admin. Code § 134.550 Medical Interlocutory Order

(a) The purpose of this section is to provide a prescribing doctor or pharmacy an ability to obtain a medical interlocutory order when preauthorization denials of previously prescribed and dispensed drugs excluded from the closed formulary pose an unreasonable risk of a medical emergency as defined in §134.500(7) of this title (Definitions) and Insurance Code §1305.004(a)(13).

(b) A request for an interlocutory order that does not meet the criteria described by this section may still be submitted under §133.306 of this title (Interlocutory Orders for Medical Benefits).

(1) injured employee name;

(2) date of birth of injured employee;

(3) prescribing doctor's name;

(4) name of drug and dosage;

(5) requester's name (pharmacy or prescribing doctor);

(6) requester's contact information;

(7) a statement that a preauthorization request for a previously prescribed and dispensed drug, which is excluded from the closed formulary, has been denied by the insurance carrier;

(8) a statement that an independent review request has already been submitted to the insurance carrier or the insurance carrier's utilization review agent under §133.308 of this title (MDR of Medical Necessity Disputes);

(9) a statement that the preauthorization denial poses an unreasonable risk of a medical emergency as defined in §134.500(7) of this title;

(10) a statement that the potential medical emergency has been documented in the preauthorization process;

(11) a statement that the insurance carrier has been notified that a request for a medical interlocutory order is being submitted to the division; and

(12) a signature and the following certification by the medical interlocutory order requester for paragraphs (7) - (12) of this subsection, "I hereby certify under penalty of law that the previously listed conditions have been met."

(d) The division will process and approve a complete request for a medical interlocutory order under this section. At its discretion, the division may consider an incomplete request for a medical interlocutory order.

(e) The request for a medical interlocutory order must be in writing and must contain the information in subsection (c) of this section. A convenient form that contains the required information is on the division's website at https://www.tdi.texas.gov/forms/form20numeric.html.

(f) The requester must provide a copy of the request to the insurance carrier, prescribing doctor, injured employee, and dispensing pharmacy, if known, on the date the requester submits the request to the division.

(g) An approved medical interlocutory order is effective retroactively to the date the division received the complete request for the medical interlocutory order.

(h) Notwithstanding §133.308 of this title:

(1) A request for reconsideration of a preauthorization denial is not required prior to a request for independent review when pursuing a medical interlocutory order under this section. If a request for reconsideration or a medical interlocutory order request is not initiated within 15 days from the initial preauthorization denial, then the opportunity to request a medical interlocutory order under this section does not apply.

(2) If pursuing a medical interlocutory order after denial of a reconsideration request, a complete medical interlocutory order must be submitted within five working days of the reconsideration denial.

(i) An appeal of the independent review organization (IRO) decision relating to the medical necessity and reasonableness of the drugs contained in the medical interlocutory order must be submitted under §133.308(t) of this title.

(j) The medical interlocutory order continues in effect until the later of:

(1) final adjudication of a medical dispute about the medical necessity and reasonableness of the drug contained in the medical interlocutory order;

(2) expiration of the period for a timely appeal; or

(3) agreement of the parties.

(k) If a requester withdraws a request for medical necessity dispute resolution, the requester accepts the preauthorization denial.

(l) A party must comply with a medical interlocutory order entered under this section, and the insurance carrier must reimburse the pharmacy for prescriptions dispensed under a medical interlocutory order.

(m) The insurance carrier must notify the prescribing doctor, injured employee, and the dispensing pharmacy once reimbursement is no longer required under subsection (j) of this section.

(n) Payments made by insurance carriers under this section may be eligible for reimbursement from the subsequent injury fund under Labor Code §§410.209 and 413.055 and applicable rules.

(o) A decision issued by an IRO is not an agency or commissioner decision.

(p) A party may seek to reverse or modify a medical interlocutory order issued under this section if:

(1) a final determination of medical necessity has been rendered; and

(2) the party requests a benefit contested case hearing (CCH) from the division's chief clerk no later than 20 days after the date the IRO decision is sent to the party. A benefit review conference is not a prerequisite to a division CCH under this subsection. Except as provided by this subsection, a division CCH must be conducted under Chapters 140 and 142 of this title (Dispute Resolution--General Provisions and Dispute Resolution--Benefit Contested Case Hearing).

(q) The insurance carrier may dispute an interlocutory order entered under this title by filing a written request for a hearing under Labor Code §413.055 and §148.3 of this title (Requesting a Hearing).

History

Source Note: The provisions of this §134.550 adopted to be effective January 17, 2011, 35 TexReg 11344; amended to be effective November 28, 2024, 49 TexReg 9758.

Subchapter G PROSPECTIVE AND CONCURRENT REVIEW OF HEALTH CARE

28 Tex. Admin. Code § 134.600 Preauthorization, Concurrent Utilization Review, and Voluntary Certification of Health Care

(a) The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

(1) Adverse determination: A determination by a utilization review agent made on behalf of a payor that the health care services provided or proposed to be provided to an injured employee are not medically necessary or appropriate. The term does not include a denial of health care services due to the failure to request prospective or concurrent utilization review. An adverse determination does not include a determination that health care services are experimental or investigational.

(2) Ambulatory surgical services: surgical services provided in a facility that operates primarily to provide surgical services to patients who do not require overnight hospital care.

(3) Concurrent utilization review: a form of utilization review for on-going health care listed in subsection (q) of this section for an extension of treatment beyond previously approved health care listed in subsection (p) of this section.

(4) Diagnostic study: any test used to help establish or exclude the presence of disease/injury in symptomatic individuals. The test may help determine the diagnosis, screen for specific disease/injury, guide the management of an established disease/injury, and formulate a prognosis.

(5) Final adjudication: the commissioner has issued a final decision or order that is no longer subject to appeal by either party.

(6) Outpatient surgical services: surgical services provided in a freestanding surgical center or a hospital outpatient department to patients who do not require overnight hospital care.

(7) Preauthorization: a form of prospective utilization review by a payor or a payor's utilization review agent of health care services proposed to be provided to an injured employee.

(8) Reasonable opportunity: At least one documented good faith attempt to contact the provider of record that provides an opportunity for the provider of record to discuss the services under review with the utilization review agent during normal business hours prior to issuing a prospective, concurrent, or retrospective utilization review adverse determination:

(A) no less than one working day prior to issuing a prospective utilization review adverse determination;

(B) no less than five working days prior to issuing a retrospective utilization review adverse determination; or

(9) Requestor: the health care provider or designated representative, including office staff or a referral health care provider or health care facility that requests preauthorization, concurrent utilization review, or voluntary certification.

(10) Work conditioning and work hardening: return-to-work rehabilitation programs as defined in this chapter.

(b) When division-adopted treatment guidelines conflict with this section, this section prevails.

(1) listed in subsection (p) or (q) of this section only when the following situations occur:

(A) an emergency, as defined in Chapter 133 of this title (relating to General Medical Provisions);

(B) preauthorization of any health care listed in subsection (p) of this section that was approved prior to providing the health care;

(C) concurrent utilization review of any health care listed in subsection (q) of this section that was approved prior to providing the health care; or

(D) when ordered by the commissioner;

(2) or per subsection (r) of this section when voluntary certification was requested and payment agreed upon prior to providing the health care for any health care not listed in subsection (p) of this section.

(d) The insurance carrier is not liable under subsection (c)(1)(B) or (C) of this section if there has been a final adjudication that the injury is not compensable or that the health care was provided for a condition unrelated to the compensable injury.

(e) The insurance carrier shall designate accessible direct telephone and facsimile numbers and may designate an electronic transmission address for use by the requestor or injured employee to request preauthorization or concurrent utilization review during normal business hours. The direct number shall be answered or the facsimile or electronic transmission address responded to within the time limits established in subsection (i) of this section. The insurance carrier shall also comply with any additional requirements of §19.2012 of this title (relating to URA's Telephone Access and Procedures for Certain Drug Requests and Post-Stabilization Care).

(f) The requestor or injured employee shall request and obtain preauthorization from the insurance carrier prior to providing or receiving health care listed in subsection (p) of this section. Concurrent utilization review shall be requested prior to the conclusion of the specific number of treatments or period of time preauthorized and approval must be obtained prior to extending the health care listed in subsection (q) of this section. The request for preauthorization or concurrent utilization review shall be sent to the insurance carrier by telephone, facsimile, or electronic transmission and, include the:

(1) name of the injured employee;

(2) specific health care listed in subsection (p) or (q) of this section;

(3) number of specific health care treatments and the specific period of time requested to complete the treatments;

(4) information to substantiate the medical necessity of the health care requested;

(5) accessible telephone and facsimile numbers and may designate an electronic transmission address for use by the insurance carrier;

(6) name of the requestor and requestor's professional license number or national provider identifier, or injured employee's name if the injured employee is requesting preauthorization;

(7) name, professional license number or national provider identifier of the health care provider who will render the health care if different than paragraph (6) of this subsection and if known;

(8) facility name, and the facility's national provider identifier if the proposed health care is to be rendered in a facility; and

(9) estimated date of proposed health care.

(g) A health care provider may submit a request for health care to treat an injury or diagnosis that is not accepted by the insurance carrier in accordance with Labor Code §408.0042.

(1) The request shall be in the form of a treatment plan for a 60 day timeframe.

(2) The insurance carrier shall review requests submitted in accordance with this subsection for both medical necessity and relatedness.

(3) If denying the request, the insurance carrier shall indicate whether it is issuing an adverse determination, and/or whether the denial is based on an unrelated injury or diagnosis in accordance with subsection (m) of this section.

(4) The requestor or injured employee may file an extent of injury dispute upon receipt of an insurance carrier's response which includes a denial due to an unrelated injury or diagnosis, regardless of whether an adverse determination was also issued.

(5) Requests which include a denial due to an unrelated injury or diagnosis may not proceed to medical dispute resolution based on the denial of unrelatedness. However, requests which include the dispute of an adverse determination may proceed to medical dispute resolution for the issue of medical necessity in accordance with subsection (o) of this section.

(h) Except for requests submitted in accordance with subsection (g) of this section, the insurance carrier shall either approve or issue an adverse determination on each request based solely on the medical necessity of the health care required to treat the injury, regardless of:

(1) unresolved issues of compensability, extent of or relatedness to the compensable injury;

(2) the insurance carrier's liability for the injury; or

(3) the fact that the injured employee has reached maximum medical improvement.

(i) The insurance carrier shall contact the requestor or injured employee within the following timeframes by telephone, facsimile, or electronic transmission with the decision to approve the request; issue an adverse determination on a request; or deny a request under subsection (g) of this section because of an unrelated injury or diagnoses as follows:

(1) three working days of receipt of a request for preauthorization; or

(2) three working days of receipt of a request for concurrent utilization review, except for health care listed in subsection (q)(1) of this section, which is due within one working day of the receipt of the request.

(j) The insurance carrier shall send written notification of the approval of the request, adverse determination on the request, or denial of the request under subsection (g) of this section because of an unrelated injury or diagnosis within one working day of the decision to the:

(1) injured employee;

(2) injured employee's representative; and

(3) requestor, if not previously sent by facsimile or electronic transmission.

(k) The insurance carrier's failure to comply with any timeframe requirements of this section shall result in an administrative violation.

(l) The insurance carrier shall not withdraw a preauthorization or concurrent utilization review approval once issued. The approval shall include:

(1) the specific health care;

(2) the approved number of health care treatments and specific period of time to complete the treatments;

(3) a notice of any unresolved dispute regarding the denial of compensability or liability or an unresolved dispute of extent of or relatedness to the compensable injury; and

(4) the insurance carrier's preauthorization approval number that conforms to the standards described in §19.2009(a)(4) of this title (relating to Notice of Determinations Made in Utilization Review).

(m) In accordance with §19.2010 of this title (relating to Requirements Prior to Issuing Adverse Determination), the insurance carrier shall afford the requestor a reasonable opportunity to discuss the clinical basis for the adverse determination prior to issuing the adverse determination. The notice of adverse determination must comply with the requirements of §19.2009 of this title and if preauthorization is denied under Labor Code §408.0042 because the treatment is for an injury or diagnosis unrelated to the compensable injury the notice must include notification to the injured employee and health care provider of entitlement to file an extent of injury dispute in accordance with Chapter 141 of this title (relating to Dispute Resolution--Benefit Review Conference).

(n) The insurance carrier shall not condition an approval or change any elements of the request as listed in subsection (f) of this section, unless the condition or change is mutually agreed to by the health care provider and insurance carrier and is documented.

(o) If the initial response is an adverse determination of preauthorization or concurrent utilization review, the requestor or injured employee may request reconsideration orally or in writing. A request for reconsideration under this section constitutes an appeal for the purposes of §19.2011 of this title (relating to Written Procedures for Appeal of Adverse Determinations).

(1) The requestor or injured employee may within 30 days of receipt of a written adverse determination request the insurance carrier to reconsider the adverse determination and shall document the reconsideration request.

(2) The insurance carrier shall respond to the request for reconsideration of the adverse determination:

(A) as soon as practicable but not later than the 30th day after receiving a request for reconsideration of an adverse determination of preauthorization; or

(B) within three working days of receipt of a request for reconsideration of an adverse determination of concurrent utilization review, except for health care listed in subsection (q)(1) of this section, which is due within one working day of the receipt of the request.

(3) In addition to the requirements in this section and §19.2011 of this title, the insurance carrier's reconsideration procedures shall include a provision that the period during which the reconsideration is to be completed shall be based on the medical or clinical immediacy of the condition, procedure, or treatment.

(4) In any instance where the insurance carrier is questioning the medical necessity or appropriateness of the health care services prior to the issuance of an adverse determination on the request for reconsideration, the insurance carrier shall comply with the requirements of §19.2010 and §19.2011 of this title, including the requirement that the insurance carrier afford the requestor a reasonable opportunity to discuss the proposed health care with a doctor or, in cases of a dental plan or chiropractic services, with a dentist or chiropractor, respectively.

(5) The requestor or injured employee may appeal the denial of a reconsideration request regarding an adverse determination by filing a dispute in accordance with Labor Code §413.031 and related division rules.

(6) A request for preauthorization for the same health care shall only be resubmitted when the requestor provides objective clinical documentation to support a substantial change in the injured employee's medical condition or that demonstrates that the injured employee has met clinical prerequisites for the requested health care that had not been previously met before submission of the previous request. The insurance carrier shall review the documentation and determine if any substantial change in the injured employee's medical condition has occurred or if all necessary clinical prerequisites have been met. A frivolous resubmission of a preauthorization request for the same health care constitutes an administrative violation.

(p) Non-emergency health care requiring preauthorization includes:

(1) inpatient hospital admissions, including the principal scheduled procedure(s) and the length of stay;

(2) outpatient surgical or ambulatory surgical services as defined in subsection (a) of this section;

(3) spinal surgery;

(4) all work hardening or work conditioning services;

(5) physical and occupational therapy services, which includes those services listed in the Healthcare Common Procedure Coding System (HCPCS) at the following levels:

(A) Level I code range for Physical Medicine and Rehabilitation, but limited to:

(i) Modalities, both supervised and constant attendance;

(ii) Therapeutic procedures, excluding work hardening and work conditioning;

(iii) Orthotics/Prosthetics Management;

(iv) Other procedures, limited to the unlisted physical medicine and rehabilitation procedure code; and

(B) Level II temporary code(s) for physical and occupational therapy services provided in a home setting;

(C) except for the first six visits of physical or occupational therapy following the evaluation when such treatment is rendered within the first two weeks immediately following:

(i) the date of injury; or

(ii) a surgical intervention previously preauthorized by the insurance carrier;

(6) any investigational or experimental service or device for which there is early, developing scientific or clinical evidence demonstrating the potential efficacy of the treatment, service, or device but that is not yet broadly accepted as the prevailing standard of care;

(7) all psychological testing and psychotherapy, repeat interviews, and biofeedback, except when any service is part of a preauthorized return-to-work rehabilitation program;

(8) unless otherwise specified in this subsection, a repeat individual diagnostic study;

(A) with a reimbursement rate of greater than $350 as established in the current Medical Fee Guideline; or

(B) without a reimbursement rate established in the current Medical Fee Guideline;

(9) all durable medical equipment (DME) in excess of $500 billed charges per item (either purchase or expected cumulative rental);

(10) chronic pain management/interdisciplinary pain rehabilitation;

(11) drugs not included in the applicable division formulary;

(12) treatments and services that exceed or are not addressed by the commissioner's adopted treatment guidelines or protocols and are not contained in a treatment plan preauthorized by the insurance carrier. This requirement does not apply to drugs prescribed for claims under §§134.506, 134.530 or 134.540 of this title (relating to Pharmaceutical Benefits);

(13) required treatment plans; and

(14) any treatment for an injury or diagnosis that is not accepted by the insurance carrier under Labor Code §408.0042 and §126.14 of this title (relating to Treating Doctor Examination to Define the Compensable Injury).

(q) The health care requiring concurrent utilization review for an extension for previously approved services includes:

(1) inpatient length of stay;

(2) all work hardening or work conditioning services;

(3) physical and occupational therapy services as referenced in subsection (p)(5) of this section;

(4) investigational or experimental services or use of devices;

(5) chronic pain management/interdisciplinary pain rehabilitation; and

(6) required treatment plans.

(r) The requestor and insurance carrier may voluntarily discuss health care that does not require preauthorization or concurrent utilization review under subsections (p) and (q) of this section respectively.

(1) Denial of a request for voluntary certification is not subject to dispute resolution for prospective review of medical necessity.

(2) The insurance carrier may certify health care requested. The carrier and requestor shall document the agreement. Health care provided as a result of the agreement is not subject to retrospective utilization review of medical necessity.

(3) If there is no agreement between the insurance carrier and requestor, health care provided is subject to retrospective utilization review of medical necessity.

(s) An increase or decrease in review and preauthorization controls may be applied to individual doctors or individual workers' compensation claims by the division in accordance with Labor Code §408.0231(b)(4) and other sections of this title.

(t) The insurance carrier shall maintain accurate records to reflect information regarding requests for preauthorization, or concurrent utilization review approval or adverse determination decisions, and appeals, including requests for reconsideration and requests for medical dispute resolution, if any. The insurance carrier shall also maintain accurate records to reflect information regarding requests for voluntary certification approval/denial decisions. Upon request of the division, the insurance carrier shall submit such information in the form and manner prescribed by the division.

(u) For the purposes of this section, all utilization review must be performed by an insurance carrier that is registered with, or a utilization review agent that is certified by, the Texas Department of Insurance to perform utilization review in accordance with Insurance Code Chapter 4201 and Chapter 19 of this title (relating to Licensing and Regulation of Insurance Professionals).

History

Source Note: The provisions of this §134.600 adopted to be effective December 23, 1991, 16 TexReg 7099; amended to be effective April 1, 1997, 22 TexReg 1317; amended to be effective January 1, 2002, 26 TexReg 9874; amended to be effective January 1, 2003, 27 TexReg 12359; amended to be effective March 14, 2004, 29 TexReg 2349; amended to be effective May 2, 2006, 31 TexReg 3566; amended to be effective July 1, 2012, 37 TexReg 2420; amended to be effective March 30, 2014, 39 TexReg 2102; amended to be effective November 1, 2018, 43 TexReg 7174; amended to be effective December 28, 2023, 48 TexReg 8001; amended to be effective January 29, 2026, 51 TexReg 411.

Subchapter I MEDICAL BILL REPORTING

28 Tex. Admin. Code § 134.800 Applicability

(a) This subchapter applies to all insurance carriers as defined in Labor Code §401.011(27), including insurance carriers that have contracted with or established a workers' compensation health care network as defined in Labor Code §401.011(31-a) and insurance carriers that provide medical benefits in a manner authorized by Labor Code §504.053(b)(2). All insurance carriers are required to report information prescribed by the commissioner under Labor Code §413.007 and §413.008 for each medical bill on a workers' compensation claim.

(b) This section is effective September 1, 2011. Insurance carriers and trading partners may submit medical EDI records in accordance with this subchapter prior to this effective date.

History

Source Note: The provisions of this §134.800 adopted to be effective September 1, 2011, 36 TexReg 4136.

28 Tex. Admin. Code § 134.801 Purpose

(a) The purpose of this subchapter is to prescribe the reporting requirements for information and data submitted to the division and to adopt by reference the implementation guide and specifications necessary for successful electronic data interchange transaction processing. The reporting of information and data is necessary to maintain a statewide data base of medical charges, actual payments, and treatment protocols pursuant to Labor Code §413.007 and §413.008.

(b) This section is effective September 1, 2011.

History

Source Note: The provisions of this §134.801 adopted to be effective September 1, 2011, 36 TexReg 4136.

28 Tex. Admin. Code § 134.802 Definitions

(a) The following words and terms, when used in this subchapter, shall have the following meaning, unless the context clearly indicates otherwise:

(1) Application Acknowledgment Code--A code used to identify the accepted or rejected status of the transaction being acknowledged.

(2) Claim Adjustment Reason Code (CARC)--A code that is used on a medical EDI record and an explanation of benefits to communicate why the amount paid for a medical bill or service line does not equal the amount charged. The term is synonymous with service adjustment reason code in the IAIABC EDI Implementation Guide for Medical Bill Payment Records, Release 1.0, dated July 4, 2002.

(3) Claim Administrator Claim Number--An identifier that distinguishes a specific claim within a claim administrator's claim processing system and is used throughout the life of the claim.

(4) Division--The Texas Department of Insurance, Division of Workers' Compensation or its data collection agent.

(5) EDI--Electronic data interchange.

(6) Element Requirement Table--A receiver specific list of requirement codes for each data element depending on the bill submission reason code.

(7) IAIABC--The International Association of Industrial Accident Boards and Commissions.

(8) Medical EDI Record--The accurate data associated with a single medical bill which is being reported in a Medical EDI Transaction obtained from all sources, including the medical bill, explanation of benefits, and insurance carrier's claim file.

(9) Medical EDI Transmission--The data that is contained within the interchange envelope.

(10) Medical EDI Transaction--The data that is contained within the functional group.

(11) Person--An individual, partnership, corporation, hospital district, insurance carrier, organization, business trust, estate trust, association, limited liability company, limited liability partnership or other entity. This term does not include an injured employee.

(12) Trading Partner--A person that has entered into an agreement with the insurance carrier to format electronic data for transmission to the division, transmits electronic data to the division, and responds to any technical issues related to the contents or structure of an EDI file.

(13) W3--A Texas-specific claim adjustment reason code to designate the medical EDI record as a reconsideration or appeal.

(b) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.802 adopted to be effective February 20, 1991, 16 TexReg 671; amended to be effective June 1, 1992, 17 TexReg 3250; amended to be effective December 1, 1992, 17 TexReg 7903; amended to be effective July 15, 2000, 25 TexReg 2139; amended to be effective July 11, 2004, 29 TexReg 6303; amended to be effective April 28, 2005, 30 TexReg 2398; amended to be effective May 2, 2006, 31 TexReg 3561; amended to be effective September 1, 2011, 36 TexReg 4136; amended to be effective September 1, 2015, 40 TexReg 595.

28 Tex. Admin. Code § 134.803 Reporting Standards

(a) Except as provided in this subchapter, the commissioner adopts by reference the IAIABC EDI Implementation Guide for Medical Bill Payment Records, Release 1.0, dated July 4, 2002 (IAIABC Guide) published by the IAIABC.

(b) The commissioner adopts by reference the Texas EDI Medical Data Element Requirement Table, Version 2.0, dated September 2015, the Texas EDI Medical Data Element Edits Table, Version 2.0, dated September 2015, and the Texas EDI Medical Difference Table, Version 3.0, dated September 2015. All tables are published by the division.

(d) In the event of a conflict between the IAIABC Guide and the Labor Code or division rules, the Labor Code or division rules shall prevail.

(e) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.803 adopted to be effective September 1, 2011, 36 TexReg 4136; amended to be effective February 17, 2013, 38 TexReg 673; amended to be effective September 1, 2015, 40 TexReg 595.

28 Tex. Admin. Code § 134.804 Reporting Requirements

(a) Insurance carriers shall submit an '00' original medical EDI record for each action (initial processing, request for reconsideration or appeal, or subsequent orders) taken on an individual medical bill. Original medical EDI records shall be reported within 30 days after the date of the action. Each iteration of an '00' original medical EDI record must contain a different unique medical bill identification number. The amount paid on each action related to a medical bill must contain only the amount issued for that event and must not contain a cumulative amount reflecting all events related to an individual medical bill. Original medical EDI records on subsequent actions must contain a Texas-specific claim adjustment reason code of 'W3' to designate the medical EDI record as a reconsideration or appeal. The Texas-specific claim adjustment reason code must be included on the explanation of benefits issued pursuant to §133.250 of this title (relating to Reconsideration for Payment of Medical Bills).

(b) Insurance carriers shall submit an '01' cancel medical EDI record if the '00' original medical EDI record should not have been sent or contained the incorrect insurance carrier identification number. Cancel medical EDI records shall be reported within 30 days after the earliest date the insurance carrier discovered the reporting error. The '01' cancel medical EDI record must contain the same unique bill identification number as the '00' original medical EDI record that was previously submitted and accepted. An '00' original medical EDI record must be accepted by the division before an '01' cancel medical EDI record may be submitted.

(c) Insurance carriers shall submit an '05' replacement medical EDI record when correcting data on a previously submitted medical EDI record. Replacement medical EDI records shall be submitted within 30 days after the earliest date the insurance carrier discovered the reporting error. The '05' replacement medical EDI record must contain the same unique bill identification number as the associated '00' original medical EDI record. An '00' original medical EDI record must be accepted by the division before an '05' replacement medical EDI record may be submitted.

(d) Insurance carriers must submit timely and accurate medical EDI records to the division. For the purpose of this section, a medical EDI record is considered to have been accurately submitted when the record:

(1) received an Application Acknowledgment Code of accepted;

(2) contained accurate medical EDI data; medical EDI data may be obtained from all sources, including the medical bill, explanation of benefits, and insurance carrier's claim file; and

(3) to the extent supported by the format, contained all appropriate modifiers, code qualifiers, and data elements necessary to identify health care services, charges and payments.

(e) Insurance carriers are responsible for correcting and resubmitting rejected medical EDI records within 30 days of the action that triggered the reporting requirement. The insurance carrier's receipt of a rejection does not modify, extend or otherwise change the date the transaction is required to be reported to the division. The resubmitted medical EDI record must contain the same unique bill identification number as the previously rejected medical EDI record.

(f) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.804 adopted to be effective September 1, 2011, 36 TexReg 4136; amended to be effective September 1, 2015, 40 TexReg 595.

28 Tex. Admin. Code § 134.805 Records Required to be Reported

(a) Insurance carriers shall submit medical EDI records when the insurance carrier:

(1) pays a medical bill;

(2) reduces or denies payment for a medical bill, including duplicate bills;

(3) receives a refund for a medical bill;

(4) discovers that a medical EDI record should not have been submitted to the division and the medical EDI record had previously been accepted by the division;

(5) reimburses an injured employee for health care paid in accordance with §133.270; or

(6) reimburses an employer for health care paid in accordance with §133.280.

(b) Regardless of the Application Acknowledgment Code returned in an acknowledgment, medical EDI records are not considered received by the division if the medical EDI record:

(1) contains data which does not accurately reflect the code values used or actions taken when the insurance carrier processed the medical bill; or

(2) fails to contain a conditional data element and the mandatory trigger condition existed at the time the insurance carrier processed the medical bill.

(c) Except in situations where the health care provider included an invalid service or procedure code on the medical bill, rejected medical EDI records are not considered received and shall be corrected and resubmitted to the division as provided in §134.804(e) of this title (relating to Reporting Requirements). Medical EDI records submitted in the test environment are not considered received and do not comply with the reporting requirements of this section.

(d) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.805 adopted to be effective September 1, 2011, 36 TexReg 4136; amended to be effective September 1, 2015, 40 TexReg 595.

28 Tex. Admin. Code § 134.806 Records Excluded from Reporting

(a) Insurance carriers shall not report medical EDI records for health care services:

(1) rendered outside the United States;

(2) related to dates of injury before January 1, 1991;

(3) rendered at a Federal health care facility and the health care facility does not provide the insurance carrier with the data required to be reported;

(4) related to an injured employee's travel reimbursement as provided in §134.110 of this title (relating to Reimbursement of Injured Employee for Travel Expenses Incurred); or

(5) related to a request for reimbursement by a health care insurer in accordance with the provisions of Labor Code §409.0091.

(b) Insurance carriers shall not report interest and penalty payments paid on health care services, medical cost containment expenses, medical bill review expenses or data transmission expenses in medical EDI records.

History

Source Note: The provisions of this §134.806 adopted to be effective September 1, 2011, 36 TexReg 4136.

28 Tex. Admin. Code § 134.807 State Specific Requirements

(a) A medical EDI transmission shall not exceed a file size of 1.5 megabytes. A transaction set shall not contain more than 100 medical EDI records in a claimant hierarchical loop.

(b) Insurance carriers shall submit medical EDI transactions using Secure File Transfer Protocol (SFTP). All alphabetic characters used in the SFTP file name must be lower case and the file must be compressed/zipped. Files that do not comply with these requirements or the naming convention may be rejected and placed in appropriate failure folders. Insurance carriers must monitor these folders for file failures and make corrections in accordance with §134.804(e) of this title (relating to Reporting Requirements).

(1) Two digit alphanumeric state indicator of 'tx';

(2) Nine digit trading partner Federal Employer Identification Number (FEIN);

(3) Nine digit trading partner postal code;

(4) Nine digit insurance carrier FEIN or 'xxxxxxxxx' if the file contains medical EDI transactions from different insurance carriers;

(5) Three digit record type '837';

(6) One character Test/Production indicator ('t' or 'p');

(7) Eight digit date file sent 'CCYYMMDD';

(8) Six digit time file sent 'HHMMSS';

(9) One character standard extension delimiter of '.'; and

(10) Three digit alphanumeric standard file extension of 'zip' or 'txt'.

(d) The transaction types accepted by the division include '00' original, '01' cancel, and '05' replacement.

(e) Insurance carriers are required to use the following delimiters:

(1) Date Element Separator--'*' asterisk;

(2) Sub-element Separator--':' colon; and

(3) Segment Terminator--'~' tilde.

(f) In addition to the requirements adopted under §134.803 of this title (relating to Reporting Standards), state reporting of medical EDI transactions shall comply with the following formatting requirements:

(1) Loop 2400 Service Line Information must not contain more than one type of service. Only one of the following data segments may be contained in an iteration of this loop: SV1 Professional Service, SV2 Institutional Service, SV3 Dental Service or SV4 Pharmacy Service.

(2) When reporting compound medications, Loop 2400 Service Line Information SV4 Pharmacy Drug Service must include a separate line for each reimbursable component of the compound medication. The same prescription number for each reimbursable component of the compound medication, including the compounding fee, must be reported. The compounding fee must be reported using a default NDC number equal to '99999999999' as a separate service line.

(3) When reporting pharmacy medical EDI records, the following data element definition clarifications apply:

(A) DN501 Total Charge Per Bill is the total amount charged by the pharmacy or pharmacy processing agent;

(B) DN511 Date Insurer Received Bill is the date the insurance carrier received the bill;

(D) DN638 Rendering Bill Provider Last/Group Name is the name of the dispensing pharmacy;

(E) DN690 Referring Provider Last/Group Name is the last name of the prescribing doctor; and

(F) DN691 Referring Provider First Name is the first name of the prescribing doctor.

(4) When ICD-10-CM and ICD-10-PCS codes are contained on the medical bill, the insurance carrier must report these codes in the associated ICD-9-CM data elements using the ICD-9-CM code qualifiers.

(5) If the injured employee's social security number is unknown, it must be reported in accordance with §102.8(a)(1) of this title (relating to Information Requested on Written Communications to the Division).

(6) The DN53 data element must be reported on all medical EDI records.

(7) The provider agreement code must be reported on all medical EDI records, must not be reported with the value of "Y", and must only contain one of the following values:

(A) "H" for services performed within a Certified Workers' Compensation Health Care Network;

(B) "P" for services performed under a contractual fee arrangement, excluding services performed within a certified network; or

(8) When an insurance carrier calculated a reimbursement amount by applying the most recently adopted and effective Medicare Inpatient Prospective Payment System (IPPS) as required in §134.404 of this title (relating to Hospital Facility Fee Guideline--Inpatient), the DN515 (Contract Type Code) must be reported as "01" and the valid Diagnosis Related Group Code for DN518 must be reported.

(9) On a professional medical bill, an insurance carrier shall only report up to four (4) diagnosis codes on each medical EDI record.

(10) On a professional medical bill, an insurance carrier shall only report to the Division up to four diagnosis code pointers and those pointers must be reported numerically. If a professional medical bill containing more than four diagnosis pointers is reported to the insurance carrier, each diagnosis pointer after the first four shall be reported to the Division with the value of "1."

(g) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.807 adopted to be effective September 1, 2011, 36 TexReg 4136; amended to be effective February 17, 2013, 38 TexReg 673; amended to be effective September 1, 2015, 40 TexReg 595.

28 Tex. Admin. Code § 134.808 Insurance Carrier EDI Compliance Coordinator and Trading Partners

(a) Insurance carriers may submit medical EDI records directly to the division or may contract with an external trading partner to submit the records on the insurance carrier's behalf.

(b) Each insurance carrier, including those using external trading partners, must designate one individual to the division as the EDI Compliance Coordinator and provide the individual's name, working title, mailing address, email address, and telephone number in the form and manner prescribed by the division. The EDI Compliance Coordinator must:

(1) be a centrally-located employee of the insurance carrier who has the responsibility for EDI reporting;

(2) receive and appropriately disperse data reporting information received from the division; and

(3) serve as the central compliance control for data reporting under this subchapter.

(c) At least five working days prior to sending its first transaction to the division under this subchapter, the insurance carrier shall send a notice to the division. The notice shall be in the form and manner established by the division. The notice shall include the name of the insurance carrier, the insurance carrier's FEIN, the insurance carrier's TxCOMP customer number, the name of the trading partner(s) authorized to conduct medical EDI transactions on behalf of the insurance carrier, the FEIN of the trading partner(s), and the EDI Compliance Coordinator's signature. The insurance carrier shall report changes within five working days of any amendment to data sharing agreements, including the addition or removal of any trading partners. The failure to timely submit updated information may result in the rejection of medical EDI records.

(d) At least five working days prior to sending its first test transaction to the division under this subchapter, the insurance carrier or trading partner sending the medical EDI transmission shall send a notice to the division. The notice shall be in the form and manner established by the division. The notice shall include the entity's name, FEIN, nine-digit postal code, address, and the technical contact's name, address, phone number, and email address. The insurance carrier or trading partner shall report changes within five working days of any amendment to the information required to be reported.

(e) Insurance carriers and trading partners must successfully complete testing prior to transmitting any production data. Trading partners must receive approval to submit data for at least one insurance carrier prior to initiating the testing process. Insurance carriers and trading partners must submit each transaction type during the testing process which can be successfully processed by the division. The division will not approve an insurance carrier or trading partner for production submissions until the insurance carrier or trading partner has:

(1) successfully submitted ten percent of its anticipated monthly volume per service type, not to exceed 100 medical EDI records per service type;

(2) received and reviewed the acknowledgments generated by the division; and

(3) correctly resubmitted rejected records identified in the acknowledgments.

(f) Insurance carriers are responsible for the acts or omissions of their trading partners. The insurance carrier commits an administrative violation if the insurance carrier or its trading partner fails to timely or accurately submit medical EDI records.

(g) This section is effective September 1, 2015.

History

Source Note: The provisions of this §134.808 adopted to be effective September 1, 2011, 36 TexReg 4136; amended to be effective September 1, 2015, 40 TexReg 595.

Subchapter J REVIEWS AND AUDITS

28 Tex. Admin. Code § 134.900 Medical Benefit Review and Audit

(a) The division of medical review (the division) shall review and audit medical services, to include, but not be limited to:

(1) treatments administered;

(2) services provided;

(3) fees charged;

(4) payments made for medical treatment or services provided to injured employees; and

(5) compliance with other commission rules regulating health care.

(b) The division may conduct a review or audit at the office of an insurance carrier, third party administrator, audit company, health care provider, or at any other appropriate location as determined by the division.

(c) The division shall notify, in writing, the person or entity whose documents are to be reviewed and audited, stating when the review and audit will be performed and the commission employee to contact.

(d) The division shall be granted access to documents and to information regarding health care treatment; fees charged; or payments made, modified, or denied. Pursuant to law, failure or refusal to comply with a division request or order for any information is an administrative violation subject to penalty as provided by the Act.

(e) The person or entity being reviewed or audited by the division shall furnish division personnel, for the duration of the review and audit, with:

(1) a contact person to answer questions and respond to the needs of division staff;

(2) office space;

(3) access to a copy machine; and

(4) access to a telephone.

(f) The commission shall charge a reasonable administrative fee, set in accordance with Administrative Procedure 5, for the review and audit conducted under this rule.

(g) The intensity of review and audit for compliance with medical policies and fee guidelines shall be increased as necessary to induce compliance by the health care provider who has established practices and patterns in medical charges or treatments inconsistent with medical policies and guidelines established by the commission.

(h) Reports of all probable violations of law and commission rules found during a review and audit shall be forwarded to the division of compliance and practices.

History

Source Note: The provisions of this §134.900 adopted to be effective October 1, 1992, 17 TexReg 6364.

Chapter 136 BENEFITS--VOCATIONAL REHABILITATION

28 Tex. Admin. Code § 136.1 Review of Employer Report of Injury

(a) The division shall analyze each employer report of injury, within 30 days of its receipt, for any information indicating that the injured employee had or is likely to have:

(1) an amputation of:

(A) an arm or leg;

(B) three fingers or more; or

(2) the loss of use of an arm or leg;

(3) a permanent spinal cord injury;

(4) a head injury;

(5) a heart attack or heart disease;

(6) an occupational disease;

(7) blindness or significant vision loss;

(8) severe or extensive burns;

(9) any other condition that indicates an impairment is likely; or

(10) any injury resulting in more than 30 days lost time. Such injury shall be reviewed and a determination made as to the degree of impairment and the appropriateness of vocational rehabilitation services.

(b) Whenever the division finds facts that suggest one or more of the conditions listed in subsection (a) of this section, the division shall notify the injured employee and the Texas Workforce Commission that the division has identified an injured employee who may be assisted by vocational rehabilitation. The notice shall:

(1) be made no later than 60 days after the date the division received the employer report of injury; and

(2) contain the following information:

(A) the workers' compensation claim number assigned by the division;

(B) the address of the local office of the division assigned to manage the claim;

(D) the name, address, and phone number of the injured employee; and

(E) the condition listed in subsection (a) of this section, that indicates that the injured employee may be assisted by vocational rehabilitation.

(c) In addition to the information required by subsection (b) of this section, the division's notice to the injured employee shall contain the following:

(1) the address and telephone number of the central office of the Texas Workforce Commission; and

(2) a statement that the division notified the Texas Workforce Commission that the injured employee may be assisted by vocational rehabilitation.

History

Source Note: The provisions of this §136.1 adopted to be effective March 18, 1991, 16 TexReg 1367; amended to be effective February 3, 2011, 36 TexReg 427; amended to be effective April 15, 2018, 43 TexReg 2155.

Chapter 137 DISABILITY MANAGEMENT

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 137.1 Disability Management Concept

(a) Disability management is a process designed to optimize health care and return to work outcomes for injured employees to avoid delayed recovery in the Texas Workers' Compensation System.

(b) This chapter is designed to provide disability management tools, such as treatment and return to work guidelines, treatment protocols, treatment planning, and case management to benchmark, manage, and achieve improved outcomes. The Division may use these tools for the following purposes, including, but not limited to:

(1) resolving income benefit disputes;

(2) resolving medical benefit disputes;

(3) establishing performance-based tiers;

(4) defining performance-based incentives;

(5) determining sanctions or penalties;

(6) performing medical quality reviews; or

(7) assessing other matters deemed appropriate by the Commissioner of Workers' Compensation.

(c) The Division will utilize this chapter to implement and interpret specific provisions contained in Labor Code §413.011(a) and (e), and this chapter takes precedence over any conflicting payment policy provisions adopted or utilized by the Centers for Medicare and Medicaid Services (CMS) in administering the Medicare program.

(d) Independent Review Organization (IRO) decisions regarding medical necessity made in accordance with Labor Code §413.031 and §133.308 of this title (relating to Medical Dispute Resolution by Independent Review Organizations), which are made on a case-by-case basis, take precedence in that case only, over adopted treatment guidelines, treatment protocols, treatment planning and Medicare payment policies.

History

Source Note: The provisions of this §137.1 adopted to be effective January 18, 2007, 32 TexReg 163.

28 Tex. Admin. Code § 137.5 Case Manager Certification

(a) This section applies to all case management services as defined by Labor Code §401.011(5-a) that are provided under Labor Code Title 5 to injured employees by an insurance carrier on or after September 1, 2011.

(b) This section does not apply to case management services:

(1) subject to Insurance Code Chapter 1305;

(2) subject to Labor Code §504.053(b)(2); or

(3) of a health care provider subject to §134.204 of this title (relating to Medical Fee Guideline for Workers' Compensation Specific Services).

(c) Case managers who are certified must be certified by an established accredited organization including the National Commission for Certifying Agencies, the American Board of Nursing Specialties, or other national accrediting agencies with similar standards for case management certification. Case managers must be certified in one or more of the following areas:

(1) case management;

(2) case management administration;

(3) continuity of care;

(4) disability management;

(5) occupational health; or

(6) rehabilitation case management.

(d) When conducting evaluations to determine if case management services are required, insurance carriers shall utilize case managers who are certified in accordance with subsection (c) of this section.

(e) When providing case management services other than those specified in subsection (d) of this section, an insurance carrier shall utilize case managers who are:

(1) appropriately certified in accordance with subsection (c) of this section; or

(2) skilled, non-certified case managers as specified in subsection (f) of this section.

(f) Skilled, non-certified case managers are eligible to provide services other than those identified in subsection (d) of this section if:

(1) they meet all of the requirements of subsection (c) to sit for a case management certification examination, with the exception of work experience; and

(2) they are working under the direct supervision of an identified case manager that is certified in accordance with subsection (c) of this section in order to meet the experience requirements to sit for a case management certification examination.

(g) Individuals may only be employed or contracted as skilled, non-certified case managers as specified in subsection (f) of this section for an aggregate total of 24 months, beginning with the first month in which the individual first performs case management related services that occurs after the effective date outlined in subsection (a) of this section. After accrual of the 24 months, these individuals shall not conduct case management services until a certification is obtained in accordance with subsection (c) of this section.

(h) Insurance carriers shall be responsible for verifying and documenting in writing compliance with the requirements of subsections (d), (e) and (f) of this section. Insurance carriers shall provide this verification and documentation information to the division upon request.

(i) Claims adjusters shall not be used as case managers. This does not prohibit claims adjusters from performing claims services that are within the scope of licensure in accordance with the Insurance Code Chapter 4101.

(j) Reimbursement policies and maximum allowable reimbursement rates set forth in the adopted fee guidelines under §134.204 of this title between the treating doctor and other health care providers does not apply to the reimbursement of case managers employed or contracted by insurance carriers under this section.

(k) If the requirements of this section are not met, the insurance carrier may be held liable for administrative violations in accordance with Labor Code provisions and division rules.

History

Source Note: The provisions of this §137.5 adopted to be effective September 1, 2011, 35 TexReg 11378.

Subchapter B RETURN TO WORK

28 Tex. Admin. Code § 137.10 Return to Work Guidelines

(a) Insurance carriers, health care providers, and employers shall use the disability duration values in the current edition of The Medical Disability Advisor, Workplace Guidelines for Disability Duration, excluding all sections and tables relating to rehabilitation, (MDA), published by the Reed Group, Ltd. (Division return to work guidelines), as guidelines for the evaluation of expected or average return to work time frames.

(b) Information on how to obtain or inspect copies of the Division return to work guidelines may be found on the Division's website: www.tdi.state.tx.us.

(c) The Division return to work guidelines provide disability duration expectancies. The Division return to work guidelines shall be presumed to be a reasonable length of disability duration and shall be used by:

(1) health care providers to establish return to work goals or a return to work plan for safely returning injured employees to medically appropriate work environments;

(2) insurance carriers as a basis for requesting a designated doctor examination to resolve an issue regarding an injured employee's ability to return to work as well as a basis to initiate case management and to refer an injured employee to vocational rehabilitation providers; and

(3) employers, insurance carriers, health care providers, and injured employees to facilitate and improve communications among the parties regarding the return to work goals or plans established by health care providers.

(d) The health care provider, insurance carrier, employer, and Division may consider co-morbid conditions, medical complications, or other factors that may influence medical recoveries and disability durations as mitigating circumstances when setting return to work goals or revising expected return to work durations and goals.

(e) Disability duration values in the guidelines are not absolute values and do not represent specific lengths or periods of time at which an injured employee must return to work; the values represent points in time at which additional evaluation may take place if full medical recovery and return to work have not occurred. System participants may, however, determine additional evaluation is appropriate at any time during a claim. The disability duration values depict a continuum from the minimum time to the maximum time for most individuals to return to work following a particular injury. An insurance carrier may request additional return to work information from a health care provider at any time. An insurance carrier may not use the Division return to work guidelines as the sole justification or the only reasonable grounds for reducing, denying, suspending or terminating income benefits to an injured employee.

(f) For all diagnoses or injuries that are not addressed by the Division return to work guidelines, system participants shall establish disability duration parameters and return to work goals in accordance with the principles of evidence-based medicine as defined by Labor Code §401.011(18-a).

(g) This section is effective on or after May 1, 2007.

History

Source Note: The provisions of this §137.10 adopted to be effective January 18, 2007, 32 TexReg 163.

28 Tex. Admin. Code § 137.41 Purpose

The purpose of §§137.41 - 137.51 of this title (relating to Disability Management) is to set forth the terms, conditions, and requirements for the return-to-work reimbursement program for employers.

History

Source Note: The provisions of this §137.41 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective February 7, 2008, 33 TexReg 930; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.42 Definitions

The following words and terms shall have the following meanings only for the purposes of the return-to-work reimbursement program for employers:

(1) Allowable expense--An expenditure of funds, costs incurred, or costs that will be incurred by an eligible employer for workplace modifications or other costs that are necessary to reasonably assist an injured employee's doctor-identified restrictions that are intended to facilitate the early and sustained return to work of an employee who has a compensable injury. An indemnity benefit, medical benefit, or health care for which an insurance carrier is liable is not an allowable expense under the program.

(2) Applicant--The employer requesting funds from the return-to-work reimbursement program.

(3) Application--The return-to-work reimbursement program application provided by the division for reimbursement, preauthorization, or advancement of funds used or proposed to be used by employers for workplace modifications.

(4) Alternative duty--Job duties that are different from the injured employee's normal or regular pre-injury job duties and that are assigned specifically to facilitate the injured employee's doctor-identified work restrictions or limitations.

(5) Eligible employer--Any employer that:

(A) is not a state agency or political subdivision of the state;

(B) employed at least two but not more than 50 employees on each business day during the preceding calendar year; and

(6) Division--The Texas Department of Insurance, Division of Workers' Compensation.

(7) Modified duty--The injured employee's normal or regular pre-injury job with workplace modifications to facilitate doctor-identified work restrictions or limitations.

(8) Return-to-work reimbursement program (program)--The division's program for the reimbursement, preauthorization, or advancement of funds to eligible employers for allowable expenses which facilitate the early and sustained return to work of an employee who has a compensable injury.

(9) Return-to-work reimbursement program administrator (administrator)--The administrator of the Texas Department of Insurance, Division of Workers' Compensation return-to-work reimbursement program for employers.

(10) Single employer--An employer operating one or more businesses under the same federal employer identification number. In the absence of a federal employer identification number, a single employer is established by the employer's social security number.

(11) State appropriation year--The State of Texas' fiscal accounting year that begins September 1 and ends August 31 of the following year.

(12) Workplace modification--Physical modifications to the worksite; equipment, devices, furniture, or tools; or other reasonable costs necessary to facilitate an employee's return to restricted, modified or alternative duty.

History

Source Note: The provisions of this §137.42 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.43 Return-to-Work Reimbursement Program Administrator

The Commissioner of Workers' Compensation shall appoint a qualified employee of the Texas Department of Insurance, Division of Workers' Compensation to serve as the return-to-work reimbursement program administrator to implement the provisions of this subchapter.

History

Source Note: The provisions of this §137.43 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.44 Return-to-Work Reimbursement Program for Employers

(a) Disbursements of funds for the program are dependent on the availability of funds identified by the division.

(b) The disbursement that any single employer may receive from the program may not exceed $5,000 for all workplace modification expenditures made during the state appropriation year for all injured employees.

(c) Disbursements from the program to approved eligible employers shall be made on a reimbursement basis, or at the discretion of the commissioner or the commissioner's designee on an advancement basis, subject to verification of employer eligibility, receipts and expenditures, workplace modifications, the employee's return to work, approval of the employer's application, and any other requirements listed in §§137.45 - 137.50 of this title (relating to the Return-to-Work Reimbursement Program).

(d) Applications shall be processed in the order that completed applications are received by the division.

(e) Approved applications shall be funded from the program as funds become available.

(f) Applications may be denied in whole or in part due to the lack of available funds for the program or if the division determines that all or part of the application does not meet the requirements listed in §§137.45 - 137.50 of this title.

History

Source Note: The provisions of this §137.44 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.45 Employer Eligibility for Disbursements from the Return-to-Work Reimbursement Program

(a) In order to be eligible to receive a disbursement from the program, an employer must:

(1) be an eligible employer that has incurred or will incur an allowable expense;

(2) have Texas workers' compensation insurance coverage in effect on the date the employee is injured and be able to provide proof of coverage;

(3) submit an application for funds from the program;

(4) timely provide any additional or supplemental information to the administrator that may be deemed necessary by the division; and

(5) the application must be approved by the division.

(b) In order for an expense to be eligible for a disbursement from the program, the expense must not have been incurred by the employer beyond one year prior to submitting the application to the division. For good cause, the division or the administrator may extend this one year requirement.

(c) After approval of an application by the division, release of funds are contingent upon the approval of the Texas Comptroller of Public Accounts. Approval of an application by the division is not a guarantee of release of funds from the Texas Comptroller of Public Accounts.

History

Source Note: The provisions of this §137.45 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.46 Application for Funds from the Return-to-Work Reimbursement Program

(a) An eligible employer seeking funds from the program shall submit to the division an application as defined in §137.42 of this title (relating to Definitions).

(b) Applications shall be available on the division's website (www.tdi.state.tx.us/wc) and through the division. Upon request, the division shall provide an application form to an employer.

(c) Applications shall be submitted to the division in the form prescribed by the division and must meet the minimum requirements provided in §137.47 of this title (relating to the Criteria for Return-to-Work Reimbursement Program Applications).

(d) The date the completed application is received by the division shall be the official date for purposes of processing the application. An application shall not be processed for approval until all required or requested documentation has been received by the division and any other applicable requirements listed on the application have been met.

(e) An application that has information missing or that does not include the information described in §137.47 of this title, receipts, or other documentation necessary to support the application and to justify the workplace modification may be returned to the employer for completion, documentation supplementation, or the application may be denied.

History

Source Note: The provisions of this §137.46 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.47 Criteria for Return-to-Work Reimbursement Program Applications

In order to be processed and approved by the division an application must contain at a minimum:

(1) The date the employee returned to work or will return to work, and the injured employee's name, date of injury, and Texas Department of Insurance, Division of Workers' Compensation claim number.

(2) An employer's statement or certification that the injured employee returned to work or will return to work in either a modified or alternative duty capacity.

(3) An employer's statement or certification that the employer was able or will be able to sustain the employment of the injured employee as a result of the workplace modification.

(4) A copy of the division's "Work Status Report" as provided by §129.5 of this title (relating to Work Status Reports) from the injured employee's doctor that specifies the injured employee's physical restrictions or limitations, which necessitated the provision of a workplace modification in order for the employee to return to work in a modified or alternative duty capacity and additional documentation, if any.

(5) A detailed description of the workplace modification, including any supporting information such as receipts, photos or diagrams of the modification, and how the modification facilitates the doctor-identified physical restrictions or limitations.

(6) Documentation of the expenses, including receipts, that provided the workplace modification or other costs necessary to facilitate the injured employee's return to work or the estimated costs in making those proposed workplace modifications.

(7) A signature by the employer or the employer's authorized representative.

History

Source Note: The provisions of this §137.47 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.48 Return-to-Work Reimbursement Program Administrator Determinations

(a) The administrator shall make determinations regarding the following:

(1) the employer's eligibility to participate in the program;

(2) the appropriateness of the workplace modification in facilitating the injured employee's return to work based on doctor-identified restrictions;

(3) the effectiveness of the workplace modification in facilitating the injured employee's early and sustained return to work;

(4) the cost of the workplace modification in relation to usual and customary costs of the same or similar modification; and

(5) the appropriateness of other costs incurred or to be incurred by the employer to return the injured employee to work in a modified or alternative duty capacity.

(b) The administrator or designee may make an on-site evaluation or request information from the employer or providers of a workplace modification in order to verify that:

(1) the workplace modification was or will be provided;

(2) the workplace modification was or will be a reasonable modification and expenditure; and

(3) the injured employee returned to work as a result of the workplace modification.

(c) The administrator may utilize the National Institute of Health's "Searchable Online Accommodation Resource," U.S. Department of Labor resources, Texas Department of Assistive and Rehabilitative Services resources, or similar resources in evaluating and verifying workplace modifications and associated costs. The administrator may consult with a rehabilitation counselor or specialist when verifying the appropriateness of workplace modifications and costs.

(d) The administrator may approve or deny in whole or in part the employer's request for funds from the program pursuant to §137.44 of this title (relating to the Return-to-Work Reimbursement Program for Employers), §137.45 of this title (relating to Employer Eligibility for Disbursements from the Return-to-Work Reimbursement Program), §137.46 of this title (relating to the Application for Funds from the Return-to-Work Reimbursement Program), and §137.47 of this title (relating to the Criteria for Return-to-Work Reimbursement Program Applications).

(e) Decisions regarding approval or denial of applications, the reason for approval or denial of an application, and the amount to be disbursed from the program are final, may not be appealed, and are the discretion of the administrator.

(f) Upon completion of the application evaluation, the employer will be notified in writing of the approval or denial of the application by the administrator.

History

Source Note: The provisions of this §137.48 adopted to be effective February 22, 2006, 31 TexReg 1037; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.49 Optional Preauthorization Plan

(a) An eligible employer, as provided by §137.45 of this title (relating to Employer Eligibility for Disbursements from the Return-to-Work Reimbursement Program), who participates in the return-to-work reimbursement program for employers may apply to the division for a preauthorized reimbursement of allowable expenses from the program prior to making workplace modifications designed to accommodate an injured employee's return to work.

(b) To apply for a preauthorized reimbursement of allowable expenses, an eligible employer must submit to the division a properly completed application as provided in §137.47 of this title (relating to the Criteria for Return-to-Work Reimbursement Program Applications). The application may be obtained from the division as provided by §137.46 of this title (relating to the Application for Funds from the Return-to-Work Reimbursement Program).

(c) Applications will be reviewed in accordance with §137.48 of this title (relating to Return-to-Work Reimbursement Program Administrator Determinations).

(d) Upon receipt of division approval of the application, the employer may begin all approved workplace modifications set out in the approved application. Upon completion of the approved workplace modifications, the employer may obtain reimbursement from the program by submitting to the division sufficient documentation and receipts to show that the approved workplace modification has been completed.

(e) Upon receipt of the information described in subsection (d) of this section and subject to §137.44 of this title (relating to the Return-to-Work Reimbursement Program for Employers), the division shall reimburse the employer the costs incurred by the employer in making the approved workplace modifications unless the division determines that the modifications differ materially from the employer's application.

(f) Release of funds are subject to §137.45(c) of this title.

History

Source Note: The provisions of this §137.49 adopted to be effective February 7, 2008, 33 TexReg 930; amended to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.50 Optional Advance of Funds Plan

(a) An eligible employer, as provided by §137.45 of this title (relating to Employer Eligibility for Disbursements from the Return-to-Work Reimbursement Program), who participates in the return-to-work reimbursement program for employers may apply to the division for an advance of funds for allowable expenses from the program prior to making workplace modifications designed to accommodate an injured employee's return to work.

(b) To apply for an advance of funds for allowable expenses, an eligible employer must submit to the division a properly completed application as provided in §137.47 of this title (relating to the Criteria for Return-to-Work Reimbursement Program Applications). The application may be obtained from the division as provided by §137.46 of this title (relating to the Application for Funds from the Return-to-Work Reimbursement Program).

(c) Applications will be reviewed in accordance with §137.48 of this title (relating to Return-to-Work Reimbursement Program Administrator Determinations).

(d) Upon receipt of a completed application and subject to §137.44 of this title (relating to the Return-to-Work Reimbursement Program for Employers), the division may advance funds to the employer to make approved workplace modifications. The employer shall not make workplace modifications that materially differ from the employer's approved application unless the employer receives written approval from the division for the materially different modifications.

(e) Upon the receipt of the advanced funds from the division, the employer shall complete all approved workplace modifications set out in the approved application within six months of receiving funds from the division. For good cause, the division or the administrator may extend this six-month requirement. Any extension of time for completing workplace modifications must be granted by the division in writing and for a determinable period of time.

(f) Upon completion of the approved workplace modifications, the employer shall submit to the division all receipts for the payments made by the employer for the approved modifications. Any funds not spent after the six-month time frame must be immediately returned to the division.

(g) Release of funds are subject to §137.45(c) of this title.

History

Source Note: The provisions of this §137.50 adopted to be effective April 25, 2010, 35 TexReg 3061.

28 Tex. Admin. Code § 137.51 Monitoring and Enforcement

(a) Once an application is submitted, the commissioner or the commissioner's designated representative(s), including the administrator, may inspect the applicant's business to insure that the funds have been or will be spent according to what was or could be authorized. The commissioner or the commissioner's designated representative(s), including the administrator, are authorized to make a complete on-site review of the operations of each applicant at the place of business where the workplace modification has been or will be made, as often as is deemed necessary.

(b) At a minimum, notice of an on-site inspection shall be in writing and be presented by the commissioner or the commissioner's designated representative(s), including the administrator, upon arrival. On-site inspections shall not be conducted during legal holidays as defined in the Government Code §662.003(a).

(c) During an on-site review or upon written request of the commissioner or the commissioner's designated representative(s), including the administrator, the applicant shall make available all records relating to the requested or spent funds. Employers must maintain all relevant records for at least one year from the date of disbursement from the division.

(d) An employer commits an administrative violation if any part of the reimbursed or advanced funds are not used for the purpose or in the manner that the division previously approved in writing. Any unused funds must be returned to the division within six months of disbursement and any funds that are used not in accordance with the plan approved by the division must be immediately returned to the division.

History

Source Note: The provisions of this §137.51 adopted to be effective April 25, 2010, 35 TexReg 3061.

Subchapter C TREATMENT GUIDELINES

28 Tex. Admin. Code § 137.100 Treatment Guidelines

(a) Health care providers shall provide treatment in accordance with the current edition of the Official Disability Guidelines - Treatment in Workers' Comp, excluding the return to work pathways, (ODG), published by Work Loss Data Institute (Division treatment guidelines), unless the treatment(s) or service(s) require(s) preauthorization in accordance with §134.600 of this title (relating to Preauthorization, Concurrent Review and Voluntary Certification of Health Care) or §137.300 of this title (relating to Required Treatment Planning).

(b) Information on how to obtain or inspect copies of the Division treatment guidelines may be found on the Division's website: www.tdi.state.tx.us.

(c) Health care provided in accordance with the Division treatment guidelines is presumed reasonable as specified in Labor Code §413.017, and is also presumed to be health care reasonably required as defined by Labor Code §401.011(22-a).

(d) The insurance carrier is not liable for the costs of treatments or services provided in excess of the Division treatment guidelines unless:

(1) the treatment(s) or service(s) were provided in a medical emergency; or

(2) the treatment(s) or service(s) were preauthorized in accordance with §134.600 or §137.300 of this title.

(e) An insurance carrier may retrospectively review, and if appropriate, deny payment for treatments and services not preauthorized under subsection (d) of this section when the insurance carrier asserts that health care provided within the Division treatment guidelines is not reasonably required. The assertion must be supported by documentation of evidence-based medicine that outweighs the presumption of reasonableness established by Labor Code §413.017.

(f) A health care provider that proposes treatments and services which exceed, or are not included, in the treatment guidelines may be required to obtain preauthorization in accordance with §134.600 of this title, or may be required to submit a treatment plan in accordance with §137.300 of this title.

(g) The insurance carrier shall not deny treatment solely because the diagnosis or treatment is not specifically addressed by the Division treatment guidelines or Division treatment protocols.

(h) This section applies to health care provided on or after May 1, 2007.

History

Source Note: The provisions of this §137.100 adopted to be effective January 18, 2007, 32 TexReg 163.

Chapter 140 DISPUTE RESOLUTION--GENERAL PROVISIONS

28 Tex. Admin. Code § 140.1 Definitions

The following words and terms, when used in this part, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Benefit dispute--A disputed issue arising under the Texas Workers' Compensation Act (Act) in a workers' compensation claim regarding compensability or eligibility for, or the amount of, income or death benefits.

(2) Benefit proceeding--A proceeding pursuant to the Act, Chapter 410, conducted by a presiding officer to resolve one or more benefit disputes. Benefit proceedings include benefit review conferences, benefit contested case hearings, appeals, and, after January 1, 1992, arbitration.

(3) Party to a proceeding--A person entitled to take part in a proceeding because of a direct legal interest in the outcome.

(4) Presiding officer--The division employee, or independent arbitrator, assigned to conduct a proceeding. Presiding officers include benefit review officers, administrative law judges, appeals panel judges, and arbitrators.

(5) Special accommodations--Individuals and equipment necessary to allow an individual who does not speak English or who has a physical, mental, or developmental handicap to participate in a proceeding. The term includes spoken language translators and sign language translators.

(6) Stipulation--A voluntary accord between parties to a benefit contested case hearing regarding any matter relating to the hearing that does not constitute an agreement, as defined by the Act, §401.011(3), or a settlement, as defined by the Act, §401.011(40).

History

Source Note: The provisions of this §140.1 adopted to be effective May 24, 1991, 16 TexReg 2607; amended to be effective June 9, 2005, 30 TexReg 3236; amended to be effective January 7, 2019, 44 TexReg 104.

28 Tex. Admin. Code § 140.2 Special Accommodations

(a) The commission, on its own motion or upon request, will provide special accommodations to an individual who intends to participate in a proceeding and who does not speak English, or who has a physical, mental, or developmental handicap.

(b) A request for special accommodations may be made by the individual desiring them, the carrier, or anyone knowing of the need.

(1) may be made in any manner;

(2) should describe the special accommodations needed; and

(3) should be sent to the commission no later than 10 days before the date of the proceeding.

History

Source Note: The provisions of this §140.2 adopted to be effective May 24, 1991, 16 TexReg 2607.

28 Tex. Admin. Code § 140.3 Expedited Proceedings

In addition to expedited proceedings provided by any other commission rule, the commission may provide expedited benefit review conferences and benefit contested case hearings for resolution of disputes involving compensability, liability for essential medical treatment, or any type of issue as defined by commission policy for which the executive director or delegate determines an expedited proceeding will serve the best interests of the workers' compensation system or its participants.

History

Source Note: The provisions of this §140.3 adopted to be effective May 24, 1991, 16 TexReg 2607; amended to be effective September 1, 1993, 18 TexReg 5214.

28 Tex. Admin. Code § 140.4 Conduct and Decorum

(a) The presiding officer may at the beginning of any proceeding and during the course of that proceeding establish rules of decorum to be followed during the proceeding. The presiding officer may also establish times for beginning the proceeding, for recesses, and for ending the proceeding.

(b) Parties and participants in a proceeding shall conduct themselves with dignity, shall show courtesy and respect for one another and for the presiding officer, shall follow the decorum prescribed by the presiding officer at the proceeding, and shall adhere to the beginning times of the proceeding, and to the times established for each recess and for ending the proceeding.

(c) To maintain and enforce proper conduct and decorum at a proceeding, and to enforce promptness at a proceeding, the presiding officer may take appropriate action, including, but not limited to:

(1) issuing a warning;

(2) excluding any person from the proceeding;

(3) recessing the proceeding; and

(4) referring an action for possible enforcement as an administrative violation.

History

Source Note: The provisions of this §140.4 adopted to be effective May 24, 1991, 16 TexReg 2607; amended to be effective June 9, 2005, 30 TexReg 3236.

28 Tex. Admin. Code § 140.5 Correction of Clerical Error

(a) The executive director or the executive director's designee may at any time revise an order or decision to correct clerical error:

(1) at the joint written request of the parties;

(2) at the request of a party affected by the order or decision; or

(3) on his or her own motion.

(b) When a party requests correction of clerical error, the request must:

(1) include a copy of the order or decision marked to indicate the alleged error;

(2) state the requested correction, and the reasons for making it;

(3) be filed with the hearings division; and

(4) be sent to all other parties affected by the order or decision.

(c) A party affected by the order or decision may file a response to the request no later than 10 days after receipt of the request.

(d) No later than 30 days after the request was filed, the hearings division shall either:

(1) issue and deliver to the parties a corrected order or decision; or

(2) advise the parties in writing that the order or decision was correct as originally entered.

(e) When clerical error is corrected on the motion of the executive director or designee, a copy of the corrected order or decision will be delivered to all affected parties.

History

Source Note: The provisions of this §140.5 adopted to be effective May 24, 1991, 16 TexReg 2607; amended to be effective May 1, 1996, 21 TexReg 3436.

28 Tex. Admin. Code § 140.6 Subclaimant Status: Establishment, Rights, and Procedures

(a) Applicability. This section is applicable to a subclaim pursued under Labor Code §409.009, including a subclaim pursued by a health care insurer.

(b) Party status. A subclaimant as described in §409.009 is a party to a claim concerning workers' compensation benefits.

(1) A subclaimant may file and pursue a claim for reimbursement of a benefit that has been provided to an injured employee, and is entitled to appropriate dispute resolution in accordance with the Texas Workers' Compensation Act (Act) and Division of Workers' Compensation (Division) rules.

(2) A subclaimant may pursue a claim for reimbursement of a benefit that has been provided to an injured employee and participate in the dispute resolution process without the participation of the injured employee if:

(A) there is no prior written agreement between the injured employee and the workers' compensation insurance carrier or no final decision by the Division on the issue in dispute;

(B) the workers' compensation insurance carrier has denied the entitlement to benefits under the Act and Division rules;

(C) the injured employee is not pursuing dispute resolution to establish the injured employee's entitlement to benefits with reasonable diligence; and

(D) the subclaimant has provided the injured employee with written notice of:

(i) subclaimant's intent to pursue a claim for reimbursement of a benefit;

(ii) warning that a decision rendered may be binding against the injured employee; and

(iii) contact information for the Office of the Injured Employee Counsel.

(3) At a contested case hearing without the participation of the injured employee, the subclaimant must show, in addition to other facts:

(A) subclaimant provided written notice to the injured employee as specified in paragraph (2)(D) of this subsection;

(B) it has contacted the injured employee and the injured employee is not pursuing the dispute with reasonable diligence; or

(d) Claims for Reimbursement of Medical Benefits.

(1) Subclaimants, other than subclaimants described in §409.0091, must pursue a claim for reimbursement of medical benefits and participate in medical dispute resolution in the same manner as an injured employee or in the same manner as a health care provider, as appropriate, under Chapters 133 and 134 of this title (relating to General Medical Provisions and Benefits--Guidelines for Medical Services, Charges, and Payments).

(2) A health care insurer subclaimant must submit a reimbursement request in the form/format and manner prescribed by the Division and must contain all the required elements listed on the form.

(3) Workers' compensation insurance carriers must process reimbursement requests from subclaimants pursuant to Chapters 133 and 134 of this title.

(e) Contested Case Hearing. A subclaimant may pursue a contested case hearing under the provisions of Chapters 140 - 143 of this title (relating to Dispute Resolution).

History

Source Note: The provisions of this §140.6 adopted to be effective September 23, 2008, 33 TexReg 8002.

28 Tex. Admin. Code § 140.7 Health Care Insurer Reimbursement under Labor Code §409.0091

(a) Applicability. This section applies only to subclaims by a health care insurer based on information received under Labor Code §402.084(c-3).

(b) Health care insurer. "Health care insurer" means an insurance carrier and an authorized representative of an insurance carrier, as described by Labor Code §402.084(c-1).

(c) Reimbursement of Health Care Insurers. A health care insurer may be reimbursed for medical benefits provided to or paid on behalf of an injured employee with a compensable workers' compensation claim in accordance with Labor Code §409.0091, the procedures of §140.8 of this title (relating to Procedures for Health Care Insurers to Pursue Reimbursement of Medical Benefits under Labor Code §409.0091), and this section.

(d) Certain Defenses Not Allowed. A workers' compensation insurance carrier shall not deny a reimbursement request under Labor Code §409.0091 from a health care insurer because:

(1) the health care insurer has not sought reimbursement from the health care provider or the health care insurer's insured;

(2) the health care insurer or the health care provider did not request preauthorization under §134.600 of this title (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care) or Labor Code §413.014; or

(3) the health care provider did not bill the workers' compensation insurance carrier, as provided by Labor Code §408.027, before the 95th day after the date the health care for which the health care insurer paid was provided.

History

Source Note: The provisions of this §140.7 adopted to be effective September 23, 2008, 33 TexReg 8002.

28 Tex. Admin. Code § 140.8 Procedures for Health Care Insurers to Pursue Reimbursement of Medical Benefits under Labor Code §409.0091

(a) Applicability. This section applies only to subclaims by a health care insurer based on information received under Labor Code §402.084(c-3).

(b) Health care insurer. "Health care insurer" means an insurance carrier and an authorized representative of an insurance carrier, as described by Labor Code §402.084(c-1).

(c) Request to Workers' Compensation Insurance Carrier. A health care insurer seeking reimbursement must first file a reimbursement request with the workers' compensation insurance carrier.

(1) Form. The request must be in the form/format and manner prescribed by the Division of Workers' Compensation (Division) and must contain all the required elements listed on the form.

(2) Notice. The health care insurer must give notice of the request to the injured employee and the health care provider that performed the services that are the subject of the reimbursement request. The notice shall include a copy of the reimbursement request and an explanation that the health care insurer is seeking reimbursement for medical care costs.

(d) Deadlines for Response to Reimbursement Request to the Workers' Compensation Insurance Carrier.

(1) 90 Day Response Deadline. The workers' compensation insurance carrier must respond to a reimbursement request under this section by either paying, reducing, or denying payment in writing not later than the 90th day after the date the reimbursement request was first received, unless additional information is requested, pursuant to paragraph (2) of this subsection.

(2) Request for Additional Information. The workers' compensation insurance carrier may request additional information from the health care insurer if there is not sufficient information to substantiate the claim. The health care insurer has 30 days after receiving the request for more information to provide the information requested to the workers' compensation insurance carrier. Any request for additional information shall be in writing, be relevant and necessary for the resolution of the request. A workers' compensation insurance carrier shall not be penalized, including not being held responsible for costs of obtaining the additional information, if the workers' compensation insurance carrier denies payment in order to move to dispute resolution to obtain additional information to process the request. It is the health care insurer's obligation to furnish its authorized representatives with any information necessary for the resolution of a reimbursement request. The Division considers any medical billing information or documentation possessed by the health care insurer or one of its authorized representatives to be simultaneously possessed by the health care insurer and all of its authorized representatives.

(3) 120 Day Response Deadline. If the workers' compensation insurance carrier has requested additional information from the health care insurer pursuant to paragraph (2) of this subsection, the workers' compensation insurance carrier must respond in writing to the health care insurer's reimbursement request not later than the 120th day after the date the reimbursement request was first received, unless otherwise provided by mutual agreement.

(e) Response to a Reimbursement Request. The workers' compensation insurance carrier must respond to a reimbursement request by either paying, reducing or denying payment.

(1) Paying or Reducing Payment.

(A) The workers' compensation insurance carrier shall pay the health care insurer the lesser of:

(i) the amount payable under the applicable Division fee guideline as of the date of service; or

(ii) the actual amount paid by the health care insurer.

(B) If No Fee Guideline. In the absence of a Division fee guideline for a specific service paid, the amount per service paid by the health care insurer shall be considered in determining a fair and reasonable payment pursuant to §134.1 of this title (relating to Medical Reimbursement).

(D) Previous Payments. The workers' compensation insurance carrier shall reduce any reimbursable amount by any payments the workers' compensation insurance carrier previously made to the same health care provider for the provision of the same health care on the same dates of service. In making such a reduction in reimbursement, the workers' compensation insurance carrier shall provide evidence of the previous payments made to the health care provider.

(E) Notice to Injured Employee and Health Care Provider. The workers' compensation insurance carrier must give notice of its response to the reimbursement request to the injured employee and the health care provider that performed the services that are the subject of the reimbursement request. If the claim is compensable, the notice shall include an explanation that the claim is compensable and that the health care provider must reimburse the injured employee for any amounts paid to the health care provider by the injured employee.

(F) The health care provider may submit a reimbursement request to the workers' compensation insurance carrier for any money owed under Division fee guidelines for the medical services rendered on a compensable claim and is entitled to dispute resolution under §133.307 of this title (relating to MDR of Fee Disputes). The workers' compensation insurance carrier is liable for full payment in accordance with Division fee guidelines and applicable rules for the medical services rendered on a compensable claim.

(2) Explanation of Benefits. The workers' compensation insurance carrier must provide the health care insurer, all health care providers, and the injured employee an explanation of benefits (EOB) in the form and manner prescribed by the Division. The EOB must provide sufficient explanation regarding the basis for a denial of the reimbursement request.

(f) Reimbursement of Injured Employee. If the injured employee's medical care costs are reimbursable under Title 5 of the Labor Code, a health care provider must refund to the injured employee any payments made by the injured employee to the health care provider, including but not limited to, copays and deductibles. Reimbursement must be made within 45 days of receipt of the notice that the claim is compensable.

(g) Filing Notice of Subclaimant Status.

(1) 120 Day Deadline. A health care insurer must file a written notice of subclaimant status with the Division not later than the 120th day after a workers' compensation insurance carrier fails to respond to a health care insurer's reimbursement request or reduces or denies the requested reimbursement amount.

(2) Location for Filing Notice. The notice may be filed with the Division of Workers' Compensation at any local Division field office or at the Division's central office in Austin, Texas.

(3) One Injured Employee Per Notice. A health care insurer must file separate notices for each individual injured employee in which the health care insurer seeks subclaimant status.

(4) One Notice Per Injured Employee Date of Injury. If an individual injured employee has multiple claims based on different dates of injury, the health care insurer must file a separate notice for each date of injury for which medical benefits were provided.

(5) Form. The notice of subclaimant status must be in the form and manner prescribed by the Division.

(h) Request for Dispute Resolution. The rules applicable to dispute resolution vary according to the reason for denial of reimbursement. Disputes regarding extent of injury, liability, or medical necessity must be resolved prior to pursuing a medical fee dispute. A request for medical dispute resolution may be filed in lieu of a request for subclaimant status, and shall be considered a request for subclaimant status for purposes of this section.

(1) Claim or Treatment Not Compensable.

(A) A health care insurer must file a request for a benefit review conference pursuant to §141.1 of this title (relating to Requesting and Setting a Benefit Review Conference) with the Division not later than the 120th day after a workers' compensation insurance carrier reduces or denies the requested reimbursement amount based on compensability or extent of injury issues.

(B) The health care insurer may pursue dispute resolution to obtain an order from an administrative law judge regarding compensability or eligibility for benefits in accordance with Labor Code Chapter 410 and applicable Division rules.

(C) A subclaim dispute based on a denial of reimbursement due to compensability or extent of injury is subject to dispute resolution pursuant to Chapters 140 - 143 of this title (relating to Dispute Resolution).

(2) Lack of Medical Necessity.

(A) A health care insurer must file a request for medical dispute resolution with the workers' compensation insurance carrier or the insurance carrier's utilization review agent not later than the 120th day after a workers' compensation insurance carrier reduces or denies the requested reimbursement amount due to lack of medical necessity.

(B) A medical dispute based on the workers' compensation insurance carrier's denial of a health care insurer's reimbursement request due to lack of medical necessity is subject to dispute resolution pursuant to §133.308 of this title (relating to MDR of Medical Necessity Disputes).

(C) A subclaimant shall follow the independent review process allowed for a non-network health care provider seeking retrospective review of a service under that section, with any modifications specified by this subsection.

(D) A request for reconsideration is not required prior to a request for independent review, notwithstanding the requirements for requesting independent review under §133.308 of this title.

(E) A request for independent review may be filed, notwithstanding the timeliness requirements for filing a request for independent review under §133.308 of this title.

(F) Notwithstanding the provisions of §133.308 of this title, regarding independent review organization requests for additional information, if a health care provider is requested to submit records, the health care insurer shall reimburse the health care provider copy expenses for the requested records.

(3) Reduction, Denial or Failure to Respond.

(A) A health care insurer must file a request for medical dispute resolution with the Division not later than:

(i) the 120th day after a workers' compensation insurance carrier fails to respond to a health care insurer's reimbursement request or reduces or denies the requested reimbursement amount for reasons other than lack of medical necessity; or

(ii) 60 days after the date the requestor receives the final decision, inclusive of all appeals, on compensability or extent of injury issues raised in accordance with this subsection.

(B) A medical dispute based on the workers' compensation insurance carrier's failure to respond to a health care insurer's reimbursement request or the result of a reduction or denial of the requested reimbursement amount for reasons other than those listed in paragraph (1) or (2) of this subsection is subject to medical dispute resolution pursuant to §133.307 of this title, notwithstanding the definition of medical fee dispute in §133.305 of this title (relating to MDR--General), and the health care insurer must follow the medical fee dispute resolution process allowed for a health care provider under that section, with any modifications specified by this subsection.

(C) Notwithstanding the requirements of §133.307(c)(2) of this title, a health care insurer shall only be required to include with a request for medical fee dispute resolution, a copy of the health care insurer reimbursement request as originally submitted to the workers' compensation insurance carrier, a copy of the EOB relevant to the fee dispute received from the workers' compensation insurance carrier, and sufficient information to substantiate the claim.

(D) A request for reconsideration is not required prior to a request for medical fee dispute resolution, notwithstanding the requirements for requesting medical fee dispute resolution under §133.307 of this title.

(E) A request for medical fee dispute resolution may be filed, notwithstanding the timeliness requirements for filing a request for medical fee dispute resolution under §133.307 of this title.

(i) Multiple Entities Seeking Reimbursement for Same Services. If there are multiple entities seeking reimbursement for the same services and dates of services for the same health care insurer for the same injured employee, the following apply:

(1) When the workers' compensation insurance carrier obtains a release from the health care insurer indicating that those specific services have been paid in full, no other entity may collect for those specific services.

(2) If a dispute remains over the fees to be paid for those specific services, the first in time to file a dispute with the Division is the only subclaimant that has a right to dispute resolution, and reimbursement, for that injured employee's claim and those specific services rendered unless that subclaimant abandons the dispute resolution process prior to a final adjudication of the issues.

History

Source Note: The provisions of this §140.8 adopted to be effective September 23, 2008, 33 TexReg 8002; amended to be effective January 7, 2019, 44 TexReg 104.

28 Tex. Admin. Code § 140.9 Requests by Parties

(a) This subsection applies to carriers, carrier representatives, claimants represented by an attorney, and claimants assisted by the Office of Injured Employee Counsel (OIEC). The parties shall work collaboratively to reach any agreement reasonably necessary for the efficient disposition of a case. Unless presented during a proceeding, all requests to presiding officers, including rescheduling and continuance requests, discovery requests, and other requests, must be in writing and include a signed statement that the requester made reasonable efforts to confer with the other party or parties about the request. If the requester was unable to confer with the other party or parties, the statement must summarize the efforts made to confer. If the parties conferred, the statement must:

(1) include whether the other party or parties oppose the request; and

(2) for a request to reschedule or continue a proceeding, propose a date and time the parties are available for the rescheduled proceeding that has been coordinated with the division's docketing section.

(b) Requests must be sent to the division and to the opposing party or parties. For claimants represented by an attorney, requests must be sent to the claimant and the claimant's representative. For claimants assisted by OIEC, requests must be sent to the claimant and to OIEC.

(c) Unless otherwise directed or allowed by a presiding officer, any responses to requests for rescheduling and continuance must be filed, in writing, with the division and delivered to all parties within three days of receipt of the request and any responses to other requests must be filed, in writing, with the division and delivered to all parties within five days of receipt.

(d) Unless precluded by other law, a presiding officer may, in the interest of justice, consider a request or response that is not timely filed or which otherwise fails to comply with the requirements of this section. The presiding officer may reconsider previous rulings made in the absence of this information.

(e) Requests to reschedule or cancel a benefit review conference must meet the requirements of §141.2 of this title (relating to Canceling or Rescheduling a Benefit Review Conference).

(f) Claimants who are neither represented by an attorney nor assisted by OIEC may request a continuance by contacting the division in any manner.

History

Source Note: The provisions of this §140.9 adopted to be effective January 7, 2019, 44 TexReg 104.

Chapter 141 DISPUTE RESOLUTION--BENEFIT REVIEW CONFERENCE

28 Tex. Admin. Code § 141.1 Requesting and Setting a Benefit Review Conference

(a) Prior Notification. Before requesting a benefit review conference, a disputing party must notify the other parties of the nature of the dispute and attempt to resolve the dispute.

(b) Who May Request. A request for a benefit review conference may be made by an injured employee, a subclaimant, or an insurance carrier. An employer may request a benefit review conference to contest compensability when the insurance carrier has accepted the claim as compensable.

(c) Subclaimant. A request for a benefit review conference made by a subclaimant under Labor Code §409.009 must also comply with the requirements of §140.6 of this title (relating to Subclaimant Status: Establishment, Rights, and Procedures).

(d) Request for Benefit Review Conference. A request for a benefit review conference must be made in the form and manner required by the division. The request must:

(1) identify and describe the disputed issues;

(2) provide details and supporting documentation of efforts made by the requesting party to resolve the disputed issues, including, but not limited to, copies of the notification provided in accordance with subsection (a) of this section, correspondence, emails, faxes, records of telephone contacts, or summaries of meetings or telephone conversations. For the purposes of this subsection, copies of the notification provided under subsection (a) of this section, correspondence, emails, faxes, records of telephone contacts, or summaries of meetings or telephone conversations should not include all attachments of pertinent information exchanged with the opposing parties as required by §141.4 of this title (relating to Sending and Exchanging Pertinent Information);

(3) contain the requesting party's signature to show that the party made reasonable efforts to resolve the disputed issues before requesting a benefit review conference, and provide any pertinent information in their possession to the other parties as required by §141.4(c) of this title; and

(4) send the request to the division and opposing parties.

(e) Complete Request. A request that meets the requirements of subsection (d) of this section is a complete request for a benefit review conference. The division will schedule a benefit review conference if the request is complete and otherwise appropriate for a benefit review conference.

(f) Incomplete Request. A request for a benefit review conference that does not meet the requirements of subsection (d) of this section is an incomplete request. The division will deny an incomplete request.

(1) A denied request for a benefit review conference does not constitute a dispute proceeding, except as provided by subsection (g) of this section.

(2) If the division denies a request, it will provide notice to the parties and state the reasons for the denial.

(3) On notice from the division, the requesting party may submit a new request for a benefit review conference that meets the requirements of this section.

(g) Incomplete Request Denials. If a party disagrees with the division's determination that the request was incomplete, or if a party has good cause for failing to meet the requirements of subsection (d) of this section, the party may pursue an administrative appeal of the division's determination under Chapter 142 of this title (relating to Dispute Resolution--Benefit Contested Case Hearing). The party may also request an expedited contested case hearing under §140.3 of this title (relating to Expedited Proceedings).

(h) Setting. If a request meets the standards of subsection (e) of this section, the division will schedule a benefit review conference:

(1) within 40 days after the division received the request; and

(2) within 20 days after the division received the request, if the division determines that an expedited setting is needed.

(i) Notice. After setting the benefit review conference, the division must provide, by first class mail, electronic transmission, or personal delivery, written notice of the date, time, and location to the parties and the employer.

(j) Method for Conducting. The benefit review conference will be conducted by telephone or videoconference, unless the division determines that good cause exists for conducting the benefit review conference in person. Unless the division determines that good cause exists for the selection of a different location, an in-person benefit review conference will be conducted at a site no more than 75 miles from the injured employee's residence at the time of injury.

History

Source Note: The provisions of this §141.1 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective October 1, 2010, 35 TexReg 7430; amended to be effective December 9, 2021, 46 TexReg 8258.

28 Tex. Admin. Code § 141.2 Canceling or Rescheduling a Benefit Review Conference

(a) In this subsection, "good cause" will be determined at the discretion of the benefit review officer on a case-by-case basis, including consideration of prejudice to parties, and means:

(1) objective facts beyond the control of a party, which reasonably:

(A) prevent a party from attending the benefit review conference; or

(B) would prevent the benefit review conference from accomplishing its purpose, such as the need for a reasonable amount of additional time to secure necessary evidence for the dispute; or

(2) objective facts which make the benefit review conference unnecessary.

(b) The division may cancel a benefit review conference at any time before the benefit review conference:

(1) on its own motion;

(2) at the request of the party who requested the conference; or

(3) at the mutual request of the parties.

(1) on its own motion, or

(2) at the request of a party.

(d) A request for cancellation or rescheduling under subsection (b) or (c) of this section shall be made by notifying the division in writing, with a copy to all parties, within 10 days of the date the notice of setting is received.

(1) The first request to reschedule a benefit review conference under subsection (d) of this section does not have to demonstrate good cause for the request but must comply with §140.9 of this title (relating to Requests by Parties).

(2) A request to reschedule or cancel a benefit review conference made outside of the 10-day period, as well as all subsequent rescheduling requests under subsection (c) of this section by any party, must:

(A) be in writing and in the form prescribed by the division;

(B) demonstrate good cause for canceling or rescheduling, as defined by subsection (a) of this section;

(C) be sent to the division and opposing party or parties no later than five days before the scheduled benefit review conference unless good cause is demonstrated for filing later; and

(D) comply with the requirements of §140.9 of this title.

(3) A claimant who is neither represented by an attorney nor assisted by OIEC may request that a benefit review conference be rescheduled or cancelled by contacting the division in any manner.

(4) A cancellation of a benefit review conference without simultaneous rescheduling constitutes a withdrawal of the dispute on the issue. A request to cancel a benefit review conference subject to §130.12 of this title (relating to Finality of the First Certification of Maximum Medical Improvement and/or First Assignment of Impairment Rating) must comply with the provisions of §130.12(b)(3) of this title.

(5) Unless otherwise directed by a presiding officer, a party opposing the rescheduling or cancellation of a benefit review conference must file any written opposition with the division within three days of receiving the cancellation or rescheduling request.

(6) The division will notify the parties of a cancellation or rescheduling of a benefit review conference in a timely manner.

(7) If the benefit review officer denies a request to cancel or reschedule a benefit review conference under this section, the benefit review officer will notify the parties in writing and state the reasons for the denial.

History

Source Note: The provisions of this §141.2 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective October 1, 2010, 35 TexReg 7430; amended to be effective November 20, 2011, 36 TexReg 7867; amended to be effective January 7, 2019, 44 TexReg 107.

28 Tex. Admin. Code § 141.3 Failure to Attend a Benefit Review Conference

(a) Applicability. This subsection applies to a benefit review conference that is requested before December 1, 2011.

(1) When a party fails to attend a benefit review conference without good cause, as determined by the benefit review officer, the benefit review officer:

(A) shall hold the conference as scheduled; and

(B) may recommend the issuance of an administrative violation.

(2) A representative who fails to attend a benefit review conference without good cause commits an administrative violation.

(b) Applicability. This subsection applies to a benefit review conference that is requested on or after December 1, 2011.

(1) In this subsection, "good cause" will be determined at the discretion of the benefit review officer on a case-by-case basis and means objective facts beyond the control of a party, which reasonably:

(A) prevented the party from attending the benefit review conference;

(B) prevented the party from requesting the division to cancel or reschedule in advance of the benefit review conference; and

(C) if applicable, prevented the party from filing a request to reschedule within the third business day after failing to attend the scheduled benefit review conference and justifies the subsequent delay in filing the request to reschedule.

(2) When a party fails to attend a benefit review conference without good cause, as determined by the benefit review officer, the benefit review officer shall hold the conference as scheduled.

(3) A party who fails to attend a scheduled benefit review conference may request to reschedule the benefit review conference under the provisions of this subsection. The request to reschedule must:

(A) be filed with the division as soon as practicable, but no later than the close of the third business day after the scheduled benefit review conference, unless good cause exists for further delay;

(B) be in writing and in the form prescribed by the division;

(D) be sent to opposing party or parties.

(4) Except as provided by paragraph (5) of this subsection, if a party fails to attend a benefit review conference without good cause, the party forfeits the party's entitlement to attend a benefit review conference on the issue in dispute. If a party forfeits this entitlement, the division will not reschedule the benefit review conference on the issue in dispute.

(5) A party will not be considered to have forfeited the party's entitlement to attend a benefit review conference on the issue in dispute under paragraph (4) of this subsection if a benefit review officer is authorized to schedule an additional benefit review conference under Labor Code §410.026(b).

(6) A party who forfeits the party's entitlement to attend a benefit review conference on the issue in dispute does not forfeit the party's right, as provided by the Workers' Compensation Act and division rules, to a contested case hearing on the issue in dispute.

(7) Notwithstanding paragraph (3) of this subsection, the division may refuse to reschedule a benefit review conference under this section and may direct the parties to proceed to a contested case hearing, if authorized under §142.5(b) of this title (relating to Sequence of Proceedings to Resolve Benefit Disputes).

(8) A party who fails to attend a benefit review conference without good cause commits an administrative violation.

(9) If the benefit review officer denies a request to reschedule a benefit review conference under this section, the benefit review officer will notify the parties in writing and state the reasons for the denial.

History

Source Note: The provisions of this §141.3 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective May 10, 2000, 25 TexReg 3988; amended to be effective November 20, 2011, 36 TexReg 7867.

28 Tex. Admin. Code § 141.4 Sending and Exchanging Pertinent Information

(a) As used in this chapter "pertinent information" means all information relevant to the resolution of the disputed issue or issues to be addressed at the benefit review conference, including but not limited to:

(1) reports regarding the compensable injury;

(2) the injured employee's wage records; and

(3) the injured employee's medical records.

(b) Examples of "pertinent information" are listed on the division's website.

(c) All pertinent information, as described in subsections (a) and (b) of this section, not previously exchanged, in the possession of the party requesting a benefit review conference must be sent to the opposing party or parties before the time the request for a benefit review conference is sent to the division.

(d) The opposing party must send all pertinent information in its possession, not previously exchanged, to the requesting party and other parties within 10 working days after receiving a copy of the request for a benefit review conference.

(e) Not later than 14 days before the benefit review conference, or not later than five days before an expedited conference set under §141.1(d)(2) of this title (relating to Requesting and Setting a Benefit Review Conference):

(1) all pertinent information in the parties' possession not previously sent to the division shall be sent to the division; and

(2) all pertinent information in the parties' possession not previously exchanged must be sent to the other parties.

(f) Additional pertinent information that becomes available thereafter shall be brought to the conference in sufficient copies for the division and opposing party or parties.

(g) The benefit review officer may schedule a second conference upon a determination that pertinent information necessary to resolve the dispute has not been submitted or exchanged. No more than two benefit review conferences may be scheduled for each disputed issue.

(h) The division will not retain the pertinent information received for the BRC after the parties:

(1) reach an agreement on the issues;

(2) set unresolved issues for a contested case hearing; or

(3) fail to reschedule a second benefit review conference within at least 90 days after the first benefit review conference.

(i) Effective date. The effective date of this section is October 1, 2010.

History

Source Note: The provisions of this §141.4 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective October 1, 2010, 35 TexReg 7430.

28 Tex. Admin. Code § 141.5 Description of the Benefit Review Conference

(a) Definitions. As used in this section, "participant" means an individual entitled or permitted to attend and take part in a benefit review conference. Participants include:

(1) the parties;

(2) the parties' representatives;

(3) the employer exercising the right to present evidence relevant to the disputed issue or issues; and

(4) any other individual, at the discretion of the benefit review officer.

(b) Overview of the benefit review conference. The benefit review conference consists of three parts: opening, mediation, and closing.

(1) identify the case and introduce the parties and other participants;

(2) thoroughly inform the parties and participants of their rights and responsibilities under the Texas Workers' Compensation Act;

(3) explain the purpose of the conference and the procedures and time frame to be observed;

(4) identify and describe the disputed issues to be mediated; and

(5) elicit each party's statement of position regarding each disputed issue.

(d) Mediation. The benefit review officer shall:

(1) ask and answer questions of the parties and other participants;

(2) encourage the parties to discuss the disputed issues and ask and answer questions;

(3) permit the employer to present evidence relevant to the disputed issues;

(4) permit other participants to discuss the disputed issues and ask and answer questions, to the extent the benefit review officer deems appropriate;

(5) if necessary, caucus individually with each party;

(6) assist the parties to agree on specific options for resolution; and

(7) assist the parties in resolving disputed issues by agreement or settlement.

(e) Closing. The benefit review officer shall:

(1) assist the parties in reducing agreements or settlements to writing;

(2) identify any issues left unresolved; and

(3) if available information pertinent to the resolution of the disputed issue(s) was not produced at the benefit review conference, require a second benefit review conference to be scheduled if a second one has not already been conducted.

History

Source Note: The provisions of this §141.5 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective September 4, 2006, 31 TexReg 7127.

28 Tex. Admin. Code § 141.7 Division Actions After a Benefit Review Conference

(a) All Issues Resolved. Division actions if all issues are resolved at the benefit review conference.

(1) If all issues in dispute are resolved at the benefit review conference by agreement or settlement, the agreement or settlement must be reduced to writing and signed by each party and their designated representative, if any, and the benefit review officer.

(2) The benefit review officer shall make the agreement part of the claim file. If all issues in dispute are resolved at the benefit review conference by settlement, the benefit review officer shall submit the signed settlement to the commissioner or commissioner's designee for handling as provided by Chapter 147 of this title (relating to Dispute Resolution--Agreements, Settlements, Commutations). If the commissioner or commissioner's designee rejects the settlement, the parties may request:

(A) a second benefit review conference, if a second benefit review conference has not already been held; or

(B) a contested case hearing.

(b) Issues Not Resolved. Division actions if issues are not resolved at the benefit review conference.

(1) After First Benefit Review Conference. If all issues in dispute are not resolved at the first benefit review conference, the benefit review officer may set a second benefit review conference or a contested case hearing.

(2) After Second Benefit Review Conference. If all issues in dispute are not resolved at the second benefit review conference, a contested case hearing will be scheduled by the benefit review officer.

(c) Written Report. Within five days after the benefit review conference is closed, the benefit review officer shall submit the written report and any signed agreements to the division's central office in Austin in accordance with Labor Code §410.031 and §410.034.

(d) Copies of Report and Hearing Notice. The division shall send to the injured employee; injured employee's representative, if any; the insurance carrier; subclaimants; and the employer the following:

(1) a file-stamped copy of the report; and

(2) notice of the date, time, and location of the contested case hearing.

(e) Effective date. The effective date of this section is October 1, 2010.

History

Source Note: The provisions of this §141.7 adopted to be effective June 7, 1991, 16 TexReg 2876; amended to be effective May 10, 2000, 25 TexReg 3988; amended to be effective September 4, 2006, 31 TexReg 7127; amended to be effective October 1, 2010, 35 TexReg 7430.

Chapter 142 DISPUTE RESOLUTION--BENEFIT CONTESTED CASE HEARING

28 Tex. Admin. Code § 142.1 Application of the Administrative Procedure Act

The following sections of the Government Code, apply to benefit contested case hearings: §2001.201, relating to enforcement of subpoenas.

History

Source Note: The provisions of this §142.1 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990.

28 Tex. Admin. Code § 142.2 Authority of the Administrative Law Judge

The administrative law judge is authorized to:

(1) issue subpoenas;

(2) rule on requests;

(3) issue orders, including interlocutory orders;

(4) use summary procedures as provided by §142.8 of this chapter (relating to Summary Procedures);

(5) direct parties to appear at a prehearing conference to resolve evidentiary and procedural issues;

(6) establish time limits for conducting a hearing;

(7) administer oaths;

(8) rule on the admissibility of evidence;

(9) determine the relevancy, materiality, weight, and credibility of evidence;

(10) request additional evidence;

(11) take official notice of the law of Texas and other jurisdictions, Texas city and county ordinances, the contents of the Texas Register, the rule of state agencies, facts that are judicially cognizable, and generally recognized facts within the division's specialized knowledge;

(12) examine parties and witnesses, and permit examination and cross-examination of parties and witnesses;

(13) recess, postpone, or dismiss a hearing; and

(14) take any other action as authorized by law, or as may facilitate the orderly conduct and disposition of the hearing.

History

Source Note: The provisions of this §142.2 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.3 Ex Parte Communications

(a) No person, except as otherwise provided in subsection (c) of this section, may communicate, either directly or indirectly, with the administrative law judge regarding any facts, issues, law or rules relating to the benefit contested case hearing after the hearing has been set, and until all administrative and judicial remedies have been exhausted, unless all parties to the hearing are present, except where the communication is:

(1) written; and

(2) delivered to all parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(b) Notwithstanding subsection (a) of this section, any of the individuals named in subsection (a) may communicate with the administrative law judge in any manner regarding procedural issues.

(c) An administrative law judge assigned to render a decision in a benefit contested case hearing, may communicate ex parte with other division employees for the purpose of utilizing their special skills or knowledge in evaluating the evidence.

History

Source Note: The provisions of this §142.3 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.4 Delivery of Copies to All Parties

A party who sends a document relating to a benefit contested case hearing to the division shall also deliver copies of the document to all other parties as provided in §140.9 of this title (Requests by Parties). Delivery shall be accomplished by presenting in person, mailing by first class mail, facsimile, or electronic transmission. The document sent to the division shall contain a statement certifying delivery. The following statement of certification shall be used: "I hereby certify that I have on this ______ day of ____________, _______, delivered a copy of the attached document to (state the names of all parties to whom a copy was delivered) by (state the manner of delivery)."

History

Source Note: The provisions of this §142.4 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.5 Sequence of Proceedings to Resolve Benefit Disputes

(a) Usual sequence. Except as provided in this section, parties to a benefit dispute are required to attempt to resolve the dispute by mediation at a benefit review conference before proceeding to a contested case hearing or to arbitration by mutual election.

(b) Guidelines for proceeding directly to a benefit contested case hearing. Parties may proceed directly to a contested case hearing without attending a benefit review conference if the division determines that:

(1) mediation would not prove effective to resolve the dispute;

(2) necessary evidence cannot be obtained without subpoena; or

(3) the situation of the parties or the nature of the facts or law of the case is such that the overall policy of the Act would be advanced by proceeding directly to a contested case hearing.

(c) Requesting a hearing. A party may request that the division set a benefit contested case hearing. The request shall be made in the following manner:

(1) If the requester is a carrier, carrier representative, claimant represented by an attorney, or claimant assisted by OIEC, the request shall:

(A) be made in writing and signed by the requestor;

(B) identify and describe the disputed issue or issues;

(D) be sent to the division; and

(E) be delivered to all the other parties, as provided by §142.4 of this chapter (relating to Delivery of Copies to All Parties).

(2) A claimant who is neither represented by an attorney nor assisted by OIEC may request a hearing by contacting the division in any manner.

(d) Division action on a request for hearing. The division will rule on the request and notify the parties. A ruling granting the request will include a notice of hearing, as provided in §142.6 of this chapter (relating to Setting a Benefit Contested Case Hearing). A ruling denying the request may include a notice of benefit review conference.

(e) Response. If a hearing is set upon request, the other party or parties may submit a response. The response shall:

(1) be made in writing and signed;

(2) describe and explain the party's position on the dispute or disputes;

(3) be sent to the division no later than five days before the hearing; and

(4) be delivered to all other parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(f) A claimant who is neither represented by an attorney nor assisted by OIEC may respond by contacting the division in any manner.

History

Source Note: The provisions of this §142.5 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.6 Setting a Benefit Contested Case Hearing

(a) Setting with prior benefit review conference. The commission shall set a benefit contested case hearing to be held:

(1) no later than 60 days from the date of the benefit review conference; or

(2) if the commission determines that an expedited setting is appropriate, as provided by §140.3 of this title (relating to Expedited Hearings), no later than 30 days from the date of the benefit review conference.

(b) Setting without prior benefit review conference. For those disputes determined not to require a benefit review conference, as defined in §142.5 of this title (relating to Sequence of Proceedings To Resolve Benefit Disputes), the commission may set a benefit contested case hearing on its own motion, or at the request of a party. When requested, the hearing shall be set on a date:

(1) no later than 60 days from receipt of the request; or

(2) if the commission determines that an expedited setting is appropriate, no later than 30 days from the commission's receipt of the request.

(c) Notice of hearing. After setting a hearing, the commission shall furnish to the parties, by first class mail or personal delivery, written notice of the date, time, duration, and location of the hearing. The notice shall be furnished:

(1) at the same time that the notice of the benefit review conference is given;

(2) not later than 45 days before a hearing set under subsection (b)(1) of this section; or

(3) not later than 10 days before a hearing set under subsection (b)(2) of this section.

History

Source Note: The provisions of this §142.6 adopted to be effective February 12, 1991, 16 TexReg 463.

28 Tex. Admin. Code § 142.7 Statement of Disputes

(a) Statement of disputes. The statement of disputes is a written description of the benefit dispute or disputes to be considered by the administrative law judge. A dispute not expressly included in the statement of disputes will not be considered by the administrative law judge.

(b) Statement of disputes after a benefit review conference. The statement of disputes for a hearing held after a benefit review conference includes:

(1) the benefit review officer's report, identifying the disputes remaining unresolved at the close of the benefit review conference;

(2) the parties' responses, if any;

(3) additional disputes by unanimous consent, as provided by subsection (c) of this section; and

(4) additional disputes presented by a party, as provided by subsections (d) and (e) of this section, if the administrative law judge determines that the party has good cause.

(c) Party response to the benefit review officer's report. A party may submit a response to the disputes identified as unresolved in the benefit review officer's report. The response shall:

(1) be in writing;

(2) describe and explain the party's position on the unresolved dispute or disputes;

(3) be sent to the division no later than 20 days after receiving the benefit review officer's report; and

(4) be delivered to all other parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(d) Additional disputes by unanimous consent. Parties may, by unanimous consent, submit for inclusion in the statement of disputes one or more disputes not identified as unresolved in the benefit review officer's report. Additional disputes submitted by consent shall:

(1) be made in writing;

(2) identify the dispute and explain the party's position on it;

(3) be signed by all parties;

(4) be sent to the division no later than 10 days before the hearing; and

(5) explain why the issue was not raised earlier.

(e) Additional disputes by permission of the administrative law judge. A party may request the administrative law judge to include in the statement of disputes one or more disputes not identified as unresolved in the benefit review officer's report. The administrative law judge will allow such amendment only on a determination of good cause.

(1) If the requester is a carrier, carrier representative, claimant represented by an attorney, or claimant assisted by OIEC, the request shall:

(A) be made in writing;

(B) identify and describe the dispute or disputes;

(D) be sent to the division no later than 15 days before the hearing; and

(E) be delivered to all other parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(2) A claimant who is neither represented by an attorney nor assisted by OIEC may request additional disputes to be included in the statement of disputes by contacting the division in any manner no later than 15 days before the hearing.

(3) The administrative law judge will rule on the request, and notify the parties of the ruling.

(f) Statement of disputes without prior benefit review conference. The statement of disputes for a hearing held without a prior benefit review conference includes:

(1) the request for hearing, as described in §142.5(c) of this title (relating to Sequence of Proceedings To Resolve Benefit Disputes); and

(2) the other party's response, as described in §142.5(e) of this title (relating to Sequence of Proceedings To Resolve Benefit Disputes), if any.

History

Source Note: The provisions of this §142.7 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.8 Summary Procedures

(a) In order to expedite the presentation of a case, the administrative law judge may allow summary procedures, including, but not limited to, the use of:

(1) sworn witness statements;

(2) summaries of evidence;

(3) medical reports;

(4) agreements; and

(5) stipulations.

(b) The administrative law judge may allow the use of summary procedures:

(1) on its own motion; or

(2) at the request of a party.

History

Source Note: The provisions of this §142.8 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.9 Stipulations, Agreements, and Settlements

(a) At any time before or during the hearing, parties may:

(1) enter into stipulations, as provided by §140.1 of this title (relating to Definitions);

(2) resolve one or more benefit disputes by agreement; or

(3) resolve all benefit disputes by settlement.

(b) Stipulations shall be made as follows:

(1) Stipulations made before the hearing shall be:

(A) made in writing;

(B) signed by all parties to the stipulation, or their representative; and

(2) Stipulations may be made orally at a hearing and preserved in the record.

(c) Agreements and Settlements shall be made as provided by Chapter 147 of this title (relating to Dispute Resolution by Agreement or Settlement).

History

Source Note: The provisions of this §142.9 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990.

28 Tex. Admin. Code § 142.10 Continuance

(a) As used in this chapter, continuance means postponing a hearing from the time or date set, and rescheduling it on a later time or date.

(b) The division may continue a hearing:

(1) on its own motion; or

(2) at the request of a party, if the administrative law judge determines the party has good cause.

(1) A request made before a hearing by a carrier, carrier representative, claimant represented by an attorney, or claimant assisted by OIEC shall:

(A) be in writing;

(B) state the reason for continuing the hearing;

(D) be delivered to all parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(2) A claimant who is neither represented by an attorney nor assisted by OIEC may request a continuance before a hearing by contacting the division in any manner.

(3) A party may orally request a continuance during a hearing. In addition to showing good cause, the party must show that a continuance will not prejudice the rights of the other parties.

(d) The administrative law judge will rule on the request and notify all parties of the ruling. A ruling granting the continuance will include notice of the date, time, and location of the rescheduled hearing.

History

Source Note: The provisions of this §142.10 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.11 Failure To Attend a Benefit Contested Case Hearing

(a) When a party fails to attend a scheduled contested case hearing for which proper notice was provided, the administrative law judge shall proceed with the scheduled hearing. Following the close of evidence, the administrative law judge shall send written notice that the non-attending party has 10 days from the date of receipt of the notice to respond in writing and show good cause for the party's failure to attend.

(b) Other parties to the proceeding may reply, in writing, to the non-attending party's response within three days of receipt of the response.

(c) The administrative law judge shall issue a written ruling based on the filings allowed under subsections (a) and (b) of this section. If the administrative law judge determines that good cause exists for the failure to attend, the hearing will be rescheduled. If good cause is not found, or if the non-attending party does not respond to the notice, the administrative law judge shall issue a decision based on the evidence presented at the hearing and may recommend the issuance of an administrative violation.

History

Source Note: The provisions of this §142.11 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.12 Subpoena

(a) Definitions. The following words and terms, as used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Evidence - Testimony or documents, including books, papers, and tangible things.

(2) Service - Delivery of a subpoena by an authorized individual to the person to whom it is addressed.

(3) Subpoena - A division order issued by the administrative law judge requiring a person to attend or to produce evidence at a deposition (deposition subpoena) or at a hearing (hearing subpoena).

(b) How issued. The division may issue a subpoena:

(1) on its own motion; or

(2) at the request of a party, if the administrative law judge determines the party has a good cause.

(1) If the requester is a carrier, carrier representative, claimant represented by an attorney, or claimant assisted by OIEC, the request shall:

(A) be in writing;

(B) identify the evidence to be produced, and explain why it is relevant to a disputed issue;

(D) be sent to the division; and

(E) be delivered to all parties, as provided by §142.4 of this chapter (relating to Delivery of Copies to All Parties).

(2) A claimant who is neither represented by an attorney nor assisted by OIEC may request a subpoena by contacting the division in any manner, and may also request the division to arrange for service, if service will be at no cost to the division.

(d) Special provisions for hearing subpoenas. A request for a hearing subpoena shall be sent to the division and delivered to the parties, as provided by §142.4 of this chapter (relating to Delivery of Copies to All Parties), no later than 10 days before the hearing. The administrative law judge may deny a request for a hearing subpoena upon a determination that the testimony may be adequately obtained by deposition or written affidavit.

(e) Service. Upon granting a request and issuing a subpoena, the administrative law judge shall:

(1) return it to the requester for service, according to §176.5, Texas Rules of Civil Procedure; or

(2) send it to the appropriate sheriff or constable, or any person who is not a party and is 18 years of age or older for service, if a claimant who is neither represented by an attorney nor assisted by OIEC has requested the division to arrange for service, as provided by subsection (c)(2) of this section.

(f) Costs.

(1) Except as provided by subsection (c)(2) of this section, the party requesting the subpoena is responsible for all costs associated with the subpoena, including service, witness fees, and mileage.

(2) A witness or deponent who is not a party and who is subpoenaed or otherwise compelled to attend a hearing or deposition to give testimony or produce documents is entitled to receive from the party requesting the subpoena:

(A) a fee of $30 a day for each day or part of a day the person is necessarily present as a witness or deponent;

(B) mileage at the rate set for state employees in the General Appropriations Act, for going to and returning from the place of the hearing or the place of the deposition, if the place is more than 25 miles from the person's place of residence; and

(C) fees for providing expert testimony relating to medical issues shall be paid according to guidelines established by the division pursuant to the Texas Labor Code, Chapter 413.

(g) A subpoena may be enforced in the manner provided by the Government Code §2001.201 and the Texas Labor Code.

History

Source Note: The provisions of this §142.12 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.13 Discovery

(a) Description of discovery. As used in this chapter, discovery is the process by which a party may, before the hearing, obtain evidence relating to the disputed issue or issues from the other parties and witnesses. If the evidence is not produced voluntarily, the party may request a subpoena, as provided in §142.12 of this title (relating to Subpoena). Discovery includes:

(1) parties' exchange of documentary evidence;

(2) interrogatories, as prescribed by §142.19 of this title (relating to Interrogatories); and

(3) witness depositions, as follows:

(A) a health care provider may be deposed only on written questions; and

(B) other witnesses may be deposed within their county of residence or employment, orally or on written questions, if the administrative law judge determines the party has good cause to request such testimony.

(b) Sequence of discovery. Parties shall exchange documentary evidence in their possession not previously exchanged, as described in subsection (c) of this section, before requesting additional discovery by interrogatory, as described in subsection (d) of this section, or deposition, as described in subsection (e) of this section. Additional discovery shall be limited to evidence not exchanged, or not readily derived from evidence exchanged.

(1) Except as provided in subsection (g) of this section, no later than 15 days after the benefit review conference, parties shall exchange with one another the following information:

(A) all medical reports and reports of expert witnesses who will testify at the hearing;

(B) all medical records;

(D) the identity and location of any witness known to have knowledge of relevant facts; and

(E) all photographs or other documents which a party intends to offer into evidence at the hearing.

(2) Thereafter, parties shall exchange additional documentary evidence as it becomes available.

(3) Parties shall bring all documentary evidence not previously exchanged to the hearing in sufficient copies for exchange. The administrative law judge shall make a determination whether good cause exists for a party not having previously exchanged such information or documents to introduce such evidence at the hearing.

(d) Interrogatories.

(1) Interrogatories, as prescribed by §142.19 of this title (concerning Interrogatories), may be used by all parties, including subclaimants, to obtain information from any other party.

(2) Except as provided in subsection (g) of this section, interrogatories must be presented no later than 25 days before the hearing, unless otherwise agreed.

(3) Answers to interrogatories must be exchanged no later than 10 days after receipt of the interrogatories.

(4) Answers to interrogatories must be made under oath.

(e) Witness deposition. A party wishing to depose a witness shall request permission for deposition from the administrative law judge. The request shall:

(1) be made in writing;

(2) identify the witness to be deposed;

(3) state why the testimony is needed;

(4) propose a date, time, and place for taking the deposition;

(5) include a copy of the questions to be asked, if the deposition is to be on written questions;

(6) if needed, include a request for subpoena, as provided by §142.12 of this title (relating to Subpoena);

(7) be filed with the division no later than 10 days before the hearing; and

(8) be delivered to all parties, as provided by §142.4 of this title (relating to Delivery of Copies to All Parties).

(f) Additional discovery. The administrative law judge may grant a party permission to conduct discovery beyond that described previously upon a showing of good cause at a hearing held for this purpose.

(g) Time for discovery when the hearing is expedited or held without a prior benefit review conference. The notice setting an expedited hearing, or a hearing held without a prior benefit review conference, shall include time limits for completion of discovery.

History

Source Note: The provisions of this §142.13 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective February 18, 1992, 17 TexReg 949; amended to be effective January 7, 2019, 44 TexReg 108; amended to be effective February 18, 2021, 46 TexReg 1068.

28 Tex. Admin. Code § 142.14 Permission To Use Court Reporter

(a) A party may request permission to have the hearing recorded by a court reporter provided by the party. The party may select, and must bear the cost of, the court reporter.

(b) A request for permission to use a court reporter may be made in any manner and at any time before the hearing. The administrative law judge will rule on the request, and notify the parties only if the request is denied.

(c) A copy of the court reporter's audiotape, or transcript, if produced, shall be furnished to the division at no charge.

History

Source Note: The provisions of this §142.14 adopted to be effective February 12, 1991, 16 TexReg 463; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.16 Decision

(a) After the record closes, the administrative law judge shall issue a decision on benefits. The decision shall:

(1) be in writing;

(2) include findings of fact and conclusions of law; a determination of whether benefits are due; and, if so, an award of benefits due; and

(3) be signed by the administrative law judge.

(b) On a form prescribed by the division the administrative law judge shall issue a separate written decision regarding attorney's fees and any matter related to attorney fees. A decision on income or medical benefits may include an interlocutory order at the discretion of the administrative law judge.

(c) No later than the tenth day after the close of the hearing, the administrative law judge shall file all decisions with the division.

(d) No later than seven days after filing the decision, the division shall furnish to the parties, by first class mail or personal delivery:

(1) a file-stamped copy of the decision; and

(2) a statement specifying the place, manner, and time period within which an appeal must be filed.

(e) A decision issued under this section shall be effective and binding on the date signed by the administrative law judge unless superceded by an interlocutory order contained in the decision, if any.

(f) A decision regarding benefits not appealed to the appeals panel, as provided by the Texas Labor Code, §410.202 and Chapter 143 of this title, becomes final on the sixteenth day after the date received from the division of hearings. Parties shall comply with a final decision or order within 20 days of the date it becomes final as provided by the Texas Labor Code, §410.208.

(g) A decision regarding benefits appealed to the appeals panel as provided by the Texas Labor Code, §410.202 and Chapter 143 of this title, is binding on the parties and payable during an appeal to the appeals panel unless superceded by an interlocutory order contained in the decision, if any.

(h) Parties shall comply with a decision regarding benefits appealed to the appeals panel that does not contain an interlocutory order by issuing and delivering payment of accrued and unpaid income benefits no later than the fifth day after filing a written request for appeal with the appeals panel as provided by the Texas Labor Code, §410.202, and Chapter 143 of this title.

(i) Payment of accrued and unpaid income benefits paid in accordance with a decision shall include interest pursuant to the Texas Labor Code, §408.064 and §408.081.

(j) Payment of medical benefits pursuant to a decision shall be made in accordance with Chapters 408 and 413 of the Texas Labor Code.

History

Source Note: The provisions of this §142.16 adopted to be effective February 12, 1991, 16 TexReg 467; amended to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.17 Transcript or Duplicate of the Hearing Audiotape

(a) A party or the employer may submit a request to the commission for a transcript of the hearing audiotape. The requester shall pay the cost of the transcript, as established by the commission.

(b) A party or the employer may submit a request to the commission for a duplicate of the hearing audiotape. The requester shall pay the cost of the duplication, as established by the commission.

History

Source Note: The provisions of this §142.17 adopted to be effective February 12, 1991, 16 TexReg 467.

28 Tex. Admin. Code § 142.18 Special Provisions for Cases on Remand from the Appeals Panel

(a) Priority setting for case on remand from appeals panel. When the appeals panel reverses an administrative law judge's decision and remands the case for further consideration, the division shall set the hearing to be held within 30 days of the date of the appeals panel's decision.

(b) Notice of hearing. After setting a hearing under this section, the division shall furnish, by first class mail or personal delivery, written notice of the date, time, and location to the parties. The notice shall be furnished at least 20 days before the hearing.

(1) the decision of the appeals panel; and

(2) the parties' responses, if any.

History

Source Note: The provisions of this §142.18 adopted to be effective February 12, 1991, 16 TexReg 467; amended to be effective January 7, 2019, 44 TexReg 108.

28 Tex. Admin. Code § 142.19 Form Interrogatories

(a) The division has developed standard interrogatories for parties to exchange the following information:

(1) the name and contact information of the person answering the interrogatories;

(2) the issues in dispute;

(3) any certification of maximum medical improvement and impairment rating;

(4) any statement obtained from any person on the issues in dispute;

(5) the name and contact information for each health care provider the claimant has seen since the date of injury, and the conditions the health care provider treated;

(6) any recordings, photographs, videotapes, or similar material showing the claimant since the date of injury;

(7) for each health care provider the claimant has seen during the five years before the date of injury for treatment of a body part the claimant believes to be part of the claim:

(A) the health care provider's name and contact information;

(B) the dates the health care provider treated the claimant; and

(8) for each expert witness expected to testify:

(A) the expert witness' name and contact information;

(B) the subject matter the expert witness may or will testify on; and

(b) In addition to these standard interrogatories, a party may add up to five additional questions. The parties should write the questions in plain language and present them in a readable and understandable format.

(c) Parties to a dispute must use the standard form interrogatories developed and published by the division in a form and manner consistent with this rule:

(1) Claimant's Interrogatories to Carrier; and

(2) Carrier's Interrogatories to Claimant.

History

Source Note: The provisions of this §142.19 adopted to be effective July 9, 1991, 16 TexReg 3397; amended to be effective February 18, 2021, 46 TexReg 1068.

28 Tex. Admin. Code § 142.20 Interlocutory Orders

(a) The administrative law judge may enter an interlocutory order to pay all or part of income benefits or medical benefits.

(b) An interlocutory order contained in a decision supercedes the decision as it pertains to the payment of income benefits or medical benefits and remains in effect until:

(1) the decision becomes final in accordance with §142.16(f) of this title (relating to the Decision);

(2) the decision of the appeals panel is issued pursuant to the Texas Labor Code, §410.204, and Chapter 143 of this title, if appealed to the appeals panel as provided by the Texas Labor Code, §410.202, and Chapter 143 of this title and the decision and order are affirmed or an appeals panel decision reverses the administrative law judge's decision and renders a decision;

(3) reversed or modified by an agreement or settlement, as provided by §147.7 of this title (relating to Effect on Previously-Entered Decisions and Orders); or

(4) reversed or modified by a subsequent interlocutory order or decision issued after remand from the appeals panel pursuant to the Texas Labor Code, §410.203, and Chapter 143 of this title.

(c) An interlocutory order for payment of income benefits or medical benefits shall be effective on the date signed by the administrative law judge.

(d) A party shall comply with an interlocutory order by issuing and delivering payment of accrued and unpaid income benefits no later than the fifth day after receiving the interlocutory order to pay accrued and unpaid benefits, and shall pay benefits in accordance with the interlocutory order as and when they accrue.

(e) Payment of accrued and unpaid income benefits paid in accordance with an interlocutory order shall include interest pursuant to the Texas Labor Code, §408.064 and §408.081.

(f) Payment of medical benefits pursuant to an interlocutory order shall be made in accordance with Chapters 408 and 413 of the Texas Labor Code.

(g) An interlocutory order contained in a decision will be distributed to the parties as provided by §142.16 of this title (relating to the Decision).

History

Source Note: The provisions of this §142.20 adopted to be effective May 10, 2000, 25 TexReg 3990; amended to be effective January 7, 2019, 44 TexReg 108.

Chapter 143 DISPUTE RESOLUTION REVIEW BY THE APPEALS PANEL

28 Tex. Admin. Code § 143.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Appellant--A party to a benefit contested case hearing who is dissatisfied with the decision of the administrative law judge, and files a request for review of that decision by the appeals panel.

(2) Request--The appellant's written appeal for review of the decision of an administrative law judge.

(3) Respondent--The other party to a benefit contested case hearing who must file a response to the appellant's request.

(4) Response--The respondent's written answer to the appellant's request.

History

Source Note: The provisions of this §143.1 adopted to be effective March 7, 1991, 16 TexReg 1195; amended to be effective May 9, 2004, 29 TexReg 4223; amended to be effective January 7, 2019, 44 TexReg 111.

28 Tex. Admin. Code § 143.2 Description of the Appeal Proceeding

(a) To review the decision of the administrative law judge, the appeals panel considers the appellant's request, the respondent's response, and the record of the benefit contested case hearing. The parties do not appear in person before the panel.

(b) The appeals panel may:

(1) reverse the decision of the administrative law judge and render a new decision;

(2) reverse the decision of the administrative law judge and remand to the administrative law judge for a second benefit contested case hearing, which shall be set as provided by §142.18 of this title (relating to Special Provisions for Cases on Remand from the Appeals Panel). The appeals panel may not remand a case more than once; or

(3) affirm the decision of an administrative law judge in a case as described by Labor Code §410.204(a-1).

History

Source Note: The provisions of this §143.2 adopted to be effective March 7, 1991, 16 TexReg 1195; amended to be effective December 13, 2009, 34 TexReg 8739; amended to be effective November 20, 2011, 36 TexReg 7876; amended to be effective January 7, 2019, 44 TexReg 111.

28 Tex. Admin. Code § 143.3 Requesting the Appeals Panel to Review the Decision of the Administrative Law Judge

(a) A party to a benefit contested case hearing who is dissatisfied with the decision of the administrative law judge may request the appeals panel to review that decision. The request shall:

(1) be in writing;

(2) clearly and concisely rebut each issue in the administrative law judge's decision that the appellant wants reviewed, and state the relief the appellant wants granted;

(3) be filed with the Chief Clerk of Proceedings in the division's central office in Austin not later than the 15th day after receipt of the administrative law judge's decision. The administrative law judge's decision is deemed to have been received by the parties in accordance with §102.5 (relating to General Rules for Written Communications To and From the Commission) and §102.3 (relating to Computation of Time) of this title. Requests that are timely submitted to a division location other than the Chief Clerk of Proceedings, such as a local field office of the division, will be considered timely filed and forwarded to the division's appeals panel for consideration, but this may result in delay in the processing of the request. Untimely requests, regardless of whether they are filed with the Chief Clerk of Proceedings in the division's central office or in a different division field office, do not invoke the jurisdiction of the appeals panel and will not be reviewed by the appeals panel;

(4) be served on the other party or parties on the same day filed with the division; and

(5) contain a statement certifying that a copy has been served on the other party or parties in person, mailed by certified mail, return receipt requested, or transmitted by verifiable means. A certificate in substantially the following form shall be used: "I hereby certify that I have on this ____ day of ____________, _____, served a copy of the attached request for appeal on _______________________________ (state the name of the other party or parties on whom a copy was served) by _______________________________ (state the manner of service)." _______________________________ Signature

(b) If it is not clear from the request for review that the party has properly served a copy of the request on the other party or parties, the division will provide a copy of the request expeditiously.

(c) A party may make a conditional request for review by the appeals panel even if the overall contested case hearing decision is favorable. A timely request that indicates that the filing party seeks consideration only if the opposing party files a request for review will not be treated as a request for review unless an opposing party timely files a request. If an opposing party does file a timely request, the conditional request will be treated as a cross-appeal.

(d) A request for review by the appeals panel shall be filed not later than the 15th day after the appealing party is deemed to have received the administrative law judge's decision. Saturdays and Sundays and holidays listed in Government Code §662.003 are not included in the computation of this 15-day period. A request made under this section shall be presumed to be timely filed or timely served with the division if it is:

(1) mailed on or before the 15th day after the date of deemed receipt of the administrative law judge's decision, as provided in subsection (a) of this section; and

(2) received by the division not later than the 20th day after the date of deemed receipt of the administrative law judge's decision.

History

Source Note: The provisions of this §143.3 adopted to be effective March 7, 1991, 16 TexReg 1195; amended to be effective December 31, 1991, 16 TexReg 7358; amended to be effective March 14, 2001, 26 TexReg 2032; amended to be effective May 9, 2004, 29 TexReg 4223; amended to be effective December 13, 2009, 34 TexReg 8739; amended to be effective January 7, 2019, 44 TexReg 111.

28 Tex. Admin. Code § 143.4 Responding to a Request for Review by the Appeals Panel

(a) The other party shall respond to the appellant's request. The response shall:

(1) be in writing;

(2) clearly and concisely support each issue in the administrative law judge's decision that the appellant has rebutted in the request, and state why the appellant's relief should not be granted;

(3) be filed with the Chief Clerk of Proceedings in the division's central office in Austin not later than the 15th day after receipt of the appellant's appeal. The appellant's appeal is deemed received in accordance with §102.5 (relating to General Rules for Written Communications To and From the Commission, §102.4 (relating to General Rules for Non-Commission Communications) and §102.3 (relating to Computation of Time) of this title. Responses that are timely submitted to a division location other than the Chief Clerk of Proceedings, such as a local field office of the division, will be considered filed timely and forwarded to the division's appeals panel for consideration, but this may result in delay in the processing of the response. Untimely responses, regardless of whether they are filed with the Chief Clerk of Proceedings or in a different division office, will not be reviewed by the appeals panel;

(4) be served on the other party or parties on the same day filed with the division; and

(5) contain a statement certifying that a copy has been served on the other party or parties in person, mailed by certified mail, return receipt requested, or transmitted by verifiable means. A certificate in substantially the following form shall be used: "I hereby certify that I have on this ____ day of ____________, _____, served a copy of the attached response to a request for appeal on _______________________________ (state the name of the other party or parties on whom a copy was served) by _______________________________ (state the manner of service)." _______________________________ Signature

(b) If it is not clear from the response that the party has properly served a copy of the response on the other party or parties, the division shall provide a copy of the response expeditiously.

(c) A response to the appellant's request with the division shall be filed not later than the 15th day after the responding party is deemed to have received the appellant's request. Saturdays and Sundays and holidays listed in §662.003, Government Code, are not included in the computation of this 15-day period. A response made under this section shall be presumed to be timely filed with the division if it is:

(1) mailed on or before the 15th day after the date of deemed receipt of the appellant's request, as provided in subsection (a) of this section; and

(2) received by the division not later than the 20th day after the date of deemed receipt of the appellant's request.

History

Source Note: The provisions of this §143.4 adopted to be effective March 7, 1991, 16 TexReg 1195; amended to be effective March 31, 1992, 17 TexReg 2009; amended to be effective March 14, 2001, 26 TexReg 2032; amended to be effective May 9, 2004, 29 TexReg 4223; amended to be effective December 13, 2009, 34 TexReg 8739; amended to be effective January 7, 2019, 44 TexReg 111.

28 Tex. Admin. Code § 143.5 Decision of the Appeals Panel

(a) Not later than the 45th day after the date the response was filed with the division, the appeals panel will issue its written decision, concluding with a separate paragraph stating words to the effect: "The true corporate name of the insurance carrier is (NAME IN BOLD PRINT) and the name and address of its registered agent for service of process is (NAME AND ADDRESS IN BOLD PRINT)", and file a copy with the division.

(b) If the appeals panel does not issue a written decision by the 45th day after the date the response was filed with the division, the administrative law judge's decision becomes final, constitutes the decision of the appeals panel, and, for the purpose of establishing the time for seeking judicial review, is deemed filed with the division on that day.

(c) Not later than the seventh day after the appeals panel files its decision with the division, or a decision is deemed filed, as provided in subsection (b) of this section, the division shall send to each party a copy of the decision, or a notice that the administrative law judge's decision has become final and constitutes the decision of the appeals panel.

(d) A decision of the appeals panel that is not appealed for judicial review, as provided by the Texas Labor Code §410.252, et seq., becomes final on the 46th day after the division mailed the party the decision of the appeals panel. For purposes of this section the mailing date is considered to be the fifth day after the date the decision of the appeals panel was filed by the division.

(e) A decision of the appeals panel that is appealed for judicial review is binding on the parties for the duration of the judicial review.

History

Source Note: The provisions of this §143.5 adopted to be effective March 7, 1991, 16 TexReg 1195; amended to be effective May 9, 2004, 29 TexReg 4223; amended to be effective December 13, 2009, 34 TexReg 8739; amended to be effective January 7, 2019, 44 TexReg 111.

Chapter 144 DISPUTE RESOLUTION

Subchapter A ARBITRATION

28 Tex. Admin. Code § 144.1 Authority and Duties of Arbitrators

(a) The arbitrator is authorized but not limited to:

(1) set the time and location of the arbitration proceeding pursuant to the applicable provisions of Labor Code §410.005 and §410.109;

(2) compel the parties to exchange all pertinent medical reports and other documentary evidence, and proposals for resolving the issues in dispute;

(3) conduct, at the arbitrator's discretion, preliminary conferences to identify issues to resolve questions concerning evidence and witnesses, and to otherwise expedite the arbitration proceeding;

(4) exclude individuals other than the parties and the employer from the arbitration proceeding;

(5) administer oaths;

(6) take official notice of the law of Texas and other jurisdictions, Texas city and county ordinances, the content of the Texas Register, the rules of state agencies, facts that are judicially cognizable, and generally recognized facts within the division's specialized knowledge;

(7) determine the relevancy and materiality of the evidence offered, without a requirement to conform to legal rules of evidence; and

(8) accept stipulations by the parties on uncontested issues.

(b) The arbitrator has a duty to:

(1) disclose to all parties and the division's chief clerk of proceedings any potential conflicts of interest prior to and during the arbitration, including any pecuniary, personal or business related interest. Further, to disclose any circumstances that may affect or reasonably raise a question as to the impartiality of the arbitrator, including any past or present relationships with the parties;

(2) protect the interests of all parties, including the advisement of the injured employee's rights if not represented;

(3) maintain the confidentiality of the arbitration proceeding;

(4) encourage brevity, consistent with completeness, at all stages of the arbitration proceeding;

(5) ensure that all relevant evidence has been disclosed to the arbitrator and to all parties;

(6) render an award based upon the evidence and consistent with the terms of the Act, and the rules and policies of the division;

(7) ensure an electronic recording is made of the proceedings;

(8) arrange for the provision of interpreter services if necessary; and

(9) comply with standards of conduct and ethical principles of the arbitrator's professional group, those set forth in the Act, division rules, and the codes of professional responsibility and conduct promulgated by the arbitrator's professional association.

History

Source Note: The provisions of this §144.1 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.2 Ex Parte Communications

(a) On any substantive matter regarding facts, issues, law, or rules, an arbitrator may not communicate with any party outside the arbitration unless the communication is:

(1) in writing; and

(2) a copy is delivered to all parties to the arbitration.

(b) Notwithstanding subsection (a) of this section, any party may communicate with the arbitrator concerning any procedural matter.

History

Source Note: The provisions of this §144.2 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.3 Delivery of Copies of Documents

A party who sends a document relating to the arbitration proceeding to the division's chief clerk of proceedings or the arbitrator shall also deliver copies of the document to all other parties, or their representatives or attorneys. Delivery shall be accomplished by presenting in person, mailing by certified mail, or electronic transmission. The document sent to the division's chief clerk of proceedings or the arbitrator shall contain a statement certifying delivery using the following format: "I hereby certify that I have on the ____ day of ____________, _____, delivered a copy of the attached document to _______________________________ by _______________________________ (state manner of delivery)."

History

Source Note: The provisions of this §144.3 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective March 14, 2001, 26 TexReg 2033; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.4 Election to Engage in Arbitration

(a) Following a benefit review conference where disputed benefit issue(s) remain unresolved, the parties may mutually agree to engage in arbitration on those issues.

(b) Parties agreeing to engage in arbitration must complete and sign a form prescribed by the division and file it with the division's chief clerk of proceedings not later than the 20th day after the last day of the benefit review conference.

(c) A party may submit a response to the disputes identified as unresolved in the benefit review officer's report. The response shall:

(1) be in writing;

(2) describe and explain the party's position on the unresolved dispute or disputes;

(3) be sent to the division's chief clerk of proceedings no later than 20 days after receiving the benefit review officer's report; and

(4) be delivered to all other parties, as provided by §144.3 of this title (relating to Delivery of Copies of Documents).

(d) Except as provided by §144.10 of this title (relating to Stipulations, Agreements, and Settlements), the decision to proceed with arbitration in place of a division contested case hearing, once filed with the division's chief clerk of proceedings, is binding and irrevocable for the resolution of all disputes arising out of the claims that are under the jurisdiction of the division. For medical fee disputes arising from Labor Code §413.0312, except as provided by §144.10 of this title, the decision to proceed with arbitration in place of a contested case hearing at the State Office of Administrative Hearings is binding and irrevocable for the resolution of that dispute.

History

Source Note: The provisions of this §144.4 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.5 Statement of Disputes

(a) Statement of disputes. The statement of disputes is a written description of the dispute(s) to be considered by the arbitrator. A dispute not expressly included in the statement of disputes will not be considered by the arbitrator.

(b) Statement of disputes after a benefit review conference. The statement of disputes for an arbitration proceeding conducted after a benefit review conference includes:

(1) the benefit review officer's report, identifying the disputes remaining unresolved at the close of the benefit review conference;

(2) the parties' responses to the benefit review officer's report, if any; and

(3) additional disputes by unanimous consent, as provided by subsections (c) and (d) of this section.

(c) Additional disputes by unanimous consent. Parties may, by unanimous consent, submit for inclusion in the statement of disputes one or more disputes not identified as unresolved in the benefit review officer's report. Additional disputes submitted by consent shall:

(1) be made in writing;

(2) identify the dispute and explain each party's position on it;

(3) be signed by all parties;

(4) be sent to the division's chief clerk of proceedings no later than 10 days before the arbitration proceeding; and

(5) explain why the issue was not raised earlier.

(d) The statement of dispute in the arbitration of a medical fee dispute may not include a dispute regarding compensability, extent of injury, liability, or medical necessity for the same service for which there is a medical fee dispute. Chapter 133, Subchapter D of this title (relating to Dispute of Medical Bills) requires parties to resolve such disputes prior to requesting medical fee dispute resolution by the division. If a party provides the arbitrator with documentation listed in §133.307(d)(2)(H) or (I) of this title (relating to MDR of Fee Disputes) that shows unresolved issues regarding compensability, extent of injury, liability, or medical necessity for the same service subject to the fee dispute, then the arbitrator shall abate the arbitration proceedings until those issues have been resolved.

History

Source Note: The provisions of this §144.5 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.6 Assignment of Arbitrator

(a) The division will maintain, in random name order, lists of qualified arbitrators established by the division. Not later than the 30th day after an election to engage in arbitration is filed, an arbitrator will be assigned from the appropriate list. Each party will be notified immediately either personally or by certified mail.

(b) Assignment from the list of arbitrators shall be from the top of the list. When the list has been exhausted by assignment of each arbitrator to a case, the list will be randomly reordered.

(c) Each party to the arbitration proceeding is entitled to one rejection of an assigned arbitrator and must exercise such rejection not later than the third day following receipt of notification of an arbitrator's assignment. Once a rejection is exercised, the next arbitrator from the top of the list will be assigned.

(d) A rejection exercised by a party must be:

(1) in writing;

(2) signed by the party or authorized representative;

(3) personally delivered, sent by certified mail or electronic transmission, not later than the third day following receipt of notice of an arbitrator's assignment, to the division's chief clerk of proceedings with a copy to all parties.

History

Source Note: The provisions of this §144.6 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.7 Setting the Arbitration Proceeding

(a) Following any rejections as set forth in §144.6 of this title (relating to Assignment of Arbitrator), the arbitrator shall schedule arbitration to be held not later than the 30th day following the assignment of the arbitrator.

(b) The arbitrator shall notify, in writing, all parties and the employer of the time and place scheduled for the arbitration. The notification shall be by personal delivery or certified mail.

(c) Unless the assigned arbitrator determines that good cause exists for the selection of a different location, arbitration proceedings may not be conducted at a site more than 75 miles from the injured employee's residence at the time of injury.

History

Source Note: The provisions of this §144.7 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.8 Expediting Procedures

(a) In addition to the use of affidavits, medical reports, stipulations, and agreements, the arbitrator may allow, to the maximum extent possible and with due consideration to completeness and fairness, expediting procedures, including, but not limited to, the use of:

(1) unsworn witness statements; and

(2) summaries of evidence.

(b) The arbitrator may allow use of expediting procedures unless objected to by a party, and the arbitrator determines that there is good cause for sustaining the objection.

History

Source Note: The provisions of this §144.8 adopted to be effective December 31, 1991, 16 TexReg 7358.

28 Tex. Admin. Code § 144.9 Exchange of Evidence and Proposed Resolution

(a) Not later than the seventh day preceding the arbitration proceeding, each party is required to exchange with the other party, and file with the arbitrator:

(1) all pertinent medical reports and other documentary evidence in the party's possession not previously exchanged or filed; and

(2) written proposals for resolving the issues in dispute.

(b) A party failing to comply with this requirement without good cause, as determined by the arbitrator, commits an administrative violation.

History

Source Note: The provisions of this §144.9 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.10 Stipulations, Agreements, and Settlements

(a) Except as provided by subsections (d) and (e) of this section, at any time before or during the arbitration proceeding, parties may:

(1) enter into stipulations, defined as a voluntary accord between parties to an arbitration regarding any matter relating to the arbitration that does not constitute an agreement or a settlement, as defined by Labor Code §401.011;

(2) resolve one or more benefit disputes by agreement; or

(3) resolve all benefit disputes by settlement.

(b) Stipulations shall be made as follows:

(1) in writing; and

(2) signed by all parties to the stipulation, or their representatives.

(c) Agreements and settlements shall be made as provided by Chapter 147 of this title (relating to Dispute Resolution--Agreements, Settlements, Commutations).

(d) Parties to a medical fee dispute may not enter into a:

(1) settlement; or

(2) a stipulation or agreement on a dispute regarding compensability, extent of injury, liability, or medical necessity for the same service for which there is a medical fee dispute.

(e) Parties to a medical fee dispute may not resolve the dispute by negotiating fees that are inconsistent with any applicable fee guidelines adopted by the commissioner of workers' compensation.

History

Source Note: The provisions of this §144.10 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.11 Continuance

(a) Any request for a continuance by a party must be directed to the division's chief clerk of proceedings and served personally by certified mail, or by electronic transmission, on all other parties.

(b) A continuance may be granted for up to 30 days only upon a determination of good cause. Notwithstanding the existence of good cause, not more than one continuance will be granted to each party.

History

Source Note: The provisions of this §144.11 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.12 Failure to Attend Arbitration

A party who fails to attend any session of the arbitration proceeding after electing arbitration commits an administrative violation unless the arbitrator determines that the party had good cause not to attend.

History

Source Note: The provisions of this §144.12 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.13 Rights of Parties

(a) Each party to the arbitration proceeding is entitled to be present, to have a full, fair, and impartial hearing of all relevant evidence, and to present the party's respective position on the issue(s) in dispute.

(b) Parties to the arbitration are entitled to be represented by counsel or other representative authorized under and in accordance with the Texas Workers' Compensation Act and division rules.

(c) Each party, and the arbitrator, is permitted to call witnesses who have relevant information to testify (under oath if required by the arbitrator or requested by a party) and to ask questions of any witnesses called.

(d) A party desiring to have a record made of the arbitration proceeding by stenographic means may do so and is responsible for arranging for and the expense of making a record by such means. A copy of the stenographic report shall be provided to the division's chief clerk of proceedings at no charge and may be made available to the other parties.

History

Source Note: The provisions of this §144.13 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.14 Usual Order of Proceedings

(a) The arbitration proceeding will begin with preliminary matters including the introduction of copies of the election of arbitration and the assignment of the arbitrator, the introduction of all parties and representatives, statements for the record of the date, time, and place of the proceedings, and a concise statement of the disputed issue(s).

(b) An electronic recording of the proceeding will be made by the arbitrator.

(c) The arbitrator will allow and may assist each party to make a brief opening statement setting forth its position on unresolved issues and the issues with respect to which it is prepared to stipulate.

(d) The requestor shall be the first party to present all relevant evidence desired in support of the claim including the testimony of witnesses.

(e) Following the requestor's presentation of evidence, the other party to the proceeding may present evidence desired to be considered by the arbitrator, including the calling of witnesses.

(f) After each party has presented the evidence desired, the arbitrator may call for additional evidence that the arbitrator considers necessary for a proper understanding and determination of the issues.

(g) Each party may present closing statements as desired, but the record may not remain open for written briefs unless requested by the arbitrator.

History

Source Note: The provisions of this §144.14 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.15 Award of the Arbitrator

(a) Not later than the seventh day after the last day of arbitration, the arbitrator shall enter the final award which must:

(1) be in writing;

(2) be signed and dated by the arbitrator;

(3) include a statement of the arbitrator's decision on the contested issues and the parties' stipulations on uncontested issues;

(4) be sent to the division and all parties by certified mail, or personal delivery; and

(5) be filed as a part of the permanent claim file.

(b) The award entered is final and binding on all parties. Except as provided by Labor Code §410.121 there is no right of appeal or judicial review.

(d) For the purposes of correcting a clerical error, an arbitrator retains jurisdiction of the award for 20 days after the date of the award.

History

Source Note: The provisions of this §144.15 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

28 Tex. Admin. Code § 144.16 Requesting a Copy of the Record

A party or the employer may request a copy of the electronic recording of the arbitration proceeding from the division. The requestor shall pay the cost of the duplication, as established by the division.

History

Source Note: The provisions of this §144.16 adopted to be effective December 31, 1991, 16 TexReg 7358; amended to be effective May 31, 2012, 37 TexReg 3856.

Chapter 147 DISPUTE RESOLUTION--AGREEMENTS, SETTLEMENTS, COMMUTATIONS

28 Tex. Admin. Code § 147.1 Form and Execution

(a) A settlement or a written agreement must be on a form prescribed by the division.

(b) In addition to the parties, the employee's representative, if any, must sign the written agreement or settlement.

(c) Unless the division finds that an extraordinary circumstance applies, an employee's representative must not sign a written agreement or settlement on behalf of the employee.

(d) The insurance carrier's representative must sign a written agreement or settlement as the agent of the insurance carrier, and the insurance carrier will be bound by the written agreement or settlement.

History

Source Note: The provisions of this §147.1 adopted to be effective July 8, 2024, 49 TexReg 4921.

28 Tex. Admin. Code § 147.4 Agreements; Filing and Effective Dates

(a) An agreement may be reduced to writing and sent to the division. The agreement is effective and binding on the date the division approves it.

(b) An oral agreement reached during a benefit contested case hearing and preserved in the record is effective and binding on the date made.

(1) an insurance carrier and a claimant represented by an attorney through the final conclusion of all matters relating to the claim, whether before the division or in court, unless set aside by the division or court on a finding of fraud, newly discovered evidence, or other good and sufficient cause; and

(2) a claimant not represented by an attorney through the final conclusion of all matters relating to the claim while the claim is pending before the division, unless set aside by the division for good cause.

History

Source Note: The provisions of this §147.4 adopted to be effective April 25, 1991, 16 TexReg 2097; amended to be effective July 8, 2024, 49 TexReg 4921.

28 Tex. Admin. Code § 147.5 Settlements: Requirements, Effective Dates, and Informal Settlement Conferences

(a) A settlement must be sent to the division.

(b) The division may approve or reject it before the 16th day after the date the settlement is submitted to the division.

(1) establish that the insurance carrier is liable for the claim;

(2) establish that the claim is compensable;

(3) establish that the employee is entitled to benefits;

(4) incorporate by reference all prior oral and written agreements between the parties; and

(5) state that a final resolution has been reached on all issues in the claim, and that the parties waive their rights to subsequent division proceedings, other than those necessary to resolve medical benefit disputes or to enforce compliance with the terms of the settlement.

History

Source Note: The provisions of this §147.5 adopted to be effective April 25, 1991, 16 TexReg 2097; amended to be effective July 8, 2024, 49 TexReg 4921.

28 Tex. Admin. Code § 147.7 Agreements and Settlements: Effect on Previously Entered Decisions and Orders

(a) A written agreement on one or more disputed issues addressed in a presiding officer's decision or order, including an interlocutory order, sets aside the decision or order, as it relates to the agreement, on the date the agreement is approved by the presiding officer.

(b) A settlement filed before a presiding officer's decision becomes final sets aside a presiding officer's decision or order, except for an interlocutory order, on the date received by the division. If the division rejects the settlement, the decision or order will be immediately reentered.

History

Source Note: The provisions of this §147.7 adopted to be effective April 25, 1991, 16 TexReg 2097; amended to be effective July 8, 2024, 49 TexReg 4921.

28 Tex. Admin. Code § 147.10 Commutation of Impairment Income Benefits

(a) A request to commute impairment income benefits must:

(1) be in writing on a form prescribed by the division;

(2) state the date the employee reached maximum medical improvement, the impairment rating, and the employee's weekly impairment income benefit;

(3) be sent to the insurance carrier; and

(4) be filed with the division.

(b) The insurance carrier must send a notice of approval or denial of the request to the employee no later than 14 days after receiving the request. A notice of approval must include payment of the commuted impairment income benefits. A notice of denial must include the insurance carrier's reasons for denial. A copy of the notice must be filed with the division.

(c) If the insurance carrier denies the request, the employee may request the division to schedule a benefit review conference to resolve the issue, as provided by §141.1 of this title (relating to Form and Execution).

History

Source Note: The provisions of this §147.10 adopted to be effective December 16, 1991, 16 TexReg 7018; amended to be effective July 8, 2024, 49 TexReg 4921; amended to be effective October 17, 2024, 49 TexReg 8395.

28 Tex. Admin. Code § 147.11 Notification to Division of Proposed Judgments and Settlements

The insurance carrier or its representative must file a copy of a final judgment or settlement with the division no later than the 10th day after a court approves the agreement or settlement.

History

Source Note: The provisions of this §147.11 adopted to be effective February 2, 1996, 21 TexReg 514; amended to be effective December 2, 1997, 22 TexReg 11714; amended to be effective July 8, 2024, 49 TexReg 4921.

Chapter 148 HEARINGS CONDUCTED BY THE STATE OFFICE OF ADMINISTRATIVE HEARINGS

28 Tex. Admin. Code § 148.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Act--The Texas Workers' Compensation Act, Labor Code, §§401.001 et seq.

(2) ALJ--The administrative law judge designated by the State Office of Administrative Hearings to preside over the hearing.

(3) APA--The Administrative Procedure Act, as specified in the Government Code, Chapter 2001.

(4) Chief Clerk of Proceedings--The Chief Clerk of Proceedings within the hearings section in the central office of the Texas Department of Insurance, Division of Workers' Compensation.

(5) Contested Case--A proceeding held by the State Office of Administrative Hearings in which the legal rights, duties, or privileges of a party are to be determined by an agency after an opportunity for adjudicative hearing as defined in Government Code, §2001.003.

(6) Division Representative--The attorney or any representative that may be designated by the commissioner or his designee to represent the division.

(7) Party--A person or state agency named or admitted as a party.

(8) Person--An individual, partnership, corporation, association, governmental subdivision, or public or private organization that is not a state agency as defined in the APA.

(9) Petitioner--

(A) The division is the petitioner in a contested case in which the division seeks to impose a sanction or has issued an emergency cease and desist order.

(B) In all other cases, the petitioner is the person who has filed a written request for a hearing in accordance with these procedures.

(10) Respondent--

(A) The respondent is the opposing party to the division in a contested case in which the division seeks to impose a sanction or has issued an emergency cease and desist order.

(B) In all other cases, the respondent is the person responding to the petitioner's request for a hearing.

(11) SOAH--The State Office of Administrative Hearings.

History

Source Note: The provisions of this §148.1 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.2 Scope and Applicability

(a) Scope. This chapter governs contested case hearings, which adjudicate disputes before SOAH as authorized under the Act.

(b) Coordination with SOAH's Procedural Rules. This chapter governs the following procedural matters and also provides related policies of the division on the following:

(1) matters arising before a case is transferred by the division to SOAH;

(2) matters arising after a proposal for decision or after the entire case is received from SOAH;

(3) requests for the issuance of a subpoena and related matters; and

(4) requests for issuance of a commission requiring deposition and related matters.

(1) The entire APA applies to contested case hearings under Labor Code §§407.046, 407A.007, 413.031, 413.0312, 413.055, 415.0211, and 415.034.

(2) The sections of the APA enumerated in Labor Code §401.021(1) apply to all other contested case hearings governed by this chapter.

(3) The ALJ renders the final decision in hearings conducted pursuant to Labor Code §§413.031, 413.0312, and 413.055.

(4) The commissioner renders the final decision in all other cases not specified in paragraph (3) of this subsection pursuant to Government Code §2001.062.

History

Source Note: The provisions of this §148.2 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.3 Requesting a Hearing

(a) Hearings Requested by the Division. The division may request a hearing before SOAH as permitted by the APA, the Act, and division rules.

(b) Requests for Hearing by Other Parties. Other Parties may file requests for hearings before SOAH as permitted by the APA, the Act, and division rules. The request for hearing must be in writing. The request for hearing must be filed with the Chief Clerk of Proceedings.

(c) Date Deemed Filed or Received. When a request for a hearing is addressed to the Chief Clerk of Proceedings but is sent to an office other than the Chief Clerk of Proceedings, the date filed or received shall be the date the request is received by the division. The request for hearing will be forwarded to the division's Chief Clerk of Proceedings, but this may result in delay of processing the request. When a request for a hearing is not addressed to the Chief Clerk of Proceedings, it will not be considered filed or received by the division unless it is actually received by the Chief Clerk of Proceedings. Otherwise, a request for a hearing is deemed filed as of the date of the division date stamp placed on the document or other evidence of receipt.

(d) Deadlines for Filing. A request for hearing before SOAH must be filed with the Chief Clerk of Proceedings within the following time periods:

(1) medical fee dispute under Labor Code §413.031 and §413.0312: 20 days after the conclusion of the benefit review conference under Chapter 141 of this title (concerning Dispute Resolution--Benefit Review Conference);

(2) administrative violation: 20 days after receipt of a notice of possible administrative violation under Labor Code §415.032 and §180.8 of this title (concerning Notices of Violation; Notices of Hearing; Default Judgments);

(3) interlocutory order: 20 days after receipt of an interlocutory order for payment under Labor Code §413.055;

(4) emergency cease and desist order: not later than the 30th day after the date the affected person receives the order;

(5) division audit or review: 20 days after receipt of a division refund order issued pursuant to a division audit or review; or

(6) requests for hearing not specified in this subsection: the time for filing a request for hearing before SOAH is 20 days after receipt of a notice of the action that the party is requesting a hearing on, unless specified in other law.

(e) Requests for Hearing Under Labor Code §413.031 and §413.0312. If the request for hearing is based on Labor Code §413.031 and §413.0312, the request must be in the form and manner specified by the division and must:

(1) contain a statement indicating that it is a request for hearing;

(2) include a copy of the findings and decision on which a hearing is being requested;

(3) include verification of the date of the conclusion of the Benefit Review Conference;

(4) be signed by a requestor or respondent as defined by §133.305 of this title (concerning MDR--General), or its representative; and

(5) include a certificate of service demonstrating that the request has been sent to the other party in accordance with the requirements of §133.307 of this title (concerning MDR of Fee Disputes), in substance as follows: "I hereby certify that I have on this ___ day of __________, 20 __, served a copy of the attached instrument on (state the name of the other parties on whom a copy was served) by (state the manner of service.)"

(f) Notice of Violation.

(1) If a person receives a notice of violation, the person charged must file an answer not later than the 20th day after the date of receipt of the notice. The answer must either:

(A) remit the amount of the sanction to the division or otherwise consent to the imposed sanction; or

(B) request a hearing.

(2) If the person charged does not file an answer to the notice of violation, the division shall schedule a hearing at SOAH, pursuant to §180.8(c) of this title (concerning Notices of Violation; Notices of Hearing; Default Judgments).

(g) Dismissal of Late Filings. The division, or the ALJ pursuant to paragraph (3) of this subsection, shall dismiss a request for hearing filed later than the deadline date. This subsection does not apply to requests for hearing submitted in response to a Notice of Violation pursuant to §180.8 of this title.

(1) The division shall send a letter to the requestor informing the requestor that the untimely request will be dismissed unless the requestor provides information about timely filing or good cause for untimely filing within 10 working days of the date of the letter.

(2) If the requestor responds with information about timely filing or good cause, the Chief Clerk of Proceedings will send the request for hearing and the additional filing or good cause information to SOAH.

(3) The SOAH ALJ will dismiss a request for hearing that the ALJ determines to be filed later than the deadline date without good cause.

(h) Division Delivery of Request for Hearing to SOAH. The Chief Clerk of Proceedings shall send the request for a hearing to SOAH within 20 working days of receipt, unless:

(1) the decision has been withdrawn under the provisions contained in §148.8 of this title (concerning Withdrawal of Hearing Request);

(2) the request for hearing has been dismissed under subsection (g) of this section;

(3) the division has notified the parties of a proposed clerical correction to the order or decision; or

(4) a party has requested a correction of clerical error with the division.

History

Source Note: The provisions of this §148.3 adopted to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.4 Correction of Clerical Error

(a) Correction of Clerical Error Discovered by the Division. The division may at any time revise an order or decision to correct a clerical error. The division may enter a nunc pro tunc order after an order or decision has become final. To initiate the correction, the division will notify the parties to the order or decision of the proposed correction. If a party objects to the proposed clerical correction, it must do so by the date and time specified by the division. The date and time specified by the division may not exceed the point at which the order or decision becomes final.

(b) Request for Correction of Clerical Error Discovered by a Party.

(1) A party to an order or decision may request the correction of a clerical error from the division prior to the point at which the order or decision becomes final.

(2) To initiate the correction, the division will notify the parties of the proposed correction. If a party objects to the proposed clerical correction, it must do so by the date and time specified by the division. The date and time specified by the division may not exceed the point at which the order or decision becomes final.

(c) Notification. The division will notify the parties to an order or decision that a clerical correction was made by issuing a letter that includes the:

(1) date of the original order or decision;

(2) erroneous portion as originally stated;

(3) corrected portion as it reads; and

(4) signature of the authorized division personnel.

History

Source Note: The provisions of this §148.4 adopted to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.5 Notice of Hearing

(a) Notice of Hearing. The Chief Clerk of Proceedings shall notify the parties in writing, by verifiable means, of the date, time, place, and nature of the hearing no later than 10 days before the hearing date. SOAH shall notify the parties of a hearing no later than 30 days before the hearing date for a hearing under Labor Code §407.046(b).

(b) Contents. The notice of hearing must include:

(1) a statement of the time, place, and nature of the hearing;

(2) the docket number;

(3) the legal authority and jurisdiction under which the hearing will be held;

(4) a reference to the particular sections of the statutes and any rules involved;

(5) a notice regarding failure to appear and default judgments; and

(6) a short, plain statement of the matters asserted.

(c) Alternative Submission. In lieu of the Chief Clerk of Proceedings, the division's representative may provide the reference to the statutes and any rules involved, nature of the hearing, and the short, plain statement of the matters asserted.

(d) Administrative Violation Notice of Hearing; Default.

(1) A person who receives a notice of hearing under §180.8(c) of this title (relating to Notices of Violation; Notices of Hearing; Default Judgments) must file a written answer or other responsive pleading with the Chief Clerk of Proceedings within 20 days of receipt of the notice as required by §180.8(c) of this title.

(2) Failure to file the required answer or pleading constitutes a default, and the division may seek informal disposition by default under §180.8(f) and (g) of this title.

(e) Notice of Hearing under Labor Code §407.046(b) from SOAH.

(1) SOAH shall notify, in writing, a certified self-insurer and the Chief Clerk of Proceedings of the date, time, place, and nature of a hearing concerning the intent of the division to revoke a certificate of self-insurance under Labor Code §407.046.

(2) The notice must be sent no later than 30 days before the hearing date.

(3) The notice must include:

(A) the notice required under Government Code §2001.052, and

(B) a notice regarding failure to appear and default judgment.

History

Source Note: The provisions of this §148.5 adopted to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.6 Venue

Hearings under this chapter are held in Austin, Travis County, Texas.

History

Source Note: The provisions of this §148.6 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.7 Representation

(a) Representation of Injured Employees or Insurance Carriers. Pursuant to Labor Code §402.071 and §150.3 of this title (relating to Representatives: Written Authorization Required), a person representing an injured employee or insurance carrier in a contested case hearing shall not receive a fee for providing representation under this subtitle unless the person is an adjuster representing an insurance carrier or licensed to practice law.

(b) Fee Defined. For the purposes of this section, "fee" means any remuneration received directly or indirectly, in cash or in kind. It includes voluntary contributions. The provision of representation before SOAH as an extension of, or in addition to, other services for which a fee was paid shall be considered receipt of a fee for providing representation as specified in Labor Code §401.011(37) and §402.071 and §150.3 of this title.

(c) Representation by Employee. The prohibitions in subsections (a) and (b) of this section do not preclude representation by a person who receives a salary as an employee of the person represented to perform services in the usual course and scope of the employer's business.

(1) For the purposes of this subsection, "employee" means a person in the service of another under a contract of hire, whether express or implied, or oral or written.

(2) The term "employee" does not include:

(A) an independent contractor or the employee of an independent contractor; or

(B) a person whose employment is not in the usual course and scope of the employer's business.

(d) Ombudsman Program. Nothing in this subsection shall be construed to limit assistance pursuant to Labor Code §404.105.

(e) Administrative violation. A person commits an administrative violation if that person receives a fee for providing representation under circumstances prohibited by this section.

History

Source Note: The provisions of this §148.7 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.8 Withdrawal of Hearing Request

(a) The petitioner may, at any time before the decision or order is signed, submit a written request to withdraw the request for a hearing. The request must be sent to the Chief Clerk of Proceedings and to SOAH in accordance with its procedural rules in Title 1 TAC Chapter 155 (relating to Rules of Procedure).

(b) Notwithstanding the provisions of subsection (a) of this section, a decision of the division's medical fee dispute resolution section in a review of a medical fee under the Act may be withdrawn by the division within 15 working days after the division receives the request for hearing before SOAH if the request has not yet been delivered to SOAH.

History

Source Note: The provisions of this §148.8 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.10 Hearings Subpoenas to Compel Attendance and Subpoenas Duces Tecum

(a) Issuance of Subpoena. A request for issuance of a subpoena shall be directed to the Chief Clerk of Proceedings in the division's central office. On the written request of any party in compliance with the requirements set forth below and upon a showing of good cause, the division shall issue a subpoena addressed to the sheriff or any constable to require the attendance of a witness and production of books, records, paper, or other objects that may be necessary and proper for the purpose of the proceedings. The determination of good cause under this section shall include consideration of whether the issuance of the subpoena would cause undue burden or expense to the person served.

(b) Request for Subpoena. A request for issuance of a subpoena must be in writing, addressed to the Chief Clerk of Proceedings, contain a showing of good cause, and comply with the following:

(1) The request must include the subpoena sought to be issued and be prepared for the signature of the Chief Clerk of Proceedings.

(2) The subpoena must be addressed to a sheriff or constable for service in accordance with Government Code §2001.089. The request must contain the name and address of the applicable sheriff or constable.

(3) The request must include a good faith, itemized estimate of the amount likely to accrue under §148.20 of this title (relating to Reimbursement, Travel Expenses, and Fees for Witnesses and Deponents) and include a deposit of the same amount as required by Government Code §2001.089(2) (relating to Issuance of Subpoena). The deposit must be made by certified check, money order, or other negotiable instrument satisfactory to the division.

(4) If the subpoena is for the attendance of a witness, the written request and accompanying subpoena must contain:

(A) the name, address, and title, if any, of the witness;

(B) the date, time and place where the person is to appear and give testimony;

(D) a statement showing date of execution and return of the subpoena to the Chief Clerk of Proceedings.

(5) If the subpoena is for the production of books, records, writings, or other tangible items, the written request and accompanying subpoena sought must contain:

(A) a specific, detailed description of the items sought to be produced;

(B) the date, time, and place where the person is to appear and give testimony and produce the requested items;

(D) a statement showing date of execution and return of the subpoena duces tecum to the Chief Clerk of Proceedings.

(6) The request must contain a description of the reasonable steps taken to avoid imposing undue burden or expense on the person served.

(c) Failure to Comply with Subpoena. If a person fails to comply with a subpoena, the division, acting through the attorney general, or the party requesting the subpoena, may bring suit to enforce the subpoena in a district court in Travis County. This remedy is not exclusive. The division may enforce the subpoena in any manner permitted by the Act, the APA, or division rules.

History

Source Note: The provisions of this §148.10 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.11 Commissions to Compel Attendance for Deposition

(a) Issuance of Commission Requiring Deposition. A request for issuance of a commission requiring deposition must be directed to the Chief Clerk of Proceedings in the division's central office. On the written request of any party in compliance with the requirements set forth below, the division must issue a commission addressed to the several officers authorized by statute to take depositions in accordance with the requirements of Government Code §2001.094. On the written request of any party in compliance with the requirements set forth below the Chief Clerk of Proceedings shall issue a commission to require that the witness appear and produce, at the time the deposition is taken, books, records, papers, or other objects that may be necessary and proper for the purpose of the proceeding.

(b) Commission Not Required for a Party. The issuance of a commission requiring deposition is not required if the witness is a party or is retained by, employed by, or otherwise subject to the control of a party. Service of the notice of oral deposition upon the party or the party's representative is sufficient.

(c) Deposition of a Member of an Agency, Board, or Division. A member of an agency, board, or division shall not be deposed after a hearing date has been set.

(d) Requests for Commissions Requiring Deposition. A request for a commission requiring deposition must be in writing addressed to the Chief Clerk of Proceedings and comply with the following:

(1) The request must include the commission requiring deposition sought to be issued prepared for the signature of the Chief Clerk of Proceedings.

(2) The commission requiring deposition must be addressed to an officer authorized by statute to take a deposition in accordance with Government Code §2001.094. The request must contain the name and address of the applicable officer authorized to take the deposition, the date, time and place where either the witness is to appear and give testimony or where the written deposition responses are to be sent, a detailed description of any items the witness will be required to produce, and a statement showing date of execution and return of the commission requiring deposition to the Chief Clerk of Proceedings.

(3) The request must include a good faith itemized estimate of the amount likely to accrue under §148.20 of this title (relating to Reimbursement, Travel Expenses, and Fees for Witnesses and Deponents) and include a deposit of the same amount as required by Government Code §2001.094(a). The deposit must be made by certified check, money order, or other negotiable instrument satisfactory to the division.

(4) The party seeking the commission requiring deposition shall coordinate with the other party or parties and with the witness to determine a mutually agreeable location and time for the attendance of the witness. The request for commission requiring deposition must state whether such coordination has been made and whether the proposed location and time is by mutual agreement of the parties and witness.

(5) The party seeking the commission requiring deposition that includes a requirement for production should coordinate with the other party or parties, and with the person from whom production is sought, to determine a mutually agreeable location and time for the requested production. The request for the commission requiring deposition must state whether such coordination has been made and whether the proposed location and time is by mutual agreement with the parties and the person from whom production is sought.

(e) Application of the APA. Matters related to deposition conduct, use, opening, and any other matters relating to depositions not covered by these rules shall be in accordance with the requirements of the APA.

(f) Failure to Comply with Commission Requiring Deposition. If a person fails to comply with a commission requiring deposition, the division acting through the attorney general, or the party requesting the subpoena or commission, may bring suit to enforce the subpoena or commission in a district court in Travis County. This remedy is not exclusive. The division may enforce the subpoena or commission requiring deposition in any manner permitted by the Act, the APA, or division rules.

History

Source Note: The provisions of this §148.11 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.13 Recording the Hearing

(a) Arrangement for Court Reporter and Costs. In cases in which a court reporter is required, on the division's initiative, at the request of a party, or when required by SOAH rules or the ALJ of a case, the division will arrange for a court reporter. The Petitioner is responsible for all associated costs including the costs of the court reporter at the hearing and the costs associated with preparation of a verbatim record if one is required. In cases in which more than one party is seeking affirmative relief, the costs will be assessed equally. Nothing in this section precludes the parties from entering into their own agreement regarding arrangements for a court reporter or allocation of associated costs.

(b) Recording by a Party. A party electing to use a means of making a record that is in addition to the means specified in SOAH's rules or by the ALJ is responsible for all associated costs. If a verbatim record is made, the party shall provide the division and SOAH with a copy of the audiotape or videotape free of charge. If a transcript is made, the party shall provide the division with the original of the transcript free of charge.

History

Source Note: The provisions of this §148.13 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.14 Burden of Proof

(a) Burden of Proof on the Division. The division has the burden of proof in a contested case in which the division seeks to impose a sanction or has issued an emergency cease and desist order.

(b) Burden of Proof on Party Seeking Relief. The burden of proof rests with the party seeking relief in hearings conducted pursuant to Labor Code §§408.024, 413.031, 413.0312, and 413.055.

(c) Burden of Proof on the Certified Self-Insurer. The burden of proof rests with the certified self-insurer in hearings conducted pursuant to the following sections of the Labor Code:

(1) Section 407.043;

(2) Section 407.046;

(3) Section 407.133; and

(4) Section 407.066. The certified self-insurer has the burden of proof if they request the hearing to challenge the position of the division.

(d) Burden of Proof on the Employer. The burden of proof of showing timely filing or good cause when an allegation of untimely filing has been made rests with the employer in issues under §120.2 of this title (relating to Employer's First Report of Injury).

(e) Standard of Proof. The standard of proof in a contested case is preponderance of the evidence.

History

Source Note: The provisions of this §148.14 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.15 Final Decision by the ALJ

(a) Decision or Order. The ALJ shall adjourn the hearing after all evidence has been received in contested cases held under Labor Code §§413.031, 413.0312, and 413.055.

(b) Decision or Order that May Become Final. The ALJ shall issue a decision or order that may become final.

(c) Contents of Decision or Order that May Become Final. The decision or order that may become final must include orders that are necessary to implement the decision or order. When the decision or order requires any action or compliance, it must contain a period of time for such action to be completed, normally not to exceed 30 days from the date the decision or order is received, for such action or compliance to be completed.

(d) Furnishing the Decision or Order that May Become Final.

(1) The decision or order that may become final will be sent immediately to the parties or their representatives by verifiable means that shall be documented in the hearing file.

(2) If the decision or order that may become final is furnished by personal delivery, a receipt verifying personal delivery and containing the date of delivery and the person, any business title, and person's business address that received the delivery shall be made by the person who makes the personal delivery, and shall be date-stamped and placed in the hearing file.

(e) Procedures for Motion for Rehearing. The decision or order that may become final will become final if a motion for rehearing is not filed with SOAH within 20 days after receipt of the decision or order. The procedures for a motion for rehearing are governed by the Government Code, Chapter 2001, Subchapter F, and a motion for rehearing is a prerequisite for appealing a decision or order under this section.

(f) Finality of Decision or Order. The finality of the ALJ's decision or order is determined by Government Code §2001.144, except as provided by Labor Code §413.031 and §133.307 of this title (relating to MDR of Fee Disputes).

(g) Exhaustion of Administrative Remedies. The notification to a party of the ALJ's decision or order that has become final under Government Code §2001.144 constitutes exhaustion of all administrative remedies, except as provided by Labor Code §413.031 and §133.307 of this title.

(h) Judicial Review. A party dissatisfied with a final decision or order of the ALJ may seek judicial review as provided by the Act in accordance with the Government Code, Chapter 2001, Subchapter G, Labor Code §413.031 and §133.307 of this title.

History

Source Note: The provisions of this §148.15 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.16 Proposal for Decision or Order by the ALJ

(a) Proposal for Decision or Order. The ALJ shall adjourn the hearing after all evidence has been received in contested cases held under the Act not governed by §148.15 of this title (relating to Final Decision by ALJ).

(b) Description of Proposal for Decision or Order. The proposal for decision or order must be based solely upon the record of the individual case. It must be in writing and include:

(1) a statement of the reasons upon which the decision is based;

(2) findings of fact based on the evidence presented and matters officially noticed. If there is evidence presented regarding the ability of a party to pay the amount of a proposed sanction or bonding amount in a hearing involving assessment of sanctions under Labor Code §415.021, the ALJ shall make findings of fact on those issues;

(3) conclusions of law based on the findings of fact and other legal requirements of the law;

(4) the sanction or order recommended by the ALJ;

(5) a conclusion of whether the division is authorized by the Act or division rules to take disciplinary or sanction action against the petitioner; and

(6) the proposal for decision or order may also contain:

(A) a summary of the evidence presented by each party; and

(B) a list of all mitigating circumstances and a list of all aggravating circumstances, separately stated, which are necessary for the commissioner to have a complete understanding of the case.

(1) the Chief Clerk of Proceedings; and

(2) the parties of the hearing. SOAH shall furnish the proposal for decision or order by verifiable means and retain information on the date, address, person or entity served, and the means of service

(d) Filing of Briefs and Exceptions. If a party files a brief or exception to the proposal for decision or order or replies to the exceptions or brief with SOAH, it must also file a copy with the Chief Clerk of Proceedings.

(e) Commissioner's Hearing on the Proposal for Decision or Order.

(1) A party may submit a request for a commissioner's hearing to consider arguments with the Chief Clerk of Proceedings within 10 days after SOAH issues the proposal for decision or order.

(2) The commissioner may determine if a hearing is necessary to consider arguments, whether or not a request for a hearing has been filed. If such a determination is made, the commissioner shall consider the case at a posted hearing of the division, no later than 120 days after:

(A) SOAH provides the division with the proposal for decision or order;

(B) the date of the ALJ's comments or response to any exceptions or briefs and any replies to such exceptions or briefs; or

(C) the expiration of the ALJ's deadline for such response in accordance with Title 1 TAC §155.507 (relating to Proposal for Decision).

(3) If the commissioner determines that a hearing is not necessary, the division will notify any requestors and the commissioner shall consider the case after the later of:

(A) the issuance of the proposal for decision or order;

(B) the date of the expiration of the ALJ's comments or response to any exceptions or briefs and any replies to such exceptions or briefs; or

(f) Issuance of Decision or Order That May Become Final. The commissioner shall issue a decision or order that may become final in contested cases under this section pursuant to Labor Code §§407.046, 407A.007, 415.0211, and 415.034. A decision or order that may become final will become final in accordance with Government Code §2001.144. In all other cases, the commissioner shall issue a final decision or order and no motion for rehearing will be considered.

(g) Motion for Rehearing. A motion for rehearing may be filed in contested cases under this section pursuant to Labor Code §§407.046, 407A.007, 415.0211, and 415.034. The procedures of the Government Code, Chapter 2001, Subchapter F govern a motion for rehearing under this section. A motion for rehearing is a prerequisite for filing an appeal of a decision or order under Labor Code §§407.046, 407A.007, 415.0211, or 415.034.

(h) Notification. The Chief Clerk of Proceedings shall notify the parties to a contested case of the final decision or order of the commissioner by verifiable means.

(i) Exhaustion of Administrative Remedies. The notification to a party of the commissioner's final decision or order constitutes exhaustion of all administrative remedies.

(j) Judicial Review. A party dissatisfied with a decision or order of the commissioner may seek judicial review as provided in the Act in accordance with the APA. Judicial review will be in accordance with the Act and the Government Code §§2001.171, 2001.172, and 2001.174.

History

Source Note: The provisions of this §148.16 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.17 Special Provisions for Sanctions

(a) Unless otherwise stated in a final, unappealable order from the commissioner or a court, a charged party must comply with a sanction no later than 30 days after the order becomes final and unappealable.

(b) If an order imposing a sanction assesses a penalty against the charged party, the charged party must file the amount of the penalty with the Chief Clerk of Proceedings in the form of a cashier's check, a certified check, a certified draft, or other form of payment authorized by the division.

History

Source Note: The provisions of this §148.17 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608; amended to be effective January 9, 2019, 44 TexReg 263.

28 Tex. Admin. Code § 148.19 Transcript or Duplicate of the Hearing Audiotape or Videotape

(a) A party may submit a request to the division for a transcript of the hearing audiotape or videotape. The requestor shall pay the cost of the transcript, as established by the division.

(b) A party may submit a request to the division for a duplicate of the hearing audiotape or videotape. The requestor shall pay the cost of the duplication, as established by the division.

History

Source Note: The provisions of this §148.19 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.20 Reimbursement, Travel Expenses, and Fees for Witnesses and Deponents

(a) Reimbursement of Witness or Deponent. A witness or deponent who is not a party and who is served with a subpoena or otherwise compelled to attend any hearing or proceeding to give a deposition or to produce books, records, papers, or other objects that are necessary for the proceeding is entitled to receive reimbursement for travel, meals, lodging, and other amounts as specified and limited in the Government Code §2001.103.

(b) Reasonable and Necessary Expenses and Service. The party requesting the subpoena or commission or otherwise compelling the attendance of a witness at any hearing or proceeding to give a deposition or produce books, records, papers, or other objects shall be responsible for the payment, of any expense, incurred in serving the subpoena, as well as reasonable and necessary expenses incurred by a nonparty witness who appears in response to the subpoena.

(c) Failure to Pay Expenses. The party requesting the subpoena or commission or otherwise compelling the attendance of a witness at any hearing or proceeding to give a deposition or produce books, records, papers, or other objects shall pay the witness the amount accrued under this section. Failure to pay the witness the amount accrued when sought is an administrative violation.

(d) Return of Deposit. After the Chief Clerk of Proceedings has received, from the party requesting the subpoena or commission to take deposition, sufficient documentation of all requests by the witness for payment of witness expenses and sufficient proof of payment of all amounts due to the non-party witness or deponent, the division will return the amount of any deposit required under §148.10(b)(3) and §148.11(d)(3) of this title (relating to Hearings Subpoenas To Compel Attendance and Subpoenas Duces Tecum and Commissions To Compel Attendance For Deposition), respectively.

History

Source Note: The provisions of this §148.20 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.21 Expenses to be Paid by Party Seeking Judicial Review

(a) Upon receiving a copy of a petition filed in district court which seeks judicial review of a final decision in a contested case decided under this chapter, the division shall prepare a certified copy of the entire record of the proceeding under review, including a transcript of the hearing audiotape, and transmit it to the reviewing court.

(b) The division shall assess to the party seeking judicial review, expenses incurred by the division in preparing this copy, including transcription costs, in accordance with the Government Code §2001.177. Upon request, the division shall consider the financial ability of the party to pay the costs or any other factor that is relevant to a just and reasonable assessment of costs. If the party seeking judicial review is an injured employee, the division shall not charge for duplicating the record.

History

Source Note: The provisions of this §148.21 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.22 Failure to Appear or Comply with Order or Decision, Administrative Violation

A person commits an administrative violation if that person in the status of a party, or otherwise within the jurisdiction of SOAH (for example, a witness), in a contested case hearing or proceeding before SOAH, fails to comply with an order of the ALJ to include any final decisions issued.

History

Source Note: The provisions of this §148.22 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.23 Division Enforcement of Orders

Any final order of SOAH is a final order of the division and may be enforced by the division in any manner permitted by the Act, the APA, or division rules. After conclusion of the administrative process, any SOAH order which survives the entry of a final order, the sending of a proposal for decision to the division, or the dismissal or withdrawal of the case from the SOAH docket, regardless of upon whose motion the dismissal or withdrawal was granted, is an order of the commissioner and may be enforced by the division in any manner permitted by the Act, the APA, or division rules. Examples of enforceable orders include, but are not limited to, orders to reimburse, orders to pay reasonable and necessary medical costs, orders to pay administrative fines, orders to refund, orders assessing attorney fees, orders assessing costs, and orders imposing discovery sanctions.

History

Source Note: The provisions of this §148.23 adopted to be effective June 9, 2005, 30 TexReg 3237; amended to be effective July 27, 2014, 39 TexReg 5608.

28 Tex. Admin. Code § 148.24 Confidentiality of Records

(a) SOAH shall ensure that the confidentiality provisions of Labor Code, §§402.082 - 402.092, 411.034, 413.0513, and 413.0514 and the Code of Federal Regulations, Title 20, §603.6 and §603.7 (for information obtained from the Texas Workforce Commission or its successor agencies) will be followed, including requests for release of documents or information made confidential under the Act or other applicable law.

(b) Unless authorized by law, SOAH will not identify the name of a claimant for workers' compensation coverage under the Act or other information contained in or derived from the division's claim file for such a claimant in listings of docketed cases or in other documents distributed to persons other than to the division and the parties to a contested case involving that claimant.

(c) If a party or a member of the public files a written request with the Chief Clerk of Proceedings and with SOAH that a hearing be conducted as a hearing open to the public, the ALJ shall consider that request and issue a ruling prior to the opening of the hearing to the public.

(d) Any request for a hearing open to the public shall be filed with the Chief Clerk of Proceedings and with SOAH at least seven days prior to the first day of the hearing unless the ALJ allows a shorter filing period upon a showing of good cause.

(e) When considering a request that a hearing be open to the public, the ALJ's considerations shall include, but are not limited to, whether the hearing would contain information made confidential under the Act or other applicable laws. If confidential information would be included, then the ALJ may consider whether any procedure could be devised and utilized which would allow a hearing to be open to the public without violating the confidentiality provisions of the Act, other applicable laws, other applicable regulations, and agreements required by those laws or regulations or without causing an undue burden on the division or the parties to the hearing.

(f) While SOAH will have temporary custody of the hearing records, the commissioner retains statutory authority as custodian of records and is ultimately responsible, as the originating agency, for the release or non-release of the information. Therefore, should any information, which may be confidential under the Act, division rules, or other law, be requested from SOAH by any person or entity, SOAH shall follow all legal requirements necessary to ensure that the confidential information or document is not released, unless specifically required by law, and shall provide such request to the commissioner immediately upon receipt.

(g) Pursuant to Labor Code §413.031(c), the division shall be responsible for publishing any SOAH decisions required to be published by that section on the department's website. SOAH shall as soon as practicable deliver to the division a version of the decision in an electronic format.

(h) SOAH and the division have responsibilities for compliance with the Texas Public Information Act, Government Code, Chapter 552. Each agency maintains information that may be considered confidential or exempt from disclosure under laws administered by that agency. To the extent required by law, each agency is responsible for replying to all public information requests for information maintained by that agency. Each agency will promptly notify the other agency of the receipt of a Texas Public Information Act request relating to confidential or exempt records obtained from the other agency and will coordinate responses as necessary.

History

Source Note: The provisions of this §148.24 adopted to be effective July 27, 2014, 39 TexReg 5608.

Chapter 150 REPRESENTATION OF PARTIES BEFORE THE AGENCY--QUALIFICATIONS FOR REPRESENTATIVES

28 Tex. Admin. Code § 150.1 Minimum Standards of Practice for an Attorney

(a) An attorney, in practice before the commission, shall observe:

(1) these rules;

(2) the Texas Disciplinary Rules of Professional Conduct; and

(3) the Texas Lawyer's Creed, promulgated by the Supreme Court of Texas on November 7, 1989.

(b) An attorney who undertakes representation of a claimant on a valid compensation claim and a third party liability action shall not abandon the compensation claim for the purpose of avoiding the maximum attorney fee established under the Texas Workers' Compensation Act (the Act), §4.09.

(c) An attorney who fails to comply with this rule may be assessed an administrative penalty under the Act, §10.07(a)(11).

History

Source Note: The provisions of this §150.1 adopted to be effective March 7, 1991, 16 TexReg 1196.

28 Tex. Admin. Code § 150.2 Qualification and Authorization of Attorney To Practice before the Commission

(a) An attorney who represents any party before the commission shall be licensed to practice law by the State Bar of Texas in order to receive an attorney's fee.

(b) An attorney who represents a claimant for benefits shall notify the commission in writing within 10 days of undertaking the representation of the party. The written notice shall identify the attorney and the claimant and the injured employee (if different from the claimant).

(c) An attorney may be disqualified, after a hearing under the Texas Workers' Compensation Act (the Act), §10.33, from representing any party before the commission for the following activities:

(1) knowingly charging a claimant a fee in excess of that allowed by the commission;

(2) knowingly assisting any person in making a false or misleading statement, misrepresenting or concealing a material fact, and/or fabricating, altering, concealing, or destroying a document, in order to claim benefits;

(3) knowingly assisting any person in making a false or misleading statement, misrepresenting or concealing a material fact, and/or fabricating, altering, concealing, or destroying a document, in order to defeat a claim for benefits;

(4) for engaging in conduct described in the Act, §10.07(a)(1)-(10) or (b)(1)-(23), whether or not an administrative violation is assessed; or

(5) being suspended or disbarred by the State Bar of Texas.

(d) An attorney who is disqualified may apply to the commission for reinstatement, no sooner than the expiration of the term of disqualification. However, an attorney who has been disbarred by the State Bar of Texas cannot apply for reinstatement to practice before the commission unless the State Bar of Texas certifies that the attorney has had the license to practice law reinstated.

History

Source Note: The provisions of this §150.2 adopted to be effective March 7, 1991, 16 TexReg 1197.

28 Tex. Admin. Code § 150.3 Representatives: Written Authorization Required

(a) A representative, as that term is defined in the Texas Workers' Compensation Act (the Act), §1.03(40), is authorized under the Act, §2.09(e), to provide services in workers' compensation matters if:

(1) the person is an insurance adjuster holding a State Board of Insurance license to adjust workers' compensation claims, if the adjuster provides, to the commission, a written authorization from an insurance carrier to adjust claims. Written authorization is not required from an adjuster who is an employee of the insurance carrier;

(2) the person is an attorney and complies with the requirements of §150.2(a) of this title (relating to Qualification and Authorization of Attorney To Practice before the Commission); or

(3) the person who is not either an adjuster or attorney files with the commission a written power of attorney, or written authorization from the claimant, allowing that person access to confidential records. No fee or remuneration shall be received either directly or indirectly from a claimant.

(b) A representative that fails to comply with the Act, or violates a rule of the commission, may be subject to sanctions, including suspension, as provided by the Act, §2.09(f) and §10.07(d).

History

Source Note: The provisions of this §150.3 adopted to be effective July 8, 1991, 16 TexReg 3399.

Chapter 152 ATTORNEY FEES

28 Tex. Admin. Code § 152.1 Attorney Fees: General Provisions

(a) To be eligible to earn a fee, an attorney representing any party shall hold an active license to practice law in Texas and not be currently under suspension for any reason.

(b) An attorney may receive a fee for representation of any party before the commission only after the commission approves the amount of the fee. An attorney shall not receive an amount greater than the fee approved by the commission, notwithstanding any agreements between the parties, including retainer fee agreements.

(c) The fee approved by the commission shall be limited to 25% of each weekly income benefit payment to the employee, up to 25% of the total income benefits allowed and shall also be based on the attorney's time and expenses, subject to the guidelines and standards set forth in the Texas Workers' Compensation Act (the Act) and commission rules. An attorney's fee for representing an injured employee becomes a lien against any unpaid income benefits due the injured employee once the carrier receives the commission order approving the fee. The carrier must begin payment out of the approved income benefits by mailing a check to the attorney within seven days after receiving the commission order and thereafter whenever income benefits are paid until the fee has been paid or income benefits cease.

(d) An attorney's fee for representing a claimant may upon request by the attorney or carrier and approval by the commission be commuted to a lump sum only out of a sum certain award or order to pay benefits. This commuted fee may be discounted for present payment at the rate provided under the Act, §401.023, and shall not exceed 25% of the unpaid sum certain. A commuted fee shall be recouped by the carrier out of the future income benefits paid to the represented claimant, not to exceed more than 25% out of any single payment. The fee for representing a claimant for death benefits cannot be commuted where the only dispute involves identification of the proper beneficiaries.

(e) A client who discharges an attorney does not, by that action, defeat the attorney's right to claim a fee for services performed by that attorney prior to discharge.

(f) An attorney for an employee who prevails when a carrier contests a commission determination of eligibility for supplemental income benefits shall be eligible to receive a reasonable and necessary attorney's fee, including expenses. This fee is payable by the carrier, not out of the employee's benefits, and the fee shall not be limited to a maximum of 25% of the employee's recovery. All provisions of these rules, except §152.4 of this title (relating to Guidelines for Legal Services Provided to Claimants and Carriers), apply.

History

Source Note: The provisions of this §152.1 adopted to be effective February 22, 1991, 16 TexReg 774; amended to be effective April 20, 1994, 19 TexReg 2547.

28 Tex. Admin. Code § 152.2 Attorney Fees: Representation of Claimants

(a) An attorney who represents a claimant shall notify the commission in writing within 10 days of undertaking representation, and shall provide a copy of the contract of employment if requested by the commission.

(b) For purposes of computing the maximum amount of a fee that may be fixed and approved for a claimant's attorney, "claimant's recovery" shall not include:

(1) the amount of benefits paid to the claimant prior to hiring the attorney;

(2) benefits initiated or offered by an insurance carrier when the initiation or offer is based upon documentation in a claimant's file, and has not been the subject of a dispute with the carrier;

(3) any undisputed portion of impairment benefits paid or offered to the claimant based upon an impairment rating that is assessed by the carrier, under the Texas Workers' Compensation Act (the Act), §4.26(f);

(4) the value of medical and hospital benefits provided to the claimant; or

(5) lifetime income or death benefits when the carrier admits liability on all issues involved, and when the maximum benefit is tendered in writing by a carrier, no later than the date on which the carrier is required to contest the claim.

(c) An attorney shall not represent multiple legal beneficiaries on a claim for death benefits if it is reasonably foreseeable that a judgment favorable to one legal beneficiary would impact unfavorably on another legal beneficiary.

(d) The total amount that the commission approves for the attorney's time and expenses constitute the fee, and shall not exceed 25% of the claimant's recovery, except as provided in the Act, §4.28(l)(2), and §152.1(f) of this title (relating to Attorney Fees: General Provisions).

History

Source Note: The provisions of this §152.2 adopted to be effective February 22, 1991, 16 TexReg 774.

28 Tex. Admin. Code § 152.3 Approval or Denial of Fee by the Division

(a) To claim a fee, an attorney representing any party must submit to the division a complete and accurate application for attorney fees in the form and manner prescribed by the division.

(b) An application for attorney fees must include:

(1) each attorney's name and bar card number;

(2) the law firm name, phone number, and mailing address;

(3) the injured employee's name, date of injury, and DWC claim number;

(4) the beneficiary's name, type, contact information, and social security number, if applicable;

(5) the dates of legal service;

(6) the hourly rate and number of hours for each attorney and legal assistant providing legal services;

(7) an itemized list of each legal service performed and expense incurred representing the claimant or insurance carrier that identifies the attorney or legal assistant who provided the service, the date the service was provided, and the hours or amount requested;

(8) a certification that every statement, numerical figure, and calculation in the application for attorney fees submitted to the division is within the attorney's personal knowledge, is true and correct, and represents services, charges, and expenses provided by the attorney or a legal assistant under the attorney's supervision; and

(9) additional case-specific justification for any fee that exceeds the guidelines for legal services.

(c) The division may approve, partially approve, or deny an application for attorney fees based on the division's determination of whether the requested time and expenses are reasonable according to the guidelines for legal services and maximum hourly rate established in §152.4 of this title, Labor Code §408.221 and §408.222, and written evidence presented to the division. The division will issue an order approving, partially approving, or denying an application for attorney fees. Submission of an application requesting fees for the same services or expenses addressed in any previous application is prohibited. Attorneys are subject to review for compliance with commissioner rules, the Act, and other laws under Labor Code Chapter 414. An order approving, partially approving, or denying an application for attorney fees does not limit the commissioner's authority to enforce a sanction, administrative penalty, or other remedy authorized by the Act. At any time an attorney whose application is found to contain false or inaccurate information may be referred to enforcement or other authorities, including licensing agencies, district and county attorneys, or the attorney general for investigation and appropriate proceedings.

(d) To contest a division order approving, partially approving, or denying an application for attorney fees, an attorney, claimant, or insurance carrier must request a contested case hearing through the dispute resolution process outlined in Chapters 140 - 144 of this title. A request must be submitted by personal delivery, first class mail, or facsimile to the division no later than the 20th day after receipt of the division's order. A claimant may request a hearing by contacting the division in any manner no later than the 20th day after receipt of the division's order. A contesting party other than a claimant must send a copy of the request by personal delivery, first class mail, or electronic transmission to the insurance carrier and the other parties, including the claimant and attorney, on the same day the request is submitted to the division.

(e) After a contested case hearing under subsection (d) of this section, an attorney, claimant, or insurance carrier must request review by the appeals panel pursuant to the provisions of §143.3 of this title (Requesting the Appeals Panel To Review the Decision of the Administrative Law Judge) to contest the division order approving, partially approving, or denying an application for attorney fees.

(f) The division's order approving, partially approving, or denying an application for attorney fees is binding during the pendency of a contest or an appeal of the order. Notice of a contest or an appeal does not relieve the insurance carrier of the obligation to pay attorney fees according to the division order.

(g) Following a contested case hearing or appeals panel review of an order approving, partially approving, or denying an application for attorney fees under subsection (d) or subsection (e) of this section, the division will issue a final order or decision. If the final order or decision of the division requires an attorney to reimburse funds, the reimbursement must be made no later than the 15th day after receipt of the final order or decision.

(h) This section is effective January 30, 2017.

History

Source Note: The provisions of this §152.3 adopted to be effective January 30, 2017, 41 TexReg 10624; amended to be effective January 7, 2019, 44 TexReg 111.

28 Tex. Admin. Code § 152.4 Guidelines for Legal Services Provided to Claimants and Insurance Carriers

(a) The division will consider the guidelines for legal services outlined in subsection (c), the maximum hourly rate for legal services in subsection (d), Labor Code, §408.221 and §408.222, and written evidence presented to the division, when approving, partially approving, or denying an application for attorney fees.

(b) An attorney may request, and the division may approve, a number of hours greater than those allowed by the guidelines for legal services if the attorney demonstrates to the satisfaction of the division that the higher fee was justified based on the circumstances of the specific claim and Labor Code, §408.221 and §408.222.

Attached Graphic

(d) The maximum hourly rate for legal services shall be as follows. Hourly rate:

(1) attorney--$200; and

(2) legal assistant (not to include hours for general office staff)--$65.

(e) Each attorney must bill for hours using that attorney's state bar card number.

(f) This section is effective January 30, 2017.

History

Source Note: The provisions of this §152.4 adopted to be effective January 30, 2017, 41 TexReg 10624.

28 Tex. Admin. Code § 152.5 Allowable Expenses

(a) As part of the application for attorney fees, an attorney shall submit an itemized list of expenses incurred for the preparation and presentation of the client's case. The date, nature, and amount of the expense shall be clearly identified.

(b) The commission shall allow those expenses necessary for the preparation and presentation of a person's claim or a carrier's defense before the commission, including:

(1) travel expenses, at the rate set for state employees by the legislature for state employees in the General Appropriation Act, if the attorney is required to attend a benefit review conference or hearing more than 25 miles from the attorney's office nearest to the location of the conference or hearing;

(2) expenses necessary to present a case at a hearing including subpoena costs, court reporter's fee, per diem witness fees incurred, and translator's fee;

(3) the costs of records necessary to prepare or present a claim or defense including copies of commission files, a record check performed by the commission, medical reports (except medical reports required to be provided by commission rule), and copies of certificates, licenses, and decrees necessary for perfecting a claim for death benefits;

(4) costs of long distance telephone calls to: the client, an attorney or other representative of the other party, health care providers, or others necessary to prepare the claim or defense;

(5) costs of collect long distance telephone calls from the client; and

(6) investigative services necessary to establish or dispute a claim.

(c) The commission shall not allow as attorney expenses those expenses that are not necessary for the preparation and presentation of a party's individual claim or defense before the commission, including:

(1) attorney travel, except as permitted in subsection (b)(1) of this section;

(2) overhead costs of operating a law office including: rent, utilities, copies, fax, telecopier, postage, shipping, local telephone calls, long distance calls to the commission, and salaries for general office staff; and

(3) medical reports and hospital records that commission rules require to be sent to the claimant and carrier.

(d) An attorney's payment of out-of-pocket expenses for items listed in subsection (b) of this section does not constitute a loan to the client as prohibited by the Texas Workers' Compensation Act, §10.03.

History

Source Note: The provisions of this §152.5 adopted to be effective February 22, 1991, 16 TexReg 774.

28 Tex. Admin. Code § 152.6 Attorney Withdrawal

(a) An attorney withdrawing representation must submit a notice of withdrawal under subsection (b) of this section or a motion to withdraw under subsection (d) of this section and comply with the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, including surrendering papers and property to the client as required.

(b) An attorney must submit a notice of withdrawal in the form and manner prescribed by the division when:

(1) the attorney withdraws representation and a motion to withdraw under subsection (d) of this section is not required; or

(2) the attorney's representation is terminated by the attorney's client.

(c) An attorney must submit a notice of withdrawal under subsection (b) of this section to the division by personal delivery, first class mail, or facsimile no later than the 10th day following withdrawal. An attorney must provide a copy of the notice to the attorney's client and the opposing party by personal delivery, first class mail, or electronic transmission on the same day the notice is submitted to the division. The notice of withdrawal must include:

(1) the attorney's name, bar card number, and contact information;

(2) the law firm name, if applicable;

(3) the injured employee's name, contact information, date of injury, and DWC claim number;

(4) the beneficiary's name, contact information, and social security number, if applicable;

(5) the insurance carrier name;

(6) the effective date of the attorney's withdrawal of representation under paragraph (1) or (2) of subsection (b); and

(7) the attorney's signature.

(d) Except when the attorney's representation is terminated by the attorney's client, an attorney withdrawing representation must submit a motion to withdraw to the division, and receive a division order granting the motion to withdraw, after notice of a scheduled benefit review conference or contested case hearing has been received and until resolution of the disputed issues through the division's dispute resolution process provided in Labor Code Chapter 410, Subchapters A - E.

(e) The motion to withdraw must provide good cause for withdrawing from the case and a certification that states:

(1) the attorney's client has knowledge of and has approved or refused to approve the withdrawal; or

(2) the attorney made a good faith effort to notify the attorney's client and the attorney's client cannot be located.

(f) An attorney must submit the motion to withdraw to the division by personal delivery, first class mail, or facsimile. An attorney must also provide a copy of the motion to the attorney's client and the opposing party by personal delivery, first class mail, or electronic transmission on the same day the motion is submitted to the division.

(g) The administrative law judge will determine whether good cause exists for the attorney's withdrawal based on Rule 1.15 of the Texas Disciplinary Rules of Professional Conduct and other factors, including:

(1) how close in time the attorney withdrawal is to a scheduled benefit review conference or contested case hearing;

(2) the amount of attorney fees that have been requested and approved by the division;

(3) whether the attorney is willing to waive payment of any portion of the approved fees;

(4) the attorney's reason for the withdrawal; and

(5) whether the attorney's client refused to approve the withdrawal, if applicable.

(h) If the administrative law judge determines good cause does not exist for the attorney's withdrawal, the attorney must continue to represent the party until resolution of the disputed issues through the division's dispute resolution process provided in Labor Code Chapter 410, Subchapters A - E.

(i) This section does not prevent the attorney's client from terminating the attorney-client relationship or notifying the division of the termination of the attorney-client relationship. If the attorney's client notifies the division of a termination, the attorney is not relieved of the duty to submit to the division a notice of withdrawal under subsection (b) of this section.

(j) This section is effective January 30, 2017.

History

Source Note: The provisions of this §152.6 adopted to be effective January 30, 2017, 41 TexReg 10624; amended to be effective January 7, 2019, 44 TexReg 111.

Chapter 156 REPRESENTATION OF PARTIES BEFORE THE AGENCY--CARRIER'S AUSTIN REPRESENTATIVE

28 Tex. Admin. Code § 156.1 Carrier's Austin Representative

(a) Each insurance carrier shall designate a person in Austin, Travis County, Texas as its representative to the Commission, to act as agent for receiving notice from the Commission.

(b) The designation required by this section shall be made in the form and manner prescribed by the Commission and contain the representative's name, address, telephone number, facsimile number and e- mail address.

(c) Any notice from the Commission, sent to the designated representative's Austin address, is notice from the Commission to the insurance carrier.

(d) A person designated under this rule continues as agent for the insurance carrier until 30 days after the Commission receives notice that the insurance carrier designates another representative.

History

Source Note: The provisions of this §156.1 adopted to be effective January 1, 1991, 15 TexReg 7029; amended to be effective March 13, 2000, 25 TexReg 2147.

Chapter 160 REPORTS OF INJURY AND OCCUPATIONAL DISEASE--GENERAL PROVISIONS

28 Tex. Admin. Code § 160.1 Applicability

(a) This chapter applies to an employer as defined by Labor Code §411.001(2) and that is subject to Labor Code Chapter 411, Subchapter C.

(b) This section is effective January 1, 2013.

History

Source Note: The provisions of this §160.1 adopted to be effective January 1, 2013, 37 TexReg 5592.

28 Tex. Admin. Code § 160.2 Non-Subscribing Employer's Report of Injury

(a) An employer that does not have workers' compensation insurance coverage (non-subscriber) and employs five or more employees not exempt from workers' compensation insurance coverage shall file with the division a report of each:

(1) death;

(2) on-the-job injury that results in more than one day's absence from work for the injured employee; and

(3) occupational disease of which the employer has knowledge.

(b) An employer shall file a report required by subsection (a) of this section with the division not later than the seventh day of the month following the month in which:

(1) the death occurred;

(2) the employee was absent from work for more than one day as a result of the on-the-job injury; or

(3) the employer acquired knowledge of the occupational disease.

(c) A report shall be filed in writing or electronically and shall be in the form and manner prescribed by the division. A report must include:

(1) the employer's business name;

(2) the employer's North American Industry Classification System (NAICS) codes;

(3) the employer's business mailing address;

(4) the employer's physical address (if different from mailing address);

(5) the employer's telephone number;

(6) the employer's federal employer identification number (FEIN);

(7) the name, title, telephone number, signature, and date of signature of the person completing the report for the employer;

(8) the reporting period;

(9) the injured employee's name;

(10) the employee's social security number;

(11) the employee's date of birth;

(12) the employee's date of hire;

(13) the employee's sex;

(14) the employee's occupation;

(15) the employee's hourly wage;

(16) the employee's NAICS code;

(17) the employee's race/ethnic identification;

(18) the address where injury or occupational disease occurred;

(19) the type of location of where injury or occupational disease occurred;

(20) the date of injury or occupational disease;

(21) the date reported by employee;

(22) the return-to-work date or expected date;

(23) the reported cause of injury;

(24) the nature of injury or occupational disease;

(25) any equipment involved in the injury;

(26) body part(s) affected;

(27) the first day of absence from work;

(28) the number of days absent from work;

(29) whether the injury is an occupational disease;

(30) whether the injury resulted in death; and

(31) a description of incident.

(d) Employers are responsible for timely and accurate filing of reports under this section. A report required by this section is considered filed with the division only when it accurately contains all of the data elements specified under subsection (c) of this section and is received by the division.

(e) This section is effective January 1, 2013.

History

Source Note: The provisions of this §160.2 adopted to be effective June 1, 1992, 17 TexReg 3252; amended to be effective February 2, 1996, 21 TexReg 515; amended to be effective March 13, 2000, 25 TexReg 2148; amended to be effective January 1, 2013, 37 TexReg 5592.

28 Tex. Admin. Code § 160.3 Subscribing Employer's Report of Injury

(a) An employer that has workers' compensation insurance coverage (subscriber) shall file a report of injury with the division pursuant to Labor Code §411.032. A subscribing employer's report of injury filed in accordance with Labor Code §409.005 and applicable division rules satisfies that employer's requirement to file a report of injury under Labor Code §411.032, unless the division requests that the employer file a report with the division for a specific injury.

(b) For an employee who has waived workers' compensation insurance coverage in accordance with Labor Code §406.034, an employer covered by workers' compensation insurance, whether by commercial insurance or through self-insurance as provided by the Texas Workers' Compensation Act, shall file with the division a report of each:

(1) death;

(2) on-the-job injury that results in more than one day's absence from work for the injured employee; and

(3) occupational disease of which the employer has knowledge.

(c) The report of injury required by subsection (b) of this section shall be filed in the form, manner, and timeframes prescribed by the division in §160.2(b) and (c) of this title (relating to Non-Subscribing Employer's Report of Injury) and shall include a statement that the injured employee has waived workers' compensation coverage in accordance with Labor Code §406.034.

(e) This section is effective January 1, 2013.

History

Source Note: The provisions of this §160.3 adopted to be effective February 2, 1996, 21 TexReg 515; amended to be effective January 1, 2013, 37 TexReg 5592.

Chapter 165 REJECTED RISK: INJURY PREVENTION SERVICES

28 Tex. Admin. Code § 165.1 Identification and Notification of Certain Policyholders Insured by the Texas Mutual Insurance Company Acting as the Insurer of Last Resort

(a) The Texas Mutual Insurance Company must provide the division a list of the policyholders requiring accident prevention services (rejected risk employers). This list must include rejected risk employers that meet the criteria in Texas Insurance Code Chapter 2054, Subchapters H and K.

(b) A policyholder subject to Texas Insurance Code §2054.504, whose corporate office is located outside of Texas must, on receipt of notification by the Texas Mutual Insurance Company of the requirement to get a safety consultation as a condition of insurance, provide the Texas Mutual Insurance Company the following information:

(1) the name and title of the senior official in Texas with the authority to commit funds and to establish policy, procedures, and actions required to implement the accident prevention plan and address the exposures identified in the hazard exposure survey;

(2) the official's mailing address; and

(3) the official's business telephone number.

(c) Information required by subsection (b) of this section must be mailed to the Texas Mutual Insurance Company at 2200 Aldrich Street, Austin, Texas 78723-3474.

History

Source Note: The provisions of this §165.1 adopted to be effective April 25, 1999, 24 TexReg 3092; amended to be effective March 14, 2001, 26 TexReg 2034; amended to be effective September 12, 2004, 29 TexReg 8610; amended to be effective March 26, 2023, 48 TexReg 1637.

28 Tex. Admin. Code § 165.2 Safety Consultation

(a) Policyholders who have not had an accident prevention plan developed and implemented in the last six months prior to notification shall, not later than 30 days following the effective date of the policy, or receipt of notice of identification as a Rejected Risk employer, whichever occurs later, complete a safety consultation using a source approved by the division pursuant to §164.9 and §164.10 of this title (relating to Approval of Professional Sources for Safety Consultations; and Removal From the List of Approved Sources). The consultation may be provided by:

(1) the Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division);

(2) the Texas Mutual Insurance Company; or

(3) another professional source.

(b) Policyholders who have had an accident prevention plan developed and implemented within the six months prior to notification of their identification as a Rejected Risk employer must obtain division review of the plan for adequacy, to include an on-site visit.

(c) The division shall provide the Texas Mutual Insurance Company with a list of approved professional sources. If the Texas Mutual Insurance Company elects not to provide the policyholder with safety consultation and accident prevention plan development services, the Texas Mutual Insurance Company shall include a copy of the list with the notification letter to the policyholder. If the Texas Mutual Insurance Company elects to provide such services, the list will be provided to the policyholder by the Texas Mutual Insurance Company at the request of the policyholder.

(d) The safety consultant, identified in subsection (a) of this section, shall visit the policyholder's work place, review existing safety programs, conduct a walk through at each appropriate job site to include a hazard exposure survey, and prepare a program review report. The report shall be in a written format prescribed by the commission.

(e) The initial program review report must be delivered to the division of Workers' Health and Safety no later than 30 days after the policyholder receives the notice of identification. An extension of 30 days may be obtained from the division for good cause.

(f) The safety consultants identified in subsection (a) of this section may charge the employer for consultations provided under this section.

History

Source Note: The provisions of this §165.2 adopted to be effective April 25, 1999, 24 TexReg 3092; amended to be effective September 12, 2004, 29 TexReg 8610.

28 Tex. Admin. Code § 165.3 Formulation and Components of Accident Prevention Plan

(a) Policyholders who have not had an accident prevention plan developed in the last six months prior to notification will, within 30 days of the date of the safety consultant's initial report, develop an accident prevention plan. This plan will be consistent with established state safety and health codes and with accepted industry practices. The accident prevention plan shall be developed with the assistance of an Approved Professional Source as defined in §164.9 of this title (relating to Approval of Professional Sources for Safety Consultations), and shall be in the format prescribed by the commission. The policyholder shall submit the completed accident prevention plan, developed and signed by the policyholder and the Approved Professional Source, to the division. The Approved Professional Source's signature on the accident prevention plan cover sheet certifies that the accident prevention plan meets the format prescribed by the commission. The format shall include the following components and specify the individual responsible for each, by position or title:

(1) a management component with a written safety policy statement and assignment of responsibilities and authority;

(2) analysis component which includes a review of safety program documentation, existing operations, and injury trends. The analysis will be used to evaluate the effectiveness of the existing programs and to detect existing or potential trends. The analysis component will contain a statement as to the interval between the accomplishment of the analyses;

(3) a safety program recordkeeping system component;

(4) a safety and health education and training component with a statement as to the interval between training sessions;

(5) a safety audit/inspection component with a statement as to the interval between safety audits/inspections;

(6) an accident investigation component to identify the cause factors of injuries, and plan and record corrective actions; and

(7) a component to ensure review and revision of the safety program when changes in operations, equipment, or employee activities are determined or anticipated, to ensure continued effectiveness of the program requirements. This component also includes the periodic review and revisions of the safety program including a statement as to the interval (minimum of annually) between reviews.

(b) Policyholders who have had an accident prevention plan developed and implemented within the six months prior to notification as a Rejected Risk Employer and verified and approved by the Texas Mutual Insurance Company or the Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division) will continue implementation of the plan and obtain an inspection by the division as provided in §165.6 of this title (relating to Follow-up Inspection by the Division).

(d) An implementation time line, not to exceed three months after the formulation of the plan, shall be developed and included with the plan.

(e) If the policyholder disagrees with any or all of the plan, the policyholder shall sign the accident prevention plan cover sheet and attach a statement containing the specific reasons for disagreement to the plan and what alternative measures the policyholder proposes to meet the objectives of the program. The division will review the areas of disagreement and notify the policyholder and the safety consultant of the decision on each area of the disagreement.

(f) The policyholder's signature is understood to exclude those areas of the plan for which a disagreement has been attached to the plan, pending review by the division or a formal appeal.

(g) If the division finds it is practical to do so, the division may direct the policyholder to begin implementation of any or all parts of the plan that are not subject to the policyholder's disagreement. The time lines specified in the plan shall remain in effect for those parts of the plan the policyholder is directed to implement.

(h) The policyholder shall be responsible for filing the accident prevention plan that has been reviewed by the Approved Professional Source and signed as meeting the criteria in subsection (a) of this section with the division no later than 30 days after completion of the safety consultation and no later than 90 days after the policyholder received notification of identification as a Rejected Risk employer. Delays requested for good cause may be granted by the division.

History

Source Note: The provisions of this §165.3 adopted to be effective April 25, 1999, 24 TexReg 3092; amended to be effective September 12, 2004, 29 TexReg 8610.

28 Tex. Admin. Code § 165.4 Request for Safety Consultation From the Division

(a) A policyholder notified as a Rejected Risk employer may request that the division perform the safety consultation.

(b) The request shall be in writing on the form prescribed by the commission and may be delivered to the Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division) by mail, in person, by facsimile, or by electronic transmission. The form shall include:

(1) the policyholder's name, address, and telephone number;

(2) the name of the contact person at the policyholder's place of business; and

(3) the date the policyholder received notice of identification as a Rejected Risk employer.

(c) The division shall notify each policyholder who requests services whether the division has accepted or rejected the request. The notice shall be in writing and shall be made within three working days of the date the commission received the request.

History

Source Note: The provisions of this §165.4 adopted to be effective April 25, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 165.5 Reimbursement of Division for Services Provided to Rejected Risk Employers

(a) A policyholder shall be required to reimburse the Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division) for the services the division renders when:

(1) the policyholder requested services under §165.4 of this title (relating to Request for Safety Consultation from the Division) and the division provides the consultation and formulates an accident prevention plan for the policyholder;

(2) the division conducts a follow-up inspection of the policyholder's premises under §165.6 of this title (relating to Follow-up Inspection by the Division); or

(3) the division investigates accidents at the policyholder's worksite(s) while the policyholder is in the rejected risk program.

(b) The commission shall bill the policyholder as listed in the commission's approved fee schedule.

(c) The commission shall provide the policyholder with an itemized statement each month. The payment is due 30 days after the billing date.

History

Source Note: The provisions of this §165.5 adopted to be effective April 25, 1999, 24 TexReg 3092.

28 Tex. Admin. Code § 165.6 Follow-up Inspection of the Policyholder's Premises by the Division

(a) The Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division) shall conduct a follow-up inspection to ensure compliance with, and effectiveness of, the accident prevention plan developed in response to a safety consultation required by the Texas Insurance Code, Article 5.76-3, §8(c). This inspection shall be conducted at the policyholder's premises. The inspection shall be conducted not earlier than 90 days or later than six months after the date the accident prevention plan is submitted to the division.

(b) The inspection shall be conducted and completed during normal work hours.

(c) The policyholder shall allow the division access to the policyholder's premises, including remote job sites, and employees during normal work hours to conduct the follow-up inspection. A policyholder who without good cause refuses to allow the division access to the policyholder's premises may be served with an order of the commission demanding such access. Failure to comply with the commission order will subject the policyholder to penalties and sanctions as provided in the Texas Insurance Code and the Texas Labor Code.

(d) The division may require the presence of the professional source consultant that conducted the hazard survey or assisted with the accident prevention plan development during the follow-up inspection. If the professional source is required during the inspection, the division will coordinate that requirement with the policyholder and the professional source, at the policyholder's expense.

(e) At the time of the inspection, the division may consider as evidence of compliance information which includes, but is not limited to, visual verification, written policies and procedures, attendance rosters for training programs, employee interviews, and purchase orders or receipts for equipment or services necessary to support the accident prevention plan.

History

Source Note: The provisions of this §165.6 adopted to be effective April 25, 1999, 24 TexReg 3092; amended to be effective June 5, 2003, 28 TexReg 4294.

28 Tex. Admin. Code § 165.7 Report of Follow-Up Inspection

(a) As soon as practical, but not later than 30 days from the date of the follow-up inspection, the policyholder, the safety consultant, and the Texas Mutual Insurance Company, shall be provided copies of the follow-up inspection report by the division.

(b) The report shall be in writing and shall specify whether the policyholder has, or has not, implemented the accident prevention plan or other acceptable corrective measures approved by the division.

(c) If the policyholder is found not to have implemented the accident prevention plan, the report shall also contain a list of the specific areas of the accident prevention plan which have not been implemented.

(d) Failure or refusal to implement the accident prevention plan is an administrative violation with penalty not to exceed $5,000 for each day of non-compliance. The Texas Workers' Compensation Commission's Division of Workers' Health and Safety (the division) shall refer the matter to the Commission's Division of Compliance and Practices to pursue the administrative violation if:

(1) the policyholder fails or refuses to implement the accident prevention plan or approved alternative measures;

(2) the policyholder does not cancel coverage within 30 days after the date of the division's determination of such failure or refusal; and

(3) the Texas Mutual Insurance Company notifies the division that it will not cancel the coverage.

History

Source Note: The provisions of this §165.7 adopted to be effective April 25, 1999, 24 TexReg 3092; amended to be effective September 12, 2004, 29 TexReg 8610.

Chapter 166 ACCIDENT PREVENTION SERVICES

28 Tex. Admin. Code § 166.1 Definitions of Terms

(a) The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Accident prevention facilities--All personnel, procedures, equipment, materials, documents, buildings, programs, and information necessary to maintain or provide accident prevention services to the policyholder.

(2) Nature of the policyholders' operations--Type of business or industry with specific reference to potential for accident, injury, or disease determined by the standard hazards associated with the most hazardous industrial operations in which the policyholder is engaged.

(3) Premium--The amount charged for a workers' compensation insurance policy, including any endorsements, after the application of individual risk variations based on loss or expense considerations as defined by Insurance Code §2053.001(2-a).

(4) Survey--An on-site visit to a policyholder's worksite in Texas where the risk exists or the loss occurred and during which the insurance company's accident prevention personnel performs a hazard assessment of the worksite, reviews safety and health programs, and makes recommendations to assist in mitigating risks and preventing injuries and illnesses.

(b) This section is effective July 1, 2024.

History

Source Note: The provisions of this §166.1 adopted to be effective September 1, 1995, 20 TexReg 5248; amended to be effective December 2, 1997, 22 TexReg 11715; amended to be effective October 1, 2013, 38 TexReg 2000; amended to be effective July 1, 2024, 49 TexReg 2546.

28 Tex. Admin. Code § 166.2 Adequacy of Accident Prevention Services

(a) Under Labor Code §§411.061, 411.063, and 411.068(a)(1), an insurance company writing workers' compensation insurance in Texas must maintain or provide accident prevention facilities that are adequate to provide accident prevention services required by the nature of its policyholders' operations, and must include:

(1) surveys;

(2) recommendations;

(3) training programs;

(4) consultations;

(5) analyses of accident causes;

(6) industrial hygiene;

(7) industrial health services;

(8) qualified accident prevention personnel. To provide qualified accident prevention personnel and services, an insurance company may:

(A) employ qualified personnel;

(B) retain qualified independent contractors;

(D) use a combination of the methods provided in this paragraph; and

(9) written records, reports, and evidence of all accident prevention services provided to each policyholder.

(b) Under Labor Code §411.068(a)(2), an insurance company must use accident prevention services to prevent injuries to employees of its policyholders in a reasonable manner, which at a minimum, include:

(1) Notice of availability of accident prevention services and return-to-work coordination services. Under Labor Code §411.066, an insurance company must include a notice on the information page or on the front of the policy containing text identical to the following in at least 10-point bold type for each workers' compensation insurance policy delivered or issued for delivery in Texas: Pursuant to Texas Labor Code §411.066, (name of company) is required to notify its policyholders that accident prevention services are available from (name of company) at no additional charge. These services may include surveys, recommendations, training programs, consultations, analyses of accident causes, industrial hygiene, and industrial health services. (Name of company) is also required to provide return-to-work coordination services as required by Texas Labor Code §413.021 and to notify you of the availability of the return-to-work reimbursement program for employers under Texas Labor Code §413.022. If you would like more information, contact (name of company) at (telephone number) and (email address) for accident prevention services or (telephone number) and (email address) for return-to-work coordination services. For information about these requirements, call the Texas Department of Insurance, Division of Workers' Compensation (TDI-DWC) at 1-800-687-7080 or for information about the return-to-work reimbursement program for employers, call the TDI-DWC at (512) 804-5000. If (name of company) fails to respond to your request for accident prevention services or return-to-work coordination services, you may file a complaint with the TDI-DWC in writing at http://www.tdi.texas.gov or by mail to Texas Department of Insurance, Division of Workers' Compensation, P.O. Box 12050, HS-WS, Austin, Texas 78711-2050;

(2) Contact and surveys following fatalities. An insurance company must contact the policyholder within seven working days of knowledge of a work-related fatality and offer a survey. Survey offers accepted by the policyholder must be initiated by the insurance company within 60 days of policyholder acceptance of the survey offer. No offer of a survey is required if the fatality occurred outside of Texas or was the result of an accident on a common carrier, unless the fatality involves an employee of the common carrier during the course and scope of normal job duties; and

(3) Services requested by a policyholder. An insurance company must provide to each policyholder accident prevention services required by the nature of their policyholders' operations within 15 days from the date of a policyholder request for services, if appropriate services can be provided without conducting a survey; and within 60 days from the date of a policyholder request, if a survey is required regardless of any provision of this section. Services can be provided at a later date if circumstances require, and the policyholder agrees to the later date.

(c) The division may determine adequacy of an insurance company's accident prevention services in accordance with the requirements of this chapter and generally accepted tools and guidelines of loss control provision and through:

(1) review of reports of annual information, as required by §166.3 of this title; and

(2) inspections, as specified in §166.5 of this title (relating to Inspections of Adequacy of Accident Prevention Facilities and Services).

(d) Accident prevention services must be provided to policyholders at no additional charge.

(e) An insurance company must not solicit or obtain from its policyholders a prospective waiver declining all accident prevention services. Under Labor Code §411.063(a)(3), if an insurance company contracts with a policyholder to provide accident prevention personnel or services, this contract does not limit in any way the insurance company's authority or responsibility to comply with any statutory or regulatory requirement contained in this chapter. Insurance companies are responsible for maintaining or providing all services, including contracted services, in accordance with this chapter.

(f) This section is effective July 1, 2024.

History

Source Note: The provisions of this §166.2 adopted to be effective October 1, 2013, 38 TexReg 2000; amended to be effective July 1, 2024, 49 TexReg 2546.

28 Tex. Admin. Code § 166.3 Annual Information Submitted by Insurance Companies

(a) An insurance company writing workers' compensation insurance in Texas must file with the division an annual report on its accident prevention services no later than April 1 of each calendar year.

(b) An annual report required by this section must be filed with the division in the format and manner prescribed by the division.

(c) The annual reports must not include the expenses or the costs of underwriting visits to a policyholder's premises unless accident prevention services are provided during the visit. In that case, the proportionate costs of the accident prevention services may be included in the report.

(d) Insurance companies are responsible for timely and accurate reporting under this section. A report required by this section is considered filed with the division only when it accurately contains all of the required data elements and is received by the division.

(e) This section is effective July 1, 2024.

History

Source Note: The provisions of this §166.3 adopted to be effective September 1, 1995, 20 TexReg 5248; amended to be effective October 1, 2013, 38 TexReg 2000; amended to be effective July 1, 2024, 49 TexReg 2546.

28 Tex. Admin. Code § 166.5 Inspections of Adequacy of Accident Prevention Facilities and Services

(a) Inspections. The division may conduct inspections to determine the adequacy of an insurance company's accident prevention services.

(1) Affiliated companies of an insurer may be inspected together if the same facilities, programs, and personnel are used by each of the companies.

(2) At least 90 days before an inspection, the division must notify the insurance company in writing of the inspection. The notice must specify the location and date of the inspection.

(3) The division may conduct unannounced on-site visits to determine compliance with the Labor Code and division rules in accordance with the procedures governing on-site visits in Chapter 180 of this title (relating to Monitoring and Enforcement) regardless of the provisions of this section.

(b) Site of inspection. The inspection of the insurance company's accident prevention services must take place as determined by the division:

(1) at the insurance company's office in Texas;

(2) at the division; or

(3) electronically.

(1) At least 60 days before the date set for inspection, in the format and manner specified by the division, the insurance company must provide to the division a list of policyholders.

(A) For the period of time determined by the division, the list must be organized by:

(i) policyholder name;

(ii) policy number;

(iii) effective date or expiration date of the policy;

(iv) premium;

(v) number of fatalities;

(vi) principal Texas location;

(vii) indication of whether the insurance company has contracted with the policyholder for accident prevention services; and

(viii) indication of whether that policyholder has requested accident prevention services.

(B) The list must also:

(i) be taken from the insurance company's most current records;

(ii) be separated by affiliated companies;

(iii) be arranged in descending order by premium; and

(iv) include all policies.

(2) Within 10 days of receipt of the policyholder list, the division must select the specific policyholder files to be evaluated and notify the insurance company of those selected files.

(3) For each policy selected by the division, the insurance company must prepare an accident prevention services worksheet in the format and manner prescribed by the division. The worksheet must include the:

(A) policyholder name;

(B) policy number;

(D) principal Texas office address or principal corporate office address if there is no principal Texas office address;

(E) policyholder contact person's name, phone number, and email address;

(F) insurance company name;

(G) effective date of the policy; and

(H) name of person completing the form and date completed.

(4) At least 10 days before the date of the inspection, the insurance company must file the completed worksheets with the division.

(d) Information to be made available at or before the inspection. The insurance company must make available for the time frame specified by the division:

(1) the loss control files corresponding to the requested worksheets;

(2) a sample policy declaratory page as evidence that each policyholder has been provided the notice required by §166.2(b)(1) of this title;

(3) a copy of all documentation of accident prevention services provided in accordance with this title;

(4) samples of policyholder training materials, audiovisual aids, and training programs; and

(5) other information requested by the division necessary to complete the inspection. Information requested may include, but is not limited to:

(A) records of surveys;

(B) consultations;

(D) training provided;

(E) loss analyses;

(F) industrial health and hygiene services;

(G) return-to-work coordination services information; and

(H) the name, location, status (whether employee or contractor), and qualifications of each person that provided accident prevention services in the loss control files being reviewed during the inspection.

(e) Insurance company policyholder visits and contacts. The division may conduct scheduled visits of the jobsite of an insurance company's policyholder and make other off-site contacts with a policyholder to obtain information about the insurance company's accident prevention facilities and use of services.

(f) Written report of inspection.

(1) The division must prepare a written report of the inspection and must provide a copy to the insurance company's executive management and to the Texas Department of Insurance, Loss Control Regulation Division.

(2) The inspection report must contain the division's determination of adequacy in accordance with Labor Code §411.061 and §166.2 of this title, and include specific findings and required corrective actions. The inspection report will indicate whether the division has issued a final determination of adequacy, a final determination of inadequacy, or an initial determination of inadequacy with regard to an insurance company's accident prevention services.

(3) The division will provide written notification to the insurance company of specific deficiencies and recommendations for corrective action if it assigns an initial determination of inadequacy. Not later than the 60th day after the date of the initial inspection report, the insurance company must provide written documentation evidencing its compliance with the division's recommendations contained in the initial inspection report. The written documentation must detail the corrective actions taken to address each specific finding. If the insurance company believes that it will take more than 60 days to implement the recommendations listed in the initial inspection report, it must request an extension from the division. After the end of the correction period, a final determination of adequacy or inadequacy will be assigned. The division must provide the insurance company with notification of this final determination.

(g) Reinspection.

(1) After an inspection and a final determination of inadequacy of an insurance company's accident prevention services, the division will reinspect the accident prevention services of the insurance company not earlier than the 180th day or later than the 270th day after the date the accident prevention services were determined by the division to be inadequate.

(2) Information required under this section to be provided at the time of initial inspection is required to again be provided at the time of reinspection in accordance with the time frames established within this section.

(h) This section is effective July 1, 2024.

History

Source Note: The provisions of this §166.5 adopted to be effective September 1, 1995, 20 TexReg 5248; amended to be effective October 1, 2013, 38 TexReg 2000; amended to be effective July 1, 2024, 49 TexReg 2546.

Chapter 180 MONITORING AND ENFORCEMENT

Subchapter A GENERAL RULES FOR ENFORCEMENT

28 Tex. Admin. Code § 180.1 Definitions

The following words and terms, when used in this chapter, will have the following meanings:

(1) Act--The Texas Workers' Compensation Act, Labor Code, Title 5, Subtitle A.

(2) Administrative violation--A violation, failure to comply with, or refusal to comply with the Act, or a rule, order, or decision of the commissioner. This term is synonymous with the terms "violation" or "violate."

(3) Agent--A person who a system participant uses or contracts with for the purpose of providing claims service or fulfilling duties under the Labor Code, Title 5 and rules. The system participant who uses or contracts with the agent may also be responsible for the administrative violations of that agent.

(4) Appropriate credentials--The certifications, education, training, and experience to provide the health care that an injured employee is receiving or is requesting to receive. Under Texas Labor Code §408.0043, a physician who performs a peer review, utilization review, or independent review of health care services requested, ordered, provided, or to be provided by a physician must be of the same or similar specialty as the physician who requested, ordered, provided, or will provide the health care service. A dentist must meet the requirements of Texas Labor Code §408.0044. A chiropractor must meet the requirements of Texas Labor Code §408.0045.

(5) Commissioner--The commissioner of workers' compensation.

(6) Complaint--A written submission to the division alleging a violation of the Act or rules by a system participant.

(7) Compliance Audit (also Performance Review)--An official examination of compliance with one or more duties under the Act and rules. A compliance audit does not include monitoring or review activities involving the Medical Advisor or the Medical Quality Review Panel.

(8) Conviction or convicted--

(A) A system participant is considered to have been convicted when:

(i) a judgment of conviction has been entered against the system participant in a federal, state, or local court;

(ii) the system participant has been found guilty in a federal, state, or local court;

(iii) the system participant has entered a plea of guilty or nolo contendere (no contest) that has been accepted by a federal, state, or local court;

(iv) the system participant has entered a first offender or other program and judgment of conviction has been withheld; or

(v) the system participant has received probation or community supervision, including deferred adjudication.

(B) A conviction is still a conviction until and unless overturned on appeal even if:

(i) it is stayed, deferred, or probated;

(ii) an appeal is pending; or

(iii) the system participant has been discharged from probation or community supervision, including deferred adjudication.

(9) Department--Texas Department of Insurance.

(10) Division--Texas Department of Insurance, Division of Workers' Compensation.

(11) Emergency--As defined in §133.2 of this title (relating to Definitions). This definition does not apply to "emergency" as used in the term "ex parte emergency cease and desist orders."

(12) Frivolous--That which does not have a basis in fact or is not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.

(13) Frivolous complaint--A complaint that does not have a basis in fact or is not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.

(14) Immediate post-injury medical care--That health care provided on the date that the injured employee first seeks medical attention for the workers' compensation injury.

(15) Notice of Violation (NOV)--A notice issued to a system participant by the division when the division has found that the system participant has committed an administrative violation and the division seeks to impose a sanction in accordance with Labor Code, Title 5 or division rules.

(16) Peer Review--An administrative review by a health care provider performed at the insurance carrier's request without a physical examination of the injured employee.

(17) Remuneration--Any payment or other benefit made directly or indirectly, overtly or covertly, in cash or in kind, including, but not limited to, forgiveness of debt.

(18) Rules--The division's rules adopted under Labor Code, Title 5.

(19) Sanction--A penalty or other punitive action or remedy imposed by the commissioner on an insurance carrier, representative, injured employee, employer, or health care provider, or any other person regulated by the division under the Act, for an administrative violation.

(20) SOAH--The State Office of Administrative Hearings.

(21) System Participant--A person or their agent subject to the Act or a rule, order, or decision of the commissioner.

History

Source Note: The provisions of this §180.1 adopted to be effective July 29, 1991, 16 TexReg 3940; amended to be effective March 14, 2002, 27 TexReg 1817; amended to be effective September 14, 2003, 28 TexReg 7711; amended to be effective January 9, 2011, 35 TexReg 11873; amended to be effective February 14, 2012, 37 TexReg 691; amended to be effective February 10, 2021, 46 TexReg 928.

28 Tex. Admin. Code § 180.2 Filing a Complaint

(a) Any person may submit a complaint to the division for alleged administrative violations, except as provided in subsection (b) of this section.

(b) A health care provider cannot submit a complaint about a medical billing issue if the date of service for the medical billing issue was more than 12 months before the date of the complaint, unless the issue qualifies for an exception to the filing deadline under §133.307(c)(1)(B) of this title, concerning medical fee dispute resolution. If the issue qualifies for an exception to the medical fee dispute resolution filing deadline under §133.307(c)(1)(B), then a health care provider cannot submit a complaint about that issue if the medical fee dispute resolution filing deadline in §133.307(c)(1)(B) has passed. This subsection does not apply to a health care provider submitting a complaint under Insurance Code Chapter 1305.

(1) through the division's website;

(2) by email;

(3) through written correspondence;

(4) by fax; or

(5) in person. The division will help a person submitting an in-person complaint reduce the complaint to writing.

(d) A complaint submitted on the form provided by the division or in any other written format must contain the following information as applicable:

(1) complainant's name and contact information;

(2) name and contact information of the subject or parties of the complaint, if known;

(3) name and contact information of witnesses, if known;

(4) claim file information, including, but not limited to, the name, address, and date of injury of the injured employee, if known;

(5) the statement of the facts about the alleged violation, including the dates or time period the alleged violation occurred;

(6) the nature of the alleged violation, including the specific sections of the Act and division rules alleged to have been violated, if known;

(7) supporting documentation relevant to the allegation that may include, but is not limited to, medical bills, Explanation of Benefits statements, copies of payment invoices or checks, and medical reports, as applicable;

(8) supporting documentation for alleged fraud that may include photographs, video, audio, and surveillance recordings, and reports; and

(9) other sources of pertinent information, if known.

(e) Contact information may include, but is not limited to, name, address, telephone number, fax number, email address, business name, business address, business telephone number, and websites.

(f) A complaint must contain sufficient information for the division to investigate the complaint.

(g) On receipt of a complaint, the division will review, monitor, and may investigate the allegation against a person or entity who may have violated the Act or division rules.

(h) The division will assign priorities to complaints being investigated based on a risk-based complaint investigation system that considers:

(1) the severity of the alleged violation;

(2) whether the noncompliance or alleged violation is ongoing;

(3) whether a commissioner order has been violated; or

(4) other risk-based criteria the division determines necessary.

(i) A person commits an administrative violation if the person submits a complaint to the division that is:

(1) frivolous, as defined in §180.1 of this title (relating to Definitions);

(2) groundless or made in bad faith; or

(3) done specifically for competitive or economic advantage.

History

Source Note: The provisions of this §180.2 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective January 9, 2011, 35 TexReg 11873; amended to be effective May 27, 2024, 49 TexReg 3805.

28 Tex. Admin. Code § 180.3 Compliance Audits

(a) The division shall conduct Compliance Audits of the workers' compensation records of system participants and their agents for compliance with the Act and division rules.

(b) The division may conduct a compliance audit at the offices of a system participant or at any location the division deems appropriate. During a compliance audit, the division may, at its discretion, utilize persons in addition to division staff to provide additional expertise.

(1) be in writing;

(2) be sent at least 10 days before the compliance audit is to be performed;

(3) specify the information that must be made available;

(4) list the name and telephone number of the audit coordinator; and

(5) specify the date, time, location, and conditions of the compliance audit.

(d) The system participant being audited (auditee) shall designate a general contact person and a contact person at each relevant location to coordinate the compliance audit. That contact person shall:

(1) provide reasonable access to requested personnel and information;

(2) respond to reasonable needs of auditors on-site or to inquiries by auditors; and

(3) be familiar with the system participant's procedures and recordkeeping systems related to the scope of the compliance audit.

(e) System participants (which may include those who are not being audited but whose records are necessary to conduct an audit of another system participant), upon request, shall make available for review claim files and other workers' compensation records in the format and manner specified by the division.

(f) Initial findings of the compliance audit will be provided in writing to the auditee.

(g) The auditee may prepare and file with the division a management response to the initial findings. The response may include proposed corrective actions. If such a response is provided, the division shall review the response and shall adjust its findings if deemed appropriate.

(h) Final compliance audit reports may be published on the division's Internet website and shall be redacted to not include any confidential claim file information.

(i) The division, should it deem it appropriate or upon request of a licensing or certification authority, shall provide the appropriate licensing or certification authority with a copy of all final compliance audit reports (redacted in accordance with subsection (h) of this section) and the auditee's response to the final compliance audit report, if any.

(j) To the extent permitted by the Act and division rules, the division shall submit a bill to the auditee for the actual expenses associated with the compliance audit, including audit staff time, additional expertise, travel and per diem expenses, and copying costs.

(k) The auditee shall submit payment by check, made payable to the order of the Texas Department of Insurance, for the expenses within 25 days after receipt of the bill.

History

Source Note: The provisions of this §180.3 adopted to be effective July 29, 1991, 16 TexReg 3940; amended to be effective September 14, 2003, 28 TexReg 7711; amended to be effective January 9, 2011, 35 TexReg 11873; amended to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.4 On-Site Visits

(a) As often as it considers necessary, the division may review the operations of a system participant to determine compliance with the Act or division rules.

(b) When reviewing the operations of a system participant to determine compliance with the Act or division rules, the division may conduct on-site visits to the system participant's premises. On-site visits may be announced or unannounced.

(d) An on-site visit must not disturb a health care provider's actual provision of health care to a patient.

(e) The division shall provide written notice of each announced and unannounced on-site visit. This notice shall:

(1) be sent at least 10 days before the on-site visit unless the on-site visit is unannounced in which case the notice will be provided at the time of the on-site visit;

(2) specify the alleged violation(s) that is the subject of the on-site visit;

(3) specify the types of records that must be made available during the on-site visit;

(4) list the name and telephone number of the division staff representative; and

(5) specify the date, time, location, and conditions of the on-site visit.

(f) The person who is the subject of the on-site visit shall designate a general contact person at the premises. During the on-site visit the contact person shall:

(1) provide access to requested personnel and information;

(2) respond to the needs of division staff and to inquiries by division staff; and

(3) be familiar with the system participant's procedures and recordkeeping systems that are related to the records and information requested during the on-site visit.

(g) The person subject to an on-site visit shall make available to the division in the format and manner specified by the division all records specified in the written notice provided under subsection (e) of this section. A written notice may specify for inspection any records related to the person's participation in the workers' compensation system, including:

(1) claim files;

(2) medical records and reports;

(3) payment records;

(4) billing records;

(5) electronic records;

(6) communications;

(7) adjustor notes;

(8) accident reports;

(9) notifications of lost time;

(10) notifications of injuries;

(11) payroll data and wage statements;

(12) investigative reports;

(13) filed division forms; and

(14) contracts.

History

Source Note: The provisions of this §180.4 adopted to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.5 Access to Workers' Compensation Related Records and Information

(a) Upon written request from the division any system participant shall provide copies of or access to all records and information held by that system participant related to issues being reviewed or investigated in the format and manner specified by the division.

(b) The request will identify the records and information to be produced and will provide a specific, reasonable date to produce the information.

History

Source Note: The provisions of this §180.5 adopted to be effective July 29, 1991, 16 TexReg 3941; amended to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.8 Notices of Violation; Notices of Hearing; Default Judgments

(a) A notice of violation (NOV) is a notice issued to a system participant when the division finds that the system participant has committed an administrative violation and the division seeks to impose a sanction under the Act or division rules. An NOV is not required to be issued before or after the issuance of an ex parte emergency cease and desist order.

(b) An NOV shall be in writing and include:

(1) the provision(s) of the Act, rule, order, or decision of the commissioner that the system participant violated;

(2) a summary of the facts that establish that the violation(s) occurred;

(3) a description of the proposed sanction that the division intends to impose;

(4) a statement of the basis for the proposed sanction including:

(A) a description of the underlying facts considered by the division for each of the factors listed in Labor Code §415.021(c) and (c-2), if applicable, (relating to Assessment of Administrative Penalties) and §180.26 of this title (relating to Criteria for Proposing, Recommending and Determining Sanctions; Other Remedies) in determining the appropriateness of the division's proposed sanction;

(B) a description of which factors under Labor Code §415.021(c) and (c-2), if applicable, and §180.26 of this title had a mitigating or aggravating effect on the division's proposed sanctions; and

(C) a description of the division's proposed sanction for each violation or violation type in the case of repeated administrative violations. This requirement does not prohibit the division from considering the aggregate impact of all administrative violations described in the NOV when proposing a sanction if justice requires such consideration;

(5) the right to consent to the charge and the proposed sanction(s);

(6) the right to request a hearing; and

(7) other information about the rights, obligations, and procedures for requesting a hearing.

(c) The charged party shall file a written answer to the NOV not later than the twentieth day after the notice is received. The answer shall either consent to the proposed sanction, and remit the amount of the penalty, if any, or request a hearing by being filed with the division's chief clerk of proceedings. If the charged party fails to respond to the NOV within 20 days of receipt of the notice, the division shall schedule a hearing at the State Office of Administrative Hearings (SOAH) and provide notice of hearing to the charged party that meets the requirements of §148.5 of this title (relating to Notice of Hearing) and must include the information in subsection (b)(3) and (4) of this section.

(d) A charged party that receives a notice of hearing under subsection (c) of this section shall, within 20 days of the date on which the notice of hearing is provided to the party, file a written answer or other responsive pleading. Such response shall be filed in accordance with 1 TAC §155.101 of this title (relating to Filing Documents) and §155.103 of this title (relating to Service of Documents on Parties).

(e) For purposes of this section, events described in paragraphs (1) or (2) of this subsection constitute a default on the part of a charged party who receives a notice of hearing under subsection (c) of this section:

(1) failure of the charged party to file a written response as provided by subsection (d) of this section; or

(2) failure of the charged party to appear in person or by legal representative on the day and at the time set for hearing in a contested case at SOAH, regardless of whether a written response has been filed.

(f) In the event that a charged party defaults as described by subsection (e) of this section, the division may seek informal disposition by default by the commissioner as permitted by Government Code §2001.056.

(g) For purposes of this subchapter, "disposition by default" shall mean the issuance of an order against the charged party in which the allegations against the party in the notice of hearing are deemed admitted as true, upon the offer of proof to the commissioner that proper notice was provided to the defaulting party. For purposes of this section, proper notice means notice sufficient to meet the provisions of the Government Code §2001.051 and §2001.052 and §148.5 of this title (relating to Notice of Hearing).

(h) After informal disposition of a contested case by default, a charged party may file a written motion to set aside the default order and reopen the record. A motion by the charged party to set aside the default order and reopen the record shall be granted by the commissioner if the charged party establishes that the failure to file a written response or to attend the hearing was neither intentional nor the result of conscious indifference, and that such failure was due to a mistake or accident. A motion to set aside the default order and reopen the record shall be filed by the charged party with the division's chief clerk of proceedings prior to the time that the order of the commissioner becomes final pursuant to the applicable provisions of Government Code, Chapter 2001, Subchapter F.

(i) A motion to set aside the default order and reopen the record is not a motion for rehearing and is not to be considered a substitute for a motion for rehearing. A motion for rehearing is required in order to exhaust administrative remedies. The filing of a motion to set aside the default order and reopen the record has no effect on either the statutory time periods for the filing of a motion for rehearing or on the time period for ruling on a motion for rehearing, as provided in applicable provisions of the Government Code, Chapter 2001, Subchapter F.

History

Source Note: The provisions of this §180.8 adopted to be effective July 29, 1991, 16 TexReg 3941; amended to be effective December 4, 1995, 20 TexReg 9717; amended to be effective September 14, 2003, 28 TexReg 7711; amended to be effective January 9, 2011, 35 TexReg 11873; amended to be effective February 14, 2012, 37 TexReg 691; amended to be effective January 16, 2019, 44 TexReg 264; amended to be effective January 12, 2020, 45 TexReg 359.

28 Tex. Admin. Code § 180.9 Proposals for Decision

(a) If a hearing was conducted in conjunction with Labor Code §§407.046, 408.023, 415.0215, or 415.034, or in another case under the Act that is not subject to Labor Code §402.073(b), the commissioner shall review the proposed decision of the administrative law judge. If the commissioner modifies, amends, or changes a recommended finding of fact or conclusion of law, or order of the administrative law judge, the commissioner's final order shall state the legal basis and the specific reasons for the change.

(b) The division shall notify the person by issuing an order that describes the effects of the sanction. This order shall be delivered by verifiable means with a copy to the appropriate licensing or certification authority.

History

Source Note: The provisions of this §180.9 adopted to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.10 Ex Parte Emergency Cease and Desist Orders

(a) The commissioner ex parte may issue an emergency cease and desist order upon application by division staff if:

(1) the commissioner believes a person regulated by the division under Labor Code, Title 5 is engaging in conduct violating a law, rule or order; and

(2) the commissioner believes that the alleged conduct under paragraph (1) of this subsection will result in harm to the health, safety, or welfare of another person.

(b) The order must contain the following information:

(1) the name and last known address of the person against whom the order is entered;

(2) the alleged conduct that the commissioner believes the person regulated by the division under Labor Code, Title 5 is engaging in that is a violation of a law, rule, or order and that the commissioner believes will result in harm to the health, safety, or welfare of another person;

(3) a statement that the person is to immediately cease and desist from the acts, methods, or practices stated in the order;

(4) the rights of the person against whom the order is entered with regard to requesting a hearing to contest the order. (This statement must include a reference to the specific statute, rule, or order found to have been violated, a statement of the legal authority and jurisdiction under which the order is issued, specific reference to the time limit for requesting a hearing to contest the order, and reference to the statute or statutes in which the time limit is contained. This statement must include the fact that the burden of requesting the hearing is on the person against whom the order was entered);

(5) a statement that the order is final on the 31st day after the date the affected person receives the order unless the affected person requests a hearing; and

(6) a statement regarding the actions that may be taken or sanctions that may be imposed against the person against whom the order was entered in the event of violation of the order.

(c) A request for a hearing to contest the order must be requested not later than the 30th day after the date the affected person receives the order and must:

(1) be in writing;

(2) be directed to the commissioner and filed with the division's chief clerk of proceedings; and

(3) state the grounds for the request to set aside or modify the order.

(d) On receiving a request for a hearing the division shall serve notice of the time and place of the hearing at the State Office of Administrative Hearings (SOAH). The hearing shall be held not later than the 10th day after the date the commissioner receives the request for a hearing unless the parties mutually agree to a later hearing date. At the hearing, the person requesting the hearing is entitled to show cause why the order should not be affirmed and the burden of proof is on the division to show why the order should be affirmed.

(e) Agreements to hold the hearing at a later date must be in writing. The person who is adversely affected by the issuance of the ex parte emergency cease and desist order and who desires a hearing regarding such order must file any such agreement with the division's chief clerk of proceedings before the expiration of the 10th day after the date the request for hearing is received.

(f) Following receipt of the proposal for decision from SOAH regarding the hearing the commissioner shall review the proposed decision of the administrative law judge and wholly or partly affirm, modify, or set aside the order. If the commissioner modifies, amends, or changes a recommended finding of fact or conclusion of law, or order of the administrative law judge, the commissioner's final order shall state the legal basis and the specific reasons for the change.

(g) Pending a hearing, the order continues in effect unless the order is stayed by the commissioner.

(h) If the person against whom the order was entered submits a motion for stay of the ex parte emergency cease and desist order, the motion may be granted by the commissioner before the date of the show cause hearing. If the parties agree to a later show cause hearing date pursuant to subsection (d) of this section, the motion for stay may be granted by the commissioner before the date of the show cause hearing upon written motion by any party to the hearing. If the motion for stay is granted, notice shall be sent to the requesting party that the order has been stayed in whole or in part and what part of the order continues to be in effect. If the motion is not granted before the date of the show cause hearing the motion is denied and notice is not required of the denial.

History

Source Note: The provisions of this §180.10 adopted to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.19 Incentives

(a) The purpose of this section is to develop incentives and emphasize performance-based oversight to regulatory outcomes. Regulatory outcomes are assessed for the following key regulatory goals:

(1) provide timely and accurate income and medical benefits;

(2) increase timely and accurate communications among system participants;

(3) encourage safe and timely return of injured employees to productive roles;

(4) promote safe and healthy workplaces;

(5) ensure each injured employee shall have access to prompt, high-quality, cost-effective medical care; and

(6) limit disputes to those appropriate and necessary.

(b) At least once every biennium, the Division shall assess the performance of insurance carriers and health care providers based on the key regulatory goals stated in subsection (a)(1) - (6) of this section.

(c) Insurance carriers and health care providers who are assessed will be placed into one of the following regulatory tiers based upon their level of compliance with the Labor Code and related rules and their performance in meeting the key regulatory goals in §180.19(a) relative to the performance of all other assessed insurance carriers and health care providers:

(1) high performers;

(2) average performers; or

(3) poor performers.

(d) Incentives will be based on the regulatory tier into which the insurance carrier or health care provider was placed after being assessed on the key regulatory goals.

(e) In granting incentives, the Commissioner may also consider any other factors that the Commissioner finds relevant which leads to overall compliance or which may adversely impact the workers' compensation system.

(f) Incentives for insurance carriers and health care providers placed into the high performer regulatory tier are:

(1) public recognition, and

(2) use of that designation as a marketing tool.

(g) Other incentives for insurance carriers and health care providers placed into a regulatory tier may include:

(1) limited audit exemption for insurance carriers and health care providers placed in the average and high performers regulatory tiers, while reserving the Division's discretion to audit an average or high performer if deemed necessary;

(2) penalties which may be lower than normally assessed for insurance carriers and health care providers who have been placed in the high performer regulatory tier;

(3) penalties which may be reduced for insurance carriers and health care providers in any regulatory tier who self-disclose non-compliance;

(4) flexibility for audits and inspections based on performance and placement in any regulatory tier; and

(5) any other incentive the Commissioner may deem appropriate.

History

Source Note: The provisions of this §180.19 adopted to be effective January 16, 2008, 33 TexReg 428.

Subchapter B MEDICAL BENEFIT REGULATION

28 Tex. Admin. Code § 180.22 Health Care Provider Roles and Responsibilities

(a) Health care providers as defined in subsections (c) - (e) of this section shall provide all health care reasonably required by the nature of the injury as and when needed to:

(1) cure or relieve the effects naturally resulting from the compensable injury;

(2) promote recovery; or

(3) enhance the ability of the injured employee to return to or retain employment.

(b) In addition to the general requirements of this section, health care providers shall timely and appropriately comply with all applicable requirements under the Act and department and division rules, including, but not limited to:

(1) reporting required information;

(2) disclosing financial interests;

(3) impartially evaluating an injured employee's condition;

(4) correctly billing for health care provided;

(5) examine an injured employee to determine a date of maximum medical improvement and design impairment ratings as and when appropriate; and

(6) complying with all applicable provisions of the Americans with Disabilities Act.

(c) The treating doctor is the doctor primarily responsible for the efficient management of health care and for coordinating the health care for an injured employee's compensable injury. The treating doctor shall:

(1) except in the case of an emergency, approve or recommend all health care reasonably required that is to be rendered to the injured employee including, but not limited to, treatment or evaluation provided through referrals to consulting and referral doctors or other health care providers, as defined in this section;

(2) maintain efficient utilization of health care;

(3) communicate with the injured employee, injured employee's representative, if any, employer, and insurance carrier about the injured employee's ability to work or any work restrictions on the injured employee;

(4) make available, upon request, in the form and manner prescribed by the division:

(A) work release data;

(B) cost and utilization data; and/or

(C) patient satisfaction data, including comorbidity, patient outcomes, return-to-work outcomes, functional health outcomes, and recovery expectations; and

(5) examine an injured employee to determine a date of maximum medical improvement and assign impairment ratings when appropriate.

(d) The consulting doctor is a doctor who examines an injured employee or the injured employee's medical record in response to a request from the treating doctor, the designated doctor, or the division. The consulting doctor shall:

(1) perform unbiased evaluations of the injured employee as directed by the requestor including, but not limited to, evaluations of:

(A) the accuracy of the diagnosis and appropriateness of the treatment of the injured employee;

(B) the injured employee's work status, ability to work, and work restrictions;

(D) other similar issues;

(2) submit a narrative report to the treating doctor, the injured employee, the injured employee's representative (if any), the insurance carrier, and the division (if the requestor was the division);

(3) not make referrals without the approval of the treating doctor and when such approval is obtained, ensure that the health care provider to whom the consulting doctor is making an approved referral knows the identity and contact information of the treating doctor;

(4) initiate or provide treatment only if the treating doctor approves or recommends the treatment; and

(5) become a referral doctor if the doctor begins to prescribe or provide health care to an injured employee.

(e) The referral doctor is a doctor who examines and treats an injured employee in response to a request from the treating doctor. The referral doctor shall:

(1) supplement the treating doctor's care;

(2) timely report the injured employee's status to the treating doctor and the insurance carrier as required by applicable division rules; and

(3) not make referrals without the approval of the treating doctor and when such approval is obtained, ensure that the health care provider to whom the referral doctor is making an approved referral knows the identity and contact information of the treating doctor.

(f) The Required Medical Examination (RME) doctor is a doctor who examines the injured employee's medical condition in response to a request from the insurance carrier or the division pursuant to Labor Code §§408.004, 408.0041, or 408.151. The RME doctor shall:

(1) perform unbiased evaluations of the injured employee as directed by the RME notice issued by the division;

(2) not make referrals without the approval of the treating doctor and when such approval is obtained, ensure that the health care provider to whom the RME doctor is making an approved referral knows the identity and contact information of the treating doctor;

(3) initiate or provide treatment only if the treating doctor approves or recommends the treatment; and

(4) not evaluate, except following an examination by a designated doctor:

(A) the impairment caused by the injured employee's compensable injury;

(B) the attainment of maximum medical improvement;

(D) whether the injured employee's disability is a direct result of the work related injury;

(E) the ability of the injured employee to return to work; or

(F) issues similar to those described by subparagraphs (A) - (E) of this paragraph; and

(5) be a doctor licensed to practice medicine in Texas that holds the appropriate credentials as defined in §180.1 of this title (relating to Definitions);

(A) a dentist that performs dental services under the Act may review dental services that may lawfully be performed within the scope of the dentist's license to practice dentistry; or

(B) a chiropractor that performs chiropractic services under the Act may review chiropractic services that may lawfully be performed within the scope of the chiropractor's license to engage in the practice of chiropractic.

(g) A peer reviewer is a health care provider who performs an administrative review at the insurance carrier's request without a physical examination of the injured employee. The peer reviewer must not have any known conflicts of interest with the injured employee or the health care provider who has proposed or rendered any health care being reviewed.

(1) A peer reviewer who performs a prospective, concurrent, or retrospective review of the medical necessity or reasonableness of health care services (utilization review) is subject to the applicable provisions of the Labor Code; Insurance Code, Chapters 1305 and 4201; and department and division rules. A peer reviewer who performs utilization review must:

(A) be certified or registered as a utilization review agent (URA) by the department or be employed by or under contract with a certified or registered URA to perform utilization review;

(B) hold the appropriate professional license issued by this state; and

(2) A peer reviewer who performs a review for any issue other than medical necessity, such as compensability or an injured employee's ability to return to work, must:

(A) hold the appropriate professional license issued by this state; and

(B) hold the appropriate credentials as defined in §180.1 of this title.

(h) The designated doctor is a doctor assigned by the division to recommend a resolution of a dispute as to the medical condition of an injured employee. At the request of an insurance carrier or an injured employee, or on the commissioner's own order, the commissioner may order a medical examination by a designated doctor in accordance with Labor Code §408.0041 and §408.1225. The credentials, qualifications, and responsibilities of a designated doctor are governed by §180.21 of this title (relating to Division Designated Doctor List), §180.1 of this title that defines "appropriate credentials", applicable provisions of the Act, and other rules providing for use of a designated doctor.

(i) A member of the MQRP is a health care provider chosen by the division's Medical Advisor under Labor Code §413.0512. All eligibilities, terms, responsibilities, and prohibitions shall be prescribed by contract, and the MQRP members shall serve on the MQRP as prescribed by contract. A health care provider must meet the performance standards specified in the contract to be eligible for selection by the Medical Advisor to serve on the MQRP. A member of the medical quality review panel, other than a chiropractor or dentist, who reviews a specific workers' compensation case is subject to Labor Code §408.0043. Doctors seeking membership on the MQRP must hold appropriate credentials as defined in §180.1 of this title. A chiropractor who serves on the MQRP and that reviews a chiropractic service under the Act must be licensed to engage in the practice of chiropractic pursuant to Labor Code §408.0045. A health care provider that serves on the MQRP may only review health care services or treatment that may lawfully be performed within the scope of the health care provider's license.

(j) Independent review organizations (IROs) must comply with the applicable provisions of Insurance Code, Chapter 4201; Labor Code, Title 5; and Chapters 12, 133 and 180 of this title (relating to Independent Review Organizations; General Medical Provisions; and Monitoring and Enforcement, respectively). The division or the department may initiate appropriate proceedings under applicable provisions of the Insurance Code, Chapter 4201; Labor Code, Title 5; and Chapters 12, 133 and 180 of this title.

History

Source Note: The provisions of this §180.22 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective August 16, 2006, 31 TexReg 6370; amended to be effective January 9, 2011, 35 TexReg 11873.

28 Tex. Admin. Code § 180.23 Division-Required Training for Doctors

(a) Applicability. This section governs authorization relating to certification of maximum medical improvement (MMI), determination of permanent impairment, and assignment of impairment ratings in the event that a doctor finds permanent impairment exists.

(b) Authorization. Full authorization to assign an impairment rating and certify MMI in an instance where the injured employee is found to have permanent impairment requires a doctor to obtain division certification by completing the division-prescribed impairment rating training and passing the test or meeting the training and testing requirements for designated doctor certification under §127.100 of this title (relating to Designated Doctor Certification). To remain certified, a doctor is required to complete follow-up training at least every two years.

(c) Training. A doctor who has not completed the required training under subsection (b) of this section but who has had similar training in the American Medical Association Guides from a division-approved vendor within the prior two years may submit the syllabus and training materials from that course to the division for review. If the division determines that the training is substantially the same as the division-required training and the doctor passes the division-required test, the doctor is fully authorized under this section. The ability to substitute training only applies to the initial training requirement.

(d) Exceptions. Notwithstanding any other provision of this section, a doctor who has not successfully completed training and testing required by this section for authorization to assign impairment ratings and certify MMI when there is permanent impairment may receive permission by exception to do so from the division on a specific case-by-case basis.

History

Source Note: The provisions of this §180.23 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective June 5, 2003, 28 TexReg 4294; amended to be effective September 1, 2012, 37 TexReg 5476; amended to be effective April 30, 2023, 48 TexReg 2133.

28 Tex. Admin. Code § 180.24 Financial Disclosure

(a) Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise.

(1) Compensation arrangement--Any arrangement involving any remuneration between a health care practitioner (or a member of a health care practitioner's immediate family) and a health care provider.

(2) Financial interest means:

(A) an interest of a health care practitioner, including an interest of the health care provider who employs the health care practitioner, or an interest of an immediate family member of the health care practitioner, which constitutes a direct or indirect ownership or investment interest in a health care provider; or

(B) a direct or indirect compensation arrangement between the health care practitioner, the health care provider who employs the referring health care practitioner, or an immediate family member of the health care practitioner and a health care provider.

(3) Immediate family member--Immediate family member or member of a doctor's immediate family means husband or wife; birth or adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.

(b) Submission of Financial Disclosure Information to the division.

(1) If a health care practitioner refers an injured employee to another health care provider in which the health care practitioner, or the health care provider that employs the health care practitioner, has a financial interest, the health care practitioner shall file a disclosure with the division within 30 days of the date the first referral is made unless the disclosure was previously made. This annual disclosure shall be filed for each health care provider to whom an injured employee is referred and shall include the information in paragraph (2) of this subsection.

(2) The health care practitioner's disclosures in paragraph (1) of this subsection shall at a minimum include:

(A) the disclosing health care practitioner's name, business address, federal tax identification number, professional license number, and any other unique identification number;

(B) the name(s), business address(es), federal tax identification number(s), professional license number(s), and any other unique identification number of the health care provider(s) in which the disclosing health care practitioner has a financial interest as defined in subsection (a)(2) of this section; and

(C) the nature of the financial interest including, but not limited to, percentage of ownership, type of ownership (e.g., direct or indirect, equity, mortgage), type of compensation arrangement (e.g., salary, contractual arrangement, stock as part of a salary payment) and the entity with the ownership (disclosing health care practitioner, the health care provider who employs the health care practitioner, or an immediate family member of the health care practitioner).

(c) Failure to disclose. In addition to any sanctions provided by the Act and rules, failure to disclose a financial interest by a health care provider is an administrative violation and is subject to a penalty of forfeiture of the right to reimbursement for any services rendered on the claim during the period of noncompliance, regardless of whether the circumstances of the services themselves were subject to disclosure, and regardless of whether the services were medically necessary.

(1) Limitations on billing. A health care practitioner who rendered services on a claim during a period in which the practitioner was out of compliance with the disclosure requirements under this section for that claim, regardless of whether the circumstances of the services themselves were subject to disclosure, shall not present or cause to be presented a claim or bill to any individual, third party payer, or other entity for those services (regardless of whether the services were medically necessary).

(2) Refunds. If a health care practitioner collects any amounts that were billed for services on a claim provided during a period in which the practitioner was in noncompliance with the disclosure requirements of this section for that claim, regardless of whether the circumstances of the services themselves were subject to disclosure, the practitioner shall be liable to the individual or entity for, and shall timely refund, any amounts collected (regardless of whether the services were medically necessary).

(3) Rebuttable Presumption. A referral for services to a health care provider by a health care practitioner under circumstances which required a disclosure under this section, but which was not timely disclosed as required, creates a rebuttable presumption that the services were not medically necessary unless one of the statutory and regulatory exceptions that apply to referrals in Title 42, United States Code §1395nn(b)-(e) applies to the referral in question. Whenever one of these exceptions is revised and effective, the revised exception shall be effective for referrals made on or after the effective date of the revision.

History

Source Note: The provisions of this §180.24 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective January 9, 2011, 35 TexReg 11873.

28 Tex. Admin. Code § 180.25 Improper Inducements, Influence and Threats

(a) Pursuant to Labor Code §415.0036, offering, paying, soliciting, or receiving an improper inducement relating to the delivery of benefits to an injured employee is prohibited. Improper attempts to influence the delivery of benefits to an injured employee, including the making of improper threats. This section applies to all system participants in the workers' compensation system who have authority under Labor Code, Title 5 to request the performance of a service affecting the delivery of benefits to an injured employee or who actually performs such a service, including peer reviews, performance of designated doctor examinations, performance of required medical examinations, or case management.

(b) The following specific acts will be deemed to be an improper inducement, attempt to influence or threat:

(1) Soliciting or receiving any remuneration (including, but not limited to, any kickback, bribe, or rebate) in return for referring an injured employee to a person (either the person soliciting or receiving the inducement or another person):

(A) for the furnishing or arranging for the furnishing of any item, treatment, or service constituting a medical benefit for which payment may be made in whole or in part under Labor Code, Title 5 or rules; or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, treatment or item constituting a medical benefit for which payment may be made in whole or in part under Labor Code, Title 5 or rules.

(2) Offering or paying any remuneration (including, but not limited to, any kickback, bribe, or rebate) in return for referring an injured employee to a person (either the person offering or paying the inducement or another person):

(A) for the furnishing or arranging for the furnishing of any item, treatment or service constituting a medical benefit for which payment may be made in whole or in part under the Labor Code, Title 5 or rules; or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, treatment, or item constituting a medical benefit for which payment may be made in whole or in part under Labor Code, Title 5 or rules.

(3) Providing any financial incentive or promising or threatening to provide injured employee evaluation reports or other medical opinions that could enhance or reduce the injured employee's income benefits or affect the injured employee's work release status as an inducement to have the injured employee treat with or be evaluated by the health care provider or comply with the health care provider's proposed treatment.

(4) Offering or soliciting an inducement in return for selecting a particular health care provider for the furnishing or arranging for the furnishing of any item, treatment, or service (including purchasing or leasing) for which payment may be made in whole or in part under Labor Code, Title 5 or rules; or offering or soliciting an inducement which may reasonably tend to cause a particular health care provider to be selected (excluding a convenience necessary to allow for the provision of health care, such as transportation to and from the health care provider's facility, translator services related to evaluation and treatment, providing claim filing forms or information on rights and responsibilities under the Labor Code, Title 5 and rules, if generally available to all patients). Such inducement is improper whether offered directly or indirectly, overtly or covertly, in cash or in kind.

(5) Making, presenting, filing, or threatening to make, present, or file any frivolous claim or assertion against a system participant, medical peer reviewer, or any other person performing duties arising under Labor Code, Title 5 or rules, with the division or any licensing, certifying, regulatory, or investigatory body.

(6) Making or causing to be made a threat against life, safety, or property directed to a system participant related to their performance of duties arising under Labor Code, Title 5 or rules.

(c) The exceptions that apply to subsection (b)(1) and (2) of this section are those that apply to analogous provisions in Title 42, United States Code §1320a-7b(3). The exceptions shall apply to subsection (b)(1) and (2) of this section.

(d) A violation of applicable federal standards that prohibit the payment or acceptance of payment in exchange for health care referrals relating to fraud, abuse, and antikickbacks is an administrative violation.

History

Source Note: The provisions of this §180.25 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective January 9, 2011, 35 TexReg 11873.

28 Tex. Admin. Code § 180.26 Criteria for Imposing, Recommending and Determining Sanctions; Other Remedies

(a) The division may impose sanctions on any system participant if that system participant commits an administrative violation.

(b) The division may impose the following sanctions against a doctor or insurance carrier for any reason listed in Labor Code §408.0231(c) or any other criteria the commissioner considers relevant.

(c) In addition to a penalty or the other sanctions that may be imposed in accordance with other applicable provisions of the Act, the division may also impose the following sanctions pursuant to Labor Code §415.023(b) against an insurance carrier or its representative, a health care provider, or a representative of an injured employee or legal beneficiary if any of those parties commit an administrative violation as a matter of practice, meaning a repeated violation of the Act or a rule, order, or decision of the commissioner:

(1) a reduction or denial of fees;

(2) public or private reprimand by the commissioner;

(3) suspension from practice before the division;

(4) restriction, suspension, or revocation of the right to receive reimbursement under the Act; and

(5) referral and petition to the appropriate licensing authority for appropriate disciplinary action, including the restriction, suspension, or revocation of the person's license.

(d) In addition to, or in lieu of, the sanctions in subsections (b) and (c) of this section, the division may impose any other sanction or remedy allowed under the Act or division rules, including but not limited to assessing an administrative penalty of up to $25,000 per violation against a person who commits an administrative violation.

(e) When determining which sanction to impose against a system participant and the severity of that sanction, the division shall consider the factors listed in Labor Code §415.021(c) and other matters that justice may require, including but not limited to:

(1) Performance Based Oversight (PBO) assessment;

(2) the promptness and earnestness of actions to prevent future violations;

(3) self-report of the violation;

(4) the size of the company or practice;

(5) the effect of a sanction on the availability of health care; and

(6) evidence of heightened awareness of the legal duty to comply with the Act and division rules.

(f) When determining which sanction to impose against a system participant and the severity of that sanction in claims where the insurance carrier provided notice under Labor Code §409.021(a-3), (Notice of Continuing Investigation), the division shall consider the factors listed in Labor Code §415.021(c-2).

(g) In an investigation where both an administrative violation and a criminal prosecution are possible, the division may, at its discretion, postpone action on the administrative violation until the related criminal prosecution is completed.

(h) As an alternative to imposing a sanction such as an administrative penalty on a charged system participant, the division may, at its discretion, provide formal notice of the violation through a Warning Letter. A Warning Letter shall:

(1) include a summary of the duty that the division believes that the charged system participant failed to fulfill or timely fulfill;

(2) identify the facts that establish that a violation occurred; and

(3) inform the charged system participant that subsequent noncompliance of the same sort may be deemed to be a repeated administrative violation or matter of practice, any of which will be subject to sanction.

(i) The division may enter into a consent order with the system participant if the division and the system participant have communicated regarding:

(1) the relevant statute or rule violated;

(2) the facts establishing that the administrative violation occurred; and

(3) the appropriateness of the proposed sanction, including how the division considered the factors under Labor Code §415.021(c) and (c-2) and subsection (e) of this section in determining the proposed sanction.

(j) A consent order may be entered into before or after issuance of an NOV under §180.8 of this title (relating to Notices of Violation; Notices of Hearing; Default Judgments). Consent orders must include:

(1) a description of which factors under Labor Code §415.021(c) and (c-2) and subsection (e) of this section the division considered aggravating or mitigating when determining the proposed sanctions; and

(2) a statement that the system participant acknowledges:

(A) the division and the system participant communicated regarding the information listed in subsection (h)(1)-(3) of this section; and

(B) the division considered the factors under Labor Code §415.021(c) and (c-2) and subsection (e) of this section.

History

Source Note: The provisions of this §180.26 adopted to be effective January 9, 2011, 35 TexReg 11873; amended to be effective January 16, 2019, 44 TexReg 264; amended to be effective January 12, 2020, 45 TexReg 359.

28 Tex. Admin. Code § 180.27 Restoration

(a) In accordance with Labor Code §408.0231(d)(2) a doctor, other than a doctor to which Labor Code §408.023(r) applies, may apply for the restoration of a doctor privilege removed under Labor Code §408.0231 by sending a letter of consideration to the Medical Advisor.

(b) The request shall be evaluated by the Medical Advisor and /or members of the Medical Quality Review Panel. The requestor shall be liable for the cost of the review, which may include an audit of the records of the requestor.

(1) If, in the Medical Advisor's opinion, the doctor:

(A) has all the appropriate unrestricted licenses/certifications;

(B) has overcome the conditions that resulted in the sanction;

(C) meets all the division's qualification standards and conditions for restoration of some or all of the practice privileges removed; and

(D) is not out of compliance with the Labor Code, Insurance Code, a department rule, or a rule, order, or decision of the commissioner the Medical Advisor may recommend that the commissioner lift the sanction(s) or restore some or all of the privileges removed or restricted by the sanction(s).

(2) If in the Medical Advisor's opinion, the doctor has not met all the requirements for restoration of privileges, the Medical Advisor shall notify the doctor by verifiable means of the intent to recommend to the commissioner that the sanctions not be lifted or that the privileges removed or restricted by the sanction(s) not be restored in whole or in part and the reasons for that recommendation. Within 15 days after receiving the notice, a doctor may file a response that addresses the reasons given in the recommendation to deny lifting the sanction(s) or restoration of some or all of the privileges removed or restricted by the sanction(s). The Medical Advisor shall review the response and make a final recommendation to the commissioner. A copy of the requestor's response to the division shall be provided to the commissioner for consideration.

(c) The commissioner shall consider the matter and shall notify the requestor of the final decision by verifiable means, and may send a copy to the appropriate licensing or certification authority. If the commissioner does not lift the sanction, the commissioner may include in the final decision the conditions that the doctor must meet before the division will reconsider lifting the sanctions including, but not limited to, the amount of time that the doctor must wait prior to re-requesting lifting the sanction(s) or restoration of some or all of the privileges removed or restricted by the sanction(s).

History

Source Note: The provisions of this §180.27 adopted to be effective March 14, 2002, 27 TexReg 1817; amended to be effective September 12, 2004, 29 TexReg 8613; amended to be effective January 9, 2011, 35 TexReg 11873; amended to be effective February 14, 2012, 37 TexReg 691.

28 Tex. Admin. Code § 180.28 Peer Review Requirements, Reporting, and Sanctions

(a) A peer reviewer's report, including a report used to deny preauthorization, shall document the objective medical findings and evidence-based medicine that supports the opinion and include:

(1) the peer reviewer's name and professional Texas license number;

(2) certification that the peer reviewer holds the appropriate credentials as defined in §180.1 of this title (relating to Definitions);

(3) a summary of the reviewer's qualifications;

(4) a list of all medical records and other documents reviewed by the peer reviewer, including dates of those documents;

(5) a summary of the clinical history; and

(6) an analysis and explanation for the peer review recommendation, including the findings and conclusions used to support the recommendations.

(b) The insurance carrier shall not request subsequent peer reviews regarding the medical necessity of health care for dates of services for which a peer review report has already been issued unless:

(1) the review is for a different health care service requiring review by a different peer review specialty;

(2) the insurance carrier needs clarification of the peer review opinion based on new medical evidence that has not been presented to the peer reviewer;

(3) the peer reviewer failed to fully address the questions submitted by the insurance carrier; or

(4) for purposes other than determining medical necessity of the health care.

(c) The insurance carrier shall submit a copy of a peer review report to the treating doctor and the health care provider who rendered or requested the health care, as well as the injured employee and injured employee's representative, if any, when the insurance carrier uses the report to deny the compensability or extent of the compensable injury or reduce or deny income or medical benefits of an injured employee.

(d) A peer reviewer and insurance carrier shall maintain accurate records to reflect information regarding requests, reports, and results for peer reviews. The insurance carrier and peer reviewer shall submit such information at the request of the division in the form and manner proscribed by the division. The division will monitor peer review use, activity, and decisions which may result in the initiation of a medical quality review or other division action.

(e) The commissioner may impose sanctions on health care providers performing peer reviews pursuant to §180.26 and §180.27 of this title (relating to Criteria for Imposing, Recommending and Determining Sanctions; Other Remedies; and Sanctions Process/Appeals/Restoration, respectively) and other applicable provisions of the Labor Code and division rules. The commissioner may prohibit a doctor from conducting peer reviews for any of the following:

(1) non-compliance with the provisions of §180.22 of this title (relating to Health Care Provider Roles and Responsibilities), this section, or applicable provisions of the Act, or a rule, order, or decision of the commissioner;

(2) failure to consider all records provided for review;

(3) a history of improper or unjustified decisions regarding the medical necessity of health care reviewed;

(4) failure to hold the appropriate professional license issued by this state;

(5) review of health care without holding the appropriate credentials, as defined in §180.1 of this title, in a health care specialty appropriate to the type of health care reviewed; or

(6) any other violation of the Labor Code or division rules.

(f) In accordance with Labor Code §408.0046, an entity requesting a peer review must obtain and provide to the doctor providing peer review services all relevant and updated medical records.

History

Source Note: The provisions of this §180.28 adopted to be effective August 16, 2006, 31 TexReg 6370; amended to be effective January 9, 2011, 35 TexReg 11873.

28 Tex. Admin. Code § 180.50 Severability

Where any provisions of this chapter are determined by a court of competent jurisdiction to be inconsistent with any statutes of this state, or to be unconstitutional, the remaining provisions of this chapter shall remain in effect.

History

Source Note: The provisions of this §180.50 adopted to be effective January 9, 2011, 35 TexReg 11873.

Subchapter C MEDICAL QUALITY REVIEW PANEL

28 Tex. Admin. Code § 180.60 Definitions

The following terms, when used in this subchapter, shall have the following meanings:

(1) Doctor--As defined by Labor Code §401.011(17), a doctor of medicine, osteopathic medicine, optometry, dentistry, podiatry, or chiropractic who is licensed and authorized to practice.

(2) Medical Case Review--A review of a particular case by a Medical Quality Review Panel (MQRP) member regarding professional medical services, delivery of health care, or the quality of a health care practitioner's opinion, recommendation or report. Medical case review includes but it is not limited to review of a treating doctor, peer review doctor, designated doctor, another health care practitioner, an independent review organization, an insurance carrier, or a utilization review agent.

History

Source Note: The provisions of this §180.60 adopted to be effective January 1, 2013, 37 TexReg 8839.

28 Tex. Admin. Code § 180.62 Medical Quality Review Panel

(a) Purpose. The purpose of the Medical Quality Review Panel (MQRP) is to assist the medical advisor in the performance of the medical advisor's duties under Labor Code §413.0511 in accordance with the provisions of Labor Code §§413.0512, 413.05121, and 413.05122.

(b) Experts. Members of the MQRP who prepare reports for medical case review will be known as MQRP Experts.

(c) Composition. Applicants may be selected and appointed to the MQRP at the discretion of the medical advisor and the commissioner of workers' compensation (commissioner) in accordance with this section. The MQRP must be composed of health care practitioners appointed by the medical advisor and the commissioner in accordance with this section.

(1) The MQRP must have at least 25 members.

(2) The MQRP must, at a minimum, have members in the following health care specialty fields:

(A) Orthopedic Surgery--A medical doctor (MD) or a doctor of osteopathy (DO) with board certification in orthopedic surgery.

(B) Neurosurgery--An MD or DO with board certification in neurological surgery.

(D) Occupational Medicine--An MD or DO with board certification in occupational medicine.

(E) Pain Medicine--An MD or DO with a board certification in a subspecialty of anesthesiology, neurology, or physical medicine.

(3) The MQRP may have members that include other types of health care practitioners determined to be necessary by the medical advisor and the commissioner.

(d) Eligibility. To be eligible to serve on the MQRP, a health care practitioner must meet the following criteria, as applicable:

(1) Possess an unrestricted license to practice in Texas with the appropriate credentials, as defined by §180.1 of this title (relating to Definitions);

(2) Be board-certified in a specialty or subspecialty. An MD or DO is board-certified in a specialty or subspecialty if the MD or DO holds:

(A) a general certificate in the specialty or a subspecialty certificate from one of the member boards of the American Board of Medical Specialties (ABMS); or

(B) a primary certificate in the specialty and:

(i) a certificate of special qualifications from the American Osteopathic Association Bureau of Osteopathic Specialists (AOABOS); or

(ii) a certificate of added qualifications in the subspecialty from the AOABOS.

(3) Be in active practice in Texas. "Active practice" means, within either of the last two calendar years, at the time of appointment to the MQRP, the applicant has:

(A) actively diagnosed or treated persons at least 20 hours per week for 40 weeks duration during a given calendar year; or

(B) performed administrative, leadership, or advisory roles in the practice of medicine.

(4) The medical advisor and the commissioner may waive the requirements of paragraphs (2) and (3) of this subsection if needed to adequately perform medical case review.

(e) Term; Resignation; Removal.

(1) MQRP members will be appointed for a maximum term of 10 years. They will serve until the expiration of their term, until their resignation, or until their removal from the MQRP. The division will review MQRP members periodically during their term to ensure their continued eligibility.

(2) An MQRP member may submit a new application for membership in the MQRP after the term expires.

(3) An MQRP member may resign from the MQRP at any time.

(4) An MQRP member may be removed from the MQRP for cause at any time. The notice of removal will state the date of removal, which may be immediately after the member receives the notice or on a specified future date. Causes for removal include, but are not limited to:

(A) Failure to maintain eligibility under this subchapter.

(B) Failure to timely inform the division of conflicts of interest.

(D) Repeated failure to prepare the reports in the prescribed format.

(E) Other issues deemed sufficient by the medical advisor or commissioner.

(f) Prohibition. An MQRP member must not use his or her position to influence an insurance carrier, agent, or other person or entity in connection with a personal or other insurance-related matter beyond referring to their position to demonstrate qualifications.

(g) Quality Assurance Panel.

(1) The medical advisor will establish the Quality Assurance Panel (QAP) within the MQRP. All members of the QAP are members of the MQRP. They perform all the duties of an MQRP member under Labor Code §413.0512, as well as the duties of a QAP member under Labor Code §413.05121.

(2) A member of the QAP will also be known as an Arbiter.

(3) QAP members may provide any services to the medical advisor provided by Labor Code §§413.0512, 413.05121, and 413.05122, including, but not limited to:

(A) Serving as the chair to the quality assurance committee.

(B) Serving as expert witnesses in enforcement actions as appropriate.

(C) Providing an additional level of medical expertise and quality assurance to assist the medical advisor in the medical advisor's duties under Labor Code §413.0511.

(D) Performing medical case review if no other MQRP member is available in a specific area of expertise. In this case, the Arbiter would be ineligible from participating in the informal settlement process for the subject the Arbiter reviewed.

History

Source Note: The provisions of this §180.62 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective October 6, 2022, 47 TexReg 6436.

28 Tex. Admin. Code § 180.64 MQRP Application Process

(a) To apply to the MQRP, a person must submit an application in the form and manner required by the division demonstrating compliance with the required qualifications. The application must contain complete information as provided by subsection (b) of this section. The medical advisor and the Commissioner may select and appoint only qualified applicants to the division's MQRP but are not required to accept all applicants who meet the requirements specified in this subchapter.

(b) The division's required application form for the MQRP, at a minimum, shall include:

(1) contact information for the health care practitioner;

(2) information about the health care practitioner's education;

(3) a description of the health care practitioner's license(s), certifications, and professional specialty, if any;

(4) a description of the health care practitioner's work history and hospital or other health care practitioner affiliations;

(5) a description of any affiliations the health care practitioner has with a workers' compensation health care network certified under Chapter 1305 of the Insurance Code or a political subdivision as described in Labor Code §504.053(b)(2);

(6) identification of and a description of all current and past medical review affiliations, including but not limited to an independent review organization (IRO), utilization review agent (URA), licensing board, and insurance carrier;

(7) information regarding the health care practitioner's current practice locations;

(8) disclosure regarding the health care practitioner's professional background, education, training, and fitness to perform the duties of an MQRP member, including disclosure of any disciplinary actions or other sanctions taken against the health care practitioner by any state licensing board, state or federal agency, and hospital or other health care institution, as well as disclosure of any voluntary relinquishments, drug and alcohol misuse, malpractice claims history and criminal history;

(9) a description of all ownership interests or other financial arrangements, such as salaried or contract employment, involving a person or their agent subject to the Act or a rule, order, or decision of the commissioner;

(10) an authorization for third parties to release information relevant to the verification of the information provided on the application to the division;

(11) an affirmation that all information provided in the application is accurate and complete to the best of the health care practitioner's knowledge; and

(12) an affirmation of understanding of the legal requirements, including confidentiality provisions, for MQRP members.

(c) A credentialing application for hospital credentialing may substitute for some items under subsection (b) of this section.

(d) The health care practitioner must inform the medical advisor of any changes to this information within 30 days after the change.

(e) The application shall be reviewed by the medical advisor.

(f) The medical advisor and the commissioner have the discretion to select, appoint and remove an applicant to the MQRP.

(g) Membership in the MQRP is for a term of 10 years. The acceptance letter will include the effective date and expiration date.

(h) Membership in the MQRP is not a guarantee of any number of assignments.

(i) MQRP members shall be entitled to compensation for work assigned by the medical advisor at the following hourly rates:

(1) Doctors - Medical case reviews, ad hoc work groups, or special projects: $150 per hour.

(2) Non-Doctors - Medical case reviews, ad hoc work groups or special projects: $100 per hour.

(3) Limits on hours. A member shall not be paid for more than:

(A) five hours for a medical case review of a single case;

(B) five hours for ad hoc work group or special project service; or

(4) The medical advisor may approve additional hours in writing upon review of a submitted narrative report or a report of an ad hoc work group.

(5) Hearings or trial preparation.

(A) Doctors - Payment for time spent in hearing or in trial preparation, in providing testimony in deposition, hearing or trial: $350 per hour.

(B) Non-doctors - Payment for time spent in hearing or in trial preparation, in providing testimony in deposition, hearing or trial: $175 per hour.

(C) An MQRP member shall not be paid for more than eight hours per day for a deposition, a hearing, trial preparation or court testimony. If travel is required, the division will pay the member for travel, lodging and per diem expenses in accordance with the Texas State Travel Management Program, 34 TAC §20.301 et seq.

(6) The division may vary the above reimbursement provisions if deemed by the division to be in the best interests of the division or the State of Texas.

(j) In accordance with Labor Code §§402.083 - 402.086, 402.091, 402.092, and 413.0513, an MQRP member may not disclose confidential information, including a report or other documentation prepared by the MQRP member for the division.

(k) All reports and related documents, including electronic and non-electronic data, prepared by or furnished to the member for the MQRP, are the sole property of the division.

History

Source Note: The provisions of this §180.64 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective August 22, 2023, 48 TexReg 4484.

28 Tex. Admin. Code § 180.66 Medical Case Review

The MQRP may perform medical case review for the medical advisor. Medical case review may be performed for the purposes of the medical quality review process, designated doctor certification and renewal, performance-based oversight, or any other medical case review necessary to assist the medical advisor in performing the medical advisor's duties under the Labor Code.

History

Source Note: The provisions of this §180.66 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective August 22, 2023, 48 TexReg 4484.

28 Tex. Admin. Code § 180.68 Medical Quality Review Process

(a) The medical quality review process is medical case review initiated on the basis of complaints, plan-based audits, or monitoring as a result of a consent order and performed in accordance with criteria adopted under Labor Code §413.05115. The medical quality review process does not include medical case review performed for the purpose of:

(1) certification and renewal of designated doctors;

(2) performance-based oversight;

(3) administrative violations that do not require an expert medical opinion; or

(4) complaints about professionalism that do not require an expert medical opinion.

(b) A complaint must be documented in accordance with the provisions of §180.2 of this title (relating to Filing a Complaint).

History

Source Note: The provisions of this §180.68 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective August 22, 2023, 48 TexReg 4484.

28 Tex. Admin. Code § 180.70 MQRP Training

An MQRP member must receive training by the division prior to any assignments and at least every two years thereafter on the following topics:

(1) The requirements of this subchapter concerning the medical quality review process under §180.68 of this title (relating to Medical Quality Review Process);

(2) The division's goals regarding the medical quality review process;

(3) Administrative violations that affect the delivery of appropriate medical care;

(4) Confidentiality requirements of Labor Code §§402.083, 402.091, 402.092 and 413.0513;

(5) Immunity from liability under Labor Code §413.054;

(6) The medical quality review criteria adopted under Labor Code §413.05115;

(7) The current division adopted edition of the American Medical Association Guides to the Evaluation of Permanent Impairment and the division's adopted treatment and return-to-work guidelines; and

(8) Other topics as determined by the medical advisor and commissioner.

History

Source Note: The provisions of this §180.70 adopted to be effective January 1, 2013, 37 TexReg 8839.

28 Tex. Admin. Code § 180.72 Conflict of Interest

(a) If the selected MQRP member has a conflict of interest in a case under medical review, that member may not review the case or serve as an arbiter. If all MQRP members in a particular health care specialty field as the subject of a medical case review have conflicts of interest in a case under medical case review, and the division is unable to enter into an interagency agreement pursuant to subsection (e) of this section, then the division may refer the case to the appropriate licensing authority.

(b) A conflict of interest exists if the selected MQRP member:

(1) has a familial relationship within the third degree of affinity with any party or witness related to the case;

(2) has a relationship with the subject beyond a mere acquaintance;

(3) has ever treated the injured employee whose records are being reviewed;

(4) in regard to a particular injured employee's claim, has served as a:

(A) peer review doctor;

(B) designated doctor; or

(5) has a financial interest in a matter as set forth in §180.24 of this title (relating to Financial Disclosure);

(6) is a medical director for an Insurance Carrier, Utilization Review Agent, or a workers' compensation health care network certified under Chapter 1305 of the Insurance Code or a political subdivision as described in Labor Code §504.053(b)(2). Medical directors can perform all functions of the MQRP and the QAP except performing individual medical case reviews or serving as Arbiters in a informal settlement conference (ISC); or

(7) has other issues deemed to be a conflict of interest by the medical advisor.

(c) If an MQRP member selected for a medical case review has a conflict of interest, the member must notify the medical advisor of the conflict before taking any further action on the case.

(d) If the medical advisor has a conflict of interest in a case, the medical advisor must recuse himself from the case. If the medical advisor recuses himself, the commissioner will delegate the duties of the medical advisor, including enforcement decisions and recommendations, for that particular case, to an arbiter.

(e) The division may enter into agreements with other state agencies to access, as necessary, expertise in health care specialty fields as determined by the medical advisor.

History

Source Note: The provisions of this §180.72 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective August 22, 2023, 48 TexReg 4484.

28 Tex. Admin. Code § 180.74 MQRP Notification of Case Status

The division shall notify MQRP panel members in writing at least quarterly of the status of and enforcement outcomes resulting from cases in the medical quality review process. A MQRP panel member shall comply with all confidentiality laws that apply to information provided under this section including Labor Code §§402.083 - 402.086, 402.091, 402.092 and 413.0513.

History

Source Note: The provisions of this §180.74 adopted to be effective January 1, 2013, 37 TexReg 8839.

28 Tex. Admin. Code § 180.76 Rights and Responsibilities of Persons Involved in the Medical Quality Review Process

(a) The person subject to the medical quality review process has the right:

(1) to be notified that the person has been selected for the medical quality review process;

(2) to be notified of the disposition of the medical quality review process;

(3) to communicate with the office of the medical advisor at any time during the medical quality review process;

(4) to be represented by legal counsel, including legal counsel at the informal settlement conference (ISC);

(5) to receive written notice of an ISC at least 45 days before the ISC, including the time and place of the ISC and the nature of the allegations; and

(6) to an ISC in accordance with the provisions of this section. The ISC provides persons subject to the medical quality review process an opportunity to discuss and resolve their medical case review with arbiters. The division may, at its discretion, conduct an ISC remotely or in person. An ISC is available under the following conditions:

(A) The case has been referred to enforcement.

(B) The request for an ISC must be in writing.

(D) The requester has the right to receive copies of all documents that pertain to the substance of the case and that were given to the arbiters for review for that particular case.

(E) All information the requester wishes the arbiters to consider at the ISC must be received by the division no later than 15 days before the ISC. The arbiters may refuse to consider any information not timely received by the division.

(F) The requester may request to reschedule the scheduled date of the ISC for good cause shown, in writing, as determined by the division's presiding attorney. Good cause means circumstances beyond the requester's control that reasonably prevent the requester from attending the ISC and requesting that the ISC be rescheduled any sooner.

(G) If a requester fails to attend an ISC as scheduled, the requester loses the right to an ISC. But failure to attend the ISC does not affect the requester's rights to:

(i) communicate with the office of the medical advisor as paragraph (3) of this subsection provides;

(ii) enter into a consent order with the division; or

(iii) defend an enforcement case at the State Office of Administrative Hearings.

(b) A person subject to a medical case review must:

(1) provide records and information requested from the office of the medical advisor in the format and manner specified by the division;

(2) provide the records and information within the time period specified in the request; and

(3) attach an accurate and completed business records affidavit to the request for records and information.

History

Source Note: The provisions of this §180.76 adopted to be effective January 1, 2013, 37 TexReg 8839; amended to be effective August 22, 2023, 48 TexReg 4484.

Part 3 TEXAS CERTIFIED SELF-INSURER GUARANTY ASSOCIATION

Chapter 181 BYLAWS

28 Tex. Admin. Code § 181.1 Bylaws of the Texas Certified Self-Insurer Guaranty Association

(a) The membership of the Texas Certified Self-Insurer Guaranty Association (the Association) shall consist of all certified self-insurers (members) that hold a certificate of authority to self-insure issued by the Commissioner of Workers' Compensation of the Texas Department of Insurance, Division of Workers' Compensation (the Commissioner). Only certified self-insurers may be members of the Association.

(1) Membership shall begin on the date the certificate of authority to self-insure takes effect and each member shall designate a representative to receive notices from the association.

(2) The members of the Association shall meet annually at a place and time designated by the Board of Directors. At the Annual Meeting, the members shall conduct any necessary and proper business.

(3) The association shall have a president and vice-president and may have other officers as necessary to conduct the business of the association.

(4) Special meetings of the association may be called by the president of the association on 30 days notice to the members of the association.

(5) A majority of the members present either in person or by proxy at any meeting of the association shall constitute a quorum.

(b) The business of the Association shall be managed by the Board of Directors (the Board).

(1) The Board shall consist of three members of the Association, one member designated by the Commissioner, and the Public Insurance Counsel. The members of the Board shall hereinafter be referred to as Directors. Each Director representing members of the Association must be a current employee of a member of the Association.

(2) A quorum of the board is three voting directors. No business may be conducted by the board unless a quorum of its members is present at the meeting. An action by the board requires the concurring vote of three directors. A motion to recommend an application for certification that fails to receive the concurring vote of three directors constitutes disapproval of the application.

(3) The board shall elect a chair and vice-chair annually. The chair and vice-chair must be voting members of the board of directors. The board may also elect other officers. The chair shall preside at all meetings of the board. In the absence of the chair, the vice-chair shall preside at the meeting.

(4) The board shall meet at least once during each calendar quarter. Additional meetings may be held as necessary to conduct the business of the association. Meetings shall be held at the call of the chair or upon written request to the chair by any three directors of the board.

(5) The board shall have the authority to hire an executive director to conduct the day-to-day operations of the association. The board may also authorize the hiring of additional staff as necessary. The executive director serves at the pleasure of the board. The employment or removal of an executive director requires the affirmative vote of at least three members of the board. The salaries of the executive director and staff shall be set by the board and be commensurate with the salaries paid by state agencies.

(6) The board shall have the authority to contract with others for any services necessary for the operation of the association, including administration of the trust fund and administration of claims of impaired self-insurers.

(7) A director shall abstain from voting on any matter in which he or she has, directly or indirectly, a personal, private, or business interest. As used in this rule, personal, private, or business interest includes being an officer, director, or affiliate of a person or entity subject to an action by the board, or directly or indirectly having a material financial interest in a matter before the board.

(8) The directors shall serve without compensation. But, the directors shall be reimbursed for any reasonable expenses incurred in carrying out the duties of the board.

(c) The members of the Association shall elect directors to represent the Association and shall elect officers of the Association annually. The terms for the elected directors will begin on January 1 of each year. The Association shall annually elect one director for a term of three years. Directors may serve consecutive terms on the Board.

(1) Prior to the election, the President shall appoint from the membership of the Association a Nominations Committee of at least three members, which shall be responsible for nominating Officers and Directors to be elected by the Association. The Board shall provide a method by which nominations may also be made by members of the Association. Any nominee must be a current employee of a member of the Association.

(2) Each member of the association may cast one vote for each director or officer to be elected by the association.

(3) If a vacancy occurs in any office elected by the association, including a director representing the members of the association (by death, resignation, or otherwise), the president, or in the event of a vacancy in the office of the president, the vice president, shall appoint a committee of at least three members which shall select a successor to fill the vacancy for the unexpired term. A vacancy occurs when a term expires, a director resigns, dies, is adjudicated mentally incompetent, or is convicted of a felony. If a director is convicted of a felony, and cannot be removed by statute, the director is prohibited from voting on any matter before the board.

(d) The Board shall levy assessments against each member necessary to create and maintain the Texas Certified Self-Insurer Guaranty Trust Fund (the Trust Fund). Assessments shall be levied in amounts that will provide at least $1 million, but not more than $2 million. For purposes of assessments, "payments" means all income benefits paid in the preceding reported calendar year pursuant to obligations as a certified self-insurer, or in the case of a first-year member of the Association, made by the member's carrier on behalf of the member, pursuant to the Texas Workers' Compensation Act. All earned income of the trust fund is retained by the trust fund and may be used by the Board of Directors as provided in subsection (f)(1) of these Bylaws.

(1) The amount assessed against each individual member shall be based on the ratio of the payments made by the member to the total payments made by or on behalf of all certified self-insurers.

(2) If the security deposit of an impaired certified self-insurer (or former self-insurer) is not adequate to cover its self-insured liabilities for workers' compensation benefits, the funds required to pay the additional benefits shall be paid from the Trust Fund and reimbursed to the Trust Fund through assessment. The Board shall assess those currently unimpaired self-insurers and former self-insurers that were members of the Association for any time during the five years immediately preceding the date of assessment (the "members subject to assessment"), in accordance with this section. The Board shall provide for the calculation of the estimated total amount necessary to pay all benefits and to reimburse the Trust Fund (the "estimated total assessment"). The estimated total assessment shall be assessed by the Board. The amount assessed against each of the members subject to assessment shall be based on the ratio of payments by a member to total payments.

(3) When all liabilities of an impaired certified self-insurer (or former self-insurer) have been paid, and the trust fund has been reimbursed, excess funds may be held in lieu of or in reduction of an Administrative Fee, paid to the Division of Workers' Compensation in lieu of or in reduction of a regulatory fee, used by the Board to pay administrative expenses of the Association, or otherwise used for the benefit of the members of the Association.

(4) The Board of Directors shall have the authority to collect from the impaired certified self-insurer (or former self-insurer) any amount that has been assessed against other self-insurers to pay the liabilities of the impaired certified self-insurer (or former self-insurer). The board may use any appropriate means for collection of the assessment up to and including filing suit against the impaired member or former member. Continued failure to pay the assessment may result in a recommendation to the Commissioner that the member's certificate of self-insurance be revoked.

(5) If the Trust Fund is terminated for any reason, the funds then held in the Trust Fund shall be paid to the Division of Workers' Compensation to be used for the administration of the Workers' Compensation Act.

(e) The association shall mail notice of any assessment to the designated representative of each member or former member of the association. Each member or former member shall pay all assessments not later than 30 days after it is notified of the assessment. Late payments shall accrue interest at the rate of 1.5% per month on any unpaid balance. The board may use any appropriate means for collection of the assessment up to and including filing suit against the member or former member and continued failure to pay the assessment may result in a recommendation to the Commissioner that the member's certificate of self-insurance be revoked.

(f) The board of directors shall approve a budget for the operating expenses for the succeeding year not later than December 31 of each year.

(1) Income earned from the investment of the trust fund shall be used for expenses of administration of the association and of the trust fund.

(2) The board may assess an administrative fee against members only when trust fund income is insufficient to pay the costs of administering the trust fund, operations of the association, and administering the claims of impaired members or former members.

(g) If the Commissioner declares that a certified self-insurer (or former self-insurer) is impaired and determines that the payment of benefits and claims administration shall be made through the association, the board shall provide for the administration and payment of claims on behalf of the impaired certified self-insurer (or former self-insurer) in accordance with the Texas Workers' Compensation Act. The board shall provide for the creation of a separate account for the administration of each impaired certified self-insurer (or former self-insurer) and for the payment from the trust fund to the separate account if the Commissioner advises the board that additional funds are needed to supplement the security deposit.

(h) The association shall indemnify, or pay in advance, any present or former director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee for expenses, or other loss in connection with any proceeding in which such a person is made a party because of the position they hold for the association to the full extent of the law.

(1) The association may purchase insurance for any present or former director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee of the association against any liability arising out of the position they hold for the association, whether or not the association would have the power to indemnify him or her against liability.

(2) The protection and indemnification provided in this article shall be in addition to any other right to which a director, officer, appointee, committee member, person serving in any appointed or elected capacity, or employee may be entitled.

(i) The board shall adopt and amend rules, including these bylaws, in accordance with the Administrative Procedure Act, Government Code, Chapter 2001. After proposing, publishing, and receiving comments on rules, the board shall meet and vote on a final version. Adoption of rules must be made contingent on approval by the Commissioner and ratification by the association. The rules so adopted shall be sent to the Commissioner. Upon approval by the Commissioner, and ratification by the association, the rules shall be filed with the Texas Register and shall become effective in accord with the provisions of the Administrative Procedure Act. Failure to obtain ratification by the members will result in the board reconsidering the rule and voting on a revised version.

(1) Rules shall be ratified by a majority vote of the members of the association after adoption by the board. The president may choose to conduct the ratification vote by mail-in ballot. Notice of rulemaking actions by the board must be given in the manner provided by this rule.

(2) Any notice required or allowed by this rule shall be in writing and delivered by the United States Postal Service or private delivery service, return receipt requested. In the case of notice to a member of the association, notice shall be made to the designated representative of the member. In the absence of a return receipt, notice shall be deemed to be given five days after deposit with the United States Postal Service or private delivery service, postage prepaid. Failure of a member to actually receive a notice shall not invalidate any action that may have been taken by the association or the board.

(j) The fiscal year of the association shall be January 1 through December 31 of each year.

(k) The board shall keep books and records of accounts, minutes of meetings of directors, and a record of members. All records of the association will be open to review by any member at a time and place convenient to the member and association staff. The financial records of the association shall be audited annually by an independent auditor.

(l) All meetings of the association and the board of directors shall be conducted in accordance with the most current edition of Roberts Rules of Order, except when in conflict with the Texas Workers' Compensation Act, these rules, and any other applicable statute including the Texas Open Meetings Act.

History

Source Note: The provisions of this §181.1 adopted to be effective March 4, 1994, 19 TexReg 1232; amended to be effective April 2, 1996, 21 TexReg 2392; amended to be effective June 30, 1997, 22 TexReg 5926; amended to be effective December 11, 2006, 31 TexReg 9839.

Part 4 STATE OFFICE OF RISK MANAGEMENT

Chapter 251 STATE EMPLOYEES--WORKERS' COMPENSATION

Subchapter A DEFINITION OF TERMS

28 Tex. Admin. Code § 251.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commission--The Texas Workers' Compensation Commission.

(2) Director--The director of the State Office of Risk Management.

(3) Division--The Workers' Compensation Division of the Office of the Attorney General.

(4) Employee--Any person who is an "employee" as defined by the Texas Labor Code, Chapter 501, §501.001(5) and §501.024, or is otherwise considered under Texas law to be a state employee for purposes of that chapter.

(5) Employing agency--The agency, department, office, board, commission, body, or entity of the state by which the injured person is employed.

(6) Insured--The State of Texas.

(7) Insurer--The director, State Office of Risk Management.

History

Source Note: The provisions of this §251.1 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

Subchapter B PROCEDURES

28 Tex. Admin. Code § 251.20 Compliance

Any party seeking action by the director shall comply with these sections, unless in the director's judgment, compliance in a particular case would result in injustice to any party.

History

Source Note: The provisions of this §251.20 adopted to be effective January 1, 1976; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.201 Employing Agency's Cooperation

All employing agencies shall cooperate with the State Office of Risk Management in all actions required for the proper administration of the Texas Labor Code, Chapter 501, and any amendments thereto.

History

Source Note: The provisions of this §251.201 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.202 Posting Proposed Changes

Proposed changes in rules will be posted on the public bulletin board in the director's office in Austin and in the Texas Register. Each rule adopted shall take effect after expiration of the statutory period except that any emergency rule concerning health or safety will take effect immediately on issuance.

History

Source Note: The provisions of this §251.202 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.203 Filing of Instruments

Any reference in this chapter to a specific form to be used for giving notices, making reports, or otherwise transmitting information to the commission is meant to include the form or forms prescribed for that particular purpose by the commission's executive director, pursuant to the Texas Workers' Compensation Act, as of the time that the notice, report, or transmittal is required to be made. The following shall be filed with the State Office of Risk Management in Austin:

(1) Employer's First Report of Injury or Illness (Form TWCC-1S);

(2) any supplemental report of injury by the employing agency (Form TWCC-6);

(3) any special reports required by the director;

(4) any other forms prescribed or required from the employing agency by the commission will be submitted to the director who will be responsible for filing with the commission.

History

Source Note: The provisions of this §251.203 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.204 Communicating with Commission

Nothing contained in §251.203 of this title (relating to Filing of Instruments) is to be taken as precluding an injured employee from communicating directly with the commission in person or in any other manner.

History

Source Note: The provisions of this §251.204 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.205 Medical Reports

Any health care provider, as defined in the Texas Workers' Compensation Act, Labor Code, §401.011(22), rendering care to an injured employee must render reports to the director in keeping with that Act and commission rules.

History

Source Note: The provisions of this §251.205 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.206 Employing Agency's Records

Every employing agency shall keep a record of all injuries sustained by an employee.

History

Source Note: The provisions of this §251.206 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.207 Requirement for Submitting Form TWCC-1S

Reports are to be submitted to the director on Form TWCC-1S (Employer's First Report of Injury or Illness) for any injury which necessitates the expenditure of monies for any medical treatment or service or if there is as much as one day's lost time from work.

History

Source Note: The provisions of this §251.207 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.208 Two-Year Retention of Records

Above reports and records as set forth in §251.203 of this title (relating to Filing of Instruments) and §251.206 of this title (relating to Employing Agency's Records) are to be retained by the employing agency on each case for a minimum of two years.

History

Source Note: The provisions of this §251.208 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.209 Time Limit on Submitting Form TWCC-1S

Form TWCC-1S is to be completed and submitted by the employing agency to the director no later than the next working day after the employing agency receives its first notice of injury or work-related illness of an employee. This form shall be completed by the employing agency's claims coordinator or designee, and not by the injured employee.

History

Source Note: The provisions of this §251.209 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.210 Form TWCC-6

In case of lost time injury, Form TWCC-6 is to be completed and submitted to the director immediately after an injured employee returns to work.

History

Source Note: The provisions of this §251.210 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.211 Absence of More Than 60 Days

If an injured employee is absent from work for more than 60 days, the employing agency will immediately file Form TWCC-6 with the director and will do so at end of each 60-day period as long as the employee remains unable to resume work.

History

Source Note: The provisions of this §251.211 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.212 Immediate Notice of Injury

Immediately after the employing agency learns of any serious injury or work-related illness or injury resulting in death to an employee, the employing agency must give notice to the director by telephone. Form TWCC-1S must still be filed as required.

History

Source Note: The provisions of this §251.212 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.213 Claims Coordinator

Each employing agency will designate one or more claims coordinators, as may be necessary, who will be responsible for receiving notice of injury from fellow employees and for completion of all required reports and submission to the director. The employing agency will report to the director any change in personnel designated as claims coordinator.

History

Source Note: The provisions of this §251.213 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.214 Duties of Claims Coordinator

Claims coordinators will serve as the liaison between an injured employee and the State Office of Risk Management (SORM). Claims coordinators will submit the required injury reports to SORM.

History

Source Note: The provisions of this §251.214 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.215 Employee Report

Upon request, agencies will prepare a report reflecting the total number of employees by county within the agency. Forms will be provided by the State Office of Risk Management at the time request is made.

History

Source Note: The provisions of this §251.215 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.216 Legal Responsibilities of Injured Employee

Nothing contained in this chapter is intended to limit, expand, or otherwise alter any of the requirements relating to giving notice of injury and filing a claim for compensation placed upon an injured employee, nor the consequences established for a failure to fulfill those requirements, by the provisions of the Texas workers' compensation statutes or commission rules.

History

Source Note: The provisions of this §251.216 adopted to be effective September 1, 1993, 18 TexReg 5322; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.217 Agency Policies Regarding Workers' Compensation

In formulating agency personnel policies, no agency should disseminate any guidelines or instructions at variance with the Texas workers' compensation statutes or State Office of Risk Management rules.

History

Source Note: The provisions of this §251.217 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.218 Correspondence

All correspondence with the State Office of Risk Management concerning a claim must contain the following information:

(1) the name of the injured employee;

(2) the social security number of the injured employee;

(3) the date of injury;

(4) the name of the employing agency;

(5) the director's claim number and the commission number, if known.

History

Source Note: The provisions of this §251.218 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.219 Reconsideration of Claim

Where a claim has been rejected by the director and a hearing has not been held by the commission, the employee may request reconsideration of a claim by letter to the director. A hearing by the commission may be requested by the injured employee in accordance with commission rules.

History

Source Note: The provisions of this §251.219 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.220 Request for Inspection or Copying in Writing

Requests for the inspection or copying of records or documents of the State Office of Risk Management must be made in writing.

History

Source Note: The provisions of this §251.220 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.221 Officer for Public Records

For the purposes of the Texas Open Records Act, the director is the officer for public records of the State Office of Risk Management.

History

Source Note: The provisions of this §251.221 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.222 Legal Authorization for Access

For a request to be acted upon, the person who applies for inspection or copying must be authorized by law to receive a copy or inspect the records.

(1) Charges for copying records will be in keeping with Texas Civil Statutes, Article 3913, or as set by the General Services Commission.

(2) Nothing required by this section shall conflict with the Texas Open Records Act.

History

Source Note: The provisions of this §251.222 adopted to be effective January 1, 1976; amended to be effective September 1, 1993, 18 TexReg 5321; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

Subchapter C EMPLOYEE ENTITLEMENT TO COMPENSATION

28 Tex. Admin. Code § 251.301 Utilization of Sick Leave

For purposes of this chapter, "sick leave" includes sick leave regularly earned and accumulated by the employee because of employment with the state, extended sick leave with pay authorized by the administrative head or heads of any state agency, and sick leave with pay granted to the employee from any sick leave pool. When sick leave is used, it will be utilized as follows.

(1) For each work day an injured employee is unable to work as a result of occupational injury or illness, a day of sick leave will be charged.

(2) As long as sick leave is available, authorized "days off" (Saturday, Sunday, legal holiday, or days used in place of Saturday and Sunday for those who work other than regular five-day week) will not count against sick leave.

(3) While utilizing sick leave, if an additional day accrues due to change of month, it will be credited to the employee and not utilized.

History

Source Note: The provisions of this §251.301 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.302 No Waiting Period

There is no waiting period for the utilization of sick leave.

History

Source Note: The provisions of this §251.302 adopted to be effective January 1, 1976; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.303 Waiting Period

If a state employee has less than 40 hours of sick leave, the payment of compensation for the statutory waiting period will be adjusted according to the number of hours of sick leave used.

History

Source Note: The provisions of this §251.303 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.304 Computing Sick Leave

Sick leave of four hours or more, but less than eight, will be counted as one day's sick leave for compensation purposes.

History

Source Note: The provisions of this §251.304 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.305 Right to Compensation

If an employee sustains an injury in the course of his or her employment, he or she may be entitled to compensation.

History

Source Note: The provisions of this §251.305 adopted to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.306 Effect of Sick Leave

Should the employee qualify for weekly compensation, he or she may elect to utilize sick leave before receiving weekly payments of compensation. If the employee elects to utilize sick leave, the employee is not entitled to weekly payments of compensation under Texas workers' compensation statutes until sick leave is exhausted.

History

Source Note: The provisions of this §251.306 adopted to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.307 Payment of Compensation

Once sick leave has been exhausted or the employee has elected not to use sick leave, the employee will be paid weekly compensation in accordance with Texas workers' compensation statutes.

History

Source Note: The provisions of this §251.307 adopted to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.308 Effect of Emergency Leave

If, in accordance with the General Appropriations Act, the administrative head or heads of an agency or institution authorize payment for emergency leave to an employee receiving workers' compensation benefits, the payments may not exceed an amount equal to the difference between the basic monthly wage of the employee and the amount of benefits received and may not extend beyond six months from the date on which compensation payments begin. In authorizing these payments for emergency leave, the administrative head or heads of the agency or institution must review the merits of each case individually. If payment for emergency leave is authorized, the agency or institution shall attach a statement of the reasons for the authorization to its duplicate payroll voucher for the first payroll period affected by the leave.

History

Source Note: The provisions of this §251.308 adopted to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.309 Communications Concerning Sick and Emergency Leave

The director will mail to the employing agency's claims coordinator a copy of all initiations, terminations, reductions, or resumptions of compensation (Form TWCC-21). The employing agency shall immediately notify the director when an injured employee elects to utilize accrued sick leave before receiving weekly payments of compensation, or when extended sick leave, pool sick leave, or emergency leave is granted to an employee injured in the course of employment.

History

Source Note: The provisions of this §251.309 adopted to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

Subchapter D ACCIDENT PREVENTION

28 Tex. Admin. Code § 251.401 Authority for Accident Prevention Rules

(a) Compliance with these rules is mandated by the Texas Labor Code, §501.043.

(b) The director's responsibility is mandated by the Texas Labor Code, §501.043.

(c) Each agency under the Texas Labor Code, §501.043, has the general duty to furnish each of its employees' places of employment free from recognized hazards likely to cause physical harm.

(d) Each employing agency will designate one, or as many accident prevention coordinators as may be required, who will be responsible for the implementation within that department of the safety rules promulgated by the director.

(1) The employing agency will report to the director any changes in personnel designated as an accident prevention coordinator.

(2) Within 60 days after an inspection report has been received by an agency--if it contains recommendations requiring corrective action--a reply will be made delineating items on which action has been taken, or is to be taken. Where action cannot be taken, it should be so stated and reasons listed.

History

Source Note: The provisions of this §251.401 adopted to be effective January 1, 1976; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.402 Accident Prevention Rules

The following is adopted by reference as accident prevention rules of the director, State Office of Risk Management. Copies of the Occupational Safety and Health Standards may be obtained by writing superintendent of documents, United States Government Printing Office, Washington, D.C. 20402. The Occupational Safety and Health Standards, Department of Labor, Occupational Safety and Health Administration being:

(1) 29 Code of Federal Regulations, Part 1910, republished in its entirety as of November 7, 1978 (commonly known as OSHA); and

(2) 29 Code of Federal Regulations, Part 1926, Occupational Safety and Health Regulations for Contractors, republished in its entirety February 9, 1979, and amendments thereto.

History

Source Note: The provisions of this §251.402 adopted to be effective January 1, 1976; amended to be effective September 3, 1976, 1 TexReg 2381; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective June 9, 1980, 5 TexReg 2103; amended to be effective September 1, 1993, 18 TexReg 5323; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.403 Interpretation of Director

Any adopted rule will be interpreted by the director so as to reflect the intent of the rule when applied to state agencies and employees.

History

Source Note: The provisions of this §251.403 adopted to be effective September 3, 1976, 1 TexReg 2381; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.404 National Safety Council Guidelines

Hazards not covered by an existing rule will be treated in conformity with recognized national safety procedures and identified as such. Recommendations for correction will be made in keeping with National Safety Council guidelines and those of organizations referenced therein, all of which are legally incorporated by reference to this part and have same force and effect as other standards in this part.

History

Source Note: The provisions of this §251.404 adopted to be effective September 3, 1976, 1 TexReg 2381; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.405 Administration of Accident Prevention Rules

It is the express intent of the director that all accident prevention rules be administered in such a manner as not to create an unmanageable hardship on any agency or department. Compliance will be required in accordance with the ability of the department to respond, taking into consideration the nature of the discrepancy and any existing budgetary limitations.

History

Source Note: The provisions of this §251.405 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.406 Correction of Cited Discrepancy

(a) Within 90 days after a cited variance or violation, if in the opinion of an interested party, the hazard cannot be corrected with the means at hand or compliance would work an undue hardship or the involved agency does not believe it should be required to comply, a written request for a hearing shall be given to the director.

(b) If in the director's judgment, the protest is valid, appropriate relief will be determined and granted.

(1) If the matter cannot be disposed of, it shall be scheduled for a hearing.

(2) Hearings will be held by the director or his designee.

History

Source Note: The provisions of this §251.406 adopted to be effective January 1, 1976; amended to be effective September 3, 1976, 1 TexReg 2381; amended to be effective July 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.407 Hearing Procedures

(a) A hearing request will be by written procedure setting out:

(1) subject matter;

(2) reason for request;

(3) list of witnesses who will appear; and

(4) itemization of evidence to be submitted.

(b) Any hearing held shall be open to the public.

History

Source Note: The provisions of this §251.407 adopted to be effective September 3, 1976, 1 TexReg 2381; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.408 Hearing Records

The record in a hearing shall include petition of applicant, supporting documents, response of accident prevention manager, transcript of proceedings, and director's ruling.

History

Source Note: The provisions of this §251.408 adopted to be effective September 3, 1976, 1 TexReg 2381; amended to be effective March 19, 1980, 5 TexReg 862; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.409 Request for Change in Rules

Any agency, commission, board, or department of the State of Texas interested in any safety rule, standard, or regulation, or an amendment, modification, change, or repeal thereof, may write the director requesting a hearing on such rule, standard, or regulation.

History

Source Note: The provisions of this §251.409 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.410 Provisions for Requesting a Change in Rules

Such request for hearing shall be in writing to the director, setting out specifically the regulation, standard, amendment, modification, change, or repeal upon which a hearing is desired, and the reasons therefor. Any hearing held shall be open to the public.

History

Source Note: The provisions of this §251.410 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.411 Director's Determination Regarding Change in Rules

Upon receipt of request, the director may resolve the issue by confirming without a hearing his previous ruling. If the material issues presented by the request have not been previously considered, the director will hold a hearing on the matter. Notice of the time and place of the hearing shall be given to the requestor. The issues involved and the date of the hearing will be published in the Texas Register for any other interested parties.

History

Source Note: The provisions of this §251.411 adopted to be effective January 1, 1976; amended to be effective June 9, 1980, 5 TexReg 2103; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.412 Substitute Rule Request

The director will formulate and promulgate such substitute rule, standard, or regulation as he shall determine to be reasonable if need for same is established.

History

Source Note: The provisions of this §251.412 adopted to be effective January 1, 1976; amended to be effective September 3, 1976, 1 TexReg 2381; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

28 Tex. Admin. Code § 251.413 Availability of Rules

Every rule, standard, or regulation adopted and every amendment, change, or repeal thereof shall be published and the director shall make same available for inspection and copying during normal business hours at the office of the State Office of Risk Management.

History

Source Note: The provisions of this §251.413 adopted to be effective January 1, 1976; amended to be effective September 3, 1976, 1 TexReg 2381; transferred effective September 1, 1997, as published in the Texas Register April 24, 1998, 23 TexReg 4060.

Subchapter E RISK ALLOCATION PROGRAM

28 Tex. Admin. Code § 251.501 Purpose

The purpose of this subchapter is to:

(1) equitably distribute the cost of funding workers' compensation losses, the cost of administering claims, and the cost of providing loss control services to participating state agencies;

(2) encourage the development and implementation of risk management programs and practices designed to minimize occupational injuries and illnesses; protect state property; and provide appropriate safety and health training for all state employees;

(3) pool large and small risks to enable catastrophic loss(es) to be spread throughout all participating state agencies; and

(4) encourage compliance with State Office of Risk Management regulations, and the policies and programs recommended in Risk Management For Texas State Agencies within the following areas of risk: property exposures; workers' compensation exposures; and liability exposures.

History

Source Note: The provisions of this §251.501 adopted to be effective October 8, 2001, 26 TexReg 7877.

28 Tex. Admin. Code § 251.503 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings:

(1) Claims Cost. The net amount of payments made on claims, minus subrogation and restitution costs, as reported by the Office.

(2) Covered Agency. A department, board, commission, or institution of this state with workers' compensation coverage under Chapter 501 of the Texas Labor Code (Labor Code).

(3) Covered FTE. An FTE covered under workers' compensation coverage under Chapter 501 of the Labor Code.

(4) Injury Frequency Rate (IFR). The number of accepted claims, as reported by the State Office of Risk Management (the Office), per 100 covered FTEs. For purposes of this calculation all agencies are deemed to have no less than 100 employees.

(5) Payroll. The total dollars paid for gross salary for all covered Full-Time Equivalents (FTEs), as reported by covered agencies.

(6) Plan Year. The state fiscal year beginning on September 1 and ending on August 31 the following year.

(7) Texas Enterprise Risk Management Guidelines--Risk management guidelines published by the Office for implementation and use by covered state agencies.

History

Source Note: The provisions of this §251.503 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600; amended to be effective September 4, 2022, 47 TexReg 5137.

28 Tex. Admin. Code § 251.505 Total assessment

(a) Each plan year the Office will calculate the total amount to be collected from covered agencies to pay the aggregate costs of:

(1) workers' compensation losses; and

(2) the Office's risk management program.

(b) The office will commission an actuarial study each plan year for the purpose of projecting the total amount of workers' compensation losses which will be paid in the following plan year. The board of the State Office of Risk Management (the Board) will set the amount to be collected based on the actuarial study, with the goal of collecting an amount sufficient to pay the expected losses.

(1) the projected workers' compensation costs for the following plan year;

(2) any amount which the Office has borrowed in the previous plan year for paying workers' compensation costs or any carryover of funds from the previous plan year (expressed as a negative amount); and

(3) the cost of the Office's risk management program.

History

Source Note: The provisions of this §251.505 adopted to be effective October 8, 2001, 26 TexReg 7877.

28 Tex. Admin. Code § 251.507 Calculating the Allocation of the Total Assessment

(a) The total assessment will be divided among participating agencies based on each agency's:

(1) payroll as a percentage of all participating agencies' payroll;

(2) FTEs as a percentage of the total of all participating agencies' FTEs;

(3) the total number of accepted claims as multiplied by the agency's IFR modifier;

(4) claim costs as a percentage of all claims payments made on behalf of participating agencies; and

(5) such other relevant factors as the Board may determine.

(b) The Office will use a weighted three-year rolling average to calculate payroll, FTEs and injury frequency rate for each covered agency. In the weighted average the most recent completed plan year will constitute 50% of the total for that factor, the next most recent plan year will be given 33% of the total, and the earliest plan year will be given 17% of the total for the factor.

(c) The Office will use a simple three-year rolling average to calculate total number of accepted claims and claim costs for each covered agency.

(d) Subject to modification by the Board pursuant to §251.515 of this subchapter, the factors used in the calculation shall be weighted as follows:

(1) Payroll--12.5%;

(2) FTEs--12.5%;

(3) Accepted Claims as modified by IFR--15%;

(4) Claims cost--60%.

(e) Subject to modification by the Board pursuant to §251.515 of this subchapter, an IFR modifier shall be applied to an agency's total number of accepted claims as follows:

(1) Less than 3.50% (Low) = 0.95%;

(2) 3.50% up to 7.50% (Moderate) = 1.00%;

(3) Greater than 7.50% (High) = 1.05%.

(f) The amount of the total allocation determined by an agency's modified total number of accepted claims cannot exceed 2% of an agency's weighted average payroll. The amount of the total allocation determined by claims costs cannot exceed 4.0% of an agency's weighted average payroll. The difference between the formula-based assessment amount and cap established herein shall be allocated among all other agencies in the same manner and within the same factors as the initial assessment calculation.

History

Source Note: The provisions of this §251.507 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600.

28 Tex. Admin. Code § 251.509 Omitted or Newly Created Agencies

(a) In the event that a covered agency is omitted from the annual assessment for any plan year, that agency will promptly:

(1) remit to the Office an assessed amount based on projected payroll and FTEs, as reported by the agency; and

(2) reimburse the Office for all covered losses incurred in that plan year in excess of the assessed amount.

(b) Notwithstanding §251.507(b) of this subchapter:

(1) if an agency has existed for only the two most recent plan years of the weighted three-year rolling average period, then the most recent completed plan year shall constitute 60% of the total for the weighted factors and the next most recent plan year shall constitute 40% of the total for the weighted factors;

(2) if an agency has existed for only the most recent plan year of the weighted three-year rolling average period, then the most recent completed plan year shall constitute 100% of the total for the weighted factors; and

(3) the assessment for an agency that was not in existence during any of the plan years of the weighted three-year rolling average period shall be calculated using that agency's current or projected payroll and FTEs, as reported by the agency, and the agency's actual claims costs, if any.

History

Source Note: The provisions of this §251.509 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600.

28 Tex. Admin. Code § 251.511 Required Reports

(a) In addition to other reports required under this chapter, each covered agency shall report to the Office not later than February 1 of each plan year their total payroll and the number of covered FTEs, by funding source for the prior plan year. The report shall be made in the form and manner required by the Office.

(b) In addition to other reports provided by the Office to covered state agencies, the Office will report to each covered agency not later than March 1 of each plan year the agency's injury frequency rate, accepted claims, and claims cost for the three most recent plan years. The Office may satisfy this requirement by posting the information required on its web site.

(c) The reports required by this section may be amended, supplemented or corrected at any time prior to June 1 of the plan year. The calculation of assessments to agencies will be made using the data contained in these reports as of June 1 of each year.

History

Source Note: The provisions of this §251.511 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600.

28 Tex. Admin. Code § 251.513 Date of payment for assessments

(a) Each covered agency's assessment payment must be received by the Office not later than the third day after appropriations becomes available on USAS in the new fiscal year, except as otherwise provided by this rule.

(b) Upon timely petition and justification by the requesting agency, and subject to review and approval by the Office, the portion of an agency's assessment which must be paid from funding sources that must first be collected may be paid in semiannual or quarterly installments. An agency authorized by the Office to exercise this option must pay at least 25% of that portion of the agency's assessment which will be paid from funding sources that must first be collected by the date specified in 251.513(a), with the balance of the assessment due according to the payment schedule approved by the Office.

History

Source Note: The provisions of this §251.513 adopted to be effective October 8, 2001, 26 TexReg 7877.

28 Tex. Admin. Code § 251.515 Changes in the Factors, Relative Weights, Modifiers and Caps Used in the Assessment

(a) The Board may modify the factors, relative weights, modifiers or caps set forth in §251.507 of this subchapter in open meeting and after notice as provided by the Open Meetings Act.

(b) Any person may request that the Board make specific changes to modify the factors, relative weights, modifiers or caps used in calculating agency assessments. Specific requests for changes must be delivered to the General Counsel for the Office by March 1 of any plan year to be considered for adoption in the following plan year.

(c) Any modification of the factors, relative weights, modifiers or caps used in calculating agency assessments will be made in accordance with the statement of purpose contained in §251.501 of this subchapter.

(d) The Office shall publish on its website the effective factors, relative weights, modifiers or caps to be used in calculating agency assessments on or before the 15th day following any modifications made by the Board pursuant to subsection (a) of this section.

History

Source Note: The provisions of this §251.515 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600.

28 Tex. Admin. Code § 251.517 Unitization of agency assessments

An agency may allocate the assessment authorized in these rules internally to promote the purposes set forth in §251.501. In allocating costs internally an agency is not bound to use the same factors and weighting established in these rules. The Office will provide data, to the extent that it is available, to assist agencies in properly allocating costs to the internal units designated by the agency.

History

Source Note: The provisions of this §251.517 adopted to be effective October 8, 2001, 26 TexReg 7877.

28 Tex. Admin. Code § 251.519 Distribution of Existing Claim Fund Appropriation

(a) The Office will make recommendations to the Comptroller of Public Accounts regarding the distribution of funds appropriated to the Office for FY2003.

(b) The amount distributed to each agency will be calculated to make the assessment "revenue neutral" as it impacts general revenue funds held in the state treasury.

(c) The Office will recommend an amount be distributed to an agency calculated by subtracting from the agency's assessment the amount of the agency's liability for reimbursement of actual paid workers' compensation losses in FY2000 and the amount of the expected Risk Management contract which would have been charged without the change in funding methods. That total will be multiplied by the percentage of actual re-appropriation for the assessment approved by the Comptroller of Public Accounts for FY2002 to maintain a revenue neutral status for general revenue funds in FY2003.

History

Source Note: The provisions of this §251.519 adopted to be effective October 8, 2001, 26 TexReg 7877; amended to be effective November 17, 2002, 27 TexReg 10600.

Subchapter F AGENCY ADMINISTRATION

28 Tex. Admin. Code § 251.601 Historically Underutilized Businesses Program

Pursuant to Texas Government Code §2161.003, the State Office of Risk Management adopts by reference the Historically Underutilized Business Program rules of the Texas Building and Procurement Commission, as such rules may be amended by the commission from time to time. The rules may be found at 1 T.A.C. §§111.11-111.28. Copies are available upon request from the General Counsel, State Office of Risk Management, P.O. Box 13777, Austin, TX 78711-3777.

History

Source Note: The provisions of this §251.601 adopted to be effective November 17, 2002, 27 TexReg 10605.

Chapter 252 STATE RISK MANAGEMENT

Subchapter A CHAPTER DEFINITIONS; OFFICE FORMS AND COMMUNICATIONS

28 Tex. Admin. Code § 252.101 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Business Day--Days in which an agency operates under a normal business schedule, including days in which an agency is staffed with a skeleton crew and optional holidays as defined in Texas Government Code §662.003(c).

(2) Claim--A demand by an individual or entity to recover a financial loss caused by an agency or its employee.

(3) Exposures--A situation, practice or condition that might lead to a loss.

(4) Incident--An event that disrupts normal activities and may become a loss or claim.

(5) Insurance Policy--Any line of insurance, other than health or life insurance, including liability insurance authorized under Government Code, Chapter 612. This definition applies to all property, casualty and liability insurance.

(6) Liability--Includes every character of hazard or responsibility. The term includes professional liability, medical malpractice, employment and civil rights violations, and similar liabilities. The term includes, but is not limited to, the duty to pay for:

(A) the actions or lack of action by a state official, state employee, or person operating under the authority of the state;

(B) liability-assumed contracts such as lease or rental agreements; and

(7) Loss--The basis of a claim for damages under the terms of a policy or the loss of assets resulting from an insurable risk.

(8) Notary Without Bond--An employee of a state agency whose responsibilities include serving as notary for an agency.

(9) Notary Bond--A bond, as required under Government Code §406.010, to protect against the negligent act of a notary public.

(10) Office--The State Office of Risk Management.

(11) Property--Anything owned, leased, occupied, or borrowed by a state agency, whether corporeal or incorporeal, tangible or intangible, real or personal. The term includes, but is not limited to:

(A) land and mineral rights;

(B) buildings and other improvements;

(D) equipment;

(E) published materials;

(F) works of art and antiquities;

(G) furniture;

(H) supplies;

(I) chemicals;

(J) food and agricultural products;

(K) apparel;

(L) raw materials;

(M) rights and royalties;

(N) intellectual property;

(O) financial assets including money; and

(P) EDP hardware and software.

(12) Sponsored Policy--A policy obtained by the Office on behalf of agencies for statewide use.

(13) Surety Bond--Shall have the meaning given under Government Code §653.003. Surety bonds include, but are not limited to, public official bonds and fidelity bonds.

History

Source Note: The provisions of this §252.101 adopted to be effective December 22, 2002, 27 TexReg 11773.

28 Tex. Admin. Code § 252.103 Forms and Communications--In General

(a) Forms referenced in this chapter may be obtained at The State Office of Risk Management's website at www.sorm.state.tx.us unless otherwise noted in the rules.

(b) All forms and applications pertaining to a particular matter shall be sent to the Office simultaneously, whenever practicable. Where the original of a document is required by these rules, facsimile or electronic transmission shall not be used. Except for reports required under Subchapter B, correspondence to the Office under this chapter shall be addressed to: State Office of Risk Management, Bonds and Insurance Section by:

(1) interagency mail code No. 031 (state agencies only);

(2) facsimile transmission to (512) 472-4769, (subject to change as posted on the Office's website);

(3) hand delivery to: 300 W. 15th Street, 6th Floor, Austin, Texas 78701;

(4) regular mail to: P.O. Box 13777, Austin, Texas 78711-3777; or

(5) electronic mail to bonds.insurance@sorm.state.tx.us.

History

Source Note: The provisions of this §252.103 adopted to be effective December 22, 2002, 27 TexReg 11773.

Subchapter B RISK MANAGEMENT

28 Tex. Admin. Code § 252.201 State Risk Management Guidelines

(a) Each state agency covered by Texas Labor Code, Chapter 412, shall develop and implement an agency risk management program, which shall include a safety and health program and a return-to-work program. State agency risk management programs shall either:

(1) comply with the risk management guidelines, including risk control and risk financing, contained in the Texas Enterprise Risk Management Guidelines published by the State Office of Risk Management (the Office); or

(2) utilize other appropriate nationally recognized standards, including Occupational Safety and Health Administration (OSHA) standards.

(b) When a risk exposure is not covered by the guidelines referenced in subsection (a) of this section, appropriate nationally recognized standards shall be followed, including the OSHA standards.

(c) A state agency that cannot comply with any applicable guideline or nationally recognized standard shall, upon request of the Office at the time of a risk management program review, file a statement with the Office which:

(1) clearly identifies the factors preventing the agency's compliance with the appropriate guideline or nationally recognized standard; and

(2) states the action the agency will take in lieu of complying with the guideline or nationally recognized standard.

(d) The Office shall review, verify, monitor, and approve state agency risk management programs based on compliance with subsections (a), (b), and (c) of this section.

(e) State agencies covered by Chapter 412 of the Texas Labor Code that do not comply with subsections (a), (b), and (c) of this section will be identified as not in compliance with this subchapter in the biennial report to the Legislature.

History

Source Note: The provisions of this §252.201 adopted to be effective December 22, 2002, 27 TexReg 11774; amended to be effective September 4, 2022, 47 TexReg 5138.

28 Tex. Admin. Code § 252.203 Reports

(a) A state agency subject to the Texas Labor Code, Chapter 412, shall file the following with the Office no later than October 30 of each year:

(1) an annual Loss Summary Report on the SORM-200;

(2) a list of any loss exposures unique to the agency that have not been reported and placed in a statewide database accessible to the Office.

(b) Where state controlled databases containing information relating to state property, and liability and workers' compensation losses exist, the controlling agency shall, upon request by the Office, provide the Office access to the database to obtain claims, and/or loss information.

History

Source Note: The provisions of this §252.203 adopted to be effective December 22, 2002, 27 TexReg 11774.

Subchapter C REPORTING AND OBTAINING INSURANCE COVERAGE

28 Tex. Admin. Code § 252.301 Review of Lines of Insurance by the Office

(a) This subchapter shall apply to agencies of the State of Texas, courts or institutions subject to Labor Code, Chapter 501, except for an institution subject to §501.022.

(b) The Office shall select lines of insurance for review based on the following factors:

(1) reported purchases by agencies;

(2) identified exposures and liabilities as reported by agencies or as determined by the Office;

(3) the number of agencies requesting the line or type of insurance;

(4) whether the insurance is necessary to protect the interests of the state;

(5) whether the insurance is economically advantageous to the state;

(6) whether the line is available from acceptable vendors at acceptable prices; or

(7) other relevant factors as determined by the Office.

(1) approved with sponsored policy;

(2) approved without sponsored policy; or

(3) prohibited, except as authorized under §252.305.

(d) After review, the classification assigned to each line of insurance reviewed, along with any comments by the Office, shall be posted on the Office's website.

History

Source Note: The provisions of this §252.301 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.303 Purchases of Approved Lines

(a) The Office shall procure insurance policies to be generally available to agencies. Policies from specific vendors shall be selected for statewide use and posted on the Office website. Unless excepted by subsections (c) or (d), agencies shall use a policy from one of these pre-selected lines.

(b) To participate in a sponsored insurance policy, an agency shall complete and submit the SORM-201 along with any other information requested by the Office. The form must be submitted 15 days before the inception date of any sponsored policy.

(c) Agencies must seek a written exception to obtain a line of insurance under a policy not sponsored by the Office when the Office offers the line under a sponsored policy. Agencies must submit a SORM-201 and all documentation supporting the coverage 30 days before the inception of the proposed policy. If, after review of the submission, the Office finds that the agency has unique exposures or that the purchase is necessary because of substantial or unusual risk of loss or that the coverage is necessary to protect the interests of the state, the Office shall authorize the purchase.

(d) To purchase a policy from lines other than approved policies, agencies must submit a SORM-201 and all documentation supporting the necessity of the coverage 30 days before the inception of the proposed policy. If, after review of the submission, the Office finds that the agency has unique exposures or that the purchase is necessary because of substantial or unusual risk of loss or that the coverage is necessary to protect the interests of the state, the Office shall authorize the purchase.

History

Source Note: The provisions of this §252.303 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.305 Purchases of Prohibited Lines

(a) After reviewing lines of insurance as provided under §252.301, the Office may prohibit agencies from purchasing particular lines of insurance. Agencies may apply to the Office for an exception to purchase coverage under a prohibited line in the following manner:

(1) submit a SORM-201 to the Office 45 days before the effective date of the proposed policy; and

(2) state the grounds for seeking the otherwise prohibited policy.

(b) After review of the submission, the Office may grant an exception for an otherwise prohibited policy to be used by a specific agency.

History

Source Note: The provisions of this §252.305 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.307 Reporting Purchases of Insurance

State agencies shall initiate the process of procuring or renewing a line of insurance not yet reviewed by the Office by completing the SORM 201 and submitting it to the Bonds and Insurance Section of the Office no later than 30 days before the intended purchase is scheduled to occur.

History

Source Note: The provisions of this §252.307 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.309 Agency Duties

(a) Agencies participating in any insurance polices covered under this subchapter shall:

(1) timely pay premiums incurred by the agency to the insurer as calculated per policy;

(2) coordinate with underwriters by complying with reasonable requests for information in a timely manner unless otherwise directed by state legal counsel;

(3) consider and respond to insurer loss control recommendations;

(4) cooperate with insurer claims personnel to investigate and process claims; and

(5) comply with the Office's loss control mandates.

(b) State agencies failing to comply with this section may be reported to the legislature and the comptroller for appropriate action.

History

Source Note: The provisions of this §252.309 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.311 Reporting Losses and Claims, by Agencies

(a) Agencies shall report all losses and claims to the Office in the form and manner prescribed by the Office by the close of the tenth calendar day following the day of any claims or losses or any changes in status thereto, including settlement or denial. If the applicable insurance policy requires a shorter reporting time period for claims or losses, the time period in the policy shall govern both reports to the Office and the insurance company.

(b) Agencies shall notify the Office of the Attorney General of claims pursuant to Civil Practice & Remedies Code, Chapter 101 on written notice of a claim. Agencies shall notify the Office of the Attorney General of claims pursuant to Civil Practice & Remedies Code, Chapter 104 on written notice of a lawsuit.

History

Source Note: The provisions of this §252.311 adopted to be effective December 22, 2002, 27 TexReg 11775.

28 Tex. Admin. Code § 252.313 Insurers' Report to the Office

(a) Except for health or life insurance, insurers shall report to the Office any policy, contract or agreement for any line of insurance delivered or renewed on or after January 1, 2002 to an entity subject to this subchapter. Insurance under this section includes surety bonds.

(b) Insurers shall complete the SORM-202 and submit it to the Office not later than 30 days before the date any intended sale of coverage is scheduled to occur.

(1) policy changes upon issuance;

(2) claims filed as settled;

(3) cancellation and reinstatement notices; or

(4) non-renewal notices.

History

Source Note: The provisions of this §252.313 adopted to be effective December 22, 2002, 27 TexReg 11775.

Subchapter D SURETY BOND PURCHASES

28 Tex. Admin. Code § 252.401 General Provisions

(a) This subchapter shall be applicable to a state department, commission, board, institution, court, or institution of higher education or soil conservation district of the state. This subchapter does not apply to any other political subdivisions of the state.

(b) Surety bonds shall not be purchased without approval of the Office. State agencies failing to obtain approval for purchases of surety bonds may result in non-authorization of the expenditure and/or report to the legislature for appropriate action.

History

Source Note: The provisions of this §252.401 adopted to be effective December 22, 2002, 27 TexReg 11779.

28 Tex. Admin. Code § 252.403 Surety Bond Purchases

(a) State agencies shall initiate the process of purchasing surety bonds by submitting the SORM-201 not later than 30 days before the inception date of the bond.

(b) The following factors shall be considered by the Office in determining the necessity of surety bonds for state agencies:

(1) whether the bond is required under the Texas Constitution, federal law or regulation, or court order;

(2) whether the surety bond is warranted by a substantial or unusual risk of loss;

(3) whether the surety bond is necessary to protect the interests of the state; and/or

(4) other relevant factors.

(c) If the Office approves the application for the surety bond, the Office shall determine the scope and amount of the bond coverage and shall authorize the purchase of the bond.

History

Source Note: The provisions of this §252.403 adopted to be effective December 22, 2002, 27 TexReg 11779.

28 Tex. Admin. Code § 252.405 Reporting of Claims Against Surety Bonds

(a) Claims against surety bonds shall be reported by entities subject to this subchapter in the manner provided in §252.311.

(b) Claims against surety bonds shall be reported by insurers in the manner provided in §252.313.

History

Source Note: The provisions of this §252.405 adopted to be effective December 22, 2002, 27 TexReg 11779.

Subchapter E NOTARIES WITHOUT BOND

28 Tex. Admin. Code § 252.501 General Provisions

(a) State employees whose duties include service as notaries shall serve without bond and shall not submit a notary bond or notary bond filing fee with their notary applications. Notaries without bond shall otherwise meet the general requirements of Government Code, Chapter 406, including but not limited to, maintaining a notary record book and taking the official oath.

(b) This subchapter shall be applicable only to a state department, commission, board, institution, court, or institution of higher education or soil conservation district of the state. This subchapter does not apply to other political subdivisions of the state.

History

Source Note: The provisions of this §252.501 adopted to be effective December 22, 2002, 27 TexReg 11780.

28 Tex. Admin. Code § 252.503 Notaries Without Bond--Application Process

(a) Applicants shall complete the Secretary of State (SOS) form 2301-NB and the SORM-201 and provide it to the employing agency for submission to the Office.

(b) The agency shall submit to the office:

(1) the original SOS form 2301-NB;

(2) the original SORM-203; and

(3) an inter-agency transfer voucher (ITV) payable to the Secretary of State. The employee's name shall appear in the descriptive legal text (DLT). The ITV shall constitute acceptable proof of the applicant's state-employment status, to be verifiable through the employing agency at any time.

(c) The Office shall review and forward the approved applications consisting of the SOS form 2301-NB and the ITV to the Secretary of State for final processing.

History

Source Note: The provisions of this §252.503 adopted to be effective December 22, 2002, 27 TexReg 11780.

28 Tex. Admin. Code § 252.505 Agency Duties

(a) The agency shall provide a stamp to the notary upon which "Notary without Bond" is affixed. Information for ordering the stamp is available on the Office's website or by contacting the Bonds and Insurance Section of the Office. A notary without bond may not use a stamp unless the stamp contains the additional line reading "Notary without Bond". Notaries without bond shall use this stamp on all documents notarized pursuant to their official state duties. The stamp shall comply with all additional notary stamp requirements of the Secretary of State.

(b) Agencies shall require notaries without bond to attend a notary training class, either provided internally or externally. Information concerning notary training is available on the Office's website or by contacting the Bonds and Insurance Section of the Office.

History

Source Note: The provisions of this §252.505 adopted to be effective December 22, 2002, 27 TexReg 11780.

28 Tex. Admin. Code § 252.507 Notification Requirements Upon Transfer or Termination of Notaries Without Bond

(a) Upon transfer of any notary without bond to another state agency, the new agency shall immediately notify the Bonds and Insurance Section of the Office using the SORM-204.

(b) Upon termination of any notary without bond, the terminating agency shall immediately notify the Bonds and Insurance Section of the Office using the SORM-204.

(c) Notaries without bond should voluntarily resign notary commissions immediately before termination of state employment or as soon thereafter as practicable. Immediately before termination, each agency shall notify all notaries without bond of the Office's recommendation. The stamp shall remain with the agency upon termination of state employment as state property. The original of the notary record book shall remain with the employee unless the employee resigns the commission, in which case the employee shall comply with Government Code §406.022.

History

Source Note: The provisions of this §252.507 adopted to be effective December 22, 2002, 27 TexReg 11780.

28 Tex. Admin. Code § 252.509 State Employees' Notarization of Documents Outside of State Employment

(a) A state employee is not prohibited from purchasing a notary bond or paying the Secretary of State's bond filing fee at personal expense. The cost of the notary bond filing fee and bond premium shall not be reimbursed by any state agency or with any other state funds. State employees who purchase a notary bond shall complete a standard SOS form 2301 form and follow the filing procedures as established by the Secretary of State.

(b) Notaries without bond who notarize documents outside of their state duties and who fail to use the "Notary without Bond" stamp shall be subject to disciplinary action by their respective agencies.

History

Source Note: The provisions of this §252.509 adopted to be effective December 22, 2002, 27 TexReg 11780.

28 Tex. Admin. Code § 252.511 Reporting of Claims Against Notaries Without Bond

Claims against notaries without bond shall be reported by entities subject to this subchapter in the manner provided in §252.311.

History

Source Note: The provisions of this §252.511 adopted to be effective December 22, 2002, 27 TexReg 11780.

Part 6 OFFICE OF INJURED EMPLOYEE COUNSEL

Chapter 276 GENERAL ADMINISTRATION

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 276.1 Definitions

The following words and terms when used in this chapter shall have the following meaning, unless the context clearly indicates otherwise:

(1) Office of Injured Employee Counsel (OIEC)--An independent state agency created by the 79th Texas Legislature, Regular Session, 2005, to represent the interests of injured employees in the workers' compensation system.

(2) Ombudsman--A specially trained employee of the Office of Injured Employee Counsel (OIEC) who assists injured employees with disputes in the workers' compensation system.

History

Source Note: The provisions of this §276.1 adopted to be effective December 20, 2006, 31 TexReg 10098; amended to be effective June 16, 2022, 47 TexReg 3485.

28 Tex. Admin. Code § 276.3 Rulemaking Petition

(a) Changes or amendments to the Office of Injured Employee Counsel's (OIEC) rules may be petitioned by an interested person. Rulemaking petitions shall be in the form of a letter to the Public Counsel that contains the following:

(1) a brief statement summarizing the proposed section or changes to the section;

(2) the text of the adopted section in the exact form proposed for adoption;

(3) a statement setting forth the statutory reference that authorizes the proposed rule or rule change;

(4) a suggested effective date;

(5) any other matter which may be required by law;

(6) the petitioner's name, mailing address, and telephone number; and

(7) the petitioner's signature.

(b) The petitioner may also include a cost-benefit analysis, which provides:

(1) an estimate of the public benefit expected as a result of the proposed section or rule change; and

(2) the probable economic cost to persons required to comply with the proposed section.

(d) Within 60 days after the petition is submitted, OIEC shall either initiate rulemaking procedures or shall deny the petition and provide the petitioner with reasons for the denial in writing.

History

Source Note: The provisions of this §276.3 adopted to be effective November 25, 2007, 32 TexReg 8317; amended to be effective October 24, 2021, 46 TexReg 7047.

28 Tex. Admin. Code § 276.4 Sick Leave Pool

A sick leave pool is established to alleviate hardship caused to an employee and employee's immediate family if a catastrophic illness or injury forces the employee to exhaust all sick leave earned by the employee and to lose compensation from the state.

(1) The agency head shall develop and administer a procedure for the administration of this section.

(2) Operation of the pool shall be consistent with Chapter 661 of the Texas Government Code.

History

Source Note: The provisions of this §276.4 adopted to be effective January 6, 2010, 35 TexReg 105; amended to be effective October 24, 2021, 46 TexReg 7047.

28 Tex. Admin. Code § 276.5 Employer's Notice of Ombudsman Program and First Responder Liaison to Employees

(a) All employers participating in the workers' compensation system shall post notice of the Office of Injured Employee Counsel's (OIEC) Ombudsman Program. This notice shall be posted in the workplace where each employee is likely to see the notice on a regular basis.

(b) This notice of the Ombudsman Program shall be publicly posted in English, Spanish, and any other language that is common to the employer's employees.

Attached Graphic

(d) An employer that employs first responders or that supervises volunteer first responders shall:

(1) Post the notice contained in paragraph (3) of this subsection in its workplace to inform employees who are first responders or volunteers who are first responders about the OIEC first responder liaison. The notice shall be posted in the personnel office and in the workplace where employees or volunteers are likely to read the notice on a regular basis.

(2) "First responder" has the meaning assigned by Texas Labor Code §504.055.

(3) The following notice shall be printed in English and Spanish or in English and any other language common to the employer's affected employee population. The text of the notice shall be as follows without any additional words or changes:

Attached Graphic

History

Source Note: The provisions of this §276.5 adopted to be effective December 20, 2006, 31 TexReg 10098; amended to be effective September 1, 2013, 38 TexReg 4511; amended to be effective April 17, 2018, 43 TexReg 2282; amended to be effective October 24, 2021,46 TexReg 7047; amended to be effective June 16, 2022, 47 TexReg 3485.

28 Tex. Admin. Code § 276.6 Notice of Injured Employee Rights and Responsibilities

(a) The Public Counsel adopts by reference the Notice of Injured Employee Rights and Responsibilities in the Texas Workers' Compensation System (Notice) in accordance with Labor Code §404.109.

(b) The Notice shall be distributed by the Texas Department of Insurance, Division of Workers' Compensation (Division).

(1) Office of Injured Employee Counsel's website at www.oiec.texas.gov or at the physical location located at 1601 Congress Avenue, Austin, Texas 78701; or

(2) Texas Department of Insurance, Division of Workers' Compensation website at www.tdi.texas.gov or at the physical location located at 1601 Congress Avenue, Austin, Texas 78701.

(d) This section may not be construed as establishing an entitlement to benefits to which the claimant is not otherwise entitled under Labor Code Title 5.

History

Source Note: The provisions of this §276.6 adopted to be effective March 22, 2010, 35 TexReg 2193; amended to be effective June 1, 2012, 37 TexReg 125; amended to be effective September 1, 2022, 47 TexReg 3485.

Subchapter B OMBUDSMAN PROGRAM

28 Tex. Admin. Code § 276.10 Ombudsman Training and Continuing Education

(a) Definitions. The following words and phrases shall have the following meaning in this section unless the context clearly indicates otherwise:

(1) Continuing education: A formal training program required for all ombudsmen in this state.

(2) Ombudsmen education and training program: The training required by the Office of Injured Employee Counsel (OIEC) to serve as an ombudsman, which results in certification upon completion.

(b) Purpose. OIEC shall establish and maintain the ombudsmen education and training program to ensure consistent, quality, and thorough training of ombudsmen staff. The ombudsmen education and training program applies to every ombudsman, regardless of hire date. The ombudsmen education and training program shall include, but is not limited to:

(1) formal classroom training conducted by OIEC staff;

(2) on-the-job training monitored by a supervising ombudsman, associate director, and regional staff attorneys;

(3) observations of ombudsmen by supervising ombudsman, associate director, and regional staff attorneys;

(4) professional skill development and legal education on workers' compensation laws, rules, advisories, and appeals panel decisions by the regional attorneys; and

(5) resource meetings with OIEC's central staff to discuss current and pending issues instrumental to providing assistance to injured employees in informal and formal proceedings; and

(6) practical skills training and legal assistance provided by the regional staff attorneys.

(c) OIEC staff's responsibilities regarding education and training. OIEC staff shall maintain the knowledge and skills needed to properly assist unrepresented injured employees in the workers' compensation system.

(1) The Ombudsman Program is the division within OIEC that is responsible for the overall management of the ombudsmen education and training program. The Ombudsman Program's responsibilities include, but are not limited to:

(A) educating ombudsmen about the workers' compensation laws, rules, advisories, appeals panel decisions, dispute resolution, OIEC policies and procedures, and application of such information to specific cases or factual situations;

(B) selecting supervisory staff to observe, supervise, train, and provide feedback to ombudsmen on a daily basis;

(D) establishing on-going training schedules for ombudsmen and evaluating the performance of ombudsmen's progress through the education and training program;

(E) maintaining documentation to monitor the effectiveness of the ombudsman program and coordinating with OIEC's Legal Services division to develop education and training materials to address systematic issues to enhance ombudsmen's effectiveness;

(F) examining the proficiency and competency of each ombudsman by conducting technical observations and identifying areas for professional improvement;

(G) providing targeted training to individual ombudsman for professional development and incorporating the technical observations and evaluations into the performance evaluation process;

(H) providing continuing education and training, at least annually, to ombudsmen on workers' compensation laws, rules, advisories, appeals panel decisions, dispute resolution, OIEC policies and procedures; and

(I) assigning a staff attorney to each ombudsman who will advise the ombudsman on providing assistance to injured employees and preparing for informal and formal proceedings.

(2) An ombudsman's responsibilities shall include, but is not limited to:

(A) completing the ombudsmen education and training program;

(B) participating in OIEC conferences;

(D) maintaining the technical and professional skills to perform all the duties of an Ombudsman; and

(E) assisting injured employees throughout the workers' compensation system.

History

Source Note: The provisions of this §276.10 adopted to be effective August 23, 2006, 31 TexReg 6515; amended to be effective October 28, 2008, 33 TexReg 8788; amended to be effective October 24, 2021, 46 TexReg 7047.

28 Tex. Admin. Code § 276.11 Access to Injured Employee Medical Documentation

Upon written request, a health care provider shall provide the Office of Injured Employee Counsel (OIEC) medical documentation regarding an injured employee within five (5) business days from the date posted on the request at no cost to OIEC. A health care provider's reimbursement from an insurance carrier for costs of documentation provided to OIEC are prescribed by the provisions of §134.120 of this title. A health care provider or insurance carrier that fails to comply with the requirements of this section commits an administrative violation. The Commissioner shall enforce a violation under this section in accordance with Chapter 415 of the Texas Labor Code.

History

Source Note: The provisions of this §276.11 adopted to be effective June 30, 2008, 33 TexReg 5011.

28 Tex. Admin. Code § 276.13 Ombudsman Program Ethics Code of Conduct

(a) Definition. Groundless--no basis in law or fact and not warranted by a good faith argument for the extension, modification, or reversal of existing law.

(b) The Office of Injured Employee Counsel Ombudsmen shall adhere to the ethical standards as reflected in Rule 13 of the Texas Rules of Civil Procedure in that groundless factual or legal assertions will not be made by the Ombudsman. Groundless factual or legal assertions that might be made by an injured employee or other person without the foreknowledge of the Ombudsman are not included in this prohibition. This shall not be construed as a limitation to Texas Labor Code §404.101 in the pursuit of valid claims or issues.

History

Source Note: The provisions of this §276.13 adopted to be effective September 11, 2011, 36 TexReg 5924.

Part 7 OFFICE OF PUBLIC INSURANCE COUNSEL

Chapter 280 CERTIFICATE OF PUBLIC ADVANTAGE

Subchapter A GENERAL PROVISIONS

28 Tex. Admin. Code § 280.1 Purpose

The purpose of this chapter is to implement Texas Health and Safety Code Chapter 314A, which requires qualifying hospitals seeking to negotiate and enter into a merger agreement to be certified by the Texas Health and Human Services Commission through the issuance of a Certificate of Public Advantage.

History

Source Note: The provisions of this §280.1 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.2 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Certificate of Public Advantage (COPA)--The written approval by the Texas Health and Human Services Commission (HHSC) that governs a cooperative agreement between hospitals that are party to a merger.

(2) Hospital--A nonpublic general hospital that is licensed under Texas Health and Safety Code Chapter 241 and is not maintained or operated by a political subdivision of this state.

(3) Merger Agreement--An agreement among two or more hospitals for the consolidation by merger, or other acquisition or transfer of assets, by which ownership or control over substantially all the stock, assets, or activities of one or more previously licensed and operating hospitals is placed under the control of another licensed hospital, or hospitals, or another entity that controls the hospitals.

(4) Terms or conditions--Any actions or measures that HHSC may require as a condition for issuing a COPA or allowing continued operation under a COPA.

History

Source Note: The provisions of this §280.2 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.3 Applicability

This chapter only applies to a merger agreement among hospitals, each of which is located within a county that:

(1) contains two or more hospitals; and

(2) has a population of:

(A) less than 100,000 and is not adjacent to a county with a population of 250,000 or more; or

(B) more than 100,000 and less than 150,000 and is not adjacent to a county with a population of 100,000 or more.

History

Source Note: The provisions of this §280.3 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.4 Certificate of Public Advantage Required

A merger agreement between hospitals may not receive immunity under Texas Health and Safety Code Chapter 314A without a Certificate of Public Advantage.

History

Source Note: The provisions of this §280.4 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.5 Compliance

(a) Each party to a merger agreement shall comply with Texas Health and Safety Code Chapter 314A (relating to Merger Agreements Among Certain Hospitals), this chapter, and all statutes and rules applicable under the hospital license.

(b) Each hospital operating under a Certificate of Public Advantage shall agree to any ongoing supervision the Texas Health and Human Services Commission may require.

History

Source Note: The provisions of this §280.5 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.6 Scope

(a) A Certificate of Public Advantage (COPA) is issued for a merger agreement between the parties identified in a COPA application.

(b) A COPA is limited to the parties that apply for a COPA.

History

Source Note: The provisions of this §280.6 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

Subchapter B APPLICATION AND ISSUANCE

28 Tex. Admin. Code § 280.21 Changes That May Affect the Certificate of Public Advantage Application

A Certificate of Public Advantage (COPA) applicant shall notify the Texas Health and Human Services Commission of the following in writing no later than five business days after:

(1) cessation of operation of any hospital party to the agreement, and the certificate holder shall include in the written notice the location where the medical records will be stored and the identity and telephone number of the custodian of the medical records;

(2) change in Centers for Medicare and Medicaid Services Certification Number of any hospital party to the agreement;

(3) change to the accrediting organization status of any hospital party to the agreement;

(4) change in hospital name, telephone number, or administrator of any hospital party to the agreement;

(5) pending sale of or change in ownership of any hospital party to the agreement;

(6) bankruptcy filing of any hospital party to the agreement; or

(7) federal antitrust action related to the COPA.

History

Source Note: The provisions of this §280.21 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.22 Application

(a) The acquiring party in a proposed merger agreement (the applicant) may apply to the Texas Health and Human Services Commission (HHSC) for a Certificate of Public Advantage (COPA) governing the merger agreement.

(b) The acquiring party must submit an application as specified by HHSC and the following information:

(1) the entities party to the proposed merger agreement, including names, addresses, contact information, and licensure and accreditation information;

(2) the specifics of the proposed transaction, including a letter of intent from each party, and alternatives to the merger agreement;

(3) post-transaction governance structure of the merged entity;

(4) post-transaction competition in the market area;

(5) financial strength of the merged entity;

(6) impact of the proposed merger agreement on employees;

(7) the geographic service areas and services offered by each party to the proposed merger agreement, including designations made by the state or other organizations;

(8) quality initiatives for each party to the proposed merger agreement;

(9) physicians, primary care services, and other healthcare services available to the public in the market area;

(10) community health needs;

(11) the condition of the physical plant and equipment of each party to the proposed merger agreement;

(12) financial assistance policies and the amount of uncompensated care provided by each party to the proposed merger agreement;

(13) current hospital rates and third-party reimbursement agreements;

(14) savings from the proposed merger agreement;

(15) benefits of the proposed merger agreement to the public;

(16) public comments regarding the proposed merger agreement; and

(17) any additional information HHSC deems necessary based on the circumstances specific to the application.

(c) An application is not complete until it contains all supplementary information, including any additional information HHSC deems necessary based on the circumstances specific to the application, and the application fee.

(d) If an applicant believes the application contains proprietary information that is required to remain confidential, the applicant may submit two applications:

(1) one application with complete information for HHSC's use with proprietary information clearly identified but not redacted; and

(2) one application, labeled as redacted and available for public release, with proprietary information redacted, subject to the following:

(A) The redacted version shall include at the minimum enough unredacted information, as determined by HHSC, to indicate continued public benefit.

(B) The redacted version may not redact any information that is publicly available, including:

(i) financial statements and other compliance documents required in the issue of tax-exempt bonds, if applicable;

(ii) Medicare Cost Reports;

(iii) Community Health Needs Assessments;

(iv) charity care and other patient financial policies;

(v) charge and payment data, including the chargemaster, list of shoppable services, and machine-readable payor specific data;

(vi) quality ratings, including Centers for Medicare and Medicaid Services Star Ratings, Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) ratings, and Leapfrog ratings; and

(vii) information included in the Texas Department of State Health Services' Annual Survey of Hospitals.

(e) An applicant shall submit a complete unredacted copy of the application and any related materials to the Attorney General at the same time it submits the application to HHSC.

(f) An application shall not be deemed filed until HHSC determines the application is complete.

(g) HHSC may request additional information necessary to make the application complete and to meet the requirements of Texas Health and Safety Code Chapter 314A and this chapter.

(h) The deadline for granting or denying the application under Texas Health and Safety Code §314A.054 does not begin until HHSC deems the application filed.

History

Source Note: The provisions of this §280.22 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.23 Texas Health and Human Services Commission Review

Upon reception of a complete application, the Texas Health and Human Services Commission will review the application in accordance with the standards prescribed by Texas Health and Safety Code §314A.056 and this chapter.

History

Source Note: The provisions of this §280.23 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.24 Attorney General Review

The Texas Health and Human Services Commission will consult with the Attorney General regarding each Certificate of Public Advantage application.

History

Source Note: The provisions of this §280.24 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.25 Application Fees

(a) All application fees shall be paid to the Texas Health and Human Services Commission and are nonrefundable.

(b) The fee for a Certificate of Public Advantage application is $75,000 and must be submitted with the application.

History

Source Note: The provisions of this §280.25 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.26 Conditions for Issuing a Certificate of Public Advantage

The Texas Health and Human Services Commission (HHSC) will issue a Certificate of Public Advantage (COPA) if:

(1) it determines under the totality of the circumstances that:

(A) the proposed merger would likely benefit the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public; and

(B) the likely benefits resulting from the proposed merger agreement outweigh any disadvantages attributable to a reduction in competition that may result from the proposed merger; and

(2) the application:

(A) provides specific evidence showing that the proposed merger would likely benefit the public;

(B) explains in detail how the likely benefits resulting from the proposed merger agreement outweigh any disadvantages attributable to a reduction in competition; and

(i) the quality and price of hospital and health care services provided to citizens of this state;

(ii) the preservation of sufficient hospitals within a geographic area to ensure public access to acute care;

(iii) the cost efficiency of services, resources, and equipment provided or used by the hospitals that are a party to the merger agreement;

(iv) the ability of health care payors to negotiate payment and service arrangements with hospitals proposed to be merged under the agreement;

(v) the extent of any reduction in competition among physicians, allied health professionals, other health care providers, or other persons providing goods or services to, or in competition with, hospitals; and

(vi) any other factor the applicant deems relevant to HHSC's determination under Texas Health and Safety Code §314A.056.

History

Source Note: The provisions of this §280.26 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

Subchapter C OPERATIONAL REQUIREMENTS

28 Tex. Admin. Code § 280.31 Terms

(a) The Texas Health and Human Services Commission (HHSC) may include terms or conditions of compliance in connection with issuing a Certificate of Public Advantage (COPA), if necessary, to ensure that the proposed merger likely benefits the public as specified in this chapter.

(b) A hospital operating under a COPA shall comply with all terms or conditions required in the issuance of a COPA.

(c) Any terms or conditions for a COPA are separate from the COPA itself. HHSC retains the authority to amend the terms or conditions. HHSC shall notify the hospital of any change in the terms or conditions not less than 30 days before the change takes effect.

History

Source Note: The provisions of this §280.31 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.32 Changes that May Affect the Certificate of Public Advantage

A hospital operating under a Certificate of Public Advantage (COPA) shall notify the Texas Health and Human Services Commission of the following in writing no later than five business days after:

(1) cessation of operation of any hospital that was party to the merger agreement, and the certificate holder shall include in the written notice the location where the medical records will be stored and the identity and telephone number of the custodian of the medical records;

(2) change in the Centers for Medicare and Medicaid Services Certification Number of any hospital party to the agreement;

(3) change to the accrediting organization status of any hospital party to the agreement;

(4) change in hospital name, telephone number, or administrator of any hospital party to the agreement;

(5) pending sale of or change in ownership of any hospital party to the agreement;

(6) bankruptcy filing of any hospital party to the agreement; or

(7) federal antitrust action related to the COPA.

History

Source Note: The provisions of this §280.32 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.33 Annual Public Hearing

(a) A hospital operating under a Certificate of Public Advantage (COPA) shall conduct a live, annual public hearing that is held face-to-face either in-person or using synchronous audiovisual interaction between the meeting attendees to obtain input from the public regarding the hospital's COPA.

(1) The public hearing must occur no sooner than one month before and no later than the anniversary of the date the Texas Health and Human Services Commission issued the COPA.

(2) If the hospital operating under the COPA holds the hearing in-person, the hearing shall take place within the geographic service area of the hospital operating under the COPA. The location shall be open to the public.

(b) At least 14 calendar days before the public hearing, the hospital operating under the COPA shall publicly advertise the hearing's details, including its date, time, location, and method of participation, by:

(1) posting a notice on the website of each hospital operating under the COPA or on a different webpage available through a hyperlink that is located prominently on the website's home page;

(2) posting the information on each social media account maintained by each hospital operating under the COPA; and

(3) notifying local news media, including print, internet, and broadcast outlets.

(c) During the hearing, the hospital operating under the COPA shall receive oral and written comments from the public regarding the COPA.

(d) The hospital operating under the COPA shall make an audio and video recording of the hearing and maintain the recording for one year from the hearing date.

(e) The hospital operating under the COPA shall provide information about the hearing in the annual report required by §567.34 of this subchapter (relating to Annual Report), including:

(1) an unedited copy of the hearing recording required by subsection (d) of this section in a format accessible by HHSC;

(2) a summary of all oral and written comments received at the public hearing;

(3) a copy of any written comments received;

(4) any responses or actions planned in response to comments received;

(5) the number of persons who attended the hearing;

(6) the date and time of the hearing;

(7) the duration of the hearing; and

(8) the names and titles of all individuals representing the hospital at the hearing.

History

Source Note: The provisions of this §280.33 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.34 Annual Report

(a) No later than 90 days after the anniversary of the date the Texas Health and Human Services Commission (HHSC) issued a Certificate of Public Advantage (COPA), each hospital operating under the COPA shall submit an annual report to HHSC. The report must include:

(1) information about the extent of the benefits attributable to the issuance of the COPA;

(2) if applicable, information about the hospital's actions taken:

(A) in furtherance of any commitments made by the parties to the merger; and

(B) to comply with terms imposed by HHSC as a condition for approval of the merger agreement;

(3) a description of the activities conducted by the hospital under the merger agreement;

(4) information relating to the price, cost, and quality of and access to health care for the population served by the hospital; and

(5) any other information required by HHSC to ensure compliance with Texas Health and Safety Code Chapter 314A and this chapter, including information relating to compliance with any terms or conditions for issuance of the COPA.

(b) HHSC may require more frequent reporting, but no more often than quarterly, as a condition of the COPA.

History

Source Note: The provisions of this §280.34 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.35 Voluntary Termination

In accordance with Texas Health and Safety Code §314A.058, a hospital operating under a Certificate of Public Advantage (COPA) approved under this chapter may voluntarily terminate its COPA by giving the Texas Health and Human Services Commission notice at least 30 days before the date of the termination.

History

Source Note: The provisions of this §280.35 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.36 Supervision Fees

In accordance with Texas Health and Safety Code §314A.105, the Texas Health and Human Services Commission (HHSC) may assess an annual supervision fee in an amount that is at least $75,000 but not more than $200,000 for each hospital operating under a Certificate of Public Advantage (COPA).

(1) The amount of the annual supervision fee is $100,000 for each hospital operating under the COPA. However, HHSC may decrease this amount to the statutory minimum or increase this amount to the statutory maximum by the amount needed to cover the reasonable costs incurred in supervising hospitals and in implementing and administering Texas Health and Safety Code Chapter 314A and this chapter.

(2) The amount of any increase of the annual supervision fee may not exceed 25% of the previous annual supervision fee.

(3) HHSC shall publish on its website and directly notify each hospital operating under the COPA of the amount of the supervision fee annually and at least 90 days before any increase takes effect.

(4) Each hospital operating under a COPA shall pay the first supervision fee no later than 30 calendar days after the date HHSC issues the COPA.

(5) Each hospital operating under a COPA shall pay each subsequent supervision fee no later than the anniversary of the date HHSC issued the COPA.

History

Source Note: The provisions of this §280.36 adopted to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

Subchapter D RATE REVIEW

28 Tex. Admin. Code § 280.41 Rate Reviews for Hospitals Operating Under a Certificate of Public Advantage

(a) Texas Health and Safety Code §314A.102, requires the Texas Health and Human Services Commission (HHSC) to conduct rate reviews for certain hospitals operating under a Certificate of Public Advantage (COPA).

(b) A hospital operating under a COPA pursuant to Texas Health and Safety Code §314A.056 may not change rates for hospital services without prior approval from HHSC.

(c) At least 90 days before the implementation of any proposed change in rates for inpatient or outpatient hospital services and, if applicable, at least 60 days before the execution of a reimbursement agreement with a third-party payor, a hospital operating under a COPA must submit to HHSC:

(1) a completed rate review application as provided by HHSC;

(2) any proposed change in rates for services that meet the definition in 25 TAC §133.2 of "inpatient services" or "outpatient services;"

(3) a market analysis of current rates using geographical area;

(4) a capital expenditures requirement beginning with the requested implementation date;

(5) if applicable, any change in reimbursement rates under a reimbursement agreement with a third-party payor;

(6) for an agreement with a third-party payor, other than an agreement described by paragraph (7) of this subsection, or in which rates are set under the Medicare or Medicaid program, information showing:

(A) that the hospital and the third-party payor have agreed to the proposed rates;

(B) whether the proposed rates are less than the corresponding amounts in the producer price index published by the Bureau of Labor Statistics of the United States Department of Labor relating to the hospital services for which the rates are proposed, or a comparable price index chosen by HHSC if the producer price index described by this paragraph is abolished; and

(C) if the proposed rates are above the corresponding amounts in the producer price index, as described by subparagraph (B) of this paragraph, a justification for proposing rates above the corresponding amounts in the producer price index;

(7) to the extent allowed by federal law, for an agreement with a managed care organization that provides or arranges for the provision of health care services under the Medicare or Medicaid program, information showing:

(A) whether the proposed rates are different from rates under an agreement that was in effect before the date the applicable merger agreement took effect;

(B) whether the proposed rates are different from the rates most recently approved by HHSC for the applicable hospital, if HHSC has previously approved rates for the applicable hospital following the issuance of the COPA under this chapter that governs the hospital; and

(C) if the proposed rates exceed rates described by subparagraphs (A) or (B) of this paragraph, a justification for proposing rates in excess of those rates; and

(8) any information concerning costs, patient volume, acuity, payor mix, and other information requested by HHSC.

(d) A hospital operating under a COPA shall provide any information requested by HHSC, or its designee, to HHSC or its designee no later than 10 business days after the request. If the hospital operating under the COPA does not provide the information HHSC requested within the 10-business-day time frame:

(1) HHSC may deny the request due to insufficient time to review the information; or

(2) HHSC may require the hospital operating under the COPA to amend the date of the proposed rate change.

(e) HHSC in its sole discretion may designate an individual or entity contracted with HHSC to review the provided materials and make a recommendation to HHSC.

(f) HHSC shall approve the proposed rate change if HHSC determines that:

(1) the proposed rate change likely benefits the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public; and

(2) the proposed rate does not inappropriately exceed competitive rates for comparable services in the hospital's market area.

(g) HHSC shall deny or modify the proposed rate change to meet requirements outlined in subsection (f) of this section, if HHSC determines that the proposed rate change does not satisfy subsection (f) of this section.

(h) Subject to subsection (d) of this section, HHSC will notify the hospital in writing of HHSC's decision to approve, deny, or modify the proposed rate change not later than the 30th day before the implementation date of the proposed change.

History

Source Note: The provisions of this §280.41 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

Subchapter E ENFORCEMENT

28 Tex. Admin. Code § 280.51 Supervision

The Texas Health and Human Services Commission will supervise each hospital operating under a Certificate of Public Advantage to ensure that the immunized conduct of a merged entity furthers the purposes of this chapter.

History

Source Note: The provisions of this §280.51 adopted to be effective October 25, 2020, 45 TexReg 7588; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.52 Annual Review

(a) Upon receipt of the annual report required by §567.34 of this chapter (relating to Annual Report), the Texas Health and Human Services Commission (HHSC) will conduct an annual review of each approved Certificate of Public Advantage (COPA).

(b) Prior to any review, HHSC will ask the Attorney General whether the Attorney General intends to conduct any review of the COPA.

(1) the Attorney General informs HHSC whether that office intends to conduct any review of the COPA; and

(2) the Attorney General has had the opportunity to conduct the review, if needed.

History

Source Note: The provisions of this §280.52 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.53 Investigation; Consequences

(a) To ensure that the activities of a hospital resulting from a merger agreement continue to benefit the public, the Texas Health and Human Services Commission (HHSC) may:

(1) investigate the hospital's activities; and

(2) require the hospital to perform a certain action or refrain from a certain action or revoke the hospital's certificate of public advantage, if HHSC determines that:

(A) the hospital is not complying with Texas Health and Safety Code Chapter 314A, this chapter, or a term or condition of compliance with the Certificate of Public Advantage (COPA) governing the hospital's immunized activities;

(B) HHSC's approval and issuance of the COPA was obtained as a result of material misrepresentation;

(D) the benefits resulting from the approved merger no longer outweigh the disadvantages attributable to the reduction in competition resulting from the approved merger.

(b) HHSC may make any entrance, inspection, review, or investigation it considers necessary to ensure the activities of a hospital operating under a COPA continue to benefit the public.

(1) An HHSC representative may enter the premises of a hospital operating under the COPA at any reasonable time for purposes of this chapter.

(2) HHSC may access, inspect, and copy all books, records, or other documents maintained by or on behalf of a hospital operating under the COPA as necessary for the purposes of this chapter.

(3) A hospital operating under the COPA shall cooperate with any entrance, inspection, review, or investigation by HHSC for the purposes of this chapter.

(4) HHSC shall maintain the confidentiality of hospital records as applicable under federal and state law.

History

Source Note: The provisions of this §280.53 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.

28 Tex. Admin. Code § 280.54 Corrective Action Plan

(a) If the Texas Health and Human Services Commission (HHSC) determines that an activity of a hospital operating under a Certificate of Public Advantage does not benefit the public as described by this chapter or no longer meets the standard prescribed by this chapter, HHSC will notify the hospital that it must adopt a plan to correct any deficiency in the hospital's activities.

(b) No later than 20 calendar days after receipt of notification by HHSC, the hospital shall return a written corrective action plan to HHSC responding to each cited deficiency, including time frame for corrections, together with any additional evidence of compliance.

(c) If HHSC determines the corrective action plan does not sufficiently address each cited deficiency, HHSC will notify the hospital that it must submit a revised corrective action plan. A hospital shall submit a revised corrective action plan no later than 20 calendar days after receipt of notification by HHSC.

History

Source Note: The provisions of this §280.54 adopted to be effective October 25, 2020, 45 TexReg 7588; amended to be effective January 1, 2023, 47 TexReg 8724; transferred effective May 1, 2025, as published in the April 11, 2025, issue of the Texas Register, 50 TexReg 2439.