Texas Insurance Code - Not Codified - Article 21.49-3. Medical Liability Insurance Underwriting Association Act
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Art. 21.49-3. MEDICAL LIABILITY INSURANCE UNDERWRITING
ASSOCIATION ACT.
Short title
Text of Sec. 1 effective until April 1, 2007
Section 1. This Act shall be known as the "Texas Medical
Liability Insurance Underwriting Association Act."
Definitions
Sec. 2. (1) "Medical liability insurance" means primary and
excess insurance coverage against the legal liability of the
insured and against loss, damage, or expense incident to a claim
arising out of the death or injury of any person as the result of
negligence in rendering or the failure to render professional
service by a health care provider or physician who is in one of the
categories eligible for coverage by the association.
(2) "Association" means the joint underwriting association
established pursuant to the provisions of this article.
(3) "Net direct premiums" means gross direct premiums
written on automobile liability and liability other than auto
insurance written pursuant to the provisions of the Insurance Code,
less policyholder dividends, return premiums for the unused or
unabsorbed portion of premium deposits and less return premiums
upon cancelled contracts written on such liability risks.
(4) "Board" means the State Board of Insurance of the State
of Texas.
(5) "Physician" means a person licensed to practice
medicine in this state.
(6) "Health care provider" means:
(A) any person, partnership, professional association,
corporation, facility, or institution duly licensed or chartered by
the State of Texas to provide health care as defined in Section
1.03(a)(2), Medical Liability and Insurance Improvement Act of
Texas (Article 4590i, Vernon's Texas Civil Statutes), as:
(i) a registered nurse, hospital, dentist, podiatrist,
pharmacist, chiropractor, or optometrist;
(ii) a for-profit or not-for-profit nursing home;
(iii) a radiation therapy center that is independent of any
other medical treatment facility and which is licensed by the Texas
Department of Health in that agency's capacity as the Texas
Radiation Control Agency pursuant to the provisions of Chapter 401,
Health and Safety Code, and which is in compliance with the
regulations promulgated under that chapter;
(iv) a blood bank that is a nonprofit corporation chartered
to operate a blood bank and which is accredited by the American
Association of Blood Banks;
(v) a nonprofit corporation which is organized for the
delivery of health care to the public and which is certified under
Chapter 162, Occupations Code;
(vi) a health center as defined by 42 U.S.C. Section 254b,
as amended; or
(vii) a for-profit or not-for-profit assisted living
facility; or
(B) an officer, employee, or agent of an entity listed in
Paragraph (A) of this subdivision acting in the course and scope of
that person's employment.
Joint underwriting association
Text of Sec. 3 effective until April 1, 2007
Sec. 3. (a) A joint underwriting association is hereby
created, consisting of all insurers authorized to write and engaged
in writing, within this state, on a direct basis, automobile
liability and liability other than auto insurance on or after
January 1, 1975, as provided in the Insurance Code, specifically
including and applicable to Lloyds and reciprocal or interinsurance
exchanges, but excluding farm mutual insurance companies as
authorized by Chapter 16 of this code, and county mutual insurance
companies as authorized by Chapter 17 of this code. Every such
insurer shall be a member of the association and shall remain a
member as a condition of its authority to continue to transact such
kind of insurance in this state. The purpose of the association
shall be to provide medical liability insurance on a
self-supporting basis. The association shall not be a licensed
insurer within the meaning of Article 1.14-2, Insurance Code,
relating to medical liability insurance for physicians as defined
in this article.
(b) The association shall, pursuant to the provisions of
this article and the plan of operation with respect to medical
liability insurance, have the power on behalf of its members:
(1) to issue, or to cause to be issued, policies of
insurance to applicants, including primary, excess, and incidental
coverages and subject to limits as specified in the plan of
operation; provided that no individual or organization may be
insured by policies issued by the association for an amount
exceeding a total of $1 million per occurrence and $3 million
aggregate per annum;
(2) to underwrite such insurance and to adjust and pay
losses with respect thereto, or to appoint service companies to
perform those functions;
(3) to either or both accept and refuse the assumption of
reinsurance from its members; and
(4) to cede and purchase reinsurance.
(c)(1) The board shall, after consultation with the joint
underwriting association, representatives of the public, the Texas
Medical Association, the Texas Podiatry Association, the Texas
Hospital Association, and other affected individuals and
organizations, promulgate a plan of operation consistent with the
provisions of this article, to become effective and operative no
later than 90 days after the effective date of this Act.
(2) The plan of operation shall provide for economic, fair,
and nondiscriminatory administration and for the prompt and
efficient provision of medical liability insurance, and shall
contain other provisions including, but not limited to, preliminary
assessment of all members for initial expenses necessary to
commence operations, establishment of necessary facilities,
management of the association, assessment of members and assessment
of policyholders to defray losses and expenses, administration of
the policyholder's stabilization reserve fund, commission
arrangements, reasonable and objective underwriting standards,
acceptance, assumption, and cession of reinsurance, appointment of
servicing carriers, and procedures for determining amounts of
insurance to be provided by the association.
(3) The plan of operation shall provide that any balance
remaining in the funds of the association at the close of its fiscal
year, meaning its then excess of revenue over expenditures after
reimbursement of members' contributions in accordance with Section
4(b)(5) of this article by the association shall be added to the
reserves of the association.
(4) Amendments to the plan of operation may be made by the
directors of the association, subject to the approval of the board,
or shall be made at the direction of the board.
(d) The association may provide general liability insurance
coverage to be issued in connection with medical liability
insurance issued by the association.
Eligibility for Coverage
Text of Sec. 3A effective until April 1, 2007
Sec. 3A. (a) The commissioner shall establish by order the
categories of physicians and health care providers who are eligible
to obtain coverage from the association and may, from time to time,
revise its order to include or exclude from eligibility particular
categories of such physicians and health care providers.
(b) If a category of physicians or health care providers has
been excluded from eligibility to obtain coverage from the
association, the commissioner may determine, after notice of at
least 10 days and a hearing, that medical liability insurance is not
available. On that determination, the category of physicians or
health care providers is eligible to obtain insurance coverage from
the association.
(c) A for-profit or not-for-profit nursing home or assisted
living facility not otherwise eligible under this section for
coverage from the association is eligible for coverage if the
nursing home or assisted living facility demonstrates, in
accordance with the requirements of the association, that the
nursing home or assisted living facility made a verifiable effort
to obtain coverage from authorized insurers and eligible surplus
lines insurers and was unable to obtain substantially equivalent
coverage and rates.
(d) In consultation with the Texas Department of Human
Services, the commissioner shall, by rule, adopt minimum rating
standards for for-profit nursing homes and for-profit assisted
living facilities that must be met before a for-profit nursing home
or for-profit assisted living facility may obtain coverage through
the association. The standards must promote the highest practical
level of care for residents of those nursing homes and assisted
living facilities.
Eligibility of Other Health Care Practitioners and Facilities
Text of Sec. 3B effective until April 1, 2007
Sec. 3B. (a) In this section:
(1) "Health care" includes any medical or health care
service, including an examination, treatment, medical diagnosis,
or evaluation, and care provided in an inpatient, outpatient, or
residential setting.
(2) "Health care facility" means a facility providing
health care, other than a facility described by Section 2(6) of this
article.
(3) "Health care practitioner" means an individual, other
than an individual described by Section 2(6) of this article, who:
(A) is licensed to provide health care; or
(B) is not licensed to provide health care but provides
health care under the direction or supervision of a licensed
individual.
(b) After notice and opportunity for hearing, the
commissioner may:
(1) determine that appropriate liability insurance coverage
written by insurers authorized to engage in business in this state
is not reasonably available to a type of health care practitioner or
health care facility; and
(2) by order designate that type of health care practitioner
or health care facility to be included as a health care provider
eligible to receive coverage under this article.
(c) A health care practitioner or facility designated under
Subsection (b) of this section is entitled to receive coverage
provided under this article in accordance with Article 5.15-1 of
this code in the same manner as other health care providers
described by Section 2 of this article and Section 2, Article
5.15-1, of this code.
(d) The commissioner's order may indicate whether a health
care practitioner or facility designated under Subsection (b) of
this section is included under the policyholder's stabilization
reserve fund established under Section 4A or 4B of this article or
whether a separate policyholder's stabilization reserve fund is
created. A separate policyholder's stabilization reserve fund
established under this subsection operates in the same manner as a
stabilization reserve fund created under Section 4B of this
article.
Coverage for Volunteer Health Care Providers
Text of Sec. 3C effective until April 1, 2007
Sec. 3C. (a) In this section:
(1) "Charitable organization" has the meaning assigned by
Section 84.003, Civil Practice and Remedies Code.
(2) "Volunteer health care provider" has the meaning
assigned by Section 84.003, Civil Practice and Remedies Code.
(b) The association shall make available medical liability
insurance or appropriate health care liability insurance covering a
volunteer health care provider for the legal liability of the
person against any loss, damage, or expense incident to a claim
arising out of the death or injury of any person as the result of
negligence in rendering or the failure to render professional
service while acting in the course and scope of the person's duties
as a volunteer health care provider as described by Chapter 84,
Civil Practice and Remedies Code.
(c) A volunteer health care provider who is serving as a
direct service volunteer of a charitable organization is eligible
to obtain from the association the liability insurance made
available under this section. A volunteer health care provider who
obtains coverage under this section is subject to Section 4A of this
article and the other provisions of this article in the same manner
as physicians who are eligible to obtain medical liability
insurance from the association.
(d) This section does not affect the liability of a
volunteer health care provider who is serving as a direct service
volunteer of a charitable organization. Section 84.004(c), Civil
Practice and Remedies Code, applies to the volunteer health care
provider without regard to whether the volunteer health care
provider obtains liability insurance under this section.
Procedures
Text of Sec. 4 effective until April 1, 2007
Sec. 4. (a)(1) Any health care provider or physician included
in one of the categories of health care providers eligible for
coverage by the association shall, on or after the effective date of
the plan of operation, be entitled to apply to the association for
such coverage. Such application may be made on behalf of an
applicant by an agent authorized pursuant to Article 21.14 of this
code.
(2) If the association determines that the applicant meets
the underwriting standards of the association as prescribed in the
plan of operation and there is no unpaid, uncontested premium,
policyholder stabilization reserve fund charge, or assessment due
from the applicant for prior insurance (as shown by the insured
having failed to pay or make written objection to such charges
within 30 days after billing) then the association, upon receipt of
the premium and the policyholder stabilization reserve fund charge,
or such portion thereof as is prescribed in the plan of operation,
shall cause to be issued a policy of medical liability insurance for
a term of one year or less, as determined by the association.
(b)(1) Subject to Subdivision (6) of this subsection, the
rates, rating plans, rating rules, rating classification,
territories, and policy forms applicable to the insurance written
by the association and statistics relating thereto shall be subject
to Subchapter B of Chapter 5 of the Insurance Code, as amended,
giving due consideration to the past and prospective loss and
expense experience for medical professional liability insurance
within and without this state of all of the member companies of the
association, trends in the frequency and severity of losses, the
investment income of the association, and such other information as
the commissioner may require; provided, that if any article of the
above subchapter is in conflict with any provision of this Act, this
Act shall prevail. For purposes of this article, rates, rating
plans, rating rules, rating classifications, territories, and
policy forms for for-profit nursing homes and for-profit assisted
living facilities are subject to the requirements of Article 5.15-1
of this code to the same extent as not-for-profit nursing homes and
not-for-profit assisted living facilities.
(2) Repealed by Acts 2003, 78th Leg., ch. 206, Sec.
21.47(8).
(3) Any deficit sustained by the association with respect to
physicians and health care providers, other than for-profit and
not-for-profit nursing homes and assisted living facilities, or by
for-profit and not-for-profit nursing homes and assisted living
facilities in any one year shall be recouped, pursuant to the plan
of operation and the rating plan then in effect, by one or more of
the following procedures in this sequence:
First, a contribution from the policyholder's stabilization
reserve fund for physicians and health care providers, other than
for-profit and not-for-profit nursing homes and assisted living
facilities, established under Section 4A of this article or from
the stabilization reserve fund for for-profit and not-for-profit
nursing homes and assisted living facilities, established under
Section 4B of this article, as appropriate, until the respective
fund is exhausted;
Second, an assessment upon the policyholders pursuant to
Section 5(a) of this article;
Third, an assessment upon the members pursuant to Section
5(b) of this article. To the extent a member has paid one or more
assessments and has not received reimbursement from the association
in accordance with Subdivision (5) of this subsection, a credit
against premium taxes under Article 4.10 of this code, as amended,
shall be allowed. The tax credit shall be allowed at a rate of 20
percent per year for five successive years following the year in
which said deficit was sustained and at the option of the insurer
may be taken over an additional number of years.
(4) After the initial year of operation, rates, rating
plans, and rating rules, and any provision for recoupment should be
based upon the association's loss and expense experience, together
with such other information based upon such experience as the
department may deem appropriate. The resultant premium rates shall
be on an actuarially sound basis and shall be calculated to be
self-supporting.
(5) In the event that sufficient funds are not available for
the sound financial operation of the association, in addition to
assessments paid pursuant to the plan of operation in accordance
with Section 3(c)(2) of this article and contributions from the
policyholder's stabilization reserve fund, all members shall, on a
basis authorized by the department, as long as the department deems
it necessary, contribute to the financial requirements of the
association in the manner provided for in Section 5. Any assessment
or contribution shall be reimbursed to the members, or to the state
to the extent that the members have recouped their assessments
using premium tax credits as provided under Subsection (b)(3) of
this section, with interest at a rate to be approved by the
commissioner, subject to the approval of the commissioner. Pending
recoupment or reimbursement of assessments or contributions paid to
the association by a member, the unrepaid balance of such
assessments and contributions may be reflected in the books and
records of the insurer as an admitted asset of the insurer for all
purposes, including exhibition in annual statements pursuant to
Section 862.001 of this code.
(6) The rates applicable to professional liability
insurance provided by the association that cover nursing homes and
assisted living facilities that are not for profit must reflect a
discount of 30 percent from the rates for the same coverage provided
to others in the same category of insureds. The commissioner shall
ensure compliance with this subdivision.
(c) Excess insurance coverage written for a health care
provider or a physician by the association under this article shall
be written on a following form basis to the primary insurance
coverage of that health care provider.
(d) A policy of medical liability insurance issued to or
renewed for a physician or health care provider by the association
under this article may not include coverage for punitive damages
assessed against the physician or health care provider.
(e) The association may offer an installment payment plan
for coverage obtained through the association.
(f) Section 7, Article 5.15-1 of this code, does not apply
to a medical liability insurance policy issued by the association
for a term of less than one year. With respect to a policy subject
to this subsection, the association shall ensure that appropriate
written notice is provided to an insured if premiums are increased
or the policy is to be canceled or is not to be renewed other than
for nonpayment of premiums or because the insured is no longer
licensed.
Policyholder's Stabilization Reserve Fund for Physicians and
Certain Health Care Providers
Text of Sec. 4A effective until April 1, 2007
Sec. 4A. (a) There is hereby created a policyholder's
stabilization reserve fund for physicians and health care
providers, other than for-profit and not-for-profit nursing homes
and assisted living facilities, which shall be administered as
provided herein and in the plan of operation of the association.
The stabilization reserve fund created by this section is separate
and distinct from the stabilization reserve fund for for-profit and
not-for-profit nursing homes and assisted living facilities
created by Section 4B of this article.
(b) Each policyholder shall pay annually into the
stabilization reserve fund a charge, the amount of which shall be
established annually by advisory directors chosen by health care
providers, other than for-profit and not-for-profit nursing homes
and assisted living facilities, and physicians eligible for
insurance in the association in accordance with the plan of
operation. The charge shall be in proportion to each premium
payment due for liability insurance through the association. Such
charge shall be separately stated in the policy, but shall not
constitute a part of premiums or be subject to premium taxation,
servicing fees, acquisition costs, or any other such charges. If
the association offers an installment payment plan for coverage
obtained through the association, the association may permit
payment of the stabilization reserve fund charge on an installment
basis or may require the policyholder to pay the charge as an annual
lump sum.
(c) The stabilization reserve fund shall be collected and
administered by the association and shall be treated as a liability
of the association along with and in the same manner as premium and
loss reserves. The fund shall be valued annually by the board of
directors as of the close of the last preceding year.
(d) Collections of the stabilization reserve fund charge
shall continue until such time as the net balance of the
stabilization reserve fund is not less than the projected sum of
premiums for physicians and health care providers, other than
for-profit and not-for-profit nursing homes and assisted living
facilities, to be written in the year following valuation date.
(e) The stabilization reserve fund shall be credited with
all stabilization reserve fund charges collected from physicians
and health care providers, other than for-profit and not-for-profit
nursing homes and assisted living facilities, and shall be charged
with any deficit sustained by physicians and health care providers,
other than for-profit and not-for-profit nursing homes and assisted
living facilities, from the prior year's operation of the
association.
Stabilization reserve fund for for-profit and not-for-profit
nursing homes
Text of Sec. 4B effective until April 1, 2007
Sec. 4B. (a) There is hereby created a stabilization reserve
fund for for-profit and not-for-profit nursing homes and assisted
living facilities that shall be administered as provided in this
section and in the plan of operation of the association. The
stabilization reserve fund created by this section is separate and
distinct from the policyholder's stabilization reserve fund for
physicians and health care providers, other than for-profit and
not-for-profit nursing homes and assisted living facilities,
created by Section 4A of this article.
(b) Each policyholder shall pay annually into the
stabilization reserve fund a charge, the amount of which shall be
established annually by advisory directors chosen by for-profit and
not-for-profit nursing homes and assisted living facilities
eligible for insurance in the association in accordance with the
plan of operation. The charge shall be in proportion to each
premium payment due for liability insurance through the
association. The charge shall be separately stated in the policy,
but shall not constitute a part of premiums or be subject to premium
taxation, servicing fees, acquisition costs, or any other similar
charges. If the association offers an installment payment plan for
coverage obtained through the association, the association may
permit payment of the stabilization reserve fund charge on an
installment basis or may require the policyholder to pay the charge
as an annual lump sum.
(c) The stabilization reserve fund shall be collected and
administered by the association and shall be treated as a liability
of the association along with and in the same manner as premium and
loss reserves. The fund shall be valued annually by the board of
directors as of the close of the last preceding year.
(d) Collections of the stabilization reserve fund charge
shall continue only until such time as the net balance of the
stabilization reserve fund is not less than the projected sum of
premiums for for-profit and not-for-profit nursing homes and
assisted living facilities to be written in the year following the
valuation date.
(e) The stabilization reserve fund shall be credited with
all stabilization reserve fund charges collected from for-profit
and not-for-profit nursing homes and assisted living facilities and
the net earnings on liability insurance policies issued to
for-profit and not-for-profit nursing homes and assisted living
facilities and shall be charged with any deficit sustained by
for-profit and not-for-profit nursing homes and assisted living
facilities from the prior year's operation of the association.
(f) The stabilization reserve fund established under this
section, and any earnings of the fund, are state funds and shall be
held by the comptroller outside the state treasury on behalf of, and
with legal title in, the department. No part of the fund, or the
earnings of the fund, may inure to the benefit of a member of the
association, a policyholder, or any other individual, and the
assets of the fund may be used in accordance with the association's
plan of operation only to implement this article and for the
purposes of the association, including making payment to satisfy,
in whole or in part, the liability of the association regarding a
claim made on a policy written by the association.
(g) Notwithstanding Sections 11, 12, and 13 of this article,
the stabilization reserve fund established under this section may
be terminated only by law.
(h) Notwithstanding Section 11 of this article, on
termination of the stabilization reserve fund established under
this section, all assets of the fund shall be transferred to the
general revenue fund to be appropriated for purposes related to
ensuring the kinds of liability insurance coverage that may be
provided by the association under this article for for-profit and
not-for-profit nursing homes and assisted living facilities.
Liability for exemplary damages; expiration
Text of section effective until January 1, 2007.
Sec. 4C. (a) The association is not liable for exemplary
damages under a professional liability insurance policy that covers
a for-profit or not-for-profit nursing home or assisted living
facility and that excludes coverage for exemplary damages awarded
in relation to a covered claim awarded under Chapter 41, Civil
Practice and Remedies Code, or any other law. This subsection
applies without regard to the application of the common law theory
of recovery commonly known in Texas as the "Stowers Doctrine." This
subsection does not affect the application of that doctrine to the
liability of the association for compensatory damages.
(b) This section does not affect the contractual duties
imposed under an insurance policy.
(c) This section does not prohibit a for-profit or
not-for-profit nursing home or assisted living facility from
purchasing a policy to cover exemplary damages.
(d) This section applies only to the liability of the
association for exemplary damages under an insurance policy
delivered, issued for delivery, or renewed by the association to a
for-profit or not-for-profit nursing home on or after January 1,
2002, and applies only to coverage provided under the policy for any
portion of the term of the policy that occurs before January 1,
2006. This section applies only to the liability of the association
for exemplary damages with respect to a claim for which a notice of
loss or notice of occurrence was made, or should have been made, in
accordance with the terms of the policy, on or after January 1,
2002, but before January 1, 2006.
(d-1) This section applies only to the liability of the
association for exemplary damages under an insurance policy
delivered, issued for delivery, or renewed by the association to a
for-profit or not-for-profit assisted living facility on or after
September 1, 2003, and applies only to coverage provided under the
policy for any portion of the term of the policy that occurs before
January 1, 2006. This section applies only to the liability of the
association for exemplary damages with respect to a claim for which
a notice of loss or notice of occurrence was made, or should have
been made, in accordance with the terms of the policy, on or after
September 1, 2003, but before January 1, 2006.
(e) This section expires January 1, 2007.
Participation
Text of Sec. 5 effective until April 1, 2007
Sec. 5. (a) Each policyholder within the group of physicians
and health care providers, other than for-profit and not-for-profit
nursing homes and assisted living facilities, or within the group
of for-profit and not-for-profit nursing homes and assisted living
facilities shall have contingent liability for a proportionate
share of any assessment of policyholders in the applicable group
made under the authority of this article. Whenever a deficit, as
calculated pursuant to the plan of operation, is sustained with
respect to the group of physicians and health care providers, other
than for-profit and not-for-profit nursing homes and assisted
living facilities, or the group of for-profit and not-for-profit
nursing homes and assisted living facilities in any one year, its
directors shall levy an assessment only upon those policyholders in
the applicable group who held policies in force at any time within
the two most recently completed calendar years in which the
association was issuing policies preceding the date on which the
assessment was levied. The aggregate amount of the assessment
shall be equal to that part of the deficit not recouped from the
applicable stabilization reserve fund. The maximum aggregate
assessment per policyholder in the applicable group shall not
exceed the annual premium for the liability policy most recently in
effect. Subject to such maximum limitation, each policyholder in
the applicable group shall be assessed for that portion of the
deficit reflecting the proportion which the earned premium on the
policies of such policyholder bears to the total earned premium for
all policies of the association in the applicable group in the two
most recently completed calendar years.
(b) All insurers which are members of the association shall
participate in its writings, expenses, and losses in the proportion
that the net direct premiums, as defined herein, of each such
member, excluding that portion of premiums attributable to the
operation of the association, written during the preceding calendar
year bears to the aggregate net direct premiums written in this
state by all members of the association. Each insurer's
participation in the association shall be determined annually on
the basis of such net direct premiums written during the preceding
calendar year, as reported in the annual statements and other
reports filed by the insurer that may be required by the board. No
member shall be obligated in any one year to reimburse the
association on account of its proportionate share in the deficits
from operations of the association in that year in excess of one
percent of its surplus to policyholders and the aggregate amount
not so reimbursed shall be reallocated among the remaining members
in accordance with the method of determining participation
prescribed in this subdivision, after excluding from the
computation the total net direct premiums of all members not
sharing in such excess deficits. In the event that the deficits from
operations allocated to all members of the association in any
calendar year shall exceed one percent of their respective surplus
to policyholders, the amount of such deficits shall be allocated to
each member in accordance with the method of determining
participation prescribed in this subdivision.
Directors
Text of Sec. 6 effective until April 1, 2007
Sec. 6. (a) The association shall be governed by a board of
nine directors, to be selected annually as follows:
(1) five representatives of insurers required to be members
of the association who are elected by members of the association;
(2) one physician who is appointed by the Texas Medical
Association or its successor;
(3) one representative of hospitals appointed by the Texas
Hospital Association or its successor; and
(4) two members of the public to be appointed by the State
Board of Insurance.
(b) Members of the association's board of directors take
office on October 1 each year.
Appeals
Text of Sec. 7 effective until April 1, 2007
Sec. 7. (a) Any person insured or applying for insurance
pursuant to this Act, or his duly authorized representative, or any
affected insurer who may be aggrieved by an act, ruling, or decision
of the association, may, within 30 days after such act, ruling, or
decision, appeal to the board of directors of the association. At
the time the person is notified of the act, ruling, or decision of
the association, the association shall provide to the person
written notice of the person's right to appeal under this
subsection.
(b) The board of directors of the association shall hear
said appeal within 30 days after receipt of such request or appeal
and shall give not less than 10 days' written notice of the time and
place of hearing to the person making such request or the duly
authorized representative. Within 10 days after such hearing, the
board of directors of the association shall affirm, reverse, or
modify its previous action or the act, ruling, or decision appealed
to the board of directors of the association. At the time the
person is notified of the final action of the board of directors of
the association, the association shall provide to the person
written notice of the person's right to appeal under Subsection (c)
of this section.
(c) In the event any person insured or applying for
insurance is aggrieved by the final action of the board of directors
of the association, the aggrieved party may, within 30 days after
such action, make a written request to the commissioner for a
hearing thereon. The commissioner shall hear the appeal from an
act, ruling, or decision of the association, within 30 days after
receipt of such request or appeal and shall give not less than 10
days' written notice of the time and place of hearing to the person,
or his duly authorized representative, appealing from the act,
ruling, or decision of the board of directors of the association.
Within 30 days after such hearing, the commissioner shall affirm,
reverse, or modify the act, ruling, or decision appealed to the
commissioner. Pending such hearing and decision thereon, the
commissioner may suspend or postpone the effective date of the rule
or of the act, ruling, or decision appealed.
(d) The association, or the person aggrieved by any order or
decision of the commissioner, may thereafter appeal in accordance
with Article 1.04 of this code. At the time the person is notified
of the decision of the commissioner, the commissioner shall provide
to the person written notice of the person's right to appeal under
this subsection.
Privileged communications
Text of Sec. 8 effective until April 1, 2007
Sec. 8. There shall be no liability on the part of, and no
cause of action of any nature shall arise against the association,
its agents or employees, an insurer, any licensed agent, or the
board or its authorized representatives, for any statements made in
good faith by them in any reports or communications, concerning
risks insured or to be insured by the association, or at any
administrative hearings conducted in connection therewith.
Annual statements
Text of Sec. 9 effective until April 1, 2007
Sec. 9. The association shall file in the office of the board,
annually on or before the first day of March, a statement which
shall contain information with respect to its transactions,
condition, operations, and affairs during the preceding calendar
year. Such statement shall contain such matters and information as
are prescribed and shall be in such form as is approved by the
board. The board may, at any time, require the association to
furnish additional information with respect to its transactions,
condition, or any matter connected therewith considered to be
material and of assistance in evaluating the scope, operation, and
experience of the association.
Examinations
Text of Sec. 10 effective until April 1, 2007
Sec. 10. The association is subject to Articles 1.15 and 1.16
of this code.
Dissolution of the association
Sec. 11. Upon the effective date of this article, the board
shall, after consultation with the joint underwriting association,
representatives of the public, the Texas Medical Association, the
Texas Podiatry Association, the Texas Hospital Association, and
other affected individuals and organizations, promulgate a plan of
suspension consistent with the provisions of this article, to
become effective and operative on December 31, 1985, unless the
board determines before that time that the association may be
suspended or is no longer needed to accomplish the purposes for
which it was created. The plan of suspension shall contain
provisions for maintaining reserves for losses which may be
reported subsequent to the expiration of all policies in force at
the time of such suspension. If, after the date of suspension
ordered by the board, the board finds, after notice and hearing,
that all known claims have been paid, provided for, or otherwise
disposed of by the association, relating to policies issued prior
to such suspension, then the board may wind up the affairs of the
association, relating to policies issued prior to such suspension,
by paying all funds remaining in the association to a special fund
created by the statutory liquidator of the board as a reasonable
reserve to be administered by said liquidator for unknown claims
and claims expenses and for reimbursing assessments and
contributions in accordance with Section 4(b)(5) of this article.
The board shall, after consultation with the representatives of the
public, the Texas Medical Association, the Texas Podiatry
Association, the Texas Hospital Association, and other affected
individuals and organizations, promulgate a plan for distribution
of funds, if any, less reasonable and necessary expenses, to the
policyholders ratably in proportion to premiums and assessments
paid during the period of time prior to suspension in which the
association issued policies. When all claims have been paid and no
further liability of this association exists, the statutory
liquidator shall distribute all funds in its possession to the
applicable policyholders in accordance with the plan promulgated by
the board. If such reserve fund administered by the statutory
liquidator proves inadequate, the association shall be treated as
an insolvent insurer in respect to the applicable provisions of
Articles 21.28, 21.28A and 21.28-C, Insurance Code, not
inconsistent with this article. Notice of claim shall be made upon
the board.
Authority of the board over dissolution
Sec. 12. At any time the board finds that the association is
no longer needed to accomplish the purposes for which it was
created, the board may issue an order suspending the association as
of a certain date stated in the order. As soon as may be reasonably
practical after December 31, 1984, the board shall determine
whether or not medical liability insurance is reasonably available
to physicians, health care providers, or any category of physicians
or health care providers in this state through facilities other
than the association and the need for the continuation of the
operation of the association as to physicians, health care
providers, or any category of physicians or health care providers.
The board shall not make such determination until a public meeting
has been held. Prior notice of such meeting shall be given at least
10 days to the same persons or entities as are required for
consultation in Section 11 of this article.
Termination of policies
Sec. 13. After the date ordered for suspension by the board,
no policies will be issued by the association. All then issued
policies shall continue in force until terminated in accordance
with the terms and conditions of such policies.
Acts 1975, 64th Leg., p. 867, ch. 331, Sec. 1, eff. June 3, 1975.
Amended by Acts 1977, 65th Leg., p. 129, ch. 59, Sec. 1, 2, eff.
April 13, 1977; Acts 1977, 65th Leg. p. 2057, ch. 817, Sec. 31.03 to
31.12, eff. Aug. 29, 1977; Acts 1979, 66th Leg., p. 147, ch. 79,
Sec. 1, 2, eff. Aug. 27, 1979; Acts 1981, 67th Leg., p. 3159, ch.
829, Sec. 1, eff. June 17, 1981.
Secs. 3, 11 to 13 amended by Acts 1983, 68th Leg., p. 5027, ch. 904,
Sec. 1, eff. Aug. 29, 1983; Sec. 2(6) amended by Acts 1986, 69th
Leg., 3rd C.S., ch. 11, Sec. 1, eff. Oct. 2, 1986; Sec. 3(b) amended
by Acts 1987, 70th Leg., 1st C.S., ch. 1, Sec. 7.02, eff. Sept. 2,
1987; Sec. 2(6) amended by Acts 1991, 72nd Leg., ch. 14, Sec.
284(89), eff. Sept. 1, 1991; Sec. 6 amended by Acts 1991, 72nd
Leg., ch. 242, Sec. 9.11, eff. Sept. 1, 1991; Sec. 7(b) amended by
Acts 1991, 72nd Leg., ch. 242, Sec. 1.14, eff. Sept. 1, 1991; Sec.
7(b) amended by Acts 1993, 73rd Leg., ch. 685, Sec. 22.07, eff.
Sept. 1, 1993; Sec. 10 amended by Acts 1997, 75th Leg., ch. 879,
Sec. 9, eff. Sept. 1, 1997; Sec. 7 amended by Acts 1999, 76th Leg.,
ch. 779, Sec. 1, eff. Sept. 1, 1999; Sec. 2(6) amended by Acts 2001,
77th Leg., ch. 921, Sec. 1, eff. Sept. 1, 2001; Sec. 2(6) amended by
Acts 2001, 77th Leg., ch. 1284, Sec. 5.04, eff. June 15, 2001; Sec.
3A(c) added by Acts 2001, 77th Leg., ch. 921, Sec. 2, eff. Sept. 1,
2001; Sec. 3A(c) added by Acts 2001, 77th Leg., ch. 1284, Sec.
5.05, eff. June 15, 2001; Sec. 4(b)(1) amended by Acts 2001, 77th
Leg., ch. 921, Sec. 3, eff. Sept. 1, 2001; Sec. 4(b)(1), (3)
amended by Acts 2001, 77th Leg., ch. 1284, Sec. 5.06, eff. June 15,
2001; Sec. 4(b)(6) added by Acts 2001, 77th Leg., ch. 1284, Sec.
5.06, eff. June 15, 2001; Sec. 4(d) added by Acts 2001, 77th Leg.,
ch. 921, Sec. 4, eff. Sept. 1, 2001; Sec. 4A amended by Acts 2001,
77th Leg., ch. 921, Sec. 5, eff. Sept. 1, 2001; Sec. 4A amended by
Acts 2001, 77th Leg., ch. 1284, Sec. 5.07, eff. June 15, 2001;
Secs. 4B, 4C added by Acts 2001, 77th Leg., ch. 1284, Sec. 5.08,
eff. June 15, 2001; Sec. 5 amended by Acts 2001, 77th Leg., ch.
1284, Sec. 5.09, eff. June 15, 2001; Sec. 2(6) amended by Acts
2003, 78th Leg., ch. 141, Sec. 3, eff. Sept. 1, 2003; Sec. 3(d),
added by Acts 2003, 78th Leg., ch. 1195, Sec. 1, eff. Sept. 1, 2003;
Sec. 3A amended by Acts 2003, 78th Leg., ch. 141, Sec. 4, eff. Sept.
1, 2003; Sec. 3B added by Acts 2003, 78th Leg., ch. 141, Sec. 5,
eff. Sept. 1, 2003; Sec. 4(a)(2) amended by Acts 2003, 78th Leg.,
ch. 56, Sec. 1, eff. Sept. 1, 2003; Sec. 4(b)(1) amended by Acts
2003, 78th Leg., ch. 141, Sec. 6, eff. Sept. 1, 2003; Sec. 4(b)(2)
amended by Acts 2003, 78th Leg., ch. 206, Sec. 21.47(8), eff. June
11, 2003; Sec. 4(b)(3), amended by Acts 2003, 78th Leg., ch. 141,
Sec. 6, eff. Sept. 1, 2003; Sec. 4(b)(4) amended by Acts 2003, 78th
Leg., ch. 206, Sec. 21.34, eff. June 11, 2003; Sec. 4(b)(5) amended
by Acts 2003, 78th Leg., ch. 206, Sec. 18.01, eff. June 11, 2003;
Sec. 4(b)(6) amended by Acts 2003, 78th Leg., ch. 141, Sec. 6, eff.
Sept. 1, 2003; Sec. 4(e), (f) added by Acts 2003, 78th Leg., ch. 56,
Sec. 2, eff. Sept. 1, 2003; Sec. 4A amended by Acts 2003, 78th Leg.,
ch. 141, Sec. 7, eff. Sept. 1, 2003; amended by Acts 2003, 78th
Leg., ch. 1195, Sec. 2, eff. Sept. 1, 2003; Sec. 4A(b) amended by
Acts 2003, 78th Leg., ch. 56, Sec. 3, eff. Sept. 1, 2003; Sec. 4B(a)
amended by Acts 2003, 78th Leg., ch. 141, Sec. 9, eff. Sept. 1,
2003; Sec. 4B(b) amended by Acts 2003, 78th Leg., ch. 56, Sec. 4,
eff. Sept. 1, 2003; amended by Acts 2003, 78th Leg. ch. 141, Sec. 9,
eff. Sept. 1, 2003; Sec. 4B(d), (e), (h) amended by Acts 2003, 78th
Leg., ch. 141, Sec. 9, eff. Sept. 1, 2003; Sec. 4C(a), (c) amended
by Acts 2003, 78th Leg., ch. 141, Sec. 10, eff. Sept. 1, 2003, Sec.
4C(d-1) added by Acts 2003, 78th Leg., ch. 141, Sec. 10, eff. Sept.
1, 2003; Sec. 5(a) amended by Acts 2003, 78th Leg., ch. 141, Sec.
11, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 1136, Sec. 2, eff.
June 18, 2005; Secs. 1, 3 to 4B, and 5 to 10 are repealed by Acts
2005, 79th Leg., ch. 727, Sec. 18(h), eff. April 7, 2007; Sec. 3C
added by Acts 2005, 79th Leg., ch. 246, Sec. 1, eff. May 30, 2005.
Article: 21.39-B 21.40 21.41 21.42 21.47 21.49 21.49-2V 21.49-3 21.49-3a 21.49-3b 21.49-3c 21.49-3d 21.49-4 21.49-4a 21.49-5
Last modified: August 11, 2007
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