State Codes and Statutes

Statutes > Texas > Insurance-code > Title-10-property-and-casualty-insurance > Chapter-2054-texas-mutual-insurance-company

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE E. WORKERS' COMPENSATION INSURANCE

CHAPTER 2054. TEXAS MUTUAL INSURANCE COMPANY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2054.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of directors of the company.

(2) Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.

3B.056, eff. September 1, 2007.

(3) "Company" means the Texas Mutual Insurance Company.

(4) "Workers' compensation insurance" means insurance for a risk

under:

(A) Subtitle A, Title 5, Labor Code;

(B) Chapter 504, Labor Code;

(C) the Longshore and Harbor Workers' Compensation Act (33

U.S.C. Section 901 et seq.);

(D) the Federal Mine Safety and Health Act of 1977 (30 U.S.C.

Section 801 et seq.);

(E) the Defense Base Act (42 U.S.C. Sections 1651-1654);

(F) the federal Employers' Liability Act (45 U.S.C. Section 51

et seq.);

(G) the Nonappropriated Fund Instrumentalities Act (5 U.S.C.

Sections 8171-8173);

(H) the Outer Continental Shelf Lands Act (43 U.S.C. Section

1331 et seq.); or

(I) the Merchant Marine Act of 1920 (46 App. U.S.C. Section 861

et seq.).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.056, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.056, eff. September 1, 2007.

Sec. 2054.002. REFERENCE TO TEXAS WORKERS' COMPENSATION

INSURANCE FUND. A reference in state law to the Texas Workers'

Compensation Insurance Fund means the Texas Mutual Insurance

Company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.003. OPERATION AS DOMESTIC MUTUAL INSURANCE COMPANY.

(a) The company operates as a domestic mutual insurance company

under Chapter 883. The company is subject to that chapter, but

is not subject to Chapter 826.

(b) The company:

(1) has the legal rights of a mutual insurance company operating

under Chapter 883 and of an individual in this state; and

(2) may bring a suit in the company's own name without any

procedural prerequisites to the exercise of that power.

(c) The company is not a state agency or executive agency or a

governmental entity for any purpose.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 1, eff. May 4, 2007.

Sec. 2054.004. INSURANCE COMPANY UNDER TEXAS WORKERS'

COMPENSATION ACT. The company is an insurance company for

purposes of Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.005. APPLICABILITY OF CODE. The company is subject to

this code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.006. AUTHORITY OF COMMISSIONER AND DEPARTMENT. (a)

The commissioner may regulate the company to the same extent that

the commissioner may regulate a mutual insurance company.

(b) The company is subject to the jurisdiction of the

commissioner and department in the same manner as a private

insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.007. OPEN MEETINGS LAW AND OPEN RECORDS LAW NOT

APPLICABLE. Notwithstanding any other state law, Chapters 551

and 552, Government Code, do not apply to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 2, eff. May 4, 2007.

Sec. 2054.008. INVESTIGATION FILES. (a) In this section,

"investigation file" means information the company compiles or

maintains with respect to a company investigation authorized by

law.

(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(c) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(d) Except as provided by Subsection (e), a company

investigation file:

(1) is confidential; and

(2) may be disclosed only:

(A) in a criminal proceeding;

(B) in a hearing conducted by the division of workers'

compensation of the department;

(C) on a judicial determination of good cause; or

(D) to a governmental agency, political subdivision, or

regulatory body if the disclosure is necessary or proper for the

enforcement of a law of this state, another state, or the United

States.

(e) Disclosure of information in an investigation file that is

contained in or derived from a claim file, an employer injury

report, or an occupational disease report is governed by any

confidentiality provision applicable to that information.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 3, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 4, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 6, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.051(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.051(a), eff. September 1, 2007.

Sec. 2054.009. CONFLICTS WITH CERTAIN INSURANCE LAWS. To the

extent of a conflict between this chapter and Chapter 883 or

another law of this state applicable to a nonlife mutual

insurance company, this chapter prevails.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER B. BOARD OF DIRECTORS

Sec. 2054.051. BOARD OF DIRECTORS; COMPOSITION. (a) The

company is governed by a board composed of nine members.

(b) The governor, with the advice and consent of the senate,

shall appoint five board members. The company's policyholders

shall elect the remaining members.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.052. QUALIFICATIONS. (a) Each board member must be a

resident of this state.

(b) An individual may not serve as a board member if the

individual, another individual related to the individual within

the second degree by consanguinity or affinity, or another

individual residing in the same household with the individual:

(1) is registered or licensed under this code or is required to

be registered or licensed under this code;

(2) is employed by or acts as a consultant to a person

registered or licensed under this code or required to be

registered or licensed under this code;

(3) owns, controls, has a financial interest in, or participates

in the management of an organization registered or licensed under

this code or required to be registered or licensed under this

code;

(4) receives a substantial tangible benefit from the company or

the department; or

(5) is an officer, employee, or consultant of an association in

the field of insurance.

(c) Subsection (b) does not prohibit an individual from serving

as a board member if the individual is only a policyholder or a

consumer of insurance or insurance products.

(d) An individual who is ineligible to serve on the board under

Subsection (b) may not serve as a board member until the first

anniversary of the date the condition that makes the individual

ineligible ends.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.053. PRESIDING OFFICER; OTHER OFFICERS. (a) The

governor shall designate a board member as the presiding officer

to serve in that capacity at the pleasure of the governor.

(b) The board members shall elect annually any other officers

the board considers necessary to perform the board's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.054. TERMS. (a) Board members serve staggered

six-year terms, with the terms of three members expiring July 1

of each odd-numbered year.

(b) A board member whose term has expired shall continue to

serve until the member's successor is appointed by the governor

or is elected by the company's policyholders, as applicable.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.055. VACANCIES. (a) The governor shall fill a

vacancy in the appointed board members by appointment with the

advice and consent of the senate.

(b) A vacancy in the elected board members shall be filled as

provided by the company's bylaws.

(c) If a vacancy occurs before the date the vacating member's

term expires, the successor member shall be appointed or elected

for a term that expires on the same date as the vacating member's

term.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.056. GROUNDS FOR REMOVAL. (a) It is a ground for

removal from the board if a member:

(1) does not have at the time of appointment or election the

qualifications required by Section 2054.052;

(2) does not maintain during service on the board the

qualifications required by Section 2054.052;

(3) cannot because of illness or disability discharge the

member's duties for a substantial part of the term for which the

member is appointed or elected; or

(4) is absent from more than half of the regularly scheduled

board meetings that the member is eligible to attend during a

calendar year.

(b) The validity of a board action is not affected by the fact

that it is taken when a ground for removal of a board member

exists.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.057. PROCEDURES FOR REMOVAL. (a) If the president of

the company has knowledge that a potential ground for removal of

a board member exists, the president shall notify the presiding

officer of the board of the potential ground.

(b) If the potential ground for removal involves an appointed

board member, the presiding officer shall notify the governor and

the attorney general that a potential ground for removal exists.

(c) If the potential ground for removal involves the presiding

officer, the president shall notify the next highest board

officer, who shall notify the governor and the attorney general

that a potential ground for removal exists.

(d) If the potential ground for removal involves an elected

board member, the board shall act on the potential ground for

removal as provided by the company's bylaws.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.058. COMMITTEES AND SUBCOMMITTEES. The board may

create committees and subcommittees.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.059. MEETINGS. (a) The board shall hold a meeting at

least once each calendar quarter, at other times at the call of

the presiding officer, and at times established by the company's

bylaws.

(b) A special meeting may be called by any two board members on

two days' notice.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.060. QUORUM. Five board members constitute a quorum.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.061. COMPENSATION. A board member is entitled to

receive:

(1) fees for service on the board commensurate with industry

standards; and

(2) actual and necessary travel expenses and any other expense

incurred in performing the member's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER C. MANAGEMENT OF COMPANY

Sec. 2054.101. GENERAL POWERS OF BOARD. The board has full

authority over the company and may:

(1) perform any act necessary or convenient to administer the

company or in connection with the company's insurance business;

and

(2) function in all aspects as the governing body of a domestic

mutual insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.102. GENERAL DUTIES OF BOARD RELATING TO WORKERS'

COMPENSATION INSURANCE. The board shall:

(1) provide for engaging in the business of workers'

compensation insurance and for the delivery in this state of

workers' compensation insurance to the same extent as any other

insurance company engaging in the business of workers'

compensation insurance in this state;

(2) propose rates for workers' compensation insurance issued by

the company; and

(3) exercise any other authority necessary to engage in the

business of workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.103. APPOINTMENT OF PRESIDENT. (a) The board shall

appoint a president who serves at the pleasure of the board.

(b) The president must have proven successful experience as an

executive at the general management level in the business of

insurance.

(c) The president shall receive compensation as set by the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.104. APPOINTMENT OF INTERNAL AUDITOR. The board shall

appoint an internal auditor who serves at the pleasure of the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.105. PERSONAL LIABILITY OF BOARD MEMBERS, OFFICERS,

AND EMPLOYEES. In connection with the administration,

management, or conduct of the company, the company's business, or

a related matter, a board member, the president, or an officer or

employee of the company is not personally liable in the

individual's private capacity for an act performed or a contract

or other obligation entered into or undertaken in the

individual's official capacity in good faith and without intent

to defraud.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.106. PRINCIPAL OFFICE. The board shall maintain the

company's principal office in Travis County.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.107. CERTAIN RELATIONSHIPS WITH OTHER INSURERS

PROHIBITED. The company may not have:

(1) an affiliate, spin-off, or subsidiary that writes a line of

insurance other than workers' compensation insurance; or

(2) interlocking boards of directors with an insurer that writes

a line of insurance other than workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.108. PROGRAM AND FACILITY ACCESSIBILITY. (a) The

company shall comply with federal and state laws that relate to

program and facility accessibility.

(b) The president shall prepare and maintain a written plan that

describes the manner in which an individual who does not speak

English can be provided reasonable access to the company's

programs and services.

(c) The board shall develop and implement policies that provide

the public with a reasonable opportunity to appear before the

board and to speak on any issue under the company's jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. OPERATION OF COMPANY; FINANCIAL ADMINISTRATION

Sec. 2054.151. PURPOSES OF COMPANY. The company shall:

(1) serve as a competitive force in the marketplace;

(2) guarantee the availability of workers' compensation

insurance in this state; and

(3) serve as an insurer of last resort as provided by Subchapter

H.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.152. PAYMENT OF TAXES, FEES, AND OTHER CHARGES. The

company shall pay the following in the same manner as a domestic

mutual insurance company authorized to engage in the business of

insurance and to write workers' compensation insurance in this

state:

(1) taxes, including maintenance and premium taxes;

(2) fees; and

(3) payments due in lieu of taxes.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.153. MEMBERSHIP IN TEXAS PROPERTY AND CASUALTY

INSURANCE GUARANTY ASSOCIATION. (a) In this section,

"association" means the Texas Property and Casualty Insurance

Guaranty Association.

(b) The company is:

(1) a member of and protected by the association; and

(2) subject to assessment under Chapter 462.

(c) Notwithstanding Subsection (b), the company is liable only

for an assessment by the association regarding a claim with a

date of injury occurring on or after January 1, 2000, and the

association, with respect to an insolvency of the company, is

liable only for a claim with a date of injury occurring on or

after that date.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.154. COMPANY ASSETS; STATE LIABILITY. (a) All money,

revenues, and other assets of the company belong solely to the

company and are governed by the laws applicable to domestic

mutual insurance companies.

(b) The state:

(1) covenants with the company's policyholders, persons

receiving workers' compensation benefits, and the company's

creditors that the state will not borrow, appropriate, or direct

payments from the company's money, revenues, or other assets for

any purpose; and

(2) has no liability or responsibility to those policyholders,

persons receiving benefits, or creditors if the company is placed

in conservatorship or receivership or becomes insolvent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.155. REQUIRED RESERVES. The company shall establish

and maintain reserves for losses on an actuarially sound basis in

accordance with Chapter 426.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.156. RATIO OF CERTAIN PREMIUMS TO SURPLUS. The

company shall maintain a ratio of net written premiums on

policies written after reinsurance to surplus of not more than

three to one.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.157. DISSOLUTION PROHIBITED. The company may not be

dissolved.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER E. EXAMINATIONS, REPORTS, AND FILINGS

Sec. 2054.201. EXAMINATION BY DEPARTMENT. (a) The department

shall examine the company in the manner and under the conditions

specified by Chapters 86 and 401 for the examination of insurers.

(b) The company shall pay the costs of the examination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.202. PROVIDING INFORMATION TO LEGISLATURE. The

company shall provide requested information to each appropriate

legislative committee in the manner requested by the committee.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.203. ANNUAL ACCOUNTING OF MONEY RECEIVED AND

DISBURSED. Each year, the company shall prepare a complete and

detailed written report accounting for all money the company

received and disbursed during the preceding fiscal year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.204. ANNUAL STATEMENTS. (a) The company shall file

annual statements with the department in the same manner as is

required of other workers' compensation insurance companies.

(b) The department shall include in the department's annual

report under Section 32.021 a report on the company's condition.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.052(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.052(a), eff. September 1, 2007.

Sec. 2054.205. PUBLICATION AND FILING OF AUDITED REPORT. The

board shall:

(1) publish an independently audited report analyzing the

company's activities and fiscal condition during the preceding

fiscal year; and

(2) file the audited report with the department for submission

simultaneously with its annual financial report.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.206. ADDITIONAL REPORTS. The company shall file with

the department all reports required of other workers'

compensation insurance companies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.053(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.053(a), eff. September 1, 2007.

Sec. 2054.207. PERIODIC REPORTS TO BOARD. The president shall

make periodic reports to the board regarding:

(1) the company's status; and

(2) the company's investments.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER F. GENERAL POWERS AND DUTIES RELATING TO INSURANCE

Sec. 2054.251. RATEMAKING AUTHORITY. (a) Except as provided by

this section, the board may propose rates to be charged by the

company for insurance.

(b) The board shall engage the services of an independent

actuary who is a member in good standing with the Casualty

Actuarial Society or the American Academy of Actuaries to develop

and recommend actuarially sound rates.

(c) The company is subject to the requirements of Subchapter A,

Chapter 2053, and shall include the recommendations of the

independent actuary as part of the company's filing under that

subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.252. AMOUNTS OF RATES. Rates charged by the company

for insurance must be set in amounts sufficient, when invested,

to:

(1) carry all claims to maturity;

(2) meet the reasonable expenses of conducting the company's

business; and

(3) maintain a reasonable surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.253. MULTITIERED PREMIUM SYSTEMS. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company may establish

multitiered premium systems to price workers' compensation

insurance policies to:

(1) insureds in the company's competitive programs; and

(2) insureds to whom policies are offered by the company under

Subchapter H.

(b) The systems may provide for a higher or lower premium

payment by an insured based on the company's evaluation of the

underwriting characteristics of the individual risk and the

appropriate premium to be charged for the policy coverages.

(c) The systems must be filed in accordance with Subchapter A,

Chapter 2053.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.0531, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.0531, eff. September 1, 2007.

Sec. 2054.254. CASH DIVIDENDS; CREDIT ON RENEWAL PREMIUM. (a)

The company may pay a cash dividend or allow a credit on the

renewal premium for a policyholder insured with the company,

other than a policyholder insured under Subchapter H.

(b) Payment of a cash dividend or allowance of a credit:

(1) must be made in accordance with criteria approved by the

board, which may consider the policyholder's safety record and

performance; and

(2) may be made only with the department's prior approval.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.255. APPOINTMENT OF AGENT NOT REQUIRED. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company is not required to

appoint a general property and casualty agent to act as an agent

for the company.

(b) An agent who transacts business with the company acts as an

agent for the applicant and not as an agent for the company,

unless the company and the agent have entered into a written

agreement for the agent to act on behalf of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.256. WORK PRODUCT INFORMATION. (a) Information

submitted to the company by an insurance agent on behalf of an

employer, including a policy expiration date, is the work product

of the agent. The company may not use the information in any

marketing or direct sales activity.

(b) The company may not provide to an insurance agent

information obtained from another insurance agent.

(c) This section does not prevent:

(1) an employer from designating another insurance agent or the

company as the agent of record; or

(2) the company from using information submitted to the company

under this section for underwriting or a fraud investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 5, eff. May 4, 2007.

Sec. 2054.257. PAYMENT OF COMMISSION TO AGENT. The company

shall pay an insurance agent a reasonable commission on a

workers' compensation insurance policy that is written through

the agent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER G. ISSUANCE OF COVERAGE

Sec. 2054.301. APPLICATION FOR COVERAGE. An application to the

company for workers' compensation insurance coverage must be:

(1) made on the form prescribed by the company; and

(2) submitted directly by the applicant or by a general property

and casualty agent on behalf of the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.302. POLICY FORMS. The company shall use the uniform

policy and standard policy forms prescribed by the department

under Section 2052.002.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.303. DENIAL OF COVERAGE BASED ON CREDIT RISK. The

company may refuse to write insurance coverage for an applicant

that the company identifies as a credit risk unless the

applicant, before a policy is issued:

(1) pays the total estimated premium and related charges; or

(2) provides security for payment of the total estimated premium

and related charges.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.304. CANCELLATION AND NONRENEWAL. The company may

cancel or refuse to renew coverage on a policyholder as provided

by Section 406.008, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER H. COMPANY AS INSURER OF LAST RESORT

Sec. 2054.351. INSURER OF LAST RESORT. (a) Except as provided

by Section 2054.304 and this subchapter, the company may not

refuse to insure a risk that tenders:

(1) the necessary premium; and

(2) any applicable accident prevention service fee.

(b) If an applicant would be rejected for workers' compensation

insurance under the company's underwriting standards, the company

may not reject the risk, but shall insure the risk at a higher

premium as provided by the company's requirements. The company

may require the risk to meet other conditions considered

necessary to protect the company's interests.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.352. REQUIRED DECLINATION OF CERTAIN RISKS. (a) In

this section, "good faith" means honesty in fact in any conduct

or transaction.

(b) The company shall decline to insure a risk if:

(1) insuring the risk would cause the company to exceed the

premium-to-surplus ratios established by Section 2054.156; or

(2) the risk is not, in good faith, entitled to insurance

through the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.353. REQUIRED INSURANCE OF CERTAIN COMMONLY OWNED OR

CONTROLLED ENTITIES. If the company suspects fraud or identifies

conditions that may result in acts of fraud, the company may

require an applicant for workers' compensation insurance coverage

who is identified as a risk for purposes of Section 2054.351(b)

to insure all business entities that are commonly owned or

controlled by the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.354. DEVELOPMENT AND PUBLICATION OF CERTAIN

INFORMATION. (a) The company shall develop statistical and

other information as necessary to allow the company to

distinguish between the company's:

(1) writings in the voluntary market; and

(2) writings as the insurer of last resort.

(b) The department shall develop and publish classification

relativities specifically designed for the risks insured under

this subchapter.

(c) On request, the company shall report statistical or other

information developed under Subsection (a) to:

(1) the department; or

(2) any successor entity for research and oversight of the

workers' compensation system of this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER I. APPEALS

Sec. 2054.401. APPEAL OF CERTAIN ACTIONS AND DECISIONS. (a) An

act or decision by the company to deny, cancel, or refuse to

renew a policy or risk insured under Subchapter H may be appealed

to the board not later than the 30th day after the date the

affected party receives actual notice that the act occurred or

the decision was made.

(b) The company shall:

(1) not later than the 30th day after the date the request for

hearing is made, hear the appeal; and

(2) not later than the 10th day before the date of the hearing,

notify the appellant in writing of the time and place of the

hearing.

(c) Not later than the 30th day after the last day of the

hearing, the board shall affirm, reverse, or modify the act or

decision appealed to the board.

(d) Unless the board specifically orders otherwise, a hearing

under this section does not suspend the operation of an act or

decision of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.402. REVIEW OF BOARD DECISION BY COMMISSIONER. (a) A

board decision under Section 2054.401 is subject to review by the

commissioner in the manner provided by Chapter 2001, Government

Code.

(b) The commissioner's review of a board decision does not

suspend the operation of an act or decision of the company unless

the commissioner specifically orders the suspension on a showing

by an aggrieved party of:

(1) immediate, irreparable injury, loss, or damage; and

(2) probable success on the merits.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.403. APPEAL OF COMMISSIONER'S DECISION. (a) A person

aggrieved by a decision of the commissioner under Section

2054.402 may appeal the decision to a district court.

(b) Judicial review under this section is governed by the

substantial evidence rule.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER J. CONTROL OF FRAUD AND OTHER VIOLATIONS

Sec. 2054.451. IDENTIFICATION AND INVESTIGATION PROGRAM FOR

FRAUD AND OTHER VIOLATIONS. (a) The company shall develop and

implement a program to identify and investigate acts of fraud and

violations of this code relating to workers' compensation

insurance by applicants, policyholders, claimants, agents,

insurers, health care providers, or other persons.

(b) The company shall cooperate with the division of workers'

compensation of the department to compile and maintain

information necessary to detect practices or patterns of conduct

that violate this code relating to workers' compensation

insurance or that violate Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(a), eff. September 1, 2007.

Sec. 2054.452. INVESTIGATIONS; COORDINATION. (a) The company

may investigate cases of suspected fraud and violations of this

code relating to workers' compensation insurance.

(b) The company may:

(1) coordinate the company's investigations with those conducted

by the division of workers' compensation of the department to

avoid duplication of efforts; and

(2) refer to the division of workers' compensation of the

department a case that is not otherwise resolved by the company

so that the division may:

(A) perform any further investigation necessary under the

circumstances;

(B) conduct administrative violation proceedings; and

(C) assess and collect penalties and restitution.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(b), eff. September 1, 2007.

Sec. 2054.453. RESTITUTION PAYABLE TO COMPANY. Restitution

collected under Section 2054.452(b) must be paid to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.454. DEPOSIT AND USE OF PENALTIES COLLECTED BY

DIVISION. A penalty collected under Section 2054.452(b):

(1) must be deposited in the Texas Department of Insurance

operating account; and

(2) may be appropriated only to the division of workers'

compensation of the department to offset the costs of the program

under Section 2054.451.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(c), eff. September 1, 2007.

Sec. 2054.455. FUNDING AGREEMENTS FOR CRIMINAL PROSECUTIONS.

The company may enter into funding agreements with local

prosecutors to prosecute offenses against the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.456. IMMUNITY FOR CERTAIN ACTIONS. The company, the

board, and company employees are not liable in a civil action for

an action taken in good faith in executing a duty under this

subchapter, including identifying or referring a person for

investigation of or prosecution for a possible administrative

violation or criminal offense.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER K. ACCIDENT PREVENTION

Sec. 2054.501. DEFINITION. In this subchapter, "division" means

the division of workers' compensation of the department.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(a), eff. September 1, 2007.

Sec. 2054.502. REQUIREMENTS FOR PREVENTION OF INJURIES. The

company may make and enforce requirements for the prevention of

injuries to an employee of a policyholder or applicant for

insurance under this chapter. On reasonable notice, a

policyholder or applicant shall grant representatives of the

company or the department free access to the premises of the

policyholder or applicant during regular working hours for

purposes of this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(b), eff. September 1, 2007.

Sec. 2054.503. GROUNDS FOR CANCELLATION OR DENIAL OF COVERAGE.

A failure or refusal by a policyholder or applicant for insurance

to comply with a requirement prescribed by the company under

Section 2054.502, or a failure or refusal to fully disclose all

information pertinent to insuring or servicing the policyholder

or applicant, constitutes sufficient grounds for the company to

cancel a policy or deny an application.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.504. SAFETY CONSULTATION FOR CERTAIN INSUREDS. (a) A

policyholder who is insured under Subchapter H shall obtain a

safety consultation:

(1) if the policyholder:

(A) has a Texas experience modifier greater than 1.25;

(B) has a national experience modifier greater than 1.25 and

estimated premium allocable to this state of $2,500 or more; or

(C) does not have an experience modifier but has had a loss

ratio greater than 0.70 in at least two of the three most recent

policy years for which information is available; or

(2) as required by the company, if the policyholder:

(A) has been in business for less than three years; and

(B) meets the criteria established by the company for a safety

consultation.

(b) The criteria under Subsection (a)(2)(B) may include:

(1) the number and classification of employees;

(2) the policyholder's industry; and

(3) the policyholder's previous workers' compensation experience

in this state or another jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.505. SAFETY CONSULTATION PROCEDURES. Not later than

the 30th day after the effective date of a policy, the

policyholder shall obtain a safety consultation required under

Section 2054.504 from a safety consultant. The safety consultant

must be:

(1) the company;

(2) the division; or

(3) a professional source approved for that purpose by the

division.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.506. SAFETY CONSULTANT REPORT. A safety consultant

acting under this subchapter shall file a written report with the

division and the policyholder specifying any hazardous condition

or practice identified in the safety consultation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(c), eff. September 1, 2007.

Sec. 2054.507. ACCIDENT PREVENTION PLAN. (a) If a safety

consultant identifies a hazardous condition or practice, the

policyholder and the safety consultant shall develop a specific

accident prevention plan that addresses the condition or

practice.

(b) The safety consultant may approve an existing accident

prevention plan.

(c) The policyholder shall comply with the accident prevention

plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.508. ACCIDENT INVESTIGATIONS; OTHER MONITORING. The

division may:

(1) investigate an accident that occurs at a work site of a

policyholder for whom an accident prevention plan was developed

under Section 2054.507; and

(2) otherwise monitor as the division determines necessary the

implementation of the accident prevention plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.509. FOLLOW-UP INSPECTION. (a) Not earlier than the

90th day after or later than the sixth month after the date an

accident prevention plan is developed under Section 2054.507, the

division shall conduct a follow-up inspection of the

policyholder's premises in accordance with rules adopted by the

commissioner of workers' compensation.

(b) The division may require the participation of the safety

consultant who performed the initial consultation and developed

the accident prevention plan.

(c) If the commissioner of workers' compensation determines that

a policyholder has complied with the terms of the accident

prevention plan or has implemented other accepted corrective

measures, the commissioner of workers' compensation shall certify

that determination.

(d) If the commissioner of workers' compensation determines that

a policyholder has failed or refuses to implement the accident

prevention plan or other suitable hazard abatement measures, the

policyholder may elect to cancel coverage not later than the 30th

day after the date of the determination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(d), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(d), eff. September 1, 2007.

Sec. 2054.510. CANCELLATION OF COVERAGE BY COMPANY; IMPOSITION

OF ADMINISTRATIVE PENALTY. (a) If a policyholder described by

Section 2054.509(d) does not elect to cancel coverage as provided

by that section:

(1) the company may cancel the coverage; or

(2) the commissioner of workers' compensation may impose an

administrative penalty on the policyholder.

(b) The amount of an administrative penalty under Subsection

(a)(2) may not exceed $5,000. Each day of noncompliance

constitutes a separate violation.

(c) In imposing an administrative penalty, the commissioner of

workers' compensation may consider any matter that justice may

require and shall consider:

(1) the seriousness of the violation, including the nature,

circumstances, consequences, extent, and gravity of the

prohibited act;

(2) the history and extent of previous administrative

violations;

(3) the demonstrated good faith of the violator, including

actions taken to rectify the consequences of the prohibited act;

(4) any economic benefit resulting from the prohibited act; and

(5) the penalty necessary to deter future violations.

(d) A penalty collected under this section:

(1) must be deposited in the general revenue fund; and

(2) may be appropriated to the division to offset the costs of

implementing and administering this subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(e), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(e), eff. September 1, 2007.

Sec. 2054.511. CONTINUING COMPLIANCE WITH SUBCHAPTER. The

procedures established under this subchapter must be followed

each year the policyholder meets the criteria established by

Section 2054.504(a)(1).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.512. FEES FOR SERVICES. The division shall:

(1) charge a policyholder for the reasonable cost of services

provided to the policyholder under Sections 2054.505, 2054.506,

2054.507, 2054.509, and 2054.510(a); and

(2) set the fees for the services at a cost-reimbursement level,

including a reasonable allocation of the division's

administrative costs.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(f), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(f), eff. September 1, 2007.

Sec. 2054.513. ENFORCEMENT OF SUBCHAPTER. The division shall

enforce compliance with this subchapter through the

administrative violation proceedings under Chapter 415, Labor

Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(g), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(g), eff. September 1, 2007.

SUBCHAPTER L. PUBLIC INTEREST INFORMATION AND COMPLAINT

PROCEDURES

Sec. 2054.551. PUBLIC INTEREST INFORMATION. (a) The company

shall prepare information of public interest describing the

functions of the company and the procedures by which complaints

are submitted to and resolved by the company.

(b) The company shall make the information available to the

public and appropriate state agencies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.552. COMPLAINTS. (a) The company shall establish

methods by which consumers and service recipients are notified of

the name, mailing address, and telephone number of the company

for the purpose of directing a complaint to the company.

(b) The company may provide for the notice:

(1) by a supplement or endorsement to a written policy;

(2) on a sign prominently displayed in the place of business of

each regional office of the company; or

(3) in a bill for services provided by the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.553. COMPLAINT RECORD. (a) The company shall keep

information about each written complaint filed with the company.

The information must include:

(1) the date the complaint is received;

(2) the name of the complainant;

(3) the subject matter of the complaint;

(4) a record of each person contacted in relation to the

complaint;

(5) a summary of the results of the review or investigation of

the complaint; and

(6) for a complaint for which the company takes no action, an

explanation of the reason the complaint was closed without

action.

(b) For each written complaint the company receives and has

authority to resolve, the company shall:

(1) provide the company's policies and procedures relating to

complaint investigation and resolution to the person filing the

complaint and each person or entity that is a subject of the

complaint; and

(2) at least quarterly and until final disposition of the

complaint, notify the person filing the complaint and each person

or entity that is a subject of the complaint of the status of the

complaint unless the notification would jeopardize an undercover

investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-10-property-and-casualty-insurance > Chapter-2054-texas-mutual-insurance-company

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE E. WORKERS' COMPENSATION INSURANCE

CHAPTER 2054. TEXAS MUTUAL INSURANCE COMPANY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2054.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of directors of the company.

(2) Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.

3B.056, eff. September 1, 2007.

(3) "Company" means the Texas Mutual Insurance Company.

(4) "Workers' compensation insurance" means insurance for a risk

under:

(A) Subtitle A, Title 5, Labor Code;

(B) Chapter 504, Labor Code;

(C) the Longshore and Harbor Workers' Compensation Act (33

U.S.C. Section 901 et seq.);

(D) the Federal Mine Safety and Health Act of 1977 (30 U.S.C.

Section 801 et seq.);

(E) the Defense Base Act (42 U.S.C. Sections 1651-1654);

(F) the federal Employers' Liability Act (45 U.S.C. Section 51

et seq.);

(G) the Nonappropriated Fund Instrumentalities Act (5 U.S.C.

Sections 8171-8173);

(H) the Outer Continental Shelf Lands Act (43 U.S.C. Section

1331 et seq.); or

(I) the Merchant Marine Act of 1920 (46 App. U.S.C. Section 861

et seq.).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.056, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.056, eff. September 1, 2007.

Sec. 2054.002. REFERENCE TO TEXAS WORKERS' COMPENSATION

INSURANCE FUND. A reference in state law to the Texas Workers'

Compensation Insurance Fund means the Texas Mutual Insurance

Company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.003. OPERATION AS DOMESTIC MUTUAL INSURANCE COMPANY.

(a) The company operates as a domestic mutual insurance company

under Chapter 883. The company is subject to that chapter, but

is not subject to Chapter 826.

(b) The company:

(1) has the legal rights of a mutual insurance company operating

under Chapter 883 and of an individual in this state; and

(2) may bring a suit in the company's own name without any

procedural prerequisites to the exercise of that power.

(c) The company is not a state agency or executive agency or a

governmental entity for any purpose.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 1, eff. May 4, 2007.

Sec. 2054.004. INSURANCE COMPANY UNDER TEXAS WORKERS'

COMPENSATION ACT. The company is an insurance company for

purposes of Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.005. APPLICABILITY OF CODE. The company is subject to

this code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.006. AUTHORITY OF COMMISSIONER AND DEPARTMENT. (a)

The commissioner may regulate the company to the same extent that

the commissioner may regulate a mutual insurance company.

(b) The company is subject to the jurisdiction of the

commissioner and department in the same manner as a private

insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.007. OPEN MEETINGS LAW AND OPEN RECORDS LAW NOT

APPLICABLE. Notwithstanding any other state law, Chapters 551

and 552, Government Code, do not apply to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 2, eff. May 4, 2007.

Sec. 2054.008. INVESTIGATION FILES. (a) In this section,

"investigation file" means information the company compiles or

maintains with respect to a company investigation authorized by

law.

(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(c) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(d) Except as provided by Subsection (e), a company

investigation file:

(1) is confidential; and

(2) may be disclosed only:

(A) in a criminal proceeding;

(B) in a hearing conducted by the division of workers'

compensation of the department;

(C) on a judicial determination of good cause; or

(D) to a governmental agency, political subdivision, or

regulatory body if the disclosure is necessary or proper for the

enforcement of a law of this state, another state, or the United

States.

(e) Disclosure of information in an investigation file that is

contained in or derived from a claim file, an employer injury

report, or an occupational disease report is governed by any

confidentiality provision applicable to that information.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 3, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 4, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 6, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.051(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.051(a), eff. September 1, 2007.

Sec. 2054.009. CONFLICTS WITH CERTAIN INSURANCE LAWS. To the

extent of a conflict between this chapter and Chapter 883 or

another law of this state applicable to a nonlife mutual

insurance company, this chapter prevails.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER B. BOARD OF DIRECTORS

Sec. 2054.051. BOARD OF DIRECTORS; COMPOSITION. (a) The

company is governed by a board composed of nine members.

(b) The governor, with the advice and consent of the senate,

shall appoint five board members. The company's policyholders

shall elect the remaining members.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.052. QUALIFICATIONS. (a) Each board member must be a

resident of this state.

(b) An individual may not serve as a board member if the

individual, another individual related to the individual within

the second degree by consanguinity or affinity, or another

individual residing in the same household with the individual:

(1) is registered or licensed under this code or is required to

be registered or licensed under this code;

(2) is employed by or acts as a consultant to a person

registered or licensed under this code or required to be

registered or licensed under this code;

(3) owns, controls, has a financial interest in, or participates

in the management of an organization registered or licensed under

this code or required to be registered or licensed under this

code;

(4) receives a substantial tangible benefit from the company or

the department; or

(5) is an officer, employee, or consultant of an association in

the field of insurance.

(c) Subsection (b) does not prohibit an individual from serving

as a board member if the individual is only a policyholder or a

consumer of insurance or insurance products.

(d) An individual who is ineligible to serve on the board under

Subsection (b) may not serve as a board member until the first

anniversary of the date the condition that makes the individual

ineligible ends.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.053. PRESIDING OFFICER; OTHER OFFICERS. (a) The

governor shall designate a board member as the presiding officer

to serve in that capacity at the pleasure of the governor.

(b) The board members shall elect annually any other officers

the board considers necessary to perform the board's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.054. TERMS. (a) Board members serve staggered

six-year terms, with the terms of three members expiring July 1

of each odd-numbered year.

(b) A board member whose term has expired shall continue to

serve until the member's successor is appointed by the governor

or is elected by the company's policyholders, as applicable.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.055. VACANCIES. (a) The governor shall fill a

vacancy in the appointed board members by appointment with the

advice and consent of the senate.

(b) A vacancy in the elected board members shall be filled as

provided by the company's bylaws.

(c) If a vacancy occurs before the date the vacating member's

term expires, the successor member shall be appointed or elected

for a term that expires on the same date as the vacating member's

term.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.056. GROUNDS FOR REMOVAL. (a) It is a ground for

removal from the board if a member:

(1) does not have at the time of appointment or election the

qualifications required by Section 2054.052;

(2) does not maintain during service on the board the

qualifications required by Section 2054.052;

(3) cannot because of illness or disability discharge the

member's duties for a substantial part of the term for which the

member is appointed or elected; or

(4) is absent from more than half of the regularly scheduled

board meetings that the member is eligible to attend during a

calendar year.

(b) The validity of a board action is not affected by the fact

that it is taken when a ground for removal of a board member

exists.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.057. PROCEDURES FOR REMOVAL. (a) If the president of

the company has knowledge that a potential ground for removal of

a board member exists, the president shall notify the presiding

officer of the board of the potential ground.

(b) If the potential ground for removal involves an appointed

board member, the presiding officer shall notify the governor and

the attorney general that a potential ground for removal exists.

(c) If the potential ground for removal involves the presiding

officer, the president shall notify the next highest board

officer, who shall notify the governor and the attorney general

that a potential ground for removal exists.

(d) If the potential ground for removal involves an elected

board member, the board shall act on the potential ground for

removal as provided by the company's bylaws.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.058. COMMITTEES AND SUBCOMMITTEES. The board may

create committees and subcommittees.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.059. MEETINGS. (a) The board shall hold a meeting at

least once each calendar quarter, at other times at the call of

the presiding officer, and at times established by the company's

bylaws.

(b) A special meeting may be called by any two board members on

two days' notice.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.060. QUORUM. Five board members constitute a quorum.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.061. COMPENSATION. A board member is entitled to

receive:

(1) fees for service on the board commensurate with industry

standards; and

(2) actual and necessary travel expenses and any other expense

incurred in performing the member's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER C. MANAGEMENT OF COMPANY

Sec. 2054.101. GENERAL POWERS OF BOARD. The board has full

authority over the company and may:

(1) perform any act necessary or convenient to administer the

company or in connection with the company's insurance business;

and

(2) function in all aspects as the governing body of a domestic

mutual insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.102. GENERAL DUTIES OF BOARD RELATING TO WORKERS'

COMPENSATION INSURANCE. The board shall:

(1) provide for engaging in the business of workers'

compensation insurance and for the delivery in this state of

workers' compensation insurance to the same extent as any other

insurance company engaging in the business of workers'

compensation insurance in this state;

(2) propose rates for workers' compensation insurance issued by

the company; and

(3) exercise any other authority necessary to engage in the

business of workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.103. APPOINTMENT OF PRESIDENT. (a) The board shall

appoint a president who serves at the pleasure of the board.

(b) The president must have proven successful experience as an

executive at the general management level in the business of

insurance.

(c) The president shall receive compensation as set by the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.104. APPOINTMENT OF INTERNAL AUDITOR. The board shall

appoint an internal auditor who serves at the pleasure of the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.105. PERSONAL LIABILITY OF BOARD MEMBERS, OFFICERS,

AND EMPLOYEES. In connection with the administration,

management, or conduct of the company, the company's business, or

a related matter, a board member, the president, or an officer or

employee of the company is not personally liable in the

individual's private capacity for an act performed or a contract

or other obligation entered into or undertaken in the

individual's official capacity in good faith and without intent

to defraud.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.106. PRINCIPAL OFFICE. The board shall maintain the

company's principal office in Travis County.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.107. CERTAIN RELATIONSHIPS WITH OTHER INSURERS

PROHIBITED. The company may not have:

(1) an affiliate, spin-off, or subsidiary that writes a line of

insurance other than workers' compensation insurance; or

(2) interlocking boards of directors with an insurer that writes

a line of insurance other than workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.108. PROGRAM AND FACILITY ACCESSIBILITY. (a) The

company shall comply with federal and state laws that relate to

program and facility accessibility.

(b) The president shall prepare and maintain a written plan that

describes the manner in which an individual who does not speak

English can be provided reasonable access to the company's

programs and services.

(c) The board shall develop and implement policies that provide

the public with a reasonable opportunity to appear before the

board and to speak on any issue under the company's jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. OPERATION OF COMPANY; FINANCIAL ADMINISTRATION

Sec. 2054.151. PURPOSES OF COMPANY. The company shall:

(1) serve as a competitive force in the marketplace;

(2) guarantee the availability of workers' compensation

insurance in this state; and

(3) serve as an insurer of last resort as provided by Subchapter

H.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.152. PAYMENT OF TAXES, FEES, AND OTHER CHARGES. The

company shall pay the following in the same manner as a domestic

mutual insurance company authorized to engage in the business of

insurance and to write workers' compensation insurance in this

state:

(1) taxes, including maintenance and premium taxes;

(2) fees; and

(3) payments due in lieu of taxes.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.153. MEMBERSHIP IN TEXAS PROPERTY AND CASUALTY

INSURANCE GUARANTY ASSOCIATION. (a) In this section,

"association" means the Texas Property and Casualty Insurance

Guaranty Association.

(b) The company is:

(1) a member of and protected by the association; and

(2) subject to assessment under Chapter 462.

(c) Notwithstanding Subsection (b), the company is liable only

for an assessment by the association regarding a claim with a

date of injury occurring on or after January 1, 2000, and the

association, with respect to an insolvency of the company, is

liable only for a claim with a date of injury occurring on or

after that date.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.154. COMPANY ASSETS; STATE LIABILITY. (a) All money,

revenues, and other assets of the company belong solely to the

company and are governed by the laws applicable to domestic

mutual insurance companies.

(b) The state:

(1) covenants with the company's policyholders, persons

receiving workers' compensation benefits, and the company's

creditors that the state will not borrow, appropriate, or direct

payments from the company's money, revenues, or other assets for

any purpose; and

(2) has no liability or responsibility to those policyholders,

persons receiving benefits, or creditors if the company is placed

in conservatorship or receivership or becomes insolvent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.155. REQUIRED RESERVES. The company shall establish

and maintain reserves for losses on an actuarially sound basis in

accordance with Chapter 426.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.156. RATIO OF CERTAIN PREMIUMS TO SURPLUS. The

company shall maintain a ratio of net written premiums on

policies written after reinsurance to surplus of not more than

three to one.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.157. DISSOLUTION PROHIBITED. The company may not be

dissolved.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER E. EXAMINATIONS, REPORTS, AND FILINGS

Sec. 2054.201. EXAMINATION BY DEPARTMENT. (a) The department

shall examine the company in the manner and under the conditions

specified by Chapters 86 and 401 for the examination of insurers.

(b) The company shall pay the costs of the examination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.202. PROVIDING INFORMATION TO LEGISLATURE. The

company shall provide requested information to each appropriate

legislative committee in the manner requested by the committee.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.203. ANNUAL ACCOUNTING OF MONEY RECEIVED AND

DISBURSED. Each year, the company shall prepare a complete and

detailed written report accounting for all money the company

received and disbursed during the preceding fiscal year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.204. ANNUAL STATEMENTS. (a) The company shall file

annual statements with the department in the same manner as is

required of other workers' compensation insurance companies.

(b) The department shall include in the department's annual

report under Section 32.021 a report on the company's condition.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.052(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.052(a), eff. September 1, 2007.

Sec. 2054.205. PUBLICATION AND FILING OF AUDITED REPORT. The

board shall:

(1) publish an independently audited report analyzing the

company's activities and fiscal condition during the preceding

fiscal year; and

(2) file the audited report with the department for submission

simultaneously with its annual financial report.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.206. ADDITIONAL REPORTS. The company shall file with

the department all reports required of other workers'

compensation insurance companies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.053(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.053(a), eff. September 1, 2007.

Sec. 2054.207. PERIODIC REPORTS TO BOARD. The president shall

make periodic reports to the board regarding:

(1) the company's status; and

(2) the company's investments.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER F. GENERAL POWERS AND DUTIES RELATING TO INSURANCE

Sec. 2054.251. RATEMAKING AUTHORITY. (a) Except as provided by

this section, the board may propose rates to be charged by the

company for insurance.

(b) The board shall engage the services of an independent

actuary who is a member in good standing with the Casualty

Actuarial Society or the American Academy of Actuaries to develop

and recommend actuarially sound rates.

(c) The company is subject to the requirements of Subchapter A,

Chapter 2053, and shall include the recommendations of the

independent actuary as part of the company's filing under that

subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.252. AMOUNTS OF RATES. Rates charged by the company

for insurance must be set in amounts sufficient, when invested,

to:

(1) carry all claims to maturity;

(2) meet the reasonable expenses of conducting the company's

business; and

(3) maintain a reasonable surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.253. MULTITIERED PREMIUM SYSTEMS. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company may establish

multitiered premium systems to price workers' compensation

insurance policies to:

(1) insureds in the company's competitive programs; and

(2) insureds to whom policies are offered by the company under

Subchapter H.

(b) The systems may provide for a higher or lower premium

payment by an insured based on the company's evaluation of the

underwriting characteristics of the individual risk and the

appropriate premium to be charged for the policy coverages.

(c) The systems must be filed in accordance with Subchapter A,

Chapter 2053.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.0531, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.0531, eff. September 1, 2007.

Sec. 2054.254. CASH DIVIDENDS; CREDIT ON RENEWAL PREMIUM. (a)

The company may pay a cash dividend or allow a credit on the

renewal premium for a policyholder insured with the company,

other than a policyholder insured under Subchapter H.

(b) Payment of a cash dividend or allowance of a credit:

(1) must be made in accordance with criteria approved by the

board, which may consider the policyholder's safety record and

performance; and

(2) may be made only with the department's prior approval.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.255. APPOINTMENT OF AGENT NOT REQUIRED. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company is not required to

appoint a general property and casualty agent to act as an agent

for the company.

(b) An agent who transacts business with the company acts as an

agent for the applicant and not as an agent for the company,

unless the company and the agent have entered into a written

agreement for the agent to act on behalf of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.256. WORK PRODUCT INFORMATION. (a) Information

submitted to the company by an insurance agent on behalf of an

employer, including a policy expiration date, is the work product

of the agent. The company may not use the information in any

marketing or direct sales activity.

(b) The company may not provide to an insurance agent

information obtained from another insurance agent.

(c) This section does not prevent:

(1) an employer from designating another insurance agent or the

company as the agent of record; or

(2) the company from using information submitted to the company

under this section for underwriting or a fraud investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 5, eff. May 4, 2007.

Sec. 2054.257. PAYMENT OF COMMISSION TO AGENT. The company

shall pay an insurance agent a reasonable commission on a

workers' compensation insurance policy that is written through

the agent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER G. ISSUANCE OF COVERAGE

Sec. 2054.301. APPLICATION FOR COVERAGE. An application to the

company for workers' compensation insurance coverage must be:

(1) made on the form prescribed by the company; and

(2) submitted directly by the applicant or by a general property

and casualty agent on behalf of the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.302. POLICY FORMS. The company shall use the uniform

policy and standard policy forms prescribed by the department

under Section 2052.002.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.303. DENIAL OF COVERAGE BASED ON CREDIT RISK. The

company may refuse to write insurance coverage for an applicant

that the company identifies as a credit risk unless the

applicant, before a policy is issued:

(1) pays the total estimated premium and related charges; or

(2) provides security for payment of the total estimated premium

and related charges.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.304. CANCELLATION AND NONRENEWAL. The company may

cancel or refuse to renew coverage on a policyholder as provided

by Section 406.008, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER H. COMPANY AS INSURER OF LAST RESORT

Sec. 2054.351. INSURER OF LAST RESORT. (a) Except as provided

by Section 2054.304 and this subchapter, the company may not

refuse to insure a risk that tenders:

(1) the necessary premium; and

(2) any applicable accident prevention service fee.

(b) If an applicant would be rejected for workers' compensation

insurance under the company's underwriting standards, the company

may not reject the risk, but shall insure the risk at a higher

premium as provided by the company's requirements. The company

may require the risk to meet other conditions considered

necessary to protect the company's interests.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.352. REQUIRED DECLINATION OF CERTAIN RISKS. (a) In

this section, "good faith" means honesty in fact in any conduct

or transaction.

(b) The company shall decline to insure a risk if:

(1) insuring the risk would cause the company to exceed the

premium-to-surplus ratios established by Section 2054.156; or

(2) the risk is not, in good faith, entitled to insurance

through the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.353. REQUIRED INSURANCE OF CERTAIN COMMONLY OWNED OR

CONTROLLED ENTITIES. If the company suspects fraud or identifies

conditions that may result in acts of fraud, the company may

require an applicant for workers' compensation insurance coverage

who is identified as a risk for purposes of Section 2054.351(b)

to insure all business entities that are commonly owned or

controlled by the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.354. DEVELOPMENT AND PUBLICATION OF CERTAIN

INFORMATION. (a) The company shall develop statistical and

other information as necessary to allow the company to

distinguish between the company's:

(1) writings in the voluntary market; and

(2) writings as the insurer of last resort.

(b) The department shall develop and publish classification

relativities specifically designed for the risks insured under

this subchapter.

(c) On request, the company shall report statistical or other

information developed under Subsection (a) to:

(1) the department; or

(2) any successor entity for research and oversight of the

workers' compensation system of this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER I. APPEALS

Sec. 2054.401. APPEAL OF CERTAIN ACTIONS AND DECISIONS. (a) An

act or decision by the company to deny, cancel, or refuse to

renew a policy or risk insured under Subchapter H may be appealed

to the board not later than the 30th day after the date the

affected party receives actual notice that the act occurred or

the decision was made.

(b) The company shall:

(1) not later than the 30th day after the date the request for

hearing is made, hear the appeal; and

(2) not later than the 10th day before the date of the hearing,

notify the appellant in writing of the time and place of the

hearing.

(c) Not later than the 30th day after the last day of the

hearing, the board shall affirm, reverse, or modify the act or

decision appealed to the board.

(d) Unless the board specifically orders otherwise, a hearing

under this section does not suspend the operation of an act or

decision of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.402. REVIEW OF BOARD DECISION BY COMMISSIONER. (a) A

board decision under Section 2054.401 is subject to review by the

commissioner in the manner provided by Chapter 2001, Government

Code.

(b) The commissioner's review of a board decision does not

suspend the operation of an act or decision of the company unless

the commissioner specifically orders the suspension on a showing

by an aggrieved party of:

(1) immediate, irreparable injury, loss, or damage; and

(2) probable success on the merits.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.403. APPEAL OF COMMISSIONER'S DECISION. (a) A person

aggrieved by a decision of the commissioner under Section

2054.402 may appeal the decision to a district court.

(b) Judicial review under this section is governed by the

substantial evidence rule.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER J. CONTROL OF FRAUD AND OTHER VIOLATIONS

Sec. 2054.451. IDENTIFICATION AND INVESTIGATION PROGRAM FOR

FRAUD AND OTHER VIOLATIONS. (a) The company shall develop and

implement a program to identify and investigate acts of fraud and

violations of this code relating to workers' compensation

insurance by applicants, policyholders, claimants, agents,

insurers, health care providers, or other persons.

(b) The company shall cooperate with the division of workers'

compensation of the department to compile and maintain

information necessary to detect practices or patterns of conduct

that violate this code relating to workers' compensation

insurance or that violate Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(a), eff. September 1, 2007.

Sec. 2054.452. INVESTIGATIONS; COORDINATION. (a) The company

may investigate cases of suspected fraud and violations of this

code relating to workers' compensation insurance.

(b) The company may:

(1) coordinate the company's investigations with those conducted

by the division of workers' compensation of the department to

avoid duplication of efforts; and

(2) refer to the division of workers' compensation of the

department a case that is not otherwise resolved by the company

so that the division may:

(A) perform any further investigation necessary under the

circumstances;

(B) conduct administrative violation proceedings; and

(C) assess and collect penalties and restitution.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(b), eff. September 1, 2007.

Sec. 2054.453. RESTITUTION PAYABLE TO COMPANY. Restitution

collected under Section 2054.452(b) must be paid to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.454. DEPOSIT AND USE OF PENALTIES COLLECTED BY

DIVISION. A penalty collected under Section 2054.452(b):

(1) must be deposited in the Texas Department of Insurance

operating account; and

(2) may be appropriated only to the division of workers'

compensation of the department to offset the costs of the program

under Section 2054.451.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(c), eff. September 1, 2007.

Sec. 2054.455. FUNDING AGREEMENTS FOR CRIMINAL PROSECUTIONS.

The company may enter into funding agreements with local

prosecutors to prosecute offenses against the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.456. IMMUNITY FOR CERTAIN ACTIONS. The company, the

board, and company employees are not liable in a civil action for

an action taken in good faith in executing a duty under this

subchapter, including identifying or referring a person for

investigation of or prosecution for a possible administrative

violation or criminal offense.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER K. ACCIDENT PREVENTION

Sec. 2054.501. DEFINITION. In this subchapter, "division" means

the division of workers' compensation of the department.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(a), eff. September 1, 2007.

Sec. 2054.502. REQUIREMENTS FOR PREVENTION OF INJURIES. The

company may make and enforce requirements for the prevention of

injuries to an employee of a policyholder or applicant for

insurance under this chapter. On reasonable notice, a

policyholder or applicant shall grant representatives of the

company or the department free access to the premises of the

policyholder or applicant during regular working hours for

purposes of this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(b), eff. September 1, 2007.

Sec. 2054.503. GROUNDS FOR CANCELLATION OR DENIAL OF COVERAGE.

A failure or refusal by a policyholder or applicant for insurance

to comply with a requirement prescribed by the company under

Section 2054.502, or a failure or refusal to fully disclose all

information pertinent to insuring or servicing the policyholder

or applicant, constitutes sufficient grounds for the company to

cancel a policy or deny an application.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.504. SAFETY CONSULTATION FOR CERTAIN INSUREDS. (a) A

policyholder who is insured under Subchapter H shall obtain a

safety consultation:

(1) if the policyholder:

(A) has a Texas experience modifier greater than 1.25;

(B) has a national experience modifier greater than 1.25 and

estimated premium allocable to this state of $2,500 or more; or

(C) does not have an experience modifier but has had a loss

ratio greater than 0.70 in at least two of the three most recent

policy years for which information is available; or

(2) as required by the company, if the policyholder:

(A) has been in business for less than three years; and

(B) meets the criteria established by the company for a safety

consultation.

(b) The criteria under Subsection (a)(2)(B) may include:

(1) the number and classification of employees;

(2) the policyholder's industry; and

(3) the policyholder's previous workers' compensation experience

in this state or another jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.505. SAFETY CONSULTATION PROCEDURES. Not later than

the 30th day after the effective date of a policy, the

policyholder shall obtain a safety consultation required under

Section 2054.504 from a safety consultant. The safety consultant

must be:

(1) the company;

(2) the division; or

(3) a professional source approved for that purpose by the

division.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.506. SAFETY CONSULTANT REPORT. A safety consultant

acting under this subchapter shall file a written report with the

division and the policyholder specifying any hazardous condition

or practice identified in the safety consultation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(c), eff. September 1, 2007.

Sec. 2054.507. ACCIDENT PREVENTION PLAN. (a) If a safety

consultant identifies a hazardous condition or practice, the

policyholder and the safety consultant shall develop a specific

accident prevention plan that addresses the condition or

practice.

(b) The safety consultant may approve an existing accident

prevention plan.

(c) The policyholder shall comply with the accident prevention

plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.508. ACCIDENT INVESTIGATIONS; OTHER MONITORING. The

division may:

(1) investigate an accident that occurs at a work site of a

policyholder for whom an accident prevention plan was developed

under Section 2054.507; and

(2) otherwise monitor as the division determines necessary the

implementation of the accident prevention plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.509. FOLLOW-UP INSPECTION. (a) Not earlier than the

90th day after or later than the sixth month after the date an

accident prevention plan is developed under Section 2054.507, the

division shall conduct a follow-up inspection of the

policyholder's premises in accordance with rules adopted by the

commissioner of workers' compensation.

(b) The division may require the participation of the safety

consultant who performed the initial consultation and developed

the accident prevention plan.

(c) If the commissioner of workers' compensation determines that

a policyholder has complied with the terms of the accident

prevention plan or has implemented other accepted corrective

measures, the commissioner of workers' compensation shall certify

that determination.

(d) If the commissioner of workers' compensation determines that

a policyholder has failed or refuses to implement the accident

prevention plan or other suitable hazard abatement measures, the

policyholder may elect to cancel coverage not later than the 30th

day after the date of the determination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(d), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(d), eff. September 1, 2007.

Sec. 2054.510. CANCELLATION OF COVERAGE BY COMPANY; IMPOSITION

OF ADMINISTRATIVE PENALTY. (a) If a policyholder described by

Section 2054.509(d) does not elect to cancel coverage as provided

by that section:

(1) the company may cancel the coverage; or

(2) the commissioner of workers' compensation may impose an

administrative penalty on the policyholder.

(b) The amount of an administrative penalty under Subsection

(a)(2) may not exceed $5,000. Each day of noncompliance

constitutes a separate violation.

(c) In imposing an administrative penalty, the commissioner of

workers' compensation may consider any matter that justice may

require and shall consider:

(1) the seriousness of the violation, including the nature,

circumstances, consequences, extent, and gravity of the

prohibited act;

(2) the history and extent of previous administrative

violations;

(3) the demonstrated good faith of the violator, including

actions taken to rectify the consequences of the prohibited act;

(4) any economic benefit resulting from the prohibited act; and

(5) the penalty necessary to deter future violations.

(d) A penalty collected under this section:

(1) must be deposited in the general revenue fund; and

(2) may be appropriated to the division to offset the costs of

implementing and administering this subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(e), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(e), eff. September 1, 2007.

Sec. 2054.511. CONTINUING COMPLIANCE WITH SUBCHAPTER. The

procedures established under this subchapter must be followed

each year the policyholder meets the criteria established by

Section 2054.504(a)(1).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.512. FEES FOR SERVICES. The division shall:

(1) charge a policyholder for the reasonable cost of services

provided to the policyholder under Sections 2054.505, 2054.506,

2054.507, 2054.509, and 2054.510(a); and

(2) set the fees for the services at a cost-reimbursement level,

including a reasonable allocation of the division's

administrative costs.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(f), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(f), eff. September 1, 2007.

Sec. 2054.513. ENFORCEMENT OF SUBCHAPTER. The division shall

enforce compliance with this subchapter through the

administrative violation proceedings under Chapter 415, Labor

Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(g), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(g), eff. September 1, 2007.

SUBCHAPTER L. PUBLIC INTEREST INFORMATION AND COMPLAINT

PROCEDURES

Sec. 2054.551. PUBLIC INTEREST INFORMATION. (a) The company

shall prepare information of public interest describing the

functions of the company and the procedures by which complaints

are submitted to and resolved by the company.

(b) The company shall make the information available to the

public and appropriate state agencies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.552. COMPLAINTS. (a) The company shall establish

methods by which consumers and service recipients are notified of

the name, mailing address, and telephone number of the company

for the purpose of directing a complaint to the company.

(b) The company may provide for the notice:

(1) by a supplement or endorsement to a written policy;

(2) on a sign prominently displayed in the place of business of

each regional office of the company; or

(3) in a bill for services provided by the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.553. COMPLAINT RECORD. (a) The company shall keep

information about each written complaint filed with the company.

The information must include:

(1) the date the complaint is received;

(2) the name of the complainant;

(3) the subject matter of the complaint;

(4) a record of each person contacted in relation to the

complaint;

(5) a summary of the results of the review or investigation of

the complaint; and

(6) for a complaint for which the company takes no action, an

explanation of the reason the complaint was closed without

action.

(b) For each written complaint the company receives and has

authority to resolve, the company shall:

(1) provide the company's policies and procedures relating to

complaint investigation and resolution to the person filing the

complaint and each person or entity that is a subject of the

complaint; and

(2) at least quarterly and until final disposition of the

complaint, notify the person filing the complaint and each person

or entity that is a subject of the complaint of the status of the

complaint unless the notification would jeopardize an undercover

investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.


State Codes and Statutes

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-10-property-and-casualty-insurance > Chapter-2054-texas-mutual-insurance-company

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE E. WORKERS' COMPENSATION INSURANCE

CHAPTER 2054. TEXAS MUTUAL INSURANCE COMPANY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2054.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of directors of the company.

(2) Repealed by Acts 2007, 80th Leg., R.S., Ch. 730, Sec.

3B.056, eff. September 1, 2007.

(3) "Company" means the Texas Mutual Insurance Company.

(4) "Workers' compensation insurance" means insurance for a risk

under:

(A) Subtitle A, Title 5, Labor Code;

(B) Chapter 504, Labor Code;

(C) the Longshore and Harbor Workers' Compensation Act (33

U.S.C. Section 901 et seq.);

(D) the Federal Mine Safety and Health Act of 1977 (30 U.S.C.

Section 801 et seq.);

(E) the Defense Base Act (42 U.S.C. Sections 1651-1654);

(F) the federal Employers' Liability Act (45 U.S.C. Section 51

et seq.);

(G) the Nonappropriated Fund Instrumentalities Act (5 U.S.C.

Sections 8171-8173);

(H) the Outer Continental Shelf Lands Act (43 U.S.C. Section

1331 et seq.); or

(I) the Merchant Marine Act of 1920 (46 App. U.S.C. Section 861

et seq.).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.056, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.056, eff. September 1, 2007.

Sec. 2054.002. REFERENCE TO TEXAS WORKERS' COMPENSATION

INSURANCE FUND. A reference in state law to the Texas Workers'

Compensation Insurance Fund means the Texas Mutual Insurance

Company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.003. OPERATION AS DOMESTIC MUTUAL INSURANCE COMPANY.

(a) The company operates as a domestic mutual insurance company

under Chapter 883. The company is subject to that chapter, but

is not subject to Chapter 826.

(b) The company:

(1) has the legal rights of a mutual insurance company operating

under Chapter 883 and of an individual in this state; and

(2) may bring a suit in the company's own name without any

procedural prerequisites to the exercise of that power.

(c) The company is not a state agency or executive agency or a

governmental entity for any purpose.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 1, eff. May 4, 2007.

Sec. 2054.004. INSURANCE COMPANY UNDER TEXAS WORKERS'

COMPENSATION ACT. The company is an insurance company for

purposes of Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.005. APPLICABILITY OF CODE. The company is subject to

this code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.006. AUTHORITY OF COMMISSIONER AND DEPARTMENT. (a)

The commissioner may regulate the company to the same extent that

the commissioner may regulate a mutual insurance company.

(b) The company is subject to the jurisdiction of the

commissioner and department in the same manner as a private

insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.007. OPEN MEETINGS LAW AND OPEN RECORDS LAW NOT

APPLICABLE. Notwithstanding any other state law, Chapters 551

and 552, Government Code, do not apply to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 2, eff. May 4, 2007.

Sec. 2054.008. INVESTIGATION FILES. (a) In this section,

"investigation file" means information the company compiles or

maintains with respect to a company investigation authorized by

law.

(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(c) Repealed by Acts 2007, 80th Leg., R.S., Ch. 23, Sec. 6, eff.

May 4, 2007.

(d) Except as provided by Subsection (e), a company

investigation file:

(1) is confidential; and

(2) may be disclosed only:

(A) in a criminal proceeding;

(B) in a hearing conducted by the division of workers'

compensation of the department;

(C) on a judicial determination of good cause; or

(D) to a governmental agency, political subdivision, or

regulatory body if the disclosure is necessary or proper for the

enforcement of a law of this state, another state, or the United

States.

(e) Disclosure of information in an investigation file that is

contained in or derived from a claim file, an employer injury

report, or an occupational disease report is governed by any

confidentiality provision applicable to that information.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 3, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 4, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 6, eff. May 4, 2007.

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.051(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.051(a), eff. September 1, 2007.

Sec. 2054.009. CONFLICTS WITH CERTAIN INSURANCE LAWS. To the

extent of a conflict between this chapter and Chapter 883 or

another law of this state applicable to a nonlife mutual

insurance company, this chapter prevails.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER B. BOARD OF DIRECTORS

Sec. 2054.051. BOARD OF DIRECTORS; COMPOSITION. (a) The

company is governed by a board composed of nine members.

(b) The governor, with the advice and consent of the senate,

shall appoint five board members. The company's policyholders

shall elect the remaining members.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.052. QUALIFICATIONS. (a) Each board member must be a

resident of this state.

(b) An individual may not serve as a board member if the

individual, another individual related to the individual within

the second degree by consanguinity or affinity, or another

individual residing in the same household with the individual:

(1) is registered or licensed under this code or is required to

be registered or licensed under this code;

(2) is employed by or acts as a consultant to a person

registered or licensed under this code or required to be

registered or licensed under this code;

(3) owns, controls, has a financial interest in, or participates

in the management of an organization registered or licensed under

this code or required to be registered or licensed under this

code;

(4) receives a substantial tangible benefit from the company or

the department; or

(5) is an officer, employee, or consultant of an association in

the field of insurance.

(c) Subsection (b) does not prohibit an individual from serving

as a board member if the individual is only a policyholder or a

consumer of insurance or insurance products.

(d) An individual who is ineligible to serve on the board under

Subsection (b) may not serve as a board member until the first

anniversary of the date the condition that makes the individual

ineligible ends.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.053. PRESIDING OFFICER; OTHER OFFICERS. (a) The

governor shall designate a board member as the presiding officer

to serve in that capacity at the pleasure of the governor.

(b) The board members shall elect annually any other officers

the board considers necessary to perform the board's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.054. TERMS. (a) Board members serve staggered

six-year terms, with the terms of three members expiring July 1

of each odd-numbered year.

(b) A board member whose term has expired shall continue to

serve until the member's successor is appointed by the governor

or is elected by the company's policyholders, as applicable.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.055. VACANCIES. (a) The governor shall fill a

vacancy in the appointed board members by appointment with the

advice and consent of the senate.

(b) A vacancy in the elected board members shall be filled as

provided by the company's bylaws.

(c) If a vacancy occurs before the date the vacating member's

term expires, the successor member shall be appointed or elected

for a term that expires on the same date as the vacating member's

term.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.056. GROUNDS FOR REMOVAL. (a) It is a ground for

removal from the board if a member:

(1) does not have at the time of appointment or election the

qualifications required by Section 2054.052;

(2) does not maintain during service on the board the

qualifications required by Section 2054.052;

(3) cannot because of illness or disability discharge the

member's duties for a substantial part of the term for which the

member is appointed or elected; or

(4) is absent from more than half of the regularly scheduled

board meetings that the member is eligible to attend during a

calendar year.

(b) The validity of a board action is not affected by the fact

that it is taken when a ground for removal of a board member

exists.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.057. PROCEDURES FOR REMOVAL. (a) If the president of

the company has knowledge that a potential ground for removal of

a board member exists, the president shall notify the presiding

officer of the board of the potential ground.

(b) If the potential ground for removal involves an appointed

board member, the presiding officer shall notify the governor and

the attorney general that a potential ground for removal exists.

(c) If the potential ground for removal involves the presiding

officer, the president shall notify the next highest board

officer, who shall notify the governor and the attorney general

that a potential ground for removal exists.

(d) If the potential ground for removal involves an elected

board member, the board shall act on the potential ground for

removal as provided by the company's bylaws.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.058. COMMITTEES AND SUBCOMMITTEES. The board may

create committees and subcommittees.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.059. MEETINGS. (a) The board shall hold a meeting at

least once each calendar quarter, at other times at the call of

the presiding officer, and at times established by the company's

bylaws.

(b) A special meeting may be called by any two board members on

two days' notice.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.060. QUORUM. Five board members constitute a quorum.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.061. COMPENSATION. A board member is entitled to

receive:

(1) fees for service on the board commensurate with industry

standards; and

(2) actual and necessary travel expenses and any other expense

incurred in performing the member's duties.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER C. MANAGEMENT OF COMPANY

Sec. 2054.101. GENERAL POWERS OF BOARD. The board has full

authority over the company and may:

(1) perform any act necessary or convenient to administer the

company or in connection with the company's insurance business;

and

(2) function in all aspects as the governing body of a domestic

mutual insurance company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.102. GENERAL DUTIES OF BOARD RELATING TO WORKERS'

COMPENSATION INSURANCE. The board shall:

(1) provide for engaging in the business of workers'

compensation insurance and for the delivery in this state of

workers' compensation insurance to the same extent as any other

insurance company engaging in the business of workers'

compensation insurance in this state;

(2) propose rates for workers' compensation insurance issued by

the company; and

(3) exercise any other authority necessary to engage in the

business of workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.103. APPOINTMENT OF PRESIDENT. (a) The board shall

appoint a president who serves at the pleasure of the board.

(b) The president must have proven successful experience as an

executive at the general management level in the business of

insurance.

(c) The president shall receive compensation as set by the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.104. APPOINTMENT OF INTERNAL AUDITOR. The board shall

appoint an internal auditor who serves at the pleasure of the

board.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.105. PERSONAL LIABILITY OF BOARD MEMBERS, OFFICERS,

AND EMPLOYEES. In connection with the administration,

management, or conduct of the company, the company's business, or

a related matter, a board member, the president, or an officer or

employee of the company is not personally liable in the

individual's private capacity for an act performed or a contract

or other obligation entered into or undertaken in the

individual's official capacity in good faith and without intent

to defraud.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.106. PRINCIPAL OFFICE. The board shall maintain the

company's principal office in Travis County.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.107. CERTAIN RELATIONSHIPS WITH OTHER INSURERS

PROHIBITED. The company may not have:

(1) an affiliate, spin-off, or subsidiary that writes a line of

insurance other than workers' compensation insurance; or

(2) interlocking boards of directors with an insurer that writes

a line of insurance other than workers' compensation insurance.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.108. PROGRAM AND FACILITY ACCESSIBILITY. (a) The

company shall comply with federal and state laws that relate to

program and facility accessibility.

(b) The president shall prepare and maintain a written plan that

describes the manner in which an individual who does not speak

English can be provided reasonable access to the company's

programs and services.

(c) The board shall develop and implement policies that provide

the public with a reasonable opportunity to appear before the

board and to speak on any issue under the company's jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER D. OPERATION OF COMPANY; FINANCIAL ADMINISTRATION

Sec. 2054.151. PURPOSES OF COMPANY. The company shall:

(1) serve as a competitive force in the marketplace;

(2) guarantee the availability of workers' compensation

insurance in this state; and

(3) serve as an insurer of last resort as provided by Subchapter

H.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.152. PAYMENT OF TAXES, FEES, AND OTHER CHARGES. The

company shall pay the following in the same manner as a domestic

mutual insurance company authorized to engage in the business of

insurance and to write workers' compensation insurance in this

state:

(1) taxes, including maintenance and premium taxes;

(2) fees; and

(3) payments due in lieu of taxes.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.153. MEMBERSHIP IN TEXAS PROPERTY AND CASUALTY

INSURANCE GUARANTY ASSOCIATION. (a) In this section,

"association" means the Texas Property and Casualty Insurance

Guaranty Association.

(b) The company is:

(1) a member of and protected by the association; and

(2) subject to assessment under Chapter 462.

(c) Notwithstanding Subsection (b), the company is liable only

for an assessment by the association regarding a claim with a

date of injury occurring on or after January 1, 2000, and the

association, with respect to an insolvency of the company, is

liable only for a claim with a date of injury occurring on or

after that date.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.154. COMPANY ASSETS; STATE LIABILITY. (a) All money,

revenues, and other assets of the company belong solely to the

company and are governed by the laws applicable to domestic

mutual insurance companies.

(b) The state:

(1) covenants with the company's policyholders, persons

receiving workers' compensation benefits, and the company's

creditors that the state will not borrow, appropriate, or direct

payments from the company's money, revenues, or other assets for

any purpose; and

(2) has no liability or responsibility to those policyholders,

persons receiving benefits, or creditors if the company is placed

in conservatorship or receivership or becomes insolvent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.155. REQUIRED RESERVES. The company shall establish

and maintain reserves for losses on an actuarially sound basis in

accordance with Chapter 426.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.156. RATIO OF CERTAIN PREMIUMS TO SURPLUS. The

company shall maintain a ratio of net written premiums on

policies written after reinsurance to surplus of not more than

three to one.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.157. DISSOLUTION PROHIBITED. The company may not be

dissolved.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER E. EXAMINATIONS, REPORTS, AND FILINGS

Sec. 2054.201. EXAMINATION BY DEPARTMENT. (a) The department

shall examine the company in the manner and under the conditions

specified by Chapters 86 and 401 for the examination of insurers.

(b) The company shall pay the costs of the examination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.202. PROVIDING INFORMATION TO LEGISLATURE. The

company shall provide requested information to each appropriate

legislative committee in the manner requested by the committee.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.203. ANNUAL ACCOUNTING OF MONEY RECEIVED AND

DISBURSED. Each year, the company shall prepare a complete and

detailed written report accounting for all money the company

received and disbursed during the preceding fiscal year.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.204. ANNUAL STATEMENTS. (a) The company shall file

annual statements with the department in the same manner as is

required of other workers' compensation insurance companies.

(b) The department shall include in the department's annual

report under Section 32.021 a report on the company's condition.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.052(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.052(a), eff. September 1, 2007.

Sec. 2054.205. PUBLICATION AND FILING OF AUDITED REPORT. The

board shall:

(1) publish an independently audited report analyzing the

company's activities and fiscal condition during the preceding

fiscal year; and

(2) file the audited report with the department for submission

simultaneously with its annual financial report.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.206. ADDITIONAL REPORTS. The company shall file with

the department all reports required of other workers'

compensation insurance companies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.053(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.053(a), eff. September 1, 2007.

Sec. 2054.207. PERIODIC REPORTS TO BOARD. The president shall

make periodic reports to the board regarding:

(1) the company's status; and

(2) the company's investments.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER F. GENERAL POWERS AND DUTIES RELATING TO INSURANCE

Sec. 2054.251. RATEMAKING AUTHORITY. (a) Except as provided by

this section, the board may propose rates to be charged by the

company for insurance.

(b) The board shall engage the services of an independent

actuary who is a member in good standing with the Casualty

Actuarial Society or the American Academy of Actuaries to develop

and recommend actuarially sound rates.

(c) The company is subject to the requirements of Subchapter A,

Chapter 2053, and shall include the recommendations of the

independent actuary as part of the company's filing under that

subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.252. AMOUNTS OF RATES. Rates charged by the company

for insurance must be set in amounts sufficient, when invested,

to:

(1) carry all claims to maturity;

(2) meet the reasonable expenses of conducting the company's

business; and

(3) maintain a reasonable surplus.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.253. MULTITIERED PREMIUM SYSTEMS. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company may establish

multitiered premium systems to price workers' compensation

insurance policies to:

(1) insureds in the company's competitive programs; and

(2) insureds to whom policies are offered by the company under

Subchapter H.

(b) The systems may provide for a higher or lower premium

payment by an insured based on the company's evaluation of the

underwriting characteristics of the individual risk and the

appropriate premium to be charged for the policy coverages.

(c) The systems must be filed in accordance with Subchapter A,

Chapter 2053.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.0531, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.0531, eff. September 1, 2007.

Sec. 2054.254. CASH DIVIDENDS; CREDIT ON RENEWAL PREMIUM. (a)

The company may pay a cash dividend or allow a credit on the

renewal premium for a policyholder insured with the company,

other than a policyholder insured under Subchapter H.

(b) Payment of a cash dividend or allowance of a credit:

(1) must be made in accordance with criteria approved by the

board, which may consider the policyholder's safety record and

performance; and

(2) may be made only with the department's prior approval.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.255. APPOINTMENT OF AGENT NOT REQUIRED. (a)

Notwithstanding any other provision of this code or another

insurance law of this state, the company is not required to

appoint a general property and casualty agent to act as an agent

for the company.

(b) An agent who transacts business with the company acts as an

agent for the applicant and not as an agent for the company,

unless the company and the agent have entered into a written

agreement for the agent to act on behalf of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.256. WORK PRODUCT INFORMATION. (a) Information

submitted to the company by an insurance agent on behalf of an

employer, including a policy expiration date, is the work product

of the agent. The company may not use the information in any

marketing or direct sales activity.

(b) The company may not provide to an insurance agent

information obtained from another insurance agent.

(c) This section does not prevent:

(1) an employer from designating another insurance agent or the

company as the agent of record; or

(2) the company from using information submitted to the company

under this section for underwriting or a fraud investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

23, Sec. 5, eff. May 4, 2007.

Sec. 2054.257. PAYMENT OF COMMISSION TO AGENT. The company

shall pay an insurance agent a reasonable commission on a

workers' compensation insurance policy that is written through

the agent.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER G. ISSUANCE OF COVERAGE

Sec. 2054.301. APPLICATION FOR COVERAGE. An application to the

company for workers' compensation insurance coverage must be:

(1) made on the form prescribed by the company; and

(2) submitted directly by the applicant or by a general property

and casualty agent on behalf of the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.302. POLICY FORMS. The company shall use the uniform

policy and standard policy forms prescribed by the department

under Section 2052.002.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.303. DENIAL OF COVERAGE BASED ON CREDIT RISK. The

company may refuse to write insurance coverage for an applicant

that the company identifies as a credit risk unless the

applicant, before a policy is issued:

(1) pays the total estimated premium and related charges; or

(2) provides security for payment of the total estimated premium

and related charges.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.304. CANCELLATION AND NONRENEWAL. The company may

cancel or refuse to renew coverage on a policyholder as provided

by Section 406.008, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER H. COMPANY AS INSURER OF LAST RESORT

Sec. 2054.351. INSURER OF LAST RESORT. (a) Except as provided

by Section 2054.304 and this subchapter, the company may not

refuse to insure a risk that tenders:

(1) the necessary premium; and

(2) any applicable accident prevention service fee.

(b) If an applicant would be rejected for workers' compensation

insurance under the company's underwriting standards, the company

may not reject the risk, but shall insure the risk at a higher

premium as provided by the company's requirements. The company

may require the risk to meet other conditions considered

necessary to protect the company's interests.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.352. REQUIRED DECLINATION OF CERTAIN RISKS. (a) In

this section, "good faith" means honesty in fact in any conduct

or transaction.

(b) The company shall decline to insure a risk if:

(1) insuring the risk would cause the company to exceed the

premium-to-surplus ratios established by Section 2054.156; or

(2) the risk is not, in good faith, entitled to insurance

through the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.353. REQUIRED INSURANCE OF CERTAIN COMMONLY OWNED OR

CONTROLLED ENTITIES. If the company suspects fraud or identifies

conditions that may result in acts of fraud, the company may

require an applicant for workers' compensation insurance coverage

who is identified as a risk for purposes of Section 2054.351(b)

to insure all business entities that are commonly owned or

controlled by the applicant.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.354. DEVELOPMENT AND PUBLICATION OF CERTAIN

INFORMATION. (a) The company shall develop statistical and

other information as necessary to allow the company to

distinguish between the company's:

(1) writings in the voluntary market; and

(2) writings as the insurer of last resort.

(b) The department shall develop and publish classification

relativities specifically designed for the risks insured under

this subchapter.

(c) On request, the company shall report statistical or other

information developed under Subsection (a) to:

(1) the department; or

(2) any successor entity for research and oversight of the

workers' compensation system of this state.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER I. APPEALS

Sec. 2054.401. APPEAL OF CERTAIN ACTIONS AND DECISIONS. (a) An

act or decision by the company to deny, cancel, or refuse to

renew a policy or risk insured under Subchapter H may be appealed

to the board not later than the 30th day after the date the

affected party receives actual notice that the act occurred or

the decision was made.

(b) The company shall:

(1) not later than the 30th day after the date the request for

hearing is made, hear the appeal; and

(2) not later than the 10th day before the date of the hearing,

notify the appellant in writing of the time and place of the

hearing.

(c) Not later than the 30th day after the last day of the

hearing, the board shall affirm, reverse, or modify the act or

decision appealed to the board.

(d) Unless the board specifically orders otherwise, a hearing

under this section does not suspend the operation of an act or

decision of the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.402. REVIEW OF BOARD DECISION BY COMMISSIONER. (a) A

board decision under Section 2054.401 is subject to review by the

commissioner in the manner provided by Chapter 2001, Government

Code.

(b) The commissioner's review of a board decision does not

suspend the operation of an act or decision of the company unless

the commissioner specifically orders the suspension on a showing

by an aggrieved party of:

(1) immediate, irreparable injury, loss, or damage; and

(2) probable success on the merits.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.403. APPEAL OF COMMISSIONER'S DECISION. (a) A person

aggrieved by a decision of the commissioner under Section

2054.402 may appeal the decision to a district court.

(b) Judicial review under this section is governed by the

substantial evidence rule.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER J. CONTROL OF FRAUD AND OTHER VIOLATIONS

Sec. 2054.451. IDENTIFICATION AND INVESTIGATION PROGRAM FOR

FRAUD AND OTHER VIOLATIONS. (a) The company shall develop and

implement a program to identify and investigate acts of fraud and

violations of this code relating to workers' compensation

insurance by applicants, policyholders, claimants, agents,

insurers, health care providers, or other persons.

(b) The company shall cooperate with the division of workers'

compensation of the department to compile and maintain

information necessary to detect practices or patterns of conduct

that violate this code relating to workers' compensation

insurance or that violate Subtitle A, Title 5, Labor Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(a), eff. September 1, 2007.

Sec. 2054.452. INVESTIGATIONS; COORDINATION. (a) The company

may investigate cases of suspected fraud and violations of this

code relating to workers' compensation insurance.

(b) The company may:

(1) coordinate the company's investigations with those conducted

by the division of workers' compensation of the department to

avoid duplication of efforts; and

(2) refer to the division of workers' compensation of the

department a case that is not otherwise resolved by the company

so that the division may:

(A) perform any further investigation necessary under the

circumstances;

(B) conduct administrative violation proceedings; and

(C) assess and collect penalties and restitution.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(b), eff. September 1, 2007.

Sec. 2054.453. RESTITUTION PAYABLE TO COMPANY. Restitution

collected under Section 2054.452(b) must be paid to the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.454. DEPOSIT AND USE OF PENALTIES COLLECTED BY

DIVISION. A penalty collected under Section 2054.452(b):

(1) must be deposited in the Texas Department of Insurance

operating account; and

(2) may be appropriated only to the division of workers'

compensation of the department to offset the costs of the program

under Section 2054.451.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.054(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.054(c), eff. September 1, 2007.

Sec. 2054.455. FUNDING AGREEMENTS FOR CRIMINAL PROSECUTIONS.

The company may enter into funding agreements with local

prosecutors to prosecute offenses against the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.456. IMMUNITY FOR CERTAIN ACTIONS. The company, the

board, and company employees are not liable in a civil action for

an action taken in good faith in executing a duty under this

subchapter, including identifying or referring a person for

investigation of or prosecution for a possible administrative

violation or criminal offense.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

SUBCHAPTER K. ACCIDENT PREVENTION

Sec. 2054.501. DEFINITION. In this subchapter, "division" means

the division of workers' compensation of the department.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(a), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(a), eff. September 1, 2007.

Sec. 2054.502. REQUIREMENTS FOR PREVENTION OF INJURIES. The

company may make and enforce requirements for the prevention of

injuries to an employee of a policyholder or applicant for

insurance under this chapter. On reasonable notice, a

policyholder or applicant shall grant representatives of the

company or the department free access to the premises of the

policyholder or applicant during regular working hours for

purposes of this section.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(b), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(b), eff. September 1, 2007.

Sec. 2054.503. GROUNDS FOR CANCELLATION OR DENIAL OF COVERAGE.

A failure or refusal by a policyholder or applicant for insurance

to comply with a requirement prescribed by the company under

Section 2054.502, or a failure or refusal to fully disclose all

information pertinent to insuring or servicing the policyholder

or applicant, constitutes sufficient grounds for the company to

cancel a policy or deny an application.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.504. SAFETY CONSULTATION FOR CERTAIN INSUREDS. (a) A

policyholder who is insured under Subchapter H shall obtain a

safety consultation:

(1) if the policyholder:

(A) has a Texas experience modifier greater than 1.25;

(B) has a national experience modifier greater than 1.25 and

estimated premium allocable to this state of $2,500 or more; or

(C) does not have an experience modifier but has had a loss

ratio greater than 0.70 in at least two of the three most recent

policy years for which information is available; or

(2) as required by the company, if the policyholder:

(A) has been in business for less than three years; and

(B) meets the criteria established by the company for a safety

consultation.

(b) The criteria under Subsection (a)(2)(B) may include:

(1) the number and classification of employees;

(2) the policyholder's industry; and

(3) the policyholder's previous workers' compensation experience

in this state or another jurisdiction.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.505. SAFETY CONSULTATION PROCEDURES. Not later than

the 30th day after the effective date of a policy, the

policyholder shall obtain a safety consultation required under

Section 2054.504 from a safety consultant. The safety consultant

must be:

(1) the company;

(2) the division; or

(3) a professional source approved for that purpose by the

division.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.506. SAFETY CONSULTANT REPORT. A safety consultant

acting under this subchapter shall file a written report with the

division and the policyholder specifying any hazardous condition

or practice identified in the safety consultation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(c), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(c), eff. September 1, 2007.

Sec. 2054.507. ACCIDENT PREVENTION PLAN. (a) If a safety

consultant identifies a hazardous condition or practice, the

policyholder and the safety consultant shall develop a specific

accident prevention plan that addresses the condition or

practice.

(b) The safety consultant may approve an existing accident

prevention plan.

(c) The policyholder shall comply with the accident prevention

plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.508. ACCIDENT INVESTIGATIONS; OTHER MONITORING. The

division may:

(1) investigate an accident that occurs at a work site of a

policyholder for whom an accident prevention plan was developed

under Section 2054.507; and

(2) otherwise monitor as the division determines necessary the

implementation of the accident prevention plan.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.509. FOLLOW-UP INSPECTION. (a) Not earlier than the

90th day after or later than the sixth month after the date an

accident prevention plan is developed under Section 2054.507, the

division shall conduct a follow-up inspection of the

policyholder's premises in accordance with rules adopted by the

commissioner of workers' compensation.

(b) The division may require the participation of the safety

consultant who performed the initial consultation and developed

the accident prevention plan.

(c) If the commissioner of workers' compensation determines that

a policyholder has complied with the terms of the accident

prevention plan or has implemented other accepted corrective

measures, the commissioner of workers' compensation shall certify

that determination.

(d) If the commissioner of workers' compensation determines that

a policyholder has failed or refuses to implement the accident

prevention plan or other suitable hazard abatement measures, the

policyholder may elect to cancel coverage not later than the 30th

day after the date of the determination.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(d), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(d), eff. September 1, 2007.

Sec. 2054.510. CANCELLATION OF COVERAGE BY COMPANY; IMPOSITION

OF ADMINISTRATIVE PENALTY. (a) If a policyholder described by

Section 2054.509(d) does not elect to cancel coverage as provided

by that section:

(1) the company may cancel the coverage; or

(2) the commissioner of workers' compensation may impose an

administrative penalty on the policyholder.

(b) The amount of an administrative penalty under Subsection

(a)(2) may not exceed $5,000. Each day of noncompliance

constitutes a separate violation.

(c) In imposing an administrative penalty, the commissioner of

workers' compensation may consider any matter that justice may

require and shall consider:

(1) the seriousness of the violation, including the nature,

circumstances, consequences, extent, and gravity of the

prohibited act;

(2) the history and extent of previous administrative

violations;

(3) the demonstrated good faith of the violator, including

actions taken to rectify the consequences of the prohibited act;

(4) any economic benefit resulting from the prohibited act; and

(5) the penalty necessary to deter future violations.

(d) A penalty collected under this section:

(1) must be deposited in the general revenue fund; and

(2) may be appropriated to the division to offset the costs of

implementing and administering this subchapter.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(e), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(e), eff. September 1, 2007.

Sec. 2054.511. CONTINUING COMPLIANCE WITH SUBCHAPTER. The

procedures established under this subchapter must be followed

each year the policyholder meets the criteria established by

Section 2054.504(a)(1).

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.512. FEES FOR SERVICES. The division shall:

(1) charge a policyholder for the reasonable cost of services

provided to the policyholder under Sections 2054.505, 2054.506,

2054.507, 2054.509, and 2054.510(a); and

(2) set the fees for the services at a cost-reimbursement level,

including a reasonable allocation of the division's

administrative costs.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(f), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(f), eff. September 1, 2007.

Sec. 2054.513. ENFORCEMENT OF SUBCHAPTER. The division shall

enforce compliance with this subchapter through the

administrative violation proceedings under Chapter 415, Labor

Code.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 3B.055(g), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 9.055(g), eff. September 1, 2007.

SUBCHAPTER L. PUBLIC INTEREST INFORMATION AND COMPLAINT

PROCEDURES

Sec. 2054.551. PUBLIC INTEREST INFORMATION. (a) The company

shall prepare information of public interest describing the

functions of the company and the procedures by which complaints

are submitted to and resolved by the company.

(b) The company shall make the information available to the

public and appropriate state agencies.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.552. COMPLAINTS. (a) The company shall establish

methods by which consumers and service recipients are notified of

the name, mailing address, and telephone number of the company

for the purpose of directing a complaint to the company.

(b) The company may provide for the notice:

(1) by a supplement or endorsement to a written policy;

(2) on a sign prominently displayed in the place of business of

each regional office of the company; or

(3) in a bill for services provided by the company.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.

Sec. 2054.553. COMPLAINT RECORD. (a) The company shall keep

information about each written complaint filed with the company.

The information must include:

(1) the date the complaint is received;

(2) the name of the complainant;

(3) the subject matter of the complaint;

(4) a record of each person contacted in relation to the

complaint;

(5) a summary of the results of the review or investigation of

the complaint; and

(6) for a complaint for which the company takes no action, an

explanation of the reason the complaint was closed without

action.

(b) For each written complaint the company receives and has

authority to resolve, the company shall:

(1) provide the company's policies and procedures relating to

complaint investigation and resolution to the person filing the

complaint and each person or entity that is a subject of the

complaint; and

(2) at least quarterly and until final disposition of the

complaint, notify the person filing the complaint and each person

or entity that is a subject of the complaint of the status of the

complaint unless the notification would jeopardize an undercover

investigation.

Added by Acts 2005, 79th Leg., Ch.

727, Sec. 2, eff. April 1, 2007.