CHAPTER 2203. MEDICAL LIABILITY INSURANCE JOINT UNDERWRITING ASSOCIATION

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-10-property-and-casualty-insurance > Chapter-2203-medical-liability-insurance-joint-underwriting-association

INSURANCE CODE

TITLE 10. PROPERTY AND CASUALTY INSURANCE

SUBTITLE G. POOLS, GROUPS, PLANS, AND SELF-INSURANCE

CHAPTER 2203. MEDICAL LIABILITY INSURANCE JOINT UNDERWRITING

ASSOCIATION

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2203.001. SHORT TITLE. This chapter may be cited as the

Texas Medical Liability Insurance Underwriting Association Act.

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

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

Sec. 2203.002. DEFINITIONS. In this chapter:

(1) "Assisted living facility" means a for-profit or

not-for-profit assisted living facility.

(2) "Association" means the joint underwriting association

established under this chapter.

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

association.

(4) "Health care provider" means:

(A) a person, partnership, professional association,

corporation, facility, or institution licensed or chartered by

this state to provide health care, as defined in Section

74.001(a)(10), Civil Practice and Remedies Code, as:

(i) a registered nurse, dentist, podiatrist, pharmacist,

chiropractor, or optometrist;

(ii) a hospital;

(iii) a nursing home;

(iv) a radiation therapy center that is independent of any other

medical treatment facility, is licensed by the Department of

State Health Services in that agency's capacity as the Texas

Radiation Control Agency under Chapter 401, Health and Safety

Code, and is in compliance with the regulations adopted under

that chapter;

(v) a blood bank that is a nonprofit corporation chartered to

operate a blood bank and is accredited by the American

Association of Blood Banks;

(vi) a nonprofit corporation that is organized for the delivery

of health care to the public and is certified under Chapter 162,

Occupations Code;

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

amended; or

(viii) an assisted living facility; or

(B) an officer, employee, or agent of an entity listed in

Paragraph (A) acting in the course and scope of that person's

office, employment, or agency.

(5) "Medical liability insurance" means primary and excess

liability insurance coverage against:

(A) the legal liability of the insured; and

(B) loss, damage, or expense incident to a claim arising out of

the death or injury of a person as the result of negligence in

rendering or failing to render professional service by a health

care provider or physician who is in a category eligible for

coverage by the association.

(6) "Net direct premiums" means gross direct premiums written on

automobile liability and other liability insurance written under

this code, less:

(A) policyholder dividends;

(B) return premiums for the unused or unabsorbed portion of

premium deposits; and

liability risks.

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

home.

(8) "Physician" means a person licensed to practice medicine in

this state.

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

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

Sec. 2203.003. IMMUNITY. Liability does not exist on the part

of, and a cause of action does not arise against, the

association, an association agent or employee, an insurer, an

agent licensed under this code, the commissioner or department,

or an authorized representative of the commissioner or department

for a statement made in good faith by any of them:

(1) in a report or communication concerning risks insured or to

be insured through the association; or

(2) at an administrative hearing conducted in connection with

the report or communication.

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

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

Sec. 2203.004. APPLICABILITY OF OTHER LAW. The association is

subject to Sections 401.051, 401.052, 401.054-401.062, 401.151,

401.152, 401.155, and 401.156 and Subchapter A, Chapter 86.

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

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

Sec. 2203.005. RELATIONSHIP TO SURPLUS LINES INSURANCE. The

association is not an authorized insurer for purposes of Chapter

981 with respect to medical liability insurance for physicians.

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

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

SUBCHAPTER B. ASSOCIATION ADMINISTRATION AND OPERATION

Sec. 2203.051. PURPOSE OF ASSOCIATION. The association provides

medical liability insurance on a self-supporting basis.

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

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

Sec. 2203.052. BOARD OF DIRECTORS. (a) The association is

governed by a board of directors composed of the following nine

members:

(1) five representatives of insurers that are required to be

association members, elected by association members;

(2) one physician, appointed by the Texas Medical Association or

a successor to that association;

(3) one representative of hospitals, appointed by the Texas

Hospital Association or a successor to that association; and

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

(b) The board members serve one-year terms beginning on October

1 of each year.

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

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

Sec. 2203.053. PLAN OF OPERATION. (a) The association operates

under a plan of operation adopted by the commissioner.

(b) The plan of operation must:

(1) provide for economic, fair, and nondiscriminatory

administration;

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

liability insurance; and

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

(A) the establishment of necessary facilities;

(B) the association's management;

and expenses;

(D) the administration of the policyholder's stabilization

reserve funds;

(E) commission arrangements;

(F) reasonable and objective underwriting standards;

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

(H) the appointment of servicing insurers; and

(I) procedures for determining amounts of insurance to be

provided by the association.

expenditures that remains in the association's funds at the close

of the association's fiscal year, after the association

reimburses members' contributions in accordance with Section

2203.255(a), be added to the association's reserves.

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

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

Sec. 2203.054. AMENDMENTS TO PLAN OF OPERATION. Amendments to

the plan of operation:

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

(2) may be made by the board of directors, subject to the

commissioner's approval.

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

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

Sec. 2203.055. JOINT UNDERWRITING ASSOCIATION MEMBERSHIP. (a)

The association is composed of each insurer, including a Lloyd's

plan and a reciprocal or interinsurance exchange, authorized to

write and writing liability insurance, including automobile

liability insurance, on a direct basis in this state, other than:

(1) a farm mutual insurance company authorized under Chapter

911; and

(2) a county mutual insurance company authorized under Chapter

912.

(b) An insurer that is a member of the association must remain a

member as a condition of the insurer's authority to engage in the

business of the insurance described by Subsection (a).

expenses, and losses of the association in the proportion that

the net direct premiums of the member, excluding the portion of

premiums attributable to the operation of the association,

written during the preceding calendar year bears to the aggregate

net direct premiums written in this state by all association

members.

(d) The association shall annually determine a member's

participation in the association on the basis of the net direct

premiums written by the member during the preceding calendar

year, as reported in the annual statements and other reports the

member files as required by the department.

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

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

Sec. 2203.056. ANNUAL STATEMENT; ADDITIONAL INFORMATION. (a)

Not later than March 1 of each year, the association shall file

with the department a statement that contains information

regarding the association's transactions, condition, operations,

and affairs during the preceding calendar year.

(b) The statement must:

(1) contain the matters and information required by the

department; and

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

provide additional information regarding the association's

transactions or condition, or any related matter considered to

be:

(1) material; and

(2) of assistance in evaluating the scope, operation, and

experience of the association.

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

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

SUBCHAPTER C. ELIGIBILITY FOR COVERAGE

Sec. 2203.101. GENERAL ELIGIBILITY. (a) The commissioner shall

by order establish the categories of physicians and health care

providers that are eligible to obtain insurance coverage from the

association. The commissioner may revise the order to:

(1) include as eligible for that coverage other categories of

physicians and health care providers; or

(2) exclude from eligibility for that coverage particular

categories of physicians and health care providers.

(b) If a category of physicians or health care providers is

excluded from eligibility to obtain insurance coverage from the

association, the commissioner may determine, after notice of at

least 10 days and a hearing, that medical liability insurance is

not otherwise available. On that determination, the previously

excluded category is eligible to obtain insurance coverage from

the association.

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

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

Sec. 2203.102. INSURER OF LAST RESORT FOR CERTAIN NURSING HOMES

AND ASSISTED LIVING FACILITIES. (a) A nursing home or assisted

living facility not otherwise eligible for insurance coverage

from the association under Section 2203.101 is eligible for that

coverage if the home or facility demonstrates, in accordance with

the requirements of the association, that the home or facility:

(1) made a verifiable effort to obtain insurance coverage from

authorized insurers and eligible surplus lines insurers; and

(2) was unable to obtain substantially equivalent insurance

coverage and rates.

(b) In consultation with the Department of Aging and Disability

Services, the commissioner by rule shall adopt minimum rating

standards for for-profit nursing homes and for-profit assisted

living facilities that must be met before a for-profit nursing

home or for-profit assisted living facility may obtain insurance

coverage through the association. The standards must promote the

highest practical level of care for residents of the nursing

homes and assisted living facilities.

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

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

Sec. 2203.1021. VOLUNTEER HEALTH CARE PROVIDERS. (a) In this

section:

(1) "Charitable organization" has the meaning assigned by

Section 84.003, Civil Practice and Remedies Code.

(2) "Volunteer health care provider" has the meaning assigned by

Section 84.003, Civil Practice and Remedies Code.

(b) The association shall make available medical liability

insurance or appropriate health care liability insurance covering

a volunteer health care provider for the legal liability of the

person against any loss, damage, or expense incident to a claim

arising out of the death or injury of any person as the result of

negligence in rendering or the failure to render professional

service while acting in the course and scope of the person's

duties as a volunteer health care provider as described by

Chapter 84, Civil Practice and Remedies Code.

service volunteer of a charitable organization is eligible to

obtain from the association the liability insurance made

available under this section. A volunteer health care provider

who obtains coverage under this section is subject to Section

2203.302 and the other provisions of this chapter in the same

manner as physicians who are eligible to obtain medical liability

insurance from the association.

(d) This section does not affect the liability of a volunteer

health care provider who is serving as a direct service volunteer

of a charitable organization. Section 84.004(c), Civil Practice

and Remedies Code, applies to the volunteer health care provider

without regard to whether the volunteer health care provider

obtains liability insurance under this section.

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

730, Sec. 3B.060(a), eff. September 1, 2007.

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

921, Sec. 9.060(a), eff. September 1, 2007.

Sec. 2203.103. ELIGIBILITY OF OTHER HEALTH CARE PRACTITIONERS

AND FACILITIES. (a) In this section:

(1) "Health care" includes a medical or health care service,

including an examination, treatment, medical diagnosis, or

evaluation, and care provided in an inpatient, outpatient, or

residential setting.

(2) "Health care facility" means a facility providing health

care, other than a facility described by Section 2203.002(4).

(3) "Health care practitioner" means an individual, other than

an individual described by Section 2203.002(4), who:

(A) is licensed to provide health care; or

(B) is not licensed to provide health care but provides health

care under the direction or supervision of a licensed individual.

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

may:

(1) determine that appropriate liability insurance coverage

written by insurers authorized to engage in business in this

state is not reasonably available to a type of health care

practitioner or health care facility; and

(2) by order designate that type of health care practitioner or

health care facility to be included as a health care provider

eligible to receive coverage under this chapter.

Subsection (b) is entitled to receive insurance coverage under

this chapter in accordance with Chapter 1901 in the same manner

as other health care providers described by Section 2203.002 and

Section 1901.001.

(d) The commissioner's order may indicate whether a health care

practitioner or facility designated under Subsection (b) is

included under the policyholder's stabilization reserve fund

established under Section 2203.301 or 2203.303 or whether a

separate policyholder's stabilization reserve fund is created. A

separate policyholder's stabilization reserve fund established

under this subsection operates in the same manner as a

policyholder's stabilization reserve fund created under Section

2203.303.

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

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

Sec. 2203.104. APPLICATION FOR COVERAGE. (a) A health care

provider or physician included in a category eligible for

insurance coverage by the association is entitled to apply to the

association for the coverage. An agent authorized under Chapter

4051 may apply on behalf of an applicant.

(b) The association shall issue a medical liability insurance

policy to an applicant:

(1) if the association determines that:

(A) the applicant meets the underwriting standards of the

association prescribed by the plan of operation; and

(B) there is no unpaid and uncontested premium, policyholder's

stabilization reserve fund charge, or assessment due from the

applicant for prior insurance, as shown by the insured's failure

to pay or to object in writing to the charges on or before the

30th day after the date of the billing; and

(2) on receipt of the premium and the policyholder's

stabilization reserve fund charge, or the portion of the premium

and charge prescribed by the plan of operation.

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

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

SUBCHAPTER D. ASSOCIATION COVERAGE

Sec. 2203.151. POWERS RELATING TO MEDICAL LIABILITY INSURANCE

COVERAGE. (a) Under this chapter and the plan of operation, the

association, on behalf of the association members, may:

(1) issue, or cause to be issued, medical liability insurance

policies to applicants, including primary, excess, and incidental

coverages, subject to the limits specified in the plan of

operation and Section 2203.152;

(2) underwrite medical liability insurance and adjust and pay

losses related to that insurance, or appoint servicing insurers

to perform those functions;

(3) either or both accept and refuse the assumption of

reinsurance from association members; and

(4) cede and purchase reinsurance.

(b) The association may provide general liability insurance

coverage to be issued in connection with medical liability

insurance issued by the association.

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

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

Sec. 2203.152. POLICY LIMITS. The association may not issue one

or more policies insuring an individual or organization for an

amount exceeding $1 million for each occurrence and $3 million in

the aggregate for a year.

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

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

Sec. 2203.153. FOLLOWING FORM EXCESS LIABILITY COVERAGE. Excess

liability insurance coverage written for a physician or health

care provider by the association under this chapter must be

written as following form excess liability insurance to the

physician's or provider's primary insurance coverage.

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

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

Sec. 2203.154. PUNITIVE DAMAGES EXCLUDED. The association may

not issue or renew a medical liability insurance policy for a

physician or health care provider under this chapter that

includes coverage for punitive damages assessed against the

physician or health care provider.

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

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

Sec. 2203.155. INSTALLMENT PLAN. The association may offer an

installment payment plan for insurance coverage obtained through

the association.

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

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

Sec. 2203.156. TERM OF POLICY; NOTICE OF CERTAIN CHANGES. (a)

A policy issued by the association must be for a term of one year

or less, as determined by the association.

(b) Section 1901.253 does not apply to a medical liability

insurance policy issued by the association for a term of less

than one year.

is provided to the insured for a policy described by Subsection

(b) if the association intends to:

(1) increase the premiums on the policy; or

(2) cancel or not renew the policy for a reason other than for

nonpayment of premiums or because the insured is no longer

licensed.

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

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

SUBCHAPTER E. RATES AND POLICY FORMS

Sec. 2203.201. APPLICABILITY OF OTHER LAW TO RATES AND POLICY

FORMS. (a) Except as provided by Subsection (b) and subject to

Section 2203.203, the following laws govern the rates, rating

plans, rating rules, rating classifications, territories, and

policy forms applicable to the insurance written by the

association and related statistics:

(1) Section 36.002(1);

(2) Subchapter B, Chapter 5;

(3) Subchapters A and C, Chapter 1806;

(4) Subchapter A, Chapter 2301;

(5) Chapter 251, as that chapter relates to casualty insurance

and fidelity, guaranty, and surety bond insurance;

(6) Chapter 253;

(7) Chapters 2251 and 2252; and

(8) Subtitle B.

(b) If a provision of a law described by Subsections (a)(1)-(8)

conflicts with a provision of this chapter, this chapter

prevails.

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

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

Sec. 2203.202. RATE STANDARDS. (a) In determining rates,

rating plans, rating rules, rating classifications, territories,

and policy forms, the association shall consider:

(1) the past and prospective loss and expense experience for

medical professional liability insurance, inside and outside this

state, of all of the association members;

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

(3) the association's investment income; and

(4) other information the commissioner may require.

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

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

(2) other information based on that experience the department

considers appropriate.

(1) actuarially sound; and

(2) computed to be self-supporting.

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

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

Sec. 2203.203. DISCOUNT FOR CERTAIN HEALTH CARE PROVIDERS. (a)

The rates applicable to professional liability insurance coverage

provided by the association for not-for-profit nursing homes and

not-for-profit assisted living facilities must reflect a discount

of 30 percent from the rates for the same coverage provided to

others in the same category of insureds.

(b) The commissioner shall ensure compliance with this section.

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

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

SUBCHAPTER F. FINANCIAL PARTICIPATION BY MEMBERS AND

POLICYHOLDERS

Sec. 2203.251. DEFICIT RECOUPMENT. (a) This section applies to

a deficit sustained in a single year by the association with

respect to:

(1) physicians and health care providers, other than nursing

homes and assisted living facilities; or

(2) a nursing home or assisted living facility.

(b) The deficit must be recouped in accordance with the plan of

operation and the rating plan in effect when the deficit is

sustained under one or more of the following procedures, in this

sequence:

(1) a contribution from the policyholder's stabilization reserve

fund established under Section 2203.301 or the policyholder's

stabilization reserve fund established under Section 2203.303, as

appropriate, until the respective fund is exhausted;

(2) an assessment on the policyholders in accordance with

Section 2203.252; or

(3) an assessment on the members in accordance with Sections

2203.055(c) and (d) and 2203.253.

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

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

Sec. 2203.252. ASSESSMENT OF POLICYHOLDERS FOR DEFICIT

RECOUPMENT. (a) Each policyholder within the group of

physicians and health care providers, other than nursing homes

and assisted living facilities, or within the group of nursing

homes and assisted living facilities, has contingent liability

for a proportionate share of an assessment made under this

chapter of policyholders in the applicable group.

(b) If a deficit, as computed under the plan of operation, is

sustained with respect to a group described by Subsection (a) in

a single year, the board of directors shall levy an assessment

only on the policyholders in the applicable group who held

policies in force at any time during the two most recently

completed calendar years:

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

(2) in which the association was issuing policies.

must be equal to the amount of the deficit not recouped under

Section 2203.251(b)(1) from the applicable policyholder's

stabilization reserve fund. Subject to Subsection (d), each

policyholder in the applicable group shall be assessed for a

portion of the deficit that reflects the proportion that the

earned premium on the policies of that policyholder bears to the

total earned premium for all policies of the association in the

applicable group in the two most recently completed calendar

years.

(d) The maximum aggregate assessment on each policyholder in the

applicable group may not exceed the annual premium for the

liability insurance policy most recently in effect.

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

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

Sec. 2203.253. LIMITATION ON REIMBURSEMENT BY MEMBER FOR DEFICIT

RECOUPMENT. (a) An association member is not obligated in a

single year to reimburse the association for the member's

proportionate share of the deficits from the association's

operations in that year in an amount that exceeds one percent of

the member's policyholder surplus. The aggregate amount not

reimbursed in accordance with this subsection shall be

reallocated among the other association members. The association

shall reallocate that amount in accordance with the method of

determining a member's participation under Sections 2203.055(c)

and (d), after excluding the total net direct premiums of all

members not sharing in the excess deficits.

(b) If the deficits from the association's operations allocated

to all association members in a calendar year exceed one percent

of all members' respective policyholder surplus, the association

shall allocate to each member the amount of the deficits in

accordance with the method of determining a member's

participation under Sections 2203.055(c) and (d).

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

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

Sec. 2203.254. CONTRIBUTION BY MEMBERS FOR SOUND FINANCIAL

OPERATION. If sufficient funds are not available for the sound

financial operation of the association, each association member

shall contribute to the financial requirements of the association

in accordance with Sections 2203.055(c) and (d), 2203.252, and

2203.253, as authorized and considered necessary by the

department. A contribution under this section is in addition to:

(1) an assessment paid in accordance with the plan of operation

under Section 2203.053(b); and

(2) a contribution from a policyholder's stabilization reserve

fund.

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

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

Sec. 2203.255. REIMBURSEMENT OF ASSESSMENT OR CONTRIBUTION;

PREMIUM TAX CREDIT. (a) Subject to commissioner approval, the

association shall reimburse an assessment or contribution, with

interest at a rate approved by the commissioner, to:

(1) the association members; or

(2) the state, to the extent that the members have recouped

their assessments using premium tax credits as provided by

Subsection (c).

(b) Pending recoupment or reimbursement of an assessment or

contribution paid by a member to the association, the unrepaid

balance of the assessment or contribution may be reflected in the

member's books and records as an admitted asset of the member for

all purposes, including exhibition in an annual statement under

Section 862.001.

has not received reimbursement from the association in accordance

with Subsection (a), a credit against premium taxes under Chapter

221 is allowed at a rate of 20 percent a year for five successive

years following the year in which the deficit was sustained. At

the member's option, the tax credit may be taken over an

additional number of years.

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

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

Sec. 2203.256. STANDARDS FOR RECOUPMENT PROVISIONS. A provision

for recoupment must be based on:

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

(2) other information based on that experience the department

considers appropriate.

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

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

SUBCHAPTER G. POLICYHOLDER'S STABILIZATION RESERVE FUNDS

Sec. 2203.301. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR

PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) The

policyholder's stabilization reserve fund for physicians and

health care providers other than nursing homes and assisted

living facilities is collected and administered by the

association as provided by this section, Section 2203.302, and

the plan of operation.

(b) The policyholder's stabilization reserve fund shall be:

(1) credited with all policyholder's stabilization reserve fund

charges collected under Section 2203.302;

(2) charged with any deficit sustained by physicians and health

care providers, other than nursing homes and assisted living

facilities, from the association's operation during the previous

year;

(3) treated as a liability of the association along with, and in

the same manner as, premium and loss reserves; and

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

the preceding year.

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

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

Sec. 2203.302. POLICYHOLDER'S STABILIZATION RESERVE FUND CHARGE

FOR PHYSICIANS AND CERTAIN HEALTH CARE PROVIDERS. (a) Each

policyholder other than a nursing home or assisted living

facility shall pay annually into the policyholder's stabilization

reserve fund under Section 2203.301 a charge that:

(1) is in an amount established annually by advisory directors

chosen by physicians and health care providers, other than

nursing homes and assisted living facilities, eligible for

insurance through the association in accordance with the plan of

operation;

(2) is in proportion to each premium payment due for liability

insurance through the association; and

(3) is separately stated in the policy.

(b) A charge stated in a policy as required by Subsection (a)(3)

is not:

(1) a part of premiums; or

(2) subject to premium taxation or a servicing fee, acquisition

cost, or any other similar charge.

coverage obtained through the association, the association may:

(1) permit payment of the policyholder's stabilization reserve

fund charge under this section on an installment basis; or

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

sum.

(d) Collections of the policyholder's stabilization reserve fund

charge under this section shall continue until the net balance of

the policyholder's stabilization reserve fund under Section

2203.301 is not less than the projected sum of premiums for

physicians and health care providers, other than nursing homes

and assisted living facilities, to be written in the year

following the valuation date.

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

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

Sec. 2203.303. POLICYHOLDER'S STABILIZATION RESERVE FUND FOR

NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) The

policyholder's stabilization reserve fund for nursing homes and

assisted living facilities is collected and administered by the

association as provided by this section, Section 2203.304, and

the plan of operation.

(b) The policyholder's stabilization reserve fund shall be:

(1) credited with:

(A) all policyholder's stabilization reserve fund charges

collected under Section 2203.304; and

(B) the net earnings on liability insurance policies issued to

nursing homes and assisted living facilities;

(2) charged with any deficit sustained by nursing homes and

assisted living facilities from the association's operation

during the previous year;

(3) treated as a liability of the association along with, and in

the same manner as, premium and loss reserves; and

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

the preceding year.

section, and any earnings of the fund, are state funds and shall

be held by the comptroller outside the state treasury on behalf

of, and with legal title in, the department. No part of the fund

or the earnings of the fund may inure to the benefit of an

association member, a policyholder, or another individual. The

fund assets may be used in accordance with the association's plan

of operation only to implement this chapter and for the purposes

of the association, including to make payment to satisfy, wholly

or partly, the liability of the association regarding a claim

made on a policy written by the association.

(d) Notwithstanding Sections 11, 12, and 13, Article 21.49-3,

the policyholder's stabilization reserve fund under this section

may be terminated only by law.

(e) Notwithstanding Section 11, Article 21.49-3, on termination

of the policyholder's stabilization reserve fund under this

section, all assets of the fund shall be transferred to the

general revenue fund to be appropriated for purposes related to

ensuring the provision of the kinds of liability insurance

coverage that the association may provide under this chapter to

nursing homes and assisted living facilities.

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

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

Sec. 2203.304. POLICYHOLDER'S STABILIZATION RESERVE FUND CHARGE

FOR NURSING HOMES AND ASSISTED LIVING FACILITIES. (a) Each

policyholder that is a nursing home or assisted living facility

shall pay annually into the policyholder's stabilization reserve

fund under Section 2203.303 a charge that:

(1) is in an amount established annually by advisory directors

chosen by nursing homes and assisted living facilities eligible

for insurance through the association in accordance with the plan

of operation;

(2) is in proportion to each premium payment due for liability

insurance through the association; and

(3) is separately stated in the policy.

(b) A charge stated in a policy as required by Subsection (a)(3)

is not:

(1) a part of premiums; or

(2) subject to premium taxation or a servicing fee, acquisition

cost, or any other similar charge.

coverage obtained through the association, the association may:

(1) permit payment of the policyholder's stabilization reserve

fund charge under this section on an installment basis; or

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

sum.

(d) Collections of the policyholder's stabilization reserve fund

charge under this section shall continue only until the net

balance of the policyholder's stabilization reserve fund under

Section 2203.303 is not less than the projected sum of premiums

for nursing homes and assisted living facilities to be written in

the year following the valuation date.

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

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

Sec. 2203.305. SEPARATE FUNDS. The policyholder's stabilization

reserve fund for physicians and health care providers other than

nursing homes and assisted living facilities described by Section

2203.301 is separate from the policyholder's stabilization

reserve fund for nursing homes and assisted living facilities

described by Section 2203.303.

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

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

SUBCHAPTER H. REVENUE BOND PROGRAM

Sec. 2203.351. PURPOSE. The legislature finds that the issuance

of bonds to provide a method to raise funds to provide

professional liability insurance for nursing homes and assisted

living facilities in this state through the association is to

benefit the public and to further a public purpose.

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

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

Sec. 2203.352. DEFINITIONS. In this subchapter:

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

Finance Authority.

(2) "Bond resolution" means the resolution or order authorizing

bonds to be issued under this subchapter.

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

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

Sec. 2203.353. APPLICABILITY OF OTHER LAWS. The following laws

apply to bonds issued under this subchapter to the extent

consistent with this subchapter:

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

Government Code; and

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

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

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

Sec. 2203.354. ISSUANCE OF BONDS AUTHORIZED. On behalf of the

association and subject to Section 2203.355, the Texas Public

Finance Authority shall issue revenue bonds to:

(1) fund the policyholder's stabilization reserve fund for

nursing homes and assisted living facilities under Section

2203.303;

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

(3) pay other costs related to the bonds as determined by the

board.

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

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

Sec. 2203.355. LIMITATION ON AMOUNT OF BONDS. The Texas Public

Finance Authority may issue on behalf of the association bonds in

a total amount not to exceed $75 million.

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

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

Sec. 2203.356. TERMS OF ISSUANCE. (a) Bonds issued under this

subchapter may be issued at a public or private sale.

(b) Bonds must:

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

(2) mature not more than 10 years after the date issued.

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

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

Sec. 2203.357. CONTENTS OF BOND RESOLUTION; ADMINISTRATION OF

ACCOUNTS. (a) In a bond resolution, the board may:

(1) provide for the flow of funds and the establishment,

maintenance, and investment of funds and special accounts with

regard to the bonds, including an interest and sinking fund

account, a reserve account, and other accounts; and

(2) make additional covenants with regard to the bonds and the

designated income and receipts of the association pledged to the

payment of the bonds.

(b) The association shall administer the accounts in accordance

with this chapter.

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

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

Sec. 2203.358. SOURCE OF PAYMENT. (a) Bonds issued under this

subchapter are payable only from:

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

(2) other sources the association is authorized to levy and

charge and from which the association is authorized to collect in

connection with paying any portion of the bonds.

(b) The bonds are obligations solely of the association and do

not create a pledge, gift, or loan of the faith, credit, or

taxing authority of this state.

(1) include a statement that the state is not obligated to pay

any amount on the bond and that the faith, credit, and taxing

authority of this state are not pledged, given, or loaned to

those payments; and

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

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

and

(B) is not a legal or moral obligation of the state.

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

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

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

against:

(1) each association member; and

(2) the association.

(b) The commissioner shall set the surcharge fee in an amount

sufficient to pay all debt service on the bonds issued under this

subchapter. Each association member and the association shall

pay the surcharge fee as required by the commissioner by rule.

department shall reimburse the comptroller in the manner

described by Section 201.052.

(d) The commissioner, in consultation with the comptroller, may

coordinate payment and collection of the surcharge fee with other

payments made by association members and collected by the

comptroller.

(e) Except as provided by Subsection (f), as a condition of

engaging in the business of insurance in this state, an

association member agrees that, if the member leaves the

liability insurance market in this state, the member remains

obligated to pay the member's share of the surcharge fee assessed

under this section until the bonds are retired. The amount

assessed against a member under this subsection must be:

(1) proportionate to the member's share of the liability

insurance market, including automobile liability insurance, in

this state as of the last complete reporting period before the

date the member ceases to engage in the liability insurance

business in this state; and

(2) based on the member's gross premiums for liability

insurance, including automobile liability insurance, for the

member's last reporting period.

(f) An association member is not required to pay the

proportionate amount under Subsection (e) in any year in which

the surcharge fee assessed against association members continuing

to write liability insurance in this state is sufficient to

service the bond obligation.

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

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

Sec. 2203.360. EXEMPTION FROM TAXATION. Bonds issued under this

subchapter, any interest from the bonds, and all assets pledged

to secure the payment of the bonds are exempt from taxation by

the state or a political subdivision of this state.

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

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

Sec. 2203.361. AUTHORIZED INVESTMENTS. Bonds issued under this

subchapter are authorized investments under Subchapter B, Chapter

424, and Subchapter D, Chapter 425.

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

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

Sec. 2203.362. STATE PLEDGE REGARDING BOND OWNER RIGHTS AND

REMEDIES. (a) The state pledges to and agrees with the owners

of bonds issued in accordance with this subchapter that the state

will not limit or alter the rights vested in the association to

fulfill the terms of agreements made with the owners or impair

the rights and remedies of the owners until the following

obligations are fully discharged:

(1) the bonds;

(2) any bond premium;

(3) interest; and

(4) all costs and expenses related to an action or proceeding by

or on behalf of the owners.

(b) The association may include the state's pledge and agreement

under Subsection (a) in an agreement with the owners of the

bonds.

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

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

Sec. 2203.363. PAYMENT ENFORCEABLE BY MANDAMUS. A writ of

mandamus and any other legal or equitable remedy are available to

a party in interest to require the association or another party

to fulfill an agreement or perform a function or duty under:

(1) this subchapter;

(2) the Texas Constitution; or

(3) a bond resolution.

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

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

SUBCHAPTER I. APPEALS

Sec. 2203.401. DEFINITION. In this subchapter, "act" includes a

ruling or decision.

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

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

Sec. 2203.402. APPEAL TO BOARD OF DIRECTORS; HEARING. (a) A

person insured or applying for insurance under this chapter, the

person's authorized representative, or an affected insurer that

may be aggrieved by an act of the association may appeal to the

board of directors not later than the 30th day after the date the

act occurs. At the time the person is notified of the act, the

association shall provide to the person written notice of the

person's right to appeal under this subsection.

(b) The board of directors shall:

(1) hear an appeal brought under Subsection (a) not later than

the 30th day after the date the board of directors receives the

appeal; and

(2) give not less than 10 days' written notice of the time and

place of the hearing to the person bringing the appeal or the

person's authorized representative.

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

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

Sec. 2203.403. DECISION OF BOARD OF DIRECTORS. (a) Not later

than the 10th day after the date of the hearing under Section

2203.402(b), the board of directors shall affirm, reverse, or

modify the board's previous action or the appealed act.

(b) At the time the person is notified of the final action of

the board of directors, the association shall provide to the

person written notice of the person's right to appeal under

Section 2203.404.

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

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

Sec. 2203.404. APPEAL TO COMMISSIONER; HEARING. (a) Not later

than the 30th day after the date of the final action of the board

of directors under Section 2203.403, a person insured or applying

for insurance aggrieved by that final action may appeal to the

commissioner by making a written request for a hearing.

(b) The appeal shall be heard not later than the 30th day after

the date the appeal is received. The person bringing the appeal

or the person's authorized representative must be given written

notice of the time and place of the hearing on or before the 10th

day before the date of the hearing.

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

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

Sec. 2203.405. COMMISSIONER'S DECISION. (a) Not later than the

30th day after the date of the hearing under Section 2203.404,

the commissioner shall affirm, reverse, or modify the appealed

act.

(b) Pending the hearing and decision, the commissioner may

suspend or postpone the effective date of a rule or of the act

appealed.

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

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

Sec. 2203.406. APPEAL OF COMMISSIONER'S DECISION. (a) The

association or a person aggrieved by an order or decision of the

commissioner may appeal in accordance with Subchapter D, Chapter

36.

(b) At the time the person is notified of the commissioner's

order or decision, the commissioner shall provide to the person

written notice of the person's right to appeal under this

section.

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

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

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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