State Codes and Statutes
Statutes > Texas > Occupations-code > Title-14-regulation-of-motor-vehicles-and-transportation > Chapter-2307-insurer-interests-in-repair-facilities
OCCUPATIONS CODE
TITLE 14. REGULATION OF MOTOR VEHICLES AND TRANSPORTATION
SUBTITLE A. REGULATIONS RELATED TO MOTOR VEHICLES
CHAPTER 2307. INSURER INTERESTS IN REPAIR FACILITIES
Sec. 2307.001. DEFINITIONS. In this chapter:
(1) "Arm's length transaction" means the standard of conduct
under which two parties having substantially equal bargaining
power, each acting in its own interest, would negotiate or carry
out a particular transaction.
(2) "Claims center" means a location designated by an insurer
where a claims adjuster, employee, or agent of the insurer
performs an initial damage estimate on a vehicle under the terms
of an insurance policy.
(3) "Favored facility agreement" means an agreement between an
insurer and a repair facility under which the insurer agrees to
recommend, directly or indirectly, to its policyholders or other
beneficiaries under the insurer's policies, that the policyholder
or other beneficiary obtain repairs at that repair facility or in
any other way agrees to influence its policyholders or other
beneficiaries under the insurer's policies to obtain repairs at
that repair facility.
(4) "Insurer" means an insurer authorized by the Texas
Department of Insurance to write motor vehicle insurance in this
state, including a county mutual insurance company, a Lloyd's
plan, and a reciprocal or interinsurance exchange if that insurer
owns an interest in a repair facility in this state. The term
includes an entity that is an affiliate of an insurer as
described by Section 823.003, Insurance Code.
(5) "Repair facility" has the meaning assigned by Section
2304.001.
(6) "Support services" means basic services, provided
nonspecifically, that are provided internally and to each
affiliate or subsidiary, by an insurer, its parent company, or a
separate affiliate created to provide basic corporate support.
The term does not include a service related to the operation of a
repair facility if that service would have no value, or minimal
value to any other type of business.
(7) "Tied repair facility" means a repair facility in which an
insurer owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 20.01, eff.
Sept. 1, 2003.
Renumbered from Occupations Code, Section 2306.001 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.002. INSURER INTERESTS. (a) Except as provided by
this section, an insurer may not own or acquire an interest in a
repair facility.
(b) An insurer that owns an interest in a tied repair facility
that was open for business, or on which construction had
commenced, on April 15, 2003, may maintain that ownership
interest and may operate that facility.
(c) An insurer may relocate a tied repair facility described by
Subsection (b), but may not obtain an ownership interest in any
additional facility not described by Subsection (b).
(d) Subsections (b) and (c) are applicable to an insurer only if
the insurer and its tied repair facility are otherwise in
compliance with this chapter.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.002 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.003. FAVORED FACILITY AGREEMENT PRESUMED. An insurer
is presumed to have a favored facility agreement with a repair
facility in which it owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.003 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.004. CONTRACTUAL CONDITIONS. (a) An insurer that
owns an interest in a repair facility may use only one favored
facility agreement.
(b) Except as otherwise provided by this subsection, the terms
under which the insurer enters into a favored facility agreement
must be identical for all repair facilities, including a tied
repair facility. An insurer may vary the terms as necessary to
implement technical differences required by geographical factors
or other legitimate business factors.
(c) Except as provided by Subsection (d), an insurer may not
cancel a favored facility agreement until the expiration of the
30th day after the date on which the insurer provides notice to
the repair facility of the insurer's intent to cancel the
agreement. The insurer shall include with the notice a statement
explaining the reason for the cancellation of the agreement.
(d) An insurer may summarily cancel a favored facility agreement
with a repair facility if the insurer, a policyholder of the
insurer, or another beneficiary under the insurer's policy
establishes reasonable grounds to believe that the repair
facility is fraudulent in its dealings with the insurer or the
policyholder or other beneficiaries under the insurer's policy.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.004 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.005. NOTICE. (a) An insurer that owns an interest in
a repair facility shall post the following notice in each of its
tied repair facilities:
"THIS REPAIR FACILITY IS OWNED IN WHOLE OR IN PART BY (NAME OF
INSURER). YOU ARE HEREBY NOTIFIED THAT YOU ARE ENTITLED TO SEEK
REPAIRS AT ANY REPAIR FACILITY OF YOUR CHOICE."
(b) The notice required by Subsection (a) must be posted
prominently in a location in which it is likely to be seen and
read by a customer of the repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.005 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.006. PROHIBITIONS. An insurer may not:
(1) condition the provision of a product, service, insurance
policy renewal, pricing, or other benefit on the purchase of any
good or service from its tied repair facilities;
(2) share information with its tied repair facilities that is
not made available on identical terms and conditions to other
repair facilities with which the insurer has entered into a
favored facility agreement;
(3) engage in a joint marketing program with its tied repair
facilities;
(4) provide its tied repair facilities a recommendation,
referral, description, advantage, or access to its policyholders
or other beneficiaries under its insurance policies that is not
provided on identical terms to other repair facilities with which
the insurer has entered into a favored facility agreement;
(5) provide a tied repair facility access to the insurer's
products or services on terms and conditions different from those
under which the insurer provides access to the same products or
services to another repair facility with which the insurer has
entered into a favored facility agreement;
(6) allow a tied repair facility to use the insurer's name,
trademark, tradename, brand, or logo in a manner different than
that allowed for any other favored facility;
(7) subsidize the business activities or operating expenses of a
tied repair facility;
(8) directly or indirectly require a policyholder of the insurer
or other beneficiary under the insurer's policy to obtain a
damage estimate on a vehicle covered by the insurance policy at a
tied repair facility;
(9) authorize or allow a person representing the insurer,
whether an employee or an independent contractor, to recommend to
a policyholder or other beneficiary under the insurance policy
that the policyholder or other beneficiary obtain repairs at a
tied repair facility, except to the same extent that the person
recommends other repair facilities with whom the insurer has
entered into a favored facility agreement;
(10) require a policyholder or beneficiary to use a claims
center located on the premises of a tied repair facility;
(11) enter into a favored facility agreement exclusively with
its tied repair facilities;
(12) retaliate or discriminate against a person who:
(A) files an action as provided by this chapter; or
(B) assists or participates in any manner in an investigation,
judicial proceeding, or other action brought or maintained as
provided by this chapter; or
(13) include earnings or losses of a tied repair facility in a
rate filing made under Chapter 5, Insurance Code.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.006 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.007. CONFLICT OF INTEREST PROHIBITED. Except as
otherwise provided by this chapter, an agreement between an
insurer and its tied repair facility must be negotiated and
executed as an arm's length transaction.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.007 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.008. SUPPORT SERVICES. (a) Notwithstanding this
chapter, and except as provided by Subsection (b), an insurer may
provide support services to its tied repair facilities if those
services:
(1) are priced at a level that is fair and reasonable to both
the insurer and the tied repair facility; and
(2) do not directly or indirectly confer a competitive advantage
to the tied repair facility.
(b) Notwithstanding Subsection (a), an agreement by an insurer
to provide support services to its tied repair facility may not
create the potential for confusion among the policyholders of the
insurer, other beneficiaries of an insurance policy issued by the
insurer, or other parties.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.008 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.009. ACTION TO COMPEL COMPLIANCE; DISCIPLINARY ACTION.
(a) A person, including a repair facility, aggrieved by a
violation of this chapter by an insurer may bring an action for
injunctive or other appropriate relief to compel the insurer to
comply with this chapter.
(b) In an action brought under this section, in addition to
other appropriate relief, the court may impose a civil penalty as
provided by this section.
(c) A civil penalty imposed under this section may not be less
than $1,000 or more than $5,000 per violation. Each day during
which a violation occurs is a separate violation.
(d) The amount of a civil penalty under this section is based on
the seriousness of the violation, and must reflect the following
factors:
(1) the nature, circumstances, extent, and gravity of the act or
omission that constitutes the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the need to deter future violations by the person charged
with a violation;
(5) efforts, if any, made to correct the violation; and
(6) any other factors the court considers appropriate to
implement the remedial intent of this chapter.
(e) A civil penalty collected under this section shall be sent
to the comptroller for deposit in the general revenue fund.
(f) A plaintiff who prevails in an action under this section is
entitled to recover reasonable attorney's fees and court costs.
(g) If a court finds that an action brought under this section
was groundless, brought in bad faith, or brought for the purpose
of harassment, the court may award reasonable attorney's fees to
the prevailing defendant.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.009 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.010. ANTITRUST ENFORCEMENT. This chapter does not
confer immunity from an antitrust law of this state or the United
States. A sanction or penalty imposed in an action brought under
this chapter is in addition to other relief granted on the basis
of the violation of an antitrust law of this state or the United
States.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.010 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.011. EXCLUSIVITY. Unless otherwise specifically
provided by this chapter, this chapter provides the exclusive
authority and rules applicable to the regulation of the relations
between an insurer and a tied repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.011 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
State Codes and Statutes
Statutes > Texas > Occupations-code > Title-14-regulation-of-motor-vehicles-and-transportation > Chapter-2307-insurer-interests-in-repair-facilities
OCCUPATIONS CODE
TITLE 14. REGULATION OF MOTOR VEHICLES AND TRANSPORTATION
SUBTITLE A. REGULATIONS RELATED TO MOTOR VEHICLES
CHAPTER 2307. INSURER INTERESTS IN REPAIR FACILITIES
Sec. 2307.001. DEFINITIONS. In this chapter:
(1) "Arm's length transaction" means the standard of conduct
under which two parties having substantially equal bargaining
power, each acting in its own interest, would negotiate or carry
out a particular transaction.
(2) "Claims center" means a location designated by an insurer
where a claims adjuster, employee, or agent of the insurer
performs an initial damage estimate on a vehicle under the terms
of an insurance policy.
(3) "Favored facility agreement" means an agreement between an
insurer and a repair facility under which the insurer agrees to
recommend, directly or indirectly, to its policyholders or other
beneficiaries under the insurer's policies, that the policyholder
or other beneficiary obtain repairs at that repair facility or in
any other way agrees to influence its policyholders or other
beneficiaries under the insurer's policies to obtain repairs at
that repair facility.
(4) "Insurer" means an insurer authorized by the Texas
Department of Insurance to write motor vehicle insurance in this
state, including a county mutual insurance company, a Lloyd's
plan, and a reciprocal or interinsurance exchange if that insurer
owns an interest in a repair facility in this state. The term
includes an entity that is an affiliate of an insurer as
described by Section 823.003, Insurance Code.
(5) "Repair facility" has the meaning assigned by Section
2304.001.
(6) "Support services" means basic services, provided
nonspecifically, that are provided internally and to each
affiliate or subsidiary, by an insurer, its parent company, or a
separate affiliate created to provide basic corporate support.
The term does not include a service related to the operation of a
repair facility if that service would have no value, or minimal
value to any other type of business.
(7) "Tied repair facility" means a repair facility in which an
insurer owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 20.01, eff.
Sept. 1, 2003.
Renumbered from Occupations Code, Section 2306.001 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.002. INSURER INTERESTS. (a) Except as provided by
this section, an insurer may not own or acquire an interest in a
repair facility.
(b) An insurer that owns an interest in a tied repair facility
that was open for business, or on which construction had
commenced, on April 15, 2003, may maintain that ownership
interest and may operate that facility.
(c) An insurer may relocate a tied repair facility described by
Subsection (b), but may not obtain an ownership interest in any
additional facility not described by Subsection (b).
(d) Subsections (b) and (c) are applicable to an insurer only if
the insurer and its tied repair facility are otherwise in
compliance with this chapter.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.002 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.003. FAVORED FACILITY AGREEMENT PRESUMED. An insurer
is presumed to have a favored facility agreement with a repair
facility in which it owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.003 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.004. CONTRACTUAL CONDITIONS. (a) An insurer that
owns an interest in a repair facility may use only one favored
facility agreement.
(b) Except as otherwise provided by this subsection, the terms
under which the insurer enters into a favored facility agreement
must be identical for all repair facilities, including a tied
repair facility. An insurer may vary the terms as necessary to
implement technical differences required by geographical factors
or other legitimate business factors.
(c) Except as provided by Subsection (d), an insurer may not
cancel a favored facility agreement until the expiration of the
30th day after the date on which the insurer provides notice to
the repair facility of the insurer's intent to cancel the
agreement. The insurer shall include with the notice a statement
explaining the reason for the cancellation of the agreement.
(d) An insurer may summarily cancel a favored facility agreement
with a repair facility if the insurer, a policyholder of the
insurer, or another beneficiary under the insurer's policy
establishes reasonable grounds to believe that the repair
facility is fraudulent in its dealings with the insurer or the
policyholder or other beneficiaries under the insurer's policy.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.004 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.005. NOTICE. (a) An insurer that owns an interest in
a repair facility shall post the following notice in each of its
tied repair facilities:
"THIS REPAIR FACILITY IS OWNED IN WHOLE OR IN PART BY (NAME OF
INSURER). YOU ARE HEREBY NOTIFIED THAT YOU ARE ENTITLED TO SEEK
REPAIRS AT ANY REPAIR FACILITY OF YOUR CHOICE."
(b) The notice required by Subsection (a) must be posted
prominently in a location in which it is likely to be seen and
read by a customer of the repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.005 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.006. PROHIBITIONS. An insurer may not:
(1) condition the provision of a product, service, insurance
policy renewal, pricing, or other benefit on the purchase of any
good or service from its tied repair facilities;
(2) share information with its tied repair facilities that is
not made available on identical terms and conditions to other
repair facilities with which the insurer has entered into a
favored facility agreement;
(3) engage in a joint marketing program with its tied repair
facilities;
(4) provide its tied repair facilities a recommendation,
referral, description, advantage, or access to its policyholders
or other beneficiaries under its insurance policies that is not
provided on identical terms to other repair facilities with which
the insurer has entered into a favored facility agreement;
(5) provide a tied repair facility access to the insurer's
products or services on terms and conditions different from those
under which the insurer provides access to the same products or
services to another repair facility with which the insurer has
entered into a favored facility agreement;
(6) allow a tied repair facility to use the insurer's name,
trademark, tradename, brand, or logo in a manner different than
that allowed for any other favored facility;
(7) subsidize the business activities or operating expenses of a
tied repair facility;
(8) directly or indirectly require a policyholder of the insurer
or other beneficiary under the insurer's policy to obtain a
damage estimate on a vehicle covered by the insurance policy at a
tied repair facility;
(9) authorize or allow a person representing the insurer,
whether an employee or an independent contractor, to recommend to
a policyholder or other beneficiary under the insurance policy
that the policyholder or other beneficiary obtain repairs at a
tied repair facility, except to the same extent that the person
recommends other repair facilities with whom the insurer has
entered into a favored facility agreement;
(10) require a policyholder or beneficiary to use a claims
center located on the premises of a tied repair facility;
(11) enter into a favored facility agreement exclusively with
its tied repair facilities;
(12) retaliate or discriminate against a person who:
(A) files an action as provided by this chapter; or
(B) assists or participates in any manner in an investigation,
judicial proceeding, or other action brought or maintained as
provided by this chapter; or
(13) include earnings or losses of a tied repair facility in a
rate filing made under Chapter 5, Insurance Code.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.006 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.007. CONFLICT OF INTEREST PROHIBITED. Except as
otherwise provided by this chapter, an agreement between an
insurer and its tied repair facility must be negotiated and
executed as an arm's length transaction.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.007 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.008. SUPPORT SERVICES. (a) Notwithstanding this
chapter, and except as provided by Subsection (b), an insurer may
provide support services to its tied repair facilities if those
services:
(1) are priced at a level that is fair and reasonable to both
the insurer and the tied repair facility; and
(2) do not directly or indirectly confer a competitive advantage
to the tied repair facility.
(b) Notwithstanding Subsection (a), an agreement by an insurer
to provide support services to its tied repair facility may not
create the potential for confusion among the policyholders of the
insurer, other beneficiaries of an insurance policy issued by the
insurer, or other parties.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.008 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.009. ACTION TO COMPEL COMPLIANCE; DISCIPLINARY ACTION.
(a) A person, including a repair facility, aggrieved by a
violation of this chapter by an insurer may bring an action for
injunctive or other appropriate relief to compel the insurer to
comply with this chapter.
(b) In an action brought under this section, in addition to
other appropriate relief, the court may impose a civil penalty as
provided by this section.
(c) A civil penalty imposed under this section may not be less
than $1,000 or more than $5,000 per violation. Each day during
which a violation occurs is a separate violation.
(d) The amount of a civil penalty under this section is based on
the seriousness of the violation, and must reflect the following
factors:
(1) the nature, circumstances, extent, and gravity of the act or
omission that constitutes the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the need to deter future violations by the person charged
with a violation;
(5) efforts, if any, made to correct the violation; and
(6) any other factors the court considers appropriate to
implement the remedial intent of this chapter.
(e) A civil penalty collected under this section shall be sent
to the comptroller for deposit in the general revenue fund.
(f) A plaintiff who prevails in an action under this section is
entitled to recover reasonable attorney's fees and court costs.
(g) If a court finds that an action brought under this section
was groundless, brought in bad faith, or brought for the purpose
of harassment, the court may award reasonable attorney's fees to
the prevailing defendant.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.009 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.010. ANTITRUST ENFORCEMENT. This chapter does not
confer immunity from an antitrust law of this state or the United
States. A sanction or penalty imposed in an action brought under
this chapter is in addition to other relief granted on the basis
of the violation of an antitrust law of this state or the United
States.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.010 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.011. EXCLUSIVITY. Unless otherwise specifically
provided by this chapter, this chapter provides the exclusive
authority and rules applicable to the regulation of the relations
between an insurer and a tied repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.011 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
State Codes and Statutes
Statutes >
Texas >
Occupations-code >
Title-14-regulation-of-motor-vehicles-and-transportation >
Chapter-2307-insurer-interests-in-repair-facilities OCCUPATIONS CODE
TITLE 14. REGULATION OF MOTOR VEHICLES AND TRANSPORTATION
SUBTITLE A. REGULATIONS RELATED TO MOTOR VEHICLES
CHAPTER 2307. INSURER INTERESTS IN REPAIR FACILITIES
Sec. 2307.001. DEFINITIONS. In this chapter:
(1) "Arm's length transaction" means the standard of conduct
under which two parties having substantially equal bargaining
power, each acting in its own interest, would negotiate or carry
out a particular transaction.
(2) "Claims center" means a location designated by an insurer
where a claims adjuster, employee, or agent of the insurer
performs an initial damage estimate on a vehicle under the terms
of an insurance policy.
(3) "Favored facility agreement" means an agreement between an
insurer and a repair facility under which the insurer agrees to
recommend, directly or indirectly, to its policyholders or other
beneficiaries under the insurer's policies, that the policyholder
or other beneficiary obtain repairs at that repair facility or in
any other way agrees to influence its policyholders or other
beneficiaries under the insurer's policies to obtain repairs at
that repair facility.
(4) "Insurer" means an insurer authorized by the Texas
Department of Insurance to write motor vehicle insurance in this
state, including a county mutual insurance company, a Lloyd's
plan, and a reciprocal or interinsurance exchange if that insurer
owns an interest in a repair facility in this state. The term
includes an entity that is an affiliate of an insurer as
described by Section 823.003, Insurance Code.
(5) "Repair facility" has the meaning assigned by Section
2304.001.
(6) "Support services" means basic services, provided
nonspecifically, that are provided internally and to each
affiliate or subsidiary, by an insurer, its parent company, or a
separate affiliate created to provide basic corporate support.
The term does not include a service related to the operation of a
repair facility if that service would have no value, or minimal
value to any other type of business.
(7) "Tied repair facility" means a repair facility in which an
insurer owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003. Amended by Acts 2003, 78th Leg., ch. 206, Sec. 20.01, eff.
Sept. 1, 2003.
Renumbered from Occupations Code, Section 2306.001 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.002. INSURER INTERESTS. (a) Except as provided by
this section, an insurer may not own or acquire an interest in a
repair facility.
(b) An insurer that owns an interest in a tied repair facility
that was open for business, or on which construction had
commenced, on April 15, 2003, may maintain that ownership
interest and may operate that facility.
(c) An insurer may relocate a tied repair facility described by
Subsection (b), but may not obtain an ownership interest in any
additional facility not described by Subsection (b).
(d) Subsections (b) and (c) are applicable to an insurer only if
the insurer and its tied repair facility are otherwise in
compliance with this chapter.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.002 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.003. FAVORED FACILITY AGREEMENT PRESUMED. An insurer
is presumed to have a favored facility agreement with a repair
facility in which it owns an interest.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.003 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.004. CONTRACTUAL CONDITIONS. (a) An insurer that
owns an interest in a repair facility may use only one favored
facility agreement.
(b) Except as otherwise provided by this subsection, the terms
under which the insurer enters into a favored facility agreement
must be identical for all repair facilities, including a tied
repair facility. An insurer may vary the terms as necessary to
implement technical differences required by geographical factors
or other legitimate business factors.
(c) Except as provided by Subsection (d), an insurer may not
cancel a favored facility agreement until the expiration of the
30th day after the date on which the insurer provides notice to
the repair facility of the insurer's intent to cancel the
agreement. The insurer shall include with the notice a statement
explaining the reason for the cancellation of the agreement.
(d) An insurer may summarily cancel a favored facility agreement
with a repair facility if the insurer, a policyholder of the
insurer, or another beneficiary under the insurer's policy
establishes reasonable grounds to believe that the repair
facility is fraudulent in its dealings with the insurer or the
policyholder or other beneficiaries under the insurer's policy.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.004 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.005. NOTICE. (a) An insurer that owns an interest in
a repair facility shall post the following notice in each of its
tied repair facilities:
"THIS REPAIR FACILITY IS OWNED IN WHOLE OR IN PART BY (NAME OF
INSURER). YOU ARE HEREBY NOTIFIED THAT YOU ARE ENTITLED TO SEEK
REPAIRS AT ANY REPAIR FACILITY OF YOUR CHOICE."
(b) The notice required by Subsection (a) must be posted
prominently in a location in which it is likely to be seen and
read by a customer of the repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.005 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.006. PROHIBITIONS. An insurer may not:
(1) condition the provision of a product, service, insurance
policy renewal, pricing, or other benefit on the purchase of any
good or service from its tied repair facilities;
(2) share information with its tied repair facilities that is
not made available on identical terms and conditions to other
repair facilities with which the insurer has entered into a
favored facility agreement;
(3) engage in a joint marketing program with its tied repair
facilities;
(4) provide its tied repair facilities a recommendation,
referral, description, advantage, or access to its policyholders
or other beneficiaries under its insurance policies that is not
provided on identical terms to other repair facilities with which
the insurer has entered into a favored facility agreement;
(5) provide a tied repair facility access to the insurer's
products or services on terms and conditions different from those
under which the insurer provides access to the same products or
services to another repair facility with which the insurer has
entered into a favored facility agreement;
(6) allow a tied repair facility to use the insurer's name,
trademark, tradename, brand, or logo in a manner different than
that allowed for any other favored facility;
(7) subsidize the business activities or operating expenses of a
tied repair facility;
(8) directly or indirectly require a policyholder of the insurer
or other beneficiary under the insurer's policy to obtain a
damage estimate on a vehicle covered by the insurance policy at a
tied repair facility;
(9) authorize or allow a person representing the insurer,
whether an employee or an independent contractor, to recommend to
a policyholder or other beneficiary under the insurance policy
that the policyholder or other beneficiary obtain repairs at a
tied repair facility, except to the same extent that the person
recommends other repair facilities with whom the insurer has
entered into a favored facility agreement;
(10) require a policyholder or beneficiary to use a claims
center located on the premises of a tied repair facility;
(11) enter into a favored facility agreement exclusively with
its tied repair facilities;
(12) retaliate or discriminate against a person who:
(A) files an action as provided by this chapter; or
(B) assists or participates in any manner in an investigation,
judicial proceeding, or other action brought or maintained as
provided by this chapter; or
(13) include earnings or losses of a tied repair facility in a
rate filing made under Chapter 5, Insurance Code.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.006 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.007. CONFLICT OF INTEREST PROHIBITED. Except as
otherwise provided by this chapter, an agreement between an
insurer and its tied repair facility must be negotiated and
executed as an arm's length transaction.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.007 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.008. SUPPORT SERVICES. (a) Notwithstanding this
chapter, and except as provided by Subsection (b), an insurer may
provide support services to its tied repair facilities if those
services:
(1) are priced at a level that is fair and reasonable to both
the insurer and the tied repair facility; and
(2) do not directly or indirectly confer a competitive advantage
to the tied repair facility.
(b) Notwithstanding Subsection (a), an agreement by an insurer
to provide support services to its tied repair facility may not
create the potential for confusion among the policyholders of the
insurer, other beneficiaries of an insurance policy issued by the
insurer, or other parties.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.008 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.009. ACTION TO COMPEL COMPLIANCE; DISCIPLINARY ACTION.
(a) A person, including a repair facility, aggrieved by a
violation of this chapter by an insurer may bring an action for
injunctive or other appropriate relief to compel the insurer to
comply with this chapter.
(b) In an action brought under this section, in addition to
other appropriate relief, the court may impose a civil penalty as
provided by this section.
(c) A civil penalty imposed under this section may not be less
than $1,000 or more than $5,000 per violation. Each day during
which a violation occurs is a separate violation.
(d) The amount of a civil penalty under this section is based on
the seriousness of the violation, and must reflect the following
factors:
(1) the nature, circumstances, extent, and gravity of the act or
omission that constitutes the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the need to deter future violations by the person charged
with a violation;
(5) efforts, if any, made to correct the violation; and
(6) any other factors the court considers appropriate to
implement the remedial intent of this chapter.
(e) A civil penalty collected under this section shall be sent
to the comptroller for deposit in the general revenue fund.
(f) A plaintiff who prevails in an action under this section is
entitled to recover reasonable attorney's fees and court costs.
(g) If a court finds that an action brought under this section
was groundless, brought in bad faith, or brought for the purpose
of harassment, the court may award reasonable attorney's fees to
the prevailing defendant.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.009 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.010. ANTITRUST ENFORCEMENT. This chapter does not
confer immunity from an antitrust law of this state or the United
States. A sanction or penalty imposed in an action brought under
this chapter is in addition to other relief granted on the basis
of the violation of an antitrust law of this state or the United
States.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.010 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
Sec. 2307.011. EXCLUSIVITY. Unless otherwise specifically
provided by this chapter, this chapter provides the exclusive
authority and rules applicable to the regulation of the relations
between an insurer and a tied repair facility.
Added by Acts 2003, 78th Leg., ch. 1045, Sec. 1, eff. Sept. 1,
2003.
Renumbered from Occupations Code, Section 2306.011 by Acts 2005,
79th Leg., Ch.
728, Sec. 23.001(76), eff. September 1, 2005.
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