Bill Text: TX SB1171 | 2017-2018 | 85th Legislature | Enrolled

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Bill Title: Relating to the suspension and reactivation of the operation of the Texas Health Reinsurance System.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2017-05-23 - Effective immediately [SB1171 Detail]

Download: Texas-2017-SB1171-Enrolled.html

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S.B. No. 1171

relating to the suspension and reactivation of the operation of the
Texas Health Reinsurance System.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1501.302, Insurance Code, is amended to
read as follows:
Sec. 1501.302. TEXAS HEALTH REINSURANCE SYSTEM. (a) The
Texas Health Reinsurance System is a nonprofit entity administered
by a board of directors and subject to the supervision and control
of the commissioner.
(b) The system may operate only during the period an order
authorizing operation of the system under Section 1501.3021 is in
effect. The system may not operate after the effective date of an
order of suspension of operation of the system under Section
1501.3022 until a subsequent order authorizing the operation of the
system under Section 1501.3021, if any, is effective.
SECTION 2. Subchapter G, Chapter 1501, Insurance Code, is
amended by adding Sections 1501.3021 and 1501.3022 to read as
follows:
Sec. 1501.3021. AUTHORIZATION OF OPERATION. (a) The
commissioner shall hold a hearing if:
(1) the commissioner believes small employer health
benefit plan issuers in this state are threatened with the
inability to secure reinsurance coverage in the open market; or
(2) the commissioner receives a petition requesting
the hearing from an association of health benefit plan issuers in
this state or a group of at least 15 small employer health benefit
plan issuers operating in this state.
(b) If, after a hearing under Subsection (a), the
commissioner finds that the operation of the system is in the public
interest, the commissioner by order shall:
(1) authorize the operation of the system;
(2) appoint a board of directors under Section
1501.303; and
(3) direct the board to develop a plan of operation
under Section 1501.306 to ensure the system is fully implemented on
a date specified in the order that is not later than the 60th day
after the effective date of the order.
(c) Sections 1501.307-1501.326 apply to the operation of
the system after the date the system is implemented as described by
Subsection (b)(3).
Sec. 1501.3022. SUSPENSION OF OPERATION. (a) The
commissioner shall hold a hearing if the system is operating or is
authorized to operate and:
(1) the commissioner believes small employer health
benefit plan issuers in this state are not threatened with the
inability to secure reinsurance coverage in the open market; or
(2) the commissioner receives a petition requesting
the hearing from an association of health benefit plan issuers in
this state or a group of at least 15 small employer health benefit
plan issuers operating in this state.
(b) If, after a hearing under Subsection (a), the
commissioner finds that suspension of the operation of the system
is in the public interest, the commissioner by order shall direct
the board to submit to the commissioner for approval, not later than
the 60th day after the date of the order, a plan of suspension of
operation of the system.
(c) A plan of suspension under Subsection (b) must:
(1) specify the date after which a health benefit plan
issuer that is a risk-assuming health benefit plan issuer on the
effective date of the plan of suspension may not:
(A) become a reinsured health benefit plan issuer
under Sections 1501.310, 1501.311, and 1501.312; and
(B) reinsure with the system a small employer
group, or any risk, covered under any small employer health benefit
plan;
(2) specify the date after which a health benefit plan
issuer that is a reinsured health benefit plan issuer on the
effective date of the plan of suspension may not:
(A) reinsure with the system additional small
employer groups in accordance with Section 1501.314; or
(B) cede additional eligible lives to the system
in accordance with Section 1501.314;
(3) provide for:
(A) the filing, receipt, processing, and payment
of all claims against and debts of the system, and extinguishment of
all liabilities of the system, including balances on any lines of
credit that may have been established by or on behalf of the system;
(B) the collection and receipt of all assessments
made with respect to reinsured health benefit plan issuers,
including any deferred assessments and any final assessment made
under Subsection (f); and
(C) a final audit of the system by the state
auditor as provided by Subsection (g);
(4) specify that the transactions required by the plan
of suspension and addressed in Subdivisions (1)-(3) must be closed
not later than the effective date of the suspension of the operation
of the system as specified under Subdivision (5);
(5) state the effective date of the suspension of the
operation of the system; and
(6) provide for the proportionate distribution of any
surplus assets of the system that remain after the date specified
under Subdivision (5).
(d) The effective date of the suspension of the operation of
the system as specified under Subsection (c)(5) may not be later
than the 270th day after the date the commissioner by order approves
the plan of suspension.
(e) If the board fails to submit a suitable plan of
suspension, the commissioner, after notice and hearing, shall adopt
a plan in accordance with Subsection (c).
(f) The board may make a final assessment of the small
employer health benefit plan issuers that, for any portion of the
last year in which the system operated, were reinsured health
benefit plan issuers. An assessment under this subsection may be
made only if the board determines the assessment is necessary to
recover net losses of the system, as provided in Sections
1501.319-1501.326, including administrative expenses for
transactions essential to complete execution of the plan of
suspension, and the cost of the final audit by the state auditor.
(g) The transactions necessary to complete execution of the
plan of suspension are subject to audit by the state auditor under
Chapter 321, Government Code. The state auditor shall report the
cost of the final audit conducted under this section to the board
and the comptroller, and the board shall remit that amount to the
comptroller for deposit to the general revenue fund.
(h) The board serving immediately before the effective date
of the suspension of the operation of the system is discharged on
the effective date of the suspension of the operation of the system
as specified under Subsection (c)(5).
(i) After the effective date of the suspension of the
operation of the system as specified under Subsection (c)(5), the
commissioner shall take any action necessary under Subsection
(c)(6) to distribute the surplus assets of the system until all
remaining assets are distributed.
(j) During a period in which the operation of the system is
suspended, Sections 1501.307-1501.326 have no effect.
SECTION 3. The board of directors of the Texas Health
Reinsurance System serving on the effective date of this Act shall
submit to the commissioner of insurance a plan of suspension of the
operation of the Texas Health Reinsurance System, as described by
Section 1501.3022(c), Insurance Code, as added by this Act, not
later than the 90th day after the effective date of this Act. If the
board fails to timely submit the plan, the commissioner of
insurance shall adopt a plan in accordance with Sections
1501.3022(c)-(i), Insurance Code, as added by this Act.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2017.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1171 passed the Senate on
April 19, 2017, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1171 passed the House on
May 12, 2017, by the following vote: Yeas 142, Nays 0, one
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor