Texas Labor Code -CHAPTER 407. SELF-INSURANCE REGULATION
Texas Workers Compensation Act
Title 5 - Texas Labor Code - Chapters 401-506
TABLE OF CONTENTS
LABOR CODE
CHAPTER 407. SELF-INSURANCE REGULATION
SUBCHAPTER A. GENERAL PROVISIONS
§ 407.001. DEFINITIONS. In this chapter:
(1) "Association" means the Texas Certified
Self-Insurer Guaranty Association.
(2) Repealed by Acts 2005, 79th Leg., ch. 265, §
7.01(17).
(3) "Impaired employer" means a certified
self-insurer:
(A) who has suspended payment of compensation as
determined by the division;
(B) who has filed for relief under bankruptcy
laws;
(C) against whom bankruptcy proceedings have
been filed; or
(D) for whom a receiver has been appointed by a
court of this state.
(4) "Incurred liabilities for compensation" means the
amount equal to the sum of:
(A) the estimated amount of the liabilities for
outstanding workers' compensation claims, including claims
incurred but not yet reported; and
(B) the estimated amount necessary to provide for
the administration of those claims, including legal costs.
(5) "Qualified claims servicing contractor" means a
person who provides claims service for a certified self-insurer,
who is a separate business entity from the affected certified
self-insurer, and who is:
(A) an insurance company authorized by the Texas
Department of Insurance to write workers' compensation insurance;
(B) a subsidiary of an insurance company that
provides claims service under contract; or
(C) a third-party administrator that has on its
staff an individual licensed under Chapter 4101, Insurance Code.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.042, 7.01(17), eff. Sept.
1, 2005; Acts 2005, 79th Leg., ch. 728, § 11.137, eff. Sept. 1,
2005.
SUBCHAPTER B. DIVISION OF SELF-INSURANCE REGULATION
§ 407.023. EXCLUSIVE POWERS AND DUTIES OF
COMMISSIONER. The commissioner shall:
(1) approve or deny the issuance or revocation of a
certificate of authority to self-insure; and
(2) certify that a certified self-insurer has
suspended payment of compensation or has otherwise become an
impaired employer.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.0421, eff. Sept. 1, 2005.
§ 407.024. CLAIM OR SUIT. (a) A claim or suit brought by
a claimant or a certified self-insurer shall be styled "in re:
[name of employee] and [name of certified self-insurer]."
(b) The commissioner is the agent for service of process for
a claim or suit brought by a workers' compensation claimant against
the qualified claims servicing contractor of a certified
self-insurer.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.0422, eff. Sept. 1, 2005.
SUBCHAPTER C. CERTIFICATE OF AUTHORITY TO SELF-INSURE
§ 407.041. APPLICATION. (a) An employer who desires to
self-insure under this chapter must submit an application to the
division for a certificate of authority to self-insure.
(b) The application must be:
(1) submitted on a form adopted by the commissioner;
and
(2) accompanied by a nonrefundable $1,000 application
fee.
(c) Not later than the 60th day after the date on which the
application is received, the commissioner shall approve or deny the
application.
(d) During the pendency of the approval or denial of the
application, the applicant may not operate as a self-insurer under
this chapter.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.043, eff. Sept. 1, 2005.
§ 407.042. ISSUANCE OF CERTIFICATE. With the approval of
the Texas Certified Self-Insurer Guaranty Association, the
commissioner shall issue a certificate of authority to self-insure
to an applicant who meets the certification requirements under this
chapter and pays the required fee.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.044, eff. Sept. 1, 2005.
§ 407.043. PROCEDURES ON DENIAL OF APPLICATION. (a) If
the commissioner determines that an applicant for a certificate of
authority to self-insure does not meet the certification
requirements, the division shall notify the applicant in writing of
the commissioner's determination, stating the specific reasons for
the denial and the conditions to be met before approval may be
granted.
(b) The applicant is entitled to a reasonable period, as
determined by the commissioner, to meet the conditions for approval
before the application is considered rejected for purposes of
appeal.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.045, eff. Sept. 1, 2005.
§ 407.044. TERM OF CERTIFICATE OF AUTHORITY;
RENEWAL. (a) A certificate of authority to self-insure is valid
for one year after the date of issuance and may be renewed under
procedures prescribed by the commissioner.
(b) The commissioner may stagger the renewal dates of
certificates of authority to self-insure to facilitate the work
load of the division.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.046, eff. Sept. 1, 2005.
§ 407.045. WITHDRAWAL FROM SELF-INSURANCE. (a) A
certified self-insurer may withdraw from self-insurance at any time
with the approval of the commissioner. The commissioner shall
approve the withdrawal if the certified self-insurer shows to the
satisfaction of the commissioner that the certified self- insurer
has established an adequate program to pay all incurred losses,
including unreported losses, that arise out of accidents or
occupational diseases first distinctly manifested during the
period of operation as a certified self-insurer.
(b) A certified self-insurer who withdraws from
self-insurance shall surrender to the division the certificate of
authority to self-insure.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.047, eff. Sept. 1, 2005.
§ 407.046. REVOCATION OF CERTIFICATE OF AUTHORITY. (a)
The commissioner may revoke the certificate of authority to
self-insure of a certified self-insurer who fails to comply with
requirements or conditions established by this chapter or a rule
adopted by the commissioner under this chapter.
(b) If the commissioner believes that a ground exists to
revoke a certificate of authority to self-insure, the commissioner
shall refer the matter to the State Office of Administrative
Hearings. That office shall hold a hearing to determine if the
certificate should be revoked. The hearing shall be conducted in
the manner provided for a contested case hearing under Chapter
2001, Government Code.
(c) The State Office of Administrative Hearings shall
notify the certified self-insurer of the hearing and the grounds
not later than the 30th day before the scheduled hearing date.
(d) If the certified self-insurer fails to show cause why
the certificate should not be revoked, the commissioner immediately
shall revoke the certificate.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 76, § 5.95(49), eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 980, § 1.21, eff. Sept. 1, 1995; Acts
2005, 79th Leg., ch. 265, § 3.048, eff. Sept. 1, 2005.
§ 407.047. EFFECT OF REVOCATION. (a) A certified
self-insurer whose certificate of authority to self-insure is
revoked is not relieved of the obligation for compensation to an
employee for an accidental injury or occupational disease that
occurred during the period of self-insurance.
(b) The security required under Sections 407.064 and
407.065 shall be maintained with the division or under the
division's control until each claim for workers' compensation
benefits is paid, is settled, or lapses under this subtitle.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.049, eff. Sept. 1, 2005.
SUBCHAPTER D. REQUIREMENTS FOR CERTIFICATE OF AUTHORITY
§ 407.061. GENERAL REQUIREMENTS. (a) To be eligible for
a certificate of authority to self-insure, an applicant for an
initial or renewal certificate must present evidence satisfactory
to the commissioner and the association of sufficient financial
strength and liquidity, under standards adopted by the
commissioner, to ensure that all workers' compensation obligations
incurred by the applicant under this chapter are met promptly.
(b) The applicant must:
(1) be a business entity, or one of the consolidated
subsidiaries of the entity, that is required to register under the
Securities Act of 1933 (15 U.S.C. Section 77a et seq.) and furnish
financial information prepared in accordance with the requirements
for those business entities; or
(2) annually furnish audited financial statements
comparable in form and manner of preparation to those filed by a
business entity required to register under the Securities Act of
1933 (15 U.S.C. Section 77a et seq.).
(c) The applicant must present a plan for claims
administration that is acceptable to the commissioner and that
designates a qualified claims servicing contractor.
(d) The applicant must demonstrate the existence of an
effective safety program for each location in the state at which it
conducts business.
(e) The applicant must provide to the commissioner a copy of
each contract entered into with a person that provides claims
services, underwriting services, or accident prevention services
if the provider of those services is not an employee of the
applicant. The contract must be acceptable to the commissioner and
must be submitted in a standard form adopted by the commissioner, if
the commissioner adopts such a form.
(f) The commissioner shall adopt rules for the requirements
for the financial statements required by Subsection (b)(2).
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.050, eff. Sept. 1, 2005.
§ 407.062. FINANCIAL STRENGTH AND LIQUIDITY
REQUIREMENTS. In assessing the financial strength and liquidity
of an applicant, the commissioner shall consider:
(1) the applicant's organizational structure and
management background;
(2) the applicant's profit and loss history;
(3) the applicant's compensation loss history;
(4) the source and reliability of the financial
information submitted by the applicant;
(5) the number of employees affected by
self-insurance;
(6) the applicant's access to excess insurance
markets;
(7) financial ratios, indexes, or other financial
measures that the commissioner finds appropriate; and
(8) any other information considered appropriate by
the commissioner.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.051, eff. Sept. 1, 2005.
§ 407.063. PREMIUM REQUIREMENTS. (a) In addition to
meeting the other certification requirements imposed under this
chapter, an applicant for an initial certificate of authority to
self-insure must present evidence satisfactory to the commissioner
of a total unmodified workers' compensation insurance premium in
this state in the calendar year of application of at least $500,000.
(b) Instead of the state premium required under this
section, the applicant may present evidence of a total unmodified
national workers' compensation insurance premium of at least $10
million.
(c) Expired.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.052, eff. Sept. 1, 2005.
§ 407.064. GENERAL SECURITY REQUIREMENTS. (a) Each
applicant shall provide security for incurred liabilities for
compensation through a deposit with the division, in a combination
and from institutions approved by the commissioner, of the
following security:
(1) cash or negotiable securities of the United States
or of this state;
(2) a surety bond that names the commissioner as
payee; or
(3) an irrevocable letter of credit that names the
commissioner as payee.
(b) If an applicant who has provided a letter of credit as
all or part of the security required under this section desires to
cancel the existing letter of credit and substitute a different
letter of credit or another form of security, the applicant shall
notify the division in writing not later than the 60th day before
the effective date of the cancellation of the original letter of
credit.
(c) An estimate of the applicant's incurred liabilities for
compensation must be signed and sworn to by an accredited casualty
actuary and submitted with the application.
(d) The sum of the deposited securities must be at least
equal to the greater of:
(1) $300,000; or
(2) 125 percent of the applicant's incurred
liabilities for compensation.
(e) If an applicant is granted a certificate of authority to
self-insure, any interest or other income that accrues from cash or
negotiable securities deposited by the applicant as security under
this section while the cash or securities are on deposit with the
division shall be paid to the applicant quarterly.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.053, eff. Sept. 1, 2005.
§ 407.065. SPECIFIC SECURITY REQUIREMENTS. (a) A
security deposit must include within its coverage all amounts
covered by terminated surety bonds or terminated excess insurance
policies.
(b) A surety bond, irrevocable letter of credit, or document
indicating issuance of an irrevocable letter of credit must be in a
form approved by the commissioner and must be issued by an
institution acceptable to the commissioner. The instrument may be
released only according to its terms but may not be released by the
deposit of additional security.
(c) The certified self-insurer shall deposit the security
with the comptroller on behalf of the division. The comptroller may
accept securities for deposit or withdrawal only on the written
order of the commissioner.
(d) On receipt by the division of a request to renew,
submit, or increase or decrease a security deposit, a perfected
security interest is created in the certified self-insurer's assets
in favor of the commissioner to the extent of any then unsecured
portion of the self-insurer's incurred liabilities for
compensation. That perfected security interest transfers to cash
or securities deposited by the self-insurer with the division after
the date of the request and may be released only on:
(1) the acceptance by the commissioner of a surety
bond or irrevocable letter of credit for the full amount of the
incurred liabilities for compensation; or
(2) the return of cash or securities by the division.
(e) The certified self-insurer loses all right to, title to,
interest in, and control of the assets or obligations submitted or
deposited as security. The commissioner may liquidate the deposit
and apply it to the certified self-insurer's incurred liabilities
for compensation either directly or through the association.
(f) If the commissioner determines that a security deposit
is not immediately available for the payment of compensation, the
commissioner shall determine the appropriate method of payment and
claims administration, which may include payment by the surety that
issued the bond or by the issuer of an irrevocable letter of credit,
and administration by a surety, an adjusting agency, the
association, or through any combination of those entities approved
by the commissioner.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1997, 75th Leg., ch. 1423, § 12.12, eff. Sept. 1, 1997;
Acts 2005, 79th Leg., ch. 265, § 3.054, eff. Sept. 1, 2005.
§ 407.066. EFFECT OF DISPUTE. (a) The commissioner,
after notice to the concerned parties and an opportunity for a
hearing, shall resolve a dispute concerning the deposit, renewal,
termination, release, or return of all or part of the security,
liability arising out of the submission or failure to submit
security, or the adequacy of the security or reasonableness of the
administrative costs, including legal fees, that arises among:
(1) a surety;
(2) an issuer of an agreement of assumption and
guarantee of workers' compensation liabilities;
(3) an issuer of a letter of credit;
(4) a custodian of the security deposit;
(5) a certified self-insurer; or
(6) the association.
(b) A party aggrieved by a decision of the commissioner is
entitled to judicial review. Venue for an appeal is in Travis
County.
(c) Payment of claims from the security deposit or by the
association may not be stayed pending the resolution of a dispute
under this section unless the court issues a determination staying
the payment of claims.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.055, eff. Sept. 1, 2005.
§ 407.067. EXCESS INSURANCE; REINSURANCE;
ADMINISTRATIVE VIOLATION. (a) Each applicant shall obtain excess
insurance or reinsurance to cover liability for losses not paid by
the self-insurer in an amount not less than the amount required by
the commissioner.
(b) The commissioner shall require excess insurance or
reinsurance in at least the amount of $5 million per occurrence.
(c) A certified self-insurer shall notify the division not
later than the 10th day after the date on which the certified
self-insurer has notice of the cancellation or termination of
excess insurance or reinsurance coverage required under this
section.
(d) A person commits an administrative violation if the
person violates Subsection (c).
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.056, eff. Sept. 1, 2005.
§ 407.068. GUARANTEE BY PARENT ORGANIZATION. If an
applicant for a certificate of authority to self-insure is a
subsidiary, the parent organization of the applicant must guarantee
the obligations imposed by this chapter.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
SUBCHAPTER E. POWERS AND DUTIES OF CERTIFIED SELF-INSURER
§ 407.081. ANNUAL REPORT. (a) Each certified
self-insurer shall file an annual report with the division. The
commissioner shall prescribe the form of the report and shall
furnish blank forms for the preparation of the report to each
certified self-insurer.
(b) The report must:
(1) include payroll information, in the form
prescribed by this chapter and the commissioner;
(2) state the number of injuries sustained in the
three preceding calendar years; and
(3) indicate separately the amount paid during each
year for income benefits, medical benefits, death benefits, burial
benefits, and other proper expenses related to worker injuries.
(c) Each certified self-insurer shall file with the
division as part of the annual report annual independent financial
statements that reflect the financial condition of the
self-insurer. The division shall make a financial statement filed
under this subsection available for public review.
(d) The division may require that the report include
additional financial and statistical information.
(e) The certified self-insurer shall present evidence in
the report of sufficient financial ability to meet all obligations
under this chapter.
(f) The report must include an estimate of future liability
for compensation. The estimate must be signed and sworn to by a
certified casualty actuary every third year, or more frequently if
required by the commissioner.
(g) If the commissioner considers it necessary, the
commissioner may order a certified self-insurer whose financial
condition or claims record warrants closer supervision to report as
provided by this section more often than annually.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.057, eff. Sept. 1, 2005.
§ 407.082. EXAMINATION OF RECORDS; ADMINISTRATIVE
VIOLATION. (a) Each certified self-insurer shall maintain the
books, records, and payroll information necessary to compile the
annual report required under Section 407.081 and any other
information reasonably required by the commissioner.
(b) The certified self-insurer may maintain the books,
records, and payroll information in locations outside this state.
(c) The material maintained by the certified self-insurer
shall be open to examination by an authorized agent or
representative of the division at reasonable times to ascertain the
correctness of the information.
(d) The examination may be conducted at any location,
including the division's Austin offices, or, at the certified
self-insurer's option, in the offices of the certified
self-insurer. The certified self-insurer shall pay the reasonable
expenses, including travel expenses, of an inspector who conducts
an inspection at its offices.
(e) An unreasonable refusal on the part of a certified
self-insurer to make available for inspection the books, records,
payroll information, or other required information constitutes
grounds for the revocation of the certificate of authority to
self-insure and is an administrative violation.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.058, eff. Sept. 1, 2005.
§ 407.083. PAYMENT OF INSURANCE AGENT'S COMMISSION. This
chapter does not prohibit a certified self-insurer from paying a
commission to an insurance agent licensed in this state.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
SUBCHAPTER F. FINANCING OF SELF-INSURANCE PROGRAM
§ 407.101. FUND. (a) The workers' compensation
self-insurance fund is a fund in the state treasury. The fund may
be used only for the regulation of certified self-insurers.
(b) The department shall deposit the application fee for a
certificate of authority to self-insure in the Texas Department of
Insurance operating account to the credit of the division.
(c) Any amount remaining in the fund at the end of a fiscal
year shall be used to reduce the regulatory fee assessed under
Section 407.102 in the succeeding fiscal year.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.059, eff. Sept. 1, 2005.
§ 407.102. REGULATORY FEE. (a) Each certified
self-insurer shall pay an annual fee to cover the administrative
costs incurred by the division in implementing this chapter.
(b) The division shall base the fee on the total amount of
income benefit payments made in the preceding calendar year. The
division shall assess each certified self-insurer a pro rata share
based on the ratio that the total amount of income benefit payments
made by that certified self-insurer bears to the total amount of
income benefit payments made by all certified self-insurers.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.060, eff. Sept. 1, 2005.
§ 407.103. SELF-INSURER MAINTENANCE TAX; EFFECT ON
GENERAL MAINTENANCE TAX. (a) Each certified self-insurer shall
pay a self-insurer maintenance tax for the administration of the
division and the office of injured employee counsel and to support
the prosecution of workers' compensation insurance fraud in this
state. Not more than two percent of the total tax base of all
certified self-insurers, as computed under Subsection (b), may be
assessed for a maintenance tax under this section.
(b) To determine the tax base of a certified self-insurer
for purposes of this chapter, the department shall multiply the
amount of the certified self-insurer's liabilities for workers'
compensation claims incurred in the previous year, including claims
incurred but not reported, plus the amount of expense incurred by
the certified self-insurer in the previous year for administration
of self-insurance, including legal costs, by 1.02.
(c) The tax liability of a certified self-insurer under this
section is the tax base computed under Subsection (b) multiplied by
the rate assessed workers' compensation insurance companies under
Sections 403.002 and 403.003.
(d) In setting the rate of maintenance tax assessment for
insurance companies, the commissioner of insurance may not consider
revenue or expenditures related to the operation of the
self-insurer program under this chapter.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 980, § 1.22, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1443, § 6, eff. Sept. 1, 1997; Acts
2005, 79th Leg., ch. 265, § 3.061, eff. Sept. 1, 2005.
§ 407.104. COLLECTION OF TAXES AND FEES; ADMINISTRATIVE
VIOLATION. (a) The regulatory fee imposed by Section 407.102 and
the taxes imposed by Section 407.103 are due on the 60th day after
the issuance of a certificate of authority to self-insure and on the
60th day after each annual renewal date.
(b) The department shall compute the fee and taxes of a
certified self-insurer and notify the certified self-insurer of the
amounts due. The taxes and fees shall be remitted to the division.
(c) The regulatory fee imposed under Section 407.102 shall
be deposited in the Texas Department of Insurance operating account
to the credit of the division. The self-insurer maintenance tax
shall be deposited in the Texas Department of Insurance operating
account to the credit of the division.
(d) A certified self-insurer commits an administrative
violation if the self-insurer does not pay the taxes and fee imposed
under Sections 407.102 and 407.103 in a timely manner.
(e) If the certificate of authority to self-insure of a
certified self-insurer is terminated, the commissioner or the
commissioner of insurance shall proceed immediately to collect
taxes due under this subtitle, using legal process as necessary.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.062, eff. Sept. 1, 2005.
SUBCHAPTER G. TEXAS CERTIFIED SELF-INSURER GUARANTY ASSOCIATION
§ 407.121. GUARANTY ASSOCIATION. (a) The Texas Certified
Self-Insurer Guaranty Association provides for the payment of
workers' compensation insurance benefits for the injured employees
of an impaired employer.
(b) Each employer who desires to become a certified
self-insurer must be a member of the association.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.122. BOARD OF DIRECTORS. (a) The members of the
association shall elect a board of directors.
(b) The board of directors is composed of the following
voting members:
(1) three certified self-insurers;
(2) one member designated by the commissioner; and
(3) the public counsel of the office of public
insurance counsel.
(c) Repealed by Acts 2005, 79th Leg., ch. 265, §
7.01(19).
(d) A member of the board of directors or a member of the
staff of the board of directors is not liable in a civil action for
an act performed in good faith in the execution of that person's
powers or duties.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 980, § 1.23, eff. Sept. 1, 1995;
Acts 2005, 79th Leg., ch. 265, § 3.063, 7.01(19), eff. Sept. 1,
2005.
§ 407.123. BOARD RULES. (a) The board of directors may
adopt rules for the operation of the association.
(b) Rules adopted by the board are subject to the approval
of the commissioner.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.064, eff. Sept. 1, 2005.
§ 407.124. IMPAIRED EMPLOYER; ASSESSMENTS. (a) On
determination by the division that a certified self-insurer has
become an impaired employer, the commissioner shall secure release
of the security deposit required by this chapter and shall promptly
estimate:
(1) the amount of additional funds needed to
supplement the security deposit;
(2) the available assets of the impaired employer for
the purpose of making payment of all incurred liabilities for
compensation; and
(3) the funds maintained by the association for the
emergency payment of compensation liabilities.
(b) The commissioner shall advise the board of directors of
the association of the estimate of necessary additional funds, and
the board shall promptly assess each certified self-insurer to
collect the required funds. An assessment against a certified
self-insurer shall be made in proportion to the ratio that the total
paid income benefit payment for the preceding reported calendar
year for that self-insurer bears to the total paid income benefit
payment by all certified self-insurers, except impaired employers,
in this state in that calendar year.
(c) A certified self-insurer designated as an impaired
employer is exempt from assessments beginning on the date of the
designation until the division determines that the employer is no
longer impaired.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.065, eff. Sept. 1, 2005.
§ 407.125. PAYMENT OF ASSESSMENTS. Each certified
self-insurer shall pay the amount of its assessment to the
association not later than the 30th day after the date on which the
division notifies the self-insurer of the assessment. A delinquent
assessment may be collected on behalf of the association through
suit. Venue is in Travis County.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.126. TRUST FUND; FEE; SCHEDULE. (a) Each member
of the association shall be assessed a fee, based on total amount of
income benefits payments made in this state for the preceding
reported calendar year, to create, over a period of 10 years
beginning January 1, 1993, a Texas certified self-insurer guaranty
trust fund of at least $1 million for the emergency payment of the
compensation liabilities of an impaired employer. The fund may not
exceed $2 million.
(b) The board of directors shall adopt a year-by-year
schedule of assessments to meet the 10-year funding goal of the
trust fund.
(c) The assessment for the first year after an employer is
issued a certificate of authority to self-insure shall be based on
the income benefit payments paid by the employer's insurance
carrier on the employer's policy in the year before the certificate
was issued.
(d) The board of directors shall administer the trust fund
in accordance with rules adopted by the commissioner.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 980, § 1.24, eff. Sept. 1, 1995;
Acts 2005, 79th Leg., ch. 265, § 3.066, eff. Sept. 1, 2005.
§ 407.127. PAYMENT OF BENEFITS THROUGH ASSOCIATION. (a)
If the commissioner determines that the payment of benefits and
claims administration shall be made through the association, the
association assumes the workers' compensation obligations of the
impaired employer and shall begin the payment of the obligations
for which it is liable not later than the 30th day after the date of
notification by the director.
(b) The association shall make payments to claimants whose
entitlement to benefits can be ascertained by the association.
(c) Notwithstanding Subsection (a), the association is not
liable for the payment of any penalties assessed for any act or
omission on the part of any person other than the association.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 76, § 9.52(a), eff. Sept. 1, 1995;
Acts 2005, 79th Leg., ch. 265, § 3.067, eff. Sept. 1, 2005.
§ 407.128. POSSESSION OF SECURITY BY ASSOCIATION. On the
assumption of obligations by the association under the
commissioner's determination, the association is entitled to
immediate possession of any deposited security, and the custodian,
surety, or issuer of an irrevocable letter of credit shall deliver
the security to the association with any accrued interest.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.068, eff. Sept. 1, 2005.
§ 407.129. RELEASE OF CLAIM INFORMATION TO
ASSOCIATION. Information on a workers' compensation claim may be
released to the association as provided by Section 402.084(a), if
the association has assumed the obligations of an impaired
employer.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.130. ASSOCIATION AS PARTY IN INTEREST. (a) The
association is a party in interest in a proceeding involving a
workers' compensation claim against an impaired employer whose
compensation obligations have been paid or assumed by the
association.
(b) The association has the same rights and defenses as the
impaired employer, including the right to:
(1) appear, defend, or appeal a claim;
(2) receive notice of, investigate, adjust,
compromise, settle, or pay a claim; and
(3) investigate, handle, or deny a claim.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.131. PREFERENCE. The benefit payments made by the
association or the surety under this chapter are entitled to the
same preference over other debts of the impaired employer or the
impaired employer's estate as provided by law to benefit payments
owed by the employer or employer's estate to the person entitled to
the benefits.
Acts 1993, 73rd Leg., ch. 269 , § 1, eff. Sept. 1, 1993.
§ 407.132. SPECIAL FUND. Funds advanced by the
association under this subchapter do not become assets of the
impaired employer but are a special fund advanced to the
commissioner, trustee in bankruptcy, receiver, or other lawful
conservator only for the payment of compensation liabilities,
including the costs of claims administration and legal costs.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 2005, 79th Leg., ch. 265, § 3.069, eff. Sept. 1, 2005.
§ 407.133. SUSPENSION OR REVOCATION OF CERTIFICATE FOR
FAILURE TO PAY ASSESSMENT. (a) The commissioner may suspend or
revoke the certificate of authority to self-insure of a certified
self-insurer who fails to pay an assessment. The association
promptly shall report such a failure to the director.
(b) A certified self-insurer whose certificate of authority
to self-insure is revoked or surrendered remains liable for any
unpaid assessments made against an impaired employer who becomes an
impaired employer before the date of the revocation or surrender.
(c) Repealed by Acts 1995, 74th Leg., ch. 76, § 9.52(b),
eff. Sept. 1, 1995.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993. Amended
by Acts 1995, 74th Leg., ch. 76, § 9.52(b), eff. Sept. 1, 1995;
Acts 2005, 79th Leg., ch. 265, § 3.070, eff. Sept. 1, 2005.
