Daniel Kruger 2013-08-27 03:05:00
DURING THE 83RD SESSION OF THE LEGISLATURE, AN IMPORTANT CHANGE DEALT WITH THE CONTRACTUAL SUBROGATION RIGHTS OF HEALTH INSURANCE COMPANIES. 1 Health insurance companies previously were allowed to include in their policies a contractual right of subrogation in the event that they had to provide medical or surgical benefits on behalf of a policyholder as a result of a personal injury to the policyholder caused by the tortious conduct of a third party. This allowed the insurance company to recover all amounts paid on behalf of its policyholder even if it meant that the policyholder would receive nothing. This situation is remedied by the passage of House Bill 1869. The legislation provides that if a covered insured is not represented by an attorney in obtaining a recovery, the health insurance company may recover an amount that is equal to the lesser of either one-half of the covered policyholder’s gross recovery, or the total cost of benefits paid, provided, or assumed by the health insurance company as a direct result of tortious conduct of the third party.2 If the policyholder is represented by an attorney, the health insurance company may recover an amount that is equal to the lesser of either one-half of the policyholder’s gross recovery less attorneys’ fees and procurement costs, or the total cost of benefits paid, provided, or assumed by the health insurance company as a direct result of tortious conduct of the third party, plus attorneys’ fees and procurement cost.3 The common law doctrine that requires an injured party to be made whole before a subrogee makes a recovery does not apply to the recovery of a health insurance company in this context.4 ELECTRONIC TRANSACTIONS The provisions of the Texas Insurance Code dealing with electronic transactions has been expanded to allow an insurance company to transmit a notice or other written communication to a party that is required in an insurance transaction or that is to serve as evidence of the insurance coverage by electronic means.5 The insurance company must comply with Chapter 322 of the Texas Business and Commerce Code, and the policyholder must affirmatively consent to the delivery by electronic means and must not have withdrawn the consent.6 Before giving consent, the policyholder must be provided with a clear and conspicuous statement informing the policyholder of any right or option the policyholder may have for the written communication to be provided or made available in paper or another non-electronic form, the right of the policyholder to withdraw a consent, and any conditions or consequences imposed if the consent is withdrawn.7 Delivery in compliance with this section of the Texas Insurance Code is equivalent to any delivery method required by law including delivery by first-class mail or certified mail.8 If the written communication provided to the policyholder expressly requires verification or acknowledgment of receipt, the written communication may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.9 INQUIRIES BY POLICYHOLDERS An insurance company may no longer use an underwriting guideline based solely on whether a consumer inquiry has been made by or on behalf of an applicant or insured, or charge a rate that is different from the rate charged to other individuals for the same coverage, or increase the rate charged to an individual based solely on whether a consumer inquiry has been made by or on behalf of the applicant or insured.10 In addition, an insurance company may not consider a consumer inquiry as a basis for non-renewal or cancellation of an insurance policy.11 PORTABLE ELECTRONICS INSURANCE Any insurer may terminate or change the terms and conditions of a policy of portable electronics insurance only after notice to the master or group policyholder and to each enrolled customer.12 This notice must be provided not later than 30 days before the date of termination or change of coverage. If the insurance company changes the terms and conditions of the policy, the insurance company is required to provide each enrolled customer a revised certificate, revised endorsement, updated brochure, or other document indicating that a change in the terms and conditions of the policy has occurred. The company also must provide a summary of the material changes, a disclosure that enrollment and coverage is optional, and information on how to discontinue enrollment.13 REFUND OF UNEARNED PREMIUM An insurance company that issues a policy that requires the insurer to maintain an unearned premium reserve for the portion of the written policy premium applicable to the unexpired or unused part of the policy for which the premium has been paid must now refund the appropriate portion of any unearned premium to the policyholder not later than 15 business days after the effective date of cancellation or termination of a policy of automobile or residential property insurance.14 The insurance company previously was only required to “promptly refund the appropriate portion of any unearned premium to the policyholder.”15 LIFE SETTLEMENT CONTRACTS The owner of a life insurance policy with a face amount of more than $10,000 may now enter into a life settlement contract pursuant to Chapter 1111A of the Texas Insurance Code for the benefit of a recipient of long-term care services in exchange for direct payments to either a health care provider for the provision of those services to the recipient, or the state to offset the costs of providing those services to the recipient under the medical assistance program. 16 The proceeds of the life settlement contract must be used for the payment of long-term care services.17 A life settlement contract entered into pursuant to this chapter of the Human Resources Code must provide that the lesser of five percent of the face amount of the policy or $5,000 is reserved and is payable to the owner’s estate or a named beneficiary for funeral expenses.18 INDIVIDUAL ACCIDENT AND HEALTH INSURANCE POLICIES Section 1201.227 of the Texas Insurance Code has been repealed. This provision required individual accident and health insurance policies to contain the following provision if the policy addresses the subject matter of the provision: “Intoxicants or narcotics: the insurer is not liable for any loss sustained or contracted in consequence of the insured being intoxicated or under the influence of any narcotic unless the narcotic is administered on the advice of a physician.” PRIOR AUTHORIZATION OF HEALTH CARE SERVICES Chapter 1217 has been added to the Texas Insurance Code to provide procedures regarding a standard request form for prior authorization of health care services. This chapter applies to a health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, or a small or large employer group contract or similar coverage document.19 The commissioner is required to prescribe a single, standard form for requesting prior authorization of health services.20 COVERAGE FOR BRAIN INJURIES Chapter 1352 has been amended to provide that a health benefit plan may not limit the number of days of covered post-acute care or the number of days of covered in-patient care to the extent that the treatment or care is determined to be medically necessary as a result of and related to an acquired brain injury.21 The treating physician of the insured or enrollee shall determine whether treatment or care is medically necessary in consultation with the treatment or care provider, the insured, and, if appropriate, a member of the family of the insured or enrollee.22 SCREENING FOR AUTISM Section 1355.015 of the Texas Insurance Code has been amended to require that a health benefit plan must at least provide coverage for screening a child for autism spectrum disorder at the ages of 18 and 24 months, and the health benefit plan must also provide coverage for treatment of autism spectrum disorder.23 Coverage for autism spectrum disorder must be provided if the individual is diagnosed with the disorder prior to the individual’s 10th birthday.24 After the child’s 10th birthday, there is a limit of $36,000 per year on the amount to be paid by the insurance company for the treatment of autism spectrum disorder.25 TEXAS HEALTH INSURANCE POOL The Texas Health Insurance Pool, which was established to provide access to quality health care at minimum cost to the public to individuals who are eligible for coverage under the act, will be dissolved as soon as practical after Sept. 1, 2013.26 The pool’s board of directors is directed to develop a plan for dissolving the board and the pool. Health benefit coverage that is issued to an individual by the pool will terminate on the later of Jan. 1, 2014, or the earliest day on which the individual is enrolled in comparable health benefit coverage or could reasonably be expected to have obtained health benefit coverage on a guaranteed issue basis. PRIOR AUTHORIZATION OF PRESCRIPTION DRUG BENEFITS The commissioner of insurance is directed to prescribe a single, standard form for requesting prior authorization of prescription drug benefits to which an individual is entitled under a health benefit plan.27 The form must be used by a health benefit plan issuer for any prior authorization of prescription drug benefits required by the plan. The commissioner is to appoint a committee to advise regarding a single, standard form for requesting prior authorization of prescription drug benefits, the length of time allowed for acknowledgment of receipt of the form by the health benefit plan issuer, the acceptable methods to acknowledge receipt, and the penalty to be imposed on the health benefit plan issuer for failure to acknowledge receipt of the form.28 AUTOMOBILE INSURANCE A personal automobile insurance policy must now contain a provision expanding the definition of a covered vehicle to include a motor vehicle acquired by the insured during the policy term.29 A motor vehicle is defined as a private passenger automobile or a pickup, utility vehicle, or van with a gross vehicle weight of 25,000 pounds or less that is not used for the delivery of goods, materials, or supplies other than samples unless the delivery of the goods, materials, or supplies is not the primary use for which the vehicle is employed, or the vehicle is used for farming or ranching.30 Coverage is required only for a vehicle that is acquired during the policy term. The insurer must be notified on or before the 20th day after the date on which the insured becomes the owner of the vehicle or a later date if specified by the policy. 31 Coverage for the vehicle that replaces the covered vehicle shown in the declarations for the policy must be the same as the coverage for the vehicle being replaced.32 Coverage for a vehicle that is an additional covered vehicle must be the broadest coverage provided under the policy for any covered vehicle shown in the declarations.33 RESIDENTIAL PROPERTY INSURANCE DECLARATION PAGE A residential property insurance policy is now required to include a declaration page that lists and identifies each type of deductible under the residential property insurance policy and states the exact dollar amount of each deductible under the residential property insurance policy.34 If the residential property insurance policy or an endorsement attached to the policy contains a provision that may cause the exact dollar amount of a deductible under the policy to change, the declaration page must identify or include a written disclosure that clearly identifies the applicable policy provision or endorsement.35 AVAILABILITY OF SPECIMEN POLICIES A specimen policy used by an insurer to write per- sonal automobile, commercial automobile, inland marine, or residential property insurance may now be posted on the insurance company’s website.36 The insurance company is required to provide to the insured a copy of the specimen policy applicable to the insured that is posted to the insurer’s website upon receiving a request from the insured and without charge to the insured.37 An insurer that does post a specimen policy on the insurer’s website must, on issuance or renewal of the policy, disclose that the specimen policy is available on the insurer’s website and clearly identify each posted specimen policy incorporated into the insured’s policy and explain how the insured, on request and without charge, may obtain a copy of the specimen policy from the insurer.38 An insurer that during an insurance policy period posts a specimen policy or amends a posted specimen policy incorporated into an insurance policy must: (1) notify the insured in writing that the specimen policy is available on the insurer’s website; (2) clearly identify each added or amended specimen policy incorporated into the insured’s policy; and (3) explain how the insured, on request and without charge, may obtain a copy of the specimen policy from the insurer.39 NAMED DRIVER AUTOMOBILE POLICY Companies that issue automobile insurance policies that do not provide coverage for an individual residing in a named insured’s household unless the individual is named on the policy must now provide a disclosure, both orally and in writing, prior to accepting any premium or fee for such a policy.40 The disclosure must state: “WARNING: A named driver policy does not provide coverage for individuals residing in the insured’s household that are not named on the policy.”41 The disclosure must be signed by the applicant or insured.42 INSURANCE ADJUSTERS Licensed insurance adjusters may no longer adjust a loss related to roofing damages on behalf of an insurer if the adjuster is a roofing contractor or otherwise provides roofing services or roofing products for compensation.43 In addition, public adjusters who are also roofing contractors are prohibited from adjusting roofing claims44 if the public adjuster would also be providing roofing services.45 INDEPENDENT REVIEW ORGANIZATIONS An independent review organization that reviews the medical necessity and appropriateness of health care services as set out in Chapters 4201 and 4202 of the Texas Insurance Code is now required to maintain a physical address and a mailing address in this state, be incorporated in this state, and be in good standing with the comptroller.46 The time limit for an independent review organization to make a determination for a lifethreatening condition has been reduced from five days to three days after the date the organization receives information necessary to make the determination.47 The time limit for an independent review organization to make a determination regarding health care services for worker’s compensation medical benefits has been reduced to eight days.48 NOTES 1. Texas Civil Practice and Remedies Code Chapter 140. 2. Texas Civil Practice and Remedies Code Section 140.005(b). 3. Texas Civil Practice and Remedies Code Section 140.005(c). 4. Texas Civil Practice and Remedies Code Section 140.005(d). 5. Texas Insurance Code Section 35.004(a). 6. Texas Insurance Code Section 35.004(a). 7. Texas Insurance Code Section 35.004(c)(2). 8. Texas Insurance Code Section 35.004(b). 9. Texas Insurance Code Section 351.004(f). 10. Texas Insurance Code Section 544.553. 11. Texas Insurance Code Section 551.113(b-1). 12. Texas Insurance Code Section 551.202(a). 13. Texas Insurance Code Section 551.202(b)(2). 14. Texas Insurance Code Section 558.002(d). 15. Texas Insurance Code Section 558.002(d). 16. Human Resources Code Section 32.02613(b). 17. Human Resources Code Section 32.02613(c). 18. Human Resources Code Section 32.02613(d). 19. Texas Insurance Code Section 1217.002(a). 20. Texas Insurance Code Section 1217.004(a). 21. Texas Insurance Code Section 1352.003(c-1). 22. Texas Insurance Code Section 1352.003(c-1). 23. Texas Insurance Code Section 1355.015(a)(a-1). 24. Texas Insurance Code Section 1355.015(a). 25. Texas Insurance Code Section 1355.015(c-1). 26. S.B. 1367. 27. Texas Insurance Code Section 1369.254(a). 28. Texas Insurance Code Section 1369.255(b). 29. Texas Insurance Code Section 1952.059(b). 30. Texas Insurance Code Section 1952.059(c). 31. Texas Insurance Code Section 1952.059(d). 32. Texas Insurance Code Section 1952.059(e). 33. Texas Insurance Code Section 1952.059(f). 34. Texas Insurance Code Section 2301.056(a). 35. Texas Insurance Code Section 2301.056(b). 36. Texas Insurance Code Section 1812.002. 37. Texas Insurance Code Section 1812.002(b). 38. Texas Insurance Code Section 1812.003(a). 39. Texas Insurance Code Section 1812.003(b). 40. Texas Insurance Code Section 1952.0545. 41. Texas Insurance Code Section 1952.0545(b). 42. Texas Insurance Code Section 1952.0545(c). 43. Texas Insurance Code Section 4101.251(a). 44. Texas Insurance Code Section 4101.251(b). 45. Texas Insurance Code 4102.163(a). 46. Texas Insurance Code Section 4202.002(c)(2). 47. Texas Insurance Code Section 4202.003(1). 48. Texas Insurance Code Section 4202.003(1)(a). DANIEL KRUGER is an attorney and mediator in San Antonio. He is licensed to practice law in Texas and the District of Columbia.
Published by State Bar of Texas. View All Articles.
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