CIVIL PRACTICE & REMEDIES CODE
CHAPTER 88. HEALTH CARE LIABILITY
§ 88.001. DEFINITIONS. In this chapter:
(1) 'Appropriate and medically necessary' means the
standard for health care services as determined by physicians and
health care providers in accordance with the prevailing practices
and standards of the medical profession and community.
(2) 'Enrollee' means an individual who is enrolled in a
health care plan, including covered dependents.
(3) 'Health care plan' means any plan whereby any
person undertakes to provide, arrange for, pay for, or reimburse
any part of the cost of any health care services.
(4) 'Health care provider' means a person or entity as
defined in Section 1.03(a)(3), Medical Liability and Insurance
Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
Statutes).
(5) 'Health care treatment decision' means a
determination made when medical services are actually provided by
the health care plan and a decision which affects the quality of the
diagnosis, care, or treatment provided to the plan's insureds or
enrollees.
(6) 'Health insurance carrier' means an authorized
insurance company that issues policies of accident and sickness
insurance under Section 1, Chapter 397, Acts of the 54th
Legislature, 1955 (Article 3.70-1, Vernon's Texas Insurance Code).
(7) 'Health maintenance organization' means an
organization licensed under Chapter 843, Insurance Code.
(8) 'Managed care entity' means any entity which
delivers, administers, or assumes risk for health care services
with systems or techniques to control or influence the quality,
accessibility, utilization, or costs and prices of such services to
a defined enrollee population, but does not include an employer
purchasing coverage or acting on behalf of its employees or the
employees of one or more subsidiaries or affiliated corporations of
the employer or a pharmacy licensed by the State Board of Pharmacy.
(9) 'Physician' means:
(A) an individual licensed to practice medicine
in this state;
(B) a professional association organized under
the Texas Professional Association Act (Article 1528f, Vernon's
Texas Civil Statutes) or a nonprofit health corporation certified
under Section 5.01, Medical Practice Act (Article 4495b, Vernon's
Texas Civil Statutes); or
(C) another person wholly owned by physicians.
(10) 'Ordinary care' means, in the case of a health
insurance carrier, health maintenance organization, or managed
care entity, that degree of care that a health insurance carrier,
health maintenance organization, or managed care entity of ordinary
prudence would use under the same or similar circumstances. In the
case of a person who is an employee, agent, ostensible agent, or
representative of a health insurance carrier, health maintenance
organization, or managed care entity, 'ordinary care' means that
degree of care that a person of ordinary prudence in the same
profession, specialty, or area of practice as such person would use
in the same or similar circumstances.
Added by Acts 1997, 75th Leg., ch. 163, § 1, eff. Sept. 1, 1997.
Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.508, eff. Sept.
1, 2003.
§ 88.002. APPLICATION. (a) A health insurance
carrier, health maintenance organization, or other managed care
entity for a health care plan has the duty to exercise ordinary care
when making health care treatment decisions and is liable for
damages for harm to an insured or enrollee proximately caused by its
failure to exercise such ordinary care.
(b) A health insurance carrier, health maintenance
organization, or other managed care entity for a health care plan is
also liable for damages for harm to an insured or enrollee
proximately caused by the health care treatment decisions made by
its:
(1) employees;
(2) agents;
(3) ostensible agents; or
(4) representatives who are acting on its behalf and
over whom it has the right to exercise influence or control or has
actually exercised influence or control which result in the failure
to exercise ordinary care.
(c) It shall be a defense to any action asserted against a
health insurance carrier, health maintenance organization, or
other managed care entity for a health care plan that:
(1) neither the health insurance carrier, health
maintenance organization, or other managed care entity, nor any
employee, agent, ostensible agent, or representative for whose
conduct such health insurance carrier, health maintenance
organization, or other managed care entity is liable under
Subsection (b), controlled, influenced, or participated in the
health care treatment decision; and
(2) the health insurance carrier, health maintenance
organization, or other managed care entity did not deny or delay
payment for any treatment prescribed or recommended by a provider
to the insured or enrollee.
(d) The standards in Subsections (a) and (b) create no
obligation on the part of the health insurance carrier, health
maintenance organization, or other managed care entity to provide
to an insured or enrollee treatment which is not covered by the
health care plan of the entity.
(e) This chapter does not create any liability on the part
of an employer, an employer group purchasing organization, or a
pharmacy licensed by the State Board of Pharmacy that purchases
coverage or assumes risk on behalf of its employees.
(f) A health insurance carrier, health maintenance
organization, or managed care entity may not remove a physician or
health care provider from its plan or refuse to renew the physician
or health care provider with its plan for advocating on behalf of an
enrollee for appropriate and medically necessary health care for
the enrollee.
(g) A health insurance carrier, health maintenance
organization, or other managed care entity may not enter into a
contract with a physician, hospital, or other health care provider
or pharmaceutical company which includes an indemnification or hold
harmless clause for the acts or conduct of the health insurance
carrier, health maintenance organization, or other managed care
entity. Any such indemnification or hold harmless clause in an
existing contract is hereby declared void.
(h) Nothing in any law of this state prohibiting a health
insurance carrier, health maintenance organization, or other
managed care entity from practicing medicine or being licensed to
practice medicine may be asserted as a defense by such health
insurance carrier, health maintenance organization, or other
managed care entity in an action brought against it pursuant to this
section or any other law.
(i) In an action against a health insurance carrier, health
maintenance organization, or managed care entity, a finding that a
physician or other health care provider is an employee, agent,
ostensible agent, or representative of such health insurance
carrier, health maintenance organization, or managed care entity
shall not be based solely on proof that such person's name appears
in a listing of approved physicians or health care providers made
available to insureds or enrollees under a health care plan.
(j) This chapter does not apply to workers' compensation
insurance coverage as defined in Section 401.011, Labor Code.
(k) An enrollee who files an action under this chapter shall
comply with the requirements of Section 13.01, Medical Liability
and Insurance Improvement Act of Texas (Article 4590i, Vernon's
Texas Civil Statutes), as it relates to cost bonds, deposits, and
expert reports.
Added by Acts 1997, 75th Leg., ch. 163, § 1, eff. Sept. 1, 1997.
§ 88.003. LIMITATIONS ON CAUSE OF ACTION. (a) A person
may not maintain a cause of action under this chapter against a
health insurance carrier, health maintenance organization, or
other managed care entity that is required to comply with or
otherwise complies with the utilization review requirements of
Article 21.58A, Insurance Code, or Chapter 843, Insurance Code,
unless the affected insured or enrollee or the insured's or
enrollee's representative:
(1) has exhausted the appeals and review applicable
under the utilization review requirements; or
(2) before instituting the action:
(A) gives written notice of the claim as provided
by Subsection (b); and
(B) agrees to submit the claim to a review by an
independent review organization under Article 21.58A, Insurance
Code, as required by Subsections (c) and (d).
(b) The notice required by Subsection (a)(2)(A) must be
delivered or mailed to the health insurance carrier, health
maintenance organization, or managed care entity against whom the
action is made not later than the 30th day before the date the claim
is filed.
(c) The insured or enrollee or the insured's or enrollee's
representative must submit the claim to a review by an independent
review organization if the health insurance carrier, health
maintenance organization, or managed care entity against whom the
claim is made requests the review not later than the 14th day after
the date notice under Subsection (a)(2)(A) is received by the
health insurance carrier, health maintenance organization, or
managed care entity. If the health insurance carrier, health
maintenance organization, or managed care entity does not request
the review within the period specified by this subsection, the
insured or enrollee or the insured's or enrollee's representative
is not required to submit the claim to independent review before
maintaining the action.
(d) A review conducted under Subsection (c) as requested by
a health insurance carrier, health maintenance organization, or
managed care entity must be performed in accordance with Article
21.58C, Insurance Code. The health insurance carrier, health
maintenance organization, or managed care entity requesting the
review must agree to comply with Subdivisions (2), (3), and (4),
Section 6A, Article 21.58A, Insurance Code.
(e) Subject to Subsection (f), if the enrollee has not
complied with Subsection (a), an action under this section shall
not be dismissed by the court, but the court may, in its discretion,
order the parties to submit to an independent review or mediation or
other nonbinding alternative dispute resolution and may abate the
action for a period of not to exceed 30 days for such purposes. Such
orders of the court shall be the sole remedy available to a party
complaining of an enrollee's failure to comply with Subsection (a).
(f) The enrollee is not required to comply with Subsection
(c) and no abatement or other order pursuant to Subsection (e) for
failure to comply shall be imposed if the enrollee has filed a
pleading alleging in substance that:
(1) harm to the enrollee has already occurred because
of the conduct of the health insurance carrier, health maintenance
organization, or managed care entity or because of an act or
omission of an employee, agent, ostensible agent, or representative
of such carrier, organization, or entity for whose conduct it is
liable under Section 88.002(b); and
(2) the review would not be beneficial to the
enrollee, unless the court, upon motion by a defendant carrier,
organization, or entity finds after hearing that such pleading was
not made in good faith, in which case the court may enter an order
pursuant to Subsection (e).
(g) If the insured or enrollee or the insured's or
enrollee's representative seeks to exhaust the appeals and review
or provides notice, as required by Subsection (a), before the
statute of limitations applicable to a claim against a managed care
entity has expired, the limitations period is tolled until the
later of:
(1) the 30th day after the date the insured or enrollee
or the insured's or enrollee's representative has exhausted the
process for appeals and review applicable under the utilization
review requirements; or
(2) the 40th day after the date the insured or enrollee
or the insured's or enrollee's representative gives notice under
Subsection (a)(2)(A).
(h) This section does not prohibit an insured or enrollee
from pursuing other appropriate remedies, including injunctive
relief, a declaratory judgment, or relief available under law, if
the requirement of exhausting the process for appeal and review
places the insured's or enrollee's health in serious jeopardy.
Added by Acts 1997, 75th Leg., ch. 163, § 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 1327, § 1, eff. Sept. 1,
1999; Acts 2003, 78th Leg., ch. 1276, § 10A.509, eff. Sept. 1,
2003.
