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) "Director" means the director of the division of
self-insurance regulation.
(3) "Impaired employer" means a certified
self-insurer:
(A) who has suspended payment of compensation as
determined by the commission;
(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 407, Acts of the 63rd
Legislature, Regular Session, 1973 (Article 21.07-4, Vernon's
Texas Insurance Code).
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
SUBCHAPTER B. DIVISION OF SELF-INSURANCE REGULATION
§ 407.021. DIVISION. The division of self-insurance
regulation is a division of the commission.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.022. DIRECTOR. (a) The executive director of
the commission shall appoint the director of the division.
(b) The director shall exercise all the rights, powers, and
duties imposed or conferred on the commission by this chapter,
other than by Section 407.023.
Acts 1993, 73rd Leg., ch. 269 , § 1, eff. Sept. 1, 1993.
§ 407.023. EXCLUSIVE POWERS AND DUTIES OF
COMMISSION. (a) The commission, by majority vote, shall:
(1) approve or deny a recommendation by the director
concerning 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.
(b) The commission may not delegate the powers and duties
imposed by this section.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 director 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.
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
commission for a certificate of authority to self-insure.
(b) The application must be:
(1) submitted on a form adopted by the commission; 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 director shall recommend approval or
denial of the application to the commission.
(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.
§ 407.042. ISSUANCE OF CERTIFICATE. With the approval
of the Texas Certified Self-Insurer Guaranty Association, and by
majority vote, the commission 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.
§ 407.043. PROCEDURES ON DENIAL OF
APPLICATION. (a) If the commission determines that an applicant
for a certificate of authority to self-insure does not meet the
certification requirements, the commission shall notify the
applicant in writing of its 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 commission, 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.
§ 407.044. TERM OF CERTIFICATE; 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 commission.
(b) The director 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.
§ 407.045. WITHDRAWAL FROM SELF-INSURANCE. (a) A
certified self-insurer may withdraw from self-insurance at any time
with the approval of the commission. The commission shall approve
the withdrawal if the certified self-insurer shows to the
satisfaction of the commission 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 commission the certificate of
authority to self-insure.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.046. REVOCATION OF CERTIFICATE OF
AUTHORITY. (a) The commission by majority vote 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 commission under this chapter.
(b) If the commission believes that a ground exists to
revoke a certificate of authority to self-insure, the commission
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 (the administrative procedure law).
(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 commission 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.
§ 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 commission or under the
commission'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.
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 commission and the association of sufficient financial
strength and liquidity, under standards adopted by the commission,
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 commission 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 commission 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 commission and
must be submitted in a standard form adopted by the commission, if
the commission adopts such a form.
(f) The commission 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.
§ 407.062. FINANCIAL STRENGTH AND LIQUIDITY
REQUIREMENTS. In assessing the financial strength and liquidity
of an applicant, the commission 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 commission finds appropriate; and
(8) any other information considered appropriate by
the commission.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 commission 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.
§ 407.064. GENERAL SECURITY REQUIREMENTS. (a) Each
applicant shall provide security for incurred liabilities for
compensation through a deposit with the director, in a combination
and from institutions approved by the director, of the following
security:
(1) cash or negotiable securities of the United States
or of this state;
(2) a surety bond that names the director as payee; or
(3) an irrevocable letter of credit that names the
director 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 commission 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
director shall be paid to the applicant quarterly.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 director and must be issued by an institution
acceptable to the director. 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 director. The comptroller may
accept securities for deposit or withdrawal only on the written
order of the director.
(d) On receipt by the director 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 director 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 director after the date of
the request and may be released only on:
(1) the acceptance by the director 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 director.
(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 director 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 director determines that a security deposit is
not immediately available for the payment of compensation, the
director 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 director.
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.
§ 407.066. EFFECT OF DISPUTE. (a) The director, 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 director 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.
§ 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 director.
(b) The director shall require excess insurance or
reinsurance in at least the amount of $5 million per occurrence.
(c) A certified self-insurer shall notify the director 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 a violation if the person violates
Subsection (c). A violation under this subsection is a Class B
administrative violation. Each day of noncompliance constitutes a
separate violation.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 commission. The
commission 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 commission;
(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
commission as part of the annual report annual independent
financial statements that reflect the financial condition of the
self-insurer. The commission shall make a financial statement
filed under this subsection available for public review.
(d) The commission 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 commission.
(g) If the commission considers it necessary, it 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.
§ 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 commission.
(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 commission at reasonable times to ascertain
the correctness of the information.
(d) The examination may be conducted at any location,
including the commission'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 a Class A administrative violation. Each day of
noncompliance constitutes a separate violation.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 commission shall deposit the application fee for a
certificate of authority to self-insure in the state treasury to
the credit of the workers' compensation self-insurance fund.
(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.
§ 407.102. REGULATORY FEE. (a) Each certified
self-insurer shall pay an annual fee to cover the administrative
costs incurred by the commission in implementing this chapter.
(b) The commission shall base the fee on the total amount of
income benefit payments made in the preceding calendar year. The
commission 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.
§ 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
commission 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 director 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 commission may not consider revenue or
expenditures related to the division.
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.
§ 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 commission 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
commission.
(c) The regulatory fee imposed under Section 407.102 shall
be deposited in the state treasury to the credit of the workers'
compensation self-insurance fund. The self-insurer maintenance
tax shall be deposited in the state treasury to the credit of the
commission.
(d) A certified self-insurer commits a violation if the
self-insurer does not pay the taxes and fee imposed under Sections
407.102 and 407.103 in a timely manner. A violation under this
subsection is a Class B administrative violation. Each day of
noncompliance constitutes a separate violation.
(e) If the certificate of authority to self-insure of a
certified self-insurer is terminated, the insurance commissioner
or the executive director of the commission 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.
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 commission member representing wage earners;
(3) one commission member representing employers; and
(4) the public counsel of the office of public
insurance counsel.
(c) The executive director of the commission and the
director of the division of self-insurance regulation serve as
nonvoting members of the board of directors.
(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.
§ 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 commission.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 407.124. IMPAIRED EMPLOYER; ASSESSMENTS. (a) On
determination by the commission that a certified self-insurer has
become an impaired employer, the director 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 director 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 commission determines that the employer is no
longer impaired.
Acts 1993, 73rd Leg., ch. 269, § 1, eff. Sept. 1, 1993.
§ 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 commission.
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.
§ 407.127. PAYMENT OF BENEFITS THROUGH
ASSOCIATION. (a) If the commission 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.
§ 407.128. POSSESSION OF SECURITY BY ASSOCIATION. On
the assumption of obligations by the association under the
director'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.
§ 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 director,
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.
§ 407.133. SUSPENSION OR REVOCATION OF CERTIFICATE FOR
FAILURE TO PAY ASSESSMENT. (a) The commission, after notice and
hearing and by majority vote, 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.
