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AN ACT
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relating to the prohibited use of discretionary clauses in certain |
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health maintenance organization and insurance contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 1271, Insurance Code, is |
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amended by adding Section 1271.057 to read as follows: |
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Sec. 1271.057. DISCRETIONARY CLAUSES PROHIBITED. (a) An |
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evidence of coverage may not contain a discretionary clause |
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provision. |
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(b) A discretionary clause provision includes a provision |
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that: |
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(1) purports or acts to bind the enrollee to, or grant |
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deference in subsequent proceedings to, adverse eligibility or |
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benefit decisions or interpretations of the evidence of coverage by |
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the health maintenance organization; or |
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(2) specifies: |
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(A) that an enrollee or other claimant may not |
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contest or appeal a denial of a benefit; |
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(B) that the health maintenance organization's |
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interpretation of the terms of an evidence of coverage or other form |
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or its decision to deny coverage or the amount of benefits is |
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binding on an enrollee or other claimant; |
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(C) that in an appeal, the health maintenance |
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organization's decision-making power as to the interpretation of |
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the terms of an evidence of coverage or other form, or as to |
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coverage, is binding; or |
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(D) a standard of review in any appeal process |
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that gives deference to the original benefit decision or provides |
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standards of interpretation or review that are inconsistent with |
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the laws of this state, including the common law. |
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SECTION 2. Subchapter B, Chapter 1701, Insurance Code, is |
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amended by adding Section 1701.062 to read as follows: |
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Sec. 1701.062. DISCRETIONARY CLAUSES PROHIBITED. (a) An |
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insurer may not use a document described by Section 1701.002 in this |
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state if the document contains a discretionary clause. |
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(b) A discretionary clause includes a provision that: |
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(1) purports or acts to bind the claimant to, or grant |
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deference in subsequent proceedings to, adverse eligibility or |
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claim decisions or policy interpretations by the insurer; or |
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(2) specifies: |
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(A) that a policyholder or other claimant may not |
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contest or appeal a denial of a claim; |
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(B) that the insurer's interpretation of the |
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terms of a document or decision to deny coverage or the amount of |
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benefits is binding upon a policyholder or other claimant; |
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(C) that in an appeal, the insurer's decision |
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about or interpretation of the terms of a document or coverage is |
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binding; or |
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(D) a standard of review in any appeal process |
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that gives deference to the original claim decision or provides |
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standards of interpretation or review that are inconsistent with |
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the laws of this state, including the common law. |
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SECTION 3. The change in law made by this Act applies only |
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to a document or evidence of coverage that is delivered, issued for |
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delivery, or renewed on or after January 1, 2012. A document or |
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evidence of coverage that is delivered, issued for delivery, or |
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renewed before January 1, 2012, is governed by the law in effect |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 4. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2011. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 3017 was passed by the House on May |
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10, 2011, by the following vote: Yeas 144, Nays 0, 2 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 3017 was passed by the Senate on May |
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24, 2011, by the following vote: Yeas 31, Nays 0 |
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. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |