By: Price, Creighton, King of Parker, Eiland, H.B. No. 1869
      Clardy, et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to contractual subrogation and other recovery rights of
  certain insurers and benefit plan issuers.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 6, Civil Practice and Remedies Code, is
  amended by adding Chapter 140 to read as follows:
  CHAPTER 140. CONTRACTUAL SUBROGATION RIGHTS OF PAYORS OF CERTAIN
  BENEFITS
         Sec. 140.001.  DEFINITIONS. In this chapter:
               (1)  "Covered individual" means an individual entitled
  to benefits described by Section 140.002.
               (2)  "Payor of benefits" or "payor" means an issuer of a
  plan providing benefits described by Section 140.002 that:
                     (A)  pays benefits to or on behalf of a covered
  individual as a result of personal injuries to the covered
  individual caused by the tortious conduct of a third party; and
                     (B)  has a contractual right of subrogation
  described by Section 140.004.
         Sec. 140.002.  APPLICABILITY OF CHAPTER. (a) This chapter
  applies to an issuer of a health benefit plan that provides benefits
  for medical or surgical expenses incurred as a result of a health
  condition, accident, or sickness, a disability benefit plan, or an
  employee welfare benefit plan, including an individual, group,
  blanket, or franchise insurance policy or insurance agreement, a
  group hospital service contract, or an individual or group evidence
  of coverage or similar coverage document, including:
               (1)  an insurance company;
               (2)  a group hospital service corporation operating
  under Chapter 842, Insurance Code;
               (3)  a fraternal benefit society operating under
  Chapter 885, Insurance Code;
               (4)  a stipulated premium insurance company operating
  under Chapter 884, Insurance Code;
               (5)  a reciprocal exchange operating under Chapter 942,
  Insurance Code;
               (6)  a health maintenance organization operating under
  Chapter 843, Insurance Code;
               (7)  a multiple employer welfare arrangement that holds
  a certificate of authority under Chapter 846, Insurance Code; or
               (8)  an approved nonprofit health corporation that
  holds a certificate of authority under Chapter 844, Insurance Code.
         (b)  Notwithstanding Section 172.014, Local Government Code,
  or any other law, this chapter applies to a risk pool providing
  health and accident coverage under Chapter 172, Local Government
  Code.
         (c)  Notwithstanding any other law, this chapter applies to
  an issuer of a plan or coverage under Chapter 1551, 1575, 1579, or
  1601, Insurance Code.
         (d)  Notwithstanding any other law, this chapter applies to
  any self-funded issuer of a plan that provides a benefit described
  by Subsection (a).
         (e)  This chapter applies to any policy, evidence of
  coverage, or contract under which a benefit described by Subsection
  (a) is provided and:
               (1)  that is delivered, issued for delivery, or entered
  into in this state; or
               (2)  under which an individual or group in this state is
  entitled to benefits.
         (f)  This chapter does not apply to:
               (1)  a workers' compensation insurance policy or any
  other source of medical benefits under Title 5, Labor Code;
               (2)  Medicare;
               (3)  the Medicaid program under Chapter 32, Human
  Resources Code;
               (4)  a Medicaid managed care program operated under
  Chapter 533, Government Code;
               (5)  the state child health plan or any other program
  operated under Chapter 62 or 63, Health and Safety Code; or
               (6)  a self-funded plan that is subject to the Employee
  Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
  seq.).
         Sec. 140.003.  CONFLICTS WITH OTHER LAW. In the event of a
  conflict between this chapter and another law, including a rule of
  procedure or evidence, this chapter controls to the extent of the
  conflict.
         Sec. 140.004.  CONTRACTUAL SUBROGATION RIGHTS AUTHORIZED.
  An issuer of a plan that provides benefits described by Section
  140.002 under which the policy or plan issuer may be obligated to
  make payments or provide medical or surgical benefits to or on
  behalf of a covered individual as a result of a personal injury to
  the individual caused by the tortious conduct of a third party may
  contract to be subrogated to and have a right of reimbursement for
  payments made or costs of benefits provided from the individual's
  recovery for that injury, subject to this chapter.
         Sec. 140.005.  PAYORS' RECOVERY LIMITED. (a) If an injured
  covered individual is entitled by law to seek a recovery from the
  third-party tortfeasor for benefits paid or provided by a subrogee
  as described by Section 140.004, then all payors are entitled to
  recover as provided by Subsection (b) or (c).
         (b)  This subsection applies when a covered individual is not
  represented by an attorney in obtaining a recovery. All payors'
  share under Subsection (a) of a covered individual's recovery is an
  amount that is equal to the lesser of:
               (1)  one-half of the covered individual's gross
  recovery; or
               (2)  the total cost of benefits paid, provided, or
  assumed by the payor as a direct result of the tortious conduct of
  the third party.
         (c)  This subsection applies when a covered individual is
  represented by an attorney in obtaining a recovery. All payors'
  share under Subsection (a) of a covered individual's recovery is an
  amount that is equal to the lesser of:
               (1)  one-half of the covered individual's gross
  recovery less attorney's fees and procurement costs as provided by
  Section 140.007; or
               (2)  the total cost of benefits paid, provided, or
  assumed by the payor as a direct result of the tortious conduct of
  the third party less attorney's fees and procurement costs as
  provided by Section 140.007.
         (d)  A 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 payor under this section.
         Sec. 140.006.  ATTORNEY'S FEES IN DECLARATORY JUDGMENT
  ACTION. Notwithstanding Section 37.009 or any other law, if a
  declaratory judgment action is brought under this chapter, the
  court may not award costs or attorney's fees to any party in the
  action.
         Sec. 140.007.  ATTORNEY'S FEES IN RECOVERY ACTION. (a)
  Except as provided by Subsection (c), a payor of benefits whose
  interest is not actively represented by an attorney in an action to
  recover for a personal injury to a covered individual shall pay to
  an attorney representing the covered individual a fee in an amount
  determined under an agreement entered into between the attorney and
  the payor plus a pro rata share of expenses incurred in connection
  with the recovery.
         (b)  Except as provided by Subsection (c), in the absence of
  an agreement described by Subsection (a), the court shall award to
  the attorney, payable out of the payor's share of the total gross
  recovery, a reasonable fee for recovery of the payor's share, not to
  exceed one-third of the payor's recovery.
         (c)  If an attorney representing the payor's interest
  actively participates in obtaining a recovery, the court shall
  award and apportion between the covered individual's and the
  payor's attorneys a fee payable out of the payor's subrogation
  recovery. In apportioning the award, the court shall consider the
  benefit accruing to the payor as a result of each attorney's
  service. The total attorney's fees may not exceed one-third of the
  payor's recovery.
         Sec. 140.008.  FIRST-PARTY RECOVERY. (a) Except as provided
  by Subsection (b), a payor of benefits may not pursue a recovery
  against a covered individual's first-party recovery.
         (b)  A payor of benefits may pursue recovery against
  uninsured/underinsured motorist coverage or medical payments
  coverage only if the covered individual or the covered individual's
  immediate family did not pay the premiums for the coverage.
         Sec. 140.009.  CONSTRUCTION OF CHAPTER. This chapter does
  not create a cause of action. Nothing in this chapter shall be
  construed to prevent a payor of benefits from waiving, negotiating,
  or not pursuing any claim or recovery described by Section 140.004
  or 140.005.
         SECTION 2.  Section 172.015, Local Government Code, is
  repealed.
         SECTION 3.  It is the intent of the legislature that if any
  provision, section, subsection, sentence, clause, phrase, or word
  of this Act or the application thereof to any person or circumstance
  is found to be unconstitutional, the provision, section,
  subsection, sentence, clause, phrase, or word is hereby declared to
  be severable and the balance of this Act remains effective
  notwithstanding such unconstitutionality.
  Moreover, the
  legislature declares that it would have passed this Act, and each
  provision, section, subsection, sentence, clause, phrase, or word
  thereof, irrespective of the fact that any provision, section,
  subsection, sentence, clause, phrase, or word, or any of their
  applications, were to be declared unconstitutional.
         SECTION 4.  The change in law made by this Act applies only
  to a contractual right of subrogation in a cause of action that
  accrues on or after the effective date of this Act to assert a
  contractual right of subrogation or recovery described by Section
  140.004, Civil Practice and Remedies Code, as added by this Act.
         SECTION 5.  This Act takes effect January 1, 2014.