83R14884 AJA-F
 
  By: Price H.B. No. 1869
 
  Substitute the following for H.B. No. 1869:
 
  By:  Raymond C.S.H.B. No. 1869
 
 
 
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 AND OTHER RECOVERY 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 who:
                     (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,
  reimbursement, lien, assignment, credit, or offset or other
  contractual right of recovery described by Section 140.004.
         Sec. 140.002.  APPLICABILITY OF CHAPTER; EXCEPTION. (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, and to any other payor of benefits described by Section
  172.015, 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 issuer of a self-funded plan that provides a benefit described
  by Subsection (a).
         (e)  Except as provided by Subsection (f), 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 with respect to a workers' 
  compensation insurance policy or any other source of medical
  benefits under Title 5, Labor Code.
         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 RECOVERY RIGHTS AUTHORIZED. An
  issuer of a plan that provides benefits described by Section
  140.002 under which the plan issuer may make payments 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 or have a right of reimbursement, lien,
  assignment, credit, or offset or other right of recovery from the
  individual's third-party recovery for that injury, subject to this
  chapter.
         Sec. 140.005.  PAYOR'S RECOVERY LIMITED. (a)  If an injured
  covered individual whose third-party recovery is subject to a
  payor's right of subrogation or recovery described by Section
  140.004 is not able to realize a complete and adequate recovery for
  an injury sustained as a result of the actionable tortious conduct
  of a third party, the payor is entitled to recover as provided by
  Subsection (b).
         (b)  Subject to Subsections (c), (d), and (e), a payor's
  share under Subsection (a) of a covered individual's recovery is an
  amount that is equal to the lesser of:
               (1)  one-third of the covered individual's total
  recovery; or
               (2)  the total cost of benefits paid by the payor as a
  direct result of the tortious conduct of the third party.
         (c)  A covered individual may bring a declaratory judgment
  action to limit the amount of a payor's recovery under this section
  to an amount that is less than the amount otherwise payable under
  Subsection (b), as provided by Subsections (d) and (e).
         (d)  If, in an action under Subsection (c), the covered
  individual proves by a preponderance of the evidence that the
  covered individual's total recovery is less than 50 percent of the
  value of the covered person's underlying claim for damages, the
  payor's total recovery under this section is limited to an amount
  that is not less than 15 percent of and not more than one-third of
  the covered individual's total recovery.
         (e)  If, in an action under Subsection (c), the covered
  individual shows by clear and convincing evidence that the payor's
  recovery of an amount otherwise payable under this section would
  result in a recognized injustice, the payor's total recovery under
  this section is limited to an amount that is less than 15 percent of
  and equal to or greater than five percent of the covered
  individual's total recovery.
         (f)  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 ACTION TO LIMIT PAYOR'S
  RECOVERY. Notwithstanding Section 37.009 or any other law, in an
  action brought under Section 140.005(c), the court may not award
  costs or attorney's fees to any party in the action.
         Sec. 140.007.  ATTORNEY'S FEES IN THIRD-PARTY ACTION. (a)
  Except as provided by Subsection (c), a payor of benefits whose
  interest is not actively represented by an attorney in a
  third-party 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
  recovery, a reasonable fee for recovery of the payor's share, not to
  exceed one-third of the payor's recovery.
         (c)  Notwithstanding Subsection (a) or (b), a payor may not
  be assessed out of a recovery limited under Section 140.005(d) or
  (e) any attorney's fees under any theory or rule of law, including
  the common fund doctrine.
         Sec. 140.008.  FIRST PARTY RECOVERY. A payor of benefits may
  not pursue a recovery against a covered individual's first party
  recovery.
         Sec. 140.009.  CONSTRUCTION OF CHAPTER. Except as provided
  by Section 140.005(c), this chapter does not create a cause of
  action.
         SECTION 2.  Chapter 140, Civil Practice and Remedies Code,
  as added by this Act, applies only to an action commenced 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 3.  This Act takes effect September 1, 2013.