| |
| |
| |
|
|
AN ACT
|
|
|
relating to nonprofit legal services corporations. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Section 501.204(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) This section applies to each insurer authorized to |
|
|
engage in business in this state under: |
|
|
(1) Chapter 841; |
|
|
(2) Chapter 842; |
|
|
(3) Section 1367.053, Subchapter A, Chapter 1452, |
|
|
Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as applicable |
|
|
to a health maintenance organization, Chapter 843, Chapter 1271, or |
|
|
Chapter 1272; |
|
|
(4) Chapter 882; |
|
|
(5) Chapter 884; |
|
|
(6) Chapter 885; |
|
|
(7) Chapter 887; |
|
|
(8) Chapter 888; |
|
|
(9) [Chapter 961;
|
|
|
[(10)] Chapter 962; |
|
|
(10) [(11)] Chapter 982; |
|
|
(11) [(12)] Subchapter B, Chapter 1103; |
|
|
(12) [(13)] Subchapter A, Chapter 1104; |
|
|
(13) [(14)] Chapter 1201, or a provision listed in |
|
|
Section 1201.005; |
|
|
(14) [(15)] Chapter 1551; |
|
|
(15) [(16)] Chapter 1578; or |
|
|
(16) [(17)] Chapter 1601. |
|
|
SECTION 2. Section 961.002(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) The Texas Nonprofit Corporation Law as described by |
|
|
Section 1.008, Business Organizations Code, applies [Texas
|
|
|
Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
|
|
|
Vernon's Texas Civil Statutes) and the Texas Non-Profit Corporation
|
|
|
Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)
|
|
|
apply] to a nonprofit legal services corporation to the extent |
|
|
provided by [not in conflict with] this chapter. |
|
|
SECTION 3. Section 961.003, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.003. CORPORATION NOT SUBJECT TO DEPARTMENT |
|
|
REGULATION. A [Each] nonprofit legal services corporation is not |
|
|
subject to [this chapter and to direct] regulation by the |
|
|
department. |
|
|
SECTION 4. Section 961.004, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.004. CORPORATION NOT ENGAGED IN BUSINESS OF |
|
|
INSURANCE. A nonprofit legal services corporation [that complies
|
|
|
with this chapter] is not engaged in the business of insurance and[,
|
|
|
except as provided by Section 961.002(b),] is not subject to laws |
|
|
relating to insurers. |
|
|
SECTION 5. The heading to Section 961.051, Insurance Code, |
|
|
is amended to read as follows: |
|
|
Sec. 961.051. FILING OF CERTIFICATE OF FORMATION |
|
|
[APPLICATION FOR CORPORATE CHARTER]; NONPROFIT STATUS REQUIRED. |
|
|
SECTION 6. Section 961.051, Insurance Code, is amended by |
|
|
amending Subsection (a) and adding Subsection (a-1) to read as |
|
|
follows: |
|
|
(a) Seven or more persons may file with [apply to] the |
|
|
secretary of state a certificate of formation in accordance with |
|
|
Title 1, Business Organizations Code, to form a nonprofit legal |
|
|
services corporation. |
|
|
(a-1) Notwithstanding Subsection (a), a nonprofit legal |
|
|
services corporation that on or before September 1, 2019, was |
|
|
organized [for a corporate charter] under the former Texas |
|
|
Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's |
|
|
Texas Civil Statutes) or was formed under the Texas Nonprofit |
|
|
Corporation Law, as described by Section 1.008, Business |
|
|
Organizations Code, is [for] a nonprofit legal services corporation |
|
|
for purposes of this chapter. |
|
|
SECTION 7. The heading to Subchapter D, Chapter 961, |
|
|
Insurance Code, is amended to read as follows: |
|
|
SUBCHAPTER D. OFFICERS [BOARD OF DIRECTORS; PERSONNEL] |
|
|
SECTION 8. Section 961.152, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.152. FINANCIAL OFFICER[; BOND]. [(a)] A |
|
|
nonprofit legal services corporation, by resolution entered in its |
|
|
minutes, shall designate one or more officers to be responsible for |
|
|
handling the corporation's funds. [The president, secretary, or
|
|
|
general manager of the corporation must certify a copy of the
|
|
|
resolution, and the corporation shall file the copy with the
|
|
|
department.
|
|
|
[(b)
Except as provided by Subsection (c), the corporation
|
|
|
shall make and file a separate or blanket surety bond covering each
|
|
|
officer designated under Subsection (a).
The bond must:
|
|
|
[(1)
be issued by a corporate surety company
|
|
|
authorized to issue surety bonds in this state;
|
|
|
[(2)
be satisfactory to the department and payable to
|
|
|
the department for the use and benefit of the corporation;
|
|
|
[(3)
obligate the principal and surety to pay any
|
|
|
monetary loss to the corporation through an act of fraud,
|
|
|
dishonesty, forgery, theft, embezzlement, or wilful misapplication
|
|
|
by a covered officer, whether acting alone or with other persons,
|
|
|
while employed as or exercising the powers of an officer designated
|
|
|
under Subsection (a); and
|
|
|
[(4)
be in an amount of at least $25,000 for each
|
|
|
officer covered.
|
|
|
[(c)
Instead of the bond required by Subsection (b), an
|
|
|
officer designated under Subsection (a) may deposit with the
|
|
|
department cash or securities approved by the department in the
|
|
|
amount and subject to the conditions applicable to the bond.
|
|
|
[(d)
Successive recoveries may be made on a bond under this
|
|
|
section until the amount of the bond is exhausted.] |
|
|
SECTION 9. The heading to Subchapter E, Chapter 961, |
|
|
Insurance Code, is amended to read as follows: |
|
|
SUBCHAPTER E. OPERATION [REGULATION] OF NONPROFIT LEGAL SERVICES |
|
|
CORPORATIONS |
|
|
SECTION 10. Section 961.206, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.206. ADVANCE TO CORPORATION. Any person may |
|
|
advance to a nonprofit legal services corporation, on a contingent |
|
|
liability basis, money necessary for the purposes of the |
|
|
corporation's business or to comply with this chapter[, except that
|
|
|
the advance may be repaid only on prior approval of the department]. |
|
|
The advance may be made in an amount and at a rate of interest agreed |
|
|
to by the person and the corporation. |
|
|
SECTION 11. Section 961.207, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.207. PARTICIPATION AGREEMENTS. A [(a) Subject to
|
|
|
Subsection (b), a] nonprofit legal services corporation may: |
|
|
(1) contract with another nonprofit legal services |
|
|
corporation or an insurer authorized to engage in business in this |
|
|
state for joint participation through: |
|
|
(A) a mutualization contract agreement; or |
|
|
(B) a guaranty treaty; and |
|
|
(2) cede or accept a legal services obligation from |
|
|
such a corporation or insurer on all or part of a legal services |
|
|
obligation. |
|
|
[(b)
Each document used for a purpose described by
|
|
|
Subsection (a) must be filed with the department and approved by the
|
|
|
department to be in accordance with the corporation's plan of
|
|
|
operation before the document takes effect.
|
|
|
[(c)
To carry out the purposes of this section, the
|
|
|
commissioner may adopt rules governing an agreement with an insurer
|
|
|
under Subsection (a).] |
|
|
SECTION 12. Section 961.254(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) A nonprofit legal services corporation may issue a |
|
|
contract for legal services[, as provided by rules adopted by the
|
|
|
commissioner,] providing for indemnity for costs of services of an |
|
|
attorney who is not a contracting attorney [if the department is
|
|
|
satisfied that the corporation's plan of operation, experience, and
|
|
|
financial standing, including a proper amount of unencumbered
|
|
|
surplus, are adequate to ensure performance of the contract]. |
|
|
SECTION 13. Section 961.301, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.301. CONTRACTS WITH ATTORNEYS. [(a)] A nonprofit |
|
|
legal services corporation may contract with qualified attorneys |
|
|
[as provided by this chapter] to ensure to each participant legal |
|
|
services performed by the attorneys under the contract for legal |
|
|
services between the corporation and the participant. A |
|
|
contracting attorney must be licensed to practice law in the |
|
|
jurisdiction in which legal services are to be provided. |
|
|
[(b)
Before issuing a contract for legal services and while
|
|
|
the corporation continues to issue those contracts, the corporation
|
|
|
must maintain the number of contracting attorneys that the
|
|
|
department determines is necessary to service the participant
|
|
|
contracts contemplated by the corporation's plan of operation.] |
|
|
SECTION 14. Section 961.307, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.307. COMPLAINT REGARDING ATTORNEY. If a nonprofit |
|
|
legal services corporation [the department] receives a complaint |
|
|
concerning the performance of an attorney connected with the [a
|
|
|
nonprofit legal services] corporation, the corporation |
|
|
[department] shall refer the complaint to: |
|
|
(1) the supreme court of this state or a person that |
|
|
the supreme court designates to receive attorney grievances from |
|
|
the public, if the attorney is licensed by this state; or |
|
|
(2) the appropriate licensing agency of another |
|
|
jurisdiction where the attorney is licensed, if the attorney is not |
|
|
licensed by this state. |
|
|
SECTION 15. Section 961.402, Insurance Code, is amended to |
|
|
read as follows: |
|
|
Sec. 961.402. VOLUNTARY DISSOLUTION. (a) The board of |
|
|
directors of a nonprofit legal services corporation may vote to |
|
|
dissolve the corporation at any time[, but the corporation may not
|
|
|
be dissolved without the department's approval]. |
|
|
(b) In a dissolution under this section, the officers of the |
|
|
corporation shall settle all outstanding obligations to |
|
|
participants and otherwise dispose of the corporation's affairs. |
|
|
After the officers have completed the corporation's liquidation |
|
|
[and a final settlement has been filed with and approved by the
|
|
|
department], the corporation shall be dissolved as provided by: |
|
|
(1) the provisions relating to winding up and |
|
|
termination under Subchapter G, Chapter 22, Business Organizations |
|
|
Code; or |
|
|
(2) if the corporation was organized [to voluntary
|
|
|
dissolution] under the former Texas Non-Profit Corporation Act |
|
|
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), the |
|
|
provisions relating to voluntary dissolution under that former law. |
|
|
SECTION 16. Section 4001.002(a), Insurance Code, is amended |
|
|
to read as follows: |
|
|
(a) Except as otherwise provided by this code, this title |
|
|
applies to each person licensed under: |
|
|
(1) Subchapter H, Chapter 885; |
|
|
(2) Subchapter F, Chapter 911; |
|
|
(3) Section 912.251; |
|
|
(4) [Section 961.005;
|
|
|
[(5)] Subchapter E, Chapter 981; |
|
|
(5) [(6)] Subchapter D, Chapter 1152; |
|
|
(6) [(7)] Subchapter C or D of this chapter; |
|
|
(7) [(8)] Subtitle B, C, or D of this title; or |
|
|
(8) [(9)] Subsection (c), Article 5.13-1. |
|
|
SECTION 17. The following provisions of the Insurance Code |
|
|
are repealed: |
|
|
(1) Chapter 260; |
|
|
(2) Sections 961.002(b) and 961.005; |
|
|
(3) Section 961.052; |
|
|
(4) Subchapter C, Chapter 961; |
|
|
(5) Sections 961.151 and 961.153; |
|
|
(6) Sections 961.201, 961.202, 961.203, 961.204, |
|
|
961.205, 961.208, 961.209, 961.210, 961.211(b), and 961.212; |
|
|
(7) Section 961.252; |
|
|
(8) Sections 961.304 and 961.305(b); and |
|
|
(9) Sections 961.401, 961.403, and 961.404. |
|
|
SECTION 18. This Act takes effect September 1, 2019. |
|
|
|
|
|
|
| |
| |
| |
| |
______________________________ |
______________________________ |
| |
President of the Senate |
Speaker of the House |
| |
|
|
I hereby certify that S.B. No. 1623 passed the Senate on |
|
|
May 10, 2019, by the following vote: Yeas 31, Nays 0. |
|
|
|
| |
| |
______________________________ |
| |
Secretary of the Senate |
| |
|
|
I hereby certify that S.B. No. 1623 passed the House on |
|
|
May 22, 2019, by the following vote: Yeas 142, Nays 2, two |
|
|
present not voting. |
|
|
|
| |
| |
______________________________ |
| |
Chief Clerk of the House |
| |
|
|
|
| |
|
|
Approved: |
|
|
|
|
|
______________________________ |
|
|
Date |
|
|
|
|
|
|
|
|
______________________________ |
|
|
Governor |