Principais projectos de lei sobre seguros no Texas da 89ª Sessão Legislativa Ordinária

The topic of insurance often causes glazed eyes in some readers not immersed in the industry, but insurance was a hot topic coming into the 89th Regular Session of the Texas Legislature. Interest stemmed not only from ongoing concerns about health insurance and pharmaceutical costs, coverage, and access but also from an increasing concern about the availability and affordability of property & casualty insurance. Some property and casualty insurers have pulled out of the Texas market or curtailed their Texas offerings, and many legislative constituents have expressed concerns about increases in homeowners rates across the state. Coastal area residents have also raised concerns over windstorm insurance access and affordability. As a result, proposals that would not have seen much interest in years past achieved some traction this session, such as bills filed to change the state’s “file and use” system (that in general allows insurers to file rates without pre-approval from the Texas Department of Insurance), and a bill to end the Department’s current single insurance commissioner structure in favor of a multi-person board (which Texas had decades ago). Additionally, legislators looked at ways to bend the property & casualty insurance cost curve by starting a state building resiliency grant program to fortify structures with the aim of reducing incidents of loss necessitating insurance payoffs. Although these particular proposals did not pass, the state enacted into law many bills designed to address Texans’ insurance-related concerns. What follows is an overview of some key insurance-related legislative initiatives that survived the 140-day regular session dash that just concluded in Austin.

General Insurance Consumer Protection Legislation

• HB2067 (relating to declination, cancellation, or nonrenewal of insurance policies) — The bill generally requires insurers that decline, cancel, or refuse to renew specified types of insurance policies to provide a written statement of the reasons for doing so to (1) the applicant or policy holder or (2) the applicant’s agent (who is not captive). The bill removes certain previous requirements that applicants or policy holders request a written statement describing an insurer’s reasons for its action. The bill also requires covered insurers to provide the Texas Department of Insurance with a quarterly written report summarizing the insurers’ reasons for declinations, cancellations, or non-renewals. Finally, the bill includes new requirements for notices in connection with declinations of liability insurance and commercial lines of insurance.

• HB3388 (relating to group property and casualty insurance policies) — This bill creates certain disclosure requirements regarding policy limits for specified types of policies. It also permits casualty and liability coverage incidental to covered property risks for certain insurance policies. For specified personal lines of insurance, subject to certain requirements and limitations, the bill allows group policies for property and casualty insurance for “permitted groups.” Parts of the bill’s requirements are applicable to surplus lines carriers and the bill also sets forth parts of the Insurance Code applicable to group policies provided for under the bill. Finally, the bill provides that certain “group enrollers” are not subject to agent licensing if engaged in certain activities and not receiving commissions with respect to the sale of a group policy or related enrollments.

• SB213 (relating to prohibiting insurers from requiring the tying of residential property and personal automobile insurance policies). Subject to specified exceptions, SB213 generally prohibits specified types of authorized insurers writing property and casualty insurance in Texas from tying residential property and personal automobile insurance policies as a condition for issuance or renewal. The new law makes such tying an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.

• SB1644 (relating to the use of a consumer’s credit score in the underwriting or rating of certain personal lines property and casualty insurance policies). Subject to certain limitations and exceptions, this bill enacts requirements concerning the use of credit scoring by certain insurers in rating or underwriting, including — among other things — using regularly updated credit scores as well as the requirement in some cases to provide notice of an insured’s or applicant’s right to request that an insurer re-underwrite and re-rate the insured’s policy if adverse action is taken as a result in whole or in part of information contained in a credit report.

• SB1238 (Relating to prohibited insurance discrimination on the basis of an insured’s marital status following the death of the insured ’s spouse). Generally prohibits insurers from refusing to continue to insure or provide coverage for, or charge a different rate, because an individual is widowed or the individual’s marital status otherwise reflects the death of a spouse.

• SB2544 (Relating to eligibility for mediation of certain out-of-network health benefit claims). Within its parameters, the bill places a 180-day limit on an out-of-network provider that has received an initial payment for a health care or medical service or supply for that provider to request a mandatory mediation.

• SB1332 (Relating to a group health benefit plan policy or contract holder’s obligation to pay premiums on behalf of an individual after the individual’s eligibility for group coverage terminates). Adds provisions to the Insurance Code providing that covered insurers or HMOs may waive group contract holders’ or policyholders’ liability for premiums depending on when they notify the insurers or HMOs of termination of individuals eligibility for coverage and whether covered services were provided during the specified periods.

• HB2221 (relating to certain trade practices related to life insurance, annuity contracts, and accident and health coverage). The bill has the stated purposes of (a) creating uniform standards for prohibited acts and practices, along with specific value-added services for life insurance, annuity contracts, accident and health insurance, and health plans and (b) providing for more uniformity in well-recognized exceptions to existing rebate and discrimination laws for certain value-added services, acts, or practices. Various provisions of the bill apply, subject to exceptions, to insurance companies writing life insurance and annuities in Texas, specified TPAs, and insurers authorized to engage in accident and health insurance business in Texas. With respect to covered parties, the bill specifies various types of conduct that will or will not be considered an unfair method of competition or a false, misleading, or deceptive act or practice under the DTPA and Insurance Code, unfair discrimination and unfair distinctions in insurance, and regulates and sets forth both permitted and forbidden parameters regarding matters such as providing loss-control or value-added products or services relating to covered risks, rebates, inducements, noncash gifts, charitable donations, and raffles.

• SB455 (relating to arbitration provisions in certain surplus lines insurance contracts). Subject to exceptions, the bill provides parameters for arbitration provisions in specified surplus lines insurance contracts for risks wholly located in Texas, such as requiring the arbitration to be conducted in Texas and to be governed by Texas laws.

Property and Casualty Appraisal Processes

• SB458 (relating to an appraisal process for disputed losses under personal automobile or residential property insurance policies). Subject to certain exceptions, the bill requires specified personal automobile and residential property insurance policies to include an appraisal provision/process meeting certain specification for resolving disputes regarding loss amounts. The bill also provides that subject to exceptions, the amount of loss determined under this appraisal process is binding on both the policyholder and insurer.

Windstorm Insurance

• HB3689 (relating to funding of excess losses and operating expenses of the Texas Windstorm Insurance Association; authorizing an assessment; authorizing a surcharge). The bill targets TWIA’s current funding for losses in excess of premium and reserve funds effected through the issuance of public securities (due to the excessive cost of issuing public securities). To this end, the bill creates a state-funding financing mechanism whereby up to specified amounts the state will fund TWIA excess losses, and such financing is ultimately recouped via premium surcharges on policyholders of specified insurers. Additionally, the legislation provides for both pre-catastrophic event and post-catastrophic event state financing and also changes the required total available loss funding TWIA must maintain by replacing a minimum 1 in 100 year probable maximum loss standard with a 1 in 50 standard.

Health Insurance Regulation and Oversight

• HB2254 (relating to certain health care services contract arrangements entered into by insurers and health care providers). Subject to specific parameters, the bill authorizes preferred provider benefit plans or exclusive provider benefit plans to enter into various arrangements with primary care physicians or primary care physician groups, e.g., capitated or risk-based arrangements.

• HB3812 (relating to health benefit plan preauthorization requirements for certain health care services and the direction of utilization review by physicians). The bill would modify utilization review involving physicians and the processes/parameters for exemptions from preauthorization and require annual reporting to the Texas Department of Insurance regarding prior authorization exemptions.

• SB 815 (relating to the use of artificial intelligence in utilization review conducted for health benefit plans). This bill seeks generally to prevent utilization review agents from using automated decision systems (algorithms that use data-based analytics in connection with recommendations, determinations, decisions, etc.), including those incorporating artificial intelligence, to make any part of an adverse determination regarding health care services. The bill also gives the Texas Insurance Commissioner the authority to audit and inspect a review agent’s use of such systems. The bill makes clear that it does not preclude the use of such systems for administrative or fraud-detection functions. Finally, the bill clarifies the parameters for notices of adverse determinations.

• SB 926 (relating to certain practices of health benefit plan issuers to encourage the use of certain physicians and health care providers and rank physicians). This bill allows insurers offering preferred provider plans and health maintenance organizations to offer incentives such as modified deductibles, copayments, coinsurance, or other cost-sharing provisions to steer plan enrollees to certain providers, subject to exceptions and subject to protections for enrollees designed to ensure such practices are utilized in enrollees’ best interest. In this regard, the bill specifically states there is a fiduciary duty owed to enrollees. The bill also modifies the law regarding the ability of health plan issuers to publish physician-specific information that includes comparisons of a physician’s performance against standards, measures, or other physicians and associated exceptions, including provisions concerning corrections to and suspension of such “ranking” of physicians.

• SB 1151 (relating to an insurer’s responsibility to review and audit a third-party administrator). This bill modifies the obligations of insurers concerning the review of specified third-party administrators. It removes a requirement for semi-annual audits of third-party administrators to be done on-site.

• HB1052 (relating to health benefit plan coverage of telemedicine, teledentistry, and telehealth appointments with an originating site or distant site located outside this state). Subject to certain parameters, the bill requires covered health benefit plans to cover an already covered health care service or procedure when it is delivered as a telemedicine medical service, teledentistry dental service, or telehealth service with an “originating site” or “distant site” located outside Texas, on the same basis and to the same extent that the plan provides coverage for the service or procedure delivered as a telemedicine medical service, teledentistry dental service, or telehealth service with an originating site and distant site located in Texas.

• HB541 (relating to the provision of direct patient care by physicians and health care practitioners). Subject to various parameters, this bill expands the type of health care practitioners that can provide direct primary care, i.e., care for which patients may directly pay — without insurance in the mix — their physicians agreed upon fees. With respect to the expansion of the direct patient care model, the bill addresses matters such as the noninsurance nature of direct care, prohibitions on billing insurers or HMOs for direct care paid under such a direct pay model, preclusion of interference with or retaliation for use of direct care pay, and disclosures to patients concerning the non-insurance nature of direct care.

• HB1612 (relating to direct payment for certain health care provided by a hospital). The bill generally provides that persons not enrolled in health benefit plans can require hospitals to accept direct payments from such persons and sets parameters concerning the amounts hospitals can charge such persons.

• HB3211 (relating to vision care benefits, including participation of optometrists and therapeutic optometrists in vision care or managed care plans). Among other things, the bill regulates specified vision care plans’ inclusion or exclusion of licensed optometrists or therapeutic optometrists as participating providers.

• HB4076 (relating to prohibiting organ transplant recipient discrimination on the basis of vaccination status). The bill seeks to prohibit health care providers from discriminating against an individual in connection with organ transplants, solely based upon their vaccination status, unless that status is medically significant to the organ transplant. The bill also restricts persons from taking adverse action against or imposing penalties on health care providers solely based on providers complying with the foregoing requirements.

• SB 896 (relating to the enrollment period for newborns under certain employer health benefit plans). Subject to certain parameters, the bill extends the coverage period for newborns under certain health benefit plans and restricts the ability of certain health benefit plans to limit coverage of newborns within such extended periods.

• SB1257 (Relating to required health benefit plan coverage for gender transition adverse effects and reversals). This bill requires specified health benefit plans that provide coverage for an enrollee’s gender transition procedures or treatments to also provide coverage for any related adverse consequences, specified follow-ups, and procedures or treatments necessary to reverse the gender transition procedures or treatments.

• SB 527 (relating to health benefit coverage for general anesthesia in connection with certain pediatric dental services). This bill requires specified health benefit plans that cover general anesthesia to also cover medically necessary general anesthesia for dental procedures for children under 13 who cannot otherwise undergo the procedure due to documented physical, mental, or medical reasons so long as the anesthesia is performed by a qualified provider. The bill explicitly states that it does not mandate coverage for dental care or services themselves.

Medicare/Medicare Supplement Plans

• HB2516  (relating to the eligibility of certain individuals younger than 65 years of age to purchase Medicare supplement benefit plans). This bill provides that certain entities delivering or issuing for delivery a Medicare supplement benefit plan in Texas to individuals at or over the age of 65 to offer the same coverage to younger persons eligible for and enrolled in Medicare by reason of end-stage renal disease or amyotrophic lateral sclerosis and sets forth the allowed charges for offering such coverage to such younger persons. The bill also includes provisions pertaining to enrollment periods for certain individuals younger than age 65 and limits the ability of entities to impose various conditions or restrictions.

• SB1330 (relating to billing and reimbursement for certain medical equipment, devices, and supplies provided to Medicare enrollees; creating a criminal offense). Subject to certain exceptions/parameters, this bill limits the charges of certain nonparticipating suppliers of certain medical equipment and supplies for which the suppliers have not accepted written assignment may impose on Medicare enrollees to specified percentages over Medicare-approved amounts. The bill also includes provisions concerning written agreements between nonparticipating suppliers and enrollees concerning payments in excess of allowed amounts including certain notices to enrollees concerning reimbursements. SB 1330 also includes provisions applicable to Medicare supplement benefit plan issuers and whether they are obligated to reimburse nonparticipating suppliers and enrollees for excess charges. Finally, the bill subjects certain nonparticipating suppliers of medical equipment and supplies violating the bill’s provisions to DTPA liability and criminal prosecution.

Pharmacies/Pharmaceuticals

• SB493 (relating to the protection of certain disclosures and communications by pharmacists and pharmacies regarding prescription drug benefits). This bill seeks to prevent pharmacy benefit managers from prohibiting or restricting pharmacies or pharmacists from informing an enrollee of any difference between the enrollee’s out-of-pocket cost for a prescription drug under the enrollee’s prescription drug benefit and the out-of-pocket cost without submitting a claim under the enrollee’s prescription drug benefit. Subject to its parameters, the bill also makes void and unenforceable provisions in a pharmacy benefit manager’s pharmacy benefit network contract attempting (a) to effect such restrictions or prohibitions and (b) to curtail communications with plan sponsors or administrators regarding member services with respect to prescription drug benefits, pharmacy services and benefits, network access and adequacy with respect to prescription drug benefits, partnership opportunities, or prescription claim reimbursement.

• SB1236 (Relating to the relationship between pharmacists or pharmacies and health benefit plan issuers or pharmacy benefit managers). Among other things, the bill modifies the assignment of group numbers provided to enrollees in certain health benefit plans. It also seeks to restrict payment/claim adjustments and reductions by health benefit plan issuers or pharmacy benefit managers in connection with claim payments to pharmacists or pharmacies and includes new provisions and parameters regarding covered health benefit plans’ or pharmacy benefit managers’ ability to recoup the cost of prescription drugs and dispensing fees from pharmacies and pharmacists. The bill requires covered health benefit plan issuers and pharmacy benefit managers to make available to pharmacists or pharmacies in their network access to an online portal through which pharmacists and pharmacies may access their pharmacy benefit network contracts with plan issuers and managers and includes provisions regulating the substantive contents and provisions of such contracts and when certain changes to such contracts are considered to be consented to or agreed or effective. Under the bill, covered provider manuals and changes thereto and other information must be made readily available by health benefit plan issuers and pharmacy benefit managers via portal. Among other things, also included are restrictions on pharmacy network contract fees imposed by health benefit plan issuers or pharmacy benefit managers before providing the full contract to pharmacies and pharmacists and prohibitions on requiring participation in a pharmacy benefit network or conditioning participation in networks.

Annuity Contracts

• HB4386  (relating to the exchange or surrender of an annuity contract). This bill establishes detailed processing procedures for annuity contract replacements/exchanges and annuity contract surrender requests.

About Foley’s Government Solutions & Insurance Practice Groups

Foley’s Government Solutions attorneys provide a full range of legal and public policy counsel to clients on any matters related to federal, state, and local government. Foley’s Insurance attorneys share a deep industry knowledge and provide legal solutions — encompassing everything from mergers and acquisitions to intellectual property services — reflecting and anticipating all aspects of an insurer’s operations. These two practice groups are well-positioned to advise you on the implications of state and federal insurance legislation that might affect the way you do business, as well as to advocate on your behalf in front of key regulatory and legislative authorities in connection with insurance matters, laws, and regulations.

Special thanks to Foley 2025 Summer Associates Abby Keilen, Zach Brown, and Deajah L. Scott for their contributions to this article.