28 Tex. Admin. Code § 19.1603 - Financial Responsibility Requirement

(a) As required by the Insurance Code § 562.103(f)(1), a discount health care program operator, as a condition of being registered and continuing such registration, shall maintain a surety bond payable to the department, for the use and benefit of members, in the principal amount of $50,000, except that a discount health care program operator that is an insurer that holds a certificate of authority under Title 6 is not required to maintain the surety bond.

(b) Each discount health care program operator is required to obtain separate proof of financial responsibility and may not rely on the bond of any other discount health care program operator to demonstrate proof of financial responsibility.

(c) The discount health care program operator applicant or registrant is required to demonstrate proof of financial responsibility by providing to the department the original surety bond upon application, renewal, or replacement of the bond.

(d) A surety bond used to maintain and demonstrate proof of financial responsibility under this section is required to:

(1) be issued by a company authorized, or eligible, to do business as a surety in the State of Texas;

(2) be in compliance with all applicable provisions of the Insurance Code and applicable department rules;

(3) be on a form filed with and approved by the department;

(4) be consistent with the Insurance Code § 562.103(f), to be payable to the Texas Department of Insurance for the use and benefit of members:

(A) on the determination by the department that funds are necessary for the payment of such claims following compliance with all applicable provisions of the Insurance Code and applicable rules of the department; or

(B) upon final judgment against the Principal arising from such a claim.

(5) provide that the issuing company will provide the department and the registrant at least 30 days prior written notice of its intent to cancel the bond;

(6) be effective for the entire time period of the registration;

(7) be separate from any other financial obligation; and

(8) not be used to demonstrate professional responsibility for any other registration or individual or entity.

(e) The department may make claims against the bond for one year after the program operator ceases to be registered in the state, or for one year after the bond is terminated, based on actions within the registration and bond period. The aggregate liability of the surety shall be limited to the penal sum of the bond.

(f) Failure to maintain the bond for the entire period required by this section and the Insurance Code § 562.103(f)(1) will be cause for the department to institute action pursuant to Chapters 82, 83, and 84 of the Insurance Code.

Notes

28 Tex. Admin. Code § 19.1603

The provisions of this §19.1603 adopted to be effective September 8, 2010, 35 TexReg 8111