CHAPTER 172. TEXAS POLITICAL SUBDIVISIONS UNIFORM GROUP BENEFITS PROGRAM
LOCAL GOVERNMENT CODE
TITLE 5. MATTERS AFFECTING PUBLIC OFFICERS AND EMPLOYEES
SUBTITLE C. MATTERS AFFECTING PUBLIC OFFICERS AND EMPLOYEES OF
MORE THAN ONE TYPE OF LOCAL GOVERNMENT
CHAPTER 172. TEXAS POLITICAL SUBDIVISIONS UNIFORM GROUP BENEFITS
PROGRAM
Sec. 172.001. SHORT TITLE. This chapter may be cited as the
Texas Political Subdivision Employees Uniform Group Benefits Act.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Sec. 172.002. PURPOSE. The purpose of this chapter is to:
(1) provide uniformity in benefits including accident, health,
dental, and long-term disability coverage to employees of
political subdivisions;
(2) enable the political subdivisions to attract and retain
competent and able employees by providing them with accident and
health benefits coverages at least equal to those commonly
provided in private industry;
(3) foster, promote, and encourage employment by and service to
political subdivisions as a career profession for persons of high
standards of competence and ability;
(4) recognize and protect the political subdivisions' investment
in each permanent employee by promoting and preserving economic
security and good health among those employees;
(5) foster and develop high standards of employer-employee
relationships between each political subdivision and its
employees;
(6) recognize the service to political subdivisions by elected
officials and employees of affiliated service contractors by
extending to them the same accident and health benefits coverages
as are provided for political subdivision employees; and
(7) recognize the long and faithful service and dedication of
employees of political subdivisions and to encourage them to
remain in service of their respective political subdivisions
until eligible for retirement by providing health benefits to
those employees.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 2001, 77th Leg., ch. 491, Sec. 1, eff.
Sept. 1, 2001.
Sec. 172.003. DEFINITIONS. In this chapter:
(1) "Affiliated service contractor" means an organization
qualified for exemption under Section 501(c), Internal Revenue
Code (26 U.S.C. Section 501(c)), as amended, that provides
governmental or quasi-governmental services on behalf of a
political subdivision and derives more than 25 percent of its
gross revenues from grants or funding from the political
subdivision.
(2) "Employee" means a person who works at least 20 hours a week
for a political subdivision.
(3) "Political subdivision" means a county, municipality,
special district, school district, junior college district,
housing authority, or other political subdivision of this state
or any other state.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 2001, 77th Leg., ch. 491, Sec. 2, eff.
Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
1094, Sec. 28, eff. September 1, 2005.
Acts 2009, 81st Leg., R.S., Ch.
1363, Sec. 5, eff. June 19, 2009.
Sec. 172.004. BENEFITS CONTRACT. (a) A political subdivision
or a group of political subdivisions pursuant to The Interlocal
Cooperation Act (Chapter 791, Government Code) directly or
through a risk pool may provide health and accident coverage for
political subdivision officials, employees, and retirees or any
class of officials, employees, or retirees, and employees of
affiliated service contractors.
(b) The types of coverage that may be provided include group
health and accident, group dental, accidental death and
dismemberment, and hospital, surgical, and medical expense.
(c) A political subdivision also may include under the coverage
dependents of the officers, employees, and retirees and of
employees of affiliated service contractors.
(d) A pool's board of trustees may provide coverage for the
trustees and the pool's staff, including persons with whom the
pool has contracted to perform staff functions, on approval of
the members of the pool.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 2001, 77th Leg., ch. 491, Sec. 3, eff.
Sept. 1, 2001.
Sec. 172.005. RISK POOL. (a) A political subdivision may
establish a risk pool or may enter into an interlocal agreement
under The Interlocal Cooperation Act (Chapter 791, Government
Code) with other political subdivisions to establish a risk pool
to provide health and accident coverage for officials, employees,
retirees, employees of affiliated service contractors, and their
dependents.
(b) Contributions paid by a political subdivision's officials,
employees, and retirees and employees of affiliated service
contractors for coverage shall be deposited to the credit of the
risk pool's fund and used as provided by rules of the risk pool.
(c) A pool by contract may purchase insurance coverage for
persons who are covered by the pool from an insurance company
authorized to do business in this state.
(d) A pool or its agents may not represent to persons who apply
for coverage or who are covered by the pool that the coverage
being provided is insurance unless the coverage is by contract
purchased from an insurance company authorized to do business in
this state.
(e) A risk pool organized under this section is a legal entity
that may contract with an insurer licensed to do business in
Texas to assume any excess of loss of a benefit contract
authorized under Section 172.004. Notwithstanding any provision
of the Insurance Code or any other law governing insurance in
this state, an insurer authorized to do business in Texas may
assume the excess of loss of the benefit contract under Section
172.004.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1991, 72nd Leg., ch. 611, Sec. 1, eff. Aug.
26, 1991; Acts 2001, 77th Leg., ch. 491, Sec. 4, eff. Sept. 1,
2001.
Sec. 172.006. SUPERVISION AND ADMINISTRATION OF POOL. (a) A
political subdivision or a group of political subdivisions that
create a risk pool shall select trustees to supervise the
operation of the pool.
(b) A pool may be administered by a staff employed by the pool,
an entity created by the political subdivision or group of
political subdivisions participating in the pool, a staff or
entity that administers another pool established under this
chapter, or a third party administrator.
(c) Before entering into a contract with a person to be a third
party administrator of the pool, the trustees shall require that
person to submit information necessary for the trustees to
evaluate the background, experience, and financial qualifications
and solvency of that person. The information submitted by a
prospective administrator other than an insurance company must
disclose:
(1) any ownership interest that the prospective administrator
has in an insurance company, group hospital service corporation,
health maintenance organization, or other provider of health care
indemnity; and
(2) any commission or other benefit that the prospective
administrator will receive for purchasing services or coverage
for the pool.
(d) An attorney employed by a third party administrator,
provider of excess loss coverage, or reinsurer may not be
simultaneously employed by the pool unless, before the attorney
is employed by the pool, the third party administrator, provider
of excess loss coverage, reinsurer, or attorney discloses to the
pool's board of trustees that the attorney is employed by the
administrator, provider, or reinsurer.
(e) If the state enacts a law providing for the licensing or
registration of third party administrators, a risk pool in
contracting for administrative services may only contract for
services of a third party administrator licensed or registered
under that law. This subsection does not apply to a nonprofit
corporation that is acting solely on behalf of the risk pool or
other pools or administrative agencies established under The
Interlocal Cooperation Act (Article 4413(32c), Vernon's Texas
Civil Statutes).
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1999, 76th Leg., ch. 988, Sec. 1, eff.
Sept. 1, 1999.
Sec. 172.007. TRUSTEE TRAINING. (a) Trustees who act as
fiduciaries for a risk pool must have at least 16 hours of
combined professional instruction with four hours of instruction
in each of the following areas:
(1) law governing the establishment and operation of risk pools
by political subdivisions;
(2) principles of self-insurance and risk pools, including
actuarial and underwriting principles and investment principles;
(3) principles relating to reading and understanding financial
statements; and
(4) the general fiduciary duties of trustees.
(b) Not later than the 180th day after the date of selection as
trustee, or after the effective date of this chapter, whichever
is the later date, a trustee must complete the training required
by Subsection (a).
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Sec. 172.008. EXCESS LOSS COVERAGE AND REINSURANCE. (a) A risk
pool may purchase excess loss coverage or reinsurance to insure a
pool against financial losses that the pool determines might
place the solvency of the pool in financial jeopardy.
(b) If a risk pool does not purchase excess loss coverage or
reinsurance, the administrator shall give written notice to each
person who applies for coverage from the pool that the pool does
not maintain excess loss coverage or reinsurance. The
administrator shall provide the notice before coverage is issued
to an applicant and shall give the applicant the opportunity to
decline the coverage.
(c) If a risk pool cancels or does not renew excess loss
coverage or reinsurance, the administrator shall give notice to
each person covered by the pool that the coverage has been
canceled or has not been renewed and shall give each an
opportunity to cancel his coverage. The administrator must give
the notice and opportunity to cancel coverage not later than the
30th day after the date on which the pool cancels or does not
renew the excess loss coverage or reinsurance.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Sec. 172.009. INVESTMENTS. (a) The trustees of a risk pool
shall invest the pool's money in accordance with Subchapter A,
Chapter 2256, Government Code to the extent that law can be made
applicable.
(b) In addition to investments authorized under Subchapter A,
Chapter 2256, Government Code, the trustees of a pool may invest
the pool's money in any investment authorized by the Texas Trust
Code (Subtitle B, Title 9, Property Code).
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(11),
eff. Sept. 1, 1995.
Sec. 172.010. AUDITS. (a) The trustees of the pool shall have
the fiscal accounts and records of the risk pool audited annually
by an independent auditor.
(b) The person who performs the audit must be a certified public
accountant or public accountant licensed by the Texas State Board
of Public Accountancy.
(c) The independent audit shall cover a pool's fiscal year.
(d) The trustees of the pool shall file annually with the State
Board of Insurance a copy of the audit report. The State Board of
Insurance shall maintain the copies of the audit reports at a
convenient location and shall make the copies of the audit
reports available for public inspection during regular business
hours. A person may request the State Board of Insurance to
provide copies of any item included in an audit report on payment
of the cost of providing the copies. The State Board of Insurance
may adopt rules governing the time and manner for filing audit
reports under this subsection and the procedures for filing,
inspecting, and obtaining copies of audit reports.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1991, 72nd Leg., ch. 599, Sec. 15, eff.
Sept. 1, 1991.
Sec. 172.011. INSOLVENCY. (a) The trustees of a risk pool
shall declare the pool insolvent if the trustees determine that
the pool is unable to pay valid claims within 60 days after the
date the claims are verified.
(b) If a pool is declared insolvent by the trustees, the pool
shall cease operation on the day of the declaration, and the
trustees shall provide for the disposition of the pool's assets,
debts, obligations, losses, and other liabilities.
(c) A person who has coverage under a risk pool may institute
proceedings to have the pool declared insolvent by petitioning a
district court in Travis County to declare the pool insolvent. If
the district court, after notice and hearing, determines that the
pool is insolvent, the court shall appoint a receiver to take
charge of and dispose of the pool's assets, debts, obligations,
losses, and other liabilities. Except as provided by this
chapter, a receivership under this section is governed by Chapter
64, Civil Practice and Remedies Code, to the extent that chapter
can be made applicable.
(d) After a receiver takes charge of the assets and determines
outstanding debts, obligations, losses, and other liabilities,
the receiver shall give notice of his determination to any
person, including a political subdivision that is a participant
in the pool.
(e) If the receiver determines that money is owed to the pool by
a political subdivision that is a participant in the pool, the
political subdivision may protest the determination by filing
with the court a protest statement not later than the 15th day
after the date the notice of the receiver's determination is
mailed.
(f) If a court in which a protest statement is filed determines
after a hearing that an amount is owed by the political
subdivision filing the protest statement, the political
subdivision shall pay that amount to the receiver not later than
the 30th day after the date on which the court's determination
becomes final. A determination by a court on a protest statement
is interlocutory.
(g) If a protest statement is not filed with the court, the
political subdivision shall pay to the receiver the amount
determined to be owed not later than the 30th day after the date
on which the receiver mails the notice under Subsection (d).
(h) The court that appoints a receiver may direct that a
reasonable fee be paid to the receiver as compensation for
performance of responsibilities and duties and may assess each
political subdivision that is a participant in the pool under the
receiver's control an amount necessary to compensate the
receiver.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Sec. 172.012. LIMITATION OF RISK POOLS. (a) Except as provided
by Subsection (b), a county may not provide health and accident
coverage through a risk pool under this chapter, except:
(1) as authorized by Subchapter A, Chapter 157; or
(2) through an interlocal contract entered under The Interlocal
Cooperation Act (Article 4413(32c), Vernon's Texas Civil
Statutes) with other political subdivisions of this state if the
aggregate annual contributions to the pool will exceed $1 million
based on an actuarial estimate by an actuary who is a member of
the American Academy of Actuaries.
(b) A county with a population of fewer than 500,000 may create
and provide coverage through a pool if the aggregate annual
claims, contributions, or both claims and contributions to the
pool will exceed $300,000 based on an actuarial estimate by an
actuary who is a member of the American Academy of Actuaries.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 1991, 72nd Leg., ch. 649, Sec. 1, eff. Aug.
26, 1991.
Sec. 172.013. PAYMENT OF CONTRIBUTIONS AND PREMIUMS. (a) A
political subdivision may pay all or part of the contributions
for coverage under this chapter from local funds, including
federal grant or contract pass-through funds, that are not
dedicated by law to some other purpose.
(b) A political subdivision also may pay all or part of the
contributions for coverage for officers, employees, retirees, and
dependents, but may not pay any part of the contributions for
coverage for employees of affiliated service contractors or their
dependents.
(c) On written approval of an officer or employee, a political
subdivision may deduct from the officer's or employee's
compensation an amount necessary to pay that person's and his
dependents' contributions. A retiree may authorize in writing the
person who pays his retirement benefits to deduct from those
benefits an amount sufficient to pay the retiree's and his
dependents' contributions.
(d) State funds, except federal grant or contract funds passed
through the state to its political subdivisions, may not be used
to purchase coverage or to pay contributions under this chapter.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989. Amended by Acts 2001, 77th Leg., ch. 491, Sec. 5, eff.
Sept. 1, 2001.
Sec. 172.014. APPLICATION OF CERTAIN LAWS. A risk pool created
under this chapter is not insurance or an insurer under the
Insurance Code and other laws of this state, and the State Board
of Insurance does not have jurisdiction over a pool created under
this chapter.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Sec. 172.015. SUBROGATION; ADEQUATE RECOVERY. (a) In this
section, "covered individual" means a person who is covered by
the pool. The term includes an official, an employee, a retiree,
and an employee of an affiliated service contractor and their
dependents.
(b) The payor of employee benefits, whether a political
subdivision, group of political subdivisions, pool, or carrier
providing reinsurance to one of those entities, is subrogated to
a covered individual's right of recovery for personal injuries
caused by the tortious conduct of a third party.
(c) A payor of employee benefits whose interest is not actively
represented by an attorney in a third-party action 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 of employee benefits. Except as provided
by Subsection (i), in the absence of an agreement, the court
shall award to the attorney, payable out of the recovery of the
payor of employee benefits, a reasonable fee for recovery of the
interest of the payor of employee benefits, not to exceed
one-third of the payor's recovery.
(d) If the injured covered individual is not able to realize a
complete and adequate recovery for injuries sustained as a result
of the actionable fault of a third party, the payor of employee
benefits is entitled to a pro rata recovery described by
Subsection (e). A common law doctrine that requires that an
injured party be made whole before a subrogee makes a recovery
does not apply to the recovery of the payor of employee benefits
under this subsection.
(e) Unless otherwise agreed by a covered individual and the
payor of employee benefits and subject to Subsection (f), the
payor's pro rata share under Subsection (d) 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 employee benefits paid by the payor as a
direct result of the tortious conduct of the third party.
(f) A covered individual may bring an action for declaratory
judgment to establish that the amount of the pro rata recovery to
which the payor of employee benefits is entitled is an amount
that is less than the pro rata share described by Subsection (e).
To prevail in an action brought under this subsection, the
covered individual must prove by a preponderance of the evidence
that the amount of the covered individual's total recovery is
less than 50 percent of the value of the covered person's
underlying claim for damages.
(g) Except as otherwise provided by this subsection, the court
shall establish the payor's pro rata recovery under Subsection
(f) in an amount that is not less than 15 percent of and not more
than one-third of the covered individual's total recovery. If a
covered individual shows by clear and convincing evidence that
the pro rata share otherwise described by this subsection would
result in manifest injustice, the court shall establish the
payor's pro rata recovery in an amount that is less than 15
percent of and equal to or greater than five percent of the
covered individual's total recovery.
(h) Notwithstanding Chapter 37, Civil Practice and Remedies
Code, or any other law, in an action brought under Subsection (f)
the court may not award costs or attorney's fees to any party in
the action.
(i) Notwithstanding Subsection (c), a payor of employee benefits
may not be assessed out of the recovery to which the payor is
entitled under Subsection (e) or (f) any attorney's fees under
any theory or rule of law, including the common fund doctrine.
(j) Subsections (c)-(i) do not apply to a payor of employee
benefits participating in a cooperative effort to design and
administer benefits through an administrative agency that
includes a cooperative member that is a county with a population
of at least two million that is adjacent to a county with a
population of at least one million.
Added by Acts 1989, 71st Leg., ch. 1067, Sec. 1, eff. Sept. 1,
1989.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1379, Sec. 1, eff. June 15, 2007.
Sec. 172.016. STATUS OF AFFILIATED SERVICE CONTRACTORS.
Inclusion of the employees of affiliated service contractors in
the uniform group benefits program authorized by this chapter
does not, for any purpose:
(1) make an affiliated service contractor a political
subdivision or a division of a political subdivision; or
(2) make an employee of an affiliated service contractor an
employee of a political subdivision or a division of a political
subdivision.
Added by Acts 2001, 77th Leg., ch. 491, Sec. 6, eff. Sept. 1,
2001.