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HB 3090 seeks to make a variety of administrative changes regarding the regulation of for-profit legal service contract companies, administrators, and sales representatives. Most of the changes involve removing the power from the executive director of Texas Department of Licensing and Regulation and giving it to the the Texas Commission of Licensing and Regulation. The commission would have the authority to adopt reasonable and necessary fees to cover these administrative costs.
HB 3090 would change the amount a company is required to deposit and maintain at all times with the executive director of TDLR as financial security to ensure the faithful performance of the company's obligations to its legal service contract holders, setting those amounts as fixed dollar amounts instead of as the minimum amounts required to be deposited by companies at different levels of annual gross revenues. The acceptable forms of financial security are a surety bond, certificate of performance, cash deposit, or letter of credit.
The bill also shortens the deadlines for various procedures as follows:
HB 3090 would change the deadline for a company whose financial security is issued or written for a specified term to replace the financial security or notify the executive director of TDLR of the company's intention to renew the financial security, requiring such action not later than the 60th day rather than not later than the 90th day before the date the term expires.
HB 3090 would change from not later than the 60th day to not later than the 30th day before the date a company's financial security expires the deadline by which the executive director must receive satisfactory notification of a company's renewal or replacement of the financial security before the executive director may draw on the company's financial security to ensure the company's obligations to its legal service contract holders are met.
The bill would require that the executive director, not later than the 30th day after the date the executive director is notified that the company's financial security has been renewed or replaced, to return any financial security drawn.
The bill would require that a company to pay the refund or credit the contract holder's account before the 46th day
after the date the contract is canceled and, if the company fails to make the refund or credit the
account by that deadline, makes the company liable to the contract holder for a penalty in an
amount equal to 10% of the amount outstanding for each month an amount remains
outstanding. The bill establishes that the penalty is in addition to the amount of the refund owed
and establishes that the right to cancel a legal service contract is not transferable.
The bill defines a "group legal services contract" as a legal service contract entered into by an employer or association on behalf of its employees or association members that choose to purchase the service.
HB 3090 maintains auditing and record-keeping requirements.
The executive director of TDLR would be allowed to issue cease and desist orders to enforce provisions and prevent violations.
The sections that would be repealed under HB 3090 are in regards to statutory provisions relating to prepaid legal service contract programs, additional financial security deposit requirements, and an appeal by a person affected by a ruling, order, decision, or other action of the executive director of TDLR or TDLR by filing a petition in a district court in Travis County.
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