INSURANCE CODE
CHAPTER 83. EMERGENCY CEASE AND DESIST ORDERS
SUBCHAPTER A. GENERAL PROVISIONS
§ 83.001. DEFINITIONS. In this chapter:
(1) "Authorized person" means an individual or entity
described by Section 83.002.
(2) "Emergency" means a sudden, urgent occurrence that
requires immediate action.
(3) "Unauthorized person" means an individual or a
corporation, association, partnership, or other artificial person
who directly or indirectly does an act of insurance business that
is:
(A) described by Section 101.051 or 101.052; and
(B) not done in accordance with specific
authorization of law.
(4) "Unfair act" means an unfair method of
competition, an unfair or deceptive act or practice, or an unfair
claim settlement practice as defined under Article 21.21 or 21.21-2
or a rule adopted under either article.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 1419, § 19, eff. June 1,
2003; Acts 2001, 77th Leg., ch. 1420, § 11.003, eff. Sept. 1,
2001.
§ 83.002. APPLICATION OF CHAPTER. (a) This chapter
applies to each company regulated by the commissioner, including:
(1) a domestic or foreign, stock or mutual, life,
health, or accident insurance company;
(2) a domestic or foreign, stock or mutual, fire or
casualty insurance company;
(3) a Mexican casualty company;
(4) a domestic or foreign Lloyd's plan insurer;
(5) a domestic or foreign reciprocal or interinsurance
exchange;
(6) a domestic or foreign fraternal benefit society;
(7) a domestic or foreign title insurance company;
(8) an attorney's title insurance company;
(9) a stipulated premium insurance company;
(10) a nonprofit legal service corporation;
(11) a statewide mutual assessment company;
(12) a local mutual aid association;
(13) a local mutual burial association;
(14) an association exempt under Article 14.17;
(15) a nonprofit hospital, medical, or dental service
corporation, including a company subject to Chapter 20;
(16) a county mutual insurance company; and
(17) a farm mutual insurance company.
(b) This chapter also applies to:
(1) an agent of an entity described by Subsection (a);
and
(2) an individual or a corporation, association,
partnership, or other artificial person who:
(A) is engaged in the business of insurance;
(B) holds a permit, certificate, registration,
license, or other authority under this code; or
(C) is regulated by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 1419, § 20, eff. June 1,
2003; Acts 2001, 77th Leg., ch. 1420, § 11.004, eff. Sept. 1,
2001.
§ 83.003. RULES. The commissioner may adopt reasonable
rules to implement this chapter, including rules that provide, to
the extent possible, uniformity of procedures between this state
and other states, the United States, or the National Association of
Insurance Commissioners.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.004. PROCEEDINGS UNDER OTHER LAW. The
commissioner may proceed solely under this chapter or under this
chapter in conjunction with other applicable law.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
SUBCHAPTER B. ISSUANCE OF ORDERS
§ 83.051. AUTHORITY OF COMMISSIONER TO ISSUE
ORDER. (a) The commissioner ex parte may issue an emergency cease
and desist order if:
(1) the commissioner believes that:
(A) an authorized person engaging in the business
of insurance is:
(i) committing an unfair act; or
(ii) in a hazardous condition or a
hazardous financial condition under Section 19, Texas Health
Maintenance Organization Act (Article 20A.19, Vernon's Texas
Insurance Code), or Article 1.32, as determined by the
commissioner; or
(B) an unauthorized person:
(i) is engaging in the business of
insurance in violation of Chapter 101 or in violation of a rule
adopted under that chapter; or
(ii) is engaging in the business of
insurance in violation of Chapter 101 and is committing an unfair
act; and
(2) it appears to the commissioner that the alleged
conduct:
(A) is fraudulent;
(B) is hazardous or creates an immediate danger
to the public safety; or
(C) is causing or can be reasonably expected to
cause public injury that:
(i) is likely to occur at any moment;
(ii) is incapable of being repaired or
rectified; and
(iii) has or is likely to have influence or
effect.
(b) An order is final on the 31st day after the date it is
received, unless the affected person requests a hearing under
Section 83.053.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.052. NOTICE. (a) On issuance of an order under
Section 83.051, the commissioner shall serve on the affected person
an order that:
(1) contains a statement of the charges; and
(2) requires the person immediately to cease and
desist from the acts, methods, or practices stated in the order.
(b) The commissioner shall serve the order by registered or
certified mail, return receipt requested, to the affected person's
last known address.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.053. REQUEST FOR HEARING. (a) A person affected
by an order is entitled to request a hearing to contest the order.
(b) The affected person must request the hearing not later
than the 30th day after the date on which the person receives the
order required by Section 83.052.
(c) A request to contest an order must:
(1) be in writing;
(2) be directed to the commissioner; and
(3) state the grounds for the request to set aside or
modify the order.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.054. HEARING. (a) On receiving a request for a
hearing under Section 83.053, the commissioner shall serve notice
of the time and place of the hearing.
(b) The hearing is subject to the procedures for contested
cases under Chapter 2001, Government Code. The hearing must be held
not later than the 10th day after the date the commissioner receives
the request for a hearing unless the parties mutually agree to a
later hearing date.
(c) At the hearing, the person requesting the hearing is
entitled to show cause why the order should not be affirmed.
(d) Following receipt of the proposal for decision from the
State Office of Administrative Hearings regarding the hearing, the
commissioner shall affirm, modify, or set aside in whole or in part
the order.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.055. EFFECT OF ORDER PENDING HEARING. Pending a
hearing under this subchapter, an order continues in effect unless
the order is stayed by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
SUBCHAPTER C. ENFORCEMENT
§ 83.101. AUTHORITY OF COMMISSIONER. If the
commissioner reasonably believes that a person has violated an
order issued under this chapter, the commissioner may:
(1) initiate proceedings under this subchapter to impose an
administrative penalty or direct restitution;
(2) refer the matter to the attorney general for
enforcement;
(3) initiate a proceeding to revoke the person's
certificate of authority; or
(4) pursue another action the commissioner considers
appropriate under applicable law.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.102. DETERMINATION OF VIOLATION. In determining
whether an order has been violated, the commissioner shall consider
the maintenance of procedures reasonably adopted to ensure
compliance with the order.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.103. HEARING ON ADMINISTRATIVE PENALTY. (a) If
the commissioner pursues action to impose an administrative penalty
under Section 83.101(1), the commissioner shall serve on the person
notice of the time and place of a hearing to be held not earlier than
the 21st day after the date the notice is received.
(b) The notice must contain a statement of the facts or
conduct alleged to violate the order.
(c) The commissioner shall serve the notice by registered or
certified mail, return receipt requested, to the person's last
known address.
(d) The hearing is subject to the procedures for contested
cases under Chapter 2001, Government Code.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.104. IMPOSITION OF ADMINISTRATIVE PENALTY;
RESTITUTION. (a) After a hearing, if the commissioner determines
that an order has been violated, the commissioner may:
(1) impose an administrative penalty of $25,000 for
each act of violation;
(2) direct the person against whom the order was
issued to make complete restitution to each Texas resident, Texas
insured, and entity operating in this state that is harmed by the
violation; or
(3) impose the penalty and direct restitution.
(b) A person directed to make restitution shall make the
restitution in the form and amount and within the period determined
by the commissioner.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.105. FAILURE TO PAY PENALTY. If a person fails to
pay a penalty assessed under this subchapter, the commissioner may:
(1) refer the matter to the attorney general for
enforcement; or
(2) cancel or revoke any permit, license, certificate of
authority, certificate of registration, or other authorization
issued under this code as provided by Chapter 82.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
SUBCHAPTER D. JUDICIAL REVIEW; JUDICIAL ACTION
§ 83.151. APPEAL. A person affected by an order of the
commissioner under Section 83.051 or 83.104 may appeal the order by
filing suit in a district court in Travis County not later than the
20th day after the date of the order.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.152. EFFECT OF PETITION ON ORDER OR RELATED
DECISION. A petition for appeal filed under Section 83.151 does
not stay or vacate an order or a decision made under Subchapter B
unless the court, after hearing, issues an order that specifically
stays or vacates the order or decision.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
§ 83.153. JUDICIAL ACTION FOR ENFORCEMENT OF ORDER;
ATTORNEY'S FEES. The department may recover reasonable attorney's
fees if judicial action is necessary to enforce an order issued
under Section 83.051 or 83.104.
Added by Acts 1999, 76th Leg., ch. 101, § 1, eff. Sept. 1, 1999.
