INSURANCE CODE
SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES
CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
ACTS OR PRACTICES
SUBCHAPTER A. GENERAL PROVISIONS
§ 541.001. PURPOSE. The purpose of this chapter is to
regulate trade practices in the business of insurance by:
(1) defining or providing for the determination of
trade practices in this state that are unfair methods of
competition or unfair or deceptive acts or practices; and
(2) prohibiting those trade practices.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.002. DEFINITIONS. In this chapter:
(1) "Knowingly" means actual awareness of the falsity,
unfairness, or deceptiveness of the act or practice on which a claim
for damages under Subchapter D is based. Actual awareness may be
inferred if objective manifestations indicate that a person acted
with actual awareness.
(2) "Person" means an individual, corporation,
association, partnership, reciprocal or interinsurance exchange,
Lloyd's plan, fraternal benefit society, or other legal entity
engaged in the business of insurance, including an agent, broker,
adjuster, or life and health insurance counselor.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR
DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage in
this state in a trade practice that is defined in this chapter as or
determined under this chapter to be an unfair method of competition
or an unfair or deceptive act or practice in the business of
insurance.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.004. VENUE FOR ACTIONS INVOLVING DEPARTMENT OR
COMMISSIONER. An action under this chapter in which the department
or commissioner is a party must be brought in a district court in
Travis County.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.005. APPLICABILITY TO RISK RETENTION OR PURCHASING
GROUP. (a) A risk retention group or purchasing group, as those
terms are defined by Section 2, Article 21.54, not chartered in this
state may not engage in a trade practice in this state that is
defined as unlawful under this chapter.
(b) A risk retention group or purchasing group is subject to
this chapter and rules adopted under this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.006. PROHIBITED CONTENT OF CERTAIN INSURANCE
POLICIES. Notwithstanding any other provision of this code, it is
unlawful for an insurer engaged in the business of life, accident,
or health insurance to issue or deliver in this state a policy
containing the words "Approved by the Texas Department of
Insurance" or words of a similar meaning.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.007. IMMUNITY FROM PROSECUTION. (a) This
section applies to a person who requests to be excused from
attending and testifying at a hearing or from producing books,
papers, records, correspondence, or other documents at the hearing
on the ground that the testimony or evidence may:
(1) tend to incriminate the person; or
(2) subject the person to a penalty or forfeiture.
(b) A person who, notwithstanding a request described by
Subsection (a), is directed to provide the testimony or produce the
documents shall comply with that direction. Except as provided by
Subsection (c), the person may not be prosecuted or subjected to a
penalty or forfeiture for or on account of a transaction, matter, or
thing about which the person testifies or produces documents, and
the testimony or documents produced may not be received against the
person in a criminal action, investigation, or proceeding.
(c) A person who complies with a direction to testify or
produce documents is not exempt from prosecution or punishment for
perjury committed while testifying and the testimony or evidence
given or produced is admissible against the person in a criminal
action, investigation, or proceeding concerning the perjury, and
the person is not exempt from the denial, revocation, or suspension
of any license, permission, or authority conferred or to be
conferred under this code.
(d) A person may waive the immunity or privilege granted by
this section by executing, acknowledging, and filing with the
department a statement expressly waiving the immunity or privilege
for a specified transaction, matter, or thing. On filing the
statement:
(1) the testimony or documents produced by the person
in relation to the transaction, matter, or thing may be received by
or produced before a judge or justice or a court, grand jury, or
other tribunal; and
(2) the person is not entitled to immunity or
privilege for the testimony or documents received or produced under
Subdivision (1).
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.008. LIBERAL CONSTRUCTION. This chapter shall be
liberally construed and applied to promote the underlying purposes
as provided by Section 541.001.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
ACTS OR PRACTICES DEFINED
§ 541.051. MISREPRESENTATION REGARDING POLICY OR
INSURER. It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to:
(1) make, issue, or circulate or cause to be made,
issued, or circulated an estimate, illustration, circular, or
statement misrepresenting with respect to a policy issued or to be
issued:
(A) the terms of the policy;
(B) the benefits or advantages promised by the
policy; or
(C) the dividends or share of surplus to be
received on the policy;
(2) make a false or misleading statement regarding the
dividends or share of surplus previously paid on a similar policy;
(3) make a misleading representation or
misrepresentation regarding:
(A) the financial condition of an insurer; or
(B) the legal reserve system on which a life
insurer operates;
(4) use a name or title of a policy or class of
policies that misrepresents the true nature of the policy or class
of policies; or
(5) make a misrepresentation to a policyholder insured
by any insurer for the purpose of inducing or that tends to induce
the policyholder to allow an existing policy to lapse or to forfeit
or surrender the policy.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.052. FALSE INFORMATION AND ADVERTISING. (a) It
is an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to make, publish,
disseminate, circulate, or place before the public or directly or
indirectly cause to be made, published, disseminated, circulated,
or placed before the public an advertisement, announcement, or
statement containing an untrue, deceptive, or misleading
assertion, representation, or statement regarding the business of
insurance or a person in the conduct of the person's insurance
business.
(b) This section applies to an advertisement, announcement,
or statement made, published, disseminated, circulated, or placed
before the public:
(1) in a newspaper, magazine, or other publication;
(2) in a notice, circular, pamphlet, letter, or
poster;
(3) over a radio or television station; or
(4) in any other manner.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.053. DEFAMATION OF INSURER. (a) It is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to directly or indirectly make, publish,
disseminate, or circulate or to aid, abet, or encourage the making,
publication, dissemination, or circulation of a statement that:
(1) is false, maliciously critical of, or derogatory
to the financial condition of an insurer; and
(2) is calculated to injure a person engaged in the
business of insurance.
(b) This section applies to any oral or written statement,
including a statement in any pamphlet, circular, article, or
literature.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.054. BOYCOTT, COERCION, OR INTIMIDATION. It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to commit through concerted
action or to enter into an agreement to commit an act of boycott,
coercion, or intimidation that results in or tends to result in the
unreasonable restraint of or a monopoly in the business of
insurance.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.055. FALSE FINANCIAL STATEMENT. (a) It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to, with intent to deceive:
(1) file with a supervisory or other public official a
false statement of financial condition of an insurer; or
(2) make, publish, disseminate, circulate, deliver to
any person, or place before the public or directly or indirectly
cause to be made, published, disseminated, circulated, delivered to
any person, or placed before the public a false statement of
financial condition of an insurer.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to make a
false entry in an insurer's book, report, or statement or wilfully
omit to make a true entry of a material fact relating to the
insurer's business in the insurer's book, report, or statement with
intent to deceive:
(1) an agent or examiner lawfully appointed to examine
the insurer's condition or affairs; or
(2) a public official to whom the insurer is required
by law to report or who has authority by law to examine the
insurer's condition or affairs.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.056. PROHIBITED REBATES AND
INDUCEMENTS. (a) Subject to Section 541.058 and except as
otherwise expressly provided by law, it is an unfair method of
competition or an unfair or deceptive act or practice in the
business of insurance to knowingly permit the making of, offer to
make, or make a life insurance contract, life annuity contract, or
accident and health insurance contract or an agreement regarding
the contract, other than as plainly expressed in the issued
contract, or directly or indirectly pay, give, or allow or offer to
pay, give, or allow as inducement to enter into a life insurance
contract, life annuity contract, or accident and health insurance
contract a rebate of premiums payable on the contract, a special
favor or advantage in the dividends or other benefits of the
contract, or a valuable consideration or inducement not specified
in the contract, or give, sell, or purchase or offer to give, sell,
or purchase in connection with a life insurance, life annuity, or
accident and health insurance contract or as inducement to enter
into the contract stocks, bonds, or other securities of an insurer
or other corporation, association, or partnership, dividends or
profits accrued from the stocks, bonds, or securities, or anything
of value not specified in the contract.
(b) It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to issue or
deliver or to permit an agent, officer, or employee to issue or
deliver as an inducement to insurance:
(1) company stock or other capital stock;
(2) a benefit certificate or share in a corporation;
(3) securities; or
(4) a special or advisory board contract or any other
contract promising returns or profits.
(c) Subsection (b) does not prohibit issuing or delivering a
participating insurance policy otherwise authorized by law.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.057. UNFAIR DISCRIMINATION IN LIFE INSURANCE AND
ANNUITY CONTRACTS. Subject to Section 541.058, it is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to make or permit with respect to a life
insurance or life annuity contract an unfair discrimination between
individuals of the same class and equal life expectancy regarding:
(1) the rates charged;
(2) the dividends or other benefits payable; or
(3) any of the other terms and conditions of the
contract.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.058. CERTAIN PRACTICES NOT CONSIDERED
DISCRIMINATION OR INDUCEMENT. It is not a rebate or discrimination
prohibited by Section 541.056(a) or 541.057:
(1) for a life insurance or life annuity contract, to
pay a bonus to a policyholder or otherwise abate the policyholder's
premiums in whole or in part out of surplus accumulated from
nonparticipating insurance policies if the bonus or abatement:
(A) is fair and equitable to policyholders; and
(B) is in the best interests of the insurer and
its policyholders;
(2) for a life insurance policy issued on the
industrial debit plan, to make to a policyholder who has
continuously for a specified period made premium payments directly
to the insurer's office an allowance in an amount that fairly
represents the saving in collection expenses;
(3) for a group insurance policy, to readjust the rate
of premium based on the loss or expense experience under the policy
at the end of a policy year if the adjustment is retroactive for
only that policy year; or
(4) for a life annuity contract, to waive surrender
charges under the contract when the contract holder exchanges that
contract for another annuity contract issued by the same insurer if
the waiver and the exchange are fully, fairly, and accurately
explained to the contract holder in a manner that is not deceptive
or misleading.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.059. DECEPTIVE NAME, WORD, SYMBOL, DEVICE, OR
SLOGAN. (a) Except as provided by Subsection (b), it is an unfair
method of competition or an unfair or deceptive act or practice in
the business of insurance to use, display, publish, circulate,
distribute, or cause to be used, displayed, published, circulated,
or distributed in a letter, pamphlet, circular, contract, policy,
evidence of coverage, article, poster, or other document,
literature, or public media:
(1) a name as the corporate or business name of a
person or entity engaged in the business of insurance or in an
insurance-related business in this state that is the same as or
deceptively similar to the name adopted and used by an insurance
entity, health maintenance organization, third-party
administrator, or group hospital service corporation authorized to
engage in business under the laws of this state; or
(2) a word, symbol, device, or slogan, either alone or
in combination and regardless of whether registered, and including
the titles, designations, character names, and distinctive
features of broadcast or other advertising, that is the same as or
deceptively similar to a word, symbol, device, or slogan adopted
and used by an insurance entity, health maintenance organization,
third-party administrator, or group hospital service corporation
to distinguish the entity or the entity's products or services from
another entity.
(b) If more than one person or entity uses names, words,
symbols, devices, or slogans, either alone or in combination, that
are the same or deceptively similar and are likely to cause
confusion or mistake, the person or entity that demonstrates the
first continuous actual use of the name, word, symbol, device,
slogan, or combination has not engaged in an unfair method of
competition or deceptive act or practice under this section.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.060. UNFAIR SETTLEMENT PRACTICES. (a) It is an
unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to engage in the following
unfair settlement practices with respect to a claim by an insured or
beneficiary:
(1) misrepresenting to a claimant a material fact or
policy provision relating to coverage at issue;
(2) failing to attempt in good faith to effectuate a
prompt, fair, and equitable settlement of:
(A) a claim with respect to which the insurer's
liability has become reasonably clear; or
(B) a claim under one portion of a policy with
respect to which the insurer's liability has become reasonably
clear to influence the claimant to settle another claim under
another portion of the coverage unless payment under one portion of
the coverage constitutes evidence of liability under another
portion;
(3) failing to promptly provide to a policyholder a
reasonable explanation of the basis in the policy, in relation to
the facts or applicable law, for the insurer's denial of a claim or
offer of a compromise settlement of a claim;
(4) failing within a reasonable time to:
(A) affirm or deny coverage of a claim to a
policyholder; or
(B) submit a reservation of rights to a
policyholder;
(5) refusing, failing, or unreasonably delaying a
settlement offer under applicable first-party coverage on the basis
that other coverage may be available or that third parties are
responsible for the damages suffered, except as may be specifically
provided in the policy;
(6) undertaking to enforce a full and final release of
a claim from a policyholder when only a partial payment has been
made, unless the payment is a compromise settlement of a doubtful or
disputed claim;
(7) refusing to pay a claim without conducting a
reasonable investigation with respect to the claim;
(8) with respect to a Texas personal automobile
insurance policy, delaying or refusing settlement of a claim solely
because there is other insurance of a different kind available to
satisfy all or part of the loss forming the basis of that claim; or
(9) requiring a claimant as a condition of settling a
claim to produce the claimant's federal income tax returns for
examination or investigation by the person unless:
(A) a court orders the claimant to produce those
tax returns;
(B) the claim involves a fire loss; or
(C) the claim involves lost profits or income.
(b) Subsection (a) does not provide a cause of action to a
third party asserting one or more claims against an insured covered
under a liability insurance policy.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.061. MISREPRESENTATION OF INSURANCE POLICY. It
is an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to misrepresent an insurance
policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make
other statements made not misleading, considering the
circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a
reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be
disclosed, including failing to make a disclosure in accordance
with another provision of this code.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF COMPETITION AND
UNFAIR OR DECEPTIVE ACTS OR PRACTICES; SANCTIONS AND PENALTIES
§ 541.101. EXAMINATION AND INVESTIGATION. The
department may examine and investigate the affairs of a person
engaged in the business of insurance in this state to determine
whether the person has or is engaged in an unfair method of
competition or unfair or deceptive act or practice prohibited by
Section 541.003.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.102. STATEMENT OF CHARGES; NOTICE OF
HEARING. (a) When the department has reason to believe that a
person engaged in the business of insurance in this state has
engaged or is engaging in this state in an unfair method of
competition or unfair or deceptive act or practice defined by
Subchapter B and that a proceeding by the department regarding the
charges is in the interest of the public, the department shall issue
and serve on the person:
(1) a statement of the charges; and
(2) a notice of the hearing on the charges, including
the time and place for the hearing.
(b) The department may not hold the hearing before the sixth
day after the date the notice is served.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.103. HEARING. A person against whom charges are
made under Section 541.102 is entitled at the hearing on the charges
to have an opportunity to be heard and show cause why the department
should not issue an order requiring the person to cease and desist
from the unfair method of competition or unfair or deceptive act or
practice described in the charges.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.104. HEARING PROCEDURES. (a) Nothing in this
chapter requires the observance of formal rules of pleading or
evidence at a hearing under this subchapter.
(b) At a hearing under this subchapter, the department, on a
showing of good cause, shall permit any person to intervene,
appear, and be heard by counsel or in person.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.105. RECORD OF HEARING. (a) At a hearing under
this subchapter, the department may, and at the request of a party
to the hearing shall, make a stenographic record of the proceedings
and the evidence presented at the hearing.
(b) If the department does not make a stenographic record
and a person seeks judicial review of the decision made at the
hearing, the department shall prepare a statement of the evidence
and proceeding for use on review.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.106. COMPLIANCE WITH SUBPOENA. (a) If a person
refuses to comply with a subpoena issued in connection with a
hearing under this subchapter or refuses to testify with respect to
a matter about which the person may be lawfully interrogated, on
application of the department, a district court in Travis County or
in the county in which the person resides may order the person to
comply with the subpoena or testify.
(b) A court may punish as contempt a person's failure to
obey an order under this section.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.107. DETERMINATION OF VIOLATION. After a hearing
under this subchapter, the department shall determine whether:
(1) the method of competition or the act or practice
considered in the hearing is defined as:
(A) an unfair method of competition or deceptive
act or practice under Subchapter B or a rule adopted under this
chapter; or
(B) a false, misleading, or deceptive act or
practice under Section 17.46, Business & Commerce Code; and
(2) the person against whom the charges were made
engaged in the method of competition or act or practice in violation
of:
(A) this chapter or a rule adopted under this
chapter; or
(B) Subchapter E, Chapter 17, Business & Commerce
Code, as specified in Section 17.46, Business & Commerce Code.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.108. CEASE AND DESIST ORDER. On determining that
a person committed a violation described by Section 541.107, the
department shall:
(1) make written findings; and
(2) issue and serve on the person an order requiring
the person to cease and desist from engaging in the method of
competition or act or practice determined to be a violation.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.109. MODIFICATION OR SETTING ASIDE OF ORDER. On
the notice and in the manner the department determines proper, the
department may modify or set aside in whole or in part a cease and
desist order issued under Section 541.108 at any time before a
petition appealing the order is filed in accordance with Subchapter
D, Chapter 36.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.110. ADMINISTRATIVE PENALTY. (a) A person who
violates a cease and desist order issued under Section 541.108 is
subject to an administrative penalty under Chapter 84.
(b) In determining whether a person has violated a cease and
desist order, the department shall consider the maintenance of
procedures reasonably adapted to ensure compliance with the order.
(c) An administrative penalty imposed under this section
may not exceed:
(1) $1,000 for each violation; or
(2) $5,000 for all violations.
(d) An order of the department imposing an administrative
penalty under this section applies only to a violation of the cease
and desist order committed before the date the order imposing the
penalty is issued.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.111. CIVIL PENALTY FOR VIOLATION OF CEASE AND
DESIST ORDER. (a) A person who is found by a court to have
violated a cease and desist order issued under Section 541.108 is
liable to the state for a penalty. The state may recover the
penalty in a civil action.
(b) The penalty may not exceed $50 unless the court finds
the violation to be wilful, in which case the penalty may not exceed
$500.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER D. PRIVATE ACTION FOR DAMAGES
§ 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED. A
person who sustains actual damages may bring an action against
another person for those damages caused by the other person
engaging in an act or practice:
(1) defined by Subchapter B to be an unfair method of
competition or an unfair or deceptive act or practice in the
business of insurance; or
(2) specifically enumerated in Section 17.46(b),
Business & Commerce Code, as an unlawful deceptive trade practice
if the person bringing the action shows that the person relied on
the act or practice to the person's detriment.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER
RELIEF. (a) A plaintiff who prevails in an action under this
subchapter may obtain:
(1) the amount of actual damages, plus court costs and
reasonable and necessary attorney's fees;
(2) an order enjoining the act or failure to act
complained of; or
(3) any other relief the court determines is proper.
(b) On a finding by the trier of fact that the defendant
knowingly committed the act complained of, the trier of fact may
award an amount not to exceed three times the amount of actual
damages.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.153. FRIVOLOUS ACTION. A court shall award to the
defendant court costs and reasonable and necessary attorney's fees
if the court finds that an action under this subchapter is
groundless and brought in bad faith or brought for the purpose of
harassment.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.154. PRIOR NOTICE OF ACTION. (a) A person
seeking damages in an action against another person under this
subchapter must provide written notice to the other person not
later than the 61st day before the date the action is filed.
(b) The notice must advise the other person of:
(1) the specific complaint; and
(2) the amount of actual damages and expenses,
including attorney's fees reasonably incurred in asserting the
claim against the other person.
(c) The notice is not required if giving notice is
impracticable because the action:
(1) must be filed to prevent the statute of
limitations from expiring; or
(2) is asserted as a counterclaim.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.155. ABATEMENT. (a) A person against whom an
action under this subchapter is pending who does not receive the
notice as required by Section 541.154 may file a plea in abatement
not later than the 30th day after the date the person files an
original answer in the court in which the action is pending.
(b) The court shall abate the action if, after a hearing,
the court finds that the person is entitled to an abatement because
the claimant did not provide the notice as required by Section
541.154.
(c) An action is automatically abated without a court order
beginning on the 11th day after the date a plea in abatement is
filed if the plea:
(1) is verified and alleges that the person against
whom the action is pending did not receive the notice as required by
Section 541.154; and
(2) is not controverted by an affidavit filed by the
claimant before the 11th day after the date the plea in abatement is
filed.
(d) An abatement under this section continues until the 60th
day after the date notice is provided in compliance with Section
541.154.
(e) This section does not apply if Section 541.154(c)
applies.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.156. SETTLEMENT OFFER. (a) A person who
receives notice provided under Section 541.154 may make a
settlement offer during a period beginning on the date notice under
Section 541.154 is received and ending on the 60th day after that
date.
(b) In addition to the period described by Subsection (a),
the person may make a settlement offer during a period:
(1) if mediation is not conducted under Section
541.161, beginning on the date an original answer is filed in the
action and ending on the 90th day after that date; or
(2) if mediation is conducted under Section 541.161,
beginning on the day after the date the mediation ends and ending on
the 20th day after that date.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.157. CONTENTS OF SETTLEMENT OFFER. A settlement
offer made by a person against whom a claim under this subchapter is
pending must include an offer to pay the following amounts,
separately stated:
(1) an amount of money or other consideration, reduced
to its cash value, as settlement of the claim for damages; and
(2) an amount of money to compensate the claimant for
the claimant's reasonable and necessary attorney's fees incurred as
of the date of the offer.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.158. REJECTION OF SETTLEMENT OFFER. (a) A
settlement offer is rejected unless both parts of the offer
required under Section 541.157 are accepted by the claimant not
later than the 30th day after the date the offer is made.
(b) A settlement offer made by a person against whom a claim
under this subchapter is pending that complies with this subchapter
and is rejected by the claimant may be filed with the court
accompanied by an affidavit certifying the offer's rejection.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT
OFFER. (a) If the court finds that the amount stated in the
settlement offer for damages under Section 541.157(1) is the same
as, substantially the same as, or more than the amount of damages
found by the trier of fact, the claimant may not recover as damages
any amount in excess of the lesser of:
(1) the amount of damages stated in the offer; or
(2) the amount of damages found by the trier of fact.
(b) If the court makes the finding described by Subsection
(a), the court shall determine reasonable and necessary attorney's
fees to compensate the claimant for attorney's fees incurred before
the date and time the rejected settlement offer was made. If the
court finds that the amount stated in the offer for attorney's fees
under Section 541.157(2) is the same as, substantially the same as,
or more than the amount of reasonable and necessary attorney's fees
incurred by the claimant as of the date of the offer, the claimant
may not recover any amount of attorney's fees in excess of the
amount of fees stated in the offer.
(c) This section does not apply if the court finds that the
offering party:
(1) could not perform the offer at the time the offer
was made; or
(2) substantially misrepresented the cash value of the
offer.
(d) The court shall award:
(1) damages as required by Section 541.152 if
Subsection (a) does not apply; and
(2) attorney's fees as required by Section 541.152 if
Subsection (b) does not apply.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.160. EFFECT OF SETTLEMENT OFFER. A settlement
offer is not an admission of engaging in an act or practice defined
by Subchapter B to be an unfair method of competition or an unfair
or deceptive act or practice in the business of insurance.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.161. MEDIATION. (a) A party may, not later than
the 90th day after the date a pleading seeking relief under this
subchapter is served, file a motion to compel mediation of the
dispute in the manner provided by this section.
(b) The court shall, not later than the 30th day after the
date a motion under this section is filed, sign an order setting the
time and place of the mediation.
(c) The court shall appoint a mediator if the parties do not
agree on a mediator.
(d) The mediation must be held not later than the 30th day
after the date the order is signed, unless:
(1) the parties agree otherwise; or
(2) the court determines that additional time not to
exceed 30 days is warranted.
(e) Each party who has appeared in the action, except as
agreed to by all parties who have appeared, shall:
(1) participate in the mediation; and
(2) except as provided by Subsection (f), share the
mediation fee.
(f) A party may not compel mediation under this section if
the amount of actual damages claimed is less than $15,000 unless the
party seeking to compel mediation agrees to pay the costs of the
mediation.
(g) Except as provided by this section, the following apply
to the appointment of a mediator and the mediation process provided
by this section:
(1) Section 154.023, Civil Practice and Remedies Code;
and
(2) Subchapters C and D, Chapter 154, Civil Practice
and Remedies Code.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.162. LIMITATIONS PERIOD. (a) A person must
bring an action under this chapter before the second anniversary of
the following:
(1) the date the unfair method of competition or
unfair or deceptive act or practice occurred; or
(2) the date the person discovered or, by the exercise
of reasonable diligence, should have discovered that the unfair
method of competition or unfair or deceptive act or practice
occurred.
(b) The limitations period provided by Subsection (a) may be
extended for 180 days if the person bringing the action proves that
the person's failure to bring the action within that period was
caused by the defendant's engaging in conduct solely calculated to
induce the person to refrain from or postpone bringing the action.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL
§ 541.201. INJUNCTIVE RELIEF. (a) The attorney
general may bring an action under this section if the attorney
general has reason to believe that:
(1) a person engaged in the business of insurance in
this state is engaging in, has engaged in, or is about to engage in
an act or practice defined as unlawful under:
(A) this chapter or a rule adopted under this
chapter; or
(B) Section 17.46, Business & Commerce Code; and
(2) the action is in the public interest.
(b) The attorney general may bring the action in the name of
the state to restrain by temporary or permanent injunction the
person's use of the method, act, or practice.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.202. VENUE FOR INJUNCTIVE ACTION. An action for
an injunction under this subchapter may be commenced in a district
court in:
(1) the county in which the person against whom the
action is brought:
(A) resides;
(B) has the person's principal place of business;
or
(C) is engaging in business;
(2) the county in which the transaction or a
substantial portion of the transaction occurred; or
(3) Travis County.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.203. ISSUANCE OF INJUNCTION. (a) The court may
issue an appropriate temporary or permanent injunction.
(b) The court shall issue the injunction without bond.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.204. CIVIL PENALTY. In addition to requesting a
temporary or permanent injunction under Section 541.201, the
attorney general may request a civil penalty of not more than
$10,000 for each violation on a finding by the court that the
defendant has engaged in or is engaging in an act or practice
defined as unlawful under:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.205. COMPENSATION OR RESTORATION. The court may
make an additional order or judgment as necessary to compensate an
identifiable person for actual damages or for restoration of money
or property that may have been acquired by means of an enjoined act
or practice.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.206. CIVIL PENALTY FOR VIOLATION OF
INJUNCTION. (a) A person who violates an injunction issued under
this subchapter is liable for and shall pay to the state a civil
penalty of not more than $10,000 for each violation.
(b) The attorney general may, in the name of the state,
petition the court for recovery of the civil penalty against the
person who violates the injunction.
(c) The court shall consider the maintenance of procedures
reasonably adapted to ensure compliance with the injunction in
determining whether a person has violated an injunction.
(d) The court issuing the injunction retains jurisdiction
and the cause is continued for the purpose of assessing a civil
penalty under this section.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.207. REMEDIES NOT EXCLUSIVE. The remedies
provided by this subchapter are:
(1) not exclusive; and
(2) in addition to any other remedy or procedure
provided by another law or at common law.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER F. CLASS ACTIONS BY ATTORNEY GENERAL OR PRIVATE
INDIVIDUAL
§ 541.251. CLASS ACTION AUTHORIZED. (a) If a member of
the insurance buying public has been damaged by an unlawful method,
act, or practice defined in Subchapter B as an unlawful deceptive
trade practice, the department may request the attorney general to
bring a class action or the individual damaged may bring an action
on the individual's own behalf and on behalf of others similarly
situated to recover damages and obtain relief as provided by this
subchapter.
(b) A class action may not be maintained under this
subchapter if the department and attorney general have initiated an
action under Subchapter G or an action under that subchapter has
resulted in a final determination regarding the same act or
practice and the same defendant in the action under this
subchapter.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.252. RECOVERY. A plaintiff who prevails in a
class action under this subchapter may recover:
(1) court costs and attorney's fees reasonable in
relation to the amount of work expended in addition to actual
damages;
(2) an order enjoining the act or failure to act; and
(3) any other relief the court determines is proper.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.253. FRIVOLOUS ACTION. The court may award to the
defendant court costs and reasonable attorney's fees in relation to
the work expended on a finding by the court that a class action
under this subchapter was brought by an individual plaintiff in bad
faith or for the purpose of harassment.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.254. STATUTE OF LIMITATIONS TOLLED. The filing of
a class action under this subchapter tolls the statute of
limitations for bringing an action by an individual under Section
541.162.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.255. PRIOR NOTICE. (a) Not later than the 31st
day before the date a class action for damages is commenced under
this subchapter, the prospective plaintiff must:
(1) notify the intended defendant of the complaint;
and
(2) demand that the defendant provide relief to the
prospective plaintiff and others similarly situated.
(b) The notice must be in writing and be sent by certified or
registered mail, return receipt requested, to:
(1) the place where the transaction occurred;
(2) the intended defendant's principal place of
business in this state; or
(3) if notice to the place described by Subdivision
(1) or (2) does not effect notice, the office of the secretary of
state.
(c) A copy of the notice must also be sent to the
commissioner.
(d) A class action for injunctive relief may be commenced
under this subchapter without complying with Subsection (a).
(e) A plaintiff in a class action for injunctive relief
under this subchapter may, on or after the 31st day after the date
the action is commenced and after complying with Subsection (a),
amend the complaint without leave of court to include a request for
damages.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.256. PREREQUISITES TO CLASS ACTION. The court
shall permit one or more members of a class to sue or be sued as
representative parties on behalf of the class only if:
(1) the class is so numerous that joinder of all
members is impracticable;
(2) there are questions of law or fact common to the
class;
(3) the claims or defenses of the representative
parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and
adequately protect the interests of the class.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.257. CLASS ACTIONS MAINTAINABLE. (a) An action
may be maintained as a class action under this subchapter if the
prerequisites of Section 541.256 are satisfied and, in addition:
(1) the prosecution of separate actions by or against
individual members of the class would create a risk of:
(A) inconsistent or varying adjudications with
respect to individual members of the class that would establish
incompatible standards of conduct for the party opposing the class;
or
(B) adjudication with respect to individual
members of the class that would as a practical matter be dispositive
of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to
protect their interests;
(2) the party opposing the class has acted or refused
to act on grounds generally applicable to the class, making
appropriate final injunctive relief or corresponding declaratory
relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact
common to the members of the class predominate over any questions
affecting only individual members and that a class action is
superior to other available methods for the fair and efficient
adjudication of the controversy.
(b) Matters pertinent to a finding under Subsection (a)(3)
include:
(1) the interest of members of the class in
individually controlling the prosecution or defense of separate
actions;
(2) the extent and nature of any litigation concerning
the controversy already commenced by or against members of the
class;
(3) the desirability or undesirability of
concentrating the litigation of the claims in the particular forum;
and
(4) the difficulties likely to be encountered in the
management of a class action.
(c) In construing this section, the courts of this state
shall be guided by the decisions of the federal courts interpreting
Rule 23, Federal Rules of Civil Procedure, as amended.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.258. CLASS ACTIONS: ISSUES AND SUBCLASSES
AUTHORIZED. When appropriate, an action may be brought or
maintained as a class action under this subchapter with respect to
particular issues or a class may be divided into subclasses and each
subclass treated as a class, and the provisions of this subchapter
shall be construed and applied accordingly.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.259. DETERMINATION REGARDING WHETHER CLASS ACTION
MAY BE MAINTAINED. (a) As soon as practicable after the
commencement of an action brought as a class action, the court shall
determine by order whether it is to be maintained as a class action
under this subchapter.
(b) An order under this section may be altered or amended
before a decision on the merits.
(c) An order determining whether the action may be
maintained as a class action under this subchapter is an
interlocutory order that is appealable. The procedures applicable
to accelerated appeals in the Texas Rules of Appellate Procedure
apply to the appeal.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.260. EFFECT OF DENIAL OF CLASS ACTION. A court
order denying that an action under this subchapter may be brought as
a class action does not affect whether an individual may bring the
same or a similar action under Subchapter D.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.261. NOTICE OF CLASS ACTION. (a) If an action is
permitted as a class action under this subchapter, the court shall
direct to the members of the class the best notice practicable under
the circumstances, including individual notice to all members who
can be identified through reasonable effort.
(b) The notice must contain a statement that:
(1) the court will exclude from the class a notified
member if the member requests exclusion by a specified date;
(2) the judgment, whether favorable or not, includes
all members who do not request exclusion; and
(3) a member who does not request exclusion may enter
an appearance through counsel.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.262. PROCEDURES IN CLASS ACTION. In a class
action under this subchapter, the court may make appropriate
orders:
(1) determining the course of proceedings or
prescribing measures to prevent undue repetition or complication in
the presentation of evidence or argument;
(2) requiring, for the protection of the members of
the class or otherwise for the fair conduct of the action, that
notice be given in a manner the court directs to some or all of the
members or the attorney general of:
(A) any step in the action;
(B) the proposed extent of the judgment; or
(C) the opportunity for members to:
(i) signify whether the members consider
the representation to be fair and adequate;
(ii) intervene and present claims or
defenses; or
(iii) otherwise come into the action;
(3) imposing conditions on the representative parties
or intervenors;
(4) requiring that the pleadings be amended to
eliminate allegations relating to representation of absent
persons, and that the action proceed accordingly; or
(5) dealing with similar procedural matters.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.263. EFFECT OF SETTLEMENT OFFER. (a) Damages
may not be awarded to a class under this subchapter if, not later
than the 30th day after the date the intended defendant receives
notice under Section 541.255, the intended defendant provides to
the plaintiff by certified or registered mail, return receipt
requested, a written settlement offer.
(b) The settlement offer must include:
(1) a statement that all persons similarly situated
have been adequately identified or a reasonable effort to identify
those persons has been made;
(2) a description of the class identified and the
method used to identify that class;
(3) a statement that all persons identified have been
notified that, on request, the intended defendant will provide
relief to those persons and all others similarly situated;
(4) a complete explanation of the relief being
afforded;
(5) a copy of the notice or communication the intended
defendant is providing to the members of the class;
(6) a statement that the relief being afforded the
consumer has been or, if the offer is accepted by the consumer, will
be given within a stated reasonable time; and
(7) a statement that the practice complained of has
ceased.
(c) Except as provided by Subsection (d), an attempt to
comply with this section by a person receiving a demand is:
(1) an offer to compromise;
(2) not admissible as evidence; and
(3) not an admission of engaging in an unlawful act or
practice.
(d) A defendant may introduce evidence of compliance or an
attempt to comply with this section for the purpose of:
(1) establishing good faith; or
(2) showing compliance with this section.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.264. DEFENSES. Damages may not be awarded in a
class action under this subchapter if the defendant:
(1) proves that the action complained of resulted from
a bona fide error, notwithstanding the use of reasonable procedures
adopted to avoid an error; and
(2) made restitution of any consideration received
from any member of the class.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.265. LIMITATIONS PERIOD FOR DAMAGES. In a class
action under this subchapter, damages may not include any damages
incurred more than two years before the date the action is
commenced.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.266. DISPOSITION. (a) A class action under this
subchapter may not be dismissed, settled, or compromised without
the approval of the court.
(b) Notice of the proposed dismissal, settlement, or
compromise shall be given to all members of the class in the manner
the court directs.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.267. CONTENTS OF JUDGMENT; NOTICE. (a) The
judgment in a class action under this subchapter must describe
those to whom the notice under Section 541.261 was directed and who
have not requested exclusion and those the court finds to be members
of the class.
(b) The court shall direct to the members of the class the
best notice of the judgment practicable under the circumstances,
including individual notice to each member who can be identified
through reasonable effort.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER G. DEPARTMENT ACTION FOR REFUND OF PREMIUMS
§ 541.301. REFUND OF PREMIUMS. (a) After notice and
hearing as provided in Subchapter C, the department may require a
person to make an accounting under Subsection (b):
(1) in connection with a method of competition or act
or practice that is the basis of a cease and desist order issued
under Section 541.108; or
(2) on application of an aggrieved person, in
connection with a determination by the department that the
aggrieved person and other persons similarly situated were induced
to purchase an insurance policy as a result of the person engaging
in a method of competition or act or practice in violation of:
(A) this chapter or a rule adopted under this
chapter; or
(B) Section 17.46, Business & Commerce Code.
(b) A person required to make an accounting under this
section must account for all premiums collected for policies issued
by the person during the preceding two years in connection with the
acts in violation of this chapter described by Subsection (a)(1) or
(2).
(c) The department may require the person described by
Subsection (a) to:
(1) give notice to all persons from whom the premiums
were collected; and
(2) refund the total of all premiums collected from
each person who elects to accept a premium refund in exchange for
cancellation of the insurance policy issued.
(d) A person who refunds premiums under this section shall
deduct from the amount of premiums refunded the amount of benefits
actually paid by the person while the insurance policy was in force.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.302. TIME TO MAKE REFUNDS. The department shall
specify a reasonable time within which a person required to make
premium refunds under Section 541.301 must make the refunds.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.303. SANCTION. (a) The department may report to
the attorney general a person's failure to comply with the
department's requirement to refund premiums within the time
specified under Section 541.302. The department may request that
the attorney general file an action to enforce the department's
requirement to refund premiums.
(b) Venue for the action is in a district court in Travis
County.
(c) The court shall enter an appropriate order to enforce
the department's requirement to refund premiums if the court finds
that:
(1) the requirement was lawfully entered; and
(2) the person failed to comply with the requirement.
(d) The court may enforce its order through contempt
proceedings.
(e) The sanction provided by this section is in addition to
any other sanctions provided in this code or other applicable laws.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.304. EVIDENTIARY USE OF COMPLIANCE OR ATTEMPT TO
COMPLY. (a) Compliance or an attempt to comply with the
department's requirement to refund premiums is:
(1) an offer to compromise;
(2) not admissible as evidence; and
(3) not an admission of engaging in an unlawful act or
practice.
(b) A defendant may introduce evidence of compliance or an
attempt to comply with the department's requirement for the purpose
of:
(1) establishing good faith; or
(2) showing compliance with the department's
requirement.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER H. ASSURANCE OF VOLUNTARY COMPLIANCE
§ 541.351. ACCEPTANCE OF ASSURANCE. (a) In
administering this chapter, the department may accept assurance of
voluntary compliance from a person who is engaging in, has engaged
in, or is about to engage in an act or practice in violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(b) The assurance must be in writing and be filed with the
department.
(c) The department may condition acceptance of an assurance
of voluntary compliance on the stipulation that the person offering
the assurance restore to a person in interest money that may have
been acquired by the act or practice described in Subsection (a).
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.352. EFFECT OF ASSURANCE. (a) An assurance of
voluntary compliance is not an admission of a prior violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
(b) Unless an assurance of voluntary compliance is
rescinded by agreement, a subsequent failure to comply with the
assurance is prima facie evidence of a violation of:
(1) this chapter or a rule adopted under this chapter;
or
(2) Section 17.46, Business & Commerce Code.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.353. REOPENING. A matter closed by the filing of
an assurance of voluntary compliance may be reopened at any time.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.354. RIGHT TO BRING ACTION NOT AFFECTED. An
assurance of voluntary compliance does not affect the right of an
individual to bring an action under this chapter, except that the
right of an individual in relation to money received according to a
stipulation under Section 541.351(c) is governed by the terms of
the assurance.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER I. RULEMAKING
§ 541.401. RULEMAKING AUTHORITY. (a) The commissioner
may adopt and enforce reasonable rules the commissioner determines
necessary to accomplish the purposes of this chapter.
(b) Notwithstanding a previous definition or interpretation
of a term used in this chapter contained in or derived from the
common law or other statutory law of this state, the commissioner
may adopt an express provision necessary to accomplish the purposes
of this chapter, including a provision the commissioner considers
necessary to:
(1) achieve necessary uniformity with the laws of
other states or the United States; or
(2) conform to the adopted procedures of the National
Association of Insurance Commissioners.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.402. PETITION. (a) A petition may be submitted
to the commissioner to adopt, amend, or repeal a rule. The petition
must be:
(1) signed by 100 interested persons; and
(2) supported by evidence that:
(A) a particular act or practice has been or
could be false, misleading, or deceptive to the insurance buying
public; or
(B) an act or practice defined by department rule
to be false, misleading, or deceptive is not false, misleading, or
deceptive.
(b) Not later than the 30th day after the date the
department receives the petition, the department shall:
(1) deny the petition as provided by Section 541.403;
or
(2) initiate hearing proceedings under Section
541.404.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.403. DENIAL OF PETITION. (a) The department
must state in writing the reason for denying a petition to adopt,
amend, or repeal a rule.
(b) The department is expressly authorized to deny the
petition if the action sought would:
(1) destroy uniformity with the laws of other states
or the United States; or
(2) not conform to the adopted procedures of the
National Association of Insurance Commissioners.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.404. HEARING ON PETITION. (a) A hearing held by
the department in response to a petition to adopt, amend, or repeal
a rule must be open to the public.
(b) At the hearing, any person may present to the department
in writing or orally testimony, data, or other information
regarding the act or practice under consideration.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.405. JUDICIAL REVIEW OF DEPARTMENT
ACTION. (a) A person aggrieved by the denial of a petition under
Section 541.402 or the adoption, amendment, or repeal of or failure
to adopt a rule under this subchapter may file a petition in a
district court in Travis County for:
(1) a declaratory judgment on the validity or
applicability of an adopted, amended, or repealed rule; or
(2) review of the denial of a petition under Section
541.402.
(b) The commissioner must be made a party to the action.
(c) An action of the commissioner under this subchapter in
adopting, amending, repealing, or failing to adopt a rule or
denying a petition may be invalidated only if the court finds that
the action:
(1) violates a constitutional or state statutory
provision;
(2) exceeds the commissioner's statutory authority;
(3) is arbitrary or capricious or characterized by
abuse of discretion or unwarranted exercise of discretion;
(4) is so vague that it does not establish
sufficiently definite standards to which conduct can be conformed;
(5) is made following unlawful procedure; or
(6) is clearly erroneous in view of the reliable,
probative, and substantial evidence in the whole record as
submitted.
(d) The court may issue an injunction in an action under
this section.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
SUBCHAPTER J. CONSTRUCTION OF CHAPTER WITH OTHER LAWS
§ 541.451. LIABILITY UNDER OTHER LAW. An order of the
department under this chapter or an order by a court to enforce that
order does not relieve or absolve a person affected by either order
from liability under another law of this state.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.452. POWERS IN ADDITION TO OTHER POWERS AUTHORIZED
BY LAW. The powers vested in the department and the commissioner
by this chapter are in addition to any other powers to enforce a
penalty, fine, or forfeiture authorized by law with respect to a
method of competition or act or practice defined as unfair or
deceptive.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.453. DOUBLE RECOVERY PROHIBITED. A person may not
recover damages and penalties for the same act or practice under
both this chapter and another law.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
§ 541.454. PENALTIES AND RELATED PAYMENTS BY
INSURER. (a) Civil penalties, premium refunds, judgments,
compensatory judgments, individual recoveries, orders, class
action awards, costs, damages, or attorney's fees assessed or
awarded under this chapter:
(1) may be paid only from the capital or surplus funds
of the offending insurer; and
(2) may not take precedence over, be in priority to, or
in any other manner apply to:
(A) Article 21.28-C or 21.28-D or any other
insurance guaranty act; or
(B) Article 21.39-A.
(b) The statutes described by Subsection (a)(2) and the
priorities of funds created by those statutes are exempt from the
provisions of this chapter.
Added by Acts 2003, 78th Leg., ch. 1274, § 2, eff. April 1, 2005.
