85R6542 PMO-F     By: Paul H.B. No. 3343       A BILL TO BE ENTITLED     relating to the suspension and reactivation of the operation of the   Texas Health Reinsurance System.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1501.302, Insurance Code, is amended to   read as follows:          Sec. 1501.302.  TEXAS HEALTH REINSURANCE SYSTEM. (a) The   Texas Health Reinsurance System is a nonprofit entity administered   by a board of directors and subject to the supervision and control   of the commissioner.          (b)  The system may operate only during the period an order   authorizing operation of the system under Section 1501.3021 is in   effect. The system may not operate after the effective date of an   order of suspension of operation of the system under Section   1501.3022 until a subsequent order authorizing the operation of the   system under Section 1501.3021, if any, is effective.          SECTION 2.  Subchapter G, Chapter 1501, Insurance Code, is   amended by adding Sections 1501.3021 and 1501.3022 to read as   follows:          Sec. 1501.3021.  AUTHORIZATION OF OPERATION. (a) The   commissioner shall hold a hearing if:                (1)  the commissioner believes small employer health   benefit plan issuers in this state are threatened with the   inability to secure reinsurance coverage in the open market; or                (2)  the commissioner receives a petition requesting   the hearing from an association of health benefit plan issuers in   this state or a group of at least 15 small employer health benefit   plan issuers operating in this state.          (b)  If, after a hearing under Subsection (a), the   commissioner finds that the operation of the system is in the public   interest, the commissioner by order shall:                (1)  authorize the operation of the system;                (2)  appoint a board of directors under Section   1501.303; and                (3)  direct the board to develop a plan of operation   under Section 1501.306 to ensure the system is fully implemented on   a date specified in the order that is not later than the 60th day   after the effective date of the order.          (c)  Sections 1501.307-1501.326 apply to the operation of   the system after the date the system is implemented as described by   Subsection (b)(3).          Sec. 1501.3022.  SUSPENSION OF OPERATION. (a) The   commissioner shall hold a hearing if the system is operating or is   authorized to operate and:                (1)  the commissioner believes small employer health   benefit plan issuers in this state are not threatened with the   inability to secure reinsurance coverage in the open market; or                (2)  the commissioner receives a petition requesting   the hearing from an association of health benefit plan issuers in   this state or a group of at least 15 small employer health benefit   plan issuers operating in this state.          (b)  If, after a hearing under Subsection (a), the   commissioner finds that suspension of the operation of the system   is in the public interest, the commissioner by order shall direct   the board to submit to the commissioner for approval, not later than   the 60th day after the date of the order, a plan of suspension of   operation of the system.          (c)  A plan of suspension under Subsection (b) must:                (1)  specify the date after which a health benefit plan   issuer that is a risk-assuming health benefit plan issuer on the   effective date of the plan of suspension may not:                      (A)  become a reinsured health benefit plan issuer   under Sections 1501.310, 1501.311, and 1501.312; and                      (B)  reinsure with the system a small employer   group, or any risk, covered under any small employer health benefit   plan;                (2)  specify the date after which a health benefit plan   issuer that is a reinsured health benefit plan issuer on the   effective date of the plan of suspension may not:                      (A)  reinsure with the system additional small   employer groups in accordance with Section 1501.314; or                      (B)  cede additional eligible lives to the system   in accordance with Section 1501.314;                (3)  provide for:                      (A)  the filing, receipt, processing, and payment   of all claims against and debts of the system, and extinguishment of   all liabilities of the system, including balances on any lines of   credit that may have been established by or on behalf of the system;                      (B)  the collection and receipt of all assessments   made with respect to reinsured health benefit plan issuers,   including any deferred assessments and any final assessment made   under Subsection (f); and                      (C)  a final audit of the system by the state   auditor as provided by Subsection (g);                (4)  specify that the transactions required by the plan   of suspension and addressed in Subdivisions (1)-(3) must be closed   not later than the effective date of the suspension of the operation   of the system as specified under Subdivision (5);                (5)  state the effective date of the suspension of the   operation of the system; and                (6)  provide for the proportionate distribution of any   surplus assets of the system that remain after the date specified   under Subdivision (5).          (d)  The effective date of the suspension of the operation of   the system as specified under Subsection (c)(5) may not be later   than the 270th day after the date the commissioner by order approves   the plan of suspension.          (e)  If the board fails to submit a suitable plan of   suspension, the commissioner, after notice and hearing, shall adopt   a plan in accordance with Subsection (c).          (f)  The board may make a final assessment of the small   employer health benefit plan issuers that, for any portion of the   last year in which the system operated, were reinsured health   benefit plan issuers.  An assessment under this subsection may be   made only if the board determines the assessment is necessary to   recover net losses of the system, as provided in Sections   1501.319-1501.326, including administrative expenses for   transactions essential to complete execution of the plan of   suspension, and the cost of the final audit by the state auditor.          (g)  The transactions necessary to complete execution of the   plan of suspension are subject to audit by the state auditor under   Chapter 321, Government Code. The state auditor shall report the   cost of the final audit conducted under this section to the board   and the comptroller, and the board shall remit that amount to the   comptroller for deposit to the general revenue fund.          (h)  The board serving immediately before the effective date   of the suspension of the operation of the system is discharged on   the effective date of the suspension of the operation of the system   as specified under Subsection (c)(5).          (i)  After the effective date of the suspension of the   operation of the system as specified under Subsection (c)(5), the   commissioner shall take any action necessary under Subsection   (c)(6) to distribute the surplus assets of the system until all   remaining assets are distributed.          (j)  During a period in which the operation of the system is   suspended, Sections 1501.307-1501.326 have no effect.          SECTION 3.  The board of directors of the Texas Health   Reinsurance System serving on the effective date of this Act shall   submit to the commissioner of insurance a plan of suspension of the   operation of the Texas Health Reinsurance System, as described by   Section 1501.3022(c), Insurance Code, as added by this Act, not   later than the 90th day after the effective date of this Act. If the   board fails to timely submit the plan, the commissioner of   insurance shall adopt a plan in accordance with Sections   1501.3022(c)-(i), Insurance Code, as added by this Act.          SECTION 4.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2017.