Insura n c e N e w s REGULATORY NEWS PUBLISHED BY THE TEXAS DEPARTMENT OF INSURANCE
Bundling, Downcoding Rules Proposed
TDImaking “bundling,”twoforalternative rule-
approaches disclosure of
June 3, 2002. The Department complied with that
Montemayor noted after Cornyn issued his opin-
other payment procedures to physicians and pro-
I N S I D E viders that contract with HMOs and insurers offer-
ion that TDI staff had been addressing the disclo-
sure issue with the Texas Medical Association, the
TDI Issues New Data 2 ing preferred provider beneﬁt plans.
Texas Hospital Association and Texas Association
on Mold Claims
For the purposes of brevity, this article will refer of Health Plans and other parties that participate
HMOs Report First Quarterly 3 to HMOs and insurers offering preferred provider in the Department’s Clean Claims Working Group.
Proﬁt Since 1996 plans as “carriers.”
The proposed rules would amend 28 TAC §
USAA’s National HO Policy 5 The Department published proposals to amend 3.3703 with respect to preferred provider plans
Approved for Texas Use
TDI rules on preferred provider plan and HMO and 28 TAC § 11.901 with respect to HMOs.
contracts in the June 14, 2002, issue of the Texas
Following is a description of the alternative dis-
Register. The proposals also can be accessed on
closure rules proposed by TDI staff:
TDI’s Web site, www.tdi.state.tx.us. Each
TexasInsuranceNews proposal includes the two alternative approaches. Alternative One
is published each month. For a one-year Physician and provider contracts would be requir-
subscription (12 issues), contact TDI’s One approach would require that all physician
Publications Division at: and provider contracts entered into or renewed ed to contain information in sufﬁcient detail to en-
after the effective date of the rule contain the re- able a reasonable person with sufﬁcient training,
Texas Department of Insurance
Texas Insurance News⁄MC-9999 quired payment procedure information. Carriers experience and competence in claim processing
P O.Box 149104
would be required to provide the same informa- to determine the payments to be made under those
Austin, TX 78714-9104 contracts. This information would have to explain
tion to physicians or providers with existing con-
Enclose a check for $30 made out to the
tracts no later than 90 days after the proposal all the methodologies the carrier would use to
Texas Department of Insurance. process and pay claims, including a fee schedule,
If you have questions about subscribing, takes effect. The alternative approach would re-
call Publications at (512) 322-4283. quire disclosure of this information only to physi- any non-standard coding methodologies, bundling
Direct questions or suggestions about cians and providers with contracts entered into or processes and downcoding policies.
content to (512) 463-6425 or write:
renewed after the proposal takes effect and only In addition, a carrier would have to provide any
Texas Insurance News, MC-113-1A, upon request. addendum, schedule, exhibit or policy that is nec-
P O.Box 149104
Austin, TX 78714-9104 TDI’s Texas Register ﬁling states that Commis- essary to provide a reasonable understanding of
The staff that prepares this newsletter sioner Jose Montemayor will adopt one of the two the information being disclosed. For instance, a
has no role in proposing, drafting, editing,
alternatives, possibly with changes from the pro- schedule indicating that the carrier will reimburse
or approving TDI rules or policies or inter- certain claims at a “usual and customary rate”
preting statutes. Texas Insurance News posed version.
should not be construed to represent the would have to explain how that rate is determined
policy, endorsement or opinion of the Montemayor will hold a hearing on the proposals for a particular service.
Commissioner of Insurance or the Texas at 9:30 a.m., July 19, 2002, in Room 100 of the
Department of Insurance.
William P. Hobby Jr. State Ofﬁce Building, 333 A carrier could provide any required information
By necessity, summaries of proposed
Guadalupe, Austin. The deadline for submitting in a document or manual separate from the con-
and adopted rules cannot explain their tract if the contract itself identiﬁes the document
full complexity. Readers interested in written comments is 5 p.m., July 15, 2002.
complete information about administra- or manual as the source of the information. In
tive rules should consult the versions In an opinion issued on May 8, 2002, Attorney this case, the carrier would have to present the
published in the Texas Register. General John Cornyn held that the Commissioner document or manual to the physician or provider
To the best of the staff’s ability, infor- of Insurance has legal authority to issue rules
mation presented in this newsletter is
no later than the date the contract is executed.
correct as of the publication date, but requiring carriers to disclose their fee schedules,
scheduled dates and proposed rules bundling processes and downcoding policies to If copyright laws or a licensing agreement prevent
and amendments may change as the contracting physicians and providers. Governor the carrier from providing the required informa-
adoption process goes forward.
Rick Perry immediately asked the Department to tion, the carrier could satisfy the disclosure re-
submit proposed rules to the Texas Register by Please see Bundling on page 5
2 TexasInsuranceNews July 2002
TDI Issues Instructions water claims in which the presence of mold is connection with the purchase of insurance. The
on National HO Policies known or alleged and include payment of costs program must set forth customer identity veriﬁca-
not related to mold such as underlying non-mold tion and documentation procedures as well as
insurers that they may
TDI HAS NOTIFIED
use the recently adopted State Farm
and USAA national residential property insurance
water damage, slab damage and other repairs not
directly resulting from mold itself.
procedures for notifying customers about this re-
quirement and to determine whether a customer
appears on government lists of known or suspect-
forms if they comply with certain conditions. The number of mold-related claims jumped from
ed terrorists or terrorist organizations.
7,083 in 2000 to 37,202 in 2001.
The Department issued a bulletin (B-0029-02)
The full text of the bulletin may be accessed on
on June 5, 2002, informing companies of the The quarterly claim count multiplied almost geo-
TDI’s Web site, www.tdi.state.tx.us. ★
State Farm and USAA adoptions and describing metrically, from 1,050 in the ﬁrst quarter of 2000
what a company must do to use the forms. The to 14,706 in the fourth quarter of 2001. ★
bulletin can be accessed on TDI’s Web site, Annual Statements
www.tdi.state.tx.us. Available On-Line
TDI Advises Insurers
According to the bulletin, a company that elects to
use the State Farm or USAA forms must ﬁle for
of U.S. PATRIOT Act ﬁled electronically
Athe NAIC can now be accessed onlinewith
and receive TDI’s approval. In the ﬁling, the com-
pany must agree to abide by conditions and re-
Totherthem licenseeshasanti-moneyinsurers and
TDI that a new federal law will
to establish laundering
panySearch. The information also can be
quirements laid out in the Commissioner’s orders reached through TDI’s Web site. Go to the Forms/
programs later this year.
adopting those forms. These conditions include: Databases/Lists menu and click on “Annual State-
• Rate reductions to reﬂect changes in coverage. The requirement is contained in the “Uniting and ments.” An application that reads PDF ﬁles, such
• The ﬁling of rate information with TDI for two Strengthening America by Providing Appropriate as the Adobe Acrobat Reader, is needed to view
years after a company starts using the State Tools Required to Intercept and Obstruct Terror- the annual statements. The NAIC advises that in-
Farm or USAA forms. ism (USA PATRIOT) Act of 2001.” formation in the statements is presented “as is”
• Disclosure to existing policyholders how the with “no guarantee of the truth, accuracy or com-
TDI issued a bulletin (B-0025-02) on May 22,
State Farm and USAA forms differ from the po- pleteness of the information.” ★
2002, calling attention to this statute. The bulletin
licies the customers currently have. notes that the U. S. Department of the Treasury
• Giving policyholders the option to buy en- has been examining the money laundering risks Fraud Unit Prosecutions
dorsements providing water damage, slab associated with insurance products and will soon
foundation and mold coverage similar to the Indictments
issue proposed rules governing the establishment
coverage provided in the Texas standard HO-B Ortega, Gwenna, indicted in Austin on
of anti-money laundering programs by insurance
policy that most homeowners now have. ★ charges of making a false statement in a
written instrument, a third-degree felony.
“The Texas Department of Insurance encourages Catland, Barbara Elaine, indicted in Austin
TDI Tabulates Latest all insurance companies to be alert for the issu- on charges of making a false statement in a
Mold Data Call Results ance of the proposed rule,” the bulletin said. It written instrument, a third-degree felony.
HE FIVE LARGEST homeowners writers, with notes that the Treasury had temporarily exempt-
T75 percent hadthe44,285 mold-related water
of state’s total market, have ed insurers from the money laundering provi-
sions. The exemption applies for no more than
Harmel, Don, indicted in Austin on charges
of misapplication of ﬁduciary property, a
claims in Texas over the past two years, with esti- six months, or no later than October 24, 2002.
mated incurred losses and ALAE totaling more Montgomery, Latisha Renee, indicted in
Anti-money laundering provisions of the USA Beaumont on charges of insurance fraud,
than $1 billion.
PATRIOT Act require ﬁnancial institutions, at min- a state jail felony.
State Farm, Allstate, Farmers, USAA and Travelers imum, to:
Rice, Kevin, indicted in Dallas on charges
provided the statistics in response to a TDI call for • Develop internal policies, procedures and con-
of securing the execution of a document by
data on results in the third and fourth quarters of trols.
deception, a third-degree felony.
2001. USAA and Travelers data was added to • Designate a compliance ofﬁcer with access to
numbers previously collected from the other senior management and with appropriate train- Case Dispositions
three carriers for 2000 and the ﬁrst half of 2001. ing and background to execute his or her re- Harris, Shann Hydrick, received two years’
sponsibilities. deferred adjudication and 200 hours of commu-
The revised and updated numbers are on the
• Establish an employee training program. nity service in Belton for insurance fraud, a state
Mold Resource page of TDI’s Web site, www.
• Have an independent audit function to test the jail felony.
ﬁnancial institution’s anti-money laundering King, Kenneth Day, received 36 months’ de-
According to the data, the ﬁve carriers paid and programs. ferred adjudication in Dallas for misapplication
reserved $152.7 million in mold-related water of ﬁduciary property, a third-degree felony. ★
Under the federal statute, the Treasury must
claims and ALAE in 2000 but $854.4 million in
establish minimum standards for ﬁnancial institu-
2001. The ﬁgures represent the total amount of
tions regarding the identity of their customers in
July 2002 TexasInsuranceNews 3
HMOs Report Proﬁt
in First Quarter of ‘02
American Beneﬁt Plans Fined $4.15 Million
Sof Austin has placedinsurer, intoBeneﬁtJenkins
TATE DISTRICT COURT JUDGE
(ABP), an unauthorized
$4.15 million in civil penalties.
receivership and entered a judgment imposing
Judge Jenkins also ordered ABP and other defen-
appointed by Commissioner Jose Montemayor, to
take control of ABP’s money, books and records.
Loiseau testiﬁed that $2.5 million in assets had
been recovered so far, and that an additional $1.5
million held by entities not named as defendants
had been identiﬁed. Judge Jenkins’ order direct-
ed those entities to turn the funds over to the SDR.
dants to reimburse TDI $74,192 for investigative
NAUDITED FINANCIAL REPORTS Health plan members’ claims will take prece-
Uthat the ﬁrst quarter of 2002 indi-a
basic service HMOs, taken as
dence over the civil penalties in the distribution of
Approximately 30,000 persons in 41 states, in- assets recovered by the SDR.
whole, made a proﬁt on their Texas-only cluding 8,000 in Texas, were insured by ABP, pri-
Among other defendants, the court order names
business for the ﬁrst time in six years. marily under contracts with employers.
ABP ofﬁcers Robert David Neal of Fort Worth and
The reports indicated combined after- ABP was placed in temporary receivership on Robert Neal Pointer of Dallas and the National As-
tax net income of $595,567. This con- March 6. That order froze ABP’s assets and en- sociation of Working Americans. ★
trasts with an after-tax loss of $56.5 mil- abled Robert Loiseau, the special deputy receiver
lion in the ﬁrst quarter of 2001.
Twenty of the 36 licensed basic service
Tyler Agent Arrested in Fraud Unit Case
HMOs showed an after-tax proﬁt on
their unaudited quarterly ﬁnancial re-
ports. Thirteen lost money, one broke
Ahas Tesseyman III and oftheTylerinvestigation
N UNAUTHORIZED INSURANCE
led to the arrest agent John
issuance of an
Tesseyman’s actions may have left more than 100
Fourth of July ﬁreworks displays and hundreds of
trucks transporting petroleum products without
even and two were inactive. emergency cease-and-desist order against the valid insurance.
“I welcome the ﬁrst quarter’s apparent Tesher Corp., his unlicensed corporate insurance
Commissioner Jose Montemayor issued an emer-
proﬁtability as a sign that the HMO re- agency.
gency cease-and-desist order on June 6, 2002,
forms of the past few years may be get- Tyler police on June 10, 2002, executed an arrest directing Tesher Corp. and Tesseyman to stop
ting the results we intended,” Com- warrant issued by State District Judge Julie selling insurance products without the necessary
missioner Jose Montemayor said. Kocurek of Austin. The warrant listed charges of licenses.
“These reforms included more accu- misapplication of fiduciary property over
rate accounting of an HMO’s true net Tesseyman sold the policies through the Tesher
$200,000, theft over $200,000 and securing exe-
worth and a requirement that HMOs Corp., Southwest Pyro Consortium and Southwest
cution of a document by deception over $200,000
post special cash reserves when they Property and Casualty in Tyler. While Tesseyman is
and unauthorized insurance. Kocurek set
know their premiums are insufﬁcient individually licensed to sell life/health and P&C
Tesseyman’s bond at $400,000.
to cover claims and expenses.” insurance, Tesher Corp. is not licensed as a cor-
The charges followed an investigation conducted porate P&C agency or corporate surplus lines
The last industrywide proﬁt on Texas- by TDI’s Insurance Fraud Unit and the Travis agency. ★
only business occurred in the ﬁrst County District Attorney’s ofﬁce.
quarter of 1996. After that, the basic
service HMO industry posted after-tax Judge Issues TRO Against Bogus Policies
losses in 23 consecutive quarters.
Basic service HMO enrollment report-
ed for the ﬁrst quarter was 3,402,099,
Sthestop sellingtwo TexasPete Lowry hasdirected
TATE DISTRICT JUDGE
assets of agents and
allegedly fraudulent commer-
Judge Lowry issued a temporary restraining order
on May 31, 2002, and followed it with a tempo-
rary injunction on June 13, 2002. The injunction
a reduction from the 3,611,072 re- cial property policies. took the restraining order a step further by pro-
ported as of the close of 2001. hibiting the agents from replacing or attempting
TDI investigators alleged that agents Robert S.
to replace the allegedly fraudulent policies, ex-
The 16 single-service HMOs reported Harrison of Richmond and Pete F. Ballard of San
cept with the written approval of the receiver.
after-tax net income of $8.2 million in Antonio, operating as Harrison Insurance Agency,
the ﬁrst quarter. Their enrollment in collected millions of dollars for worthless cover- The judge appointed San Antonio CPA Edward L.
Texas was 3,401,233. age on as many as 73 apartment complexes. Rishebarger as receiver of Harrison, Ballard,
Harrison Insurance Agency, HB Insurance
The three limited service HMOs, with The investigators determined that Harrison and
Management Inc. and HB Insurance Services Inc.
183,780 enrollees, reported they lost Ballard continued to add properties to a Lloyd’s of
Assets seized will be used to provide restitution to
$2.6 million. ★ London policy despite Lloyd’s cancellation of their
individuals who have outstanding claims. ★
appointment and placed $1.4 billion of exposure
on an $850 million policy by adding risks after
policy limits were reached.
4 TexasInsuranceNews July 2002
AUTOMOBILE In its proposal, TDI states that there is a need Publication: 27TexReg5059, June 14, 2002
Earliest possible adoption: July 14, 2002
to approve assumption reinsurance agree-
Exempt Adoption ments in limited situations other than conser-
Further information: 512 463-6327
Underinsured Vehicle Deﬁnition vatorship or receivership. In general, these li- HMO Disclosures
■ Commissioner Jose Montemayor has amend- mited situations are tied to the best interests of ■ The Department has proposed amendments
ed the Texas Automobile Rules and Rating the affected policyholders when a transaction to 28 TAC § 11.901, concerning required
Manual with respect to the deﬁnitions of an such as a related dissolution, sale or hazar- provisions in HMO contracts with physicians
underinsured vehicle in Endorsements 578, dous ﬁnancial condition, or other ﬁnancial and providers. The changes address disclo-
Named Non-Owner Coverage, and 579, condition of the ceding insurer, indicates an sure of information of fee schedules and cod-
Named Operator-Government Employees. assumption of the policies would be in the ing procedures that affect the payment pro-
The changes conform the deﬁnition of an un- best interest of the policyholders. Each situa- cess. For details, please see the cover article
derinsured motor vehicle in the endorse- tion would be determined on a case-by-case in this issue of TexasInsuranceNews.
ments to the deﬁnition contained in the Texas review. Publication: 27TexReg5071, June 14, 2002
Personal Auto Policy. The inconsistency be- Publication: 27TexReg5063, June 14, 2002
Earliest possible adoption: July 14, 2002
Further information: 512 463-6327 ★
tween the deﬁnitions recently was brought to Earliest possible adoption: July 14, 2002
staff’s attention. Further information: 512 463-6327
Effective August 13, 2002, the deﬁnition will 2002 Annual and Quarterly Brown to Head Combined
read as follows in all applicable automobile Statements
insurance forms: ■ The Department has proposed new 28 TAC §
HE PROPERTY and Casualty and Life, Accident
An underinsured motor vehicle is one
to which a liability bond or policy ap-
7.65 concerning the requirements for ﬁling
2002 annual and quarterly statements. Tand Health Complaints Resolution sections ofa
Consumer Protection have been merged into
plies but its limit of liability: The proposed rule incorporates annual and single unit headed by Valerie Brown, who had
a. is not enough to pay the full quarterly ﬁling updates from the prior period. been director of the P&C section.
amount the covered person is The instructions and forms required are es-
sentially the same as the 2001annual and Brown has been with TDI for 18 years, the past
legally entitled to recover as
quarterly statement ﬁlings except for the addi- eight as director of Property and Casualty Com-
tion of: plaints Resolution. She previously was an insur-
b. has been reduced by the payment
• A new NAIC form for life companies to ﬁle ance specialist in that section. She joined the
of claims to an amount which is
a Worker’s Compensation Carve-out Sup- agency in 1984 and worked brieﬂy in Legal and
not enough to pay the full amount
plement. This form reﬂects information on Compliance before transferring to Consumer
the covered person is legally enti-
reinsurance assumed by life and health in- Protection.
tled to receive as damages.
surers on certain business originally writen Audrey Selden, senior associate commissioner of
In addition, the rule change redesignates the as workers’ compensation. The applicable Consumer Protection, said she merged the two
endorsements as 578A and 579A. exposures are occupational illness and ac- units to increase efﬁciency and improve service.
Publication: 27TexReg 5257, June 14, 2002 cident but not employers liability.
Reference No. A-0402-13-I • A “Supplemental Investment Risks Interro- “Combining our complaints resolution functions
Further information: 512 463-6327 into one unit allows us to devote more resources
gatories” supplement. This supplement is
designed to improve disclosures regarding to reviewing complaints and eliminate some du-
FINANCIAL diversiﬁcation and valuation of assets. plicative functions,” Selden said. ★
APA Proposals Publication: 27TexReg5064, June 14, 2002
Auto Insurance Assumptions Earliest possible adoption: July 14, 2002 Robinson to Manage
■ The Department has proposed an amend- Further information: 512 463-6327
Consumer Help Line
ment to 28 TAC § 5.11, concerning assump-
tion certiﬁcates related to automobile insur-
JdirectorProtection.has accepted the to requests
of Information Assistance (IA) in
IA staff respond
The change would eliminate the present re- Preferred Provider Plan Disclosures for information and assistance made through the
striction that an assumption certiﬁcate may be ■ The Department has proposed amendments agency’s toll-free Consumer Help Line.
attached only when the ceding carrier is in to 28 TAC § 3.3703 concerning required pro-
receivership or conservatorship and only visions in preferred provider plan contracts Robinson is a graduate of Southwest Texas State
when a court has approved a reinsurance with physicians and providers. The changes University with a degree in geography. He worked
agreement. Instead, a certiﬁcate could be at- address disclosure of certain information at USAA in San Antonio for 19 years, including
tached to an auto policy when a reinsurance about fee schedules and coding procedures nearly 51⁄2 years as manager of USAA’s policy ser-
assumption agreement has been approved by that affect the payment process. For details, vices call center. Most recently, he served as a bu-
a Commissioner’s order. please see the cover article in this issue of siness projects manager at USAA. ★
July 2002 TexasInsuranceNews 5
Montemayor Adopts USAA’s HO Policy Data Call Reminders
OMMISSIONER JOSE MONTEMAYOR has is- those resulting from covered water losses. The (Failure to comply with TDI’s reporting requirements
C sued an order adopting USAA’s national resi-
dential property forms for use in Texas.
HO-B covers such losses to some extent but does
not pay for mold “remediation,” including detec-
may result in disciplinary action)
Quarterly Closed Claim Reports
tion, inspection, isolation, etc. Reports (Long/Short Forms) for claims closed
USAA has indicated it will start using its national
during the second quarter of 2002 are due July
forms in lieu of Texas standard forms on both new USAA’s package includes “buy-back” endorse-
10, 2002. The forms may be downloaded from
and renewal business starting January 1, 2003. ments that will enable policyholders to add:
TDI’s Web site located at http://www.tdi.
Other companies may apply to TDI for authoriza- • Up to $15,000 in coverage for slab or founda-
tion to use the USAA forms. tion damage resulting from accidental water
TDI contact is Vicky Knox, 512 475-1879.
discharges, including constant and repeated
Preliminary numbers from USAA indicate the E-mail address: email@example.com.
seepage. The $15,000 limit of liability would
company’s average rate for a brick veneer house tx.us
include tear-out costs.
insured for $80,000 will drop from $1,645 for a
• Coverage for direct physical loss caused by Call for Quarterly Experience
Texas standard HO-B policy with full mold reme-
constant or repeated seepage or leakage of The Call for Second Quarter 2002 Experience will
diation coverage to $779 for the basic USAA poli-
water, including the cost of tearing out and re- be due August 15, 2002. The bulletin and forms
cy. If a policyholder elects to buy water coverage
placing any part of the building necessary to may be downloaded from TDI’s Web site located
similar to that provided by the HO-B, with full
access the system or appliance from which the at http://www.tdi.state.tx.us/
mold remediation, the average premium would
seepage or leakage occurred. company/indexpc.html TDI contact is
• Coverage to remediate mold resulting from a Julie Jones, 512 475-3030. E-mail address:
As with the State Farm national policies adopted covered water loss, with limits of $25,000, firstname.lastname@example.org
by Montemayor in March, the primary differences $50,000, $75,000 or 100 percent of the Cover-
between the USAA national forms and the Texas age A-Dwelling limit of liability. The endorse- Call for Quarterly Experience, Work-
ers’ Compensation Deductible Plans
standard forms are in coverage of water-related ment would include additional living expenses.
The Call for First Quarter 2002 Experience will be
damage. The basic USAA policy covers damage
USAA will offer slab or foundation coverage, water due August 15, 2002. The bulletin and forms may
from sudden and accidental water discharges but
damage coverage and mold coverage endorse- be downloaded from TDI’s Web site located at
excludes losses, including slab foundation dam-
ments to all applicants for new policies and to http://www.tdi.state.tx.us/
age, caused by constant or repeated seepage or
current policyholders when their HO-B policies company/indexpc.html TDI contact is
leakage of water or by sewer backup.
are converted to the new forms. The endorse- Julie Jones, 512 475-3030. E-mail address:
The basic USAA policies exclude losses caused by ments also will be available for purchase at a later email@example.com
mold and other microbial organisms, including date, subject to underwriting review. ★
Texas Title Insurance
Agent Statistical Report
The call was issued April 16, 2002, and was due
Bundling… from page 1 schedules applicable to speciﬁc procedures. A May 27, 2002, for hard copy reports and June 10,
quirement by supplying a summary of this infor- carrier would have to furnish the information 2002, for electronic submissions. The bulletin
mation. However, this summary would have to be within 30 days after receiving a request. and forms may be downloaded from TDI’s Web
sufﬁcient to enable the physician or provider to site located at http://www.tdi.state.
A carrier would be required to provide 60 days’
determine the payment to be made under the tx.us/company/indexpc.html TDI
advance notice of material changes in its coding
contract. contact is Data Services, 512 475-1878. E-
guidelines and fee schedules and could not make
mail address: TitleCall@tdi.state.tx.us
A carrier would have to give physicians or pro- retroactive changes in the guidelines and sched-
viders at least 60 calendar days’ notice before ules.
changing or replacing any of the required infor- Physicians and providers that receive this infor-
mation. mation could use or disclose it only for the pur-
Physicians and providers receiving the required pose of practice management, billing activities or
information could not use or disclose it for pur- other business operations. The rules would not
poses other than practice management, billing be subject to any interpretation that would re-
activities or other business operations. They also quire a carrier to violate copyright or other law by Texas Title Insurance
would be prohibited from using the information disclosing proprietary software licensed to it. Company Statistical Report
to misrepresent the level of services actually per- Upon request from a physician or provider, a car- The call was issued June 13, 2002, and is due July
formed when submitting a claim. rier would be required to furnish the name, edi- 26, 2002. The bulletin and forms may be down-
tion and model version of software used to deter- loaded from TDI’s Web site located at http:/
Physicians and providers would have a contractu- mine the bundling and unbundling of claims. ★
dexpc.html . TDI contact is Clare Pramuk,
al right to request a description of a carrier’s cod-
512 475-3015. E-mail address: clare.
ing guidelines, including any underlying bundl-
ing, recoding or other payment processes and fee
6 TexasInsuranceNews July 2002
Editor’s Note: Copies of individual orders may be obtained by calling TDI’s Public Information Ofﬁce, 512 463-6425.
AGENTS & AGENCIES NAME CITY ACTION TAKEN VIOLATION ORDER DATE
Acosta, Augustin Laredo County Mutual License and Failure to Pay Fine 02-0445 4/29/02
General Life, Accident and
Health License Revoked
Cervantes, Ramon Vasquez Lubbock Agent License Application Fraudulent or 02-0512 5/16/02
Denied Dishonest Acts
Cochran, Riley Chad Arlington $3,000 Fine Fraudulent or Dishonest 02-0479 5/6/02
Acts or Practices
Hernandez, Eduardo Hernandez Pasadena General Life, Accident, Felony Conviction 02-0420 4/23/02
Health and HMO License
and General Property and
Casualty License Revoked
Lamb-Young, Cheri Jan Abilene Credit Insurance Agent’s Material Misstatements 02-0486 5/8/02
License Revoked on License Application
Parfait, Enrique Lufkin General Life, Accident, Fraudulent or Dishonest 02-0403 4/18/02
Health and HMO License Acts or Practices
Rienstra, Hendrik, dba Geneva, Switzerland Cease-and-Desist Order Unauthorized Insurance 02-0530 5/22/02
New England International Surety Co. Brussels, Belgium and $200,000 Fine
Sullivan, Clair V. Boston, MA $5,000 Fine, $10,000 Unauthorized Insurance 02-0399 4/17/02
Restitution and Cease-
COMPANIES NAME CITY ACTION TAKEN VIOLATION ORDER DATE
American Bankers Insurance Group Inc. Miami, FL $3 Million Multi-State Fine, Failure to Comply with 02-0559 5/31/02
Including $150,883 of Texas Previous Multi-State
Chrysler Insurance Co. Southﬁeld, MO $1,500 Fine Late Payment of Workers’ 02-0485 5/8/02
Tax Surcharge Refunds
Life Insurance Company of Georgia Atlanta, GA $1,000 Fine and Order Consent Order; Alleged 02-0558 5/31/02
and Southland Life Insurance Co. Plano Requiring Compliance Race-Based Pricing of
with National Regulatory Life Insurance
Requiring Restitution to
Ofﬁce and Professional Employees New York, NY Emergency Cease-and- Unauthorized Insurance 02-0487 5/9/02
International Union et al Desist Order
Southland Lloyds Insurance Co. Dallas $3,000 Fine Errors in Data Submitted 02-0510 5/15/02
to TDI’s Statistical Agent
for Private Passenger Auto
Union National Life Insurance Co. Baton Rouge, LA $225,205 Fine and Order Consent Order; Alleged 02-0480 5/6/02
United Insurance Company of America Chicago, IL Requiring Restitution and Race-Based Pricing of
and Reliable Life Insurance Co. Webster Groves, MO Remediation for Consumers Life Insurance.
URA NAME CITY ACTION TAKEN VIOLATION ORDER DATE
Health Administration Services Inc. Houston $10,000 Fine Consent Order; Alleged 02-0511 5/15/02
Violations of Utilization
Review Agent Requirements
For admission to do business in Texas
COMPANY NAME LINE HOME OFFICE
Acadia Insurance Co. Fire and/or Casualty Westbrook, ME
BeniComp Inc. TPA Fort Wayne, IN
Encompass Home and Auto Insurance Co. Fire and/or Casualty Chicago, IL
Encompass Independent Insurance Co. Fire and/or Casualty Chicago, IL
Continued on page 7
July 2002 TexasInsuranceNews 7
For admission to do business in Texas
COMPANY NAME LINE HOME OFFICE
FBD Consulting Inc. TPA Kansas City, MO
Integrated Disability Resources Inc. TPA Bloomﬁeld, CT
Stonebridge Casualty Insurance Co. Fire and/or Casualty Columbus, OH
Synergence Group Inc. TPA Chicago, IL
United Life Agency Services, LLC TPA Garden City, NY
(using the assumed name of Paylogix)
Usplate Glass Insurance Co. Fire and/or Casualty Westchester, IL
COMPANY NAME LINE HOME OFFICE
Heartland Security Insurance Co. Fire and/or Casualty Tyler, TX
RMS Texas, L.L.C. TPA Beaumont, TX
(using the assumed Name of
Risk Management Services)
For certiﬁcate of authority
COMPANY NAME LINE HOME OFFICE
PSO Health Services L.L.C. Provider Sponsored San Antonio, TX
under the assumed name Organization
Physicians Health Choice
For name change in Texas
FROM TO LINE LOCATION
J. C. Penney Life Insurance Co. Stonebridge Life Insurance Co. Life, Accident and/or Health Rutland, VT
For admission to do business in Texas
COMPANY NAME LINE HOME OFFICE
Computer Health Network Inc. TPA Schaumburg, IL
Eldorado Claims Services Inc. TPA Phoenix, AZ
Florida Select Insurance Co. Fire & Casualty Sarasota, FL
Forte’ Information Services Inc. TPA Riverside, CA
National Land Title Insurance Co. Title Barrington, IL
Starmount Financial Corp. Inc. TPA Baton Rouge, LA
COMPANY NAME LINE HOME OFFICE
Health Plan Administrators Inc., TPA San Antonio, TX
dba HP Management Services
Quorum Administrators Inc. TPA Dallas, TX
For name change in Texas
FROM TO LINE LOCATION
Aetna Insurance Company of America ING Insurance Company of America Life Tampa, FL
Aetna U.S. Healthcare Dental Plan Inc. Aetna Dental Inc. HMO Houston, TX
Aetna U.S. Healthcare Inc. Aetna Health Inc HMO Houston, TX
Aetna U.S. Healthcare of North Texas Inc. Aetna Health of North Texas Inc. HMO Dallas, TX
EOShealth Inc., dba GEOS EOSouthsource Inc., dba GEOS TPA Tempe, AZ
First ING Life Insurance Company of New York National Security Life and Annuity Co. Life Binghamton, NY
Foundation Health Systems Life Health Net Life Insurance Co. Life Woodland Hills, CA
& Health Insurance Co.
Sorema North America Reinsurance Co. General Security National Insurance Co. Fire & Casualty New York, NY
Travelers Indemnity Company of Missouri, The Travelers Commercial Casualty Co. Fire & Casualty Hartford, CT
Virginia Surety Co. Inc. Combined Specialty Insurance Co. Fire & Casualty Glenview, IL
ZC Insurance Co. Converium Insurance (North America) Inc. Fire & Casualty Fort Lee, NJ
Zurich Reinsurance (North America) Inc. Converium Reinsurance (North America) Inc. Fire & Casualty Stamford, CT
TexasInsuranceNews July 2002
Montemayor to Consider ISO Homeowner Policies
notice that ISO’s six resi- premises, while the HO-B does. ISO has pro- valuable documents to $1,500. The HO-B has a
TDI HAS POSTED
dential property policy forms, plus 95
endorsements, are under consideration for use in
posed an endorsement to add this coverage for
an additional premium. •
The ISO policy provides $1,500 in coverage for
Texas. • ISO’s policy excludes damage to foundations, boats and other watercraft away from the resi-
etc., as an ensuing loss caused by a covered dence premises, while the HO-B totally ex-
Commissioner Jose Montemayor will consider
water discharge, while the HO-B provides cov- cludes coverage when a loss occurs off the
adoption of the forms after the July 1, 2002, dead-
erage. This coverage could be added to the ISO premises.
line for submission of written comments. Notice
policy by means of an endorsement, with a • ISO’s limit for theft of jewelry, watches and furs
was published at 27TexReg4731 on May 31, 2002.
limit of 15 percent of Coverage A-Dwelling. is $1,500, while the HO-B contains a $500
ISO’s policy forms are commonly used in most • The ISO policy does not cover losses caused by limit.
other states by insurers that do not have their own fungi or microbes, including mold. The HO-B • ISO provides $500 in coverage for business
national forms. covers removal of mold from an area directly property away from the residence, while the
affected by a covered water loss but does not HO-B offers no such coverage.
ISO ﬁled its Homeowners 2-Broad Form, Home-
cover “remediation,” including detection, in- • The ISO policy provides an additional 5 per-
owners 3-Special Form, Homeowners 4-Contents
spection and isolation. A policyholder could cent of policy limits for debris removal if the
Broad Form, Homeowners 5-Comprehensive
buy an endorsement to the ISO policy covering total cost of covered damage and debris re-
Form, Homeowners 6-Unit Owners Form and
remediation of mold resulting from a sudden moval exceed the limit of liability for the dam-
Homeowners 8-Modiﬁed Coverage Form, along
and accidental water discharge. aged property. The HO-B covers debris remov-
with the endorsements for use in Texas.
• ISO’s policy contains an exclusion not in the al within policy limits and does not provide ad-
The Homeowners 3-Special Form is analogous to HO-B policy for losses to business data. ditional coverage.
the Texas standard HO-B policy form, which is the • ISO’s policy provides coverage of boats and • ISO provides up to $500 for covered damage
form most commonly sold to Texas consumers. other water craft up to $1,500 for named per- to any one tree, shrub or plant. The HO-B limit
The Homeowners 2-Broad Form is analogous to ils, regardless of where the loss occurs but is $250.
the less comprehensive HO-A with the Additional with an exclusion for theft away from the resi- • ISO’s policy provides up to $5,000 in coverage
Extended Coverage Endorsement (HO-170) at- dence premises. The HO-B provides coverage for grave markers, including mausoleums, for
tached. The Homeowners 5-Comprehensive Form up to the limits of Coverage B (Personal Pro- losses caused by perils insured against. The
is analogous to the Texas standard HO-C. perty) for boats located on the residence pre- HO-B does not provide similar coverage.
mises for all perils insured against.
Differences between the ISO Homeowners 3 and Insurers proposing to use the ISO forms would be
• The ISO policy limits coverage of stolen
the Texas standard HO-B include, but are not lim- required to apply for TDI’s prior approval. One
ﬁrearms, goldware and silverware to $2,500,
ited to, the following: condition would be to offer the ISO endorsements
while the HO-B provides coverage up to the
providing coverage for constant or repeated seep-
Restrictions limits of Coverage B.
age or leakage, foundation damage and mold re-
• ISO’s policy does not cover losses caused by • ISO’s policy covers golf carts only if used exclu-
mediation coverage, subject to underwriting.
constant or repeated seepage or leakage of sively to service the residence premises. The
Other conditions include disclosure of coverage
water from plumbing, appliances, etc., while HO-B covers golf carts for all perils insured
changes to existing customers, rate reductions to
the HO-B does. A policyholder could add this against up to the limits of Coverage B.
reﬂect coverage changes, and the ﬁling of rate in-
coverage by purchasing an endorsement. formation with TDI for two years after a company
• ISO’s policy does not cover losses from sewer starts using the ISO forms. ★
• ISO limits coverage of stamps, tickets, person-
or drain back-up or from accidental dis-
al records, passports, deeds and certain other
charges or overﬂow from off the residence
Texas Department of Insurance Presorted Standard
P O.Box 149104 U. S. Postage Paid
Austin, Texas 78714-9104 A u s t i n, T e x a s
P e r m i t No. 16 13