S.B. No. 1623

	AN ACT
	relating to nonprofit legal services corporations.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 501.204(a), Insurance Code, is amended
	to read as follows:
	(a)  This section applies to each insurer authorized to
	engage in business in this state under:
	(1)  Chapter 841;
	(2)  Chapter 842;
	(3)  Section 1367.053, Subchapter A, Chapter 1452,
	Subchapter B, Chapter 1507, Chapter 222, 251, or 258, as applicable
	to a health maintenance organization, Chapter 843, Chapter 1271, or
	Chapter 1272;
	(4)  Chapter 882;
	(5)  Chapter 884;
	(6)  Chapter 885;
	(7)  Chapter 887;
	(8)  Chapter 888;
	(9)  [Chapter 961;
	[(10)] Chapter 962;
	(10) [(11)]  Chapter 982;
	(11) [(12)]  Subchapter B, Chapter 1103;
	(12) [(13)]  Subchapter A, Chapter 1104;
	(13) [(14)]  Chapter 1201, or a provision listed in
	Section 1201.005;
	(14) [(15)]  Chapter 1551;
	(15) [(16)]  Chapter 1578; or
	(16) [(17)]  Chapter 1601.
	SECTION 2.  Section 961.002(a), Insurance Code, is amended
	to read as follows:
	(a)  The Texas Nonprofit Corporation Law as described by
	Section 1.008, Business Organizations Code, applies [Texas
	Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
	Vernon's Texas Civil Statutes) and the Texas Non-Profit Corporation
	Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes)
	apply] to a nonprofit legal services corporation to the extent
	provided by [not in conflict with] this chapter.
	SECTION 3.  Section 961.003, Insurance Code, is amended to
	read as follows:
	Sec. 961.003.  CORPORATION NOT SUBJECT TO DEPARTMENT
	REGULATION.  A [Each] nonprofit legal services corporation is not
	subject to [this chapter and to direct] regulation by the
	department.
	SECTION 4.  Section 961.004, Insurance Code, is amended to
	read as follows:
	Sec. 961.004.  CORPORATION NOT ENGAGED IN BUSINESS OF
	INSURANCE. A nonprofit legal services corporation [that complies
	with this chapter] is not engaged in the business of insurance and[,
	except as provided by Section 961.002(b),] is not subject to laws
	relating to insurers.
	SECTION 5.  The heading to Section 961.051, Insurance Code,
	is amended to read as follows:
	Sec. 961.051.  FILING OF CERTIFICATE OF FORMATION
	[APPLICATION FOR CORPORATE CHARTER]; NONPROFIT STATUS REQUIRED.
	SECTION 6.  Section 961.051, Insurance Code, is amended by
	amending Subsection (a) and adding Subsection (a-1) to read as
	follows:
	(a)  Seven or more persons may file with [apply to] the
	secretary of state a certificate of formation in accordance with
	Title 1, Business Organizations Code, to form a nonprofit legal
	services corporation.
	(a-1)  Notwithstanding Subsection (a), a nonprofit legal
	services corporation that on or before September 1, 2019, was
	organized [for a corporate charter] under the former Texas
	Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
	Texas Civil Statutes) or was formed under the Texas Nonprofit
	Corporation Law, as described by Section 1.008, Business
	Organizations Code, is [for] a nonprofit legal services corporation
	for purposes of this chapter.
	SECTION 7.  The heading to Subchapter D, Chapter 961,
	Insurance Code, is amended to read as follows:
	SUBCHAPTER D.  OFFICERS [BOARD OF DIRECTORS; PERSONNEL]
	SECTION 8.  Section 961.152, Insurance Code, is amended to
	read as follows:
	Sec. 961.152.  FINANCIAL OFFICER[; BOND].  [(a)]  A
	nonprofit legal services corporation, by resolution entered in its
	minutes, shall designate one or more officers to be responsible for
	handling the corporation's funds.  [The president, secretary, or
	general manager of the corporation must certify a copy of the
	resolution, and the corporation shall file the copy with the
	department.
	[(b)     Except as provided by Subsection (c), the corporation
	shall make and file a separate or blanket surety bond covering each
	officer designated under Subsection (a).   The bond must:
	[(1)     be issued by a corporate surety company
	authorized to issue surety bonds in this state;
	[(2)     be satisfactory to the department and payable to
	the department for the use and benefit of the corporation;
	[(3)     obligate the principal and surety to pay any
	monetary loss to the corporation through an act of fraud,
	dishonesty, forgery, theft, embezzlement, or wilful misapplication
	by a covered officer, whether acting alone or with other persons,
	while employed as or exercising the powers of an officer designated
	under Subsection (a); and
	[(4)     be in an amount of at least $25,000 for each
	officer covered.
	[(c)     Instead of the bond required by Subsection (b), an
	officer designated under Subsection (a) may deposit with the
	department cash or securities approved by the department in the
	amount and subject to the conditions applicable to the bond.
	[(d)     Successive recoveries may be made on a bond under this
	section until the amount of the bond is exhausted.]
	SECTION 9.  The heading to Subchapter E, Chapter 961,
	Insurance Code, is amended to read as follows:
	SUBCHAPTER E.  OPERATION [REGULATION] OF NONPROFIT LEGAL SERVICES
	CORPORATIONS
	SECTION 10.  Section 961.206, Insurance Code, is amended to
	read as follows:
	Sec. 961.206.  ADVANCE TO CORPORATION. Any person may
	advance to a nonprofit legal services corporation, on a contingent
	liability basis, money necessary for the purposes of the
	corporation's business or to comply with this chapter[, except that
	the advance may be repaid only on prior approval of the department].
	The advance may be made in an amount and at a rate of interest agreed
	to by the person and the corporation.
	SECTION 11.  Section 961.207, Insurance Code, is amended to
	read as follows:
	Sec. 961.207.  PARTICIPATION AGREEMENTS.  A [(a) Subject to
	Subsection (b), a] nonprofit legal services corporation may:
	(1)  contract with another nonprofit legal services
	corporation or an insurer authorized to engage in business in this
	state for joint participation through:
	(A)  a mutualization contract agreement; or
	(B)  a guaranty treaty; and
	(2)  cede or accept a legal services obligation from
	such a corporation or insurer on all or part of a legal services
	obligation.
	[(b)     Each document used for a purpose described by
	Subsection (a) must be filed with the department and approved by the
	department to be in accordance with the corporation's plan of
	operation before the document takes effect.
	[(c)     To carry out the purposes of this section, the
	commissioner may adopt rules governing an agreement with an insurer
	under Subsection (a).]
	SECTION 12.  Section 961.254(a), Insurance Code, is amended
	to read as follows:
	(a)  A nonprofit legal services corporation may issue a
	contract for legal services[, as provided by rules adopted by the
	commissioner,] providing for indemnity for costs of services of an
	attorney who is not a contracting attorney [if the department is
	satisfied that the corporation's plan of operation, experience, and
	financial standing, including a proper amount of unencumbered
	surplus, are adequate to ensure performance of the contract].
	SECTION 13.  Section 961.301, Insurance Code, is amended to
	read as follows:
	Sec. 961.301.  CONTRACTS WITH ATTORNEYS.  [(a)]  A nonprofit
	legal services corporation may contract with qualified attorneys
	[as provided by this chapter] to ensure to each participant legal
	services performed by the attorneys under the contract for legal
	services between the corporation and the participant.  A
	contracting attorney must be licensed to practice law in the
	jurisdiction in which legal services are to be provided.
	[(b)     Before issuing a contract for legal services and while
	the corporation continues to issue those contracts, the corporation
	must maintain the number of contracting attorneys that the
	department determines is necessary to service the participant
	contracts contemplated by the corporation's plan of operation.]
	SECTION 14.  Section 961.307, Insurance Code, is amended to
	read as follows:
	Sec. 961.307.  COMPLAINT REGARDING ATTORNEY. If a nonprofit
	legal services corporation [the department] receives a complaint
	concerning the performance of an attorney connected with the [a
	nonprofit legal services] corporation, the corporation
	[department] shall refer the complaint to:
	(1)  the supreme court of this state or a person that
	the supreme court designates to receive attorney grievances from
	the public, if the attorney is licensed by this state; or
	(2)  the appropriate licensing agency of another
	jurisdiction where the attorney is licensed, if the attorney is not
	licensed by this state.
	SECTION 15.  Section 961.402, Insurance Code, is amended to
	read as follows:
	Sec. 961.402.  VOLUNTARY DISSOLUTION. (a)  The board of
	directors of a nonprofit legal services corporation may vote to
	dissolve the corporation at any time[, but the corporation may not
	be dissolved without the department's approval].
	(b)  In a dissolution under this section, the officers of the
	corporation shall settle all outstanding obligations to
	participants and otherwise dispose of the corporation's affairs.
	After the officers have completed the corporation's liquidation
	[and a final settlement has been filed with and approved by the
	department], the corporation shall be dissolved as provided by:
	(1)  the provisions relating to winding up and
	termination under Subchapter G, Chapter 22, Business Organizations
	Code; or
	(2)  if the corporation was organized [to voluntary
	dissolution] under the former Texas Non-Profit Corporation Act
	(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), the
	provisions relating to voluntary dissolution under that former law.
	SECTION 16.  Section 4001.002(a), Insurance Code, is amended
	to read as follows:
	(a)  Except as otherwise provided by this code, this title
	applies to each person licensed under:
	(1)  Subchapter H, Chapter 885;
	(2)  Subchapter F, Chapter 911;
	(3)  Section 912.251;
	(4)  [Section 961.005;
	[(5)] Subchapter E, Chapter 981;
	(5) [(6)]  Subchapter D, Chapter 1152;
	(6) [(7)]  Subchapter C or D of this chapter;
	(7) [(8)]  Subtitle B, C, or D of this title; or
	(8) [(9)]  Subsection (c), Article 5.13-1.
	SECTION 17.  The following provisions of the Insurance Code
	are repealed:
	(1)  Chapter 260;
	(2)  Sections 961.002(b) and 961.005;
	(3)  Section 961.052;
	(4)  Subchapter C, Chapter 961;
	(5)  Sections 961.151 and 961.153;
	(6)  Sections 961.201, 961.202, 961.203, 961.204,
	961.205, 961.208, 961.209, 961.210, 961.211(b), and 961.212;
	(7)  Section 961.252;
	(8)  Sections 961.304 and 961.305(b); and
	(9)  Sections 961.401, 961.403, and 961.404.
	SECTION 18.  This Act takes effect September 1, 2019.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1623 passed the Senate on
	May 10, 2019, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1623 passed the House on
	May 22, 2019, by the following vote:  Yeas 142, Nays 2, two
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor