HBA-DMH H.B. 1433 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1433
By: Dunnam
Insurance
3/15/2001
Introduced



BACKGROUND AND PURPOSE 

Under current law, an insured party's attorney can be compelled to submit
detailed billing statements to a third-party auditor.  This may constitute
a violation of attorney-client privilege that could lead to the revelation
of client confidences and make confidential materials discoverable.  House
Bill 1433 requires an insured to give consent before confidential
information may be made available to a third-party auditor. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated  to the commissioner of insurance SECTION
1 (Article 21.56A, Insurance Code) of this bill. 

ANALYSIS

House Bill 1433 amends the Insurance Code to prohibit any insurer
authorized to write casualty insurance that is obligated under a casualty
insurance policy to defend an insured in a suit from submitting to a
thirdparty auditor, or from requiring the insured's attorney to submit to
the auditor,  a specified billing statement unless, after full disclosure
to the insured, the insured has given prior written consent for such an
action to take place. 

The bill requires the commissioner of insurance, in consultation with the
State Bar of Texas, to adopt rules and provides that the rules must specify
the disclosure required to be made to the insured. 

EFFECTIVE DATE

September 1, 2001, and applies only to a billing statement in relation to a
defense provided under a casualty insurance policy that is delivered,
issued for delivery, or renewed on or after January 1, 2002.