HBA-CCH H.B. 3563 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3563
By: Dunnam
Civil Practices
3/20/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, many insurance companies require holders of a liability
insurance policy to utilize legal resources available through or associated
with the insurance company.  This practice creates a conflict of interest
between an attorney and a policyholder, and enables the insurance company
to control and reduce the potential amount of the policyholder's award.
House Bill 3563 prohibits insurance companies from requiring a holder of a
liability insurance policy to utilize legal services associated with the
insurance company.     

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 3563 amends the Government Code to prohibit an insurer from
using or requiring an insured under a liability insurance policy to use an
attorney who is an employee of the insurer or an employee, owner, partner,
or shareholder of a law firm that works solely for the insurer or solely
for a group of affiliated insurers.  The bill provides that an insurer who
violates this provision commits an act that constitutes the practice of
law.   

H.B. 3563 authorizes a person to bring an action against an insurer to
recover any actual damages proximately suffered by an insured because of a
violation of this bill, and obtain injunctive relief to prevent the
threatened or continued violation of a provision.  The bill requires a
court to award reasonable and necessary attorney's fees to a person who
recovers damages or obtains injunctive relief and, on its own motion or on
the motion of any party, to disqualify an attorney who is representing an
insured before that court in violation of a provision. 

The provisions of this bill apply only to an insurer that issues a
liability insurance policy covering any resident of Texas, covering
liability incurred by an insured in Texas, or under which the insurer
provides a defense to an insured in a claim or action pending in Texas. 

EFFECTIVE DATE

September 1, 2001.