CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS OR PRACTICES - Texas Statutes

INSURANCE CODE

TITLE 5. PROTECTION OF CONSUMER INTERESTS

SUBTITLE C. DECEPTIVE, UNFAIR, AND PROHIBITED PRACTICES

CHAPTER 541. UNFAIR METHODS OF COMPETITION AND UNFAIR OR

DECEPTIVE ACTS OR PRACTICES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 541.001. PURPOSE. The purpose of this chapter is to

regulate trade practices in the business of insurance by:

(1) defining or providing for the determination of trade

practices in this state that are unfair methods of competition or

unfair or deceptive acts or practices; and

(2) prohibiting those trade practices.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.002. DEFINITIONS. In this chapter:

(1) "Knowingly" means actual awareness of the falsity,

unfairness, or deceptiveness of the act or practice on which a

claim for damages under Subchapter D is based. Actual awareness

may be inferred if objective manifestations indicate that a

person acted with actual awareness.

(2) "Person" means an individual, corporation, association,

partnership, reciprocal or interinsurance exchange, Lloyd's plan,

fraternal benefit society, or other legal entity engaged in the

business of insurance, including an agent, broker, adjuster, or

life and health insurance counselor.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.003. UNFAIR METHODS OF COMPETITION AND UNFAIR OR

DECEPTIVE ACTS OR PRACTICES PROHIBITED. A person may not engage

in this state in a trade practice that is defined in this chapter

as or determined under this chapter to be an unfair method of

competition or an unfair or deceptive act or practice in the

business of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.004. VENUE FOR ACTIONS INVOLVING DEPARTMENT OR

COMMISSIONER. An action under this chapter in which the

department or commissioner is a party must be brought in a

district court in Travis County.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.005. APPLICABILITY TO RISK RETENTION OR PURCHASING

GROUP. (a) A risk retention group or purchasing group described

by Subchapter B, Chapter 2201, or Section 2201.251 that is not

chartered in this state may not engage in a trade practice in

this state that is defined as unlawful under this chapter.

(b) A risk retention group or purchasing group is subject to

this chapter and rules adopted under this chapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2D.005, eff. April 1, 2009.

Sec. 541.006. PROHIBITED CONTENT OF CERTAIN INSURANCE POLICIES.

Notwithstanding any other provision of this code, it is unlawful

for an insurer engaged in the business of life, accident, or

health insurance to issue or deliver in this state a policy

containing the words "Approved by the Texas Department of

Insurance" or words of a similar meaning.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.007. IMMUNITY FROM PROSECUTION. (a) This section

applies to a person who requests to be excused from attending and

testifying at a hearing or from producing books, papers, records,

correspondence, or other documents at the hearing on the ground

that the testimony or evidence may:

(1) tend to incriminate the person; or

(2) subject the person to a penalty or forfeiture.

(b) A person who, notwithstanding a request described by

Subsection (a), is directed to provide the testimony or produce

the documents shall comply with that direction. Except as

provided by Subsection (c), the person may not be prosecuted or

subjected to a penalty or forfeiture for or on account of a

transaction, matter, or thing about which the person testifies or

produces documents, and the testimony or documents produced may

not be received against the person in a criminal action,

investigation, or proceeding.

(c) A person who complies with a direction to testify or produce

documents is not exempt from prosecution or punishment for

perjury committed while testifying and the testimony or evidence

given or produced is admissible against the person in a criminal

action, investigation, or proceeding concerning the perjury, and

the person is not exempt from the denial, revocation, or

suspension of any license, permission, or authority conferred or

to be conferred under this code.

(d) A person may waive the immunity or privilege granted by this

section by executing, acknowledging, and filing with the

department a statement expressly waiving the immunity or

privilege for a specified transaction, matter, or thing. On

filing the statement:

(1) the testimony or documents produced by the person in

relation to the transaction, matter, or thing may be received by

or produced before a judge or justice or a court, grand jury, or

other tribunal; and

(2) the person is not entitled to immunity or privilege for the

testimony or documents received or produced under Subdivision

(1).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.008. LIBERAL CONSTRUCTION. This chapter shall be

liberally construed and applied to promote the underlying

purposes as provided by Section 541.001.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER B. UNFAIR METHODS OF COMPETITION AND UNFAIR OR

DECEPTIVE ACTS OR PRACTICES DEFINED

Sec. 541.051. MISREPRESENTATION REGARDING POLICY OR INSURER. It

is an unfair method of competition or an unfair or deceptive act

or practice in the business of insurance to:

(1) make, issue, or circulate or cause to be made, issued, or

circulated an estimate, illustration, circular, or statement

misrepresenting with respect to a policy issued or to be issued:

(A) the terms of the policy;

(B) the benefits or advantages promised by the policy; or

(C) the dividends or share of surplus to be received on the

policy;

(2) make a false or misleading statement regarding the dividends

or share of surplus previously paid on a similar policy;

(3) make a misleading representation or misrepresentation

regarding:

(A) the financial condition of an insurer; or

(B) the legal reserve system on which a life insurer operates;

(4) use a name or title of a policy or class of policies that

misrepresents the true nature of the policy or class of policies;

or

(5) make a misrepresentation to a policyholder insured by any

insurer for the purpose of inducing or that tends to induce the

policyholder to allow an existing policy to lapse or to forfeit

or surrender the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.052. FALSE INFORMATION AND ADVERTISING. (a) It is an

unfair method of competition or an unfair or deceptive act or

practice in the business of insurance to make, publish,

disseminate, circulate, or place before the public or directly or

indirectly cause to be made, published, disseminated, circulated,

or placed before the public an advertisement, announcement, or

statement containing an untrue, deceptive, or misleading

assertion, representation, or statement regarding the business of

insurance or a person in the conduct of the person's insurance

business.

(b) This section applies to an advertisement, announcement, or

statement made, published, disseminated, circulated, or placed

before the public:

(1) in a newspaper, magazine, or other publication;

(2) in a notice, circular, pamphlet, letter, or poster;

(3) over a radio or television station;

(4) through the Internet; or

(5) in any other manner.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 2, eff. September 1, 2007.

Sec. 541.053. DEFAMATION OF INSURER. (a) It is an unfair

method of competition or an unfair or deceptive act or practice

in the business of insurance to directly or indirectly make,

publish, disseminate, or circulate or to aid, abet, or encourage

the making, publication, dissemination, or circulation of a

statement that:

(1) is false, maliciously critical of, or derogatory to the

financial condition of an insurer; and

(2) is calculated to injure a person engaged in the business of

insurance.

(b) This section applies to any oral or written statement,

including a statement in any pamphlet, circular, article, or

literature.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.054. BOYCOTT, COERCION, OR INTIMIDATION. It is an

unfair method of competition or an unfair or deceptive act or

practice in the business of insurance to commit through concerted

action or to enter into an agreement to commit an act of boycott,

coercion, or intimidation that results in or tends to result in

the unreasonable restraint of or a monopoly in the business of

insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.055. FALSE FINANCIAL STATEMENT. (a) It is an unfair

method of competition or an unfair or deceptive act or practice

in the business of insurance to, with intent to deceive:

(1) file with a supervisory or other public official a false

statement of financial condition of an insurer; or

(2) make, publish, disseminate, circulate, deliver to any

person, or place before the public or directly or indirectly

cause to be made, published, disseminated, circulated, delivered

to any person, or placed before the public a false statement of

financial condition of an insurer.

(b) It is an unfair method of competition or an unfair or

deceptive act or practice in the business of insurance to make a

false entry in an insurer's book, report, or statement or

wilfully omit to make a true entry of a material fact relating to

the insurer's business in the insurer's book, report, or

statement with intent to deceive:

(1) an agent or examiner lawfully appointed to examine the

insurer's condition or affairs; or

(2) a public official to whom the insurer is required by law to

report or who has authority by law to examine the insurer's

condition or affairs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.056. PROHIBITED REBATES AND INDUCEMENTS. (a) Subject

to Section 541.058 and except as otherwise expressly provided by

law, it is an unfair method of competition or an unfair or

deceptive act or practice in the business of insurance to

knowingly permit the making of, offer to make, or make a life

insurance contract, life annuity contract, or accident and health

insurance contract or an agreement regarding the contract, other

than as plainly expressed in the issued contract, or directly or

indirectly pay, give, or allow or offer to pay, give, or allow as

inducement to enter into a life insurance contract, life annuity

contract, or accident and health insurance contract a rebate of

premiums payable on the contract, a special favor or advantage in

the dividends or other benefits of the contract, or a valuable

consideration or inducement not specified in the contract, or

give, sell, or purchase or offer to give, sell, or purchase in

connection with a life insurance, life annuity, or accident and

health insurance contract or as inducement to enter into the

contract stocks, bonds, or other securities of an insurer or

other corporation, association, or partnership, dividends or

profits accrued from the stocks, bonds, or securities, or

anything of value not specified in the contract.

(b) It is an unfair method of competition or an unfair or

deceptive act or practice in the business of insurance to issue

or deliver or to permit an agent, officer, or employee to issue

or deliver as an inducement to insurance:

(1) company stock or other capital stock;

(2) a benefit certificate or share in a corporation;

(3) securities; or

(4) a special or advisory board contract or any other contract

promising returns or profits.

(c) Subsection (b) does not prohibit issuing or delivering a

participating insurance policy otherwise authorized by law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.057. UNFAIR DISCRIMINATION IN LIFE INSURANCE AND

ANNUITY CONTRACTS. Subject to Section 541.058, it is an unfair

method of competition or an unfair or deceptive act or practice

in the business of insurance to make or permit with respect to a

life insurance or life annuity contract an unfair discrimination

between individuals of the same class and equal life expectancy

regarding:

(1) the rates charged;

(2) the dividends or other benefits payable; or

(3) any of the other terms and conditions of the contract.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.058. CERTAIN PRACTICES NOT CONSIDERED DISCRIMINATION OR

INDUCEMENT. (a) In this section:

(1) "Health-related services" means services that are available

in connection with an accident and health insurance policy or

certificate or an evidence of coverage and that are directed to

an individual's health improvement or maintenance.

(2) "Health-related information" means that information that is

directed to an individual's health improvement or maintenance or

to costs associated with particular options available in

connection with an accident and health insurance policy or

certificate or an evidence of coverage.

(b) It is not a rebate or discrimination prohibited by Section

541.056(a) or 541.057:

(1) for a life insurance or life annuity contract, to pay a

bonus to a policyholder or otherwise abate the policyholder's

premiums in whole or in part out of surplus accumulated from

nonparticipating insurance policies if the bonus or abatement:

(A) is fair and equitable to policyholders; and

(B) is in the best interests of the insurer and its

policyholders;

(2) for a life insurance policy issued on the industrial debit

plan, to make to a policyholder who has continuously for a

specified period made premium payments directly to the insurer's

office an allowance in an amount that fairly represents the

saving in collection expenses;

(3) for a group insurance policy, to readjust the rate of

premium based on the loss or expense experience under the policy

at the end of a policy year if the adjustment is retroactive for

only that policy year;

(4) for a life annuity contract, to waive surrender charges

under the contract when the contract holder exchanges that

contract for another annuity contract issued by the same insurer

if the waiver and the exchange are fully, fairly, and accurately

explained to the contract holder in a manner that is not

deceptive or misleading;

(5) in connection with an accident and health insurance policy,

to provide to policy or certificate holders, in addition to

benefits under the terms of the insurance contract,

health-related services or health-related information, or to

disclose the availability of those additional services and

information to prospective policy or certificate holders; or

(6) in connection with a health maintenance organization

evidence of coverage, to provide to enrollees, in addition to

benefits under the evidence of coverage, health-related services

or health-related information, or to disclose the availability of

those additional services and information to prospective

enrollees or contract holders.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

112, Sec. 1, eff. May 17, 2007.

Sec. 541.059. DECEPTIVE NAME, WORD, SYMBOL, DEVICE, OR SLOGAN.

(a) Except as provided by Subsection (b), it is an unfair method

of competition or an unfair or deceptive act or practice in the

business of insurance to use, display, publish, circulate,

distribute, or cause to be used, displayed, published,

circulated, or distributed in a letter, pamphlet, circular,

contract, policy, evidence of coverage, article, poster, or other

document, literature, or public media:

(1) a name as the corporate or business name of a person or

entity engaged in the business of insurance or in an

insurance-related business in this state that is the same as or

deceptively similar to the name adopted and used by an insurance

entity, health maintenance organization, third-party

administrator, or group hospital service corporation authorized

to engage in business under the laws of this state; or

(2) a word, symbol, device, or slogan, either alone or in

combination and regardless of whether registered, and including

the titles, designations, character names, and distinctive

features of broadcast or other advertising, that is the same as

or deceptively similar to a word, symbol, device, or slogan

adopted and used by an insurance entity, health maintenance

organization, third-party administrator, or group hospital

service corporation to distinguish the entity or the entity's

products or services from another entity.

(b) If more than one person or entity uses names, words,

symbols, devices, or slogans, either alone or in combination,

that are the same or deceptively similar and are likely to cause

confusion or mistake, the person or entity that demonstrates the

first continuous actual use of the name, word, symbol, device,

slogan, or combination has not engaged in an unfair method of

competition or deceptive act or practice under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.060. UNFAIR SETTLEMENT PRACTICES. (a) It is an unfair

method of competition or an unfair or deceptive act or practice

in the business of insurance to engage in the following unfair

settlement practices with respect to a claim by an insured or

beneficiary:

(1) misrepresenting to a claimant a material fact or policy

provision relating to coverage at issue;

(2) failing to attempt in good faith to effectuate a prompt,

fair, and equitable settlement of:

(A) a claim with respect to which the insurer's liability has

become reasonably clear; or

(B) a claim under one portion of a policy with respect to which

the insurer's liability has become reasonably clear to influence

the claimant to settle another claim under another portion of the

coverage unless payment under one portion of the coverage

constitutes evidence of liability under another portion;

(3) failing to promptly provide to a policyholder a reasonable

explanation of the basis in the policy, in relation to the facts

or applicable law, for the insurer's denial of a claim or offer

of a compromise settlement of a claim;

(4) failing within a reasonable time to:

(A) affirm or deny coverage of a claim to a policyholder; or

(B) submit a reservation of rights to a policyholder;

(5) refusing, failing, or unreasonably delaying a settlement

offer under applicable first-party coverage on the basis that

other coverage may be available or that third parties are

responsible for the damages suffered, except as may be

specifically provided in the policy;

(6) undertaking to enforce a full and final release of a claim

from a policyholder when only a partial payment has been made,

unless the payment is a compromise settlement of a doubtful or

disputed claim;

(7) refusing to pay a claim without conducting a reasonable

investigation with respect to the claim;

(8) with respect to a Texas personal automobile insurance

policy, delaying or refusing settlement of a claim solely because

there is other insurance of a different kind available to satisfy

all or part of the loss forming the basis of that claim; or

(9) requiring a claimant as a condition of settling a claim to

produce the claimant's federal income tax returns for examination

or investigation by the person unless:

(A) a court orders the claimant to produce those tax returns;

(B) the claim involves a fire loss; or

(C) the claim involves lost profits or income.

(b) Subsection (a) does not provide a cause of action to a third

party asserting one or more claims against an insured covered

under a liability insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.061. MISREPRESENTATION OF INSURANCE POLICY. It is an

unfair method of competition or an unfair or deceptive act or

practice in the business of insurance to misrepresent an

insurance policy by:

(1) making an untrue statement of material fact;

(2) failing to state a material fact necessary to make other

statements made not misleading, considering the circumstances

under which the statements were made;

(3) making a statement in a manner that would mislead a

reasonably prudent person to a false conclusion of a material

fact;

(4) making a material misstatement of law; or

(5) failing to disclose a matter required by law to be

disclosed, including failing to make a disclosure in accordance

with another provision of this code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER B-1. ADVERTISING REQUIREMENTS

Sec. 541.082. ADVERTISING AND INTERNET WEBSITES. (a) In this

section, "insurer" includes:

(1) a life insurance company;

(2) a health insurance company;

(3) an accident insurance company;

(4) a general casualty company;

(5) a mutual life insurance company or other mutual insurance

company;

(6) a mutual or natural premium life insurance company;

(7) a Lloyd's plan;

(8) a county mutual insurance company;

(9) a farm mutual insurance company;

(10) a reciprocal or interinsurance exchange;

(11) a fraternal benefit society;

(12) a local mutual aid association;

(13) a health maintenance organization;

(14) a group hospital service corporation; or

(15) a multiple employer welfare arrangement that holds a

certificate of coverage under Chapter 846.

(b) A web page of an insurer's Internet website must include all

appropriate disclosures and information required by applicable

rules adopted by the commissioner relating to advertising only if

the web page:

(1) describes specific policies or coverage available in this

state; or

(2) includes an opportunity for an individual to apply for

coverage or obtain a quote from an insurer for an insurance

policy or certificate or an evidence of coverage.

(c) As may be permitted by commissioner rule, an insurer may

comply with Subsection (b) by including a link to a web page that

includes the information necessary to comply with the applicable

rules relating to advertising. The link must be prominently

placed on the insurer's web page.

(d) Web pages of an Internet website that do not refer to a

specific insurance policy, certificate of coverage, or evidence

of coverage or that do not provide an opportunity for an

individual to apply for coverage or request a quote from an

insurer are considered to be institutional advertisements subject

to rules adopted by the commissioner relating to advertising.

(e) Web pages or navigation aids within an insurer's Internet

website that provide a link to a web page described by

Subsection (b) but that do not otherwise contain content

described in Subsection (b) are considered to be institutional

advertisements subject to rules adopted by the commissioner

relating to advertising.

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

Sec. 541.083. ADVERTISEMENTS TO CERTAIN ASSOCIATIONS. An

insurer may advertise to the general public policies or coverage

available only to members of an association described by Section

1251.052.

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

Sec. 541.084. ADVERTISEMENTS RELATING TO MEDICARE PROGRAM. A

person may not use an advertisement for an insurance product

relating to Medicare coverage unless the advertisement includes

in a prominent place the following language or similar language:

"Not connected with or endorsed by the United States government

or the federal Medicare program."

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

Sec. 541.085. ADVERTISEMENTS RELATING TO PREFERRED PROVIDER

BENEFIT PLANS. It is sufficient for an insurer to use the term

"PPO plan" in advertisements when referring to a preferred

provider benefit plan offered under Chapter 1301.

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

Sec. 541.086. ADVERTISING REGARDING GUARANTEED RENEWABLE

COVERAGE. (a) An advertisement for a guaranteed renewable

accident and health insurance policy must include, in a prominent

place, a statement indicating that rates for the policy may

change if the advertisement suggests or implies that rates for

the product will not change.

(b) If an advertisement is required to include the statement

described by Subsection (a), the statement must generally

identify the manner in which rates may change, such as by age, by

health status, by class, or through application of other general

criteria.

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

Sec. 541.087. ADVERTISEMENTS EXEMPT FROM FILING REQUIREMENTS.An

advertisement subject to requirements regarding filing of the

advertisement with the department for department review under

this code or commissioner rule and that is the same as or

substantially similar to an advertisement previously reviewed and

accepted by the department is not required to be filed for

department review.

Added by Acts 2007, 80th Leg., R.S., Ch.

475, Sec. 1, eff. September 1, 2007.

SUBCHAPTER C. DETERMINATION OF UNFAIR METHODS OF COMPETITION AND

UNFAIR OR DECEPTIVE ACTS OR PRACTICES; SANCTIONS AND PENALTIES

Sec. 541.101. EXAMINATION AND INVESTIGATION. The department may

examine and investigate the affairs of a person engaged in the

business of insurance in this state to determine whether the

person has or is engaged in an unfair method of competition or

unfair or deceptive act or practice prohibited by Section

541.003.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.102. STATEMENT OF CHARGES; NOTICE OF HEARING. (a)

When the department has reason to believe that a person engaged

in the business of insurance in this state has engaged or is

engaging in this state in an unfair method of competition or

unfair or deceptive act or practice defined by Subchapter B and

that a proceeding by the department regarding the charges is in

the interest of the public, the department shall issue and serve

on the person:

(1) a statement of the charges; and

(2) a notice of the hearing on the charges, including the time

and place for the hearing.

(b) The department may not hold the hearing before the sixth day

after the date the notice is served.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.103. HEARING. A person against whom charges are made

under Section 541.102 is entitled at the hearing on the charges

to have an opportunity to be heard and show cause why the

department should not issue an order requiring the person to

cease and desist from the unfair method of competition or unfair

or deceptive act or practice described in the charges.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.104. HEARING PROCEDURES. (a) Nothing in this chapter

requires the observance of formal rules of pleading or evidence

at a hearing under this subchapter.

(b) At a hearing under this subchapter, the department, on a

showing of good cause, shall permit any person to intervene,

appear, and be heard by counsel or in person.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.105. RECORD OF HEARING. (a) At a hearing under this

subchapter, the department may, and at the request of a party to

the hearing shall, make a stenographic record of the proceedings

and the evidence presented at the hearing.

(b) If the department does not make a stenographic record and a

person seeks judicial review of the decision made at the hearing,

the department shall prepare a statement of the evidence and

proceeding for use on review.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.106. COMPLIANCE WITH SUBPOENA. (a) If a person

refuses to comply with a subpoena issued in connection with a

hearing under this subchapter or refuses to testify with respect

to a matter about which the person may be lawfully interrogated,

on application of the department, a district court in Travis

County or in the county in which the person resides may order the

person to comply with the subpoena or testify.

(b) A court may punish as contempt a person's failure to obey an

order under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.107. DETERMINATION OF VIOLATION. After a hearing under

this subchapter, the department shall determine whether:

(1) the method of competition or the act or practice considered

in the hearing is defined as:

(A) an unfair method of competition or deceptive act or practice

under Subchapter B or a rule adopted under this chapter; or

(B) a false, misleading, or deceptive act or practice under

Section 17.46, Business & Commerce Code; and

(2) the person against whom the charges were made engaged in the

method of competition or act or practice in violation of:

(A) this chapter or a rule adopted under this chapter; or

(B) Subchapter E, Chapter 17, Business & Commerce Code, as

specified in Section 17.46, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.108. CEASE AND DESIST ORDER. On determining that a

person committed a violation described by Section 541.107, the

department shall:

(1) make written findings; and

(2) issue and serve on the person an order requiring the person

to cease and desist from engaging in the method of competition or

act or practice determined to be a violation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.109. MODIFICATION OR SETTING ASIDE OF ORDER. On the

notice and in the manner the department determines proper, the

department may modify or set aside in whole or in part a cease

and desist order issued under Section 541.108 at any time before

a petition appealing the order is filed in accordance with

Subchapter D, Chapter 36.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.110. ADMINISTRATIVE PENALTY. (a) A person who

violates a cease and desist order issued under Section 541.108 is

subject to an administrative penalty under Chapter 84.

(b) In determining whether a person has violated a cease and

desist order, the department shall consider the maintenance of

procedures reasonably adapted to ensure compliance with the

order.

(c) An administrative penalty imposed under this section may not

exceed:

(1) $1,000 for each violation; or

(2) $5,000 for all violations.

(d) An order of the department imposing an administrative

penalty under this section applies only to a violation of the

cease and desist order committed before the date the order

imposing the penalty is issued.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.111. CIVIL PENALTY FOR VIOLATION OF CEASE AND DESIST

ORDER. (a) A person who is found by a court to have violated a

cease and desist order issued under Section 541.108 is liable to

the state for a penalty. The state may recover the penalty in a

civil action.

(b) The penalty may not exceed $50 unless the court finds the

violation to be wilful, in which case the penalty may not exceed

$500.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER D. PRIVATE ACTION FOR DAMAGES

Sec. 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED. A person

who sustains actual damages may bring an action against another

person for those damages caused by the other person engaging in

an act or practice:

(1) defined by Subchapter B to be an unfair method of

competition or an unfair or deceptive act or practice in the

business of insurance; or

(2) specifically enumerated in Section 17.46(b), Business &

Commerce Code, as an unlawful deceptive trade practice if the

person bringing the action shows that the person relied on the

act or practice to the person's detriment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER RELIEF. (a)

A plaintiff who prevails in an action under this subchapter may

obtain:

(1) the amount of actual damages, plus court costs and

reasonable and necessary attorney's fees;

(2) an order enjoining the act or failure to act complained of;

or

(3) any other relief the court determines is proper.

(b) On a finding by the trier of fact that the defendant

knowingly committed the act complained of, the trier of fact may

award an amount not to exceed three times the amount of actual

damages.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.153. FRIVOLOUS ACTION. A court shall award to the

defendant court costs and reasonable and necessary attorney's

fees if the court finds that an action under this subchapter is

groundless and brought in bad faith or brought for the purpose of

harassment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.154. PRIOR NOTICE OF ACTION. (a) A person seeking

damages in an action against another person under this subchapter

must provide written notice to the other person not later than

the 61st day before the date the action is filed.

(b) The notice must advise the other person of:

(1) the specific complaint; and

(2) the amount of actual damages and expenses, including

attorney's fees reasonably incurred in asserting the claim

against the other person.

(c) The notice is not required if giving notice is impracticable

because the action:

(1) must be filed to prevent the statute of limitations from

expiring; or

(2) is asserted as a counterclaim.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.155. ABATEMENT. (a) A person against whom an action

under this subchapter is pending who does not receive the notice

as required by Section 541.154 may file a plea in abatement not

later than the 30th day after the date the person files an

original answer in the court in which the action is pending.

(b) The court shall abate the action if, after a hearing, the

court finds that the person is entitled to an abatement because

the claimant did not provide the notice as required by Section

541.154.

(c) An action is automatically abated without a court order

beginning on the 11th day after the date a plea in abatement is

filed if the plea:

(1) is verified and alleges that the person against whom the

action is pending did not receive the notice as required by

Section 541.154; and

(2) is not controverted by an affidavit filed by the claimant

before the 11th day after the date the plea in abatement is

filed.

(d) An abatement under this section continues until the 60th day

after the date notice is provided in compliance with Section

541.154.

(e) This section does not apply if Section 541.154(c) applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.156. SETTLEMENT OFFER. (a) A person who receives

notice provided under Section 541.154 may make a settlement offer

during a period beginning on the date notice under Section

541.154 is received and ending on the 60th day after that date.

(b) In addition to the period described by Subsection (a), the

person may make a settlement offer during a period:

(1) if mediation is not conducted under Section 541.161,

beginning on the date an original answer is filed in the action

and ending on the 90th day after that date; or

(2) if mediation is conducted under Section 541.161, beginning

on the day after the date the mediation ends and ending on the

20th day after that date.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.157. CONTENTS OF SETTLEMENT OFFER. A settlement offer

made by a person against whom a claim under this subchapter is

pending must include an offer to pay the following amounts,

separately stated:

(1) an amount of money or other consideration, reduced to its

cash value, as settlement of the claim for damages; and

(2) an amount of money to compensate the claimant for the

claimant's reasonable and necessary attorney's fees incurred as

of the date of the offer.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.158. REJECTION OF SETTLEMENT OFFER. (a) A settlement

offer is rejected unless both parts of the offer required under

Section 541.157 are accepted by the claimant not later than the

30th day after the date the offer is made.

(b) A settlement offer made by a person against whom a claim

under this subchapter is pending that complies with this

subchapter and is rejected by the claimant may be filed with the

court accompanied by an affidavit certifying the offer's

rejection.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.159. LIMIT ON RECOVERY AFTER SETTLEMENT OFFER. (a) If

the court finds that the amount stated in the settlement offer

for damages under Section 541.157(1) is the same as,

substantially the same as, or more than the amount of damages

found by the trier of fact, the claimant may not recover as

damages any amount in excess of the lesser of:

(1) the amount of damages stated in the offer; or

(2) the amount of damages found by the trier of fact.

(b) If the court makes the finding described by Subsection (a),

the court shall determine reasonable and necessary attorney's

fees to compensate the claimant for attorney's fees incurred

before the date and time the rejected settlement offer was made.

If the court finds that the amount stated in the offer for

attorney's fees under Section 541.157(2) is the same as,

substantially the same as, or more than the amount of reasonable

and necessary attorney's fees incurred by the claimant as of the

date of the offer, the claimant may not recover any amount of

attorney's fees in excess of the amount of fees stated in the

offer.

(c) This section does not apply if the court finds that the

offering party:

(1) could not perform the offer at the time the offer was made;

or

(2) substantially misrepresented the cash value of the offer.

(d) The court shall award:

(1) damages as required by Section 541.152 if Subsection (a)

does not apply; and

(2) attorney's fees as required by Section 541.152 if Subsection

(b) does not apply.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.160. EFFECT OF SETTLEMENT OFFER. A settlement offer is

not an admission of engaging in an act or practice defined by

Subchapter B to be an unfair method of competition or an unfair

or deceptive act or practice in the business of insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.161. MEDIATION. (a) A party may, not later than the

90th day after the date a pleading seeking relief under this

subchapter is served, file a motion to compel mediation of the

dispute in the manner provided by this section.

(b) The court shall, not later than the 30th day after the date

a motion under this section is filed, sign an order setting the

time and place of the mediation.

(c) The court shall appoint a mediator if the parties do not

agree on a mediator.

(d) The mediation must be held not later than the 30th day after

the date the order is signed, unless:

(1) the parties agree otherwise; or

(2) the court determines that additional time not to exceed 30

days is warranted.

(e) Each party who has appeared in the action, except as agreed

to by all parties who have appeared, shall:

(1) participate in the mediation; and

(2) except as provided by Subsection (f), share the mediation

fee.

(f) A party may not compel mediation under this section if the

amount of actual damages claimed is less than $15,000 unless the

party seeking to compel mediation agrees to pay the costs of the

mediation.

(g) Except as provided by this section, the following apply to

the appointment of a mediator and the mediation process provided

by this section:

(1) Section 154.023, Civil Practice and Remedies Code; and

(2) Subchapters C and D, Chapter 154, Civil Practice and

Remedies Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.162. LIMITATIONS PERIOD. (a) A person must bring an

action under this chapter before the second anniversary of the

following:

(1) the date the unfair method of competition or unfair or

deceptive act or practice occurred; or

(2) the date the person discovered or, by the exercise of

reasonable diligence, should have discovered that the unfair

method of competition or unfair or deceptive act or practice

occurred.

(b) The limitations period provided by Subsection (a) may be

extended for 180 days if the person bringing the action proves

that the person's failure to bring the action within that period

was caused by the defendant's engaging in conduct solely

calculated to induce the person to refrain from or postpone

bringing the action.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER E. ENFORCEMENT BY ATTORNEY GENERAL

Sec. 541.201. INJUNCTIVE RELIEF. (a) The attorney general may

bring an action under this section if the attorney general has

reason to believe that:

(1) a person engaged in the business of insurance in this state

is engaging in, has engaged in, or is about to engage in an act

or practice defined as unlawful under:

(A) this chapter or a rule adopted under this chapter; or

(B) Section 17.46, Business & Commerce Code; and

(2) the action is in the public interest.

(b) The attorney general may bring the action in the name of the

state to restrain by temporary or permanent injunction the

person's use of the method, act, or practice.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.202. VENUE FOR INJUNCTIVE ACTION. An action for an

injunction under this subchapter may be commenced in a district

court in:

(1) the county in which the person against whom the action is

brought:

(A) resides;

(B) has the person's principal place of business; or

(C) is engaging in business;

(2) the county in which the transaction or a substantial portion

of the transaction occurred; or

(3) Travis County.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.203. ISSUANCE OF INJUNCTION. (a) The court may issue

an appropriate temporary or permanent injunction.

(b) The court shall issue the injunction without bond.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.204. CIVIL PENALTY. In addition to requesting a

temporary or permanent injunction under Section 541.201, the

attorney general may request a civil penalty of not more than

$10,000 for each violation on a finding by the court that the

defendant has engaged in or is engaging in an act or practice

defined as unlawful under:

(1) this chapter or a rule adopted under this chapter; or

(2) Section 17.46, Business & Commerce Code.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.205. COMPENSATION OR RESTORATION. The court may make

an additional order or judgment as necessary to compensate an

identifiable person for actual damages or for restoration of

money or property that may have been acquired by means of an

enjoined act or practice.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.206. CIVIL PENALTY FOR VIOLATION OF INJUNCTION. (a) A

person who violates an injunction issued under this subchapter is

liable for and shall pay to the state a civil penalty of not more

than $10,000 for each violation.

(b) The attorney general may, in the name of the state, petition

the court for recovery of the civil penalty against the person

who violates the injunction.

(c) The court shall consider the maintenance of procedures

reasonably adapted to ensure compliance with the injunction in

determining whether a person has violated an injunction.

(d) The court issuing the injunction retains jurisdiction and

the cause is continued for the purpose of assessing a civil

penalty under this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.207. REMEDIES NOT EXCLUSIVE. The remedies provided by

this subchapter are:

(1) not exclusive; and

(2) in addition to any other remedy or procedure provided by

another law or at common law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER F. CLASS ACTIONS BY ATTORNEY GENERAL OR PRIVATE

INDIVIDUAL

Sec. 541.251. CLASS ACTION AUTHORIZED. (a) If a member of the

insurance buying public has been damaged by an unlawful method,

act, or practice defined in Subchapter B as an unlawful deceptive

trade practice, the department may request the attorney general

to bring a class action or the individual damaged may bring an

action on the individual's own behalf and on behalf of others

similarly situated to recover damages and obtain relief as

provided by this subchapter.

(b) A class action may not be maintained under this subchapter

if the department and attorney general have initiated an action

under Subchapter G or an action under that subchapter has

resulted in a final determination regarding the same act or

practice and the same defendant in the action under this

subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.252. RECOVERY. A plaintiff who prevails in a class

action under this subchapter may recover:

(1) court costs and attorney's fees reasonable in relation to

the amount of work expended in addition to actual damages;

(2) an order enjoining the act or failure to act; and

(3) any other relief the court determines is proper.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.253. FRIVOLOUS ACTION. The court may award to the

defendant court costs and reasonable attorney's fees in relation

to the work expended on a finding by the court that a class

action under this subchapter was brought by an individual

plaintiff in bad faith or for the purpose of harassment.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.254. STATUTE OF LIMITATIONS TOLLED. The filing of a

class action under this subchapter tolls the statute of

limitations for bringing an action by an individual under Section

541.162.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.255. PRIOR NOTICE. (a) Not later than the 31st day

before the date a class action for damages is commenced under

this subchapter, the prospective plaintiff must:

(1) notify the intended defendant of the complaint; and

(2) demand that the defendant provide relief to the prospective

plaintiff and others similarly situated.

(b) The notice must be in writing and be sent by certified or

registered mail, return receipt requested, to:

(1) the place where the transaction occurred;

(2) the intended defendant's principal place of business in this

state; or

(3) if notice to the place described by Subdivision (1) or (2)

does not effect notice, the office of the secretary of state.

(c) A copy of the notice must also be sent to the commissioner.

(d) A class action for injunctive relief may be commenced under

this subchapter without complying with Subsection (a).

(e) A plaintiff in a class action for injunctive relief under

this subchapter may, on or after the 31st day after the date the

action is commenced and after complying with Subsection (a),

amend the complaint without leave of court to include a request

for damages.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.256. PREREQUISITES TO CLASS ACTION. The court shall

permit one or more members of a class to sue or be sued as

representative parties on behalf of the class only if:

(1) the class is so numerous that joinder of all members is

impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are

typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately

protect the interests of the class.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.257. CLASS ACTIONS MAINTAINABLE. (a) An action may be

maintained as a class action under this subchapter if the

prerequisites of Section 541.256 are satisfied and, in addition:

(1) the prosecution of separate actions by or against individual

members of the class would create a risk of:

(A) inconsistent or varying adjudications with respect to

individual members of the class that would establish incompatible

standards of conduct for the party opposing the class; or

(B) adjudication with respect to individual members of the class

that would as a practical matter be dispositive of the interests

of the other members not parties to the adjudications or

substantially impair or impede their ability to protect their

interests;

(2) the party opposing the class has acted or refused to act on

grounds generally applicable to the class, making appropriate

final injunctive relief or corresponding declaratory relief with

respect to the class as a whole; or

(3) the court finds that the questions of law or fact common to

the members of the class predominate over any questions affecting

only individual members and that a class action is superior to

other available methods for the fair and efficient adjudication

of the controversy.

(b) Matters pertinent to a finding under Subsection (a)(3)

include:

(1) the interest of members of the class in individually

controlling the prosecution or defense of separate actions;

(2) the extent and nature of any litigation concerning the

controversy already commenced by or against members of the class;

(3) the desirability or undesirability of concentrating the

litigation of the claims in the particular forum; and

(4) the difficulties likely to be encountered in the management

of a class action.

(c) In construing this section, the courts of this state shall

be guided by the decisions of the federal courts interpreting

Rule 23, Federal Rules of Civil Procedure, as amended.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.258. CLASS ACTIONS: ISSUES AND SUBCLASSES AUTHORIZED.

When appropriate, an action may be brought or maintained as a

class action under this subchapter with respect to particular

issues or a class may be divided into subclasses and each

subclass treated as a class, and the provisions of this

subchapter shall be construed and applied accordingly.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.259. DETERMINATION REGARDING WHETHER CLASS ACTION MAY

BE MAINTAINED. (a) As soon as practicable after the

commencement of an action brought as a class action, the court

shall determine by order whether it is to be maintained as a

class action under this subchapter.

(b) An order under this section may be altered or amended before

a decision on the merits.

(c) An order determining whether the action may be maintained as

a class action under this subchapter is an interlocutory order

that is appealable. The procedures applicable to accelerated

appeals in the Texas Rules of Appellate Procedure apply to the

appeal.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.260. EFFECT OF DENIAL OF CLASS ACTION. A court order

denying that an action under this subchapter may be brought as a

class action does not affect whether an individual may bring the

same or a similar action under Subchapter D.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.261. NOTICE OF CLASS ACTION. (a) If an action is

permitted as a class action under this subchapter, the court

shall direct to the members of the class the best notice

practicable under the circumstances, including individual notice

to all members who can be identified through reasonable effort.

(b) The notice must contain a statement that:

(1) the court will exclude from the class a notified member if

the member requests exclusion by a specified date;

(2) the judgment, whether favorable or not, includes all members

who do not request exclusion; and

(3) a member who does not request exclusion may enter an

appearance through counsel.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.262. PROCEDURES IN CLASS ACTION. In a class action

under this subchapter, the court may make appropriate orders:

(1) determining the course of proceedings or prescribing

measures to prevent undue repetition or complication in the

presentation of evidence or argument;

(2) requiring, for the protection of the members of the class or

otherwise for the fair conduct of the action, that notice be

given in a manner the court directs to some or all of the members

or the attorney general of:

(A) any step in the action;

(B) the proposed extent of the judgment; or

(C) the opportunity for members to:

(i) signify whether the members consider the representation to

be fair and adequate;

(ii) intervene and present claims or defenses; or

(iii) otherwise come into the action;

(3) imposing conditions on the representative parties or

intervenors;

(4) requiring that the pleadings be amended to eliminate

allegations relating to representation of absent persons, and

that the action proceed accordingly; or

(5) dealing with similar procedural matters.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.263. EFFECT OF SETTLEMENT OFFER. (a) Damages may not

be awarded to a class under this subchapter if, not later than

the 30th day after the date the intended defendant receives

notice under Section 541.255, the intended defendant provides to

the plaintiff by certified or registered mail, return receipt

requested, a written settlement offer.

(b) The settlement offer must include:

(1) a statement that all persons similarly situated have been

adequately identified or a reasonable effort to identify those

persons has been made;

(2) a description of the class identified and the method used to

identify that class;

(3) a statement that all persons identified have been notified

that, on request, the intended defendant will provide relief to

those persons and all others similarly situated;

(4) a complete explanation of the relief being afforded;

(5) a copy of the notice or communication the intended defendant

is providing to the members of the class;

(6) a statement that the relief being afforded the consumer has

been or, if the offer is accepted by the consumer, will be given

within a stated reasonable time; and

(7) a statement that the practice complained of has ceased.

(c) Except as provided by Subsection (d), an attempt to comply

with this section by a person receiving a demand is:

(1) an offer to compromise;

(2) not admissible as evidence; and

(3) not an admission of engaging in an unlawful act or practice.

(d) A defendant may introduce evidence of compliance or an

attempt to comply with this section for the purpose of:

(1) establishing good faith; or

(2) showing compliance with this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.264. DEFENSES. Damages may not be awarded in a class

action under this subchapter if the defendant:

(1) proves that the action complained of resulted from a bona

fide error, notwithstanding the use of reasonable procedures

adopted to avoid an error; and

(2) made restitution of any consideration received from any

member of the class.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.265. LIMITATIONS PERIOD FOR DAMAGES. In a class action

under this subchapter, damages may not include any damages

incurred more than two years before the date the action is

commenced.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.266. DISPOSITION. (a) A class action under this

subchapter may not be dismissed, settled, or compromised without

the approval of the court.

(b) Notice of the proposed dismissal, settlement, or compromise

shall be given to all members of the class in the manner the

court directs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.267. CONTENTS OF JUDGMENT; NOTICE. (a) The judgment

in a class action under this subchapter must describe those to

whom the notice under Section 541.261 was directed and who have

not requested exclusion and those the court finds to be members

of the class.

(b) The court shall direct to the members of the class the best

notice of the judgment practicable under the circumstances,

including individual notice to each member who can be identified

through reasonable effort.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

SUBCHAPTER G. DEPARTMENT ACTION FOR REFUND OF PREMIUMS

Sec. 541.301. REFUND OF PREMIUMS. (a) After notice and hearing

as provided in Subchapter C, the department may require a person

to make an accounting under Subsection (b):

(1) in connection with a method of competition or act or

practice that is the basis of a cease and desist order issued

under Section 541.108; or

(2) on application of an aggrieved person, in connection with a

determination by the department that the aggrieved person and

other persons similarly situated were induced to purchase an

insurance policy as a result of the person engaging in a method

of competition or act or practice in violation of:

(A) this chapter or a rule adopted under this chapter; or

(B) Section 17.46, Business & Commerce Code.

(b) A person required to make an accounting under this section

must account for all premiums collected for policies issued by

the person during the preceding two years in connection with the

acts in violation of this chapter described by Subsection (a)(1)

or (2).

(c) The department may require the person described by

Subsection (a) to:

(1) give notice to all persons from whom the premiums were

collected; and

(2) refund the total of all premiums collected from each person

who elects to accept a premium refund in exchange for

cancellation of the insurance policy issued.

(d) A person who refunds premiums under this section shall

deduct from the amount of premiums refunded the amount of

benefits actually paid by the person while the insurance policy

was in force.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 2, eff. April 1,

2005.

Sec. 541.302. TIME TO MAKE REFUNDS. The department shall

specify a reasonable time within which a person required to make

premium refunds under Section 541.301 must