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Archived File - for Reference Use

This file is historical in nature. Links and contact information may be outdated and no longer valid.


COMMISSIONER'S BULLETIN #B-0007-98

February 4, 1998

 

TO: All Insurers and HMO's Authorized To Do Business in Texas

RE: Prompt Payment of First Party Claims

You recently received a bulletin dated January 23, 1998, regarding prompt payment of claims to providers. This bulletin reminds you of responsibilities relating to first party claims. The Texas Department of Insurance has received complaints indicating some insurers and HMO's are not promptly paying claims according to the time limits contained in the Insurance Code, Article 21.55. Failure to pay a first party claim within the time limits in Article 21.55 is illegal and may result in disciplinary action.

The Texas Legislature has repeatedly addressed the subject of prompt payment of claims, and it is clear that the Department of Insurance is required to enforce this law. The scope of Article 21.55 was further expanded in 1997 legislation, and in particular, amendments to Article 20A.09 make it very clear that HMO's must comply with this law.

TEX. INS. CODE Art. 21.55 requires an insurer or HMO to make payment not later than five business days after notifying a claimant that a claim will be paid. If payment is conditioned on performance of an act by the first party claimant, the insurer or HMO shall make payment within five business days after the act is performed. Surplus lines insurers shall pay claims not later than 20 business days after notice or the date the act is performed.

Article 21.55 also requires prompt acknowledgement and acceptance or rejection of first party claims. Insurers and HMO's shall, within 15 business days of notice of claim (or 30 business days for surplus lines insurers) acknowledge receipt of the claim, commence any claim investigation, and request items needed from the claimant. Insurers and HMO's shall notify a first party claimant in writing of the acceptance or rejection of the claim not later than 15 business days after the date the insurer or HMO receives all items required to secure final proof of loss. If the insurer or HMO rejects the claim, the notice must state the reasons for rejection. There are exceptions to the above-stated deadlines which are listed in Article 21.55, and certain types of insurers are exempt, as listed in 21.55.

The Texas Department of Insurance directs each insurer and HMO to comply with Article 21.55. Please remind your employees and staff of these requirements for business in Texas. For inquiries please contact Consumer Protection at 1-800-252-3439, for HMO inquiries contact Cady Crismon, Director HMO Quality Assurance at 512-322-4266, or Life/Health inquiries contact Kim Stokes, Deputy Commissioner of Life/Health at 512-322-3401.

___________________________
ELTON BOMER
COMMISSIONER OF INSURANCE


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Archived File - for Reference Use

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